SECOND DIVISION

[G.R. No. 129315. October 2, 2000]

OSIAS I. CORPORAL, SR., PEDRO TOLENTINO, MANUEL CAPARAS, ELPIDIO
LACAP, SIMPLICIO PEDELOS, PATRICIA NAS, and TERESITA FLORES,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LAO ENTENG
COMPANY, INC. and/or TRINIDAD LAO ONG, respondents.
DECISION
QUISUMBING, J.:

This special civil action for certiorari seeks the review of the Resolution dated October
17, 1996 of public respondent National Labor Relations Commission (First Division),i[1]
in NLRC NCR Case No. 00-04-03163-95, and the Resolution dated March 5, 1997
denying the motion for reconsideration. The aforecited October 17th Resolution affirmed
the Decision dated September 28, 1996 of Labor Arbiter Potenciano S. Caizares
dismissing the petitioners' complaint for illegal dismissal and declaring that petitioners
are not regular employees of private respondent Lao Enteng Company, Inc..
The records of the case show that the five male petitioners, namely, Osias I. Corporal,
Sr., Pedro Tolentino, Manuel Caparas, Elpidio Lacap, and Simplicio Pedelos worked as
barbers, while the two female petitioners, Teresita Flores and Patricia Nas worked as
manicurists in New Look Barber Shop located at 651 P. Paterno Street, Quiapo, Manila
owned by private respondent Lao Enteng Co. Inc.. Petitioner Nas alleged that she also
worked as watcher and marketer of private respondent.
Petitioners claim that at the start of their employment with the New Look Barber Shop, it
was a single proprietorship owned and managed by Mr. Vicente Lao. In or about January
1982, the children of Vicente Lao organized a corporation which was registered with the
Securities and Exchange Commission as Lao Enteng Co. Inc. with Trinidad Ong as
President of the said corporation. Upon its incorporation, the respondent company took
over the assets, equipment, and properties of the New Look Barber Shop and continued
the business. All the petitioners were allowed to continue working with the new company
until April 15, 1995 when respondent Trinidad Ong informed them that the building
wherein the New Look Barber Shop was located had been sold and that their services
were no longer needed.ii[2]
On April 28, 1995, petitioners filed with the Arbitration Branch of the NLRC, a
complaint for illegal dismissal, illegal deduction, separation pay, non-payment of 13th
month pay, and salary differentials. Only petitioner Nas asked for payment of salary
differentials as she alleged that she was paid a daily wage of P25.00 throughout her
period of employment. The petitioners also sought the refund of the P1.00 that the
respondent company collected from each of them daily as salary of the sweeper of the
barber shop.

Private respondent in its position paper averred that the petitioners were joint venture
partners and were receiving fifty percent commission of the amount charged to
customers. Thus, there was no employer-employee relationship between them and
petitioners. And assuming arguendo, that there was an employer-employee relationship,
still petitioners are not entitled to separation pay because the cessation of operations of
the barber shop was due to serious business losses.
Respondent Trinidad Lao Ong, President of respondent Lao Enteng Co. Inc., specifically
stated in her affidavit dated September 06, 1995 that Lao Enteng Company, Inc. did not
take over the management of the New Look Barber Shop, that after the death Lao Enteng
petitioner were verbally informed time and again that the partnership may fold up
anytime because nobody in the family had the time to be at the barber shop to look after
their interest; that New Look Barber Shop had always been a joint venture partnership
and the operation and management of the barber shop was left entirely to petitioners; that
her father's contribution to the joint venture included the place of business, payment for
utilities including electricity, water, etc. while petitioners as industrial partners, supplied
the labor; and that the barber shop was allowed to remain open up to April 1995 by the
children because they wanted to give the partners a chance at making it work. Eventually,
they were forced to close the barber shop because they continued to lose money while
petitioners earned from it. Trinidad also added that private respondents had no control
over petitioners who were free to come and go as they wished. Admittedly too by
petitioners they received fifty percent to sixty percent of the gross paid by customers.
Trinidad explained that some of the petitioners were allowed to register with the Social
Security System as employees of Lao Enteng Company, Inc. only as an act of
accommodation. All the SSS contributions were made by petitioners. Moreover, Osias
Corporal, Elpidio Lacap and Teresita Flores were not among those registered with the
Social Security System. Lastly, Trinidad avers that without any employee-employer
relationship petitioners claim for 13th month pay and separation pay have no basis in fact
and in law.iii[3]
In a Decision dated September 28, 1995, Labor Arbiter Potenciano S. Caizares, Jr.
ordered the dismissal of the complaint on the basis of his findings that the complainants
and the respondents were engaged in a joint venture and that there existed no employeremployee relation between them. The Labor Arbiter also found that the barber shop was
closed due to serious business losses or financial reverses and consequently declared that
the law does not compel the establishment to pay separation pay to whoever were its
employees.iv[4]
On appeal, NLRC affirmed the said findings of the Labor Arbiter and dismissed the
complaint for want of merit, ratiocinating thus:
Indeed, complainants failed to show the existence of employer-employee relationship
under the fourway test established by the Supreme Court. It is a common practice in the
Barber Shop industry that barbers supply their own scissors and razors and they split their
earnings with the owner of the barber shop. The only capital of the owner is the place of
work whereas the barbers provide the skill and expertise in servicing customers. The only

control exercised by the owner of the barber shop is to ascertain the number of customers
serviced by the barber in order to determine the sharing of profits. The barbers maybe
characterized as independent contractors because they are under the control of the barber
shop owner only with respect to the result of the work, but not with respect to the details
or manner of performance. The barbers are engaged in an independent calling requiring
special skills available to the public at large.v[5]
Its motion for reconsideration denied in the Resolutionvi[6] dated March 5, 1997,
petitioners filed the instant petition assigning that the NLRC committed grave abuse of
discretion in:
I.
ARBITRARILY DISREGARDING SUBSTANTIAL EVIDENCE PROVING
THAT PETITIONERS WERE EMPLOYEES OF RESPONDENT COMPANY IN
RULING THAT PETITIONERS WERE INDEPENDENT CONTRACTORS.
II.
NOT HOLDING THAT PETITIONERS WERE ILLEGALLY DISMISSED
AND IN NOT AWARDING THEIR MONEY CLAIMS.vii[7]
Petitioners principally argue that public respondent NLRC gravely erred in declaring that
the petitioners were independent contractors. They contend that they were employees of
the respondent company and cannot be considered as independent contractors because
they did not carry on an independent business. They did not cut hair, manicure, and do
their work in their own manner and method. They insist they were not free from the
control and direction of private respondents in all matters, and their services were
engaged by the respondent company to attend to its customers in its barber shop.
Petitioners also stated that, individually or collectively, they do not have substantial
capital nor investments in tools, equipments, work premises and other materials
necessary in the conduct of the barber shop. What the barbers owned were merely combs,
scissors, and razors, while the manicurists owned only nail cutters, nail polishes, nippers
and cuticle removers. By no standard can these be considered "substantial capital"
necessary to operate a barbers shop.
Finally, petitioners fault the NLRC for arbitrarily disregarding substantial evidence on
record showing that petitioners Pedro Tolentino, Manuel Caparas, Simplicio Pedelos, and
Patricia Nas were registered with the Social Security System as regular employees of the
respondent company. The SSS employment records in common show that the employer's
ID No. of Vicente Lao/Barber and Pawn Shop was 03-0606200-1 and that of the
respondent company was 03-8740074-7. All the foregoing entries in the SSS employment
records were painstakingly detailed by the petitioners in their position paper and in their
memorandum appeal but were arbitrarily ignored first by the Labor Arbiter and then by
the respondent NLRC which did not even mention said employment records in its
questioned decision.
We found petition is impressed with merit.

In our view, this case is an exception to the general rule that findings of facts of the
NLRC are to be accorded respect and finality on appeal. We have long settled that this
Court will not uphold erroneous conclusions unsupported by substantial evidence.viii[8]
We must also stress that where the findings of the NLRC contradict those of the labor
arbiter, the Court, in the exercise of its equity jurisdiction, may look into the records of
the case and reexamine the questioned findings.ix[9]
The issues raised by petitioners boil down to whether or not an employer-employee
relationship existed between petitioners and private respondent Lao Enteng Company,
Inc. The Labor Arbiter has concluded that the petitioners and respondent company were
engaged in a joint venture. The NLRC concluded that the petitioners were independent
contractors.
The Labor Arbiter's findings that the parties were engaged in a joint venture is
unsupported by any documentary evidence. It should be noted that aside from the selfserving affidavit of Trinidad Lao Ong, there were no other evidentiary documents, nor
written partnership agreements presented. We have ruled that even the sharing of
proceeds for every job of petitioners in the barber shop does not mean they were not
employees of the respondent company. x[10]
Petitioner aver that NLRC was wrong when it concluded that petitioners were
independent contractors simply because they supplied their own working implements,
shared in the earnings of the barber shop with the owner and chose the manner of
performing their work. They stressed that as far as the result of their work was concerned
the barber shop owner controlled them.
An independent contractor is one who undertakes "job contracting", i.e., a person who (a)
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 (b) 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.xi[11]
Juxtaposing this provision vis--vis the facts of this case, we are convinced that
petitioners are not "independent contractors". They did not carry on an independent
business. Neither did they undertake cutting hair and manicuring nails, on their own as
their responsibility, and in their own manner and method. The services of the petitioners
were engaged by the respondent company to attend to the needs of its customers in its
barber shop. More importantly, the petitioners, individually or collectively, did not have a
substantial capital or investment in the form of tools, equipment, work premises and other
materials which are necessary in the conduct of the business of the respondent company.
What the petitioners owned were only combs, scissors, razors, nail cutters, nail polishes,
the nippers - nothing else. By no standard can these be considered substantial capital
necessary to operate a barber shop. From the records, it can be gleaned that petitioners
were not given work assignments in any place other than at the work premises of the New

Look Barber Shop owned by the respondent company. Also, petitioners were required to
observe rules and regulations of the respondent company pertaining, among other things,
observance of daily attendance, job performance, and regularity of job output. The nature
of work performed by were clearly directly related to private respondent's business of
operating barber shops. Respondent company did not dispute that it owned and operated
three (3) barber shops. Hence, petitioners were not independent contractors.
Did an employee-employer relationship exist between petitioners and private respondent?
The following elements must be present for an employer-employee relationship to exist:
(1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment
of wages by whatever means; and (4) the power to control the worker's conduct, with the
latter assuming primacy in the overall consideration. Records of the case show that the
late Vicente Lao engaged the services of the petitioners to work as barbers and
manicurists in the New Look Barber Shop, then a single proprietorship owned by him;
that in January 1982, his children organized a corporation which they registered with the
Securities and Exchange Commission as Lao Enteng Company, Inc.; that upon its
incorporation, it took over the assets, equipment, and properties of the New Look Barber
Shop and continued the business; that the respondent company retained the services of all
the petitioners and continuously paid their wages. Clearly, all three elements exist in
petitioners' and private respondent's working arrangements.
Private respondent claims it had no control over petitioners. The power to control refers
to the existence of the power and not necessarily to the actual exercise thereof, nor is it
essential for the employer to actually supervise the performance of duties of the
employee. It is enough that the employer has the right to wield that power.xii[12] As to the
"control test", the following facts indubitably reveal that respondent company wielded
control over the work performance of petitioners, in that: (1) they worked in the barber
shop owned and operated by the respondents; (2) they were required to report daily and
observe definite hours of work; (3) they were not free to accept other employment
elsewhere but devoted their full time working in the New Look Barber Shop for all the
fifteen (15) years they have worked until April 15, 1995; (4) that some have worked with
respondents as early as in the 1960's; (5) that petitioner Patricia Nas was instructed by the
respondents to watch the other six (6) petitioners in their daily task. Certainly, respondent
company was clothed with the power to dismiss any or all of them for just and valid
cause. Petitioners were unarguably performing work necessary and desirable in the
business of the respondent company.
While it is no longer true that membership to SSS is predicated on the existence of an
employee-employer relationship since the policy is now to encourage even the selfemployed dressmakers, manicurists and jeepney drivers to become SSS members, we
could not agree with private respondents that petitioners were registered with the Social
Security System as their employees only as an accommodation. As we have earlier
mentioned private respondent showed no proof to their claim that petitioners were the
ones who solely paid all SSS contributions. It is unlikely that respondents would report
certain persons as their workers, pay their SSS premium as well as their wages if it were
not true that they were indeed their employees.xiii[13]

Finally, we agree with the labor arbiter that there was sufficient evidence that the barber
shop was closed due to serious business losses and respondent company closed its barber
shop because the building where the barber shop was located was sold. An employer may
adopt policies or changes or adjustments in its operations to insure profit to itself or
protect investment of its stockholders. In the exercise of such management prerogative,
the employer may merge or consolidate its business with another, or sell or dispose all or
substantially all of its assets and properties which may bring about the dismissal or
termination of its employees in the process.xiv[14]
Prescinding from the above, we hold that the seven petitioners are employees of the
private respondent company; as such, they are to be accorded the benefits provided under
the Labor Code, specifically Article 283 which mandates the grant of separation pay in
case of closure or cessation of employer's business which is equivalent to one (1) month
pay for every year of service.xv[15] Likewise, they are entitled to the protection of
minimum wage statutes. Hence, the separation pay due them may be computed on the
basis of the minimum wage prevailing at the time their services were terminated by the
respondent company. The same is true with respect to the 13th month pay. The Revised
Guidelines on the Implementation of the 13th Month Pay Law states that "all rank and
file employees are now entitled to a 13th month pay regardless of the amount of basic
salary that they receive in a month. Such employees are entitled to the benefit regardless
of their designation or employment status, and irrespective of the method by which their
wages are paid, provided that they have worked for at least one (1) month during a
calendar year" and so all the seven (7) petitioners who were not paid their 13th month
pay must be paid accordingly.xvi[16]
Anent the other claims of the petitioners, such as the P10,000.00 as penalty for noncompliance with procedural process; P10,000.00 as moral damages; refund of P1.00 per
day paid to the sweeper; salary differentials for petitioner Nas; attorney's fees), we find
them without basis.
IN VIEW WHEREOF, the petition is GRANTED. The public respondent's Decision
dated October 17, 1996 and Resolution dated March 05, 1997 are SET ASIDE. Private
respondents are hereby ordered to pay, severally and jointly, the seven (7) petitioners
their (1) 13th month pay and (2) separation pay equivalent to one month pay for every
year of service, to be computed at the then prevailing minimum wage at the time of their
actual termination which was April 15, 1995.
Costs against private respondents.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

i[1] Per Commissioner Alberto R. Quimpo and concurred in by Presiding Commissioner Bartolome S.
Carale and Commissioner Vicente S E. Veloso.
ii[2] Rollo, pp. 5-7.
iii[3] Rollo, pp. 115-119.
iv[4] Id. at 84-85.
v[5] Id. at 122.
vi[6] Id. at 128-130.
vii[7] Id. at 11.
viii[8] Anino vs. NLRC, 290 SCRA 489, 499-500 (1998).
ix[9] Paz Martin Jo vs. NLRC, G.R. No. 121605, February 02, 2000, p. 7.
x[10] Labor Congress of the Philippines vs. NLRC, 290 SCRA 509, 528 (1998); San Miguel Jeepney
Service vs. NLRC, 265 SCRA 35 (1998).
xi[11] Section 8, Rule VIII, Book III, of the Omnibus Rules Implementing the Labor Code; Ponce vs.
NLRC, 293 SCRA 366, 374-375 (1998).
xii[12] Paz Martin Jo and Cesar Jo vs. NLRC, G.R. No. 121605, February 02, 2000, p. 5.
xiii[13] Nagusara vs. NLRC, 290 SCRA 245, 251 (1998).
xiv[14] Associated Labor Unions-VIMCONTU vs. NLRC, 204 SCRA 913, 923 (1991).
xv[15] Phil. Tobacco Flue-Curing & Redrying Corp. vs. NLRC, 300 SCRA 37, 55 (1998)
xvi[16] See Sec. 1, P.D. 851; Osias Academy vs. DOLE, 192 SCRA 612, 619 (1990); Dentech Mfg.
Corp. vs. NLRC, 172 SCRA 588 (1989).

FIRST DIVISION
[G.R. No. 138051. June 10, 2004]

JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING CORPORATION, respondent.

DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on certiorari[1] assailing the 26 March 1999 Decision[2] of the
Court of Appeals in CA-G.R. SP No. 49190 dismissing the petition filed by Jose Y. Sonza (SONZA).
The Court of Appeals affirmed the findings of the National Labor Relations Commission (NLRC),
which affirmed the Labor Arbiters dismissal of the case for lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed an Agreement
(Agreement) with the Mel and Jay Management and Development Corporation (MJMDC). ABSCBN was represented by its corporate officers while MJMDC was represented by SONZA, as
President and General Manager, and Carmela Tiangco (TIANGCO), as EVP and Treasurer. Referred
to in the Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively to ABSCBN as talent for radio and television. The Agreement listed the services SONZA would render to
ABS-CBN, as follows:
a.

Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;

b.

Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.[3]

ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year and
P317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on the
10th and 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, which reads:
Dear Mr. Lopez,
We would like to call your attention to the Agreement dated May 1994 entered into by your goodself
on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his
programs and career. We consider these acts of the station violative of the Agreement and the station
as in breach thereof. In this connection, we hereby serve notice of rescission of said Agreement at our
instance effective as of date.
Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount stipulated
in paragraph 7 of the Agreement but reserves the right to seek recovery of the other benefits under said
Agreement.

Thank you for your attention.

Very truly yours,
(Sgd.)
JOSE Y. SONZA
President and Gen. Manager[4]
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not
pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock Option Plan (ESOP).
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee
relationship existed between the parties. SONZA filed an Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at
PCIBank, Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new account with
the same bank where ABS-CBN deposited SONZAs talent fees and other payments due him under the
Agreement.
In his Order dated 2 December 1996, the Labor Arbiter[5] denied the motion to dismiss and directed the
parties to file their respective position papers. The Labor Arbiter ruled:
In this instant case, complainant for having invoked a claim that he was an employee of respondent
company until April 15, 1996 and that he was not paid certain claims, it is sufficient enough as to
confer jurisdiction over the instant case in this Office. And as to whether or not such claim would
entitle complainant to recover upon the causes of action asserted is a matter to be resolved only after
and as a result of a hearing. Thus, the respondents plea of lack of employer-employee relationship
may be pleaded only as a matter of defense. It behooves upon it the duty to prove that there really is no
employer-employee relationship between it and the complainant.
The Labor Arbiter then considered the case submitted for resolution. The parties submitted their
position papers on 24 February 1997.
On 11 March 1997, SONZA filed a Reply to Respondents Position Paper with Motion to Expunge
Respondents Annex 4 and Annex 5 from the Records. Annexes 4 and 5 are affidavits of ABS-CBNs
witnesses Soccoro Vidanes and Rolando V. Cruz. These witnesses stated in their affidavits that the
prevailing practice in the television and broadcast industry is to treat talents like SONZA as
independent contractors.
The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of
jurisdiction.[6] The pertinent parts of the decision read as follows:
xxx

While Philippine jurisprudence has not yet, with certainty, touched on the true nature of the contract
of a talent, it stands to reason that a talent as above-described cannot be considered as an employee
by reason of the peculiar circumstances surrounding the engagement of his services.
It must be noted that complainant was engaged by respondent by reason of his peculiar skills and
talent as a TV host and a radio broadcaster. Unlike an ordinary employee, he was free to
perform the services he undertook to render in accordance with his own style. The benefits
conferred to complainant under the May 1994 Agreement are certainly very much higher than those
generally given to employees. For one, complainant Sonzas monthly talent fees amount to a
staggering P317,000. Moreover, his engagement as a talent was covered by a specific contract.
Likewise, he was not bound to render eight (8) hours of work per day as he worked only for such
number of hours as may be necessary.
The fact that per the May 1994 Agreement complainant was accorded some benefits normally given to
an employee is inconsequential. Whatever benefits complainant enjoyed arose from specific
agreement by the parties and not by reason of employer-employee relationship. As correctly put
by the respondent, All these benefits are merely talent fees and other contractual benefits and should
not be deemed as salaries, wages and/or other remuneration accorded to an employee,
notwithstanding the nomenclature appended to these benefits. Apropos to this is the rule that the term
or nomenclature given to a stipulated benefit is not controlling, but the intent of the parties to the
Agreement conferring such benefit.
The fact that complainant was made subject to respondents Rules and Regulations, likewise,
does not detract from the absence of employer-employee relationship. As held by the Supreme
Court, The line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use
of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means to achieve it. (Insular Life
Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484, November 15, 1989).
x x x (Emphasis supplied)[7]
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision affirming the
Labor Arbiters decision. SONZA filed a motion for reconsideration, which the NLRC denied in its
Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of Appeals
assailing the decision and resolution of the NLRC. On 26 March 1999, the Court of Appeals rendered
a Decision dismissing the case.[8]
Hence, this petition.
The Rulings of the NLRC and Court of Appeals
The Court of Appeals affirmed the NLRCs finding that no employer-employee relationship existed
between SONZA and ABS-CBN. Adopting the NLRCs decision, the appellate court quoted the
following findings of the NLRC:

x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merely as an
agent of complainant Sonza, the principal. By all indication and as the law puts it, the act of the agent
is the act of the principal itself. This fact is made particularly true in this case, as admittedly MJMDC
is a management company devoted exclusively to managing the careers of Mr. Sonza and his
broadcast partner, Mrs. Carmela C. Tiangco. (Opposition to Motion to Dismiss)
Clearly, the relations of principal and agent only accrues between complainant Sonza and MJMDC, and
not between ABS-CBN and MJMDC. This is clear from the provisions of the May 1994 Agreement
which specifically referred to MJMDC as the AGENT. As a matter of fact, when complainant herein
unilaterally rescinded said May 1994 Agreement, it was MJMDC which issued the notice of rescission
in behalf of Mr. Sonza, who himself signed the same in his capacity as President.
Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that historically, the
parties to the said agreements are ABS-CBN and Mr. Sonza. And it is only in the May 1994
Agreement, which is the latest Agreement executed between ABS-CBN and Mr. Sonza, that MJMDC
figured in the said Agreement as the agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-CBN such that
there exist[s] employer-employee relationship between the latter and Mr. Sonza. On the contrary, We
find it indubitable, that MJMDC is an agent, not of ABS-CBN, but of the talent/contractor Mr. Sonza,
as expressly admitted by the latter and MJMDC in the May 1994 Agreement.
It may not be amiss to state that jurisdiction over the instant controversy indeed belongs to the regular
courts, the same being in the nature of an action for alleged breach of contractual obligation on the part
of respondent-appellee. As squarely apparent from complainant-appellants Position Paper, his claims
for compensation for services, 13th month pay, signing bonus and travel allowance against
respondent-appellee are not based on the Labor Code but rather on the provisions of the May 1994
Agreement, while his claims for proceeds under Stock Purchase Agreement are based on the latter. A
portion of the Position Paper of complainant-appellant bears perusal:
Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually bound itself to
pay complainant a signing bonus consisting of shares of stockswith FIVE HUNDRED THOUSAND
PESOS (P500,000.00).
Similarly, complainant is also entitled to be paid 13th month pay based on an amount not lower than the
amount he was receiving prior to effectivity of (the) Agreement.
Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travel
benefit amounting to at least One Hundred Fifty Thousand Pesos (P150,000.00) per year.
Thus, it is precisely because of complainant-appellants own recognition of the fact that his contractual
relations with ABS-CBN are founded on the New Civil Code, rather than the Labor Code, that instead
of merely resigning from ABS-CBN, complainant-appellant served upon the latter a notice of
rescission of Agreement with the station, per his letter dated April 1, 1996, which asserted that instead
of referring to unpaid employee benefits, he is waiving and renouncing recovery of the remaining
amount stipulated in paragraph 7 of the Agreement but reserves the right to such recovery of the other
benefits under said Agreement. (Annex 3 of the respondent ABS-CBNs Motion to Dismiss dated July
10, 1996).

Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/or the
Stock Purchase Agreement by respondent-appellee that complainant-appellant filed his complaint.
Complainant-appellants claims being anchored on the alleged breach of contract on the part of
respondent-appellee, the same can be resolved by reference to civil law and not to labor law.
Consequently, they are within the realm of civil law and, thus, lie with the regular courts. As held in
the case of Dai-Chi Electronics Manufacturing vs. Villarama, 238 SCRA 267, 21 November 1994, an
action for breach of contractual obligation is intrinsically a civil dispute.[9] (Emphasis supplied)
The Court of Appeals ruled that the existence of an employer-employee relationship between SONZA
and ABS-CBN is a factual question that is within the jurisdiction of the NLRC to resolve.[10] A special
civil action for certiorari extends only to issues of want or excess of jurisdiction of the NLRC.[11] Such
action cannot cover an inquiry into the correctness of the evaluation of the evidence which served as
basis of the NLRCs conclusion.[12] The Court of Appeals added that it could not re-examine the
parties evidence and substitute the factual findings of the NLRC with its own.[13]
The Issue
In assailing the decision of the Court of Appeals, SONZA contends that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DECISION AND
REFUSING TO FIND THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED
BETWEEN SONZA AND ABS-CBN, DESPITE THE WEIGHT OF CONTROLLING LAW,
JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH A FINDING.[14]
The Courts Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the decision of the Court of Appeals affirming the
NLRC ruling which upheld the Labor Arbiters dismissal of the case for lack of jurisdiction.
The present controversy is one of first impression. Although Philippine labor laws and jurisprudence
define clearly the elements of an employer-employee relationship, this is the first time that the Court
will resolve the nature of the relationship between a television and radio station and one of its talents.
There is no case law stating that a radio and television program host is an employee of the broadcast
station.
The instant case involves big names in the broadcast industry, namely Jose Jay Sonza, a known
television and radio personality, and ABS-CBN, one of the biggest television and radio networks in the
country.
SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an employee of
ABS-CBN. On the other hand, ABS-CBN insists that the Labor Arbiter has no jurisdiction because
SONZA was an independent contractor.
Employee or Independent Contractor?

The existence of an employer-employee relationship is a question of fact. Appellate courts accord the
factual findings of the Labor Arbiter and the NLRC not only respect but also finality when supported
by substantial evidence.[15] Substantial evidence means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.[16] A party cannot prove the absence of substantial
evidence by simply pointing out that there is contrary evidence on record, direct or circumstantial. The
Court does not substitute its own judgment for that of the tribunal in determining where the weight of
evidence lies or what evidence is credible.[17]
SONZA maintains that all essential elements of an employer-employee relationship are present in this
case. Case law has consistently held that the elements of an employer-employee relationship are: (a)
the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employers power to control the employee on the means and methods by which the work is
accomplished.[18] The last element, the so-called control test, is the most important element.[19]
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAs services to co-host its television and radio programs because of
SONZAs peculiar skills, talent and celebrity status. SONZA contends that the discretion used by
respondent in specifically selecting and hiring complainant over other broadcasters of possibly similar
experience and qualification as complainant belies respondents claim of independent contractorship.
Independent contractors often present themselves to possess unique skills, expertise or talent to
distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of
his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance
indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess
such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement
with SONZA but would have hired him through its personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively determine his status.
We must consider all the circumstances of the relationship, with the control test being the most
important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC.
SONZA asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA
also points out that ABS-CBN granted him benefits and privileges which he would not have enjoyed if
he were truly the subject of a valid job contract.
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate
on benefits such as SSS, Medicare, x x x and 13th month pay[20] which the law automatically
incorporates into every employer-employee contract.[21] Whatever benefits SONZA enjoyed arose from
contract and not because of an employer-employee relationship.[22]
SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out
of the ordinary that they indicate more an independent contractual relationship rather than an employeremployee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of

SONZAs unique skills, talent and celebrity status not possessed by ordinary employees. Obviously,
SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees
for his services. The power to bargain talent fees way above the salary scales of ordinary employees is
a circumstance indicative, but not conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of
SONZA as an independent contractor. The parties expressly agreed on such mode of payment. Under
the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any
talent fee accruing under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their relationship.
SONZA failed to show that ABS-CBN could terminate his services on grounds other than breach of
contract, such as retrenchment to prevent losses as provided under labor laws.[23]
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as AGENT
and Jay Sonza shall faithfully and completely perform each condition of this Agreement.[24] Even if it
suffered severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained
obligated to pay SONZAs talent fees during the life of the Agreement. This circumstance indicates an
independent contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him
his talent fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement to continue paying
SONZAs talent fees during the remaining life of the Agreement even if ABS-CBN cancelled
SONZAs programs through no fault of SONZA.[25]
SONZA assails the Labor Arbiters interpretation of his rescission of the Agreement as an admission
that he is not an employee of ABS-CBN. The Labor Arbiter stated that if it were true that
complainant was really an employee, he would merely resign, instead. SONZA did actually resign
from ABS-CBN but he also, as president of MJMDC, rescinded the Agreement. SONZAs letter
clearly bears this out.[26] However, the manner by which SONZA terminated his relationship with ABSCBN is immaterial. Whether SONZA rescinded the Agreement or resigned from work does not
determine his status as employee or independent contractor.
D. Power of Control
Since there is no local precedent on whether a radio and television program host is an employee or an
independent contractor, we refer to foreign case law in analyzing the present case. The United States
Court of Appeals, First Circuit, recently held in Alberty-Vlez v. Corporacin De Puerto Rico Para La
Difusin Pblica (WIPR)[27] that a television program host is an independent contractor. We quote
the following findings of the U.S. court:
Several factors favor classifying Alberty as an independent contractor. First, a television actress is a
skilled position requiring talent and training not available on-the-job. x x x In this regard, Alberty
possesses a masters degree in public communications and journalism; is trained in dance, singing, and
modeling; taught with the drama department at the University of Puerto Rico; and acted in several
theater and television productions prior to her affiliation with Desde Mi Pueblo. Second, Alberty

provided the tools and instrumentalities necessary for her to perform. Specifically, she
provided, or obtained sponsors to provide, the costumes, jewelry, and other image-related supplies and
services necessary for her appearance. Alberty disputes that this factor favors independent contractor
status because WIPR provided the equipment necessary to tape the show. Albertys argument is
misplaced. The equipment necessary for Alberty to conduct her job as host of Desde Mi Pueblo
related to her appearance on the show. Others provided equipment for filming and producing the show,
but these were not the primary tools that Alberty used to perform her particular function. If we
accepted this argument, independent contractors could never work on collaborative projects because
other individuals often provide the equipment required for different aspects of the collaboration. x x x
Third, WIPR could not assign Alberty work in addition to filming Desde Mi Pueblo. Albertys
contracts with WIPR specifically provided that WIPR hired her professional services as Hostess for
the Program Desde Mi Pueblo. There is no evidence that WIPR assigned Alberty tasks in addition to
work related to these tapings. x x x[28] (Emphasis supplied)
Applying the control test to the present case, we find that SONZA is not an employee but an
independent contractor. The control test is the most important test our courts apply in distinguishing
an employee from an independent contractor.[29] This test is based on the extent of control the hirer
exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the
worker is deemed an employee. The converse holds true as well the less control the hirer exercises,
the more likely the worker is considered an independent contractor.[30]
First, SONZA contends that ABS-CBN exercised control over the means and methods of his work.
SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the
Mel & Jay programs. ABS-CBN did not assign any other work to SONZA. To perform his work,
SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and
sounded on radio were outside ABS-CBNs control. SONZA did not have to render eight hours of
work per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as
well as pre- and post-production staff meetings.[31] ABS-CBN could not dictate the contents of
SONZAs script. However, the Agreement prohibited SONZA from criticizing in his shows ABSCBN or its interests.[32] The clear implication is that SONZA had a free hand on what to say or discuss
in his shows provided he did not attack ABS-CBN or its interests.
We find that ABS-CBN was not involved in the actual performance that produced the finished product
of SONZAs work.[33] ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely
reserved the right to modify the program format and airtime schedule for more effective
programming.[34] ABS-CBNs 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
SONZAs work.
SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the
means and methods of the performance of his work. Although ABS-CBN did have the option not to
broadcast SONZAs show, ABS-CBN was still obligated to pay SONZAs talent fees. Thus, even if
ABS-CBN was completely dissatisfied with the means and methods of SONZAs 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 SONZAs show but ABS-CBN must still pay
his talent fees in full.[35]

Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to
continue paying in full SONZAs talent fees, did not amount to control over the means and methods of
the performance of SONZAs 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-CBNs approval. This proves that ABS-CBNs control was limited only to the
result of SONZAs work, whether to broadcast the final product or not. In either case, ABS-CBN must
still pay SONZAs talent fees in full until the expiry of the Agreement.
In Vaughan, et al. v. Warner, et al.,[36] the United States Circuit Court of Appeals ruled that vaudeville
performers were independent contractors although the management reserved the right to delete
objectionable features in their shows. Since the management did not have control over the manner of
performance of the skills of the artists, it could only control the result of the work by deleting
objectionable features.[37]
SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment
and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the
Mel & Jay programs. However, the equipment, crew and airtime are not the tools and
instrumentalities SONZA needed to perform his job. What SONZA principally needed were his talent
or skills and the costumes necessary for his appearance. [38] 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-CBNs sole concern was for SONZA to
display his talent during the airing of the programs.[39]
A radio broadcast specialist who works under minimal supervision is an independent contractor.[40]
SONZAs work as television and radio program host required special skills and talent, which SONZA
admittedly possesses. The records do not show that ABS-CBN exercised any supervision and control
over how SONZA utilized his skills and talent in his shows.
Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him
to its rules and standards of performance. SONZA claims that this indicates ABS-CBNs control not
only [over] his manner of work but also the quality of his work.
The Agreement stipulates that SONZA shall abide with the rules and standards of performance
covering talents[41] of ABS-CBN. The Agreement does not require SONZA to comply with the rules
and standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed
on SONZA under the Agreement refers to the Television and Radio Code of the Kapisanan ng mga
Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of
Ethics.[42] The KBP code applies to broadcasters, not to employees of radio and television stations.
Broadcasters are not necessarily employees of radio and television stations. Clearly, the rules and
standards of performance referred to in the Agreement are those applicable to talents and not to
employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an
employee of the former.[43] In this case, SONZA failed to show that these rules controlled his
performance. We find that these general rules are merely guidelines towards the achievement of the
mutually desired result, which are top-rating television and radio programs that comply with standards
of the industry. We have ruled that:

