G.R. No.
162583 June 8, 2007 given a notice of termination8 which enumerated
ALBERTO NAVARRO, petitioner,
vs.
COCA-COLA BOTTLERS PHILS. INC., MANUEL
GARCIA and RUSTUM
ALEJANDRINO, respondents.
DECISION
QUISUMBING, J.:
This is an appeal to reverse and set aside both the
Decision1 dated August 27, 2003 and the
Resolution2 dated March 8, 2004 of the Court of
Appeals in CA-G.R. SP No. 63379. The appellate
court had reversed the Resolution3of the National
Labor Relations Commission (NLRC) and held that
petitioner Alberto Navarro was validly dismissed by
the respondents.
The facts are undisputed.
Petitioner was an employee of the respondent
Coca-Cola Bottlers Phils., Inc. (Coca-Cola) for
more than a decade. Specifically, he worked as a
forklift operator for Coca-Cola from November 1,
1987 to February 27, 1998.
The respondent company has an Employees Code
of Disciplinary Rules and Regulations, which
includes Rule 002-85. Section 4(i) of the rule
provided for the penalty of DISCHARGE for a tenth
AWOP4 /AWOL,5 whether consecutive or not,
following other AWOP/AWOLs within one calendar
year.
On August 11, 1997, petitioner did not report to
work because of heavy rains which flooded the
entire barangay where he resided. In a
Memorandum dated October 1, 1997, he was
required to explain in writing within 24 hours why no
disciplinary action should be imposed on him for his
tenth absence without permission. In response,
petitioner submitted a written explanation
accompanied by a Certification6 from
his Barangay Captain, stating that his absence was
due to heavy rains and subsequent flooding that hit
his barangay. Later, petitioner filed a Supplemental
Written Explanation,7 in lieu of answers to a
questionnaire provided by the company. Petitioner
stated that on August 11, 1997, his house was
heavily flooded and that on the next day, he
immediately filed an application for leave of
absence. Despite his compliance and explanation,
petitioner was dismissed on February 27, 1998 and
the dates of his absences without permission.
Thereafter, petitioner filed a complaint for illegal
dismissal with the Labor Arbiter, which was
dismissed for lack of merit.
On appeal, the NLRC reversed the Decision of the
Labor Arbiter. The dispositive portion of the NLRC
Resolution reads:
WHEREFORE, premises considered,
Complainants’ appeal is GRANTED. The Labor
Arbiter’s decision in the above-entitled case is
hereby ANNULLED and SET ASIDE. A new one is
entered declaring that Complainant Navarro’s
dismissal from his employment is illegal.
Respondent Coca-Cola Bottlers Phils., Inc. is
hereby ordered to immediately reinstate
Complainant Navarro to his former position without
loss of seniority rights and other privileges and to
pay his full backwages, inclusive of allowances,
and his other benefits or their monetary equivalent
computed from the time he was illegally dismissed
up to the time of his actual reinstatement.
Respondent Coca-Cola Bottlers Phils., Inc. is
likewise ordered to pay Complainant Navarro
attorney’s fees equivalent to ten percent (10%) of
his total monetary award.
SO ORDERED.9
Respondent elevated the case to the Court of
Appeals. The Court of Appeals annulled the
resolution of the NLRC. It ruled as follows:
WHEREFORE, premises considered, the Decision
(sic) as well as the Resolution of the National Labor
Relations Commission is hereby SET ASIDE and
the Decision of the Labor Arbiter is reinstated with
the MODIFICATION that petitioner Coca-Cola
Bottlers Phils., Inc. is ordered to pay private
respondent Alberto Navarro separation pay
equivalent to one-half (1/2) month salary for every
year of service starting from November 1, 1987
until his dismissal on February 27, 1998.
SO ORDERED.10
The appellate court also denied petitioner’s motion
for reconsideration.
Hence the instant petition before us, raising the
following issues:
-A-
WHETHER OR NOT THE HONORABLE COURT
OF APPEALS COMMITTED REVERSIBLE
ERROR AND GRAVELY ABUSED ITS
DISCRETION IN REVERSING AND SETTING
ASIDE THE DECISION OF THE NLRC AND
REINSTATING, WITH MODIFICATION, THAT OF
THE LABOR ARBITER WHEN, OBVIOUSLY, THE
RULING OF THE COMMISSION IS MORE IN
ACCORD WITH THE EVIDENCE AND SETTLED
JURISPRUDENCE.
-B-
THE HONORABLE COURT OF APPEALS DID
NOT HEED THE INJUNCTION OF THIS
HONORABLE COURT THAT: "AS IS WELL-
SETTLED, IF DOUBTS EXIST BETWEEN THE
EVIDENCE PRESENTED BY THE EMPLOYER
AND THE EMPLOYEE, THE SCALES OF
JUSTICE MUST BE TILTED IN FAVOR OF THE
EMPLOYEE. SINCE IT IS A TIME-HONORED
RULE 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" IN
RENDERING THE DISPUTED DECISION AND
RESOLUTION.11
Raised also as the threshold issue in this petition is:
WHETHER PETITIONER’S APPLICATION FOR
LEAVE OF ABSENCE SHOULD HAVE BEEN
ALLOWED BY THE COMPANY.
Respondents contend that the application for leave
was correctly denied, and that petitioner violated
the Employees Code of Disciplinary Rules and
Regulations when he incurred his tenth
absence. Petitioner, on the other hand, argues that
his absence was excusable under the
circumstances.
On this point, we are in agreement that petitioner’s
application for leave should have been approved by
the company. His absence was due to a fortuitous
event outside of petitioner’s control.
In our view, petitioner had no wrongful, perverse or
even negligent attitude, intended to defy the order
of his employer when he absented himself. He did
so because heavy rains flooded their residential
area which was along the railroad.12 In his favor,
the Barangay Captain certified that indeed there
was flooding in their place of residence.
A worker cannot be reasonably expected to
anticipate times of sickness nor emergency. Hence,
to require prior notice of such times would be
absurd. He can only give proper notice after the
occurrence of the event – which is what petitioner
did in this case.
In earlier cases, we have expressed disapproval of
dismissal of employees who have absented
themselves due to emergency circumstances.
In Brew Master International, Inc. v. National
Federation of Labor Unions (NAFLU),13 the
employee’s absence was precipitated by a grave
family problem when his wife unexpectedly
deserted him and abandoned the family. Under
said circumstances, his absence was deemed
justified. Similarly, in this case, the reason for
petitioner’s absence was not of his own doing much
less to his liking, thus we are of the view that he did
not merit the extreme penalty of dismissal from the
service.
We reiterate that the State policy is to afford full
protection to labor. When conflicting interests of
labor and capital are weighed on the scales of
social justice, the heavier influence of capital
should be counterbalanced by the compassion that
the law accords the less privileged
workingman.14 Under Article 27915 of the Labor
Code, an employee who is unjustly dismissed is
entitled to reinstatement, without loss of seniority
rights and other privileges, and to the payment of
full backwages, inclusive of allowances, and other
benefits or their monetary equivalent, computed
from the time his compensation was withheld from
him.16
WHEREFORE, both the assailed Decision dated
August 27, 2003 of the Court of Appeals and its
Resolution dated March 8, 2004 denying the motion
for reconsideration are REVERSED and SET
ASIDE.
Respondent Coca-Cola Bottlers Phils., Inc. is
hereby ORDERED:
(1) to immediately reinstate petitioner Navarro to
his former position without loss of seniority rights
and other privileges;
(2) to pay his full backwages, inclusive of
allowances, and his other benefits or their monetary
equivalent computed from the time he was illegally
dismissed up to the time of his actual
reinstatement; and
(3) to pay petitioner Navarro attorney’s fees
equivalent to 10% of his total monetary award.
Costs against respondents.
SO ORDERED.
G.R. No. 162308 November 22, 2006
G & M PHILIPPINES, INC., Petitioner,
vs.
ROMIL V. CUAMBOT,* Respondent.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule
45 of the Rules of Court assailing the Decision1 of
the Court of Appeals (CA) in CA-G.R. SP No.
64744, as well as the Resolution2 dated February
20, 2004 denying the motion for reconsideration
thereof.
The antecedent facts are as follows:
On November 7, 1994, respondent Romil V.
Cuambot applied for deployment to Saudi Arabia as
a car body builder with petitioner G & M Philippines,
Inc., a duly licensed placement and recruitment
agency. Respondent’s application was duly
processed and he later signed a two-year
employment contract to work at the Al Waha
Workshop in Unaizah City, Gassim, Kingdom of
Saudi Arabia. He left the country on January 5,
1995. However, respondent did not finish his
contract and returned to the Philippines barely six
months later, on July 24, 1995. On July 26, 1995,
he filed before the National Labor Relations
Commission (NLRC) a complaint for unpaid wages,
withheld salaries, refund of plane ticket and
repatriation bond, later amended to include illegal
dismissal, claim for the unexpired portion of his
employment contract, actual, exemplary and moral
damages, and attorney’s fees. The complaint was
docketed as NLRC-NCR Case No. 00-07-05252-
95.
Respondent narrated that he began working for
Mohd Al Motairi,3 the President and General
Manager of the Al Waha Workshop, on January 8,
1995. Along with his Filipino co-workers, he was
subjected to inhuman and unbearable working
conditions, to wit:
1. [He] was required to work from 7:00
o’clock in the morning to 10:00 o’clock in the
evening everyday, except Friday, or six (6)
hours overtime work daily from the usual
eight (8) working hours per day.
2. [He] was never paid x x x his monthly
basic salary of 1,200 [Riyals] including his
overtime pay for the six (6) hours overtime
work he rendered every working day during
his work in Saudi Arabia except for the
amount of 100 [Riyals] given every month
for his meal allowance;
3. [He] was subjected to serious insult by
respondent Muthiri everytime he asked or
demanded for his salary; and,
4. [S]ome of complainant’s letters that were
sent by his family were not given by
respondent Muthiri and/or his staff x x x.4
When respondent asked Motairi for his salary, he
was told that since a huge sum had been paid to
the agency for his recruitment and deployment, he
would only be paid after the said amount had
already been recovered. He was also told that his
salary was only 800 Saudi Riyals (SAR) per month,
in contrast to the SAR1200 that was promised him
under the contract. Motairi warned that he would be
sent home the next time he demanded for his
salary. Due to his family’s incessant letters asking
for financial support, however, respondent
mustered the courage to again demand for his
salaries during the second week of July 1996. True
to his word, Motairi ordered him to pack up and
leave. He was able to purchase his plane ticket
only through the contributions of his fellow Filipinos.
Motairi even accompanied him to the airport when
he bought his plane ticket. In the meantime, his
wife had been making inquiries about him.
To corroborate his claims, respondent submitted
the following documents: an undated letter5 he had
written addressed to the Philippine Labor Attaché in
Riyadh, with Arabic translation;6 his wife’s
letter7 dated June 28, 1995 addressed to the
"Gulangco Monteverde Agency, Manila Head
Office," asking for a "favor to help [her] husband to
come home as early as possible;" a fax
message8 dated July 17, 1995 from a
representative of the Land Bank of the Philippines
(LBP) to a counterpart in Riyadh, asking for
assistance to locate respondent;9 and the
reply10 from the Riyadh LBP representative
requesting for contact numbers to facilitate
communication with respondent.1âwphi1
Respondent further claimed that his employer’s
actuations violated Articles 83 and 103 of the Labor
Code. While he was entitled to terminate his
employment in accordance with Article 285 (b) due
to the treatment he received, he did not exercise
this right. He was nevertheless illegally dismissed
by his employer when he tried to collect the salaries
due him. Respondent further claimed that the
reduction of his monthly salary from SAR1,200 to
SAR800 and petitioner’s failure to furnish him a
copy of the employment contract before his
departure amounted to prohibited practices under
Article 34 (i) and (k) of the Labor Code.
Respondent prayed for the following relief:
WHEREFORE, premises considered, complainant
most respectfully prays unto this Honorable Office
that the instant complaint be given due course and
that a decision be rendered in his favor and against
respondents G & M (Phils.), Inc., Alwaha (sic)
Workshop and/or Muhamd (sic) Muthiri, as follows:
(1) Ordering the respondents to pay, jointly
and severally, complainant the unpaid
salaries and overtime pay in the amounts of
₱61,560.00 and ₱66,484.80, respectively,
including interests, until the same will be
fully paid;
(2) Ordering the respondents to pay, jointly
and severally, complainant[’s] salary for the
unexpired portion of the contract in the
amount of ₱184,680.00, including interests,
until the same will be fully paid;
(3) Ordering the respondents to pay, jointly
and severally, complainant[’s] actual
expenses which he incurred in applying for
the job, including expenses in leaving for
the job, including expenses in leaving for
Saudi Arabia and plane ticket, as well as
repatriation bond and incidental expenses in
going home to the Philippines in the
amounts of ₱49,000.00 and ₱20,000.00,
respectively, including interests, until the
same will be fully paid;
(4) Ordering the respondents to pay, jointly
and severally, complainant moral damages
in the amount of ₱150,000.00 and
exemplary damages in the amount of
₱150,000.00, including interests, until the
same will be fully paid;
(5) Ordering the respondents to pay, jointly
and severally, complainant for and as
attorney’s fees in the amount of ₱68,172.48
or the amount equivalent to 10% of the total
amount of the foregoing claims and
damages that may be awarded by the
Honorable Office to the complainant.11
In its position paper, petitioner alleged that
respondent was deployed "for overseas work as car
body builder for its Principal Golden Wings Est. for
General Services and Recruitment in Saudi Arabia
for an employment period of 24 months, with a
monthly salary of US$400.00."12 It insisted that
respondent was religiously paid his salaries as they
fell due. After working for a little over seven
months, respondent pleaded with his employer to
be allowed to return home since there were family
problems he had to settle personally. Respondent
even submitted a resignation letter13 dated July 23,
1995.
To support its claim that respondent had been paid
his salaries as they fell due, petitioner submitted in
evidence copies of seven payslip14 authenticated
by the Philippine Labor Attaché in Riyadh, Saudi
Arabia. Petitioner asserted that since respondent
only worked for a little over seven months and did
not finish his contract, he should pay the cost of the
plane ticket. It pointed out that according to the
standard employment contract, the employer would
provide the employee with a free plane ticket for the
flight home only if the worker finishes his contract.
Respondent countered that his signatures in the
purported payslips were forged. He denied having
received his salaries for the said period, except
only for the SAR100 as monthly allowance. He
pointed out that the authentication of the alleged
pay slips and resignation letter before the labor
attaché in Riyadh is immaterial, since the
documents themselves were falsified.
Respondent further claimed that petitioner required
him to pay a ₱10,000.00 placement fee and that he
had to borrow ₱2,000.00 from a relative. He was
then told that the amount would be considered as
an advance payment and that the balance would be
deducted from his salary. He was not, however,
given any receipt. He insisted that the employment
contract which he signed indicated that he was
supposed to receive a monthly salary of SAR1,200
for working eight hours a day, excluding overtime
pay. He was repeatedly promised to be furnished a
copy of the contract and was later told that it would
be given to his wife, Minda. However, she was also
given the run-around and was told that the contract
had already been given to her husband.
To counter the allegation of forgery, petitioner
claimed that there was a great possibility that
respondent had changed his signature while
abroad so that he could file a complaint for illegal
dismissal upon his return. The argument that the
stroke and handwriting on the payslip was written
by one and the same person is mere conjecture, as
respondent could have requested someone, i.e.,
the cashier, to prepare the resignation letter for
him. While it is the employer who fills up the pay
slip, respondent could have asked another
employee to prepare the resignation letter,
particularly if he (respondent) did not know how to
phrase it himself. Moreover, it could not be
presumed that the payslip and resignation letter
were prepared by one and the same person, as
respondent is not a handwriting expert. Petitioner
further pointed out that respondent has different
signatures, not only in the pleadings submitted
before the Labor Arbiter, but also in respondents’
personal documents.
On January 30, 1997, Labor Arbiter Jose De Vera
ruled in favor of respondent on the following
ratiocination:
What convinced this Arbitration Branch about the
unreliability of the complainant’s signature in the
payslip is the close semblance of the handwritings
in the payslips and the handwritings in the
purported handwritten resignation of the
complainant. It unmistakably appears to this
Arbitration Branch that the payslips as well as the
handwritten letter-resignation were prepared by one
and the same person. If it were true that the
handwritten letter-resignation was prepared by the
complainant, it follows that he also prepared the
payslips because the handwritings in both
documents are exactly the same and identical. But
[this] is quite unbelievable that complainant himself
as the payee prepared the payslips with the
corresponding entries therein in his own
handwriting. Under the circumstances, the only
logical conclusion is that both the payslips and the
handwritten letter-resignation were prepared and
signed by one and the same person definitely not
the complainant.
With the foregoing findings and conclusions, this
Arbitration Branch is of the well-considered view
that complainant was not paid his salaries from
January 5, 1995 up to July 23, 1995 and that he
was unjustifiably dismissed from his employment
when he repeatedly demanded for his unpaid
salaries. Respondents are, therefore, liable to pay
the complainant his salaries from January 5, 1995
up to July 23, 1995 which amount to US$2,640.00
(US$400 x 6.6 mos). Further, respondents are also
liable to the complainant for the latter’s salaries for
the unexpired portion of his contract up to the
maximum of three (3) months pursuant to Section
10 of RA 8042, which amount to US$1,200.00.
Respondents must also refund complainant’s plane
fare for his return flight. And finally, being
compelled to litigate his claims, it is but just and x x
x that complainant must be awarded attorney’s fees
at the rate of ten percent (10%) of the judgment
award.
WHEREFORE, all the foregoing premises
considered, judgment is hereby rendered ordering
the respondents to pay complainant the aggregate
sum of US$3,840.00 or its equivalent in Philippine
Currency at the exchange rate prevailing at the
time of payment, and to refund complainant’s plane
fare for his return flight. Further, respondents are
ordered to pay complainant attorney’s fees at the
rate of Ten percent (10%) of the foregoing
judgment award.15
Petitioner appealed the Decision of the Labor
Arbiter to the NLRC, alleging that the Labor Arbiter,
not being a handwriting expert, committed grave
abuse of discretion amounting to lack of jurisdiction
in finding for respondent. In its Decision16 dated
December 9, 1997, the NLRC upheld this
contention and remanded the case "to the
Arbitration Branch of origin for referral to the
government agency concerned for calligraphy
examination of the questioned documents."17
The case was then re-raffled to Labor Arbiter
Enrico Angelo Portillo. On September 11, 1998, the
parties agreed to a resetting to enable petitioner to
secure the original copies of documents from its
foreign principal. However, on December 9, 1998,
the parties agreed to submit the case for resolution
based on the pleadings and on the evidence on
record.
This time, the complaint was dismissed for lack of
merit. According to Labor Arbiter Portillo, aside
from respondent’s bare allegations, he failed to
substantiate his claim of poor working conditions
and long hours of employment. The fact that he
executed a handwritten resignation letter is enough
evidence of the fact that he voluntarily resigned
from work. Moreover, respondent failed to submit
any evidence to refute the pay slips duly signed
and authenticated by the labor attaché in Saudi
Arabia, inasmuch as their probative value cannot
be impugned by mere self-serving allegations. The
Labor Arbiter concluded that as between the oral
allegations of workers that they were not paid
monetary benefits and the documentary evidence
presented by employer, the latter should prevail. 18
Respondent appealed the decision before the
NLRC, alleging that the Labor Arbiter failed to
consider the genuineness of the signature which
appears in the purported resignation letter dated
July 23, 1995, as well as those that appear in the
seven pay slips. He insisted that these documents
should have been endorsed to the National Bureau
of Investigation Questioned Documents Division or
the Philippine National Police Crime Laboratory for
calligraphy examination.
The NLRC dismissed the appeal for lack of merit in
a Resolution19 dated December 27, 2000. It held
that the questioned documents could not be
endorsed to the agency concerned since mere
photocopies had been submitted in evidence. The
records also revealed that petitioner had
communicated to the foreign employer abroad, who
sent the original copies, but there was no response
from respondent. It also stressed that during the
December 9, 1998 hearing, the parties agreed to
submit the case for resolution on the basis of the
pleadings and the evidence on record; if
respondent had wanted to have the documents
endorsed to the NBI or the PNP, he should have
insisted that the documents be examined by a
handwriting expert of the government. Thus,
respondent was estopped from assailing the Labor
Arbiter’s ruling.
Unsatisfied, respondent elevated the matter to the
CA via petition for certiorari. He pointed out that he
merely acceded to the submission of the case for
resolution due to the inordinate delays in the case.
Moreover, the questioned documents were within
petitioner’s control, and it was petitioner that
repeatedly failed to produce the original copies.
The CA reversed the ruling of the NLRC. According
to the appellate court, a visual examination of the
questioned signatures would instantly reveal
significant differences in the handwriting
movement, stroke, and structure, as well as the
quality of lines of the signatures; Labor Arbiter
Portillo committed patent error in examining the
signatures, and it is the decision of Labor Arbiter
De Vera which must be upheld. The CA also
pointed out the initial ruling of the NLRC (Second
Division) dated December 9, 1997 which set aside
the earlier decision of Labor Arbiter De Vera
included a special directive to the Arbitration
Branch of origin to endorse the questioned
documents for calligraphy examination. However,
respondent Cuambot failed to produce original
copies of the documents; hence, Labor Arbiter
Portillo proceeded with the case and ruled in favor
of petitioner G.M.Phils. The dispositive portion of
the CA ruling reads:
IN VIEW OF ALL THE FOREGOING, the instant
petition is hereby GRANTED. Accordingly, the
assailed Resolutions dated 27 December 2000 and
12 February 2001, respectively, of the NLRC
Second Division are hereby SET ASIDE and the
Decision dated 20 February 1997 rendered by
Labor Arbiter Jose De Vera is hereby
REINSTATED.20
Petitioner filed a motion for reconsideration, which
the CA denied for lack of merit in its
Resolution21 dated February 20, 2004.
Hence, the present petition, where petitioner claims
that –
THE COURT OF APPEALS GRAVELY ERRED ON
A MATTER OF LAW IN HOLDING THAT LABOR
ARBITER ENRICO PORTILLO GRAVELY
ABUSED HIS DISCRETION WHEN HE HELD
THAT THE SIGNATURES APPEARING ON THE
QUESTIONED DOCUMENTS ARE THOSE OF
THE PETITIONER.22
Petitioner points out that most of the signatures
which Labor Arbiter De Vera used as standards for
comparison with the signatures appearing on the
questioned documents were those in the pleadings
filed by the respondent long after the questioned
documents had been supposedly signed by him. It
claims that respondent affixed his signatures on the
pleadings in question and intentionally made them
different from his true signature so that he could
later on conveniently impugn their authenticity.
Petitioner claims that "had Labor Arbiter De Vera
taken pains in considering these circumstances, he
could have determined that respondent may have
actually intentionally given a different name and
slightly changed his signature in his application,
which name and signature he used when he signed
the questioned letter of resignation and payslips,
only to conveniently disown the same when he
came back to the country to file the present
case."23 Thus, according to petitioner, the CA
clearly committed a palpable error of law when it
reversed the ruling of the NLRC, which in turn
affirmed Labor Arbiter Portillo’s decision.
For his part, respondent contends that petitioner’s
arguments were already raised in the pleadings
filed before Labor Arbiter De Vera which had
already been passed upon squarely in the Labor
Arbiter’s Decision of January 30, 1997.
The determinative issues in this case are
essentially factual in nature - (a) whether the
signatures of respondent in the payslips are mere
forgeries, and (b) whether respondent executed the
resignation letter. Generally, it is not our function to
review findings of fact. However, in case of a
divergence in the findings and conclusions of the
NLRC on the one hand, and those of the Labor
Arbiter and the CA on the other, the Court may
examine the evidence presented by the parties to
determine whether or not the employee was
illegally dismissed or voluntarily resigned from
employment.24 The instant case thus falls within the
exception.
We have carefully examined the evidence on
record and find that the petition must fail.
In its Decision25 dated December 9, 1997, the
NLRC had ordered the case remanded to the Labor
Arbiter precisely so that the questioned documents
purportedly signed/executed by respondent could
be subjected to calligraphy examination by experts.
It is precisely where a judgment or ruling fails to
make findings of fact that the case may be
remanded to the lower tribunal to enable it to
determine them.26 However, instead of referring the
questioned documents to the NBI or the PNP as
mandated by the Commission’s ruling, Labor
Arbiter Portillo proceeded to rule in favor of
petitioner, concluding that respondent’s signatures
were not forged, and as such, respondent’s
separation from employment was purely voluntary.
