LABOR CASES ROBINSONS GALLERIA/ROBINSONS SUPERMARKET CORPORATION and/or JESS MANUE vs. IRENE R. RANCHEZ G.R. No.

177937 January 19, 2011 Facts: Respondent was a probationary employee of petitioner Robinsons Galleria/Robinsons Supermarket Corporation (petitioner Supermarket) for a period of five (5) months, or from October 15, 1997 until March 14, 1998. She underwent six (6) weeks of training as a cashier before she was hired as such on October 15, 1997. Two weeks after she was hired, or on October 30, 1997, respondent reported to her supervisor the loss of cash amounting to P20,299.00 which she had placed inside the company locker. Petitioner Jess Manuel (petitioner Manuel), the Operations Manager of petitioner Supermarket, ordered that respondent be strip-searched by the company guards. However, the search on her and her personal belongings yielded nothing. Respondent acknowledged her responsibility and requested that she be allowed to settle and pay the lost amount. However, petitioner Manuel did not heed her request and instead reported the matter to the police. Petitioner Manuel likewise requested the Quezon City Prosecutors Office for an inquest. Respondent filed a complaint for illegal dismissal and damages. On March 12, 1998, petitioners sent to respondent by mail a notice of termination and/or notice of expiration of probationary employment dated March 9, 1998 The Labor Arbiter ratiocinated that at the time respondent filed the complaint for illegal dismissal, she was not yet dismissed by petitioners. When she was stripsearched by the security personnel of petitioner Supermarket, the guards were merely conducting an investigation. The subsequent referral of the loss to the police authorities might be considered routine. Respondents non-reporting for work after her release from detention could be taken against her in the investigation that petitioner supermarket would conduct. The NLRC ruled that respondent was denied due process by petitioners. Stripsearching respondent and sending her to jail for two weeks certainly amounted to constructive dismissal because continued employment had been rendered impossible, unreasonable, and unlikely. The wedge that had been driven between the parties was impossible to ignore. Although respondent was only a probationary employee, the subsequent lapse of her probationary contract of employment did not have the effect of validly terminating her employment because constructive dismissal had already been effected earlier by petitioners. Issue: Whether or not respondent was illegally terminated from employment by petitioners Ruling: The Court rule in the affirmative.There is probationary employment when the employee upon his engagement is made to undergo a trial period during which the employer determines his fitness to qualify for regular employment based on reasonable standards made known to him at the time of engagement. A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of probationary employment, aside from just or authorized causes of termination, an additional ground is provided under Article 281 of the Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of the engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated for any of the following: (1) a just or (2) an authorized cause; and (3) when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer. Article 277(b) of the Labor Code mandates that subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal, except for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the same Code, the employer shall furnish the worker, whose employment is sought to be terminated, a written notice containing a statement of the causes of termination, and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of a representative if he so desires, in accordance with company rules and regulations pursuant to the guidelines set by the Department of Labor and Employment. In the instant case, based on the facts on record, petitioners failed to accord respondent substantive and procedural due process. The haphazard manner in the investigation of the missing cash, which was left to the determination of the police authorities and the Prosecutors Office, left respondent with no choice but to cry foul. Administrative investigation was not conducted by petitioner Supermarket. On the same day that the missing money was reported by respondent to her immediate superior, the company already pre-judged her guilt without proper investigation, and instantly reported her to the police as the suspected thief, which resulted in her languishing in jail for two weeks. An illegally or constructively dismissed employee, respondent is entitled to: (1) either reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are awarded conjunctively. In this case, since respondent was a probationary employee at the time she was constructively dismissed by petitioners, she is entitled to separation pay and backwages. Reinstatement of respondent is no longer viable considering the circumstances. LEYTE GEOTHERMAL POWER PROGRESSIVE EMPLOYEES UNION - ALU - TUCP, PETITIONER, VS. PHILIPPINE NATIONAL OIL COMPANY - ENERGY DEVELOPMENT CORPORATION, RESPONDENT. DECISION NACHURA, J.: Under review is the Decision[1] dated June 30, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 65760, which dismissed the petition for certiorari filed by petitioner Leyte Geothermal Power Progressive Employees Union - ALU?TUCP (petitioner Union) to annul and set aside the decision[2] dated December 10, 1999 of the

National Labor Relations Commission (NLRC) in NLRC Certified Case No. V-02-99. The facts, fairly summarized by the CA, follow. [Respondent Philippine National Oil Corporation]-Energy Development Corporation [PNOC-EDC] is a government-owned and controlled corporation engaged in exploration, development, utilization, generation and distribution of energy resources like geothermal energy. Petitioner is a legitimate labor organization, duly registered with the Department of Labor and Employment (DOLE) Regional Office No. VIII, Tacloban City. Among [respondent's] geothermal projects is the Leyte Geothermal Power Project located at the Greater Tongonan Geothermal Reservation in Leyte. The said Project is composed of the Tongonan 1 Geothermal Project (T1GP) and the Leyte Geothermal Production Field Project (LGPF) which provide the power and electricity needed not only in the provinces and cities of Central and Eastern Visayas (Region VII and VIII), but also in the island of Luzon as well. Thus, the [respondent] hired and employed hundreds of employees on a contractual basis, whereby, their employment was only good up to the completion or termination of the project and would automatically expire upon the completion of such project. Majority of the employees hired by [respondent] in its Leyte Geothermal Power Projects had become members of petitioner. In view of that circumstance, the petitioner demands from the [respondent] for recognition of it as the collective bargaining agent of said employees and for a CBA negotiation with it. However, the [respondent] did not heed such demands of the petitioner. Sometime in 1998 when the project was about to be completed, the [respondent] proceeded to serve Notices of Termination of Employment upon the employees who are members of the petitioner. On December 28, 1998, the petitioner filed a Notice of Strike with DOLE against the [respondent] on the ground of purported commission by the latter of unfair labor practice for "refusal to bargain collectively, union busting and mass termination." On the same day, the petitioner declared a strike and staged such strike. To avert any work stoppage, then Secretary of Labor Bienvenido E. Laguesma intervened and issued the Order, dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration. Accordingly, all the striking workers were directed to return to work within twelve (12) hours from receipt of the Order and for the [respondent] to accept them back under the same terms and conditions of employment prior to the strike. Further, the parties were directed to cease and desist from committing any act that would exacerbate the situation. However, despite earnest efforts on the part of the Secretary of Labor and Employment to settle the dispute amicably, the petitioner remained adamant and unreasonable in its position, causing the failure of the negotiation towards a peaceful compromise. In effect, the petitioner did not abide by [the] assumption order issued by the Secretary of Labor. Consequently, on January 15, 1999, the [respondent] filed a Complaint for Strike Illegality, Declaration of Loss of Employment and Damages at the NLRC-RAB VIII in Tacloban City and at the same time, filed a Petition for Cancellation of Petitioner's Certificate of Registration with DOLE, Regional Office No. VIII. The two cases were later on consolidated pursuant to the New NLRC Rules of Procedure. The consolidated case was docketed as NLRC Certified Case No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99). The said certified case was indorsed to the NLRC 4th Division in Cebu City on June 21, 1999 for the proper disposition thereof.[3] In due course, the NLRC 4th Division rendered a decision in favor of respondent, to wit: WHEREFORE, based on the foregoing premises, judgment is hereby rendered as follows: Declaring the officers and members of [petitioner] Union as project employees; Declaring the termination of their employment by reason of the completion of the project, or a phase or portion thereof, to which they were assigned, as valid and legal; Declaring the strike staged and conducted by [petitioner] Union through its officers and members on December 28, 1998 to January 6, 1999 as illegal for failure to comply with the mandatory requirements of the law on strike[;] Declaring all the officers and members of the board of [petitioner] Union who instigated and spearheaded the illegal strike to have lost their employment[;] Dismissing the claim of [petitioner] Union against PNOC-EDC for unfair labor practice for lack of merit[;] Dismissing both parties' claims against each other for violation of the Assumption Order dated January 4, 1999 for lack of factual basis[;] Dismissing all other claims for lack of merit.[4] Petitioner Union filed a motion for reconsideration of the NLRC decision, which was subsequently denied. Posthaste, petitioner Union filed a petition for certiorari before the CA, alleging grave abuse of discretion in the decision of the NLRC. As previously adverted to, the CA dismissed the petition for certiorari, thus: WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the Petition. The assailed Decision dated December 10, 1999 of the NLRC 4th Division in NLRC Certified Case No. V-02-99 (NCMB-RAB VIII-NS-12-0190-98; RAB Case No. VIII-1-0019-99) and its Order dated March 30, 2001 are hereby AFFIRMED. Costs against the Petitioner.[5] Hence, this appeal by certiorari filed by petitioner Union, positing the following questions of law:

1. MAY THE HONORABLE COURT OF APPEALS SUSTAIN THE "PROJECT CONTRACTS" THAT ARE DESIGNED TO DENY AND DEPRIVE THE EMPLOYEES' THEIR RIGHT TO SECURITY OF TENURE BY MAKING IT APPEAR THAT THEY ARE MERE PROJECT EMPLOYEES? 2. WHEN THERE ARE NO INTERVALS IN THE EMPLOYEES' CONTRACT, SUCH THAT THE SO-CALLED UNDERTAKING WAS CONTINUOUS, ARE THE EMPLOYEES PROPERLY TREATED AS PROJECT EMPLOYEES? 3. MAY THE HONORABLE COURT OF APPEALS IGNORE THE FIRM'S OWN ESTIMATE OF JOB COMPLETION, PROVING THAT THERE IS STILL 56.25% CIVIL/STRUCTURAL WORK TO BE ACCOMPLISHED, AND RULE THAT THE EMPLOYEES WERE DISMISSED FOR COMPLETION [OF] THE "PROJECT?" 4. MAY A FIRM HIDE UNDER THE SPURIOUS CLOAK OF "PROJECT COMPLETION" TO DISMISS EN MASSE THE EMPLOYEES WHO HAVE ORGANIZED AMONG THEMSELVES A LEGITIMATE LABOR ORGANIZATION TO PROTECT THEIR RIGHTS? 5. WHEN THERE IS NO STOPPAGE OF WORK, MAY A PROTEST ACTIVITY BE CONSIDERED AS A STRIKE CONTRARY TO ITS CONCEPTUAL DEFINITION UNDER ARTICLE 212 (O) OF THE LABOR CODE OF THE PHILIPPINES? 6. WHEN THE DISMISSAL IS AIMED AT RIDDING THE COMPANY OF MEMBERS OF THE UNION, IS THIS UNION BUSTING?[6] Stripped of rhetoric, the issues for our resolution are: Whether the officers and members of petitioner Union are project employees of respondent; and Whether the officers and members of petitioner Union engaged in an illegal strike. On the first issue, petitioner Union contends that its officers and members performed activities that were usually necessary and desirable to respondent's usual business. In fact, petitioner Union reiterates that its officers and members were assigned to the Construction Department of respondent as carpenters and masons, and to other jobs pursuant to civil works, which are usually necessary and desirable to the department. Petitioner Union likewise points out that there was no interval in the employment contract of its officers and members, who were all employees of respondent, which lack of interval, for petitioner Union, "manifests that the `undertaking' is usually necessary and desirable to the usual trade or business of the employer." We cannot subscribe to the view taken by petitioner Union. The distinction between a regular and a project employment is provided in Article 280, paragraph 1, of the Labor Code: 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.[7] The foregoing contemplates four (4) kinds of employees: (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;[8] and (d) casual employees or those who are not regular, project, or seasonal employees. Jurisprudence has added a fifth kind-- a fixed-term employee.[9] Article 280 of the Labor Code, as worded, establishes that the nature of the employment is determined by law, regardless of any contract expressing otherwise. The supremacy of the law over the nomenclature of the contract and the stipulations contained therein is to bring to life the policy enshrined in the Constitution to "afford full protection to labor."[10] Thus, labor contracts are placed on a higher plane than ordinary contracts; these are imbued with public interest and therefore subject to the police power of the State.[11] However, notwithstanding the foregoing iterations, project employment contracts which fix the employment for a specific project or undertaking remain valid under the law: x x x By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the project. He may not expect to be employed continuously beyond the completion of the project. It is of judicial notice that project employees engaged for manual services or those for special skills like those of carpenters or masons, are, as a rule, unschooled. However, this fact alone is not a valid reason for bestowing special treatment on them or for invalidating a contract of employment. Project employment contracts are not lopsided agreements in favor of only one party thereto. The employer's interest is equally important as that of the employee[s'] for theirs is the interest that propels economic activity. While it may be true that it is the employer who drafts project employment contracts with its business interest as overriding consideration, such contracts do not, of necessity, prejudice the employee. Neither is the employee left