Further, not every form of control that a party reserves to himself over the conduct of the other party in
relation to the services being rendered may be accorded the effect of establishing an employeremployee relationship. The facts of this case fall squarely with the case of Insular Life Assurance Co.,
Ltd. vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use
of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it.[44]
The Vaughan case also held that one could still be an independent contractor although the hirer
reserved certain supervision to insure the attainment of the desired result. The hirer, however, must not
deprive the one hired from performing his services according to his own initiative.[45]
Lastly, SONZA insists that the exclusivity clause in the Agreement is the most extreme form of
control which ABS-CBN exercised over him.
This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an employee
of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring
party. In the broadcast industry, exclusivity is not necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry. [46]
This practice is not designed to control the means and methods of work of the talent, but simply to
protect the investment of the broadcast station. The broadcast station normally spends substantial
amounts of money, time and effort in building up its talents as well as the programs they appear in and
thus expects that said talents remain exclusive with the station for a commensurate period of time.[47]
Normally, a much higher fee is paid to talents who agree to work exclusively for a particular radio or
television station. In short, the huge talent fees partially compensates for exclusivity, as in the present
case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted out his
services to ABS-CBN. The Labor Arbiter ruled that as a talent of MJMDC, SONZA is not an employee
of ABS-CBN. SONZA insists that MJMDC is a labor-only contractor and ABS-CBN is his
employer.
In a labor-only contract, there are three parties involved: (1) the labor-only contractor; (2) the
employee who is ostensibly under the employ of the labor-only contractor; and (3) the principal who
is deemed the real employer. Under this scheme, the labor-only contractor is the agent of the
principal. The law makes the principal responsible to the employees of the labor-only contractor as
if the principal itself directly hired or employed the employees.[48] These circumstances are not present
in this case.
There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-CBN.
MJMDC merely acted as SONZAs agent. The Agreement expressly states that MJMDC acted as the
AGENT of SONZA. The records do not show that MJMDC acted as ABS-CBNs agent. MJMDC,

which stands for Mel and Jay Management and Development Corporation, is a corporation organized
and owned by SONZA and TIANGCO. The President and General Manager of MJMDC is SONZA
himself. It is absurd to hold that MJMDC, which is owned, controlled, headed and managed by
SONZA, acted as agent of ABS-CBN in entering into the Agreement with SONZA, who himself is
represented by MJMDC. That would make MJMDC the agent of both ABS-CBN and SONZA.
As SONZA admits, MJMDC is a management company devoted exclusively to managing the careers
of SONZA and his broadcast partner, TIANGCO. MJMDC is not engaged in any other business, not
even job contracting. MJMDC does not have any other function apart from acting as agent of SONZA
or TIANGCO to promote their careers in the broadcast and television industry. [49]
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January
1979 finally settled the status of workers in the broadcast industry. Under this policy, the types of
employees in the broadcast industry are the station and program employees.
Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of law.
There is no legal presumption that Policy Instruction No. 40 determines SONZAs status. A mere
executive issuance cannot exclude independent contractors from the class of service providers to the
broadcast industry. The classification of workers in the broadcast industry into only two groups under
Policy Instruction No. 40 is not binding on this Court, especially when the classification has no basis
either in law or in fact.
Affidavits of ABS-CBNs Witnesses
SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro Vidanes and Rolando Cruz
without giving his counsel the opportunity to cross-examine these witnesses. SONZA brands these
witnesses as incompetent to attest on the prevailing practice in the radio and television industry.
SONZA views the affidavits of these witnesses as misleading and irrelevant.
While SONZA failed to cross-examine ABS-CBNs witnesses, he was never prevented from denying
or refuting the allegations in the affidavits. The Labor Arbiter has the discretion whether to conduct a
formal (trial-type) hearing after the submission of the position papers of the parties, thus:
Section 3. Submission of Position Papers/Memorandum
xxx
These verified position papers shall cover only those claims and causes of action raised in the
complaint excluding those that may have been amicably settled, and shall be accompanied by all
supporting documents including the affidavits of their respective witnesses which shall take the place
of the latters direct testimony. x x x
Section 4. Determination of Necessity of Hearing. Immediately after the submission of the parties of
their position papers/memorandum, the Labor Arbiter shall motu propio determine whether there is
need for a formal trial or hearing. At this stage, he may, at his discretion and for the purpose of making
such determination, ask clarificatory questions to further elicit facts or information, including but not

limited to the subpoena of relevant documentary evidence, if any from any party or witness.[50]
The Labor Arbiter can decide a case based solely on the position papers and the supporting documents
without a formal trial.[51] The holding of a formal hearing or trial is something that the parties cannot
demand as a matter of right.[52] If the Labor Arbiter is confident that he can rely on the documents
before him, he cannot be faulted for not conducting a formal trial, unless under the particular
circumstances of the case, the documents alone are insufficient. The proceedings before a Labor
Arbiter are non-litigious in nature. Subject to the requirements of due process, the technicalities of law
and the rules obtaining in the courts of law do not strictly apply in proceedings before a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to
treat talents like SONZA as independent contractors. SONZA argues that if such practice exists, it is
void for violating the right of labor to security of tenure.
The right of labor to security of tenure as guaranteed in the Constitution[53] arises only if there is an
employer-employee relationship under labor laws. Not every performance of services for a fee creates
an employer-employee relationship. To hold that every person who renders services to another for a
fee is an employee - to give meaning to the security of tenure clause - will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to offer their services as
independent contractors. The right to life and livelihood guarantees this freedom to contract as
independent contractors. The right of labor to security of tenure cannot operate to deprive an
individual, possessed with special skills, expertise and talent, of his right to contract as an independent
contractor. An individual like an artist or talent has a right to render his services without any one
controlling the means and methods by which he performs his art or craft. This Court will not interpret
the right of labor to security of tenure to compel artists and talents to render their services only as
employees. If radio and television program hosts can render their services only as employees, the
station owners and managers can dictate to the radio and television hosts what they say in their shows.
This is not conducive to freedom of the press.
Different Tax Treatment of Talents and Broadcasters
The National Internal Revenue Code (NIRC)[54] in relation to Republic Act No. 7716,[55] as amended
by Republic Act No. 8241,[56] treats talents, television and radio broadcasters differently. Under the
NIRC, these professionals are subject to the 10% value-added tax (VAT) on services they render.
Exempted from the VAT are those under an employer-employee relationship.[57] This different tax
treatment accorded to talents and broadcasters bolters our conclusion that they are independent
contractors, provided all the basic elements of a contractual relationship are present as in this case.
Nature of SONZAs Claims
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service
incentive leave, signing bonus, travel allowance, and amounts due under the Employee Stock Option
Plan. We agree with the findings of the Labor Arbiter and the Court of Appeals that SONZAs claims
are all based on the May 1994 Agreement and stock option plan, and not on the Labor Code.
Clearly, the present case does not call for an application of the Labor Code provisions but an

interpretation and implementation of the May 1994 Agreement. In effect, SONZAs cause of action is
for breach of contract which is intrinsically a civil dispute cognizable by the regular courts.[58]
WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals dated 26
March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs against petitioner.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Panganiban, Ynares-Santiago, and Azcuna, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 84484 November 15, 1989
INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents.
Tirol & Tirol for petitioner.
Enojas, Defensor & Teodosio Cabado Law Offices for private respondent.

NARVASA, J.:
On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and
Melecio T. Basiao entered into a contract 1 by which:

1. Basiao was "authorized to solicit within the Philippines applications for insurance policies and
annuities in accordance with the existing rules and regulations" of the Company;
2. he would receive "compensation, in the form of commissions ... as provided in the Schedule
of Commissions" of the contract to "constitute a part of the consideration of ... (said) agreement;"
and
3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its
circulars ... and those which may from time to time be promulgated by it, ..." were made part of
said contract.

The contract also contained, among others, provisions governing the relations of the parties,
the duties of the Agent, the acts prohibited to him, and the modes of termination of the
agreement, viz.:
RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to
time, place and means of soliciting insurance. Nothing herein contained shall therefore be
construed to create the relationship of employee and employer between the Agent and the
Company. However, the Agent shall observe and conform to all rules and regulations which the
Company may from time to time prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving, directly or
indirectly, rebates in any form, or from making any misrepresentation or over-selling, and, in
general, from doing or committing acts prohibited in the Agent's Manual and in circulars of the
Office of the Insurance Commissioner.
TERMINATION. The Company may terminate the contract at will, without any previous notice to
the Agent, for or on account of ... (explicitly specified causes). ...
Either party may terminate this contract by giving to the other notice in writing to that effect. It
shall become ipso facto cancelled if the Insurance Commissioner should revoke a Certificate of
Authority previously issued or should the Agent fail to renew his existing Certificate of Authority
upon its expiration. The Agent shall not have any right to any commission on renewal of
premiums that may be paid after the termination of this agreement for any cause whatsoever,
except when the termination is due to disability or death in line of service. As to commission
corresponding to any balance of the first year's premiums remaining unpaid at the termination of
this agreement, the Agent shall be entitled to it if the balance of the first year premium is paid,
less actual cost of collection, unless the termination is due to a violation of this contract,
involving criminal liability or breach of trust.
ASSIGNMENT. No Assignment of the Agency herein created or of commissions or other
compensations shall be valid without the prior consent in writing of the Company. ...

Some four years later, in April 1972, the parties entered into another contract an Agency
Manager's Contract and to implement his end of it Basiao organized an agency or office to
which he gave the name M. Basiao and Associates, while concurrently fulfilling his
commitments under the first contract with the Company. 2
In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking
a reconsideration, Basiao sued the Company in a civil action and this, he was later to claim,
prompted the latter to terminate also his engagement under the first contract and to stop
payment of his commissions starting April 1, 1980. 3

Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and
its president. Without contesting the termination of the first contract, the complaint sought to
recover commissions allegedly unpaid thereunder, plus attorney's fees. The respondents
disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the
Company's employee, but an independent contractor and that the Company had no obligation
to him for unpaid commissions under the terms and conditions of his contract. 5
The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the
underwriting agreement had established an employer-employee relationship between him and
the Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim.
Said official's decision directed payment of his unpaid commissions "... equivalent to the
balance of the first year's premium remaining unpaid, at the time of his termination, of all the
insurance policies solicited by ... (him) in favor of the respondent company ..." plus 10%
attorney's fees. 6
This decision was, on appeal by the Company, affirmed by the National Labor Relations
Commission. 7 Hence, the present petition for certiorari and prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the
Company's employee by virtue of the contract invoked by him, thereby placing his claim for
unpaid commissions within the original and exclusive jurisdiction of the Labor Arbiter under
the provisions of Section 217 of the Labor Code, 8 or, contrarily, as the Company would have
it, that under said contract Basiao's status was that of an independent contractor whose claim
was thus cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an
ordinary civil action.
The Company's thesis, that no employer-employee relation in the legal and generally
accepted sense existed between it and Basiao, is drawn from the terms of the contract they
had entered into, which, either expressly or by necessary implication, made Basiao the
master of his own time and selling methods, left to his judgment the time, place and means of
soliciting insurance, set no accomplishment quotas and compensated him on the basis of
results obtained. He was not bound to observe any schedule of working hours or report to any
regular station; he could seek and work on his prospects anywhere and at anytime he chose
to, and was free to adopt the selling methods he deemed most effective.
Without denying that the above were indeed the expressed implicit conditions of Basiao's
contract with the Company, the respondents contend that they do not constitute the decisive
determinant of the nature of his engagement, invoking precedents to the effect that the critical
feature distinguishing the status of an employee from that of an independent contractor is
control, that is, whether or not the party who engages the services of another has the power
to control the latter's conduct in rendering such services. Pursuing the argument, the
respondents draw attention to the provisions of Basiao's contract obliging him to "... observe
and conform to all rules and regulations which the Company may from time to time
prescribe ...," as well as to the fact that the Company prescribed the qualifications of
applicants for insurance, processed their applications and determined the amounts of
insurance cover to be issued as indicative of the control, which made Basiao, in legal
contemplation, an employee of the Company. 9

It is true that the "control test" expressed in the following pronouncement of the Court in the
1956 case of Viana vs. Alejo Al-Lagadan 10
... In determining the existence of employer-employee relationship, the following elements are
generally considered, namely: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the employees'
conduct although the latter is the most important element (35 Am. Jur. 445). ...

has been followed and applied in later cases, some fairly recent. 11 Indeed, it is without
question a valid test of the character of a contract or agreement to render service. 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. The distinction acquires particular relevance in the case of an
enterprise affected with public interest, as is the business of insurance, and is on that account
subject to regulation by the State with respect, not only to the relations between insurer and
insured but also to the internal affairs of the insurance company. 12 Rules and regulations
governing the conduct of the business are provided for in the Insurance Code and enforced
by the Insurance Commissioner. It is, therefore, usual and expected for an insurance
company to promulgate a set of rules to guide its commission agents in selling its policies that
they may not run afoul of the law and what it requires or prohibits. Of such a character are the
rules which prescribe the qualifications of persons who may be insured, subject insurance
applications to processing and approval by the Company, and also reserve to the Company
the determination of the premiums to be paid and the schedules of payment. None of these
really invades the agent's contractual prerogative to adopt his own selling methods or to sell
insurance at his own time and convenience, hence cannot justifiably be said to establish an
employer-employee relationship between him and the company.
There is no dearth of authority holding persons similarly placed as respondent Basiao to be
independent contractors, instead of employees of the parties for whom they worked. In
Mafinco Trading Corporation vs. Ople, 13 the Court ruled that a person engaged to sell soft
drinks for another, using a truck supplied by the latter, but with the right to employ his own
workers, sell according to his own methods subject only to prearranged routes, observing no
working hours fixed by the other party and obliged to secure his own licenses and defray his
own selling expenses, all in consideration of a peddler's discount given by the other party for
at least 250 cases of soft drinks sold daily, was not an employee but an independent
contractor.

In Investment Planning Corporation of the Philippines us. Social Security System 14 a case
almost on all fours with the present one, this Court held that there was no employer-employee
relationship between a commission agent and an investment company, but that the former
was an independent contractor where said agent and others similarly placed were: (a) paid
compensation in the form of commissions based on percentages of their sales, any balance
of commissions earned being payable to their legal representatives in the event of death or
registration; (b) required to put up performance bonds; (c) subject to a set of rules and
regulations governing the performance of their duties under the agreement with the company
and termination of their services for certain causes; (d) not required to report for work at any
time, nor to devote their time exclusively to working for the company nor to submit a record of
their activities, and who, finally, shouldered their own selling and transportation expenses.
More recently, in Sara vs. NLRC, 15 it was held that one who had been engaged by a rice
miller to buy and sell rice and palay without compensation except a certain percentage of
what he was able to buy or sell, did work at his own pleasure without any supervision or
control on the part of his principal and relied on his own resources in the performance of his
work, was a plain commission agent, an independent contractor and not an employee.
The respondents limit themselves to pointing out that Basiao's contract with the Company
bound him to observe and conform to such rules and regulations as the latter might from time
to time prescribe. No showing has been made that any such rules or regulations were in fact
promulgated, much less that any rules existed or were issued which effectively controlled or
restricted his choice of methods or the methods themselves of selling insurance. Absent
such showing, the Court will not speculate that any exceptions or qualifications were imposed
on the express provision of the contract leaving Basiao "... free to exercise his own judgment
as to the time, place and means of soliciting insurance."
The Labor Arbiter's decision makes reference to Basiao's claim of having been connected
with the Company for twenty-five years. Whatever this is meant to imply, the obvious reply
would be that what is germane here is Basiao's status under the contract of July 2, 1968, not
the length of his relationship with the Company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an
employee of the petitioner, but a commission agent, an independent contractor whose claim
for unpaid commissions should have been litigated in an ordinary civil action. The Labor
Arbiter erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to
do so, as did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders
it unnecessary and premature to consider Basiao's claim for commissions on its merits.
WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set
aside, and that complaint of private respondent Melecio T. Basiao in RAB Case No. VI-001083 is dismissed. No pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco, Grio-Aquino, and Medialdea, JJ., concur.