In fine, then, the Labor Arbiter gravely abused his
discretion when he ruled in favor of petitioner
without abiding by the Commission’s directive.
We note, however, that a remand of the case at this
juncture would only result in unnecessary delay,
especially considering that this case has been
pending since 1995. Indeed, it is this Court’s duty to
settle, whenever possible, the entire controversy in
a single proceeding, "leaving no root or branch to
bear the seeds of future litigation."27Hence, the
case shall be fully resolved on its merits.
We find that petitioner’s failure to submit the
original copies of the pay slips and the resignation
letter raises doubts as to the veracity of its claim
that they were actually signed/penned by
respondent. The failure of a party to produce the
original copy of the document which is in issue has
been taken against such party, and has even been
considered as a mere "bargaining chip," a dilatory
tactic so that such party would be granted the
opportunity to adduce controverting evidence.28 In
fact, petitioner did not even present in evidence the
original copy of the employment contract, much
less a machine copy, giving credence to
respondent’s claim that he was not at all given a
copy of the employment contract after he signed it.
What petitioner presented was a mere photocopy of
the OCW Info Sheet29 issued by the Philippine
Overseas Employment Administration as well as
the Personal Data Sheet30which respondent filled
up. It bears stressing that the original copies of all
these documents, including the employment
contract, were in the possession of petitioner, or, at
the very least, petitioner’s principal.
Moreover, as correctly noted by the CA, the
opinions of handwriting experts, although helpful in
the examination of forged documents because of
the technical procedure involved in the analysis,
are not binding upon the courts.31 As such, resort to
these experts is not mandatory or indispensable to
the examination or the comparison of handwriting.
A finding of forgery does not depend entirely on the
testimonies of handwriting experts, because the
judge must conduct an independent examination of
the questioned signature in order to arrive at a
reasonable conclusion as to its authenticity.32 No
less than Section 22, Rule 132 of the Rules of
Court explicitly authorizes the court, by itself, to
make a comparison of the disputed handwriting
"with writings admitted or treated as genuine by the
party against whom the evidence is offered or
proved to be genuine to the satisfaction of the
judge." Indeed, the authenticity of signatures is not
a highly technical issue in the same sense that
questions concerning, e.g., quantum physics or
topology, or molecular biology, would constitute
matters of a highly technical nature. The opinion of
a handwriting expert on the genuineness of a
questioned signature is certainly much less
compelling upon a judge than an opinion rendered
by a specialist on a highly technical issue.33
Even a cursory perusal of the resignation
letter34 and the handwritten pay slips will readily
show that they were written by only one person. A
mere layman will immediately notice that the
strokes and letters in the documents are very
similar, if not identical, to one another. It is also
quite apparent from a comparison of the signatures
in the pay slips that they are inconsistent, irregular,
with uneven and faltering strokes.
We also find it unbelievable that after having waited
for so long to be deployed to Saudi Arabia and with
the hopes of opportunity to earn a better living
within his reach, respondent would just suddenly
decide to abandon his work and go home due to
"family problems." At the very least, respondent
could have at least specified the reason or
elaborated on the details of such an urgent matter
so as not to jeopardize future employment
opportunities.
That respondent also filed the complaint
immediately gives more credence to his claim that
he was illegally dismissed.1âwphi1 He arrived in
the Philippines on July 24, 1995, and immediately
filed his complaint for illegal dismissal two days
later, on July 26, 1995.
We are not impervious of petitioner’s claim that
respondent could have asked another person to
execute the resignation letter for him. However,
petitioner failed to present even an affidavit from a
representative of its foreign principal in order to
support this allegation.
Indeed, the rule is that all doubts in the
implementation and the interpretation of the Labor
Code shall be resolved in favor of labor,35 in order
to give effect to the policy of the State to "afford
protection to labor, promote full employment,
ensure equal work opportunities regardless of sex,
race or creed, and regulate the relations between
workers and employers," and to "assure the rights
of workers to self-organization, collective
bargaining, security of tenure, and just and humane
conditions of work."36 We reiterate the following
pronouncement in Nicario v. National Labor
Relations Commission:37
It is a well-settled doctrine, that if doubts exist
between the evidence presented by the employer
and the employee, the scales of justice must be
tilted in favor of the latter. It is a time-honored rule
that in controversies between a laborer and his
master, doubts reasonably arising from the
evidence, or in the interpretation of agreements and
writing should be resolved in the former’s favor.
The policy is to extend the doctrine to a greater
number of employees who can avail of the benefits
under the law, which is in consonance with the
avowed policy of the State to give maximum aid
and protection of labor.
Moreover, one who pleads payment has the burden
of proving it. The reason for the rule is that the
pertinent personnel files, payrolls, records,
remittances and other similar documents – which
will show that overtime, differentials, service
incentive leave, and other claims of workers have
been paid – are not in the possession of the worker
but in the custody and absolute control of the
employer. Thus, the burden of showing with legal
certainty that the obligation has been discharged
with payment falls on the debtor, in accordance
with the rule that one who pleads payment has the
burden of proving it.38 Only when the debtor
introduces evidence that the obligation has been
extinguished does the burden shift to the creditor,
who is then under a duty of producing evidence to
show why payment does not extinguish the
obligation.39 In this case, petitioner was unable to
present ample evidence to prove its claim that
respondent had received all his salaries and
benefits in full.1âwphi1
IN LIGHT OF ALL THE FOREGOING, the Petition
is DENIED for lack of merit. The Decision of the
Court of Appeals in CA-G.R. SP No. 64744 is
AFFIRMED. Costs against the petitioners.
SO ORDERED.
G.R. No. 73887 December 21, 1989
GREAT PACIFIC LIFE ASSURANCE
CORPORATION, petitioner,
vs.
HONORATO JUDICO and NATIONAL LABOR
RELATIONS COMMISSION, respondents.
G.A. Fortun and Associates for petitioner.
Corsino B. Soco for private respondent.
PARAS J.:
Before us is a Petition for certiorari to review the
decision of the National Labor Relations Commission
(NLRC, for brevity) dated September 9, 1985
reversing the decision of Labor Arbiter Vito J. Minoria,
dated June 9, 1983, by 1) ordering petitioner
insurance company, Great Pacific Life Assurance
Corporation (Grepalife, for brevity) to recognize
private respondent Honorato Judico, as its regular
employee as defined under Art. 281 of the Labor
Code and 2) remanding the case to its origin for the
determination of private respondent Judico's money
claims.
The records of the case show that Honorato Judico
filed a complaint for illegal dismissal against Grepalife,
a duly organized insurance firm, before the NLRC
Regional Arbitration Branch No. VII, Cebu City on
August 27, 1982. Said complaint prayed for award of
money claims consisting of separation pay, unpaid
salary and 13th month pay, refund of cash bond,
moral and exemplary damages and attorney's fees.
Both parties appealed to the NLRC when a decision
was rendered by the Labor Arbiter dismissing the
complaint on the ground that the employer-employee
relations did not exist between the parties but ordered
Grepalife to pay complainant the sum of Pl,000.00 by
reason of Christian Charity.
On appeal, said decision was reversed by the NLRC
ruling that complainant is a regular employee as
defined under Art. 281 of the Labor Code and
declaring the appeal of Grepalife questioning the
legality of the payment of Pl,000.00 to complainant
moot and academic. Nevertheless, for the purpose of
revoking the supersedeas bond of said company it
ruled that the Labor Arbiter erred in awarding
Pl,000.00 to complainant in the absence of any legal
or factual basis to support its payment.
Petitioner company moved to reconsider, which was
denied, hence this petition for review raising four legal
issues to wit:
I. Whether the relationship between
insurance agents and their principal,
the insurance company, is that of
agent and principal to be governed by
the Insurance Code and the Civil
Code provisions on agency, or one of
employer-employee, to be governed
by the Labor Code.
II. Whether insurance agents are
entitled to the employee benefits
prescribed by the Labor Code.
III. Whether the public respondent
NLRC has jurisdiction to take
cognizance of a controversy between
insurance agent and the insurance
company, arising from their agency
relations.
IV. Whether the public respondent
acted correctly in setting aside the
decision of Labor Arbiter Vito J.
Minoria and in ordering the case
remanded to said Labor Arbiter for
further proceedings.(p. 159, Rollo)
The crux of these issues boil down to the question of
whether or not employer-employee relationship
existed between petitioner and private respondent.
Petitioner admits that on June 9, 1976, private
respondent Judico entered into an agreement of
agency with petitioner Grepalife to become a debit
agent attached to the industrial life agency in Cebu
City. Petitioner defines a debit agent as "an insurance
agent selling/servicing industrial life plans and policy
holders. Industrial life plans are those whose
premiums are payable either daily, weekly or monthly
and which are collectible by the debit agents at the
home or any place designated by the policy holder"
(p. 156, Rollo). Such admission is in line with the
findings of public respondent that as such debit agent,
private respondent Judico had definite work
assignments including but not limited to collection of
premiums from policy holders and selling insurance to
prospective clients. Public respondent NLRC also
found out that complainant was initially paid P 200. 00
as allowance for thirteen (13) weeks regardless of
production and later a certain percentage
denominated as sales reserve of his total collections
but not lesser than P 200.00. Sometime in September
1981, complainant was promoted to the position of
Zone Supervisor and was given additional
(supervisor's) allowance fixed at P110.00 per week.
During the third week of November 1981, he was
reverted to his former position as debit agent but, for
unknown reasons, not paid so-called weekly sales
reserve of at least P 200.00. Finally on June 28, 1982,
complainant was dismissed by way of termination of
his agency contract.
Petitioner assails the findings of the NLRC that private
respondent is an employee of the former. Petitioner
argues that Judico's compensation was not based on
any fixed number of hours he was required to devote
to the service of petitioner company but rather it was
the production or result of his efforts or his work that
was being compensated and that the so-called
allowance for the first thirteen weeks that Judico
worked as debit agent, cannot be construed as salary
but as a subsidy or a way of assistance for
transportation and meal expenses of a new debit
agent during the initial period of his training which was
fixed for thirteen (13) weeks. Stated otherwise,
petitioner contends that Judico's compensation, in the
form of commissions and bonuses, was based on
actual production, (insurance plans sold and premium
collections).
Said contentions of petitioner are strongly rejected by
private respondent. He maintains that he received a
definite amount as his Wage known as "sales
reserve" the failure to maintain the same would bring
him back to a beginner's employment with a fixed
weekly wage of P 200.00 regardless of production. He
was assigned a definite place in the office to work on
when he is not in the field; and in addition to
canvassing and making regular reports, he was
burdened with the job of collection and to make
regular weekly report thereto for which an anemic
performance would mean dismissal. He earned out of
his faithful and productive service, a promotion to
Zone Supervisor with additional supervisor's
allowance, (a definite or fixed amount of P110.00) that
he was dismissed primarily because of anemic
performance and not because of the termination of
the contract of agency substantiate the fact that he
was indeed an employee of the petitioner and not an
insurance agent in the ordinary meaning of the term.
That private respondent Judico was an agent of the
petitioner is unquestionable. But, as We have held in
Investment Planning Corp. vs. SSS, 21 SCRA 294, an
insurance company may have two classes of agents
who sell its insurance policies: (1) salaried employees
who keep definite hours and work under the control
and supervision of the company; and (2) registered
representatives who work on commission basis. The
agents who belong to the second category are not
required to report for work at anytime, they do not
have to devote their time exclusively to or work solely
for the company since the time and the effort they
spend in their work depend entirely upon their own will
and initiative; they are not required to account for their
time nor submit a report of their activities; they
shoulder their own selling expenses as well as
transportation; and they are paid their commission
based on a certain percentage of their sales. One
salient point in the determination of employer-
employee relationship which cannot be easily ignored
is the fact that the compensation that these agents on
commission received is not paid by the insurance
company but by the investor (or the person insured).
After determining the commission earned by an agent
on his sales the agent directly deducts it from the
amount he received from the investor or the person
insured and turns over to the insurance company the
amount invested after such deduction is made. The
test therefore is whether the "employer" controls or
has reserved the right to control the "employee" not
only as to the result of the work to be done but also as
to the means and methods by which the same is to be
accomplished.
Applying the aforementioned test to the case at bar,
We can readily see that the element of control by the
petitioner on Judico was very much present. The
record shows that petitioner Judico received a definite
minimum amount per week as his wage known as
"sales reserve" wherein the failure to maintain the
same would bring him back to a beginner's
employment with a fixed weekly wage of P 200.00 for
thirteen weeks regardless of production. He was
assigned a definite place in the office to work on when
he is not in the field; and in addition to his canvassing
work he was burdened with the job of collection. In
both cases he was required to make regular report to
the company regarding these duties, and for which an
anemic performance would mean a dismissal.
Conversely faithful and productive service earned him
a promotion to Zone Supervisor with additional
supervisor's allowance, a definite amount of P110.00
aside from the regular P 200.00 weekly "allowance".
Furthermore, his contract of services with petitioner is
not for a piece of work nor for a definite period.
On the other hand, an ordinary commission insurance
agent works at his own volition or at his own leisure
without fear of dismissal from the company and short
of committing acts detrimental to the business interest
of the company or against the latter, whether he
produces or not is of no moment as his salary is
based on his production, his anemic performance or
even dead result does not become a ground for
dismissal. Whereas, in private respondent's case, the
undisputed facts show that he was controlled by
petitioner insurance company not only as to the kind
of work; the amount of results, the kind of
performance but also the power of dismissal.
Undoubtedly, private respondent, by nature of his
position and work, had been a regular employee of
petitioner and is therefore entitled to the protection of
the law and could not just be terminated without valid
and justifiable cause.
Premises considered, the appealed decision is hereby
AFFIRMED in toto.
SO ORDERED.
G.R. No. 167622 June 29, 2010
GREGORIO V. TONGKO, Petitioner,
vs.
THE MANUFACTURERS LIFE INSURANCE CO.
(PHILS.), INC. and RENATO A. VERGEL DE
DIOS,Respondents.
RESOLUTION
BRION, J.:
This resolves the Motion for Reconsideration1 dated
December 3, 2008 filed by respondent The
Manufacturers Life Insurance Co. (Phils.), Inc.
(Manulife) to set aside our Decision of November 7,
2008. In the assailed decision, we found that an
employer-employee relationship existed between
Manulife and petitioner Gregorio Tongko and ordered
Manulife to pay Tongko backwages and separation
pay for illegal dismissal.
The following facts have been stated in our Decision
of November 7, 2008, now under reconsideration, but
are repeated, simply for purposes of clarity.
The contractual relationship between Tongko and
Manulife had two basic phases. The first or initial
phase began on July 1, 1977, under a Career Agent’s
Agreement (Agreement) that provided:
It is understood and agreed that the Agent is an
independent contractor and nothing contained herein
shall be construed or interpreted as creating an
employer-employee relationship between the
Company and the Agent.
xxxx
a) The Agent shall canvass for applications for Life
Insurance, Annuities, Group policies and other
products offered by the Company, and collect, in
exchange for provisional receipts issued by the Agent,
money due to or become due to the Company in
respect of applications or policies obtained by or
through the Agent or from policyholders allotted by the
Company to the Agent for servicing, subject to
subsequent confirmation of receipt of payment by the
Company as evidenced by an Official Receipt issued
by the Company directly to the policyholder.
xxxx
The Company may terminate this Agreement for any
breach or violation of any of the provisions hereof by
the Agent by giving written notice to the Agent within
fifteen (15) days from the time of the discovery of the
breach. No waiver, extinguishment, abandonment,
withdrawal or cancellation of the right to terminate this
Agreement by the Company shall be construed for
any previous failure to exercise its right under any
provision of this Agreement.
Either of the parties hereto may likewise terminate his
Agreement at any time without cause, by giving to the
other party fifteen (15) days notice in writing.2
Tongko additionally agreed (1) to comply with all
regulations and requirements of Manulife, and (2) to
maintain a standard of knowledge and competency in
the sale of Manulife’s products, satisfactory to
Manulife and sufficient to meet the volume of the new
business, required by his Production Club
membership.3
The second phase started in 1983 when Tongko was
named Unit Manager in Manulife’s Sales Agency
Organization. In 1990, he became a Branch Manager.
Six years later (or in 1996), Tongko became a
Regional Sales Manager.4
Tongko’s gross earnings consisted of commissions,
persistency income, and management overrides.
Since the beginning, Tongko consistently declared
himself self-employed in his income tax returns. Thus,
under oath, he declared his gross business income
and deducted his business expenses to arrive at his
taxable business income. Manulife withheld the
corresponding 10% tax on Tongko’s earnings.5
In 2001, Manulife instituted manpower development
programs at the regional sales management level.
Respondent Renato Vergel de Dios wrote Tongko a
letter dated November 6, 2001 on concerns that were
brought up during the October 18, 2001 Metro North
Sales Managers Meeting. De Dios wrote:
The first step to transforming Manulife into a big
league player has been very clear – to increase the
number of agents to at least 1,000 strong for a start.
This may seem diametrically opposed to the way
Manulife was run when you first joined the
organization. Since then, however, substantial
changes have taken place in the organization, as
these have been influenced by developments both
from within and without the company.
xxxx
The issues around agent recruiting are central to the
intended objectives hence the need for a Senior
Managers’ meeting earlier last month when Kevin
O’Connor, SVP-Agency, took to the floor to determine
from our senior agency leaders what more could be
done to bolster manpower development. At earlier
meetings, Kevin had presented information where
evidently, your Region was the lowest performer (on a
per Manager basis) in terms of recruiting in 2000 and,
as of today, continues to remain one of the laggards
in this area.
While discussions, in general, were positive other
than for certain comments from your end which were
perceived to be uncalled for, it became clear that a
one-on-one meeting with you was necessary to
ensure that you and management, were on the same
plane. As gleaned from some of your previous
comments in prior meetings (both in group and one-
on-one), it was not clear that we were proceeding in
the same direction.
Kevin held subsequent series of meetings with you as
a result, one of which I joined briefly. In those
subsequent meetings you reiterated certain views, the
validity of which we challenged and subsequently
found as having no basis.
With such views coming from you, I was a bit
concerned that the rest of the Metro North Managers
may be a bit confused as to the directions the
company was taking. For this reason, I sought a
meeting with everyone in your management team,
including you, to clear the air, so to speak.
This note is intended to confirm the items that were
discussed at the said Metro North Region’s Sales
Managers meeting held at the 7/F Conference room
last 18 October.
xxxx
Issue # 2: "Some Managers are unhappy with their
earnings and would want to revert to the position of
agents."
This is an often repeated issue you have raised with
me and with Kevin. For this reason, I placed the issue
on the table before the rest of your Region’s Sales
Managers to verify its validity. As you must have
noted, no Sales Manager came forward on their own
to confirm your statement and it took you to name
Malou Samson as a source of the same, an allegation
that Malou herself denied at our meeting and in your
very presence.
This only confirms, Greg, that those prior comments
have no solid basis at all. I now believe what I had
thought all along, that these allegations were simply
meant to muddle the issues surrounding the inability
of your Region to meet its agency development
objectives!
Issue # 3: "Sales Managers are doing what the
company asks them to do but, in the process, they
earn less."
xxxx
All the above notwithstanding, we had your own
records checked and we found that you made a lot
more money in the Year 2000 versus 1999. In
addition, you also volunteered the information to
Kevin when you said that you probably will make
more money in the Year 2001 compared to Year
2000. Obviously, your above statement about making
"less money" did not refer to you but the way you
argued this point had us almost believing that you
were spouting the gospel of truth when you were not.
xxx
xxxx
All of a sudden, Greg, I have become much more
worried about your ability to lead this group towards
the new direction that we have been discussing these
past few weeks, i.e., Manulife’s goal to become a
major agency-led distribution company in the
Philippines. While as you claim, you have not stopped
anyone from recruiting, I have never heard you
proactively push for greater agency recruiting. You
have not been proactive all these years when it
comes to agency growth.
xxxx
I cannot afford to see a major region fail to deliver on
its developmental goals next year and so, we are
making the following changes in the interim:
1. You will hire at your expense a competent assistant
who can unload you of much of the routine tasks
which can be easily delegated. This assistant should
be so chosen as to complement your skills and help
you in the areas where you feel "may not be your cup
of tea."
You have stated, if not implied, that your work as
Regional Manager may be too taxing for you and for
your health. The above could solve this problem.
xxxx
2. Effective immediately, Kevin and the rest of the
Agency Operations will deal with the North Star
Branch (NSB) in autonomous fashion. x x x
I have decided to make this change so as to reduce
your span of control and allow you to concentrate
more fully on overseeing the remaining groups under
Metro North, your Central Unit and the rest of the
Sales Managers in Metro North. I will hold you solely
responsible for meeting the objectives of these
remaining groups.
xxxx
The above changes can end at this point and they
need not go any further. This, however, is entirely
dependent upon you. But you have to understand that
meeting corporate objectives by everyone is primary
and will not be compromised. We are meeting tough
challenges next year, and I would want everybody on
board. Any resistance or holding back by anyone will
be dealt with accordingly.6
Subsequently, de Dios wrote Tongko another letter,
dated December 18, 2001, terminating Tongko’s
services:
It would appear, however, that despite the series of
meetings and communications, both one-on-one
meetings between yourself and SVP Kevin O’Connor,
some of them with me, as well as group meetings with
your Sales Managers, all these efforts have failed in
helping you align your directions with Management’s
avowed agency growth policy.
xxxx
On account thereof, Management is exercising its
prerogative under Section 14 of your Agents Contract
as we are now issuing this notice of termination of
your Agency Agreement with us effective fifteen days
from the date of this letter.7
Tongko responded by filing an illegal dismissal
complaint with the National Labor Relations
Commission (NLRC) Arbitration Branch. He
essentially alleged – despite the clear terms of the
letter terminating his Agency Agreement – that he was
Manulife’s employee before he was illegally
dismissed.8
Thus, the threshold issue is the existence of an
employment relationship. A finding that none exists
renders the question of illegal dismissal moot; a
finding that an employment relationship exists, on the
other hand, necessarily leads to the need to
determine the validity of the termination of the
relationship.
A. Tongko’s Case for Employment Relationship
Tongko asserted that as Unit Manager, he was paid
an annual over-rider not exceeding ₱50,000.00,
regardless of production levels attained and exclusive
of commissions and bonuses. He also claimed that as
Regional Sales Manager, he was given a travel and
entertainment allowance of ₱36,000.00 per year in
addition to his overriding commissions; he was tasked
with numerous administrative functions and
supervisory authority over Manulife’s employees,
aside from merely selling policies and recruiting
agents for Manulife; and he recommended and
recruited insurance agents subject to vetting and
approval by Manulife. He further alleges that he was
assigned a definite place in the Manulife offices when
he was not in the field – at the 3rd Floor, Manulife
Center, 108 Tordesillas corner Gallardo Sts., Salcedo
Village, Makati City – for which he never paid any
rental. Manulife provided the office equipment he
used, including tables, chairs, computers and printers
(and even office stationery), and paid for the
electricity, water and telephone bills. As Regional
Sales Manager, Tongko additionally asserts that he
was required to follow at least three codes of
conduct.9
B. Manulife’s Case – Agency Relationship with
Tongko
Manulife argues that Tongko had no fixed wage or
salary. Under the Agreement, Tongko was paid
commissions of varying amounts, computed based on
the premium paid in full and actually received by
Manulife on policies obtained through an agent. As
sales manager, Tongko was paid overriding sales
commission derived from sales made by agents under
his unit/structure/branch/region. Manulife also points
out that it deducted and withheld a 10% tax from all
commissions Tongko received; Tongko even declared
himself to be self-employed and consistently paid
taxes as such—i.e., he availed of tax deductions such
as ordinary and necessary trade, business and
professional expenses to which a business is entitled.
Manulife asserts that the labor tribunals have no
jurisdiction over Tongko’s claim as he was not its
employee as characterized in the four-fold test and
our ruling in Carungcong v. National Labor Relations
Commission.10
The Conflicting Rulings of the Lower Tribunals
The labor arbiter decreed that no employer-employee
relationship existed between the parties. However, the
NLRC reversed the labor arbiter’s decision on appeal;
it found the existence of an employer-employee
relationship and concluded that Tongko had been
illegally dismissed. In the petition for certiorari with the
Court of Appeals (CA), the appellate court found that
the NLRC gravely abused its discretion in its ruling
and reverted to the labor arbiter’s decision that no
employer-employee relationship existed between
Tongko and Manulife.