helpless by a prejudicial employment contract. After all, under the law, the interest of the worker is paramount.[12] In the case at bar, the records reveal that the officers and the members of petitioner Union signed employment contracts indicating the specific project or phase of work for which they were hired, with a fixed period of employment. The NLRC correctly disposed of this issue: A deeper examination also shows that [the individual members of petitioner Union] indeed signed and accepted the [employment contracts] freely and voluntarily. No evidence was presented by [petitioner] Union to prove improper pressure or undue influence when they entered, perfected and consummated [the employment] contracts. In fact, it was clearly established in the course of the trial of this case, as explained by no less than the President of [petitioner] Union, that the contracts of employment were read, comprehended, and voluntarily accepted by them. x x x. xxxx As clearly shown by [petitioner] Union's own admission, both parties had executed the contracts freely and voluntarily without force, duress or acts tending to vitiate the worker[s'] consent. Thus, we see no reason not to honor and give effect to the terms and conditions stipulated therein. x x x.[13] Thus, we are hard pressed to find cause to disturb the findings of the NLRC which are supported by substantial evidence. It is well-settled in jurisprudence that factual findings of administrative or quasi-judicial bodies, which are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by substantial evidence.[14] Rule 133, Section 5 defines substantial evidence as "that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion." Consistent therewith is the doctrine that this Court is not a trier of facts, and this is strictly adhered to in labor cases.[15] We may take cognizance of and resolve factual issues, only when the findings of fact and conclusions of law of the Labor Arbiter or the NLRC are inconsistent with those of the CA.[16] In the case at bar, both the NLRC and the CA were one in the conclusion that the officers and the members of petitioner Union were project employees. Nonetheless, petitioner Union insists that they were regular employees since they performed work which was usually necessary or desirable to the usual business or trade of the Construction Department of respondent. The landmark case of ALU-TUCP v. NLRC[17] instructs on the two (2) categories of project employees: It is evidently important to become clear about the meaning and scope of the term "project" in the present context. The "project" for the carrying out of which "project employees" are hired would ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project" undertaking might not have an ordinary or normal relationship to the usual business of the employer. In this latter case, the determination of the scope and parameters of the "project" becomes fairly easy. x x x. From the viewpoint, however, of the legal characterization problem here presented to the Court, there should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture or the production of vegetables as "project employees," as distinguished from ordinary or "regular employees," so long as the duration and scope of the project were determined or specified at the time of engagement of the "project employees." For, as is evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees were engaged for that project. In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a particular construction job or project of a construction company. A construction company ordinarily carries out two or more [distinct] identifiable construction projects: e.g., a twenty-five-storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and their services may be lawfully terminated at completion of the project. The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times.[18] Plainly, the litmus test to determine whether an individual is a project employee lies in setting a fixed period of employment involving a specific undertaking which completion or termination has been determined at the time of the particular employee's engagement. In this case, as previously adverted to, the officers and the members of petitioner Union were specifically hired as project employees for respondent's Leyte Geothermal Power Project located at the Greater Tongonan Geothermal Reservation in Leyte. Consequently, upon the completion of the project or substantial phase

thereof, the officers and the members of petitioner Union could be validly terminated. Petitioner Union is adamant, however, that the lack of interval in the employment contracts of its officer and members negates the latter's status as mere project employees. For petitioner Union, the lack of interval further drives home its point that its officers and members are regular employees who performed work which was usually necessary or desirable to the usual business or trade of respondent. We are not persuaded. Petitioner Union's members' employment for more than a year does equate to their regular employment with respondent. In this regard, Mercado, Sr. v. NLRC[19] illuminates: The first paragraph [of Article 280 of the Labor Code] answers the question of who are regular employees. It states that, regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual business or trade of the employer, except for project employees. A project employee has been defined to be one 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, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season, as in the present case. The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fall under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and that the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without merit. The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain or limit the generality of the clause that it immediately follows. Thus, it has been held that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to the statute itself or to other sections thereof. The only exception to this rule is where the clear legislative intent is to restrain or qualify not only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself as a whole. Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual employees was designed to put an end to casual employment in regular jobs, which has been abused by many employers to prevent so - called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us believe, to prevent small-scale businesses from engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to the employees who are deemed "casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280. Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the [end of the] season. The termination of their employment cannot and should not constitute an illegal dismissal. Considering our holding that the officers and the members of petitioner Union were project employees, its claim of union busting is likewise dismissed. On the second issue, petitioner Union contends that there was no stoppage of work; hence, they did not strike. Euphemistically, petitioner Union avers that it "only engaged in picketing,"[20] and maintains that "without any work stoppage, [its officers and members] only engaged in xxx protest activity." We are not convinced. Petitioner Union splits hairs. To begin with, quite evident from the records is the undisputed fact that petitioner Union filed a Notice of Strike on December 28, 1998 with the Department of Labor and Employment, grounded on respondent's purported unfair labor practices, i.e., "refusal to bargain collectively, union busting and mass termination." On even date, petitioner Union declared and staged a strike. Second, then Secretary of Labor, Bienvenido E. Laguesma, intervened and issued a Return-to-Work Order[21] dated January 4, 1999, certifying the labor dispute to the NLRC for compulsory arbitration. The Order narrates the facts leading to the labor dispute, to wit: On 28 December 1998, [petitioner Union] filed a Notice of Strike against [respondent] citing unfair labor practices, specifically: refusal to bargain collectively, union busting and mass termination as the grounds [therefor]. On the same day, [petitioner] Union went on strike and took control over [respondent's] facilities of its Leyte Geothermal Project. Attempts by the National Conciliation and Mediation Board -RBVIII to forge a mutually acceptable solution proved futile. In the meantime, the strike continues with no settlement in sight placing in jeopardy the supply of much needed power supply in the Luzon and Visayas grids. xxxx

The on-going strike threatens the availability of continuous electricity to these areas which is critical to day-today life, industry, commerce and trade. Without doubt, [respondent's] operations [are] indispensable to the national interest and falls (sic) within the purview of Article 263 (g) of the Labor Code, as amended, which warrants (sic) the intervention of this Office. Third, petitioner Union itself, in its pleadings, used the word "strike." Ultimately, petitioner Union's asseverations are belied by the factual findings of the NLRC, as affirmed by the CA: The failure to comply with the mandatory requisites for the conduct of strike is both admitted and clearly shown on record. Hence, it is undisputed that no strike vote was conducted; likewise, the cooling-off period was not observed and that the 7-day strike ban after the submission of the strike vote was not complied with since there was no strike vote taken. xxxx The factual issue of whether a notice of strike was timely filed by [petitioner] Union was resolved by the evidence on record. The evidence revealed that [petitioner] Union struck even before it could file the required notice of strike. Once again, this relied on [petitioner] Union's proof. [Petitioner] Union['s] witness said: Atty. Sinsuat: You stated that you struck on 28 December 1998 is that correct? Witness : Early in the morning of December 1998. xxxx Atty. Sinsuat: And you went there to conduct the strike did you not? Witness : Our plan then was to strike at noon of December 28 and the strikers will be positioned at their respective areas.[22] Article 263 of the Labor Code enumerates the requisites for holding a strike: Art. 263. Strikes, picketing, and lockouts. - (a) x x x. x x x x. (c) In cases of bargaining deadlocks, the duly certified or recognized bargaining agent may file a notice of strike or the employer may file a notice of lockout with the Department at least 30 days before the intended date thereof. In cases of unfair labor practice, the period of notice shall be 15 days and in the absence of a duly certified bargaining agent, the notice of strike may be filed by any legitimate labor organization in behalf of its members. However, in case of dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws, which may constitute union busting, where the existence of the union is threatened, the 15-day cooling-off period shall not apply and the union may take action immediately. (d) The notice must be in accordance with such implementing rules and regulations as the Department of Labor and Employment may promulgate. (e)During the cooling-off period, it shall be the duty of the Department to exert all efforts at mediation and conciliation to effect a voluntary settlement. Should the dispute remain unsettled until the lapse of the requisite number of days from the mandatory filing of the notice, the labor union may strike or the employer may declare a lockout. (f) A decision to declare a strike must be approved by a majority of the total union membership in the bargaining unit concerned, obtained by secret ballot in meetings or referenda called for that purpose. A decision to declare a lockout must be approved by a majority of the board of directors of the corporation or association or of the partners in a partnership, obtained by secret ballot in a meeting called for that purpose. The decision shall be valid for the duration of the dispute based on substantially the same grounds considered when the strike or lockout vote was taken. The Department may, at its own initiative or upon the request of any affected party, supervise the conduct of the secret balloting. In every case, the union or the employer shall furnish the Department the results of the voting at least seven days before the intended strike or lockout, subject to the cooling-off period herein provided. In fine, petitioner Union's bare contention that it did not hold a strike cannot trump the factual findings of the NLRC that petitioner Union indeed struck against respondent. In fact, and more importantly, petitioner Union failed to comply with the requirements set by law prior to holding a strike. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 65760 is AFFIRMED. Costs against petitioner Union. SO ORDERED. MILLENNIUM ERECTORS CORPORATION, Petitioner, - versus - VIRGILIO MAGALLANES, Respondent. G.R. No. 184362 DECISION CARPIO MORALES, J.: Respondent Virgilio Magallanes started working in 1988 as a utility man for Laurencito Tiu (Tiu), Chief Executive Officer of Millennium Erectors Corporation (petitioner), Tius family, and Kenneth Construction Corporation. He was assigned to different construction projects undertaken by petitioner in Metro Manila, the last of which was for a building in Libis, Quezon City. In July of 2004 he was told not to report for work anymore allegedly due to old age, prompting him to file on August 6, 2004 an illegal dismissal complaint[1] before the Labor Arbiter. In its Position Paper,[2] petitioner claimed that respondent was a project employee whom it hired for a building project in Libis on January 30, 2003, to prove which it submitted the employment contract[3] signed by him; that on August 3, 2004, respondents services were terminated as the project was nearing completion; and he was given financial assistance[4] in the amount of P2,000, for which he signed a quitclaim and waiver.[5]

Petitioner likewise submitted a termination report to the Department of Labor and Employment (DOLE) dated August 17, 2004. Rebutting respondents claim that he was employed since 1988, petitioner contended that it was incorporated only in February 2000, and Kenneth Construction Corporation which was established in 1989 and dissolved in 2000, was a separate and distinct entity. By Decision[6] of November 25, 2005, the Labor Arbiter ruled in favor of petitioner and dismissed the complaint, holding that respondent knew of the nature of his employment as a project employee, he having executed an employment contract specifying therein the name of and duration of the project from January 2003 until its completion; and that the services of respondent were terminated due to the completion of the project as shown by the termination report submitted to the DOLE. The Labor Arbiter noted that respondent admitted having been assigned to several building projects and that he failed to give pertinent details of his dismissal such as who terminated him, when he was terminated, and what were the overt acts leading to his dismissal. On appeal, the National Labor Relations Commission (NLRC) set aside the Labor Arbiters Decision[7] of February 6, 2007 holding that respondent was a regular, not a project employee, as the employment contract he supposedly signed contained the date of commencement but not a specific date when it would end, contrary to the rule that the duration and scope of similar contracts should be clearly set forth therein; and that based on the payrolls[8] petitioner submitted and contrary to its claim that respondent was hired in January 2003, he had been employed in 2001, not 2003, lending weight to his claim that he had worked for petitioner for 16 years prior to the filing of his complaint. The NLRC thus concluded that while respondents work as a utility man may not have been necessary or desirable in the usual business of petitioner as a construction company, that he performed the same functions continuously for 16 years converted an otherwise casual employment to regular employment, hence, his termination without just or authorized cause amounted to illegal dismissal. Petitioner moved for reconsideration of the NLRC decision, contending that respondents motion for reconsideration which it treated as an appeal was not perfected, it having been belatedly filed; that there was no statement of the date of receipt of the appealed decision; and that it lacked verification and copies thereof were not furnished the adverse parties. Petitioners motion was denied. The Court of Appeals, to which petitioner appealed, affirmed the NLRCs ruling by Decision[9] of April 11, 2008. Petitioners motion for reconsideration having been denied by Resolution[10] of August 28, 2008, it filed the present petition for review. Petitioner contends that the Labor Arbiters Decision dismissing the complaint had become final and executory following respondents failure to perfect his appeal, maintaining that the requirements for perfection of an appeal and for proof of service are not mere rules of technicality which may easily be set aside. The petition fails. The NLRC did not err in treating respondents motion for reconsideration as an appeal, the presence of some procedural flaws including the lack of verification and proof of service notwithstanding. In labor cases, rules of procedure should not be applied in a very rigid and technical sense. They are merely tools designed to facilitate the attainment of justice, and where their strict application would result in the frustration rather than promotion of substantial justice, technicalities must be avoided. Technicalities should not be permitted to stand in the way of equitably and completely resolving the rights and obligations of the parties. Where the ends of substantial justice shall be better served, the application of technical rules of procedure may be relaxed.[11] (emphasis supplied) Respecting the lack of verification, Pacquing v. Coca-Cola Philippines, Inc.[12] instructs: As to the defective verification in the appeal memorandum before the NLRC, the same liberality applies. After all, the requirement regarding verification of a pleading is formal, not jurisdictional. Such requirement is simply a condition affecting the form of pleading, the non-compliance of which does not necessarily render the pleading fatally defective. Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith. The court or tribunal may order the correction of the pleading if verification is lacking or act on the pleading although it is not verified, if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that the ends of justice may thereby be served. (emphasis supplied) As for the requirement on proof of service, it may also be dispensed with since in appeals in labor cases, non-service of copy of the appeal or appeal memorandum to the adverse party is not a jurisdictional defect which calls for the dismissal of the appeal.[13] On the merits of the case, the Court finds that, indeed, respondent was a regular, not a project employee. Saberola v. Suarez[14] reiterates the well-settled definition of project employee, viz: A project employee is one 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 or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season." (emphasis and underscoring supplied) And Equipment Technical Services v. Court of Appeals[15] emphasizes the difference between a regular employee and a project employee: As the Court has consistently held, the service of project employees are coterminus [sic] with the project and