SECOND DIVISION
[G.R. No. 151228. August 15, 2002]
ROLANDO Y. TAN, petitioner, vs. LEOVIGILDO LAGRAMA and THE HONORABLE COURT OF
APPEALS, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision,[1] dated May 31, 2001, and the resolution,[2]
dated November 27, 2001, of the Court of Appeals in C.A.-G.R. SP. No. 63160, annulling the
resolutions of the National Labor Relations Commission (NLRC) and reinstating the ruling of the
Labor Arbiter which found petitioner Rolando Tan guilty of illegally dismissing private respondent
Leovigildo Lagrama and ordering him to pay the latter the amount of P136,849.99 by way of separation
pay, backwages, and damages.
The following are the facts.
Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of
Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter,
making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown

Theaters for more than 10 years, from September 1, 1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan and upbraided: Nangihi na
naman ka sulod sa imong drawinganan. (You again urinated inside your work area.) When
Lagrama asked what Tan was saying, Tan told him, Ayaw daghang estorya. Dili ko gusto nga modrawing ka pa. Guikan karon, wala nay drawing. Gawas. (Dont say anything further. I dont want
you to draw anymore. From now on, no more drawing. Get out.)
Lagrama denied the charge against him. He claimed that he was not the only one who entered the
drawing area and that, even if the charge was true, it was a minor infraction to warrant his dismissal.
However, everytime he spoke, Tan shouted Gawas (Get out), leaving him with no other choice but
to leave the premises.
Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the National Labor
Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and
sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential,
and damages.
Petitioner Tan denied that Lagrama was his employee. He asserted that Lagrama was an independent
contractor who did his work according to his methods, while he (petitioner) was only interested in the
result thereof. He cited the admission of Lagrama during the conferences before the Labor Arbiter that
he was paid on a fixed piece-work basis, i.e., that he was paid for every painting turned out as ad
billboard or mural for the pictures shown in the three theaters, on the basis of a no mural/billboard
drawn, no pay policy. He submitted the affidavits of other cinema owners, an amusement park owner,
and those supervising the construction of a church to prove that the services of Lagrama were
contracted by them. He denied having dismissed Lagrama and alleged that it was the latter who
refused to paint for him after he was scolded for his habits.
As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi directed the parties to
file their position papers. On June 17, 1999, he rendered a decision, the dispositive portion of which
reads:
WHEREFORE, premises considered judgment is hereby ordered:
1.

Declaring complainants [Lagramas] dismissal illegal and

2.

Ordering respondents [Tan] to pay complainant the following:

A.

Separation Pay
P 59,000.00
B. Backwages
47,200.00
(from 17 October 1998 to 17 June 1999)
C. 13th month pay (3 years)
17,700.00
D. Service Incentive Leave
Pay (3 years)
2, 949.99
E.
Damages
10,000.00
TOTAL
[P136,849.99]

Complainants other claims are dismissed for lack of merit.[3]

Petitioner Rolando Tan appealed to the NLRC Fifth Division, Cagayan de Oro City, which, on June 30,
2000, rendered a decision[4] finding Lagrama to be an independent contractor, and for this reason
reversing the decision of the Labor Arbiter.
Respondent Lagrama filed a motion for reconsideration, but it was denied for lack of merit by the
NLRC in a resolution of September 29, 2000. He then filed a petition for certiorari under Rule 65
before the Court of Appeals.
The Court of Appeals found that petitioner exercised control over Lagramas work by dictating the
time when Lagrama should submit his billboards and murals and setting rules on the use of the work
area and rest room. Although it found that Lagrama did work for other cinema owners, the appeals
court held it to be a mere sideline insufficient to prove that he was not an employee of Tan. The
appeals court also found no evidence of any intention on the part of Lagrama to leave his job or sever
his employment relationship with Tan. Accordingly, on May 31, 2001, the Court of Appeals rendered a
decision, the dispositive portion of which reads:
IN THE LIGHT OF ALL THE FOREGOING, the Petition is hereby GRANTED. The Resolutions of
the Public Respondent issued on June 30, 2000 and September 29, 2000 are ANNULLED. The
Decision of the Honorable Labor Arbiter Rogelio P. Legaspi on June 17, 1999 is hereby
REINSTATED.
Petitioner moved for a reconsideration, but the Court of Appeals found no reason to reverse its decision
and so denied his motion for lack of merit.[5] Hence, this petition for review on certiorari based on the
following assignments of errors:
I. With all due respect, the decision of respondent Court of Appeals in CA-G.R. SP NO. 63160 is
bereft of any finding that Public Respondent NLRC, 5th Division, had no jurisdiction or exceeded it or
otherwise gravely abused its discretion in its Resolution of 30 June 2000 in NLRC CA-NO. M-00495099.
II. With all due respect, respondent Court of Appeals, absent any positive finding on its part that the
Resolution of 30 June 2000 of the NLRC is not supported by substantial evidence, is without authority
to substitute its conclusion for that of said NLRC.
III. With all due respect, respondent Court of Appeals discourse on freelance artists and painters in
the decision in question is misplaced or has no factual or legal basis in the record.
IV. With all due respect, respondent Court of Appeals opening statement in its decision as to
employment, monthly salary of P1,475.00 and work schedule from Monday to Saturday, from
8:00 oclock in the morning up to 5:00 oclock in the afternoon as facts is not supported by the
evidence on record.
V. With all due respect, the case of Lambo, et al., v. NLRC, et al., 317 SCRA 420 [G.R. No. 111042
October 26, 1999] relied upon by respondent Court of Appeals is not applicable to the peculiar
circumstances of this case.[6]
The issues raised boil down to whether or not an employer-employee relationship existed between
petitioner and private respondent, and whether petitioner is guilty of illegally dismissing private

respondent. We find the answers to these issues to be in the affirmative.

I.
In determining whether there is an employer-employee relationship, we have applied a four-fold test,
to wit: (1) whether the alleged employer has the power of selection and engagement of employees; (2)
whether he has control of the employee with respect to the means and methods by which work is to be
accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages.
[7] These elements of the employer-employee relationship are present in this case.
First. The existence in this case of the first element is undisputed. It was petitioner who engaged the
services of Lagrama without the intervention of a third party. It is the existence of the second element,
the power of control, that requires discussion here.
Of the four elements of the employer-employee relationship, the control test is the most important.
Compared to an employee, an independent contractor is one who carries on a distinct and independent
business and undertakes to perform the job, work, or service on its own account and under its own
responsibility according to its own manner and method, 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.[8]
Hence, while an independent contractor enjoys independence and freedom from the control and
supervision of his principal, an employee is subject to the employers power to control the means and
methods by which the employees work is to be performed and accomplished.
In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an independent
contractor and never his employee, the evidence shows that the latter performed his work as painter
under the supervision and control of petitioner. Lagrama worked in a designated work area inside the
Crown Theater of petitioner, for the use of which petitioner prescribed rules. The rules included the
observance of cleanliness and hygiene and a prohibition against urinating in the work area and any
place other than the toilet or the rest rooms.[9] Petitioners control over Lagramas work extended not
only to the use of the work area, but also to the result of Lagramas work, and the manner and means
by which the work was to be accomplished.
Moreover, it would appear that petitioner not only provided the workplace, but supplied as well the
materials used for the paintings, because he admitted that he paid Lagrama only for the latters
services.[10]
Private respondent Lagrama claimed that he worked daily, from 8 oclock in the morning to 5 oclock
in the afternoon. Petitioner disputed this allegation and maintained that he paid Lagrama P1,475.00 per
week for the murals for the three theaters which the latter usually finished in 3 to 4 days in one week.
[11] Even assuming this to be true, the fact that Lagrama worked for at least 3 to 4 days a week proves
regularity in his employment by petitioner.
Second. That petitioner had the right to hire and fire was admitted by him in his position paper
submitted to the NLRC, the pertinent portions of which stated:
Complainant did not know how to use the available comfort rooms or toilets in and about his work
premises. He was urinating right at the place where he was working when it was so easy for him, as
everybody else did and had he only wanted to, to go to the comfort rooms. But no, the complainant

had to make a virtual urinal out of his work place! The place then stunk to high heavens, naturally, to
the consternation of respondents and everyone who could smell the malodor.
...
Given such circumstances, the respondents had every right, nay all the compelling reason, to fire him
from his painting job upon discovery and his admission of such acts. Nonetheless, though thoroughly
scolded, he was not fired. It was he who stopped to paint for respondents.[12]
By stating that he had the right to fire Lagrama, petitioner in effect acknowledged Lagrama to be his
employee. For the right to hire and fire is another important element of the employer-employee
relationship.[13] Indeed, the fact that, as petitioner himself said, he waited for Lagrama to report for
work but the latter simply stopped reporting for work reinforces the conviction that Lagrama was
indeed an employee of petitioner. For only an employee can nurture such an expectancy, the frustration
of which, unless satisfactorily explained, can bring about some disciplinary action on the part of the
employer.
Third. Payment of wages is one of the four factors to be considered in determining the existence of
employer-employee relation. Wages are defined as remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered.[14] That Lagrama worked for Tan on a fixed piece-work basis is of
no moment. Payment by result is a method of compensation and does not define the essence of the
relation.[15] It is a method of computing compensation, not a basis for determining the existence or
absence of employer-employee relationship. One may be paid on the basis of results or time expended
on the work, and may or may not acquire an employment status, depending on whether the elements of
an employer-employee relationship are present or not.[16]
The Rules Implementing the Labor Code require every employer to pay his employees by means of
payroll.[17] The payroll should show among other things, the employees rate of pay, deductions made,
and the amount actually paid to the employee. In the case at bar, petitioner did not present the payroll
to support his claim that Lagrama was not his employee, raising speculations whether his failure to do
so proves that its presentation would be adverse to his case.[18]
The primary standard for determining regular employment is the reasonable connection between the
particular activity performed by the employee in relation to the usual trade or business of the employer.
[19] In this case, there is such a connection between the job of Lagrama painting billboards and murals
and the business of petitioner. To let the people know what movie was to be shown in a movie theater
requires billboards. Petitioner in fact admits that the billboards are important to his business.[20]
The fact that Lagrama was not reported as an employee to the SSS is not conclusive on the question of
whether he was an employee of petitioner.[21] Otherwise, an employer would be rewarded for his failure
or even neglect to perform his obligation.[22]
Neither does the fact that Lagrama painted for other persons affect or alter his employment relationship
with petitioner. That he did so only during weekends has not been denied by petitioner. On the other
hand, Samuel Villalba, for whom Lagrama had rendered service, admitted in a sworn statement that he

was told by Lagrama that the latter worked for petitioner.[23]

Lagrama had been employed by petitioner since 1988. Under the law, therefore, he is deemed a regular
employee and is thus entitled to security of tenure, as provided in Art. 279 of Labor Code:
ART. 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.
This Court has held that if the employee has been performing the job for at least one year, even if not
continuously but intermittently, the repeated and continuing need for its performance is sufficient
evidence of the necessity, if not indispensability, of that activity to the business of his employer.
Hence, the employment is also considered regular, although with respect only to such activity, and
while such activity exists.[24]
It is claimed that Lagrama abandoned his work. There is no evidence to show this. Abandonment
requires two elements: (1) the failure to report for work or absence without valid or justifiable reason,
and (2) a clear intention to sever the employer-employee relationship, with the second element as the
more determinative factor and being manifested by some overt acts.[25] Mere absence is not sufficient.
What is more, the burden is on the employer to show a deliberate and unjustified refusal on the part of
the employee to resume his employment without any intention of returning.[26] In the case at bar, the
Court of Appeals correctly ruled:
Neither do we agree that Petitioner abandoned his job. In order for abandonment to be a just and valid
ground for dismissal, the employer must show, by clear proof, the intention of the employee to abandon
his job. . . .
In the present recourse, the Private Respondent has not established clear proof of the intention of the
Petitioner to abandon his job or to sever the employment relationship between him and the Private
Respondent. On the contrary, it was Private Respondent who told Petitioner that he did not want the
latter to draw for him and thereafter refused to give him work to do or any mural or billboard to paint
or draw on.
More, after the repeated refusal of the Private Respondent to give Petitioner murals or billboards to
work on, the Petitioner filed, with the Sub-Regional Arbitration Branch No. X of the National Labor
Relations Commission, a Complaint for Illegal Dismissal and Money Claims. Such act has, as the
Supreme Court declared, negate any intention to sever employment relationship. . . .[27]
II.
The second issue is whether private respondent Lagrama was illegally dismissed. To begin, the
employer has the burden of proving the lawfulness of his employees dismissal. [28] The validity of the
charge must be clearly established in a manner consistent with due process. The Implementing Rules
of the Labor Code[29] provide that no worker shall be dismissed except for a just or authorized cause
provided by law and after due process. This provision has two aspects: (1) the legality of the act of

dismissal, that is, dismissal under the grounds provided for under Article 282 of the Labor Code and (2)
the legality in the manner of dismissal. The illegality of the act of dismissal constitutes discharge
without just cause, while illegality in the manner of dismissal is dismissal without due process.[30]
In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get out of his sight as
the latter tried to explain his side, petitioner made it plain that Lagrama was dismissed. Urinating in a
work place other than the one designated for the purpose by the employer constitutes violation of
reasonable regulations intended to promote a healthy environment under Art. 282(1) of the Labor Code
for purposes of terminating employment, but the same must be shown by evidence. Here there is no
evidence that Lagrama did urinate in a place other than a rest room in the premises of his work.
Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the Labor Arbiter
found that the relationship between the employer and the employee has been so strained that the latters
reinstatement would no longer serve any purpose. The parties do not dispute this finding. Hence, the
grant of separation pay in lieu of reinstatement is appropriate. This is of course in addition to the
payment of backwages which, in accordance with the ruling in Bustamante v. NLRC,[31] should be
computed from the time of Lagramas dismissal up to the time of the finality of this decision, without
any deduction or qualification.
The Bureau of Working Conditions[32] classifies workers paid by results into two groups, namely; (1)
those whose time and performance is supervised by the employer, and (2) those whose time and
performance is unsupervised by the employer. The first involves an element of control and supervision
over the manner the work is to be performed, while the second does not. If a piece worker is
supervised, there is an employer-employee relationship, as in this case. However, such an employee is
not entitled to service incentive leave pay since, as pointed out in Makati Haberdashery v. NLRC[33]
and Mark Roche International v. NLRC,[34] he is paid a fixed amount for work done, regardless of the
time he spent in accomplishing such work.
WHEREFORE, based on the foregoing, the petition is DENIED for lack of showing that the Court of
Appeals committed any reversible error. The decision of the Court of Appeals, reversing the decision
of the National Labor Relations Commission and reinstating the decision of the Labor Arbiter, is
AFFIRMED with the MODIFICATION that the backwages and other benefits awarded to private
respondent Leovigildo Lagrama should be computed from the time of his dismissal up to the time of
the finality of this decision, without any deduction and qualification. However, the service incentive
leave pay awarded to him is DELETED.
SO ORDERED.
Bellosillo, (Chairman), Quisumbing, and Corona, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION

G.R. No. 91307 January 24, 1991

SINGER SEWING MACHINE COMPANY, petitioner
vs.
HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER
MACHINE COLLECTORS UNION-BAGUIO (SIMACUB), respondents.
Misa, Castro, Villanueva, Oposa, Narvasa & Pesigan for petitioner.
Domogan, Lockey, Orate & Dao-ayan Law Office for private respondent.

GUTIERREZ, JR., J.:p

This is a petition for certiorari assailing the order of Med-Arbiter Designate Felix B. Chaguile,
Jr., the resolution of then Labor Secretary Franklin M. Drilon affirming said order on appeal
and the order denying the motion for reconsideration in the case entitled "In Re: Petition for
Direct Certification as the Sole and Exclusive Collective Bargaining Agent of Collectors of
Singer Sewing Machine Company-Singer Machine Collectors Union-Baguio (SIMACUB)"
docketed as OS-MA-A-7-119-89 (IRD Case No. 02-89 MED).