Our Decision of November 7, 2008
In our Decision of November 7, 2008, we reversed the
CA ruling and found that an employment relationship
existed between Tongko and Manulife. We concluded
that Tongko is Manulife’s employee for the following
reasons:
1. Our ruling in the first Insular11 case did not
foreclose the possibility of an insurance agent
becoming an employee of an insurance
company; if evidence exists showing that the
company promulgated rules or regulations
that effectively controlled or restricted an
insurance agent’s choice of methods or the
methods themselves in selling insurance, an
employer-employee relationship would be
present. The determination of the existence of
an employer-employee relationship is thus on
a case-to-case basis depending on the
evidence on record.
2. Manulife had the power of control over
Tongko, sufficient to characterize him as an
employee, as shown by the following
indicators:
2.1 Tongko undertook to comply with
Manulife’s rules, regulations and other
requirements, i.e., the different codes
of conduct such as the Agent Code of
Conduct, the Manulife Financial Code
of Conduct, and the Financial Code of
Conduct Agreement;
2.2 The various affidavits of Manulife’s
insurance agents and managers, who
occupied similar positions as Tongko,
showed that they performed
administrative duties that established
employment with Manulife;12 and
2.3 Tongko was tasked to recruit
some agents in addition to his other
administrative functions. De Dios’
letter harped on the direction Manulife
intended to take, viz., greater agency
recruitment as the primary means to
sell more policies; Tongko’s alleged
failure to follow this directive led to the
termination of his employment with
Manulife.
The Motion for Reconsideration
Manulife disagreed with our Decision and filed the
present motion for reconsideration on the
following GROUNDS:
1. The November 7[, 2008] Decision violates
Manulife’s right to due process by: (a)
confining the review only to the issue of
"control" and utterly disregarding all the other
issues that had been joined in this case; (b)
mischaracterizing the divergence of
conclusions between the CA and the NLRC
decisions as confined only to that on "control";
(c) grossly failing to consider the findings and
conclusions of the CA on the majority of the
material evidence, especially [Tongko’s]
declaration in his income tax returns that he
was a "business person" or "self-employed";
and (d) allowing [Tongko] to repudiate his
sworn statement in a public document.
2. The November 7[, 2008] Decision
contravenes settled rules in contract law and
agency, distorts not only the legal
relationships of agencies to sell but also
distributorship and franchising, and ignores
the constitutional and policy context of
contract law vis-à-vis labor law.
3. The November 7[, 2008] Decision ignores
the findings of the CA on the three elements
of the four-fold test other than the "control"
test, reverses well-settled doctrines of law on
employer-employee relationships, and grossly
misapplies the "control test," by selecting,
without basis, a few items of evidence to the
exclusion of more material evidence to
support its conclusion that there is "control."
4. The November 7[, 2008] Decision is judicial
legislation, beyond the scope authorized by
Articles 8 and 9 of the Civil Code, beyond the
powers granted to this Court under Article VIII,
Section 1 of the Constitution and contravenes
through judicial legislation, the constitutional
prohibition against impairment of contracts
under Article III, Section 10 of the
Constitution.
 5. For all the above reasons, the November
7[, 2008] Decision made unsustainable and
reversible errors, which should be corrected,
in concluding that Respondent Manulife and
Petitioner had an employer-employee
relationship, that Respondent Manulife
illegally dismissed Petitioner, and for
consequently ordering Respondent Manulife
to pay Petitioner backwages, separation pay,
nominal damages and attorney’s fees.13
THE COURT’S RULING
A. The Insurance and the Civil Codes;
the Parties’ Intent and Established
Industry Practices
We cannot consider the present case purely from a
labor law perspective, oblivious that the factual
antecedents were set in the insurance industry so that
the Insurance Code primarily governs. Chapter IV,
Title 1 of this Code is wholly devoted to "Insurance
Agents and Brokers" and specifically defines the
agents and brokers relationship with the insurance
company and how they are governed by the Code
and regulated by the Insurance Commission.
The Insurance Code, of course, does not wholly
regulate the "agency" that it speaks of, as agency is a
civil law matter governed by the Civil Code. Thus, at
the very least, three sets of laws – namely, the
Insurance Code, the Labor Code and the Civil Code –
have to be considered in looking at the present case.
Not to be forgotten, too, is the Agreement (partly
reproduced on page 2 of this Dissent and which no
one disputes) that the parties adopted to govern their
relationship for purposes of selling the insurance the
company offers. To forget these other laws is to take
a myopic view of the present case and to add to the
uncertainties that now exist in considering the legal
relationship between the insurance company and its
"agents."
The main issue of whether an agency or an
employment relationship exists depends on the
incidents of the relationship. The Labor Code concept
of "control" has to be compared and distinguished
with the "control" that must necessarily exist in a
principal-agent relationship. The principal cannot but
also have his or her say in directing the course of the
principal-agent relationship, especially in cases where
the company-representative relationship in the
insurance industry is an agency.
a. The laws on insurance and agency
The business of insurance is a highly regulated
commercial activity in the country, in terms particularly
of who can be in the insurance business, who can act
for and in behalf of an insurer, and how these parties
shall conduct themselves in the insurance business.
Section 186 of the Insurance Code provides that "No
person, partnership, or association of persons shall
transact any insurance business in the Philippines
except as agent of a person or corporation authorized
to do the business of insurance in the Philippines."
Sections 299 and 300 of the Insurance Code on
Insurance Agents and Brokers, among other
provisions, provide:
Section 299. No insurance company doing business
in the Philippines, nor any agent thereof, shall pay any
commission or other compensation to any person for
services in obtaining insurance, unless such person
shall have first procured from the Commissioner a
license to act as an insurance agent of such company
or as an insurance broker as hereinafter provided.
No person shall act as an insurance agent or as an
insurance broker in the solicitation or procurement of
applications for insurance, or receive for services in
obtaining insurance, any commission or other
compensation from any insurance company doing
business in the Philippines or any agent thereof,
without first procuring a license so to act from the
Commissioner x x x The Commissioner shall satisfy
himself as to the competence and trustworthiness of
the applicant and shall have the right to refuse to
issue or renew and to suspend or revoke any such
license in his discretion.
1avvphi1.net
Section 300. Any person who for compensation
solicits or obtains insurance on behalf of any
insurance company or transmits for a person other
than himself an application for a policy or contract of
insurance to or from such company or offers or
assumes to act in the negotiating of such insurance
shall be an insurance agent within the intent of this
section and shall thereby become liable to all the
duties, requirements, liabilities and penalties to which
an insurance agent is subject.
The application for an insurance agent’s license
requires a written examination, and the applicant must
be of good moral character and must not have been
convicted of a crime involving moral turpitude.14 The
insurance agent who collects premiums from an
insured person for remittance to the insurance
company does so in a fiduciary capacity, and an
insurance company which delivers an insurance
policy or contract to an authorized agent is deemed to
have authorized the agent to receive payment on the
company’s behalf.15 Section 361 further prohibits the
offer, negotiation, or collection of any amount other
than that specified in the policy and this covers any
rebate from the premium or any special favor or
advantage in the dividends or benefit accruing from
the policy.
Thus, under the Insurance Code, the agent must, as a
matter of qualification, be licensed and must also act
within the parameters of the authority granted under
the license and under the contract with the principal.
Other than the need for a license, the agent is limited
in the way he offers and negotiates for the sale of the
company’s insurance products, in his collection
activities, and in the delivery of the insurance contract
or policy. Rules regarding the desired results (e.g., the
required volume to continue to qualify as a company
agent, rules to check on the parameters on the
authority given to the agent, and rules to ensure that
industry, legal and ethical rules are followed) are built-
in elements of control specific to an insurance agency
and should not and cannot be read as elements of
control that attend an employment relationship
governed by the Labor Code.
On the other hand, the Civil Code defines an agent as
a "person [who] binds himself to render some service
or to do something in representation or on behalf of
another, with the consent or authority of the
latter."16 While this is a very broad definition that on its
face may even encompass an employment
relationship, the distinctions between agency and
employment are sufficiently established by law and
jurisprudence.
Generally, the determinative element is the control
exercised over the one rendering service. The
employer controls the employee both in the results
and in the means and manner of achieving this result.
The principal in an agency relationship, on the other
hand, also has the prerogative to exercise control
over the agent in undertaking the assigned task based
on the parameters outlined in the pertinent laws.
Under the general law on agency as applied to
insurance, an agency must be express in light of the
need for a license and for the designation by the
insurance company. In the present case, the
Agreement fully serves as grant of authority to Tongko
as Manulife’s insurance agent.17 This agreement is
supplemented by the company’s agency practices
and usages, duly accepted by the agent in carrying
out the agency.18 By authority of the Insurance Code,
an insurance agency is for compensation,19 a matter
the Civil Code Rules on Agency presumes in the
absence of proof to the contrary.20 Other than the
compensation, the principal is bound to advance to, or
to reimburse, the agent the agreed sums necessary
for the execution of the agency.21 By implication at
least under Article 1994 of the Civil Code, the
principal can appoint two or more agents to carry out
the same assigned tasks,22 based necessarily on the
specific instructions and directives given to them.
With particular relevance to the present case is the
provision that "In the execution of the agency, the
agent shall act in accordance with the instructions of
the principal."23 This provision is pertinent for
purposes of the necessary control that the principal
exercises over the agent in undertaking the assigned
task, and is an area where the instructions can intrude
into the labor law concept of control so that minute
consideration of the facts is necessary. A related
article is Article 1891 of the Civil Code which binds the
agent to render an account of his transactions to the
principal.
B. The Cited Case
The Decision of November 7, 2008 refers to the first
Insular and Grepalife cases to establish that the
company rules and regulations that an agent has to
comply with are indicative of an employer-employee
relationship.24 The Dissenting Opinions of Justice
Presbitero Velasco, Jr. and Justice Conchita Carpio
Morales also cite Insular Life Assurance Co. v.
National Labor Relations Commission (second Insular
case)25 to support the view that Tongko is Manulife’s
employee. On the other hand, Manulife cites the
Carungcong case and AFP Mutual Benefit
Association, Inc. v. National Labor Relations
Commission (AFPMBAI case)26 to support its
allegation that Tongko was not its employee.
A caveat has been given above with respect to the
use of the rulings in the cited cases because none of
them is on all fours with the present case; the
uniqueness of the factual situation of the present case
prevents it from being directly and readily cast in the
mold of the cited cases. These cited cases are
themselves different from one another; this difference
underscores the need to read and quote them in the
context of their own factual situations.
The present case at first glance appears aligned with
the facts in the Carungcong, the Grepalife, and the
second Insular Life cases. A critical difference,
however, exists as these cited cases dealt with the
proper legal characterization of a subsequent
management contract that superseded the original
agency contract between the insurance company and
its agent. Carungcong dealt with a subsequent
Agreement making Carungcong a New Business
Manager that clearly superseded the Agreement
designating Carungcong as an agent empowered to
solicit applications for insurance. The Grepalife case,
on the other hand, dealt with the proper legal
characterization of the appointment of the Ruiz
brothers to positions higher than their original position
as insurance agents. Thus, after analyzing the duties
and functions of the Ruiz brothers, as these were
enumerated in their contracts, we concluded that the
company practically dictated the manner by which the
Ruiz brothers were to carry out their jobs. Finally, the
second Insular Life case dealt with the implications of
de los Reyes’ appointment as acting unit manager
which, like the subsequent contracts in the
Carungcong and the Grepalife cases, was clearly
defined under a subsequent contract. In all these cited
cases, a determination of the presence of the Labor
Code element of control was made on the basis of the
stipulations of the subsequent contracts.
In stark contrast with the Carungcong, the Grepalife,
and the second Insular Life cases, the only contract or
document extant and submitted as evidence in the
present case is the Agreement – a pure agency
agreement in the Civil Code context similar to the
original contract in the first Insular Life case and the
contract in the AFPMBAI case. And while Tongko was
later on designated unit manager in 1983, Branch
Manager in 1990, and Regional Sales Manager in
1996, no formal contract regarding these undertakings
appears in the records of the case. Any such contract
or agreement, had there been any, could have at the
very least provided the bases for properly ascertaining
the juridical relationship established between the
parties.
These critical differences, particularly between the
present case and the Grepalife and the second
Insular Life cases, should therefore immediately drive
us to be more prudent and cautious in applying the
rulings in these cases.
C. Analysis of the Evidence
c.1. The Agreement
The primary evidence in the present case is the July
1, 1977 Agreement that governed and defined the
parties’ relations until the Agreement’s termination in
2001. This Agreement stood for more than two
decades and, based on the records of the case, was
never modified or novated. It assumes primacy
because it directly dealt with the nature of the parties’
relationship up to the very end; moreover, both parties
never disputed its authenticity or the accuracy of its
terms.
By the Agreement’s express terms, Tongko served as
an "insurance agent" for Manulife, not as an
employee. To be sure, the Agreement’s legal
characterization of the nature of the relationship
cannot be conclusive and binding on the courts; as
the dissent clearly stated, the characterization of the
juridical relationship the Agreement embodied is a
matter of law that is for the courts to determine. At the
same time, though, the characterization the parties
gave to their relationship in the Agreement cannot
simply be brushed aside because it embodies their
intent at the time they entered the Agreement, and
they were governed by this understanding throughout
their relationship. At the very least, the provision on
the absence of employer-employee relationship
between the parties can be an aid in considering the
Agreement and its implementation, and in
appreciating the other evidence on record.
The parties’ legal characterization of their intent,
although not conclusive, is critical in this case
because this intent is not illegal or outside the
contemplation of law, particularly of the Insurance and
the Civil Codes. From this perspective, the provisions
of the Insurance Code cannot be disregarded as this
Code (as heretofore already noted) expressly
envisions a principal-agent relationship between the
insurance company and the insurance agent in the
sale of insurance to the public. For this reason, we
1awph!1
can take judicial notice that as a matter of Insurance
Code-based business practice, an agency relationship
prevails in the insurance industry for the purpose of
selling insurance. The Agreement, by its express
terms, is in accordance with the Insurance Code
model when it provided for a principal-agent
relationship, and thus cannot lightly be set aside nor
simply be considered as an agreement that does not
reflect the parties’ true intent. This intent, incidentally,
is reinforced by the system of compensation the
Agreement provides, which likewise is in accordance
with the production-based sales commissions the
Insurance Code provides.
Significantly, evidence shows that Tongko’s role as an
insurance agent never changed during his relationship
with Manulife. If changes occurred at all, the changes
did not appear to be in the nature of their core
relationship. Tongko essentially remained an agent,
but moved up in this role through Manulife’s
recognition that he could use other agents approved
by Manulife, but operating under his guidance and in
whose commissions he had a share. For want of a
better term, Tongko perhaps could be labeled as a
"lead agent" who guided under his wing other
Manulife agents similarly tasked with the selling of
Manulife insurance.
Like Tongko, the evidence suggests that these other
agents operated under their own agency agreements.
Thus, if Tongko’s compensation scheme changed at
all during his relationship with Manulife, the change
was solely for purposes of crediting him with his share
in the commissions the agents under his wing
generated. As an agent who was recruiting and
guiding other insurance agents, Tongko likewise
moved up in terms of the reimbursement of expenses
he incurred in the course of his lead agency, a
prerogative he enjoyed pursuant to Article 1912 of the
Civil Code. Thus, Tongko received greater
reimbursements for his expenses and was even
allowed to use Manulife facilities in his interactions
with the agents, all of whom were, in the strict sense,
Manulife agents approved and certified as such by
Manulife with the Insurance Commission.
That Tongko assumed a leadership role but
nevertheless wholly remained an agent is the
inevitable conclusion that results from the reading of
the Agreement (the only agreement on record in this
case) and his continuing role thereunder as sales
agent, from the perspective of the Insurance and the
Civil Codes and in light of what Tongko himself
attested to as his role as Regional Sales Manager. To
be sure, this interpretation could have been
contradicted if other agreements had been submitted
as evidence of the relationship between Manulife and
Tongko on the latter’s expanded undertakings. In the
absence of any such evidence, however, this reading
– based on the available evidence and the applicable
insurance and civil law provisions – must stand,
subject only to objective and evidentiary Labor Code
tests on the existence of an employer-employee
relationship.
In applying such Labor Code tests, however, the
enforcement of the Agreement during the course of
the parties’ relationship should be noted. From 1977
until the termination of the Agreement, Tongko’s
occupation was to sell Manulife’s insurance policies
and products. Both parties acquiesced with the terms
and conditions of the Agreement. Tongko, for his part,
accepted all the benefits flowing from the Agreement,
particularly the generous commissions.
Evidence indicates that Tongko consistently clung to
the view that he was an independent agent selling
Manulife insurance products since he invariably
declared himself a business or self-employed person
in his income tax returns. This consistency with,
and action made pursuant to the Agreement were
pieces of evidence that were never mentioned nor
considered in our Decision of November 7,
2008. Had they been considered, they could, at the
very least, serve as Tongko’s admissions against his
interest. Strictly speaking, Tongko’s tax returns cannot
but be legally significant because he certified under
oath the amount he earned as gross business
income, claimed business deductions, leading to his
net taxable income. This should be evidence of the
first order that cannot be brushed aside by a mere
denial. Even on a layman’s view that is devoid of legal
considerations, the extent of his annual income alone
renders his claimed employment status doubtful.27
Hand in hand with the concept of admission against
interest in considering the tax returns, the concept of
estoppel – a legal and equitable concept28 –
necessarily must come into play. Tongko’s previous
admissions in several years of tax returns as an
independent agent, as against his belated claim that
he was all along an employee, are too diametrically
opposed to be simply dismissed or ignored.
Interestingly, Justice Velasco’s dissenting opinion
states that Tongko was forced to declare himself a
business or self-employed person by Manulife’s
persistent refusal to recognize him as its
employee.29 Regrettably, the dissent has shown no
basis for this conclusion, an understandable
omission since no evidence in fact exists on this
point in the records of the case. In fact, what the
evidence shows is Tongko’s full conformity with, and
action as, an independent agent until his relationship
with Manulife took a bad turn.
Another interesting point the dissent raised with
respect to the Agreement is its conclusion that the
Agreement negated any employment relationship
between Tongko and Manulife so that the
commissions he earned as a sales agent should not
be considered in the determination of the backwages
and separation pay that should be given to him. This
part of the dissent is correct although it went on to
twist this conclusion by asserting that Tongko had
dual roles in his relationship with Manulife; he was an
agent, not an employee, in so far as he sold insurance
for Manulife, but was an employee in his capacity as a
manager. Thus, the dissent concluded that Tongko’s
backwages should only be with respect to his role as
Manulife’s manager.
The conclusion with respect to Tongko’s employment
as a manager is, of course, unacceptable for the
legal, factual and practical reasons discussed in this
Resolution. In brief, the factual reason is grounded
on the lack of evidentiary support of the conclusion
that Manulife exercised control over Tongko in the
sense understood in the Labor Code. The legal
reason, partly based on the lack of factual basis, is
the erroneous legal conclusion that Manulife
controlled Tongko and was thus its employee.
The practical reason, on the other hand, is the havoc
that the dissent’s unwarranted conclusion would
cause the insurance industry that, by the law’s own
design, operated along the lines of principal-agent
relationship in the sale of insurance.
c.2. Other Evidence of Alleged Control
A glaring evidentiary gap for Tongko in this case is the
lack of evidence on record showing that Manulife ever
exercised means-and-manner control, even to a
limited extent, over Tongko during his ascent in
Manulife’s sales ladder. In 1983, Tongko was The general law on agency, on the other hand,
appointed unit manager. Inexplicably, Tongko never expressly allows the principal an element of control
bothered to present any evidence at all on what this over the agent in a manner consistent with an agency
designation meant. This also holds true for Tongko’s relationship. In this sense, these control measures
appointment as branch manager in 1990, and as cannot be read as indicative of labor law control.
Regional Sales Manager in 1996. The best evidence
Duties of Manulife’s Duties of Grepalife’s
of control – the agreement or directive relating to
Tongko’s duties and responsibilities – was never Manager Managers/Supervisors
introduced as part of the records of the case. The
reality is, prior to de Dios’ letter, Manulife had - to render or - train understudies for the
practically left Tongko alone not only in doing the recommend position of district manager
business of selling insurance, but also in guiding the prospective agents to
agents under his wing. As discussed below, the be licensed, trained
alleged directives covered by de Dios’ letter, and contracted to sell
heretofore quoted in full, were policy directions and Manulife products and
targeted results that the company wanted Tongko and who will be part of my
the other sales groups to realign with in their own Unit
selling activities. This is the reality that the parties’
presented evidence consistently tells us. - to coordinate - properly account, record
activities of the agents and document the
What, to Tongko, serve as evidence of labor law under [the managers’] company’s funds, spot-
control are the codes of conduct that Manulife Unit in [the agents’] check and audit the work
imposes on its agents in the sale of insurance. The daily, weekly and of the zone supervisors, x
mere presentation of codes or of rules and monthly selling x x follow up the
regulations, however, is not per se indicative of labor activities, making sure submission of weekly
law control as the law and jurisprudence teach us. that their respective remittance reports of the
sales targets are met; debit agents and zone
supervisors
As already recited above, the Insurance Code
imposes obligations on both the insurance company - to conduct periodic
and its agents in the performance of their respective training sessions for - direct and supervise the
obligations under the Code, particularly on licenses [the] agents to further sales activities of the debit
and their renewals, on the representations to be made enhance their sales agents under him, x x x
to potential customers, the collection of premiums, on skill; and undertake and discharge
the delivery of insurance policies, on the matter of the functions of absentee
compensation, and on measures to ensure ethical - to assist [the] agents debit agents, spot-check
business practice in the industry. with their sales the record of debit agents,
activities by way of and insure proper
joint fieldwork, documentation of sales
consultations and one- and collections of debit
on-one evaluation and agents.
analysis of particular
accounts
Foremost among these are the directives that the
principal may impose on the agent to achieve the
assigned tasks, to the extent that they do not involve
the means and manner of undertaking these tasks.
The law likewise obligates the agent to render an
account; in this sense, the principal may impose on
the agent specific instructions on how an account
shall be made, particularly on the matter of expenses
and reimbursements. To these extents, control can be
imposed through rules and regulations without
intruding into the labor law concept of control for
purposes of employment.

From jurisprudence, an important lesson that the first

Insular Life case teaches us is that a commitment to
abide by the rules and regulations of an insurance
company does not ipso facto make the insurance
agent an employee. Neither do guidelines somehow
restrictive of the insurance agent’s conduct
necessarily indicate "control" as this term is defined in
jurisprudence. Guidelines indicative of labor law
"control," as the first Insular Life case tells us,
should not merely relate to the mutually desirable
result intended by the contractual relationship;
they must have the nature of dictating the means
or methods to be employed in attaining the result, or
of fixing the methodology and of binding or restricting
the party hired to the use of these means. In fact,
results-wise, the principal can impose production
quotas and can determine how many agents, with
specific territories, ought to be employed to achieve
the company’s objectives. These are management
policy decisions that the labor law element of control
cannot reach. Our ruling in these respects in the first
Insular Life case was practically reiterated in
Carungcong. Thus, as will be shown more fully below,
Manulife’s codes of conduct,30 all of which do not
intrude into the insurance agents’ means and manner
of conducting their sales and only control them as to
the desired results and Insurance Code norms,
cannot be used as basis for a finding that the labor
law concept of control existed between Manulife and
Tongko.
The dissent considers the imposition of administrative
and managerial functions on Tongko as indicative of
labor law control; thus, Tongko as manager, but not
as insurance agent, became Manulife’s employee. It
drew this conclusion from what the other Manulife
managers disclosed in their affidavits (i.e., their
enumerated administrative and managerial functions)
and after comparing these statements with the
managers in Grepalife. The dissent compared the
control exercised by Manulife over its managers in the
present case with the control the managers in the
Grepalife case exercised over their employees by
presenting the following matrix:31
Aside from these affidavits however, no other
evidence exists regarding the effects of Tongko’s
additional roles in Manulife’s sales operations on the
contractual relationship between them.