may be terminated upon the end or completion of that project or project phase for which they were hired. Regular employees, in contrast, enjoy security of tenure and are entitled to hold on to their work or position until their services are terminated by any of the modes recognized under the Labor Code. (emphasis and underscoring supplied) Petitioners various payrolls dating as early as 2001 show that respondent had been employed by it. As aptly observed by the appellate court, these documents, rather than sustaining petitioners argument, only serve to support respondents contention that he had been employed in various projects, if not for 16 years, at the very least two years prior to his dismissal. Assuming arguendo that petitioner hired respondent initially on a per project basis, his continued rehiring, as shown by the sample payrolls converted his status to that of a regular employee. Following Cocomangas Beach Hotel Resort v. Visca,[16] the repeated and continuing need for respondents services is sufficient evidence of the necessity, if not indispensability, of his services to petitioner's business and, as a regular employee, he could only be dismissed from employment for a just or authorized cause. Petitioner having failed to discharge its burden of proving that it terminated the services of respondent for cause and with due process, the challenged decision must remain. WHEREFORE, the petition is DENIED. SO ORDERED.

THE COCA-COLA EXPORT CORPORATION VS. CLARITA P. GACAYAN (G.R. NO. 149433, 15 DECEMBER 2010, J. LEONARDO-DE CASTRO) SUBJECTS: LOSS OF CONFIDENCE; MISCONDUCT; COMPUTATION OF BACKWAGES. BRIEF TITLE: COCA-COLA VS. GACAYAN. CLARITA, A SENIOR FINANCIAL ASSISTANT, WAS DISMISSED AFTER COCA-COLA DISCOVERED THAT SHE SUBMITTED FOR REIMBURSEMENT TAMPERED RECEIPTS FOR FOOD ITEMS. THEIR GROUND WAS LOSS OF CONFIDENCE. LATER IN THE PROCEEDINGS THEY INCLUDED THE GROUND OF MISCONDUCT. SUPREME COURT RULED THAT THERE WAS NO LOSS OF CONFIDENCE BECAUSE COCA-COLAS MEMO TO CLARITA DISMISSING HER DID NOT MENTION LOSS OF CONFIDENCE. THERE WAS NO MISCONDUCT BECAUSE THERE WAS NO WRONGFUL INTENT DOCTRINES LOSS OF CONFIDENCE AS GROUND MUST BE MADE KNOWN TO EMPLOYEE GUIDELINES FOR APPLICATION OF DOCTRINE OF LOSS OF CONFIDENCE AS GROUND FOR DISMISSAL In Nokom v. National Labor Relations Commission,[2][44] this Court set the guidelines for the application of the doctrine of loss of confidence (a) Loss of confidence should not be simulated;

(b) It should not be used as a subterfuge for causes which are improper, illegal or unjustified; (c) It may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and

(d) It must be genuine, not a mere afterthought to justify earlier action taken in bad faith. MISCONDUCT MUST NOT ONLY VIOLATE COMPANY RULES. IT MUST BE COMMITTED WITH WRONGFUL INTENT. PENALTY OF DISMISSAL TOO HARSH. COMPANY POLICY WHICH PRESCRIBES IT MUST BE SUBORDINATE TO WHAT LAW AND JURISPRUDENCE PRESCRIBES. COMPUTATION OF BACKWAGES IN CASE OF RE-INSTATEMENT: FROM THE TIME COMPENSATION WAS NOT PAID UP TO TIME OF REINSTATEMENT In line with Article 279 of the Labor Code and prevailing jurisprudence,[6][58] the award of backwages should be modified in the sense that backwages should be computed from the time the compensation was not paid up to the time of reinstatement.

HOSPITAL MANAGEMENT SERVICES, INC. - MEDICAL CENTER MANILA, PETITIONER, VS. HOSPITAL

MANAGEMENT SERVICES, INC. - MEDICAL CENTER MANILA EMPLOYEES ASSOCIATION-AFW AND EDNA R. DE CASTRO, RESPONDENTS. DECISION PERALTA, J.: Before this Court is a petition for review on certiorari seeking to set aside the Decision[1] dated May 24, 2006 and Resolution[2] dated January 10, 2007 of the Court of Appeals (CA), Special First Division, in CA-G.R. SP No. 73189, entitled Hospital Management Services, Inc.-Medical Center Manila Employees Association-AFW and Edna R. De Castro v. National Labor Relations Commission, Hospital Management Services, Inc.-Medical Center Manila and Asuncion Abaya-Morido, which reversed and set aside the Decision[3] dated February 28, 2002 of the National Labor Relations Commission (NLRC), Second Division, in NLRC NCR No. 00-07-07716-99 (CA No. 027766-01), and its Resolution[4] dated May 31, 2002. The assailed CA decision ordered petitioner Hospital Management Services, Inc.-Medical Center Manila to reinstate respondent Edna R. De Castro to her former position without loss of seniority rights or by payroll reinstatement, pursuant to the Labor Arbiter's Decision dated January 18, 2001, but with payment of full backwages and other benefits or their monetary equivalent, computed from the expiration of the 14-day suspension period up to actual reinstatement. The antecedent facts are as follows: Respondent De Castro started working as a staff nurse at petitioner hospital since September 28, 1990, until she was dismissed on July 20, 1999. Between 2:00 a.m. to 3:00 a.m. of March 24, 1999, while respondent De Castro and ward-clerk orientee Gina Guillergan were at the nurse station on night duty (from 10:00 p.m. of March 23, 1999 to 6:00 a.m. of March 24, 1999), one Rufina Causaren, an 81-year-old patient confined at Room 724-1 of petitioner hospital for "gangrenous wound on her right anterior leg and right forefoot" and scheduled for operation on March 26, 1999, fell from the right side of the bed as she was trying to reach for the bedpan. Because of what happened, the niece of patient Causaren staying in the room was awakened and she sought assistance from the nurse station. Instead of personally seeing the patient, respondent De Castro directed ward-clerk orientee Guillergan to check the patient. The vital signs of the patient were normal. Later, the physician on duty and the nursing staff on duty for the next shift again attended to patient Causaren. Chief Nurse Josefina M. Villanueva informed Dr. Asuncion Abaya-Morido, president and hospital director, about the incident and requested for a formal investigation. On May 11, 1999, the legal counsel of petitioner hospital directed respondent De Castro and three other nurses on duty, Staff Nurse Janith V. Paderes and Nursing Assistants Marilou Respicio and Bertilla T. Tatad, to appear before the Investigation Committee on May 13, 1999, 2:00 p.m., at the conference room of petitioner hospital. During the committee investigation, respondent De Castro explained that at around 2:30 a.m. to 3:00 a.m., she was attending to a newly-admitted patient at Room 710 and, because of this, she instructed Nursing Assistant Tatad to check the vital signs of patient Causaren, with ward-clerk orientee Guillergan accompanying the latter. When the two arrived at the room, the patient was in a squatting position, with the right arm on the bed and the left hand holding on to a chair. In the Investigation Report[5] dated May 20, 1999, the Investigation Committee found that the subject incident happened between 11:00 a.m. to 11:30 a.m. of March 23, 1999. The three other nurses for the shift were not at the nurse station. Staff Nurse Paderes was then in another nurse station encoding the medicines for the current admissions of patients, while Nursing Assistant Respicio was making the door name tags of admitted patients and Nursing Assistant Tatad delivered some specimens to the laboratory. The committee recommended that despite her more than seven years of service, respondent De Castro should be terminated from employment for her lapse in responding to the incident and for trying to manipulate and influence her staff to cover-up the incident. As for Staff Nurse Paderes and Nursing Assistants Respicio and Tatad, the committee recommended that they be issued warning notices for failure to note the incident and endorse it to the next duty shift and, although they did not have any knowledge of the incident, they should be reminded not to succumb to pressure from their superiors in distorting the facts. On July 5, 1999, Janette A. Calixijan, HRD Officer of petitioner hospital, issued a notice of termination, duly noted by Dr. Abaya-Morido, upon respondent De Castro, effective at the close of office hours of July 20, 1999, for alleged violation of company rules and regulations, particularly paragraph 16 (a), Item 3, Chapter XI of the Employee's Handbook and Policy Manual of 1996 (Employee's Handbook):[6] (1) negligence to follow company policy on what to do with patient Rufina Causaren who fell from a hospital bed; (2) failure to record and refer the incident to the physician-[on- duty and] allow[ing] a significant lapse of time before reporting the incident; (3) deliberately instructing the staff to follow her version of the incident in order to cover up the lapse; and (4) negligence and carelessness in carrying out her duty as staff nurse-on-duty when the incident happened. On July 21, 1999, respondent De Castro, with the assistance of respondent Hospital Management Services Inc.Medical Center Manila Employees Association-AFW, filed a Complaint[7] for illegal dismissal against petitioners with prayer for reinstatement and payment of full backwages without loss of seniority rights, P20,000.00 moral damages, P10,000.00 exemplary damages, and 10% of the total monetary award as attorney's fees. On January 18, 2001, the Labor Arbiter rendered a Decision,[8] ordering petitioner hospital to reinstate respondent De Castro to her former position or by payroll reinstatement, at the option of the former, without loss of seniority rights, but without backwages and, also, directing petitioners to notify her to report to work. Her prayer for damages and attorney's fees was denied. The Labor Arbiter concluded that although respondent De Castro committed the act complained of, being her first offense, the penalty to be meted should not be

