EMPLOYER-EMPLOYEE RELATIONSHIP:

ANGELINA FRANCISCO, Petitioner, versus NATIONAL LABOR RELATIONS COMMISSION,

KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE
BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents., G.R. No. 170087, 2006
Aug 31.

FACTS:
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.
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. 1996, petitioner was designated 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 BIR, 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.
January 2001, petitioner was replaced by a certain Liza R. Fuentes as Manager.
Kasei Corporation reduced her salary, she was not paid her mid-year bonus allegedly because
the company was not earning well. On October 2001, petitioner did not receive her salary
from the company. She made repeated follow-ups with the company cashier but she was
advised that the company was not earning well. Eventually she was informed that she is no
longer connected with the company.
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 and that her services
were only temporary in nature and dependent on the needs of the corporation.
The Labor Arbiter found that petitioner was illegally dismissed, NLRC affirmed
with modification the Decision of the Labor Arbiter. On appeal, CA reversed the NLRC
decision. CA denied petitioners MR, hence, the present recourse.

ISSUES:
1. WON there was an employer-employee relationship between petitioner and private
respondent; and if in the affirmative,
2. Whether petitioner was illegally dismissed.

RULING:
1. Generally, courts have relied on the so-called right of control test where the
person for whom the 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.
There are instances when, aside from the employers power to control the
employee, 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.
It is better, therefore, to adopt a two-tiered test involving: (1) the employers
power to control; and (2) the economic realities of the activity or relationship.
The control test means 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.
There has to be 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, 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. 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
By applying the control test, it can be said 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. Respondent corporation had the power to control
petitioner with the means and methods by which the work is to be accomplished.
Under the economic reality test, the petitioner can also be said to be an
employee of respondent corporation because she had served the company for 6 yrs. 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 from.
When petitioner was designated General Manager, respondent corporation made a report to
the SSS. Petitioners membership in the SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation. The coverage of Social Security
Law is predicated on the existence of an employer-employee relationship.
2. The corporation constructively dismissed petitioner when it reduced her. This
amounts to an illegal termination of employment, where the petitioner is entitled to full
backwages
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. Petition is
GRANTED.


Sonza vs ABS-CBN (2004) G.R. 138051
Facts:
In May 1994, ABS-CBN signed an agreement with Mel & Jay Management and Development
Corp for a radio and television program. ABS-CBN agreed to pay for SONZAs services a
monthly talent fee of P310,000 for the first year and P317,000 for the second and third year
of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the
month.
On April 1996, Sonza wrote a letter to ABS-CBN President Eugenio Lopez III about a recent
event concerning his programs and career, and that the said violation of the company has
breached the agreement, thus, the notice of rescission of Agreement was sent.
At the end of the same month, Sonza filed a complaint against ABS-CBN before the DOLE for
non-payment of salaries, separation pay, service incentive leave pay, 13th month pay,
signing bonus, travel allowance and amounts due under the Employees Stock Option Plan
(ESOP) which was opposed by ABS-CBN on the ground there was no employer-employee
relationship existed between the parties.
Issue: WON Sonza was an employee or independent contractor?
Held: There was no employer-employee relationship that existed, but that of an independent
contractor.
Case law has consistently held that the elements of an employer-employee relationship are:
(a) The selection and engagement of the employee - ABS-CBN engaged SONZAs
services to co-host its television and radio programs because of SONZAs peculiar skills, talent
and celebrity status. 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.
(b) The payment of wages - ABS-CBN directly paid SONZA his monthly talent fees
with no part of his fees going to MJMDC. 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 law automatically incorporates into every employer-
employee contract.
(c) The power of dismissal - For violation of any provision of the Agreement, either
party may terminate their relationship. During the life of the Agreement, ABS-CBN agreed to
pay SONZAs talent fees as long as "AGENT and Jay Sonza shall faithfully and completely
perform each condition of this Agreement." Even if it suffered severe business losses, ABS-
CBN could not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent
fees during the life of the Agreement.
(d) The employers power to control the employee on the means and methods by
which the work is accomplished - The control test is the most important test. This test is
based on the extent of control the hirer exercises over a worker. The greater the supervision
and control the hirer exercises, the more likely the worker is deemed an employee. The
converse holds true as well the less control the hirer exercises, the more likely the worker
is considered an independent contractor.
First, ABS-CBN engaged SONZAs services specifically to co-host the "Mel & Jay" programs.
ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only needed
his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on
radio were outside ABS-CBNs control. SONZA did not have to render eight hours of work per
day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as
well as pre- and post-production staff meetings. ABS-CBN could not dictate the contents of
SONZAs script. However, the Agreement prohibited SONZA from criticizing in his shows ABS-
CBN or its interests. The clear implication is that SONZA had a free hand on what to say or
discuss in his shows provided he did not attack ABS-CBN or its interests.
Second, The Agreement stipulates that SONZA shall abide with the rules and standards of
performance "covering talents" of ABS-CBN. The Agreement does not require SONZA to
comply with the rules and standards of performance prescribed for employees of ABS-CBN.
The code of conduct imposed on SONZA under the Agreement refers to the "Television and
Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted
by the COMPANY (ABS-CBN) as its Code of Ethics." The KBP code applies to broadcasters, not
to employees of radio and television stations. Broadcasters are not necessarily employees of
radio and television stations. Clearly, the rules and standards of performance referred to in
the Agreement are those applicable to talents and not to employees of ABS-CBN.
Lastly, being an exclusive talent does not by itself mean that SONZA is an employee of ABS-
CBN. Even an independent contractor can validly provide his services exclusively to the hiring
party. In the broadcast industry, exclusivity is not necessarily the same as control. The hiring
of exclusive talents is a widespread and accepted practice in the entertainment industry. This
practice is not designed to control the means and methods of work of the talent, but simply
to protect the investment of the broadcast station. The broadcast station normally spends
substantial amounts of money, time and effort "in building up its talents as well as the
programs they appear in and thus expects that said talents remain exclusive with the station
for a commensurate period of time." Normally, a much higher fee is paid to talents who
agree to work exclusively for a particular radio or television station. In short, the huge talent
fees partially compensates for exclusivity.


BITOY JAVIER (DANILO P. JAVIER), Petitioner,
vs.
FLY ACE CORPORATION/FLORDELYN CASTILLO, Respondents.
MENDOZA, J.: February 15, 2012
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 from Monday 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 company; that on May 6, 2008, he reported for work but he was no
longer allowed to enter the company premises by the security guard upon the instruction of
Ruben Ong (Mr. Ong), his superior;5 that after several minutes of begging to the guard to
allow him to enter, he saw Ong whom he approached and asked why he was being barred
from entering the premises; that Ong replied by saying, "Tanungin mo anak mo;" 6 that he
then went home and discussed the matter with his family; that he discovered that Ong had
been courting his daughter Annalyn after the two met at a fiesta celebration in Malabon City;
that Annalyn tried to talk to Ong and convince him to spare her father from trouble but he
refused to accede; that thereafter, Javier was terminated from his employment without
notice; and that he was neither given the opportunity to refute the cause/s of his dismissal
from work.
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.
Labor Arbiter LA dismissed the complaint. Javier failed to present proof that he was a regular
employee of Fly Ace. [no ID, documents, payslips. Fly Ace is not engaged in trucking business
but in the importation and sales of groceries. Since there is a regular hauler to deliver its
products, we give credence to Respondents claim that complainant was contracted on
"pakiao" basis.
NLRC It was of the view that 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 follow that a worker was a job
contractor and not an employee, just because the work he was doing was not directly related
to the 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.
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.
Court of Appeals Reinstated dismissal of complaint. Javier failed to prove by substantial
evidence er-ee relationship. Did not pass the control test.
ISSUE:WON Javier was regular employee of Fly Ace. NO, onus probandi was on Javier and he
failed to provide substantial evidence.
RATIO:
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.
Existence of an employer-employee relationship between him and Fly Ace is essentially a
question of fact. 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
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 quantum of proof required, however, must still be satisfied.
Hence, "when confronted with conflicting versions on factual matters, it is for them in the
exercise of discretion to determine which party deserves credence on the basis of evidence
received, subject only to the requirement that their decision must be supported by
substantial evidence."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.
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."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.
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.
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.
The Court is of the considerable view that on Javier lies the burden to pass the well -settled
tests to determine the existence of an employer-employee relationship, viz: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the 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 him on 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
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.


Orozco vs. Fifth Division of the Court of Appeals

Facts:

PDI engaged the services of Orozco to write a weekly column for its Lifestyle
section. She religiously submitted her articles except for a 6-month stint when she went to
NY City. Nevertheless, she continued to send her articles through mail. She also received
compensation for every column that was published.

When Orozcos column appeared in the newspaper for the last time, her editor,
Logarta, told her that the PDIs editor-in-chief, Magsanoc, wanted to stop publishing her
columns for no reason at all and advised her to talk to the editor-in-chief. When Orozco
talked to Magsanoc, the latter told her that it was the PDI chairperson who wanted to stop
the publication of her column. However, when Orozco talked to Apostol, the latter told her
that Magsanoc informed her that the Lifestyle section had already many columnists.

PDI claims that Magsanoc met with the editor of the Lifestyle section to discuss
how to improve said section. They agreed to cut down the number of columnists by keeping
only those whose columns were well-written, with regular feedback and following. In their
judgment, petitioners column failed to improve, continued to be superficially and poorly
written, and failed to meet the high standards of the newspaper. Hence, they decided to
terminate petitioners column.

Orozco filed a complaint for illegal dismissal. The LA decided in favor of
petitioner. On appeal, the NLRC dismissed the appeal and affirmed the LAs decision. The CA
on the other hand, set aside the NLRCs decision and dismissed Orozcos complaint.

Issue:
Whether petitioner is an employee of PDI.
Whether petitioner was illegally dismissed.

Decision:

Petition dismissed. Judgment and Resolution affirmed.

Applying the four-fold test, the Court held that PDI lacked control over the
petitioner. Though PDI issued guidelines for the petitioner to follow in the course of writing
her columns, careful examination reveals that the factors enumerated by the petitioner are
inherent conditions in running a newspaper. In other words, the so-called control as to time,
space, and discipline are dictated by the very nature of the newspaper business itself. Aside
from the constraints presented by the space allocation of her column, there were no
restraints on her creativity; petitioner was free to write her column in the manner and style
she was accustomed to and to use whatever research method she deemed suitable for her
purpose. The apparent limitation that she had to write only on subjects that befitted the
Lifestyle section did not translate to control, but was simply a logical consequence of the fact
that her column appeared in that section and therefore had to cater to the preference of the
readers of that section.

Orozco in this case is considered as an independent contractor. As stated in the
case of Sonza vs. ABS-CBN, independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary employees. Like the
petitioner in the cited case, Petitioner was engaged as a columnist for her talent, skill,
experience, and her unique viewpoint as a feminist advocate. How she utilized all these in
writing her column was not subject to dictation by respondent. As in Sonza, respondent PDI
was not involved in the actual performance that produced the finished product. It only
reserved the right to shorten petitioners articles based on the newspapers capacity to
accommodate the same. This fact was not unique to petitioners column. It is a reality in the
newspaper business that space constraints often dictate the length of articles and columns,
even those that regularly appear therein.

Furthermore, respondent PDI did not supply petitioner with the tools and
instrumentalities she needed to perform her work. Petitioner only needed her talent and skill
to come up with a column every week. As such, she had all the tools she needed to perform
her work. Hence, since Orozco is not an employee of PDI, the latter cannot be held guilty of
illegally dismissing the petitioner.


Tongko v. Manufacturers LIfe Insurance Co. (Phils.), Inc.
(570 SCRA 503)
FACTS:
The contractual relationship between Tongko and Manulife had two basic phases. The first
phase began on July 1, 1977, under a CareerAgents Agreement, which provided that the
Agent is an independent contractor and nothing contained herein shall be construed or
interpreted ascreating an employer-employee relationship between the Company and the
Agent.The second phase started in 1983 when Tongko was named Unit Manager in
Manulifes Sales Agency Organization. In 1990, he became aBranch Manager. In 1996),
Tongko became a Regional Sales Manager. Tongkos gross earnings consisted of
commissions, persistency income, andmanagement overrides. Since the beginning, Tongko
consistently declared himself self-employed in his income tax returns. Under oath, he
declared hisgross business income and deducted his business expenses to arrive at his
taxable business income.Respondent Renato Vergel de Dios, sales manager, wrote Tongko a
letter dated November 6, 2001 on concerns that were brought up duringthe Metro North
Sales Managers Meeting, expressing dissatisfaction of Tongkos performance in their agent
recruiting business, which resulted in somechanges on how Tongko would conduct his
duties, including that Tongko hire at his expense a competent assistant to unload him of
routine tasks, whichhe had been complaining to be too taxing for him.On December 18,
2001, de Dios wrote Tongko another letter which served as notice of termination of his
Agency Agreement with the companyeffective fifteen days from the date of the letter.
Tongko filed an illegal dismissal complaint with the National Labor Relations Commission
(NLRC),alleging that despite the clear terms of the letter terminating his Agency Agreement,
that he was Manulifes employee before he was illegally dismissed.The
labor arbiter
decreed that no employer-employee relationship existed between the parties.The
NLRC
reversed the labor arbiters decision on appeal; it found the existence of an employer-
employee relationship and concluded thatTongko had been illegally dismissed.The
Court of Appeals
found that the NLRC gravely abused its discretion in its ruling and reverted to the labor
arbiters decision that noemployer-employee relationship existed between Tongko and
Manulife.
ISSUE:
Is there an employer-employee relationship between Tongko and Manulife?.
HELD:
NO. In the determination of whether an employer-employee relationship exists between 2
parties, this court applies the four-fold test todetermine the existence of the elements of
such relationship. Jurisprudence is firmly settled that whenever the existence of an
employment relationshipis in dispute, four elements constitute the reliable yardstick: (a) the
selection and engagement of the employee; (b) the payment of wages; (c) the powerof
dismissal; and (d) the employers power to
control
the employees conduct. IT is the so-called control test which constitutes the most
important indexof existence of the employer-employee relationship that is, whether the
employer controls or has reserved the right to control the employee not only asto the result
of the work to be done but also as to the means and methods by which the same is to be
accomplished. Stated otherwise, an employer-employee relationship exists where the person
for whom the services are performed reserves the right to control not only the end to be
achieved butalso the means to be used in reaching such end. In the case at bar, the absence
of evidence showing Manulifes control over Tongkos contractualduties points to the
absence of any employer-employee relationship between Tongko and Manulife. In the
context of the established evidence, Tongkoremained an agent all along; although his
subsequent duties made him a lead agent with leadership role, he was nevertheless only an
agent whosebasic contract yields no evidence of means-and-manner control. Claimant
clearly failed to substantiate his claim of employment relationship by thequantum of
evidence the Labor Code requires.Tongkos failure to comply with the guidelines of de Dios
letter, as a ground for termination of Tongkos agency, is a matter that the labortribunals
cannot rule upon in the absence of an employer-employee relationship. Jurisdiction over the
matter belongs to the courts applying the laws ofinsurance, agency and contracts.
Dispositive:
We REVERSE our Decision of November 7, 2008, GRANT Manulifes motion for
reconsideration and, accordingly, DISMISSTongkos petition.


Television and Production Exponents, Inc. and/or Antonio P. Tuviera vs Roberto C. Servaa

Servaa started out as a security for the Agro-Commercial Security Agency (ACSA) since
1987. The agency had a contract with TV network RPN 9.
On the other hand, Television and Production Exponents, Inc (TAPE). is a company in charge
of TV programming and was handling shows like Eat Bulaga! Eat Bulaga! was then with RPN
9.
In 1995, RPN 9 severed its relations with ACSA. TAPE retained the services of Servaa as a
security guard and absorbed him.
In 2000, TAPE contracted the services of Sun Shield Security Agency. It then notified Servaa
that he is being terminated because he is now a redundant employee.
Servaa then filed a case for illegal Dismissal. The Labor Arbiter ruled that Servaas dismissal
is valid on the ground of redundancy but though he was not illegally dismissed he is still
entitled to be paid a separation pay which is amounting to one month pay for every year of
service which totals to P78,000.00.
TAPE appealed and argued that Servaa is not entitled to receive separation pay for he is
considered as a talent and not as a regular employee; that as such, there is no employee-
employer relationship between TAPE and Servaa. The National Labor Relations Commission
ruled in favor of TAPE. It ruled that Servaa is a program employee. Servaa appealed before
the Court of Appeals.
The Court of Appeals reversed the NLRC and affirmed the LA. The CA further ruled that TAPE
and its president Tuviera should pay for nominal damages amounting to P10,000.00.
ISSUE: Whether or not there is an employee-employer relationship existing between TAPE
and Servaa.
HELD: Yes. Servaa is a regular employee.
In determining Servaas nature of employment, the Supreme Court employed the Four Fold
Test:
1. Whether or not employer conducted the selection and engagement of the employee.
Servaa was selected and engaged by TAPE when he was absorbed as a talent in 1995. He
is not really a talent, as termed by TAPE, because he performs an activity which is necessary
and desirable to TAPEs business and that is being a security guard. Further, the primary
evidence of him being engaged as an employee is his employee identification card. An
identification card is usually provided not just as a security measure but to mainly identify
the holder thereof as a bona fide employee of the firm who issues it.
2. Whether or not there is payment of wages to the employee by the employer.
Servaa is definitely receiving a fixed amount as monthly compensation. Hes receiving
P6,000.00 a month.
3. Whether or not employer has the power to dismiss employee.
The Memorandum of Discontinuance issued to Servaa to notify him that he is a redundant
employee evidenced TAPEs power to dismiss Servaa.
4. Whether or not the employer has the power of control over the employee.
The bundy cards which showed that Servaa was required to report to work at fixed hours of
the day manifested the fact that TAPE does have control over him. Otherwise, Servaa could
have reported at any time during the day as he may wish.
Therefore, Servaa is entitled to receive a separation pay.
On the other hand, the Supreme Court ruled that Tuviera, as president of TAPE, should not
be held liable for nominal damages as there was no showing he acted in bad faith in
terminating Servaa.
Regular Employee Defined:
One having been engaged to perform an activity that is necessary and desirable to a
companys business.


ENCYCLOPEDIA BRITANNICA (Philippines), INC. vs. NLRC
Facts:
Limjoco was a Sales Divison of Encyclopaedia Britannica and was in charge of selling the
products through some sales representatives. As compensation, he would receive
commissions from the products sold by his agents. He was also allowed to use the
petitioners name, goodwill and logo. It was agreed that office expenses would be deducted
from Limjocos commissions.
In 1974, Limjoco resigned to pursue his private business and filed a complaint against
petitioner for alleged non-payment of separation pay and other benefits and also illegal
deduction from sales commissions. Petitioner alleged that Limjoco was not an employee of
the company but an independent dealer authorized to promote and sell its products and in
return, received commissions therein. Petitioner also claims that it had no control and
supervision over the complainant as to the manners and means he conducted his business
operations. Limjoco maintained otherwise. He alleged he was hired by the petitioner and
was assigned in the sales department.
The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also affirmed
the decision and opined that there was no evidence supporting allegation that Limjoco was
an independent contractor or dealer.
Issue:
Whether or not there was an employee-employer relationship between the parties.
SC Ruling:
There was no employee-employer relationship. In determining the relationship, the following
elements must be present: selection and engagement of the employee, payment of wages,
power of dismissal and power to control the employees conduct. The power of control is
commonly regarded as the most crucial and determinative indicator of the presence or
absence of an employee-employer relationship. Under the control test, an employee-
employer relationship exists where the person for whom the services are performed reserves
a right to control not only the end to be achieved, but also the manner and means to be
employed in reaching that end.
The issuance of guidelines by the petitioner was merely guidelines on company policies
which sales managers follow and impose on their respective agents. Limjoco was not an
employee of the company since he had the free rein in the means and methods for
conducting the marketing operations. He was merely an agent or an independent dealer of
the petitioner. He was free to conduct his work and he was free to engage in other means of
livelihood.
In ascertaining the employee-employer relationship, the factual circumstances must be
considered. The element of control is absent where a person who works for another does so
more or less at his own pleasure and is not subject to definite hours or conditions of work,
and in turn is compensated in according to the result of his efforts and not the amount
thereof. Hence, there was no employee-employer relationship.


ATOK BIG WEDGE COMPANY, INC., Petitioner,
vs.
JESUS P. GISON, Respondent.

D E C I S I O N

PERALTA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the Decision1 dated
May 31, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 87846, and the Resolution2
dated August 23, 2005 denying petitioners motion for reconsideration.

The procedural and factual antecedents are as follows:

Sometime in February 1992, respondent Jesus P. Gison was engaged as part-time consultant
on retainer basis by petitioner Atok Big Wedge Company, Inc. through its then Asst. Vice-
President and Acting Resident Manager, Rutillo A. Torres. As a consultant on retainer basis,
respondent assisted petitioner's retained legal counsel with matters pertaining to the
prosecution of cases against illegal surface occupants within the area covered by the
company's mineral claims. Respondent was likewise tasked to perform liaison work with
several government agencies, which he said was his expertise.

Petitioner did not require respondent to report to its office on a regular basis, except when
occasionally requested by the management to discuss matters needing his expertise as a
consultant. As payment for his services, respondent received a retainer fee of P3,000.00 a
month,3 which was delivered to him either at his residence or in a local restaurant. The
parties executed a retainer agreement, but such agreement was misplaced and can no longer
be found.

The said arrangement continued for the next eleven years.

Sometime thereafter, since respondent was getting old, he requested that petitioner cause
his registration with the Social Security System (SSS), but petitioner did not accede to his
request. He later reiterated his request but it was ignored by respondent considering that he
was only a retainer/consultant. On February 4, 2003, respondent filed a Complaint4 with the
SSS against petitioner for the latter's refusal to cause his registration with the SSS.

On the same date, Mario D. Cera, in his capacity as resident manager of petitioner, issued a
Memorandum5 advising respondent that within 30 days from receipt thereof, petitioner is
terminating his retainer contract with the company since his services are no longer
necessary.

On February 21, 2003, respondent filed a Complaint6 for illegal dismissal, unfair labor
practice, underpayment of wages, non-payment of 13th month pay, vacation pay, and sick
leave pay with the National Labor Relations Commission (NLRC), Regional Arbitration Branch
(RAB), Cordillera Administrative Region, against petitioner, Mario D. Cera, and Teofilo R.
Asuncion, Jr. The case was docketed as NLRC Case No. RAB-CAR-02-0098-03.

Respondent alleged that:

x x x [S]ometime in January 1992, Rutillo A. Torres, then the resident manager of respondent
Atok Big Wedge Co., Inc., or Atok for brevity, approached him and asked him if he can help
the companys problem involving the 700 million pesos crop damage claims of the residents
living at the minesite of Atok. He participated in a series of dialogues conducted with the
residents. Mr. Torres offered to pay him P3,000.00 per month plus representation expenses.
It was also agreed upon by him and Torres that his participation in resolving the problem was
temporary and there will be no employer-employee relationship between him and Atok. It
was also agreed upon that his compensation, allowances and other expenses will be paid
through disbursement vouchers.

On February 1, 1992 he joined Atok. One week thereafter, the aggrieved crop damage
claimants barricaded the only passage to and from the minesite. In the early morning of
February 1, 1992, a dialogue was made by Atok and the crop damage claimants.
Unfortunately, Atoks representatives, including him, were virtually held hostage by the irate
claimants who demanded on the spot payment of their claims. He was able to convince the
claimants to release the company representatives pending referral of the issue to higher
management.

A case was filed in court for the lifting of the barricades and the court ordered the lifting of
the barricade. While Atok was prosecuting its case with the claimants, another case erupted
involving its partner, Benguet Corporation. After Atok parted ways with Benguet
Corporation, some properties acquired by the partnership and some receivables by Benguet
Corporation was the problem. He was again entangled with documentation, conferences,
meetings, planning, execution and clerical works. After two years, the controversy was
resolved and Atok received its share of the properties of the partnership, which is about 5
million pesos worth of equipment and condonation of Atoks accountabilities with Benguet
Corporation in the amount of P900,000.00.

In the meantime, crop damage claimants lost interest in pursuing their claims against Atok
and Atok was relieved of the burden of paying 700 million pesos. In between attending the
problems of the crop damage issue, he was also assigned to do liaison works with the SEC,
Bureau of Mines, municipal government of Itogon, Benguet, the Courts and other
government offices.

After the crop damage claims and the controversy were resolved, he was permanently
assigned by Atok to take charge of some liaison matters and public relations in Baguio and
Benguet Province, and to report regularly to Atoks office in Manila to attend meetings and
so he had to stay in Manila at least one week a month.

Because of his length of service, he invited the attention of the top officers of the company
that he is already entitled to the benefits due an employee under the law, but management
ignored his requests. However, he continued to avail of his representation expenses and
reimbursement of company-related expenses. He also enjoyed the privilege of securing
interest free salary loans payable in one year through salary deduction.

In the succeeding years of his employment, he was designated as liaison officer, public
relation officer and legal assistant, and to assist in the ejection of illegal occupants in the
mining claims of Atok.

Since he was getting older, being already 56 years old, he reiterated his request to the
company to cause his registration with the SSS. His request was again ignored and so he filed
a complaint with the SSS. After filing his complaint with the SSS, respondents terminated his
services.7

On September 26, 2003, after the parties have submitted their respective pleadings, Labor
Arbiter Rolando D. Gambito rendered a Decision8 ruling in favor of the petitioner. Finding no
employer-employee relationship between petitioner and respondent, the Labor Arbiter
dismissed the complaint for lack of merit.

Respondent then appealed the decision to the NLRC.

On July 30, 2004, the NLRC, Second Division, issued a Resolution9 affirming the decision of
the Labor Arbiter. Respondent filed a Motion for Reconsideration, but it was denied in the
Resolution10 dated September 30, 2004.

Aggrieved, respondent filed a petition for review under Rule 65 of the Rules of Court before
the CA questioning the decision and resolution of the NLRC, which was later docketed as CA-
G.R. SP No. 87846. In support of his petition, respondent raised the following issues:

a) Whether or not the Decision of the Honorable Labor Arbiter and the subsequent
Resolutions of the Honorable Public Respondent affirming the same, are in harmony with the
law and the facts of the case;

b) Whether or not the Honorable Labor Arbiter Committed a Grave Abuse of Discretion in
Dismissing the Complaint of Petitioner and whether or not the Honorable Public Respondent
Committed a Grave Abuse of Discretion when it affirmed the said Decision.11

On May 31, 2005, the CA rendered the assailed Decision annulling and setting aside the
decision of the NLRC, the decretal portion of which reads:

WHEREFORE, the petition is GRANTED. The assailed Resolution of the National Labor
Relations Commission dismissing petitioner's complaint for illegal dismissal is ANNULLED and
SET ASIDE. Private respondent Atok Big Wedge Company Incorporated is ORDERED to
reinstate petitioner Jesus P. Gison to his former or equivalent position without loss of
seniority rights and to pay him full backwages, inclusive of allowances and other benefits or
their monetary equivalent computed from the time these were withheld from him up to the
time of his actual and effective reinstatement. This case is ordered REMANDED to the Labor
Arbiter for the proper computation of backwages, allowances and other benefits due to
petitioner. Costs against private respondent Atok Big Wedge Company Incorporated.

SO ORDERED.12

In ruling in favor of the respondent, the CA opined, among other things, that both the Labor
Arbiter and the NLRC may have overlooked Article 280 of the Labor Code,13 or the provision
which distinguishes between two kinds of employees, i.e., regular and casual employees.
Applying the provision to the respondent's case, he is deemed a regular employee of the
petitioner after the lapse of one year from his employment. Considering also that
respondent had been performing services for the petitioner for eleven years, respondent is
entitled to the rights and privileges of a regular employee.

The CA added that although there was an agreement between the parties that respondent's
employment would only be temporary, it clearly appears that petitioner disregarded the
same by repeatedly giving petitioner several tasks to perform. Moreover, although
respondent may have waived his right to attain a regular status of employment when he
agreed to perform these tasks on a temporary employment status, still, it was the law that
recognized and considered him a regular employee after his first year of rendering service to
petitioner. As such, the waiver was ineffective.

Hence, the petition assigning the following errors:

I. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE
CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT GAVE
DUE COURSE TO THE PETITION FOR CERTIORARI DESPITE THE FACT THAT THERE WAS NO
SHOWING THAT THE NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE
OF DISCRETION.

II. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE
CONTRARY TO THE LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT
BASED ITS FINDING THAT RESPONDENT IS ENTITLED TO REGULAR EMPLOYMENT ON A
PROVISION OF LAW THAT THIS HONORABLE COURT HAS DECLARED TO BE INAPPLICABLE IN
CASE THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP IS IN DISPUTE OR IS THE
FACT IN ISSUE.

III. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE
CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT
ERRONEOUSLY FOUND THAT RESPONDENT IS A REGULAR EMPLOYEE OF THE COMPANY.

IV. WHETHER OR NOT THE COURT OF APPEALS DECIDED QUESTIONS OF SUBSTANCE
CONTRARY TO LAW AND APPLICABLE RULINGS OF THIS HONORABLE COURT WHEN IT
ERRONEOUSLY DIRECTED RESPONDENT'S REINSTATEMENT DESPITE THE FACT THAT THE
NATURE OF THE SERVICES HE PROVIDED TO THE COMPANY WAS SENSITIVE AND
CONFIDENTIAL.14

Petitioner argues that since the petition filed by the respondent before the CA was a petition
for certiorari under Rule 65 of the Rules of Court, the CA should have limited the issue on
whether or not there was grave abuse of discretion on the part of the NLRC in rendering the
resolution affirming the decision of the Labor Arbiter.

Petitioner also posits that the CA erred in applying Article 280 of the Labor Code in
determining whether there was an employer-employee relationship between the petitioner
and the respondent. Petitioner contends that where the existence of an employer-employee
relationship is in dispute, Article 280 of the Labor Code is inapplicable. The said article only
set the distinction between a casual employee from a regular employee for purposes of
determining the rights of an employee to be entitled to certain benefits.

Petitioner insists that respondent is not a regular employee and not entitled to
reinstatement.

On his part, respondent maintains that he is an employee of the petitioner and that the CA
did not err in ruling in his favor.

The petition is meritorious.

At the outset, respondent's recourse to the CA was the proper remedy to question the
resolution of the NLRC. It bears stressing that there is no appeal from the decision or
resolution of the NLRC. As this Court enunciated in the case of St. Martin Funeral Home v.
NLRC,15 the special civil action of certiorari under Rule 65 of the Rules of Civil Procedure,
which is filed before the CA, is the proper vehicle for judicial review of decisions of the NLRC.
The petition should be initially filed before the Court of Appeals in strict observance of the
doctrine on hierarchy of courts as the appropriate forum for the relief desired.16 This Court
not being a trier of facts, the resolution of unclear or ambiguous factual findings should be
left to the CA as it is procedurally equipped for that purpose. From the decision of the Court
of Appeals, an ordinary appeal under Rule 45 of the Rules of Civil Procedure before the
Supreme Court may be resorted to by the parties. Hence, respondent's resort to the CA was
appropriate under the circumstances.

Anent the primordial issue of whether or not an employer-employee relationship exists
between petitioner and respondent.

Well-entrenched is the doctrine that the existence of an employer-employee relationship is
ultimately a question of fact and that the findings thereon by the Labor Arbiter and the NLRC
shall be accorded not only respect but even finality when supported by substantial
evidence.17 Being a question of fact, the determination whether such a relationship exists
between petitioner and respondent was well within the province of the Labor Arbiter and
the NLRC. Being supported by substantial evidence, such determination should have been
accorded great weight by the CA in resolving the issue.

To ascertain the existence of an employer-employee relationship jurisprudence has
invariably adhered to the four-fold test, to wit: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control
the employee's conduct, or the so-called "control test."18 Of these four, the last one is the
most important.19 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
whom the 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.20

Applying the aforementioned test, an employer-employee relationship is apparently absent
in the case at bar. Among other things, respondent was not required to report everyday
during regular office hours of petitioner. Respondent's monthly retainer fees were paid to
him either at his residence or a local restaurant. More importantly, petitioner did not
prescribe the manner in which respondent would accomplish any of the tasks in which his
expertise as a liaison officer was needed; respondent was left alone and given the freedom
to accomplish the tasks using his own means and method. Respondent was assigned tasks to
perform, but petitioner did not control the manner and methods by which respondent
performed these tasks. Verily, the absence of the element of control on the part of the
petitioner engenders a conclusion that he is not an employee of the petitioner.

Moreover, the absence of the parties' retainership agreement notwithstanding, respondent
clearly admitted that petitioner hired him in a limited capacity only and that there will be no
employer-employee relationship between them. As averred in respondent's Position
Paper:21

2. For the participation of complainant regarding this particular problem of Atok, Mr. Torres
offered him a pay in the amount of Php3,000.00 per month plus representation expenses. It
was also agreed by Mr. Torres and the complainant that his participation on this particular
problem of Atok will be temporary since the problem was then contemplated to be limited in
nature, hence, there will be no employer-employee relationship between him and Atok.
Complainant agreed on this arrangement. It was also agreed that complainant's
compensations, allowances, representation expenses and reimbursement of company-
related expenses will be processed and paid through disbursement vouchers;22

Respondent was well aware of the agreement that he was hired merely as a liaison or
consultant of the petitioner and he agreed to perform tasks for the petitioner on a
temporary employment status only. However, respondent anchors his claim that he became
a regular employee of the petitioner based on his contention that the "temporary" aspect of
his job and its "limited" nature could not have lasted for eleven years unless some time
during that period, he became a regular employee of the petitioner by continually
performing services for the company.

Contrary to the conclusion of the CA, respondent is not an employee, much more a regular
employee of petitioner. The appellate court's premise that regular employees are those who
perform activities which are desirable and necessary for the business of the employer is not
determinative in this case. In fact, any agreement may provide that one party shall render
services for and in behalf of another, no matter how necessary for the latter's business, even
without being hired as an employee.23 Hence, respondent's length of service and
petitioner's repeated act of assigning respondent some tasks to be performed did not result
to respondent's entitlement to the rights and privileges of a regular employee.

Furthermore, despite the fact that petitioner made use of the services of respondent for
eleven years, he still cannot be considered as a regular employee of petitioner. Article 280 of
the Labor Code, in which the lower court used to buttress its findings that respondent
became a regular employee of the petitioner, is not applicable in the case at bar. Indeed, the
Court has ruled that said provision is not the yardstick for determining the existence of an
employment relationship because it merely distinguishes between two kinds of employees,
i.e., regular employees and casual employees, for purposes of determining the right of an
employee to certain benefits, to join or form a union, or to security of tenure; it does not
apply where the existence of an employment relationship is in dispute.24 It is, therefore,
erroneous on the part of the Court of Appeals to rely on Article 280 in determining whether
an employer-employee relationship exists between respondent and the petitioner

Considering that there is no employer-employee relationship between the parties, the
termination of respondent's services by the petitioner after due notice did not constitute
illegal dismissal warranting his reinstatement and the payment of full backwages, allowances
and other benefits.

WHEREFORE, premises considered, the petition is GRANTED. The Decision and the
Resolution of the Court of Appeals in CA-G.R. SP No. 87846, are REVERSED and SET ASIDE.
The Resolutions dated July 30, 2004 and September 30, 2004 of the National Labor Relations
Commission are REINSTATED.

SO ORDERED.


Dumpit vs ABC

Facts:
Murillo was hired under a talent contract, as a newscaster and co-anchor for ABCs early
evening
news program. The contract was for a period of three months. It was renewed fifteen times
within
four years. Upon the expiration of her last talent contract, she informed ABC of her desire to
renew.
Not having received a reply, she considered the companys inaction as constructive dismissal
of her services.

Held:
Murillo was not a fixed term employee.
An employer-employee relationship was created when the private respondents started to
merely
renew the contracts repeatedly fifteen times or for four consecutive years. Petitioner was a
regular
employee. The practice of having fixed-term contracts in the industry does not automatically
make all talent contracts valid and compliant with labor law.
In the case at bar, it does not appear that the employer and employee dealt with each other
on equal
terms. Being one of the numerous newscasters/broadcasters of ABC and desiring to keep her
job as
a broadcasting practitioner, petitioner was left with no choice but to affix her signature of
conformity
on each renewal of her contract as already prepared by private respondents; otherwise,
private
respondents would have simply refused to renew her contract. Patently, the petitioner
occupied a
position of weakness vis--vis the employer. Moreover, private respondents practice of
repeatedly
extending petitioners 3-month contract for four years is a circumvention of the acquisition
of regular
status. Hence, there was no valid fixed-term employment between petitioner and private
respondents.

Sonza case is not applicable [i.e. absence of employer-employee relationship between a
talent and
the media entity which engaged the talents services on a per talent contract basis]

In Sonza, the television station did not instruct Sonza how to perform his job. How Sonza
delivered his lines, appeared on television, and sounded on radio were outside the television
stations control.
In the case at bar, ABC had control over the performance of petitioners work. Noteworthy
too, is the comparatively low P28,000 monthly pay of petitioner vis the P

300,000 a month salary of Sonza, that
all the more bolsters the conclusion that petitioner was not in the same situation as Sonza.
The duties of petitioner as enumerated in her employment contract indicate that ABC had
control
over the work of petitioner. Aside from control, ABC also dictated the work assignments and
payment of petitioners wages. ABC also had power to dismiss her.

Murillo was a regular employee
The assertion that a talent contract exists does not necessarily prevent a regular
employment status.
Petitioners work was necessary or desirable in the usual business or trade of the employer
which
includes, as a pre-condition for its enfranchisement, its participation in the governments
news and public information dissemination. In addition, her work was continuous for a
period of four years.
This repeated engagement under contract of hire is indicative of the necessity and
desirability of the
petitioners work in private respondent ABCs business


JOSE MEL BERNARTE, petitioner, vs. PHILIPPINE BASKETBALL ASSOCIATION (PBA), JOSE
EMMANUEL M. EALA, andPERRY MARTINEZ, respondents.

FACTS:Complainants (Jose Mel Bernarte and Renato Guevarra) aver that they were invited to
join the PBA as referees. During the leadership of Commissioner Emilio Bernardino, they
were made to sign contracts on a year-to-year basis. During the term of Commissioner Eala,
however,changes were made on the terms of their employment. Complainant Bernarte, for
instance, was not made to sign a contract during the first conference of the All-Filipino Cup
which was from February 23,2003 to June 2003. It was only during the second conference
when he was made to sign a one and a half month contract for the period July 1 toAugust 5,
2003. On January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing hisunsatisfactory performance on
and off the court. It was a total shock for Bernarte who was awarded Referee of the year in
2003. He felt that thedismissal was caused by his refusal to fix a game upon order of Ernie De
Leon. On the other hand, complainant Guevarra alleges that he was invited to join the PBA
pool of referees in February 2001. On March 1, 2001, he signeda contract as trainee.
Beginning 2002, he signed a yearly contract as Regular Class C referee. On May 6, 2003,
respondent Martinez issued amemorandum to Guevarra expressing dissatisfaction over his
questioning on the assignment of referees officiating out-of-town games. BeginningFebruary
2004, he was no longer made to sign a contract. Respondents aver, on the other hand, that
complainants entered into two contracts of retainer with the PBA in the year 2003. The first
contract wasfor the period January 1, 2003 to July 15, 2003; and the second was for
September 1 to December 2003. After the lapse of the latter period, PBAdecided not to
renew their contracts.Complainants were not illegally dismissed because they were not
employees of the PBA. Their respective contracts of retainer were simply notrenewed. PBA
had the prerogative of whether or not to renew their contracts, which they knew were
fixed.In her 31 March 2005 Decision, the Labor Arbiter declared petitioner an employee
whose dismissal by respondents was illegal. Accordingly, theLabor Arbiter ordered the
reinstatement of petitioner and the payment of backwages, moral and exemplary damages
and attorneys fees. The NLRCaffirmed the Labor Arbiter's judgment. Respondents filed a
petition for certiorari with the Court of Appeals, which overturned the decisions of the NLRC
and Labor Arbiter.
ISSUE: Whether petitioner is an employee of respondents, which in turn determines whether
petitioner was illegally dismissed
HELD: NO, Petitioner is not an employee of the respondents. The SC DENIED the petition and
AFFIRMED the assailed decision of the Court of Appeals.To determine the existence of an
employer-employee relationship, case law has consistently applied the four-fold test, to wit:
(a) the selection andengagement of the employee; (b) the payment of wages; (c) the power
of dismissal; and (d) the employers power to control the employee on themeans and
methods by which the work is accomplished. The so-called control test is the most
important indicator of the presence or absence of anemployer-employee relationship.19 In
this case, PBA admits repeatedly engaging petitioners services, as shown in the retainer
contracts. PBA pays petitioner a retainer fee, exclusive of per diem or allowances, as
stipulated in the retainer contract. PBA can terminate the retainer contract for petitioners
violation of its terms andconditions.However, respondents argue that the all-important
element of control is lacking in this case, making petitioner an independent contractor and
not anemployee of respondents.The contractual stipulations do not pertain to, much less
dictate, how and when petitioner will blow the whistle and makecalls. On the contrary, they
merely serve as rules of conduct or guidelines in order to maintain the integrity of the
professional basketball league. Ascorrectly observed by the Court of Appeals, how could a
skilled referee perform his job without blowing a whistle and making calls? x x x [H]owcan
the PBA control the performance of work of a referee without controlling his acts of blowing
the whistle and making calls?We agree with respondents that once in the playing court, the
referees exercise their own independent judgment, based on the rules of the game, as
towhen and how a call or decision is to be made. The referees decide whether an infraction
was committed, and the PBA cannot overrule them once thedecision is made on the playing
court. The referees are the only, absolute, and final authority on the playing court.
Respondents or any of the PBAofficers cannot and do not determine which calls to make or
not to make and cannot control the referee when he blows the whistle because
suchauthority exclusively belongs to the referees. The very nature of petitioners job of
officiating a professional basketball game undoubtedly calls for freedom of control by
respondents.Moreover, unlike regular employees who ordinarily report for work eight hours
per day for five days a week, petitioner is required to report for work only when PBA games
are scheduled or three times a week at two hours per game. In addition, there are no
deductions for contributions to the SocialSecurity System, Philhealth or Pag-Ibig, which are
the usual deductions from employees salaries. These undisputed circumstances buttress the
factthat petitioner is an independent contractor, and not an employee of respondents.