To the dissent, Tongko’s administrative functions as
recruiter, trainer, or supervisor of other sales agents
constituted a substantive alteration of Manulife’s
authority over Tongko and the performance of his end
of the relationship with Manulife. We could not deny
though that Tongko remained, first and foremost, an
insurance agent, and that his additional role as
Branch Manager did not lessen his main and
dominant role as insurance agent; this role continued
to dominate the relations between Tongko and
Manulife even after Tongko assumed his leadership
role among agents. This conclusion cannot be denied
because it proceeds from the undisputed fact that
Tongko and Manulife never altered their July 1, 1977
Agreement, a distinction the present case has with the
contractual changes made in the second Insular Life
case. Tongko’s results-based commissions, too, attest
to the primacy he gave to his role as insurance sales
agent.
The dissent apparently did not also properly analyze
and appreciate the great qualitative difference that
exists between:
 the Manulife managers’ role is to coordinate
activities of the agents under the managers’
Unit in the agents’ daily, weekly, and monthly
selling activities, making sure that their
respective sales targets are met.
 the District Manager’s duty in Grepalife is to
properly account, record, and document the
company's funds, spot-check and audit the
work of the zone supervisors, conserve the
company's business in the district through
"reinstatements," follow up the submission of
weekly remittance reports of the debit agents
and zone supervisors, preserve company
property in good condition, train understudies
for the position of district managers, and
maintain his quota of sales (the failure of
which is a ground for termination).
 the Zone Supervisor’s (also in
Grepalife) has the duty to direct and
supervise the sales activities of the debit
agents under him, conserve company
property through "reinstatements," undertake
and discharge the functions of absentee debit
agents, spot-check the records of debit
agents, and insure proper documentation of
sales and collections by the debit agents.
These job contents are worlds apart in terms of
"control." In Grepalife, the details of how to do the job
are specified and pre-determined; in the present case,
the operative words are the "sales target," the
methodology being left undefined except to the extent
of being "coordinative." To be sure, a "coordinative"
standard for a manager cannot be indicative of
control; the standard only essentially describes what a
Branch Manager is – the person in the lead who
orchestrates activities within the group. To
"coordinate," and thereby to lead and to orchestrate,
is not so much a matter of control by Manulife; it is
simply a statement of a branch manager’s role in
relation with his agents from the point of view of
Manulife whose business Tongko’s sales group
carries.
A disturbing note, with respect to the presented
affidavits and Tongko’s alleged administrative
functions, is the selective citation of the portions
supportive of an employment relationship and the
consequent omission of portions leading to the
contrary conclusion. For example, the following
portions of the affidavit of Regional Sales Manager
John Chua, with counterparts in the other affidavits,
were not brought out in the Decision of November 7,
2008, while the other portions suggesting labor law
control were highlighted. Specifically, the following
portions of the affidavits were not brought out:32
1.a. I have no fixed wages or salary since my
services are compensated by way of
commissions based on the computed
premiums paid in full on the policies obtained
thereat;
1.b. I have no fixed working hours and employ
my own method in soliticing insurance at a
time and place I see fit;
1.c. I have my own assistant and messenger
who handle my daily work load;
1.d. I use my own facilities, tools, materials
and supplies in carrying out my business of
selling insurance;
xxxx
6. I have my own staff that handles the day to
day operations of my office;
7. My staff are my own employees and
received salaries from me;
xxxx
9. My commission and incentives are all
reported to the Bureau of Internal Revenue
(BIR) as income by a self-employed individual
or professional with a ten (10) percent
creditable withholding tax. I also remit monthly
for professionals.
These statements, read with the above comparative
analysis of the Manulife and the Grepalife cases,
would have readily yielded the conclusion that no
employer-employee relationship existed between
Manulife and Tongko.
Even de Dios’ letter is not determinative of control as
it indicates the least amount of intrusion into Tongko’s
exercise of his role as manager in guiding the sales
agents. Strictly viewed, de Dios’ directives are merely
operational guidelines on how Tongko could align his
operations with Manulife’s re-directed goal of being a
"big league player." The method is to expand
coverage through the use of more agents. This
requirement for the recruitment of more agents is not
a means-and-method control as it relates, more than
anything else, and is directly relevant, to Manulife’s
objective of expanded business operations through
the use of a bigger sales force whose members are all
on a principal-agent relationship. An important point to
note here is that Tongko was not supervising regular
full-time employees of Manulife engaged in the
running of the insurance business; Tongko was
effectively guiding his corps of sales agents, who are
bound to Manulife through the same Agreement that
he had with Manulife, all the while sharing in these
agents’ commissions through his overrides. This is the
lead agent concept mentioned above for want of a
more appropriate term, since the title of Branch
Manager used by the parties is really a misnomer
given that what is involved is not a specific regular
branch of the company but a corps of non-employed
agents, defined in terms of covered territory, through
which the company sells insurance. Still another point
to consider is that Tongko was not even setting
policies in the way a regular company manager does;
company aims and objectives were simply relayed to
him with suggestions on how these objectives can be
reached through the expansion of a non-employee
sales force.
Interestingly, a large part of de Dios’ letter focused on
income, which Manulife demonstrated, in Tongko’s
case, to be unaffected by the new goal and direction
the company had set. Income in insurance agency, of
course, is dependent on results, not on the means
and manner of selling – a matter for Tongko and his
agents to determine and an area into which Manulife
had not waded. Undeniably, de Dios’ letter contained
a directive to secure a competent assistant at
Tongko’s own expense. While couched in terms of a
directive, it cannot strictly be understood as an
intrusion into Tongko’s method of operating and
supervising the group of agents within his delineated
territory. More than anything else, the "directive" was
a signal to Tongko that his results were
unsatisfactory, and was a suggestion on how
Tongko’s perceived weakness in delivering results
could be remedied. It was a solution, with an eye on
results, for a consistently underperforming group; its
obvious intent was to save Tongko from the result that
he then failed to grasp – that he could lose even his
own status as an agent, as he in fact eventually did.
The present case must be distinguished from the
second Insular Life case that showed the hallmarks of
an employer-employee relationship in the
management system established. These were:
exclusivity of service, control of assignments and
removal of agents under the private respondent’s unit,
and furnishing of company facilities and materials as
well as capital described as Unit Development Fund.
All these are obviously absent in the present case. If
there is a commonality in these cases, it is in the
collection of premiums which is a basic authority that
can be delegated to agents under the Insurance
Code.
As previously discussed, what simply happened in
Tongko’s case was the grant of an expanded sales
agency role that recognized him as leader amongst
agents in an area that Manulife defined. Whether this
consequently resulted in the establishment of an
employment relationship can be answered by
concrete evidence that corresponds to the
following questions:
 as lead agent, what were Tongko’s specific
functions and the terms of his additional
engagement;
 was he paid additional compensation as a so-
called Area Sales Manager, apart from the
commissions he received from the insurance
sales he generated;
 what can be Manulife’s basis to terminate his
status as lead agent;
 can Manulife terminate his role as lead agent
separately from his agency contract; and
 to what extent does Manulife control the
means and methods of Tongko’s role as lead
agent?
The answers to these questions may, to some extent,
be deduced from the evidence at hand, as partly
discussed above. But strictly speaking, the questions
cannot definitively and concretely be answered
through the evidence on record. The concrete
evidence required to settle these questions is simply
not there, since only the Agreement and the anecdotal
affidavits have been marked and submitted as
evidence.
Given this anemic state of the evidence, particularly
on the requisite confluence of the factors
determinative of the existence of employer-employee
relationship, the Court cannot conclusively find that
the relationship exists in the present case, even if
such relationship only refers to Tongko’s additional
functions. While a rough deduction can be made, the
answer will not be fully supported by the substantial
evidence needed.
Under this legal situation, the only conclusion that can
be made is that the absence of evidence showing
Manulife’s control over Tongko’s contractual duties
points to the absence of any employer-employee
relationship between Tongko and Manulife. In the
context of the established evidence, Tongko remained
an agent all along; although his subsequent duties
made him a lead agent with leadership role, he was
nevertheless only an agent whose basic contract
yields no evidence of means-and-manner control.
This conclusion renders unnecessary any further
discussion of the question of whether an agent may
simultaneously assume conflicting dual personalities.
But to set the record straight, the concept of a single
person having the dual role of agent and employee
while doing the same task is a novel one in our
jurisprudence, which must be viewed with caution
especially when it is devoid of any jurisprudential
support or precedent. The quoted portions in Justice
Carpio-Morales’ dissent,33 borrowed from both the
Grepalife and the second Insular Life cases, to
support the duality approach of the Decision of
November 7, 2008, are regrettably far removed from
their context – i.e., the cases’ factual situations, the
issues they decided and the totality of the rulings in
these cases – and cannot yield the conclusions that
the dissenting opinions drew.
The Grepalife case dealt with the sole issue of
whether the Ruiz brothers’ appointment as zone
supervisor and district manager made them
employees of Grepalife. Indeed, because of the
presence of the element of control in their contract of
engagements, they were
considered Grepalife’s employees. This did not mean,
however, that they were simultaneously considered
agents as well as employees of Grepalife; the Court’s
ruling never implied that this situation existed insofar
as the Ruiz brothers were concerned. The Court’s
statement – the Insurance Code may govern the
licensing requirements and other particular duties of
insurance agents, but it does not bar the application of
the Labor Code with regard to labor standards and
labor relations – simply means that when an
insurance company has exercised control over its
agents so as to make them their employees, the
relationship between the parties, which was otherwise
one for agency governed by the Civil Code and the
Insurance Code, will now be governed by the Labor
Code. The reason for this is simple – the contract of
agency has been transformed into an employer-
employee relationship.
The second Insular Life case, on the other hand,
involved the issue of whether the labor bodies have
jurisdiction over an illegal termination dispute
involving parties who had two contracts – first, an
original contract (agency contract), which was
undoubtedly one for agency, and another subsequent
contract that in turn designated the agent acting unit
manager (a management contract). Both the Insular
Life and the labor arbiter were one in the position that
both were agency contracts. The Court disagreed with
this conclusion and held that insofar as the
management contract is concerned, the labor arbiter
has jurisdiction. It is in this light that we remanded the
case to the labor arbiter for further proceedings. We
never said in this case though that the insurance
agent had effectively assumed dual personalities for
the simple reason that the agency contract has been
effectively superseded by the management contract.
The management contract provided that if the
appointment was terminated for any reason other than
for cause, the acting unit manager would be reverted
to agent status and assigned to any unit.
The dissent pointed out, as an argument to support its
employment relationship conclusion, that any doubt in
the existence of an employer-employee relationship
should be resolved in favor of the existence of the
relationship.34This observation, apparently drawn from
Article 4 of the Labor Code, is misplaced, as Article 4
applies only when a doubt exists in the
"implementation and application" of the Labor Code
and its implementing rules; it does not apply where no
doubt exists as in a situation where the claimant
clearly failed to substantiate his claim of employment
relationship by the quantum of evidence the Labor
Code requires.
On the dissent’s last point regarding the lack of
jurisprudential value of our November 7, 2008
Decision, suffice it to state that, as discussed above,
the Decision was not supported by the evidence
adduced and was not in accordance with controlling
jurisprudence. It should, therefore, be reconsidered
and abandoned, but not in the manner the dissent
suggests as the dissenting opinions are as factually
and as legally erroneous as the Decision under
reconsideration.
In light of these conclusions, the sufficiency of
Tongko’s failure to comply with the guidelines of de
Dios’ letter, as a ground for termination of Tongko’s
agency, is a matter that the labor tribunals cannot rule
upon in the absence of an employer-employee
relationship. Jurisdiction over the matter belongs to
the courts applying the laws of insurance, agency and
contracts.
WHEREFORE, considering the foregoing discussion,
we REVERSE our Decision of November 7,
2008, GRANTManulife’s motion for reconsideration
and, accordingly, DISMISS Tongko’s petition. No
costs.
SO ORDERED.
FIRST DIVISION
G.R. No. 138051 June 10, 2004
JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING
CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on
certiorari1 assailing the 26 March 1999 Decision2 of
the Court of Appeals in CA-G.R. SP No. 49190
dismissing the petition filed by Jose Y. Sonza
("SONZA"). The Court of Appeals affirmed the
findings of the National Labor Relations Commission
("NLRC"), which affirmed the Labor Arbiter’s dismissal
of the case for lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting
Corporation ("ABS-CBN") signed an Agreement
("Agreement") with the Mel and Jay Management and
Development Corporation ("MJMDC"). ABS-CBN was
represented by its corporate officers while MJMDC
was represented by SONZA, as President and
General Manager, and Carmela Tiangco
("TIANGCO"), as EVP and Treasurer. Referred to in
the Agreement as "AGENT," MJMDC agreed to
provide SONZA’s services exclusively to ABS-CBN as
talent for radio and television. The Agreement listed
the services SONZA would render to ABS-CBN, as
follows:
a. Co-host for Mel & Jay radio program, 8:00
to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program,
5:30 to 7:00 p.m., Sundays.3
ABS-CBN agreed to pay for SONZA’s services a
monthly talent fee of ₱310,000 for the first year and
₱317,000 for the second and third year of the
Agreement. ABS-CBN would pay the talent fees on
the 10th and 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBN’s
President, Eugenio Lopez III, which reads:
Dear Mr. Lopez,
 We would like to call your attention to the
Agreement dated May 1994 entered into by
your goodself on behalf of ABS-CBN with our
company relative to our talent JOSE Y.
SONZA.
As you are well aware, Mr. Sonza irrevocably
resigned in view of recent events concerning
his programs and career. We consider these
acts of the station violative of the Agreement
and the station as in breach thereof. In this
connection, we hereby serve notice of
rescission of said Agreement at our instance
effective as of date.
Mr. Sonza informed us that he is waiving and
renouncing recovery of the remaining amount
stipulated in paragraph 7 of the Agreement
but reserves the right to seek recovery of the
other benefits under said Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.)
JOSE Y. SONZA
President and Gen.
Manager4
On 30 April 1996, SONZA filed a complaint against
ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon City.
SONZA complained that ABS-CBN did not pay his
salaries, separation pay, service incentive leave pay,
13th month pay, signing bonus, travel allowance and
amounts due under the Employees Stock Option Plan
("ESOP").
On 10 July 1996, ABS-CBN filed a Motion to Dismiss
on the ground that no employer-employee relationship
existed between the parties. SONZA filed an
Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZA’s
monthly talent fees through his account at PCIBank,
Quezon Avenue Branch, Quezon City. In July 1996,
ABS-CBN opened a new account with the same bank
where ABS-CBN deposited SONZA’s talent fees and
other payments due him under the Agreement.
In his Order dated 2 December 1996, the Labor
Arbiter5 denied the motion to dismiss and directed the
parties to file their respective position papers. The
Labor Arbiter ruled:
In this instant case, complainant for having
invoked a claim that he was an employee of
respondent company until April 15, 1996 and
that he was not paid certain claims, it is
sufficient enough as to confer jurisdiction over
the instant case in this Office. And as to
whether or not such claim would entitle
complainant to recover upon the causes of
action asserted is a matter to be resolved only
after and as a result of a hearing. Thus, the
respondent’s plea of lack of employer-
employee relationship may be pleaded only as
a matter of defense. It behooves upon it the
duty to prove that there really is no employer-
employee relationship between it and the
complainant.
The Labor Arbiter then considered the case submitted
for resolution. The parties submitted their position
papers on 24 February 1997.
On 11 March 1997, SONZA filed a Reply to
Respondent’s Position Paper with Motion to Expunge
Respondent’s Annex 4 and Annex 5 from the
Records. Annexes 4 and 5 are affidavits of ABS-
CBN’s witnesses Soccoro Vidanes and Rolando V.
Cruz. These witnesses stated in their affidavits that
the prevailing practice in the television and broadcast
industry is to treat talents like SONZA as independent
contractors.
The Labor Arbiter rendered his Decision dated 8 July
1997 dismissing the complaint for lack of
jurisdiction.6 The pertinent parts of the decision read
as follows:
xxx
While Philippine jurisprudence has not yet,
with certainty, touched on the "true nature of
the contract of a talent," it stands to reason
that a "talent" as above-described cannot be
considered as an employee by reason of the
peculiar circumstances surrounding the
engagement of his services.
It must be noted that complainant was
engaged by respondent by reason of his
peculiar skills and talent as a TV host and
a radio broadcaster. Unlike an ordinary
employee, he was free to perform the
services he undertook to render in
accordance with his own style. The benefits
conferred to complainant under the May 1994
Agreement are certainly very much higher
than those generally given to employees. For
one, complainant Sonza’s monthly talent fees
amount to a staggering ₱317,000. Moreover,
his engagement as a talent was covered by a
specific contract. Likewise, he was not bound
 to render eight (8) hours of work per day as he
worked only for such number of hours as may
be necessary.
The fact that per the May 1994 Agreement
complainant was accorded some benefits
normally given to an employee is
inconsequential. Whatever benefits
complainant enjoyed arose from specific
agreement by the parties and not by
reason of employer-employee
relationship. As correctly put by the
respondent, "All these benefits are merely
talent fees and other contractual benefits and
should not be deemed as ‘salaries, wages
and/or other remuneration’ accorded to an
employee, notwithstanding the nomenclature
appended to these benefits. Apropos to this is
the rule that the term or nomenclature given to
a stipulated benefit is not controlling, but the
intent of the parties to the Agreement
conferring such benefit."
The fact that complainant was made
subject to respondent’s Rules and
Regulations, likewise, does not detract
from the absence of employer-employee
relationship. As held by the Supreme Court,
"The line should be drawn between rules that
merely serve as guidelines towards the
achievement of the mutually desired result
without dictating the means or methods to be
employed in attaining it, and those that control
or fix the methodology and bind or restrict the
party hired to the use of such means. The
first, which aim only to promote the result,
create no employer-employee relationship
unlike the second, which address both the
result and the means to achieve it." (Insular
Life Assurance Co., Ltd. vs. NLRC, et al., G.R.
No. 84484, November 15, 1989).
x x x (Emphasis supplied)7
SONZA appealed to the NLRC. On 24 February 1998,
the NLRC rendered a Decision affirming the Labor
Arbiter’s decision. SONZA filed a motion for
reconsideration, which the NLRC denied in its
Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action
for certiorari before the Court of Appeals assailing the
decision and resolution of the NLRC. On 26 March
1999, the Court of Appeals rendered a Decision
dismissing the case.8
Hence, this petition.
The Rulings of the NLRC and Court of Appeals
The Court of Appeals affirmed the NLRC’s finding that
no employer-employee relationship existed between
SONZA and ABS-CBN. Adopting the NLRC’s
decision, the appellate court quoted the following
findings of the NLRC:
x x x the May 1994 Agreement will readily
reveal that MJMDC entered into the contract
merely as an agent of complainant Sonza, the
principal. By all indication and as the law puts
it, the act of the agent is the act of the
principal itself. This fact is made particularly
true in this case, as admittedly MJMDC ‘is a
management company devoted exclusively to
managing the careers of Mr. Sonza and his
broadcast partner, Mrs. Carmela C. Tiangco.’
(Opposition to Motion to Dismiss)
Clearly, the relations of principal and agent
only accrues between complainant Sonza and
MJMDC, and not between ABS-CBN and
MJMDC. This is clear from the provisions of
the May 1994 Agreement which specifically
referred to MJMDC as the ‘AGENT’. As a
matter of fact, when complainant herein
unilaterally rescinded said May 1994
Agreement, it was MJMDC which issued the
notice of rescission in behalf of Mr. Sonza,
who himself signed the same in his capacity
as President.
Moreover, previous contracts between Mr.
Sonza and ABS-CBN reveal the fact that
historically, the parties to the said agreements
are ABS-CBN and Mr. Sonza. And it is only in
the May 1994 Agreement, which is the latest
Agreement executed between ABS-CBN and
Mr. Sonza, that MJMDC figured in the said
Agreement as the agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is
a mere ‘labor-only’ contractor of ABS-CBN
such that there exist[s] employer-employee
relationship between the latter and Mr. Sonza.
On the contrary, We find it indubitable, that
MJMDC is an agent, not of ABS-CBN, but of
the talent/contractor Mr. Sonza, as expressly
admitted by the latter and MJMDC in the May
1994 Agreement.
It may not be amiss to state that jurisdiction
over the instant controversy indeed belongs to
the regular courts, the same being in the
nature of an action for alleged breach of
contractual obligation on the part of
respondent-appellee. As squarely apparent
from complainant-appellant’s Position Paper,
his claims for compensation for services, ‘13th
month pay’, signing bonus and travel
allowance against respondent-appellee are
not based on the Labor Code but rather on the
provisions of the May 1994 Agreement, while
his claims for proceeds under Stock Purchase
Agreement are based on the latter. A portion
of the Position Paper of complainant-appellant
bears perusal:
‘Under [the May 1994 Agreement] with
respondent ABS-CBN, the latter
contractually bound itself to pay
complainant a signing bonus
consisting of shares of stocks…with
FIVE HUNDRED THOUSAND PESOS
(₱500,000.00).
Similarly, complainant is also entitled
to be paid 13th month pay based on
an amount not lower than the amount
he was receiving prior to effectivity of
(the) Agreement’.
Under paragraph 9 of (the May 1994
Agreement), complainant is entitled to
a commutable travel benefit
amounting to at least One Hundred
Fifty Thousand Pesos (₱150,000.00)
per year.’
Thus, it is precisely because of complainant-
appellant’s own recognition of the fact that his
contractual relations with ABS-CBN are
founded on the New Civil Code, rather than
the Labor Code, that instead of merely
resigning from ABS-CBN, complainant-
appellant served upon the latter a ‘notice of
rescission’ of Agreement with the station, per
his letter dated April 1, 1996, which asserted
that instead of referring to unpaid employee
benefits, ‘he is waiving and renouncing
recovery of the remaining amount stipulated in
paragraph 7 of the Agreement but reserves
the right to such recovery of the other benefits
under said Agreement.’ (Annex 3 of the
respondent ABS-CBN’s Motion to Dismiss
dated July 10, 1996).
Evidently, it is precisely by reason of the
alleged violation of the May 1994 Agreement
and/or the Stock Purchase Agreement by
respondent-appellee that complainant-
appellant filed his complaint. Complainant-
appellant’s claims being anchored on the
alleged breach of contract on the part of
respondent-appellee, the same can be
resolved by reference to civil law and not to
labor law. Consequently, they are within the
realm of civil law and, thus, lie with the regular
courts. As held in the case of Dai-Chi
Electronics Manufacturing vs. Villarama, 238
SCRA 267, 21 November 1994, an action for
breach of contractual obligation is
intrinsically a civil dispute.9 (Emphasis
supplied)
The Court of Appeals ruled that the existence of an
employer-employee relationship between SONZA and
ABS-CBN is a factual question that is within the
jurisdiction of the NLRC to resolve.10 A special civil
action for certiorari extends only to issues of want or
excess of jurisdiction of the NLRC.11 Such action
cannot cover an inquiry into the correctness of the
evaluation of the evidence which served as basis of
the NLRC’s conclusion.12 The Court of Appeals added
that it could not re-examine the parties’ evidence and
substitute the factual findings of the NLRC with its
own.13
The Issue
In assailing the decision of the Court of Appeals,
SONZA contends that:
THE COURT OF APPEALS GRAVELY
ERRED IN AFFIRMING THE NLRC’S
DECISION AND REFUSING TO FIND THAT
AN EMPLOYER-EMPLOYEE
RELATIONSHIP EXISTED BETWEEN
SONZA AND ABS-CBN, DESPITE THE
WEIGHT OF CONTROLLING LAW,
JURISPRUDENCE AND EVIDENCE TO
SUPPORT SUCH A FINDING.14
The Court’s Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of
the decision of the Court of Appeals affirming the
NLRC ruling which upheld the Labor Arbiter’s
dismissal of the case for lack of jurisdiction.
The present controversy is one of first impression.
Although Philippine labor laws and jurisprudence
define clearly the elements of an employer-employee
relationship, this is the first time that the Court will
resolve the nature of the relationship between a
television and radio station and one of its "talents."
There is no case law stating that a radio and
television program host is an employee of the
broadcast station.
The instant case involves big names in the broadcast
industry, namely Jose "Jay" Sonza, a known
television and radio personality, and ABS-CBN, one of
the biggest television and radio networks in the
country.