dismissal from the service, but merely 7 to 14 days suspension as the same was classified as a less serious offense under the Employee's Handbook On appeal by respondent De Castro, the NLRC rendered a Decision dated February 28, 2002, reversing the findings of the Labor Arbiter and dismissing the complaint against the petitioners. It observed that respondent De Castro lacked diligence and prudence in carrying out her duty when, instead of personally checking on the condition of patient Causaren after she fell from the bed, she merely sent ward-clerk orientee Guillergan to do the same in her behalf and for influencing her staff to conceal the incident. On May 31, 2002, the NLRC denied respondent De Castro's Motion for Reconsideration dated April 16, 2002. On May 24, 2006, the CA reversed and set aside the Decision of the NLRC and reinstated the Decision of the Labor Arbiter, with modification that respondent De Castro should be entitled to payment of full backwages and other benefits, or their monetary equivalent, computed from the expiration of the 14-day-suspension period up to actual reinstatement. The CA ruled that while respondent De Castro's failure to personally attend to patient Causeran amounted to misconduct, however, being her first offense, such misconduct could not be categorized as serious or grave that would warrant the extreme penalty of termination from the service after having been employed for almost 9 years. It added that the subject infraction was a less serious offense classified under "commission of negligent or careless acts during working time or on company property that resulted in the personal injury or property damage causing expenses to be incurred by the company" stated in subparagraph 11, paragraph 3 (B), Chapter XI [on the Rules on Discipline] of the Employee's Handbook[9] of petitioner hospital. The CA did not sustain the NLRC's ruling that respondent De Castro's dismissal was proper on the ground that her offense was aggravated to serious misconduct on account of her alleged act of asking her co-employees to lie for her as this fact was not proven. Petitioners' motion for reconsideration was denied by the CA in the Resolution dated January 10, 2007. Hence, this present petition. Petitioners allege that the deliberate refusal to attend to patient Causaren after the latter fell from the bed justifies respondent De Castro's termination from employment due to serious misconduct. They claim that respondent De Castro failed to: (a) personally assist the patient; (b) check her vital signs and examine if she sustained any injury; (c) refer the matter to the patient's attending physician or any physician-on-duty; and (d) note the incident in the report sheet for endorsement to the next shift for proper monitoring. They also aver that respondent De Castro persuaded her co-nurses to follow her version of what transpired so as to cover up her nonfeasance. In her Comment, respondent De Castro counters that there was no serious misconduct or gross negligence committed, but simple misconduct or minor negligence which would warrant the penalty of 7 to 14 days of suspension under the Employee's Handbook of petitioner hospital. She denies exerting influence over the four nursing personnel, but points out that it was Chief Nurse Villanueva, a close friend of patient Causaren's niece, who persuaded the four nursing staff to retract their statements appearing in the incident reports as to the approximate time of occurrence, from 2:00 a.m. to 3:00 a.m. of March 24, 1999 to 11:00 p.m. to 11:30 p.m. of March 23, 1999, so as to pin her for negligence. She appeals for leniency, considering that the subject infraction was her first offense in a span of almost nine years of employment with petitioner hospital. We affirm with modification the CA ruling which declared petitioners guilty of illegal dismissal. Article 282 (b) of the Labor Code provides that an employer may terminate an employment for gross and habitual neglect by the employee of his duties. The CA ruled that per the Employee's Handbook of petitioner hospital, respondent De Castro's infraction is classified as a less serious offense for "commission of negligent acts during working time" as set forth in subparagraph 11, paragraph 3 (B) of Chapter XI[10] thereof. Petitioners anchor respondent De Castro's termination of employment on the ground of serious misconduct for failure to personally attend to patient Causaren who fell from the bed as she was trying to reach for the bedpan. Based on her evaluation of the situation, respondent De Castro saw no necessity to record in the chart of patient Causaren the fact that she fell from the bed as the patient did not suffer any injury and her vital signs were normal. She surmised that the incident was not of a magnitude that would require medical intervention as even the patient and her niece did not press charges against her by reason of the subject incident. It is incumbent upon respondent De Castro to ensure that patients, covered by the nurse station to which she was assigned, be accorded utmost health care at all times without any qualification or distinction. Respondent De Castro's failure to personally assist patient Causaren, check her vital signs and examine if she sustained any injury, refer the matter to the patient's attending physician or any physician-on-duty, and note the incident in the report sheet for endorsement to the next shift for proper monitoring constitute serious misconduct that warrants her termination of employment. After attending to the toxic patients under her area of responsibility, respondent De Castro should have immediately proceeded to check the health condition of patient Causaren and, if necessary, request the physician-on-duty to diagnose her further. More importantly, respondent De Castro should make everything of record in the patient's chart as there might be a possibility that while the patient may appear to be normal at the time she was initially examined, an injury as a consequence of her fall may become manifest only in the succeeding days of her confinement. The patient's chart is a repository of one's medical history and, in this regard, respondent De Castro should have recorded the subject incident in the chart of patient Causaren so that any subsequent discomfort or injury of the patient arising from the incident may be accorded proper medical treatment. Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence connotes want of care in the performance of one's duties. Habitual neglect implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. A single or isolated act of negligence does not

constitute a just cause for the dismissal of the employee.[11] Despite our finding of culpability against respondent De Castro; however, we do not see any wrongful intent, deliberate refusal, or bad faith on her part when, instead of personally attending to patient Causaren, she requested Nursing Assistant Tatad and wardclerk orientee Guillergan to see the patient, as she was then attending to a newly-admitted patient at Room 710. It was her judgment call, albeit an error of judgment, being the staff nurse with presumably more work experience and better learning curve, to send Nursing Assistant Tatad and ward-clerk orientee Guillergan to check on the health condition of the patient, as she deemed it best, under the given situation, to attend to a newly-admitted patient who had more concerns that needed to be addressed accordingly. Being her first offense, respondent De Castro cannot be said to be grossly negligent so as to justify her termination of employment. Moreover, petitioners' allegation, that respondent De Castro exerted undue pressure upon her co-nurses to alter the actual time of the incident so as to exculpate her from any liability, was not clearly substantiated. Negligence is defined as the failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation.[12] The Court emphasizes that the nature of the business of a hospital requires a higher degree of caution and exacting standard of diligence in patient management and health care as what is involved are lives of patients who seek urgent medical assistance. An act or omission that falls short of the required degree of care and diligence amounts to serious misconduct which constitutes a sufficient ground for dismissal. However, in some cases, the Court had ruled that sanctioning an erring employee with suspension would suffice as the extreme penalty of dismissal would be too harsh.[13] Considering that this was the first offense of respondent De Castro in her nine (9) years of employment with petitioner hospital as a staff nurse without any previous derogatory record and, further, as her lapse was not characterized by any wrongful motive or deceitful conduct, the Court deems it appropriate that, instead of the harsh penalty of dismissal, she would be suspended for a period of six (6) months without pay, inclusive of the suspension for a period of 14 days which she had earlier served. Thereafter, petitioner hospital should reinstate respondent Edna R. De Castro to her former position without loss of seniority rights, full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the expiration of her suspension of six (6) months up to the time of actual reinstatement. WHEREFORE, the petition is DENIED. The Decision dated May 24, 2006 and Resolution dated January 10, 2007 of the Court of Appeals, Special First Division, in CA-G.R. SP No. 73189, which reversed and set aside the Decision dated February 28, 2002 and Resolution dated May 31, 2002 of the National Labor Relations Commission, Second Division, are AFFIRMED WITH MODIFICATION insofar as respondent Edna R. De Castro is found guilty of gross negligence and is SUSPENDED for a period of SIX (6) MONTHS without pay, inclusive of the suspension for a period of 14 days which she had earlier served. Petitioner Hospital Management Services, Inc.-Medical Center Manila is ORDERED to reinstate respondent Edna R. De Castro to her former position without loss of seniority rights, full backwages, inclusive of allowances and other benefits, or their monetary equivalent, computed from the expiration of her suspension of six (6) months up to the time of actual reinstatement. GREGORIO V. TONGKO, PETITIONER, VS. THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. AND RENATO A. VERGEL DE DIOS, RESPONDENTS. RESOLUTION BRION, J.: We resolve petitioner Gregorio V. Tongko's bid, through his Motion for Reconsideration,[1] to set aside our June 29, 2010 Resolution that reversed our Decision of November 7, 2008.[2] With the reversal, the assailed June 29, 2010 Resolution effectively affirmed the Court of Appeals' ruling[3] in CA-G.R. SP No. 88253 that the petitioner was an insurance agent, not the employee, of the respondent The Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife). In his Motion for Reconsideration, petitioner reiterates the arguments he had belabored in his petition and various other submissions. He argues that for 19 years, he performed administrative functions and exercised supervisory authority over employees and agents of Manulife, in addition to his insurance agent functions.[4] In these 19 years, he was designated as a Unit Manager, a Branch Manager and a Regional Sales Manager, and now posits that he was not only an insurance agent for Manulife but was its employee as well. We find no basis or any error to merit the reconsideration of our June 29, 2010 Resolution. A. Labor Law Control = Employment Relationship Control over the performance of the task of one providing service - both with respect to the means and manner, and the results of the service - is the primary element in determining whether an employment relationship exists. We resolve the petitioner's Motion against his favor since he failed to show that the control Manulife exercised over him was the control required to exist in an employer-employee relationship; Manulife's control fell short of this norm and carried only the characteristic of the relationship between an insurance company and its agents, as defined by the Insurance Code and by the law of agency under the Civil Code. The petitioner asserts in his Motion that Manulife's labor law control over him was demonstrated (1) when it set the objectives and sales targets regarding production, recruitment and training programs; and (2) when it prescribed the Code of Conduct for Agents and the Manulife Financial Code of Conduct to govern his activities. [5] We find no merit in these contentions.

In our June 29, 2010 Resolution, we noted that there are built-in elements of control specific to an insurance agency, which do not amount to the elements of control that characterize an employment relationship governed by the Labor Code. The Insurance Code provides definite parameters in the way an agent negotiates for the sale of the company's insurance products, his collection activities and his delivery of the insurance contract or policy.[6] In addition, the Civil Code defines an agent as a person who binds himself to do something in behalf of another, with the consent or authority of the latter.[7] Article 1887 of the Civil Code also provides that in the execution of the agency, the agent shall act in accordance with the instructions of the principal. All these, read without any clear understanding of fine legal distinctions, appear to speak of control by the insurance company over its agents. They are, however, controls aimed only at specific results in undertaking an insurance agency, and are, in fact, parameters set by law in defining an insurance agency and the attendant duties and responsibilities an insurance agent must observe and undertake. They do not reach the level of control into the means and manner of doing an assigned task that invariably characterizes an employment relationship as defined by labor law. From this perspective, the petitioner's contentions cannot prevail. To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable result intended by the contractual relationship; they must have the nature of dictating the means and methods to be employed in attaining the result.[8] Tested by this norm, Manulife's instructions regarding the objectives and sales targets, in connection with the training and engagement of other agents, are among the directives that the principal may impose on the agent to achieve the assigned tasks. They are targeted results that Manulife wishes to attain through its agents. Manulife's codes of conduct, likewise, do not necessarily intrude into the insurance agents' means and manner of conducting their sales. Codes of conduct are norms or standards of behavior rather than employer directives into how specific tasks are to be done. These codes, as well as insurance industry rules and regulations, are not per se indicative of labor law control under our jurisprudence. [9] The duties[10] that the petitioner enumerated in his Motion are not supported by evidence and, therefore, deserve scant consideration. Even assuming their existence, however, they mostly pertain to the duties of an insurance agent such as remitting insurance fees to Manulife, delivering policies to the insured, and after-sale services. For agents leading other agents, these include the task of overseeing other insurance agents, the recruitment of other insurance agents engaged by Manulife as principal, and ensuring that these other agents comply with the paperwork necessary in selling insurance. That Manulife exercises the power to assign and remove agents under the petitioner's supervision is in keeping with its role as a principal in an agency relationship; they are Manulife agents in the same manner that the petitioner had all along been a Manulife agent. The petitioner also questions Manulife's act of investing him with different titles and positions in the course of their relationship, given the respondents' position that he simply functioned as an insurance agent.[11] He also considers it an unjust and inequitable situation that he would be unrewarded for the years he spent as a unit manager, a branch manager, and a regional sales manager.[12] Based on the evidence on record, the petitioner's occupation was to sell Manulife's insurance policies and products from 1977 until the termination of the Career Agent's Agreement (Agreement). The evidence also shows that through the years, Manulife permitted him to exercise guiding authority over other agents who operate under their own agency agreements with Manulife and whose commissions he shared.[13] Under this scheme - an arrangement that pervades the insurance industry - petitioner in effect became a "lead agent" and his own commissions increased as they included his share in the commissions of the other agents;[14] he also received greater reimbursements for expenses and was allowed to use Manulife's facilities. His designation also changed from unit manager to branch manager and then to regional sales manager, to reflect the increase in the number of agents he recruited and guided, as well as the increase in the area where these agents operated. As our assailed Resolution concluded and as we now similarly conclude, these arrangements, and the titles and positions the petitioner was invested with, did not change his status from the insurance agent that he had always been (as evidenced by the Agreement that governed his relationship with Manulife from the start to its disagreeable end). The petitioner simply progressed from his individual agency to being a lead agent who could use other agents in selling insurance and share in the earnings of these other agents. In sum, we find absolutely no evidence of labor law control, as extensively discussed in our Resolution of June 29, 2010, granting Manulife's motion for reconsideration. The Dissent, unfortunately, misses this point. B. No Resulting Inequity We also do not agree that our assailed Resolution has the effect of fostering an inequitable or unjust situation. The records show that the petitioner was very amply paid for his services as an insurance agent, who also shared in the commissions of the other agents under his guidance. In 1997, his income was P2,822,620; in 1998, P4,805,166.34; in 1999, P6,797,814.05; in 2001, P6,214,737.11; and in 2002, P8,003,180.38. All these he earned as an insurance agent, as he failed to ever prove that he earned these sums as an employee. In technical terms, he could not have earned all these as an employee because he failed to provide the substantial evidence required in administrative cases to support the finding that he was a Manulife employee. No inequity results under this legal situation; what would be unjust is an award of backwages and separation pay - amounts that are not due him because he was never an employee.

