[G.R. No. 192558. February 15, 2012.] BITOY JAVIER (DANILO P. JAVIER), petitioner, vs.

FLY ACE CORPORATION/FLORDELYN CASTILLO, respondents.

DECISION

MENDOZA, J :
p

This is a petition under Rule 45 of the Rules of Civil Procedure assailing the March 18, 2010 Decision 1 of the Court of Appeals (CA) and its June 7, 2010 Resolution, 2in CA-G.R. SP No. 109975, which reversed the May 28, 2009 Decision 3 of the National Labor Relations Commission (NLRC) in the case entitled Bitoy Javier v. Fly Ace/Flordelyn Castillo, 4 holding that petitioner Bitoy Javier (Javier) was illegally dismissed from employment and ordering Fly Ace Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement. Antecedent Facts On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor standard benefits. He alleged that he was an employee of Fly Ace since September 2007, performing various tasks at the respondent's warehouse such as cleaning and arranging the canned items before their delivery to certain locations, except in instances when he would be ordered to accompany the company's delivery vehicles, as pahinante; that he reported for work from Monday to Saturday from 7:00 o'clock in the morning to 5:00 o'clock in the afternoon; that during his employment, he was not issued an identification card and payslips by the company; that on May 6, 2008, he reported for work but he was no longer allowed to enter the company premises by the security guard upon the instruction of Ruben Ong (Mr. Ong), his superior; 5 that after several minutes of begging to the guard to allow him to enter, he saw Ong whom he approached and asked why he was being barred from entering the premises; that Ong replied by saying, "Tanungin mo anak mo;" 6 that he then went home and discussed the matter with his family; that he discovered that Ong had been courting his daughter Annalyn after the two met at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and convince him to spare her father from trouble but he refused to accede; that thereafter, Javier was terminated from his employment without notice; and that he was neither given the opportunity to refute the cause/s of his dismissal from work.
IASCTD

To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier was a stevedore or pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was subscribed before the Labor Arbiter (LA). 7 For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries. Sometime in December 2007, Javier was contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis at an agreed rate of P300.00 per trip, which was later increased to P325.00 in January 2008. Mr. Ong contracted Javier roughly 5 to 6 times only in a month whenever the vehicle of its contracted hauler, Milmar Hauling Services, was not available. On April 30, 2008, Fly Ace no longer needed the services of Javier. Denying that he was their employee, Fly Ace insisted that there was no illegal dismissal. 8 Fly Ace submitted a copy of its agreement with Milmar Hauling Services and copies of acknowledgment receipts evidencing payment to Javier for his contracted services bearing the words, "daily manpower (pakyaw/piece rate pay)" and the latter's signatures/initials. Ruling of the Labor Arbiter

On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to present proof that he was a regular employee of Fly Ace. He wrote:
Complainant has no employee ID showing his employment with the Respondent nor any document showing that he received the benefits accorded to regular employees of the Respondents. His contention that Respondent failed to give him said ID and payslips implies that indeed he was not a regular employee of Fly Ace considering that complainant was a helper and that Respondent company has contracted a regular trucking for the delivery of its products. Respondent Fly Ace is not engaged in trucking business but in the importation and sales of groceries. Since there is a regular hauler to deliver its products, we give credence to Respondents' claim that complainant was contracted on "pakiao" basis. As to the claim for underpayment of salaries, the payroll presented by the Respondents showing salaries of workers on "pakiao" basis has evidentiary weight because although the signature of the complainant appearing thereon are not uniform, they appeared to be his true signature. xxx xxx xxx Hence, as complainant received the rightful salary as shown by the above described payrolls, Respondents are not liable for salary differentials. 9
AEDcIH

Ruling of the NLRC On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and immediately concluded that he was not a regular employee simply because he failed to present proof. It was of the view that a pakyaw-basis arrangement did not preclude the existence of employer-employee relationship. "Payment by result . . . is a method of compensation and does not define the essence of the relation. It is a mere method of computing compensation, not a basis for determining the existence or absence of an employer-employee relationship." 10 The NLRC further averred that it did not follow that a worker was a job contractor and not an employee, just because the work he was doing was not directly related to the employer's trade or business or the work may be considered as "extra" helper as in this case; and that the relationship of an employer and an employee was determined by law and the same would prevail whatever the parties may call it. In this case, the NLRC held that substantial evidence was sufficient basis for judgment on the existence of the employer-employee relationship. Javier was a regular employee of Fly Ace because there was reasonable connection between the particular activity performed by the employee (as a 'pahinante') in relation to the usual business or trade of the employer (importation, sales and delivery of groceries). He may not be considered as an independent contractor because he could not exercise any judgment in the delivery of company products. He was only engaged as a "helper." Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For failing to present proof of a valid cause for his termination, Fly Ace was found to be liable for illegal dismissal of Javier who was likewise entitled to backwages and separation pay in lieu of reinstatement. The NLRC thus ordered:
WHEREFORE, premises considered, complainant's appeal is partially GRANTED. The assailed Decision of the labor arbiter is VACATED and a new one is hereby entered holding respondent FLY ACE CORPORATION guilty of illegal dismissal and non-payment of 13th month pay. Consequently, it is hereby ordered to pay complainant DANILO "Bitoy" JAVIER the following: 1.Backwages-P45,770.83 2.Separation pay, in lieu of reinstatement-8,450.00

3.Unpaid 13th month pay (proportionate)-5,633.33 TOTAL-P59,854.16 ========= All other claims are dismissed for lack of merit. SO ORDERED.
11

Ruling of the Court of Appeals On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace and reinstated the dismissal of Javier's complaint as ordered by the LA. The CA exercised its authority to make its own factual determination anent the issue of the existence of an employer-employee relationship between the parties. According to the CA:
xxx xxx xxx In an illegal dismissal case the onus probandi rests on the employer to prove that its dismissal was for a valid cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be established. . . . it is incumbent upon private respondent to prove the employee-employer relationship by substantial evidence. xxx xxx xxx It is incumbent upon private respondent to prove, by substantial evidence, that he is an employee of petitioners, but he failed to discharge his burden. The non-issuance of a company-issued identification card to private respondent supports petitioners' contention that private respondent was not its employee. 12

The CA likewise added that Javier's failure to present salary vouchers, payslips, or other pieces of evidence to bolster his contention, pointed to the inescapable conclusion that he was not an employee of Fly Ace. Further, it found that Javier's work was not necessary and desirable to the business or trade of the company, as it was only when there were scheduled deliveries, which a regular hauling service could not deliver, that Fly Ace would contract the services of Javier as an extra helper. Lastly, the CA declared that the facts alleged by Javier did not pass the "control test." He contracted work outside the company premises; he was not required to observe definite hours of work; he was not required to report daily; and he was free to accept other work elsewhere as there was no exclusivity of his contracted service to the company, the same being co-terminous with the trip only. 13 Since no substantial evidence was presented to establish an employer-employee relationship, the case for illegal dismissal could not prosper.
IDEHCa

The petitioners moved for reconsideration, but to no avail. Hence, this appeal anchored on the following grounds:
I. WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER WAS NOT A REGULAR EMPLOYEE OF FLY ACE.

II. WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER IS NOT ENTITLED TO HIS MONETARY CLAIMS. 14

The petitioner contends that other than its bare allegations and self-serving affidavits of the other employees, Fly Ace has nothing to substantiate its claim that Javier was engaged on a pakyaw basis. Assuming that Javier was indeed hired on a pakyaw basis, it does not preclude his regular employment with the company. Even the acknowledgment receipts bearing his signature and the confirming receipt of his salaries will not show the true nature of his employment as they do not reflect the necessary details of the commissioned task. Besides, Javier's tasks as pahinante are related, necessary and desirable to the line of business by Fly Ace which is engaged in the importation and sale of grocery items. "On days when there were no scheduled deliveries, he worked in petitioners' warehouse, arranging and cleaning the stored cans for delivery to clients." 15 More importantly, Javier was subject to the control and supervision of the company, as he was made to report to the office from Monday to Saturday, from 7:00 o'clock in the morning until 5:00 o'clock in the afternoon. The list of deliverable goods, together with the corresponding clients and their respective purchases and addresses, would necessarily have been prepared by Fly Ace. Clearly, he was subjected to compliance with company rules and regulations as regards working hours, delivery schedule and output, and his other duties in the warehouse. 16
aCSEcA

The petitioner chiefly relied on Chavez v. NLRC, 17 where the Court ruled that payment to a worker on a per trip basis is not significant because "this is merely a method of computing compensation and not a basis for determining the existence of employer-employee relationship." Javier likewise invokes the rule that, "in controversies between a laborer and his master, . . . doubts reasonably arising from the evidence should be resolved in the former's favour. The policy is reflected is no less than the Constitution, Labor Code and Civil Code." 18 Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally dismissed by the latter's failure to observe substantive and procedural due process. Since his dismissal was not based on any of the causes recognized by law, and was implemented without notice, Javier is entitled to separation pay and backwages. In its Comment, 19 Fly Ace insists that there was no substantial evidence to prove employer-employee relationship. Having a service contract with Milmar Hauling Services for the purpose of transporting and delivering company products to customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere "per trip basis." Javier, who was actually a loiterer in the area, only accompanied and assisted the company driver when Milmar could not deliver or when the exigency of extra deliveries arises for roughly five to six times a month. Before making a delivery, Fly Ace would turn over to the driver and Javier the delivery vehicle with its loaded company products. With the vehicle and products in their custody, the driver and Javier "would leave the company premises using their own means, method, best judgment and discretion on how to deliver, time to deliver, where and [when] to start, and manner of delivering the products." 20 Fly Ace dismisses Javier's claims of employment as baseless assertions. Aside from his bare allegations, he presented nothing to substantiate his status as an employee. "It is a basic rule of evidence that each party must prove his affirmative allegation. If he claims a right granted by law, he must prove his claim by competent evidence, relying on the strength of his own evidence and not upon the weakness of his opponent." 21 Invoking the case of Lopez v. Bodega City, 22 Fly Ace insists that in an illegal dismissal case, the burden of proof is upon the complainant who claims to be an employee. It is essential that an employeremployee relationship be proved by substantial evidence. Thus, it cites:
DaEATc

In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee was for a valid cause. However, before a case for illegal dismissal can prosper, an employeremployee relationship must first be established.

Fly Ace points out that Javier merely offers factual assertions that he was an employee of Fly Ace, "which are unfortunately not supported by proof, documentary or otherwise." 23 Javier simply assumed that he was an employee of Fly Ace, absent any competent or relevant evidence to support it. "He performed his contracted work outside the premises of the respondent; he was not even required to report to work at regular hours; he was not made to register his time in and time out every time he was contracted to work; he was not subjected to any disciplinary sanction imposed to other employees for company violations; he was not issued a company I.D.; he was not accorded the same benefits given to other employees; he was not registered with the Social Security System (SSS) as petitioner's employee; and, he was free to leave, accept and engage in other means of livelihood as there is no exclusivity of his contracted services with the petitioner, his services being coterminus with the trip only. All these lead to the conclusion that petitioner is not an employee of the respondents." 24 Moreover, Fly Ace claims that it had "no right to control the result, means, manner and methods by which Javier would perform his work or by which the same is to be accomplished." 25 In other words, Javier and the company driver were given a free hand as to how they would perform their contracted services and neither were they subjected to definite hours or condition of work. Fly Ace likewise claims that Javier's function as a pahinante was not directly related or necessary to its principal business of importation and sales of groceries. Even without Javier, the business could operate its usual course as it did not involve the business of inland transportation. Lastly, the acknowledgment receipts bearing Javier's signature and words "pakiao rate," referring to his earned salaries on a per trip basis, have evidentiary weight that the LA correctly considered in arriving at the conclusion that Javier was not an employee of the company. The Court affirms the assailed CA decision. It must be noted that the issue of Javier's alleged illegal dismissal is anchored on the existence of an employer-employee relationship between him and Fly Ace. This is essentially a question of fact. Generally, the Court does not review errors that raise factual questions. However, when there is conflict among the factual findings of the antecedent deciding bodies like the LA, the NLRC and the CA, "it is proper, in the exercise of Our equity jurisdiction, to review and re-evaluate the factual issues and to look into the records of the case and re-examine the questioned findings." 26 In dealing with factual issues in labor cases, "substantial evidence that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion is sufficient." 27 As the records bear out, the LA and the CA found Javier's claim of employment with Fly Ace as wanting and deficient. The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of Procedure of the NLRC 28 allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and objectively with little regard to technicalities or formalities but nowhere in the rules are they provided a license to completely discount evidence, or the lack of it. The quantum of proof required, however, must still be satisfied. Hence, "when confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to determine which party deserves credence on the basis of evidence received, subject only to the requirement that their decision must be supported by substantial evidence." 29Accordingly, the petitioner needs to show by substantial evidence that he was indeed an employee of the company against which he claims illegal dismissal. Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and cheese. It is, therefore, incumbent upon the Court to determine whether the party on whom the burden to prove lies was able to hurdle the same. "No particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Hence, while no particular form of evidence is required, a finding that such relationship exists must

still rest on some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as its qualitative aspects." 30 Although substantial evidence is not a function of quantity but rather of quality, the . . . circumstances of the instant case demand that something more should have been proffered. Had there been other proofs of employment, such as . . . inclusion in petitioner's payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-employee relationship." 31
EaTCSA

In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence. 32 "Whoever claims entitlement to the benefits provided by law should establish his or her right thereto . . . ." 33 Sadly, Javier failed to adduce substantial evidence as basis for the grant of relief. In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By way of evidence on this point, all that Javier presented were his self-serving statements purportedly showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his claim. Hence, the Court sees no reason to depart from the findings of the CA. While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in the company premises during weekdays arranging and cleaning grocery items for delivery to clients, no other proof was submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in strengthening Javier's cause. In said document, all Valenzuela attested to was that he would frequently see Javier at the workplace where the latter was also hired as stevedore. 34 Certainly, in gauging the evidence presented by Javier, the Court cannot ignore the inescapable conclusion that his mere presence at the workplace falls short in proving employment therein. The supporting affidavit could have, to an extent, bolstered Javier's claim of being tasked to clean grocery items when there were no scheduled delivery trips, but no information was offered in this subject simply because the witness had no personal knowledge of Javier's employment status in the company. Verily, the Court cannot accept Javier's statements, hook, line and sinker. The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to determine the existence of an employer-employee relationship,viz.: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. Of these elements, the most important criterion is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and methods by which the result is to be accomplished. 35 In this case, Javier was not able to persuade the Court that the above elements exist in his case. He could not submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javier's allegations did not establish that his relationship with Fly Ace had the attributes of an employeremployee relationship on the basis of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Ace's assertion that it had an agreement with a hauling company to undertake the delivery of its goods. It was also baffling to realize that Javier did not dispute Fly Ace's denial of his services' exclusivity to the company. In short, all that Javier laid down were bare allegations without corroborative proof.
IECAaD

Fly Ace does not dispute having contracted Javier and paid him on a "per trip" rate as a stevedore, albeit on a pakyaw basis. The Court cannot fail to note that Fly Ace presented documentary proof that Javier was indeed paid on a pakyaw basis per the acknowledgment receipts admitted as competent evidence by the LA. Unfortunately for Javier, his mere denial of the signatures affixed therein cannot automatically sway us to ignore the documents because "forgery cannot be presumed and must be proved by clear, positive and convincing evidence and the burden of proof lies on the party alleging forgery." 36 Considering the above findings, the Court does not see the necessity to resolve the second issue presented.

One final note. The Court's decision does not contradict the settled rule that "payment by the piece is just a method of compensation and does not define the essence of the relation." 37 Payment on a piece-rate basis does not negate regular employment. "The term 'wage' is broadly defined in Article 97 of the Labor Code as remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the essence of the relations. Nor does the fact that the petitioner is not covered by the SSS affect the employer-employee relationship. However, in determining whether the relationship is that of employer and employee or one of an independent contractor, each case must be determined on its own facts and all the features of the relationship are to be considered." 38 Unfortunately for Javier, the attendant facts and circumstances of the instant case do not provide the Court with sufficient reason to uphold his claimed status as employee of Fly Ace. While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its rights which are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for the less privileged in life, the Court has inclined, more often than not, toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. 39 WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the Court of Appeals and its June 7, 2010 Resolution, in CA-G.R. SP No. 109975, are herebyAFFIRMED.
aEIADT

SO ORDERED.

Carpio, * Peralta,** Abad and Perez, *** JJ., concur.

[G.R. No. L-31341. March 31, 1976.] PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION (PALEA) and PHILIPPINE AIR LINES SUPERVISORS' ASSOCIATION (PALSA),petitioners, vs. PHILIPPINE AIR LINES, INC., respondent. [G.R. No. L-31343. March 31, 1976.] PHILIPPINE AIR LINES, INC., petitioner, vs. PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION, PHILIPPINE AIR LINES SUPERVISORS ASSOCIATION and the COURT OF INDUSTRIAL RELATIONS, respondents.

petitioners in L-31341.

Mariano V. Ampil, Jr., Vicente T. Ocampo and Casiano P. Laguidon and Edwin G. Lagayada for Siguion Reyna, Montecillo, Belo & Ongsiako for respondent in L-31341. Siguion Reyna, Montecillo, Belo & Ongsiako for petitioner in L-31343.

Association PALSA, ACAP and PALEA.

Mariano V. Ampil, Jr. and Vicente T. Ocampo for respondent Philippine Air Lines Employees Casiano P. Laguidon and Edwin G. Lagayada for respondent PALSA.
SYNOPSIS

In the dispute between PAL and its two unions, the PALEA and the PALSA over the method of computing the basic and hourly rate of monthly-salaried employees the Industrial Court declared PAL's formula legal and proper. The unions moved for reconsideration, attributing error to PAL's wage formula, particularly in the use of 365 days as divisor for this would necessarily include off-days which, under the terms of the collective bargaining agreements entered into between the parties, were not paid days. A reversal of the decision was obtained but the industrial court ordered computation of pay differentials effective only July 1, 1957. From this resolution, both parties appealed, PAL contending that respondent court erred in holding that its formula for determining the basic daily or hourly rate of its monthly-salaried employees was not correct; that the unions, by their long period of consent and inaction, are estopped and barred from questioning the long-adopted formula; and that in the recovery of the pay differential, the three-year prescriptive period provided in the Eight-Hour Labor Law should apply. The unions appealed from that portion of the respondent court's resolution making the payment of the adjudicated differentials only from July 1, 1957, contending that because their claim is based on written contracts, i. e., the collective bargaining agreements, the differentials should be effective ten years from the filing of their original complaint, or from February 14, 1953. The Supreme Court held that the divisor in computing an employee's basic daily rate should be the actual working days in a year; that the long silence of the PAL employees relative to the adopted formula of their employer was innocent silence which cannot place them in estopped and that since the union members' claim anchored on the written contracts between the litigants, the ten-year prescriptive period provided by Article 1144 (1) of the New Civil Code should govern. Resolution affirmed with modification. SYLLABUS 1.LABOR RELATIONS; COMPENSATION; OFF-DAYS ARE NOT PAID DAYS. There should hardly be any doubt that off-days are not paid days. Precisely, off-days are rest days for the worker. He is not required to work on such days. This finds support not only in the principle in labor that the basis of remuneration or compensation is actual service rendered, but in the ever pervading labor spirit aimed at humanizing the conditions of the working man. Since during his off-days an employee is not compelled to work, he cannot, conversely, demand for his corresponding pay. If, however, a worker works on his off-day, our welfare laws duly reward him with a premium higher than what he would receive when he works on his regular working day. 2.ID.; ID.; ID.; METHOD OF COMPUTING EMPLOYEE'S BASIC DAILY RATE. The divisor in computing an employee's basic daily rate should be that actual working days in a year. The number of off-days are not to be counted precisely because on such off-days, an employee is not required to work. 3.ID.; ID.; ID.; RULING IN NAWASA VS. NWSA CONSOLIDATED UNIONS, ET AL., APPLICABLE TO INSTANT CASE. PAL maintains that the NAWASA doctrine (enunciated in G.R. No. L-18938, August 31, 1964) should not apply to a public utility like PAL which, from the nature of its operations, requires a whole-year-round, uninterrupted work by personnel. What PAL apparently forgets is that just like it, NAWASA is also a public utility which likewise requires its workers to work the whole year round. NAWASA is a government-owned corporation to which PAL is akin, it being a government-controlled corporations. PAL inked with the

represented unions of the employees collective bargaining agreements wherein it bound itself to duly compensate employees working on their off-days. The same situation obtained in the NAWASA case, hence, the settled doctrine should not be disturbed. 4.ID.; ID.; ACQUIESCENCE TO METHOD OF COMPUTATION OF DAILY RATE WILL NOT RESULT IN ESTOPPEL. PAL's formula of determining daily and hourly rate of pay has been decided and adopted by it unilaterally without the knowledge and express consent of the employees. It was only later on that the employees came to know of the formula's irregularity and its being violative of the collective bargaining agreements previously executed by PAL and the unions. PALSA immediately proposed that PAL use the correct method of competition, which proposal PAL chose to ignore. Clearly, therefore, the long-standing silence by the PAL employees is in truth and in fact innocent silence, which cannot place a party in estoppel. The rationale for this is not difficult to see. The doctrines of estoppel had its origin in equity. As such, its applicability depends, to a large extent, on the circumstance surrounding a particular case. Where, therefore, the neglect or omission alleged to have placed a party in estopped is actually fraught with badges of innocence, estoppel cannot be invoked. In another count, the unilateral adoption by PAL of an irregular wage formula being an act against public policy the doctrine of estoppel cannot give validity to the same. 5.ID.; ID.; CLAIM FOR PAY DIFFERENTIALS; APPLICABLE LAW. Where the claim involves the strict compliance with the provisions on wage computations embodied in the collective bargaining agreements inked between the litigants, the Civil Code provisions on the prescriptive period in the filing of action based on written contracts should apply. Where the claim for differentials is solely based on the Eight-Hour Labor Law, the three-year prescriptive period fixed therein will apply. 6.ID.; ID.; ID.; CONSTRUCTION IN FAVOR OF LABOR. Where there is doubt as to what labor legislation to apply to the grievances of the employees, that legislation which would enhance the right of the workers should be followed, consonant with the express pronouncement of the New Civil Code that: "In case of doubt, all labor legislation and labor contracts should be construed in favor of the safety and decent living of he laborer."

DECISION

MAKASIAR, J :
p

Before US are consolidated petitions to review the Court of Industrial Relations en banc resolution dated October 9, 1969 in CIR Case No 43-IPA. In G.R. No L-31341 (PALEA vs. PAL), petitioners question the date of effectivity of the adjudicated pay differentials due to the monthly-salaried employees of Philippine Air Lines, Inc. In G.R. No. L-31343 (PAL vs. PALEA), petitioner assails the reversal by the Court of Industrial Relations of its earlier resolution on the method employed by the Philippine Air Lines in computing the basic daily and hourly rate of its monthly-salaried employees. On February 14, 1963, the Philippine Air Lines Employees' Association (PALEA) and the Philippine Air Lines Supervisors' Association (PALSA) petitioners in G.R. No. L-31341 and respondents in G.R. No. 31343 commenced an action against the Philippine Air Lines (PAL) in the Court of Industrial Relations, praying that PAL be ordered to revise its method of computing the basic daily and hourly rate of its monthly-salaried employees, and necessarily, to pay them their accrued salary differentials. Sought to be revised is PAL's formula in computing wages of its employees:

Monthly salary x 12 =x(Basic daily rate) 365 (No. of calendar days in a year) x =Basic hourly rate 8

The unions would like PAL to modify the above formula in this wise:
Monthly salary x 12 =x(Basic daily rate) No. of actual working days x =Basic hourly rate 8

On May 23, 1964, the Court of Industrial Relations, through Presiding Judge Jose S. Bautista, issued an order denying the unions' prayer for a modified wage formula. Pertinent portion of the order reads:
"On the issue of rate of pay, PALSA and PALEA seek to change the long standing method in PAL of computing the basic daily and hourly rate of monthly salaried employees for the purpose of determining overtime pay, Sunday and legal holiday premium pay, night differential pay, vacation and sick leave pay, to wit, the monthly salary multiplied by 12 and dividing the product thereof by 365 and then the quotient by 8. PALEA and PALSA claim that the method of computing the basic daily and hourly rate of monthly salaried employees of PAL prior to the implementation of the 40-hour week schedule in PAL should be by dividing the monthly salary by 26 working days, and after the 40-hour week schedule, by dividing the monthly salary by 20 working days, and then dividing the quotient thereof in each case by 8. From the records, however, it appears that for many years since 1952, and even previously, PAL has been consistently and regularly determining the basic and hourly rates of monthly salaried employees by multiplying the monthly salary by 12 months and dividing the product by 365 days to arrive at the basic daily rate, and dividing the quotient by 8 to compute the basic hourly rate. There has been no attempt to revise this formula notwithstanding the various negotiations PAL had with the unions ever since its operations, and it was only on July 18, 1962, when PALSA, for the first time, proposed that it be changed in accordance with what is now alleged in the petition. This, however, was a mere proposal by PALSA for the adoption of a new formula; it was not a demand for the application of a formula claimed to be correct under the law. Under this circumstance, PALSA and PALEA are estopped from questioning the correctness and propriety of PAL's method of determining the basic hourly and daily rate of pay of its monthly salaried personnel, and considering the long period of time that elapsed before they brought their petition, are barred from insisting or demanding a different rate of pay formula.

"xxx xxx xxx

"Upon the foregoing, the Court, therefore, declares PAL's method of computing the basic daily and hourly rate of its monthly salaried employees as legal and proper, and denies the petition of PALSA and PALEA. "xxx xxx xxx"

(pp. 47-48, 49, rec. G.R. No. L-31343). On May 30, 1964, complaining unions promptly moved for the reconsideration of the above-said order (p. 51, rec. G.R. No. L-31343).