SONZA contends that the Labor Arbiter has
jurisdiction over the case because he was an
employee of ABS-CBN. On the other hand, ABS-CBN
insists that the Labor Arbiter has no jurisdiction
because SONZA was an independent contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship
is a question of fact. Appellate courts accord the
factual findings of the Labor Arbiter and the NLRC not
only respect but also finality when supported by
substantial evidence.15 Substantial evidence means
such relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.16 A party
cannot prove the absence of substantial evidence by
simply pointing out that there is contrary evidence on
record, direct or circumstantial. The Court does not
substitute its own judgment for that of the tribunal in
determining where the weight of evidence lies or what
evidence is credible.17
SONZA maintains that all essential elements of an
employer-employee relationship are present in this
case. Case law has consistently held that the
elements of an employer-employee relationship are:
(a) the selection and engagement of the employee;
(b) the payment of wages; (c) the power of dismissal;
and (d) the employer’s power to control the employee
on the means and methods by which the work is
accomplished.18 The last element, the so-called
"control test", is the most important element.19
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its
television and radio programs because of SONZA’s
peculiar skills, talent and celebrity status. SONZA
contends that the "discretion used by respondent in
specifically selecting and hiring complainant over
other broadcasters of possibly similar experience and
qualification as complainant belies respondent’s claim
of independent contractorship."
Independent contractors often present themselves to
possess unique skills, expertise or talent to distinguish
them from ordinary employees. The specific selection
and hiring of SONZA, because of his unique skills,
talent and celebrity status not possessed by
ordinary employees, is a circumstance indicative,
but not conclusive, of an independent contractual
relationship. If SONZA did not possess such unique
skills, talent and celebrity status, ABS-CBN would not
have entered into the Agreement with SONZA but
would have hired him through its personnel
department just like any other employee.
In any event, the method of selecting and engaging
SONZA does not conclusively determine his status.
We must consider all the circumstances of the
relationship, with the control test being the most
important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees
with no part of his fees going to MJMDC. SONZA
asserts that this mode of fee payment shows that he
was an employee of ABS-CBN. SONZA also points
out that ABS-CBN granted him benefits and privileges
"which he would not have enjoyed if he were truly the
subject of a valid job contract."
All the talent fees and benefits paid to SONZA were
the result of negotiations that led to the Agreement. If
SONZA were ABS-CBN’s employee, there would be
no need for the parties to stipulate on benefits such as
"SSS, Medicare, x x x and 13th month pay"20 which
the law automatically incorporates into every
employer-employee contract.21Whatever benefits
SONZA enjoyed arose from contract and not because
of an employer-employee relationship.22
SONZA’s talent fees, amounting to ₱317,000 monthly
in the second and third year, are so huge and out of
the ordinary that they indicate more an independent
contractual relationship rather than an employer-
employee relationship. ABS-CBN agreed to pay
SONZA such huge talent fees precisely because of
SONZA’s unique skills, talent and celebrity status not
possessed by ordinary employees. Obviously,
SONZA acting alone possessed enough bargaining
power to demand and receive such huge talent fees
for his services. The power to bargain talent fees way
above the salary scales of ordinary employees is a
circumstance indicative, but not conclusive, of an
independent contractual relationship.
The payment of talent fees directly to SONZA and not
to MJMDC does not negate the status of SONZA as
an independent contractor. The parties expressly
agreed on such mode of payment. Under the
Agreement, MJMDC is the AGENT of SONZA, to
whom MJMDC would have to turn over any talent fee
accruing under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either
party may terminate their relationship. SONZA failed
to show that ABS-CBN could terminate his services
on grounds other than breach of contract, such as
retrenchment to prevent losses as provided under
labor laws.23
During the life of the Agreement, ABS-CBN agreed to
pay SONZA’s talent fees as long as "AGENT and Jay
Sonza shall faithfully and completely perform each
condition of this Agreement."24 Even if it suffered
severe business losses, ABS-CBN could not retrench
SONZA because ABS-CBN remained obligated to pay
SONZA’s talent fees during the life of the Agreement.
This circumstance indicates an independent
contractual relationship between SONZA and ABS-
CBN.
SONZA admits that even after ABS-CBN ceased
broadcasting his programs, ABS-CBN still paid him
his talent fees. Plainly, ABS-CBN adhered to its
undertaking in the Agreement to continue paying
SONZA’s talent fees during the remaining life of the
Agreement even if ABS-CBN cancelled SONZA’s
programs through no fault of SONZA.25
SONZA assails the Labor Arbiter’s interpretation of his
rescission of the Agreement as an admission that he
is not an employee of ABS-CBN. The Labor Arbiter
stated that "if it were true that complainant was really
an employee, he would merely resign, instead."
SONZA did actually resign from ABS-CBN but he
also, as president of MJMDC, rescinded the
Agreement. SONZA’s letter clearly bears this
out.26 However, the manner by which SONZA
terminated his relationship with ABS-CBN is
immaterial. Whether SONZA rescinded the
Agreement or resigned from work does not determine
his status as employee or independent contractor.
D. Power of Control
Since there is no local precedent on whether a radio
and television program host is an employee or an
independent contractor, we refer to foreign case law
in analyzing the present case. The United States
Court of Appeals, First Circuit, recently held
in Alberty-Vélez v. Corporación De Puerto Rico
Para La Difusión Pública ("WIPR")27 that a
television program host is an independent contractor.
We quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an
independent contractor. First, a television
actress is a skilled position requiring talent
and training not available on-the-job. x x x
In this regard, Alberty possesses a master’s
degree in public communications and
journalism; is trained in dance, singing, and
modeling; taught with the drama department
at the University of Puerto Rico; and acted in
several theater and television productions
prior to her affiliation with "Desde Mi
Pueblo." Second, Alberty provided the
"tools and instrumentalities" necessary for
her to perform. Specifically, she provided, or
obtained sponsors to provide, the costumes,
jewelry, and other image-related supplies and
services necessary for her appearance.
Alberty disputes that this factor favors
independent contractor status because WIPR
provided the "equipment necessary to tape
the show." Alberty’s argument is misplaced.
The equipment necessary for Alberty to
conduct her job as host of "Desde Mi Pueblo"
related to her appearance on the show.
Others provided equipment for filming and
producing the show, but these were not the
primary tools that Alberty used to perform her
particular function. If we accepted this
argument, independent contractors could
never work on collaborative projects because
other individuals often provide the equipment
required for different aspects of the
collaboration. x x x
Third, WIPR could not assign Alberty work
in addition to filming "Desde Mi
Pueblo." Alberty’s contracts with WIPR
specifically provided that WIPR hired her
"professional services as Hostess for the
Program Desde Mi Pueblo." There is no
evidence that WIPR assigned Alberty tasks in
addition to work related to these tapings. x x
x28 (Emphasis supplied)
Applying the control test to the present case, we find
that SONZA is not an employee but an independent
contractor. The control test is the most important test
our courts apply in distinguishing an employee from
an independent contractor.29 This test is based on the
extent of control the hirer exercises over a worker.
The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an
employee. The converse holds true as well – the less
control the hirer exercises, the more likely the worker
is considered an independent contractor.30
First, SONZA contends that ABS-CBN exercised
control over the means and methods of his work.
SONZA’s argument is misplaced. ABS-CBN engaged
SONZA’s services specifically to co-host the "Mel &
Jay" programs. ABS-CBN did not assign any other
work to SONZA. To perform his work, SONZA only
needed his skills and talent. How SONZA delivered
his lines, appeared on television, and sounded on
radio were outside ABS-CBN’s control. SONZA did
not have to render eight hours of work per day. The
Agreement required SONZA to attend only rehearsals
and tapings of the shows, as well as pre- and post-
production staff meetings.31 ABS-CBN could not
dictate the contents of SONZA’s script. However, the
Agreement prohibited SONZA from criticizing in his
shows ABS-CBN or its interests.32 The clear
implication is that SONZA had a free hand on what to
say or discuss in his shows provided he did not attack
ABS-CBN or its interests.
We find that ABS-CBN was not involved in the actual
performance that produced the finished product of
SONZA’s work.33 ABS-CBN did not instruct SONZA
how to perform his job. ABS-CBN merely reserved the
right to modify the program format and airtime
schedule "for more effective programming."34 ABS-
CBN’s sole concern was the quality of the shows and
their standing in the ratings. Clearly, ABS-CBN did not
exercise control over the means and methods of
performance of SONZA’s work.
SONZA claims that ABS-CBN’s power not to
broadcast his shows proves ABS-CBN’s power over
the means and methods of the performance of his
work. Although ABS-CBN did have the option not to
broadcast SONZA’s show, ABS-CBN was still
obligated to pay SONZA’s talent fees... Thus, even if
ABS-CBN was completely dissatisfied with the means
and methods of SONZA’s performance of his work, or
even with the quality or product of his work, ABS-CBN
could not dismiss or even discipline SONZA. All that
ABS-CBN could do is not to broadcast SONZA’s show
but ABS-CBN must still pay his talent fees in full.35
Clearly, ABS-CBN’s right not to broadcast SONZA’s
show, burdened as it was by the obligation to continue
paying in full SONZA’s talent fees, did not amount to
control over the means and methods of the
performance of SONZA’s work. ABS-CBN could not
terminate or discipline SONZA even if the means and
methods of performance of his work - how he
delivered his lines and appeared on television - did
not meet ABS-CBN’s approval. This proves that ABS-
CBN’s control was limited only to the result of
SONZA’s work, whether to broadcast the final product
or not. In either case, ABS-CBN must still pay
SONZA’s talent fees in full until the expiry of the
Agreement.
In Vaughan, et al. v. Warner, et al.,36 the United
States Circuit Court of Appeals ruled that vaudeville
performers were independent contractors although
the management reserved the right to delete
objectionable features in their shows. Since the
management did not have control over the manner of
performance of the skills of the artists, it could only
control the result of the work by deleting objectionable
features.37
SONZA further contends that ABS-CBN exercised
control over his work by supplying all equipment and
crew. No doubt, ABS-CBN supplied the equipment,
crew and airtime needed to broadcast the "Mel & Jay"
programs. However, the equipment, crew and airtime
are not the "tools and instrumentalities" SONZA
needed to perform his job. What SONZA principally
needed were his talent or skills and the costumes
necessary for his appearance.38Even though ABS-
CBN provided SONZA with the place of work and the
necessary equipment, SONZA was still an
independent contractor since ABS-CBN did not
supervise and control his work. ABS-CBN’s sole
concern was for SONZA to display his talent during
the airing of the programs.39
A radio broadcast specialist who works under minimal
supervision is an independent contractor.40 SONZA’s
work as television and radio program host required
special skills and talent, which SONZA admittedly
possesses. The records do not show that ABS-CBN
exercised any supervision and control over how
SONZA utilized his skills and talent in his shows.
Second, SONZA urges us to rule that he was ABS-
CBN’s employee because ABS-CBN subjected him to
its rules and standards of performance. SONZA
claims that this indicates ABS-CBN’s control "not only
[over] his manner of work but also the quality of his
work."
The Agreement stipulates that SONZA shall abide
with the rules and standards of performance
"covering talents"41 of ABS-CBN. The Agreement
does not require SONZA to comply with the rules and
standards of performance prescribed for employees of
ABS-CBN. The code of conduct imposed on SONZA
under the Agreement refers to the "Television and
Radio Code of the Kapisanan ng mga Broadcaster sa
Pilipinas (KBP), which has been adopted by the
COMPANY (ABS-CBN) as its Code of Ethics."42 The
KBP code applies to broadcasters, not to employees
of radio and television stations. Broadcasters are not
necessarily employees of radio and television
stations. Clearly, the rules and standards of
performance referred to in the Agreement are those
applicable to talents and not to employees of ABS-
CBN.
In any event, not all rules imposed by the hiring party
on the hired party indicate that the latter is an
employee of the former.43 In this case, SONZA failed
to show that these rules controlled his performance.
We find that these general rules are
merely guidelines towards the achievement of the
mutually desired result, which are top-rating television
and radio programs that comply with standards of the
industry. We have ruled that:
Further, not every form of control that a party reserves
to himself over the conduct of the other party in
relation to the services being rendered may be
accorded the effect of establishing an employer-
employee relationship. The facts of this case fall
squarely with the case of Insular Life Assurance Co.,
Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between
rules that merely serve as guidelines towards
the achievement of the mutually desired result
without dictating the means or methods to be
employed in attaining it, and those that control
or fix the methodology and bind or restrict the
party hired to the use of such means. The
first, which aim only to promote the result,
create no employer-employee relationship
unlike the second, which address both the
result and the means used to achieve it.44
The Vaughan case also held that one could still be an
independent contractor although the hirer reserved
certain supervision to insure the attainment of the
desired result. The hirer, however, must not deprive
the one hired from performing his services according
to his own initiative.45
Lastly, SONZA insists that the "exclusivity clause" in
the Agreement is the most extreme form of control
which ABS-CBN exercised over him.
This argument is futile. Being an exclusive talent does
not by itself mean that SONZA is an employee of
ABS-CBN. Even an independent contractor can
validly provide his services exclusively to the hiring
party. In the broadcast industry, exclusivity is not
necessarily the same as control.
The hiring of exclusive talents is a widespread and
accepted practice in the entertainment industry.46 This
practice is not designed to control the means and
methods of work of the talent, but simply to protect the
investment of the broadcast station. The broadcast
station normally spends substantial amounts of
money, time and effort "in building up its talents as
well as the programs they appear in and thus expects
that said talents remain exclusive with the station for a
commensurate period of time."47 Normally, a much
higher fee is paid to talents who agree to work
exclusively for a particular radio or television station.
In short, the huge talent fees partially compensates
for exclusivity, as in the present case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiter’s finding that he is
a talent of MJMDC, which contracted out his services
to ABS-CBN. The Labor Arbiter ruled that as a talent
of MJMDC, SONZA is not an employee of ABS-CBN.
SONZA insists that MJMDC is a "labor-only"
contractor and ABS-CBN is his employer.
In a labor-only contract, there are three parties
involved: (1) the "labor-only" contractor; (2) the
employee who is ostensibly under the employ of the
"labor-only" contractor; and (3) the principal who is
deemed the real employer. Under this scheme, the
"labor-only" contractor is the agent of the
principal. The law makes the principal responsible to
the employees of the "labor-only contractor" as if the
principal itself directly hired or employed the
employees.48 These circumstances are not present in
this case.
There are essentially only two parties involved under
the Agreement, namely, SONZA and ABS-CBN.
MJMDC merely acted as SONZA’s agent. The
Agreement expressly states that MJMDC acted as the
"AGENT" of SONZA. The records do not show that
MJMDC acted as ABS-CBN’s agent. MJMDC, which
stands for Mel and Jay Management and
Development Corporation, is a corporation organized
and owned by SONZA and TIANGCO. The President
and General Manager of MJMDC is SONZA himself. It
is absurd to hold that MJMDC, which is owned,
controlled, headed and managed by SONZA, acted as
agent of ABS-CBN in entering into the Agreement
with SONZA, who himself is represented by MJMDC.
That would make MJMDC the agent of both ABS-CBN
and SONZA.
As SONZA admits, MJMDC is a management
company devoted exclusively to managing the
careers of SONZA and his broadcast partner,
TIANGCO. MJMDC is not engaged in any other
business, not even job contracting. MJMDC does not
have any other function apart from acting as agent of
SONZA or TIANGCO to promote their careers in the
broadcast and television industry.49
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued
by then Minister of Labor Blas Ople on 8 January
1979 finally settled the status of workers in the
broadcast industry. Under this policy, the types of
employees in the broadcast industry are the station
and program employees.
Policy Instruction No. 40 is a mere executive issuance
which does not have the force and effect of law. There
is no legal presumption that Policy Instruction No. 40
determines SONZA’s status. A mere executive
issuance cannot exclude independent contractors
from the class of service providers to the broadcast
industry. The classification of workers in the broadcast
industry into only two groups under Policy Instruction
No. 40 is not binding on this Court, especially when
the classification has no basis either in law or in fact.
Affidavits of ABS-CBN’s Witnesses
SONZA also faults the Labor Arbiter for admitting the
affidavits of Socorro Vidanes and Rolando Cruz
without giving his counsel the
opportunity to cross-examine these witnesses.
SONZA brands these witnesses as incompetent to
attest on the prevailing practice in the radio and
television industry. SONZA views the affidavits of
these witnesses as misleading and irrelevant.
While SONZA failed to cross-examine ABS-CBN’s
witnesses, he was never prevented from denying or
refuting the allegations in the affidavits. The Labor
Arbiter has the discretion whether to conduct a formal
(trial-type) hearing after the submission of the position
papers of the parties, thus:
Section 3. Submission of Position
Papers/Memorandum
xxx
These verified position papers shall cover only
those claims and causes of action raised in
the complaint excluding those that may have
been amicably settled, and shall be
accompanied by all supporting documents
including the affidavits of their respective
witnesses which shall take the place of the
latter’s direct testimony. x x x
Section 4. Determination of Necessity of
Hearing. – Immediately after the submission
of the parties of their position
papers/memorandum, the Labor Arbiter shall
motu propio determine whether there is need
for a formal trial or hearing. At this stage, he
may, at his discretion and for the purpose of
making such determination, ask clarificatory
questions to further elicit facts or information,
including but not limited to the subpoena of
relevant documentary evidence, if any from
any party or witness.50
The Labor Arbiter can decide a case based solely on
the position papers and the supporting documents
without a formal trial.51 The holding of a formal hearing
or trial is something that the parties cannot demand
as a matter of right.52 If the Labor Arbiter is confident
that he can rely on the documents before him, he
cannot be faulted for not conducting a formal trial,
unless under the particular circumstances of the case,
the documents alone are insufficient. The proceedings
before a Labor Arbiter are non-litigious in nature.
Subject to the requirements of due process, the
technicalities of law and the rules obtaining in the
courts of law do not strictly apply in proceedings
before a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing
practice in the broadcast and entertainment industries
to treat talents like SONZA as independent
contractors. SONZA argues that if such practice
exists, it is void for violating the right of labor to
security of tenure.
The right of labor to security of tenure as guaranteed
in the Constitution53 arises only if there is an
employer-employee relationship under labor laws. Not
every performance of services for a fee creates an
employer-employee relationship. To hold that every
person who renders services to another for a fee is an
employee - to give meaning to the security of tenure
clause - will lead to absurd results.
Individuals with special skills, expertise or talent enjoy
the freedom to offer their services as independent
contractors. The right to life and livelihood guarantees
this freedom to contract as independent contractors.
The right of labor to security of tenure cannot operate
to deprive an individual, possessed with special skills,
expertise and talent, of his right to contract as an
independent contractor. An individual like an artist or
talent has a right to render his services without any
one controlling the means and methods by which he
performs his art or craft. This Court will not interpret
the right of labor to security of tenure to compel artists
and talents to render their services only as
employees. If radio and television program hosts can
render their services only as employees, the station
owners and managers can dictate to the radio and
television hosts what they say in their shows. This is
not conducive to freedom of the press.
Different Tax Treatment of Talents and
Broadcasters
The National Internal Revenue Code ("NIRC")54 in
relation to Republic Act No. 7716,55 as amended by
Republic Act No. 8241,56 treats talents, television and
radio broadcasters differently. Under the NIRC, these
professionals are subject to the 10% value-added tax
("VAT") on services they render. Exempted from the
VAT are those under an employer-employee
relationship.57 This different tax treatment accorded to
talents and broadcasters bolters our conclusion that
they are independent contractors, provided all the
basic elements of a contractual relationship are
present as in this case.
Nature of SONZA’s Claims
SONZA seeks the recovery of allegedly unpaid talent
fees, 13th month pay, separation pay, service
incentive leave, signing bonus, travel allowance, and
amounts due under the Employee Stock Option Plan.
We agree with the findings of the Labor Arbiter and
the Court of Appeals that SONZA’s claims are all
based on the May 1994 Agreement and stock
option plan, and not on the Labor Code. Clearly,
the present case does not call for an application of the
Labor Code provisions but an interpretation and
implementation of the May 1994 Agreement. In effect,
SONZA’s cause of action is for breach of contract
which is intrinsically a civil dispute cognizable by the
regular courts.58
WHEREFORE, we DENY the petition. The assailed
Decision of the Court of Appeals dated 26 March
1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs
against petitioner.
SO ORDERED.
G.R. No. 164652 June 8, 2007
THELMA DUMPIT-MURILLO, petitioner,
vs.
COURT OF APPEALS, ASSOCIATED
BROADCASTING COMPANY, JOSE JAVIER AND
EDWARD TAN,respondents.
DECISION
QUISUMBING, J.:
This petition seeks to reverse and set aside both the
Decision1 dated January 30, 2004 of the Court of
Appeals in CA-G.R. SP No. 63125 and its
Resolution2 dated June 23, 2004 denying the motion
for reconsideration. The Court of Appeals had
overturned the Resolution3 dated August 30, 2000 of
the National Labor Relations Commission (NLRC)
ruling that petitioner was illegally dismissed.
The facts of the case are as follows:
On October 2, 1995, under Talent Contract No. NT95-
1805,4 private respondent Associated Broadcasting
Company (ABC) hired petitioner Thelma Dumpit-
Murillo as a newscaster and co-anchor for Balitang-
Balita, an early evening news program. The contract
was for a period of three months. It was renewed
under Talent Contracts Nos. NT95-1915, NT96-3002,
NT98-4984 and NT99-5649.5 In addition, petitioner’s
services were engaged for the program "Live on
Five." On September 30, 1999, after four years of
repeated renewals, petitioner’s talent contract expired.
Two weeks after the expiration of the last contract,
petitioner sent a letter to Mr. Jose Javier, Vice
President for News and Public Affairs of ABC,
informing the latter that she was still interested in
renewing her contract subject to a salary increase.
Thereafter, petitioner stopped reporting for work. On
November 5, 1999, she wrote Mr. Javier another
letter,6 which we quote verbatim:
xxxx
Dear Mr. Javier:
On October 20, 1999, I wrote you a letter in answer to
your query by way of a marginal note "what terms and
conditions" in response to my first letter dated
October 13, 1999. To date, or for more than fifteen
(15) days since then, I have not received any formal
written reply. xxx
In view hereof, should I not receive any formal
response from you until Monday, November 8, 1999, I
will deem it as a constructive dismissal of my
services.
xxxx
A month later, petitioner sent a demand letter7 to
ABC, demanding: (a) reinstatement to her former
position; (b) payment of unpaid wages for services
rendered from September 1 to October 20, 1999 and
full backwages; (c) payment of 13th month pay,
vacation/sick/service incentive leaves and other
monetary benefits due to a regular employee starting
March 31, 1996. ABC replied that a check covering
petitioner’s talent fees for September 16 to October
20, 1999 had been processed and prepared, but that
the other claims of petitioner had no basis in fact or in
law.
On December 20, 1999, petitioner filed a
complaint8 against ABC, Mr. Javier and Mr. Edward
Tan, for illegal constructive dismissal, nonpayment of
salaries, overtime pay, premium pay, separation pay,
holiday pay, service incentive leave pay, vacation/sick
leaves and 13th month pay in NLRC-NCR Case No.
30-12-00985-99. She likewise demanded payment for
moral, exemplary and actual damages, as well as for
attorney’s fees.
The parties agreed to submit the case for resolution
after settlement failed during the mandatory
conference/conciliation. On March 29, 2000, the
Labor Arbiter dismissed the complaint.9
On appeal, the NLRC reversed the Labor Arbiter in a
Resolution dated August 30, 2000. The NLRC held
that an employer-employee relationship existed
between petitioner and ABC; that the subject talent
contract was void; that the petitioner was a regular
employee illegally dismissed; and that she was
entitled to reinstatement and backwages or separation
pay, aside from 13th month pay and service incentive
leave pay, moral and exemplary damages and
attorney’s fees. It held as follows:
WHEREFORE, the Decision of the Arbiter dated 29
March 2000 is hereby REVERSED/SET ASIDE and
a NEW ONE promulgated:
1) declaring respondents to have illegally dismissed
complainant from her regular work therein and thus,
ordering them to reinstate her in her former position
without loss of seniority right[s] and other privileges
and to pay her full backwages, inclusive of allowances
and other benefits, including 13th month pay based
on her said latest rate of ₱28,000.00/mo. from the
date of her illegal dismissal on 21 October 1999 up to
finality hereof, or at complainant’s option, to pay her
separation pay of one (1) month pay per year of
service based on said latest monthly rate, reckoned
from date of hire on 30 September 1995 until finality
hereof;
2) to pay complainant’s accrued SILP [Service
Incentive Leave Pay] of 5 days pay per year and 13th
month pay for the years 1999, 1998 and 1997 of
₱19,236.00 and ₱84,000.00, respectively and her
accrued salary from 16 September 1999 to 20
October 1999 of ₱32,760.00 plus legal interest at 12%
from date of judicial demand on 20 December 1999
until finality hereof;
3) to pay complainant moral damages of
₱500,000.00, exemplary damages of ₱350,000.00
and 10% of the total of the adjudged monetary awards
as attorney’s fees.