The Dissent's discussion on this aspect of the case begins with the wide disparity in the status of the parties that Manulife is a big Canadian insurance company while Tongko is but a single agent of Manulife. The Dissent then went on to say that "[i]f is but just, it is but right, that the Court interprets the relationship between Tongko and Manulife as one of employment under labor laws and to uphold his constitutionally protected right, as an employee, to security of tenure and entitlement to monetary award should such right be infringed."[15] We cannot simply invoke the magical formula by creating an employment relationship even when there is none because of the unavoidable and inherently weak position of an individual over a giant corporation. The Dissent likewise alluded to an ambiguity in the true relationship of the parties after Tongko's successive appointments. We already pointed out that the legal significance of these appointments had not been sufficiently explained and that it did not help that Tongko never bothered to present evidence on this point. The Dissent recognized this but tried to excuse Tongko from this failure in the subsequent discussion, as follows: [o]ther evidence was adduced to show such duties and responsibilities. For one, in his letter of November 6, 2001, respondent De Dios addressed petitioner as sales manager. And as I wrote in my Dissent to the June 29, 2010 Resolution, it is difficult to imagine that Manulife did not issue promotional appointments to petitioner as unit manager, branch manager, and, eventually, regional sales manager. Sound management practice simply requires an appointment for any upward personnel movement, particularly when additional functions and the corresponding increase in compensation are involved. Then, too, the adverted affidavits of the managers of Manulife as to the duties and responsibilities of a unit manager, such as petitioner, point to the conclusion that these managers were employees of Manulife, applying the "four-fold" test.[16] This Court (and all adjudicators for that matter) cannot and should not fill in the evidentiary gaps in a party's case that the party failed to support; we cannot and should not take the cudgels for any party. Tongko failed to support his cause and we should simply view him and his case as they are; our duty is to sit as a judge in the case that he and the respondent presented. To support its arguments on equity, the Dissent uses the Constitution and the Civil Code, using provisions and principles that are all motherhood statements. The mandate of the Court, of course, is to decide cases based on the facts and the law, and not to base its conclusions on fundamental precepts that are far removed from the particular case presented before it. When there is no room for their application, of capacity of principles, reliance on the application of these fundamental principles is misplaced. C. Earnings were Commissions That his earnings were agent's commissions arising from his work as an insurance agent is a matter that the petitioner cannot deny, as these are the declarations and representations he stated in his income tax returns through the years. It would be doubly unjust, particularly to the government, if he would be allowed at this late point to turn around and successfully claim that he was merely an employee after he declared himself, through the years, as an independent self-employed insurance agent with the privilege of deducting business expenses. This aspect of the case alone - considered together with the probative value of income tax declarations and returns filed prior to the present controversy -- should be enough to clinch the present case against the petitioner's favor. D. The Dissent's Solution: Unwieldy and Legally Infirm The Dissent proposes that Tongko should be considered as part employee (as manager) and part insurance agent; hence, the original decision should be modified to pertain only to the termination of his employment as a manager and not as an insurance agent. Accordingly, the backwages component of the original award to him should not include the insurance sales commissions. This solution, according to the line taken by the Dissent then, was justified on the view that this was made on a case-to-case basis. Decisions of the Supreme Court, as the Civil Code provides, form part of the law of the land. When the Court states that the determination of the existence of an employment relationship should be on a case-to-case basis, this does not mean that there will be as many laws on the issue as there are cases. In the context of this case, the four-fold test is the established standard for determining employer-employee relationship and the existence of these elements, most notably control, is the basis upon which a conclusion on the absence of employment relationship was anchored. This simply means that a conclusion on whether employment relationship exists in a particular case largely depends on the facts and, in no small measure, on the parties' evidence vis- -vis the clearly defined jurisprudential standards. Given that the parties control what and how the facts will be established in a particular case and/or how a particular suit is to be litigated, deciding the issues on a case-to-case basis becomes an imperative. Another legal reality, a more important one, is that the duty of a court is to say what the law is.[17] This is the same duty of the Supreme Court that underlies the stare decisis principle. This is how the public, in general and the insurance industry in particular, views the role of this Court and courts in general in deciding cases. The lower courts and the bar, most specially, look up to the rulings of this Court for guidance. Unless extremely unavoidable, the Court must, as a matter of sound judicial policy, resist the temptation of branding its ruling pro hac vice. The compromise solution of declaring Tongko both an employee and an agent is legally unrealistic, unwieldy and is, in fact, legally infirm, as it goes against the above basic principles of judicial operation. Likewise, it does not and cannot realistically solve the problem/issue in this case; it actually leaves more questions than answers.

As already pointed out, there is no legal basis (be it statutory or jurisprudential) for the part-employee/partinsurance agent status under an essentially principal-agent contractual relation which the Dissent proposes to accord to Tongko. If the Dissent intends to establish one, this is highly objectionable for this would amount to judicial legislation. A legal relationship, be it one of employment or one based on a contract other than employment, exists as a matter of law pursuant to the facts, incidents and legal consequences of the relationship; it cannot exist devoid of these legally defined underlying facts and legal consequences unless the law itself creates the relationship - an act that is beyond the authority of this Court to do. Additionally, the Dissent's conclusion completely ignores an unavoidable legal reality - that the parties are bound by a contract of agency that clearly subsists notwithstanding the successive designation of Tongko as a unit manager, a branch manager and a regional sales manager. (As already explained in our Resolution granting Manulife's motion for reconsideration, no evidence on record exists to provide the Court with clues as to the precise impact of all these designations on the contractual agency relationship.) The Dissent, it must be pointed out, concludes that Tongko's employment as manager was illegally terminated; thus, he should be accordingly afforded relief therefor. But, can Tongko be given the remedies incidental to his dismissal as manager separately from his status as an insurance agent? In other words, since the respondents terminated all relationships with Tongko through the termination letter, can we simply rule that his role as a manager was illegally terminated without touching on the consequences of this ruling on his status as an insurance agent? Expressed in these terms, the inseparability of his contract as agent with any other relationship that springs therefrom can thus be seen as an insurmountable legal obstacle. The Dissent's compromise approach would also sanction split jurisdiction. The labor tribunals shall have jurisdiction over Tongko's employment as manager while another entity shall decide the issues/cases arising from the agency relationship. If the managerial employment is anchored on the agency, how will the labor tribunals decide an issue that is inextricably linked with a relationship that is outside the loop of their jurisdiction? As already mentioned in the Resolution granting Manulife's reconsideration, the DOMINANT relationship in this case is agency and no other. E. The Dissent's Cited Cases The Dissent cites the cases of Great Pacific Life Assurance Corporation v. National Labor Relations Commission[18] and Insular Life Assurance Co., Ltd. v. National Labor Relations Commission[19] to support the allegation that Manulife exercised control over the petitioner as an employer. In considering these rulings, a reality that cannot but be recognized is that cases turn and are decided on the basis of their own unique facts; the ruling in one case cannot simply be bodily lifted and applied to another, particularly when notable differences exist between the cited cases and the case under consideration; their respective facts must be strictly examined to ensure that the ruling in one applies to another. This is particularly true in a comparison of the cited cases with the present case. Specifically, care should be taken in reading the cited cases and applying their rulings to the present case as the cited cases all dealt with the proper legal characterization of subsequent management contracts that superseded the original agency contract between the insurance company and the agent. In Great Pacific Life, the Ruiz brothers were appointed to positions different from their original positions as insurance agents, whose duties were clearly defined in a subsequent contract. Similarly, in Insular, de los Reyes, a former insurance agent, was appointed as acting unit manager based on a subsequent contract. In both cases, the Court anchored its findings of labor control on the stipulations of these subsequent contracts. In contrast, the present case is remarkable for the absence of evidence of any change in the nature of the petitioner's employment with Manulife. As previously stated above and in our assailed Resolution, the petitioner had always been governed by the Agreement from the start until the end of his relationship with Manulife. His agency status never changed except to the extent of being a lead agent. Thus, the cited cases where changes in company-agent relationship expressly changed and where the subsequent contracts were the ones passed upon by the Court - cannot be totally relied upon as authoritative. We cannot give credit as well to the petitioner's claim of employment based on the affidavits executed by other Manulife agents describing their duties, because these same affidavits only affirm their status as independent agents, not as employees. To quote these various claims:[20] 1.a. I have no fixed wages or salary since my services are compensated by way of commissions based on the computed premiums paid in full on the policies obtained thereat; 1.b. I have no fixed working hours and employ my own method in soliciting insurance at a time and place I see fit; 1.c. I have my own assistant and messenger who handle my daily work load; 1.d. I use my own facilities, tools, materials and supplies in carrying out my business of selling insurance; x xx x 6. I have my own staff that handles day to day operations of my office; 7. My staff are my own employees and received salaries from me; xx x x 9. My commission and incentives are all reported to the Bureau of Internal Revenue (BIR) as income by a selfemployed individual or professional with a ten (10) percent creditable withholding tax. I also remit monthly for professionals. The petitioner cannot also rely on the letter written by respondent Renato Vergel de Dios to prove that Manulife exercised control over him. As we already explained in the assailed Resolution:

Even de Dios' letter is not determinative of control as it indicates the least amount of intrusion into 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. [21] Lastly, in assailing the Agreement between him and Manulife, the petitioner cites Paguio v. National Labor Relations Commission[22] on the claim that the agreement that the parties signed did not conclusively indicate the legal relationship between them. The evidentiary situation in the present case, however, shows that despite the petitioner's insistence that the Agreement was no longer binding between him and Manulife, no evidence was ever adduced to show that their relationship changed so that Manulife at some point controlled the means and method of the petitioner's work. In fact, his evidence only further supports the conclusion that he remained an independent insurance agent - a status he admits, subject only to the qualification that he is at the same time an employee. Thus, we can only conclude that the Agreement governed his relations with Manulife. Additionally, it is not lost on us that Paguio is a ruling based on a different factual setting; it involves a publishing firm and an account executive, whose repeated engagement was considered as an indication of employment. Our ruling in the present case is specific to the insurance industry, where the law permits an insurance company to exercise control over its agents within the limits prescribed by law, and to engage independent agents for several transactions and within an unlimited period of time without the relationship amounting to employment. In light of these realities, the petitioner's arguments on his last argument must also fail. The dissent also erroneously cites eight other cases -- Social Security System v. Court of Appeals,[23] Cosmopolitan Funeral Homes, Inc. v. Maalat,[24] Algon Engineering Construction Corporation v. National Labor Relations Commission,[25] Equitable Banking Corporation v. National Labor Relations Commission,[26] Lazaro v. Social Security Commission,[27] Dealco Farms, Inc. v. National Labor Relations Commission,[28] South Davao Development Company, Inc. v. Gamo,[29] and Abante, Jr. v. Lamadrid Bearing & Parts Corporation.[30] The dissent cited these cases to support its allegation that labor laws and jurisprudence should be applied in cases, to the exclusion of other laws such as the Civil Code or the Insurance Code, even when the latter are also applicable. In Social Security System, Cosmopolitan Funeral Homes, Dealco Farms, and South Davao Development, the issue that repeats itself is whether complainants were employees or independent contractors; the legal relationships involved are both labor law concepts and make no reference to the Civil Code (or even the Insurance Code). The provisions cited in the Dissent -- Articles 1458-1637 of the Civil Code[31] and Articles 1713-1720 of the Civil Code [32] -- do not even appear in the decisions cited. In Algon, the issue was whether the lease contract should dictate the legal relationship between the parties, when there was proof of an employer-employee relationship. In the cited case, the lease provisions on termination were thus considered irrelevant because of a substantial evidence of an employment relationship. The cited case lacks the complexity of the present case; Civil Code provisions on lease do not prescribe that lessees exercise control over their lessors in the way that the Insurance Code and the Civil provide that insurance companies and principals exercised control over their agents. The issue in Equitable, on the other hand, is whether a lawyer-client relationship or an employment relationship governs the legal relation between parties. Again, this case is inapplicable as it does not illustrate the predominance of labor laws and jurisprudence over other laws, in general, and the Insurance Code and Civil Code, in particular. It merely weighed the evidence in favor of an employment relationship over that of a lawyer-client relationship. Similarly in Lazaro, the Court found ample proof of control determinative of an employer-employee relationship. Both cases are not applicable to the present case, which is attended by totally different factual considerations as the petitioner had not offered any evidence of the company's control in the means and manner of the performance of his work. On the other hand, we find it strange that the dissent cites Abante as a precedent, since the Court, in this case, held that an employee-employer relationship is notably absent in this case as the complainant was a sales agent. This case better supports the majority's position that a sales agent, who fails to show control in the concept of labor law, cannot be considered an employee, even if the company exercised control in the concept of a sales agent.[33] It bears stressing that our ruling in this case is not about which law has primacy over the other, but that we should be able to reconcile these laws. We are merely saying that where the law makes it mandatory for a company to exercise control over its agents, the complainant in an illegal dismissal case cannot rely on these legally prescribed control devices as indicators of an employer-employee relationship. As shown in our discussion, our consideration of the Insurance Code and Civil Code provisions does not negate the application of labor laws and jurisprudence; ultimately, we dismissed the petition because of its failure to comply with the control test.