On February 15, 1989, the respondent union filed a petition for direct certification as the sole
and exclusive bargaining agent of all collectors of the Singer Sewing Machine Company,
Baguio City branch (hereinafter referred to as "the Company").
The Company opposed the petition mainly on the ground that the union members are actually
not employees but are independent contractors as evidenced by the collection agency
agreement which they signed.
The respondent Med-Arbiter, finding that there exists an employer-employee relationship
between the union members and the Company, granted the petition for certification election.
On appeal, Secretary of Labor Franklin M. Drilon affirmed it. The motion for reconsideration of
the Secretary's resolution was denied. Hence, this petition in which the Company alleges that
public respondents acted in excess of jurisdiction and/or committed grave abuse of discretion
in that:
a) the Department of Labor and Employment (DOLE) has no jurisdiction over the case since
the existence of employer-employee relationship is at issue;
b) the right of petitioner to due process was denied when the evidence of the union members'
being commission agents was disregarded by the Labor Secretary;
c) the public respondents patently erred in finding that there exists an employer-employee
relationship;
d) the public respondents whimsically disregarded the well-settled rule that commission
agents are not employees but are independent contractors.
The respondents, on the other hand, insist that the provisions of the Collection Agency
Agreement belie the Company's position that the union members are independent
contractors. To prove that union members are employees, it is asserted that they "perform the
most desirable and necessary activities for the continuous and effective operations of the
business of the petitioner Company" (citing Article 280 of the Labor Code). They add that the
termination of the agreement by the petitioner pending the resolution of the case before the
DOLE "only shows the weakness of petitioner's stand" and was "for the purpose of frustrating
the constitutionally mandated rights of the members of private respondent union to selforganization and collective organization." They also contend that under Section 8, Rule 8,
Book No. III of the Omnibus Rules Implementing the Labor Code, which defines jobcontracting, they cannot legally qualify as independent contractors who must be free from
control of the alleged employer, who carry independent businesses and who have substantial
capital or investment in the form of equipment, tools, and the like necessary in the conduct of
the business.
The present case mainly calls for the application of the control test, which if not satisfied,
would lead us to conclude that no employer-employee relationship exists. Hence, if the union
members are not employees, no right to organize for purposes of bargaining, nor to be
certified as such bargaining agent can ever be recognized. The following elements are
generally considered in the determination of the employer-employee relationship; "(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 although the latter is the
most important element" (Mafinco Trading Corporation v. Ople, 70 SCRA 139 [1976];
Development Bank of the Philippines v. National Labor Relations Commission, 175 SCRA
537 [1989]; Rosario Brothers, Inc. v. Ople, 131 SCRA 72 [1984]; Broadway Motors Inc. v.
NLRC, 156 SCRA 522 [1987]; Brotherhood Labor Unity Movement in the Philippines v.
Zamora, 147 SCRA 49 [1986]).
The Collection Agency Agreement defines the relationship between the Company and each of
the union members who signed a contract. The petitioner relies on the following stipulations in
the agreements: (a) a collector is designated as a collecting agent" who is to be considered at
all times as an independent contractor and not employee of the Company; (b) collection of all
payments on installment accounts are to be made monthly or oftener; (c) an agent is paid his
compensation for service in the form of a commission of 6% of all collections made and
turned over plus a bonus on said collections; (d) an agent is required to post a cash bond of
three thousand pesos (P3,000.00) to assure the faithful performance and observance of the
terms and conditions under the agreement; (e) he is subject to all the terms and conditions in
the agreement; (f) the agreement is effective for one year from the date of its execution and
renewable on a yearly basis; and (g) his services shall be terminated in case of failure to
satisfy the minimum monthly collection performance required, failure to post a cash bond, or
cancellation of the agreement at the instance of either party unless the agent has a pending
obligation or indebtedness in favor of the Company.
Meanwhile, the respondents rely on other features to strengthen their position that the
collectors are employees. They quote paragraph 2 which states that an agent shall utilize only
receipt forms authorized and issued by the Company. They also note paragraph 3 which
states that an agent has to submit and deliver at least once a week or as often as required a
report of all collections made using report forms furnished by the Company. Paragraph 4 on
the monthly collection quota required by the Company is deemed by respondents as a control
measure over the means by which an agent is to perform his services.
The nature of the relationship between a company and its collecting agents depends on the
circumstances of each particular relationship. Not all collecting agents are employees and
neither are all collecting agents independent contractors. The collectors could fall under either
category depending on the facts of each case.
The Agreement confirms the status of the collecting agent in this case as an independent
contractor not only because he is explicitly described as such but also because the provisions
permit him to perform collection services for the company without being subject to the control
of the latter except only as to the result of his work. After a careful analysis of the contents of
the agreement, we rule in favor of the petitioner.
The requirement that collection agents utilize only receipt forms and report forms issued by
the Company and that reports shall be submitted at least once a week is not necessarily an
indication of control over the means by which the job of collection is to be performed. The
agreement itself specifically explains that receipt forms shall be used for the purpose of
avoiding a co-mingling of personal funds of the agent with the money collected on behalf of
the Company. Likewise, the use of standard report forms as well as the regular time within
which to submit a report of collection are intended to facilitate order in office procedures. Even

if the report requirements are to be called control measures, any control is only with respect to
the end result of the collection since the requirements regulate the things to be done after the
performance of the collection job or the rendition of the service.
The monthly collection quota is a normal requirement found in similar contractual agreements
and is so stipulated to encourage a collecting agent to report at least the minimum amount of
proceeds. In fact, paragraph 5, section b gives a bonus, aside from the regular commission
every time the quota is reached. As a requirement for the fulfillment of the contract, it is
subject to agreement by both parties. Hence, if the other contracting party does not accede to
it, he can choose not to sign it. From the records, it is clear that the Company and each
collecting agent intended that the former take control only over the amount of collection,
which is a result of the job performed.
The respondents' contention that the union members are employees of the Company is
based on selected provisions of the Agreement but ignores the following circumstances which
respondents never refuted either in the trial proceedings before the labor officials nor in its
pleadings filed before this Court.
1. The collection agents are not required to observe office hours or report to Singer's office
everyday except, naturally and necessarily, for the purpose of remitting their collections.
2. The collection agents do not have to devote their time exclusively for SINGER. There is no
prohibition on the part of the collection agents from working elsewhere. Nor are these agents
required to account for their time and submit a record of their activity.
3. The manner and method of effecting collections are left solely to the discretion of the
collection agents without any interference on the part of Singer.
4. The collection agents shoulder their transportation expenses incurred in the collections of the
accounts assigned to them.
5. The collection agents are paid strictly on commission basis. The amounts paid to them are
based solely on the amounts of collection each of them make. They do not receive any
commission if they do not effect any collection even if they put a lot of effort in collecting. They
are paid commission on the basis of actual collections.
6. The commissions earned by the collection agents are directly deducted by them from the
amount of collections they are able to effect. The net amount is what is then remitted to Singer."
(Rollo, pp. 7-8)

If indeed the union members are controlled as to the manner by which they are supposed to
perform their collections, they should have explicitly said so in detail by specifically denying
each of the facts asserted by the petitioner. As there seems to be no objections on the part of
the respondents, the Court finds that they miserably failed to defend their position.
A thorough examination of the facts of the case leads us to the conclusion that the existence
of an employer-employee relationship between the Company and the collection agents
cannot be sustained.

The plain language of the agreement reveals that the designation as collection agent does not
create an employment relationship and that the applicant is to be considered at all times as
an independent contractor. This is consistent with the first rule of interpretation that the literal
meaning of the stipulations in the contract controls (Article 1370, Civil Code; La Suerte Cigar
and Cigarette Factory v. Director of Bureau of Labor, Relations, 123 SCRA 679 [1983]). No
such words as "to hire and employ" are present. Moreover, the agreement did not fix an
amount for wages nor the required working hours. Compensation is earned only on the basis
of the tangible results produced, i.e., total collections made (Sarra v. Agarrado, 166 SCRA
625 [1988]). In Investment Planning Corp. of the Philippines v. Social Security System, 21
SCRA 924 [1967] which involved commission agents, this Court had the occasion to rule,
thus:
We are convinced from the facts that the work of petitioner's agents or registered
representatives more nearly approximates that of an independent contractor than that of an
employee. The latter is paid for the labor he performs, that is, for the acts of which such labor
consists the former is paid for the result thereof . . . .
xxx xxx xxx
Even if an agent of petitioner should devote all of his time and effort trying to sell its investment
plans he would not necessarily be entitled to compensation therefor. His right to compensation
depends upon and is measured by the tangible results he produces."

Moreover, the collection agent does his work "more or less at his own pleasure" without a
regular daily time frame imposed on him (Investment Planning Corporation of the Philippines
v. Social Security System, supra; See also Social Security System v. Court of Appeals, 30
SCRA 210 [1969]).
The grounds specified in the contract for termination of the relationship do not support the
view that control exists "for the causes of termination thus specified have no relation to the
means and methods of work that are ordinarily required of or imposed upon employees."
(Investment Planning Corp. of the Phil. v. Social Security System, supra)
The last and most important element of the control test is not satisfied by the terms and
conditions of the contracts. There is nothing in the agreement which implies control by the
Company not only over the end to be achieved but also over the means and methods in
achieving the end (LVN Pictures, Inc. v. Philippine Musicians Guild, 1 SCRA 132 [1961]).
The Court finds the contention of the respondents that the union members are employees
under Article 280 of the Labor Code to have no basis. The definition that regular employees
are those who perform activities which are desirable and necessary for the business of the
employer is not determinative in this case. Any agreement may provide that one party shall
render services for and in behalf of another for a consideration (no matter how necessary for
the latter's business) even without being hired as an employee. This is precisely true in the
case of an independent contractorship as well as in an agency agreement. The Court agrees
with the petitioner's argument that Article 280 is not the yardstick for determining the
existence of an employment relationship because it merely distinguishes between two kinds
of employees, i.e., regular employees and casual employees, for purposes of determining the
right of an employee to certain benefits, to join or form a union, or to security of tenure. Article

280 does not apply where the existence of an employment relationship is in dispute.
Even Section 8, Rule 8, Book III of the Omnibus Rules Implementing the Labor Code does
not apply to this case. Respondents assert that the said provision on job contracting requires
that for one to be considered an independent contractor, he must have "substantial capital or
investment in the form of tools, equipment, machineries, work premises, and other materials
which are necessary in the conduct of his business." There is no showing that a collection
agent needs tools and machineries. Moreover, the provision must be viewed in relation to
Article 106 of the Labor Code which provides:
Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with
another person for the performance of the former's work, the employees of the contractor and of
the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his employees in
accordance with this Code, the employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work performed under the contract, in
the same manner and extent that he is liable to employees directly employed by him.
xxx xxx xxx
There is "labor-only" contracting where the person supplying workers to an employer does not
have substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such persons are performing
activities which are directly related to the principal business of such employer. In such cases,
the person or intermediary shall be considered merely as an agent of the employer who shall be
responsible to the workers in the same manner and extent as if the latter were directly employed
by him." (p. 20)

It can readily be seen that Section 8, Rule 8, Book Ill and Article 106 are relevant in
determining whether the employer is solidarily liable to the employees of an alleged
contractor and/or sub-contractor for unpaid wages in case it is proven that there is a jobcontracting situation.
The assumption of jurisdiction by the DOLE over the case is justified as the case was brought
on appeal by the petitioner itself which prayed for the reversal of the Order of the Med-Arbiter
on the ground that the union members are not its employees. Hence, the petitioner submitted
itself as well as the issue of existence of an employment relationship to the jurisdiction of the
DOLE which was faced with a dispute on an application for certification election.
The Court finds that since private respondents are not employees of the Company, they are
not entitled to the constitutional right to join or form a labor organization for purposes of
collective bargaining. Accordingly, there is no constitutional and legal basis for their "union" to
be granted their petition for direct certification. This Court made this pronouncement in La
Suerte Cigar and Cigarette Factory v. Director of Bureau of Labor Relations, supra:
. . . The question of whether employer-employee relationship exists is a primordial consideration
before extending labor benefits under the workmen's compensation, social security, medicare,
termination pay and labor relations law. It is important in the determination of who shall be
included in a proposed bargaining unit because, it is the sine qua non, the fundamental and
essential condition that a bargaining unit be composed of employees. Failure to establish this

juridical relationship between the union members and the employer affects the legality of the
union itself. It means the ineligibility of the union members to present a petition for certification
election as well as to vote therein . . . . (At p. 689)

WHEREFORE, the Order dated June 14,1989 of Med-Arbiter Designate Felix B. Chaguile,
Jr., the Resolution and Order of Secretary Franklin M. Drilon dated November 2, 1989 and
December 14, 1989, respectively are hereby REVERSED and SET ASIDE. The petition for
certification election is ordered dismissed and the temporary restraining order issued by the
Court on December 21, 1989 is made permanent.
SO ORDERED.
Fernan, C.J., Feliciano and Bidin, JJ., concur.

THIRD DIVISION
[G.R. No. 159121. February 3, 2005]
PAMPLONA PLANTATION COMPANY, INC. and/or JOSE LUIS BONDOC, petitioners, vs.
RODEL TINGHIL, MARYGLENN SABIHON, ESTANISLAO BOBON, CARLITO TINGHIL,
BONIFACIO TINGHIL, NOLI TINGHIL, EDGAR TINGHIL, ERNESTO ESTOMANTE, SALLY
TOROY, BENIGNO TINGHIL JR., ROSE ANN NAPAO, DIOSDADO TINGHIL, ALBERTO
TINGHIL, ANALIE TINGHIL, and ANTONIO ESTOMANTE, respondents.
DECISION
PANGANIBAN, J.:
To protect the rights of labor, two corporations with identical directors, management, office and payroll
should be treated as one entity only. A suit by the employees against one corporation should be
deemed as a suit against the other. Also, the rights and claims of workers should not be prejudiced by
the acts of the employer that tend to confuse them about its corporate identity. The corporate fiction
must yield to truth and justice.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to annul the January
31, 2003 Decision[2] and the June 17, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP
No. 62813. The assailed Decision disposed as follows:
WHEREFORE, in view of the foregoing, the petition is GRANTED. The assailed decision of
public respondent NLRC dated 19 July 2000 [is] REVERSED and SET ASIDE and a new one entered
DIRECTING private respondents to reinstate petitioners, except Rufino Bacubac, Felix Torres and
Antonio Canolas, to their former positions without loss of seniority rights plus payment of full
backwages. However, if reinstatement is no longer feasible, a one-month salary for every year of
service shall be paid the petitioners as ordered by the Labor Arbiter in his decision dated 31 August

1998 plus payment of full backwages computed from date of illegal dismissal to the finality of this
decision.[4]
The Decision[5] of the National Labor Relations Commission (NLRC),[6] reversed by the CA,
disposed as follows:
WHEREFORE, premises considered, the decision appealed from is hereby REVERSED, and another
one entered DISMISSING the complaint.[7]
The June 17, 2003 Resolution denied petitioners Motion for Reconsideration.
The Facts
The CA summarized the antecedents as follows:
Sometime in 1993, [Petitioner] Pamplona Plantations Company, Inc. (company for brevity) was
organized for the purpose of taking over the operations of the coconut and sugar plantation of Hacienda
Pamplona located in Pamplona, Negros Oriental. It appears that Hacienda Pamplona was formerly
owned by a certain Mr. Bower who had in his employ several agricultural workers.
When the company took over the operation of Hacienda Pamplona in 1993, it did not absorb all the
workers of Hacienda Pamplona. Some, however, were hired by the company during harvest season as
coconut hookers or sakador, coconut filers, coconut haulers, coconut scoopers or lugiteros, and
charcoal makers.
Sometime in 1995, Pamplona Plantation Leisure Corporation was established for the purpose of
engaging in the business of operating tourist resorts, hotels, and inns, with complementary facilities,
such as restaurants, bars, boutiques, service shops, entertainment, golf courses, tennis courts, and other
land and aquatic sports and leisure facilities.
On 15 December 1996, the Pamplona Plantation Labor Independent Union (PAPLIU) conducted an
organizational meeting wherein several [respondents] who are either union members or officers
participated in said meeting.
Upon learning that some of the [respondents] attended the said meeting, [Petitioner] Jose Luis
Bondoc, manager of the company, did not allow [respondents] to work anymore in the plantation.
Thereafter, on various dates, [respondents] filed their respective complaints with the NLRC, SubRegional Arbitration Branch No. VII, Dumaguete City against [petitioners] for unfair labor practice,
illegal dismissal, underpayment, overtime pay, premium pay for rest day and holidays, service
incentive leave pay, damages, attorneys fees and 13th month pay.
On 09 October 1997, [respondent] Carlito Tinghil amended his complaint to implead Pamplona
Plantation Leisure Corporation x x x.
On 31 August 1998, Labor Arbiter Jose G. Gutierrez rendered a decision finding [respondents], except
Rufino Bacubac, Antonio Caolas and Felix Torres who were complainants in another case, to be

entitled to separation pay.

