1

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 141608 October 4, 2002
ANFLO MANAGEMENT & INVESTMENT CORP. and/or LINDA F. LAGDAMEO, petitioners,
vs.
RODOLFO D. BOLANIO, respondent.
D E C I S I O N
CORONA, J.:
The instant petition assails (1) the decision of the Court of Appeals in CA-G.R. SP No. 50908, dated August 6, 1999, which annulled and set aside the decision of the
National Labor Relations Commission (NLRC) and (2) the resolution of the appellate court dated January 14, 2000 denying petitioners motion for reconsideration.
The generative facts of the case are chronicled as follows:
Respondent Rodolfo Bolanio was employed as company driver by petitioner corporation in 1992 and was assigned to the residence of its senior vice-president Linda F.
Lagdameo at Dasmarias Village, Makati City. He was mainly tasked to transport Lindas daughter, Regina Floirendo Lagdameo, to and fromher work at Sky Cable in
Quezon City. On November 3, 1994, respondent got involved in a heated argument with Regina while they were on their way home, stemming from respondents
failure to follow Reginas instructions regarding road directions. Upon arrival at Dasmarias Village, Regina ordered respondent to buy an ointment froma drug store.
When he returned, he was confronted by Linda who accused himof verbally abusing her daughter. Respondent tried to explain that he did not say anything against
petitioners daughter but Linda would not give hima chance and instead shouted the words "youre fired" at him. He was then ordered to return his company and
Dasmarias Village identification cards as well as his uniforms. He was not allowed to report for work anymore. Thus, he filed a complaint for illegal dismissal on
November 4, 1994 with a prayer for reinstatement and payment of monetary claims.
In their answer, petitioners denied dismissing respondent from employment. They maintained that respondent abandoned his work when he failed to report for work
on November 4, 1994, the day after his altercation with Linda Lagdameos daughter. In fact, on November 5, 1994, the companys personnel manager even visited
respondent at his residence and assured himthat he had not been dismissed fromwork but was merely reassigned to the companys pool of drivers. However,
respondent still refused to report back for work. This prompted petitioners to send, on November 10, 1994, a notice of offense upon respondent but the latter simply
ignored the same.
On December 28, 1995, labor arbiter Jovencio Mayor, Jr. dismissed the complaint for illegal dismissal on the ground that herein respondent had abandoned his work.
Respondent appealed to the NLRC which, on February 25, 1997, set aside the decision of the labor arbiter. It directed respondent Bolanio to report for work and
ordered petitioners to accept himback as company diver. The NLRC held that respondent did not abandon his work nor was he illegally dismissed by petitioners.
Aggrieved by the decision of the NLRC, respondent filed a petition for certiorari with the Court of Appeals which rendered the assailed decision finding that respondent
was illegally dismissed. In so ruling, the appellate court reasoned out that:
"x x x The dismissal of petitioner on November 3, 1994 is too vivid to be understood fromthe actuations of respondent Linda Lagdameo, who at that time was holding
the position of Senior Vice-President and to whom petitioner was particularly assigned as family/residential driver. Having been told youre fired and ordered to return
his identification cards and uniforms, there can be no other interpretation thereto except that petitioner is already being discharged fromhis employment. The fact that
thereafter the personnel manager exerted efforts to convince petitioner to return to his work as he was not dismissed but merely re-assigned to the companys pool of
drivers did not cure the vice of petitioners earlier arbitrary dismissal inasmuch as the wrong had already been committed and the harmdone."1
Petitioners moved for a reconsideration of the above decision but the same was denied by the Court of Appeals in its resolution dated January 14, 2000.
Petitioners nowcome to this Court seeking the reversal of the judgment of the Court of Appeals, arguing that:
I.
THE FINDINGS OF FACT OF THE NLRC, BEING SUPPORTED BY SUBSTANTIAL EVIDENCE, SHOULD HAVE BEENGIVEN DUE WEIGHT AND RESPECT, IF NOT FINALITY.
II.
THE EVIDENCE ON HAND CLEARLY SHOWS THAT RESPONDENT WAS NOT DISMISSED BY THE COMPANY, AND THAT IT WAS RESPONDENT WHO ABANDONED HIS
EMPLOYMENT.
III.
CONSIDERING THAT IT WAS RESPONDENT WHO SEVERED HIS EMPLOYMENT WITH THE COMPANY, THERE IS NO BASIS TO RULE THAT RESPONDENT WAS DENIED DUE
PROCESS.
IV.
AN AWARD FOR PAYMENT OF BACKWAGES CANNOT BE PROPERLY MADE IN THE PRESENT CASE, AS RESPONDENT WILFULLY REFUSED TO REPORT BACK TO WORK.2
It is immediately apparent that the foregoing arguments are questions of fact. We have consistently ruled that it is not the function of this Court to assess and evaluate
the facts and the evidence all over again, our jurisdiction being generally limited to reviewing errors of law that might have been committed by the lower court.
Nevertheless, since the factual findings of the Court of Appeals are at variance with those of the NLRC, we are compelled to reviewthe records presented in both the
Court of Appeals and the said agency.3
The aforementioned arguments, being interrelated, shall be jointly discussed.
The crux of the controversy may be narrowed down to two main issues: (1) whether respondent was unlawfully dismissed by petitioners and (2) whether respondent
abandoned his work.
We must emphasize that while the findings of fact of the NLRC are generally accorded not only respect but also, at times, even the stamp of finality, the rule is equally
settled that this Court will not uphold erroneous conclusions of the NLRC if the Court finds that it committed grave abuse of discretion or if the NLRCs findings of fact
on which its conclusions are based are not supported by substantial evidence.4 Substantial evidence, which is the quantum of evidence required to establish a fact in
cases before administrative or quasi-judicial bodies, is that level of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.5
In the instant case, while the NLRC found that respondent was not dismissed fromwork, this Court is of a contrary opinion. It is clear from the records that on
November 3, 1994, immediately after a verbal tussle with Regina, respondent was reprimanded and castigated by Reginas mother, Linda Lagdameo. The words "youre
fired" were clear, unequivocal, and categorical. Moreover, respondent was ordered to surrender his company identification cards and uniforms. These orders came
fromno less than the senior vice-president of the company. All these circumstances were sufficient to create the impression in the mind of respondent and correctly
so - that his services were being terminated. The acts of Linda Lagdameo were indicative of her intention to dismiss respondent from employment.
2

Petitioners subsequent effort to visit respondent in his residence and to assure himthat he was not dismissed fromwork was futile and did little to rectify the situation.
Jurisprudence abounds on the rule that the twin requirements of notice and hearing must be complied with before a valid dismissal can take place.6 Any procedural
shortcut that effectively allows an employer to assume the dual roles of accuser and judge at the same time treads on dangerous ground. Needless to state, the failure
to comply with the requirements taints the dismissal with illegality.
Compliance with the mandatory requirements was undeniably absent in the case at bar. Petitioners dismissed respondent on November 3, 1994 without giving him any
written notice informing him of the cause for his termination. Likewise, no hearing was conducted in order to give respondent the opportunity to be heard and defend
himself. He was simply told "youre fired" after a disagreement with Lagdameos daughter. Clearly, respondents services were terminated without any regard for an
employees right to procedural and substantive due process.
Further, where there is no showing of a clear, valid and legal cause for the termination of employment, the lawconsiders the matter to be a case of illegal dismissal. The
burden is then on the employer to prove that the termination was for a valid or justified cause.7 Petitioners failed to discharge its burden.
On the other hand, we also cannot accept the contention of petitioners that it was respondent who abandoned his job. For abandonment to exist, two elements must
concur: (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. Of the
two, the second element is the more determinative factor. Mere absence is not sufficient and it is the employer who has the burden of proof to showa deliberate and
unjustified refusal on the part of the employee to resume his employment without any intention of returning.8 Petitioners evidence of abandonment of work by
respondent fails to persuade us. The alleged intent on the part of respondent to discontinue his employment was belied by his filing of a complaint for illegal dismissal
the very next day after he was removed from service by Lagdameo. The filing of said complaint was proof enough of his desire to return to work, thus negating any
suggestion of abandonment. It is settled that the filing of a complaint for illegal dismissal is inconsistent with a charge of abandonment, for an employee who takes
steps to protest his lay-off cannot by any logic be said to have abandoned his work.9
Having determined that respondent did not abandon his job but was illegally dismissed, we next resolve the question of whether respondent is entitled to
reinstatement and backwages.
Under Article 279 of the Labor Code, as amended, an employee who is unjustly dismissed fromwork shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to other benefits or their monetary equivalent computed fromthe time his compensation
was withheld fromhimup to the time of his actual reinstatement.
It being clearly established that herein respondent was illegally dismissed, the decision of the Court of Appeals ordering his reinstatement and awarding himbackwages
is definitely in order.
As a final note, the reason for the passage of labor laws is social justice. The Constitution says that "the State affirms labor as a primary social economic force, and
therefore, it shall protect the rights of workers and promote their welfare.10
With the foregoing in mind, we affirmthe findings of the appellate court.
WHEREFORE, the petition is DENIED and the assailed decision of the Court of Appeals is hereby AFFIRMED in toto.
SO ORDERED.
Puno, (Chairman), and Morales, JJ., concur.
Panganiban, J., no part due to close family relations with a party.
Sandoval-Gutierrez, J., on leave.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC

G.R. No. 79255 January 20, 1992
UNION OF FILIPRO EMPLOYEES (UFE), petitioner,
vs.
BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL PHILIPPINES, INC. (formerly FILIPRO, INC.), respondents.
Jose C. Espinas for petitioner.
Siguion Reyna, Montecillo & Ongsiako for private respondent.

GUTIERREZ, JR., J.:
This labor dispute stems fromthe exclusion of sales personnel from the holiday pay award and the change of the divisor in the computation of benefits from 251 to 261
days.
On November 8, 1985, respondent Filipro, Inc. (nowNestle Philippines, Inc.) filed with the National Labor Relations Commission (NLRC) a petition for declaratory relief
seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay in the light of the Court's decision in Chartered Bank
Employees Association v. Ople (138 SCRA 273 [1985]).
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary
arbitrator.
On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to:
pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations
specified in Article 82 and such other legal restrictions as are provided for in the Code. (Rollo,
p. 31)
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen, sales representatives, truck drivers,
merchandisers and medical representatives (hereinafter referred to as sales personnel) from the award of the holiday pay, and (3) deduction fromthe holiday pay
award of overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145)
Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that their sales personnel are not field personnel and
are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee benefit which cannot be diminished.
3

On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall retroact to November 1, 1974, the date of
effectivity of the Labor Code. He adjudged, however, that the company's sales personnel are field personnel and, as such, are not entitled to holiday pay. He likewise
ruled that with the grant of 10 days' holiday pay, the divisor should be changed from251 to 261 and ordered the reimbursement of overpayment for overtime, night
differential, vacation and sick leave pay due to the use of 251 days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two motions as appeals and forwarded the case to the
NLRC which issued a resolution dated May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to reviewdecisions in
voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules
implementing B.P. Blg. 130.
However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case reasoning that he had no more jurisdiction to continue as
arbitrator because he had resigned from service effective May 1, 1986.
Hence, this petition.
The petitioner union raises the following issues:
1) Whether or not Nestle's sales personnel are entitled to holiday pay; and
2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days and whether or not the previous use of 251 as
divisor resulted in overpayment for overtime, night differential, vacation and sick leave pay.
The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the Labor Code. The respondent company controverts this assertion.
Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agritultural employees who regularly performtheir duties
away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable
certainty."
The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined with reasonable certainty."
It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if
they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which can be determined with
reasonable certainty.
The Court does not agree. The lawrequires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or
not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend the hours in between in actual
field work.
We concur with the following disquisition by the respondent arbitrator:
The requirement for the salesmen and other similarly situated employees to report for work at the office at 8:00 a.m. and return at
4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code but an exercise of purely management
prerogative of providing administrative control over such personnel. This does not in any manner provide a reasonable level of
determination on the actual field work of the employees which can be reasonably ascertained. The theoretical analysis that
salesmen and other similarly-situated workers regularly report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30
p.m., creating the assumption that their field work is supervised, is surface projection. Actual field work begins after 8:00 a.m., when
the sales personnel followtheir field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report back to their office.
The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope and result of
which are subject to their individual capacity and industry and which "cannot be determined with reasonable certainty." This is the
reason why effective supervision over field work of salesmen and medical representatives, truck drivers and merchandisers is
practically a physical impossibility. Consequently, they are excluded fromthe ten holidays with pay award. (Rollo, pp. 36-37)
Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of
the Implementing Rules which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage This rule shall apply to all employees except:
xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the employer . . . (Emphasis supplied)
While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless attempted to show that its affected members
are not covered by the abovementioned rule. The petitioner asserts that the company's sales personnel are strictly supervised as shown by the SOD (Supervisor of the
Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55).
Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor Code definition of field personnel.
The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of
work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel.
Hence, in deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or
not such employee's time and performance is constantly supervised by the employer.
The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's time and performance are supervised. The purpose of this
schedule is merely to ensure that the sales personnel are out of the office not later than 8:00 a.m. and are back in the office not earlier than 4:00 p.m.
Likewise, the Court fails to see howthe company can monitor the number of actual hours spent in field work by an employee through the imposition of sanctions on
absenteeism contained in the company circular of March 15, 1984.
The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based on their performance is proof that their actual hours of
work in the field can be determined with reasonable certainty.
The Court thinks otherwise.
The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good collection performance; (3) proper compliance with
good market hygiene; (4) good merchandising work; (5) minimal market returns; and (6) proper truck maintenance. (Rollo, p. 190).
The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their actual hours of field work. These
employees are evaluated by the result of their work and not by the actual hours of field work which are hardly susceptible to determination.
4

In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had occasion to discuss the nature of the job of a salesman. Citing the case
of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated:
The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent, works individually. There
are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his
ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's
place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of
hours he works per day.
While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale for their exclusion as field personnel from holiday pay
benefits also applies.
The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of holiday pay, the divisor should be changed from251 to 261 days
to include the additional 10 holidays and the employees should reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor.
Arbitrator Vivar's rationale for his decision is as follows:
. . . The newdoctrinal policy established which ordered payment of ten holidays certainly adds to or accelerates the basis of
conversion and computation by ten days. With the inclusion of ten holidays as paid days, the divisor is no longer 251 but 261 or 262
if election day is counted. This is indeed an extremely difficult legal question of interpretation which accounts for what is claimed as
falling within the concept of "solutio indebti."
When the claimof the Union for payment of ten holidays was granted, there was a consequent need to abandon that 251 divisor. To
maintain it would create an impossible situation where the employees would benefit with additional ten days with pay but would
simultaneously enjoy higher benefits by discarding the same ten days for purposes of computing overtime and night time services
and considering sick and vacation leave credits. Therefore, reimbursement of such overpayment with the use of 251 as divisor arises
concomitant with the award of ten holidays with pay. (Rollo, p. 34)
The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of
his daily rate. This is the thrust of our pronouncement inChartered Bank Employees Association v. Ople (supra). In that case, We held:
It is argued that even without the presumption found in the rules and in the policy instruction, the company practice indicates that
the monthly salaries of the employees are so computed as to include the holiday pay provided by law. The petitioner contends
otherwise.
One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing overtime compensation for
its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and
the ten (10) legal holidays fromthe total number of calendar days in a year. If the employees are already paid for all non-working
days, the divisor should be 365 and not 251.
In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows:
monthly rate x 12 months

251 days
Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent Filipro indicates that holiday pay is not yet included in the
employee's salary, otherwise the divisor should have been 261.
It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the purpose of computing overtime and night
differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10 unpaid holidays.
The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower daily rate which is violative of the prohibition on non-diminution of
benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend, which represents the
employee's annual salary, should correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual
salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his annual salary already includes holiday pay
and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claimof overpayment of
overtime and night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily rate, since the daily rate is still the same
before and after the grant of holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor must fail in light of the Labor Code mandate that "all
doubts in the implementation and interpretation of this Code, including its implementing rules and regulations, shall be resolved in favor of labor." (Article 4).
Moreover, prior to September 1, 1980, when the company was on a 6-day working schedule, the divisor used by the company was 303, indicating that the 10 holidays
were likewise not paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the chance to rectify its error, if ever there was one but did not
do so. It is now too late to allege payment by mistake.
Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed fromNovember 1, 1974. This ruling was not questioned by the petitioner
union as obviously said decision was favorable to it. Technically, therefore, respondent Nestle should have filed a separate petition raising the issue of effectivity of the
holiday pay award. This Court has ruled that an appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the judgment on other
grounds, but he cannot seek modification or reversal of the judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate Appellate Court, 178
SCRA 331 [1989], citing La Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully settle the
issues so that the execution of the Court's decision in this case may not be needlessly delayed by another petition, the Court resolved to take up the matter of
effectivity of the holiday pay award raised by Nestle.
Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when the Chartered Bank decision, promulgated on August 28, 1985,
became final and executory, and not fromthe date of effectivity of the Labor Code. Although the Court does not entirely agree with Nestle, we find its claim
meritorious.
In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the IBAA case, the Court declared that
Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor on February 16, 1976 and April 23, 1976,
respectively, and which excluded monthly paid employees from holiday pay benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the
Labor Code's provisions on holiday pay, the aforementioned implementing rule and policy instruction amended them by enlarging the scope of their exclusion.
The Chartered Bank case reiterated the above ruling and added the "divisor" test.
However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed the presumption of validity and hence, Nestle's non-payment
of the holiday benefit up to the promulgation of the IBAA case on October 23, 1984 was in compliance with these presumably valid rule and policy instruction.
In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the effect to be given to a legislative or executive act subsequently
declared invalid:
xxx xxx xxx
5

. . . It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in
force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to
obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that
in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and
presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be
reckoned with. This is merely to reflect awareness that precisely because the judiciary is the government organ which has the final
say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power
of judicial reviewthat may lead to a declaration of nullity. It would be to deprive the lawof its quality of fairness and justice then, if
there be no recognition of what had transpired prior to such adjudication.
In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination of
[unconstitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be
erased by a newjudicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various
aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official." (Chicot County
Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This language has been quoted with approval in a resolution
in Araneta v. Hill (93 Phil. 1002 [1952]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent
instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434-
435)
The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and resulting unfairness must be avoided. It is now almost the end of
1991. To require various companies to reach back to 1975now and nullify acts done in good faith is unduly harsh. 1984 is a fairer reckoning period under the facts of
this case.
Applying the aforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying on the implicit validity of the implementing rule and policy instruction
before this Court nullified them, and thinking that it was not obliged to give holiday pay benefits to its monthly paid employees, may have been moved to grant other
concessions to its employees, especially in the collective bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's employees are among
the highest paid in the industry. With this consideration, it would be unfair to impose additional burdens on Nestle when the non-payment of the holiday benefits up to
1984 was not in any way attributed to Nestle's fault.
The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of the Chartered Bank case nor fromthe date of effectivity of
the Labor Code, but fromOctober 23, 1984, the date of promulgation of the IBAA case.
WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in computing holiday pay shall be 251 days. The holiday pay as above
directed shall be computed from October 23, 1984. In all other respects, the order of the respondent arbitrator is hereby AFFIRMED.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Paras, Feliciano, Padilla, Bidin, Medialdea, Grio-Aquino, Regalado, Davide, Jr. and Romero, JJ., concur.
Cruz and Nocon, JJ., took no part.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 73681 June 30, 1988
COLGATE PALMOLIVE PHILIPPINES, Inc., petitioners,
vs.
HON. BLAS F. OPLE, COLGATE PALMOLIVE SALES UNION, respondents.

PARAS, J.:
Before Us is a Petition for certiorari seeking to set aside and annul the Order of respondent Minister of Labor and Employment (MOLE) directly certifying private
respondent as the recognized and duly-authorized collective bargaining agent for petitioner's sales force and ordering the reinstatement of three employees of
petitioner.
Acting on the petition for certiorari with prayer for temporary restraining order, this Court issued a Temporary Restraining Order enjoining respondents from enforcing
and/or carrying out the assailed order.
The antecedent facts are as follows:
On March 1, 1985, the respondent Union filed a Notice of Strike with the Bureau of Labor Relations (BLR) on ground of unfair labor practice consisting of alleged refusal
to bargain, dismissal of union officers/members; and coercing employees to retract their membership with the union and restraining non-union members fromjoining
the union.
After efforts at amicable settlement proved unavailing, the Office of the MOLE, upon petition of petitioner assumed jurisdiction over the dispute pursuant to Article 264
(g) of the Labor Code, Thereafter the case was captioned AJML-3-142-85, BLR-3-86-85 "In Re: Assumption of Jurisdiction over the Labor Dispute at Colgate Palmolive
Philippines, Inc." In its position paper, petitioner pointed out that
(a) There is no legal basis for the charge that the company refused to bargain collectively with the union considering that the alleged
union is not the certified agent of the company salesmen;
(b) The union's status as a legitimate labor organization is still under question because on 6 March 1985, a certain Monchito Rosales
informed the BLR that an overwhelming majority of the salesmen are not in favor of the Notice of Strike allegedly filed by the Union
(Annex "C");
(c) Upon verification of the records of the Ministry of Labor and Employment, it appeared that a petition for cancellation of the
registration of the alleged union was filed by Monchito Rosales on behalf of certain salesmen of the company who are obviously
against the formation of the Colgate Palmolive Sales Labor Union which is supposed to represent them;
(d) The preventive suspensions of salesmen Peregrino Sayson, Salvador Reynante and Cornelio Mejia, and their eventual dismissal
fromthe employ of the company were carried out pursuant to the inherent right and prerogative of management to discipline erring
employees; that based on the preliminary investigation conducted by the company, there appeared substantial grounds to believe
that Sayson, Reynante and Mejia violated company rules and regulations necessitating their suspension pending further
investigation of their respective cases;
6

(e) It was also ascertained that the company sustained damages resulting fromthe infractions committed by the three salesmen,
and that the final results of the investigation fully convinced the company of the existence of just causes for the dismissal of the
three salesmen;
(f) The formation of the union and the membership therein of Sayson, Reynante and Mejia were not in any manner connected with
the company's decision to dismiss the three; that the fact that their dismissal came at a time when the alleged union was being
formed was purely coincidental;
(g) The union's charge therefore, that the membership in the union and refusal to retract precipitated their dismissal was totally
false and amounted to a malicious imputation of union busting;
(h) The company never coerced or attempted to coerce employees, much less interferred in the exercise of their right to self-
organization; the company never thwarted nor tried to defeat or frustrate the employees' right to formtheir union in pursuit of their
collective interest, as long as that right is exercised within the limits prescribed by law; in fact, there are at present two unions
representing the rank and file employees of the company-the factory workers who are covered by a CBA which expired on 31
October 1985 (which was renewed on May 31, 1985) and are represented by Colgate Palmolive Employees Union (PAFLU); whereas,
the salaried employees are covered by a CBA which will expire on 31 May 1986 represented by Philippine Association of Free Labor
Union (PAFLU)-CPPI Office Chapter. (pp. 4-6, Rollo)
The respondent Union, on the other hand, in its position paper, reiterated the issue in its Notice to Strike, alleging that it was duly registered with the Bureau of Labor
Relations under Registry No. 10312-LC with a total membership of 87 regular salesmen (nationwide) out of 117 regular salesmen presently employed by the company
as of November 30, 1985 and that since the registration of the Union up to the present, more than 2/3 of the total salesmen employed are already members of the
Union, leaving no doubt that the true sentiment of the salesmen was to formand organize the Colgate-Palmolive Salesmen Union. The Union further alleged that the
company is unreasonably delaying the recognition of the union because when it was informed of the organization of the union, and when presented with a set of
proposals for a collective bargaining agreement, the company took an adversarial stance by secretly distributing a "survey sheet on union membership" to newly hired
salesmen fromthe Visayas, Mindanao and Metro Manila areas, purposely avoiding regular salesmen who are nowmembers of the union; that in the accomplishment of
the form, District Sales Managers, and Sales Supervisors coerced salesmen fromthe Visayas and Mindanao by requiring themto fill up and/or accomplish said form by
checking answers which were adverse to the union; that with a handful of the survey sheets secured by management through coercion, it nowwould like to claim that
all salesmen are not in favor of the organization of the union, which acts are clear manifestations of unfair labor practices.
On August 9,1985, respondent Minister rendered a decision which:
(a) found no merit in the Union's Complaint for unfair labor practice allegedly committed by petitioner as regards the alleged refusal
of petitioner to negotiate with the Union, and the secret distribution of survey sheets allegedly intended to discourage unionism,
(b) found the three salesmen, Peregrino Sayson, Salvador Reynante & Cornelio Mejia "not without fault" and that "the
company 1 has grounds to dismiss above named salesmen"
and at the same time respondent Minister directly certified the respondent Union as the collective bargaining agent for the sales force in petitioner company and
ordered the reinstatement of the three salesmen to the company on the ground that the employees were first offenders.
Petitioner filed a Motion for Reconsideration which was denied by respondent Minister in his assailed Order, dated December 27, 1985. Petitioner nowcomes to Us
with the following:
Assignment of Errors
I
Respondent Minister committed a grave abuse of discretion when he directly certified the Union solely on the basis of the latter's
self-serving assertion that it enjoys the support of the majority of the sales force in petitioner's company.
II
Respondent Minister committed a grave abuse of discretion when, notwithstanding his very own finding that there was just cause
for the dismissal of the three (3) salesmen, he nevertheless ordered their reinstatement. (pp. 7-8, Rollo)
Petitioner concedes that respondent Minister has the power to decide a labor dispute in a case assumed by himunder Art. 264 (g) of the Labor Code but this power was
exceeded when he certified respondent Union as the exclusive bargaining agent of the company's salesmen since this is not a representation proceeding as described
under the Labor Code. Moreover the Union did not pray for certification but merely for a finding of unfair labor practice imputed to petitioner-company.
The petition merits our consideration. The procedure for a representation case is outlined in Arts. 257-260 of the Labor Code, in relation to the provisions on
cancellation of a Union registration under Arts. 239-240 thereof, the main purpose of which is to aid in ascertaining majority representation. The requirements under
the law, specifically Secs. 2, 5, and 6 of Rule V, Book V, of the Rules Implementing the Labor Code are all calculated to ensure that the certified bargaining
representative is the true choice of the employees against all contenders. The Constitutional mandate that the State shall "assure the rights of the workers to self-
organization, collective bargaining, security of tenure and just and humane conditions of work," should be achieved under a system of law such as the aforementioned
provisions of the pertinent statutes. When an overzealous official by-passes the lawon the pretext of retaining a laudable objective, the intendment or purpose of the
law will lose its meaning as the lawitself is disregarded. When respondent Minister directly certified the Union, he in fact disregarded this procedure and its legal
requirements. There was therefore failure to determine with legal certainty whether the Union indeed enjoyed majority representation. Contrary to the respondent
Minister's observation, the holding of a certification election at the proper time is not necessarily a mere formality as there was a compelling legal reason not to directly
and unilaterally certify a union whose legitimacy is precisely the object of litigation in a pending cancellation case filed by certain "concerned salesmen," who also claim
majority status. Even in a case where a union has filed a petition for certification elections, the mere fact that no opposition is made does not warrant a direct
certification. More so as in the case at bar, when the records of the suit showthat the required proof was not presented in an appropriate proceeding and that the basis
of the direct certification was the Union's mere allegation in its position paper that it has 87 out of 117 regular salesmen. In other words, respondent Minister merely
relied on the self-serving assertion of the respondent Union that it enjoyed the support of the majority of the salesmen, without subjecting such assertion to the test of
competing claims. As pointed out by petitioner in its petition, what the respondent Minister achieved in rendering the assailed orders was to make a mockery of the
procedure provided under the lawfor representation cases because:
(a) He has created havoc by impliedly establishing a procedural short-cut to obtaining a direct certification-by merely filing a notice
of strike.
(b) By creating such a short-cut, he has officially encouraged disrespect for the law.
(c) By directly certifying a Union without sufficient proof of majority representation, he has in effect arrogated unto himself the
right, vested naturally in the employees, to choose their collective bargaining representative.
(d) He has in effect imposed upon the petitioner the obligation to negotiate with a union whose majority representation is under
serious question. This is highly irregular because while the Union enjoys the blessing of the Minister, it does not enjoy the blessing of
the employees. Petitioner is therefore under threat of being held liable for refusing to negotiate with a union whose right to
bargaining status has not been legally established. (pp. 9-10, Rollo)
The order of the respondent Minister to reinstate the employees despite a clear finding of guilt on their part is not in conformity with law. Reinstatement is simply
incompatible with a finding of guilt. Where the totality of the evidence was sufficient to warrant the dismissal of the employees the lawwarrants their dismissal without
making any distinction between a first offender and a habitual delinquent. Under the law, respondent Minister is duly mandated to equally protect and respect not only
the labor or workers' side but also the management and/or employers' side. The law, in protecting the rights of the laborer, authorizes neither oppression nor self-
destruction of the employer. To order the reinstatement of the erring employees namely, Mejia, Sayson and Reynante would in effect encourage unequal protection of
the laws as a managerial employee of petitioner company involved in the same incident was already dismissed and was not ordered to be reinstated. As stated by Us in
7

the case of San Miguel Brewery vs. National Labor Union, 2 "an employer cannot legally be compelled to continue with the employment of a person who admittedly
was guilty of misfeasance or malfeasance towards his employer, and whose continuance in the service of the latter is patently inimical to his interest."
In the subject order, respondent Minister cited a cases 3 implying that "the proximity of the dismissal of the employees to the assumption order created a doubt as to
whether their dismissal was really for just cause or due to their activities." 4
This is of no moment for the following reasons:
(a) Respondent Minister has still maintained in his assailed order that a just cause existed to justify the dismissal of the employees.
(b) Respondent Minister has not made any finding substantiated by evidence that the employees were dismissed because of their union activities.
WHEREFORE, judgment is hereby rendered REVERSING and SETTING ASIDE the Order of the respondent Minister, dated December 27, 1985 for grave abuse of
discretion. However, in view of the fact that the dismissed employees are first offenders, petitioner is hereby ordered to give them separation pay. The temporary
restraining order is hereby made permanent.
SO ORDERED.
Yap, C.J., Melencio-Herrera, Padilla and Sarmiento, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-63915 April 24, 1985
LORENZOM. TAADA, ABRAHAMF. SARMIENTO, and MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. [MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President, HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the President ,
MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacaang Records Office, and FLORENDO S. PABLO, in his capacity as Director, Bureau of
Printing, respondents.

ESCOLIN, J.:
Invoking the people's right to be informed on matters of public concern, a right recognized in Section 6, Article IV of the 1973 Philippine Constitution, 1 as well as the
principle that laws to be valid and enforceable must be published in the Official Gazette or otherwise effectively promulgated, petitioners seek a writ of mandamus to
compel respondent public officials to publish, and/or cause the publication in the Official Gazette of various presidential decrees, letters of instructions, general orders,
proclamations, executive orders, letter of implementation and administrative orders.
Specifically, the publication of the following presidential issuances is sought:
a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234, 265, 286, 298, 303, 312, 324, 325, 326, 337,
355, 358, 359, 360, 361, 368, 404, 406, 415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594, 599, 644,
658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961, 1017-1030, 1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246,
1250, 1278, 1279, 1300, 1644, 1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153, 155, 161, 173, 180, 187, 188, 192, 193, 199, 202,
204, 205, 209, 211-213, 215-224, 226-228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291, 293,
297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370, 382, 385, 386, 396-397, 405, 438-440, 444- 445,
473, 486, 488, 498, 501, 399, 527, 561, 576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702, 712-713, 726, 837-
839, 878-879, 881, 882, 939-940, 964,997,1149-1178,1180-1278.
c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.
d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529, 1532, 1535, 1538, 1540-1547, 1550-1558, 1561-
1588, 1590-1595, 1594-1600, 1606-1609, 1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 1737-1742, 1744,
1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800, 1802-1804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-
1832, 1835-1836, 1839-1840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870, 1876-1889, 1892, 1900, 1918, 1923,
1933, 1952, 1963, 1965-1966, 1968-1984, 1986-2028, 2030-2044, 2046-2145, 2147-2161, 2163-2244.
e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507, 509-510, 522, 524-528, 531-532, 536, 538, 543-
544, 549, 551-553, 560, 563, 567-568, 570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788-852,
854-857.
f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81, 92, 94, 95, 107, 120, 122, 123.
g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.
The respondents, through the Solicitor General, would have this case dismissed outright on the ground that petitioners have no legal personality or standing to bring
the instant petition. The viewis submitted that in the absence of any showing that petitioners are personally and directly affected or prejudiced by the alleged non-
publication of the presidential issuances in question 2 said petitioners are without the requisite legal personality to institute this mandamus proceeding, they are not
being "aggrieved parties" within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:
SEC. 3. Petition for Mandamus.When any tribunal, corporation, board or person unlawfully neglects the performance of an act
which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use a
rd enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the
ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty
and praying that judgment be rendered commanding the defendant, immediately or at some other specified time, to do the act
required to be done to Protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the
wrongful acts of the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition concerns a public right and its object is to compel the performance of a public duty,
they need not showany specific interest for their petition to be given due course.
The issue posed is not one of first impression. As early as the 1910 case of Severino vs. Governor General, 3 this Court held that while the general rule is that "a writ of
mandamus would be granted to a private individual only in those cases where he has some private or particular interest to be subserved, or some particular right to be
protected, independent of that which he holds with the public at large," and "it is for the public officers exclusively to apply for the writ when public rights are to be
subserved [Mithchell vs. Boardmen, 79 M.e., 469]," nevertheless, "when the question is one of public right and the object of the mandamus is to procure the
enforcement of a public duty, the people are regarded as the real party in interest and the relator at whose instigation the proceedings are instituted need not show
8

that he has any legal or special interest in the result, it being sufficient to show that he is a citizen and as such interested in the execution of the laws [High,
Extraordinary Legal Remedies, 3rd ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private individual, as a proper party to the mandamus proceedings brought to compel the Governor
General to call a special election for the position of municipal president in the town of Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said:
We are therefore of the opinion that the weight of authority supports the proposition that the relator is a proper party to
proceedings of this character when a public right is sought to be enforced. If the general rule in America were otherwise, we think
that it would not be applicable to the case at bar for the reason 'that it is always dangerous to apply a general rule to a particular
case without keeping in mind the reason for the rule, because, if under the particular circumstances the reason for the rule does not
exist, the rule itself is not applicable and reliance upon the rule may well lead to error'
No reason exists in the case at bar for applying the general rule insisted upon by counsel for the respondent. The circumstances
which surround this case are different fromthose in the United States, inasmuch as if the relator is not a proper party to these
proceedings no other person could be, as we have seen that it is not the duty of the law officer of the Government to appear and
represent the people in cases of this character.
The reasons given by the Court in recognizing a private citizen's legal personality in the aforementioned case apply squarely to the present petition. Clearly, the right
sought to be enforced by petitioners herein is a public right recognized by no less than the fundamental lawof the land. If petitioners were not allowed to institute this
proceeding, it would indeed be difficult to conceive of any other person to initiate the same, considering that the Solicitor General, the government officer generally
empowered to represent the people, has entered his appearance for respondents in this case.
Respondents further contend that publication in the Official Gazette is not a sine qua non requirement for the effectivity of laws where the laws themselves provide for
their own effectivity dates. It is thus submitted that since the presidential issuances in question contain special provisions as to the date they are to take effect,
publication in the Official Gazette is not indispensable for their effectivity. The point stressed is anchored on Article 2 of the Civil Code:
Art. 2. Laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is
otherwise provided, ...
The interpretation given by respondent is in accord with this Court's construction of said article. In a long line of decisions, 4 this Court has ruled that publication in the
Official Gazette is necessary in those cases where the legislation itself does not provide for its effectivity date-for then the date of publication is material for
determining its date of effectivity, which is the fifteenth day following its publication-but not when the law itself provides for the date when it goes into effect.
Respondents' argument, however, is logically correct only insofar as it equates the effectivity of laws with the fact of publication. Considered in the light of other
statutes applicable to the issue at hand, the conclusion is easily reached that said Article 2 does not preclude the requirement of publication in the Official Gazette, even
if the lawitself provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides as follows:
Section 1. There shall be published in the Official Gazette [1] all important legisiative acts and resolutions of a public nature of the,
Congress of the Philippines; [2] all executive and administrative orders and proclamations, except such as have no general
applicability; [3] decisions or abstracts of decisions of the Supreme Court and the Court of Appeals as may be deemed by said courts
of sufficient importance to be so published; [4] such documents or classes of documents as may be required so to be published by
law; and [5] such documents or classes of documents as the President of the Philippines shall determine from time to time to have
general applicability and legal effect, or which he may authorize so to be published. ...
The clear object of the above-quoted provision is to give the general public adequate notice of the various laws which are to regulate their actions and conduct as
citizens. Without such notice and publication, there would be no basis for the application of the maxim"ignorantia legis non excusat." It would be the height of injustice
to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one.
Perhaps at no time since the establishment of the Philippine Republic has the publication of laws taken so vital significance that at this time when the people have
bestowed upon the President a power heretofore enjoyed solely by the legislature. While the people are kept abreast by the mass media of the debates and
deliberations in the Batasan Pambansaand for the diligent ones, ready access to the legislative recordsno such publicity accompanies the law-making process of the
President. Thus, without publication, the people have no means of knowing what presidential decrees have actually been promulgated, much less a definite way of
informing themselves of the specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo la denominacion generica de leyes, se comprenden
tambien los reglamentos, Reales decretos, Instrucciones, Circulares y Reales ordines dictadas de conformidad con las mismas por el Gobierno en uso de su potestad. 5
The very first clause of Section I of Commonwealth Act 638 reads: "There shall be published in the Official Gazette ... ." The word "shall" used therein imposes upon
respondent officials an imperative duty. That duty must be enforced if the Constitutional right of the people to be informed on matters of public concern is to be given
substance and reality. The law itself makes a list of what should be published in the Official Gazette. Such listing, to our mind, leaves respondents with no discretion
whatsoever as to what must be included or excluded fromsuch publication.
The publication of all presidential issuances "of a public nature" or "of general applicability" is mandated by law. Obviously, presidential decrees that provide for fines,
forfeitures or penalties for their violation or otherwise impose a burden or. the people, such as tax and revenue measures, fall within this category. Other presidential
issuances which apply only to particular persons or class of persons such as administrative and executive orders need not be published on the assumption that they
have been circularized to all concerned. 6
It is needless to add that the publication of presidential issuances "of a public nature" or "of general applicability" is a requirement of due process. It is a rule of law that
before a person may be bound by law, he must first be officially and specifically informed of its contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC 7:
In a time of proliferating decrees, orders and letters of instructions which all formpart of the law of the land, the requirement of due
process and the Rule of Lawdemand that the Official Gazette as the official government repository promulgate and publish the texts
of all such decrees, orders and instructions so that the people may know where to obtain their official and specific contents.
The Court therefore declares that presidential issuances of general application, which have not been published, shall have no force and effect. Some members of the
Court, quite apprehensive about the possible unsettling effect this decision might have on acts done in reliance of the validity of those presidential decrees which were
published only during the pendency of this petition, have put the question as to whether the Court's declaration of invalidity apply to P.D.s which had been enforced or
implemented prior to their publication. The answer is all too familiar. In similar situations in the past this Court had taken the pragmatic and realistic course set forth
in Chicot County Drainage District vs. Baxter Bank 8 to wit:
The courts belowhave proceeded on the theory that the Act of Congress, having been found to be unconstitutional, was not a law;
that it was inoperative, conferring no rights and imposing no duties, and hence affording no basis for the challenged decree. Norton
v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559, 566. It is quite clear, however, that such broad
statements as to the effect of a determination of unconstitutionality must be taken with qualifications. The actual existence of a
statute, prior to such a determination, is an operative fact and may have consequences which cannot justly be ignored. The past
cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered
in various aspects-with respect to particular conduct, private and official. Questions of rights claimed to have become vested, of
status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of
the statute and of its previous application, demand examination. These questions are among the most difficult of those which have
engaged the attention of courts, state and federal and it is manifest from numerous decisions that an all-inclusive statement of a
principle of absolute retroactive invalidity cannot be justified.
Consistently with the above principle, this Court in Rutter vs. Esteban 9 sustained the right of a party under the Moratorium Law, albeit said right had accrued in his
favor before said lawwas declared unconstitutional by this Court.
Similarly, the implementation/enforcement of presidential decrees prior to their publication in the Official Gazette is "an operative fact which may have consequences
which cannot be justly ignored. The past cannot always be erased by a newjudicial declaration ... that an all-inclusive statement of a principle of absolute retroactive
invalidity cannot be justified."
9

Fromthe report submitted to the Court by the Clerk of Court, it appears that of the presidential decrees sought by petitioners to be published in the Official Gazette,
only Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive, have not been so published. 10 Neither the subject matters nor the texts of
these PDs can be ascertained since no copies thereof are available. But whatever their subject matter may be, it is undisputed that none of these unpublished PDs has
ever been implemented or enforced by the government. In Pesigan vs. Angeles, 11 the Court, through Justice Ramon Aquino, ruled that "publication is necessary to
apprise the public of the contents of [penal] regulations and make the said penalties binding on the persons affected thereby. " The cogency of this holding is
apparently recognized by respondent officials considering the manifestation in their comment that "the government, as a matter of policy, refrains fromprosecuting
violations of criminal laws until the same shall have been published in the Official Gazette or in some other publication, even though some criminal laws provide that
they shall take effect immediately.
WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all unpublished presidential issuances which are of general application, and unless
so published, they shall have no binding force and effect.
SO ORDERED.
Relova, J., concurs.
Aquino, J., took no part.
Concepcion, Jr., J., is on leave.


Separate Opinions

FERNANDO, C.J., concurring (with qualification):
There is on the whole acceptance on my part of the views expressed in the ably written opinion of Justice Escolin. I amunable, however, to concur insofar as it would
unqualifiedly impose the requirement of publication in the Official Gazette for unpublished "presidential issuances" to have binding force and effect.
I shall explain why.
1. It is of course true that without the requisite publication, a due process question would arise if made to apply adversely to a party who is not even aware of the
existence of any legislative or executive act having the force and effect of law. My point is that such publication required need not be confined to the Official Gazette.
Fromthe pragmatic standpoint, there is an advantage to be gained. It conduces to certainty. That is too be admitted. It does not follow, however, that failure to do so
would in all cases and under all circumstances result in a statute, presidential decree or any other executive act of the same category being bereft of any binding force
and effect. To so hold would, for me, raise a constitutional question. Such a pronouncement would lend itself to the interpretation that such a legislative or presidential
act is bereft of the attribute of effectivity unless published in the Official Gazette. There is no such requirement in the Constitution as Justice Plana so aptly pointed out.
It is true that what is decided nowapplies only to past "presidential issuances". Nonetheless, this clarification is, to my mind, needed to avoid any possible
misconception as to what is required for any statute or presidential act to be impressed with binding force or effectivity.
2. It is quite understandable then why I concur in the separate opinion of Justice Plana. Its first paragraph sets forth what to me is the constitutional doctrine applicable
to this case. Thus: "The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. It
may be said though that the guarantee of due process requires notice of laws to affected Parties before they can be bound thereby; but such notice is not necessarily by
publication in the Official Gazette. The due process clause is not that precise. 1 I am likewise in agreement with its closing paragraph: "In fine, I concur in the majority
decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness.
However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette. 2
3. It suffices, as was stated by Judge Learned Hand, that lawas the command of the government "must be ascertainable in some form if it is to be enforced at all. 3 It
would indeed be to reduce it to the level of mere futility, as pointed out by Justice Cardozo, "if it is unknown and unknowable. 4 Publication, to repeat, is thus essential.
What I am not prepared to subscribe to is the doctrine that it must be in the Official Gazette. To be sure once published therein there is the ascertainable mode of
determining the exact date of its effectivity. Still for me that does not dispose of the question of what is the jural effect of past presidential decrees or executive acts
not so published. For prior thereto, it could be that parties aware of their existence could have conducted themselves in accordance with their provisions. If no legal
consequences could attach due to lack of publication in the Official Gazette, then serious problems could arise. Previous transactions based on such "Presidential
Issuances" could be open to question. Matters deemed settled could still be inquired into. I amnot prepared to hold that such an effect is contemplated by our
decision. Where such presidential decree or executive act is made the basis of a criminal prosecution, then, of course, its ex post facto character becomes evident. 5 In
civil cases though, retroactivity as such is not conclusive on the due process aspect. There must still be a showing of arbitrariness. Moreover, where the challenged
presidential decree or executive act was issued under the police power, the non-impairment clause of the Constitution may not always be successfully invoked. There
must still be that process of balancing to determine whether or not it could in such a case be tainted by infirmity. 6 In traditional terminology, there could arise then a
question of unconstitutional application. That is as far as it goes.
4. Let me make therefore that my qualified concurrence goes no further than to affirmthat publication is essential to the effectivity of a legislative or executive act of a
general application. I am not in agreement with the view that such publication must be in the Official Gazette. The Civil Code itself in its Article 2 expressly recognizes
that the rule as to laws taking effect after fifteen days following the completion of their publication in the Official Gazette is subject to this exception, "unless it is
otherwise provided." Moreover, the Civil Code is itself only a legislative enactment, Republic Act No. 386. It does not and cannot have the juridical force of a
constitutional command. A later legislative or executive act which has the force and effect of lawcan legally provide for a different rule.
5. Nor can I agree with the rather sweeping conclusion in the opinion of Justice Escolin that presidential decrees and executive acts not thus previously published in the
Official Gazette would be devoid of any legal character. That would be, in my opinion, to go too far. It may be fraught, as earlier noted, with undesirable consequences. I
find myself therefore unable to yield assent to such a pronouncement.
I am authorized to state that Justices Makasiar, Abad Santos, Cuevas, and Alampay concur in this separate opinion.
Makasiar, Abad Santos, Cuevas and Alampay, JJ., concur.

TEEHANKEE, J., concurring:
I concur with the main opinion of Mr. Justice Escolin and the concurring opinion of Mme. Justice Herrera. The Rule of Law connotes a body of norms and laws published
and ascertainable and of equal application to all similarly circumstances and not subject to arbitrary change but only under certain set procedures. The Court has
consistently stressed that "it is an elementary rule of fair play and justice that a reasonable opportunity to be informed must be afforded to the people who are
commanded to obey before they can be punished for its violation, 1 citing the settled principle based on due process enunciated in earlier cases that "before the public
is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specially informed of said
contents and its penalties.
Without official publication in the Official Gazette as required by Article 2 of the Civil Code and the Revised Administrative Code, there would be no basis nor
justification for the corollary rule of Article 3 of the Civil Code (based on constructive notice that the provisions of the law are ascertainable from the public and official
repository where they are duly published) that "Ignorance of the law excuses no one fromcompliance therewith.
10

Respondents' contention based on a misreading of Article 2 of the Civil Code that "only laws which are silent as to their effectivity [date] need be published in the
Official Gazette for their effectivity" is manifestly untenable. The plain text and meaning of the Civil Code is that "laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is otherwise provided, " i.e. a different effectivity date is provided by the lawitself. This proviso perforce
refers to a lawthat has been duly published pursuant to the basic constitutional requirements of due process. The best example of this is the Civil Code itself: the same
Article 2 provides otherwise that it "shall take effect [only] one year [not 15 days] after such publication. 2 To sustain respondents' misreading that "most laws or
decrees specify the date of their effectivity and for this reason, publication in the Official Gazette is not necessary for their effectivity 3 would be to nullify and render
nugatory the Civil Code's indispensable and essential requirement of prior publication in the Official Gazette by the simple expedient of providing for immediate
effectivity or an earlier effectivity date in the lawitself before the completion of 15 days following its publication which is the period generally fixed by the Civil Code for
its proper dissemination.

MELENCIO-HERRERA, J., concurring:
I agree. There cannot be any question but that even if a decree provides for a date of effectivity, it has to be published. What I would like to state in connection with
that proposition is that when a date of effectivity is mentioned in the decree but the decree becomes effective only fifteen (15) days after its publication in the Official
Gazette, it will not mean that the decree can have retroactive effect to the date of effectivity mentioned in the decree itself. There should be no retroactivity if the
retroactivity will run counter to constitutional rights or shall destroy vested rights.

PLANA, J., concurring (with qualification):
The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. * It may be said though
that the guarantee of due process requires notice of laws to affected parties before they can be bound thereby; but such notice is not necessarily by publication in the
Official Gazette. The due process clause is not that precise. Neither is the publication of laws in the Official Gazette required by any statute as a prerequisite for their
effectivity, if said laws already provide for their effectivity date.
Article 2 of the Civil Code provides that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is
otherwise provided " Two things may be said of this provision: Firstly, it obviously does not apply to a lawwith a built-in provision as to when it will take effect.
Secondly, it clearly recognizes that each lawmay provide not only a different period for reckoning its effectivity date but also a different mode of notice. Thus, a law
may prescribe that it shall be published elsewhere than in the Official Gazette.
Commonwealth Act No. 638, in my opinion, does not support the proposition that for their effectivity, laws must be published in the Official Gazette. The said lawis
simply "An Act to Provide for the Uniform Publication and Distribution of the Official Gazette." Conformably therewith, it authorizes the publication of the Official
Gazette, determines its frequency, provides for its sale and distribution, and defines the authority of the Director of Printing in relation thereto. It also enumerates what
shall be published in the Official Gazette, among them, "important legislative acts and resolutions of a public nature of the Congress of the Philippines" and "all
executive and administrative orders and proclamations, except such as have no general applicability." It is noteworthy that not all legislative acts are required to be
published in the Official Gazette but only "important" ones "of a public nature." Moreover, the said lawdoes not provide that publication in the Official Gazette is
essential for the effectivity of laws. This is as it should be, for all statutes are equal and stand on the same footing. A law, especially an earlier one of general application
such as Commonwealth Act No. 638, cannot nullify or restrict the operation of a subsequent statute that has a provision of its own as to when and howit will take
effect. Only a higher law, which is the Constitution, can assume that role.
In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This
is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette.
Cuevas and Alampay, JJ., concur.

GUTIERREZ, Jr., J., concurring:
I concur insofar as publication is necessary but reserve my vote as to the necessity of such publication being in the Official Gazette.

DE LA FUENTE, J., concurring:
I concur insofar as the opinion declares the unpublished decrees and issuances of a public nature or general applicability ineffective, until due publication thereof.



Separate Opinions
FERNANDO, C.J., concurring (with qualification):
There is on the whole acceptance on my part of the views expressed in the ably written opinion of Justice Escolin. I am unable, however, to concur insofar as it would
unqualifiedly impose the requirement of publication in the Official Gazette for unpublished "presidential issuances" to have binding force and effect.
I shall explain why.
1. It is of course true that without the requisite publication, a due process question would arise if made to apply adversely to a party who is not even aware of the
existence of any legislative or executive act having the force and effect of law. My point is that such publication required need not be confined to the Official Gazette.
Fromthe pragmatic standpoint, there is an advantage to be gained. It conduces to certainty. That is too be admitted. It does not follow, however, that failure to do so
would in all cases and under all circumstances result in a statute, presidential decree or any other executive act of the same category being bereft of any binding force
and effect. To so hold would, for me, raise a constitutional question. Such a pronouncement would lend itself to the interpretation that such a legislative or presidential
act is bereft of the attribute of effectivity unless published in the Official Gazette. There is no such requirement in the Constitution as Justice Plana so aptly pointed out.
It is true that what is decided nowapplies only to past "presidential issuances". Nonetheless, this clarification is, to my mind, needed to avoid any possible
misconception as to what is required for any statute or presidential act to be impressed with binding force or effectivity.
2. It is quite understandable then why I concur in the separate opinion of Justice Plana. Its first paragraph sets forth what to me is the constitutional doctrine applicable
to this case. Thus: "The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. It
may be said though that the guarantee of due process requires notice of laws to affected Parties before they can be bound thereby; but such notice is not necessarily by
publication in the Official Gazette. The due process clause is not that precise. 1 I am likewise in agreement with its closing paragraph: "In fine, I concur in the majority
decision to the extent that it requires notice before laws become effective, for no person should be bound by a law without notice. This is elementary fairness.
However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette. 2
3. It suffices, as was stated by Judge Learned Hand, that lawas the command of the government "must be ascertainable in some form if it is to be enforced at all. 3 It
would indeed be to reduce it to the level of mere futility, as pointed out by Justice Cardozo, "if it is unknown and unknowable. 4 Publication, to repeat, is thus essential.
What I am not prepared to subscribe to is the doctrine that it must be in the Official Gazette. To be sure once published therein there is the ascertainable mode of
11

determining the exact date of its effectivity. Still for me that does not dispose of the question of what is the jural effect of past presidential decrees or executive acts
not so published. For prior thereto, it could be that parties aware of their existence could have conducted themselves in accordance with their provisions. If no legal
consequences could attach due to lack of publication in the Official Gazette, then serious problems could arise. Previous transactions based on such "Presidential
Issuances" could be open to question. Matters deemed settled could still be inquired into. I amnot prepared to hold that such an effect is contemplated by our
decision. Where such presidential decree or executive act is made the basis of a criminal prosecution, then, of course, its ex post facto character becomes evident. 5 In
civil cases though, retroactivity as such is not conclusive on the due process aspect. There must still be a showing of arbitrariness. Moreover, where the challenged
presidential decree or executive act was issued under the police power, the non-impairment clause of the Constitution may not always be successfully invoked. There
must still be that process of balancing to determine whether or not it could in such a case be tainted by infirmity. 6 In traditional terminology, there could arise then a
question of unconstitutional application. That is as far as it goes.
4. Let me make therefore that my qualified concurrence goes no further than to affirmthat publication is essential to the effectivity of a legislative or executive act of a
general application. I am not in agreement with the view that such publication must be in the Official Gazette. The Civil Code itself in its Article 2 expressly recognizes
that the rule as to laws taking effect after fifteen days following the completion of their publication in the Official Gazette is subject to this exception, "unless it is
otherwise provided." Moreover, the Civil Code is itself only a legislative enactment, Republic Act No. 386. It does not and cannot have the juridical force of a
constitutional command. A later legislative or executive act which has the force and effect of lawcan legally provide for a different rule.
5. Nor can I agree with the rather sweeping conclusion in the opinion of Justice Escolin that presidential decrees and executive acts not thus previously published in the
Official Gazette would be devoid of any legal character. That would be, in my opinion, to go too far. It may be fraught, as earlier noted, with undesirable consequences. I
find myself therefore unable to yield assent to such a pronouncement.
I am authorized to state that Justices Makasiar, Abad Santos, Cuevas, and Alampay concur in this separate opinion.
Makasiar, Abad Santos, Cuevas and Alampay, JJ., concur.

TEEHANKEE, J., concurring:
I concur with the main opinion of Mr. Justice Escolin and the concurring opinion of Mme. Justice Herrera. The Rule of Law connotes a body of norms and laws published
and ascertainable and of equal application to all similarly circumstances and not subject to arbitrary change but only under certain set procedures. The Court has
consistently stressed that "it is an elementary rule of fair play and justice that a reasonable opportunity to be informed must be afforded to the people who are
commanded to obey before they can be punished for its violation, 1 citing the settled principle based on due process enunciated in earlier cases that "before the public
is bound by its contents, especially its penal provisions, a law, regulation or circular must first be published and the people officially and specially informed of said
contents and its penalties.
Without official publication in the Official Gazette as required by Article 2 of the Civil Code and the Revised Administrative Code, there would be no basis nor
justification for the corollary rule of Article 3 of the Civil Code (based on constructive notice that the provisions of the law are ascertainable from the public and official
repository where they are duly published) that "Ignorance of the law excuses no one fromcompliance therewith.
Respondents' contention based on a misreading of Article 2 of the Civil Code that "only laws which are silent as to their effectivity [date] need be published in the
Official Gazette for their effectivity" is manifestly untenable. The plain text and meaning of the Civil Code is that "laws shall take effect after fifteen days following the
completion of their publication in the Official Gazette, unless it is otherwise provided, " i.e. a different effectivity date is provided by the lawitself. This proviso perforce
refers to a law that has been duly published pursuant to the basic constitutional requirements of due process. The best example of this is the Civil Code itself: the same
Article 2 provides otherwise that it "shall take effect [only] one year [not 15 days] after such publication. 2 To sustain respondents' misreading that "most laws or
decrees specify the date of their effectivity and for this reason, publication in the Official Gazette is not necessary for their effectivity 3 would be to nullify and render
nugatory the Civil Code's indispensable and essential requirement of prior publication in the Official Gazette by the simple expedient of providing for immediate
effectivity or an earlier effectivity date in the lawitself before the completion of 15 days following its publication which is the period generally fixed by the Civil Code for
its proper dissemination.

MELENCIO-HERRERA, J., concurring:
I agree. There cannot be any question but that even if a decree provides for a date of effectivity, it has to be published. What I would like to state in connection with
that proposition is that when a date of effectivity is mentioned in the decree but the decree becomes effective only fifteen (15) days after its publication in the Official
Gazette, it will not mean that the decree can have retroactive effect to the date of effectivity mentioned in the decree itself. There should be no retroactivity if the
retroactivity will run counter to constitutional rights or shall destroy vested rights.

PLANA, J., concurring (with qualification):
The Philippine Constitution does not require the publication of laws as a prerequisite for their effectivity, unlike some Constitutions elsewhere. * It may be said though
that the guarantee of due process requires notice of laws to affected parties before they can be bound thereby; but such notice is not necessarily by publication in the
Official Gazette. The due process clause is not that precise. Neither is the publication of laws in the Official Gazette required by any statute as a prerequisite for their
effectivity, if said laws already provide for their effectivity date.
Article 2 of the Civil Code provides that "laws shall take effect after fifteen days following the completion of their publication in the Official Gazette, unless it is
otherwise provided " Two things may be said of this provision: Firstly, it obviously does not apply to a lawwith a built-in provision as to when it will take effect.
Secondly, it clearly recognizes that each lawmay provide not only a different period for reckoning its effectivity date but also a different mode of notice. Thus, a law
may prescribe that it shall be published elsewhere than in the Official Gazette.
Commonwealth Act No. 638, in my opinion, does not support the proposition that for their effectivity, laws must be published in the Official Gazette. The said lawis
simply "An Act to Provide for the Uniform Publication and Distribution of the Official Gazette." Conformably therewith, it authorizes the publication of the Official
Gazette, determines its frequency, provides for its sale and distribution, and defines the authority of the Director of Printing in relation thereto. It also enumerates what
shall be published in the Official Gazette, among them, "important legislative acts and resolutions of a public nature of the Congress of the Philippines" and "all
executive and administrative orders and proclamations, except such as have no general applicability." It is noteworthy that not all legislative acts are required to be
published in the Official Gazette but only "important" ones "of a public nature." Moreover, the said lawdoes not provide that publication in the Official Gazette is
essential for the effectivity of laws. This is as it should be, for all statutes are equal and stand on the same footing. A law, especially an earlier one of general application
such as Commonwealth Act No. 638, cannot nullify or restrict the operation of a subsequent statute that has a provision of its own as to when and howit will take
effect. Only a higher law, which is the Constitution, can assume that role.
In fine, I concur in the majority decision to the extent that it requires notice before laws become effective, for no person should be bound by a lawwithout notice. This
is elementary fairness. However, I beg to disagree insofar as it holds that such notice shall be by publication in the Official Gazette.
Cuevas and Alampay, JJ., concur.

GUTIERREZ, Jr., J., concurring:
I concur insofar as publication is necessary but reserve my vote as to the necessity of such publication being in the Official Gazette.

12

DE LA FUENTE, J., concurring:
I concur insofar as the opinion declares the unpublished decrees and issuances of a public nature or general applicability ineffective, until due publication thereof.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-48645 January 7, 1987
"BROTHERHOOD" LABOR UNITY MOVEMENT OF THE PHILIPPINES, ANTONIO CASBADILLO, PROSPERO TABLADA, ERNESTO BENGSON, PATRICIO SERRANO, ANTONIO
B. BOBIAS, VIRGILIO ECHAS, DOMINGO PARINAS, NORBERTO GALANG, JUANITO NAVARRO, NESTORIO MARCELLANA, TEOFILO B. CACATIAN, RUFO L. EGUIA,
CARLOS SUMOYAN, LAMBERTO RONQUILLO, ANGELITO AMANCIO, DANILO B. MATIAR, ET AL., petitioners,
vs.
HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT, HON. AMADO G. INCIONG, UNDERSECRETARY OF LABOR,
SAN MIGUEL CORPORATION, GENARO OLIVES, ENRIQUE CAMAHORT, FEDERICO OATE, ERNESTO VILLANUEVA, ANTONIO BOCALING and GODOFREDO
CUETO, respondents.
Armando V. Ampil for petitioners.
Siguion Reyna, Montecillo and Ongsiako Law Office for private respondents.

GUTIERREZ, JR., J.:
The elemental question in labor law of whether or not an employer-employee relationship exists between petitioners-members of the "Brotherhood Labor Unit
Movement of the Philippines" (BLUM) and respondent San Miguel Corporation, is the main issue in this petition. The disputed decision of public respondent Ronaldo
Zamora, Presidential Assistant for legal Affairs, contains a brief summary of the facts involved:
1. The records disclose that on July 11, 1969, BLUM filed a complaint with the nowdefunct Court of Industrial Relations, charging
San Miguel Corporation, and the following officers: Enrique Camahort, Federico Ofiate Feliciano Arceo, Melencio Eugenia Jr., Ernesto
Villanueva, Antonio Bocaling and Godofredo Cueto of unfair labor practice as set forth in Section 4 (a), sub-sections (1) and (4) of
Republic Act No. 875 and of Legal dismissal. It was alleged that respondents ordered the individual complainants to disaffiliate from
the complainant union; and that management dismissed the individual complainants when they insisted on their union membership.
On their part, respondents moved for the dismissal of the complaint on the grounds that the complainants are not and have never
been employees of respondent company but employees of the independent contractor; that respondent company has never had
control over the means and methods followed by the independent contractor who enjoyed full authority to hire and control said
employees; and that the individual complainants are barred by estoppel from asserting that they are employees of respondent
company.
While pending with the Court of Industrial Relations CIR pleadings and testimonial and documentary evidences were duly presented,
although the actual hearing was delayed by several postponements. The dispute was taken over by the National Labor Relations
Commission (NLRC) with the decreed abolition of the CIR and the hearing of the case intransferably commenced on September 8,
1975.
On February 9, 1976, Labor Arbiter Nestor C. Lim found for complainants which was concurred in by the NLRC in a decision dated
June 28, 1976. The amount of backwages awarded, however, was reduced by NLRC to the equivalent of one (1) year salary.
On appeal, the Secretary in a decision dated June 1, 1977, set aside the NLRC ruling, stressing the absence of an employer-mployee
relationship as borne out by the records of the case. ...
The petitioners strongly argue that there exists an employer-employee relationship between them and the respondent company and that they were dismissed for
unionism, an act constituting unfair labor practice "for which respondents must be made to answer."
Unrebutted evidence and testimony on record establish that the petitioners are workers who have been employed at the San Miguel Parola Glass Factory since 1961,
averaging about seven (7) years of service at the time of their termination. They worked as "cargadores" or "pahinante" at the SMC Plant loading, unloading, piling or
palleting empty bottles and woosen shells to and from company trucks and warehouses. At times, they accompanied the company trucks on their delivery routes.
The petitioners first reported for work to Superintendent-in-Charge Camahort. They were issued gate passes signed by Camahort and were provided by the respondent
company with the tools, equipment and paraphernalia used in the loading, unloading, piling and hauling operation.
Job orders emanated from Camahort. The orders are then transmitted to an assistant-officer-in-charge. In turn, the assistant informs the warehousemen and checkers
regarding the same. The latter, thereafter, relays said orders to the capatazes or group leaders who then give orders to the workers as to where, when and what to
load, unload, pile, pallet or clean.
Work in the glass factory was neither regular nor continuous, depending wholly on the volume of bottles manufactured to be loaded and unloaded, as well as the
business activity of the company. Work did not necessarily mean a full eight (8) hour day for the petitioners. However, work,at times, exceeded the eight (8) hour day
and necessitated work on Sundays and holidays. For this, they were neither paid overtime nor compensation for work on Sundays and holidays.
Petitioners were paid every ten (10) days on a piece rate basis, that is, according to the number of cartons and wooden shells they were able to load, unload, or pile.
The group leader notes down the number or volume of work that each individual worker has accomplished. This is then made the basis of a report or statement which
is compared with the notes of the checker and warehousemen as to whether or not they tally. Final approval of report is by officer-in-charge Camahort. The pay check
is given to the group leaders for encashment, distribution, and payment to the petitioners in accordance with payrolls prepared by said leaders. Fromthe total earnings
of the group, the group leader gets a participation or share of ten (10%) percent plus an additional amount from the earnings of each individual.
The petitioners worked exclusive at the SMC plant, never having been assigned to other companies or departments of SMC plant, even when the volume of work was at
its minimum. When any of the glass furnaces suffered a breakdown, making a shutdown necessary, the petitioners work was temporarily suspended. Thereafter, the
petitioners would return to work at the glass plant.
Sometime in January, 1969, the petitioner workers numbering one hundred and forty (140) organized and affiliated themselves with the petitioner union and
engaged in union activities. Believing themselves entitled to overtime and holiday pay, the petitioners pressed management, airing other grievances such as being paid
belowthe minimum wage law, inhuman treatment, being forced to borrow at usurious rates of interest and to buy raffle tickets, coerced by withholding their salaries,
and salary deductions made without their consent. However, their gripes and grievances were not heeded by the respondents.
On February 6, 1969, the petitioner union filed a notice of strike with the Bureau of Labor Relations in connection with the dismissal of some of its members who were
allegedly castigated for their union membership and warned that should they persist in continuing with their union activities they would be dismissed fromtheir jobs.
Several conciliation conferences were scheduled in order to thresh out their differences, On February 12, 1969, union member Rogelio Dipad was dismissed fromwork.
At the scheduled conference on February 19, 1969, the complainant union through its officers headed by National President Artemio Portugal Sr., presented a letter to
the respondent company containing proposals and/or labor demands together with a request for recognition and collective bargaining.
13

San Miguel refused to bargain with the petitioner union alleging that the workers are not their employees.
On February 20, 1969, all the petitioners were dismissed from their jobs and, thereafter, denied entrance to respondent company's glass factory despite their regularly
reporting for work. A complaint for illegal dismissal and unfair labor practice was filed by the petitioners.
The case reaches us nowwith the same issues to be resolved as when it had begun.
The question of whether an employer-employee relationship exists in a certain situation continues to bedevil the courts. Some businessmen try to avoid the bringing
about of an employer-employee relationship in their enterprises because that judicial relation spawns obligations connected with workmen's compensation, social
security, medicare, minimum wage, termination pay, and unionism. (Mafinco Trading Corporation v. Ople, 70 SCRA 139).
In determining the existence of an employer-employee relationship, the elements that are generally considered are the following: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by
which the work is to be accomplished. It. is the called "control test" that is the most important element (Investment Planning Corp. of the Phils. v. The Social Security
System, 21 SCRA 924; Mafinco Trading Corp. v. Ople, supra,and Rosario Brothers, Inc. v. Ople, 131 SCRA 72).
Applying the above criteria, the evidence strongly indicates the existence of an employer-employee relationship between petitioner workers and respondent San
Miguel Corporation. The respondent asserts that the petitioners are employees of the Guaranteed Labor Contractor, an independent labor contracting firm.
The facts and evidence on record negate respondent SMC's claim.
The existence of an independent contractor relationship is generally established by the following criteria: "whether or not the contractor is carrying on an independent
business; the nature and extent of the work; the skill required; the termand duration of the relationship; the right to assign the performance of a specified piece of
work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control
of the premises; the duty to supply the premises tools, appliances, materials and labor; and the mode, manner and terms of payment" (56 CJS Master and Servant, Sec.
3(2), 46; See also 27 AM. Jur. Independent Contractor, Sec. 5, 485 and Annex 75 ALR 7260727)
None of the above criteria exists in the case at bar.
Highly unusual and suspect is the absence of a written contract to specify the performance of a specified piece of work, the nature and extent of the work and the term
and duration of the relationship. The records fail to showthat a large commercial outfit, such as the San Miguel Corporation, entered into mere oral agreements of
employment or labor contracting where the same would involve considerable expenses and dealings with a large number of workers over a long period of time. Despite
respondent company's allegations not an iota of evidence was offered to prove the same or its particulars. Such failure makes respondent SMC's stand subject to
serious doubts.
Uncontroverted is the fact that for an average of seven (7) years, each of the petitioners had worked continuously and exclusively for the respondent company's
shipping and warehousing department. Considering the length of time that the petitioners have worked with the respondent company, there is justification to conclude
that they were engaged to perform activities necessary or desirable in the usual business or trade of the respondent, and the petitioners are, therefore regular
employees (Phil. Fishing Boat Officers and Engineers Union v. Court of Industrial Relations, 112 SCRA 159 and RJL Martinez Fishing Corporation v. National Labor
Relations Commission, 127 SCRA 454).
As we have found in RJL Martinez Fishing Corporation v. National Labor Relations Commission (supra):
... [T]he employer-employee relationship between the parties herein is not coterminous with each loading and unloading job. As
earlier shown, respondents are engaged in the business of fishing. For this purpose, they have a fleet of fishing vessels. Under this
situation, respondents' activity of catching fish is a continuous process and could hardly be considered as seasonal in nature. So that
the activities performed by herein complainants, i.e. unloading the catch of tuna fish fromrespondents' vessels and then loading the
same to refrigerated vans, are necessary or desirable in the business of respondents. This circumstance makes the employment of
complainants a regular one, in the sense that it does not depend on any specific project or seasonable activity. (NLRC Decision, p. 94,
Rollo).lwphl@it
so as it with petitioners in the case at bar. In fact, despite past shutdowns of the glass plant for repairs, the petitioners, thereafter, promptly returned to their jobs,
never having been replaced, or assigned elsewhere until the present controversy arose. The termof the petitioners' employment appears indefinite. The continuity and
habituality of petitioners' work bolsters their claimof employee status vis-a-vis respondent company,
Even under the assumption that a contract of employment had indeed been executed between respondent SMC and the alleged labor contractor, respondent's case
will, nevertheless, fail.
Section 8, Rule VIII, Book III of the Implementing Rules of the Labor Code provides:
Job contracting. There is job contracting permissible under the Code if the following conditions are met:
(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free fromthe control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the formof tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of his business.
We find that Guaranteed and Reliable Labor contractors have neither substantial capital nor investment to qualify as an independent contractor under the law. The
premises, tools, equipment and paraphernalia used by the petitioners in their jobs are admittedly all supplied by respondent company. It is only the manpower or labor
force which the alleged contractors supply, suggesting the existence of a "labor only" contracting scheme prohibited by law (Article 106, 109 of the Labor Code; Section
9(b), Rule VIII, Book III, Implementing Rules and Regulations of the Labor Code). In fact, even the alleged contractor's office, which consists of a space at respondent
company's warehouse, table, chair, typewriter and cabinet, are provided for by respondent SMC. It is therefore clear that the alleged contractors have no capital outlay
involved in the conduct of its business, in the maintenance thereof or in the payment of its workers' salaries.
The payment of the workers' wages is a critical factor in determining the actuality of an employer-employee relationship whether between respondent company and
petitioners or between the alleged independent contractor and petitioners. It is important to emphasize that in a truly independent contractor-contractee relationship,
the fees are paid directly to the manpower agency in lump sum without indicating or implying that the basis of such lump sumis the salary per worker multiplied by the
number of workers assigned to the company. This is the rule inSocial Security Systemv. Court of Appeals (39 SCRA 629, 635).
The alleged independent contractors in the case at bar were paid a lump sumrepresenting only the salaries the workers were entitled to, arrived at by adding the
salaries of each worker which depend on the volume of work they. had accomplished individually. These are based on payrolls, reports or statements prepared by the
workers' group leader, warehousemen and checkers, where they note down the number of cartons, wooden shells and bottles each worker was able to load, unload,
pile or pallet and see whether they tally. The amount paid by respondent company to the alleged independent contractor considers no business expenses or capital
outlay of the latter. Nor is the profit or gain of the alleged contractor in the conduct of its business provided for as an amount over and above the workers' wages.
Instead, the alleged contractor receives a percentage from the total earnings of all the workers plus an additional amount corresponding to a percentage of the
earnings of each individual worker, which, perhaps, accounts for the petitioners' charge of unauthorized deductions from their salaries by the respondents.
Anent the argument that the petitioners are not employees as they worked on piece basis, we merely have to cite our rulings in Dy Keh Beng v. International Labor and
Marine Union of the Philippines (90 SCRA 161), as follows:
"[C]ircumstances must be construed to determine indeed if payment by the piece is just a method of compensation and does not
define the essence of the relation. Units of time . . . and units of work are in establishments like respondent (sic) just yardsticks
14

whereby to determine rate of compensation, to be applied whenever agreed upon. We cannot construe payment by the piece
where work is done in such an establishment so as to put the worker completely at liberty to turn him out and take in another at
pleasure."
Article 106 of the Labor Code provides the legal effect of a labor only contracting scheme, to wit:
... 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.
Firmly establishing respondent SMC's role as employer is the control exercised by it over the petitioners that is, control in the means and methods/manner by which
petitioners are to go about their work, as well as in disciplinary measures imposed by it.
Because of the nature of the petitioners' work as cargadores or pahinantes, supervision as to the means and manner of performing the same is practically nil. For, how
many ways are there to load and unload bottles and wooden shells? The mere concern of both respondent SMC and the alleged contractor is that the job of having the
bottles and wooden shells brought to and fromthe warehouse be done. More evident and pronounced is respondent company's right to control in the discipline of
petitioners. Documentary evidence presented by the petitioners establish respondent SMC's right to impose disciplinary measures for violations or infractions of its
rules and regulations as well as its right to recommend transfers and dismissals of the piece workers. The inter-office memoranda submitted in evidence prove the
company's control over the petitioners. That respondent SMC has the power to recommend penalties or dismissal of the piece workers, even as to Abner Bungay who is
alleged by SMC to be a representative of the alleged labor contractor, is the strongest indication of respondent company's right of control over the petitioners as direct
employer. There is no evidence to show that the alleged labor contractor had such right of control or much less had been there to supervise or deal with the
petitioners.
The petitioners were dismissed allegedly because of the shutdown of the glass manufacturing plant. Respondent company would have us believe that this was a case of
retrenchment due to the closure or cessation of operations of the establishment or undertaking. But such is not the case here. The respondent's shutdown was merely
temporary, one of its furnaces needing repair. Operations continued after such repairs, but the petitioners had already been refused entry to the premises and
dismissed fromrespondent's service. Newworkers manned their positions. It is apparent that the closure of respondent's warehouse was merely a ploy to get rid of the
petitioners, who were then agitating the respondent company for benefits, reforms and collective bargaining as a union. There is no showing that petitioners had been
remiss in their obligations and inefficient in their jobs to warrant their separation.
As to the charge of unfair labor practice because of SMC's refusal to bargain with the petitioners, it is clear that the respondent company had an existing collective
bargaining agreement with the IBM union which is the recognized collective bargaining representative at the respondent's glass plant.
There being a recognized bargaining representative of all employees at the company's glass plant, the petitioners cannot merely forma union and demand bargaining.
The Labor Code provides the proper procedure for the recognition of unions as sole bargaining representatives. This must be followed.
WHEREFORE, IN VIEWOF THE FOREGOING, the petition is GRANTED. The San Miguel Corporation is hereby ordered to REINSTATE petitioners, with three (3) years
backwages. However, where reinstatement is no longer possible, the respondent SMC is ordered to pay the petitioners separation pay equivalent to one (1) month pay
for every year of service.
SO ORDERED.
Feria (Chairman), Fernan, Alampay and Paras, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 170087 August 31, 2006
ANGELINA FRANCISCO, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and
RAMON ESCUETA, Respondents.
D E C I S I O N
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the Decision and Resolution of the Court of Appeals dated October
29, 2004 1 and October 7, 2005, 2 respectively, in CA-G.R. SP No. 78515 dismissing the complaint for constructive dismissal filed by herein petitioner Angelina Francisco.
The appellate court reversed and set aside the Decision of the National Labor Relations Commission (NLRC) dated April 15, 2003, 3 in NLRC NCR CA No. 032766-02
which affirmed with modification the decision of the Labor Arbiter dated July 31, 2002, 4 in NLRC-NCR Case No. 30-10-0-489-01, finding that private respondents were
liable for constructive dismissal.
In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to
handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and
other licenses for the initial operation of the company. 5
Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor required to
do so. She never prepared any legal document and never represented the company as its Corporate Secretary. However, on some occasions, she was prevailed upon to
sign documentation for the company. 6
In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner was
assigned to handle recruitment of all employees and perform management administration functions; represent the company in all dealings with government agencies,
especially with the Bureau of Internal Revenue (BIR), Social Security System(SSS) and in the city government of Makati; and to administer all other matters pertaining to
the operation of Kasei Restaurant which is owned and operated by Kasei Corporation. 7
For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10%
share in the profit of Kasei Corporation. 8
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign a prepared resolution for her replacement but
she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all employees of Kasei
Corporation and announced that nothing had changed and that petitioner was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in
charge of all BIR matters. 9
Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September
2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not receive her salary fromthe
company. She made repeated follow-ups with the company cashier but she was advised that the company was not earning well. 10
On October 15, 2001, petitioner asked for her salary fromAcedo and the rest of the officers but she was informed that she is no longer connected with the company. 11
15

Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that petitioner was hired in 1995 as one of its technical consultants
on accounting matters and act concurrently as Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion without control and
supervision of Kasei Corporation. Petitioner had no daily time record and she came to the office any time she wanted. The company never interfered with her work
except that from time to time, the management would ask her opinion on matters relating to her profession. Petitioner did not go through the usual procedure of
selection of employees, but her services were engaged through a Board Resolution designating her as technical consultant. The money received by petitioner from the
corporation was her professional fee subject to the 10%expanded withholding tax on professionals, and that she was not one of those reported to the BIR or SSS as one
of the companys employees. 12
Petitioners designation as technical consultant depended solely upon the will of management. As such, her consultancy may be terminated any time considering that
her services were only temporary in nature and dependent on the needs of the corporation.
To prove that petitioner was not an employee of the corporation, private respondents submitted a list of employees for the years 1999 and 2000 duly received by the
BIR showing that petitioner was not among the employees reported to the BIR, as well as a list of payees subject to expanded withholding tax which included petitioner.
SSS records were also submitted showing that petitioners latest employer was Seiji Corporation. 13
The Labor Arbiter found that petitioner was illegally dismissed, thus:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. finding complainant an employee of respondent corporation;
2. declaring complainants dismissal as illegal;
3. ordering respondents to reinstate complainant to her former position without loss of seniority rights and jointly and severally pay complainant her money claims in
accordance with the following computation:
a. Backwages 10/2001 07/2002 275,000.00
(27,500 x 10 mos.)
b. Salary Differentials (01/2001 09/2001) 22,500.00
c. Housing Allowance (01/2001 07/2002) 57,000.00
d. Midyear Bonus 2001 27,500.00
e. 13th Month Pay 27,500.00
f. 10%share in the profits of Kasei
Corp. from1996-2001 361,175.00
g. Moral and exemplary damages 100,000.00
h. 10%Attorneys fees 87,076.50
P957,742.50
If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with additional backwages that would accrue up to actual payment of
separation pay.
SO ORDERED. 14
On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive portion of which reads:
PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows:
1) Respondents are directed to pay complainant separation pay computed at one month per year of service in addition to full backwages from October 2001 to July 31,
2002;
2) The awards representing moral and exemplary damages and 10% share in profit in the respective accounts of P100,000.00 and P361,175.00 are deleted;
3) The award of 10% attorneys fees shall be based on salary differential award only;
4) The awards representing salary differentials, housing allowance, mid year bonus and 13th month pay are AFFIRMED.
SO ORDERED. 15
On appeal, the Court of Appeals reversed the NLRC decision, thus:
WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations Commissions dated April 15, 2003 is hereby REVERSED and SET
ASIDE and a new one is hereby rendered dismissing the complaint filed by private respondent against Kasei Corporation, et al. for constructive dismissal.
SO ORDERED. 16
The appellate court denied petitioners motion for reconsideration, hence, the present recourse.
The core issues to be resolved in this case are (1) whether there was an employer-employee relationship between petitioner and private respondent Kasei Corporation;
and if in the affirmative, (2) whether petitioner was illegally dismissed.
Considering the conflicting findings by the Labor Arbiter and the National Labor Relations Commission on one hand, and the Court of Appeals on the other, there is a
need to reexamine the records to determine which of the propositions espoused by the contending parties is supported by substantial evidence. 17
We held in Sevilla v. Court of Appeals 18 that in this jurisdiction, there has been no uniformtest to determine the existence of an employer-employee relation.
Generally, courts have relied on the so-called right of control test where the person for whomthe services are performed reserves a right to control not only the end to
be achieved but also the means to be used in reaching such end. In addition to the standard of right-of-control, the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls, can help in determining the existence of an employer-employee relationship.
16

However, in certain cases the control test is not sufficient to give a complete picture of the relationship between the parties, owing to the complexity of such a
relationship where several positions have been held by the worker. There are instances when, aside fromthe employers power to control the employee with respect to
the means and methods by which the work is to be accomplished, economic realities of the employment relations help provide a comprehensive analysis of the true
classification of the individual, whether as employee, independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to control the employee with respect to the means and
methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship.
This two-tiered test would provide us with a framework of analysis, which would take into consideration the totality of circumstances surrounding the true nature of
the relationship between the parties. This is especially appropriate in this case where there is no written agreement or terms of reference to base the relationship on;
and due to the complexity of the relationship based on the various positions and responsibilities given to the worker over the period of the latters employment.
The control test initially found application in the case of Viaa v. Al-Lagadan and Piga, 19 and lately in Leonardo v. Court of Appeals, 20 where we held that there is an
employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and
means used to achieve that end.
In Sevilla v. Court of Appeals, 21 we observed the need to consider the existing economic conditions prevailing between the parties, in addition to the standard of right-
of-control like the inclusion of the employee in the payrolls, to give a clearer picture in determining the existence of an employer-employee relationship based on an
analysis of the totality of economic circumstances of the worker.
Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, 22 such as: (1) the
extent to which the services performed are an integral part of the employers business; (2) the extent of the workers investment in equipment and facilities; (3) the
nature and degree of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill, judgment or foresight
required for the success of the claimed independent enterprise; (6) the permanency and duration of the relationship between the worker and the employer; and (7) the
degree of dependency of the worker upon the employer for his continued employment in that line of business. 23
The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. 24 In
the United States, the touchstone of economic reality in analyzing possible employment relationships for purposes of the Federal Labor Standards Act is
dependency. 25By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the
economic dependence of the worker on his employer.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was under the direct control and supervision of Seiji
Kamura, the corporations Technical Consultant. She reported for work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant,
Acting Manager and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to the company and performing
functions necessary and desirable for the proper operation of the corporation such as securing business permits and other licenses over an indefinite period of
engagement.
Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six
years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social
Security contributions fromAugust 1, 1999 to December 18, 2000. 26 When petitioner was designated General Manager, respondent corporation made a report to the
SSS signed by Irene Ballesteros. Petitioners membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of
Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between
petitioner and respondent corporation. 27
It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latters line of business.
In Domasig v. National Labor Relations Commission, 28 we held that in a business establishment, an identification card is provided not only as a security measure but
mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners salaries for the months
stated therein, these matters constitute substantial evidence adequate to support a conclusion that petitioner was an employee of private respondent.
We likewise ruled in Flores v. Nuestro 29 that a corporation who registers its workers with the SSS is proof that the latter were the formers employees. The coverage of
Social Security Lawis predicated on the existence of an employer-employee relationship.
Furthermore, the affidavit of Seiji Kamura dated December 5, 2001 has clearly established that petitioner never acted as Corporate Secretary and that her designation
as such was only for convenience. The actual nature of petitioners job was as Kamuras direct assistant with the duty of acting as Liaison Officer in representing the
company to secure construction permits, license to operate and other requirements imposed by government agencies. Petitioner was never entrusted with corporate
documents of the company, nor required to attend the meeting of the corporation. She was never privy to the preparation of any document for the corporation,
although once in a while she was required to sign prepared documentation for the company. 30
The second affidavit of Kamura dated March 7, 2002 which repudiated the December 5, 2001 affidavit has been allegedly withdrawn by Kamura himself fromthe
records of the case. 31 Regardless of this fact, we are convinced that the allegations in the first affidavit are sufficient to establish that petitioner is an employee of Kasei
Corporation.
Granting arguendo, that the second affidavit validly repudiated the first one, courts do not generally look with favor on any retraction or recanted testimony, for it
could have been secured by considerations other than to tell the truth and would make solemn trials a mockery and place the investigation of the truth at the mercy of
unscrupulous witnesses. 32 A recantation does not necessarily cancel an earlier declaration, but like any other testimony the same is subject to the test of credibility
and should be received with caution. 33
Based on the foregoing, there can be no other conclusion that petitioner is an employee of respondent Kasei Corporation. She was selected and engaged by the
company for compensation, and is economically dependent upon respondent for her continued employment in that line of business. Her main job function involved
accounting and tax services rendered to respondent corporation on a regular basis over an indefinite period of engagement. Respondent corporation hired and engaged
petitioner for compensation, with the power to dismiss her for cause. More importantly, respondent corporation had the power to control petitioner with the means
and methods by which the work is to be accomplished.
The corporation constructively dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001. This amounts to an illegal
termination of employment, where the petitioner is entitled to full backwages. Since the position of petitioner as accountant is one of trust and confidence, and under
the principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement. 34
A diminution of pay is prejudicial to the employee and amounts to constructive dismissal. Constructive dismissal is an involuntary resignation resulting in cessation of
work resorted to when continued employment becomes impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution in pay; or when a clear
discrimination, insensibility or disdain by an employer becomes unbearable to an employee. 35 In Globe Telecom, Inc. v. Florendo-Flores, 36 we ruled that where an
employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises which creates an adverse working environment rendering
it impossible for such employee to continue working for her employer. Hence, her severance from the company was not of her own making and therefore amounted to
an illegal termination of employment.
In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully
balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the lawis to apply the Labor Code to a greater number
of employees. This would enable employees to avail of the benefits accorded to them by law, in line with the constitutional mandate giving maximumaid and
protection to labor, promoting their welfare and reaffirming it as a primary social economic force in furtherance of social justice and national development.
WHEREFORE, the petition is GRANTED. The Decision and Resolution of the Court of Appeals dated October 29, 2004 and October 7, 2005, respectively, in CA-G.R. SP
No. 78515 are ANNULLED and SET ASIDE. The Decision of the National Labor Relations Commission dated April 15, 2003 in NLRC NCR CA No. 032766-02, isREINSTATED.
The case is REMANDED to the Labor Arbiter for the recomputation of petitioner Angelina Franciscos full backwages from the time she was illegally terminated until the
17

date of finality of this decision, and separation pay representing one-half month pay for every year of service, where a fraction of at least six months shall be considered
as one whole year.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 164156 September 26, 2006
ABS-CBN BROADCASTING CORPORATION, petitioner,
vs.
MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE LERASAN, respondents.
D E C I S I O N
CALLEJO, SR., J.:
Before us is a petition for reviewon certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 76582 and the Resolution denying the motion for
reconsideration thereof. The CA affirmed the Decision2 and Resolution3 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000762-2001 (RAB Case
No. VII-10-1661-2001) which likewise affirmed, with modification, the decision of the Labor Arbiter declaring the respondents Marlyn Nazareno, Merlou Gerzon,
Jennifer Deiparine and Josephine Lerasan as regular employees.
The Antecedents
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of television and radio stations, whose operations
revolve around the broadcast, transmission, and relay of telecommunication signals. It sells and deals in or otherwise utilizes the airtime it generates fromits radio and
television operations. It has a franchise as a broadcasting company, and was likewise issued a license and authority to operate by the National Telecommunications
Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and
public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees
identification cards and were required to work for a minimum of eight hours a day, including Sundays and holidays. They were made to performthe following tasks and
duties:
a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN;
b) Coordinate, arrange personalities for air interviews;
c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports;
d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints;
e) Assist, anchor program interview, etc; and
f) Record, log clerical reports, man based control radio.4
Their respective working hours were as follows:
Name Time No. of Hours
1. Marlene Nazareno 4:30 A.M.-8:00 A.M. 7
8:00 A.M.-12:00 noon
2. Jennifer Deiparine 4:30 A.M.-12:00M.N. (sic) 7
3. Joy Sanchez 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs.
9:00 A.M.-6:00 P.M. (WF) 9 hrs.
4. Merlou Gerzon 9:00 A.M.-6:00 P.M. 9 hrs.5
The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon, and News Manager Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from
December 11, 1996 to December 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the
CBA.6
On July 20, 2000, petitioner, through Dante Luzon, issued a Memoranduminforming the PAs that effective August 1, 2000, they would be assigned to non-drama
programs, and that the DYAB studio operations would be handled by the studio technician. Thus, their revised schedule and other assignments would be as follows:
Monday Saturday
4:30 A.M. 8:00 A.M. Marlene Nazareno.
Miss Nazareno will then be assigned at the Research Dept.
From8:00 A.M. to 12:00
4:30 P.M. 12:00 MN Jennifer Deiparine
Sunday
5:00 A.M. 1:00 P.M. Jennifer Deiparine
18

1:00 P.M. 10:00 P.M. Joy Sanchez
Respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa.
On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service
Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter directed the parties to submit their
respective position papers. Upon respondents failure to file their position papers within the reglementary period, Labor Arbiter Jose G. Gutierrez issued an Order dated
April 30, 2001, dismissing the complaint without prejudice for lack of interest to pursue the case. Respondents received a copy of the Order on May 16, 2001.7Instead
of re-filing their complaint with the NLRC within 10 days from May 16, 2001, they filed, on June 11, 2001, an Earnest Motion to Refile Complaint with Motion to Admit
Position Paper and Motion to Submit Case For Resolution.8 The Labor Arbiter granted this motion in an Order dated June 18, 2001, and forthwith admitted the position
paper of the complainants. Respondents made the following allegations:
1. Complainants were engaged by respondent ABS-CBN as regular and full-time employees for a continuous period of more than five (5) years with a monthly salary
rate of Four Thousand (P4,000.00) pesos beginning 1995 up until the filing of this complaint on November 20, 2000.
Machine copies of complainants ABS-CBN Employees Identification Card and salary vouchers are hereto attached as follows, thus:
I. Jennifer Deiparine:
Exhibit "A" - ABS-CBN Employees Identification Card
Exhibit "B", - ABS-CBN Salary Voucher from Nov.
Exhibit "B-1" & 1999 to July 2000 at P4,000.00
Exhibit "B-2"
Date employed: September 15, 1995
Length of service: 5 years & nine (9) months
II. Merlou Gerzon - ABS-CBNEmployees Identification Card
Exhibit "C"
Exhibit "D"
Exhibit "D-1" &
Exhibit "D-2" - ABS-CBN Salary Voucher fromMarch
1999 to January 2001 at P4,000.00
Date employed: September 1, 1995
Length of service: 5 years & 10 months
III. Marlene Nazareno
Exhibit "E" - ABS-CBNEmployees Identification Card
Exhibit "E" - ABS-CBN Salary Voucher fromNov.
Exhibit "E-1" & 1999 to December 2000
Exhibit :E-2"
Date employed: April 17, 1996
Length of service: 5 years and one (1) month
IV. Joy Sanchez Lerasan
Exhibit "F" - ABS-CBN Employees Identification Card
Exhibit "F-1" - ABS-CBN Salary Voucher from Aug.
Exhibit "F-2" & 2000 to Jan. 2001
Exhibit "F-3"
Exhibit "F-4" - Certification dated July 6, 2000
Acknowledging regular status of
Complainant Joy Sanchez Lerasan
Signed by ABS-CBN Administrative
Officer May Kima Hife
Date employed: April 15, 1998
Length of service: 3 yrs. and one (1) month9
Respondents insisted that they belonged to a "work pool" from which petitioner chose persons to be given specific assignments at its discretion, and were thus under
its direct supervision and control regardless of nomenclature. They prayed that judgment be rendered in their favor, thus:
19

WHEREFORE, premises considered, this Honorable Arbiter is most respectfully prayed, to issue an order compelling defendants to pay complainants the following:
1. One Hundred Thousand Pesos (P100,000.00) each
and by way of moral damages;
2. Minimum wage differential;
3. Thirteenth month pay differential;
4. Unpaid service incentive leave benefits;
5. Sick leave;
6. Holiday pay;
7. Premiumpay;
8. Overtime pay;
9. Night shift differential.
Complainants further pray of this Arbiter to declare themregular and permanent employees of respondent ABS-CBN as a condition precedent for their admission into
the existing union and collective bargaining unit of respondent company where they may as such acquire or otherwise performtheir obligations thereto or enjoy the
benefits due therefrom.
Complainants pray for such other reliefs as are just and equitable under the premises.10
For its part, petitioner alleged in its position paper that the respondents were PAs who basically assist in the conduct of a particular programran by an anchor or talent.
Among their duties include monitoring and receiving incoming calls fromlisteners and field reporters and calls of news sources; generally, they perform leg work for the
anchors during a programor a particular production. They are considered in the industry as "programemployees" in that, as distinguished from regular or station
employees, they are basically engaged by the station for a particular or specific program broadcasted by the radio station. Petitioner asserted that as PAs, the
complainants were issued talent information sheets which are updated fromtime to time, and are thus made the basis to determine the programs to which they shall
later be called on to assist. The programassignments of complainants were as follows:
a. Complainant Nazareno assists in the programs:
1) Nagbagang Balita (early morning edition)
2) Infor Hayupan
3) Arangkada (morning edition)
4) Nagbagang Balita (mid-day edition)
b. Complainant Deiparine assists in the programs:
1) Unzanith
2) Serbisyo de Arevalo
3) Arangkada (evening edition)
4) Balitang K (local version)
5) Abante Subu
6) Pangutana Lang
c. Complainant Gerzon assists in the program:
1) On Mondays and Tuesdays:
(a) Unzanith
(b) Serbisyo de Arevalo
(c) Arangkada (evening edition)
(d) Balitang K (local version)
(e) Abante Sugbu
(f) Pangutana Lang
2) On Thursdays
Nagbagang Balita
3) On Saturdays
(a) Nagbagang Balita
(b) Info Hayupan
(c) Arangkada (morning edition)
(d) Nagbagang Balita (mid-day edition)
20

4) On Sundays:
(a) Siesta Serenata
(b) Sunday Chismisan
(c) Timbangan sa Hustisya
(d) Sayri ang Lungsod
(e) Haranahan11
Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for other programs they produce, such as drama talents in other productions. As
programemployees, a PAs engagement is coterminous with the completion of the program, and may be extended/renewed provided that the program is on-going; a
PA may also be assigned to new programs upon the cancellation of one programand the commencement of another. As such program employees, their compensation
is computed on a program basis, a fixed amount for performance services irrespective of the time consumed. At any rate, petitioner claimed, as the payroll will show,
respondents were paid all salaries and benefits due them under the law.12
Petitioner also alleged that the Labor Arbiter had no jurisdiction to involve the CBA and interpret the same, especially since respondents were not covered by the
bargaining unit.
On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents, and declared that they were regular employees of petitioner; as such, they were
awarded monetary benefits. The fallo of the decision reads:
WHEREFORE, the foregoing premises considered, judgment is hereby rendered declaring the complainants regular employees of the respondent ABS-CBN Broadcasting
Corporation and directing the same respondent to pay complainants as follows:
I - Merlou A. Gerzon P12,025.00
II - Marlyn Nazareno 12,025.00
III - Jennifer Deiparine 12,025.00
IV - Josephine Sanchez Lerazan 12,025.00
_________
P48,100.00
plus ten (10%) percent Attorneys Fees or a TOTAL aggregate amount of PESOS: FIFTY TWO THOUSAND NINE HUNDRED TEN (P52,910.00).
Respondent Veneranda C. Sy is absolved fromany liability.
SO ORDERED.13
However, the Labor Arbiter did not award money benefits as provided in the CBA on his belief that he had no jurisdiction to interpret and apply the agreement, as the
same was within the jurisdiction of the Voluntary Arbitrator as provided in Article 261 of the Labor Code.
Respondents counsel received a copy of the decision on August 29, 2001. Respondent Nazareno received her copy on August 27, 2001, while the other respondents
received theirs on September 8, 2001. Respondents signed and filed their Appeal Memorandumon September 18, 2001.
For its part, petitioner filed a motion for reconsideration, which the Labor Arbiter denied and considered as an appeal, conformably with Section 5, Rule V, of the NLRC
Rules of Procedure. Petitioner forthwith appealed the decision to the NLRC, while respondents filed a partial appeal.
In its appeal, petitioner alleged the following:
1. That the Labor Arbiter erred in reviving or re-opening this case which had long been dismissed without prejudice for more than thirty (30) calendar days;
2. That the Labor Arbiter erred in depriving the respondent of its Constitutional right to due process of law;
3. That the Labor Arbiter erred in denying respondents Motion for Reconsideration on an interlocutory order on the ground that the same is a prohibited pleading;
4. That the Labor Arbiter erred when he ruled that the complainants are regular employees of the respondent;
5. That the Labor Arbiter erred when he ruled that the complainants are entitled to 13th month pay, service incentive leave pay and salary differential; and
6. That the Labor Arbiter erred when he ruled that complainants are entitled to attorneys fees.14
On November 14, 2002, the NLRC rendered judgment modifying the decision of the Labor Arbiter. The fallo of the decision reads:
WHEREFORE, premises considered, the decision of Labor Arbiter Jose G. Gutierrez dated 30 July 2001 is SET ASIDE and VACATED and a new one is entered ORDERING
respondent ABS-CBN Broadcasting Corporation, as follows:
1. To pay complainants of their wage differentials and other benefits arising fromthe CBA as of 30 September 2002 in the aggregate amount of Two Million Five
Hundred, Sixty-One Thousand Nine Hundred Forty-Eight Pesos and 22/100 (P2,561,948.22), broken down as follows:
a. Deiparine, Jennifer - P 716,113.49
b. Gerzon, Merlou - 716,113.49
c. Nazareno, Marlyn - 716,113.49
d. Lerazan, Josephine Sanchez - 413,607.75
Total - P 2,561,948.22
2. To deliver to the complainants Two Hundred Thirty-Three (233) sacks of rice as of 30 September 2002 representing their rice subsidy in the CBA, broken down as
follows:
21

a. Deiparine, Jennifer - 60 Sacks
b. Gerzon, Merlou - 60 Sacks
c. Nazareno, Marlyn - 60 Sacks
d. Lerazan, Josephine Sanchez - 53 Sacks
Total 233 Sacks; and
3. To grant to the complainants all the benefits of the CBA after 30 September 2002.
SO ORDERED.15
The NLRC declared that the Labor Arbiter acted conformably with the Labor Code when it granted respondents motion to refile the complaint and admit their position
paper. Although respondents were not parties to the CBA between petitioner and the ABS-CBN Rank-and-File Employees Union, the NLRC nevertheless granted and
computed respondents monetary benefits based on the 1999 CBA, which was effective until September 2002. The NLRC also ruled that the Labor Arbiter had
jurisdiction over the complaint of respondents because they acted in their individual capacities and not as members of the union. Their claimfor monetary benefits was
within the context of Article 217(6) of the Labor Code. The validity of respondents claimdoes not depend upon the interpretation of the CBA.
The NLRC ruled that respondents were entitled to the benefits under the CBA because they were regular employees who contributed to the profits of petitioner
through their labor. The NLRC cited the ruling of this Court in NewPacific Timber & Supply Company v. National Labor Relations Commission.16
Petitioner filed a motion for reconsideration, which the NLRC denied.
Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, raising both procedural and substantive issues, as follows: (a) whether
the NLRC acted without jurisdiction in admitting the appeal of respondents; (b) whether the NLRC committed palpable error in scrutinizing the reopening and revival of
the complaint of respondents with the Labor Arbiter upon due notice despite the lapse of 10 days from their receipt of the July 30, 2001 Order of the Labor Arbiter; (c)
whether respondents were regular employees; (d) whether the NLRC acted without jurisdiction in entertaining and resolving the claimof the respondents under the
CBA instead of referring the same to the Voluntary Arbitrators as provided in the CBA; and (e) whether the NLRC acted with grave abuse of discretion when it awarded
monetary benefits to respondents under the CBA although they are not members of the appropriate bargaining unit.
On February 10, 2004, the CA rendered judgment dismissing the petition. It held that the perfection of an appeal shall be upon the expiration of the last day to appeal
by all parties, should there be several parties to a case. Since respondents received their copies of the decision on September 8, 2001 (except respondent Nazareno who
received her copy of the decision on August 27, 2001), they had until September 18, 2001 within which to file their Appeal Memorandum. Moreover, the CA declared
that respondents failure to submit their position paper on time is not a ground to strike out the paper fromthe records, much less dismiss a complaint.
Anent the substantive issues, the appellate court stated that respondents are not mere project employees, but regular employees who perform tasks necessary and
desirable in the usual trade and business of petitioner and not just its project employees. Moreover, the CA added, the award of benefits accorded to rank-and-file
employees under the 1996-1999 CBA is a necessary consequence of the NLRC ruling that respondents, as PAs, are regular employees.
Finding no merit in petitioners motion for reconsideration, the CA denied the same in a Resolution17 dated June 16, 2004.
Petitioner thus filed the instant petition for reviewon certiorari and raises the following assignments of error:
1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT JURISDICTION AND GRAVELY ERRED IN UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION
NOTWITHSTANDING THE PATENT NULLITY OF THE LATTERS DECISION AND RESOLUTION.
2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC FINDING RESPONDENTS REGULAR EMPLOYEES.
3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC AWARDING CBA BENEFITS TO RESPONDENTS.18
Considering that the assignments of error are interrelated, the Court shall resolve themsimultaneously.
Petitioner asserts that the appellate court committed palpable and serious error of lawwhen it affirmed the rulings of the NLRC, and entertained respondents appeal
fromthe decision of the Labor Arbiter despite the admitted lapse of the reglementary period within which to perfect the same. Petitioner likewise maintains that the
10-day period to appeal must be reckoned fromreceipt of a partys counsel, not fromthe time the party learns of the decision, that is, notice to counsel is notice to
party and not the other way around. Finally, petitioner argues that the reopening of a complaint which the Labor Arbiter has dismissed without prejudice is a clear
violation of Section 1, Rule V of the NLRC Rules; such order of dismissal had already attained finality and can no longer be set aside.
Respondents, on the other hand, allege that their late appeal is a non-issue because it was petitioners own timely appeal that empowered the NLRC to reopen the
case. They assert that although the appeal was filed 10 days late, it may still be given due course in the interest of substantial justice as an exception to the general rule
that the negligence of a counsel binds the client. On the issue of the late filing of their position paper, they maintain that this is not a ground to strike it out from the
records or dismiss the complaint.
We find no merit in the petition.
We agree with petitioners contention that the perfection of an appeal within the statutory or reglementary period is not only mandatory, but also jurisdictional; failure
to do so renders the assailed decision final and executory and deprives the appellate court or body of the legal authority to alter the final judgment, much less entertain
the appeal. However, this Court has time and again ruled that in exceptional cases, a belated appeal may be given due course if greater injustice may occur if an appeal
is not given due course than if the reglementary period to appeal were strictly followed.19 The Court resorted to this extraordinary measure even at the expense of
sacrificing order and efficiency if only to serve the greater principles of substantial justice and equity.20
In the case at bar, the NLRC did not commit a grave abuse of its discretion in giving Article 22321 of the Labor Code a liberal application to prevent the miscarriage of
justice. Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties.22 We have held in a
catena of cases that technical rules are not binding in labor cases and are not to be applied strictly if the result would be detrimental to the workingman.23
Admittedly, respondents failed to perfect their appeal fromthe decision of the Labor Arbiter within the reglementary period therefor. However, petitioner perfected its
appeal within the period, and since petitioner had filed a timely appeal, the NLRC acquired jurisdiction over the case to give due course to its appeal and render the
decision of November 14, 2002. Case lawis that the party who failed to appeal from the decision of the Labor Arbiter to the NLRC can still participate in a separate
appeal timely filed by the adverse party as the situation is considered to be of greater benefit to both parties.24
We find no merit in petitioners contention that the Labor Arbiter abused his discretion when he admitted respondents position paper which had been belatedly filed.
It bears stressing that the Labor Arbiter is mandated by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without
technicalities of lawor procedure, all in the interest of due process.25 Indeed, as stressed by the appellate court, respondents failure to submit a position paper on
time is not a ground for striking out the paper fromthe records, much less for dismissing a complaint.26 Likewise, there is simply no truth to petitioners assertion that
it was denied due process when the Labor Arbiter admitted respondents position paper without requiring it to file a comment before admitting said position paper.
The essence of due process in administrative proceedings is simply an opportunity to explain ones side or an opportunity to seek reconsideration of the action or ruling
complained of. Obviously, there is nothing in the records that would suggest that petitioner had absolute lack of opportunity to be heard.27 Petitioner had the right to
file a motion for reconsideration of the Labor Arbiters admission of respondents position paper, and even file a Reply thereto. In fact, petitioner filed its position paper
on April 2, 2001. It must be stressed that Article 280 of the Labor Code was encoded in our statute books to hinder the circumvention by unscrupulous employers of the
employees right to security of tenure by indiscriminately and absolutely ruling out all written and oral agreements inharmonious with the concept of regular
employment defined therein.28
22

We quote with approval the following pronouncement of the NLRC:
The complainants, on the other hand, contend that respondents assailed the Labor Arbiters order dated 18 June 2001 as violative of the NLRC Rules of Procedure and
as such is violative of their right to procedural due process. That while suggesting that an Order be instead issued by the Labor Arbiter for complainants to refile this
case, respondents impliedly submit that there is not any substantial damage or prejudice upon the refiling, even so, respondents suggestion acknowledges
complainants right to prosecute this case, albeit with the burden of repeating the same procedure, thus, entailing additional time, efforts, litigation cost and precious
time for the Arbiter to repeat the same process twice. Respondents suggestion, betrays its notion of prolonging, rather than promoting the early resolution of the case.
Although the Labor Arbiter in his Order dated 18 June 2001 which revived and re-opened the dismissed case without prejudice beyond the ten (10) day reglementary
period had inadvertently failed to followSection 16, Rule V, Rules Procedure of the NLRC which states:
"A party may file a motion to revive or re-open a case dismissed without prejudice within ten (10) calendar days fromreceipt of notice of the order dismissing the same;
otherwise, his only remedy shall be to re-file the case in the arbitration branch of origin."
the same is not a serious flaw that had prejudiced the respondents right to due process. The case can still be refiled because it has not yet prescribed. Anyway, Article
221 of the Labor Code provides:
"In any proceedings before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of lawor equity shall not be controlling and it is the
spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each
case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process."
The admission by the Labor Arbiter of the complainants Position Paper and Supplemental Manifestation which were belatedly filed just only shows that he acted within
his discretion as he is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law
or procedure, all in the interest of due process. Indeed, the failure to submit a position paper on time is not a ground for striking out the paper from the records, much
less for dismissing a complaint in the case of the complainant. (University of Immaculate Conception vs. UIC Teaching and Non-Teaching Personnel Employees, G.R. No.
144702, July 31, 2001).
"In admitting the respondents position paper albeit late, the Labor Arbiter acted within her discretion. In fact, she is enjoined by lawto use every reasonable means to
ascertain the facts in each case speedily and objectively, without technicalities of lawor procedure, all in the interest of due process". (Panlilio vs. NLRC, 281 SCRA 53).
The respondents were given by the Labor Arbiter the opportunity to submit position paper. In fact, the respondents had filed their position paper on 2 April 2001. What
is material in the compliance of due process is the fact that the parties are given the opportunities to submit position papers.
"Due process requirements are satisfied where the parties are given the opportunities to submit position papers". (Laurence vs. NLRC, 205 SCRA 737).
Thus, the respondent was not deprived of its Constitutional right to due process of law.29
We reject, as barren of factual basis, petitioners contention that respondents are considered as its talents, hence, not regular employees of the broadcasting company.
Petitioners claimthat the functions performed by the respondents are not at all necessary, desirable, or even vital to its trade or business is belied by the evidence on
record.
Case lawis that this Court has always accorded respect and finality to the findings of fact of the CA, particularly if they coincide with those of the Labor Arbiter and the
National Labor Relations Commission, when supported by substantial evidence.30 The question of whether respondents are regular or project employees or
independent contractors is essentially factual in nature; nonetheless, the Court is constrained to resolve it due to its tremendous effects to the legions of production
assistants working in the Philippine broadcasting industry.
We agree with respondents contention that where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the
work is continuous or intermittent, the employment is considered regular as long as the activity exists, the reason being that a customary appointment is not
indispensable before one may be formally declared as having attained regular status. Article 280 of the Labor Code provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT.The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the
parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the
duration of the season.
In Universal Robina Corporation v. Catapang,31 the Court reiterated the test in determining whether one is a regular employee:
The primary standard, therefore, of 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. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer.
The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if
the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the lawdeems repeated and
continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such activity exists.32
As elaborated by this Court in Magsalin v. National Organization of Working Men:33
Even while the language of lawmight have been more definitive, the clarity of its spirit and intent, i.e., to ensure a "regular" workers security of tenure, however, can
hardly be doubted. In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the
particular activity performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by the law itself, is whether the work
undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and
its relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from
the normal activities required in carrying on the particular business or trade. But, although the work to be performed is only for a specific project or seasonal, where a
person thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated
and continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The
employment of such person is also then deemed to be regular with respect to such activity and while such activity exists.34
Not considered regular employees are "project employees," the completion or termination of which is more or less determinable at the time of employment, such as
those employed in connection with a particular construction project, and "seasonal employees" whose employment by its nature is only desirable for a limited period of
time. Even then, any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity
performed and while such activity actually exists.
It is of no moment that petitioner hired respondents as "talents." The fact that respondents received pre-agreed "talent fees" instead of salaries, that they did not
observe the required office hours, and that they were permitted to join other productions during their free time are not conclusive of the nature of their employment.
Respondents cannot be considered "talents" because they are not actors or actresses or radio specialists or mere clerks or utility employees. They are regular
employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors.
Thus, there are two kinds of regular employees under the law: (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of
the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which
they are employed.35
The lawoverrides such conditions which are prejudicial to the interest of the worker whose weak bargaining situation necessitates the succor of the State. What
determines whether a certain employment is regular or otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces, much less the
procedure of hiring the employee or the manner of paying the salary or the actual time spent at work. It is the character of the activities performed in relation to the
23

particular trade or business taking into account all the circumstances, and in some cases the length of time of its performance and its continued existence.36 It is
obvious that one year after they were employed by petitioner, respondents became regular employees by operation of law.37
Additionally, respondents cannot be considered as project or programemployees because no evidence was presented to show that the duration and scope of the
project were determined or specified at the time of their engagement. Under existing jurisprudence, project could refer to two distinguishable types of activities. First, a
project may refer to a particular job or undertaking that is within the regular or usual business of the employer, but which is distinct and separate, and identifiable as
such, fromthe other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Second, the termproject may also
refer to a particular job or undertaking that is not within the regular business of the employer. Such a job or undertaking must also be identifiably separate and distinct
fromthe ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times.38
The principal test is whether or not the project employees were assigned to carry out a specific project or undertaking, the duration and scope of which were specified
at the time the employees were engaged for that project.39
In this case, it is undisputed that respondents had continuously performed the same activities for an average of five years. Their assigned tasks are necessary or
desirable in the usual business or trade of the petitioner. The persisting need for their services is sufficient evidence of the necessity and indispensability of such
services to petitioners business or trade.40 While length of time may not be a sole controlling test for project employment, it can be a strong factor to determine
whether the employee was hired for a specific undertaking or in fact tasked to performfunctions which are vital, necessary and indispensable to the usual trade or
business of the employer.41We note further that petitioner did not report the termination of respondents employment in the particular "project" to the Department
of Labor and Employment Regional Office having jurisdiction over the workplace within 30 days following the date of their separation from work, using the prescribed
formon employees termination/ dismissals/suspensions.42
As gleaned from the records of this case, petitioner itself is not certain howto categorize respondents. In its earlier pleadings, petitioner classified respondents as
programemployees, and in later pleadings, independent contractors. Programemployees, or project employees, are different from independent contractors because in
the case of the latter, no employer-employee relationship exists.
Petitioners reliance on the ruling of this Court in Sonza v. ABS-CBN Broadcasting Corporation43 is misplaced. In that case, the Court explained why Jose Sonza, a well-
known television and radio personality, was an independent contractor and not a regular employee:
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 themfromordinary 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 himthrough 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-CBNgranted himbenefits 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 which the lawautomatically incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.
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 employer-employee 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 whomMJMDC would have to turn over any talent fee accruing under the
Agreement.44
In the case at bar, however, the employer-employee relationship between petitioner and respondents has been proven.
First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required fromthem because they were merely hired
through petitioners personnel department just like any ordinary employee.
Second. The so-called "talent fees" of respondents correspond to wages given as a result of an employer-employee relationship. Respondents did not have the power to
bargain for huge talent fees, a circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it find their work unsatisfactory, and respondents are highly dependent on the petitioner for continued
work.
Fourth. The degree of control and supervision exercised by petitioner over respondents through its supervisors negates the allegation that respondents are
independent contractors.
The presumption is that when the work done is an integral part of the regular business of the employer and when the worker, relative to the employer, does not furnish
an independent business or professional service, such work is a regular employment of such employee and not an independent contractor.45 The Court will peruse
beyond any such agreement to examine the facts that typify the parties actual relationship.46
It follows then that respondents are entitled to the benefits provided for in the existing CBA between petitioner and its rank-and-file employees. As regular employees,
respondents are entitled to the benefits granted to all other regular employees of petitioner under the CBA.47 We quote with approval the ruling of the appellate court,
that the reason why production assistants were excluded from the CBA is precisely because they were erroneously classified and treated as project employees by
petitioner:
x x x The award in favor of private respondents of the benefits accorded to rank-and-file employees of ABS-CBN under the 1996-1999 CBA is a necessary consequence of
public respondents ruling that private respondents as production assistants of petitioner are regular employees. The monetary award is not considered as claims
involving the interpretation or implementation of the collective bargaining agreement. The reason why production assistants were excluded fromthe said agreement is
precisely because they were classified and treated as project employees by petitioner.
As earlier stated, it is not the will or word of the employer which determines the nature of employment of an employee but the nature of the activities performed by
such employee in relation to the particular business or trade of the employer. Considering that We have clearly found that private respondents are regular employees
of petitioner, their exclusion from the said CBA on the misplaced belief of the parties to the said agreement that they are project employees, is therefore not proper.
Finding said private respondents as regular employees and not as mere project employees, they must be accorded the benefits due under the said Collective Bargaining
Agreement.
24

A collective bargaining agreement is a contract entered into by the union representing the employees and the employer. However, even the non-member employees
are entitled to the benefits of the contract. To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against
non-members. A collective bargaining agreement is binding on all employees of the company. Therefore, whatever benefits are given to the other employees of ABS-
CBN must likewise be accorded to private respondents who were regular employees of petitioner.48
Besides, only talent-artists were excluded fromthe CBA and not production assistants who are regular employees of the respondents. Moreover, under Article 1702 of
the New Civil Code: "In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer."
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 76582 are
AFFIRMED. Costs against petitioner.
SO ORDERED.
Panganiban, C.J., Chairperson, Ynares-Santiago, Austria-Martinez, Chico-Nazario, J.J., concur.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 155731 September 3, 2007
LOLITA LOPEZ, petitioner,
vs.
BODEGA CITY (Video-Disco Kitchen of the Philippines) and/or ANDRES C. TORRES-YAP, respondents.
D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Reviewon Certiorari under Rule 45 of the Rules of Court assailing the July 18, 2002 Decision1 of the Court of Appeals (CA) in CA-G.R. SP
No. 66861, dismissing the petition for certiorari filed before it and affirming the Decision of the National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 00-
03-01729-95; and its Resolution dated October 16, 2002,2 denying petitioner's Motion for Reconsideration. The NLRC Decision set aside the Decision of the Labor
Arbiter finding that Lolita Lopez (petitioner) was illegally dismissed by Bodega City and/or Andres C. Torres-Yap (respondents).
Respondent Bodega City (Bodega City) is a corporation duly registered and existing under and by virtue of the laws of the Republic of the Philippines, while respondent
Andres C. Torres-Yap (Yap) is its owner/ manager. Petitioner was the "lady keeper" of Bodega City tasked with manning its ladies' comfort room.
In a letter signed by Yap dated February 10, 1995, petitioner was made to explain why the concessionaire agreement between her and respondents should not be
terminated or suspended in viewof an incident that happened on February 3, 1995, wherein petitioner was seen to have acted in a hostile manner against a lady
customer of Bodega City who informed the management that she sawpetitioner sleeping while on duty.
In a subsequent letter dated February 25, 1995, Yap informed petitioner that because of the incident that happened on February 3, 1995, respondents had decided to
terminate the concessionaire agreement between them.
On March 1, 1995, petitioner filed with the Arbitration Branch of the NLRC, National Capital Region, Quezon City, a complaint for illegal dismissal against respondents
contending that she was dismissed from her employment without cause and due process.
In their answer, respondents contended that no employer-employee relationship ever existed between themand petitioner; that the latter's services rendered within
the premises of Bodega City was by virtue of a concessionaire agreement she entered into with respondents.
The complaint was dismissed by the Labor Arbiter for lack of merit. However, on appeal, the NLRC set aside the order of dismissal and remanded the case for further
proceedings. Upon remand, the case was assigned to a different Labor Arbiter. Thereafter, hearings were conducted and the parties were required to submit
memoranda and other supporting documents.
On December 28, 1999, the Labor Arbiter rendered judgment finding that petitioner was an employee of respondents and that the latter illegally dismissed her.3
Respondents filed an appeal with the NLRC. On March 22, 2001, the NLRC issued a Resolution, the dispositive portion of which reads as follows:
WHEREFORE, premises duly considered, the Decision appealed from is hereby ordered SET ASIDE and VACATED, and in its stead, a new one entered
DISMISSING the above-entitled case for lack of merit.4
Petitioner filed a motion for reconsideration of the above-quoted NLRC Resolution, but the NLRC denied the same.
Aggrieved, petitioner filed a Petition for Certiorari with the CA. On July 18, 2002, the CA promulgated the presently assailed Decision dismissing her special civil action
for certiorari. Petitioner moved for reconsideration but her motion was denied.
Hence, herein petition based on the following grounds:
1. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TOLACK OR IN EXCESS OF
JURISDICTION IN RULING THAT THE NATIONAL LABOR RELATIONS COMMISSION DID NOT COMMIT GRAVE ABUSE OF DISCRETION IN REVERSING THE
DECISION OF THE LABOR ARBITER FINDING PETITIONER TOHAVE BEEN ILLEGALLY DISMISSED BY PRIVATE RESPONDENTS.
2. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TOLACK OR IN EXCESS OF
JURISDICTION IN RULING THAT PETITIONER WAS NOT ANEMPLOYEE OF PRIVATE RESPONDENTS.5
Petitioner contends that it was wrong for the CA to conclude that even if she did not sign the document evidencing the concessionaire agreement, she impliedly
accepted and thus bound herself to the terms and conditions contained in the said agreement when she continued to performthe task which was allegedly specified
therein for a considerable length of time. Petitioner claims that the concessionaire agreement was only offered to her during her tenth year of service and after she
organized a union and filed a complaint against respondents. Prior to all these, petitioner asserts that her job as a "lady keeper" was a task assigned to her as an
employee of respondents.
Petitioner further argues that her receipt of a special allowance from respondents is a clear evidence that she was an employee of the latter, as the amount she
received was equivalent to the minimumwage at that time.
Petitioner also contends that her identification card clearly shows that she was not a concessionaire but an employee of respondents; that if respondents really
intended the ID card issued to her to be used simply for having access to the premises of Bodega City, then respondents could have clearly indicated such intent on the
said ID card.
Moreover, petitioner submits that the fact that she was required to followrules and regulations prescribing appropriate conduct while she was in the premises of
Bodega City is clear evidence of the existence of an employer-employee relationship between her and petitioners.
25

On the other hand, respondents contend that the present petition was filed for the sole purpose of delaying the proceedings of the case; the grounds relied upon in the
instant petition are matters that have been exhaustively discussed by the NLRC and the CA; the present petition raises questions of fact which are not proper in a
petition for reviewon certiorari under Rule 45 of the Rules of Court; the respective decisions of the NLRC and the CA are based on evidence presented by both parties;
petitioner's compliance with the terms and conditions of the proposed concessionaire contract for a period of three years is evidence of her implied acceptance of such
proposal; petitioner failed to present evidence to prove her allegation that the subject concessionaire agreement was only proposed to her in her 10th year of
employment with respondent company and after she organized a union and filed a labor complaint against respondents; petitioner failed to present competent
documentary and testimonial evidence to prove her contention that she was an employee of respondents since 1985.
The main issue to be resolved in the present case is whether or not petitioner is an employee of respondents.
The issue of whether or not an employer-employee relationship exists in a given case is essentially a question of fact.6
While it is a settled rule that only errors of laware generally reviewed by this Court in petitions for reviewoncertiorari of CA decisions,7 there are well-recognized
exceptions to this rule, as in this case, when the factual findings of the NLRC as affirmed by the CA contradict those of the Labor Arbiter.8 In that event, it is this Court's
task, in the exercise of its equity jurisdiction, to re-evaluate and review the factual issues by looking into the records of the case and re-examining the questioned
findings.9
It is a basic rule of evidence that each party must prove his affirmative allegation.10 If he claims a right granted by law, he must prove his claimby competent evidence,
relying on the strength of his own evidence and not upon the weakness of that of his opponent.11
The test for determining on whomthe burden of proof lies is found in the result of an inquiry as to which party would be successful if no evidence of such matters were
given.12
In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee was for a valid cause.13 However, before a case for illegal
dismissal can prosper, an employer-employee relationship must first be established.14
In filing a complaint before the Labor Arbiter for illegal dismissal based on the premise that she was an employee of respondent, it is incumbent upon petitioner to
prove the employee-employer relationship by substantial evidence.15
The NLRC and the CA found that petitioner failed to discharge this burden, and the Court finds no cogent reason to depart from their findings.
The Court applies the four-fold test expounded in Abante v. Lamadrid Bearing and Parts Corp.,16 to wit:
To ascertain the existence of an employer-employee relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the manner of
selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the
power of control. Of these four, the last one is the most important. The so-called "control test" is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship
exists where the person for whomthe services are performed reserves the right to control not only the end achieved, but also the manner and means
to be used in reaching that end.17
To prove the element of payment of wages, petitioner presented a petty cash voucher showing that she received an allowance for five (5) days.18 The CA did not err
when it held that a solitary petty cash voucher did not prove that petitioner had been receiving salary from respondents or that she had been respondents' employee
for 10 years.
Indeed, if petitioner was really an employee of respondents for that length of time, she should have been able to present salary vouchers or pay slips and not just a
single petty cash voucher. The Court agrees with respondents that petitioner could have easily shown other pieces of evidence such as a contract of employment, SSS or
Medicare forms, or certificates of withholding tax on compensation income; or she could have presented witnesses to prove her contention that she was an employee
of respondents. Petitioner failed to do so.
Anent the element of control, petitioner's contention that she was an employee of respondents because she was subject to their control does not hold water.
Petitioner failed to cite a single instance to prove that she was subject to the control of respondents insofar as the manner in which she should performher job as a
"lady keeper" was concerned.
It is true that petitioner was required to followrules and regulations prescribing appropriate conduct while within the premises of Bodega City. However, this was
imposed upon petitioner as part of the terms and conditions in the concessionaire agreement embodied in a 1992 letter of Yap addressed to petitioner, to wit:
January 6, 1992
Dear Ms. Lolita Lopez,
The newowners of Bodega City, 1121 Food Service Corporation offers to your goodself the concessionaire/contract to provide independently,
customer comfort services to assist users of the ladies comfort roomof the Club to further enhance its business, under the following terms and
conditions:
1. You will provide at your own expense, all toilet supplies, useful for the purpose, such as toilet papers, soap, hair pins, safety pins
and other related items or things which in your opinion is beneficial to the services you will undertake;
2. For the entire duration of this concessionaire contract, and during the Club's operating hours, you shall maintain the cleanliness of
the ladies comfort room. Provided, that general cleanliness, sanitation and physical maintenance of said comfort rooms shall be
undertaken by the owners of Bodega City;
3. You shall at all times ensure satisfaction and good services in the discharge of your undertaking. More importantly, you shall
always observe utmost courtesy in dealing with the persons/individuals using said comfort room and shall refrain fromdoing acts
that may adversely affect the goodwill and business standing of Bodega City;
4. All remunerations, tips, donations given to you by individuals/persons utilizing said comfort rooms and/or guests of Bodega City
shall be waived by the latter to your benefit provided however, that if concessionaire receives tips or donations per day in an
amount exceeding 200%the prevailing minimumwage, then, she shall remit fifty percent (50%) of said amount to Bodega City by
way of royalty or concession fees;
5. This contract shall be for a period of one year and shall be automatically renewed on a yearly basis unless notice of termination is
given thirty (30) days prior to expiration. Any violation of the terms and conditions of this contract shall be a ground for its
immediate revocation and/or termination.
6. It is hereby understood that no employer-employee relationship exists between Bodega City and/or 1121 FoodService
Corporation and your goodself, as you are an independent contractor who has represented to us that you possess the necessary
qualification as such including manpower compliment, equipment, facilities, etc. and that any person you may engage or employ to
work with or assist you in the discharge of your undertaking shall be solely your own employees and/or agents.
26

1121 FoodService Corporation Bodega City
By:
(Sgd.) ANDRES C. TORRES-YAP
Conforme:
_______________
LOLITA LOPEZ19
Petitioner does not dispute the existence of the letter; neither does she deny that respondents offered her the subject concessionaire agreement. However, she
contends that she could not have entered into the said agreement with respondents because she did not sign the document evidencing the same.
Settled is the rule that contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by the offeror.20 For a contract, to arise, the
acceptance must be made known to the offeror.21 Moreover, the acceptance of the thing and the cause, which are to constitute a contract, may be express or implied
as can be inferred from the contemporaneous and subsequent acts of the contracting parties.22 A contract will be upheld as long as there is proof of consent, subject
matter and cause; it is generally obligatory in whatever form it may have been entered into.23
In the present case, the Court finds no cogent reason to disregard the findings of both the CA and the NLRC that while petitioner did not affix her signature to the
document evidencing the subject concessionaire agreement, the fact that she performed the tasks indicated in the said agreement for a period of three years without
any complaint or question only goes to showthat she has given her implied acceptance of or consent to the said agreement.
Petitioner is likewise estopped fromdenying the existence of the subject concessionaire agreement. She should not, after enjoying the benefits of the concessionaire
agreement with respondents, be allowed to later disown the same through her allegation that she was an employee of the respondents when the said agreement was
terminated by reason of her violation of the terms and conditions thereof.
The principle of estoppel in pais applies wherein -- by one's acts, representations or admissions, or silence when one ought to speak out -- intentionally or through
culpable negligence, induces another to believe certain facts to exist and to rightfully rely and act on such belief, so as to be prejudiced if the former is permitted to
deny the existence of those facts.24
Moreover, petitioner failed to dispute the contents of the affidavit25 as well as the testimony26 of Felimon Habitan (Habitan), the concessionaire of the men's comfort
roomof Bodega City, that he had personal knowledge of the fact that petitioner was the concessionaire of the ladies' comfort roomof Bodega City.
Petitioner also claims that the concessionaire agreement was offered to her only in her 10th year of service, after she organized a union and filed a complaint against
respondents. However, petitioner's claim remains to be an allegation which is not supported by any evidence. It is a basic rule in evidence that each party must prove
his affirmative allegation,27 that mere allegation is not evidence.28
The Court is not persuaded by petitioner's contention that the Labor Arbiter was correct in concluding that there existed an employer-employee relationship between
respondents and petitioner. A perusal of the Decision29 of the Labor Arbiter shows that his only basis for arriving at such a conclusion are the bare assertions of
petitioner and the fact that the latter did not sign the letter of Yap containing the proposed concessionaire agreement. However, as earlier discussed, this Court finds no
error in the findings of the NLRC and the CA that petitioner is deemed as having given her consent to the said proposal when she continuously performed the tasks
indicated therein for a considerable length of time. For all intents and purposes, the concessionaire agreement had been perfected.
Petitioner insists that her ID card is sufficient proof of her employment. In Domasig v. National Labor Relations Commission,30 this Court held that the complainant's ID
card and the cash vouchers covering his salaries for the months indicated therein were substantial evidence that he was an employee of respondents, especially in light
of the fact that the latter failed to deny said evidence. This is not the situation in the present case. The only evidence presented by petitioner as proof of her alleged
employment are her ID card and one petty cash voucher for a five-day allowance which were disputed by respondents.
As to the ID card, it is true that the words "EMPLOYEE'S NAME" appear printed below petitioner's name.31However, she failed to dispute respondents' evidence
consisting of Habitan's testimony,32 that he and the other "contractors" of Bodega City such as the singers and band performers, were also issued the same ID cards for
the purpose of enabling them to enter the premises of Bodega City.
The Court quotes, with approval, the ruling of the CA on this matter, to wit:
Nor can petitioners identification card improve her cause any better. It is undisputed that non-employees, such as Felimon Habitan, an admitted
concessionaire, musicians, singers and the like at Bodega City are also issued identification cards. Given this premise, it appears clear to Us that
petitioner's I.D. Card is incompetent proof of an alleged employer-employee relationship between the herein parties. Viewed in the context of this
case, the card is at best a "passport" from management assuring the holder thereof of his unmolested access to the premises of Bodega City.33
With respect to the petty cash voucher, petitioner failed to refute respondent's claim that it was not given to her for services rendered or on a regular basis, but simply
granted as financial assistance to help her temporarily meet her family's needs.
Hence, going back to the element of control, the concessionaire agreement merely stated that petitioner shall maintain the cleanliness of the ladies' comfort roomand
observe courtesy guidelines that would help her obtain the results they wanted to achieve. There is nothing in the agreement which specifies the methods by which
petitioner should achieve these results. Respondents did not indicate the manner in which she should go about in maintaining the cleanliness of the ladies' comfort
room. Neither did respondents determine the means and methods by which petitioner could ensure the satisfaction of respondent company's customers. In other
words, petitioner was given a free hand as to how she would performher job as a "lady keeper." In fact, the last paragraph of the concessionaire agreement even
allowed petitioner to engage persons to work with or assist her in the discharge of her functions.34
Moreover, petitioner was not subjected to definite hours or conditions of work. The fact that she was expected to maintain the cleanliness of respondent company's
ladies' comfort roomduring Bodega City's operating hours does not indicate that her performance of her job was subject to the control of respondents as to make her
an employee of the latter. Instead, the requirement that she had to render her services while Bodega City was open for business was dictated simply by the very nature
of her undertaking, which was to give assistance to the users of the ladies' comfort room.
In Consulta v. Court of Appeals,35 this Court held:
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 untrammeled freedomto 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 aimonly to promote the result, create no employer-employee relationship unlike the second, which address
both the result and the means used to achieve it.36
Lastly, the Court finds that the elements of selection and engagement as well as the power of dismissal are not present in the instant case.
It has been established that there has been no employer-employee relationship between respondents and petitioner. Their contractual relationship was governed by
the concessionaire agreement embodied in the 1992 letter. Thus, petitioner was not dismissed by respondents. Instead, as shown by the letter of Yap to her dated
27

February 15, 1995,37 their contractual relationship was terminated by reason of respondents' termination of the subject concessionaire agreement, which was in
accordance with the provisions of the agreement in case of violation of its terms and conditions.
In fine, the CA did not err in dismissing the petition for certiorari filed before it by petitioner.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals areAFFIRMED. Costs against petitioner.
SO ORDERED.
Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 179652 May 8, 2009
PEOPLE'S BROADCASTING (BOMBO RADYO PHILS., INC.), Petitioner,
vs.
THE SECRETARY OF THE DEPARTMENT OF LABOR AND EMPLOYMENT, THE REGIONAL DIRECTOR, DOLE REGION VII, and JANDELEON JUEZAN, Respondents.
D E C I S I O N
TINGA, J.:
The present controversy concerns a matter of first impression, requiring as it does the determination of the demarcation line between the prerogative of the
Department of Labor and Employment (DOLE) Secretary and his duly authorized representatives, on the one hand, and the jurisdiction of the National Labor Relations
Commission, on the other, under Article 128 (b) of the Labor Code in an instance where the employer has challenged the jurisdiction of the DOLE at the very first level
on the ground that no employer-employee relationship ever existed between the parties.
I.
The instant petition for certiorari under Rule 65 assails the decision and the resolution of the Court of Appeals dated 26 October 2006 and 26 June 2007, respectively, in
C.A. G.R. CEB-SP No. 00855.1
The petition traces its origins to a complaint filed by Jandeleon Juezan (respondent) against Peoples Broadcasting Service, Inc. (Bombo Radyo Phils., Inc) (petitioner) for
illegal deduction, non-payment of service incentive leave, 13th month pay, premiumpay for holiday and rest day and illegal diminution of benefits, delayed payment of
wages and non-coverage of SSS, PAG-IBIG and Philhealth before the Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City.2 On the basis of
the complaint, the DOLE conducted a plant level inspection on 23 September 2003. In the Inspection Report Form,3 the Labor Inspector wrote under the heading
"Findings/Recommendations" "non-diminution of benefits" and "Note: Respondent deny employer-employee relationship with the complainant- see Notice of
Inspection results." In the Notice of Inspection Results4also bearing the date 23 September 2003, the Labor Inspector made the following notations:
Management representative informed that complainant is a drama talent hired on a per drama " participation basis" hence no employer-employeeship [sic] existed
between them. As proof of this, management presented photocopies of cash vouchers, billing statement, employments of specific undertaking (a contract between the
talent director & the complainant), summary of billing of drama production etc. They (mgt.) has [sic] not control of the talent if he ventures into another contract w/
other broadcasting industries.
On the other hand, complainant Juezans alleged violation of non-diminution of benefits is computed as follows:
@ P 2,000/15 days + 1.5 mos = P 6,000
(August 1/03 to Sept 15/03)
Note: Recommend for summary investigation or whatever action deemproper.5
Petitioner was required to rectify/restitute the violations within five (5) days fromreceipt. No rectification was effected by petitioner; thus, summary investigations
were conducted, with the parties eventually ordered to submit their respective position papers.6
In his Order dated 27 February 2004,7 DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that respondent is an employee of petitioner, and that
the former is entitled to his money claims amounting toP203,726.30. Petitioner sought reconsideration of the Order, claiming that the Regional Director gave credence
to the documents offered by respondent without examining the originals, but at the same time he missed or failed to consider petitioners evidence. Petitioners
motion for reconsideration was denied.8 On appeal to the DOLE Secretary, petitioner denied once more the existence of employer-employee relationship. In its Order
dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did not post a cash or surety bond and instead submitted a Deed
of Assignment of Bank Deposit.9
Petitioner elevated the case to the Court of Appeals, claiming that it was denied due process when the DOLE Secretary disregarded the evidence it presented and failed
to give it the opportunity to refute the claims of respondent. Petitioner maintained that there is no employer-employee relationship had ever existed between it and
respondent because it was the drama directors and producers who paid, supervised and disciplined respondent. It also added that the case was beyond the jurisdiction
of the DOLE and should have been considered by the labor arbiter because respondents claimexceeded P5,000.00.
The Court of Appeals held that petitioner was not deprived of due process as the essence thereof is only an opportunity to be heard, which petitioner had when it filed
a motion for reconsideration with the DOLE Secretary. It further ruled that the latter had the power to order and enforce compliance with labor standard laws
irrespective of the amount of individual claims because the limitation imposed by Article 29 of the Labor Code had been repealed by Republic Act No.
7730.10 Petitioner sought reconsideration of the decision but its motion was denied.11
Before this Court, petitioner argues that the National Labor Relations Commission (NLRC), and not the DOLE Secretary, has jurisdiction over respondents claim, in view
of Articles 217 and 128 of the Labor Code.12 It adds that the Court of Appeals committed grave abuse of discretion when it dismissed petitioners appeal without
delving on the issues raised therein, particularly the claim that no employer-employee relationship had ever existed between petitioner and respondent. Finally,
petitioner avers that there is no appeal, or any plain, speedy and adequate remedy in the ordinary course of lawavailable to it.
On the other hand, respondent posits that the Court of Appeals did not abuse its discretion. He invokes Republic Act No. 7730, which "removes the jurisdiction of the
Secretary of Labor and Employment or his duly authorized representatives, from the effects of the restrictive provisions of Article 129 and 217 of the Labor Code,
regarding the confinement of jurisdiction based on the amount of claims."13 Respondent also claims that petitioner was not denied due process since even when the
case was with the Regional Director, a hearing was conducted and pieces of evidence were presented. Respondent stands by the propriety of the Court of Appeals
ruling that there exists an employer-employee relationship between himand petitioner. Finally, respondent argues that the instant petition for certiorari is a wrong
mode of appeal considering that petitioner had earlier filed a Petition for Certiorari, Mandamus and Prohibition with the Court of Appeals; petitioner, instead, should
have filed a Petition for Review.14
II.
28

The significance of this case may be reduced to one simple questiondoes the Secretary of Labor have the power to determine the existence of an employer-employee
relationship?
To resolve this pivotal issue, one must look into the extent of the visitorial and enforcement power of the DOLE found in Article 128 (b) of the Labor Code, as amended
by Republic Act 7730. It reads:
Article 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still
exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in
the course of inspection. The Secretary or his duly authorized representative shall issue writs of execution to the appropriate authority for the enforcement of their
orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs
which were not considered in the course of inspection. (emphasis supplied)
x x x
The provision is quite explicit that the visitorial and enforcement power of the DOLE comes into play only "in cases when the relationship of employer-employee still
exists." It also underscores the avowed objective underlying the grant of power to the DOLE which is "to give effect to the labor standard provision of this Code and
other labor legislation." Of course, a persons entitlement to labor standard benefits under the labor laws presupposes the existence of employer-employee relationship
in the first place.
The clause "in cases where the relationship of employer-employee still exists" signifies that the employer-employee relationship must have existed even before the
emergence of the controversy. Necessarily, the DOLEs power does not apply in two instances, namely: (a) where the employer-employee relationship has ceased; and
(b) where no such relationship has ever existed.
The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition of Labor Standards Cases15 issued by the DOLE Secretary. It reads:
Rule II MONEY CLAIMS ARISING FROMCOMPLAINT/ROUTINE INSPECTION
Sec. 3. Complaints where no employer-employee relationship actually exists. Where employer-employee relationship no longer exists by reason of the fact that it has
already been severed, claims for payment of monetary benefits fall within the exclusive and original jurisdiction of the labor arbiters. Accordingly, if on the face of the
complaint, it can be ascertained that employer-employee relationship no longer exists, the case, whether accompanied by an allegation of illegal dismissal, shall
immediately be endorsed by the Regional Director to the appropriate branch of the National Labor Relations Commission (NLRC).
In the recent case of Bay Haven, Inc. v. Abuan,16 this Court recognized the first situation and accordingly ruled that a complainants allegation of his illegal dismissal had
deprived the DOLE of jurisdiction as per Article 217 of the Labor Code.17
In the first situation, the claim has to be referred to the NLRC because it is the NLRC which has jurisdiction in viewof the termination of the employer-employee
relationship. The same procedure has to be followed in the second situation since it is the NLRC that has jurisdiction in view of the absence of employer-employee
relationship between the evidentiary parties from the start.
Clearly the law accords a prerogative to the NLRC over the claimwhen the employer-employee relationship has terminated or such relationship has not arisen at all.
The reason is obvious. In the second situation especially, the existence of an employer-employee relationship is a matter which is not easily determinable from an
ordinary inspection, necessarily so, because the elements of such a relationship are not verifiable froma mere ocular examination. The intricacies and implications of an
employer-employee relationship demand that the level of scrutiny should be far above the cursory and the mechanical. While documents, particularly documents found
in the employers
office are the primary source materials, what may prove decisive are factors related to the history of the employers business operations, its current state as well as
accepted contemporary practices in the industry. More often than not, the question of employer-employee relationship becomes a battle of evidence, the
determination of which should be comprehensive and intensive and therefore best left to the specialized quasi-judicial body that is the NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehowhas to make a determination of the existence of an employer-
employee relationship. Such prerogatival determination, however, cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination
is merely preliminary, incidental and collateral to the DOLEs primary function of enforcing labor standards provisions. The determination of the existence of employer-
employee relationship is still primarily lodged with the NLRC. This is the meaning of the clause "in cases where the relationship of employer-employee still exists" in Art.
128 (b).
Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the employer-employee relationship still exist, or
alternatively, was there ever an employer-employee relationship to speak of; and (2) Are there violations of the Labor Code or of any labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the power of the Secretary of Labor, one which the legislative
branch is entitled to impose. The rationale underlying this limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a
matter fraught with questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official of the executive
branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers absent the first requisite, as the dissent proposes, his
office confers jurisdiction on itself which it cannot otherwise acquire.
The approach suggested by the dissent is frowned upon by common law. To wit:
[I]t is a general rule, that no court of limited jurisdiction can give itself jurisdiction by a wrong decision on a point collateral to the merits of the case upon which the
limit to its jurisdiction depends; and however its decision may be final on all particulars, making up together that subject matter which, if true, is within its jurisdiction,
and however necessary in many cases it may be for it to make a preliminary inquiry, whether some collateral matter be or be not within the limits, yet, upon this
preliminary question, its decision must always be open to inquiry in the superior court.18
A more liberal interpretative mode, "pragmatic or functional analysis," has also emerged in ascertaining the jurisdictional boundaries of administrative agencies whose
jurisdiction is established by statute. Under this approach, the Court examines the intended function of the tribunal and decides whether a particular provision falls
within or outside that function, rather than making the provision itself the determining centerpiece of the analysis.19 Yet even under this more expansive approach, the
dissent fails.
A reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was granted visitorial and enforcement powers for the
purpose of determining violations of, and enforcing, the Labor Code and any labor law, wage order, or rules and regulations issued pursuant thereto. Necessarily, the
actual existence of an employer-employee relationship affects the complexion of the putative findings that the Secretary of Labor may determine, since employees are
entitled to a different set of rights under the Labor Code from the employer as opposed to non-employees. Among these differentiated rights are those accorded by the
"labor standards" provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If there is no employer-employee relationship in the first place,
the duty of the employer to adhere to those labor standards with respect to the non-employees is questionable.
This decision should not be considered as placing an undue burden on the Secretary of Labor in the exercise of visitorial and enforcement powers, nor seen as an
unprecedented diminution of the same, but rather a recognition of the statutory limitations thereon. A mere assertion of absence of employer-employee relationship
does not deprive the DOLE of jurisdiction over the claim under Article 128 of the Labor Code. At least a prima facie showing of such absence of relationship, as in this
case, is needed to preclude the DOLE fromthe exercise of its power. The Secretary of Labor would not have been precluded from exercising the powers under Article
128 (b) over petitioner if another person with better-grounded claimof employment than that which respondent had. Respondent, especially if he were an employee,
could have very well enjoined other employees to complain with the DOLE, and, at the same time, petitioner could ill-afford to disclaiman employment relationship
with all of the people under its aegis.
Without a doubt, petitioner, since the inception of this case had been consistent in maintaining that respondent is not its employee. Certainly, a preliminary
determination, based on the evidence offered, and noted by the Labor Inspector during the inspection as well as submitted during the proceedings before the Regional
29

Director puts in genuine doubt the existence of employer-employee relationship. From that point on, the prudent recourse on the part of the DOLE should have been to
refer respondent to the NLRC for the proper dispensation of his claims. Furthermore, as discussed earlier, even the evidence relied on by the Regional Director in his
order are mere self-serving declarations of respondent, and hence cannot be relied upon as proof of employer-employee relationship.
III.
Aside fromlack of jurisdiction, there is another cogent reason to to set aside the Regional Directors 27 February 2004 Order. A careful study of the case reveals that the
said Order, which found respondent as an employee of petitioner and directed the payment of respondents money claims, is not supported by substantial evidence,
and was even made in disregard of the evidence on record.
It is not enough that the evidence be simply considered. The standard is substantial evidence as in all other quasi-judicial agencies. The standard employed in the last
sentence of Article 128(b) of the Labor Code that the documentary proofs be "considered in the course of inspection" does not apply. It applies only to issues other than
the fundamental issue of existence of employer-employee relationship. A contrary rule would lead to controversies on the part of labor officials in resolving the issue of
employer-employee relationship. The onset of arbitrariness is the advent of denial of substantive due process.
As a general rule, the Supreme Court is not a trier of facts. This applies with greater force in cases before quasi-judicial agencies whose findings of fact are accorded
great respect and even finality. To be sure, the same findings should be supported by substantial evidence fromwhich the said tribunals can make its own independent
evaluation of the facts. Likewise, it must not be rendered with grave abuse of discretion; otherwise, this Court will not uphold the tribunals conclusion.20 In the same
manner, this Court will not hesitate to set aside the labor tribunals findings of fact when it is clearly shown that they were arrived at arbitrarily or in disregard of the
evidence on record or when there is showing of fraud or error of law.21
At the onset, it is the Courts considered viewthat the existence of employer- employee relationship could have been easily resolved, or at least prima facie determined
by the labor inspector, during the inspection by looking at the records of petitioner which can be found in the work premises. Nevertheless, even if the labor inspector
had noted petitioners manifestation and documents in the Notice of Inspection Results, it is clear that he did not give much credence to said evidence, as he did not
find the need to investigate the matter further. Considering that the documents shown by petitioner, namely: cash vouchers, checks and statements of account,
summary billings evidencing payment to the alleged real employer of respondent, letter-contracts denominated as "Employment for a Specific Undertaking," prima
facie negate the existence of employer-employee relationship, the labor inspector could have exerted a bit more effort and looked into petitioners payroll, for
example, or its roll of employees, or interviewed other employees in the premises. After all, the labor inspector, as a labor regulation officer is given "access to
employers records and premises at any time of day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee
and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law,
wage order or rules and regulations pursuant thereto."22 Despite these far-reaching powers of labor regulation officers, records reveal that no additional efforts were
exerted in the course of the inspection.
The Court further examined the records and discovered to its dismay that even the Regional Director turned a blind eye to the evidence presented by petitioner and
relied instead on the self-serving claims of respondent.
In his position paper, respondent claimed that he was hired by petitioner in September 1996 as a radio talent/spinner, working from 8:00 amuntil 5 p.m., six days a
week, on a gross rate of P60.00 per script, earning an average of P15,0000.00 per month, payable on a semi-monthly basis. He added that the payment of wages was
delayed; that he was not given any service incentive leave or its monetary commutation, or his 13th month pay; and that he was not made a member of the Social
Security System(SSS), Pag-Ibig and PhilHealth. By January 2001, the number of radio programs of which respondent was a talent/spinner was reduced, resulting in the
reduction of his monthly income from P15,000.00 to only P4,000.00, an amount he could barely live on. Anent the claim of petitioner that no employer-employee
relationship ever existed, respondent argued that that he was hired by petitioner, his wages were paid under the payroll of the latter, he was under the control of
petitioner and its agents, and it was petitioner who had the power to dismiss himfromhis employment.23 In support of his position paper, respondent attached a
photocopy of an identification card purportedly issued by petitioner, bearing respondents picture and name with the designation "Spinner"; at the back of the I.D., the
following is written: " This certifies that the card holder is a duly Authorized MEDIA Representative of BOMBO RADYO PHILIPPINES THE NO.1 Radio Network in the
Country ***BASTA RADYO BOMBO***"24 Respondent likewise included a Certification which reads:
This is to certify that MR. JANDELEON JUEZAN is a programemployee of PEOPLES BROADCASTING SERVICES, INC. (DYMF- Bombo Radyo Cebu) since 1990 up to the
present.
Furtherly certifies that Mr. Juezan is receiving a monthly salary of FIFTEEN THOUSAND (P15,000.00) PESOS.
This certification is issued upon the request of the above stated name to substantiate loan requirement.
Given this 18th day of April 2000, Cebu City , Philippines.
(signed)
GREMAN B. SOLANTE
Station Manager
On the other hand, petitioner maintained in its position paper that respondent had never been its employee. Attached as annexes to its position paper are photocopies
of cash vouchers it issued to drama producers, as well as letters of employment captioned "Employment for a Specific Undertaking", wherein respondent was
appointed by different drama directors as spinner/narrator for specific radio programs.25
In his Order, the Regional Director merely made a passing remark on petitioners claim of lack of employer-employee relationshipa token paragraphand proceeded
to a detailed recitation of respondents allegations. The documents introduced by petitioner in its position paper and even those presented during the inspection were
not given an iota of credibility. Instead, full recognition and acceptance was accorded to the claims of respondentfrom the hours of work to his monthly salary, to his
alleged actual duties, as well as to his alleged "evidence." In fact, the findings are anchored almost verbatimon the self-serving allegations of respondent.
Furthermore, respondents pieces of evidencethe identification card and the certification issued by petitioners Greman Solanteare not even determinative of an
employer-employee relationship. The certification, issued upon the request of respondent, specifically stated that "MR. JANDELEON JUEZAN is a program employee of
PEOPLES BROADCASTING SERVICES, INC. (DYMF- Bombo Radyo Cebu)," it is not therefore "crystal clear that complainant is a station employee rather than a program
employee hence entitled to all the benefits appurtenant thereto,"26 as found by the DOLE Regional Director. Respondent should be bound by his own evidence.
Moreover, the classification as to whether one is a "station employee" and "programemployee," as lifted from Policy Instruction No. 40,27 dividing the workers in the
broadcast industry into only two groups is not binding on this Court, especially when the classification has no basis either in law or in fact.28
Even the identification card purportedly issued by petitioner is not proof of employer-employee relationship since it only identified respondent as an "Authorized
Representative of Bombo Radyo," and not as an employee. The phrase gains significance when compared vis a vis the following notation in the sample identification
cards presented by petitioner in its motion for reconsideration:
1. This is to certify that the person whose picture and signature appear hereon is an employee of Bombo Radio Philippines.
2. This ID must be worn at all times within Bombo Radyo Philippines premises for proper identification and security. Furthermore, this is the property
of Bombo Radyo Philippines and must be surrendered upon separation fromthe company.
HUMAN RESOURCE DEPARMENT
(Signed)
JENALIN D. PALER
HRD HEAD
Respondent tried to address the discrepancy between his identification card and the standard identification cards issued by petitioner to its employees by arguing that
what he annexed to his position paper was the old identification card issued to him by petitioner. He then presented a photocopy of another "old" identification card,
this time purportedly issued to one of the employees who was issued the new identification card presented by petitioner.29 Respondents argument does not convince.
If it were true that he is an employee of petitioner, he would have been issued a newidentification card similar to the ones presented by petitioner, and he should have
presented a copy of such newidentification card. His failure to show a newidentification card merely demonstrates that what he has is only his "Media" ID, which does
not constitute proof of his employment with petitioner.
30

It has long been established that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a basis for judgment on the existence of employer-
employee relationship. Substantial evidence, which is the quantumof proof required in labor cases, is "that amount of relevant evidence which a reasonable mind
might accept as adequate to justify a conclusion."30 No particular formof evidence is required to prove the existence of such employer-employee relationship. Any
competent and relevant evidence to prove the relationship may be admitted.31 Hence, while no particular form of evidence is required, a finding that such relationship
exists must still rest on some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as its qualitative aspects.32
In the instant case, save for respondents self-serving allegations and self-defeating evidence, there is no substantial basis to warrant the Regional Directors finding that
respondent is an employee of petitioner. Interestingly, the Order of the Secretary of Labor denying petitioners appeal dated 27 January 2005, as well as the decision of
the Court of Appeals dismissing the petition for certiorari, are silent on the issue of the existence of an employer-employee relationship, which further suggests that no
real and proper determination the existence of such relationship was ever made by these tribunals. Even the dissent skirted away fromthe issue of the existence of
employer-employee relationship and conveniently ignored the dearth of evidence presented by respondent.
Although substantial evidence is not a function of quantity but rather of quality, the peculiar environmental circumstances of the instant case demand that something
more should have been proffered.33 Had there been other proofs of employment, such as respondents inclusion in petitioners payroll, or a clear exercise of control,
the Court would have affirmed the finding of employer-employee relationship. The Regional Director, therefore, committed grievous error in ordering petitioner to
answer for respondents claims. Moreover, with the conclusion that no employer-employee relationship has ever existed between petitioner and respondent, it is
crystal-clear that the DOLE Regional Director had no jurisdiction over respondents complaint. Thus, the improvident exercise of power by the Secretary of Labor and
the Regional Director behooves the court to subject their actions for reviewand to invalidate all the subsequent orders they issued.
IV.
The records show that petitioners appeal was denied because it had allegedly failed to post a cash or surety bond. What it attached instead to its appeal was the Letter
Agreement34 executed by petitioner and its bank, the cash voucher,35 and the Deed of Assignment of Bank Deposits.36 According to the DOLE, these documents do
not constitute the cash or surety bond contemplated by law; thus, it is as if no cash or surety bond was posted when it filed its appeal.
The Court does not agree.
The provision on appeals fromthe DOLE Regional Offices to the DOLE Secretary is in the last paragraph of Art. 128 (b) of the Labor Code, which reads:
An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order
involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (emphasis supplied)
While the requirements for perfecting an appeal must be strictly followed as they are considered indispensable interdictions against needless delays and for orderly
discharge of judicial business, the lawdoes admit exceptions when warranted by the circumstances. Technicality should not be allowed to stand in the way of equitably
and completely resolving the rights and obligations of the parties.37 Thus, in some cases, the bond requirement on appeals involving monetary awards had been
relaxed, such as when (i) there was substantial compliance with the Rules; (ii) the surrounding facts and circumstances constitute meritorious ground to reduce the
bond; (iii) a liberal interpretation of the requirement of an appeal bond would serve the desired objective of resolving controversies on the merits; or (iv) the appellants,
at the very least exhibited their willingness and/or good faith by posting a partial bond during the reglementary period.38
A reviewof the documents submitted by petitioner is called for to determine whether they should have been admitted as or in lieu of the surety or cash bond to sustain
the appeal and serve the ends of substantial justice.
The Deed of Assignment reads:
DEED OF ASSIGNMENT OF BANK DEPOSIT
WITH SPECIAL POWER OF ATTORNEY
KNOWALL MEN BY THESE PRESENTS:
That I, GREMAN B. SOLANTE in my capacity as Station Manager of DYMF Cebu City, PEOPLES BROADCASTING SERVICES, INC., a corporation duly authorized and existing
under and by virtue of the laws of the Philippines, for and in consideration of the sum of PESOS: TWO HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX
PESOS & 30/100 ONLY (P203,726.30) Phil. Currency, as CASH BOND GUARANTEE for the monetary award in favor to the Plaintiff in the Labor Case docketed as LSED
Case No. R0700-2003-09-CI-09, nowpending appeal.
That Respondent-Appellant do hereby undertake to guarantee available and sufficient funds covered by PlatinumSavings Deposit (PSD) No. 010-8-00038-4 of PEOPLES
BROADCASTING SERVICES, INC. in the amount of PESOS: TWO HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY (P203,726.30) payable
to Plaintiff-Appellee/Department of Labor and Employment Regional Office VII at Queen City Development Bank, Cebu Branch, Sanciangko St. Cebu City.
It is understood that the said bank has the full control of PlatinumSavings Deposit (PSD) No. 010-8-00038-4 from and after this date and that said sumcannot be
withdrawn by the Plaintiff-Appellee/ Department of Labor and Employment Regional Office VII until such time that a Writ of Execution shall be ordered by the Appellate
Office.
FURTHER, this Deed of Assignment is limited to the principal amount of PESOS: TWO HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY
(P203,726.30) Phil. Currency, therefore, any interest to be earned fromthe said Deposit will be for the account holder.
IN WITNESS WHEREOF, I have hereunto affixed my signature this 18th day if June, 2004, in the City of Cebu, Philippines.
PEOPLES BROADCASTING SERVICES, INC.
By:
(Signed)
GREMAN B. SOLANTE
Station Manager
As priorly mentioned, the Deed of Assignment was accompanied by a Letter Agreement between Queen City Development Bank and petitioner concerning Platinum
Savings Deposit (PSD) No. 010-8-00038-4,39 and a Cash Voucher issued by petitioner showing the amount of P203,726.30 deposited at the said bank.
Casting aside the technical imprecision and inaptness of words that mark the three documents, a liberal reading reveals the documents petitioner did assign, as cash
bond for the monetary award in favor of respondent in LSED Case NO. RO700-2003-CI-09, the amount of P203,726.30 covered by petitioners PSD Account No. 010-8-
00038-4 with the Queen City Development Bank at Sanciangko St. Cebu City, with the depositary bank authorized to remit the amount to, and upon withdrawal by
respondent and or the Department of Labor and Employment Regional Office VII, on the basis of the proper writ of execution. The Court finds that the Deed of
Assignment constitutes substantial compliance with the bond requirement.
The purpose of an appeal bond is to ensure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the aggrieved employees
under the judgment if subsequently affirmed.40 The Deed of Assignment in the instant case, like a cash or surety bond, serves the same purpose. First, the Deed of
Assignment constitutes not just a partial amount, but rather the entire award in the appealed Order. Second, it is clear fromthe Deed of Assignment that the entire
amount is under the full control of the bank, and not of petitioner, and is in fact payable to the DOLE Regional Office, to be withdrawn by the same office after it had
issued a writ of execution. For all intents and purposes, the Deed of Assignment in tandem with the Letter Agreement and Cash Voucher is as good as cash. Third, the
Court finds that the execution of the Deed of Assignment, the Letter Agreement and the Cash Voucher were made in good faith, and constituted clear manifestation of
petitioners willingness to pay the judgment amount.
The Deed of Assignment must be distinguished fromthe type of bank certification submitted by appellants in Cordova v. Keysas Boutique,41 wherein this Court found
that such bank certification did not come close to the cash or surety bond required by law. The bank certification in Cordova merely stated that the employer maintains
31

a depository account with a balance of P23,008.19, and that the certification was issued upon the depositors request for whatever legal purposes it may serve. There
was no indication that the said deposit was made specifically for the pending appeal, as in the instant case. Thus, the Court ruled that the bank certification had not in
any way ensured that the award would be paid should the appeal fail. Neither was the appellee in the case prevented from making withdrawals from the savings
account. Finally, the amount deposited was measly compared to the total monetary award in the judgment.42
V.
Another question of technicality was posed against the instant petition in the hope that it would not be given due course. Respondent asserts that petitioner pursued
the wrong mode of appeal and thus the instant petition must be dismissed.1avvphi1.zw+ Once more, the Court is not convinced.
A petition for certiorari is the proper remedy when any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its
jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, nor any plain speedy, and adequate remedy at law.
There is "grave abuse of discretion" when respondent acts in a capricious or whimsical manner in the exercise of its judgment as to be equivalent to lack of
jurisdiction.43
Respondent may have a point in asserting that in this case a Rule 65 petition is a wrong mode of appeal, as indeed the writ of certiorari is an extraordinary remedy, and
certiorari jurisdiction is not to be equated with appellate jurisdiction. Nevertheless, it is settled, as a general proposition, that the availability of an appeal does not
foreclose recourse to the extraordinary remedies, such as certiorari and prohibition, where appeal is not adequate or equally beneficial, speedy and sufficient, as where
the orders of the trial court were issued in excess of or without jurisdiction, or there is need to promptly relieve the aggrieved party fromthe injurious effects of the
acts of an inferior court or tribunal, e.g., the court has authorized execution of the judgment.44 This Court has even recognized that a recourse to certiorari is proper
not only where there is a clear deprivation of petitioners fundamental right to due process, but so also where other special circumstances warrant immediate and more
direct action.45
In one case, it was held that the extraordinary writ of certiorari will lie if it is satisfactorily established that the tribunal acted capriciously and whimsically in total
disregard of evidence material to or even decisive of the controversy,46 and if it is shown that the refusal to allowa Rule 65 petition would result in the infliction of an
injustice on a party by a judgment that evidently was rendered whimsically and capriciously, ignoring and disregarding uncontroverted facts and familiar legal principles
without any valid cause whatsoever.47
It must be remembered that a wide breadth of discretion is granted a court of justice in certiorari proceedings.48The Court has not too infrequently given due course to
a petition for certiorari, even when the proper remedy would have been an appeal, where valid and compelling considerations would warrant such a
recourse.49Moreover, the Court allowed a Rule 65 petition, despite the availability of plain, speedy or adequate remedy, in viewof the importance of the issues raised
therein.50 The rules were also relaxed by the Court after considering the public interest involved in the case;51when public welfare and the advancement of public
policy dictates; when the broader interest of justice so requires; when the writs issued are null and void; or when the questioned order amounts to an oppressive
exercise of judicial authority.52
"The peculiar circumstances of this case warrant, as we held in Republic v. Court of Appeals, 107 SCRA 504, 524, the exercise once more of our exclusive prerogative to
suspend our own rules or to exempt a particular case fromits operation as in x x Republic of the Philippines v. Court of Appeals, et al., (83 SCRA 453, 478-480 [1978]),
thus: x x The Rules have been drafted with the primary objective of enhancing fair trials and expediting justice. As a corollary, if their applications and operation tend
to subvert and defeat instead of promote and enhance it, their suspension is justified."53
The Regional Director fully relied on the self-serving allegations of respondent and misinterpreted the documents presented as evidence by respondent. To make
matters worse, DOLE denied petitioners appeal based solely on petitioners alleged failure to file a cash or surety bond, without any discussion on the merits of the
case. Since the petition for certiorari before the Court of Appeals sought the reversal of the two aforesaid orders, the appellate court necessarily had to examine the
evidence anewto determine whether the conclusions of the DOLE were supported by the evidence presented. It appears, however, that the Court of Appeals did not
even reviewthe assailed orders and focused instead on a general discussion of due process and the jurisdiction of the Regional Director. Had the appellate court truly
reviewed the records of the case, it would have seen that there existed valid and sufficient grounds for finding grave abuse of discretion on the part of the DOLE
Secretary as well the Regional Director. In ruling and acting as it did, the Court finds that the Court of Appeals may be properly subjected to its certiorari jurisdiction.
After all, this Court has previously ruled that the extraordinary writ of certiorari will lie if it is satisfactorily1avvphi1
established that the tribunal had acted capriciously and whimsically in total disregard of evidence material to or even decisive of the controversy.54
The most important consideration for the allowance of the instant petition is the opportunity for the Court not only to set the demarcation between the NLRCs
jurisdiction and the DOLEs prerogative but also the procedure when the case involves the fundamental challenge on the DOLEs prerogative based on lack of employer-
employee relationship. As exhaustively discussed here, the DOLEs prerogative hinges on the existence of employer-employee relationship, the issue is which is at the
very heart of this case. And the evidence clearly indicates private respondent has never been petitioners employee. But the DOLE did not address, while the Court of
Appeals glossed over, the issue. The peremptory dismissal of the instant petition on a technicality would deprive the Court of the opportunity to resolve the novel
controversy.1avvphi1
WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and the Resolution dated 26 June 2007 of the Court of Appeals in C.A. G.R. CEB-SP No.
00855 are REVERSED and SET ASIDE. The Order of the then Acting Secretary of the Department of Labor and Employment dated 27 January 2005 denying petitioners
appeal, and the Orders of the Director, DOLE Regional Office No. VII, dated 24 May 2004 and 27 February 2004, respectively, are ANNULLED. The complaint against
petitioner is DISMISSED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 192558 February 15, 2012
BITOY JAVIER (DANILO P. JAVIER), Petitioner,
vs.
FLY ACE CORPORATION/FLORDELYN CASTILLO, Respondents.
D E C I S I O N
MENDOZA, J.:
This is a petition under Rule 45 of the Rules of Civil Procedure assailing the March 18, 2010 Decision1 of the Court of Appeals (CA) and its June 7, 2010 Resolution,2 in
CA-G.R. SP No. 109975, which reversed the May 28, 2009 Decision3 of the National Labor Relations Commission (NLRC) in the case entitled Bitoy Javier v. Fly
Ace/Flordelyn Castillo,4 holding that petitioner Bitoy Javier (Javier) was illegally dismissed fromemployment and ordering Fly Ace Corporation (Fly Ace) to pay
backwages and separation pay in lieu of reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor standard benefits. He alleged that he was an employee of Fly
Ace since September 2007, performing various tasks at the respondents warehouse such as cleaning and arranging the canned items before their delivery to certain
locations, except in instances when he would be ordered to accompany the companys delivery vehicles, aspahinante; that he reported for work fromMonday to
Saturday from 7:00 oclock in the morning to 5:00 oclock in the afternoon; that during his employment, he was not issued an identification card and payslips by the
32

company; that on May 6, 2008, he reported for work but he was no longer allowed to enter the company premises by the security guard upon the instruction of Ruben
Ong (Mr. Ong), his superior;5 that after several minutes of begging to the guard to allow him to enter, he sawOng whom he approached and asked why he was being
barred from entering the premises; that Ong replied by saying, "Tanungin mo anak mo;" 6 that he then went home and discussed the matter with his family; that he
discovered that Ong had been courting his daughter Annalyn after the two met at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and convince
himto spare her father fromtrouble but he refused to accede; that thereafter, Javier was terminated from his employment without notice; and that he was neither
given the opportunity to refute the cause/s of his dismissal fromwork.
To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier was a stevedore or pahinante of Fly Ace from September 2007
to January 2008. The said affidavit was subscribed before the Labor Arbiter (LA).7
For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries. Sometime in December 2007, Javier was contracted by its
employee, Mr. Ong, as extra helper on a pakyaw basis at an agreed rate of P 300.00 per trip, which was later increased to P 325.00 in January 2008. Mr. Ong contracted
Javier roughly 5 to 6 times only in a month whenever the vehicle of its contracted hauler, Milmar Hauling Services, was not available. On April 30, 2008, Fly Ace no
longer needed the services of Javier. Denying that he was their employee, Fly Ace insisted that there was no illegal dismissal.8 Fly Ace submitted a copy of its agreement
with Milmar Hauling Services and copies of acknowledgment receipts evidencing payment to Javier for his contracted services bearing the words, "daily
manpower (pakyaw/piece rate pay)" and the latters signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to present proof that he was a regular employee of Fly Ace. He
wrote:
Complainant has no employee ID showing his employment with the Respondent nor any document showing that he received the benefits accorded to regular
employees of the Respondents. His contention that Respondent failed to give himsaid ID and payslips implies that indeed he was not a regular employee of Fly Ace
considering that complainant was a helper and that Respondent company has contracted a regular trucking for the delivery of its products.
Respondent Fly Ace is not engaged in trucking business but in the importation and sales of groceries. Since there is a regular hauler to deliver its products, we give
credence to Respondents claimthat complainant was contracted on "pakiao" basis.
As to the claim for underpayment of salaries, the payroll presented by the Respondents showing salaries of workers on "pakiao" basis has evidentiary weight because
although the signature of the complainant appearing thereon are not uniform, they appeared to be his true signature.
x x x x
Hence, as complainant received the rightful salary as shown by the above described payrolls, Respondents are not liable for salary differentials. 9
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and immediately concluded that he was not a regular employee simply
because he failed to present proof. It was of the viewthat apakyaw-basis arrangement did not preclude the existence of employer-employee relationship. "Payment by
result x x x is a method of compensation and does not define the essence of the relation. It is a mere method of computing compensation, not a basis for determining
the existence or absence of an employer-employee relationship.10" The NLRC further averred that it did not followthat a worker was a job contractor and not an
employee, just because the work he was doing was not directly related to the employers trade or business or the work may be considered as "extra" helper as in this
case; and that the relationship of an employer and an employee was determined by law and the same would prevail whatever the parties may call it. In this case, the
NLRC held that substantial evidence was sufficient basis for judgment on the existence of the employer-employee relationship. Javier was a regular employee of Fly Ace
because there was reasonable connection between the particular activity performed by the employee (as a "pahinante") in relation to the usual business or trade of the
employer (importation, sales and delivery of groceries). He may not be considered as an independent contractor because he could not exercise any judgment in the
delivery of company products. He was only engaged as a "helper."
Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For failing to present proof of a valid cause for his termination, Fly
Ace was found to be liable for illegal dismissal of Javier who was likewise entitled to backwages and separation pay in lieu of reinstatement. The NLRC thus ordered:
WHEREFORE, premises considered, complainants appeal is partially GRANTED. The assailed Decision of the labor arbiter is VACATED and a newone is hereby entered
holding respondent FLY ACE CORPORATION guilty of illegal dismissal and non-payment of 13th month pay. Consequently, it is hereby ordered to pay complainant
DANILO "Bitoy" JAVIER the following:
1. Backwages -P 45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL -P 59,854.16
All other claims are dismissed for lack of merit.
SO ORDERED.11
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace and reinstated the dismissal of Javiers complaint as ordered
by the LA. The CA exercised its authority to make its own factual determination anent the issue of the existence of an employer-employee relationship between the
parties. According to the CA:
x x x
In an illegal dismissal case the onus probandi rests on the employer to prove that its dismissal was for a valid cause. However, before a case for illegal dismissal can
prosper, an employer-employee relationship must first be established. x x x it is incumbent upon private respondent to prove the employee-employer relationship by
substantial evidence.
x x x
It is incumbent upon private respondent to prove, by substantial evidence, that he is an employee of petitioners, but he failed to discharge his burden. The non-
issuance of a company-issued identification card to private respondent supports petitioners contention that private respondent was not its employee.12
The CA likewise added that Javiers failure to present salary vouchers, payslips, or other pieces of evidence to bolster his contention, pointed to the inescapable
conclusion that he was not an employee of Fly Ace. Further, it found that Javiers work was not necessary and desirable to the business or trade of the company, as it
was only when there were scheduled deliveries, which a regular hauling service could not deliver, that Fly Ace would contract the services of Javier as an extra helper.
Lastly, the CA declared that the facts alleged by Javier did not pass the "control test."
33

He contracted work outside the company premises; he was not required to observe definite hours of work; he was not required to report daily; and he was free to
accept other work elsewhere as there was no exclusivity of his contracted service to the company, the same being co-terminous with the trip only.13 Since no
substantial evidence was presented to establish an employer-employee relationship, the case for illegal dismissal could not prosper.
The petitioners moved for reconsideration, but to no avail.
Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER WAS NOT A REGULAR EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER IS NOT ENTITLED TO HIS MONETARY CLAIMS.14
The petitioner contends that other than its bare allegations and self-serving affidavits of the other employees, Fly Ace has nothing to substantiate its claim that Javier
was engaged on a pakyaw basis. Assuming that Javier was indeed hired on a pakyaw basis, it does not preclude his regular employment with the company. Even the
acknowledgment receipts bearing his signature and the confirming receipt of his salaries will not showthe true nature of his employment as they do not reflect the
necessary details of the commissioned task. Besides, Javiers tasks as pahinante are related, necessary and desirable to the line of business by Fly Ace which is engaged
in the importation and sale of grocery items. "On days when there were no scheduled deliveries, he worked in petitioners warehouse, arranging and cleaning the
stored cans for delivery to clients."15 More importantly, Javier was subject to the control and supervision of the company, as he was made to report to the office from
Monday to Saturday, from7:00 oclock in the morning until 5:00 oclock in the afternoon. The list of deliverable goods, together with the corresponding clients and their
respective purchases and addresses, would necessarily have been prepared by Fly Ace. Clearly, he was subjected to compliance with company rules and regulations as
regards working hours, delivery schedule and output, and his other duties in the warehouse.16
The petitioner chiefly relied on Chavez v. NLRC,17 where the Court ruled that payment to a worker on a per trip basis is not significant because "this is merely a method
of computing compensation and not a basis for determining the existence of employer-employee relationship." Javier likewise invokes the rule that, "in controversies
between a laborer and his master, x x x doubts reasonably arising from the evidence should be resolved in the formers favour. The policy is reflected is no less than the
Constitution, Labor Code and Civil Code."18
Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally dismissed by the latters failure to observe substantive and procedural due process. Since
his dismissal was not based on any of the causes recognized by law, and was implemented without notice, Javier is entitled to separation pay and backwages.
In its Comment,19 Fly Ace insists that there was no substantial evidence to prove employer-employee relationship. Having a service contract with Milmar Hauling
Services for the purpose of transporting and delivering company products to customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere "per trip
basis." Javier, who was actually a loiterer in the area, only accompanied and assisted the company driver when Milmar could not deliver or when the exigency of extra
deliveries arises for roughly five to six times a month. Before making a delivery, Fly Ace would turn over to the driver and Javier the delivery vehicle with its loaded
company products. With the vehicle and products in their custody, the driver and Javier "would leave the company premises using their own means, method, best
judgment and discretion on how to deliver, time to deliver, where and [when] to start, and manner of delivering the products."20
Fly Ace dismisses Javiers claims of employment as baseless assertions. Aside fromhis bare allegations, he presented nothing to substantiate his status as an employee.
"It is a basic rule of evidence that each party must prove his affirmative allegation. If he claims a right granted by law, he must prove his claimby competent evidence,
relying on the strength of his own evidence and not upon the weakness of his opponent."21 Invoking the case ofLopez v. Bodega City,22 Fly Ace insists that in an illegal
dismissal case, the burden of proof is upon the complainant who claims to be an employee. It is essential that an employer-employee relationship be proved by
substantial evidence. Thus, it cites:
In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee was for a valid cause. However, before a case for illegal
dismissal can prosper, an employer-employee relationship must first be established.
Fly Ace points out that Javier merely offers factual assertions that he was an employee of Fly Ace, "which are unfortunately not supported by proof, documentary or
otherwise."23 Javier simply assumed that he was an employee of Fly Ace, absent any competent or relevant evidence to support it. "He performed his contracted work
outside the premises of the respondent; he was not even required to report to work at regular hours; he was not made to register his time in and time out every time
he was contracted to work; he was not subjected to any disciplinary sanction imposed to other employees for company violations; he was not issued a company I.D.; he
was not accorded the same benefits given to other employees; he was not registered with the Social Security System (SSS) as petitioners employee; and, he was free to
leave, accept and engage in other means of livelihood as there is no exclusivity of his contracted services with the petitioner, his services being co-terminus with the trip
only. All these lead to the conclusion that petitioner is not an employee of the respondents."24
Moreover, Fly Ace claims that it had "no right to control the result, means, manner and methods by which Javier would perform his work or by which the same is to be
accomplished."25 In other words, Javier and the company driver were given a free hand as to how they would performtheir contracted services and neither were they
subjected to definite hours or condition of work.
Fly Ace likewise claims that Javiers function as a pahinante was not directly related or necessary to its principal business of importation and sales of groceries. Even
without Javier, the business could operate its usual course as it did not involve the business of inland transportation. Lastly, the acknowledgment receipts bearing
Javiers signature and words "pakiao rate," referring to his earned salaries on a per trip basis, have evidentiary weight that the LA correctly considered in arriving at the
conclusion that Javier was not an employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javiers alleged illegal dismissal is anchored on the existence of an employer-employee relationship between himand Fly Ace. This is
essentially a question of fact. Generally, the Court does not review errors that raise factual questions. However, when there is conflict among the factual findings of the
antecedent deciding bodies like the LA, the NLRC and the CA, "it is proper, in the exercise of Our equity jurisdiction, to reviewand re-evaluate the factual issues and to
look into the records of the case and re-examine the questioned findings."26 In dealing with factual issues in labor cases, "substantial evidence that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion is sufficient."27
As the records bear out, the LA and the CA found Javiers claimof employment with Fly Ace as wanting and deficient. The Court is constrained to agree. Although
Section 10, Rule VII of the New Rules of Procedure of the NLRC28 allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not
mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and objectively with little regard to
technicalities or formalities but nowhere in the rules are they provided a license to completely discount evidence, or the lack of it. The quantumof proof required,
however, must still be satisfied. Hence, "when confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to determine which
party deserves credence on the basis of evidence received, subject only to the requirement that their decision must be supported by substantial
evidence."29 Accordingly, the petitioner needs to show by substantial evidence that he was indeed an employee of the company against which he claims illegal
dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and cheese. It is, therefore, incumbent upon the Court to determine
whether the party on whomthe burden to prove lies was able to hurdle the same. "No particular formof evidence is required to prove the existence of such employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be
admitted.http://www.lawphil.net/judjuris/juri2009/may2009/gr_179652_2009.html - fnt31 Hence, while no particular formof evidence is required, a finding that such
relationship exists must still rest on some substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as
its qualitative aspects."30Although substantial evidence is not a function of quantity but rather of quality, the x x x circumstances of the instant case demand that
something more should have been proffered. Had there been other proofs of employment, such as x x x inclusion in petitioners payroll, or a clear exercise of control,
the Court would have affirmed the finding of employer-employee relationship."31
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence.32 "Whoever
claims entitlement to the benefits provided by law should establish his or her right thereto x x x."33 Sadly, Javier failed to adduce substantial evidence as basis for the
grant of relief.
34

In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By way of evidence on this point, all that Javier presented
were his self-serving statements purportedly showing his activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his
claim. Hence, the Court sees no reason to depart fromthe findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in the company premises during weekdays arranging and
cleaning grocery items for delivery to clients, no other proof was submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful
in strengthening Javiers cause. In said document, all Valenzuela attested to was that he would frequently see Javier at the workplace where the latter was also hired as
stevedore.34 Certainly, in gauging the evidence presented by Javier, the Court cannot ignore the inescapable conclusion that his mere presence at the workplace falls
short in proving employment therein. The supporting affidavit could have, to an extent, bolstered Javiers claim of being tasked to clean grocery items when there were
no scheduled delivery trips, but no information was offered in this subject simply because the witness had no personal knowledge of Javiers employment status in the
company. Verily, the Court cannot accept Javiers statements, hook, line and sinker.
The Court is of the considerable viewthat on Javier lies the burden to pass the well-settled tests to determine the existence of an employer-employee relationship, viz:
(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct. Of these
elements, the most important criterion is whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also
as to the means and methods by which the result is to be accomplished.35
In this case, Javier was not able to persuade the Court that the above elements exist in his case.1avvphi1 He could not submit competent proof that Fly Ace engaged his
services as a regular employee; that Fly Ace paid his wages as an employee, or that Fly Ace could dictate what his conduct should be while at work. In other words,
Javiers allegations did not establish that his relationship with Fly Ace had the attributes of an employer-employee relationship on the basis of the above-mentioned
four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it had an agreement with a hauling company to undertake the delivery of its goods. It was
also baffling to realize that Javier did not dispute Fly Aces denial of his services exclusivity to the company. In short, all that Javier laid down were bare allegations
without corroborative proof.
Fly Ace does not dispute having contracted Javier and paid himon a "per trip" rate as a stevedore, albeit on apakyaw basis. The Court cannot fail to note that Fly Ace
presented documentary proof that Javier was indeed paid on a pakyaw basis per the acknowledgment receipts admitted as competent evidence by the LA.
Unfortunately for Javier, his mere denial of the signatures affixed therein cannot automatically sway us to ignore the documents because "forgery cannot be presumed
and must be proved by clear, positive and convincing evidence and the burden of proof lies on the party alleging forgery."36
Considering the above findings, the Court does not see the necessity to resolve the second issue presented.
One final note. The Courts decision does not contradict the settled rule that "payment by the piece is just a method of compensation and does not define the essence
of the relation."37 Payment on a piece-rate basis does not negate regular employment. "The term wage is broadly defined in Article 97 of the Labor Code as
remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment by the piece
is just a method of compensation and does not define the essence of the relations. Nor does the fact that the petitioner is not covered by the SSS affect the employer-
employee relationship. However, in determining whether the relationship is that of employer and employee or one of an independent contractor, each case must be
determined on its own facts and all the features of the relationship are to be considered."38 Unfortunately for Javier, the attendant facts and circumstances of the
instant case do not provide the Court with sufficient reason to uphold his claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be
automatically decided in favor of labor. Management also has its rights which are entitled to respect and enforcement in the interest of simple fair play. Out of its
concern for the less privileged in life, the Court has inclined, more often than not, toward the worker and upheld his cause in his conflicts with the employer. Such
favoritism, however, has not blinded the Court to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine.39
WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the Court of Appeals and its June 7, 2010 Resolution, in CA-G.R. SP No. 109975, are
hereby AFFIRMED.
SO ORDERED.