WHEREFORE, premises considered, we hereby DENY the Motion for Reconsideration WITH FINALITY for lack of merit. No further pleadings shall be entertained. Let entry of judgment proceed in due course. SO ORDERED. ROMEO VILLARUEL, PETITIONER, VS. YEO HAN GUAN, DOING BUSINESS UNDER THE NAME AND STYLE YUHANS ENTERPRISES, RESPONDENT. DECISION PERALTA, J.: Assailed in the present petition are the Decision[1] and Resolution[2] of the Court of Appeals (CA) dated February 16, 2005 and August 2, 2005, respectively, in CA-G.R. SP No. 79105. The CA Decision modified the March 31, 2003 Decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA 028050-01, while the CA Resolution denied petitioner's Motion for Reconsideration. The antecedents of the case are as follows: On February 15, 1999, herein petitioner filed with the NLRC, National Capital Region, Quezon City a Complaint[3] for payment of separation pay against Yuhans Enterprises. Subsequently, in his Amended Complaint and Position Paper[4] dated December 6, 1999, petitioner alleged that in June 1963, he was employed as a machine operator by Ribonette Manufacturing Company, an enterprise engaged in the business of manufacturing and selling PVC pipes and is owned and managed by herein respondent Yeo Han Guan. Over a period of almost twenty (20) years, the company changed its name four times. Starting in 1993 up to the time of the filing of petitioner's complaint in 1999, the company was operating under the name of Yuhans Enterprises. Despite the changes in the company's name, petitioner remained in the employ of respondent. Petitioner further alleged that on October 5, 1998, he got sick and was confined in a hospital; on December 12, 1998, he reported for work but was no longer permitted to go back because of his illness; he asked that respondent allow him to continue working but be assigned a lighter kind of work but his request was denied; instead, he was offered a sum of P15,000.00 as his separation pay; however, the said amount corresponds only to the period between 1993 and 1999; petitioner prayed that he be granted separation pay computed from his first day of employment in June 1963, but respondent refused. Aside from separation pay, petitioner prayed for the payment of service incentive leave for three years as well as attorney's fees. On the other hand, respondent averred in his Position Paper[5] that petitioner was hired as machine operator from March 1, 1993 until he stopped working sometime in February 1999 on the ground that he was suffering from illness; after his recovery, petitioner was directed to report for work, but he never showed up. Respondent was later caught by surprise when petitioner filed the instant case for recovery of separation pay. Respondent claimed that he never terminated the services of petitioner and that during their mandatory conference, he even told the latter that he could go back to work anytime but petitioner clearly manifested that he was no longer interested in returning to work and instead asked for separation pay. On November 27, 2000, the Labor Arbiter handling the case rendered judgment in favor of petitioner. The dispositive portion of the Labor Arbiter's Decision reads, thus: WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant and against herein respondent, as follows: 1. Ordering the respondents to pay separation benefits equivalent to one-half () month salary per year of service, a fraction of six months equivalent to one year to herein complainant based on the complainant's length of service reckoned from June 1963 up to October 1998 as provided under Article 284 of the Labor Code, the same computed by the Computation and Examination Unit which we hereby adopt and approved (sic) as our own in the amount of NINETY-ONE THOUSAND FOUR HUNDRED FORTY-FIVE PESOS (P91,445.00); 2. Ordering the respondents to pay service incentive leave equivalent to fifteen days' salary in the amount of THREE THOUSAND FIFTEEN PESOS (P3,015.00). All other claims are dismissed for lack of merit. SO ORDERED.[6] Aggrieved, respondent filed an appeal with the NLRC. On March 31, 2003, the Third Division of the NLRC rendered its Decision[7] dismissing respondent's appeal and affirming the Labor Arbiter's Decision. Respondent filed a Motion for Reconsideration,[8] but the same was denied by the NLRC in a Resolution[9] dated May 30, 2003. Respondent then filed with the CA a petition for certiorari under Rule 65 of the Rules of Court. On February 16, 2005, the CA promulgated its presently assailed Decision disposing as follows: WHEREFORE, premises considered, the petition is partially GRANTED. The award of separation pay is hereby DELETED, but the Decision insofar as it awards private respondent [herein petitioner] service incentive leave pay of three thousand and fifteen pesos (P3,015.00) stands. The NLRC is permanently ENJOINED from partially executing its Decision dated November 27, 2000 insofar as the award of separation pay is concerned; or if it has already effected execution, it should order the private respondent to forthwith restitute the same. SO ORDERED.[10] Herein petitioner filed his Motion for Reconsideration[11] of the CA Decision, but it was denied by the CA via a Resolution[12] dated August 2, 2005.

Hence, the instant petition based on the following assignment of errors: I THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FAILURE TO APPRECIATE THE ADMISSION BY [PETITIONER] OF THE FACT AND VALIDITY OF HIS TERMINATION BY THE [RESPONDENT]. II [THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED] IN DENYING [PETITIONER'S] ENTITLEMENT TO SEPARATION PAY UNDER ARTICLE 284 OF THE LABOR CODE AND UNDER THE OMNIBUS RULES IMPLEMENTING THE LABOR CODE. III THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING THAT THE BURDEN OF PROOF THAT AN EMPLOYEE IS SUFFERING FROM DISEASE THAT HAS TO BE TERMINATED REST[S] UPON THE EMPLOYER IN ORDER FOR THE EMPLOYEE TO BE ENTITLED TO SEPARATION PAY. IV THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE DELETION OF THE AWARD OF SEPARATION PAY TO THE [PETITIONER].[13] The Court finds the petition without merit. The assigned errors in the instant petition essentially boil down to the question of whether petitioner is entitled to separation pay under the provisions of the Labor Code, particularly Article 284 thereof, which reads as follows: An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half () month salary for every year of service whichever is greater, a fraction of at least six months being considered as one (1) whole year. A plain reading of the abovequoted provision clearly presupposes that it is the employer who terminates the services of the employee found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees. It does not contemplate a situation where it is the employee who severs his or her employment ties. This is precisely the reason why Section 8,[14] Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, directs that an employer shall not terminate the services of the employee unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. Hence, the pivotal question that should be settled in the present case is whether respondent, in fact, dismissed petitioner from his employment. A perusal of the Decisions of the Labor Arbiter and the NLRC would show, however, that there was no discussion with respect to the abovementioned issue. Both lower tribunals merely concluded that petitioner is entitled to separation pay under Article 284 of the Labor Code without any explanation. The Court finds no convincing justification, in the Decision of the Labor Arbiter on why petitioner is entitled to such pay. In the same manner, the NLRC Decision did not give any rationalization as the gist thereof simply consisted of a quoted portion of the appealed Decision of the Labor Arbiter. On the other hand, the Court agrees with the CA in its observation of the following circumstances as proof that respondent did not terminate petitioner's employment: first, the only cause of action in petitioner's original complaint is that he was "offered a very low separation pay"; second, there was no allegation of illegal dismissal, both in petitioner's original and amended complaints and position paper; and, third, there was no prayer for reinstatement. In consonance with the above findings, the Court finds that petitioner was the one who initiated the severance of his employment relations with respondent. It is evident from the various pleadings filed by petitioner that he never intended to return to his employment with respondent on the ground that his health is failing. Indeed, petitioner did not ask for reinstatement. In fact, he rejected respondent's offer for him to return to work. This is tantamount to resignation. Resignation is defined as the voluntary act of an employee who finds himself in a situation where he believes that personal reasons cannot be sacrificed in favor of the exigency of the service and he has no other choice but to disassociate himself from his employment.[15] It may not be amiss to point out at this juncture that aside from Article 284 of the Labor Code, the award of separation pay is also authorized in the situations dealt with in Article 283[16] of the same Code and under Section 4 (b), Rule I, Book VI of the Implementing Rules and Regulations of the said Code[17] where there is illegal dismissal and reinstatement is no longer feasible. By way of exception, this Court has allowed grants of separation pay to stand as "a measure of social justice" where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character.[18] However, there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees. In fact, the rule is that an employee who voluntarily resigns from employment is not entitled to separation pay, except when it is stipulated in the employment contract or CBA, or it is sanctioned by established employer practice or policy. [19] In the present case, neither the abovementioned provisions of the Labor Code and its implementing rules and regulations nor the exceptions apply because petitioner was not dismissed from his employment and there is no evidence to show that payment of separation pay is stipulated in his employment contract or sanctioned by established practice or policy of herein respondent, his employer.

Since petitioner was not terminated from his employment and, instead, is deemed to have resigned therefrom, he is not entitled to separation pay under the provisions of the Labor Code. The foregoing notwithstanding, this Court, in a number of cases, has granted financial assistance to separated employees as a measure of social and compassionate justice and as an equitable concession. Taking into consideration the factual circumstances obtaining in the present case, the Court finds that petitioner is entitled to this kind of assistance. Citing Eastern Shipping Lines, Inc. v. Sedan,[20] this Court, in the more recent case of Eastern Shipping Lines v. Antonio,[21] held But we must stress that this Court did allow, in several instances, the grant of financial assistance. In the words of Justice Sabino de Leon, Jr., now deceased, financial assistance may be allowed as a measure of social justice and exceptional circumstances, and as an equitable concession. The instant case equally calls for balancing the interests of the employer with those of the worker, if only to approximate what Justice Laurel calls justice in its secular sense. In this instance, our attention has been called to the following circumstances: that private respondent joined the company when he was a young man of 25 years and stayed on until he was 48 years old; that he had given to the company the best years of his youth, working on board ship for almost 24 years; that in those years there was not a single report of him transgressing any of the company rules and regulations; that he applied for optional retirement under the company's non-contributory plan when his daughter died and for his own health reasons; and that it would appear that he had served the company well, since even the company said that the reason it refused his application for optional retirement was that it still needed his services; that he denies receiving the telegram asking him to report back to work; but that considering his age and health, he preferred to stay home rather than risk further working in a ship at sea. In our view, with these special circumstances, we can call upon the same "social and compassionate justice" cited in several cases allowing financial assistance. These circumstances indubitably merit equitable concessions, via the principle of "compassionate justice" for the working class. x x x In the present case, respondent had been employed with the petitioner for almost twelve (12) years. On February 13, 1996, he suffered from a "fractured left transverse process of fourth lumbar vertebra," while their vessel was at the port of Yokohama, Japan. After consulting a doctor, he was required to rest for a month. When he was repatriated to Manila and examined by a company doctor, he was declared fit to continue his work. When he reported for work, petitioner refused to employ him despite the assurance of its personnel manager. Respondent patiently waited for more than one year to embark on the vessel as 2nd Engineer, but the position was not given to him, as it was occupied by another person known to one of the stockholders. Consequently, for having been deprived of continued employment with petitioner's vessel, respondent opted to apply for optional retirement. In addition, records show that respondent's seaman's book, as duly noted and signed by the captain of the vessel was marked "Very Good," and "recommended for hire." Moreover, respondent had no derogatory record on file over his long years of service with the petitioner. Considering all of the foregoing and in line with Eastern, the ends of social and compassionate justice would be served best if respondent will be given some equitable relief. Thus, the award of P100,000.00 to respondent as financial assistance is deemed equitable under the circumstances.[22] While the abovecited cases authorized the grant of financial assistance in lieu of retirement benefits, the Court finds no cogent reason not to employ the same guiding principle of compassionate justice applied by the Court, taking into consideration the factual circumstances obtaining in the present case. In this regard, the Court finds credence in petitioner's contention that he is in the employ of respondent for more than 35 years. In the absence of a substantial refutation on the part of respondent, the Court agrees with the findings of the Labor Arbiter and the NLRC that respondent company is not distinct from its predecessors but, in fact, merely continued the operation of the latter under the same owners and the same business venture. The Court further notes that there is no evidence on record to show that petitioner has any derogatory record during his long years of service with respondent and that his employment was severed not by reason of any infraction on his part but because of his failing physical condition. Add to this the willingness of respondent to give him financial assistance. Hence, based on the foregoing, the Court finds that the award of P50,000.00 to petitioner as financial assistance is deemed equitable under the circumstances. WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED with MODIFICATION by awarding petitioner with financial assistance in the amount of P50,000.00. SO ORDERED.