Angel Jardin vs NLRC and Goodman Taxi (Philjama International Inc.)

FACTS: Petitioners were drivers of the respondent, a domestic corporation engaged in the
operation of Goodman Taxi. Petitioners used to drive the taxi of the respondents on a 24
hour work schedule under the boundary system and they would earn an average of 400 a
day. Nevertheless, the respondent admittedly regularly deducts from the petitioners daily
earnings 30 pesos for the washing of the taxi units. Believing that the deduction is illegal,
petitioners decided to form a labor union to protect their rights and interest. Upon learning
of this by the respondent, he refused to let the petitioners to drive his taxi units, the latter
suspected that they were singled out because they are the active members of the union.
Thereafter, they filed a complaint to the labor arbiter for unfair labor practice, illegal
dismissal and illegal deduction of the washing fees. The labor arbtiter dismissed the
complaint, but was reversed by the NLRC. Respondent filed for a motion for reconsideration
but was denied, remaining hopeful, again filed a motion for reconsideration for the second
time and was entertained and an order was rendered in their favour. Petitioners, filed for
reconsideration.
ISSUE: Whether or not employer-employee relationship exist.
HELD: Yes. In the number of cases decided by the court, it ruled that the relationship
between operators and drivers under the boundary system is that of employer-employee
and not of lessor-lessee as argued by the NLRC. The court already explained that in the lease
of chattels, the lessor loses complete control over the chattel leased although the lessee
cannot be reckless in the use thereof, otherwise he would be responsible for the damages to
the lessor. In the case of operators and drivers, the former exercise supervision and control
over the latter. The management of the business is in the owners hand. The owner as holder
of the certificate of public convenience must see to it that the drivers follow the route
prescribed by the franchising authority. The fact that the drivers do not received fixed salary
but get only that excess of the boundary is not sufficient to withdraw the relationship
between that of the employer- employee. This is based in the four fold test provided to
determine the relationship, to wit: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct, or the so-called "control test." 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.
Since the relationship was already determined the termination of employment was illegal for
it did not comply with the notice and hearing prior termination and further there was no just
cause for such termination. In the issue of the washing fee, the court held that it was a valid
deduction. It is incumbent upon the driver to restore the unit he has driven to the same
clean condition when he took it out.


Professional Services Inc., v. CA
Facts: On April 4, 1984, Natividad Agana was admitted at the Medical City General Hospital
(Medical City) because of difficulty of bowel movement and bloody anal discharge. Dr. Ampil
diagnosed her to be suffering from "cancer of the sigmoid." Thus, on April 11, 1984, Dr.
Ampil, assisted by the medical staff1 of Medical City, performed an anterior resection
surgery upon her. During the surgery, he found that the malignancy in her sigmoid area had
spread to her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil
obtained the consent of Atty. Enrique Agana, Natividads husband, to permit Dr. Juan
Fuentes, respondent in G.R. No. 126467, to perform hysterectomy upon Natividad.Dr.
Fuentes performed and completed the hysterectomy. Afterwards, Dr. Ampil took over,
completed the operation and closed the incision. However, the operation appeared to be
flawed. After a couple of days, Natividad complained of excruciating pain in her anal region.
She consulted both Dr. Ampil and Dr. Fuentes about it. They told her that the pain was the
natural consequence of the surgical operation performed upon her. Dr. Ampil recommended
that Natividad consult an oncologist to treat the cancerous nodes which were not removed
during the operation.On May 9, 1984, Natividad, accompanied by her husband, went to the
United States to seek further treatment. After four (4) months of consultations and
laboratory examinations, Natividad was told that she was free of cancer. Hence, she was
advised to return to the Philippines.
On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two (2)
weeks thereafter, her daughter found a piece of gauze protruding from her vagina. Dr. Ampil
was immediately informed. He proceeded to Natividads house where he managed to extract
by hand a piece of gauze measuring 1.5 inches in width. Dr. Ampil then assured Natividad
that the pains would soon vanish.Despite Dr. Ampils assurance, the pains intensified,
prompting Natividad to seek treatment at the Polymedic General Hospital. While confined
thereat, Dr. Ramon Gutierrez detected the presence of a foreign object in her vagina -- a
foul-smelling gauze measuring 1.5 inches in width. The gauze had badly infected her vaginal
vault. A recto-vaginal fistula had formed in her reproductive organ which forced stool to
excrete through the vagina. Another surgical operation was needed to remedy the situation.
Thus, in October 1984, Natividad underwent another surgery.
On November 12, 1984, Natividad and her husband filed with the Regional Trial Court,
Branch 96, Quezon City a complaint for damages against PSI (owner of Medical City), Dr.
Ampil and Dr. Fuentes.On February 16, 1986, pending the outcome of the above case,
Natividad died. She was duly substituted by her above-named children
On March 17, 1993, the trial court rendered judgment in favor of spouses Agana finding PSI,
Dr. Ampil and Dr. Fuentes jointly and severally liable. On appeal, the Court of Appeals, in its
Decision dated September 6, 1996, affirmed the assailed judgment with modification in the
sense that the complaint against Dr. Fuentes was dismissed.
PSI, Dr. Ampil and the Aganas filed with this Court separate petitions for review on certiorari.
On January 31, 2007, the Court, through its First Division, rendered a Decision holding that
PSI is jointly and severally liable with Dr. Ampil for the following reasons: first, there is an
employer-employee relationship between Medical City and Dr. Ampil. second, PSIs act of
publicly displaying in the lobby of the Medical City the names and specializations of its
accredited physicians, including Dr. Ampil, estopped it from denying the existence of an
employer-employee relationship between them under the doctrine of ostensible agency or
agency by estoppel; and third, PSIs failure to supervise Dr. Ampil and its resident physicians
and nurses and to take an active step in order to remedy their negligence rendered it directly
liable under the doctrine of corporate negligence.
ISSUE: Is there an employer-employee relationship? YES
HELD: In the first place, hospitals exercise significant control in the hiring and firing of
consultants and in the conduct of their work within the hospital premises. Doctors who apply
for "consultant" slots, visiting or attending, are required to submit proof of completion of
residency, their educational qualifications; generally, evidence of accreditation by the
appropriate board (diplomate), evidence of fellowship in most cases, and references. These
requirements are carefully scrutinized by members of the hospital administration or by a
review committee set up by the hospital who either accept or reject the application. This is
particularly true with respondent hospital.
After a physician is accepted, either as a visiting or attending consultant, he is normally
required to attend clinico-pathological conferences, conduct bedside rounds for clerks,
interns and residents, moderate grand rounds and patient audits and perform other tasks
and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or
for the privilege of admitting patients into the hospital. In addition to these, the physicians
performance as a specialist is generally evaluated by a peer review committee on the basis of
mortality and morbidity statistics, and feedback from patients, nurses, interns and residents.
A consultant remiss in his duties, or a consultant who regularly falls short of the minimum
standards acceptable to the hospital or its peer review committee, is normally politely
terminated.
In other words, private hospitals hire, fire and exercise real control over their attending and
visiting "consultant" staff. While "consultants" are not, technically employees, a point which
respondent hospital asserts in denying all responsibility for the patients condition, the
control exercised, the hiring, and the right to terminate consultants all fulfill the important
hallmarks of an employer-employee relationship, with the exception of the payment of
wages. In assessing whether such a relationship in fact exists, the control test is determining.
Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating
responsibility in medical negligence cases, an employer-employee relationship in effect exists
between hospitals and their attending and visiting physicians


Locsin vs. PLDT

Facts:
On November 1, 1990, respondent Philippine Long Distance Telephone Company (PLDT) and
the Security and Safety Corporation of the Philippines (SSCP) entered into a Security Services
Agreement (Agreement) whereby SSCP would provide armed security guards to PLDT to be
assigned to its various offices. Pursuant to such agreement, petitioners Raul Locsin and
Eddie Tomaquin, among other security guards, were posted at a PLDT office.
On August 30, 2001, respondent issued a Letter dated August 30, 2001 terminating the
Agreement effective October 1, 2001. Despite the termination of the Agreement, however,
petitioners continued to secure the premises of their assigned office. They were allegedly
directed to remain at their post by representatives of respondent. In support of their
contention, petitioners provided the Labor Arbiter with copies of petitioner Locsins pay slips
for the period of January to September 2002.
Then, on September 30, 2002, petitioners services were terminated. Thus, petitioners filed a
complaint before the Labor Arbiter for illegal dismissal and recovery of money claims such as
overtime pay, holiday pay, premium pay for holiday and rest day, service incentive leave pay,
Emergency Cost of Living Allowance, and moral and exemplary damages against PLDT.
The Labor Arbiter rendered a Decision finding PLDT liable for illegal dismissal. It was
explained in the Decision that petitioners were found to be employees of PLDT and not of
SSCP. Such conclusion was arrived at with the factual finding that petitioners continued to
serve as guards of PLDTs offices. As such employees, petitioners were entitled to substantive
and procedural due process before termination of employment.

Issue:
Is there employer-employee relationship?

Ruling:
Yes. From the foregoing circumstances, reason dictates that we conclude that petitioners
remained at their post under the instructions of respondent. We can further conclude that
respondent dictated upon petitioners that the latter perform their regular duties to secure
the premises during operating hours. This, to our mind and under the circumstances, is
sufficient to establish the existence of an employer-employee relationship.
To reiterate, while respondent and SSCP no longer had any legal relationship with the
termination of the Agreement, petitioners remained at their post securing the premises of
respondent while receiving their salaries, allegedly from SSCP. Clearly, such a situation makes
no sense, and the denials proffered by respondent do not shed any light to the situation. It is
but reasonable to conclude that, with the behest and, presumably, directive of respondent,
petitioners continued with their services. Evidently, such are indicia of control that
respondent exercised over petitioners.
Evidently, respondent having the power of control over petitioners must be considered as
petitioners employerfrom the termination of the Agreement onwardsas this was the
only time that any evidence of control was exhibited by respondent over petitioners and in
light of our ruling in Abella. Thus, as aptly declared by the NLRC, petitioners were entitled to
the rights and benefits of employees of respondent, including due process requirements in
the termination of their services.
Both the Labor Arbiter and NLRC found that respondent did not observe such due process
requirements. Having failed to do so, respondent is guilty of illegal dismissal.


Chavez v. NLRC
448 SCRA 478

Facts

Petitioner Pedro Chavez was hired as truck driver of Private Respondent Supreme Packaging,
Inc.
Chavez requested to avail himself of the benefits that a regular employees were receiving
but his request was denied
Chavez filed before NLRC a complaint for regularization. Later on he was dismissed by SPI
He later on filed an amended complaint for illegal dismissal

Issue
W/N there existed an employer-employee relationship between SPI and Chavez?
W/N Chavez is an independent contractor?
Held
Yes, there existed an employer-employee relationship between SPI and Chavez
Applying four-fold test, all elements are present
1. selection and engagement of the employee
- it was SPI who engaged the services of Chavez without intervention of third party
2. payment of wages
- that petitioner was paid on per trip basis is not significant, this is merely a method of
computing compensation and not a basis for determining the existence or absence of er-ee
relationship
3. power of dismissal
- power to dismiss was inherent in the fact that they engaged the services of Chavez as driver
4. power to control employee's conduct
- an employee is subject to employer's power to control the means and method by which the
work is to be performed while an independent contractor is free from control and
supervision of employer
* Manifestation of Power of Control of SPI to Chavez
truck was owned by SPI
express instruction in the method of delivery
instruction on parking of delivery truck
instruction on when and where Chavez would perform his task by issuing to him gate passes
and routing slips
Chavez is not and Independent Contractor
* Proof that Chavez is not an Independent Contractor
Chavez did not own the truck
SPI did not have substantial capitalization or investment
Delivery was exclusively done for SPI for 10years
* Er-Ee Relationship cannot be negated by expressly repudiating it in contract and providing
therein that the employee is an independent contractor. Indeed the employment status of
the person is defined and prescribed by law and not by what parties say it should be.


Coca-Cola Bottlers Phils., vs Dr. Climaco (2007) G.R. 146881
Facts:
Dr. Dean Climaco is a medical doctor who was hired by petitioner Coca-Cola BottlersPhils.,
Inc. by virtue of a Retainer Agreement for a period of 1 year with a monthlysalary of Three
Thousand Eight Hundred (P3,800.00). The Retainer Agreement, which began on January 1,
1988, was renewed annually. Thelast one expired on December 31, 1993. Despite the non-
renewal of the RetainerAgreement, respondent continued to perform his functions as
company doctor to Coca-Cola until he received a letter from petitioner company concluding
their retainershipagreement effective 30 days from receipt thereof.Petitioner was already
making inquiries regarding his status with the company. First, hewrote a letter addressed to
Dr. Willie Sy, the Acting President and Chairperson of theCommittee on Membership,
Philippine College of Occupational Medicine. In response,Dr. Sy wrote a letter to the
Personnel Officer of Coca-Cola Bottlers Phils., Bacolod City,stating that respondent should be
considered as a regular part-time physician, havingserved the company continuously for four
(4) years. He likewise stated that respondentmust receive all the benefits and privileges of an
employee under Article 157 (b) of theLabor Code.
Issue:
WON there exists an employer-employee relationship between Coca-Cola andDr. Climaco?
Held:
No employer-employee relationship exists between the parties. The Court, in determining
the existence of an employer-employee relationship, hasinvariably adhered to the four-fold
test: (1) the selection and engagement of theemployee; (2) the payment of wages; (3) the
power of dismissal; and
(4)the power tocontrol the employees conduct, or the so-called "control test," considered
tobe the most important element.
The Labor Arbiter and the NLRC correctly found that Coca-Cola lacked the power of control
over the performance by respondent of his duties. The Labor Arbiter reasonedthat the
Comprehensive Medical Plan, which contains the respondents objectives,duties and
obligations, does not tell respondent "how to conduct his physicalexamination, how to
immunize, or how to diagnose and treat his patients, employees of Coca-Cola, in each case."
The Comprehensive Medical Plan, provided guidelines merely to ensure that the endresult
was achieved, but did not control the means and methods by which respondentperformed
his assigned tasks. It is precisely because the company lacks the power of control that the
contract provides that respondent shall be directly responsible to theemployee concerned
and their dependents for any injury, harm or damage causedthrough professional
negligence, incompetence or other valid causes of action.Complainant does not dispute the
fact that outside of the two (2) hours that he isrequired to be at respondent companys
premises, he is not at all further required to just sit around in the premises and wait for an
emergency to occur so as to enable himfrom using such hours for his own benefit and
advantage. In fact, complainant maintainshis own private clinic attending to his private
practice in the city, where he services hispatients, bills them accordingly -- and if it is an
employee of respondent company whois attended to by him for special treatment that
needs hospitalization or operation, thisis subject to a special billing. More often than not, an
employee is required to stay in theemployers workplace or proximately close thereto that
he cannot utilize his timeeffectively and gainfully for his own purpose.


Gabriel vs Bilon
Bilon, Brazil and Pagaygay are jeepney drivers driving jeepneys owned by Melencio Gabriel.
They are paying P400/day for their boundary. Later, the drivers were required to pay an
additional P50.00 to cover police protection, car wash, deposit fee, and garage fees.
The three drivers refused to pay the additional P50.00. On April 30, 1995, when the drivers
reported to work, they were not given any jeepney to drive. Eventually, they were dismissed.
The three drivers sued Gabriel for illegal dismissal.
The Labor Arbiter ruled in favor of the drivers and ordered Gabriel to pay the drivers their
backwages and their separation pay amounting to about a total of P1.03M.
On April 18, 1997, the LA promulgated its decision and on the same day sent a copy thereof
to Gabriel but Flordeliza (wife of Gabriel) refused to receive the copy. Apparently, Gabriel
died on April 4, 1997. The copy was resent via registered mail on May 28, 1997. Flordeliza
appealed to the LA on June 5, 1997.
The LA dismissed the appeal; it ruled that the appeal was not on time because the
promulgation was made on April 18, 1997 and that the appeal on June 5, 1997 was already
beyond the ten day period required for appeal.
The National Labor Relations Commission reversed the LA. It ruled that there was no
employee-employer relationship between the drivers and Gabriel. The Court of Appeals
reversed the NLRC but it ruled that the separation pay should not be awarded but rather, the
employees should be reinstated.
ISSUE: Whether or not the appeal before the LA was made on time. Whether or not there
was an employer-employee relationship between the drivers and Gabriel. Whether or not
there was a strained relation between Gabriel and the drivers.
HELD: The appeal was made on time because when the promulgation was made Gabriel is
already dead. The ten day requirement to make an appeal is not applicable in this situation
because Gabriel was not yet properly substituted by the wife. The counting of the period
should be made starting from the date when the copy was sent via registered mail.
Therefore, the appeal filed on June 5 was made on time.
There exists an employer-employee relationship between the drivers and Gabriel. The fact
that the drivers do not receive fixed wages but get only that in excess of the so-called
boundary *that+ they pay to the owner/operator is not sufficient to withdraw the
relationship between them from that of employer and employee.
The award of the separation pay is not proper. It was not shown that there was a strained
relationship between Gabriel and the drivers so as to cause animosity if they are reinstated.
The Strained Relations Principle is only applied if it is shown that reinstatement would only
cause antagonism between the employer and the employee; and that the only solution is
separation and the payment of separation pay.


ALFREDO B. FELIX, petitioner,
vs.
DR. BRIGIDA BUENASEDA, in her capacity as Director, and ISABELO BAEZ, JR., in his
capacity as Administrator, both of the National Center for Mental Health, and the CIVIL
SERVICE COMMISSION, respondents.

KAPUNAN, J.:
Taking advantage of this Court's decisions involving the removal of various civil servants
pursuant to the general reorganization of the government after the EDSA Revolution,
petitioner assails his dismissal as Medical Specialist I of the National Center for Mental
Health (formerly the National Mental Hospital) as illegal and violative of the constitutional
provision on security of tenure allegedly because his removal was made pursuant to an
invalid reorganization.

In Mendoza vs. Quisumbing 1 and the consolidated cases involving the reorganization of
various government departments and agencies we held:

We are constrained to set aside the reorganizations embodied in these consolidated
petitions because the heads of departments and agencies concerned have chosen to rely on
their own concepts of unlimited discretion and "progressive" ideas on reorganization instead
of showing that they have faithfully complied with the clear letter and spirit of the two
Constitutions and the statutes affecting reorganization. 2

In De Guzman vs. CSC 3, we upheld the principle, laid down by Justice J.B.L. Reyes in Cruz vs.
Primicias 4 that a valid abolition of an office neither results in a separation or removal,
likewise upholding the corollary principle that "if the abolition is void, the incumbent is
deemed never to have ceased to hold office," in sustaining therein petitioner's right to the
position she held prior to the reorganization.

The instant petition on its face turns on similar facts and issues, which is, that petitioner's
removal from a permanent position in the National Center for Mental Health as a result of
the reorganization of the Department of Health was void.

However, a closer look at the facts surrounding the instant petition leads us to a different
conclusion.

After passing the Physician's Licensure Examinations given by the Professional Regulation
Commission in June of 1979, petitioner, Dr. Alfredo B. Felix, joined the National Center for
Mental Health (then the National Mental Hospital) on May 26, 1980 as a Resident Physician
with an annual salary of P15,264.00. 5 In August of 1983, he was promoted to the position of
Senior Resident Physician 6 a position he held until the Ministry of Health reorganized the
National Center for Mental Health (NCMH) in January of 1988, pursuant to Executive Order
No. 119.

Under the reorganization, petitioner was appointed to the position of Senior Resident
Physician in a temporary capacity immediately after he and other employees of the NCMH
allegedly tendered their courtesy resignations to the Secretary of Health. 7 In August of
1988, petitioner was promoted to the position of Medical Specialist I (Temporary Status),
which position was renewed the following year. 8

In 1988, the Department of Health issued Department Order No. 347 which required board
certification as a prerequisite for renewal of specialist positions in various medical centers,
hospitals and agencies of the said department. Specifically, Department Order No. 347
provided that specialists working in various hospitals and branches of the Department of
Health be recognized as "Fellows" of their respective specialty societies and/or "Diplomates"
of their specialty boards or both. The Order was issued for the purpose of upgrading the
quality of specialties in DOH hospitals by requiring them to pass rigorous theoretical and
clinical (bedside) examinations given by recognized specialty boards, in keeping up with
international standards of medical practice.

Upon representation of the Chiefs of Hospitals of various government hospitals and medical
centers, (then) Secretary of Health Alfredo Bengzon issued Department Order No. 347
providing for an extension of appointments of Medical Specialist positions in cases where the
termination of medical specialist who failed to meet the requirement for board certification
might result in the disruption of hospital services. Department Order No. 478 issued the
following guidelines:

1. As a general policy, the provision of Department Order No. 347, Sec. 4 shall
apply unless the Chief of Hospital requests for exemption, certifies that its application will
result in the disruption of the delivery service together with the steps taken to implement
Section 4, and submit a plan of action, lasting no more than 3-years, for the eventual phase
out of non-Board certified medical specialties.

2. Medical specialist recommended for extension of appointment shall meet the
following minimum criteria:

a. DOH medical specialist certified

b. Has been in the service of the Department at least three (3) years prior to
December 1988.

c. Has applied or taken the specialty board examination.

3. Each recommendation for extension of appointment must be individually
justified to show not only the qualification of the recommendee, but also what steps he has
taken to be board certified.

4. Recommendation for extension of appointment shall be evaluated on a case to
case basis.

5. As amended, the other provisions of Department Order No. 34/s. 1988 stands.

Petitioner was one of the hundreds of government medical specialist who would have been
adversely affected by Department Order No. 347 since he was no yet accredited by the
Psychiatry Specialty Board. Under Department Order No. 478, extension of his appointment
remained subject to the guidelines set by the said department order. On August 20, 1991,
after reviewing petitioner's service record and performance, the Medical Credentials
Committee of the National Center for Mental Health recommended non-renewal of his
appointment as Medical Specialist I, informing him of its decision on August 22, 1991. He
was, however, allowed to continue in the service, and receive his salary, allowances and
other benefits even after being informed of the termination of his appointment.

On November 25, 1991, an emergency meeting of the Chiefs of Service was held to discuss,
among other matters, the petitioner's case. In the said meeting Dr. Vismindo de Grecia,
petitioner's immediate supervisor, pointed out petitioner's poor performance, frequent
tardiness and inflexibility as among the factors responsible for the recommendation not to
renew his appointment. 9 With one exception, other department heads present in the
meeting expressed the same opinion, 10 and the overwhelming concensus was for non-
renewal. The matter was thereafter referred to the Civil Service Commission, which on
February 28, 1992 ruled that "the temporary appointment (of petitioner) as Medical
Specialist I can be terminated at any time . . ." and that "[a]ny renewal of such appointment
is within the discretion of the appointing authority." 11 Consequently, in a memorandum
dated March 25, 1992 petitioner was advised by hospital authorities to vacate his cottage
since he was no longer with said memorandum petitioner filed a petition with the Merit
System Protection Board (MSPB) complaining about the alleged harassment by respondents
and questioning the non-renewal of his appointment. In a Decision rendered on July 29,
1992, the (MSPB) dismissed petitioner's complaint for lack of merit, finding that:

As an apparent incident of the power to appoint, the renewal of a temporary appointment
upon or after its expiration is a matter largely addressed to the sound discretion of the
appointing authority. In this case, there is no dispute that Complainant was a temporary
employee and his appointment expired on August 22, 1991. This being the case, his re-
appointment to his former position or the renewal of his temporary appointment would be
determined solely by the proper appointing authority who is the Secretary, Department of
Health upon the favorable recommendation of the Chief of Hospital III, NCMH. The Supreme
Court in the case of Central Bank vs. Civil Service Commission G.R. Nos. 80455-56 dated April
10, 1989, held as follows:

The power of appointment is essentially a political question involving considerations of
wisdom which only the appointing authority can decide.

In this light, Complainant therefore, has no basis in law to assail the non-renewal of his
expired temporary appointment much less invoke the aid of this Board cannot substitute its
judgment to that of the appointing authority nor direct the latter to issue an appointment in
the complainant's favor.

Regarding the alleged Department Order secured by the complainant from the Department
of Health (DOH), the Board finds the same inconsequential. Said Department Order merely
allowed the extension of tenure of Medical Specialist I for a certain period but does not
mandate the renewal of the expired appointment.

The Board likewise finds as baseless complainant's allegation of harassment. It should be
noted that the subsistence, quarters and laundry benefits provided to the Complainant were
in connection with his employment with the NCMH. Now that his employment ties with the
said agency are severed, he eventually loses his right to the said benefits. Hence, the Hospital
Management has the right to take steps to prevent him from the continuous enjoyment
thereof, including the occupancy of the said cottage, after his cessation form office.

In sum, the actuations of Dr. Buenaseda and Lt. Col. Balez are not shown to have been
tainted with any legal infirmity, thus rendering as baseless, this instant complaint.

Said decision was appealed to the Civil Service Commission which dismissed the same in its
Resolution dated December 1, 1992. Motion for Reconsideration was denied in CSC
Resolution No. 93-677 dated February 3, 1993, hence this appeal, in which petitioner
interposes the following assignments of errors:

I
THE PUBLIC RESPONDENT CIVIL SERVICE COMMISSION ERRED IN HOLDING THAT BY
SUBMITTING HIS COURTESY RESIGNATION AND ACCEPTING HIS TEMPORARY APPOINTMENT
PETITIONER HAD EFFECTIVELY DIVESTED HIMSELF OF HIS SECURITY OF TENURE,
CONSIDERING THE CIRCUMSTANCES OF SUCH COURTESY RESIGNATION AND ACCEPTANCE
OF APPOINTMENT.

II
THE RESPONDENT COMMISSION IN NOT DECLARING THAT THE CONVERSION OF THE
PERMANENT APPOINTMENT OF PETITIONER TO TEMPORARY WAS DONE IN BAD FAITH IN
THE GUISE OF REORGANIZATION AND THUS INVALID, BEING VIOLATIVE OF THE PETITIONER'S
RIGHT OF SECURITY OF TENURE.

Responding to the instant petition, 12 the Solicitor General contends that 1) the petitioner's
temporary appointment after the reorganization pursuant to E.O. No. 119 were valid and did
not violate his constitutional right of security of tenure; 13 2) petitioner is guilty of estoppel
or laches, having acquiesced to such temporary appointments from 1988 to 1991; 14 and 3)
the respondent Commission did not act with grave abuse of discretion in affirming the
petitioner's non-renewal of his appointment at the National Center for Mental Hospital. 15

We agree.

The patent absurdity of petitioner's posture is readily obvious. A residency or resident
physician position in a medical specialty is never a permanent one. Residency connotes
training and temporary status. It is the step taken by a physician right after post-graduate
internship (and after hurdling the Medical Licensure Examinations) prior to his recognition as
a specialist or sub-specialist in a given field.

A physician who desires to specialize in Cardiology takes a required three-year accredited
residency in Internal Medicine (four years in DOH hospitals) and moves on to a two or three-
year fellowship or residency in Cardiology before he is allowed to take the specialty
examinations given by the appropriate accrediting college. In a similar manner, the
accredited Psychiatrist goes through the same stepladder process which culminates in his
recognition as a fellow or diplomate (or both) of the Psychiatry Specialty Board. 16 This
upward movement from residency to specialist rank, institutionalized in the residency
training process, guarantees minimum standards and skills and ensures that the physician
claiming to be a specialist will not be set loose on the community without the basic
knowledge and skills of his specialty. Because acceptance and promotion requirements are
stringent, competitive, and based on merit. acceptance to a first year residency program is
no guaranty that the physician will complete the program. Attribution rates are high. Some
programs are pyramidal. Promotion to the next post-graduate year is based on merit and
performance determined by periodic evaluations and examinations of knowledge, skills and
bedside manner. 17 Under this system, residents, specialty those in university teaching
hospitals 18 enjoy their right to security of tenure only to the extent that they periodically
make the grade, making the situation quite unique as far as physicians undergoing post-
graduate residencies and fellowships are concerned. While physicians (or consultants) of
specialist rank are not subject to the same stringent evaluation procedures, 19 specialty
societies require continuing education as a requirement for accreditation for good standing,
in addition to peer review processes based on performance, mortality and morbidity audits,
feedback from residents, interns and medical students and research output. The nature of
the contracts of resident physicians meet traditional tests for determining employer-
employee relationships, but because the focus of residency is training, they are neither here
nor there. Moreover, stringent standards and requirements for renewal of specialist-rank
positions or for promotion to the next post-graduate residency year are necessary because
lives are ultimately at stake.

Petitioner's insistence on being reverted back to the status quo prior to the reorganizations
made pursuant to Executive Order No. 119 would therefore be akin to a college student
asking to be sent back to high school and staying there. From the position of senior resident
physician, which he held at the time of the government reorganization, the next logical step
in the stepladder process was obviously his promotion to the rank of Medical Specialist I, a
position which he apparently accepted not only because of the increase in salary and rank
but because of the prestige and status which the promotion conferred upon him in the
medical community. Such status, however, clearly carried with it certain professional
responsibilities including the responsibility of keeping up with the minimum requirements of
specialty rank, the responsibility of keeping abreast with current knowledge in his specialty
rank, the responsibility of completing board certification requirements within a reasonable
period of time. The evaluation made by the petitioner's peers and superiors clearly showed
that he was deficient in a lot of areas, in addition to the fact that at the time of his non-
renewal, he was not even board-certified.

It bears emphasis that at the time of petitioner's promotion to the position of Medical
Specialist I (temporary) in August of 1988, no objection was raised by him about the change
of position or the temporary nature of designation. The pretense of objecting to the
promotion to specialist rank apparently came only as an afterthought, three years later,
following the non-renewal of his position by the Department of Health.

We lay stress to the fact that petitioner made no attempt to oppose earlier renewals of his
temporary Specialist I contracts in 1989 and 1990, clearly demonstrating his acquiescence to
if not his unqualified acceptance of the promotion (albeit of a temporary nature) made in
1988. Whatever objections petitioner had against the earlier change from the status of
permanent senior resident physician to temporary senior physician were neither pursued nor
mentioned at or after his designation as Medical Specialist I (Temporary). He is therefore
estopped from insisting upon a right or claim which he had plainly abandoned when he, from
all indications, enthusiastically accepted the promotion. His negligence to assert his claim
within a reasonable time, coupled with his failure to repudiate his promotion to a temporary
position, warrants a presumption, in the words of this Court in Tijam vs. Sibonghanoy, 20
that he "either abandoned (his claim) or declined to assert it."

There are weighty reasons of public policy and convenience which demand that any claim to
any position in the civil service, permanent, temporary of otherwise, or any claim to a
violation of the constitutional provision on security of tenure be made within a reasonable
period of time. An assurance of some degree of stability in the civil service is necessary in
order to avoid needless disruptions in the conduct of public business. Delays in the
statement of a right to any position are strongly discouraged. 21 In the same token, the
failure to assert a claim or the voluntary acceptance of another position in government,
obviously without reservation, leads to a presumption that the civil servant has either given
up his claim of has already settled into the new position. This is the essence of laches which
is the failure or neglect, for an unreasonable and unexplained length of time to do that
which, by exercising due diligence, could or should have been done earlier; it is the
negligence or omission to assert a right within a reasonable time, warranting a presumption
that the party entitled to assert it either has abandoned it or declined to assert it. 22

In fine, this petition, on its surface, seems to be an ordinary challenge against the validity of
the conversion of petitioner's position from permanent resident physician status to that of a
temporary resident physician pursuant to the government reorganization after the EDSA
Revolution. What is unique to petitioner's averments is the fact that he hardly attempts to
question the validity of his removal from his position of Medical Specialist I (Temporary) of
the National Center for Mental Health, which is plainly the pertinent issue in the case at
bench. The reason for this is at once apparent, for there is a deliberate and dishonest
attempt to a skirt the fundamental issue first, by falsely claiming that petitioner was forced
to submit his courtesy resignation in 1987 when he actually did not; and second, by insisting
on a right of claim clearly abandoned by his acceptance of the position of Medical Specialist I
(Temporary), which is hence barred by laches.

The validity of the government reorganization of the Ministry of Health pursuant to E.O. 119
not being the real issue in the case at bench, we decline to make any further
pronouncements relating to petitioner's contentions relating to the effect on him of the
reorganization except to say that in the specific case of the change in designation from
permanent resident physician to temporary resident physician, a change was necessary,
overall, to rectify a ludicrous situation whereby some government resident physicians were
erroneously being classified as permanent resident physicians in spite of the inherently
temporary nature of the designation. The attempts by the Department of Health not only to
streamline these positions but to make them conform to current standards of specialty
practice is a step in a positive direction. The patient who consults with a physician of
specialist rank should at least be safe in the assumption that the government physician of
specialist rank: 1.) has completed all necessary requirements at least assure the public at
large that those in government centers who claim to be specialists in specific areas of
Medicine possess the minimum knowledge and skills required to fulfill that first and
foremost maxim, embodied in the Hippocratic Oath, that they do their patients no harm.
Primium non nocere.

Finally, it is crystal clear, from the facts of the case at bench, that the petitioner accepted a
temporary appointment (Medical Specialist I). As respondent Civil Service Commission has
correctly pointed out 23, the appointment was for a definite and renewable period which,
when it was not renewed, did not involve a dismissal but an expiration of the petitioner's
term.

ACCORDINGLY, the petition is hereby DISMISSED, for lack of merit.


ART. 95

Autobus Transport System vs Bautista (2005) G.R. 156364
Facts:
Respondent Antonio Bautista has been employed by petitioner Auto Bus TransportSystems,
Inc., since May 1995, as driver-conductor with travel routes Manila- Tuguegarao via Baguio,
Baguio-Tuguegarao via Manila and Manila-Tabuk via Baguio.Respondent was paid on
commission basis, seven percent (7%) of the total grossincome per travel, on a twice a
month basis.
On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe,
NuevaVizcaya, the bus he was driving accidentally bumped the rear portion of Autobus
No.124, as the latter vehicle suddenly stopped at a sharp curve without giving any
warning.Respondent averred that the accident happened because he was compelled by
themanagement to go back to Roxas, Isabela, although he had not slept for almost twenty-
four (24) hours, as he had just arrived in Manila from Roxas, Isabela.Respondent further
alleged that he was not allowed to work until he fully paid theamount of P75,551.50,
representing thirty percent (30%) of the cost of repair of thedamaged buses and that despite
respondent's pleas for reconsideration, the same wasignored by management. After a
month, management sent him a letter of termination. Thus, on 02 February 2000,
respondent instituted a Complaint for Illegal Dismissal withMoney Claims for nonpayment of
13th month pay and service incentive leave payagainst Autobus.
Issue:
WON respondent is entitled to service incentive leave.
Held:
The respondent is entitled to service incentive leave. The disposition of the issue revolves
around the proper interpretation of Article 95 of the Labor Code vis--vis Section 1(D), Rule
V, Book III of the Implementing Rules andRegulations of the Labor Code which provides:
RIGHT TO SERVICE INCENTIVE LEAVE
, (a)Every employee who has rendered at least one year of service shall be entitled to ayearly
service incentive leave of five days with pay.Moreover, Book III, Rule V: SERVICE INCENTIVE
LEAVE also states that this rule shallapply to all employees except: (d)Field personnel and
other employees whoseperformance is unsupervised by the employer including those who
are engaged on taskor contract basis, purely commission basis, or those who are paid in a
fixed amount forperforming work irrespective of the time consumed in the performance
thereof;A careful examination of said provisions of law will result in the conclusion that
thegrant of service incentive leave has been delimited by the Implementing Rules
andRegulations of the Labor Code to apply only to those employees not explicitly excludedby
Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leaveshall not
apply to employees classified as "field personnel." The phrase "other employees whose
performance is unsupervised by the employer"must not be understood as a separate
classification of employees to which serviceincentive leave shall not be granted. Rather, it
serves as an amplification of theinterpretation of the definition of field personnel under the
Labor Code as those "whoseactual hours of work in the field cannot be determined with
reasonable certainty." The same is true with respect to the phrase "those who are engaged
on task or contractbasis, purely commission basis." Said phrase should be related with "field
personnel,"applying the rule on ejusdem generis that general and unlimited terms are
restrainedand limited by the particular terms that they follow. Hence, employees engaged
ontask or contract basis or paid on purely commission basis are not automatically exempted
from the grant of service incentive leave, unless, they fall under theclassification of field
personnel.What must be ascertained in order to resolve the issue of propriety of the grant of
service incentive leave to respondent is whether or not he is a field personnel.According to
Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal placeof business or branch office of
the employer and whose actual hours of work in the fieldcannot be determined with
reasonable certainty. This definition is further elaborated inthe Bureau of Working
Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees
Association 10 which states that:As a general rule, field personnel are those whose
performance of their job/service isnot supervised by the employer or his representative, the
workplace being away fromthe principal office and whose hours and days of work cannot be
determined withreasonable certainty; hence, they are paid specific amount for rendering
specific serviceor performing specific work. If required to be at specific places at specific
times,employees including drivers cannot be said to be field personnel despite the fact
thatthey are performing work away from the principal office of the employee.At this point, it
is necessary to stress that the definition of a "field personnel" is notmerely concerned with
the location where the employee regularly performs his dutiesbut also with the fact that the
employee's performance is unsupervised by theemployer. As discussed above, field
personnel are those who regularly perform theirduties away from the principal place of
business of the employer and whose actualhours of work in the field cannot be determined
with reasonable certainty. Thus, inorder to conclude whether an employee is a field
employee, it is also necessary toascertain if actual hours of work in the field can be
determined with reasonablecertainty by the employer. In so doing, an inquiry must be made
as to whether or notthe employee's time and performance are constantly supervised by the
employer.Respondent is not a field personnel but a regular employee who performs tasks
usuallynecessary and desirable to the usual trade of petitioner's business.
Accordingly,respondent is entitled to the grant of service incentive leave. The clear policy of
the Labor Code is to grant service incentive leave pay to workers inall establishments, subject
to a few exceptions. Section 2, Rule V, Book III of theImplementing Rules and Regulations
provides that "every employee who has renderedat least one year of service shall be entitled
to a yearly service incentive leave of fivedays with pay."Service incentive leave is a right
which accrues to every employee who has served"within 12 months, whether continuous or
broken reckoned from the date the employeestarted working, including authorized absences
and paid regular holidays unless theworking days in the establishment as a matter of practice
or policy, or that provided inthe employment contracts, is less than 12 months, in which case
said period shall beconsidered as one year." It is also "commutable to its money equivalent if
not used or exhausted at the end of the year." In other words, an employee who has served
for oneyear is entitled to it. He may use it as leave days or he may collect its monetary value.
To limit the award to three years, as the solicitor general recommends, is to undulyrestrict
such right.


ART. 97

Songco vs. NLRC
Facts: Zuellig (M) Inc. filed with the Department of Labor (Regional Office No. 4) a clearance
to terminate the services of petitioners Jose Songco, Romeo Cipres and Amancio Manuel due
to alleged financial losses. However, the petitioners argued that the company is not suffering
any losses and the real reason for their termination was their membership in the union. At
the last hearing of the case, the petitioner manifested that they no longer contesting their
dismissal, however, they argued that they should be granted a separation pay. Each of the
petitioners was receiving a monthly salary of P40, 000.00 plus commissions for every sale
they made. Under the CBA entered by the Zuellig Inc. and the petitioners, in Article XIV,
Section 1(a), Any employee, who is separated from employment due to old age, sickness,
death or permanent lay-off not due to the fault of said employee shall receive from the
company a retirement gratuity in an amount equivalent to one months salary per year of
service. One month of salary as used in this paragraph shall be deemed equivalent to the
salary at date of retirement; years of service shall be deemed equivalent to total service
credits, a fraction of at least six months being considered one year, including probationary
employment. Other basis for petitioners contention are Article 284 of the Labor Code with
regards to reduction of personnel and Sections 9(b) and 10 of Rule 1, Book VI of the Rules
Implementing the Labor Code. The Labor Arbiter rendered his decision directing the
company to pay the complainants separation pay equivalent to their one month salary
(exclusive of commissions, allowances, etc.) for every year of service that they have worked
with the company. The petitioners appealed to the NLRC but it was denied. Petitioner Romeo
Cipres filed a Notice of Voluntary Abandonment and Withdrawal of petition contending that
he had received, to his full and complete satisfaction, his separation pay. Hence, this
petition.

Issue: Whether or not earned sales commissions and allowances should be included in the
monthly salary of petitioners for the purpose of computation of their separation pay.

Held: The petition is granted. Petitioners contention that in arriving at the correct and legal
amount of separation pay due to them, whether under the Labor Code or the CBA, their
basic salary, earned sales commissions and allowances should be added together. Insofar as
whether the allowances should be included in the monthly salary of petitioners for the
purpose of computation of their separation pay is concerned, this has been settled in the
case of Santos vs. NLRC, 76721, in the computation of backwages and separation pay,
account must be taken not only of the basic salary of petitioner but also of her
transportation and emergency living allowances. In the issue of whether commission should
be included in the computation of their separation pay, it is proper to define first
commission. Blacks Law Dictionary defined commission as the recompensed, compensation
or reward of an agent, salesman, executor, trustees, receiver, factor, broker or bailee, when
the same is calculated as a percentage on the amount of his transactions or on the profit to
the principal. The nature of the work of a salesman and the reason for such type of
remuneration for services rendered demonstrate clearly that the commission are part of
petitioners wage and salary. Some salesmen do not receive any basic salary but depend on
commission and allowances or commissions alone, are part of petitioners wage and salary.
Some salesman do not received any basic salary but depend on commission and allowances
or commissions alone, although an employer-employee relationship exist. In Soriano v. NLRC,
it is ruled then that, the commissions also claimed by petitioner (override commission plus
net deposit incentive) are not properly includible in such base figure since such commissions
must be earned by actual market transactions attributable to petitioner. Applying this by
analogy, since the commissions in the present case were earned by actual market
transactions attributable to petitioners, these should be included in their separation pay. In
the computation thereof, what should be taken into account is the average commissions
earned during their last year of employment.


Millares et al., vs NLRC () 305 SCRA 501
Facts:
Petitioners numbering one hundred sixteen occupied the positions of Technical Staff,Unit
Manager, Section Manager, Department Manager, Division Manager and VicePresident in
the mill site of respondent Paper Industries Corporation of the Philippines(PICOP) in Bislig,
Surigao del Sur.In 1992 PICOP suffered a major financial setback allegedly brought about by
the jointimpact of restrictive government regulations on logging and the economic crisis.
Toavert further losses, it undertook a retrenchment program and terminated the servicesof
petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1)
month basic pay for every year of service. Believing however that theallowances they
allegedly regularly received on a monthly basis during theiremployment should have been
included in the computation thereof they lodged acomplaint for separation pay differentials.
Issue:
Whether the allowances are included in the definition of "facilities" in Art. 97,par. (f), of the
Labor Code, being necessary and indispensable for their existence andsubsistence.
Held:
The allowances are not part of the wages of the employees.Wage is defined in letter (f) as
the remuneration or earnings, however designated,capable of being expressed in terms of
money, whether fixed or ascertained on a time,task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to be done, or for services
rendered or to be renderedand includes the fair and reasonable value, as determined by the
Secretary of Labor, of board, lodging, or other facilities customarily furnished by the
employer to theemployee.When an employer customarily furnishes his employee board,
lodging or other facilities,the fair and reasonable value thereof, as determined by the
Secretary of Labor andEmployment, is included in "wage." Customary is founded on long-
established andconstant practice connoting regularity. The receipt of an allowance on a
monthly basisdoes not ipso facto characterize it as regular and forming part of salary
because thenature of the grant is a factor worth considering. The court agrees with the
observationof the Office of the Solicitor General that the subject allowances were
temporarily, notregularly, received by petitioners. Although it is quite easy to comprehend
"board" and"lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the
RulesImplementing the Labor Code gives meaning to the term as including articles orservices
for the benefit of the employee or his family but excluding tools of the trade orarticles or
service primarily for the benefit of the employer or necessary to the conductof the
employer's business.In determining whether a privilege is a facility, the criterion is not so
much its kind butits purpose. Revenue Audit Memo Order No. 1-87 pertinently provides
3.2transportation, representation or entertainment expenses shall not constitute
taxablecompensation if: (a)It is for necessary travelling and representation or
entertainmentexpenses paid or incurred by the employee in the pursuit of the trade or
business of theemployer, and (b) The employee is required to, and does, make
anaccounting/liquidation for such expense in accordance with the specific requirements of
substantiation for such category or expense.Board and lodging allowances furnished toan
employee not in excess of the latter's needs and given free of charge, constituteincome to
the latter except if such allowances or benefits are furnished to the employeefor the
convenience of the employer and as necessary incident to proper performanceof his duties
in which case such benefits or allowances do not constitute taxableincome. The Secretary of
Labor and Employment under Sec. 6, Rule VII, Book III, of the RulesImplementing the Labor
Code may from time to time fix in appropriate issuances the"fair and reasonable value of
board, lodging and other facilities customarily furnished byan employer to his employees."
Petitioners' allowances do not represent such fair andreasonable value as determined by the
proper authority simply because theStaff/Manager's allowance and transportation allowance
were amounts given byrespondent company in lieu of actual provisions for housing and
transportation needswhereas the Bislig allowance was given in consideration of being
assigned to the hostileenvironment then prevailing in Bislig. The inevitable conclusion is that
subjectallowances did not form part of petitioners' wages.

SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, EDGARDO
ZUIGA and DANILO CAETE, Respondents.

MENDOZA, J.:

Assailed in this petition for review on certiorari are the January 11, 2006 Decision1 and the
March 31, 2006 Resolution2 of the Court of Appeals (CA), in CA-G.R. SP No. 00598 which
affirmed with modification the March 31, 2004 Decision3 and December 15, 2004
Resolution4 of the National Labor Relations Commission (NLRC). The NLRC Decision found
the petitioners, SLL International Cables Specialist (SLL) and its manager, Sonny L. Lagon
(petitioners), not liable for the illegal dismissal of Roldan Lopez, Danilo Caete and Edgardo
Zuiga (private respondents) but held them jointly and severally liable for payment of certain
monetary claims to said respondents.

A chronicle of the factual antecedents has been succinctly summarized by the CA as follows:

Sometime in 1996, and January 1997, private respondents Roldan Lopez (Lopez for brevity)
and Danilo Caete (Caete for brevity), and Edgardo Zuiga (Zuiga for brevity) respectively,
were hired by petitioner Lagon as apprentice or trainee cable/lineman. The three were paid
the full minimum wage and other benefits but since they were only trainees, they did not
report for work regularly but came in as substitutes to the regular workers or in undertakings
that needed extra workers to expedite completion of work. After their training, Zuiga,
Caete and Lopez were engaged as project employees by the petitioners in their Islacom
project in Bohol. Private respondents started on March 15, 1997 until December 1997. Upon
the completion of their project, their employment was also terminated. Private respondents
received the amount of P145.00, the minimum prescribed daily wage for Region VII. In July
1997, the amount of P145 was increased to P150.00 by the Regional Wage Board (RWB) and
in October of the same year, the latter was increased to P155.00. Sometime in March 1998,
Zuiga and Caete were engaged again by Lagon as project employees for its PLDT Antipolo,
Rizal project, which ended sometime in (sic) the late September 1998. As a consequence,
Zuiga and Caetes employment was terminated. For this project, Zuiga and Caete
received only the wage of P145.00 daily. The minimum prescribed wage for Rizal at that time
was P160.00.

Sometime in late November 1998, private respondents re-applied in the Racitelcom project
of Lagon in Bulacan. Zuiga and Caete were re-employed. Lopez was also hired for the said
specific project. For this, private respondents received the wage of P145.00. Again, after the
completion of their project in March 1999, private respondents went home to Cebu City.

On May 21, 1999, private respondents for the 4th time worked with Lagons project in
Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their contract
would expire on February 28, 2000, the period of completion of the project. From May 21,
1997-December 1999, private respondents received the wage of P145.00. At this time, the
minimum prescribed rate for Manila was P198.00. In January to February 28, the three
received the wage of P165.00. The existing rate at that time was P213.00.


For reasons of delay on the delivery of imported materials from Furukawa Corporation, the
Camarin project was not completed on the scheduled date of completion. Face[d] with
economic problem[s], Lagon was constrained to cut down the overtime work of its
worker[s][,] including private respondents. Thus, when requested by private respondents on
February 28, 2000 to work overtime, Lagon refused and told private respondents that if they
insist, they would have to go home at their own expense and that they would not be given
anymore time nor allowed to stay in the quarters. This prompted private respondents to
leave their work and went home to Cebu. On March 3, 2000, private respondents filed a
complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997
and 1998 and service incentive leave pay as well as damages and attorneys fees.

In their answers, petitioners admit employment of private respondents but claimed that the
latter were only project employees[,] for their services were merely engaged for a specific
project or undertaking and the same were covered by contracts duly signed by private
respondents. Petitioners further alleged that the food allowance of P63.00 per day as well as
private respondents allowance for lodging house, transportation, electricity, water and
snacks allowance should be added to their basic pay. With these, petitioners claimed that
private respondents received higher wage rate than that prescribed in Rizal and Manila.

Lastly, petitioners alleged that since the workplaces of private respondents were all in
Manila, the complaint should be filed there. Thus, petitioners prayed for the dismissal of the
complaint for lack of jurisdiction and utter lack of merit. (Citations omitted.)

On January 18, 2001, Labor Arbiter Reynoso Belarmino (LA) rendered his decision5 declaring
that his office had jurisdiction to hear and decide the complaint filed by private respondents.
Referring to Rule IV, Sec. 1 (a) of the NLRC Rules of Procedure prevailing at that time,6 the LA
ruled that it had jurisdiction because the "workplace," as defined in the said rule, included
the place where the employee was supposed to report back after a temporary detail,
assignment or travel, which in this case was Cebu.


As to the status of their employment, the LA opined that private respondents were regular
employees because they were repeatedly hired by petitioners and they performed activities
which were usual, necessary and desirable in the business or trade of the employer.

With regard to the underpayment of wages, the LA found that private respondents were
underpaid. It ruled that the free board and lodging, electricity, water, and food enjoyed by
them could not be included in the computation of their wages because these were given
without their written consent.

The LA, however, found that petitioners were not liable for illegal dismissal. The LA viewed
private respondents act of going home as an act of indifference when petitioners decided to
prohibit overtime work.7

In its March 31, 2004 Decision, the NLRC affirmed the findings of the LA. In addition, the
NLRC noted that not a single report of project completion was filed with the nearest Public
Employment Office as required
by the Department of Labor and Employment (DOLE) Department Order No. 19, Series of
1993.8 The NLRC later denied9 the motion for reconsideration10 subsequently filed by
petitioners.

When the matter was elevated to the CA on a petition for certiorari, it affirmed the findings
that the private respondents were regular employees. It considered the fact that they
performed functions which were the regular and usual business of petitioners. According to
the CA, they were clearly members of a work pool from which petitioners drew their project
employees.

The CA also stated that the failure of petitioners to comply with the simple but compulsory
requirement to submit a report of termination to the nearest Public Employment Office
every time private respondents employment was terminated was proof that the latter were
not project employees but regular employees.

The CA likewise found that the private respondents were underpaid. It ruled that the board
and lodging, electricity, water, and food enjoyed by the private respondents could not be
included in the computation of their wages because these were given without their written
consent. The CA added that the private respondents were entitled to 13th month pay.

The CA also agreed with the NLRC that there was no illegal dismissal. The CA opined that it
was the petitioners prerogative to grant or deny any request for overtime work and that the
private respondents act of leaving the workplace after their request was denied was an act
of abandonment.

In modifying the decision of the labor tribunal, however, the CA noted that respondent
Roldan Lopez did not work in the Antipolo project and, thus, was not entitled to wage
differentials. Also, in computing the differentials for the period January and February 2000,
the CA disagreed in the award of differentials based on the minimum daily wage of P223.00,
as the prevailing minimum daily wage then was only P213.00. Petitioners sought
reconsideration but the CA denied it in its March 31, 2006 Resolution.11

In this petition for review on certiorari,12 petitioners seek the reversal and setting aside of
the CA decision anchored on this lone:

GROUND/ASSIGNMENT OF ERROR

THE PUBLIC RESPONDENT NLRC COMMITTED A SERIOUS ERROR IN LAW IN AWARDING
WAGE DIFFERENTIALS TO THE PRIVATE COMPLAINANTS ON THE BASES OF MERE
TECHNICALITIES, THAT IS, FOR LACK OF WRITTEN CONFORMITY x x x AND LACK OF NOTICE
TO THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE)[,] AND THUS, THE COURT OF
APPEALS GRAVELY ERRED IN AFFIRMING WITH MODIFICATION THE NLRC DECISION IN THE
LIGHT OF THE RULING IN THE CASE OF JENNY M. AGABON and VIRGILIO AGABON vs, NLRC,
ET AL., GR NO. 158963, NOVEMBER 17, 2004, 442 SCRA 573, [AND SUBSEQUENTLY IN THE
CASE OF GLAXO WELLCOME PHILIPPINES, INC. VS. NAGAKAKAISANG EMPLEYADO NG
WELLCOME-DFA (NEW DFA), ET AL., GR NO. 149349, 11 MARCH 2005], WHICH FINDS
APPLICATION IN THE INSTANT CASE BY ANALOGY.13

Petitioners reiterated their position that the value of the facilities that the private
respondents enjoyed should be included in the computation of the "wages" received by
them. They argued that the rulings in Agabon v. NLRC14and Glaxo Wellcome Philippines, Inc.
v. Nagkakaisang Empleyado Ng Wellcome-DFA15 should be applied by analogy, in the sense
that the lack of written acceptance of the employees of the facilities enjoyed by them should
not mean that the value of the facilities could not be included in the computation of the
private respondents "wages."

On November 29, 2006, the Court resolved to issue a Temporary Restraining Order (TRO)
enjoining the public respondent from enforcing the NLRC and CA decisions until further
orders from the Court.

After a thorough review of the records, however, the Court finds no merit in the petition.

This petition generally involves factual issues, such as, whether or not there is evidence on
record to support the findings of the LA, the NLRC and the CA that private respondents were
project or regular employees and that their salary differentials had been paid. This calls for a
re-examination of the evidence, which the Court cannot entertain. Settled is the rule that
factual findings of labor officials, who are deemed to have acquired expertise in matters
within their respective jurisdiction, are generally accorded not only respect but even finality,
and bind the Court when supported by substantial evidence. It is not the Courts function to
assess and evaluate the evidence

all over again, particularly where the findings of both the Labor tribunals and the CA concur.
16

As a general rule, on payment of wages, a party who alleges payment as a defense has the
burden of proving it.17 Specifically with respect to labor cases, the burden of proving
payment of monetary claims rests on the employer, the rationale being that the pertinent
personnel files, payrolls, records, remittances and other similar documents which will
show that overtime, differentials, service incentive leave and other claims of workers have
been paid are not in the possession of the worker but in the custody and absolute control
of the employer.18

In this case, petitioners, aside from bare allegations that private respondents received wages
higher than the prescribed minimum, failed to present any evidence, such as payroll or
payslips, to support their defense of payment. Thus, petitioners utterly failed to discharge
the onus probandi.

Private respondents, on the other hand, are entitled to be paid the minimum wage, whether
they are regular or non-regular employees.

Section 3, Rule VII of the Rules to Implement the Labor Code19 specifically enumerates those
who are not covered by the payment of minimum wage. Project employees are not among
them.

On whether the value of the facilities should be included in the computation of the "wages"
received by private respondents, Section 1 of DOLE Memorandum Circular No. 2 provides
that an employer may provide subsidized meals and snacks to his employees provided that
the subsidy shall not be less that 30% of the fair and reasonable value of such facilities. In
such cases, the employer may deduct from the wages of the employees not more than 70%
of the value of the meals and snacks enjoyed by the latter, provided that such deduction is
with the written authorization of the employees concerned.

Moreover, before the value of facilities can be deducted from the employees wages, the
following requisites must all be attendant: first, proof must be shown that such facilities are
customarily furnished by the trade; second, the provision of deductible facilities must be
voluntarily accepted in writing by the employee; and finally, facilities must be charged at
reasonable value.20 Mere availment is not sufficient to allow deductions from employees
wages.21

These requirements, however, have not been met in this case. SLL failed to present any
company policy or guideline showing that provisions for meals and lodging were part of the
employees salaries. It also failed to provide proof of the employees written authorization,
much less show how they arrived at their valuations. At any rate, it is not even clear whether
private respondents actually enjoyed said facilities.

The Court, at this point, makes a distinction between "facilities" and "supplements." It is of
the view that the food and lodging, or the electricity and water allegedly consumed by
private respondents in this case were not facilities but supplements. In the case of Atok-Big
Wedge Assn. v. Atok-Big Wedge Co.,22 the two terms were distinguished from one another
in this wise:

"Supplements," therefore, constitute extra remuneration or special privileges or benefits
given to or received by the laborers over and above their ordinary earnings or wages.
"Facilities," on the other hand, are items of expense necessary for the laborer's and his
family's existence and subsistence so that by express provision of law (Sec. 2[g]), they form
part of the wage and when furnished by the employer are deductible therefrom, since if they
are not so furnished, the laborer would spend and pay for them just the same.

In short, the benefit or privilege given to the employee which constitutes an extra
remuneration above and over his basic or ordinary earning or wage is supplement; and when
said benefit or privilege is part of the laborers' basic wages, it is a facility. The distinction lies
not so much in the kind of benefit or item (food, lodging, bonus or sick leave) given, but in
the purpose for which it is given.23 In the case at bench, the items provided were given
freely by SLL for the purpose of maintaining the efficiency and health of its workers while
they were working at their respective projects.1avvphi1

For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate,
these were cases of dismissal with just and authorized causes. The present case involves the
matter of the failure of the petitioners to comply with the payment of the prescribed
minimum wage.

The Court sustains the deletion of the award of differentials with respect to respondent
Roldan Lopez. As correctly pointed out by the CA, he did not work for the project in Antipolo.

WHEREFORE, the petition is DENIED. The temporary restraining order issued by the Court on
November 29, 2006 is deemed, as it is hereby ordered, DISSOLVED.


ART. 100
American Wire & Cable Daily Rated Employees vs American Wire (2005) G.R.155059
Facts:
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wiresand
cables. There are two unions in this company, the American Wire and CableMonthly-Rated
Employees Union and the American Wire and Cable Daily-RatedEmployees Union.On 16
February 2001, an original action was filed before the NCMB of the Department of Labor and
Employment by the two unions for voluntary arbitration. They alleged thatthe private
respondent, without valid cause, suddenly and unilaterally withdrew anddenied certain
benefits and entitlements which they have long enjoyed. These areService Award, 35%
premium pay of an employees basic pay for the work renderedduring Holy Monday, Holy
Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29,Christmas Party and Promotional
Increase.
Issue:
WON the respondent company violated Article 100 of the Labor Code.
Held:
The company is not guilty of violating Art. 100 of the Labor Code.Article 100 of the Labor
Code provides:
PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS.
Nothing inthis Book shall be construed to eliminate or in any way diminish supplements,
orother employee benefits being enjoyed at the time of promulgation of this Code.
The certain benefits and entitlements are considered bonuses. A bonus can only
beenforceable and demandable if it has ripened into a company practice. It must also
beexpressly agreed by the employer and employee or it must be on a fixed amount. The
assailed benefits were never subjects of any agreement between the union and thecompany.
It was never incorporated in the CBA. Since all these benefits are in the formof bonuses, it is
neither enforceable nor demandable.

TSPI, INCORPORATION VS. TSPIC EMPLOYEES UNION
G.R No. 163419. February 13, 2008

FACTS: TSPI Corporation entered into a Collective Bargaining Agreement with the
corporation Union for the increase of salary for the latters members for the year 2000 to
2002 starting from January 2000. thus, the increased in salary was materialized on January 1,
2000. However, on October 6, 2000, the Regional Tripartite Wage and production Board
raised daily minimum wage from P 223.50 to P 250.00 starting November 1, 2000.
Conformably, the wages of the 17 probationary employees were increased to P250.00 and
became regular employees therefore receiving another 10% increase in salary. In January
2001, TSPIC implemented the new wage rates as mandated by the CBA. As a result, the nine
employees who were senior to the 17 recently regularized employees, received less wages.
On January 19, 2001, TSPICs HRD notified the 24 employees who are private respondents,
that due to an error in the automated payroll system, they were overpaid and the
overpayment would be deducted from their salaries starting February 2001. The Union on
the other hand, asserted that there was no error and the deduction of the alleged
overpayment constituted diminution of pay.

ISSUE: Whether the alleged overpayment constitutes diminution of pay as alleged by the
Union.

RULING: Yes, because it is considered that Collective Bargaining Agreement entered into by
unions and their employers are binding upon the parties and be acted in strict compliance
therewith. Thus, the CBA in this case is the law between the employers and their employees.

Therefore, there was no overpayment when there was an increase of salary for the members
of the union simultaneous with the increasing of minimum wage for workers in the National
Capital Region. The CBA should be followed thus, the senior employees who were first
promoted as regular employees shall be entitled for the increase in their salaries and the
same with lower rank workers.

Lepanto Ceramics Inc. v. Lepanto Ceramics Employees Association

Facts: In December 1998, petitioner gave a P3,000.00 bonus to its employees, members of
the respondent Association. Subsequently, in September 1999, petitioner and respondent
Association entered into a Collective Bargaining Agreement (CBA) which provides for, among
others, the grant of a Christmas gift package/bonus to the members of the respondent
Association. The Christmas bonus was one of the enumerated existing benefit, practice of
traditional rights which shall remain in full force and effect.
The text reads:
Section 8. All other existing benefits, practice of traditional rights consisting of Christmas
Gift package/bonus, reimbursement of transportation expenses in case of breakdown of
service vehicle and medical services and safety devices by virtue of company policies by the
UNION and employees shall remain in full force and effect.

Section 1. EFFECTIVITY

This agreement shall become effective on September 1, 1999 and shall remain in full force
and effect without change for a period of four (4) years or up to August 31, 2004 except as to
the representation aspect which shall be effective for a period of five (5) years. It shall bind
each and every employee in the bargaining unit including the present and future officers of
the Union.
In the succeeding years, 1999, 2000 and 2001, the bonus was not in cash. Instead, petitioner
gave each of the members of respondent Association Tile Redemption Certificates equivalent
to P3,000.00.[9] The bonus for the year 2002 is the root of the present dispute. Petitioner
gave a year-end cash benefit of Six Hundred Pesos (P600.00) and offered a cash advance to
interested employees equivalent to one (1) month salary payable in one year.[10] The
respondent Association objected to the P600.00 cash benefit and argued that this was in
violation of the CBA it executed with the petitioner.
In support of its claim, respondent Association insisted that it has been the traditional
practice of the company to grant its members Christmas bonuses during the end of the
calendar year, each in the amount of P3,000.00 as an expression of gratitude to the
employees for their participation in the companys continued existence in the market. The
bonus was either in cash or in the form of company tiles.
The petitioner averred that the complaint for nonpayment of the 2002 Christmas bonus had
no basis as the same was not a demandable and enforceable obligation. It argued that the
giving of extra compensation was based on the companys available resources for a given
year and the workers are not entitled to a bonus if the company does not make profits.
Petitioner adverted to the fact that it was debt-ridden having incurred net losses for the
years 2001 and 2002 totaling to P1.5 billion; and since 1999, when the CBA was signed, the
companys accumulated losses amounted to over P2.7 billion.

Issue: whether petitioner violated the CBA with regard to bonus

Held: yes. By definition, a bonus is a gratuity or act of liberality of the giver. It is something
given in addition to what is ordinarily received by or strictly due the recipient. A bonus is
granted and paid to an employee for his industry and loyalty which contributed to the
success of the employers business and made possible the realization of profits. A bonus is
also granted by an enlightened employer to spur the employee to greater efforts for the
success of the business and realization of bigger profits.
Generally, a bonus is not a demandable and enforceable obligation. For a bonus to be
enforceable, it must have been promised by the employer and expressly agreed upon by the
parties. Given that the bonus in this case is integrated in the CBA, the same partakes the
nature of a demandable obligation. Verily, by virtue of its incorporation in the CBA, the
Christmas bonus due to respondent Association has become more than just an act of
generosity on the part of the petitioner but a contractual obligation it has undertaken.
A reading of the provision of the CBA reveals that the same provides for the
giving of a Christmas gift package/bonus without qualification. Terse and clear, the said
provision did not state that the Christmas package shall be made to depend on the
petitioners financial standing. The records are also bereft of any showing that the petitioner
made it clear during CBA negotiations that the bonus was dependent on any condition.
Indeed, if the petitioner and respondent Association intended that the P3,000.00 bonus
would be dependent on the company earnings, such intention should have been expressed
in the CBA.
All given, business losses are a feeble ground for petitioner to repudiate its obligation under
the CBA. The rule is settled that any benefit and supplement being enjoyed by the employees
cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of
non-diminution of benefits is founded on the constitutional mandate to protect the rights of
workers and to promote their welfare and to afford labor full protection.

EASTERN TELECOM PHILIPPINES, INC. VS EASTERN TELECOMEMPLOYEES UNION
Facts: Eastern Telecom Philippines, Inc. (ETPI) plans to defer payment of the 2003 14th, 15th
and 16th month bonusessometime in April 2004. The company's main ground in postponing
the payment of bonuses is due to allege continuingdeterioration of company's financial
position which started in the year 2000. However, ETPI while postponing payment of
bonuses sometime in April 2004, such payment would also be subject to availability of
funds.The union strongly opposed the deferment in payment of the bonuses by filing a
preventive mediation complaint with the NCMBon July 3, 2003, the purpose of which
complaint is to determine the date when the bonus should be paid.In the conference held at
the NCMB, ETPI reiterated its stand that payment of the bonuses would only be made in
April 2004 towhich date of payment, the union agreed. Subsequently, the company made a
sudden turnaround in its position by declaring thatthey will no longer pay the bonuses until
the issue is resolved through compulsory arbitration.Thus, on April 26, 2004, the union filed a
Notice of Strike on the ground of unfair labor practice for failure of ETPI to pay thebonuses in
gross violation of the economic provision of the existing CBA.On May 19, 2004, the Secretary
of Labor and Employment, finding that the company is engaged in an industry considered
vitalto the economy and any work disruption thereat will adversely affect not only its
operation but also that of the other businessrelying on its services, certified the labor dispute
for compulsory arbitration. Acting on the certified labor dispute, a hearing was called on July
16, 2004 wherein the parties have submitted that the issues for resolution. Thereafter, they
were directed to submit their respective position papers and evidence in support thereof
after whichsubmission, they agreed to have the case considered submitted for decision.On
April 28, 2005, the NLRC issued its Resolution dismissing ETEU's complaint and held that ETPI
could not be forced to paythe union members the bonuses for the year 2003 and the 14th
month bonus for the year 2004 inasmuch as the payment of these additional benefits was
basically a management prerogative, being an act of generosity and munificence on the part
of thecompany and contingent upon the realization of profits.The CA declared that the Side
Agreements of the 1998 and 2001 CBA created a contractual obligation on ETPI to confer
thesubject bonuses to its employees without qualification or condition. It also found that the
grant of said bonuses has alreadyripened into a company practice and their denial would
amount to diminution of the employees' benefits.
Issue: Whether or not ETPI is liable to pay 14th, 15th and 16th month bonuses for the year
2003 and 14th month bonus for theyear 2004 to the members of respondent union.
Decision: From a legal point of view, a bonus is a gratuity or act of liberality of the giver
which the recipient cannot demand as amatter of right. The grant of a bonus is basically a
management prerogative which cannot be forced upon the employer who maynot be
obliged to assume the onerous burden of granting bonuses. However, a bonus becomes a
demandable or enforceableobligation if the additional compensation is granted without any
conditions imposed for its payment. In such case, the bonus istreated as part of the wage,
salary or compensation of the employee.In this case, there is no dispute that Eastern
Telecommunications Phils., Inc. and Eastern Telecoms Employees Union agreed onthe
inclusion of a provision for the grant of 14th, 15th and 16th month bonuses in the 1998-2001
CBA Side Agreement, as wellas in their 2001-2004 CBA Side Agreement, which contained no
qualification for its payment. There were no conditions specifiedin the CBA Side Agreements
for the grant of the bonus. There was nothing in the relevant provisions of the CBA which
made thegrant of the bonus dependent on the company's financial standing or contingent
upon the realization of profits. There was also nostatement that if the company derives no
profits, no bonus will be given to the employees. In fine, the payment of these bonuseswas
not related to the profitability of business operations. Consequently, the giving of the subject
bonuses cannot beperemptorily withdrawn by Eastern Telecommunications Phils., Inc.
without violating Article 100 of the Labor Code, whichprohibits the unilateral elimination or
diminution of benefits by the employer. The rule is settled that any benefit and
supplementbeing enjoyed by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer.


ART. 106