On June 9, 1964, the unions filed their memorandum in support of their motion for reconsideration alleging that the questioned order is (a) contrary to law, and (b) contrary to evidence adduced during the trial (p. 53, rec., G.R. No. L-31343). The unions attributed error to PAL's wage formula, particularly in the use of 365 days as divisor. The unions contended that the use of 365 days as divisor would necessarily include off-days which, under the terms of the collective bargaining agreements entered into between the parties, were not paid days. This is so since for work done on an off-day, an employee was paid 100% plus 25% or 100% plus 37 1/2% of his regular working hour rate. On the issue of prescription, the unions pointed out:
"With respect to the period of prescription, it is clear that since the claim arises from the written contracts or collective bargaining agreements between the petitioner unions and the PAL, the action thereon prescribes in ten years from the time the right of action accrues, in accordance with Article 1144 of the New Civil Code. . . ." (p. 68, rec., G.R. No. L-31343).

On June 26, 1964, the Philippine Air Lines answered point by point the unions' memorandum, in a prompt reply. On October 9, 1969, the Court of Industrial Relations, through Presiding Judge Arsenio I. Martinez, ordered the reversal of its decision dated May 23, 1964 and sustained the unions' method of wage computation. The industrial court, however, ordered the computation of pay differentials in accordance with the sustained method of computation effective only July 1, 1957. Said the Court of Industrial Relations in this regard:
". . . In this connection, however, it will be noted as previously stated, that this case was considered as an incident of Case No. 39-IPA, in which the issues involved were related to the application to the respondent PAL of the 40-Hour Week Law (Rep. Act 1880) from the date of its effectivity July 1, 1957 . .. "This Court therefore believes that in justice and equity and substantial merits of the case, the aforesaid pay differentials due to the employees involved herein by the application of the correct method of computation of the rate of pay should be paid by the respondent also beginning July 1, 1957" (p. 117, rec., G.R. No. L-31343).

From the above resolution, both parties appealed to this COURT. The Philippine Air Lines filed its appeal petition on December 13, 1969, while PALEA filed its petition for review on certiorari on January 3, 1970. I For easy comprehension, WE start with the Philippine Air Lines, Inc. versus Philippine Air Lines Employees Association, Philippine Air Lines Supervisors Association, and the Court of Industrial Relations, G.R. No. L31343. In this appeal, PAL emphasizes three assignments of error, to wit: 1.RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN HOLDING THAT THE METHOD OF COMPUTATION USED BY PAL IN DETERMINING THE BASIC DAILY OR HOURLY RATE OF ITS MONTHLY SALARIED EMPLOYEES WHICH IS:

MONTHLY SALARY x 12 =x(BASIC DAILY RATE) 365 (NO. OF CALENDAR DAYS IN A YEAR) x =BASIC HOURLY RATE 8

IS NOT CORRECT, CONSIDERING THAT PAL, A PUBLIC UTILITY WHERE THERE IS WORK EVERYDAY OF THE WEEK FOR MANY YEARS EVEN BEFORE REPUBLIC ACT 602 AND WITH THE CONSENT AND APPROVAL OF THE EMPLOYEES, CONSISTENT WITH SECTION 19 OF REPUBLIC ACT 602 PROHIBITING REDUCTION OF WAGES FOR OFF DAYS WHICH WAS SUSTAINED BY THIS HONORABLE COURT IN AUTOMOTIVE PARTS & EQUIPMENT CO., INC. VS. JOSE B. LINGAD, G.R. NO. L-26406, OCTOBER 31, 1969 HAS BEEN TREATING OFF-DAYS, SUCH AS SATURDAYS, SUNDAYS, COMPANY OBSERVED HOLIDAYS OR ANY OTHER DESIGNATED HOLIDAYS AS PAID DAYS. 2.RESPONDENT CIR ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN NOT FINDING THAT RESPONDENT UNIONS, BY THEIR LONG PERIOD OF CONSENT, ACQUIESCENCE, INACTION AND ACCEPTANCE OF BENEFITS THEREUNDER, ARE ESTOPPED AND BARRED FROM CLAIMING THAT PAL'S FORMULA FOR DETERMINING THE BASIC DAILY AND HOURLY RATE OF PAY IS INCORRECT. 3.RESPONDENT CIR ERRED AND ACTED IN EXCESS OF ITS JURISDICTION IN SENTENCING PAL TO PAY DIFFERENTIALS FOR OVERTIME WORK, NIGHTWORK, HOLIDAY AND SUNDAY PAY FROM JULY 1, 1957 CONSIDERING THAT UNDER THE THREE-YEAR PRESCRIPTIVE PERIOD PROVIDED IN SECTION 7-a OF COMMONWEALTH ACT NO. 444, AS AMENDED, THE EIGHT-HOUR LABOR LAW, RESPONDENT UNIONS, ASSUMING THEY HAD ANY CAUSE OF ACTION, COULD RECOVER ONLY FROM FEBRUARY 14, 1960 UP TO THE PRESENT SINCE RESPONDENT UNIONS FILED THEIR ACTION ONLY ON FEBRUARY 14, 1963. A. PAL's maiden argument has a strong tendency to mislead. In an effort to emphasize that off-days are paid days and therefore should be reckoned with in determining the divisor for computing daily and hourly rate, PAL leans heavily on what it considers as additional payment of 125% or 137 1/2%, as the case may be, of an employee's basic hourly rate, given to a worker who worked on his off-day. PAL would like us to believe that the word "additional" all but accentuates the existence of a regular basic rate; otherwise, the 125% or 137 1/2% shall be in addition to what? The industrial court, however, had this to say:
"Moreover, it will be noted that before September 4, 1961, a monthly salaried employee of PAL had to work 304 days only in a year, and after said date, he had to work only 258 days in a year, to be entitled to his equivalent yearly salary. When he worked on his off-day, he was paid accordingly (125%

or 137%), indicating that his off-days were not with pay. It seems illogical for said employee to be paid 125% or 137 1/2% of his basic daily rate, if such off-days are already with pay, as indicated by the company" (p. 107, rec., G.R. No. L-31343, emphasis supplied).

WE agree. There should hardly be any doubt that off-days are not paid days. Precisely, off-days are rest days for the worker. He is not required to work on such days. This finds support not only in the basic principle in labor that the basis of remuneration or compensation is actual service rendered, but in the ever-pervading labor spirit aimed at humanizing the conditions of the working man.

Since during his off-days an employee is not compelled to work, he cannot, conversely, demand for his corresponding pay. If, however, a worker works on his off-day, our welfare laws duly reward him with a premium higher than what he would receive when he works on his regular working day. Such being the case, the divisor in computing an employee's basic daily rate should be the actual working days in a year. The number of off-days are not to be counted precisely because on such off-days, an employee is not required to work. Simple common sense dictates that should an employee opt not to work which he can legally do on an off-day, and for such he gets no pay, he would be unduly robbed of a portion of his legitimate pay if and when in computing his basic daily and hourly rate, such off-day is deemed subsumed by the divisor. For it is elementary in the fundamental process of division that with a constant dividend, the bigger your divisor is, the smaller your quotient will be. It bears emphasis that OUR view above constitutes the rationale behind the landmark ruling, surprisingly, by the same trial Judge Jose S. Bautista of the Court of Industrial Relations, in National Waterworks and Sewerage Authority vs. NWSA Consolidated Unions, et al., (G.R. No. L-18938, August 31, 1964, 11 SCRA 766, 783-784), to which decision WE gave OUR affirmance. PAL maintains that the NAWASA doctrine should not apply to a public utility like PAL which, from the nature of its operations, requires a whole-year-round, uninterrupted work by personnel. What PAL apparently forgets is that just like it, NAWASA is also a public utility which likewise requires its workers to work the whole year round. Moreover, the NAWASA is a government-owned corporation to which PAL is akin, it being a government-controlled corporation. As will later be stated herein, PAL inked with the representative unions of the employees collective bargaining agreements wherein it bound itself on duly compensate employees working on their off-days. The same situation obtained in the NAWASA case, wherein WE held:
"And in the collective bargaining agreement entered into between the NAWASA and respondent unions it was agreed that all existing benefits enjoyed by the employees and laborers prior to its effectivity shall remain in force and shall form part of the agreement, among which certainly is the 25% additional compensation for work on Sundays and legal holidays theretofore enjoyed by said laborers and employees. It may, therefore, be said that while under Commonwealth Act No. 444 a public utility is not required to pay additional compensation to its employees and workers for work done on Sundays and legal holidays, there is, however, no prohibition for it to pay such additional compensation if it voluntarily agrees to do so. The NAWASA committed itself to pay this additional compensation. It must pay not because of compulsion of law but because of contractual obligation." (11 SCRA 766, 776).

The settled NAWASA doctrine should not be disturbed. B. PAL also vigorously argues that the unions' long standing silence with respect, and acquiescence, to PAL's method of computation has placed them in estoppel to impugn the correctness of the questioned wage formula. PAL furthermore contends that laches has likewise set in precisely because of such long-standing inaction. Our jurisprudence on estoppel is, however, to the effect that:

". . . (I)t is meet to recall that 'mere innocent silence will not work estoppel. There must also be some element of turpitude or negligence connected with the silence by which another is misled to his injury' (Civil Code of the Philippines by Tolentino, Vol. IV, p. 600) . . ." [Beronilla vs. GSIS, G.R. No. L-21723, Nov. 26, 1970, 36 SCRA 44, 46, 55, emphasis supplied].

In the cases before US, it is not denied that PAL's formula of determining daily and hourly rate of pay has been decided and adopted by it unilaterally without the knowledge and express consent of the employees. It was only later on that the employees came to know of the formula's irregularity and its being violative of the collective bargaining agreements previously executed by PAL and the unions. Precisely, PALSA immediately proposed that PAL use the correct method of computation, which proposal PAL chose to ignore. Clearly, therefore, the alleged long-standing silence by the PAL employees is in truth and in fact innocent silence, which cannot place a party in estoppel. The rationale for this is not difficult to see. The doctrine of estoppel had its origin in equity. As such, its applicability depends, to a large extent, on the circumstances surrounding a particular case. Where, therefore, the neglect or omission alleged to have placed a part in estoppel is actually fraught with badges of innocence, estoppel cannot be invoked. This was the essence of OUR ruling in the case of Mirasol vs. Municipality of Tabaco (43 Phil. 610, 614). And this, in quintessence, was the compelling reason why in Lodovica vs. Court of Appeals (L-29678, July 18 1975, 65 SCRA, 154, 158), WE held that a party who had no knowledge of or gave no consent to a transaction may not be estopped by it. Furthermore, jurisprudence likewise fortifies the position that in the interest of public policy, estoppel and laches cannot arrest recovery of overtime compensation. The case of Manila Terminal Co. vs. CIR (G.R. No. L9265, April 29, 1957, 91 Phil. 625), is squarely in point. In this case WE intoned:
"The principle of estoppel and laches cannot well be invoked against the Association. In the first place, it would be contrary to the spirit of the Eight-Hour Labor Law, under which, as already seen, the laborers cannot waive their right to extra compensation. In the second place, the law principally obligates the employer to observe it, so much so that it punishes the employer for its violation and leaves the employee or laborer free and blameless. In the third place, the employee or laborer is in such a disadvantageous position as to be naturally reluctant or even apprehensive in asserting any claim which may cause the employer to devise a way for exercising his right to terminate the employment. "If the principle of estoppel and laches is to be applied, it may bring about a situation, whereby the employee or laborer, who cannot expressly renounce their right to extra compensation under the EightHour Labor Law, may be compelled to accomplish the same thing by mere silence or lapse of time, thereby frustrating the purpose of the law by indirection" (91 Phil. 625, 633, emphasis supplied).

In another count, the unilateral adoption by PAL of an irregular wage formula being an act against public policy, the doctrine of estoppel cannot give validity to the same (Auyong Hian vs. Court of Tax Appeals, 59 SCRA 110, 112). II G.R. No. L-31341 is an appeal from that portion of the en banc resolution of the Court of Industrial Relations dated October 9, 1969 in case 43-IPA making the payment of the adjudicated pay differentials effective only from July 1, 1957. In their lone assignment of error, the unions argue that pay differentials should be effective February 14, 1953, or ten (10) years from the date of the filing of their original complaint; because the claim for pay differentials is based on written contracts i.e., the collective bargaining agreements between PAL and the

employees' representative unions and under Article 1144(1) of the Civil Code, actions based on written contracts prescribe in ten ( 10) years. PAL, on the other hand, maintains that the employees' claim for pay differentials is "an action to enforce a cause of action under the Eight-Hour Labor Law (CA No. 444, as amended)" (p. 592, rec., G.R. No. L-31341). As such, the applicable provision is Section 7-a of CA No. 444, which reads:
"Sec. 7-a. Any action to enforce any cause of action under this Act shall be commenced within three years after the cause of action accrued, otherwise such action shall be forever barred; provided, however, that actions already commenced before the effective date of this Act shall not be affected by the period herein prescribed" (As amended by Rep. Act No. 1993, approved June 22, 1957, emphasis supplied).

Moreover, PAL argues that even assuming that the issue calls for the application of Article 1144(1) of the New Civil Code, a general law, still in case of conflict, Commonwealth Act No. 444, as amended, should prevail because the latter is a special law. WE believe that the present case calls for the application of the Civil Code provisions on the prescriptive period in the filing of actions based on written contracts. The reason should be fairly obvious. Petitioners' claim fundamentally involves the strict compliance by PAL of the provisions on wage computation embodied in the collective bargaining agreements inked between it and the employees' representative unions. These collective bargaining agreements were: the PAL-PALEA collective bargaining agreement of 1952-53; the PAL-PALEA collective bargaining agreement of 1956-59; the PAL-PALEA collective bargaining agreement of 1959-61 (with Article VI as supplement); the PAL-PALEA agreement of September 4, 1961; the PAL-ACAP collective bargaining agreement of 1952-54; the PAL-ACAP collective bargaining agreement of September 6, 1955; the PAL-ACAP collective bargaining agreement of 1959-61; the PAL-PALSA collective bargaining agreement of 1959-62; and the supplementary PAL-PALSA collective bargaining agreement (pp. 54-55, rec., G.R. No. L31343). The three-year prescriptive period fixed in the Eight-Hour Labor Law (CA No. 444, as amended) will apply, if the claim for differentials for overtime work is solely based on said law, and not on a collective bargaining agreement or any other contract. In the instant cases, the claim for overtime compensation is not so much because of Commonwealth Act No. 444, as amended, but because the claim is a demandable right of the employees, by reason of the above-mentioned collective bargaining agreements. That is precisely why petitioners did not make any reference as to the computation for overtime work under the Eight-Hour Labor Law (Secs. 3 and 4, CA No. 444), and instead insisted that work computation provided in the collective bargaining agreements between the parties be observed. Since the claim for pay differentials is principally anchored on the written contracts between the litigants, the ten-year prescriptive period provided by Art. 1144(1) of the New Civil Code should govern. (General Insurance and Surety Corp. vs. Republic, L-13873, January 31, 1963, 7 SCRA 4; Heirs of the Deceased Juan Sindiong vs. Committee on Burnt Areas and Improvements of Cebu, L-15975, April 30, 1964, 10 SCRA 715; Conde vs. Cuenca and Malaga, L-9405, July 31, 1956; Veluz vs. Veluz, L-23261, July 31, 1968, 24 SCRA 559). Finally, granting arguendo that there is doubt as to what labor legislation to apply to the grievances of the employees in the cases at bar, it is OUR view that legislation which would enhance the plight of the workers should be followed, consonant with the express pronouncement of the New Civil Code that:
"In case of doubt, all labor legislation and labor contracts should be construed in favor of the safety and decent living of the laborer" (Article 1702).

WHEREFORE, THE APPEALED RESOLUTION IS HEREBY AFFIRMED, WITH THE MODIFICATION THAT PAY DIFFERENTIALS BE PAID EFFECTIVE FEBRUARY 14, 1953. WITH COSTS AGAINST PHILIPPINE AIR LINES, INC. IN BOTH CASES. Teehankee, (Chairman), Esguerra, Muoz Palma and Martin, JJ., concur.

[G.R. No. L-63578. July 11, 1985.] PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), CECILIO V. BAUTISTA, PANTALEON ARAYATA, CATALINO BAEZ, LUCIO CANTILLO, ROBERTO ESPINELI, JASMIN A. ILANO, ALFONSO JOSE, ROMULO NERY, ET AL., petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), PHILIPPINE AIRLINES, INC. (PAL), BENIGNO TODA JR. and GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS),respondents.

Siguion Reyna, Montecillo & Ongsiako Law Office for respondent B. Toda, Jr.

DECISION

MAKASIAR, J :
p

This petition for certiorari with preliminary injunction seeks to annul the resolution dated May 31, 1977 of respondent National Labor Relations Commission, the dispositive portion of which reads as follows:
"WHEREFORE, the Commission has resolved, as it hereby resolves, to recall and declare inoperative the Partial Writ of Execution dated December 6, 1976, and affirm the Order dated March 4, 1977 with modification that only pay differentials beginning February 14, 1953 up to September 8, 1963 be ordered paid. "SO ORDERED."

It appears that on March 31, 1976 this Court promulgated a decision in L-31341 (Philippine Air Lines Employees Association [PALEA], et al. vs. Philippine Air Lines, Inc.) and L-31343 (Philippine Air Lines Inc. vs. Philippine Air Lines Employees Association, et al.) affirming the resolution of the defunct Court of Industrial Relations sustaining PALEA's method of computing the basic daily and hourly rate of PAL's monthly salaried employees, to wit: Monthly Salary x 12 No. of Actual Working Days=X (Basic daily rate) x =Basic hourly rate 8

with modification that the pay differentials be paid effective February 14, 1953 instead of July 1, 1957. Both parties filed their respective motions for reconsideration. PAL insisted that the method of computation of the basic daily rate of pay should be to divide the yearly salary by 365 days, to wit: Monthly Salary x 12 365 days (No. of calendar days in a year)=X (Basic daily wage) x =Basic hourly rate 8 PALEA, on the other hand, prayed that the pay differentials to be paid to the employees involved should bear interest to be fixed by the Court from the date of the filing of the complaint on February 14, 1963.

prcd

This Court denied both motions for lack of merit and declared the denial as final in the resolution of August 20, 1976. Entry of judgment was made on August 29, 1976. On September 27, 1976 PALEA filed with the NLRC a "motion for immediate execution and payments of benefits under the award and motion for immediate verification, examination and computation and payment of back differentials." After hearing, Labor Arbiter Francisco delos Reyes issued a partial writ of execution dated December 6, 1976 directing the Deputy Sheriff of the NLRC to implement, beginning October 1, 1976, the CIR resolution as affirmed with modification by the Supreme Court.. On March 4, 1977, Labor Arbiter delos Reyes granted the second portion of the motion which was filed on September 27, 1976 "for immediate verification, examination and computation and payment of back differential," and ordered the computation of differential from February 14, 1953 up to September 30, 1976. On March 28, 1977 PAL filed with the NLRC an appeal with prayer to quash the order of March 4, 1977, and a motion to stay execution of the partial writ of execution and the aforesaid order of March 4, 1977. On May 31, 1977, the NLRC issued the questioned resolution. The NLRC reasoned out that the application of the adjudged correct method or formula as adopted in the Supreme Court's decision was based on the specific provisions of the collective bargaining agreement still existing from 1952 until its expiry on September 8, 1963; and that beginning September 9, 1963 the aforesaid formula ceased to be effective. On March 29, 1983 or after a lapse of about six (6) years, the present petition for certiorari was filed before this Court assailing the said resolution.
LibLex

Petitioners maintain that this Court in its decision of March 31, 1976 had already settled the correct method or formula of computation of the basic daily rate of pay of PAL's monthly salaried employees in determining their overtime pay, night differential pay, holiday premium pay, vacation and sick leave pay effective from February 14, 1953. Thus, when the NLRC declared that the said method or formula ceased to be effective on September 8, 1963, the consequence would be to revert to the use of what had been adjudged by this Court as an erroneous method of computation of the basic daily rate of pay, by dividing the yearly salary by 365 days. The petition should be dismissed.

Under the terms of the collective bargaining agreements entered into between the parties from 1952 up to September 8, 1963, which were the subject matter of L-31341 and L-31343, off-days were not paid days. Hence, the unions contested the PAL's wage formula of computing the basic daily rate of the latter's monthlysalaried employees by using 365 days as divisor thus including even the off-days. In Our decision of March 31, 1976 in said cases, We categorically ruled that "off-days are not paid days. Such being the case, the divisor in computing an employee's basic daily rate should be the actual working days in a year. The number of off-days are not to be counted precisely because on such off-days, an employee is not required to work." It should be made clear, however, that such pronouncement was based on the provisions of the collective bargaining agreements existing from 1952 until September 8, 1963. As alleged by the respondents and found out by the respondent Commission and which was not disputed by petitioners, after September 8, 1963, there was a change of collective bargaining agreement. And the parties incorporated in the subsequent collective bargaining agreements provisions considering such "off-days" as already "paid". Hence, the method of computing the basic and hourly rate of respondent PAL's monthly-salaried employees which We decreed in G.R. No. L-31341 and No. L-31343 is no longer applicable after September 8, 1963. WE agree with the respondent Commission in limiting the application of Our decision of March 31, 1976 from February 14, 1953 to September 8, 1963. The respondent Commission ruled in this wise:
"To our mind the change of the CBA provisions interpreted by the Court can lead to no other conclusion than that the Decision is co-terminous with the last CBA containing the interpreted provision. This must be so. For, the set of facts which justified the assumption that holidays and off days were not paid, no longer obtains. The facts which form the basis of the CIR en banc's disposition is clear in pages 9 and 10 of the Resolution itself. xxx xxx xxx "What is more, the Supreme Court final decision in this proceeding, affirming the Resolution of the CIR sitting en banc, in adopting the correct formula for determining the basic daily and hourly rate of monthly rate of monthly salaried PAL employees pursuant to specific provisions of the successive CBA's from 1952 up to that which expired on September 8, 1963, specifically anchored on the assumption that `off days' are not yet paid, could not possibly have intended to unreasonably extend the effects of

the same Decision to subsequent periods of time covered by subsequent CBA's wherein the parties, obviously to prevent repetition of the same troubles arising from their different interpretations leading to the present dispute, precisely incorporated provisions clearly considering such `off-days' as already paid.

"In other words, by any stretch of valid argumentation, logic communes with reason to support the conclusion that the coverage of the CIR en banc resolution as affirmed by the Supreme Court is limited to the period from February 14, 1953 to September 8, 1963. Clearly then, beginning September 9,

1963, the adjudged formula in computing the daily and hourly rate of monthly salaried PAL employees ceased to be effective. A fortiori, there exist no valid rationale for the questioned Partial Writ of Execution" (italics supplied; pp. 123-127, rec.).

Finally, petitioners' cause of action questioning respondent Commission's resolution of May 31, 1977 is almost six (6) years late as the present petition for certiorari was filed only on March 29, 1983. The questioned resolution having long become final and executory, this Court has no jurisdiction to entertain the present petition.
cdll

WHEREFORE, THE PETITION FOR CERTIORARI IS HEREBY DISMISSED FOR LACK OF MERIT. NO COSTS. SO ORDERED.

Aquino, Concepcion Jr., Escolin and Cuevas, JJ., concur. Abad Santos, J., took no part.

[G.R. No. 166920. February 19, 2007.] PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER HENRICHSEN, petitioners, vs. KLAUS K. SCHONFELD, respondent.

DECISION

CALLEJO, SR., J :
p

Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court of the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 76563. The CA decision reversed the Resolution of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 029319-01, which, in turn, affirmed the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787-00 dismissing the complaint of respondent Klaus K. Schonfeld. The antecedent facts are as follows: Respondent is a Canadian citizen and was a resident of New Westminster, British Columbia, Canada. He had been a consultant in the field of environmental engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a corporation duly established and incorporated in accordance with the laws of the Philippines. The primary purpose of PPI was to engage in the business of providing specialty and technical services both in and out of the Philippines. 2 It is a subsidiary of Pacific Consultants International of Japan (PCIJ). The president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan. Henrichsen commuted from Japan to Manila and vice versa, as well as in other countries where PCIJ had business. In 1997, PCIJ decided to engage in consultancy services for water and sanitation in the Philippines. In October 1997, respondent was employed by PCIJ, through Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department. However, PCIJ assigned him as PPI sector manager in the Philippines. His salary was to be paid partly by PPI and PCIJ. On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in Canada, requesting him to accept the same and affix his conformity thereto. Respondent made some revisions in the letter of employment and signed the contract. 3 He then sent a copy to Henrichsen. The letter of employment reads:
Mr. Klaus K. Schonfeld II-365 Ginger Drive New Westminster, B.C. Canada V3L 5L5 Tokyo 7 January 1998 Dear Mr. Schonfeld,

Letter of Employment This Letter of Employment with the attached General Conditions of Employment constitutes the agreement under which you will be engaged by our Company on the terms and conditions defined hereunder. In case of any discrepancies or contradictions between this Letter of Employment and the General Conditions of Employment, this Letter of Employment will prevail.
THDIaC

You will, from the date of commencement, be ["seconded"] to our subsidiary Pacicon Philippines, Inc.

in Manila, hereinafter referred as Pacicon. Pacicon will provide you with a separate contract, which will define that part of the present terms and conditions for which Pacicon is responsible. In case of any discrepancies or contradictions between the present Letter of Employment and the contract with Pacicon Philippines, Inc. or in the case that Pacicon should not live up to its obligations, this Letter of Employment will prevail.
1.Project Country:The Philippines with possible short-term assignments in other countries. 2.Duty Station:Manila, the Philippines. 3.Family Status:Married. 4.Position:Sector Manager, Water and Sanitation. 5.Commencement:1st October 1997. 6.Remuneration:US$7,000.00 per month. The amount will be

paid partly as a local salary (US$2,100.00 per month) by Pacicon and partly as an offshore salary (US$4,900.00) by PCI to bank accounts to be nominated by you.

A performance related component corresponding to 17.6% of the total annual remuneration, subject to satisfactory performance against agreed tasks and targets, paid offshore. 7.Accommodation:The company will provide partly furnished accommodation to a rent including association fees, taxes and VAT not exceeding the Pesos equivalent of US$2,900.00 per month. 8.Transportation:Included for in the remuneration. 9.Leave Travels:You are entitled to two leave travels per year. 10.Shipment of Personal Effects:The maximum allowance is US$4,000.00. 11.Mobilization Travel:Mobilization travel will be from New Westminster, B.C., Canada.

This letter is send (sic) to you in duplicate; we kindly request you to sign and return one copy to us. Yours sincerely, Pacific Consultants International Jens Peter Henrichsen Above terms and conditions accepted Date: 2 March 1998 (Sgd.) Klaus Schonfeld as annotated and initialed
4

Section 21 of the General Conditions of Employment appended to the letter of employment reads:
21Arbitration Any question of interpretation, understanding or fulfillment of the conditions of employment, as well as any question arising between the Employee and the Company which is in consequence of or connected with his employment with the Company and which can not be settled amicably, is to be finally settled, binding to both parties through written submissions, by the Court of Arbitration in London. 5

Respondent arrived in the Philippines and assumed his position as PPI Sector Manager. He was accorded the status of a resident alien. As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing the Labor Code, PPI applied for an Alien Employment Permit (Permit) for respondent before the Department of Labor and Employment (DOLE). It appended respondent's contract of employment to the application.
IHAcCS

On February 26, 1999, the DOLE granted the application and issued the Permit to respondent. It reads:
Republic of the Philippines Department of Labor & Employment National Capital Region ALIEN EMPLOYMENT PERMIT ISSUED TO: SCHONFELD, KLAUS KURT DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian POSITION: VP WATER & SANITATION EMPLOYER: PACICON PHILIPPINES, INC. ADDRESS: 27/F Rufino Pacific Towers Bldg.,

Ayala Ave., Makati City

PERMIT ISSUED ON: February 26, 1999SIGNATURE OF BEARER: VALID UNTIL: January 7, 2000(Sgd.) APPROVED: BIENVENIDO S. LAGUESMA By: MAXIMO B. ANITO REGIONAL DIRECTOR (Emphasis supplied)
6

Respondent received his compensation from PPI for the following periods: February to June 1998, November to December 1998, and January to August 1999. He was also reimbursed by PPI for the expenses he incurred in connection with his work as sector manager. He reported for work in Manila except for occasional assignments abroad, and received instructions from Henrichsen. 7 On May 5, 1999, respondent received a letter from Henrichsen informing him that his employment had been terminated effective August 4, 1999 for the reason that PCIJ and PPI had not been successful in the water and sanitation sector in the Philippines. 8 However, on July 24, 1999, Henrichsen, by electronic mail, 9 requested respondent to stay put in his job after August 5, 1999, until such time that he would be able to report on certain projects and discuss all the opportunities he had developed. 10 Respondent continued his work with PPI until the end of business hours on October 1, 1999. Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled some of his claims (US$5,635.99), but refused to pay the rest. On December 5, 2000, respondent filed a Complaint 11 for Illegal Dismissal against petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as NLRC-NCR Case No. 30-12-04787-00. In his Complaint, respondent alleged that he was illegally dismissed; PPI had not notified the DOLE of its decision to close one of its departments, which resulted in his dismissal; and they failed to notify him that his employment was terminated after August 4, 1999. Respondent also claimed for separation pay and other unpaid benefits. He alleged that the company acted in bad faith and disregarded his rights. He prayed for the following reliefs:
1.Judgment be rendered in his favor ordering the respondents to reinstate complainant to his former position without loss of seniority and other privileges and benefits, and to pay his full backwages from the time compensation was with held (sic) from him up to the time of his actual reinstatement. In the alternative, if reinstatement is no longer feasible, respondents must pay the complainant full backwages, and separation pay equivalent to one month pay for every year of service, or in the amount of US$16,400.00 as separation pay; 2.Judgment be rendered ordering the respondents to pay the outstanding monetary obligation to complainant in the amount of US$10,131.76 representing the balance of unpaid salaries, leave pay, cost of his air travel and shipment of goods from Manila to Canada; and
SHCaEA

3.Judgment be rendered ordering the respondent company to pay the complainant damages in the amount of no less than US $10,000.00 and to pay 10% of the total monetary award as attorney's fees, and costs.

Other reliefs just and equitable under the premises are, likewise, prayed for.

12

Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was improperly laid. It averred that respondent was a Canadian citizen, a transient expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a foreign corporation with principal office in Tokyo, Japan. Since respondent's cause of action was based on his letter of employment executed in Tokyo, Japan dated January 7, 1998, under the principle of lex loci contractus, the complaint should have been filed in Tokyo, Japan. Petitioners claimed that respondent did not offer any justification for filing his complaint against PPI before the NLRC in the Philippines. Moreover, under Section 12 of the General Conditions of Employment appended to the letter of employment dated January 7, 1998, complainant and PCIJ had agreed that any employment-related dispute should be brought before the London Court of Arbitration. Since even the Supreme Court had already ruled that such an agreement on venue is valid, Philippine courts have no jurisdiction. 13

Respondent opposed the Motion, contending that he was employed by PPI to work in the Philippines under contract separate from his January 7, 1998 contract of employment with PCIJ. He insisted that his employer was PPI, a Philippine-registered corporation; it is inconsequential that PPI is a wholly-owned subsidiary of PCIJ because the two corporations have separate and distinct personalities; and he received orders and instructions from Henrichsen who was the president of PPI. He further insisted that the principles of forum non conveniens and lex loci contractus do not apply, and that although he is a Canadian citizen, Philippine Labor Laws apply in this case. Respondent adduced in evidence the following contract of employment dated January 9, 1998 which he had entered into with Henrichsen:
Mr. Klaus K. Schonfeld II-365 Ginger Drive New Westminster, B.C. Canada V3L 5L5 Manila 9 January, 1998 Dear Mr. Schonfeld, Letter of Employment This Letter of Employment with the attached General Conditions of Employment constitutes the agreement, under which you will be engaged by Pacicon Philippines, Inc. on the terms and conditions defined hereunder. 1.Project Country:The Philippines with possible assignments in other countries. 2.Duty Station:Manila, the Philippines. 3.Family Status:Married. 4.Position:Sector Manager Water and Sanitation Sector. 5.Commencement:1 January, 1998.

6.Remuneration:US$3,100.00 per month payable to a bank account to be nominated by you. 7.Accommodation:The company will provide partly furnished accommodation to a rent including association fees, taxes and VAT not exceeding the Pesos equivalent of US$2300.00 per month.
TcDIEH

8.Transportation:Included for in the remuneration. 9.Shipment of PersonalThe maximum allowance is US$2500.00 Effects:in connection with initial shipment of personal effects from Canada. 10.Mobilization Travel:Mobilization travel will be from New Westminster, B.C., Canada. This letter is send (sic) to you in duplicate; we kindly request you to sign and return one copy to us. Yours sincerely, Pacicon Philippines, Inc. Jens Peter Henrichsen President 14

According to respondent, the material allegations of the complaint, not petitioners' defenses, determine which quasi-judicial body has jurisdiction. Section 21 of the Arbitration Clause in the General Conditions of Employment does not provide for an exclusive venue where the complaint against PPI for violation of the Philippine Labor Laws may be filed. Respondent pointed out that PPI had adopted two inconsistent positions: it was first alleged that he should have filed his complaint in Tokyo, Japan; and it later insisted that the complaint should have been filed in the London Court of Arbitration. 15 In their reply, petitioners claimed that respondent's employer was PCIJ, which had exercised supervision and control over him, and not PPI. Respondent was dismissed by PPI via a letter of Henrichsen under the letterhead of PCIJ in Japan. 16 The letter of employment dated January 9, 1998 which respondent relies upon did not bear his (respondent's) signature nor that of Henrichsen. On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners' Motion to Dismiss. The dispositive portion reads:
WHEREFORE, finding merit in respondents' Motion to Dismiss, the same is hereby granted. The instant complaint filed by the complainant is dismissed for lack of merit. SO ORDERED.
17

The Labor Arbiter found, among others, that the January 7, 1998 contract of employment between respondent and PCIJ was controlling; the Philippines was only the "duty station" where Schonfeld was required to work under the General Conditions of Employment. PCIJ remained respondent's employer despite his having been sent to the Philippines. Since the parties had agreed that any differences regarding employer-employee relationship should be submitted to the jurisdiction of the court of arbitration in London, this agreement is controlling.

On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed the latter's decision in toto. 18 Respondent then filed a petition for certiorari under Rule 65 with the CA where he raised the following arguments:
I WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE LABOR ARBITER'S DECISION CONSIDERING THAT: A.PETITIONER'S TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS INTERNATIONAL OF JAPAN BUT RESPONDENT COMPANY, AND THEREFORE, THE LABOR ARBITER HAS JURISDICTION OVER THE INSTANT CASE; AND
cHCIEA

B.THE PROPER VENUE FOR THE PRESENT COMPLAINT IS THE ARBITRATION BRANCH OF THE NLRC AND NOT THE COURT OF ARBITRATION IN LONDON. II WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DISMISSAL OF THE COMPLAINT CONSIDERING THAT PETITIONER'S TERMINATION FROM EMPLOYMENT IS ILLEGAL: A.THE CLOSURE OF RESPONDENT COMPANY'S WATER AND SANITATION SECTOR WAS NOT BONA FIDE. B.ASSUMING ARGUENDO THAT THE CLOSURE OF RESPONDENT COMPANY'S WATER AND SANITATION SECTOR WAS JUSTIFIABLE, PETITIONER'S DISMISSAL WAS INEFFECTUAL AS THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) AND PETITIONER WAS NOT NOTIFIED THIRTY (30) DAYS BEFORE THE ALLEGED CLOSURE. 19

Respondent averred that the absence or existence of a written contract of employment is not decisive of whether he is an employee of PPI. He maintained that PPI, through its president Henrichsen, directed his work/duties as Sector Manager of PPI; proof of this was his letter-proposal to the Development Bank of the Philippines for PPI to provide consultancy services for the Construction Supervision of the Water Supply and Sanitation component of the World Bank-Assisted LGU Urban Water and Sanitation Project. 20 He emphasized that as gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him by DOLE on February 26, 1999, he is an employee of PPI. It was PPI president Henrichsen who terminated his employment; PPI also paid his salary and reimbursed his expenses related to transactions abroad. That PPI is a wholly-owned subsidiary of PCIJ is of no moment because the two corporations have separate and distinct personalities. The CA found the petition meritorious. Applying the four-fold test 21 of determining an employer-employee relationship, the CA declared that respondent was an employee of PPI. On the issue of venue, the appellate court declared that, even under the January 7, 1998 contract of employment, the parties were not precluded from bringing a case related thereto in other venues. While there was, indeed, an agreement that issues between the parties were to be resolved in the London Court of Arbitration, the venue is not exclusive, since there is no stipulation that the complaint cannot be filed in any other forum other than in the Philippines. On November 25, 2004, the CA rendered its decision granting the petition, the decretal portion of which reads:

WHEREFORE, the petition is GRANTED in that the assailed Resolutions of the NLRC are hereby REVERSED and SET ASIDE. Let this case be REMANDED to the Labor Arbiter a quo for disposition of the case on the merits. SO ORDERED.
22

A motion for the reconsideration of the above decision was filed by PPI and Henrichsen, which the appellate court denied for lack of merit. 23 In the present recourse, PPI and Henrichsen, as petitioners, raise the following issues:
I THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN EMPLOYMENT RELATIONSHIP EXISTED BETWEEN PETITIONERS AND RESPONDENT DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND WAS MERELY "SECONDED" TO PETITIONERS SINCE HIS WORK ASSIGNMENT WAS IN MANILA.
AScTaD

II THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE LABOR ARBITER A QUO HAS JURISDICTION OVER RESPONDENT'S CLAIM DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND HAD AGREED THAT ANY DISPUTE BETWEEN THEM "SHALL BE FINALLY SETTLED BY THE COURT OF ARBITRATION IN LONDON." 24

Petitioners fault the CA for reversing the findings of the Labor Arbiter and the NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by the NLRC, are conclusive on the CA. They maintain that it is not within the province of the appellate court in a petition for certiorari to review the facts and evidence on record since there was no conflict in the factual findings and conclusions of the lower tribunals. Petitioners assert that such findings and conclusions, having been made by agencies with expertise on the subject matter, should be deemed binding and conclusive. They contend that it was the PCIJ which employed respondent as an employee; it merely seconded him to petitioner PPI in the Philippines, and assigned him to work in Manila as Sector Manager. Petitioner PPI, being a wholly-owned subsidiary of PCIJ, was never the employer of respondent. Petitioners assert that the January 9, 1998 letter of employment which respondent presented to prove his employment with petitioner PPI is of doubtful authenticity since it was unsigned by the purported parties. They insist that PCIJ paid respondent's salaries and only coursed the same through petitioner PPI. PPI, being its subsidiary, had supervision and control over respondent's work, and had the responsibilities of monitoring the "daily administration" of respondent. Respondent cannot rely on the pay slips, expenses claim forms, and reimbursement memoranda to prove that he was an employee of petitioner PPI because these documents are of doubtful authenticity. Petitioners further contend that, although Henrichsen was both a director of PCIJ and president of PPI, it was he who signed the termination letter of respondent upon instructions of PCIJ. This is buttressed by the fact that PCIJ's letterhead was used to inform him that his employment was terminated. Petitioners further assert that all work instructions came from PCIJ and that petitioner PPI only served as a "conduit." Respondent's Alien Employment Permit stating that petitioner PPI was his employer is but a necessary consequence of his being "seconded" thereto. It is not sufficient proof that petitioner PPI is respondent's employer. The entry was only made to comply with the DOLE requirements.

There being no evidence that petitioner PPI is the employer of respondent, the Labor Arbiter has no jurisdiction over respondent's complaint. Petitioners aver that since respondent is a Canadian citizen, the CA erred in ignoring their claim that the principlesof forum non conveniens and lex loci contractus are applicable. They also point out that the principal office, officers and staff of PCIJ are stationed in Tokyo, Japan; and the contract of employment of respondent was executed in Tokyo, Japan. Moreover, under Section 21 of the General Conditions for Employment incorporated in respondent's January 7, 1998 letter of employment, the dispute between respondent and PCIJ should be settled by the court of arbitration of London. Petitioners claim that the words used therein are sufficient to show the exclusive and restrictive nature of the stipulation on venue. Petitioners insist that the U.S. Labor-Management Act applies only to U.S. workers and employers, while the Labor Code of the Philippines applies only to Filipino employers and Philippine-based employers and their employees, not to PCIJ. In fine, the jurisdictions of the NLRC and Labor Arbiter do not extend to foreign workers who executed employment agreements with foreign employers abroad, although "seconded" to the Philippines. 25 In his Comment, 26 respondent maintains that petitioners raised factual issues in their petition which are proscribed under Section 1, Rule 45 of the Rules of Court. The finding of the CA that he had been an employee of petitioner PPI and not of PCIJ is buttressed by his documentary evidence which both the Labor Arbiter and the NLRC ignored; they erroneously opted to dismiss his complaint on the basis of the letter of employment and Section 21 of the General Conditions of Employment. In contrast, the CA took into account the evidence on record and applied case law correctly.
SETAcC

The petition is denied for lack of merit. It must be stressed that in resolving a petition for certiorari, the CA is not proscribed from reviewing the evidence on record. Under Section 9 of Batas Pambansa Blg. 129, as amended by R.A. No. 7902, the CA is empowered to pass upon the evidence, if and when necessary, to resolve factual issues. 27 If it appears that the Labor Arbiter and the NLRC misappreciated the evidence to such an extent as to compel a contrary conclusion if such evidence had been properly appreciated, the factual findings of such tribunals cannot be given great respect and finality. 28 Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence which respondent appended to his pleadings showing that he was an employee of petitioner PPI; they merely focused on the January 7, 1998 letter of employment and Section 21 of the General Conditions of Employment. Petitioner PPI applied for the issuance of an AEP to respondent before the DOLE. In said application, PPI averred that respondent is its employee. To show that this was the case, PPI appended a copy of respondent's employment contract. The DOLE then granted the application of PPI and issued the permit. It bears stressing that under the Omnibus Rules Implementing the Labor Code, one of the requirements for the issuance of an employment permit is the employment contract. Section 5, Rule XIV (Employment of Aliens) of the Omnibus Rules provides:
SECTION 1. Coverage. This rule shall apply to all aliens employed or seeking employment in the Philippines and the present or prospective employers.

SECTION 2. Submission of list. All employers employing foreign nationals, whether resident or non-resident, shall submit a list of nationals to the Bureau indicating their names, citizenship, foreign and local address, nature of employment and status of stay in the Philippines. SECTION 3. Registration of resident aliens. All employed resident aliens shall register with the Bureau under such guidelines as may be issued by it. SECTION 4. Employment permit required for entry. No alien seeking employment, whether as a resident or non-resident, may enter the Philippines without first securing an employment permit from the Ministry. If an alien enters the country under a non-working visa and wishes to be employed thereafter, he may only be allowed to be employed upon presentation of a duly approved employment permit. SECTION 5. Requirements for employment permit applicants. The application for an employment permit shall be accompanied by the following: (a)Curriculum vitae duly signed by the applicant indicating his educational background, his work experience and other data showing that he possesses technical skills in his trade or profession. (b)Contract of employment between the employer and the principal which shall embody the following, among others: 1.That the non-resident alien worker shall comply with all applicable laws and rules and regulations of the Philippines; 2.That the non-resident alien worker and the employer shall bind themselves to train at least two (2) Filipino understudies for a period to be determined by the Minister; and 3.That he shall not engage in any gainful employment other than that for which he was issued a permit.
IcAaSD

(c)A designation by the employer of at least two (2) understudies for every alien worker. Such understudies must be the most ranking regular employees in the section or department for which the expatriates are being hired to insure the actual transfer of technology.

Under Section 6 of the Rule, the DOLE may issue an alien employment permit based only on the following:
(a)Compliance by the applicant and his employer with the requirements of Section 2 hereof; (b)Report of the Bureau Director as to the availability or non-availability of any person in the Philippines who is competent and willing to do the job for which the services of the applicant are desired; (c)His assessment as to whether or not the employment of the applicant will redound to the national interest; (d)Admissibility of the alien as certified by the Commission on Immigration and Deportation; (e)The recommendation of the Board of Investments or other appropriate government agencies if the applicant will be employed in preferred areas of investments or in accordance with the imperative of economic development.

Thus, as claimed by respondent, he had an employment contract with petitioner PPI; otherwise, petitioner PPI would not have filed an application for a Permit with the DOLE. Petitioners are thus estopped from alleging that the PCIJ, not petitioner PPI, had been the employer of respondent all along. We agree with the conclusion of the CA that there was an employer-employee relationship between petitioner PPI and respondent using the four-fold test. Jurisprudence is firmly settled that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (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. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationship that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Stated otherwise, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end. 29 We quote with approval the following ruling of the CA:
[T]here is, indeed, substantial evidence on record which would erase any doubt that the respondent company is the true employer of petitioner. In the case at bar, the power to control and supervise petitioner's work performance devolved upon the respondent company. Likewise, the power to terminate the employment relationship was exercised by the President of the respondent company. It is not the letterhead used by the company in the termination letter which controls, but the person who exercised the power to terminate the employee. It is also inconsequential if the second letter of employment executed in the Philippines was not signed by the petitioner. An employer-employee relationship may indeed exist even in the absence of a written contract, so long as the four elements mentioned in the Mafinco case are all present. 30

The settled rule on stipulations regarding venue, as held by this Court in the vintage case of Philippine Banking Corporation v. Tensuan, 31 is that while they are considered valid and enforceable, venue stipulations in a contract do not, as a rule, supersede the general rule set forth in Rule 4 of the Revised Rules of Court in the absence of qualifying or restrictive words. They should be considered merely as an agreement or additional forum, not as limiting venue to the specified place. They are not exclusive but, rather permissive. If the intention of the parties were to restrict venue, there must be accompanying language clearly and categorically expressing their purpose and design that actions between them be litigated only at the place named by them. 32 In the instant case, no restrictive words like "only," "solely," "exclusively in this court," "in no other court save ," "particularly," "nowhere else but/except ," or words of equal import were stated in the contract. 33 It cannot be said that the court of arbitration in London is an exclusive venue to bring forth any complaint arising out of the employment contract.
aITDAE

Petitioners contend that respondent should have filed his Complaint in his place of permanent residence, or where the PCIJ holds its principal office, at the place where the contract of employment was signed, in London as stated in their contract. By enumerating possible venues where respondent could have filed his complaint, however, petitioners themselves admitted that the provision on venue in the employment contract is indeed merely permissive.

Petitioners' insistence on the application of the principle of forum non conveniens must be rejected. The bare fact that respondent is a Canadian citizen and was a repatriate does not warrant the application of the principle for the following reasons:

First. The Labor Code of the Philippines does not include forum non conveniens as a ground for the dismissal of the complaint. 34 Second. The propriety of dismissing a case based on this principle requires a factual determination; hence, it is properly considered as defense. 35 Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals, that:
36

this Court held

. . . [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its decision. . . .

Admittedly, all the foregoing requisites are present in this case. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 76563 is AFFIRMED. This case is REMANDED to the Labor Arbiter for disposition of the case on the merits. Cost against petitioners. SO ORDERED.

Ynares-Santiago, Austria-Martinez and Chico-Nazario, JJ., concur.

[G.R. No. 146881. February 5, 2007.] COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager, petitioners, vs. DR. DEAN N. CLIMACO, respondent.

DECISION

AZCUNA, J :
p

This is a petition for review on certiorari of the Decision of the Court of Appeals 1 promulgated on July 7, 2000, and its Resolution promulgated on January 30, 2001, denying petitioner's motion for reconsideration. The Court of Appeals ruled that an employer-employee relationship exists between respondent Dr. Dean N. Climaco and petitioner Coca-Cola Bottlers Phils., Inc. (Coca-Cola), and that respondent was illegally dismissed. Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc. by virtue of a Retainer Agreement that stated:
WHEREAS, the COMPANY desires to engage on a retainer basis the services of a physician and the said DOCTOR is accepting such engagement upon terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual agreement hereinafter contained, the parties agree as follows:

1.This Agreement shall only be for a period of one (1) year beginning January 1, 1988 up to December 31, 1988. The said term notwithstanding, either party may terminate the contract upon giving a thirty (30)-day written notice to the other.
HIACac

2.The compensation to be paid by the company for the services of the DOCTOR is hereby fixed at PESOS: Three Thousand Eight Hundred (P3,800.00)per month. The DOCTOR may charge professional fee for hospital services rendered in line with his specialization. All payments in connection with the Retainer Agreement shall be subject to a withholding tax of ten percent (10%) to be withheld by the COMPANY under the Expanded Withholding Tax System. In the event the withholding tax rate shall be increased or decreased by appropriate laws, then the rate herein stipulated shall accordingly be increased or decreased pursuant to such laws. 3.That in consideration of the above mentioned retainer's fee, the DOCTOR agrees to perform the duties and obligations enumerated in the COMPREHENSIVE MEDICAL PLAN, hereto attached as Annex "A" and made an integral part of this Retainer Agreement. 4.That the applicable provisions in the Occupational Safety and Health Standards, Ministry of Labor and Employment shall be followed. 5.That the DOCTOR shall be directly responsible to the employee concerned and their dependents for any injury inflicted on, harm done against or damage caused upon the employee of the COMPANY or their dependents during the course of his examination, treatment or consultation, if such injury, harm or damage was committed through professional negligence or incompetence or due to the other valid causes for action. 6.That the DOCTOR shall observe clinic hours at the COMPANY'S premises from Monday to Saturday of a minimum of two (2) hours each day or a maximum of TWO (2) hours each day or treatment from 7:30 a.m. to 8:30 a.m. and 3:00 p.m. to 4:00 p.m., respectively unless such schedule is otherwise changed by the COMPANY as [the] situation so warrants, subject to the Labor Code provisions on Occupational Safety and Health Standards as the COMPANY may determine. It is understood that the DOCTOR shall stay at least two (2) hours a day in the COMPANY clinic and that such two (2) hours be devoted to the workshifts with the most number of employees. It is further understood that the DOCTOR shall be on call at all times during the other workshifts to attend to emergency case[s]; 7.That no employee-employer relationship shall exist between the COMPANY and the DOCTOR whilst this contract is in effect, and in case of its termination, the DOCTOR shall be entitled only to such retainer fee as may be due him at the time of termination. 2

The Comprehensive Medical Plan, 3 which contains the duties and responsibilities of respondent, adverted to in the Retainer Agreement, provided:
A.OBJECTIVE These objectives have been set to give full consideration to [the] employees' and dependents' health: 1.Prompt and adequate treatment of occupational and non-occupational injuries and diseases. 2.To protect employees from any occupational health hazard by evaluating health factors related to working conditions. 3.To encourage employees [to] maintain good personal health by setting up employee orientation and education on health, hygiene and sanitation, nutrition, physical fitness, first aid training, accident prevention and personnel safety.