Reno Foods Inc. vs. NLM-Katipuan et. al. G.R. No. 164016, March 15, 2010 Facts: Petitioner Corporation terminated Nenita Capor after she was caught sneaking out cans of RENO products during a standard operating procedure of searching the belongings of employees upon leaving company premises conducted by the guards. Capor alleged that the goods in her bag were not pilfered and that it may have just been planted by the company to avoid paying separation pay as she was already about to retire. RENO filed a case of qualified theft against Capor. While NLM-Katipunan filed in behalf of Capor, a case of illegal dismissal and money claims against RENO before the Head Arbitration Office of the NLRC, praying that Capor be awarded backwages and moral and exemplary damages. The Labor Arbiter found Capor guilty of grave misconduct which was just cause for termination. Further, that Capor is not entitled to reinstatement, backwages, moral and exemplary damages. On appeal, the NLRC modified the ruling by awarding separation pay to Capor as financial assistance. Petitioner appealed before the CA, which affirmed the ruling of NLRC. Meanwhile, Capor was acquitted of qualified theft charges. Issue: Is an employee terminated for just cause entitled to financial assistance? Ruling: No. Separation pay is only warranted when the cause for termination is not attributable to the employees fault, , such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible. It is not allowed when an employee is dismissed for just cause, such as serious misconduct. The Court awards financial assistance to employees who were terminated for just causes, on grounds of equity and social justice. We recognized the harsh realities faced by employees that forced them, despite their good intentions, to violate company policies, for which the employer can rightfully terminate their employment. BUT the award of financial assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character. When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult to all the laborers who, despite their economic difficulties, strive to maintain good values and moral conduct. Further, an employees acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not preclude a determination in a labor case that he is guilty of acts inimical to the employers interests. Criminal cases require proof beyond reasonable doubt while labor disputes require only substantial evidence. Since the Labor tribunals found substantial evidence to conclude that Capor had been validly dismissed for dishonesty or serious misconduct there is no compelling reason to doubt the common findings of these reviewing bodies. On Capors allegation that her length of service and previously clean employment record should be considered in awarding her separation pay, the Court ruled that it cannot simply erase the gravity of the betrayal exhibited by a malfeasant employee. Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. Betrayal by a long-time employee is more insulting and odious for a fair employer. MANILA WATER COMPANY, INC., Petitioner, - versus - JOSE J. DALUMPINES, EMMANUEL CAPIT, ROMEO B. CASTOLONE, MELITANTE CASTRO, NONITO FERNANDEZ, ARNULFO JAMISON, ARTHUR LAVISTE, ESTEBAN LEGARTO, SUSANO MIRANDA, RAMON C. REYES, JOSE SIERRA, BENJAMIN TALAVERA, MOISES ZAPATERO, EDGAR PAMORAGA, BERNARDO S. MEDINA, MELENCIO M. BAONGUIS, JR., JOSE AGUILAR, ANGEL C. GARCIA, JOSE TEODY P. VELASCO, AUGUSTUS J. TANDOC, ROBERTO DAGDAG, MIGUEL LOPEZ, GEORGE CABRERA, ARMAN BORROMEO, RONITO R. FRIAS,

ANTONIO VERGARA, RANDY CORTIGUERRA, and FIRST CLASSIC COURIER SERVICES, INC., Respondents. DECISION NACHURA, J.: Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision[1] dated September 12, 2006 and the Resolution[2] dated November 17, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 94909. The facts of the case are as follows: By virtue of Republic Act No. 8041, otherwise known as the National Water Crisis Act of 1995, the Metropolitan Waterworks and Sewerage System (MWSS) was given the authority to enter into concession agreements allowing the private sector in its operations. Petitioner Manila Water Company, Inc. (Manila Water) was one of two private concessionaires contracted by the MWSS to manage the water distribution system in the east zone of Metro Manila. The east service area included the following towns and cities: Mandaluyong, Marikina, Pasig, Pateros, San Juan, Taguig, Makati, parts of Quezon City and Manila, Angono, Antipolo, Baras, Binangonan, Cainta, Cardona, Jala-Jala, Morong, Pililla, Rodriguez, Tanay, Taytay, Teresa, and San Mateo.[3] Under the concession agreement, Manila Water undertook to absorb the regular employees of MWSS listed by the latter effective August 1, 1997. Individual respondents, with the exception of Moises Zapatero (Zapatero) and Edgar Pamoraga (Pamoraga), were among the one hundred twenty-one (121) employees not included in the list of employees to be absorbed by Manila Water. Nevertheless, Manila Water engaged their services without written contract from August 1, 1997 to August 31, 1997.[4] On September 1, 1997, individual respondents signed a three (3)-month contract to perform collection services on commission basis for Manila Waters branches in the east zone.[5] On November 21, 1997, before the expiration of the contract of services, the 121 bill collectors formed a corporation duly registered with the Securities and Exchange Commission (SEC) as the Association Collectors Group, Inc. (ACGI). ACGI was one of the entities engaged by Manila Water for its courier service. However, Manila Water contracted ACGI for collection services only in its Balara Branch.[6] In December 1997, Manila Water entered into a service agreement with respondent First Classic Courier Services, Inc. (FCCSI) also for its courier needs. The service agreements between Manila Water and FCCSI covered the periods 1997 to 1999 and 2000 to 2002.[7] Earlier, in a memorandum dated November 28, 1997, FCCSI gave a deadline for the bill collectors who were members of ACGI to submit applications and letters of intent to transfer to FCCSI. The individual respondents in this case were among the bill collectors who joined FCCSI and were hired effective December 1, 1997.[8] On various dates between May and October 2002, individual respondents were terminated from employment. Manila Water no longer renewed its contract with FCCSI because it decided to implement a collectorless scheme whereby Manila Water customers would instead remit payments through Bayad Centers.[9] The aggrieved bill collectors individually filed complaints for illegal dismissal, unfair labor practice, damages, and attorneys fees, with prayer for reinstatement and backwages against petitioner Manila Water and respondent FCCSI. The complaints were consolidated and jointly heard.[10] Respondent bill collectors alleged that their employment under Manila Water had four (4) stages: (a) from August 1, 1997 to August 31, 1997; (b) from September 1, 1997 to November 30, 1997; (c) in November 1997 when FCCSI was incorporated; and (d) after November 1977 when FCCSI came in. While in MWSS, and thereafter in Manila Water and FCCSI, respondent bill collectors were made to perform the following functions: (1) delivery of bills to customers; (2) collection of payments from customers; and (3) delivery of disconnection notice to customers. They were also allowed to effect disconnection and were given tools for this purpose.[11] Respondent bill collectors averred that when Manila Water issued their individual contracts of service for three months in September 1997, there was already an attempt to make it appear that respondent bill collectors were not its employees but independent contractors. Respondent bill collectors stressed that they could not qualify as independent contractors because they did not have an independent business of their own, tools, equipment, and capitalization, but were purely dependent on the wages they earned from Manila Water, which was termed as commission.[12] Respondent bill collectors alleged that Manila Water had complete supervision over their work and their collections, which they had to remit daily to the former. They also maintained that the incorporation of ACGI did not mean that they were not employees of Manila Water. Furthermore, they alleged that they suffered injustice when Manila Water imposed upon them the work set-up that caused them to be emotionally depressed because those who were not assigned to the Balara Branch under Manila Waters contract with ACGI were forced to join FCCSI to retain their employment. They argued that the entry of FCCSI did not change the employer-employee relationship of respondent bill collectors with Manila Water.[13] Respondent bill collectors insisted that they remained employees of Manila Water even after the entry of FCCSI. The latter did not qualify as a legitimate labor contractor since it had no substantial capital. FCCSI only had a paid-up capital of one hundred thousand pesos (P100,000.00), out of the four hundred thousand pesos (P400,000.00) authorized capital. FCCSI relied mainly on what Manila Water would pay, from which it deducted an agency fee, and it had no other clients on collection. They were forced to transfer to FCCSI when their service contracts with Manila Water was about to expire on November 30, 1997. FCCSI was engaged in laboronly contracting which is prohibited by law.[14] Respondent bill collectors averred that even under the four-fold test of employer-employee relationship,

it appeared that Manila Water was their true employer based on the following circumstances: (1) it was Manila Water who engaged their services as bill collectors when it took over the operations of the east zone from MWSS on August 1, 1997; (2) it was Manila Water which paid their wages in the form of commissions every fifteenth (15th) and thirtieth (30th) day of each month; (3) Manila Water exercised the power of dismissal over them as bill collectors as evidenced by the instances surrounding their termination as set forth in their respective affidavits, and by the individual clearances issued to them not by FCCSI but by Manila Water, stating that the same was issued in connection with his termination of contract as Contract Collector of Manila Water Company; and (4) their work as bill collectors was clearly related to the principal business of Manila Water.[15] Respondent FCCSI, on the other hand, claimed that it is an independent contractor engaged in the business of providing messengerial or courier services, and it fulfills the criteria set forth under Department Order No. 10, Series of 1997.[16] It was issued a certificate of registration by the Department of Labor and Employment (DOLE) as an independent contractor. It was incorporated and registered with the SEC in November 1995. It was duly registered with the Department of Transportation and Communication (DOTC) and the Office of the Mayor of Makati City for authority to operate. It has sufficient capital in the form of tools, equipment, and machinery as attested to by the Postal Regulation Committee of the DOTC after conducting an ocular inspection. It provides similar services to Philippine Long Distance Telephone Company, Smart Telecommunications, Inc., and Home Cable, Inc. Under the terms and conditions of its service agreement with Manila Water, FCCSI has the power to hire, assign, discipline, or dismiss its own employees, as well as control the means and methods of accomplishing the assigned tasks, and it pays the wages of the employees.[17] The termination of employment of respondent bill collectors upon the expiration of FCCSIs contract with Manila Water did not mean the automatic termination or suspension of the employer-employee relationship between FCCSI and respondent bill collectors. Their termination after their six (6) month floating status, which was allowed by law, was due to the non-renewal of FCCSIs agreement with Manila Water and its inability to enter into a similar contract requiring the skills of respondent bill collectors.[18] Petitioner Manila Water, for its part, denied that there was an employer-employee relationship between its company and respondent bill collectors. Based on the agreement between FCCSI and Manila Water, respondent bill collectors are the employees of the former, as it is the former that has the right to select/hire, discipline, supervise, and control. FCCSI has a separate and distinct legal personality from Manila Water, and it was duly registered as an independent contractor before the DOLE.[19] Petitioner further claimed that individual service contracts signed by respondent bill collectors for a 3month period with Manila Water were valid and legal. The fact that the duration of the engagement was stated on the face of the contract dispels any bad faith on the part of the company. Fixed term contracts are allowed by law. Furthermore, respondent bill collectors allegation that the incorporation of ACGI was made as a condition of their continued employment was unfounded. They transferred to FCCSI on their own volition.[20] Petitioner Manila Water also averred that, under its organizational structure, there was no regular plantilla position of bill collector, which was the main reason why respondent bill collectors were not included in the list of MWSS employees absorbed by the company. The companys out-sourcing of courier needs to an independent contractor was valid and legal. On September 27, 2004, the Labor Arbiter (LA) rendered a decision,[21] the dispositive portion of which reads: WHEREFORE, premises considered, the complaints against respondent Manila Water Company, Inc. is dismissed for lack of jurisdiction due to want of employer-employee relationship. Respondent First Classic Courier Services is hereby ordered to pay complainants separation pay equivalent to one (1) month pay for every year of service, to wit: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. JOSE P. DALUMPINES - - - - - - - - P36,400.00 SUSANO MIRANDA - - - - - - - - P36,400.00 EDGAR PAMORAGA - - - - - - - - - P29,120.00 ARTHUR G. LAVISTI - - - - - - - - - P36,400.00 BENJAMIN TALAVERA, JR. - - - - P36,400.00 JOSE S.A. SIERRA - - - - - - - - - - P36,400.00 MELITANTE D. CASTRO - - - - - P36,400.00 BERNARDO S. MEDINA - - - - - - - P36,400.00 MELENCIO BAONGUIS - - - - - - - P36,400.00 NONITO V. FERNANDEZ - - - - - - P36,400.00 LEGARTO ESTEBAN - - - - - - - - P36,400.00 ROMEO B. CASTALONE - - - - - P36,400.00 RAMON C. REYES - - - - - - - - - - - P36,400.00 MOISES L. ZAPATERO - - - - - - - - P29,120.00 JOSE T. AGUILAR - - - - - - - - - - P36,400.00 ARNULFO T. JAMISON - - - - - - P36,400.00 ANGEL C. GARCIA - - - - - - - - - - - P36,400.00 JOSE TEODY P. VELASCO - - - - - P36,400.00 AUGUSTUS J. TANDOC - - - - - - - P36,400.00 EMMANUEL L. CAPIT - - - - - - - - P36,400.00

21. 22. 23 24. 25. 26. 27. 28.

WILLIAM AGANON - - - - - - - - - - P87,360.00 ROBERTO S. DAGDAG - - - - - - - - P36,400.00 MIGUEL J. LOPEZ - - - - - - - - - - - - P36,400.00 GEORGE CABRERA - - - - - - - - - - P36,400.00 BORROMEO ARMAN - - - - - - - - - P36,400.00 RONITO R. FRIAS - - - - - - - - - - - - P36,400.00 ANTONIO A. VERGARA - - - - - - - P36,400.00 RANDY T. CORTIGUERRA - - - - - P36,400.00 TOTAL - - - - - - - P1,055,600.00 SO ORDERED.[22] Respondent bill collectors and FCCSI filed their separate appeals with the National Labor Relations Commission (NLRC). On March 15, 2006, the NLRC rendered a decision[23] affirming in toto the decision of the LA. Respondent bill collectors filed a motion for reconsideration, but the same was denied in a resolution[24] dated April 28, 2006. Disgruntled, respondent bill collectors filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. On September 12, 2006, the CA rendered a Decision, the dispositive portion of which reads: WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE and the writ prayed for accordingly GRANTED. Consequently, the assailed Decision dated March 15, 2006 and Resolution dated April 28, 2006 of the National Labor Relations Commission are hereby ANNULED and SET ASIDE. A new judgment is hereby entered (a) declaring the petitioners as employees of private respondent Manila Water Company, Inc., and their termination as bill collectors as illegal; and (b) ordering private respondent Manila Water Company, Inc. to pay the petitioners separation pay equivalent to one (1) month for every year of service. In addition, private respondent Manila Water Company, Inc. is liable to pay ten percent (10%) of the total amount awarded as attorneys fees. No pronouncement as to costs. SO ORDERED.[25] Petitioner Manila Water and respondent bill collectors filed a motion for reconsideration. However, the CA denied their respective motions for reconsideration in a Resolution dated November 17, 2006. Hence, this petition. Petitioner Manila Water presented the following issues for resolution, whether the CA erred (1) in ruling that an employment relationship exists between respondent bill collectors and petitioner Manila Water; (2) in its application of Manila Water Company, Inc. v. Pea[26] to the instant case; and (3) in ruling that respondent FCCSI is not a bona fide independent contractor.[27] The petition is bereft of merit. In this case, the LA, the NLRC, and the CA reached different conclusions of law albeit agreeing on the same set of facts. It was in their interpretation and appreciation of the evidence that they differed. The CA ruled that respondent FCCSI was a labor-only contractor and that respondent bill collectors are employees of petitioner Manila Water, while the LA and the NLRC ruled otherwise. "Contracting" or "subcontracting" refers to an arrangement whereby a principal agrees to put out or farm out with a contractor or subcontractor the performance or completion of a specific job, work, or service within a definite or predetermined period, regardless of whether such job, work, or service is to be performed or completed within or outside the premises of the principal.[28] Contracting and subcontracting arrangements are expressly allowed by law but are subject to regulation for the promotion of employment and the observance of the rights of workers to just and humane conditions of work, security of tenure, self-organization, and collective bargaining.[29] In legitimate contracting, the trilateral relationship between the parties in these arrangements involves the principal which decides to farm out a job or service to a contractor or subcontractor, which has the capacity to independently undertake the performance of the job, work, or service, and the contractual workers engaged by the contractor or subcontractor to accomplish the job, work, or service.[30] Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and 2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business.[31] On the other hand, the Labor Code expressly prohibits labor-only contracting. Article 106 of the Code provides that there is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and to the same extent as if the latter were directly employed by him.[32] Department Order No. 18-02, Series of 2002, enunciates that labor-only contracting refers to an arrangement where the contractor or subcontractor merely recruits, supplies, or places workers to perform a job, work, or service for a principal, and any of the following elements are present: (i) the contractor or subcontractor does not have substantial capital or investment which relates to the job, work, or service to be performed and the employees recruited, supplied, or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) the contractor does

not exercise the right to control the performance of the work of the contractual employee.[33] "Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries, and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work, or service contracted out. The "right to control" refers to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.[34] In the instant case, the CA found that FCCSI is a labor-only contractor. Based on the factual findings of the CA, FCCSI does not have substantial capital or investment to qualify as an independent contractor, viz.: FCCSI was incorporated on November 14, 1995, with an authorized capital stock of P400,000.00, of which only P100,000.00 is actually paid-in. Going by the pronouncement in Pea, such capitalization can hardly be considered substantial. FCCSI and Manila Water make much of the 17 April 1997 letter of Postal Regulation Committee Chairman Francisco V. Ontalan, Jr. to DOTC Secretary Arturo T. Enrile recommending the renewal and/or extension of authority to FCCSI to operate private messengerial delivery services, which states in part: Ocular inspection conducted on its office premises and evaluation of the documents submitted, the firm during the six (6) months operation has generated employment to thirty six (36) messengers, and four (4) office personnel. The office equipt [sic] with modern facilities such as computers, printers, electric typewriter, working table, telephone lines, airconditioning unit, pigeon holes, working tables and delivery vehicles such as a Suzuki van and three (3) motorcycles. The firms audited financial statement for the period ending 31 December 1996 [shows] that it earned a net income of P253,000.00. x x x. The above document only proves that FCCSI has no sufficient investment in the form of tools, equipment and machinery to undertake contract services for Manila Water involving a fleet of around 100 collectors assigned to several branches and covering the service area of Manila Water customers spread out in several cities/towns of the East Zone. The only rational conclusion is that it is Manila Water that provides most if not all the logistics and equipment including service vehicles in the performance of the contracted service, notwithstanding that the contract between FCCSI and Manila Water states that it is the Contractor which shall furnish at its own expense all materials, tools and equipment needed to perform the tasks of collectors. Moreover, it must be emphasized that petitioners who are trained collectors performed tasks that cannot be simply categorized as messengerial. In fact, these are the very functions they were already discharging even before they joined FCCSI which invited or solicited their placement just about the expiration of their three (3)-month contract with Manila Water on November 28, 1997. The Agreement between FCCSI and Manila Water provides that FCCSI shall field the required number of trained collectors to the following Customer Relations Branch Office: Cubao, Espaa, San Juan-Mandaluyong, Marikina, Pasig, Taguig-Pateros and Makati. [35] As correctly ruled by the CA, FCCSIs capitalization may not be considered substantial considering that it had close to a hundred collectors covering the east zone service area of Manila Water customers. The allegation in the position paper of FCCSI that it serves other companies courier needs does not cure the fact that it has insufficient capitalization to qualify as independent contractor. Neither did FCCSI prove its allegation by substantial evidence other than by their self-serving declarations. What is evident is that it was Manila Water that provided the equipment and service vehicles needed in the performance of the contracted service, even if the contract between FCCSI and Manila Water stated that it was the Contractor which shall furnish at its own expense all materials, tools, and equipment needed to perform the tasks of collectors. Based on the four-fold test of employer-employee relationship, Manila Water emerges as the employer of respondent collectors. 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 employee's conduct. The most important of these elements 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.[36] The factual circumstances in the instant case are essentially the same as those cited in Manila Water Company, Inc. v. Hermio Pea.[37] In that case, 121 bill collectors, headed by Pea, filed a complaint for illegal dismissal against Manila Water. The bill collectors formed ACGI which was registered with the SEC. Manila Water, in opposing the claim of the bill collectors, claimed that there was no employer-employee relationship with the latter. It averred that the bill collectors were employees of ACGI, a separate entity engaged in collection services, an independent contractor which entered into a service contract for the collection of Manila Waters accounts. The Court ruled that ACGI was not an independent contractor but was engaged in labor-only contracting, and as such, is considered merely an agent of Manila Water.[38] The Court ratiocinated that: First, ACGI does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises, and other materials to qualify as an independent contractor. Second, the work of the bill collectors was directly related to the principal business or operation of Manila Water. Being in the business of providing water to the consumers in the east zone, the collection of the charges by the bill collectors for the company can only be categorized as related to, and in the pursuit of, the latter's business. Lastly, ACGI did not carry on an independent business or undertake the performance of its service contract in its own manner and using its own methods, free from the control and supervision of its principal, Manila Water. Since ACGI is obviously a labor-only contractor, the workers it supplied are considered employees of the principal. Furthermore, the activities performed by the bill collectors were necessary or

desirable to Manila Water's principal trade or business; thus, they are regular employees of the latter. Since Manila Water failed to comply with the requirements of termination under the Labor Code, the dismissal of the bill collectors was tainted with illegality.[39] The similarity between the instant case and Pea is very evident. First, the work set-up between the respondent contractor FCCSI and respondent bill collectors is the same as in Pea. Respondent bill collectors were individually hired by the contractor, but were under the direct control and supervision of the concessionaire. Second, they performed the same function of courier and bill collection services. Third, the element of control exercised by Manila Water over respondent bill collectors is essentially the same as in Pea, manifested in the following circumstances, viz.: (a) respondent bill collectors reported daily to the branch offices of Manila Water to remit their collections with the specified monthly targets and comply with the collection reporting procedures prescribed by the latter; (b) respondent bill collectors, except for Pamoraga and Zapatero, were among the 121 collectors who incorporated ACGI; (c) Manila Water continued to pay their wages in the form of commissions even after the employees alleged transfer to FCCSI. Manila Water paid the respondent bill collectors their individual commissions, and the lump sum paid by Manila Water to FCCSI merely represented the agency fee; and (d) the certification or individual clearances issued by Manila Water to respondent bill collectors upon the termination of the service contract with FCCSI. The certification stated that respondents were contract collectors of Manila Water and not of FCCSI. Thus, this Court agrees with the findings of the CA that if, indeed, FCCSI was the true employer of the bill collectors, it should have been the one to issue the certification or individual clearances. It should be remembered that the control test merely calls for the existence of the right to control, and not necessarily the exercise thereof. It is not essential that the employer actually supervises the performance of duties of the employee. It is enough that the former has a right to wield the power.[40] Respondent bill collectors are, therefore, employees of petitioner Manila Water. It cannot be denied that the tasks performed by respondent bill collectors are directly related to the principal business or trade of Manila Water. Payments made by the subscribers are the lifeblood of the company, and the respondent bill collectors are the ones who collect these payments. The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. In this case, the connection is obvious when we consider the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Finally, the repeated and continuing need for the performance of the job is sufficient evidence of the necessity, if not indispensability of the activity to the business.[41] WHEREFORE, in view of the foregoing, the Decision dated September 12, 2006 and the Resolution dated November 17, 2006 of the Court of Appeals in CA-G.R. SP No. 94909 are hereby AFFIRMED. Costs against petitioner. SO ORDERED.