xxx

xxx

xxx

[Petitioners] appealed the Labor Arbiters decision to [the] NLRC. In the assailed decision dated 19
July 2000, the NLRCs Fourth Division reversed the Labor Arbiter, ruling that [respondents], except
Carlito Tinghil, failed to implead Pamplona Plantation Leisure Corporation, an indispensable party and
that there exist no employer-employee relation between the parties.
xxx

xxx

xxx

[Respondents] filed a motion for reconsideration which was denied by [the] NLRC in a Resolution
dated 06 December 2000.[8]
Respondents elevated the case to the CA via a Petition for Certiorari under Rule 65 of the Rules of
Court.
Ruling of the Court of Appeals
Guided by the fourfold test for determining the existence of an employer-employee relationship, the
CA held that respondents were employees of petitioner-company. Finding there was a power to hire,
the appellate court considered the admission of petitioners in their Comment that they had hired
respondents as coconut filers, coconut scoopers, charcoal makers, or as pieceworkers. The fact that
respondents were paid by piecework did not mean that they were not employees of the company.
Further, the CA ruled that petitioners necessarily exercised control over the work they performed, since
the latter were working within the premises of the plantation. According to the CA, the mere existence
-- not necessarily the actual exercise -- of the right to control the manner of doing work sufficed to
meet the fourth element of an employer-employee relation.
The appellate court also held that respondents were regular employees, because the tasks they
performed were necessary and indispensable to the operation of the company. Since there was no
compliance with the twin requirements of a valid and/or authorized cause and of procedural due
process, their dismissal was illegal.
Hence, this Petition.[9]
Issues
In their Memorandum, petitioners submit the following issues for our consideration:
1. Whether or not the finding of the Court of Appeals that herein respondents are employees of
Petitioner Pamplona Plantation Company, Inc. is contrary to the admissions of the respondents
themselves.
2. Whether or not the Court of Appeals has decided in a way not in accord with law and
jurisprudence, and with grave abuse of discretion, in not dismissing the respondents complaint
for failure to implead Pamplona Plantation Leisure Corp., which is an indispensable party to

this case.
3. Whether or not the Court of Appeals has decided in a way not in accord with law and
jurisprudence, and with grave abuse of discretion in ordering reinstatement or payment of
separation pay and backwages to the respondents, considering the lack of employer-employee
relationship between petitioner and respondents.[10]
The main issue raised is whether the case should be dismissed for the non-joinder of the Pamplona
Plantation Leisure Corporation. The other issues will be taken up in the discussion of the main
question.
The Courts Ruling
The Petition lacks merit.
Preliminary Issue:
Factual Matters
Section 1 of Rule 45 of the Rules of Court states that only questions of law are entertained in appeals
by certiorari to the Supreme Court. However, jurisprudence has recognized several exceptions in
which factual issues may be resolved by this Court:[11] (1) the legal conclusions made by the lower
tribunal are speculative;[12] (2) its inferences are manifestly mistaken,[13] absurd, or impossible; (3)
the lower court committed grave abuse of discretion; (4) the judgment is based on a misapprehension of facts;
[14] (5) the findings of fact of the lower tribunals are conflicting;[15] (6) the CA went beyond the issues; (7)
the CAs findings are contrary to the admissions of the parties;[16] (8) the CA manifestly overlooked facts not
disputed which, if considered, would justify a different conclusion; (9) the findings of fact are conclusions
without citation of the specific evidence on which they are based; and (10) when the findings of fact of the CA
are premised on the absence of evidence but such findings are contradicted by the evidence on record.[17]
The very same reason that constrained the appellate court to review the factual findings of the NLRC
impels this Court to take its own look at the facts. Normally, the Supreme Court is not a trier of facts.
[18] However, since the findings of the CA and the NLRC on this point were conflicting, we waded
through the records to find out if there was basis for the formers reversal of the NLRCs Decision. We
shall discuss our factual findings together with our review of the main issue.
Main Issue:
Piercing the Corporate Veil
Petitioners contend that the CA should have dismissed the case for the failure of respondents (except
Carlito Tinghil) to implead the Pamplona Plantation Leisure Corporation, an indispensable party, for
being the true and real employer. Allegedly, respondents admitted in their Affidavits dated February 3,
1998,[19] that they had been employed by the leisure corporation and/or engaged to perform activities
that pertained to its business.
Further, as the NLRC allegedly noted in their individual Complaints, respondents specifically averred
that they had worked in the golf course and performed related jobs in the recreational facilities of
the leisure corporation. Hence, petitioners claim that, as a sugar and coconut plantation company

separate and distinct from the Pamplona Plantation Leisure Corporation, the petitioner-company is not
the real party in interest.
We are not persuaded.
An examination of the facts reveals that, for both the coconut plantation and the golf course, there is
only one management which the laborers deal with regarding their work.[20] A portion of the
plantation (also called Hacienda Pamplona) had actually been converted into a golf course and other
recreational facilities. The weekly payrolls issued by petitioner-company bore the name Pamplona
Plantation Co., Inc.[21] It is also a fact that respondents all received their pay from the same person,
Petitioner Bondoc -- the managing director of the company. Since the workers were working for a firm
known as Pamplona Plantation Co., Inc., the reason they sued their employer through that name was
natural and understandable.
True, the Petitioner Pamplona Plantation Co., Inc., and the Pamplona Plantation Leisure Corporation
appear to be separate corporate entities. But it is settled that this fiction of law cannot be invoked to
further an end subversive of justice.[22]
The principle requiring the piercing of the corporate veil mandates courts to see through the protective
shroud that distinguishes one corporation from a seemingly separate one.[23] The corporate mask may
be removed and the corporate veil pierced when a corporation is the mere alter ego of another.[24]
Where badges of fraud exist, where public convenience is defeated, where a wrong is sought to be
justified thereby, or where a separate corporate identity is used to evade financial obligations to
employees or to third parties,[25] the notion of separate legal entity should be set aside[26] and the
factual truth upheld. When that happens, the corporate character is not necessarily abrogated.[27] It
continues for other legitimate objectives. However, it may be pierced in any of the instances cited in
order to promote substantial justice.
In the present case, the corporations have basically the same incorporators and directors and are headed
by the same official. Both use only one office and one payroll and are under one management. In their
individual Affidavits, respondents allege that they worked under the supervision and control of
Petitioner Bondoc -- the common managing director of both the petitioner-company and the leisure
corporation. Some of the laborers of the plantation also work in the golf course.[28] Thus, the attempt
to make the two corporations appear as two separate entities, insofar as the workers are concerned,
should be viewed as a devious but obvious means to defeat the ends of the law. Such a ploy should not
be permitted to cloud the truth and perpetrate an injustice.
We note that this defense of separate corporate identity was not raised during the proceedings before
the labor arbiter. The main argument therein raised by petitioners was their alleged lack of employeremployee relationship with, and power of control over, the means and methods of work of respondents
because of the seasonal nature of the latters work.[29]
Neither was the issue of non-joinder of indispensable parties raised in petitioners appeal before the
NLRC.[30] Nevertheless, in its Decision[31] dated July 19, 2000, the Commission concluded that the
plantation company and the leisure corporation were two separate and distinct corporations, and that
the latter was an indispensable party that should have been impleaded. We quote below pertinent
portions of that Decision:

Respondent posits that it is engaged in operating and maintaining sugar and coconut plantation. The
positions of complainants could only be determined through their individual complaints. Yet all
complainants alleged in their affidavits x x x that they were working at the golf course. Worthy to
note that only Carlito Tinghil amended his complaint to include Pamplona Leisure Corporation, which
respondents maintain is a separate corporation established in 1995. Thus, xxx Pamplona Plantation
Co., Inc. and Pamplona Leisure Corporation are two separate and distinct corporations. Except for
Carlito Tinghil the complainants have the wrong party respondent. Pamplona Leisure Corporation is
an indispensable party without which there could be no final determination of the case.[32]
Indeed, it was only after this NLRC Decision was issued that the petitioners harped on the separate
personality of the Pamplona Plantation Co., Inc., vis--vis the Pamplona Plantation Leisure
Corporation.
As cited above, the NLRC dismissed the Complaints because of the alleged admission of respondents
in their Affidavits that they had been working at the golf course. However, it failed to appreciate the
rest of their averments. Just because they worked at the golf course did not necessarily mean that they
were not employed to do other tasks, especially since the golf course was merely a portion of the
coconut plantation. Even petitioners admitted that respondents had been hired as coconut filers,
coconut scoopers or charcoal makers.[33] Consequently, NLRCs conclusion derived from the
Affidavits of respondents stating that they were employees of the Pamplona Plantation Leisure
Corporation alone was the result of an improper selective appreciation of the entire evidence.
Furthermore, we note that, contrary to the NLRCs findings, some respondents indicated that their
employer was the Pamplona Plantation Leisure Corporation, while others said that it was the Pamplona
Plantation Co., Inc. But in all these Affidavits, both the leisure corporation and petitioner-company
were identified or described as entities engaged in the development and operation of sugar and coconut
plantations, as well as recreational facilities such as a golf course. These allegations reveal that
petitioner successfully confused the workers as to who their true and real employer was. All things
considered, their faulty belief that the plantation company and the leisure corporation were one and the
same can be attributed solely to petitioners. It would certainly be unjust to prejudice the claims of the
workers because of the misleading actions of their employer.
Non-Joinder of Parties
Granting for the sake of argument that the Pamplona Plantation Leisure Corporation is an indispensable
party that should be impleaded, NLRCs outright dismissal of the Complaints was still erroneous.
The non-joinder of indispensable parties is not a ground for the dismissal of an action.[34] At any stage
of a judicial proceeding and/or at such times as are just, parties may be added on the motion of a party
or on the initiative of the tribunal concerned.[35] If the plaintiff refuses to implead an indispensable
party despite the order of the court, that court may dismiss the complaint for the plaintiffs failure to
comply with the order. The remedy is to implead the non-party claimed to be indispensable.[36] In this
case, the NLRC did not require respondents to implead the Pamplona Plantation Leisure Corporation as
respondent; instead, the Commission summarily dismissed the Complaints.
In any event, there is no need to implead the leisure corporation because, insofar as respondents are
concerned, the leisure corporation and petitioner-company are one and the same entity. Salvador v.
Court of Appeals[37] has held that this Court has full powers, apart from that power and authority

which is inherent, to amend the processes, pleadings, proceedings and decisions by substituting as
party-plaintiff the real party-in-interest.
In Alonso v. Villamor,[38] we had the occasion to state thus:
There is nothing sacred about processes or pleadings, their forms or contents. Their sole purpose is to
facilitate the application of justice to the rival claims of contending parties. They were created, not to
hinder and delay, but to facilitate and promote, the administration of justice. They do not constitute the
thing itself, which courts are always striving to secure to litigants. They are designed as the means best
adapted to obtain that thing. In other words, they are a means to an end. When they lose the character
of the one and become the other, the administration of justice is at fault and courts are correspondingly
remiss in the performance of their obvious duty.
The controlling principle in the interpretation of procedural rules is liberality, so that they may promote
their object and assist the parties in obtaining just, speedy and inexpensive determination of every
action and proceeding.[39] When the rules are applied to labor cases, this liberal interpretation must be
upheld with even greater vigor.[40] Without in any way depriving the employer of its legal rights, the
thrust of statutes and rules governing labor cases has been to benefit workers and avoid subjecting them
to great delays and hardships. This intent holds especially in this case, in which the plaintiffs are poor
laborers.
Employer-Employee Relationship
Petitioners insist that respondents are not their employees, because the former exercised no control over
the latters work hours and method of performing tasks. Thus, petitioners contend that under the
control test, the workers were independent contractors.
We disagree. As shown by the evidence on record, petitioners hired respondents, who performed tasks
assigned by their respective officers-in-charge, who in turn were all under the direct supervision and
control of Petitioner Bondoc. These allegations are contained in the workers Affidavits, which were
never disputed by petitioners. Also uncontroverted are the payrolls bearing the name of the plantation
company and signed by Petitioner Bondoc. Some of these payrolls include the time records of the
employees. These documents prove that petitioner-company exercised control and supervision over
them.
To operate against the employer, the power of control need not have been actually exercised. Proof of
the existence of such power is enough.[41] Certainly, petitioners wielded that power to hire or dismiss,
as well as to check on the progress and the quality of work of the laborers.
Jurisprudence provides other equally important considerations[42] that support the conclusion that
respondents were not independent contractors. First, they cannot be said to have carried on an
independent business or occupation.[43] They are not engaged in the business of filing, scooping and
hauling coconuts and/or operating and maintaining a plantation and a golf course. Second, they do not
have substantial capital or investment in the form of tools, equipment, machinery, work premises, and
other implements needed to perform the job, work or service under their own account or responsibility.
[44] Third, they have been working exclusively for petitioners for several years. Fourth, there is no
dispute that petitioners are in the business of growing coconut trees for commercial purposes. There is
no question, either, that a portion of the plantation was converted into a golf course and other

recreational facilities. Clearly, respondents performed usual, regular and necessary services for
petitioners business.
WHEREFORE, the Petition is DENIED, and the assailed Decision AFFIRMED. Costs against the
petitioners.
SO ORDERED.
Sandoval-Gutierrez, Corona, Carpio-Morales, and Garcia, JJ., concur.

[1]

Rollo, pp. 3-31.

Annex A of Petition; id., pp. 32-44. Penned by Justice B. A. Adefuin-de la Cruz (Division chair)
and concurred in by Justices Mercedes Gozo-Dadole and Mariano C. del Castillo (members).
[2]

[3]

Annex B of Petition; id., p. 45.

[4]

CA Decision, pp. 12-13; id., pp. 43-44.

Penned by Commissioner Bernabe S. Batuhan and concurred in by Presiding Commissioner Irenea

E. Ceniza and Commissioner Edgardo M. Enerlan; id., pp. 109-115.
[5]

[6]

Fourth Division, Cebu City.

[7]

Annex T of Petition, p. 6; id., p. 114.

[8]

CA Decision, pp. 2-5; id., pp. 33-36.

This case was deemed submitted for decision on September 29, 2004, upon this Courts receipt of
petitioners Memorandum, signed by Attys. Jefferson M. Marquez and Glenda S. Bonghanoy.
Respondents Memorandum, signed by Attys. Francisco Dy Yap and Whelma F. Siton-Yap, was
received by this Court on September 2, 2004.
[9]

[10]

Petitioners Memorandum, p. 8; rollo, p. 474. Original in uppercase.

[11]Fuentes

v. CA, 335 Phil. 1163, February 26, 1997; Sarmiento v. CA, 353 Phil. 834, 846, July 2,
1998; Alsua-Betts v. CA, 92 SCRA 332, July 30, 1979
Philippine Deposit Insurance Corporation v. CA, 347 Phil. 741, December 22, 1997; People v.
Milan, 330 Phil. 493, July 28, 1999; Yobido v. CA, 346 Phil. 1, October 17, 1997.
[12]

[13]

Luna v. Linatoc, 74 Phil. 15, October 28, 1942.

[14]

De la Cruz v. Sosing, 94 Phil. 26, 28, November 27, 1953.

[15]

Social Security System v. CA, 348 SCRA 1, December 14, 2000.

Rizal Commercial Banking Corporation v. Alfa RTW Manufacturing Corporation, 420 Phil. 702,
November 14, 2001.
[16]

[17]

De la Cruz v. Sosing, supra.

[18]

Far East Bank and Trust Co. v. CA, 326 Phil. 15, April 1, 1996.

[19]

Rollo, pp. 163-175.

[20]

See respondents Motion for Reconsideration; id., pp. 216-217.

[21]

Rollo, pp. 70-99.

[22]

Tomas Lao Construction v. NLRC, 344 Phil. 268, September 5, 1997.

[23]

Lim v. CA, 380 Phil. 60, January 24, 2000.

Heirs of Ramon Durano Sr. v. Uy, 344 SCRA 238, October 24, 2000; Tan Boon Bee and Co. v.
Jarencio, 163 SCRA 205, June 30, 1988.
[24]

Claparols v. Court of Industrial Relations, 65 SCRA 613, July 31, 1975; reiterated in Concept
Builders, Inc. v. NLRC, 257 SCRA 149, May 29, 1996.
[25]

[26]

De Leon v. NLRC, 358 SCRA 274, May 30, 2001; Lim v. CA, supra.

[27]

Reynoso IV v. CA, 345 SCRA 335, November 22, 2000.

[28]

See Affidavits; rollo, pp. 163-175.

[29]

See petitioners Position Paper; id., pp. 61-69.

[30]

See petitioners Notice of Appeal and Memorandum on Appeal; id., pp. 196-206.

[31]

Id., pp. 208-214.

[32]

NLRC Decision, pp. 2-3; id., pp. 209-210.

[33]

See CA Decision, p. 6; id., p. 37.

Vesagas v. CA, 371 SCRA 508, December 5, 2001; Caruncho III v. COMELEC, 315 SCRA 693,
September 30, 1999.
[34]

[35]

11, Rule 3 of the 1997 Rules of Court

[36]

Vesagas v. CA, supra; Caruncho III v. COMELEC, supra.

[37]

313 Phil. 36, April 5, 1995, per Davide Jr., J. (now CJ).

[38]

16 Phil. 315, 321, July 26, 1910, per Moreland, J.

[39]

2, Rule 1 of the Rules of Court.