Other monetary claims of complainant are dismissed
for lack of merit.
SO ORDERED.10
After its motion for reconsideration was denied, ABC
elevated the case to the Court of Appeals in a petition
for certiorari under Rule 65. The petition was first
dismissed for failure to attach particular
documents,11 but was reinstated on grounds of the
higher interest of justice.12
Thereafter, the appellate court ruled that the NLRC
committed grave abuse of discretion, and reversed
the decision of the NLRC.13 The appellate court
reasoned that petitioner should not be allowed to
renege from the stipulations she had voluntarily and
knowingly executed by invoking the security of tenure
under the Labor Code. According to the appellate
court, petitioner was a fixed-term employee and not a
regular employee within the ambit of Article 28014 of
the Labor Code because her job, as anticipated and
agreed upon, was only for a specified time.15
Aggrieved, petitioner now comes to this Court on a
petition for review, raising issues as follows:
I.
THIS HONORABLE COURT CAN REVIEW THE
FINDINGS OF THE HONORABLE COURT OF
APPEALS, THE DECISION OF WHICH IS NOT IN
ACCORD WITH LAW OR WITH THE APPLICABLE
DECISIONS OF THE SUPREME COURT[;]
II.
THE PRO-FORMA TALENT CONTRACTS, AS
CORRECTLY FOUND BY THE NLRC – FIRST
DIVISION, ARE "ANTI-REGULARIZATION
DEVICES" WHICH MUST BE STRUCK DOWN FOR
REASONS OF PUBLIC POLICY[;]
III.
BY REASON OF THE CONTINUOUS AND
SUCCESSIVE RENEWALS OF THE THREE-MONTH
TALENT CONTRACTS, AN EMPLOYER-EMPLOYEE
RELATIONSHIP WAS CREATED AS PROVIDED
FOR UNDER ARTICLE 280 OF THE LABOR CODE[;]
IV.
BY THE CONSTRUCTIVE DISMISSAL OF HEREIN
PETITIONER, AS A REGULAR EMPLOYEE, THERE
WAS A DENIAL OF PETITIONER’S RIGHT TO DUE
PROCESS THUS ENTITLING HER TO THE MONEY
CLAIMS AS STATED IN THE COMPLAINT[.]16
The issues for our disposition are: (1) whether or not
this Court can review the findings of the Court of
Appeals; and (2) whether or not under Rule 45 of the
Rules of Court the Court of Appeals committed a
reversible error in its Decision.
On the first issue, private respondents contend that
the issues raised in the instant petition are mainly
factual and that there is no showing that the said
issues have been resolved arbitrarily and without
basis. They add that the findings of the Court of
Appeals are supported by overwhelming wealth of
evidence on record as well as prevailing jurisprudence
on the matter.17
Petitioner however contends that this Court can
review the findings of the Court of Appeals, since the
appellate court erred in deciding a question of
substance in a way which is not in accord with law or
with applicable decisions of this Court.18
We agree with petitioner. Decisions, final orders or
resolutions of the Court of Appeals in any case —
regardless of the nature of the action or proceeding
involved — may be appealed to this Court through a
petition for review. This remedy is a continuation of
the appellate process over the original case,19 and
considering there is no congruence in the findings of
the NLRC and the Court of Appeals regarding the
status of employment of petitioner, an exception to the
general rule that this Court is bound by the findings of
facts of the appellate court,20 we can review such
findings.
On the second issue, private respondents contend
that the Court of Appeals did not err when it upheld
the validity of the talent contracts voluntarily entered
into by petitioner. It further stated that prevailing
jurisprudence has recognized and sustained the
absence of employer-employee relationship between
a talent and the media entity which engaged the
talent’s services on a per talent contract basis, citing
the case of Sonza v. ABS-CBN Broadcasting
Corporation.21
Petitioner avers however that an employer-employee
relationship was created when the private
respondents started to merely renew the contracts
repeatedly fifteen times or for four consecutive
years.22
Again, we agree with petitioner. The Court of Appeals
committed reversible error when it held that petitioner
was a fixed-term employee. Petitioner was a regular
employee under contemplation of law. The practice of
having fixed-term contracts in the industry does not
automatically make all talent contracts valid and
compliant with labor law. The assertion that a talent
contract exists does not necessarily prevent a regular
employment status.23
Further, the Sonza case is not applicable. In Sonza,
the television station did not instruct Sonza how to
perform his job. How Sonza delivered his lines,
appeared on television, and sounded on radio were
outside the television station’s control. Sonza had a
free hand on what to say or discuss in his shows
provided he did not attack the television station or its
interests. Clearly, the television station did not
exercise control over the means and methods of the
performance of Sonza’s work.24 In the case at bar,
ABC had control over the performance of petitioner’s
work. Noteworthy too, is the comparatively low
₱28,000 monthly pay of petitioner25 vis the ₱300,000
a month salary of Sonza,26 that all the more bolsters
the conclusion that petitioner was not in the same
situation as Sonza.
The contract of employment of petitioner with ABC
had the following stipulations:
xxxx
1. SCOPE OF SERVICES – TALENT agrees to
devote his/her talent, time, attention and best efforts
in the performance of his/her duties and
responsibilities as Anchor/Program Host/Newscaster
of the Program, in accordance with the direction of
ABC and/or its authorized representatives.
1.1. DUTIES AND RESPONSIBILITIES – TALENT
shall:
a. Render his/her services as a newscaster on the
Program;
b. Be involved in news-gathering operations by
conducting interviews on- and off-the-air;
c. Participate in live remote coverages when called
upon;
d. Be available for any other news assignment, such
as writing, research or camera work;
e. Attend production meetings;
f. On assigned days, be at the studios at least one (1)
hour before the live telecasts;
g. Be present promptly at the studios and/or other
place of assignment at the time designated by ABC;
h. Keep abreast of the news;
i. Give his/her full cooperation to ABC and its duly
authorized representatives in the production and
promotion of the Program; and
j. Perform such other functions as may be assigned to
him/her from time to time.
xxxx
1.3 COMPLIANCE WITH STANDARDS,
INSTRUCTIONS AND OTHER RULES AND
REGULATIONS – TALENT agrees that he/she will
promptly and faithfully comply with the requests and
instructions, as well as the program standards,
policies, rules and regulations of ABC, the KBP and
the government or any of its agencies and
instrumentalities.27
xxxx
In Manila Water Company, Inc. v. Pena,28 we said that
the elements to determine the existence of an
employment relationship are: (a) the selection and
engagement of the employee, (b) the payment of
wages, (c) the power of dismissal, and (d) the
employer’s power to control. The most important
element is the employer’s control of the employee’s
conduct, not only as to the result of the work to be
done, but also as to the means and methods to
accomplish it.29
The duties of petitioner as enumerated in her
employment contract indicate that ABC had control
over the work of petitioner. Aside from control, ABC
also dictated the work assignments and payment of
petitioner’s wages. ABC also had power to dismiss
her. All these being present, clearly, there existed an
employment relationship between petitioner and ABC.
Concerning regular employment, the law provides for
two kinds of employees, namely: (1) those who are
engaged to perform activities which are usually
necessary or desirable in the usual business or trade
of the employer; and (2) those who have rendered at
least one year of service, whether continuous or
broken, with respect to the activity in which they are
employed.30 In other words, regular status arises from
either the nature of work of the employee or the
duration of his employment.31 In Benares v.
Pancho,32 we very succinctly said:
…[T]he primary standard for determining regular
employment is the reasonable connection between
the particular activity performed by the employee vis-
à-vis the usual trade or business of the employer. This
connection can be determined by considering the
nature of the work performed and its relation to the
scheme of the particular business or trade in its
entirety. If the employee has been performing the job
for at least a year, even if the performance is not
continuous and merely intermittent, the law deems
repeated and continuing need for its performance as
sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence,
the employment is considered regular, but only with
respect to such activity and while such activity
exists.33
In our view, the requisites for regularity of employment
have been met in the instant case. Gleaned from the
description of the scope of services aforementioned,
petitioner’s work was necessary or desirable in the
usual business or trade of the employer which
includes, as a pre-condition for its enfranchisement,
its participation in the government’s news and public
information dissemination. In addition, her work was
continuous for a period of four years. This repeated
engagement under contract of hire is indicative of the
necessity and desirability of the petitioner’s work in
private respondent ABC’s business.34
The contention of the appellate court that the contract
was characterized by a valid fixed-period employment
is untenable. For such contract to be valid, it should
be shown that the fixed period was knowingly and
voluntarily agreed upon by the parties. There should
have been no force, duress or improper pressure
brought to bear upon the employee; neither should
there be any other circumstance that vitiates the
employee’s consent.35 It should satisfactorily appear
that the employer and the employee dealt with each
other on more or less equal terms with no moral
dominance being exercised by the employer over the
employee.36 Moreover, fixed-term employment will not
be considered valid where, from the circumstances, it
is apparent that periods have been imposed to
preclude acquisition of tenurial security by the
employee.37
In the case at bar, it does not appear that the
employer and employee dealt with each other on
equal terms. Understandably, the petitioner could not
object to the terms of her employment contract
because she did not want to lose the job that she
loved and the workplace that she had grown
accustomed to,38 which is exactly what happened
when she finally manifested her intention to negotiate.
Being one of the numerous newscasters/broadcasters
of ABC and desiring to keep her job as a broadcasting
practitioner, petitioner was left with no choice but to
affix her signature of conformity on each renewal of
her contract as already prepared by private
respondents; otherwise, private respondents would
have simply refused to renew her contract. Patently,
the petitioner occupied a position of weakness vis-à-
vis the employer. Moreover, private respondents’
practice of repeatedly extending petitioner’s 3-month
contract for four years is a circumvention of the
acquisition of regular status. Hence, there was no
valid fixed-term employment between petitioner and
private respondents.
While this Court has recognized the validity of fixed-
term employment contracts in a number of cases, it
has consistently emphasized that when the
circumstances of a case show that the periods were
imposed to block the acquisition of security of tenure,
they should be struck down for being contrary to law,
morals, good customs, public order or public policy.39
As a regular employee, petitioner is entitled to security
of tenure and can be dismissed only for just cause
and after due compliance with procedural due
process. Since private respondents did not observe
due process in constructively dismissing the
petitioner, we hold that there was an illegal dismissal.
WHEREFORE, the challenged Decision dated
January 30, 2004 and Resolution dated June 23,
2004 of the Court of Appeals in CA-G.R. SP No.
63125, which held that the petitioner was a fixed-term
employee, are REVERSED and SET ASIDE. The
NLRC decision is AFFIRMED.
Costs against private respondents.
SO ORDERED.
PEREZ, J.:
The existence of an employer-employee
relationship is at the heart of this
Petition for Review on Certiorari filed
pursuant to Rule 45 of the Rules of
Court, primarily assailing the 29 June
2011 Decision[1] rendered by the Fourth
Division of the Court of Appeals (CA) in
CA-G.R. SP No. 116928 which ruled out
said relationship between the parties.
The Facts
Respondent ABS-CBN Corporation
(formerly ABS-CBN Broadcasting
Corporation) is a television and radio
broadcasting corporation which, for its
Regional Network Group in Naga City,
employed respondent Amalia Villafuerte
(Villafuerte) as Manager. There is no
dispute regarding the fact that, thru
Villafuerte, ABS-CBN engaged the
services of petitioners Nelson Begino
(Begino) and Gener Del Valle (Del Valle)
sometime in 1996 as
Cameramen/Editors for TV
Broadcasting. Petitioners Ma. Cristina
Sumayao (Sumayao) and Monina Avila-
Llorin (Llorin) were likewise similarly
engaged as reporters sometime in 1996
and 2002, respectively. With their
services engaged by respondents thru
Talent Contracts which, though
regularly renewed over the years,
provided terms ranging from three (3)
months to one (1) year, petitioners were
given Project Assignment Forms which
detailed, among other matters, the
duration of a particular project as well as
the budget and the daily technical
requirements thereof. In the aforesaid
capacities, petitioners were tasked with
coverage of news items for subsequent
daily airings in respondents’ TV Patrol
Bicol Program.[2]
While specifically providing that nothing
therein shall be deemed or construed to
establish an employer-employee
relationship between the parties, the
aforesaid Talent Contracts included,
among other matters, provisions on the
following matters: (a) the Talent’s
creation and performance of work in
accordance with the ABS-CBN’s
professional standards and compliance
with its policies and guidelines covering
intellectual property creators, industry
codes as well as the rules and
regulations of the Kapisanan ng mga
Broadcasters sa Pilipinas (KBP) and
other regulatory agencies; (b) the
Talent’s non-engagement in similar
work for a person or entity directly or
indirectly in competition with or adverse
to the interests of ABS-CBN and non-
promotion of any product or service
without prior written consent; and (c)
the results-oriented nature of the
talent’s work which did not require them
to observe normal or fixed working
hours.[3] Subjected to contractor’s tax,
petitioners’ remunerations were
denominated as Talent Fees which, as of
last renewal, were admitted to be pegged
per airing day at P273.35 for Begino,
P302.92 for Del Valle, P323.08 for
Sumayao and P315.39 for Llorin.[4]
Claiming that they were regular
employees of ABS-CBN, petitioners filed
against respondents the
complaint[5] docketed as Sub-RAB 05-
04-00041-07 before the National Labor
Relations Commission’s (NLRC) Sub-
Regional Arbitration Branch No. 5, Naga
City. In support of their claims for
regularization, underpayment of
overtime pay, holiday pay, 13th month
pay, service incentive leave pay,
damages and attorney's fees, petitioners
alleged that they performed functions
necessary and desirable in ABS-CBN's
business. Mandated to wear company
IDs and provided all the equipment they
needed, petitioners averred that they
worked under the direct control and
supervision of Villafuerte and, at the end
of each day, were informed about the
news to be covered the following day,
the routes they were to take and,
whenever the subject of their news
coverage is quite distant, even the start
of their workday. Due to the importance
of the news items they covered and the
necessity of their completion for the
success of the program, petitioners
claimed that, under pain of immediate
termination, they were bound by the
company’s policy on, among others,
attendance and punctuality.[6]
Aside from the constant evaluation of
their actions, petitioners were reportedly
subjected to an annual competency
assessment alongside other ABS-CBN
employees, as condition for their
continued employment. Although their
work involved dealing with emergency
situations at any time of the day or
night, petitioners claimed that they were
not paid the labor standard benefits the
law extends to regular employees. To
avoid paying what is due them, however,
respondents purportedly resorted to the
simple expedient of using said Talent
Contracts and/or Project Assignment
Forms which denominated petitioners
as talents, despite the fact that they are
not actors or TV hosts of special skills.
As a result of this iniquitous situation,
petitioners asseverated that they merely
earned an average of P7,000.00 to
P8,000.00 per month, or decidedly
lower than the P21,773.00 monthly
salary ABS-CBN paid its regular rank-
and-file employees. Considering their
repeated re-hiring by respondents for
ostensible fixed periods, this situation
had gone on for years since TV Patrol
Bicol has continuously aired from 1996
onwards.[7]
In refutation of the foregoing assertions,
on the other hand, respondents argued
that, although it occasionally engages in
production and generates programs thru
various means, ABS-CBN is primarily
engaged in the business of broadcasting
television and radio content. Not having
the full manpower complement to
produce its own program, the company
had allegedly resorted to engaging
independent contractors like actors,
directors, artists, anchormen, reporters,
scriptwriters and various production
and technical staff, who offered their
services in relation to a particular
program. Known in the industry as
talents, such independent contractors
inform ABS- CBN of their availability
and were required to accomplish Talent
Information Forms to facilitate their
engagement for and appearance on
designated project days. Given the
unpredictability of viewer preferences,
respondents argued that the company
cannot afford to provide regular work
for talents with whom it negotiates
specific or determinable professional
fees on a per project, weekly or daily
basis, usually depending on the budget
allocation for a project.[8]
Respondents insisted that, pursuant to
their Talent Contracts and/or Project
Assignment Forms, petitioners were
hired as talents, to act as reporters
and/or cameramen for TV Patrol Bicol
for designated periods and rates. Fully
aware that they were not considered or
to consider themselves as employees of a
particular production or film outfit,
petitioners were supposedly engaged on
the basis of the skills, knowledge or
expertise they already possessed and, for
said reason, required no further training
from ABS-CBN. Although petitioners
were inevitably subjected to some
degree of control, the same was allegedly
limited to the imposition of general
guidelines on conduct and performance,
simply for the purpose of upholding the
standards of the company and the
strictures of the industry. Never
subjected to any control or restrictions
over the means and methods by which
they performed or discharged the tasks
for which their services were engaged,
petitioners were, at most, briefed
whenever necessary regarding the
general requirements of the project to be
executed.[9]
Having been terminated during the
pendency of the case, Petitioners filed
on 10 July 2007 a second complaint
against respondents, for regularization,
payment of labor standard benefits,
illegal dismissal and unfair labor
practice, which was docketed as Sub-
RAB 05-08-00107-07. Upon
respondents’ motion, this complaint was
dismissed for violation of the rules
against forum shopping in view of the
fact that the determination of the issues
in the second case hinged on the
resolution of those raised in the
first.[10] On 19 December 2007, however,
Labor Arbiter Jesus Orlando Quiñones
(Labor Arbiter Quiñones) resolved Sub-
RAB 05-04-00041-07 in favor of
petitioners who, having rendered
services necessary and related to ABS-
CBN’s business for more than a year,
were determined to be its regular
employees. With said conclusion found
to be buttressed by, among others, the
exclusivity clause and prohibitions
under petitioners’ Talent Contracts
and/or Project Assignment Forms which
evinced respondents’ control over
them,[11] Labor Arbiter Quiñones
disposed of the case in the following
wise:
WHEREFORE, finding merit in the
causes of action set forth by the
complainants, judgment is hereby
rendered declaring complainants
MONINA AVILA-LLORIN, GENER L.
DEL VALLE, NELSON V. BEGINO and
MA. CRISTINA V. SUMAYAO, as
regular employees of respondent
company, ABS-CBN BROADCASTING
CORPORATION.
Accordingly, respondent ABS-CBN
Broadcasting Corporation is hereby
ORDERED to pay complainants, subject
to the prescriptive period provided
under Article 291 of the Labor Code,
however applicable, the total amount
of Php2,440,908.36, representing
salaries/wage differentials, holiday pay,
service incentive leave pay and
13th month pay, to include 10% of the
judgment award as attorney’s fees of the
judgment award (computation of the
monetary awards are attached
hereto as integral part of this
decision).
Moreover, respondents are directed to
admit back complainants to work under
the same terms and conditions
prevailing prior to their separation or, at
respondents' option, merely reinstated
in the payroll.
Other than the above, all other claims
and charges are ordered DISMISSED for
lack of merit.[12]
Aggrieved by the foregoing decision,
respondents elevated the case on appeal
before the NLRC, during the pendency
of which petitioners filed a third
complaint against the former, for illegal
dismissal, regularization, non- payment
of salaries and 13th month pay, unfair
labor practice, damages and attorney’s
fees. In turn docketed as NLRC Case No.
Sub-RAB-V-05-03-00039-08, the
complaint was raffled to Labor Arbiter
Quiñones who issued an Order dated 30
April 2008, inhibiting himself from the
case and denying respondents’ motion
to dismiss on the grounds of res
judicata and forum shopping.[13] Finding
that respondents’ control over
petitioners was indeed manifest from
the exclusivity clause and prohibitions in
the Talent Contracts and/or Project
Assignment Forms, on the other hand,
the NLRC rendered a Decision dated 31
March 2010, affirming said Labor
Arbiter’s appealed
decision.[14] Undeterred by the NLRC’s
31 August 2010 denial of their motion
for reconsideration,[15] respondents filed
the Rule 65 petition
for certiorari docketed before the CA as
CA-G.R. SP No. 116928 which, in
addition to taking exceptions to the
findings of the assailed decision, faulted
petitioners for violating the rule against
forum shopping.[16]
On 29 June 2011, the CA rendered the
herein assailed decision, reversing the
findings of the Labor Arbiter and the
NLRC. Ruling out the existence of forum
shopping on the ground that petitioners'
second and third complaints were
primarily anchored on their termination
from employment after the filing of their
first complaint, the CA nevertheless
discounted the existence of an
employer-employee relation between the
parties upon the following findings and
conclusions: (a) petitioners, were
engaged by respondents as talents for
periods, work and the program specified
in the Talent Contracts and/or Project
Assignment Forms concluded between
them; (b) instead of fixed salaries,
petitioners were paid talent fees
depending on the budget allocated for
the program to which they were
assigned; (c) being mainly concerned
with the result, respondents did not
exercise control over the manner and
method by which petitioner
accomplished their work and, at most,
ensured that they complied with the
standards of the company, the KBP and
the industry; and, (d) the existence of an
employer-employee relationship is not
necessarily established by the exclusivity
clause and prohibitions which are but
terms and conditions on which the
parties are allowed to freely stipulate.[17]
Petitioners’ motion for reconsideration
of the foregoing decision was denied in
the CA's 3 October 2011
Resolution,[18] hence, this petition.
The Issues
Petitioners seek the reversal of the CA’s
assailed Decision and
Resolution on the affirmative of the
following issues:
1. Whether or not the CA seriously and
reversibly erred in not dismissing
respondents’ petition for certiorari in
view of the fact that they did file a Notice
of Appeal at the NLRC level and did not,
by themselves or through their duly
authorized representative, verify and
certify the Memorandum of Appeal they
filed thereat, in accordance with the
NLRC Rules of Procedure; and
2. Whether or not the CA seriously and
reversibly erred in brushing aside the
determination made by both the Labor
Arbiter and the NLRC of the existence of
an employer-employee relationship
between the parties, despite established
jurisprudence supporting the same.
The Court's Ruling
The Court finds the petition impressed
with merit.
Petitioners preliminarily fault the CA for
not dismissing respondents’ Rule 65
petition for certiorari in view of the fact
that the latter failed to file a Notice of
Appeal from the Labor Arbiter’s decision
and to verify and certify the
Memorandum of Appeal they filed
before the NLRC. While concededly
required under the NLRC Rules of
Procedure, however, these matters
should have been properly raised during
and addressed at the appellate stage
before the NLRC. Instead, the record
shows that the NLRC took cognizance of
respondents’ appeal and proceeded to
resolve the same in favor of petitioners
by affirming the Labor Arbiter’s
decision. Not having filed their own
petition for certiorari to take exception
to the liberal attitude the NLRC appears
to have adopted towards its own rules of
procedure, petitioners were hardly in the
proper position to raise the same before
the CA or, for that matter, before this
Court at this late stage. Aside from the
settled rule that a party who has not
appealed is not entitled to affirmative
relief other than the ones granted in the
decision[19] rendered, liberal
interpretation of procedural rules on
appeal had, on occasion, been favored in
the interest of substantive justice.[20]
Although the existence of an employer-
employee relationship is, on the other
hand, a question of fact[21] which is
ordinarily not the proper subject of a
Rule 45 petition for review
on certiorari like the one at bar, the
conflicting findings between the labor
tribunals and the CA justify a further
consideration of the matter.[22] To
determine the existence of said relation,
case law has consistently applied the
four-fold test, to wit: (a) the selection
and engagement of the employee; (b)
the payment of wages; (c) the power of
dismissal; and (d) the employer's power
to control the employee on the means
and methods by which the work is
accomplished.[23] Of these criteria, the
so-called “control test” is generally
regarded as the most crucial and
determinative indicator of the presence
or absence of an employer-employee
relationship. Under this test, an
employer-employee relationship is said
to exist where the person for whom the
services are performed reserves the right
to control not only the end result but
also the manner and means utilized to
achieve the same.[24]
In discounting the existence of said
relationship between the parties, the CA
ruled that Petitioners' services were,
first and foremost, engaged thru their
Talent Contracts and/or Project
Assignment Forms which specified the
work to be performed by them, the
project to which they were assigned, the
duration thereof and their rates of pay
according to the budget therefor
allocated. Because they are imbued with
public interest, it cannot be gainsaid,
however, that labor contracts are subject
to the police power of the state and are
placed on a higher plane than ordinary
contracts. The recognized supremacy of
the law over the nomenclature of the
contract and the stipulations contained
therein is aimed at bringing life to the
policy enshrined in the Constitution to
afford protection to labor.[25] Insofar as
the nature of one’s employment is
concerned, Article 280 of the Labor
Code of the Philippines also provides as
follows:
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 service 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 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 actually exists.
It has been ruled that the foregoing
provision contemplates four kinds of
employees, namely: (a) regular
employees or those who have been
engaged to perform activities which are
usually necessary or desirable in the
usual business or trade of the employer;
(b) project employees or those whose
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; (c)
seasonal employees or those who work
or perform services which are seasonal
in nature, and the employment is for the
duration of the season; and (d) casual
employees or those who are not regular,
project, or seasonal employees.[26] To the
foregoing classification of employee,
jurisprudence has added that of
contractual or fixed term employee
which, if not for the fixed term, would
fall under the category of regular
employment in view of the nature of the
employee’s engagement, which is to
perform activity usually necessary or
desirable in the employer’s business.[27]
The Court finds that, notwithstanding
the nomenclature of their Talent
Contracts and/or Project Assignment
Forms and the terms and condition
embodied therein, petitioners are
regular employees of ABS-CBN. Time
and again, it has been ruled that the test
to determine whether employment is
regular or not is the reasonable
connection between the activity
performed by the employee in relation
to the business or trade of the
employer.[28] As cameramen/editors and
reporters, petitioners were undoubtedly
performing functions necessary and
essential to ABS-CBN’s business of
broadcasting television and radio
content. It matters little that petitioners’
services were engaged for specified
periods for TV Patrol Bicol and that they
were paid according to the budget
allocated therefor. Aside from the fact
that said program is a regular weekday
fare of the ABS-CBN’s Regional Network
Group in Naga City, the record shows
that, from their initial engagement in
the aforesaid capacities, petitioners were
continuously re-hired by respondents
over the years. To the mind of the Court,
respondents’ repeated hiring of
petitioners for its long-running news
program positively indicates that the
latter were ABS-CBN’s regular
employees.
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
or continuing performance as sufficient
evidence of the necessity, if not
indispensability of that activity in the
business.[29] Indeed, an employment
stops being co-terminous with specific
projects where the employee is
continuously re-hired due to the
demands of the employer’s
business.[30] When circumstances show,
moreover, that contractually stipulated
periods of employment have been
imposed to preclude the acquisition of
tenurial security by the employee, this
Court has not hesitated in striking down
such arrangements as contrary to public
policy, morals, good customs or public
order.[31] The nature of the employment
depends, after all, on the nature of the
activities to be performed by the
employee, considering the nature of the
employer’s business, the duration and
scope to be done, and, in some cases,
even the length of time of the
performance and its continued
existence.[32] In the same manner that
the practice of having fixed-term
contracts in the industry does not
automatically make all talent contracts
valid and compliant with labor law, it
has, consequently, been ruled that the
assertion that a talent contract exists
does not necessarily prevent a regular
employment status.[33]
As cameramen/editors and reporters, it
also appears that petitioners were
subject to the control and supervision of
respondents which, first and foremost,
provided them with the equipments
essential for the discharge of their
functions. Prepared at the instance of
respondents, petitioners’ Talent
Contracts tellingly provided that ABS-
CBN retained “all creative,
administrative, financial and legal
control” of the program to which they
were assigned. Aside from having the
right to require petitioners “to attend
and participate in all promotional or
merchandising campaigns, activities or
events for the Program,” ABS-CBN
required the former to perform their
functions “at such locations and
Performance/Exhibition Schedules” it
provided or, subject to prior notice, as it
chose determine, modify or change.
Even if they were unable to comply with
said schedule, petitioners were required
to give advance notice, subject to
respondents’ approval.[34] However
obliquely worded, the Court finds the
foregoing terms and conditions
demonstrative of the control
respondents exercised not only over the
results of petitioners’ work but also the
means employed to achieve the same.
In finding that petitioners were regular
employees, the NLRC further ruled that
the exclusivity clause and prohibitions in
their Talent Contracts and/or Project
Assignment Forms were likewise
indicative of respondents’ control over
them. Brushing aside said finding,
however, the CA applied the ruling
in Sonza v. ABS-CBN Broadcasting
Corporation[35] where similar
restrictions were considered not
necessarily determinative of the
existence of an employer-employee
relationship. Recognizing that
independent contractors can validly
provide his exclusive services to the
hiring party, said case enunciated that
guidelines for the achievement of
mutually desired results are not
tantamount to control. As correctly
pointed out by petitioners, however,
parallels cannot be expediently drawn
between this case and that of Sonza case
which involved a well-known television
and radio personality who was
legitimately considered a talent and
amply compensated as such. While
possessed of skills for which they were
modestly recompensed by respondents,
petitioners lay no claim to fame and/or
unique talents for which talents like
actors and personalities are hired and
generally compensated in the broadcast
industry.
Later echoed in Dumpit-Murillo v.
Court of Appeals,[36] this Court has
rejected the application of the ruling in
the Sonza case to employees similarly
situated as petitioners in ABS-CBN
Broadcasting Corporation v.
Nazareno.[37] The following distinctions
were significantly observed between
employees like petitioners and television
or radio personalities like Sonza, to wit:
First. In the selection and engagement
of respondents, no peculiar or unique
skill, talent or celebrity status was
required from them because they were
merely hired through petitioner’s
personnel department just like any
ordinary employee.
Second. The so-called "talent fees" of
respondents correspond to wages given
as a result of an employer-employee
relationship. Respondents did not have
the power to bargain for huge talent
fees, a circumstance negating
independent contractual relationship.
Third. Petitioner could always discharge
respondents should it find their work
unsatisfactory, and respondents are
highly dependent on the petitioner for
continued work.
Fourth. The degree of control and
supervision exercised by petitioner over
respondents through its supervisors
negates the allegation that respondents
are independent contractors.
The presumption is that when the work
done is an integral part of the regular
business of the employer and when the
worker, relative to the employer, does
not furnish an independent business or
professional service, such work is a
regular employment of such employee
and not an independent contractor. The
Court will peruse beyond any such
agreement to examine the facts that
typify the parties’ actual
relationship.[38] (Emphasis omitted)
Rather than the project and/or
independent contractors respondents
claim them to be, it is evident from the
foregoing disquisition that petitioners
are regular employees of ABS-CBN. This
conclusion is borne out by the
ineluctable showing that petitioners
perform functions necessary and
essential to the business of ABS-CBN
which repeatedly employed them for a
long-running news program of its
Regional Network Group in Naga City.
In the course of said employment,
petitioners were provided the
equipments they needed, were required
to comply with the Company's policies
which entailed prior approval and
evaluation of their performance. Viewed
from the prism of these considerations,
we find and so hold that the CA
reversibly erred when it overturned the
NLRC's affirmance of the Labor
Arbiter's finding that an employer-
employee relationship existed between
the parties. Given the fact, however, that
Sub-RAB-V-05-03-00039-08 had not
been consolidated with this case and
appears, for all intents and purposes, to
be pending still, the Court finds that the
reinstatement of petitioners ordered by
said labor officer and tribunal should, as
a relief provided in case of illegal
dismissal, be left for determination in
said case.
WHEREFORE, the Court of Appeals'
assailed Decision dated 29 June 2011
and Resolution dated 3 October 2011 in
CA-G.R. SP No. 116928
are REVERSED and SET ASIDE.
Except for the reinstatement of Nelson
V. Begino, Gener Del Valle, Monina
Avila-Llorin and Ma. Cristina Sumayao,
the National Labor and Relations·
Commission's 31 March 2010 Decision
is, accordingly, REINSTATED.
SO ORDERED.
Sereno, C. J., (Chairperson), Leonardo-
De Castro, Bersamin, and Perlas- Decision[4] of the Labor Arbiter dismissing
Bernabe, JJ., concur. the complaint filed by respondent Jerry V.
Bustamante.

Petitioner Oscar Villamaria, Jr. was

the owner of Villamaria Motors, a sole
proprietorship engaged in assembling
passenger jeepneys with a public utility
franchise to operate along the Baclaran-
Sucat route. By 1995, Villamaria stopped
assembling jeepneys and retained only nine,
OSCAR VILLAMARIA, JR. G.R. No.
four of which he operated by employing
165881
drivers on a boundary basis. One of those
Petitioner,
drivers was respondent Bustamante who
Present:
drove the jeepney with Plate No. PVU-660.
Bustamante remitted P450.00 a day to
PANGANIBAN, C.J.,
Villamaria as boundary and kept the residue
Chairperson,
of his daily earnings as compensation for
- versus - YNARES-SANTIAGO,
driving the vehicle. In August 1997,
AUSTRIA-MARTINEZ.
Villamaria verbally agreed to sell the
CALLEJO, SR., and
jeepney to Bustamante under the boundary-
CHICO-NAZARIO, JJ.
hulog scheme, where Bustamante would
remit to Villarama P550.00 a day for a
COURT OF APPEALS and Promulgated:
period of four years; Bustamante would then
JERRY V. BUSTAMANTE,
become the owner of the vehicle and
Respondents. April 19, 2006
continue to drive the same under Villamarias
franchise. It was also agreed that
x----------------------------------------------------
Bustamante would make a downpayment
-------------------------------------x
of P10,000.00.
DECISION
On August 7, 1997, Villamaria
executed a contract entitled Kasunduan ng
Bilihan ng Sasakyan sa Pamamagitan ng
CALLEJO, SR., J.:
Boundary-Hulog[5] over the passenger
jeepney with Plate No. PVU-660, Chassis
No. EVER95-38168-C and Motor No. SL-
Before us is a Petition for Review
26647. The parties agreed that if Bustamante
on Certiorari under Rule 65 of the Revised
failed to pay the boundary-hulog for three
Rules of Court assailing the Decision[1] and
days, Villamaria Motors would hold on to
Resolution[2] of the Court of Appeals (CA)
the vehicle until Bustamante paid his
in CA-G.R. SP No. 78720 which set aside
arrears, including a penalty of P50.00 a day;
the Resolution[3] of the National Labor
in case Bustamante failed to remit the daily
Relations Commission (NLRC) in NCR-30-
boundary-hulog for a period of one week,
08-03247-00, which in turn affirmed the
the Kasunduan would cease to have legal
effect and Bustamante would have to return
the vehicle to Villamaria Motors.
Under the Kasunduan, Bustamante
was prohibited from driving the vehicle
without prior authority from Villamaria
Motors. Thus, Bustamante was authorized to
operate the vehicle to transport passengers
only and not for other purposes. He was also
required to display an identification card in
front of the windshield of the vehicle; in
case of failure to do so, any fine that may be
imposed by government authorities would
be charged against his account. Bustamante
further obliged himself to pay for the cost of
replacing any parts of the vehicle that would
be lost or damaged due to his negligence. In
case the vehicle sustained serious damage,
Bustamante was obliged to notify Villamaria
Motors before commencing
repairs. Bustamante was not allowed to wear
slippers, short pants or undershirts while
driving. He was required to be polite and
respectful towards the passengers. He was
also obliged to notify Villamaria Motors in
case the vehicle was leased for two or more
days and was required to attend any
meetings which may be called from time to
time. Aside from the boundary-hulog,
Bustamante was also obliged to pay for the
annual registration fees of the vehicle and
the premium for the vehicles comprehensive
insurance. Bustamante promised to strictly
comply with the rules and regulations
imposed by Villamaria for the upkeep and
maintenance of the jeepney.
Bustamante continued driving the jeepney
under the supervision and control of
Villamaria. As agreed upon, he made daily
remittances of P550.00 in payment of the
purchase price of the vehicle. Bustamante
failed to pay for the annual registration fees
of the vehicle, but Villamaria allowed him to
continue driving the jeepney.
In 1999, Bustamante and other drivers
who also had the same arrangement with
Villamaria Motors failed to pay their
respective boundary-hulog. This prompted
Villamaria to serve a Paalala,[6] reminding
them that under the Kasunduan, failure to
pay the daily boundary-hulog for one week,
would mean their respective jeepneys would
be returned to him without any
complaints. He warned the drivers that
the Kasunduan would henceforth be strictly
enforced and urged them to comply with
their obligation to avoid litigation.
On July 24, 2000, Villamaria took
back the jeepney driven by Bustamante and
barred the latter from driving the vehicle.
On August 15, 2000, Bustamante filed
a Complaint[7] for Illegal Dismissal against
Villamaria and his wife Teresita. In his
Position Paper,[8] Bustamante alleged that he
was employed by Villamaria in July 1996
under the boundary system, where he was
required to remit P450.00 a day. After one
year of continuously working for them, the
spouses Villamaria presented
the Kasunduan for his signature, with the
assurance that he (Bustamante) would own
the jeepney by March 2001 after
paying P550.00 in daily installments and
that he would thereafter continue driving the
vehicle along the same route under the same
franchise. He further narrated that in July
2000, he informed the Villamaria spouses
that the surplus engine of the jeepney
needed to be replaced, and was assured that
it would be done. However, he was later
arrested and his drivers license was
confiscated because apparently, the
replacement engine that was installed was
taken from a stolen vehicle. Due to
negotiations with the apprehending
authorities, the jeepney was not
impounded. The Villamaria spouses took the
jeepney from him on July 24, 2000, and he
was no longer allowed to drive the vehicle
since then unless he paid them P70,000.00.
Bustamante prayed that judgment be
rendered in his favor, thus:
WHEREFORE, in the light
of the foregoing, it is most
respectfully prayed that judgment be
rendered ordering the respondents,
jointly and severally, the following:
1. Reinstate complainant to
his former position without loss of
seniority rights and execute a Deed
of Sale in favor of the complainant
relative to the PUJ with Plate No.
PVU-660;
2. Ordering the respondents
to pay backwages in the amount
of P400.00 a day and other benefits
computed from July 24, 2000 up to
the time of his actual reinstatement;
3. Ordering respondents to
return the amount of P10,000.00
and P180,000.00 for the expenses
incurred by the complainant in the
repair and maintenance of the subject
jeep;
4. Ordering the respondents
to refund the amount of One
Hundred (P100.00) Pesos per day
counted from August 7, 1997 up to
June 2000 or a total of P91,200.00;
5. To pay moral and
exemplary damages of not less
than P200,000.00;
6. Attorneys fee[s] of not less
than 10% of the monetary award.
Other just and equitable
reliefs under the premises are also
being prayed for.[9]
In their Position Paper,[10] the spouses
Villamaria admitted the existence of
the Kasunduan, but alleged that Bustamante
failed to pay the P10,000.00 downpayment
and the vehicles annual registration
fees. They further alleged that Bustamante
eventually failed to remit the requisite
boundary-hulog of P550.00 a day, which
prompted them to issue
the Paalaala. Instead of complying with his
obligations, Bustamante stopped making his
remittances despite his daily trips and even
brought the jeepney to the province without
permission. Worse, the jeepney figured in
an accident and its license plate was
confiscated; Bustamante even abandoned
the vehicle in a gasoline station in
Sucat, Paraaque Cityfor two weeks. When
the security guard at the gasoline station
requested that the vehicle be retrieved and
Teresita Villamaria asked Bustamante for
the keys, Bustamante told her: Di kunin
ninyo. When the vehicle was finally
retrieved, the tires were worn, the alternator
was gone, and the battery was no longer
working.
Citing the cases of Cathedral School
of Technology v. NLRC[11] and Canlubang
Security Agency Corporation v.
[12]
NLRC, the spouses Villamaria argued that
Bustamante was not illegally dismissed
since the Kasunduan executed on August 7,
1997 transformed the employer-employee
relationship into that of vendor-
vendee. Hence, the spouses concluded, there
was no legal basis to hold them liable for
illegal dismissal. They prayed that the case
be dismissed for lack of jurisdiction and
patent lack of merit.
 fixed wages, he kept only the excess of the
[13]
In his Reply, Bustamante claimed boundary-hulog which he was required to
that Villamaria exercised control and remit daily to Villamaria under the
supervision over the conduct of his agreement. Bustamante maintained that he
employment. He maintained that the rulings remained an employee because he was
of the Court in National Labor Union v. engaged to perform activities which were
Dinglasan,[14] Magboo v. necessary or desirable to Villamarias trade
[15]
Bernardo, and Citizen's League of Free or business.
Workers v. Abbas[16] are germane to the The NLRC rendered
[20]
issue as they define the nature of the judgment dismissing the appeal for lack
owner/operator-driver relationship under the of merit, thus:
boundary system. He further reiterated that
it was the Villamaria spouses who presented WHEREFORE, premises
the Kasunduan to him and that he considered, complainant's appeal is
hereby DISMISSED for reasons not
conformed thereto only upon their
stated in the Labor Arbiter's decision
representation that he would own the vehicle but mainly on a jurisdictional issue,
after four years. Moreover, it appeared that there being none over the subject
the Paalala was duly received by him, as he, matter of the controversy.[21]
together with other drivers, was made to
affix his signature on a blank piece of paper The NLRC ruled that under
purporting to be an attendance sheet. the Kasunduan, the juridical relationship
between Bustamante and Villamaria was
On March 15, 2002, the Labor Arbiter that of vendor and vendee, hence, the Labor
rendered judgment[17] in favor of the spouses Arbiter had no jurisdiction over the
Villamaria and ordered the complaint complaint. Bustamante filed a Motion for
dismissed on the following ratiocination: Reconsideration, which the NLRC resolved
to deny on May 30, 2003.[22]
Respondents presented the
contract of Boundary-Hulog, as well Bustamante elevated the matter to the
as the PAALALA, to prove their
CA via Petition for Certiorari, alleging that
claim that complainant violated the
terms of their contract and afterwards the NLRC erred
abandoned the vehicle assigned to
him. As against the foregoing, [the] I
complaints (sic) mere allegations to IN DISMISSING PETITIONERS
the contrary cannot prevail. APPEAL FOR REASON NOT
STATED IN THE LABOR
Not having been illegally dismissed, ARBITERS DECISION, BUT
complainant is not entitled to MAINLY ON JURISDICTIONAL
damages and attorney's fees.[18] ISSUE;
II
Bustamante appealed the decision to IN DISREGARDING THE LAW
the NLRC,[19] insisting that AND PREVAILING
the Kasunduan did not extinguish the JURISPRUDENCE WHEN IT
DECLARED THAT THE
employer-employee relationship between
RELATIONSHIP WHICH WAS
him and Villamaria.While he did not receive ESTABLISHED BETWEEN
 PETITIONER AND THE PRIVATE from the purchase price of the unit
RESPONDENT WAS sold. Villamaria further asserted that the
DEFINITELY A MATTER WHICH
apparently restrictive conditions in
IS BEYOND THE PROTECTIVE
MANTLE OF OUR LABOR the Kasunduan did not mean that the means
LAWS.[23] and method of driver-buyers conduct was
controlled, but were mere ways to preserve
Bustamante insisted that despite the vehicle for the benefit of both parties:
the Kasunduan, the relationship between Villamaria would be able to collect the
him and Villamaria continued to be that of agreed purchase price, while Bustamante
employer-employee and as such, the Labor would be assured that the vehicle would still
Arbiter had jurisdiction over his be in good running condition even after four
complaint. He further alleged that it is years. Moreover, the right of vendor to
common knowledge that operators of impose certain conditions on the buyer
passenger jeepneys (including taxis) pay should be respected until full ownership of
their drivers not on a regular monthly basis the property is vested on the
but on commission or boundary basis, or latter.Villamaria insisted that the parallel
even the boundary- circumstances obtaining in Singer Sewing
hulog system. Bustamante asserted that he Machine Company v. Drilon[24] has
was dismissed from employment without analogous application to the instant issue.
any lawful or just cause and without due
notice. In its Decision[25] dated August 30,
For his part, Villamaria averred that 2004, the CA reversed and set aside the
Bustamante failed to adduce proof of their NLRC decision. The fallo of the decision
employer-employee relationship. He further reads:
pointed out that the Dinglasan case pertains
UPON THE VIEW WE
to the boundary system and not the
TAKE IN THIS CASE, THUS, the
boundary-hulog system, hence inapplicable impugned resolutions of the NLRC
in the instant case. He argued that upon the must be, as they are hereby
execution of the Kasunduan, the juridical tie are, REVERSED AND SET
between him and Bustamante was ASIDE, and judgment entered in
transformed into a vendor-vendee favor of petitioner:
relationship. Noting that he was engaged in
the manufacture and sale of jeepneys and not
in the business of transporting passengers 1. Sentencing
for consideration, Villamaria contended that private respondent
the daily fees which Bustmante paid were Oscar Villamaria, Jr.
actually periodic installments for the the to pay petitioner Jerry
Bustamante separation
vehicle and were not the same fees as
pay computed from
understood in the boundary system. He the time of his
added that the boundary-hulog plan was employment up to the
basically a scheme to help the driver-buyer time of termination
earn money and eventually pay for the unit based on the
in full, and for the owner to profit not from prevailing minimum
wage at the time of
the daily earnings of the driver-buyer but
termination; and,

2.
Condemning private
respondent Oscar
Villamaria, Jr. to pay
petitioner Jerry
Bustamante back
wages computed from
the time of his
dismissal up to March
2001 based on the
prevailing minimum
wage at the time of his
dismissal.
Without Costs.
SO ORDERED.[26]
The appellate court ruled that the
Labor Arbiter had jurisdiction over
Bustamantes complaint. Under
the Kasunduan, the relationship between
him and Villamaria was dual: that of
vendor-vendee and employer-employee. The
CA ratiocinated that Villamarias exercise of
control over Bustamantes conduct in
operating the jeepney is inconsistent with
the formers claim that he was not engaged in
the transportation business. There was no
evidence that petitioner was allowed to let
some other person drive the jeepney.
The CA further held that, while the
power to dismiss was not mentioned in
the Kasunduan, it did not mean that
Villamaria could not exercise it. It explained
that the existence of an employment
relationship did not depend on how the
worker was paid but on the presence or
absence of control over the means and
method of the employees work. In this case,
Villamarias directives (to drive carefully,
wear an identification card, don decent
attire, park the vehicle in his garage, and to
inform him about provincial trips, etc.) was
a means to control the way in which
Bustamante was to go about his work. In
view of Villamarias supervision and control
as employer, the fact that the boundary
represented installment payments of the
purchase price on the jeepney did not
remove the parties employer-employee
relationship.
While the appellate court recognized
that a weeks default in paying the boundary-
hulog constituted an additional cause for
terminating Bustamantes employment, it
held that the latter was illegally
dismissed. According to the CA, assuming
that Bustamante failed to make the required
payments as claimed by Villamaria, the
latter nevertheless failed to take steps to
recover the unit and waited for Bustamante
to abandon it. It also pointed out that
Villamaria neither submitted any police
report to support his claim that the vehicle
figured in a mishap nor presented the
affidavit of the gas station guard to
substantiate the claim that Bustamante
abandoned the unit.
Villamaria received a copy of the
decision on September 8, 2004, and filed,
on September 17, 2004, a motion for
reconsideration thereof. The CA denied the
motion in a Resolution[27] dated November
2, 2004, and Villamaria received a copy
thereof on November 8, 2004.
Villamaria, now petitioner, seeks relief from
this Court via petition for review
on certiorari under Rule 65 of the Rules of
Court, alleging that the CA committed grave
abuse of its discretion amounting to excess
or lack of jurisdiction in reversing the
decision of the Labor Arbiter and the
NLRC. He claims that the CA erred in
ruling that the juridical relationship between
him and respondent under
the Kasunduan was a combination of
employer-employee and vendor-vendee
relationships. The terms and conditions of
the Kasunduan clearly state that he and
respondent Bustamante had entered into a
conditional deed of sale over the jeepney; as
such, their employer-employee relationship
had been transformed into that of vendor-
vendee. Petitioner insists that he had the
right to reserve his title on the jeepney until
after the purchase price thereof had been
paid in full.
In his Comment on the petition, respondent
avers that the appropriate remedy of
petitioner was an appeal via a petition for
review on certiorari under Rule 45 of the
Rules of Court and not a special civil action
of certiorari under Rule 65. He argues that
petitioner failed to establish that the CA
committed grave abuse of its discretion
amounting to excess or lack of jurisdiction
in its decision, as the said ruling is in accord
with law and the evidence on record.
Respondent further asserts that
the Kasunduan presented to him by
petitioner which provides for a boundary-
hulog scheme was a devious circumvention
of the Labor Code of
the Philippines. Respondent insists that his
juridical relationship with petitioner is that
of employer-employee because he was
engaged to perform activities which were
necessary or desirable in the usual business
of petitioner, his employer.
In his Reply, petitioner avers that the Rules
of Procedure should be liberally construed in
his favor; hence, it behooves the Court to
resolve the merits of his petition.
We agree with respondents contention that
the remedy of petitioner from the CA
decision was to file a petition for review
on certiorari under Rule 45 of the Rules of
Court and not the independent action
of certiorari under Rule 65. Petitioner had
15 days from receipt of the CA resolution
denying his motion for the reconsideration
within which to file the petition under Rule
45.[28] But instead of doing so, he filed
a petition for certiorari under Rule
65 on November 22, 2004, which did not,
however, suspend the running of the 15-day
reglementary period; consequently, the CA
decision became final and executory upon
the lapse of the reglementary period for
appeal. Thus, on this procedural lapse, the
instant petition stands to be dismissed.[29]
It must be stressed that the recourse to a
special civil action under Rule 65 of the
Rules of Court is proscribed by the remedy
of appeal under Rule 45. As the Court
elaborated in Tomas Claudio Memorial
College, Inc. v. Court of Appeals:[30]
We agree that the remedy of the
aggrieved party from a decision or
final resolution of the CA is to file a
petition for review
on certiorari under Rule 45 of the
Rules of Court, as amended, on
questions of facts or issues of law
within fifteen days from notice of the
said resolution. Otherwise, the
decision of the CA shall become
final and executory. The remedy
under Rule 45 of the Rules of Court
is a mode of appeal to this Court
from the decision of the CA. It is a
continuation of the appellate process
over the original case. A review is
not a matter of right but is a matter of
judicial discretion. The aggrieved
party may, however, assail the
decision of the CA via a petition
for certiorari under Rule 65 of the
Rules of Court within sixty days
from notice of the decision of the CA
or its resolution denying the motion
 for reconsideration of the same. This
is based on the premise that in
issuing the assailed decision and
resolution, the CA acted with grave
abuse of discretion, amounting to
excess or lack of jurisdiction and
there is no plain, speedy and
adequate remedy in the ordinary
course of law. A remedy is
considered plain, speedy and
adequate if it will promptly relieve
the petitioner from the injurious
effect of the judgment and the acts of
the lower court.
The aggrieved party is proscribed
from filing a petition for certiorari if
appeal is available, for the remedies
of appeal and certiorari are mutually
exclusive and not alternative or
successive.The aggrieved party is,
likewise, barred from filing a petition
for certiorari if the remedy of appeal
is lost through his negligence. A
petition for certiorari is an original
action and does not interrupt the
course of the principal case unless a
temporary restraining order or a writ
of preliminary injunction has been
issued against the public respondent
from further proceeding. A petition
for certiorari must be based on
jurisdictional grounds because, as
long as the respondent court acted
within its jurisdiction, any error
committed by it will amount to
nothing more than an error of
judgment which may be corrected or
reviewed only by appeal.[31]
However, we have also ruled that a
petition for certiorari under Rule 65 may be
considered as filed under Rule 45,
conformably with the principle that rules of
procedure are to be construed liberally,
provided that the petition is filed within the
reglementary period under Section 2, Rule
45 of the Rules of Court, and where valid
and compelling circumstances warrant that
the petition be resolved on its merits.[32] In
this case, the petition was filed within the
reglementary period and petitioner has
raised an issue of substance: whether the
existence of a boundary-hulog agreement
negates the employer-employee relationship
between the vendor and vendee, and, as a
corollary, whether the Labor Arbiter has
jurisdiction over a complaint for illegal
dismissal in such case.
We resolve these issues in the
affirmative.
The rule is that, the nature of an
action and the subject matter thereof, as well
as, which court or agency of the government
has jurisdiction over the same, are
determined by the material allegations of the
complaint in relation to the law involved and
the character of the reliefs prayed for,
whether or not the complainant/plaintiff is
entitled to any or all of such reliefs.[33] A
prayer or demand for relief is not part of the
petition of the cause of action; nor does it
enlarge the cause of action stated or change
the legal effect of what is alleged.[34] In
determining which body has jurisdiction
over a case, the better policy is to consider
not only the status or relationship of the
parties but also the nature of the action that
is the subject of their controversy.[35]
Article 217 of the Labor Code, as
amended, vests on the Labor Arbiter
exclusive original jurisdiction only over the
following:
x x x (a) Except as otherwise
provided under this Code, the Labor
Arbiters shall have original and
exclusive jurisdiction to hear and
decide, within thirty (30) calendar
days after the submission of the case
by the parties for decision without
extension, even in the absence of
stenographic notes, the following
cases involving all workers, whether amount exceeding
agricultural or non-agricultural: five thousand pesos
(P5,000.00)
1. Unfair regardless of
labor practice cases; whether
2. accompanied with a
Termination claim for
disputes; reinstatement.
3. If
accompanied with a (b) The Commission shall
claim for have exclusive appellate jurisdiction
reinstatement, those over all cases decided by Labor
cases that workers Arbiters.
may file involving
wage, rates of pay, (c) Cases arising from the
hours of work, and interpretation or implementation of
other terms and collective bargaining agreements,
conditions of and those arising from the
employment; interpretation or enforcement of
4. Claims for company personnel policies shall be
actual, moral, disposed of by the Labor Arbiter by
exemplary and other referring the same to the grievance
forms of damages machinery and voluntary arbitration
arising from the as may be provided in said
employer-employee agreements.
relations;
5. Cases In the foregoing cases, an employer-
arising from
employee relationship is an indispensable
violation of Article
264 of this Code, jurisdictional requisite.[36] The jurisdiction of
including questions Labor Arbiters and the NLRC under Article
involving the 217 of the Labor Code is limited to disputes
legality of strikes arising from an employer-employee
and lockouts; and relationship which can only be resolved by
reference to the Labor Code, other labor
statutes or their collective bargaining
6. Except agreement.[37] Not every dispute between an
claims for employer and employee involves matters
Employees that only the Labor Arbiter and the NLRC
Compensation, can resolve in the exercise of their
Social Security,
adjudicatory or quasi-judicial
Medicare and
maternity benefits, powers. Actions between employers and
all other claims, employees where the employer-employee
arising from relationship is merely incidental is within
employer-employee the exclusive original jurisdiction of the
relationship, regular courts.[38] When the principal relief
including those of
is to be granted under labor legislation or a
persons in domestic
or household collective bargaining agreement, the case
service, involving an falls within the exclusive jurisdiction of the
Labor Arbiter and the NLRC even though a
claim for damages might be asserted as an
incident to such claim.[39]
We agree with the ruling of the CA
that, under the boundary-hulog scheme
incorporated in the Kasunduan, a dual
juridical relationship was created between
petitioner and respondent: that of employer-
employee and vendor-
vendee. The Kasunduan did not extinguish
the employer-employee relationship of the
parties extant before the execution of said
deed.
As early as 1956, the Court ruled
in National Labor Union v.
[40]
Dinglasan that the jeepney
owner/operator-driver relationship under the
boundary system is that of employer-
employee and not lessor-lessee. This
doctrine was affirmed, under similar factual
settings, in Magboo v.
[41]
Bernardo and Lantaco, Sr. v.
[42]
Llamas, and was analogously applied to
govern the relationships between auto-
calesa owner/operator and driver,[43] bus
owner/operator and conductor,[44] and taxi
owner/operator and driver.[45]
The boundary system is a scheme by
an owner/operator engaged in transporting
passengers as a common carrier to primarily
govern the compensation of the driver, that
is, the latters daily earnings are remitted to
the owner/operator less the excess of the
boundary which represents the drivers
compensation. Under this system, the
owner/operator exercises control and
supervision over the driver. It is unlike in
lease of chattels where the lessor loses
complete control over the chattel leased but
the lessee is still ultimately responsible for
the consequences of its use. The
management of the business is still in the
hands of the owner/operator, who, being the
holder of the certificate of public
convenience, must see to it that the driver
follows the route prescribed by the
franchising and regulatory authority, and the
rules promulgated with regard to the
business operations. The fact that the driver
does not receive fixed wages but only the
excess of the boundary given to the
owner/operator is not sufficient to change
the relationship between them. Indubitably,
the driver performs activities which are
usually necessary or desirable in the usual
business or trade of the owner/operator.[46]
Under the Kasunduan, respondent
was required to remit P550.00 daily to
petitioner, an amount which represented the
boundary of petitioner as well as
respondents partial payment (hulog) of the
purchase price of the jeepney.
Respondent was entitled to keep the excess
of his daily earnings as his daily wage. Thus,
the daily remittances also had a dual
purpose: that of petitioners boundary and
respondents partial payment (hulog) for the
vehicle. This dual purpose was expressly
stated in the Kasunduan. The well-settled
rule is that an obligation is not novated by
an instrument that expressly recognizes the
old one, changes only the terms of payment,
and adds other obligations not incompatible
with the old provisions or where the new
contract merely supplements the previous
one. [47] The two obligations of the
respondent to remit to petitioner the
boundary-hulog can stand together.
In resolving an issue based on
contract, this Court must first examine the
contract itself, keeping in mind that when
the terms of the agreement are clear and
leave no doubt as to the intention of the
contracting parties, the literal meaning of its
stipulations shall prevail.[48] The intention of
the contracting parties should be ascertained
by looking at the words used to project their
intention, that is, all the words, not just a
particular word or two or more words
standing alone. The various stipulations of a
contract shall be interpreted together,
attributing to the doubtful ones that sense
which may result from all of them taken
jointly.[49] The parts and clauses must be
interpreted in relation to one another to give
effect to the whole. The legal effect of a
contract is to be determined from the whole
read together.[50]
Under the Kasunduan, petitioner
retained supervision and control over the
conduct of the respondent as driver of the
jeepney, thus:
Ang mga patakaran,
kaugnay ng bilihang ito sa
pamamagitan ng boundary hulog ay
ang mga sumusunod:
1. Pangangalagaan at pag-
iingatan ng TAUHAN NG
IKALAWANG PANIG ang sasakyan
ipinagkatiwala sa kanya ng
TAUHAN NG UNANG PANIG.
2. Na ang sasakyan
nabanggit ay gagamitin lamang ng
TAUHAN NG IKALAWANG PANIG
sa paghahanapbuhay bilang
pampasada o pangangalakal sa
malinis at maayos na pamamaraan.
3. Na ang sasakyan
nabanggit ay hindi gagamitin ng
TAUHAN NG IKALAWANG PANIG
sa mga bagay na makapagdudulot
ng kahihiyan, kasiraan o pamamasada na ang nagmamaneho
pananagutan sa TAUHAN NG
UNANG PANIG.
4. Na hindi ito
mamanehohin ng hindi awtorisado
ng opisina ng UNANG PANIG.
5. Na ang TAUHAN NG
IKALAWANG PANIG ay
kinakailangang maglagay ng ID
Card sa harap ng windshield upang
sa pamamagitan nito ay madaliang
malaman kung ang nagmamaneho
ay awtorisado ng VILLAMARIA
MOTORS o hindi.
6. Na sasagutin ng
TAUHAN NG IKALAWANG PANIG
ang [halaga ng] multa kung
sakaling mahuli ang sasakyang ito
na hindi nakakabit ang ID card sa
wastong lugar o anuman kasalanan
o kapabayaan.
7. Na sasagutin din ng
TAUHAN NG IKALAWANG PANIG
ang materyales o piyesa na
papalitan ng nasira o nawala ito
dahil sa kanyang kapabayaan.
8. Kailangan sa
VILLAMARIA MOTORS pa rin ang
garahe habang hinuhulugan pa rin
ng TAUHAN NG IKALAWANG
PANIG ang nasabing sasakyan.
9. Na kung magkaroon ng
mabigat na kasiraan ang sasakyang
ipinagkaloob ng TAUHAN NG
UNANG PANIG, ang TAUHAN NG
IKALAWANG PANIG ay
obligadong itawag ito muna sa
VILLAMARIA MOTORS bago
ipagawa sa alin mang Motor Shop
na awtorisado ng VILLAMARIA
MOTORS.
10. Na hindi pahihintulutan
ng TAUHAN NG IKALAWANG
PANIG sa panahon ng
ay naka-tsinelas, naka short pants
at nakasando lamang. Dapat ang
nagmamaneho ay laging nasa
maayos ang kasuotan upang
igalang ng mga pasahero.
11. Na ang TAUHAN NG
IKALAWANG PANIG o ang
awtorisado niyang driver ay
magpapakita ng magandang asal sa
mga pasaheros at hindi dapat
magsasalita ng masama kung sakali
man may pasaherong pilosopo
upang maiwasan ang anumang
kaguluhan na maaaring
kasangkutan.
12. Na kung sakaling hindi
makapagbigay ng BOUNDARY
HULOG ang TAUHAN NG
IKALAWANG PANIG sa loob ng
tatlong (3) araw ay ang opisina ng
VILLAMARIA MOTORS ang may
karapatang mangasiwa ng nasabing
sasakyan hanggang matugunan ang
lahat ng
responsibilidad. Ang halagang
dapat bayaran sa opisina ay may
karagdagang multa ng P50.00 sa
araw-araw na ito ay nasa
pangangasiwa ng VILLAMARIA
MOTORS.
13. Na kung ang TAUHAN
NG IKALAWANG PANIG ay hindi
makapagbigay ng BOUNDARY
HULOG sa loob ng isang linggo ay
nangangahulugan na ang
kasunduang ito ay wala ng bisa at
kusang ibabalik ng TAUHAN NG
IKALAWANG PANIG ang nasabing
sasakyan sa TAUHAN NG UNANG
PANIG.
14. Sasagutin ng TAUHAN
NG IKALAWANG PANIG ang
bayad sa rehistro, comprehensive
insurance taon-taon at kahit anong
uri ng aksidente habang ito ay
hinuhulugan pa sa TAUHAN NG
UNANG PANIG.
15. Na ang TAUHAN NG
IKALAWANG PANIG ay
obligadong dumalo sa
pangkalahatang pagpupulong ng
VILLAMARIA MOTORS sa tuwing
tatawag ang mga tagapangasiwa
nito upang maipaabot ang anumang
mungkahi sa ikasusulong ng
samahan.
16. Na ang TAUHAN NG
IKALAWANG PANIG ay makikiisa
sa lahat ng mga patakaran na
magkakaroon ng pagbabago o
karagdagan sa mga darating na
panahon at hindi magiging hadlang
sa lahat ng mga balakin ng
VILLAMARIA MOTORS sa lalo
pang ipagtatagumpay at ikakatibay
ng Samahan.
17. Na ang TAUHAN NG
IKALAWANG PANIG ay hindi
magiging buwaya sa pasahero
upang hindi kainisan ng kapwa
driver at maiwasan ang
pagkakasangkot sa anumang gulo.
18. Ang nasabing sasakyan
ay hindi kalilimutang siyasatin ang
kalagayan lalo na sa umaga bago
pumasada, at sa hapon o gabi
naman ay sisikapin mapanatili ang
kalinisan nito.
19. Na kung sakaling ang
nasabing sasakyan ay maaarkila at
aabutin ng dalawa o higit pang
araw sa lalawigan ay dapat lamang
na ipagbigay alam muna ito sa
VILLAMARIA MOTORS upang
maiwasan ang mga anumang
suliranin.
20. Na ang TAUHAN NG
IKALAWANG PANIG ay iiwasan
ang pakikipag-unahan sa
kaninumang sasakyan upang
maiwasan ang aksidente.
21. Na kung ang TAUHAN
NG IKALAWANG PANIG ay
mayroon sasabihin sa
VILLAMARIA MOTORS mabuti
man or masama ay iparating agad
 ito sa kinauukulan at iwasan na
iparating ito kung [kani-kanino]
lamang upang maiwasan ang
anumang usapin. Magsadya agad
sa opisina ng VILLAMARIA
MOTORS.
22. Ang mga nasasaad sa
KASUNDUAN ito ay buong galang
at puso kong sinasang-ayunan at
buong sikap na pangangalagaan ng
TAUHAN NG IKALAWANG PANIG
ang nasabing sasakyan at
gagamitin lamang ito sa
paghahanapbuhay at wala nang iba
pa.[51]
The parties expressly agreed that
petitioner, as vendor, and respondent, as
vendee, entered into a contract to sell the
jeepney on a daily installment basis
of P550.00 payable in four years and that
petitioner would thereafter become its
owner. A contract is one of conditional sale,
oftentimes referred to as contract to sell, if
the ownership or title over the
property sold is retained by the vendor, and
is not passed to the vendee unless and until
there is full payment of the purchase price
and/or upon faithful compliance with the
other terms and conditions that may lawfully
be stipulated.[52] Such payment or
satisfaction of other preconditions, as the
case may be, is a positive suspensive
condition, the failure of which is not a
breach of contract, casual or serious, but
simply an event that would prevent the
obligation of the vendor to convey title from
acquiring binding force.[53] Stated
differently, the efficacy or obligatory force
of the vendor's obligation to transfer title is
subordinated to the happening of a future
and uncertain event so that if the suspensive
condition does not take place, the parties
would stand as if the conditional obligation
had never existed.[54] The vendor may
extrajudicially terminate the operation of the
contract, refuse conveyance, and retain the
sums or installments already received, where
such rights are expressly provided for.[55]
Under the boundary-hulog scheme,
petitioner retained ownership of the jeepney
although its material possession was vested
in respondent as its driver. In case
respondent failed to make his P550.00 daily
installment payment for a week, the
agreement would be of no force and effect
and respondent would have to return the
jeepney to petitioner; the employer-
employee relationship would likewise be
terminated unless petitioner would allow
respondent to continue driving the jeepney
on a boundary basis of P550.00 daily despite
the termination of their vendor-vendee
relationship.
The juridical relationship of
employer-employee between petitioner and
respondent was not negated by the foregoing
stipulation in the Kasunduan, considering
that petitioner retained control of
respondents conduct as driver of the
vehicle. As correctly ruled by the CA:
The exercise of control by
private respondent over petitioners
conduct in operating the jeepney he
was driving is inconsistent with
private respondents claim that he is,
or was, not engaged in the
transportation business; that, even if
petitioner was allowed to let some
other person drive the unit, it was not
shown that he did so; that the
existence of an employment relation
is not dependent on how the worker
is paid but on the presence or
absence of control over the means
and method of the work; that the
amount earned in excess of the
boundary hulog is equivalent to
wages; and that the fact that the
power of dismissal was not
 mentioned in the Kasunduan did not
mean that private respondent never
exercised such power, or could not
exercise such power.
Moreover, requiring
petitioner to drive the unit for
commercial use, or to wear an
identification card, or to don a decent
attire, or to park the vehicle in
Villamaria Motors garage, or to
inform Villamaria Motors about the
fact that the unit would be going out
to the province for two days of more,
or to drive the unit carefully, etc.
necessarily related to control over the
means by which the petitioner was to
go about his work; that the ruling
applicable here is not Singer Sewing
Machine but National Labor
Union since the latter case involved
jeepney owners/operators and
jeepney drivers, and that the fact that
the boundary here represented
installment payment of the purchase
price on the jeepney did not
withdraw the relationship from that
of employer-employee, in view of
the overt presence of supervision and
control by the employer.[56]
Neither is such juridical relationship
negated by petitioners claim that the terms
and conditions in the Kasunduan relative to
respondents behavior and deportment as
driver was for his and respondents benefit:
to insure that respondent would be able to
pay the requisite daily installment
of P550.00, and that the vehicle would still
be in good condition despite the lapse of
four years. What is primordial is that
petitioner retained control over the conduct
of the respondent as driver of the jeepney.
Indeed, petitioner, as the owner of the
vehicle and the holder of the franchise, is
entitled to exercise supervision and control
over the respondent, by seeing to it that the
route provided in his franchise, and the rules
and regulations of the Land Transportation
Regulatory Board are duly complied
with. Moreover, in a business establishment,
an identification card is usually provided not
just as a security measure but to mainly
identify the holder thereof as a bona
fide employee of the firm who issues it.[57]
As respondents employer, it was the
burden of petitioner to prove that
respondents termination from employment
was for a lawful or just cause, or, at the very
least, that respondent failed to make his
daily remittances of P550.00 as
boundary. However, petitioner failed to do
so. As correctly ruled by the appellate court:
It is basic of course that
termination of employment must be
effected in accordance with law. The
just and authorized causes for
termination of employment are
enumerated under Articles 282, 283
and 284 of the Labor Code.
Parenthetically, given the
peculiarity of the situation of the
parties here, the default in the
remittance of the boundary hulog for
one week or longer may be
considered an additional cause for
termination of employment. The
reason is because
the Kasunduan would be of no force
and effect in the event that the
purchaser failed to remit the
boundary hulog for one
week. The Kasunduan in this case
pertinently stipulates:
13. Na kung ang
TAUHAN NG IKALAWANG
PANIG ay hindi
makapagbigay ng
BOUNDARY HULOG sa
loob ng isang linggo ay
NANGANGAHULUGAN na
ang kasunduang ito ay wala
ng bisa at kusang ibabalik
 ng TAUHAN NG
IKALAWANG PANIG ang
nasabing sasakyan sa
TAUHAN NG UNANG
PANIG na wala ng
paghahabol pa.
Moreover, well-settled is the rule
that, the employer has the burden of
proving that the dismissal of an
employee is for a just cause. The
failure of the employer to discharge
this burden means that the dismissal
is not justified and that the employee
is entitled to reinstatement and back
wages.
In the case at bench, private
respondent in his position paper
before the Labor Arbiter, alleged that
petitioner failed to pay the
miscellaneous fee of P10,000.00 and
the yearly registration of the unit;
that petitioner also stopped remitting
the boundary hulog, prompting him
(private respondent) to issue
a Paalala, which petitioner however
ignored; that petitioner even brought
the unit to his (petitioners) province
without informing him (private
respondent) about it; and that
petitioner eventually abandoned the
vehicle at a gasoline station after
figuring in an accident. But private
respondent failed to substantiate
these allegations with solid,
sufficient proof. Notably, private
respondents allegation viz, that he
retrieved the vehicle from the gas
station, where petitioner abandoned
it, contradicted his statement in
the Paalala that he would enforce
the provision (in the Kasunduan) to
the effect that default in the
remittance of the boundary hulog for
one week would result in the
forfeiture of the
unit. The Paalala reads as follows:
Sa lahat ng mga kumukuha ng
sasakyan
Sa pamamagitan ng BOUNDARY
HULOG
Nais ko pong ipaalala sa inyo ang
Kasunduan na inyong pinirmahan
particular na ang paragrapo 13 na
nagsasaad na kung hindi kayo
makapagbigay ng Boundary Hulog
sa loob ng isang linggo ay kusa
ninyong ibabalik and nasabing
sasakyan na inyong hinuhulugan ng
wala ng paghahabol pa.
Mula po sa araw ng inyong
pagkatanggap ng Paalala na ito ay
akin na pong ipatutupad ang
nasabing Kasunduan kayat aking
pinaaalala sa inyong lahat na
tuparin natin ang nakalagay sa
kasunduan upang maiwasan natin
ito.
Hinihiling ko na sumunod kayo sa
hinihingi ng paalalang ito upang
hindi na tayo makaabot pa sa korte
kung sakaling hindi ninyo isasauli
ang inyong sasakyan na hinuhulugan
na ang mga magagastos ay kayo pa
ang magbabayad sapagkat ang hindi
ninyo pagtupad sa kasunduan ang
naging dahilan ng pagsampa ng
kaso.
Sumasainyo
Attendance: 8/27/99
(The Signatures appearing herein
include (sic) that of
petitioners) (Sgd.)
OSCAR VILLAMARIA, JR.
If it were true that petitioner did not
remit the boundary hulog for one
week or more, why did private
respondent not forthwith take steps
to recover the unit, and why did he
have to wait for petitioner to
abandon it?
 On another point, private respondent
did not submit any police report to
support his claim that petitioner
really figured in a vehicular mishap.
Neither did he present the affidavit
of the guard from the gas station to
substantiate his claim that petitioner
abandoned the unit there.[58]

Petitioners claim that he opted not to

terminate the employment of respondent
because of magnanimity is negated by his
(petitioners) own evidence that he took the
jeepney from the respondent only on July
24, 2000.

IN LIGHT OF ALL THE

FOREGOING, the petition
is DENIED. The decision of the Court of
Appeals in CA-G.R. SP No. 78720
is AFFIRMED. Costs against petitioner.

SO ORDERED.