4.To evaluate other matters relating to health such as absenteeism, leaves and termination. 5.To give family planning motivations. B.COVERAGE 1.All employees and their dependents are embraced by this program. 2.The health program shall cover pre-employment and annual p.e., hygiene and sanitation, immunizations, family planning, physical fitness and athletic programs and other activities such as group health education program, safety and first aid classes, organization of health and safety committees. 3.Periodically, this program will be reviewed and adjusted based on employees' needs. C.ACTIVITIES 1.Annual Physical Examination. 2.Consultations, diagnosis and treatment of occupational and non-occupational illnesses and injuries. 3.Immunizations necessary for job conditions. 4.Periodic inspections for food services and rest rooms. 5.Conduct health education programs and present education materials. 6.Coordinate with Safety Committee in developing specific studies and program to minimize environmental health hazards. 7.Give family planning motivations. 8.Coordinate with Personnel Department regarding physical fitness and athletic programs. 9.Visiting and follow-up treatment of Company employees and their dependents confined in the hospital.
ECHSDc

The Retainer Agreement, which began on January 1, 1988, was renewed annually. The last one expired on December 31, 1993. Despite the non-renewal of the Retainer Agreement, respondent continued to perform his functions as company doctor to Coca-Cola until he received a letter 4 dated March 9, 1995 from petitioner company concluding their retainership agreement effective 30 days from receipt thereof. It is noted that as early as September 1992, petitioner was already making inquiries regarding his status with petitioner company. First, he wrote a letter addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on Membership, Philippine College of Occupational Medicine. In response, Dr. Sy wrote a letter 5 to the Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City, stating that respondent should be considered as a regular part-time physician, having served the company continuously for four (4) years. He likewise stated that respondent must receive all the benefits and privileges of an employee under Article 157 (b) 6 of the Labor Code. Petitioner company, however, did not take any action. Hence, respondent made another inquiry directed to the Assistant Regional Director, Bacolod City District Office of the Department of Labor and Employment (DOLE),

who referred the inquiry to the Legal Service of the DOLE, Manila. In his letter 7 dated May 18, 1993, Director Dennis P. Ancheta, Legal Service, DOLE, stated that he believed that an employer-employee relationship existed between petitioner and respondent based on the Retainer Agreement and the Comprehensive Medical Plan, and the application of the "four-fold" test. However, Director Ancheta emphasized that the existence of employer-employee relationship is a question of fact. Hence, termination disputes or money claims arising from employer-employee relations exceeding P5,000 may be filed with the National Labor Relations Commission (NLRC). He stated that their opinion is strictly advisory. An inquiry was likewise addressed to the Social Security System (SSS). Thereafter, Mr. Romeo R. Tupas, OICFID of SSS-Bacolod City, wrote a letter 8 to the Personnel Officer of Coca-Cola Bottlers Phils., Inc. informing the latter that the legal staff of his office was of the opinion that the services of respondent partake of the nature of work of a regular company doctor and that he was, therefore, subject to social security coverage. Respondent inquired from the management of petitioner company whether it was agreeable to recognizing him as a regular employee. The management refused to do so. On February 24, 1994, respondent filed a Complaint 9 before the NLRC, Bacolod City, seeking recognition as a regular employee of petitioner company and prayed for the payment of all benefits of a regular employee, including 13th Month Pay, Cost of Living Allowance, Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus. The case was docketed as RAB Case No. 06-02-10138-94.
DSHcTC

While the complaint was pending before the Labor Arbiter, respondent received a letter dated March 9, 1995 from petitioner company concluding their retainership agreement effective thirty (30) days from receipt thereof. This prompted respondent to file a complaint for illegal dismissal against petitioner company with the NLRC, Bacolod City. The case was docketed as RAB Case No. 06-04-10177-95. In a Decision 10 dated November 28, 1996, Labor Arbiter Jesus N. Rodriguez, Jr. found that petitioner company lacked the power of control over respondent's performance of his duties, and recognized as valid the Retainer Agreement between the parties. Thus, the Labor Arbiter dismissed respondent's complaint in the first case, RAB Case No. 06-02-10138-94. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered dismissing the instant complaint seeking recognition as a regular employee. SO ORDERED.
11

In a Decision 12 dated February 24, 1997, Labor Arbiter Benjamin Pelaez dismissed the case for illegal dismissal (RAB Case No. 06-04-10177-95) in view of the previous finding of Labor Arbiter Jesus N. Rodriguez, Jr. in RAB Case No. 06-02-10138-94 that complainant therein, Dr. Dean Climaco, is not an employee of Coca-Cola Bottlers Phils., Inc.

Respondent appealed both decisions to the NLRC, Fourth Division, Cebu City. In a Decision 13 promulgated on November 28, 1997, the NLRC dismissed the appeal in both cases for lack of merit. It declared that no employer-employee relationship existed between petitioner company and respondent based on the provisions of the Retainer Agreement which contract governed respondent's employment. Respondent's motion for reconsideration was denied by the NLRC in a Resolution 1998.
14 promulgated

on August 7,

Respondent filed a petition for review with the Court of Appeals. In a Decision promulgated on July 7, 2000, the Court of Appeals ruled that an employer-employee relationship existed between petitioner company and respondent after applying the four-fold test: (1) the power to hire the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. The Court of Appeals held:
The Retainer Agreement executed by and between the parties, when read together with the Comprehensive Medical Plan which was made an integral part of the retainer agreements, coupled with the actual services rendered by the petitioner, would show that all the elements of the above test are present. First, the agreements provide that "the COMPANY desires to engage on a retainer basis the services of a physician and the said DOCTOR is accepting such engagement . . ." ( Rollo, page 25). This clearly shows that Coca-Cola exercised its power to hire the services of petitioner. Secondly, paragraph (2) of the agreements showed that petitioner would be entitled to a final compensation of Three Thousand Eight Hundred Pesos per month, which amount was later raised to Seven Thousand Five Hundred on the latest contract. This would represent the element of payment of wages.
SEACTH

Thirdly, it was provided in paragraph (1) of the agreements that the same shall be valid for a period of one year. "The said term notwithstanding, either party may terminate the contract upon giving a thirty (30) day written notice to the other." (Rollo, page 25). This would show that Coca-Cola had the power of dismissing the petitioner, as it later on did, and this could be done for no particular reason, the sole requirement being the former's compliance with the 30-day notice requirement. Lastly, paragraphs (3) and (6) of the agreements reveal that Coca-Cola exercised the most important element of all, that is, control, over the conduct of petitioner in the latter's performance of his duties as a doctor for the company. It was stated in paragraph (3) that the doctor agrees to perform the duties and obligations enumerated in the Comprehensive Medical Plan referred to above. In paragraph (6), the fixed and definite hours during which the petitioner must render service to the company is laid down. We say that there exists Coca-Cola's power to control petitioner because the particular objectives and activities to be observed and accomplished by the latter are fixed and set under the Comprehensive Medical Plan which was made an integral part of the retainer agreement. Moreover, the times for accomplishing these objectives and activities are likewise controlled and determined by the company. Petitioner is subject to definite hours of work, and due to this, he performs his duties to Coca-Cola not at his own pleasure but according to the schedule dictated by the company. In addition, petitioner was designated by Coca-Cola to be a member of its Bacolod Plant's Safety Committee. The minutes of the meeting of the said committee dated February 16, 1994 included the name of petitioner, as plant physician, as among those comprising the committee. It was averred by Coca-Cola in its comment that they exercised no control over petitioner for the reason that the latter was not directed as to the procedure and manner of performing his assigned tasks. It went as far as saying that "petitioner was not told how to immunize, inject, treat or diagnose the employees of the respondent (Rollo, page 228). We believe that if the "control test" would be interpreted this strictly, it would result in an absurd and ridiculous situation wherein we could declare that an entity exercises control over another's activities only in instances where the latter is directed by

the former on each and every stage of performance of the particular activity. Anything less than that would be tantamount to no control at all. To our minds, it is sufficient if the task or activity, as well as the means of accomplishing it, is dictated, as in this case where the objectives and activities were laid out, and the specific time for performing them was fixed by the controlling party. 15

Moreover, the Court of Appeals declared that respondent should be classified as a regular employee having rendered six years of service as plant physician by virtue of several renewed retainer agreements. It underscored the provision in Article 280 16 of the Labor Code stating that "any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed, and his employment shall continue while such activity exists." Further, it held that the termination of respondent's services without any just or authorized cause constituted illegal dismissal. In addition, the Court of Appeals found that respondent's dismissal was an act oppressive to labor and was effected in a wanton, oppressive or malevolent manner which entitled respondent to moral and exemplary damages.
AEITDH

The dispositive portion of the Decision reads:

WHEREFORE, in view of the foregoing, the Decision of the National Labor Relations Commission dated November 28, 1997 and its Resolution dated August 7, 1998 are found to have been issued with grave abuse of discretion in applying the law to the established facts, and are hereby REVERSED and SET ASIDE, and private respondent Coca-Cola Bottlers, Phils., Inc. is hereby ordered to: 1.Reinstate the petitioner with full backwages without loss of seniority rights from the time his compensation was withheld up to the time he is actually reinstated; however, if reinstatement is no longer possible, to pay the petitioner separation pay equivalent to one (1) month's salary for every year of service rendered, computed at the rate of his salary at the time he was dismissed, plus backwages. 2.Pay petitioner moral damages in the amount of P50,000.00. 3.Pay petitioner exemplary damages in the amount of P50,000.00. 4.Give to petitioner all other benefits to which a regular employee of Coca-Cola is entitled from the time petitioner became a regular employee (one year from effectivity date of employment) until the time of actual payment. SO ORDERED.
17

Petitioner company filed a motion for reconsideration of the Decision of the Court of Appeals. In a Resolution promulgated on January 30, 2001, the Court of Appeals stated that petitioner company noted that its Decision failed to mention whether respondent was a full-time or part-time regular employee. It also questioned how the benefits under their Collective Bargaining Agreement which the Court awarded to respondent could be given to him considering that such benefits were given only to regular employees who render a full day's work of not less than eight hours. It was admitted that respondent is only required to work for two hours per day.

The Court of Appeals clarified that respondent was a "regular part-time employee and should be accorded all the proportionate benefits due to this category of employees of [petitioner] Corporation under the CBA." It sustained its decision on all other matters sought to be reconsidered. Hence, this petition filed by Coca-Cola Bottlers Phils., Inc. The issues are:
1.THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, CONTRARY TO THE DECISIONS OF THE HONORABLE SUPREME COURT ON THE MATTER. 2.THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND HOLDING INSTEAD THAT THE WORK OF A PHYSICIAN IS NECESSARY AND DESIRABLE TO THE BUSINESS OF SOFTDRINKS MANUFACTURING, CONTRARY TO THE RULINGS OF THE SUPREME COURT IN ANALOGOUS CASES.
IHCacT

3.THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND HOLDING INSTEAD THAT THE PETITIONERS EXERCISED CONTROL OVER THE WORK OF THE RESPONDENT. 4.THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THERE IS EMPLOYER-EMPLOYEE RELATIONSHIP PURSUANT TO ARTICLE 280 OF THE LABOR CODE. 5.THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THERE EXISTED ILLEGAL DISMISSAL WHEN THE EMPLOYMENT OF THE RESPONDENT WAS TERMINATED WITHOUT JUST CAUSE. 6.THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THE RESPONDENT IS A REGULAR PART TIME EMPLOYEE WHO IS ENTITLED TO PROPORTIONATE BENEFITS AS A REGULAR PART TIME EMPLOYEE ACCORDING TO THE PETITIONERS' CBA. 7.THAT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR, BASED ON A SUBSTANTIAL QUESTION OF LAW, IN REVERSING THE FINDINGS OF THE LABOR ARBITERS AND THE NATIONAL LABOR RELATIONS COMMISSION, AND FINDING THAT THE RESPONDENT IS ENTITLED TO MORAL AND EXEMPLARY DAMAGES.

The main issue in this case is whether or not there exists an employer-employee relationship between the parties. The resolution of the main issue will determine whether the termination of respondent's employment is illegal.

The Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct, or the so-called "control test," considered to be the most important element. 18 The Court agrees with the finding of the Labor Arbiter and the NLRC that the circumstances of this case show that no employer-employee relationship exists between the parties. The Labor Arbiter and the NLRC correctly found that petitioner company lacked the power of control over the performance by respondent of his duties. The Labor Arbiter reasoned that the Comprehensive Medical Plan, which contains the respondent's objectives, duties and obligations, does not tell respondent "how to conduct his physical examination, how to immunize, or how to diagnose and treat his patients, employees of [petitioner] company, in each case." He likened this case to that of Neri v. National Labor Relations Commission, 19 which held:
In the case of petitioner Neri, it is admitted that FEBTC issued a job description which detailed her functions as a radio/telex operator. However, a cursory reading of the job description shows that what was sought to be controlled by FEBTC was actually the end result of the task, e.g., that the daily incoming and outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the register. The guidelines were laid down merely to ensure that the desired end result was achieved. It did not, however, tell Neri how the radio/telex machine should be operated.
STADIH

In effect, the Labor Arbiter held that petitioner company, through the Comprehensive Medical Plan, provided guidelines merely to ensure that the end result was achieved, but did not control the means and methods by which respondent performed his assigned tasks. The NLRC affirmed the findings of the Labor Arbiter and stated that it is precisely because the company lacks the power of control that the contract provides that respondent shall be directly responsible to the employee concerned and their dependents for any injury, harm or damage caused through professional negligence, incompetence or other valid causes of action. The Labor Arbiter also correctly found that the provision in the Retainer Agreement that respondent was on call during emergency cases did not make him a regular employee. He explained, thus:
Likewise, the allegation of complainant that since he is on call at anytime of the day and night makes him a regular employee is off-tangent. Complainant does not dispute the fact that outside of the two (2) hours that he is required to be at respondent company's premises, he is not at all further required to just sit around in the premises and wait for an emergency to occur so as to enable him from using such hours for his own benefit and advantage. In fact, complainant maintains his own private clinic attending to his private practice in the city, where he services his patients, bills them accordingly and if it is an employee of respondent company who is attended to by him for special treatment that needs hospitalization or operation, this is subject to a special billing. More often than not, an employee is required to stay in the employer's workplace or proximately close thereto that he cannot utilize his time effectively and gainfully for his own purpose. Such is not the prevailing situation here.

In addition, the Court finds that the schedule of work and the requirement to be on call for emergency cases do not amount to such control, but are necessary incidents to the Retainership Agreement. The Court also notes that the Retainership Agreement granted to both parties the power to terminate their relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of dismissal or termination. The Court agrees with the Labor Arbiter and the NLRC that there is nothing wrong with the employment of respondent as a retained physician of petitioner company and upholds the validity of the Retainership Agreement which clearly stated that no employer-employee relationship existed between the parties. The

Agreement also stated that it was only for a period of 1 year beginning January 1, 1988 to December 31, 1998, but it was renewed on a yearly basis. Considering that there is no employer-employee relationship between the parties, the termination of the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not constitute illegal dismissal of respondent. Consequently, there is no basis for the moral and exemplary damages granted by the Court of Appeals to respondent due to his alleged illegal dismissal. WHEREFORE, the petition is GRANTED and the Decision and Resolution of the Court of Appeals are REVERSED and SET ASIDE. The Decision and Resolution dated November 28, 1997 and August 7, 1998, respectively, of the National Labor Relations Commission are REINSTATED.
ICcDaA

No costs. SO ORDERED.

Puno, C.J., Sandoval-Gutierrez, Corona and Garcia, JJ., concur.

[G.R. No. 164652. June 8, 2007.] THELMA DUMPIT-MURILLO, petitioner, vs. COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE JAVIER AND EDWARD TAN, respondents.

DECISION

QUISUMBING, Acting C.J :

p

This petition seeks to reverse and set aside both the Decision 1 dated January 30, 2004 of the Court of Appeals in CA-G.R. SP No. 63125 and its Resolution 2 dated June 23, 2004 denying the motion for reconsideration. The Court of Appeals had overturned the Resolution 3 dated August 30, 2000 of the National Labor Relations Commission (NLRC) ruling that petitioner was illegally dismissed. The facts of the case are as follows: On October 2, 1995, under Talent Contract No. NT95-1805, 4 private respondent Associated Broadcasting Company (ABC) hired petitioner Thelma Dumpit-Murillo as a newscaster and co-anchor for Balitang-Balita, an early evening news program. The contract was for a period of three months. It was renewed under Talent Contracts Nos. NT95-1915, NT96-3002, NT98-4984 and NT99-5649. 5 In addition, petitioner's services were engaged for the program "Live on Five." On September 30, 1999, after four years of repeated renewals, petitioner's talent contract expired. Two weeks after the expiration of the last contract, petitioner sent a letter to Mr. Jose Javier, Vice President for News and Public Affairs of ABC, informing the latter that she was still interested in renewing her contract subject to a salary increase. Thereafter, petitioner stopped reporting for work. On November 5, 1999, she wrote Mr. Javier another letter, 6 which we quote verbatim:
DEICaA

xxx xxx xxx

Dear Mr. Javier: On October 20, 1999, I wrote you a letter in answer to your query by way of a marginal note "what terms and conditions" in response to my first letter dated October 13, 1999. To date, or for more than fifteen (15) days since then, I have not received any formal written reply . . . In view hereof, should I not receive any formal response from you until Monday, November 8, 1999, I will deem it as a constructive dismissal of my services. xxx xxx xxx

A month later, petitioner sent a demand letter 7 to ABC, demanding: (a) reinstatement to her former position; (b) payment of unpaid wages for services rendered from September 1 to October 20, 1999 and full backwages; (c) payment of 13th month pay, vacation/sick/service incentive leaves and other monetary benefits due to a regular employee starting March 31, 1996. ABC replied that a check covering petitioner's talent fees for September 16 to October 20, 1999 had been processed and prepared, but that the other claims of petitioner had no basis in fact or in law. On December 20, 1999, petitioner filed a complaint 8 against ABC, Mr. Javier and Mr. Edward Tan, for illegal constructive dismissal, nonpayment of salaries, overtime pay, premium pay, separation pay, holiday pay, service incentive leave pay, vacation/sick leaves and 13th month pay in NLRC-NCR Case No. 30-12-00985-99. She likewise demanded payment for moral, exemplary and actual damages, as well as for attorney's fees. The parties agreed to submit the case for resolution after settlement failed during the mandatory conference/conciliation. On March 29, 2000, the Labor Arbiter dismissed the complaint. 9 On appeal, the NLRC reversed the Labor Arbiter in a Resolution dated August 30, 2000. The NLRC held that an employer-employee relationship existed between petitioner and ABC; that the subject talent contract was void; that the petitioner was a regular employee illegally dismissed; and that she was entitled to reinstatement and backwages or separation pay, aside from 13th month pay and service incentive leave pay, moral and exemplary damages and attorney's fees. It held as follows:
ADEacC

WHEREFORE, the Decision of the Arbiter dated 29 March 2000 is hereby REVERSED/SET ASIDE and a NEW ONE promulgated: 1)declaring respondents to have illegally dismissed complainant from her regular work therein and thus, ordering them to reinstate her in her former position without loss of seniority right[s] and other privileges and to pay her full backwages, inclusive of allowances and other benefits, including 13th month pay based on her said latest rate of P28,000.00/mo. from the date of her illegal dismissal on 21 October 1999 up to finality hereof, or at complainant's option, to pay her separation pay of one (1) month pay per year of service based on said latest monthly rate, reckoned from date of hire on 30 September 1995 until finality hereof; 2)to pay complainant's accrued SILP [Service Incentive Leave Pay] of 5 days pay per year and 13th month pay for the years 1999, 1998 and 1997 of P19,236.00 and P84,000.00, respectively and her accrued salary from 16 September 1999 to 20 October 1999 of P32,760.00 plus legal interest at 12% from date of judicial demand on 20 December 1999 until finality hereof; 3)to pay complainant moral damages of P500,000.00, exemplary damages of P350,000.00 and 10% of the total of the adjudged monetary awards as attorney's fees. Other monetary claims of complainant are dismissed for lack of merit. SO ORDERED.
10
TEcADS

After its motion for reconsideration was denied, ABC elevated the case to the Court of Appeals in a petition for certiorari under Rule 65. The petition was first dismissed for failure to attach particular documents, 11 but was reinstated on grounds of the higher interest of justice. 12 Thereafter, the appellate court ruled that the NLRC committed grave abuse of discretion, and reversed the decision of the NLRC. 13 The appellate court reasoned that petitioner should not be allowed to renege from the stipulations she had voluntarily and knowingly executed by invoking the security of tenure under the Labor Code. According to the appellate court, petitioner was a fixed-term employee and not a regular employee within the ambit of Article 280 14 of the Labor Code because her job, as anticipated and agreed upon, was only for a specified time. 15 Aggrieved, petitioner now comes to this Court on a petition for review, raising issues as follows:
I. THIS HONORABLE COURT CAN REVIEW THE FINDINGS OF THE HONORABLE COURT OF APPEALS, THE DECISION OF WHICH IS NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT[;] II. THE PRO-FORMA TALENT CONTRACTS, AS CORRECTLY FOUND BY THE NLRC FIRST DIVISION, ARE "ANTI-REGULARIZATION DEVICES" WHICH MUST BE STRUCK DOWN FOR REASONS OF PUBLIC POLICY[;] III. BY REASON OF THE CONTINUOUS AND SUCCESSIVE RENEWALS OF THE THREE-MONTH TALENT CONTRACTS, AN EMPLOYER-EMPLOYEE RELATIONSHIP WAS CREATED AS PROVIDED FOR UNDER ARTICLE 280 OF THE LABOR CODE[;] IV. BY THE CONSTRUCTIVE DISMISSAL OF HEREIN PETITIONER, AS A REGULAR EMPLOYEE, THERE WAS A DENIAL OF PETITIONER'S RIGHT TO DUE PROCESS THUS ENTITLING HER TO THE MONEY CLAIMS AS STATED IN THE COMPLAINT[.] 16

The issues for our disposition are: (1) whether or not this Court can review the findings of the Court of Appeals; and (2) whether or not under Rule 45 of the Rules of Court the Court of Appeals committed a reversible error in its Decision.
SITCEA

On the first issue, private respondents contend that the issues raised in the instant petition are mainly factual and that there is no showing that the said issues have been resolved arbitrarily and without basis. They add that the findings of the Court of Appeals are supported by overwhelming wealth of evidence on record as well as prevailing jurisprudence on the matter. 17 Petitioner however contends that this Court can review the findings of the Court of Appeals, since the appellate court erred in deciding a question of substance in a way which is not in accord with law or with applicable decisions of this Court. 18 We agree with petitioner. Decisions, final orders or resolutions of the Court of Appeals in any case regardless of the nature of the action or proceeding involved may be appealed to this Court through a petition for review. This remedy is a continuation of the appellate process over the original case, 19 and

considering there is no congruence in the findings of the NLRC and the Court of Appeals regarding the status of employment of petitioner, an exception to the general rule that this Court is bound by the findings of facts of the appellate court, 20 we can review such findings. On the second issue, private respondents contend that the Court of Appeals did not err when it upheld the validity of the talent contracts voluntarily entered into by petitioner. It further stated that prevailing jurisprudence has recognized and sustained the absence of employer-employee relationship between a talent and the media entity which engaged the talent's services on a per talent contract basis, citing the case of Sonza v. ABS-CBN Broadcasting Corporation. 21 Petitioner avers however that an employer-employee relationship was created when the private respondents started to merely renew the contracts repeatedly fifteen times or for four consecutive years. 22 Again, we agree with petitioner. The Court of Appeals committed reversible error when it held that petitioner was a fixed-term employee. Petitioner was a regular employee under contemplation of law. The practice of having fixed-term contracts in the industry does not automatically make all talent contracts valid and compliant with labor law. The assertion that a talent contract exists does not necessarily prevent a regular employment status. 23 Further, the Sonza case is not applicable. In Sonza, the television station did not instruct Sonza how to perform his job. How Sonza delivered his lines, appeared on television, and sounded on radio were outside the television station's control. Sonza had a free hand on what to say or discuss in his shows provided he did not attack the television station or its interests. Clearly, the television station did not exercise control over the means and methods of the performance of Sonza's work. 24 In the case at bar, ABC had control over the performance of petitioner's work. Noteworthy too, is the comparatively low P28,000 monthly pay of petitioner 25 vis the P300,000 a month salary of Sonza, 26 that all the more bolsters the conclusion that petitioner was not in the same situation as Sonza.
HCEcAa

The contract of employment of petitioner with ABC had the following stipulations:
xxx xxx xxx 1.SCOPE OF SERVICES TALENT agrees to devote his/her talent, time, attention and best efforts in the performance of his/her duties and responsibilities as Anchor/Program Host/Newscaster of the Program, in accordance with the direction of ABC and/or its authorized representatives. 1.1.DUTIES AND RESPONSIBILITIES TALENT shall: a.Render his/her services as a newscaster on the Program; b.Be involved in news-gathering operations by conducting interviews on- and off-the-air; c.Participate in live remote coverages when called upon; d.Be available for any other news assignment, such as writing, research or camera work; e.Attend production meetings;

f.On assigned days, be at the studios at least one (1) hour before the live telecasts; g.Be present promptly at the studios and/or other place of assignment at the time designated by ABC; h.Keep abreast of the news; i.Give his/her full cooperation to ABC and its duly authorized representatives in the production and promotion of the Program; and j.Perform such other functions as may be assigned to him/her from time to
HTCSDE

time.

xxx xxx xxx 1.3COMPLIANCE WITH STANDARDS, INSTRUCTIONS AND OTHER RULES AND REGULATIONS TALENT agrees that he/she will promptly and faithfully comply with the requests and instructions, as well as the program standards, policies, rules and regulations of ABC, the KBP and the government or any of its agencies and instrumentalities. 27 xxx xxx xxx

In Manila Water Company, Inc. v. Pena, 28 we said that the elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee, (b) the payment of wages, (c) the power of dismissal, and (d) the employer's power to control. The most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. 29 The duties of petitioner as enumerated in her employment contract indicate that ABC had control over the work of petitioner. Aside from control, ABC also dictated the work assignments and payment of petitioner's wages. ABC also had power to dismiss her. All these being present, clearly, there existed an employment relationship between petitioner and ABC. Concerning regular employment, the law provides for two kinds of employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. 30 In other words, regular status arises from either the nature of work of the employee or the duration of his employment.31 In Benares v. Pancho, 32 we very succinctly said:
IHaCDE

. . . [T]he primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee vis--vis the usual trade or business of the employer. This connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. If the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. 33

In our view, the requisites for regularity of employment have been met in the instant case. Gleaned from the description of the scope of services aforementioned, petitioner's work was necessary or desirable in the usual business or trade of the employer which includes, as a pre-condition for its enfranchisement, its participation

in the government's news and public information dissemination. In addition, her work was continuous for a period of four years. This repeated engagement under contract of hire is indicative of the necessity and desirability of the petitioner's work in private respondent ABC's business. 34 The contention of the appellate court that the contract was characterized by a valid fixed-period employment is untenable. For such contract to be valid, it should be shown that the fixed period was knowingly and voluntarily agreed upon by the parties. There should have been no force, duress or improper pressure brought to bear upon the employee; neither should there be any other circumstance that vitiates the employee's consent. 35 It should satisfactorily appear that the employer and the employee dealt with each other on more or less equal terms with no moral dominance being exercised by the employer over the employee. 36 Moreover, fixed-term employment will not be considered valid where, from the circumstances, it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee. 37 In the case at bar, it does not appear that the employer and employee dealt with each other on equal terms. Understandably, the petitioner could not object to the terms of her employment contract because she did not want to lose the job that she loved and the workplace that she had grown accustomed to, 38 which is exactly what happened when she finally manifested her intention to negotiate. Being one of the numerous newscasters/broadcasters of ABC and desiring to keep her job as a broadcasting practitioner, petitioner was left with no choice but to affix her signature of conformity on each renewal of her contract as already prepared by private respondents; otherwise, private respondents would have simply refused to renew her contract. Patently, the petitioner occupied a position of weakness vis--vis the employer. Moreover, private respondents' practice of repeatedly extending petitioner's 3-month contract for four years is a circumvention of the acquisition of regular status. Hence, there was no valid fixed-term employment between petitioner and private respondents. While this Court has recognized the validity of fixed-term employment contracts in a number of cases, it has consistently emphasized that when the circumstances of a case show that the periods were imposed to block the acquisition of security of tenure, they should be struck down for being contrary to law, morals, good customs, public order or public policy. 39 As a regular employee, petitioner is entitled to security of tenure and can be dismissed only for just cause and after due compliance with procedural due process. Since private respondents did not observe due process in constructively dismissing the petitioner, we hold that there was an illegal dismissal. WHEREFORE, the challenged Decision dated January 30, 2004 and Resolution dated June 23, 2004 of the Court of Appeals in CA-G.R. SP No. 63125, which held that the petitioner was a fixed-term employee, are REVERSED and SET ASIDE. The NLRC decision is AFFIRMED. Costs against private respondents. SO ORDERED.
acCDSH

Carpio, Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.

[G.R. No. 168424. June 8, 2007.] CONSOLIDATED BROADCASTING SYSTEM, INC., petitioner, vs. DANNY OBERIO, ELNA DE PEDRO, LUISITO VILLAMOR, WILMA SUGATON, RUFO DEITA, JR., EMILY

DE GUZMAN, CAROLINE LADRILLO, JOSE ROBERTO REGALADO, ROSEBEL NARCISO & ANANITA TANGETE, respondents.

DECISION

YNARES-SANTIAGO, J :
p

Assailed in this petition for review is the July 30, 2004 Decision 1 of the Court of Appeals in CA-G.R. SP No. 77098, which affirmed the December 5, 2001 Decision 2 of the National Labor Relations Commission (NLRC) holding that respondents were regular employees of petitioner and that they were illegally dismissed. Respondents alleged that they were employed as drama talents by DYWB-Bombo Radyo, a radio station owned and operated by petitioner Consolidated Broadcasting System, Inc. They reported for work daily for six days in a week and were required to record their drama production in advance. Some of them were employed by petitioner since 1974, while the latest one was hired in 1997. 3 Their drama programs were aired not only in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas. 4 Sometime in August 1998, petitioner reduced the number of its drama productions from 14 to 11, but was opposed by respondents. After the negotiations failed, the latter sought the intervention of the Department of Labor and Employment (DOLE), which on November 12, 1998, conducted through its Regional Office, an inspection of DYWB station. The results thereof revealed that petitioner is guilty of violation of labor standard laws, such as underpayment of wages, 13th month pay, non-payment of service incentive leave pay, and noncoverage of respondents under the Social Security System.
aHICDc

Petitioner contended that respondents are not its employees and refused to submit the payroll and daily time records despite the subpoena duces tecum issued by the DOLE Regional Director. Petitioner further argued that the case should be referred to the NLRC because the Regional Director has no jurisdiction over the determination of the existence of employer-employee relationship which involves evidentiary matters that are not verifiable in the normal course of inspection. Vexed by the respondents' complaint, petitioner allegedly pressured and intimidated respondents. Respondents Oberio and Delta were suspended for minor lapses and the payment of their salaries were purportedly delayed. Eventually, on February 3, 1999, pending the outcome of the inspection case with the Regional Director, respondents were barred by petitioner from reporting for work; thus, the former claimed constructive dismissal. 5 On April 8, 1999, the DOLE Regional Director issued an order directing petitioner to pay respondents a total of P318,986.74 representing non-payment/underpayment of the salary and benefits due them. 6 However, on July 8, 1999, the Regional Director reconsidered the April 8, 1999 order and certified the records of the case to the NLRC, Regional Arbitration Branch VI, for determination of employer-employee relationship. 7 Respondents appealed said order to the Secretary of Labor. On October 12, 1999, respondents filed a case for illegal dismissal, underpayment/non-payment of wages and benefits plus damages against petitioner. On April 10, 2000, the Labor Arbiter dismissed the case without prejudice while waiting for the decision of the Secretary of Labor on the same issue of the existence of an employer-employee relationship between petitioner and respondents. On appeal to the NLRC, respondents raised the issue of employer-employee relationship and submitted the following to prove the existence of such relationship, to wit: time cards, identification cards, payroll, a show

cause order of the station manager to respondent Danny Oberio and memoranda either noted or issued by said manager. Petitioner, on the other hand, did not present any documentary evidence in its behalf and merely denied the allegations of respondents. It claimed that the radio station pays for the drama recorded by piece and that it has no control over the conduct of respondents. On December 5, 2001, the NLRC rendered a decision holding that respondents were regular employees of petitioner who were illegally dismissed by the latter. It further held that respondents complied with the requirements of the rule on forum shopping. The decretal portion thereof, provides:
WHEREFORE, premises considered, the decision of Labor Arbiter Ray Alan T. Drilon dated 10 April 2000 is SET ASIDE and VACATED and a new one entered. Ordering respondent Consolidated Broadcasting System, Inc. (Bombo Radyo Philippines), DYWB to reinstate the complainants without loss of seniority rights wi[th] full back wages computed from February 1999 up to the time of actual reinstatement.
TaEIcS

SO ORDERED.

Hence, petitioner filed the instant recourse. The issues for resolution are as follows: (1) Did respondents violate the rule on forum shopping; (2) whether the NLRC correctly ruled on the merits of the case instead of remanding the case to the Labor Arbiter; (3) whether respondents were employees of petitioner; and (4) whether their dismissal was illegal. Respondents' complaint in the inspection case before the DOLE Regional Director alleged that they were under the employ of petitioner at the time of the filing of said complaint. Pending the resolution thereof, they claimed to have been dismissed; hence, the filing of the present illegal dismissal case before the Labor Arbiter. The causes of action in these two complaints are different, i.e., one for violation of labor standard laws, and the other, for illegal dismissal, but the entitlement of respondents to the reliefs prayed for hinges on the same issue of the existence of an employer-employee relationship. While the decision on the said issue by one tribunal may operate as res judicata on the other, dismissal of the present illegal dismissal case on the ground of forum shopping, would work injustice to respondents because it is the law itself which provides for two separate remedies for their distinct causes of action. Under Article 217 9 of the Labor Code, termination cases fall under the jurisdiction of Labor Arbiters. Whereas, Article 128 10 of the same Code vests the Secretary of Labor or his duly authorized representatives with the power to inspect the employer's records to determine and compel compliance with labor standard laws. The exercise of the said power by the Secretary or his duly authorized representatives is exclusive to cases where employer-employee relationship still exists. Thus, in cases where the complaint for violation of labor standard laws preceded the termination of the employee and the filing of the illegal dismissal case, it would not be in consonance with justice to charge the complainants with engaging in forum shopping when the remedy available to them at the time their causes of action arose was to file separate cases before different fora. Besides, in the instant case, respondent Danny Oberio disclosed in the verification the pendency of the case regarding wage differential. 11 In addition, said case was discussed in detail in the position paper, 12 evincing the absence of any intention on the part of respondents to mislead the Labor Arbiter.
IASEca

Similarly, in Benguet Management Corporation v. Court of Appeals, 13 petitioner filed separate actions to enjoin the foreclosure of real estate mortgages before the Regional Trial Courts of San Pablo City and Zambales which has jurisdiction over the place where the properties were located. In both cases, petitioner contended, among others, that the loan secured by said mortgages imposed unauthorized penalties, interest and charges. The Court did not find the mortgagors guilty of forum shopping considering that since injunction is enforceable only within the territorial limits of the trial court, the mortgagor is left without remedy as to the properties

located outside the jurisdiction of the issuing court, unless an application for injunction is made with another court which has jurisdiction over the latter properties. By parity of reasoning, it would be unfair to hold respondents in the instant case guilty of forum shopping because the recourse available to them after their termination, but pending resolution of the inspection case before the DOLE, was to file a case for illegal dismissal before the Labor Arbiter who has jurisdiction over termination disputes. More importantly, substantial justice dictates that this case be resolved on the merits considering that the NLRC and the Court of Appeals correctly found that there existed an employer-employee relationship between petitioner and respondents and that the latter's dismissal was illegal, as will be discussed hereunder. In the same vein, the NLRC correctly ruled on the merits instead of remanding the case to the Labor Arbiter. Respondents specifically raised the issue of the existence of employer-employee relationship but petitioner refused to submit evidence to disprove such relationship on the erroneous contention that to do so would constitute a waiver of the right to question the jurisdiction of the NLRC to resolve the case on the merits. 14 This is rather odd because it was the stand of petitioner in the inspection case before the DOLE that the case should be certified to the NLRC for the resolution of the issue of employer-employee relationship. But when the same issue was proffered before the NLRC, it refused to present evidence and instead sought the dismissal of the case invoking the pendency of the inspection case before the DOLE. Petitioner refused to meet head on the substantial aspect of this controversy and resorted to technicalities to delay its disposition. It must be stressed that labor tribunals are not bound by technical rules and the Court would sustain the expedient disposition of cases so long as the parties are not denied due process. 15 The rule is that, due process is not violated where a person is given the opportunity to be heard, but chooses not to give his or her side of the case. 16Significantly, petitioner never claimed that it was denied due process. Indeed, no such denial exists because it had all the opportunities to present evidence before the labor tribunals below, the Court of Appeals, and even before this Court, but chose not to do so for reasons which will not warrant the sacrifice of substantial justice over technicalities.
EIcSDC

On the third issue, respondents' employment with petitioner passed the "four-fold test" on employer-employee relations, namely: (1) the selection and engagement of the employee, or the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee. Petitioner failed to controvert with substantial evidence the allegation of respondents that they were hired by the former on various dates from 1974 to 1997. If petitioner did not hire respondents and if it was the director alone who chose the talents, petitioner could have easily shown, being in possession of the records, a contract to such effect. However, petitioner merely relied on its contention that respondents were piece rate contractors who were paid by results. 17 Note that under Policy Instruction No. 40, petitioner is obliged to execute the necessary contract specifying the nature of the work to be performed, rates of pay, and the programs in which they will work. Moreover, project or contractual employees are required to be apprised of the project they will undertake under a written contract. This was not complied with by the petitioner, justifying the reasonable conclusion that no such contracts exist and that respondents were in fact regular employees. In ABS-CBN v. Marquez, 18 the Court held that the failure of the employer to produce the contract mandated by Policy Instruction No. 40 is indicative that the so called talents or project workers are in reality, regular employees. Thus
Policy Instruction No. 40 pertinently provides:

Program employees are those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours such that on some days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies. The engagement of program employees, including those hired by advertising or sponsoring companies, shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay, and the programs in which they will work. The contract shall be duly registered by the station with the Broadcast Media Council within three days from its consummation. (Emphasis supplied) Ironically, however, petitioner failed to adduce an iota proof that the requirements for program employment were even complied with by it. It is basic that project or contractual employees are appraised of the project they will work under a written contract, specifying, inter alia, the nature of work to be performed and the rates of pay and the program in which they will work. Sadly, however, no such written contract was ever presented by the petitioner. Petitioner is in the best of position to present these documents. And because none was presented, we have every reason to surmise that no such written contract was ever accomplished by the parties, thereby belying petitioner's posture. Worse, there was no showing of compliance with the requirement that after every engagement or production of a particular television series, the required reports were filed with the proper government agency, as provided no less under the very Policy Instruction invoked by the petitioner, nor under the Omnibus Implementing Rules of the Labor Code for project employees. This alone bolsters respondents' contention that they were indeed petitioner's regular employees since their employment was not only for a particular program.
CHEDAc

Moreover, the engagement of respondents for a period ranging from 2 to 25 years and the fact that their drama programs were aired not only in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas, undoubtedly show that their work is necessary and indispensable to the usual business or trade of petitioner. The test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business. Thus, even assuming that respondents were initially hired as project/contractual employees who were paid per drama or per project/contract, the engagement of their services for 2 to 25 years justify their classification as regular employees, their services being deemed indispensable to the business of petitioner. 19 As to the payment of wages, it was petitioner who paid the same as shown by the payroll bearing the name of petitioner company in the heading with the respective salaries of respondents opposite their names. Anent the power of control, dismissal, and imposition of disciplinary measures, which are indicative of an employeremployee relationship, 20 the same were duly proven by the following: (1) memorandum 21 duly noted by Wilfredo Alejaga, petitioner's station manager, calling the attention of the "Drama Department" to the late submission of scripts by writers and the tardiness and absences of directors and talents, as well as the imposable fines of P100 to P200 for future infractions; (2) the memorandum 22 of the station manager directing respondent Oberio to explain why no disciplinary action should be taken against him for punching the time card of a certain Mrs. Fe Oberio who was not physically present in their office; and (3) the station manager's memorandum 23 suspending respondent Oberio for six days for the said infraction which constituted violation of petitioner's network policy. All these, taken together, unmistakably show the existence of an employer-employee relationship. Not only did petitioner possess the power of control over their work but also the power to discipline them through the imposition of fines and suspension for violation of company rules and policies.

Finally, we find that respondents were illegally dismissed. In labor cases, the employer has the burden of proving that the dismissal was for a just cause; failure to show this would necessarily mean that the dismissal was unjustified and, therefore, illegal. To allow an employer to dismiss an employee based on mere allegations and generalities would place the employee at the mercy of his employer; and the right to security of tenure, which this Court is bound to protect, would be unduly emasculated. 24 In this case, petitioner merely contended that it was respondents who ceased to report to work, and never presented any substantial evidence to support said allegation. Petitioner therefore failed to discharge its burden, hence, respondents were correctly declared to have been illegally dismissed. Furthermore, if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter the employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence should be resolved in the former's favor. The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection of labor. 25
cdasia

When a person is illegally dismissed, he is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. In the event, however, that reinstatement is no longer feasible, or if the employee decides not to be reinstated, the employer shall pay him separation pay in lieu of reinstatement. Such a rule is likewise observed in the case of a strained employer-employee relationship or when the work or position formerly held by the dismissed employee no longer exists. In sum, an illegally dismissed employee is entitled to: (1) either reinstatement if viable or separation pay if reinstatement is no longer viable, and (2) backwages. In the instant controversy, reinstatement is no longer viable considering the strained relations between petitioner and respondents. As admitted by the latter, the complaint filed before the DOLE strained their relations with petitioner who eventually dismissed them from service. Payment of separation pay instead of reinstatement would thus better promote the interest of both parties. Respondents' separation pay should be computed based on their respective one (1) month pay, or one-half (1/2) month pay for every year of service, whichever is higher, reckoned from their first day of employment up to finality of this decision. Full backwages, on the other hand, should be computed from the date of their dismissal until the finality of this decision. 26 WHEREFORE, the petition is DENIED. The July 30, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 77098, finding respondents to be regular employees of petitioner and holding them to be illegally dismissed and directing petitioner to pay full backwages, is AFFIRMED with the MODIFICATION that petitioner is ordered to pay respondents their separation pay instead of effecting their reinstatement. SO ORDERED.

Austria-Martinez, Chico-Nazario and Nachura, JJ., concur.

[G.R. No. 162833. June 15, 2007.] LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG ALYANSA-PINAGBUKLOD NG MANGGAGAWANG PROMO NG BURLINGAME,petitioner, vs. BURLINGAME CORPORATION, respondent.

DECISION

QUISUMBING, J :
p

This is an appeal to reverse and set aside both the Decision 1 dated August 29, 2003 of the Court of Appeals and its Resolution 2 dated March 15, 2004 in CA-G.R. SP No. 69639. The appellate court had reversed the decision 3 dated December 29, 2000 of the Secretary of Labor and Employment which ordered the holding of a certification election among the rank-and-file promo employees of respondent Burlingame Corporation. The facts are undisputed. On January 17, 2000, the petitioner Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame (LIKHA-PMPB) filed a petition for certification election before the Department of Labor and Employment (DOLE). LIKHA-PMPB sought to represent all rank-and-file promo employees of respondent numbering about 70 in all. The petitioner claimed that there was no existing union in the aforementioned establishment representing the regular rank-and-file promo employees. It prayed that it be voluntarily recognized by the respondent to be the collective bargaining agent, or, in the alternative, that a certification/consent election be held among said regular rank-and-file promo employees. The respondent filed a motion to dismiss the petition. It argued that there exists no employer-employee relationship between it and the petitioner's members. It further alleged that the petitioner's members are actually employees of F. Garil Manpower Services (F. Garil), a duly licensed local employment agency. To prove such contention, respondent presented a copy of its contract for manpower services with F. Garil. On June 29, 2000, Med-Arbiter Renato D. Parungo dismissed 4 the petition for lack of employer-employee relationship, prompting the petitioner to file an appeal 5before the Secretary of Labor and Employment. On December 29, 2000, the Secretary of Labor and Employment ordered the immediate conduct of a certification election. 6 A motion for reconsideration of the said decision was filed by the respondent on January 19, 2001, but the same was denied in the Resolution 7 of February 19, 2002 of the Secretary of Labor and Employment. Respondent then filed a complaint with the Court of Appeals, which then reversed 8 the decision of the Secretary. The petitioner then filed a motion for reconsideration, 9 which the Court of Appeals denied 10 on March 15, 2004. Hence the instant petition for review on certiorari. The issue raised in the petition is:
WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DECLARING THAT THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PETITIONER'S MEMBERS AND BURLINGAME BECAUSE F. GARIL MANPOWER SERVICES IS AN INDEPENDENT CONTRACTOR. 11
TaCEHA

Respondent contends that there is no employer-employee relationship between the parties. the other hand, insists that there is. 13

12 Petitioner,

on

The resolution of this issue boils down to a determination of the true status of F. Garil, i.e., whether it is an independent contractor or a labor-only contractor.

The case of De Los Santos v. NLRC

14

succinctly enunciates the statutory criteria:

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. 15

According to Section 5 of DOLE Department Order No. 18-02, Series of 2002:

16

Section 5.Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are [is] present: i)The contractor or sub-contractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or ii)The contractor does not exercise the right to control over the performance of the work of the contractual employee. The foregoing provisions shall be without prejudice to the application of Article 248(C) of the Labor Code, as amended. "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" shall refer 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.

Given the above criteria, we agree with the Secretary that F. Garil is not an independent contractor.

First, F. Garil 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. No proof was adduced to show F. Garil's capitalization.

Second, the work of the promo-girls was directly related to the principal business or operation of Burlingame.
Marketing and selling of products is an essential activity to the main business of the principal.

Lastly, F. Garil did not carry on an independent business or undertake the performance of its service contract
according to its own manner and method, free from the control and supervision of its principal, Burlingame. The "four-fold test" will show that respondent is the employer of petitioner's members. 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 element is the employer's control of the employee's conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. 17

A perusal of the contractual stipulations between Burlingame and F. Garil shows the following:
1.The AGENCY shall provide Burlingame Corporation or the CLIENT, with sufficient number of screened, tested and pre-selected personnel (professionals, highly-skilled, skilled, semi-skilled and unskilled) who will be deployed in establishment selling products manufactured by the CLIENT. 2.The AGENCY shall be responsible in paying its workers under this contract in accordance with the new minimum wage including the daily living allowances and shall pay them overtime or remuneration that which is authorized by law. 3.It is expressly understood and agreed that the worker(s) supplied shall be considered or treated as employee(s) of the AGENCY. Consequently, there shall be no employer-employee relationship between the worker(s) and the CLIENT and as such, the AGENCY shall be responsible to the benefits mandated by law. 4.For and in consideration of the service to be rendered by the AGENCY to the CLIENT, the latter shall during the terms of agreement pay to the AGENCY the sum of Seven Thousand Five Hundred Pesos Only (P7,500.00) per month per worker on the basis of Eight (8) hours work payable up-to-date, semimonthly, every 15th and 30th of each calendar month. However, these rates may be subject to change proportionately in the event that there will be revisions in the Minimum Wage Law or any law related to salaries and wages. 5.The CLIENT shall report to the AGENCY any of its personnel assigned to it if those personnel are found to be inefficient, troublesome, uncooperative and not observing the rules and regulations set forth by the CLIENT. It is understood and agreed that the CLIENT may request any time the immediate replacement of any personnel(s) assigned to them. 18

It is patent that the involvement of F. Garil in the hiring process was only with respect to the recruitment aspect, i.e. the screening, testing and pre-selection of the personnel it provided to Burlingame. The actual hiring itself was done through the deployment of personnel to establishments by Burlingame. The contract states that Burlingame would pay the workers through F. Garil, stipulating that Burlingame shall pay F. Garil a certain sum per worker on the basis of eight-hour work every 15th and 30th of each calendar month. This evinces the fact that F. Garil merely served as conduit in the payment of wages to the deployed personnel. The interpretation would have been different if the payment was for the job, project, or services rendered during the month and not on a per worker basis. In Vinoya v. National Labor Relations Commission, 19 we held:
The Court takes judicial notice of the practice of employers who, in order to evade the liabilities under the Labor Code, do not issue payslips directly to their employees. Under the current practice, a third person, usually the purported contractor (service or manpower placement agency), assumes the act of paying the wage. For this reason, the lowly worker is unable to show proof that it was directly paid by the true employer. Nevertheless, for the workers, it is enough that they actually receive their pay, oblivious of the need for payslips, unaware of its legal implications. Applying this principle to the case at bar, even though the wages were coursed through PMCI, we note that the funds actually came from the pockets of RFC. Thus, in the end, RFC is still the one who paid the wages of petitioner albeit indirectly. 20

The contract also provides that "any personnel found to be inefficient, troublesome, uncooperative and not observing the rules and regulations set forth by Burlingame shall be reported to F. Garil and may be replaced upon request." Corollary to this circumstance would be the exercise of control and supervision by Burlingame over workers supplied by F. Garil in order to establish the inefficient, troublesome, and uncooperative nature

of undesirable personnel. Also implied in the provision on replacement of personnel carried upon request by Burlingame is the power to fire personnel. These are indications that F. Garil was not left alone in the supervision and control of its alleged employees. Consequently, it can be concluded that F. Garil was not an independent contractor since it did not carry a distinct business free from the control and supervision of Burlingame. It goes without saying that the contractual stipulation on the nonexistence of an employer-employee relationship between Burlingame and the personnel provided by F. Garil has no legal effect. While the parties may freely stipulate terms and conditions of a contract, such contractual stipulations should not be contrary to law, morals, good customs, public order or public policy. A contractual stipulation to the contrary cannot override factual circumstances firmly establishing the legal existence of an employer-employee relationship. Under this circumstance, there is no doubt that F. Garil was engaged in labor-only contracting, and as such, is considered merely an agent of Burlingame. In labor-only contracting, the law creates an employer-employee relationship to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. 21 Since F. Garil is a labor-only contractor, the workers it supplied should be considered as employees of Burlingame in the eyes of the law. WHEREFORE, the challenged Decision of the Court of Appeals dated August 29, 2003 and the Resolution dated March 15, 2004 denying the motion for reconsideration are REVERSED and SET ASIDE. The decision of the Secretary of Labor and Employment ordering the holding of a certification election among the rank-and-file promo employees of Burlingame is reinstated. Costs against respondent. SO ORDERED.

Carpio, Tinga and Velasco, Jr., JJ., concur. Carpio-Morales, J., is on official leave.

[G.R. No. 162813. February 12, 2007.] FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY, petitioners, vs. JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS, respondents.

DECISION

QUISUMBING, J :
p

Before us is a petition for review on certiorari assailing the Decision 1 dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its Resolution 2dated March 15, 2004 denying the motion for reconsideration. The appellate court had reversed the Decision 3 dated October 15, 2002 of the National Labor Relations Commission (NLRC) setting aside the Decision 4 dated June 27, 2001 of the Labor Arbiter.

Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996 private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50. He delivered animal feeds to the company's clients. On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22, 2000, when he was required to make a second delivery in Novaliches, Quezon City. That same day, Manuel Uy, brother of Far East's General Manager and petitioner Alexander Uy, suspended Lebatique apparently for illegal use of company vehicle. Even so, Lebatique reported for work the next day but he was prohibited from entering the company premises. On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public Assistance and Complaints Unit concerning the nonpayment of his overtime pay. According to Lebatique, two days later, he received a telegram from petitioners requiring him to report for work. When he did the next day, January 29, 2000, Alexander asked him why he was claiming overtime pay. Lebatique explained that he had never been paid for overtime work since he started working for the company. He also told Alexander that Manuel had fired him. After talking to Manuel, Alexander terminated Lebatique and told him to look for another job.
HCETDS

On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay. The Labor Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full back wages, 13th month pay, service incentive leave pay, and overtime pay. The dispositive portion of the decision is quoted herein in full, as follows:
WHEREFORE, we find the termination of complainant illegal. He should thus be ordered reinstated with full backwages. He is likewise ordered paid his 13th month pay, service incentive leave pay and overtime pay as computed by the Computation and Examination Unit as follows:
a)Backwages: 01/25/00 - 10/31/00 = 9.23 mos. P223.50 x 26 x 9.23 = P53,635.53 11/01/00 - 06/26/01 = 7.86 mos. P250.00 x 26 x 7.86 = 51,090.00P104,725.53 13th Month Pay: 1/12 of P104,725.53 =8,727.13 Service Incentive Leave Pay 01/25/00 - 10/31/00 = 9.23 mos. P223.50 x 5/12 x 9.23 = P859.54 11/01/00 - 06/26/01 = 7.86 mos. P250.00 x 5/12 x 7.86 = [818.75]1,678.29115,130.95 b)Overtime Pay: (3 hours/day) 03/20/97 - 4/30/97 = 1.36 mos. P180/8 x 1.25 x 3 x 26 x 1.36 =P2,983.50

05/01/97 - 02/05/98 = 9.16 mos. P185/8 x 1.25 x 3 x 26 x 9.16 =20,652.94 02/06/98 - 10/30/99 = 20.83 mos. P198/8 x 1.25 x 3 x 26 x [20.83] =50,265.39 10/31/99 - 01/24/00 = 2.80 mos. P223.50/8 x 1.25 x 3 x 26 x 2.80 =7,626.9481,528.77 TOTAL AWARDP196,659.72

SO ORDERED.

On appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit. The NLRC held that there was no dismissal to speak of since Lebatique was merely suspended. Further, it found that Lebatique was a field personnel, hence, not entitled to overtime pay and service incentive leave pay. Lebatique sought reconsideration but was denied. Aggrieved, Lebatique filed a petition for certiorari with the Court of Appeals. The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended on January 24, 2000 but was illegally dismissed on January 29, 2000 when Alexander told him to look for another job. It also found that Lebatique was not a field personnel and therefore entitled to payment of overtime pay, service incentive leave pay, and 13th month pay. It reinstated the decision of the Labor Arbiter as follows:
WHEREFORE, premises considered, the decision of the NLRC dated 27 December 2002 is hereby REVERSED and the Labor Arbiter's decision dated 27 June 2001 REINSTATED. SO ORDERED.
6

Petitioners moved for reconsideration but it was denied. Hence, the instant petition wherein petitioners assign the following errors:
THE COURT OF APPEALS . . . ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT THE PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED. THE COURT OF APPEALS . . . ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002 AND IN RULING THAT PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL AND THER[E]FORE ENTITLED TO OVERTIME PAY AND SERVICE INCENTIVE LEAVE PAY. THE COURT OF APPEALS . . . ERRED IN NOT DISMISSING THE PETITION FOR CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT TO ATTACH CERTIFIED TRUE COPIES OF THE QUESTIONED DECISION AND RESOLUTION OF THE PUBLIC RESPONDENT. 7

Simply stated, the principal issues in this case are: (1) whether Lebatique was illegally dismissed; and (2) whether Lebatique was a field personnel, not entitled to overtime pay.

Petitioners contend that, (1) Lebatique was not dismissed from service but merely suspended for a day due to violation of company rules; (2) Lebatique was not barred from entering the company premises since he never reported back to work; and (3) Lebatique is estopped from claiming that he was illegally dismissed since his complaint before the DOLE was only on the nonpayment of his overtime pay. Also, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field personnel whose time outside the company premises cannot be determined with reasonable certainty. According to petitioners, the drivers do not observe regular working hours unlike the other office employees. The drivers may report early in the morning to make their deliveries or in the afternoon, depending on the production of animal feeds and the traffic conditions. Petitioners also aver that Lebatique worked for less than eight hours a day. 8 Lebatique for his part insists that he was illegally dismissed and was not merely suspended. He argues that he neither refused to work nor abandoned his job. He further contends that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal. He also claims that he is not a field personnel, thus, he is entitled to overtime pay and service incentive leave pay. After consideration of the submission of the parties, we find that the petition lacks merit. We are in agreement with the decision of the Court of Appeals sustaining that of the Labor Arbiter. It is well settled that in cases of illegal dismissal, the burden is on the employer to prove that the termination was for a valid cause. 9 In this case, petitioners failed to discharge such burden. Petitioners aver that Lebatique was merely suspended for one day but he abandoned his work thereafter. To constitute abandonment as a just cause for dismissal, there must be: (a) absence without justifiable reason; and (b) a clear intention, as manifested by some overt act, to sever the employer-employee relationship. 10 The records show that petitioners failed to prove that Lebatique abandoned his job. Nor was there a showing of a clear intention on the part of Lebatique to sever the employer-employee relationship. When Lebatique was verbally told by Alexander Uy, the company's General Manager, to look for another job, Lebatique was in effect dismissed. Even assuming earlier he was merely suspended for illegal use of company vehicle, the records do not show that he was afforded the opportunity to explain his side. It is clear also from the sequence of the events leading to Lebatique's dismissal that it was Lebatique's complaint for nonpayment of his overtime pay that provoked the management to dismiss him, on the erroneous premise that a truck driver is a field personnel not entitled to overtime pay.
DaEcTC

An employee who takes steps to protest his layoff cannot by any stretch of imagination be said to have abandoned his work and the filing of the complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment. 11 A contrary notion would not only be illogical but also absurd. It is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay the day he was suspended by management's unilateral act. What matters is that he filed the complaint for illegal dismissal on March 20, 2000, after he was told not to report for work, and his filing was well within the prescriptive period allowed under the law. On the second issue, Article 82 of the Labor Code is decisive on the question of who are referred to by the term "field personnel." It provides, as follows:
ART. 82.Coverage. The provisions of this title [Working Conditions and Rest Periods] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.

xxx xxx xxx "Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

In Auto Bus Transport Systems, Inc. v. Bautista, 12 this Court emphasized that the definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee's performance is unsupervised by the employer. We held that field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee's time and performance are constantly supervised by the employer. 13 As correctly found by the Court of Appeals, Lebatique is not a field personnel as defined above for the following reasons: (1) company drivers, including Lebatique, are directed to deliver the goods at a specified time and place; (2) they are not given the discretion to solicit, select and contact prospective clients; and (3) Far East issued a directive that company drivers should stay at the client's premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m. 14 Even petitioners admit that the drivers can report early in the morning, to make their deliveries, or in the afternoon, depending on the production of animal feeds. 15Drivers, like Lebatique, are under the control and supervision of management officers. Lebatique, therefore, is a regular employee whose tasks are usually necessary and desirable to the usual trade and business of the company. Thus, he is entitled to the benefits accorded to regular employees of Far East, including overtime pay and service incentive leave pay. Note that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued; otherwise, they shall be forever barred. 16 Further, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three years before the filing of the complaint. 17 Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences at the time he was terminated. 18On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by petitioners to compute properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily time records, payroll, or other documents in management's control to determine the correct overtime pay due Lebatique. WHEREFORE, the petition is DENIED for lack of merit. The Decision dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its Resolution dated March 15, 2004 are AFFIRMED with MODIFICATION to the effect that the case is hereby REMANDED to the Labor Arbiter for further proceedings to determine the exact amount of overtime pay and other monetary benefits due Jimmy Lebatique which herein petitioners should pay without further delay. Costs against petitioners.

SO ORDERED.

Carpio, Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.

[G.R. No. 169353. April 13, 2007.] PNOC-ENERGY DEVELOPMENT CORPORATION, Southern Negros Geothermal Project, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, Fourth Division, Cebu City, and PNOC-EDC, SNGPEU-ASSOCIATED LABOR UNIONS-TUCP, LEONORA A. TORRES, ALEJANDRO B. TABAERA, JR., ARNEL T. AMOR, ROSELA S. CALIMPONG, WILSON D. NUAY, and ROBERTO S. RENZAL, respondents.

DECISION

CALLEJO, SR., J :
p

Before the Court is a Petition for Review on Certiorari of the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 77584 as well as its Resolution 2 dated August 11, 2005. The antecedents are as follows: Petitioner PNOC-Energy Development Corporation is a government-owned and controlled corporation engaged in the exploration, development, and utilization of energy. It undertakes several projects in areas where geothermal energy has been discovered. Each geothermal project undergoes the stages of exploration, development, and utilization or production. For each stage, several activities are undertaken such as drilling, construction, civil works, structural works, mechanical works, and electrical works until the project is finally completed. Aside from its projects in Negros Oriental, petitioner also had geothermal projects in Negros Occidental, Leyte, Albay, Sorsogon, and North Cotabato.
aEACcS

Petitioner's Southern Negros Geothermal Production Field in Negros Oriental is divided into two phases: Palinpinon I (PAL I) and Palinpinon II (PAL II). To augment its manpower requirement occasioned by the increased activities in the development of PAL II, petitioner hired the following employees in the Administration and Maintenance Section:
NameDate HiredPositionDate Separated 1)Leonora TorresJuly 3, 1995Clerk/TypistJune 30, 1998 2)Rosela CalimpongJuly 1, 1997Clerk/TypistJune 30, 1998 3)Arnel AmorMay 24, 1995Helper MechanicJune 30, 1998 4)Wilson NuayMay 16, 1995Service DriverJune 30, 1998 5)Roberto RenzalJanuary 25, 1995Pipe FitterJune 30, 1998 6)Alejandro TabaeraFebruary 27, 1996MechanicJune 30, 1998

The termination/expiration of their respective employment were specified in their initial employment contracts, which, however, were renewed and extended on their respective expiry dates. On May 29, 1998, petitioner submitted reports 3 to the Department of Labor and Employment (DOLE) Regional Sub-Branch No. VII in Dumaguete City, stating that six of its employees were being terminated.
CSIDEc

Petitioner thereafter furnished the employees uniformly worded notices of termination, stating that they were being terminated from employment effective June 30, 1998 due to the substantial completion of the civil works phase of PAL II. On October 29, 1998, the six employees, herein respondents, filed before the National Labor Relations Commission (NLRC) a complaint for illegal dismissal against petitioner. Aside from reinstatement, respondents sought the payment of backwages, salary differential, collective bargaining agreement benefits, damages and attorney's fees. In their Position Paper, respondents averred that they had rendered continuous and satisfactory services from the dates of their respective employment until illegally dismissed on June 30, 1998:
NAMESMONTHS and YEARS OF SERVICE 1)Arnel Amor3 years and 1 month 2)Rosela Calimpong2 years and 11 months 3)Wilson Nuay3 years and 1 month 4)Roberto Renzal3 years and 5 months 5)Alejandro Tabaera2 years and 4 months 6)Leonora Torres2 years and 11 months

Respondents further contended that their dismissal from employment was a clear case of union busting for they had previously sought union membership and actually filed a notice of strike.
aEIADT

For its part, petitioner asseverated that respondents were contractual employees; as such, they cannot claim to have been illegally dismissed because upon the expiration of the term of the contract or the completion of the project, their employer-employee relationship also ended. After evaluating the evidence presented, the Labor Arbiter rendered judgment dismissing the complaint for lack of legal and factual basis. 4 The Labor Arbiter ruled that respondents were not dismissed from work; the employer-employee relationship between the parties was severed upon the expiration of the respective contracts of respondents and the completion of the projects concerned.
ASTIED

Not satisfied, respondents interposed an appeal to the NLRC which rendered judgment reversing the decision of the Labor Arbiter. The dispositive portion reads:
WHEREFORE, the decision of the Labor Arbiter dated May 31, 1999 is SET ASIDE and a new one is rendered ORDERING the respondent the following:

(1)to immediately reinstate the following complainants to their respective positions without loss of seniority rights and other privileges: a)LEONORA TORRES b)ARNEL AMOR c)WILSON NUAY d)ROBERTO RENZAL, and e)ALEJANDRO TABAERA; (2)to pay each of the complainants his/her backwages from July 1, 1998 until actual reinstatement at the rate of P116.00 per day plus his/her 13th month pay and service incentive leave pay for the same period.
acCDSH

(3)to pay attorney's fees equivalent to ten percent (10%) of the total award. The claim of Rosela Calimpong is dismissed for lack of merit. SO ORDERED.
5

The NLRC ratiocinated that respondents were regular non-project employees for having worked for more than one year in positions that required them to perform activities necessary and desirable in the normal business or trade of petitioner. The NLRC further ruled that the employment contracts of respondents were not for a specific project or for a fixed period. According to the NLRC, the dismissals made on June 30, 1998 under the pretext of project completion were illegal, being founded on an invalid, unjust, and unauthorized cause. Respondents filed a motion for reconsideration, which the NLRC denied with modification in a Resolution 6 dated March 19, 2003. Only respondent Rosela Calimpong was granted relief.
ICDSca

Aggrieved, petitioner filed a petition for certiorari before the CA seeking to have the NLRC decision reversed. It claimed that respondents were engaged for one definite phase of petitioner's geothermal project, the execution and implementation of the civil works portion of the Fluid Collection and Disposal System (FCDS) and Associated Work Projects. Petitioner averred that at the time of respondents' termination, the projects had already been substantially if not fully completed. On August 31, 2004, the CA dismissed the petition. The fallo of the decision reads:
WHEREFORE, premises considered, the petition is hereby DENIED. The assailed May 23, 2001 Decision and March 19, 2003 Resolution of the National Labor Relations Commission, Fourth Division of Cebu City are AFFIRMED. SO ORDERED.
7

The CA ruled that respondents were performing activities necessary and desirable in the normal operations of the business of petitioner. The appellate court explained that the repeated re-hiring and the continuing need for the services of the project employees over a span of time had made them regular employees. The motion for reconsideration filed by petitioner was denied by the CA in its Resolution 8 dated August 11, 2005.
HDIaST

Petitioner sought relief from this Court via petition for review on certiorari.

The pivotal questions involved in this case for our resolution are: (a) whether respondents were project employees or regular employees; and (b) whether or not they were illegally dismissed from employment. Petitioner argues that respondents are project employees because as gleaned from their standard contracts of employment, they were hired for a specific project or undertaking, the completion or termination of which had been determined at the time of their engagement. Their contracts clearly indicated the completion or termination of the specific project or of the specific phase thereof at the time they were engaged. For their part, respondents posit that they were undeniably performing activities which are necessary or desirable in the usual trade or business of petitioner. They aver that the completion of their individual employment was not determined at the time of their engagement due to the fact that their contracts were renewed and extended over and over again. They claim that had the periods of their employment been determined, then their work with petitioner would not have lasted beyond the three-month period provided in their respective initial employment contracts. They likewise theorized that the contracts they signed were short-term contracts covering a long period of the same activity, not for a specific project or undertaking. The contentions of petitioner have no merit. Customarily, the findings made by the NLRC are afforded great respect and are even clothed with finality and considered binding on this Court, except that when such findings are contrary to those of the Labor Arbiter, this Court may elect to re-examine the same, as we shall do in this case now. Article 280 of the Labor Code of the Philippines states
Article 280. REGULAR AND CASUAL EMPLOYEES. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
cDACST

An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

Thus, the applicable formula to ascertain whether an employment should be considered regular or non-regular is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. 9 As we held in Grandspan Development Corporation v. Bernardo: 10
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. 11
cSEaDA

As defined, project employees are those workers hired (1) for a specific project or undertaking, and (2) the completion or termination of such project or undertaking has been determined at the time of the engagement of the employee. 12 However, petitioner failed to substantiate its claim that respondents were hired merely as project employees. A perusal of the records of the case reveals that the supposed specific project or undertaking of petitioner was not satisfactorily identified in the contracts of respondents. To

illustrate, the following is a list of the names of respondents and the projects written in their employment contracts:
NAMESPROJECT NAME Leonora A. TorresAdditional Manpower cover additional workloads of PAL II transferred to PAL I Operations, 13 PAL II Transfer to PAL I Operations 14 Arnel T. AmorEDC-Drilling, 15 Maintenance of Drilling Materials, Assist in Repair Maintenance of Vehicles/Equipments at Equipment Maintenance Section 17 Wilson D. NuayEDC Drilling Activities, 18 Rig #3 Operation on OK-3RWOBL-2DWO, 19 Maintenance of Drilling Materials, 20 LG4D Drilling Operation, 21 SNGP FCDS Project, 22 Fabrication Personal Driver for CD Turned-Over Projects 23 Roberto S. RenzalPAL II FCDS Nasuji-NJA RI Line and Associated Works, PAL II FCDS PN33/PN25 Branchline/Nasuji-NJA-Sogongon, 25 SNGP FCDS Project, 26 Cawayan Restoration Works, 27 SNGP FCDS Project PAL I/PAL II Refurbishments, 28 Support Workload increase in Fabrication/Equipment Maintenance Section 29
24 16

Alejandro B. Tabaera, Jr.Temporary Increase in Workload of Maintenance and Repair Activities of Light and Heavy Equipment, 30 Troubleshooting/Repair of All Equipments 31 Rosela S. CalimpongPAL II Transfer to PAL I Operations Clerical Workloads, Additional Manpower to cover additional workloads of PAL II transferred to PAL I Operations 33
32

Unmistakably, the alleged projects stated in the employment contracts were either too vague or imprecise to be considered as the "specific undertaking" contemplated by law. Petitioner's act of repeatedly and continuously hiring respondents to do the same kind of work belies its contention that respondents were hired for a specific project or undertaking. The absence of a definite duration for the project/s has led the Court to conclude that respondents are, in fact, regular employees. Another cogent factor which militates against petitioner's insistence that the services of respondents were terminated because the projects for which they were hired had been completed is the fact that respondents' contracts of employment were extended a number of times for different or new projects. It must be stressed that a contract that misuses a purported fixed-term employment to block the acquisition of tenure by employees deserves to be struck down for being contrary to law, morals, good customs, public order and public policy. 34
HaTISE

In Filipinas Pre-Fabricated Building Systems (Filsystems), Inc. v. Puente, 35 the Court ruled that "the length of service of a project employee is not the controlling test of employment tenure but whether or not 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." 36 Indeed, while length of time may not be the controlling test for project employment, it is vital in determining if the employee was hired for a specific undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, respondents had been project employees several times over. Their employment ceased to be coterminous with specific projects when they were repeatedly re-hired by petitioner. 37 Where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and are considered regular employees. 38 As regular workers, respondents are entitled to security of tenure under Article 279 of the Labor Code and can only be dismissed for a just or authorized cause. Article 279 of the Labor Code provides:

Article. 279. SECURITY OF TENURE. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

In termination cases, it is incumbent upon the employer to prove by the quantum of evidence required by law that the dismissal of an employee is not illegal; otherwise the dismissal would be unjustified. 39 In the case at bar, petitioner failed to discharge the burden. The notices of termination indicated that respondents' services were terminated due to the completion of the project. However, this allegation is contrary to the statement of petitioner in some of its pleadings that the project was merely "substantially completed." There is likewise no proof that the project, or the phase of work to which respondents had been assigned, was already completed at the time of their dismissal.
TEcAHI

Since respondents were illegally dismissed from work, they are entitled to reinstatement without loss of seniority rights, full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time their compensation was withheld from them up to the time of their actual reinstatement, pursuant to Article 279 of the Labor Code. 40 WHEREFORE, in the light of the foregoing, the petition is DENIED. The Decision of the Court of Appeals in CAG.R. SP No. 77584 and the Resolution are AFFIRMED. No costs. SO ORDERED.

Ynares-Santiago, Austria-Martinez, Chico-Nazario and Nachura, JJ., concur.

[G.R. No. 156146. June 21, 2007.] OLONGAPO MAINTENANCE SERVICES, INC., petitioner, vs. EDGARDO B. CHANTENGCO, SALVACION S. ANIGAN, POLICARPIO S. ANIGAN, NOEL C. MENDOZA, DANIEL VALENTIN, MANUEL T. MARIANO, CARLOS PALABYAB, BETTY B. OLA, SALICIO R. MAGNO, MICHAEL SALAZAR, LOPE R. MAGNO, GERARDO G. AQUINO, EDWIN Q. DAYANDANTE, JOSE P. PRIEL, ROMEO O. CLETE, ERNESTO O. CLETE, SAMUEL P. MIRALPES, PATERNO R. BERZUELA, ANTONIO C. VALDEZ, RICARDO L. LOPEZ, MANUEL C. ABADIEZ, RUTH S. DOMENS, ALVIN P. MANGASIL, TIRSO T. TISADO, EDMUNDO C. SANTOS, FRANCISCO M. ZAMORA, EFREN E. ERGINA, DANIEL CASIMIRO, CHARLIE GALVEZ, EDGARDO REYES, CELSO M. DEL MUNDO, EUGENIA ILAGAN, RAFAEL CABAIS, DEODERICO GARCIA, VENANCIO MAGHANOY, ZOSIMO DIMACULANGAN, DULLAS PACOMIO, MARLON MAGDURULAN, GAUDIOSO BORREL, FORTUNATO ANZANO, WILFREDO HERNANDEZ, ROLANDO MUCHILLAS, NOMER MAGNO, NOEL MAGNO, JEREMIAH CONEL, REMIGIO PAREO, CRISANTO LIVINA, ROGELIO CASIL, VICENTE INOFINADA, RICKY BETONIO, ERNESTO MARASIGAN, ELSA MARTINEZ, ROBERTO MERCANO, ARNEL BAYRON, ALEXANDER REGANION, RODERICO NEYRA, WILFRED BATACAN, SALVADOR CRISOL, JR., EDISON GEMALAYA, ARNOLD CAMERGA, RAMON BELMONTE, ERNESTO IGNACIO, DOMINGO GUADEZ, ROMEO TAADA, FAUSTO GARCIA, JUANITO DUMAGAT, RODOLFO PIMENTE, ANDRES SAHURDA, CACAOJ RAMILITO, ARCON MOLINA, ALEX LIBROJO, respondents.

DECISION

NACHURA, J :
p

This Petition for Review on Certiorari assails the July 29, 2002 Decision 1 of the Court of Appeals and its Resolution 2 dated November 14, 2002 in CA-G.R. SP No. 67474, which, respectively, denied the petition for certiorari and the motion for reconsideration filed by Olongapo Maintenance Services, Inc. (OMSI). OMSI is a corporation engaged in the business of providing janitorial and maintenance services to various clients, including government-owned and controlled corporations. On various dates beginning 1986, OMSI hired the respondents as janitors, grass cutters, and degreasers, and assigned them at the Ninoy Aquino International Airport (NAIA). On January 14, 1999, OMSI terminated respondents' employment. Claiming termination without just cause and non-payment of labor standard benefits, respondents filed a complaint for illegal dismissal, underpayment of wages, and non-payment of holiday and service incentive leave pays, with prayer for payment of separation pay, against OMSI. For its part, OMSI denied the allegations in the complaint. It averred that when Manila International Airport Authority (MIAA) awarded to OMSI the service contracts for the airport, OMSI hired respondents as janitors, cleaners, and degreasers to do the services under the contracts. OMSI informed the respondents that they were hired for the MIAA project and their employments were coterminous with the contracts. As project employees, they were not dismissed from work but their employments ceased when the MIAA contracts were not renewed upon their expiration. The termination of respondents' employment cannot, thus, be considered illegal.
EcHaAC

In a Decision

dated November 19, 1999, the Labor Arbiter dismissed the complaint, viz.:

WHEREFORE, premises considered, judgment is hereby rendered DISMISSING for lack of merit the claims for separation pay, wage differentials and holiday pay except that respondent is hereby ordered to pay the seventy one (71) complainants listed in pages three and four of the latter's position paper their service incentive leave pay. SO ORDERED.
4

On appeal by the respondents, the NLRC modified the Labor Arbiter's ruling. It held that respondents were regular and not project employees. Hence, they are entitled to separation pay:
WHEREFORE, the decision appealed from is hereby modified by granting in addition to the grant of service incentive leave pay, payment of separation pay equivalent to half-month pay per [every] year of service or one month pay, whichever is higher. SO ORDERED.
5

OMSI sought reconsideration of the ruling, but the NLRC denied the motion on July 30, 2001. Petitioner went up to the Court of Appeals via a petition for certiorari, imputing grave abuse of discretion to the NLRC for reversing the factual findings and the decision of the Labor Arbiter. However, the Court of Appeals dismissed the petition. The appellate court agreed with the NLRC that the continuous rehiring of respondents, who performed tasks necessary and desirable in the usual business of OMSI, was a clear indication that they were regular, not project employees. The court added that OMSI failed to establish that respondents' employment had been fixed for a specific project or undertaking, the completion or termination

of which had been determined at the time of their engagement or hiring. Neither had it shown that respondents were informed of the duration and scope of their work when they were hired. Furthermore, OMSI did not submit to the Department of Labor and Employment (DOLE) reports of termination of the respondents, thereby bolstering respondents' claim of regular employment. OMSI filed a motion for reconsideration, but the Court of Appeals denied it on November 14, 2002.
IcHTCS

Aggrieved by the resolutions of the Court of Appeals, OMSI comes to this Court theorizing that:
THE COURT OF APPEALS COMMITTED GRAVE ERROR AND GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN SUSTAINING THE NLRC'S RULING THAT RESPONDENTS ARE NOT PROJECT EMPLOYEES. CONCOMITANT THERETO, THERE IS NEITHER FACTUAL NOR LEGAL BASIS FOR THE AWARD OF SEPARATION PAY. 6

OMSI insists that respondents were project employees. Respondents, on the other hand, maintain that they were OMSI's regular employees. Article 280 of the Labor Code provides:
ART. 280.Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been

fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season . . . (Italics supplied.)

Without question, respondents, as janitors, grass cutters, and degreasers, performed work "necessary or desirable" in the janitorial and maintenance service business of OMSI. OMSI, however, argues that the respondents' performance of activities necessary and desirable to its business does not necessarily and conclusively mean that respondents were regular employees. OMSI asserts that respondents were project employees and their employment was coterminous with OMSI's service contracts with the MIAA. Thus, when the service contracts were terminated and the respondents were not re-assigned to another project, OMSI cannot be held liable for illegal dismissal. The argument does not persuade. The principal test in determining whether an employee is a project employee is whether he/she is assigned to carry out a "specific project or undertaking," the duration and scope of which are specified at the time the employee is engaged in the project, 7 or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. 8 A true project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at the time of hiring. 9 In the instant case, the record is bereft of proof that the respondents' engagement as project employees has been predetermined, as required by law. We agree with the Court of Appeals that OMSI did not provide convincing evidence that respondents were informed that they were to be assigned to a "specific project or undertaking" when OMSI hired them. Notably, the employment contracts for the specific project signed by the respondents were never presented. All that OMSI submitted in the proceedings a quo are the service contracts between OMSI and the MIAA. Clearly, OMSI utterly failed to establish by substantial evidence that, indeed, respondents were project employees and their employment was coterminous with the MIAA contract.
HcDSaT

Evidently cognizant of such neglect, OMSI attempted to correct the situation by attaching copies of the application forms 10 of the respondents to its motion for reconsideration of the Court of Appeals' Decision. Such practice cannot be tolerated. This practice of submitting evidence late is properly rejected as it defeats the speedy administration of justice involving poor workers. It is also unfair. 11 OMSI's reliance on Mamansag v. National Labor Relations Commission, 12 Cartagenas v. Romago Electric Company, Inc., 13 and Sandoval Shipyards, Inc. v. National Labor Relations Commission 14 is misplaced. Said cases are not on all fours with the case at bench. In Mamansag, Consumer Pulse Inc. duly presented the contract of employment showing that Mamansag was hired for a specific project and the completion or termination of said project was determined at the start of the employment. In Cartagenas, documentary exhibits were offered showing that the employee had been issued appointments from project to project and was issued a notice of temporary lay-off when the project was suspended due to lack of funds. Finally, in the case ofSandoval Shipyards, the termination of the project employees was duly reported to the then Ministry of Labor and Employment. These circumstances are not true in OMSI's case. As mentioned, no convincing evidence was offered to prove that respondents were informed that they were to be assigned to a "specific project or undertaking." Also, OMSI never reported respondents' termination to the then Department of Labor and Employment (DOLE). In Philippine Long Distance Telephone Co. v. Ylagan, 15 we held that the failure of the employee to file termination reports was an indication that an employee was not a project but a regular employee.

In termination cases, the burden of proof rests on the employer to show that the dismissal is for a just cause. Thus, employers who hire project employees are mandated to state and, once its veracity is challenged, to prove the actual basis for the latter's dismissal. 16 Unfortunately for OMSI, it failed to discharge the burden. All that we have is OMSI's self-serving assertion that the respondents were hired as project employees. Having been illegally dismissed, the NLRC cannot be considered to have acted whimsically in granting respondents separation pay in lieu of their reinstatement. Accordingly, the Court of Appeals committed no reversible error nor grave abuse of discretion in denying OMSI's petition for certiorari. WHEREFORE, the petition for review is DENIED and the assailed Decision and Resolution of the Court of Appeals are AFFIRMED. SO ORDERED.

Ynares-Santiago, Austria-Martinez and Chico-Nazario, JJ., concur.

[G.R. No. 167622. January 25, 2011.] GREGORIO V. TONGKO, petitioner, vs. MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS, respondents.

RESOLUTION

BRION, J :
p

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.
HcISTE

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.
HSTAcI

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.
TDSICH

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 DOMINANTrelationship 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 andInsular 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 managementcontracts 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.
TDcEaH

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; xxx xxx xxx 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; xxx xxx xxx

9.My commission and incentives are all reported to the Bureau of Internal Revenue (BIR) as income by a self-employed individual or professional with a ten (10) percent creditable withholding tax. I also remit monthly for professionals.

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.
TAEcSC

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, 27Dealco Farms, Inc. v. National Labor Relations Commission, 28 South Davao Development Company, Inc. v. Gamo, 29and 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 1713-1720 of the Civil Code 32 do not even appear in the decisions cited.

31

and Articles

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 inLazaro, 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.

Corona, C.J., Carpio, Peralta, Del Castillo, Abad, Villarama, Jr., Perez and Mendoza, JJ., concur. Carpio Morales, J., I maintain my original vote, hence, I dissent. Velasco, Jr., J., I dissent. (Pls. see dissenting opinion). Nachura, Leonardo-de Castro and Bersamin, JJ., join the dissent of Justice Velasco. Sereno, J., took no part.

[G.R. No. 155207. August 13, 2008.]

WILHELMINA S. OROZCO, petitioner, vs. THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER, and LETICIA JIMENEZ MAGSANOC, respondents.

DECISION

NACHURA, J :
p

The case before this Court raises a novel question never before decided in our jurisdiction whether a newspaper columnist is an employee of the newspaper which publishes the column. In this Petition for Review under Rule 45 of the Revised Rules on Civil Procedure, petitioner Wilhelmina S. Orozco assails the Decision 1 of the Court of Appeals (CA) in CA-G.R. SP No. 50970 dated June 11, 2002 and its Resolution 2dated September 11, 2002 denying her Motion for Reconsideration. The CA reversed and set aside the Decision 3 of the National Labor Relations Commission (NLRC), which in turn had affirmed the Decision 4 of the Labor Arbiter finding that Orozco was an employee of private respondent Philippine Daily Inquirer (PDI) and was illegally dismissed as columnist of said newspaper. In March 1990, PDI engaged the services of petitioner to write a weekly column for its Lifestyle section. She religiously submitted her articles every week, except for a six-month stint in New York City when she, nonetheless, sent several articles through mail. She received compensation of P250.00 later increased to P300.00 for every column published. 5 On November 7, 1992, petitioner's column appeared in the PDI for the last time. Petitioner claims that her then editor, Ms. Lita T. Logarta, 6 told her that respondent Leticia Jimenez Magsanoc, PDI Editor in Chief, wanted to stop publishing her column for no reason at all and advised petitioner to talk to Magsanoc herself. Petitioner narrates that when she talked to Magsanoc, the latter informed her that it was PDI Chairperson Eugenia Apostol who had asked to stop publication of her column, but that in a telephone conversation with Apostol, the latter said that Magsanoc informed her (Apostol) that the Lifestyle section already had many columnists. 7
SCaTAc

On the other hand, PDI claims that in June 1991, Magsanoc met with the Lifestyle section editor to discuss how to improve said section. They agreed to cut down the number of columnists by keeping only those whose columns were well-written, with regular feedback and following. In their judgment, petitioner's column failed to improve, continued to be superficially and poorly written, and failed to meet the high standards of the newspaper. Hence, they decided to terminate petitioner's column. 8 Aggrieved by the newspaper's action, petitioner filed a complaint for illegal dismissal, backwages, moral and exemplary damages, and other money claims before the NLRC. On October 29, 1993, Labor Arbiter Arthur Amansec rendered a Decision in favor of petitioner, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered, finding complainant to be an employee of respondent company; ordering respondent company to reinstate her to her former or equivalent position, with backwages. Respondent company is also ordered to pay her 13th month pay and service incentive leave pay.

Other claims are hereby dismissed for lack of merit. SO ORDERED.

9

The Labor Arbiter found that:

[R]espondent company exercised full and complete control over the means and method by which complainant's work that of a regular columnist had to be accomplished. This control might not be found in an instruction, verbal or oral, given to complainant defining the means and method she should write her column. Rather, this control is manifested and certained (sic) in respondents' admitted prerogative to reject any article submitted by complainant for publication.
aIcHSC

By virtue of this power, complainant was helplessly constrained to adopt her subjects and style of writing to suit the editorial taste of her editor. Otherwise, off to the trash can went her articles. Moreover, this control is already manifested in column title, "Feminist Reflection" allotted complainant. Under this title, complainant's writing was controlled and limited to a woman's perspective on matters of feminine interests. That respondent had no control over the subject matter written by complainant is strongly belied by this observation. Even the length of complainant's articles were set by respondents. Inevitably, respondents would have no control over when or where complainant wrote her articles as she was a columnist who could produce an article in thirty (3) (sic) months or three (3) days, depending on her mood or the amount of research required for an article but her actions were controlled by her obligation to produce an article a week. If complainant did not have to report for work eight (8) hours a day, six (6) days a week, it is because her task was mainly mental. Lastly, the fact that her articles were (sic) published weekly for three (3) years show that she was respondents' regular employee, not a once-in-a-blue-moon contributor who was not under any pressure or obligation to produce regular articles and who wrote at his own whim and leisure.10

PDI appealed the Decision to the NLRC. In a Decision dated August 23, 1994, the NLRC Second Division dismissed the appeal thereby affirming the Labor Arbiter's Decision. The NLRC initially noted that PDI failed to perfect its appeal, under Article 223 of the Labor Code, due to non-filing of a cash or surety bond. The NLRC said that the reason proffered by PDI for not filing the bond that it was difficult or impossible to determine the amount of the bond since the Labor Arbiter did not specify the amount of the judgment award was not persuasive. It said that all PDI had to do was compute based on the amount it was paying petitioner, counting the number of weeks from November 7, 1992 up to promulgation of the Labor Arbiter's decision. 11 The NLRC also resolved the appeal on its merits. It found no error in the Labor Arbiter's findings of fact and law. It sustained the Labor Arbiter's reasoning that respondent PDI exercised control over petitioner's work. PDI then filed a Petition for Review 12 before this Court seeking the reversal of the NLRC Decision. However, in a Resolution 13 dated December 2, 1998, this Court referred the case to the Court of Appeals, pursuant to our ruling inSt. Martin Funeral Homes v. National Labor Relations Commission. 14 The CA rendered its assailed Decision on June 11, 2002. It set aside the NLRC Decision and dismissed petitioner's Complaint. It held that the NLRC misappreciated the facts and rendered a ruling wanting in substantial evidence. The CA said:
The Court does not agree with public respondent NLRC's conclusion. First, private respondent admitted that she was and [had] never been considered by petitioner PDI as its employee. Second, it is not disputed that private respondent had no employment contract with petitioner PDI. In fact, her engagement to contribute articles for publication was based on a verbal agreement between her and the petitioner's Lifestyle Section Editor. Moreover, it was evident that private respondent was not required to report to the office eight (8) hours a day. Further, it is not disputed that she stayed in New

York for six (6) months without petitioner's permission as to her leave of absence nor was she given any disciplinary action for the same. These undisputed facts negate private respondent's claim that she is an employee of petitioner.
cIaHDA

Moreover, with regards (sic) to the control test, the public respondent NLRC's ruling that the guidelines given by petitioner PDI for private respondent to follow, e.g., in terms of space allocation and length of article, is not the form of control envisioned by the guidelines set by the Supreme Court. The length of the article is obviously limited so that all the articles to be featured in the paper can be accommodated. As to the topic of the article to be published, it is but logical that private respondent should not write morbid topics such as death because she is contributing to the lifestyle section. Other than said given limitations, if the same could be considered limitations, the topics of the articles submitted by private respondent were all her choices. Thus, the petitioner PDI in deciding to publish private respondent's articles only controls the result of the work and not the means by which said articles were written. As such, the above facts failed to measure up to the control test necessary for an employer-employee relationship to exist. 15

Petitioner's Motion for Reconsideration was denied in a Resolution dated September 11, 2002. She then filed the present Petition for Review. In a Resolution dated April 29, 2005, the Court, without giving due course to the petition, ordered the Labor Arbiter to clarify the amount of the award due petitioner and, thereafter, ordered PDI to post the requisite bond. Upon compliance therewith, the petition would be given due course. Labor Arbiter Amansec clarified that the award under the Decision amounted to P15,350.00. Thus, PDI posted the requisite bond on January 25, 2007. 16 We shall initially dispose of the procedural issue raised in the Petition. Petitioner argues that the CA erred in not dismissing outright PDI's Petition for Certiorari for PDI's failure to post a cash or surety bond in violation of Article 223 of the Labor Code. This issue was settled by this Court in its Resolution dated April 29, 2005.
17

There, the Court held:

But while the posting of a cash or surety bond is jurisdictional and is a condition sine qua non to the perfection of an appeal, there is a plethora of jurisprudence recognizing exceptional instances wherein the Court relaxed the bond requirement as a condition for posting the appeal.
ASIETa

xxx xxx xxx In the case of Taberrah v. NLRC, the Court made note of the fact that the assailed decision of the Labor Arbiter concerned did not contain a computation of the monetary award due the employees, a circumstance which is likewise present in this case. In said case, the Court stated,

As a rule, compliance with the requirements for the perfection of an appeal within the reglamentary(sic) period is mandatory and jurisdictional. However, in National Federation of Labor Unions v. Ladridoas well as in several other cases, this Court relaxed the requirement of the posting of an appeal bond within the reglementary period as a condition for perfecting the appeal. This is in line with the principle that substantial justice is better served by allowing the appeal to be resolved on the merits rather than dismissing it based on a technicality.

The judgment of the Labor Arbiter in this case merely stated that petitioner was entitled to backwages, 13th month pay and service incentive leave pay without however including a computation of the alleged amounts. xxx xxx xxx In the case of NFLU v. Ladrido III, this Court postulated that "private respondents cannot be expected to post such appeal bond equivalent to the amount of the monetary award when the amount thereof was not included in the decision of the labor arbiter". The computation of the amount awarded to petitioner not having been clearly stated in the decision of the labor arbiter, private respondents had no basis for determining the amount of the bond to be posted. Thus, while the requirements for perfecting an appeal must be strictly followed as they are considered indispensable interdictions against needless delays and for orderly discharge of judicial business, the law does admit of exceptions when warranted by the circumstances. Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties. But while this Court may relax the observance of reglementary periods and technical rules to achieve substantial justice, it is not prepared to give due course to this petition and make a pronouncement on the weighty issue obtaining in this case until the law has been duly complied with and the requisite appeal bond duly paid by private respondents. 18
aSIHcT

Records show that PDI has complied with the Court's directive for the posting of the bond; has been laid to rest. We now proceed to rule on the merits of this case.

19

thus, that issue

The main issue we must resolve is whether petitioner is an employee of PDI, and if the answer be in the affirmative, whether she was illegally dismissed. We rule for the respondents. The existence of an employer-employee relationship is essentially a question of fact. 20 Factual findings of quasi-judicial agencies like the NLRC are generally accorded respect and finality if supported by substantial evidence. 21 Considering, however, that the CA's findings are in direct conflict with those of the Labor Arbiter and NLRC, this Court must now make its own examination and evaluation of the facts of this case. It is true that petitioner herself admitted that she "was not, and [had] never been considered respondent's employee because the terms of works were arbitrarily decided upon by the respondent". 22 However, the employment status of a person is defined and prescribed by law and not by what the parties say it should be. 23 This Court has constantly adhered to the "four-fold test" to determine whether there exists an employeremployee relationship between parties. 24 The four elements 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. 25 Of these four elements, it is the power of control which is the most crucial 26 and most determinative factor, 27 so important, in fact, that the other elements may even be disregarded. 28 As this Court has previously held:

the significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to control the method and the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such control. 29
DCHaTc

In other words, the test is whether the employer controls or has reserved the right to control the employee, not only as to the work done, but also as to the means and methods by which the same is accomplished. 30 Petitioner argues that several factors exist to prove that respondents exercised control over her and her work, namely:
a.As to the Contents of her Column The PETITIONER had to insure that the contents of her column hewed closely to the objectives of its Lifestyle Section and the over-all principles that the newspaper projects itself to stand for. As admitted, she wanted to write about death in relation to All Souls Day but was advised not to. b.As to Time Control The PETITIONER, as a columnist, had to observe the deadlines of the newspaper for her articles to be published. These deadlines were usually that time period when the Section Editor has to "close the pages" of the Lifestyle Section where the column in located. "To close the pages" means to prepare them for printing and publication. As a columnist, the PETITIONER's writings had a definite day on which it was going to appear. So she submitted her articles two days before the designated day on which the column would come out. This is the usual routine of newspaper work. Deadlines are set to fulfill the newspapers' obligations to the readers with regard to timeliness and freshness of ideas. c.As to Control of Space The PETITIONER was told to submit only two or three pages of article for the column, (sic) "Feminist Reflections" per week. To go beyond that, the Lifestyle editor would already chop off the article and publish the rest for the next week. This shows that PRIVATE RESPONDENTS had control over the space that the PETITIONER was assigned to fill.
DTSaHI

d.As to Discipline Over time, the newspaper readers' eyes are trained or habituated to look for and read the works of their favorite regular writers and columnists. They are conditioned, based on their daily purchase of the newspaper, to look for specific spaces in the newspapers for their favorite writeups/or opinions on matters relevant and significant issues aside from not being late or amiss in the responsibility of timely submission of their articles. The PETITIONER was disciplined to submit her articles on highly relevant and significant issues on time by the PRIVATE RESPONDENTS who have a say on whether the topics belong to those considered as highly relevant and significant, through the Lifestyle Section Editor. The PETITIONER had to discuss the topics first and submit the articles two days before publication date to keep her column in the newspaper space regularly as expected or without miss by its readers. 31

Given this discussion by petitioner, we then ask the question: Is this the form of control that our labor laws It is not. Petitioner has misconstrued the "control test", as did the Labor Arbiter and the NLRC.

contemplate such as to establish an employer-employee relationship between petitioner and respondent PDI?

Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. Rules which serve as general guidelines towards the achievement of the mutually desired result are not indicative of the power of control. 32 Thus, this Court has explained:

It should, however, be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. . . . . 33
ISDCaT

The main determinant therefore is whether the rules set by the employer are meant to control not just the results of the work but also the means and method to be used by the hired party in order to achieve such results. Thus, in this case, we are to examine the factors enumerated by petitioner to see if these are merely guidelines or if they indeed fulfill the requirements of the control test. Petitioner believes that respondents' acts are meant to control how she executes her work. We do not agree. A careful examination reveals that the factors enumerated by the petitioner are inherent conditions in running a newspaper. In other words, the so-called control as to time, space, and discipline are dictated by the very nature of the newspaper business itself. We agree with the observations of the Office of the Solicitor General that:
The Inquirer is the publisher of a newspaper of general circulation which is widely read throughout the country. As such, public interest dictates that every article appearing in the newspaper should subscribe to the standards set by the Inquirer, with its thousands of readers in mind. It is not, therefore, unusual for the Inquirer to control what would be published in the newspaper. What is important is the fact that such control pertains only to the end result, i.e., the submitted articles. The Inquirer has no control over [petitioner] as to the means or method used by her in the preparation of her articles. The articles are done by [petitioner] herself without any intervention from the Inquirer. 34

Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce her articles each week. Aside from the constraints presented by the space allocation of her column, there were no restraints on her creativity; petitioner was free to write her column in the manner and style she was accustomed to and to use whatever research method she deemed suitable for her purpose. The apparent limitation that she had to write only on subjects that befitted the Lifestyle section did not translate to control, but was simply a logical consequence of the fact that her column appeared in that section and therefore had to cater to the preference of the readers of that section.
HTCSDE

The perceived constraint on petitioner's column was dictated by her own choice of her column's perspective. The column title "Feminist Reflections" was of her own choosing, as she herself admitted, since she had been known as a feminist writer. 35 Thus, respondent PDI, as well as her readers, could reasonably expect her columns to speak from such perspective. Contrary to petitioner's protestations, it does not appear that there was any actual restraint or limitation on the subject matter within the Lifestyle section that she could write about. Respondent PDI did not dictate how she wrote or what she wrote in her column. Neither did PDI's guidelines dictate the kind of research, time, and effort she put into each column. In fact, petitioner herself said that she received "no comments on

her articles . . . except for her to shorten them to fit into the box allotted to her column". Therefore, the control that PDI exercised over petitioner was only as to the finished product of her efforts, i.e., the column itself, by way of either shortening or outright rejection of the column. The newspaper's power to approve or reject publication of any specific article she wrote for her column cannot be the control contemplated in the "control test", as it is but logical that one who commissions another to do a piece of work should have the right to accept or reject the product. The important factor to consider in the "control test" is still the element of control over how the work itself is done, not just the end result thereof. In contrast, a regular reporter is not as independent in doing his or her work for the newspaper. We note the common practice in the newspaper business of assigning its regular reporters to cover specific subjects, geographical locations, government agencies, or areas of concern, more commonly referred to as "beats". A reporter must produce stories within his or her particular beat and cannot switch to another beat without permission from the editor. In most newspapers also, a reporter must inform the editor about the story that he or she is working on for the day. The story or article must also be submitted to the editor at a specified time. Moreover, the editor can easily pull out a reporter from one beat and ask him or her to cover another beat, if the need arises. This is not the case for petitioner. Although petitioner had a weekly deadline to meet, she was not precluded from submitting her column ahead of time or from submitting columns to be published at a later time. More importantly, respondents did not dictate upon petitioner the subject matter of her columns, but only imposed the general guideline that the article should conform to the standards of the newspaper and the general tone of the particular section.
aHECST

Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, no employer-employee relationship exists. 36 Aside from the control test, this Court has also used the economic reality test. The economic realities prevailing within the activity or between the parties are examined, taking into consideration the totality of circumstances surrounding the true nature of the relationship between the parties. 37 This is especially appropriate when, as in this case, there is no written agreement or contract on which to base the relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible employment relationships for purposes of applying the Labor Code ought to be the economic dependence of the worker on his employer. 38 Petitioner's main occupation is not as a columnist for respondent but as a women's rights advocate working in various women's organizations. 39 Likewise, she herself admits that she also contributes articles to other publications. 40 Thus, it cannot be said that petitioner was dependent on respondent PDI for her continued employment in respondent's line of business. 41 The inevitable conclusion is that petitioner was not respondent PDI's employee but an independent contractor, engaged to do independent work. There is no inflexible rule to determine if a person is an employee or an independent contractor; thus, the characterization of the relationship must be made based on the particular circumstances of each case. 42 There are several factors 43 that may be considered by the courts, but as we already said, the right to control is the dominant factor in determining whether one is an employee or an independent contractor. 44 In our jurisdiction, the Court has held that an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on one's own account and under one's own responsibility according to one's own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof. 45

On this point, Sonza v. ABS-CBN Broadcasting Corporation 46 is enlightening. In that case, the Court found, using the four-fold test, that petitioner, Jose Y. Sonza, was not an employee of ABS-CBN, but an independent contractor. Sonza was hired by ABS-CBN due to his "unique skills, talent and celebrity status not possessed by ordinary employees", a circumstance that, the Court said, was indicative, though not conclusive, of an independent contractual relationship. Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. 47 The Court also found that, as to payment of wages, Sonza's talent fees were the result of negotiations between him and ABS-CBN. 48 As to the power of dismissal, the Court found that the terms of Sonza's engagement were dictated by the contract he entered into with ABS-CBN, and the same contract provided that either party may terminate the contract in case of breach by the other of the terms thereof. 49 However, the Court held that the foregoing are not determinative of an employer-employee relationship. Instead, it is still the power of control that is most important.
HDAaIS

On the power of control, the Court found that in performing his work, Sonza only needed his skills and talent how he delivered his lines, appeared on television, and sounded on radio were outside ABS-CBN's control. 50 Thus:
We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZA's work. ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule "for more effective programming". ABSCBN's sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of SONZA's work. SONZA claims that ABS-CBN's power not to broadcast his shows proves ABS-CBN's power over the means and methods of the performance of his work. Although ABS-CBN did have the option not to broadcast SONZA's show, ABS-CBN was still obligated to pay SONZA's talent fees. Thus, even if ABSCBN was completely dissatisfied with the means and methods of SONZA's performance of his work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZA's show but ABS-CBN must still pay his talent fees in full.
TAacIE

Clearly, ABS-CBN's right not to broadcast SONZA's show, burdened as it was by the obligation to continue paying in full SONZA's talent fees, did not amount to control over the means and methods of the performance of SONZA's work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of performance of his work how he delivered his lines and appeared on television did not meet ABS-CBN's approval. This proves that ABS-CBN's control was limited only to the result of SONZA's work, whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZA's talent fees in full until the expiry of the Agreement. In Vaughan, et al. v. Warner, et al., the United States Circuit Court of Appeals ruled that vaudeville performers were independent contractors although the management reserved the right to delete objectionable features in their shows. Since the management did not have control over the manner of performance of the skills of the artists, it could only control the result of the work by deleting objectionable features. SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel & Jay" programs. However, the equipment, crew and airtime are not the "tools and instrumentalities" SONZA needed to perform his job. What SONZA principally needed were his talent or skills and the costumes necessary for his appearance. Even though ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control his work. ABS-CBN's sole concern was for SONZA to display his talent during the airing of the programs.

A radio broadcast specialist who works under minimal supervision is an independent contractor. SONZA's work as television and radio program host required special skills and talent, which SONZA admittedly possesses. The records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and talent in his shows. 51
aSCHcA

The instant case presents a parallel to Sonza. Petitioner was engaged as a columnist for her talent, skill, experience, and her unique viewpoint as a feminist advocate. How she utilized all these in writing her column was not subject to dictation by respondent. As in Sonza, respondent PDI was not involved in the actual performance that produced the finished product. It only reserved the right to shorten petitioner's articles based on the newspaper's capacity to accommodate the same. This fact, we note, was not unique to petitioner's column. It is a reality in the newspaper business that space constraints often dictate the length of articles and columns, even those that regularly appear therein. Furthermore, respondent PDI did not supply petitioner with the tools and instrumentalities she needed to perform her work. Petitioner only needed her talent and skill to come up with a column every week. As such, she had all the tools she needed to perform her work. Considering that respondent PDI was not petitioner's employer, it cannot be held guilty of illegal dismissal. WHEREFORE, the foregoing premises considered, the Petition is DISMISSED. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 50970 are hereby AFFIRMED. SO ORDERED.

Ynares-Santiago, Austria-Martinez, Chico-Nazario and Reyes, JJ., concur.

[G.R. No. 151309. October 15, 2008.] BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President, JOSELITO LARIO, VIVENCIO B. BARTE, SATURNINO EGERA and SIMPLICIO AYAAY,petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, TRYCO PHARMA CORPORATION, and/or WILFREDO C. RIVERA, respondents.

DECISION

NACHURA, J :
p

This petition seeks a review of the Decision 1 of the Court of Appeals (CA) dated July 24, 2001 and Resolution dated December 20, 2001, which affirmed the finding of the National Labor Relations Commission (NLRC) that the petitioners' transfer to another workplace did not amount to a constructive dismissal and an unfair labor practice.
STcHDC

The pertinent factual antecedents are as follows:

Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its principal office is located in Caloocan City. Petitioners Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the positions of helper, shipment helper and factory workers, respectively, assigned to the Production Department. They are members of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees. Tryco and the petitioners signed separate Memorand[a] of Agreement 2 (MOA), providing for a compressed workweek schedule to be implemented in the company effective May 20, 1996. The MOA was entered into pursuant to Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek. As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be considered as the regular working hours, and no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically stated that the employee waives the right to claim overtime pay for work rendered after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists of 46 hours. However, should an employee be permitted or required to work beyond 6:12 p.m., such employee shall be entitled to overtime pay. Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the implementation of a compressed workweek in the company. 3 In January 1997, BMT and Tryco negotiated for the renewal of their collective bargaining agreement (CBA) but failed to arrive at a new agreement. Meantime, Tryco received the Letter dated March 26, 1997 from the Bureau of Animal Industry of the Department of Agriculture reminding it that its production should be conducted in San Rafael, Bulacan, not in Caloocan City:
MR. WILFREDO C. RIVERA President, Tryco Pharma Corporation San Rafael, Bulacan Subject: LTO as VDAP Manufacturer at San Rafael, Bulacan Dear Mr. Rivera: This is to remind you that your License to Operate as Veterinary Drug and Product Manufacturer is addressed at San Rafael, Bulacan, and so, therefore, your production should be done at the above mentioned address only. Further, production of a drug includes propagation, processing, compounding, finishing, filling, repacking, labeling, advertising, storage, distribution or sale of the veterinary drug product. In no instance, therefore, should any of the above be done at your business office at 117 M. Ponce St., EDSA, Caloocan City.
DISTcH

Please be guided accordingly. Thank you. Very truly yours, (sgd.) EDNA ZENAIDA V. VILLACORTE, D.V.M. Chief, Animal Feeds Standard Division
4

Accordingly, Tryco issued a Memorandum 5 dated April 7, 1997 which directed petitioner Aya-ay to report to the company's plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the order on April 18, 1997. 6Subsequently, through a Memorandum 7 dated May 9, 1997, Tryco also directed petitioners Egera, Lario and Barte to report to the company's plant site in Bulacan. BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair labor practice. In protest, BMT declared a strike on May 26, 1997. In August 1997, petitioners filed their separate complaints 8 for illegal dismissal, underpayment of wages, nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President, Wilfredo C. Rivera. In their Position Paper, 9 petitioners alleged that the company acted in bad faith during the CBA negotiations because it sent representatives without authority to bind the company, and this was the reason why the negotiations failed. They added that the management transferred petitioners Lario, Barte, Egera and Aya-ay from Caloocan to San Rafael, Bulacan to paralyze the union. They prayed for the company to pay them their salaries from May 26 to 31, 1997, service incentive leave, and overtime pay, and to implement Wage Order No. 4. In their defense, respondents averred that the petitioners were not dismissed but they refused to comply with the management's directive for them to report to the company's plant in San Rafael, Bulacan. They denied the allegation that they negotiated in bad faith, stating that, in fact, they sent the Executive Vice-President and Legal Counsel as the company's representatives to the CBA negotiations. They claim that the failure to arrive at an agreement was due to the stubbornness of the union panel.
IEaCDH

Respondents further averred that, long before the start of the negotiations, the company had already been planning to decongest the Caloocan office to comply with the government policy to shift the concentration of manufacturing activities from the metropolis to the countryside. The decision to transfer the company's production activities to San Rafael, Bulacan was precipitated by the letter-reminder of the Bureau of Animal Industry. On February 27, 1998, the Labor Arbiter dismissed the case for lack of merit. 10 The Labor Arbiter held that the transfer of the petitioners would not paralyze or render the union ineffective for the following reasons: (1) complainants are not members of the negotiating panel; and (2) the transfer was made pursuant to the directive of the Department of Agriculture. The Labor Arbiter also denied the money claims, ratiocinating that the nonpayment of wages was justified because the petitioners did not render work from May 26 to 31, 1997; overtime pay is not due because of the compressed workweek agreement between the union and management; and service incentive leave pay cannot be claimed by the complainants because they are already enjoying vacation leave with pay for at least five days. As for the claim of noncompliance with Wage Order No. 4, the Labor Arbiter held that the issue should be left to the grievance machinery or voluntary arbitrator. On October 29, 1999, the NLRC affirmed the Labor Arbiter's Decision, dismissing the case, thus:
PREMISES CONSIDERED, the Decision of February 27, 1998 is hereby AFFIRMED and complainants' appeal therefrom DISMISSED for lack of merit. Complainants Joselito Lario, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are directed to report to work at respondents' San Rafael Plant, Bulacan but without backwages. Respondents are directed to accept the complainants back to work. SO ORDERED.
11

On December 22, 1999, the NLRC denied the petitioners' motion for reconsideration for lack of merit.

12

Left with no recourse, petitioners filed a petition for certiorari with the CA. On July 24, 2001, the CA dismissed the petition for certiorari and ruled that the transfer order was a management prerogative not amounting to a constructive dismissal or an unfair labor practice. The CA further sustained the enforceability of the MOA, particularly the waiver of overtime pay in light of this Court's rulings upholding a waiver of benefits in exchange of other valuable privileges. The dispositive portion of the said CA decision reads:
WHEREFORE, the instant petition is DISMISSED. The Decision of the Labor Arbiter dated February 27, 1998 and the Decision and Resolution of the NLRC promulgated on October 29, 1999 and December 22, 1999, respectively, in NLRC-NCR Case Nos. 08-05715-97, 08-06115-97 and 08-05920-97, are AFFIRMED. SO ORDERED.
13

The CA denied the petitioners' motion for reconsideration on December 20, 2001. Dissatisfied, petitioners filed this petition for review raising the following issues:
A

14

THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING THE PATENTLY ERRONEOUS RULING OF THE LABOR ARBITER AND THE COMMISSION THAT THERE WAS NO DISMISSAL, MUCH LESS ILLEGAL DISMISSAL, OF THE INDIVIDUAL PETITIONERS.
IDcHCS

B THE COURT OF APPEALS GRAVELY ERRED IN NOT FINDING AND CONCLUDING THAT PRIVATE RESPONDENTS COMMITTED ACTS OF UNFAIR LABOR PRACTICE. C THE COURT OF APPEALS ERRED IN NOT FINDING AND CONCLUDING THAT PETITIONERS ARE ENTITLED TO THEIR MONEY CLAIMS AND TO DAMAGES, AS WELL AS LITIGATION COSTS AND ATTORNEY'S FEES.15

The petition has no merit. We have no reason to deviate from the well-entrenched rule that findings of fact of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind us when supported by substantial evidence. 16 This is particularly true when the findings of the Labor Arbiter, the NLRC and the CA are in absolute agreement. 17 In this case, the Labor Arbiter, the NLRC, and the CA uniformly agreed that the petitioners were not constructively dismissed and that the transfer orders did not amount to an unfair labor practice. But if only to disabuse the minds of the petitioners who have persistently pursued this case on the mistaken belief that the labor tribunals and the appellate court committed grievous errors, this Court will go over the issues raised in this petition.

Petitioners mainly contend that the transfer orders amount to a constructive dismissal. They maintain that the letter of the Bureau of Animal Industry is not credible because it is not authenticated; it is only a ploy, solicited by respondents to give them an excuse to effect a massive transfer of employees. They point out that the

Caloocan City office is still engaged in production activities until now and respondents even hired new employees to replace them. We do not agree. We refuse to accept the petitioners' wild and reckless imputation that the Bureau of Animal Industry conspired with the respondents just to effect the transfer of the petitioners. There is not an iota of proof to support this outlandish claim. Absent any evidence, the allegation is not only highly irresponsible but is grossly unfair to the government agency concerned. Even as this Court has given litigants and counsel a relatively wide latitude to present arguments in support of their cause, we will not tolerate outright misrepresentation or baseless accusation. Let this be fair warning to counsel for the petitioners. Furthermore, Tryco's decision to transfer its production activities to San Rafael, Bulacan, regardless of whether it was made pursuant to the letter of the Bureau of Animal Industry, was within the scope of its inherent right to control and manage its enterprise effectively. While the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied. 18
cDTSHE

This prerogative extends to the management's right to regulate, according to its own discretion and judgment, all aspects of employment, including the freedom to transfer and reassign employees according to the requirements of its business. 19 Management's prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is, therefore, generally not constitutive of constructive dismissal. 20 Thus, the consequent transfer of Tryco's personnel, assigned to the Production Department was well within the scope of its management prerogative. When the transfer is not unreasonable, or inconvenient, or prejudicial to the employee, and it does not involve a demotion in rank or diminution of salaries, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal. 21 However, the employer has the burden of proving that the transfer of an employee is for valid and legitimate grounds. The employer must show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. 22 Indisputably, in the instant case, the transfer orders do not entail a demotion in rank or diminution of salaries, benefits and other privileges of the petitioners. Petitioners, therefore, anchor their objection solely on the ground that it would cause them great inconvenience since they are all residents of Metro Manila and they would incur additional expenses to travel daily from Manila to Bulacan. The Court has previously declared that mere incidental inconvenience is not sufficient to warrant a claim of constructive dismissal. 23 Objection to a transfer that is grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer is not a valid reason to disobey an order of transfer. 24 Incidentally, petitioners cite Escobin v. NLRC 25 where the Court held that the transfer of the employees therein was unreasonable. However, the distance of the workplace to which the employees were being transferred can hardly compare to that of the present case. In that case, the employees were being transferred from Basilan to Manila; hence, the Court noted that the transfer would have entailed the separation of the employees from their families who were residing in Basilan and accrual of additional expenses for living accommodations in Manila. In contrast, the distance from Caloocan to San Rafael, Bulacan is not considerably great so as to compel petitioners to seek living accommodations in the area and prevent them from commuting to Metro Manila daily to be with their families.

Petitioners, however, went further and argued that the transfer orders amounted to unfair labor practice because it would paralyze and render the union ineffective.
DHcTaE

To begin with, we cannot see how the mere transfer of its members can paralyze the union. The union was not deprived of the membership of the petitioners whose work assignments were only transferred to another location. More importantly, there was no showing or any indication that the transfer orders were motivated by an intention to interfere with the petitioners' right to organize. Unfair labor practice refers to acts that violate the workers' right to organize. With the exception of Article 248 (f) of the Labor Code of the Philippines, the prohibited acts are related to the workers' right to self-organization and to the observance of a CBA. Without that element, the acts, no matter how unfair, are not unfair labor practices. 26 Finally, we do not agree with the petitioners' assertion that the MOA is not enforceable as it is contrary to law. The MOA is enforceable and binding against the petitioners. Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. 27 D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive from the adoption of a compressed workweek scheme, thus:
The compressed workweek scheme was originally conceived for establishments wishing to save on energy costs, promote greater work efficiency and lower the rate of employee absenteeism, among others. Workers favor the scheme considering that it would mean savings on the increasing cost of transportation fares for at least one (1) day a week; savings on meal and snack expenses; longer weekends, or an additional 52 off-days a year, that can be devoted to rest, leisure, family responsibilities, studies and other personal matters, and that it will spare them for at least another day in a week from certain inconveniences that are the normal incidents of employment, such as commuting to and from the workplace, travel time spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus, under this scheme, the generally observed workweek of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8) hours on weekdays, in exchange for the benefits abovecited that will accrue to the employees.

Moreover, the adoption of a compressed workweek scheme in the company will help temper any inconvenience that will be caused the petitioners by their transfer to a farther workplace. Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the interest of the employees in the implementation of a compressed workweek scheme:
cCSDaI

1.The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement; 2.There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the employees; 3.If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption of the compressed workweek scheme, all such excess hours shall be considered overtime work and shall be compensated in accordance with the provisions of the Labor Code or applicable Collective Bargaining Agreement (CBA); 4.Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day may be devised by the parties to the agreement.

5.The effectivity and implementation of the new working time arrangement shall be by agreement of the parties.

PESALA v. NLRC, 28 cited by the petitioners, is not applicable to the present case. In that case, an employment
contract provided that the workday consists of 12 hours and the employee will be paid a fixed monthly salary rate that was above the legal minimum wage. However, unlike the present MOA which specifically states that the employee waives his right to claim overtime pay for work rendered beyond eight hours, the employment contract in that case was silent on whether overtime pay was included in the payment of the fixed monthly salary. This necessitated the interpretation by the Court as to whether the fixed monthly rate provided under the employment contract included overtime pay. The Court noted that if the employee is paid only the minimum wage but with overtime pay, the amount is still greater than the fixed monthly rate as provided in the employment contract. It, therefore, held that overtime pay was not included in the agreed fixed monthly rate.

Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day workweek, there is no room for interpretation and its terms should be implemented as they are written. WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated July 24, 2001 and Resolution dated December 20, 2001 are AFFIRMED. SO ORDERED.

Puno, C.J., * Ynares-Santiago, Chico-Nazario and Reyes, JJ., concur.

[G.R. No. 157680. October 8, 2008.] EQUIPMENT TECHNICAL SERVICES or JOSEPH JAMES DEQUITO, petitioners, vs. COURT OF APPEALS, ALEX ALBINO, REY ALBINO, JULIUS ABANES, MIGUEL ALINAB, CHRISTOPHER BIOL, NELSON CATONG, RENATO DULOT, FLORO PACUNDO, MARCELITO GAMAS, REYNALDO LIMA, SAMMY MESAGAL, ERNESTO PADILLA, and CONRADO SULIBAGA,respondents.

DECISION

VELASCO, JR., J :
p

This petition for review under Rule 45 assails and seeks the reversal of the Amended Decision and Resolution dated March 3, 2003 and March 24, 2003, respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 67568. The assailed amended decision and resolution effectively set aside and reversed the consolidated resolutions dated July 30, 2001 and September 24, 2001 rendered by the National Labor Relations Commission (NLRC) and reinstated the July 24, 2000 Decision of Labor Arbiter Ermita T. Abrasaldo-Cuyuca in NLRC NCR Case Nos. 00-01-00571-99, 00-02-01429-99, and 00-02-01615-99.
aHATDI

Petitioner Equipment Technical Services (ETS) is primarily engaged in the business of sub-contracting plumbing works of on-going building construction. Among its clients was Uniwide Sales, Inc. (Uniwide).

Petitioner Joseph James Dequito was, during the period material, occupying the position of manager of ETS, 1 albeit the CA referred to him as ETS' president. On various occasions involving different projects, ETS hired the services of private respondents as pipe fitters, plumbers, or threaders. In December 1998, ETS experienced financial difficulties when Uniwide, its client at the time, failed to pay for the plumbing work being done at its Coastal Mall. As a result, ETS was only able to pay its employees 13th month pay equivalent to two weeks' salary. Unhappy over what they thought was ETS' failure to release the balance of their 13th month pay, private respondents brought their case before the Arbitration Branch of the NLRC, docketed as NLRC NCR Case No. 00-01-00571-99 and entitled as Alex Albino, Renato Dulot, Miguel Alinab, Marcelito Gamas, Julius Abanes,

Christopher Biol, Sammy Mesagal, Conrado Sulibaga, Floro Pacundo v. Equipment Technical Services or Joseph James Dequito.
Later, two other cases were filed against ETS for illegal dismissal and payment of money claims when the complainants thereat were refused work in another ETS project, i.e., Richville project, allegedly because they refused to sign individual employment contracts with ETS. These two other cases were Nelson Catong, Roger Lamayon, Christopher Lamayon v. Equipment Technical Services or Joseph James Dequito, docketed as NLRC NCR Case No. 00-02-01429-99; and Rey Albino, Ernesto Padilla, Reynaldo Lima v. Equipment Technical Services or Joseph James Dequito, docketed as NLRC NCR Case No. 00-02-01615-99. The three cases were consolidated before the labor arbiter. Following failed conciliation efforts, all concerned, except Roger and Christopher Lamayon, submitted, as the labor arbiter directed, their respective position papers. Private respondents' position 2 is summed up as follows: (1) they are regular employees of ETS; (2) ETS dismissed them without cause and without due process after they filed cases for money claims against ETS in the arbitration branch of the NLRC; (3) ETS has not paid them their salaries, 13th month pay, service incentive leave pay, overtime pay, and premium pay for holidays and rest days; and (4) they are entitled to reinstatement to their former positions with paid backwages in addition to their money claims and payment of attorney's fees.
caCSDT

ETS' position 3 may be summed up as follows: (1) private respondents were its contractual/project employees engaged for different projects of the company; (2) they were not illegally dismissed, having been hired on a per project basis; (3) ETS was unable to fully release private respondents' 13th month pay because Uniwide failed to pay for its contracted plumbing project; (4) ETS was forced to abandon the Uniwide project and undertake another project, the Richville project, because the chances of being paid by Uniwide were dim; (5) ETS asked private respondents to sign employment contracts to formalize their previous agreement but said private respondents refused; and (6) as a result, ETS was constrained to deny employment to private respondents as it considered the execution of employment contracts part of management prerogative before employment commences. On July 24, 2000, Labor Arbiter Abrasaldo-Cuyuca issued a Decision, holding that private respondents were ETS' regular, not merely project, employees. Accordingly, ETS was adjudged liable for illegal dismissal and directed to pay private respondents their money claims plus 10% of the total award as attorney's fees. The fallo of the subject decision reads as follows:
WHEREFORE, judgment is hereby rendered declaring the dismissal of the complainants illegal. Further, respondents are further ordered to pay the complainants their backwages, proportionate 13th month pay, [holiday] and service incentive leave pay.

Ten percent of the total award as attorney's fees. Other claims are dismissed for lack of merit. The complaints of Roger and Christopher all surnamed Lamayon are dismissed without prejudice. The computation prepared by the Computation Unit, NCR, this Commission is attached [sic] forming part of this decision. SO ORDERED.
4

ETS appealed from the above labor arbiter's decision. On July 30, 2001, the NLRC rendered a resolution which, while reversing the labor arbiter's holding with respect to the nature of private respondents' employment and the illegality of their dismissal, nevertheless upheld the validity of the monetary award extended by the labor arbiter, part of which included the award of backwages. The pertinent portion of the modificatory resolution reads as follows:
HcISTE

ACCORDINGLY, premises considered, the decision appealed from is hereby MODIFIED in that the findings of regularity of employment and illegal dismissal are hereby VACATED. However, respondents are ordered to give complainants priority in hiring for present and future projects. All other dispositions are hereby AFFIRMED in toto. SO ORDERED.

Following the denial on September 24, 2001 of ETS' motion for reconsideration, ETS elevated its case to the CA via a petition for certiorari under Rule 65, the recourse docketed as CA-G.R. SP No. 67568. As its principal contention, ETS ascribed on the NLRC the commission of grave abuse of discretion in affirming the monetary award in favor of private respondents, despite its finding that there was no illegal dismissal in this case. On January 23, 2002, the CA rendered judgment disposing as follows:
WHEREFORE, premises considered, the assailed resolutions of the National Labor Relations Commission dated July 30, 2001 and September 24, 2001 are hereby ANNULLED and SET ASIDE and a new one rendered ORDERING petitioner Equipment Technical Services to pay private respondents their holiday pay and service incentive leave pay for the year 1998 and the balance of their 13th month pay for the year 1999. The case is hereby REMANDED to Labor Arbiter Ermita T. Abrasaldo-Cuyuca for the computation of the same. The complaint against petitioner Joseph James Dequito is hereby DISMISSED, for lack of merit. No pronouncement as to costs. SO ORDERED.

Upon motion of private respondents for reconsideration, the CA issued an Amended Decision 5 dated March 3, 2003 vacating its earlier January 23, 2002 decision. The CA, in main support of its present disposition, stated that the NLRC's determination that private respondents are "project workers" is "utterly unsupported by the evidence on record and is patently erroneous" and, therefore, is tainted with grave abuse of discretion. 6 The fallo of the Amended Decision reads:

WHEREFORE, premises considered, the present motion for reconsideration is hereby GRANTED. The petition is hereby DENIED DUE COURSE and accordingly DISMISSED, for lack of merit. Our Decision dated January 23, 2002 is hereby RECONSIDERED and SET ASIDE and a new one is hereby entered REVERSING and SETTING ASIDE the assailed Resolutions dated July 30, 2001 and September 24, 2001 of public respondent NLRC in NLRC NCR Case No. 00-01-00571-99 (NLRC CA No. 027203-2001), NLRC NCR Case No. 00-02-01429-99 and NLRC NCR Case No. 00-02-01615-99. The Decision dated July 24, 2000 rendered by Labor Arbiter Ermita T. Abrasaldo-Cuyuca is hereby REINSTATED and AFFIRMED in all respects, including the computation of the monetary awards in favor of private respondents forming part of and attached to the same.
SCIcTD

With costs against the petitioners. SO ORDERED.

Hence, this petition on the submission that, contrary to the findings of the CA, but conformably with the determination of the NLRC, private respondents are seasonal or project workers; the duration of their employment is not permanent but coterminus with the project to which they are assigned and from whose payroll they are paid. As project employees, private respondents cannot, according to petitioners, validly maintain an action for illegal dismissal with prayer for reinstatement and payment of backwages, both reliefs being usually accorded following a finding of illegal dismissal. The petition is without merit. As we see it, as did the CA and the NLRC, the primary question to be resolved and to which all others must yield is whether or not private respondents are project employees. The CA, siding with the labor arbiter, as indicated earlier, answered the poser in the affirmative, while the NLRC resolved it in the negative. As the Court has consistently held, the service of project employees are coterminus 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. 7

The principal test for determining whether an employee is properly characterized as "project employee", as distinguished from "regular employee", is whether or not "the project employee" was 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. 8 And as Article 280 of the Labor Code, defining a regular employee vis--vis a project employee, would have it:
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 . . . .

It bears to stress at the outset that ETS admits hiring or employing private respondents to perform plumbing works for various projects. Given this postulate, regular employment may reasonably be presumed and it behooves ETS to prove otherwise, that is, that the employment in question was contractual in nature ending upon the expiration of the term fixed in the contract or for a specific project or undertaking. But the categorical finding of the CA, confirmatory for the most part of that of the labor arbiter, is that not a single written contract of employment fixing the terms of employment for the duration of the Uniwide project, or any other project, was submitted by ETS despite the latter's allegations that private respondents were merely

contractual employees. Records of payroll and other pertinent documents, such as job contracts secured by ETS showing that private respondents were hired for specific projects, were also not submitted by ETS. 9
CDEaAI

Moreover, if private respondents were indeed employed as project employees, petitioners should have had submitted a report of termination every time their employment was terminated owing to the completion of each plumbing project. As correctly held by the CA in its Amended Decision, citing Tomas Lao Construction v. NLRC, 10 ETS' failure to report the employment termination and file the necessary papers after every project completion tends to support the claim of private respondents about their not being project employees. 11 Under Policy Instruction No. 20, Series of 1977, 12 the report must be made to the nearest public office employment. 13 The decision inVioleta v. NLRC is also apropos, particularly when it held:
[The employer] should have filed as many reports of termination as there were construction projects actually finished if petitioners [employees] were indeed project employees, considering that petitioners were hired and again [hired] for various projects or phases of work therein. Its failure to submit reports of termination cannot but sufficiently convince us further that petitioners are truly regular employees. Just as important, the fact that petitioners had rendered more than one year of service at the time of their dismissal overturns private respondent's allegations that petitioners were hired for a specific or fixed undertaking for a limited period of time. 14

The Court can allow that, in the instant case, private respondents may have initially been hired for specific projects or undertaking of petitioner ETS and, hence, may be classified as project employees. Their repeated rehiring to perform tasks necessary to the usual trade or business of ETS changed the legal situation altogether, for in the later instance, their continuous rehiring took them out from the scope of workers coterminus with specific projects and had made them regular employees. We said as much in Phesco, Inc. v. NLRC that "where the employment of project employees is extended long after the supposed project had been finished, the employees are removed from the scope of project employees and they shall be considered regular employees." 15 Parenthetically, petitioners' assertion that there can be no illegal dismissal of project employees inasmuch as they are not entitled to security of tenure is inaccurate. The constitutionally-protected right of labor to security of tenure covers both regular and project workers. 16 Their termination must be for lawful cause and must be done in a way which affords them proper notice and hearing. 17 In termination disputes, the burden of proving that an employee had been dismissed for a lawful cause or that the exacting procedural requirements under the Labor Code had been complied with lies with the employer. 18 Where there is no showing of a clear, valid, and legal cause for termination of employment, the law considers the case a matter of illegal dismissal. 19
CcAHEI

Based on the foregoing criteria, the factual findings of the labor arbiter on the regular nature of private respondents' employment, juxtaposed with ETS' failure to support its "project-workers theory", impel us to dismiss the instant petition. This is as it should be for, to paraphrase Asuncion v. NLRC, if doubt exists between the evidence of the employers and the employees, the scales of justice must be tilted in favor of the latter the employers must adequately show rationally adequate evidence that their case is preponderantly superior. 20 As did the CA, the Court holds that private respondents are regular employees whose services were terminated without lawful cause and effected without the requisite notice and hearing. In view of the illegality of the dismissal, the fallo of the Decision of Labor Arbiter Abrasaldo-Cuyuca, as reinstated by the CA in its assailed Amended Decision, has to be modified in the sense that private respondents are entitled to reinstatement to their previous positions as pipe fitters or threaders, as the case may be, without loss of rank and seniority rights and with full backwages.

At this juncture, the Court wishes to state that it is taking judicial notice of the fact that no corporation is registered with the Securities and Exchange Commission under the name "Equipment Technical Services". It is thus but fair that both petitioners' liability under this Decision be joint and several. WHEREFORE, the Amended Decision dated March 3, 2003 of the CA in CA-G.R. SP No. 67568, reinstating the July 24, 2000 Decision of Labor Arbiter Abrasaldo-Cuyuca, is AFFIRMED with the MODIFICATION that petitioners are jointly and severally ordered to reinstate private respondents to their former positions, without loss of rank and seniority rights, with backwages from the date of dismissal until reinstated. As modified, the fallo of the labor arbiter's Decision shall read:
WHEREFORE, judgment is hereby rendered declaring the dismissal of private respondents illegal. Petitioners ETS and Joseph James Dequito are ordered jointly and severally to reinstate private respondents ALEX ALBINO, REY ALBINO, JULIUS ABANES, MIGUEL ALINAB, CHRISTOPHER BIOL, NELSON CATONG, RENATO DULOT, FLORO PACUNDO, MARCELITO GAMAS, REYNALDO LIMA, SAMMY MESAGAL, ERNESTO PADILLA, and CONRADO SULIBAGA to their respective positions without loss of rank and seniority rights with full backwages from the date of dismissal up to the date of actual reinstatement. Petitioners are likewise jointly and severally liable to private respondents for proportionate 13th month pay, holiday pay, and service incentive leave pay.
SHIcDT

Ten percent of the total award shall be paid to the counsel of private respondents as attorney's fees. Other claims are dismissed for lack of merit. The complaints of Roger and Christopher, both surnamed Lamayon, are dismissed without prejudice.

Costs against petitioners. SO ORDERED.

Quisumbing, Carpio-Morales, Tinga and Brion, JJ., concur.