[40]

Asian Transmission Corporation v. CA, GR No. 144664, March 15, 2004.

Vinoya v. NLRC, 324 SCRA 469, February 2, 2000; Religious of the Virgin Mary v. NLRC, 316
SCRA 614, October 13, 1999.
[41]

De los Santos v. NLRC, 372 SCRA 723, December 20, 2001; Vinoya v. NLRC, supra; Religious of
the Virgin Mary v. NLRC, supra; Lim v. NLR, 303 SCRA 432, February 19, 1999; Ponce v. NLRC, 293
SCRA 366, July 30, 1998.
[42]

Some factors are whether the contractor is carrying on an independent business; the nature and
extent of work; the term and duration of the relationship; the control of the premises; the duty to supply
premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.
[43]

Vinoya v. NLRC, supra; see also Neri v. NLRC, 224 SCRA 717, July 23, 1993.

De los Santos v. NLRC, supra; Vinoya v. NLRC, supra; Lim v. NLRC, 303 SCRA 432, February 19,
1999.
[44]

FIRST DIVISION

[G.R. No. 128845. June 1, 2000]

INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE), petitioner, vs.

HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor
and Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the
Acting Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his
capacity as the Superintendent of International School-Manila; and
INTERNATIONAL SCHOOL, INC., respondents.
DECISION
KAPUNAN, J.:
Receiving salaries less than their counterparts hired abroad, the local-hires of private
respondent School, mostly Filipinos, cry discrimination. We agree. That the local-hires are
paid more than their colleagues in other schools is, of course, beside the point. The point is
that employees should be given equal pay for work of equal value. That is a principle long
honored in this jurisdiction. That is a principle that rests on fundamental notions of justice.
That is the principle we uphold today.
Private respondent International School, Inc. (the School, for short), pursuant to Presidential
Decree 732, is a domestic educational institution established primarily for dependents of
foreign diplomatic personnel and other temporary residents. [1] To enable the School to
continue carrying out its educational program and improve its standard of instruction, Section
2(c) of the same decree authorizes the School to
employ its own teaching and management personnel selected by it either locally
or abroad, from Philippine or other nationalities, such personnel being exempt
from otherwise applicable laws and regulations attending their employment,
except laws that have been or will be enacted for the protection of employees.
Accordingly, the School hires both foreign and local teachers as members of its faculty,
classifying the same into two: (1) foreign-hires and (2) local-hires. The School employs four
tests to determine whether a faculty member should be classified as a foreign-hire or a local
hire:
a.....What is one's domicile?
b.....Where is one's home economy?
c.....To which country does one owe economic allegiance?
d.....Was the individual hired abroad specifically to work in the School and was
the School responsible for bringing that individual to the Philippines? [2]
Should the answer to any of these queries point to the Philippines, the faculty member is
classified as a local hire; otherwise, he or she is deemed a foreign-hire.

The School grants foreign-hires certain benefits not accorded local-hires. These include
housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreignhires are also paid a salary rate twenty-five percent (25%) more than local-hires. The School
justifies the difference on two "significant economic disadvantages" foreign-hires have to
endure, namely: (a) the "dislocation factor" and (b) limited tenure. The School explains:
A foreign-hire would necessarily have to uproot himself from his home country,
leave his family and friends, and take the risk of deviating from a promising
career path-all for the purpose of pursuing his profession as an educator, but
this time in a foreign land. The new foreign hire is faced with economic realities:
decent abode for oneself and/or for one's family, effective means of
transportation, allowance for the education of one's children, adequate
insurance against illness and death, and of course the primary benefit of a basic
salary/retirement compensation.
Because of a limited tenure, the foreign hire is confronted again with the same
economic reality after his term: that he will eventually and inevitably return to his
home country where he will have to confront the uncertainty of obtaining
suitable employment after a long period in a foreign land.
The compensation scheme is simply the School's adaptive measure to remain
competitive on an international level in terms of attracting competent
professionals in the field of international education. [3]
When negotiations for a new collective bargaining agreement were held on June 1995,
petitioner International School Alliance of Educators, "a legitimate labor union and the
collective bargaining representative of all faculty members" [4] of the School, contested the
difference in salary rates between foreign and local-hires. This issue, as well as the question
of whether foreign-hires should be included in the appropriate bargaining unit, eventually
caused a deadlock between the parties.
On September 7, 1995, petitioner filed a notice of strike. The failure of the National
Conciliation and Mediation Board to bring the parties to a compromise prompted the
Department of Labor and Employment (DOLE) to assume jurisdiction over the dispute. On
June 10, 1996, the DOLE Acting Secretary, Crescenciano B. Trajano, issued an Order
resolving the parity and representation issues in favor of the School. Then DOLE Secretary
Leonardo A. Quisumbing subsequently denied petitioner's motion for reconsideration in an
Order dated March 19, 1997. Petitioner now seeks relief in this Court.
Petitioner claims that the point-of-hire classification employed by the School is discriminatory
to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial
discrimination.
The School disputes these claims and gives a breakdown of its faculty members, numbering
38 in all, with nationalities other than Filipino, who have been hired locally and classified as
local hires.[5]The Acting Secretary of Labor found that these non-Filipino local-hires received
the same benefits as the Filipino local-hires:

The compensation package given to local-hires has been shown to apply to all, regardless of
race. Truth to tell, there are foreigners who have been hired locally and who are paid equally
as Filipino local hires.[6]
The Acting Secretary upheld the point-of-hire classification for the distinction in salary rates:
The principle "equal pay for equal work" does not find application in the present
case. The international character of the School requires the hiring of foreign
personnel to deal with different nationalities and different cultures, among the
student population.
We also take cognizance of the existence of a system of salaries and benefits
accorded to foreign hired personnel which system is universally recognized. We
agree that certain amenities have to be provided to these people in order to
entice them to render their services in the Philippines and in the process remain
competitive in the international market.
Furthermore, we took note of the fact that foreign hires have limited contract of
employment unlike the local hires who enjoy security of tenure. To apply parity
therefore, in wages and other benefits would also require parity in other terms
and conditions of employment which include the employment contract.
A perusal of the parties' 1992-1995 CBA points us to the conditions and
provisions for salary and professional compensation wherein the parties agree
as follows:
All members of the bargaining unit shall be compensated only in
accordance with Appendix C hereof provided that the
Superintendent of the School has the discretion to recruit and hire
expatriate teachers from abroad, under terms and conditions that
are consistent with accepted international practice.
Appendix C of said CBA further provides:
The new salary schedule is deemed at equity with the Overseas
Recruited Staff (OSRS) salary schedule. The 25% differential is
reflective of the agreed value of system displacement and
contracted status of the OSRS as differentiated from the tenured
status of Locally Recruited Staff (LRS).
To our mind, these provisions demonstrate the parties' recognition of the
difference in the status of two types of employees, hence, the difference in their
salaries.
The Union cannot also invoke the equal protection clause to justify its claim of
parity. It is an established principle of constitutional law that the guarantee of
equal protection of the laws is not violated by legislation or private covenants
based on reasonable classification. A classification is reasonable if it is based

on substantial distinctions and apply to all members of the same class. Verily,
there is a substantial distinction between foreign hires and local hires, the
former enjoying only a limited tenure, having no amenities of their own in the
Philippines and have to be given a good compensation package in order to
attract them to join the teaching faculty of the School. [7]
We cannot agree.
That public policy abhors inequality and discrimination is beyond contention. Our Constitution
and laws reflect the policy against these evils. The Constitution [8] in the Article on Social
Justice and Human Rights exhorts Congress to "give highest priority to the enactment of
measures that protect and enhance the right of all people to human dignity, reduce social,
economic, and political inequalities." The very broad Article 19 of the Civil Code requires
every person, "in the exercise of his rights and in the performance of his duties, [to] act with
justice, give everyone his due, and observe honesty and good faith."
International law, which springs from general principles of law, [9] likewise proscribes
discrimination. General principles of law include principles of equity, [10] i.e., the general
principles of fairness and justice, based on the test of what is reasonable. [11] The Universal
Declaration of Human Rights,[12] the International Covenant on Economic, Social, and Cultural
Rights,[13] the International Convention on the Elimination of All Forms of Racial
Discrimination,[14] the Convention against Discrimination in Education, [15] the Convention (No.
111) Concerning Discrimination in Respect of Employment and Occupation [16] - all embody
the general principle against discrimination, the very antithesis of fairness and justice. The
Philippines, through its Constitution, has incorporated this principle as part of its national laws.
In the workplace, where the relations between capital and labor are often skewed in favor of
capital, inequality and discrimination by the employer are all the more reprehensible.
The Constitution[17] specifically provides that labor is entitled to "humane conditions of work."
These conditions are not restricted to the physical workplace - the factory, the office or the
field - but include as well the manner by which employers treat their employees.
The Constitution[18] also directs the State to promote "equality of employment opportunities for
all." Similarly, the Labor Code[19] provides that the State shall "ensure equal work
opportunities regardless of sex, race or creed." It would be an affront to both the spirit and
letter of these provisions if the State, in spite of its primordial obligation to promote and
ensure equal employment opportunities, closes its eyes to unequal and discriminatory terms
and conditions of employment.[20]
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135,
for example, prohibits and penalizes[21] the payment of lesser compensation to a female
employee as against a male employee for work of equal value. Article 248 declares it an
unfair labor practice for an employer to discriminate in regard to wages in order to encourage
or discourage membership in any labor organization.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article
7 thereof, provides:

The States Parties to the present Covenant recognize the right of everyone to
the enjoyment of just and favourable conditions of work, which ensure, in
particular:
a.....Remuneration which provides all workers, as a minimum, with:
i.....Fair wages and equal remuneration for work of equal value
without distinction of any kind, in particular women being
guaranteed conditions of work not inferior to those enjoyed by
men, with equal pay for equal work;
x x x.
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of "equal pay for equal work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries. [22] This
rule applies to the School, its "international character" notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires perform work
equal to that of foreign-hires.[23] The Court finds this argument a little cavalier. If an employer
accords employees the same position and rank, the presumption is that these employees
perform equal work. This presumption is borne by logic and human experience. If the
employer pays one employee less than the rest, it is not for that employee to explain why he
receives less or why the others receive more. That would be adding insult to injury. The
employer has discriminated against that employee; it is for the employer to explain why the
employee is treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups
have similar functions and responsibilities, which they perform under similar working
conditions.
The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize
the distinction in salary rates without violating the principle of equal work for equal pay.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for
services performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the
"[c]onsideration paid at regular intervals for the rendering of services." In Songco v.
National Labor Relations Commission,[24] we said that:
"salary" means a recompense or consideration made to a person for his pains
or industry in another man's business. Whether it be derived from "salarium," or
more fancifully from "sal," the pay of the Roman soldier, it carries with it the
fundamental idea of compensation for services rendered. (Emphasis
supplied.)
While we recognize the need of the School to attract foreign-hires, salaries should not be
used as an enticement to the prejudice of local-hires. The local-hires perform the same

services as foreign-hires and they ought to be paid the same salaries as the latter. For the
same reason, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve
as valid bases for the distinction in salary rates. The dislocation factor and limited tenure
affecting foreign-hires are adequately compensated by certain benefits accorded them which
are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and
home leave travel allowances.
The Constitution enjoins the State to "protect the rights of workers and promote their
welfare,"[25] "to afford labor full protection."[26] The State, therefore, has the right and duty to
regulate the relations between labor and capital. [27] These relations are not merely contractual
but are so impressed with public interest that labor contracts, collective bargaining
agreements included, must yield to the common good. [28] Should such contracts contain
stipulations that are contrary to public policy, courts will not hesitate to strike down these
stipulations.
In this case, we find the point-of-hire classification employed by respondent School to justify
the distinction in the salary rates of foreign-hires and local hires to be an invalid classification.
There is no reasonable distinction between the services rendered by foreign-hires and localhires. The practice of the School of according higher salaries to foreign-hires contravenes
public policy and, certainly, does not deserve the sympathy of this Court.
We agree, however, that foreign-hires do not belong to the same bargaining unit as the localhires.
A bargaining unit is "a group of employees of a given employer, comprised of all or less than
all of the entire body of employees, consistent with equity to the employer indicate to be the
best suited to serve the reciprocal rights and duties of the parties under the collective
bargaining provisions of the law." [29] The factors in determining the appropriate collective
bargaining unit are (1) the will of the employees (Globe Doctrine); (2) affinity and unity of the
employees' interest, such as substantial similarity of work and duties, or similarity of
compensation and working conditions (Substantial Mutual Interests Rule); (3) prior collective
bargaining history; and (4) similarity of employment status. [30] The basic test of an asserted
bargaining unit's acceptability is whether or not it is fundamentally the combination which will
best assure to all employees the exercise of their collective bargaining rights. [31]
It does not appear that foreign-hires have indicated their intention to be grouped together with
local-hires for purposes of collective bargaining. The collective bargaining history in the
School also shows that these groups were always treated separately. Foreign-hires have
limited tenure; local-hires enjoy security of tenure. Although foreign-hires perform similar
functions under the same working conditions as the local-hires, foreign-hires are accorded
certain benefits not granted to local-hires. These benefits, such as housing, transportation,
shipping costs, taxes, and home leave travel allowance, are reasonably related to their status
as foreign-hires, and justify the exclusion of the former from the latter. To include foreign-hires
in a bargaining unit with local-hires would not assure either group the exercise of their
respective collective bargaining rights.
WHEREFORE, the petition is GIVEN DUE COURSE. The petition is hereby GRANTED IN
PART. The Orders of the Secretary of Labor and Employment dated June 10, 1996 and

March 19, 1997, are hereby REVERSED and SET ASIDE insofar as they uphold the practice
of respondent School of according foreign-hires higher salaries than local-hires.
SO ORDERED.
Puno, and Pardo, JJ., concur.
Davide, Jr., C.J., (Chairman), on official leave.
Ynares-Santiago, J., on leave.

Republic of the Philippines

Supreme Court
Manila

FIRST DIVISION

MASING AND SONS DEVELOPMENT CORPORATION and

CRISPIN CHAN,
Petitioners,

- versus -

GREGORIO P. ROGELIO,
Respondent.

G.R. No. 161787

Present:

CORONA,C.J., Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

Promulgated:

April 27,
2011x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

In any controversy between a laborer and his master, doubts reasonably arising
from the evidence are resolved in favor of the laborer.

We re-affirm this principle, as we uphold the decision of the Court of Appeals

(CA) that reversed the uniform finding that there existed no employment relationship
between the petitioners, as employers, and the respondent, as employee, made by the
National Labor Relations Commission (NLRC) and the Labor Arbiter (LA).

Petitioners Masing and Sons Development Corporation (MSDC) and Crispin

Chan assail the October 24, 2003 decision, [1] whereby the CA reversed the decision
dated January 28, 2000 of the NLRC that affirmed the decision of the LA (dismissing
the claim of the respondent for retirement benefits on the ground that he had not been
employed by the petitioners but by another employer).

Antecedents

On May 19, 1997, respondent Gregorio P. Rogelio (Rogelio) brought against

Chan a complaint for retirement pay pursuant to Republic Act No. 7641, [2] in relation to
Article 287 of the Labor Code, holiday and rest days premium pay, service incentive
leave, 13th month pay, cost of living allowances (COLA), underpayment of wages, and
attorneys fees. On January 20, 1998, Rogelio amended his complaint to include MSDC
as a co-respondent. His version follows.

Rogelio was first employed in 1949 by Pan Phil. Copra Dealer, MSDCs
predecessor, which engaged in the buying and selling of copra in Ibajay, Aklan, with its
main office being in Kalibo, Aklan. Masing Chan owned and managed Pan Phil. Copra
Dealer, and the Branch Manager in Ibajay was a certain So Na. In 1965, Masing Chan
changed the business name of Pan Phil. Copra Dealer to Yao Mun Tek, and appointed
Jose Conanan Yap Branch Manager in Ibajay. In the 1970s, the business name of Yao
Mun Tek was changed to Aklan Lumber and General Merchandise, and Leon Chan
became the Branch Manager in Ibajay. Finally, in 1984, Masing Chan adopted the
business name of Masing and Sons Development Corporation (MSDC), appointing
Wynne or Wayne Lim (Lim) as the Branch Manager in Ibajay. Crispin Chan replaced
his father, Masing Chan, in 1990 as the manager of the entire business.

In all that time, Rogelio worked as a laborer in the Ibajay Branch, along with
twelve other employees. In January 1974, Rogelio was reported for Social Security
System (SSS) coverage. After paying contributions to the SSS for more than 10 years,
he became entitled to receive retirement benefits from the SSS. Thus, in 1991, he
availed himself of the SSS retirement benefits, and in order to facilitate the grant of such
benefits, he entered into an internal arrangement with Chan and MSDC to the effect that

MSDC would issue a certification of his separation from employment notwithstanding

that he would continue working as a laborer in the Ibajay Branch.

The certification reads as follows:[3]

CRISPIN AMIGO CHAN COPRA DEALER

IBAJAY, AKLAN
August 10, 1991
CERTIFICATION OF SEPARATION FROM EMPLOYMENT
To whom it may concern:
This is to certify that my employee, GREGORIO P. ROGELIO bearing SSS ID
No. 07-0495213-7 who was first covered effective January, 1974 up to June 30, 1989
inclusive, is now officially separated from my employ effective the 1st of July, 1989.
Please be guided accordingly.
(SGD.) CRISPIN AMIGO CHAN
Proprietor
SSS ID No. 07-0595800-4

On March 17, 1997, Rogelio was paid his last salary. Lim, then the Ibajay Branch
Manager, informed Rogelio that he was deemed retired as of that date. Chan confirmed
to Rogelio that he had already reached the compulsory retirement age when he went to
the main office in Kalibo to verify his status. Rogelio was then 67 years old.

Considering that Rogelio was supposedly receiving a daily salary of P70.00 until
1997, but did not receive any 13th month pay, service incentive leave, premium pay for
holidays and rest days and COLA, and even any retirement benefit from MSDC upon
his retirement in March 1997, he commenced his claim for such pay and benefits.

In substantiation, Rogelio submitted the January 19, 1998 affidavits of his coworkers, namely: Domingo Guevarra,[4] Juanito Palomata,[5] and Ambrosio Seeres,[6]
whereby they each declared under oath that Rogelio had already been working at the
Ibajay Branch by the time that MSDCs predecessor had hired them in the 1950s to
work in that branch; and that MSDC and Chan had continuously employed them until
their own retirements, that is, Guevarra in 1994, and Palomata and Seeres in 1997.
They thereby corroborated the history of MSDC and the names of the various Branch
Managers as narrated by Rogelio, and confirmed that like Rogelio, they did not receive
any retirement benefits from Chan and MSDC upon their retirement.

In their defense, MSDC and Chan denied having engaged in copra buying in
Ibajay, insisting that they did not ever register in such business in any government
agency. They asserted that Lim had not been their agent or employee, because he had
been an independent copra buyer. They averred, however, that Rogelio was their former
employee, hired on January 3, 1977 and retired on June 30, 1989; [7] and that Rogelio
was thereafter employed by Lim starting from July 1, 1989 until the filing of the
complaint.

MSDC and Chan submitted the affidavit of Lim, whereby Lim stated that Rogelio
was one of his employees from 1989 until the termination of his services. [8] They also
submitted SSS Form R-1A, Lims SSS Report of Employee-Members (showing that
Rogelio and Palomata were reported as Lims employees); [9] Lims application for
registration as copra buyer;[10] Chans affidavit;[11] and the affidavit of Guevarra[12]
and Seeres,[13] whereby said affiants denied having executed or signed the January 19,
1998 affidavits submitted by Rogelio.

In his affidavit, Guevarra recanted the statement attributed to him that he had been
employed by Chan and MSDC, and declared that he had been an employee of Lim.
Likewise, Guevarras daughter executed an affidavit, [14] averring that his father had
been an employee of Lim and that his father had not signed the affidavit dated January
19, 1998.

On April 5, 1999, the LA dismissed the complaint against Chan and MSDC,
ruling thus:

From said evidence, it is our considered view that there exists no employeremployee relationship between the parties effective July 1, 1989 up to the date of the
filing of the instant complaint complainant was an employee of Wynne O. Lim. Hence,
his claim for retirement should have been filed against the latter for he admitted that he
was the employer of herein complainant in his sworn statement dated June 9, 1998.
Complainants claim for retirement benefits against herein respondents under RA
No. 7641 has been barred by prescription considering the fact that it partakes of the
nature of a money claim which prescribed after the lapse of three years after its accrual.
The rest of the claims are also dismissed for the same accrued during
complainants employment with Wynne O. Lim.

WHEREFORE, PREMISES CONSIDERED, this case is hereby DISMISSED for

lack of merit.
SO ORDERED.[15]

Rogelio appealed, but the NLRC affirmed the decision of the LA on January 28,
2000, observing that there could be no double retirement in the private sector; that with
the double retirement, Rogelio would be thereby enriching himself at the expense of the
Government; and that having retired in 1991, Rogelio could not avail himself of the
benefits under Republic Act No. 7641 entitled An Act Amending Article 287 of
Presidential Decree No. 442, As Amended, Otherwise Known as The Labor Code Of
The Philippines, By Providing for Retirement Pay to Qualified Private Sector
Employees in the Absence Of Any Retirement Plan in the Establishment, which took
effect only on January 7, 1993.[16]

The NLRC denied Rogelios motion for reconsideration.

Ruling of the CA

Rogelio commenced a special civil action for certiorari in the CA, charging the
NLRC with grave abuse of discretion in denying to him the benefits under Republic Act
No. 7641, and in rejecting his money claims on the ground of prescription.

On October 24, 2003, the CA promulgated its decision, [17] holding that Rogelio
had substantially established that he had been an employee of Chan and MSDC, and that
the benefits under Republic Act No. 7641 were apart from the retirement benefits that a
qualified employee could claim under the Social Security Law, conformably with the
ruling in Oro Enterprises, Inc. v. NLRC (G.R. No. 110861, November 14, 1994, 238
SCRA 105).

The CA decreed:

WHEREFORE, premises considered, the Decision of the public respondent NLRC

is hereby VACATED and SET ASIDE. This case is remanded to the Labor Arbiter for
the proper computation of the retirement benefits of the petitioner based on Article 287
of the Labor Code, as amended, to be pegged at the minimum wage prevailing in Ibajay,
Aklan as of March 17, 1997, and attorneys fees based on the same. Without costs.
SO ORDERED.

Chan and MSDCs motion for reconsideration was denied by the CA.

Issues

In this appeal, Chan and MSDC contend that the CA erred: (a) in taking
cognizance of Rogelios petition for certiorari despite the decision of the NLRC having
become final and executory almost two months before the petition was filed; (b) in
concluding that Rogelio had remained their employee from July 6, 1989 up to March 17,

1997; and (c) in awarding retirement benefits and attorneys fees to Rogelio.

Ruling

The petition for review is barren of merit.

I
Certiorari was timely commenced in the CA

Anent the first error, the Court finds that the CA did not err in taking cognizance
of the petition for certiorari of Rogelio.

Based on the records, Rogelio received the NLRCs denial of his motion for
reconsideration on January 16, 2003. He then had 60 days from January 16, 2003, or
until March 17, 2003, within which to file his petition for certiorari. It is without doubt,
therefore, that his filing was timely considering that the CA received his petition for
certiorari at 2:44 oclock in the afternoon of March 17, 2003.

The petitioners insistence, that the issuance of the entry of judgment with respect
to the NLRCs decision precluded Rogelio from filing a petition for certiorari, was

unwarranted. It ought to be without debate that the finality of the NLRCs decision was
of no consequence in the consideration of whether or not he could bring a special civil
action for certiorari within the period of 60 days for doing so under Section 4, Rule 65,
Rules of Court, simply because the question being thereby raised was jurisdictional.

II
Respondent remained the petitioners
employee despite his supposed separation

Did Rogelio remain the employee of the petitioners from July 6, 1989 up to
March 17, 1997?

The issue of whether or not an employer-employee relationship existed between

the petitioners and the respondent in that period was essentially a question of fact. [18] In
dealing with such question, substantial evidence that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion[19] is
sufficient. Although no particular form of evidence is required to prove the existence of
the relationship, and any competent and relevant evidence to prove the relationship may
be admitted,[20] a finding that the relationship exists must nonetheless rest on substantial
evidence.

Generally, the Court does not review errors that raise factual questions, primarily
because the Court is not a trier of facts. However, where, like now, there is a conflict

between the factual findings of the Labor Arbiter and the NLRC, on the one hand, and
those of the CA, on the other hand, [21] 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.

The CA delved on and resolved the issue of the existence of an employeremployee relationship between the petitioners and the respondent thusly:

As to the factual issue, the petitioners evidence consists of his own statements and
those of his alleged co-worker from 1950 until 1997, Juanito Palomata, who unlike his
former co-workers Domingo Guevarra and Ambrosio Seeres, did not disown the
Sinumpaang Salaysay he executed, in corroboration of petitioners allegations; and
the Certification dated August 10, 1991 stating that petitioner was first placed under
coverage of the SSS in January 1974 to June 30, 1989 and was separated from service
effective July 1, 1989, a certification executed by respondent Crispin Amigo Chan
which, petitioner maintains, was only intended for his application for retirement benefits
with the SSS.
Private respondents evidence, on the other hand, consisted of respondent Crispin
Amigo Chans counter statements as well as documentary evidence consisting of (1)
Wayne Lims Affidavit which petitioner acknowledged in his Reply dated July 11,
1998, par. 8, admitting to being the employer of petitioner from July 1, 1989 until the
filing of the complaint; (2) Certification dated October 22, 1991 showing petitioners
employment with respondents to have been between January 3, 1977 until July 1, 1989;
(3) Affidavits of Guevarra and Seeres disowning their signatures in the affidavits
submitted in evidence by the petitioner; (4) SSS report executed by Wayne Lim of his
initial list of employees as of July 1, 1989 which includes the petitioner. On appeal, the
respondents further submitted documentary evidence showing that Wayne Lim
registered his business name on July 11, 1989 and apparently went into business buying
copra.
At this point, we should note the following factual discrepancies in the
evidence on hand: First, the respondents issued certificates stating the
commencement of petitioners employment on different dates, i.e. January 1974
and January 1977, although the earlier date referred only to the period when
petitioner was first placed under the coverage of the SSS, which need not
necessarily refer to the commencement of his employment. Secondly, while
respondent Crispin Amigo Chan denied having ever engaged in copra buying in

Ibajay, the certificates he issued both dated in 1991 state otherwise, for he declared
himself as a copra dealer with address in Ibajay. Then there is the statement of
the petitioner that Wayne Lim was the respondents manager in their branch office
in Ibajay since 1984, a statement that respondents failed to disavow. Instead,
respondents insisted on their non sequitur argument that they had never engaged
in copra buying activities in Ibajay, and that Wayne Lim was in business all by
himself in regard to such activity.
The denial on respondents part of their copra buying activities in Ibajay begs the
obvious question: What were petitioner and his witness Juanito Palomata then doing for
respondents as laborers in Ibajay prior to July 1, 1989? Indeed, what did petitioner do
for the respondents as the latters laborer prior to July 1, 1989, which was different from
what he did after said date? The records showed that he continued doing the same job,
i.e. as laborer and trusted employee tasked with the responsibility of getting money from
the Kalibo office of respondents which was used to buy copra and pay the employees
salaries. He did not only continue doing the same thing but he apparently did the same
at or from the same place, i.e. the bodega in Ibajay, which his co-worker Palomata
believed to belong to the respondent Masing & Sons. Since respondents admitted to
employing petitioner from 1977 to 1989, we have to conclude that, indeed, the bodega
in Ibajay was owned by respondents at least prior to July 1, 1989 since petitioner had
consistently stated that he worked for the respondents continuously in their branch office
in Ibajay under different managers and nowhere else.
We believe that the respondents strongest evidence in regard to the alleged
separation of petitioner from service effective July 1, 1989 would be the affidavit of
Wayne Lim, owning to being the employer of petitioner since July 1, 1989 and the
SSS report that he executed listing petitioner as one of his employees since said
date. But in light of the incontrovertible physical reality that petitioner and his coworkers did go to work day in and day out for such a long period of time, doing the
same thing and in the same place, without apparent discontinuity, except on paper,
these documents cannot be taken at their face value. We note that Wayne Lim
apparently inherited, at least on paper, ten (10) employees of respondent Crispin
Amigo Chan, including petitioner, all on the same day, i.e. on July 1, 1989. We
note, too, that while there exists an initial report of employees to the SSS by Wayne
Lim, no other document apart from his affidavit and business registration was
offered by respondents to bolster their contention, irrespective of the fact that
Wayne Lim was not a party respondent. What were the circumstances underlying
such alleged mass transfer of employment? Unfortunately, the evidence for the
respondents does not provide us with ready answers. We could conclude that
respondents sold their business in Ibajay and assets to Wayne Lim on July 1, 1989;
however, as pointed out above, respondent Crispin Amigo Chan himself said that
he was a copra dealer from Ibajay in August and October of 1991. Whether or not
he was registered as a copra buyer is immaterial, given that he declared himself a
copra dealer and had apparently engaged in the activity of buying copra, as
shown precisely by the employment of petitioner and Palomata. If Wayne Lim,
from being the respondents manager in Ibajay became an independent
businessman and took over the respondents business in Ibajay along with all their
employees, why did not the respondents simply state that fact for the record?
More importantly, why did the petitioner and Palomata continue believing that

Wayne Lim was only the respondents manager? Given the long employment of
petitioner with the respondents, was it possible for him and his witness to make
such mistake? We do not think so. In case of doubt, the doubt is resolved in favor of
labor, in favor of the safety and decent living for the laborer as mandated by
Article 1702 of the Civil Code. The reality of the petitioners toil speaks louder
than words. xxx[22]

We agree with the CAs factual findings, because they were based on the
evidence and records of the case submitted before the LA. The CA essentially complied
with the guidepost that the substantiality of evidence depends on both its quantitative
and its qualitative aspects.[23] Indeed, the records substantially established that Chan and
MSDC had employed Rogelio until 1997. In contrast, Chan and MSDC failed to adduce
credible substantiation of their averment that Rogelio had been Lims employee from
July 1989 until 1997. Credible proof that could outweigh the showing by Rogelio to the
contrary was demanded of Chan and MSDC to establish the veracity of their allegation,
for their mere allegation of Rogelios employment under Lim did not constitute
evidence,[24] but they did not submit such proof, sadly failing to discharge their burden of
proving their own affirmative allegation.[25] In this regard, as we pointed out at the start,
the doubts reasonably arising from the evidence are resolved in favor of the laborer in
any controversy between a laborer and his master.

III
Respondent entitled to retirement benefits
from the petitioners

Article 287 of the Labor Code, as amended by Republic Act No. 7641, provides:

Article 287. Retirement. Any employee may be retired upon reaching the
retirement age established in the collective bargaining agreement or other applicable
employment contract.
In case of retirement, the employee shall be entitled to receive such retirement
benefits as he may have earned under existing laws and any collective bargaining
agreement and other agreements; Provided, however, That an employees retirement
benefits under any collective bargaining and other agreements shall not be less than
those provided herein.
In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65) years which is hereby
declared the compulsory retirement age, who has served at least five (5) years in
the said establishment, may retire and shall be entitled to retirement pay
equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one-half (1/2)
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13 th month
pay and the cash equivalent of not more than five (5) days of service incentive
leaves.
Retail, service and agricultural establishments or operations employing not more
than ten (10) employees or workers are exempted from the coverage of this provision.
Violation of this provision is hereby declared unlawful and subject to the penal
provisions provided under Article 288 of this Code.

Was Rogelio entitled to the retirement benefits under Article 287 of the Labor
Code, as amended by Republic Act No. 7641?

The CA held so in its decision, to wit:

Having reached the conclusion that petitioner was an employee of the respondents
from 1950 to March 17, 1997, and considering his uncontroverted allegation that in the
Ibajay branch office where he was assigned, respondents employed no less than 12
workers at said later date, thus affording private respondents no relief from the duty of
providing retirement benefits to their employees, we see no reason why petitioner
should not be entitled to the retirement benefits as provided for under Article 287 of the
Labor Code, as amended. The beneficent provisions of said law, as applied in Oro
Enterprises Inc. v. NLRC, is apart from the retirement benefits that can be claimed by a
qualified employee under the social security law. Attorneys fees are also granted to the
petitioner. But the monetary benefits claimed by petitioner cannot be granted on the
basis of the evidence at hand.[26]

We concur with the CAs holding. The third paragraph of the aforequoted
provision of the Labor Code entitled Rogelio to retirement benefits as a necessary
consequence of the finding that Rogelio was an employee of MSDC and Chan. Indeed,
there should be little, if any, doubt that the benefits under Republic Act No. 7641, which
was enacted as a labor protection measure and as a curative statute to respond, in part at
least, to the financial well-being of workers during their twilight years soon following
their life of labor, can be extended not only from the date of its enactment but
retroactively to the time the employment contracts started.[27]

WHEREFORE, the Court denies the petition for review on certiorari, and
affirms the decision promulgated on October 24, 2003 in CA-G.R. SP No.75983.

Costs of suit to be paid by the petitioners.

SO ORDERED.

LUCAS P. BERSAMIN
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO

MARIANO C. DEL CASTILLO

Associate Justice

Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice