[G.R. No. 102199.

January 28, 1997]

1. During the lifetime of this Agreement, the SALES AGENT
(private respondent) shall solicit exclusively for AFPMBAI
AFP MUTUAL BENEFIT ASSOCIATION, (petitioner), and shall be bound by the latter's policies, memo
INC., petitioner, vs. NATIONAL LABOR circulars, rules and regulations which it may from time to time,
RELATIONS COMMISSION and EUTIQUIO revise, modify or cancel to serve its business interests.
BUSTAMANTE, respondents.
2. The SALES AGENT shall confine his business activities for
DECISION AFPMBAI while inside any military camp, installation or
PANGANIBAN, J.: residence of military personnel. He is free to solicit in the area
for which he/she is licensed and as authorized, provided
The determination of the proper forum is crucial because the however, that AFPMBAI may from time to time, assign him a
filing of the petition or complaint in the wrong court or tribunal is specific area of responsibility and a production quota on a case
fatal, even for a patently meritorious claim. More specifically, labor to case basis.


arbiters and the National Labor Relations Commission have no

jurisdiction to entertain and rule on money claims where no xxxxxxxxx
employer-employee relations is involved. Thus, any such award
rendered without jurisdiction is a nullity. C. Commission
This petition for certiorari under Rule 65, Rules of Court seeks
to annul the Resolution[1] of the National Labor Relations 1. The SALES AGENT shall be entitled to the commission due
Commission, promulgated September 27, 1991, in NLRC-NCR for all premiums actually due and received by AFPMBAI out of
Case No. 00-02-01196-90, entitled "Eutiquio Bustamante vs. AFP life insurance policies solicited and obtained by the SALES
Mutual Benefit Association, Inc.," affirming the decision of the AGENT at the rates set forth in the applicant's commission
labor arbiter which ordered payment of the amount
schedules hereto attached.
of P319,796.00 as insurance commissions to private respondent.
xxxxxxxxx
The Antecedent Facts
D. General Provisions

The facts are simple. Private respondent Eutiquio Bustamante 1. There shall be no employer-employee relationship between
had been an insurance underwriter of petitioner AFP Mutual the parties, the SALES AGENT being hereby deemed an
Benefit Association, Inc. since 1975. The Sales Agent's independent contractor."
Agreement between them provided:[2]

"B. Duties and Obligations:

 As compensation, he received commissions based on the
following percentages of the premiums paid:[3]
"30% of premium paid within the first year;
10% of premium paid with the second year;
5% of the premium paid during the third year;
3% of the premium paid during the fourth year; and
1% of the premium paid during the fifth year up-to the tenth
year.
On July 5, 1989, petitioner dismissed private respondent for
misrepresentation and for simultaneously selling insurance for
another life insurance company in violation of said agreement.
At the time of his dismissal, private respondent was entitled to
accrued commissions equivalent to twenty four (24) months per
the Sales Agent Agreement and as stated in the account
summary dated July 5, 1989, approved by Retired Brig. Gen.
Rosalino Alquiza, president of petitioner-company. Said summary
showed that private respondent had a total commission
receivable of P438,835.00, of which only P78,039.89 had been
paid to him.
Private respondent wrote petitioner seeking the release of his
commissions for said 24 months. Petitioner, through Marketing
Manager Juan Concepcion, replied that he was entitled to
only P75,000.00 to P100,000.00. Hence, believing Concepcion's
computations, private respondent signed a quitclaim in favor of
petitioner.
Sometime in October 1989, private respondent was informed
that his check was ready for release. In collecting his check, he
discovered from a document (account summary) attached to said
check that his total commissions for the 24 months actually
amounted to P354,796.09. Said document stated:[4]
"6. The total receivable for Mr. Bustamante out of the renewals
and old business generated since 1983 grosses P438,835.00 less
his outstanding obligation in the amount of P78,039.89 as of
June 30, 1989, total expected commission would amount
to P354,796.09. From that figure at a 15% compromise
settlement this would mean P53,219.41 due him to settle his
claim."
Private respondent, however, was paid only the amount
of P35,000.00.
On November 23, 1989, private respondent filed a complaint
with the Office of the Insurance Commissioner praying for the
payment of the correct amount of his commission. Atty. German C.
Alejandria, Chief of the Public Assistance and Information Division,
Office of the Insurance Commissioner, advised private
respondent that it was the Department of Labor and Employment
that had jurisdiction over his complaint.
On February 26, 1990, private respondent filed his complaint
with the Department of Labor claiming: (1) commission for 2 years
from termination of employment equivalent to 30% of premiums
remitted during employment; (2) P354,796.00 as commission
earned from renewals and old business generated since 1983;
(3) P100,000.00 as moral damages; and (4) P100,000.00 as
exemplary damages.
After submission of position papers, Labor Arbiter Jose G. de
Vera rendered his decision, dated August 24, 1990, the
dispositive portion of which reads:[5]
"WHEREFORE, all the foregoing premises being considered,
judgment is hereby rendered declaring the dismissal of the
complainant as just and valid, and consequently, his claim for
separation pay is denied. On his money claim, the respondent
company is hereby ordered to pay complainant the sum
of P319,796.00 plus attorney's fees in the amount
of P31,976.60.
All other claims of the complainant are dismissed for want of
merit."
The labor arbiter relied on the Sales Agent's
Agreement proviso that petitioner could assign private respondent
a specific area of responsibility and a production quota, and read
it as signaling the existence of employer-employee relationship
between petitioner and private respondent.
On appeal, the Second Division[6] of the respondent
Commission affirmed the decision of the Labor Arbiter. In the
assailed Resolution, respondent Commission found no reason to
disturb said ruling of the labor arbiter and ruled:[7]
"WHEREFORE, in view of the foregoing considerations, the
subject appeal should be as it is hereby, denied and the decision
appealed from affirmed.
SO ORDERED."
Hence, this petition.
The Issue
Petitioner contends that respondent Commission committed
grave abuse of discretion in ruling that the labor arbiter had
jurisdiction over this case. At the heart of the controversy is the
issue of whether there existed an employer-employee relationship
between petitioner and private respondent.
Petitioner argues that, despite provisions B(1) and (2) of the
Sales Agent's Agreement, there is no employer-employee
relationship between private respondent and itself. Hence,
respondent commission gravely abused its discretion when it held
that the labor arbiter had jurisdiction over the case.
The Court's Ruling
The petition is meritorious.
First Issue: Not All That Glitters Is Control
Well-settled 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 National
Labor Relations Commission shall be accorded not only respect
but even finality when supported by substantial evidence.[8] The
determinative factor in such finality is the presence of substantial
evidence to support said finding, otherwise, such factual findings
cannot bind this Court.
Respondent Commission concurred with the labor arbiter's
findings that:[9]
"x x x The complainant's job as sales insurance agent is usually
necessary and desirable in the usual business of the respondent
company. Under the Sales Agents Agreement, the complainant
was required to solicit exclusively for the respondent company,
'and he was bound by the company policies, memo circulars,
rules and regulations which were issued from time to time. By
such requirement to follow strictly management policies, orders,
circulars, rules and regulations, it only shows that the
respondent had control or reserved the right to control the
complainant's work as solicitor. Complainant was not an
independent contractor as he did not carry on an independent
business other than that of the company's x x x."
To this, respondent Commission added that the Sales Agent's
Agreement specifically provided that petitioner may assign private
respondent a specific area of responsibility and a production
quota. From there, it concluded that apparently there is that
exercise of control by the employer which is the most important
element in determining employer-employee relationship.[10]
We hold, however, that respondent Commission
misappreciated the facts of the case. Time and again, the Court
has applied the "four-fold" test in determining the existence of
employer-employee relationship. This test considers the following
elements: (1) the power to hire; (2) the payment of wages; (3) the
power to dismiss; and (4) the power to control, the last being the
most important element.[11]
The difficulty lies in correctly assessing if certain factors or
elements properly indicate the presence of control. Anent the
issue of exclusivity in the case at bar, the fact that private
respondent was required to solicit business exclusively for
petitioner could hardly be considered as control in labor
jurisprudence. Under Memo Circulars No. 2-81[12] and 2-85, dated
December 17, 1981 and August 7, 1985, respectively, issued by
the Insurance Commissioner, insurance agents are barred from
serving more than one insurance company, in order to protect the
public and to enable insurance companies to exercise exclusive
supervision over their agents in their solicitation work. Thus, the
exclusivity restriction clearly springs from a regulation issued by
the Insurance Commission, and not from an intention by petitioner
to establish control over the method and manner by which private
respondent shall accomplish his work. This feature is not meant to
change the nature of the relationship between the parties, nor
does it necessarily imbue such relationship with the quality of
control envisioned by the law.
So too, the fact that private respondent was bound by
company policies, memo/circulars, rules and regulations issued
from time to time is also not indicative of control. In its Reply to
Complainant's Position Paper,[13] petitioner alleges that the policies,
memo/circulars, and rules and regulations referred to in provision
B(1) of the Sales Agent's Agreement are only those pertaining to
payment of agents' accountabilities, availment by sales agents of
cash advances for sorties, circulars on incentives and awards to
be given based on production, and other matters concerning the
selling of insurance, in accordance with the rules promulgated by
the Insurance Commission. According to the petitioner, insurance
solicitors are never affected or covered by the rules and
regulations concerning employee conduct and penalties for
violations thereof, work standards, performance appraisals, merit
increases, promotions, absenteeism/attendance, leaves of
absence, management-union matters, employee benefits and the
like. Since private respondent failed to rebut these allegations, the
same are deemed admitted, or at least proven, thereby leaving
nothing to support the respondent Commission's conclusion that
the foregoing elements signified an employment relationship
between the parties.
In regard to the territorial assignments given to sales agents,
this too cannot be held as indicative of the exercise of control over
an employee. First of all, the place of work in the business of
soliciting insurance does not figure prominently in the
equation. And more significantly, private respondent failed to
rebut petitioner's allegation that it had never issued him any
territorial assignment at all. Obviously, this Court cannot draw the
same inference from this feature as did the respondent
Commission.
 To restate, the significant factor in determining the
relationship of the parties is the presence or absence of
supervisory authority to control the method and the details of
performance of the service being rendered, and the degree to
which the principal may intervene to exercise such control. The
presence of such power of control is indicative of an employment
relationship, while absence thereof is indicative of independent
contractorship. In other words, the test to determine the existence
of independent contractorship is whether one claiming to be an
independent contractor has contracted to do the work according
to his own methods and without being subject to the control of the
employer except only as to the result of the work.[14] Such is
exactly the nature of the relationship between petitioner and
private respondent.
Further, not every form of control that a party reserves to
himself over the conduct of the other party in relation to the
services being rendered may be accorded the effect of
establishing an employer-employee relationship. The facts of this
case fall squarely with the case of Insular Life Assurance Co., Ltd.
vs. NLRC. In said case, we held that:
"Logically, the line should be drawn between rules that merely
serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result,
create no employer-employee relationship unlike the second,
which address both the result and the means used to achieve
it. The distinction acquires particular relevance in the case of an
enterprise affected with public interest, as is the business of
insurance, and is on that account subject to regulation by the
State with respect, not only to the relations between insurer and
insured but also to the internal affairs of the insurance
company. Rules and regulations governing the conduct of the
business are provided for in the Insurance Code and enforced by
the Insurance Commissioner. It is, therefore, usual and expected
for an insurance company to promulgate a set of rules to guide
its commission agents in selling its policies that they may not
run afoul of the law and what it requires or
prohibits. xxxx None of these really invades the agent's
contractual prerogative to adopt his own selling methods or to
sell insurance at his own time and convenience, hence cannot
justifiably be said to establish an employer-employee
relationship between him and the company." [15]
Private respondent's contention that he was petitioner's
employee is belied by the fact that he was free to sell insurance at
any time as he was not subject to definite hours or conditions of
work and in turn was compensated according to the result of his
efforts. By the nature of the business of soliciting insurance,
agents are normally left free to devise ways and means of
persuading people to take out insurance. There is no prohibition,
as contended by petitioner, for private respondent to work for as
long as he does not violate the Insurance Code. As petitioner
explains:
"(Private respondent) was free to solicit life insurance anywhere
he wanted and he had free and unfettered time to pursue his
business. He did not have to punch in and punch out the bundy
clock as he was not required to report to the (petitioner's) office
regularly. He was not covered by any employee policies or
regulations and not subject to the disciplinary action of
management on the basis of the Employee Code of Conduct. He
could go out and sell insurance at his own chosen time. He was
entirely left to his own choices of areas or territories, with no
definite, much less supervised, time schedule.
(Private respondent) had complete control over his occupation
and (petitioner) did not exercise any right of Control and
Supervision over his performance except as to the payment of
commission the amount of which entirely depends on the sole
efforts of (private respondent). He was free to engage in other
occupation or practice other profession for as long as he did not
commit any violation of the ethical standards prescribed in the
Sales Agent's Agreement." [16]
Although petitioner could have, theoretically, disapproved any
of private respondent's transactions, what could be disapproved
was only the result of the work, and not the means by which it was
accomplished.
The "control" which the above factors indicate did not sum up
to the power to control private respondent's conduct in and mode
of soliciting insurance. On the contrary, they clearly indicate that
the juridical element of control had been absent in this
situation. Thus, the Court is constrained to rule that no
employment relationship had ever existed between the parties.
Second Issue: Jurisdiction of Respondent Commission &
Labor Arbiter
Under the contract invoked, private respondent had never
been petitioner's employee, but only its commission agent. As an
independent contractor, his claim for unpaid commission should
have been litigated in an ordinary civil action.[17]
The jurisdiction of labor arbiters and respondent Commission
is set forth in Article 217 of the Labor Code.[18] The unifying
element running through paragraphs (1) - (6) of said provision is
the consistent reference to cases or disputes arising out of or in
connection with an employer-employee relationship. Prior to its
amendment by Batas Pambansa Blg. 227 on June 1, 1982, this
point was clear as the article included "all other cases arising from
employer-employee relation unless expressly excluded by this
Code."[19] Without this critical element of employment relationship,
the labor arbiter and respondent Commission can never acquire
jurisdiction over a dispute. As in the case at bar. It was serious
error on the part of the labor arbiter to have assumed jurisdiction
and adjudicated the claim. Likewise, the respondent
Commission's affirmance thereof.
Such lack of jurisdiction of a court or tribunal may be raised at
any stage of the proceedings, even on appeal. The doctrine
of estoppel cannot be properly invoked by respondent
Commission to cure this fatal defect as it cannot confer jurisdiction
upon a tribunal that to begin with, was bereft of jurisdiction over a
cause of action.[20] Moreover, in the proceedings below, petitioner
consistently challenged the jurisdiction of the labor arbiter [21] and
respondent Commission.[22]
It remains a basic fact in law that the choice of the proper
forum is crucial as the decision of a court or tribunal without
jurisdiction is a total nullity.[23] A void judgment for want of
jurisdiction is no judgment at all. It cannot be the source of any
right nor the creator of any obligation. All acts performed pursuant
to it and all claims emanating from it have no legal effect. Hence, it
can never become final. "x x x (I)t may be said to be a lawless
thing which can be treated as an outlaw and slain at sight, or
ignored wherever and whenever it exhibits its head."[24]
The way things stand, it becomes unnecessary to consider
the merits of private respondent's claim for unpaid
commission. Be that as it may, this ruling is without prejudice to
private respondent's right to file a suit for collection of unpaid
commissions against petitioner with the proper forum and within
the proper period.
WHEREFORE, the petition is hereby GRANTED, and the
assailed Resolution is hereby SET ASIDE.
SO ORDERED.
G.R. No. 73887 December 21, 1989

GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner,

vs.
HONORATO JUDICO and NATIONAL LABOR RELATIONS
COMMISSION, respondents.

PARAS J.:

Before us is a Petition for certiorari to review the decision of the National

Labor Relations Commission (NLRC, for brevity) dated September 9, 1985
reversing the decision of Labor Arbiter Vito J. Minoria, dated June 9, 1983,
by 1) ordering petitioner insurance company, Great Pacific Life Assurance
Corporation (Grepalife, for brevity) to recognize private respondent
Honorato Judico, as its regular employee as defined under Art. 281 of the
Labor Code and 2) remanding the case to its origin for the determination of
private respondent Judico's money claims.

The records of the case show that Honorato Judico filed a complaint for
illegal dismissal against Grepalife, a duly organized insurance firm, before
the NLRC Regional Arbitration Branch No. VII, Cebu City on August 27,
1982. Said complaint prayed for award of money claims consisting of
separation pay, unpaid salary and 13th month pay, refund of cash bond,
moral and exemplary damages and attorney's fees.

Both parties appealed to the NLRC when a decision was rendered by the
Labor Arbiter dismissing the complaint on the ground that the
employer-employee relations did not exist between the parties but ordered
Grepalife to pay complainant the sum of Pl,000.00 by reason of Christian
Charity.
On appeal, said decision was reversed by the NLRC ruling that complainant
is a regular employee as defined under Art. 281 of the Labor Code and
declaring the appeal of Grepalife questioning the legality of the payment of
Pl,000.00 to complainant moot and academic. Nevertheless, for the
purpose of revoking the supersedeas bond of said company it ruled that the
Labor Arbiter erred in awarding Pl,000.00 to complainant in the absence of
any legal or factual basis to support its payment.
Petitioner company moved to reconsider, which was denied, hence this
petition for review raising four legal issues to wit:
I. Whether the relationship between insurance agents and their principal,
the insurance company, is that of agent and principal to be governed by the
Insurance Code and the Civil Code provisions on agency, or one of
employer-employee, to be governed by the Labor Code.
II. Whether insurance agents are entitled to the employee benefits
prescribed by the Labor Code.
III. Whether the public respondent NLRC has jurisdiction to take
cognizance of a controversy between insurance agent and the insurance
company, arising from their agency relations.
IV. Whether the public respondent acted correctly in setting aside the
decision of Labor Arbiter Vito J. Minoria and in ordering the case remanded
to said Labor Arbiter for further proceedings.(p. 159, Rollo)
The crux of these issues boil down to the question of whether or not
employer-employee relationship existed between petitioner and private
respondent.
Petitioner admits that on June 9, 1976, private respondent Judico entered
into an agreement of agency with petitioner Grepalife to become a debit
agent attached to the industrial life agency in Cebu City. Petitioner defines
a debit agent as "an insurance agent selling/servicing industrial life plans
and policy holders. Industrial life plans are those whose premiums are
payable either daily, weekly or monthly and which are collectible by the
debit agents at the home or any place designated by the policy holder" (p.
156, Rollo). Such admission is in line with the findings of public respondent
that as such debit agent, private respondent Judico had definite work
assignments including but not limited to collection of premiums from policy
holders and selling insurance to prospective clients. Public respondent
NLRC also found out that complainant was initially paid P 200. 00 as
allowance for thirteen (13) weeks regardless of production and later a
certain percentage denominated as sales reserve of his total collections but
not lesser than P 200.00. Sometime in September 1981, complainant was
promoted to the position of Zone Supervisor and was given additional
(supervisor's) allowance fixed at P110.00 per week. During the third week
of November 1981, he was reverted to his former position as debit agent
but, for unknown reasons, not paid so-called weekly sales reserve of at
least P 200.00. Finally on June 28, 1982, complainant was dismissed by
way of termination of his agency contract.
Petitioner assails the findings of the NLRC that private respondent is an
employee of the former. Petitioner argues that Judico's compensation was
not based on any fixed number of hours he was required to devote to the
service of petitioner company but rather it was the production or result of his
efforts or his work that was being compensated and that the so-called
allowance for the first thirteen weeks that Judico worked as debit agent,
cannot be construed as salary but as a subsidy or a way of assistance for
transportation and meal expenses of a new debit agent during the initial
period of his training which was fixed for thirteen (13) weeks. Stated
otherwise, petitioner contends that Judico's compensation, in the form of
commissions and bonuses, was based on actual production, (insurance
plans sold and premium collections).
Said contentions of petitioner are strongly rejected by private respondent.
He maintains that he received a definite amount as his Wage known as
"sales reserve" the failure to maintain the same would bring him back to a
beginner's employment with a fixed weekly wage of P 200.00 regardless of
production. He was assigned a definite place in the office to work on when
he is not in the field; and in addition to canvassing and making regular
reports, he was burdened with the job of collection and to make regular
weekly report thereto for which an anemic performance would mean
dismissal. He earned out of his faithful and productive service, a promotion
to Zone Supervisor with additional supervisor's allowance, (a definite or
fixed amount of P110.00) that he was dismissed primarily because of
anemic performance and not because of the termination of the contract of
agency substantiate the fact that he was indeed an employee of the
petitioner and not an insurance agent in the ordinary meaning of the term.
That private respondent Judico was an agent of the petitioner is
unquestionable. But, as We have held in Investment Planning Corp. vs.
SSS, 21 SCRA 294, an insurance company may have two classes of
agents who sell its insurance policies: (1) salaried employees who keep
definite hours and work under the control and supervision of the company;
and (2) registered representatives who work on commission basis. The
agents who belong to the second category are not required to report for
work at anytime, they do not have to devote their time exclusively to or work
solely for the company since the time and the effort they spend in their work
depend entirely upon their own will and initiative; they are not required to
account for their time nor submit a report of their activities; they shoulder
their own selling expenses as well as transportation; and they are paid their
commission based on a certain percentage of their sales. One salient point
in the determination of employer-employee relationship which cannot be
easily ignored is the fact that the compensation that these agents on
commission received is not paid by the insurance company but by the
investor (or the person insured). After determining the commission earned
by an agent on his sales the agent directly deducts it from the amount he
received from the investor or the person insured and turns over to the
insurance company the amount invested after such deduction is made. The
test therefore is whether the "employer" controls or has reserved the right to
control the "employee" not only as to the result of the work to be done but
also as to the means and methods by which the same is to be
accomplished.
Applying the aforementioned test to the case at bar, We can readily see
that the element of control by the petitioner on Judico was very much
present. The record shows that petitioner Judico received a definite
minimum amount per week as his wage known as "sales reserve" wherein
the failure to maintain the same would bring him back to a beginner's
employment with a fixed weekly wage of P 200.00 for thirteen weeks
regardless of production. He was assigned a definite place in the office to
work on when he is not in the field; and in addition to his canvassing work
he was burdened with the job of collection. In both cases he was required to
make regular report to the company regarding these duties, and for which
an anemic performance would mean a dismissal. Conversely faithful and
productive service earned him a promotion to Zone Supervisor with
additional supervisor's allowance, a definite amount of P110.00 aside from
the regular P 200.00 weekly "allowance". Furthermore, his contract of
services with petitioner is not for a piece of work nor for a definite period.
On the other hand, an ordinary commission insurance agent works at his
own volition or at his own leisure without fear of dismissal from the
company and short of committing acts detrimental to the business interest
of the company or against the latter, whether he produces or not is of no
moment as his salary is based on his production, his anemic performance
or even dead result does not become a ground for dismissal. Whereas, in
private respondent's case, the undisputed facts show that he was controlled
by petitioner insurance company not only as to the kind of work; the amount
of results, the kind of performance but also the power of dismissal.
Undoubtedly, private respondent, by nature of his position and work, had
been a regular employee of petitioner and is therefore entitled to the
protection of the law and could not just be terminated without valid and
justifiable cause.
Premises considered, the appealed decision is hereby AFFIRMED in toto.
SO ORDERED.
G.R. No. 84484 November 15, 1989
INSULAR LIFE ASSURANCE CO., LTD., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO,
respondents.
Tirol & Tirol for petitioner.
Enojas, Defensor & Teodosio Cabado Law Offices for private respondent.
NARVASA, J.:
On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called
the Company) and Melecio T. Basiao entered into a contract by which:
1
1. Basiao was "authorized to solicit within the Philippines applications for
insurance policies and annuities in accordance with the existing rules and
regulations" of the Company;
2. he would receive "compensation, in the form of commissions ... as
provided in the Schedule of Commissions" of the contract to "constitute a
part of the consideration of ... (said) agreement;" and
3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as
well as all its circulars ... and those which may from time to time be
promulgated by it, ..." were made part of said contract.
The contract also contained, among others, provisions governing the
relations of the parties, the duties of the Agent, the acts prohibited to him,
and the modes of termination of the agreement, viz.:
RELATION WITH THE COMPANY. The Agent shall be free to exercise his
own judgment as to time, place and means of soliciting insurance. Nothing
herein contained shall therefore be construed to create the relationship of
employee and employer between the Agent and the Company. However,
the Agent shall observe and conform to all rules and regulations which the
Company may from time to time prescribe.
ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from
giving, directly or indirectly, rebates in any form, or from making any
misrepresentation or over-selling, and, in general, from doing or committing
acts prohibited in the Agent's Manual and in circulars of the Office of the
Insurance Commissioner.
TERMINATION. The Company may terminate the contract at will, without
any previous notice to the Agent, for or on account of ... (explicitly specified
causes). ...
Either party may terminate this contract by giving to the other notice in
writing to that effect. It shall become ipso facto cancelled if the Insurance
Commissioner should revoke a Certificate of Authority previously issued or
should the Agent fail to renew his existing Certificate of Authority upon its
expiration. The Agent shall not have any right to any commission on
renewal of premiums that may be paid after the termination of this
agreement for any cause whatsoever, except when the termination is due
to disability or death in line of service. As to commission corresponding to
any balance of the first year's premiums remaining unpaid at the
termination of this agreement, the Agent shall be entitled to it if the balance
of the first year premium is paid, less actual cost of collection, unless the
termination is due to a violation of this contract, involving criminal liability or
breach of trust.
ASSIGNMENT. No Assignment of the Agency herein created or of
commissions or other compensations shall be valid without the prior
consent in writing of the Company. ...
Some four years later, in April 1972, the parties entered into another
contract — an Agency Manager's Contract — and to implement his end of it
Basiao organized an agency or office to which he gave the name M. Basiao
and Associates, while concurrently fulfilling his commitments under the first
contract with the Company. 2
In May, 1979, the Company terminated the Agency Manager's Contract.
After vainly seeking a reconsideration, Basiao sued the Company in a civil
action and this, he was later to claim, prompted the latter to terminate also
his engagement under the first contract and to stop payment of his
commissions starting April 1, 1980. 3
Basiao thereafter filed with the then Ministry of Labor a complaint against 4
the Company and its president. Without contesting the termination of the
first contract, the complaint sought to recover commissions allegedly
unpaid thereunder, plus attorney's fees. The respondents disputed the
Ministry's jurisdiction over Basiao's claim, asserting that he was not the
Company's employee, but an independent contractor and that the
Company had no obligation to him for unpaid commissions under the terms
and conditions of his contract. 5
The Labor Arbiter to whom the case was assigned found for Basiao. He
ruled that the underwriting agreement had established an
employer-employee relationship between him and the Company, and this
conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said
official's decision directed payment of his unpaid commissions "...
equivalent to the balance of the first year's premium remaining unpaid, at
the time of his termination, of all the insurance policies solicited by ... (him)
in favor of the respondent company ..." plus 10% attorney's fees. 6
This decision was, on appeal by the Company, affirmed by the National
Labor Relations Commission. Hence, the present petition for certiorari and
7
prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao asserts, he
had become the Company's employee by virtue of the contract invoked by
him, thereby placing his claim for unpaid commissions within the original
and exclusive jurisdiction of the Labor Arbiter under the provisions of
Section 217 of the Labor Code, or, contrarily, as the Company would have
8
it, that under said contract Basiao's status was that of an independent
contractor whose claim was thus cognizable, not by the Labor Arbiter in a
labor case, but by the regular courts in an ordinary civil action.
The Company's thesis, that no employer-employee relation in the legal and
generally accepted sense existed between it and Basiao, is drawn from the
terms of the contract they had entered into, which, either expressly or by
necessary implication, made Basiao the master of his own time and selling
methods, left to his judgment the time, place and means of soliciting
insurance, set no accomplishment quotas and compensated him on the
basis of results obtained. He was not bound to observe any schedule of
working hours or report to any regular station; he could seek and work on
his prospects anywhere and at anytime he chose to, and was free to adopt
the selling methods he deemed most effective.
Without denying that the above were indeed the expressed implicit
conditions of Basiao's contract with the Company, the respondents contend
that they do not constitute the decisive determinant of the nature of his
engagement, invoking precedents to the effect that the critical feature
distinguishing the status of an employee from that of an independent
contractor is control, that is, whether or not the party who engages the
services of another has the power to control the latter's conduct in
rendering such services. Pursuing the argument, the respondents draw
attention to the provisions of Basiao's contract obliging him to "... observe
and conform to all rules and regulations which the Company may from time
to time prescribe ...," as well as to the fact that the Company prescribed the
qualifications of applicants for insurance, processed their applications and
determined the amounts of insurance cover to be issued as indicative of the
control, which made Basiao, in legal contemplation, an employee of the
Company. 9
It is true that the "control test" expressed in the following pronouncement of
the Court in the 1956 case of Viana vs. Alejo Al-Lagadan 10
... In determining the existence of employer-employee relationship, the
following elements are generally considered, namely: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees' conduct — although
the latter is the most important element (35 Am. Jur. 445). ...
has been followed and applied in later cases, some fairly recent. Indeed, it
11
is without question a valid test of the character of a contract or agreement
to render service. It should, however, be obvious that not every form of
control that the hiring party reserves to himself over the conduct of the party
hired in relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the legal
or technical sense of the term. A line must be drawn somewhere, if the
recognized distinction between an employee and an individual contractor is
not to vanish altogether. Realistically, it would be a rare contract of service
that gives untrammelled freedom to the party hired and eschews any
intervention whatsoever in his performance of the engagement.
Logically, the line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those
that control or fix the methodology and bind or restrict the party hired to the
use of such means. The first, which aim only to promote the result, create
no employer-employee relationship unlike the second, which address both
the result and the means used to achieve it. The distinction acquires
particular relevance in the case of an enterprise affected with public interest,
as is the business of insurance, and is on that account subject to regulation
by the State with respect, not only to the relations between insurer and
insured but also to the internal affairs of the insurance company. Rules12
and regulations governing the conduct of the business are provided for in
the Insurance Code and enforced by the Insurance Commissioner. It is,
therefore, usual and expected for an insurance company to promulgate a
set of rules to guide its commission agents in selling its policies that they
may not run afoul of the law and what it requires or prohibits. Of such a
character are the rules which prescribe the qualifications of persons who
may be insured, subject insurance applications to processing and approval
by the Company, and also reserve to the Company the determination of the
premiums to be paid and the schedules of payment. None of these really
invades the agent's contractual prerogative to adopt his own selling
methods or to sell insurance at his own time and convenience, hence
cannot justifiably be said to establish an employer-employee relationship
between him and the company.
There is no dearth of authority holding persons similarly placed as
respondent Basiao to be independent contractors, instead of employees of
the parties for whom they worked. In Mafinco Trading Corporation vs.
Ople, the Court ruled that a person engaged to sell soft drinks for another,
13
using a truck supplied by the latter, but with the right to employ his own
workers, sell according to his own methods subject only to prearranged
routes, observing no working hours fixed by the other party and obliged to
secure his own licenses and defray his own selling expenses, all in
consideration of a peddler's discount given by the other party for at least
250 cases of soft drinks sold daily, was not an employee but an
independent contractor.
In Investment Planning Corporation of the Philippines us. Social Security
System a case almost on all fours with the present one, this Court held
14
that there was no employer-employee relationship between a commission
agent and an investment company, but that the former was an independent
contractor where said agent and others similarly placed were: (a) paid
compensation in the form of commissions based on percentages of their
sales, any balance of commissions earned being payable to their legal
representatives in the event of death or registration; (b) required to put up
performance bonds; (c) subject to a set of rules and regulations governing
the performance of their duties under the agreement with the company and
termination of their services for certain causes; (d) not required to report for
work at any time, nor to devote their time exclusively to working for the
company nor to submit a record of their activities, and who, finally,
shouldered their own selling and transportation expenses.
More recently, in Sara vs. NLRC, it was held that one who had been
15
engaged by a rice miller to buy and sell rice and palay without
compensation except a certain percentage of what he was able to buy or
sell, did work at his own pleasure without any supervision or control on the
part of his principal and relied on his own resources in the performance of
his work, was a plain commission agent, an independent contractor and not
an employee.
The respondents limit themselves to pointing out that Basiao's contract with
the Company bound him to observe and conform to such rules and
regulations as the latter might from time to time prescribe. No showing has
been made that any such rules or regulations were in fact promulgated,
much less that any rules existed or were issued which effectively controlled
or restricted his choice of methods — or the methods themselves — of
selling insurance. Absent such showing, the Court will not speculate that
any exceptions or qualifications were imposed on the express provision of
the contract leaving Basiao "... free to exercise his own judgment as to the
time, place and means of soliciting insurance."
The Labor Arbiter's decision makes reference to Basiao's claim of having
been connected with the Company for twenty-five years. Whatever this is
meant to imply, the obvious reply would be that what is germane here is
Basiao's status under the contract of July 2, 1968, not the length of his
relationship with the Company.
The Court, therefore, rules that under the contract invoked by him, Basiao
was not an employee of the petitioner, but a commission agent, an
independent contractor whose claim for unpaid commissions should have
been litigated in an ordinary civil action. The Labor Arbiter erred in taking
cognizance of, and adjudicating, said claim, being without jurisdiction to do
so, as did the respondent NLRC in affirming the Arbiter's decision. This
conclusion renders it unnecessary and premature to consider Basiao's
claim for commissions on its merits.
WHEREFORE, the appealed Resolution of the National Labor Relations
Commission is set aside, and that complaint of private respondent Melecio
T. Basiao in RAB Case No. VI-0010-83 is dismissed. No pronouncement as
to costs.
SO ORDERED.
G.R. No. 86693 July 2, 1990
COSMOPOLITAN FUNERAL HOMES, INC., petitioner,
vs.
NOLI MAALAT and NATIONAL LABOR RELATIONS
COMMISSION, respondents.
GUTIERREZ, JR., J.:
The nature of the work of a "funeraria" supervisor, whether employee or commission agent, is the issue
raised in this petition.
Sometime in 1962, petitioner Cosmopolitan Funeral Homes, Inc. engaged
the services of private respondent Noli Maalat as a "supervisor" to handle
the solicitation of mortuary arrangements, sales and collections. The
funeral services which he sold refer to the taking of the corpse, embalming,
casketing, viewing and delivery. The private respondent was paid on a
commission basis of 3.5% of the amounts actually collected and remitted.
On January 15, 1987, respondent Maalat was dismissed by the petitioner
for commission of the following violations despite previous warnings:
(a) Understatement of the reported contract price against the actual
contract price charged to and paid by the customers;
(b) Misappropriation of funds or collections by non-remittance of collections
and non-issuance of Official Receipt;
(c) Charging customers additional amount and pocketing the same for the
cost of medicines, linen, and security services without issuing Official
Receipt;
(d) Non-reporting of some embalming and re-embalming charges and
pocketing the same and non-issuance of Official Receipt;
(e) Engaging in tomb making and inclusion of the price of the tomb in the
package price without prior knowledge of the customers and the company.
(At p. 16, Records)
Maalat filed a complaint for illegal dismissal and non-payment of
commissions.
On the basis of the parties' position papers, Labor Arbiter Newton R.
Sancho rendered a decision declaring Maalat's dismissal illegal and
ordering the petitioner to pay separation pay, commission, interests and
attorney's fee in the total amount of P205,571.52.
In an appeal from the decision, the National Labor Relations Commission
(NLRC), on May 31, 1988, reversed the Arbiter's action and rendered a new
decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the decision dated November 27,
1987, is hereby SET ASIDE and VACATED and a New One ENTERED,
ordering as follows:
1. Judgment is hereby rendered declaring the dismissal of complainant Noli
Maalat by respondent-appellant as justified and with lawful cause. By way
of equitable relief and in the interest of social and compassionate justice,
We hereby order and direct respondent Cosmopolitan Funeral Homes, Inc.
to pay complainant Maalat his separation pay equivalent to one-half (1/2%)
month average income for every year of service to appellant, computed on
his last year of service immediately preceding his separation from
respondent, subject to allowable set-offs and deductions of the
counter-claims of respondent company, after due notice and hearing.
2. The claims for accrued commissions by complainant may be admitted,
subject to proofs thereof, and allowable set-offs and deductions credited to
the account of respondent-appellant by way of counterclaims, after due
notice and hearing.
3. All the evidence adduced by the parties are hereby admitted, subject to
rebuttal and/or controvertion by either party during the hearing and the
hearings hereafter.
4. The Attorney's fee in favor of complainant's counsel is hereby fixed at
two (2%) percent, assessable over whatever final money award
complainant may be entitled on the aggregate sums thereof, after proper
hearing on the same.
All other claims and counter-claims are hereby dismissed for lack of merit,
except those specified above.
Finally, this case is remanded to the Regional Arbitration Branch of origin
for further proceedings in accordance with the above judgment. No findings
as to costs. (At pp. 66-67, Rollo)
The petitioner's motion for reconsideration was denied, hence, this petition
for review before this Court.
The issues raised in this petition are:
I. Whether or not the NLRC erred in ruling that an employment relationship
existed between the parties; and
II. Whether or not there was equitable basis for the award of 1/2 month
separation pay for every year of service.
I
In determining whether a person who performs work for another is the
latter's employee or an independent contractor, the prevailing test is the
"right of control" test. Under this test, an employer-employee relationship
exists where the person for whom the services are performed reserves the
right to control not only the end to be achieved, but also the manner and
means to be used in reaching that end.
The petitioner argues that Maalat was never its employee for he was only a
commission agent whose work was not subject to its control.
Citing Investment Planning Corporation of the Philippines v. Social Security
System (21 SCRA 924 [1967]), the petitioner states that the work of its
agents approximates that of an independent contractor since the agent is
not under control by the latter with respect to the means and methods
employed in the performance of the work, but only as to the results.
The NLRC, after its perusal of the facts and evidence on record, stated that
there exists an employment relationship between the parties. The petitioner
has failed to overcome this factual finding.
The fact that the petitioner imposed and applied its rule prohibiting
superiors from engaging in other funeral business which it considered
inimical to company interests proves that it had the right of control
and actually exercised its control over the private respondent. In other
words, Maalat worked exclusively for the petitioner.
Moreover, the private respondent was prohibited from engaging in part-time
embalming business outside of the company and a violation thereof was
cause for dismissal. Incurring absences without leave was likewise subject
to disciplinary action: a reprimand for the first offense, one week
suspension for the second offense, and dismissal for the third offense.
The petitioner admits that these prohibitive rules bound the private
respondent but states that these rules have no bearing on the means and
methods ordinarily required of a supervisor. The overall picture is one of
employment. The petitioner failed to prove that the contract with private
respondent was but a mere agency, which indicates that a "supervisor" is
free to accomplish his work on his own terms and may engage in other
means of livelihood.
In Investment Planning Corporation, supra, cited by the petitioner, the
majority of the "commission agents" are regularly employed elsewhere.
Such a circumstance is absent in Maalat's case. Moreover, the private
respondent's job description states that ". . . he attends to the needs of the
clientele and arranges the kind of casket and funeral services the
customers would like to avail themselves of" and indicates that he must
always be on the job or at least most of time.
Likewise, the private respondent was not allowed to issue his own receipts,
nor was he allowed to directly deduct his commission as truly independent
salesmen practice.
Worthy of note too are two other company rules which provide that
"negotiation and making of contract with customers shall be done inside the
office" and "signing of contract should be made immediately before the
cadaver or deceased is place in the casket." (Annex 10-B, Petitioner's
Position Paper, Records) Said rules belie the petitioner's stand that it does
not have control over the means and methods by which the work is
accomplished. The control test has been satisfied. (Social Security System
v. Court of Appeals, 156 SCRA 383 [1987])
The finding by the public respondent that the petitioner has reported private
respondent to the Social Security System as a covered employee adds
strength to the conclusion that Maalat is an employee.
There is no reversible error in the findings of facts by the NLRC which are
supported by substantial evidence and which we, therefore, do not disturb
on appeal.
The payment of compensation by way of commission does not militate
against the conclusion that private respondent was an employee. Under
Article 97 of the Labor Code, "wage" shall mean "the renumeration of
earnings, however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, pace or commission
basis . . .".
The non-observance of regular office hours does not sufficiently show that
Maalat is a "supervisor on commission basis" nor does the same indicate
that he is an independent salesman. As a supervisor, although
compensated on commission basis, he is exempt from the observance of
normal hours of work for his compensation is measured by the number of
sales he makes. He may not have had the usual fixed time for starting and
ending his work as in other types of employment but he had to spend most
of his working hours at his job. People die at all times of the day or night.
All considered, we rule that private respondent is an employee of petitioner
corporation.
II
The petitioner impugns the award of separation pay equivalent to one-half
(1/2) month average income for every year of service to private respondent.
The NLRC ruled that:
However, mindful of the fact the complainant Noli Maalat has served
respondent company for the last twenty four (24) years, more or less, it is
but proper to afford him some equitable relief, consistent with the recent
rulings of the Supreme Court, due to his past services with no known
previous record, and the ends of social and compassionate justice will thus
be served if he is paid a portion of his separation pay, equivalent to one-half
(1/2) month every year of his service to said company. (See Soco v.
Mercantile Corporation, G.R. No. 53364-65, March 16, 1987; and Firestone,
et al, v. Lariosa et al., G.R. No. 70479, February 27, 1987). We are not
inclined to grant complainant his full month termination pay for every year of
his service because, unlike in the former Soco case, the misconduct of the
employee merely involves infraction of company rules while in the
latter Firestone case it involves misconduct of a rank-and-file employee,
although similarly involving acts of dishonesty. (At pp. 65-66, Rollo)
This Court will not disturb the finding by the NLRC that private respondent
Maalat was dishonest in the discharge of his functions. The finding is
sufficiently supported by the evidence on record.
Additionally, the private respondent did not appeal from the NLRC decision,
thereby impliedly accepting the validity of his dismissal.
We take exception, therefore, to the grant of separation pay to private
respondent.
In Philippine Long Distance Telephone Company (PLDT) v. NLRC, (164
SCRA 671 [1988]), this Court re-examined, the doctrine in the
aforecited Firestone and Soco cases and other previous cases that
employees dismissed for cause are nevertheless entitled to separation pay
on the ground of social and compassionate justice. In abandoning this
doctrine, the Court held, and we quote:
. . . We hold that henceforth separation pay shall be allowed as a measure
of social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on
his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude, like
theft or illicit sexual relations with a fellow worker, the employer may not be
required to give the dismissed employee separation pay, or financial
assistance, or whatever other name it is called, on the ground of social
justice.
A contrary rule would, as the petitioner correctly argues, have the effect of
rewarding rather than punishing the erring employee for his offense. . . .
The policy of social justice is not intended to countenance wrongdoing
simply because it is committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone the offense.
Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. . . .
Subsequent decisions have abided by this pronouncement. (See Philippine
National Construction Corporation v. National Labor Relations Commission,
170 SCRA 207 [1989]; Eastern Paper Mills, Inc. v. National Labor Relations
Commission, 170 SCRA 597 [1989]; Osias Academy v. National Labor
Relations Commission, G.R. No. 83234, April 18, 1989; and Nasipit Lumber disallowed. Private respondent Maalat is entitled to unclaimed commissions
Co., Inc. v. National Labor Relations Commission, G.R. No. 54424, August of P39,344.80 and 2% attorney's fees of P786.89, said amounts being
31, 1989.) considered final.

Conformably with the above cited PLDT ruling, this Court pronounces that SO ORDERED.
the grant of separation pay to private respondent Maalat, who was validly
terminated for dishonesty, is not justified.

Parenthetically, it may be mentioned that the Labor Arbiter, apparently

unaware of the petition for review pending before this Court, conducted
further proceedings to compute private respondent's separation pay,
unclaimed commission and 2% attorney's fees, in compliance with the
NLRC decision of May 31, 1988. After hearing, the Labor Arbiter rendered a
decision on May 10, 1989, the pertinent portion of which reads:

In sum, the sustainable claims of complainant are as follows:

(1) Separation Pay : P 76,064.40

(2) Unpaid Commissions : 39,344.80
——————
Sub-total : P 115,409.20
(3) 2% Attorney's Fees : 2,308.18
——————
P 117, 717.38

WHEREFORE, judgment is hereby rendered ordering respondent

Cosmopolitan Funeral Homes, Inc., to pay complainant Noli Maalat his
claims above set forth in the total amount of P117,717.38 only.

Neither party appealed from said decision.

For being in conflict with our holding that the private respondent is not
entitled to separation pay, this Court sets aside the Labor Arbiter's
computation of separation pay. However, we uphold his computation of
unclaimed commissions amounting to P39,344.80. The amount of
attorney's fee should consequently be recomputed at 2% of P39,344.80 or
P786.89.

WHEREFORE, the judgment of the National Labor Relations Commission

is AFFIRMED except for the grant of separation pay which is hereby
DR. RENATO SARA and/or ROMEO ARANA petitioners,
vs.
CERILA AGARRADO and the NATIONAL LABOR RELATIONS
COMMISSION, respondents.

Amparo & Barcelona Law Offices for petitioners.

The Solicitor General for public respondent. Nicanor A. Magno for private
respondent.

FERNAN, C.J.:

Challenged in this petition for certiorari is the jurisdiction of the Labor Tribunal over Case No.
LRD-ROXII-006-82, a claim for unpaid commissions and reimbursement of certain sums of money filed by
herein private respondent Cerila Agarrado against herein petitioners Dr. Renato Sara and Romeo Arabia.

Private respondent Cerila Agarrado was an attendant in the clinic of

petitioner Dr. Renato Sara She quit her job in 1973. Four years later,
petitioners Dr. Sara and Romeo Arabia, being owners of a rice mill and
having begun to engage in the buy and sell of palay and rice, entered into a
verbal agreement with private respondent Agarrado whereby it was agreed
that the latter would be paid P2.00 commission per sack of milled rice sold
as well as a commission of 10% per kilo of palay purchased. It was further
agreed that private respondent would spend her own money for the
undertaking, but to enable her to carry out the agreement more effectively,
she was authorized to borrow money from other persons, as in fact she did,
subject to reimbursement by petitioners. 1
In 1982, private respondent filed with the National Labor Relations
Commission (NLRC) Regional Arbitration Branch No. XI, Cotabato City, a
complaint against petitioners for unpaid commission of P4,598.00 on milled
rice sold, P2,982.80 on palay sold, reimbursement of P17,500.00 which she
had borrowed from various persons and Pl,749.00 of her own money which
petitioners allegedly had not reimbursed (LRD-ROXII-006- 82).
By way of defense, petitioners raised the issue of lack of jurisdiction on the
part of the Labor Arbiter to take cognizance of the case, there being no
employer-employee relationship between the parties. They averred that the
claim for alleged unpaid commission and certain sums of money is
governed by the law on agency under the Civil Code and hence a purely
civil obligation cognizable by the regular courts.
On January 17, 1973, Labor Arbiter Magno C. Cruz rendered a decision in
favor of private respondent ordering petitioners to pay all the claims
amounting to P26,397.80. 2
Petitioner appealed the decision to the NLRC, which in a resolution dated
June 25, 1986 affirmed the Labor Arbiter's decision and dismissed the
appeal. 3
Their motion for reconsideration having been denied, petitioners took the
present recourse, maintaining lack of jurisdiction on the part of the Labor
Tribunal as well as grave abuse of discretion on its part in finding them
liable to private respondent.
In his comment, the Solicitor General agreed with petitioners that there was
no employer-employee relationship between the parties and that by reason
thereof the Labor Arbiter had no jurisdiction over the case. The Solicitor
General's comment was accompanied by a manifestation and motion
stating that he was filing the comment on his own behalf and that the public
respondent NLRC had been informed about his contrary stand. 4
The primordial issue in this case is whether an employer-employee
relationship exists between petitioners and private respondent as to warrant
cognizance by the Labor Arbiter of LRD-ROXII-006-82.
To determine the existence of an employer-employee relationship, this
Court in a long line of decisions has invariably applied the following
5 to reimbursment and if that would not be sufficient, to borrow money from
four-fold test: [1] the selection and engagement of the employee; [2] the
payment of wages; [3] the power of dismissal; and [4] the power to control
the employee's conduct.
In the case at bar, we find that although there was a selection and
engagement of private respondent in 1977, the verbal agreement between
the parties negated the existence of the other requisites.
As to the payment of wages, the verbal agreement entered into by the
parties stipulated that private respondent would be paid a commission of
P2.00 per sack of milled rice sold as well as a 10% commission on palay
purchase. The arrangement thus was explicitly on a commission basis
dependent on the volume of sale or purchase. Private respondent was not
guaranteed any minimum compensation nor was she allowed any drawing
account or advance of any kind against unearned commissions. Her right to
compensation depended upon and was measured by the tangible results
she produced the quantity of rice sold and the quantity of palay purchased.
The power to terminate the relationship was mutually vested upon the
parties. Either may terminate the business arrangement at will, with or
without cause.
Finally, noticeably absent from the agreement between the parties is the
element of control. Among the four (4) requisites, control is deemed the
most important that the other requisites may even be disregarded. Under
6
the control test, an employer-employee relationship exists if the "employer"
has reserved the right to control the "employee" not only as to the result of
the work done but also as to the means and methods by which the same is
to be accomplished. Otherwise, no such relationship exists.
7
We observe that the means and methods of purchasing and selling rice or
palay by private respondent were totally independent of petitioners' control.
As established by the NLRC:
... Sometime in June 1977, respondent re-engaged the services of herein
complainant to sell milled rice to the customers of the former, as well as to
buy palay for and in behalf of Dr. Renato Sara, with the verbal agreement
that to carry out effectively the said task, complainant was duly authorized
by respondent, Dr. Sara to spend her own money, if necessary but subject
other sources with further understanding that Dr. Sala will repay the ill thru SO ORDERED.
the complainant; ... ([Emphasis supplied], p. 21, Rollo)

Note that private respondent was never given capital by his supposed
employer but relied on her own resources and if insufficient, she borrowed
money from others. Petitioners did not supply private respondent with tools
and appliances needed to enable her to carry her undertaking, except to
authorize her to borrow money from others, subject to reimbursement.

The absence of control is made more evident by the fact that private
respondent was not even obliged to sell the palay she purchased to
petitioners. She was at liberty to sell the palay to any trader offering higher
buying rates. She was thus free to sell it to anybody whom she pleased.

Moreover, private respondent worked for petitioners at her own pleasure

and was not subject to definite hours or conditions of work. She could even
delegate the task of buying and selling to others, if she so desired, or
simultaneously engaged in other means of livelihood while selling and
purchasing rice or palay.

Under the conditions set forth in their agreement, private respondent was
an independent contractor, who exercising independent employment,
contracted to do a piece of work according to her own method and without
being subject to the control of her employer except as to the result of her
work. She was paid for the result of her labor, unlike an employee who is
paid for the labor he performs. 8

The verbal agreement devoid as it was of any stipulations indicative of

control leaves no doubt that private respondent was not an employee of
petitioners but was rather an independent contractor.

The Labor Tribunal's jurisdiction being primarily predicated upon the

existence of an employer-employee relationship between the parties, the
absence of such element, as in the case at bar, removes the controversy
from the scope of its limited jurisdiction.

WHEREFORE, the instant petition for certiorari is granted. Case No. G.R. No. 75112 August 17, 1992
LRD-ROXII-006-82 of the National Labor Relations Commission is hereby
ordered DISMISSED for lack of jurisdiction. FILAMER CHRISTIAN INSTITUTE, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ENRIQUE P.
SUPLICO, in his capacity as Judge of the Regional Trial Court, Branch
XIV, Roxas City and POTENCIANO KAPUNAN, SR., respondents.
Bedona & Bedona Law Office for petitioner.
Rhodora G. Kapunan for private respondents.
GUTIERREZ, JR., J.:
The private respondents, heirs of the late Potenciano Kapunan, seek
reconsideration of the decision rendered by this Court on October 16, 1990
(Filamer Christian Institute v. Court of Appeals, 190 SCRA 477) reviewing
the appellate court's conclusion that there exists an employer-employee
relationship between the petitioner and its co-defendant Funtecha. The
Court ruled that the petitioner is not liable for the injuries caused by
Funtecha on the grounds that the latter was not an authorized driver for
whose acts the petitioner shall be directly and primarily answerable, and
that Funtecha was merely a working scholar who, under Section 14, Rule X,
Book III of the Rules and Regulations Implementing the Labor Code is not
considered an employee of the petitioner.
The private respondents assert that the circumstances obtaining in the
present case call for the application of Article 2180 of the Civil Code since
Funtecha is no doubt an employee of the petitioner. The private
respondents maintain that under Article 2180 an injured party shall have
recourse against the servant as well as the petitioner for whom, at the time
of the incident, the servant was performing an act in furtherance of the
interest and for the benefit of the petitioner. Funtecha allegedly did not steal
the school jeep nor use it for a joy ride without the knowledge of the school
authorities.
After a re-examination of the laws relevant to the facts found by the trial
court and the appellate court, the Court reconsiders its decision. We
reinstate the Court of Appeals' decision penned by the late Justice
Desiderio Jurado and concurred in by Justices Jose C. Campos, Jr. and
Serafin E. Camilon. Applying Civil Code provisions, the appellate court
affirmed the trial court decision which ordered the payment of the
P20,000.00 liability in the Zenith Insurance Corporation policy, P10,000.00
moral damages, P4,000.00 litigation and actual expenses, and P3,000.00
attorney's fees.
It is undisputed that Funtecha was a working student, being a part-time
janitor and a scholar of petitioner Filamer. He was, in relation to the school,
an employee even if he was assigned to clean the school premises for only
two (2) hours in the morning of each school day.
Having a student driver's license, Funtecha requested the driver, Allan
Masa, and was allowed, to take over the vehicle while the latter was on his
way home one late afternoon. It is significant to note that the place where
Allan lives is also the house of his father, the school president, Agustin
Masa. Moreover, it is also the house where Funtecha was allowed free
board while he was a student of Filamer Christian Institute.
Allan Masa turned over the vehicle to Funtecha only after driving down a
road, negotiating a sharp dangerous curb, and viewing that the road was
clear. (TSN, April 4, 1983, pp. 78-79) According to Allan's testimony, a fast
moving truck with glaring lights nearly hit them so that they had to swerve to
the right to avoid a collision. Upon swerving, they heard a sound as if
something had bumped against the vehicle, but they did not stop to check.
Actually, the Pinoy jeep swerved towards the pedestrian, Potenciano
Kapunan who was walking in his lane in the direction against vehicular
traffic, and hit him. Allan affirmed that Funtecha followed his advise to
swerve to the right. (Ibid., p. 79) At the time of the incident (6:30 P.M.) in
Roxas City, the jeep had only one functioning headlight.
Allan testified that he was the driver and at the same time a security guard
of the petitioner-school. He further said that there was no specific time for
him to be off-duty and that after driving the students home at 5:00 in the
afternoon, he still had to go back to school and then drive home using the
same vehicle.
Driving the vehicle to and from the house of the school president where
both Allan and Funtecha reside is an act in furtherance of the interest of the
petitioner-school. Allan's job demands that he drive home the school jeep
so he can use it to fetch students in the morning of the next school day.
It is indubitable under the circumstances that the school president had
knowledge that the jeep was routinely driven home for the said purpose.
Moreover, it is not improbable that the school president also had knowledge
of Funtecha's possession of a student driver's license and his desire to
undergo driving lessons during the time that he was not in his classrooms.
In learning how to drive while taking the vehicle home in the direction of
Allan's house, Funtecha definitely was not having a joy ride. Funtecha was
not driving for the purpose of his enjoyment or for a "frolic of his own" but
ultimately, for the service for which the jeep was intended by the petitioner
school. (See L. Battistoni v. Thomas, Can SC 144, 1 D.L.R. 577, 80 ALR
722 [1932]; See also Association of Baptists for World Evangelism, Inc. v.
Fieldmen's Insurance Co., Inc. 124 SCRA 618 [1983]). Therefore, the Court
is constrained to conclude that the act of Funtecha in taking over the
steering wheel was one done for and in behalf of his employer for which act
the petitioner-school cannot deny any responsibility by arguing that it was
done beyond the scope of his janitorial duties. The clause "within the scope
of their assigned tasks" for purposes of raising the presumption of liability of
an employer, includes any act done by an employee, in furtherance of the
interests of the employer or for the account of the employer at the time of
the infliction of the injury or damage. (Manuel Casada, 190 Va 906, 59 SE
2d 47 [1950]) Even if somehow, the employee driving the vehicle derived
some benefit from the act, the existence of a presumptive liability of the
employer is determined by answering the question of whether or not the
servant was at the time of the accident performing any act in furtherance of
his master's business. (Kohlman v. Hyland, 210 NW 643, 50 ALR 1437
[1926]; Jameson v. Gavett, 71 P 2d 937 [1937])
Section 14, Rule X, Book III of the Rules implementing the Labor Code, on
which the petitioner anchors its defense, was promulgated by the Secretary
of Labor and Employment only for the purpose of administering and
enforcing the provisions of the Labor Code on conditions of employment.
Particularly, Rule X of Book III provides guidelines on the manner by which
the powers of the Labor Secretary shall be exercised; on what records
should be kept; maintained and preserved; on payroll; and on the exclusion
of working scholars from, and inclusion of resident physicians in the
employment coverage as far as compliance with the substantive labor
provisions on working conditions, rest periods, and wages, is concerned.
In other words, Rule X is merely a guide to the enforcement of the
substantive law on labor. The Court, thus, makes the distinction and so
holds that Section 14, Rule X, Book III of the Rules is not the decisive law in
a civil suit for damages instituted by an injured person during a vehicular
accident against a working student of a school and against the school itself.
The present case does not deal with a labor dispute on conditions of
employment between an alleged employee and an alleged employer. It
invokes a claim brought by one for damages for injury caused by the
patently negligent acts of a person, against both doer-employee and his
employer. Hence, the reliance on the implementing rule on labor to
disregard the primary liability of an employer under Article 2180 of the Civil
Code is misplaced. An implementing rule on labor cannot be used by an
employer as a shield to avoid liability under the substantive provisions of
the Civil Code.
There is evidence to show that there exists in the present case an
extra-contractual obligation arising from the negligence or reckless
imprudence of a person "whose acts or omissions are imputable, by a legal
fiction, to other(s) who are in a position to exercise an absolute or limited
control over (him)." (Bahia v. Litonjua and Leynes, 30 Phil. 624 [1915])
Funtecha is an employee of petitioner Filamer. He need not have an official
appointment for a driver's position in order that the petitioner may be held
responsible for his grossly negligent act, it being sufficient that the act of
driving at the time of the incident was for the benefit of the petitioner. Hence,
the fact that Funtecha was not the school driver or was not acting within the
scope of his janitorial duties does not relieve the petitioner of the burden of
rebutting the presumption juris tantum that there was negligence on its part
either in the selection of a servant or employee, or in the supervision over
him. The petitioner has failed to show proof of its having exercised the
required diligence of a good father of a family over its employees Funtecha
and Allan.
The Court reiterates that supervision includes the formulation of suitable
rules and regulations for the guidance of its employees and the issuance of
proper instructions intended for the protection of the public and persons
with whom the employer has relations through his employees. (Bahia v.
Litonjua and Leynes, supra, at p. 628; Phoenix Construction, v.
Intermediate Appellate Court, 148 SCRA 353 [1987])
An employer is expected to impose upon its employees the necessary WHEREFORE, the motion for reconsideration of the decision dated
discipline called for in the performance of any act indispensable to the October 16, 1990 is hereby GRANTED. The decision of the respondent
business and beneficial to their employer. appellate court affirming the trial court decision is REINSTATED.

In the present case, the petitioner has not shown that it has set forth such SO ORDERED.
rules and guidelines as would prohibit any one of its employees from taking
control over its vehicles if one is not the official driver or prohibiting the
driver and son of the Filamer president from authorizing another employee
to drive the school vehicle. Furthermore, the petitioner has failed to prove
that it had imposed sanctions or warned its employees against the use of its
vehicles by persons other than the driver.

The petitioner, thus, has an obligation to pay damages for injury arising
from the unskilled manner by which Funtecha drove the vehicle. (Cangco v.
Manila Railroad Co., 38 Phil. 768, 772 [1918]). In the absence of evidence
that the petitioner had exercised the diligence of a good father of a family in
the supervision of its employees, the law imposes upon it the vicarious
liability for acts or omissions of its employees. (Umali v. Bacani, 69 SCRA
263 [1976]; Poblete v. Fabros, 93 SCRA 200 [1979]; Kapalaran Bus Liner v.
Coronado, 176 SCRA 792 [1989]; Franco v. Intermediate Appellate Court,
178 SCRA 331 [1989]; Pantranco North Express, Inc. v. Baesa, 179 SCRA
384 [1989]) The liability of the employer is, under Article 2180, primary and
solidary. However, the employer shall have recourse against the negligent
employee for whatever damages are paid to the heirs of the plaintiff.

It is an admitted fact that the actual driver of the school jeep, Allan Masa,
was not made a party defendant in the civil case for damages. This is quite
understandable considering that as far as the injured pedestrian, plaintiff
Potenciano Kapunan, was concerned, it was Funtecha who was the one
driving the vehicle and presumably was one authorized by the school to
drive. The plaintiff and his heirs should not now be left to suffer without
simultaneous recourse against the petitioner for the consequent injury
caused by a janitor doing a driving chore for the petitioner even for a short
while. For the purpose of recovering damages under the prevailing
circumstances, it is enough that the plaintiff and the private respondent
heirs were able to establish the existence of employer-employee
relationship between Funtecha and petitioner Filamer and the fact that
Funtecha was engaged in an act not for an independent purpose of his own
but in furtherance of the business of his employer. A position of
responsibility on the part of the petitioner has thus been satisfactorily
demonstrated.
G.R. No. L-32245 May 25, 1979

DY KEH BENG, petitioner,

vs.
INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES,
ET AL., respondents.

A. M Sikat for petitioner.

D. A. Hernandez for respondents.

DE CASTRO, J.:

Petitioner Dy Keh Beng seeks a review by certiorari of the decision of the

Court of Industrial Relations dated March 23, 1970 in Case No. 3019-ULP
and the Court's Resolution en banc of June 10, 1970 affirming said decision.
The Court of Industrial Relations in that case found Dy Keh Beng guilty of
the unfair labor practice acts alleged and order him to

reinstate Carlos Solano and Ricardo Tudla to their former jobs with
backwages from their respective dates of dismissal until fully reinstated
without loss to their right of seniority and of such other rights already
acquired by them and/or allowed by law. 1

Now, Dy Keh Beng assigns the following errors as having been committed
2

by the Court of Industrial Relations:

RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS

SOLANO AND TUDLA WERE EMPLOYEES OF PETITIONERS.

II

RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS

SOLANO AND TUDLA WERE DISMISSED FROM THEIR EMPLOYMENT
BY PETITIONER.
III
RESPONDENT COURT ERRED IN FINDING THAT THE TESTIMONIES
ADDUCED BY COMPLAINANT ARE CONVINCING AND DISCLOSES
(SIC) A PATTERN OF DISCRIMINATION BY THE PETITIONER HEREIN.
IV
RESPONDENT COURT ERRED IN DECLARING PETITIONER GUILTY
OF UNFAIR LABOR PRACTICE ACTS AS ALLEGED AND DESCRIBED
IN THE COMPLAINT.
V receive ?5.00 a day. sometimes less. 6
RESPONDENT COURT ERRED IN PETITIONER TO REINSTATE
RESPONDENTS TO THEIR FORMER JOBS WITH BACKWAGES FROM
THEIR RESPECTIVE DATES OF DISMISSALS UNTIL FINALLY
REINSTATED WITHOUT LOSS TO THEIR RIGHT OF SENIORITY AND
OF SUCH OTHER RIGHTS ALREADY ACQUIRED BY THEM AND/OR
ALLOWED BY LAW.
The facts as found by the Hearing Examiner are as follows:
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor
of a basket factory, for discriminatory acts within the meaning of Section
4(a), sub-paragraph (1) and (4). Republic Act No. 875, by dismissing on
3
September 28 and 29, 1960, respectively, Carlos N. Solano and Ricardo
Tudla for their union activities. After preliminary investigation was
conducted, a case was filed in the Court of Industrial Relations for in behalf
of the International Labor and Marine Union of the Philippines and two of its
members, Solano and Tudla In his answer, Dy Keh Beng contended that he
did not know Tudla and that Solano was not his employee because the
latter came to the establishment only when there was work which he did
on pakiaw basis, each piece of work being done under a separate contract.
Moreover, Dy Keh Beng countered with a special defense of simple
extortion committed by the head of the labor union, Bienvenido Onayan.
After trial, the Hearing Examiner prepared a report which was subsequently
adopted in toto by the Court of Industrial Relations. An employee-employer
relationship was found to have existed between Dy Keh Beng and
complainants Tudla and Solano, although Solano was admitted to have
worked on piece basis. The issue therefore centered on whether there
4
existed an employee employer relation between petitioner Dy Keh Beng
and the respondents Solano and Tudla .
According to the Hearing Examiner, the evidence for the complainant Union
tended to show that Solano and Tudla became employees of Dy Keh Beng
from May 2, 1953 and July 15, 1955, respectively, and that except in the
5
event of illness, their work with the establishment was continuous although
their services were compensated on piece basis. Evidence likewise showed
that at times the establishment had eight (8) workers and never less than
five (5); including the complainants, and that complainants used to
According to Dy Keh Beng, however, Solano was not his employee for the
following reasons:
(1) Solano never stayed long enought at Dy's establishment;
(2) Solano had to leave as soon as he was through with the
(3) order given him by Dy;
(4) When there were no orders needing his services there was nothing for
him to do;
(5) When orders came to the shop that his regular workers could not fill it
was then that Dy went to his address in Caloocan and fetched him for these
orders; and
(6) Solano's work with Dy's establishment was not continuous. , 7
According to petitioner, these facts show that respondents Solano and
Tudla are only piece workers, not employees under Republic Act 875,
where an employee is referred to as
8
shall include any employee and shag not be limited to the employee of a
particular employer unless the Act explicitly states otherwise and shall
include any individual whose work has ceased as a consequence of, or in
connection with any current labor dispute or because of any unfair labor
practice and who has not obtained any other substantially equivalent and
regular employment.
while an employer 9 inferred that the proprietor Dy could easily exercise control on the men he
includes any person acting in the interest of an employer, directly or
indirectly but shall not include any labor organization (otherwise than when
acting as an employer) or anyone acting in the capacity of officer or agent
of such labor organization.
Petitioner really anchors his contention of the non-existence of
employee-employer relationship on the control test. He points to the case
of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et al., L-13130,
October 31, 1959, where the Court ruled that:
The test ... of the existence of employee and employer relationship is
whether there is an understanding between the parties that one is to render
personal services to or for the benefit of the other and recognition by them
of the right of one to order and control the other in the performance of the
work and to direct the manner and method of its performance.
Petitioner contends that the private respondents "did not meet the control
test in the fight of the ... definition of the terms employer and employee,
because there was no evidence to show that petitioner had the right to
direct the manner and method of respondent's work. Moreover, it is
10
argued that petitioner's evidence showed that "Solano worked on
a pakiaw basis" and that he stayed in the establishment only when there
was work.
While this Court upholds the control test under which an 11
employer-employee 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 means to be used in reaching such end, " it finds no
merit with petitioner's arguments as stated above. It should be borne in
mind that the control test calls merely for the existence of the right to control
the manner of doing the work, not the actual exercise of the
right. Considering the finding by the Hearing Examiner that the
12
establishment of Dy Keh Beng is "engaged in the manufacture of baskets
known as kaing, it is natural to expect that those working under Dy would
13
have to observe, among others, Dy's requirements of size and quality of
the kaing. Some control would necessarily be exercised by Dy as the
making of the kaing would be subject to Dy's specifications. Parenthetically,
since the work on the baskets is done at Dy's establishments, it can be
employed.
As to the contention that Solano was not an employee because he worked
on piece basis, this Court agrees with the Hearing Examiner that
circumstances must be construed to determine indeed if payment by the
piece is just a method of compensation and does not define the essence of
the relation. Units of time ... and units of work are in establishments like
respondent (sic) just yardsticks whereby to determine rate of compensation,
to be applied whenever agreed upon. We cannot construe payment by the
piece where work is done in such an establishment so as to put the worker
completely at liberty to turn him out and take in another at pleasure.
At this juncture, it is worthy to note that Justice Perfecto, concurring with
Chief Justice Ricardo Paras who penned the decision in "Sunrise Coconut
Products Co. v. Court of Industrial Relations" (83 Phil..518, 523), opined
that
judicial notice of the fact that the so-called "pakyaw" system mentioned in
this case as generally practiced in our country, is, in fact, a labor contract
-between employers and employees, between capitalists and laborers.
Insofar as the other assignments of errors are concerned, there is no
showing that the Court of Industrial Relations abused its discretion when it
concluded that the findings of fact made by the Hearing Examiner were
supported by evidence on the record. Section 6, Republic Act 875 provides
that in unfair labor practice cases, the factual findings of the Court of
Industrial Relations are conclusive on the Supreme Court, if supported by
substantial evidence. This provision has been put into effect in a long line of
decisions where the Supreme Court did not reverse the findings of fact of
the Court of Industrial Relations when they were supported by substantial
evidence. 14
Nevertheless, considering that about eighteen (18) years have already
elapsed from the time the complainants were dismissed, and that the
15
decision being appealed ordered the payment of backwages to the
employees from their respective dates of dismissal until finally reinstated, it
is fitting to apply in this connection the formula for backwages worked out
by Justice Claudio Teehankee in "cases not terminated sooner." The 16

formula cans for fixing the award of backwages without qualification and
deduction to three years, "subject to deduction where there are mitigating
circumstances in favor of the employer but subject to increase by way of
exemplary damages where there are aggravating
circumstances. Considering there are no such circumstances in this case,
17

there is no reason why the Court should not apply the abovementioned
formula in this instance.

WHEREFORE; the award of backwages granted by the Court of Industrial

Relations is herein modified to an award of backwages for three years
without qualification and deduction at the respective rates of compensation
the employees concerned were receiving at the time of dismissal. The
execution of this award is entrusted to the National Labor Relations
Commission. Costs against petitioner.

SO ORDERED.

G.R. No. 64948 September 27, 1994

MANILA GOLF & COUNTRY CLUB, INC., petitioner,

vs.
INTERMEDIATE APPELLATE COURT and FERMIN
LLAMAR, respondents.
Bito, Misa & Lozada for petitioner.
Remberto Z. Evio for private respondent.
NARVASA, C.J.:
The question before the Court here is whether or not persons rendering
caddying services for members of golf clubs and their guests in said clubs'
courses or premises are the employees of such clubs and therefore within
the compulsory coverage of the Social Security System (SSS).
That question appears to have been involved, either directly or peripherally,
in three separate proceedings, all initiated by or on behalf of herein private
respondent and his fellow caddies. That which gave rise to the present
petition for review was originally filed with the Social Security Commission
(SSC) via petition of seventeen (17) persons who styled themselves
"Caddies of Manila Golf and Country Club-PTCCEA" for coverage and
availment of benefits under the Social Security Act as amended, "PTCCEA"
being
the acronym of a labor organization, the "Philippine Technical, Clerical,
Commercial Employees Association," with which the petitioners claimed to
be affiliated. The petition, docketed as SSC Case No. 5443, alleged in
essence that although the petitioners were employees of the Manila Golf
and Country Club, a domestic corporation, the latter had not registered
them as such with the SSS.
At about the same time, two other proceedings bearing on the same
question were filed or were pending; these were:
(1) a certification election case filed with the Labor Relations Division of the
Ministry of Labor by the PTCCEA on behalf of the same caddies of the
Manila Golf and Country Club, the case being titled "Philippine Technical,
Clerical, Commercial Association vs. Manila Golf and Country Club" and
docketed as Case No. R4-LRDX-M-10-504-78; it appears to have been
resolved in favor of the petitioners therein by Med-Arbiter Orlando S. Rojo
who was thereafter upheld by Director Carmelo S. Noriel, denying the
Club's motion for reconsideration; 1 deportment and conduct of caddies (Exh. "C") the same are designed to
(2) a compulsory arbitration case initiated before the Arbitration Branch of
the Ministry of Labor by the same labor organization, titled "Philippine
Technical, Clerical, Commercial Employees Association (PTCCEA), Fermin
Lamar and Raymundo Jomok vs. Manila Golf and Country Club, Inc.,
Miguel Celdran, Henry Lim and Geronimo Alejo;" it was dismissed for lack
of merit by Labor Arbiter Cornelio T. Linsangan, a decision later affirmed on
appeal by the National Labor Relations Commission on the ground that
there was no employer-employee relationship between the petitioning
caddies and the respondent Club. 2
In the case before the SSC, the respondent Club filed answer praying for
the dismissal of the petition, alleging in substance that the petitioners,
caddies by occupation, were allowed into the Club premises to render
services as such to the individual members and guests playing the Club's
golf course and who themselves paid for such services; that as such
caddies, the petitioners were not subject to the direction and control of the
Club as regards the manner in which they performed their work; and hence,
they were not the Club's employees.
Subsequently, all but two of the seventeen petitioners of their own accord
withdrew their claim for social security coverage, avowedly coming to
realize that indeed there was no employment relationship between them
and the Club. The case continued, and was eventually adjudicated by the
SSC after protracted proceedings only as regards the two holdouts, Fermin
Llamar and Raymundo Jomok. The Commission dismissed the petition for
lack of merit, ruling:
3
. . . that the caddy's fees were paid by the golf players themselves and not
by respondent club. For instance, petitioner Raymundo Jomok averred that
for their services as caddies a caddy's Claim Stub (Exh. "1-A") is issued by
a player who will in turn hand over to management the other portion of the
stub known as Caddy Ticket (Exh. "1") so that by this arrangement
management will know how much a caddy will be paid (TSN, p. 80, July 23,
1980). Likewise, petitioner Fermin Llamar admitted that caddy works on his
own in accordance with the rules and regulations (TSN, p. 24, February 26,
1980) but petitioner Jomok could not state any policy of respondent that
directs the manner of caddying (TSN, pp. 76-77, July 23, 1980). While
respondent club promulgates rules and regulations on the assignment,
impose personal discipline among the caddies but not to direct or conduct
their actual work. In fact, a golf player is at liberty to choose a caddy of his
preference regardless of the respondent club's group rotation system and
has the discretion on whether or not to pay a caddy. As testified to by
petitioner Llamar that their income depends on the number of players
engaging their services and liberality of the latter (TSN, pp. 10-11, Feb. 26,
1980). This lends credence to respondent's assertion that the caddies are
never their employees in the absence of two elements, namely, (1)
payment of wages and (2) control or supervision over them. In this
connection, our Supreme Court ruled that in the determination of the
existence of an employer-employee relationship, the "control test" shall be
considered decisive (Philippine Manufacturing Co. vs. Geronimo and
Garcia, 96 Phil. 276; Mansal vs. P.P. Coheco Lumber Co., 96 Phil. 941;
Viana vs.
Al-lagadan, et al., 99 Phil. 408; Vda, de Ang, et al. vs. The Manila Hotel Co.,
101 Phil. 358, LVN Pictures Inc. vs. Phil. Musicians Guild, et al.,
L-12582, January 28, 1961, 1 SCRA 132. . . . (reference being made also to
Investment Planning Corporation Phil. vs. SSS 21 SCRA 925).
Records show the respondent club had reported for SS coverage Graciano
Awit and Daniel Quijano, as bat unloader and helper, respectively, including
their ground men, house and administrative personnel, a situation indicative
of the latter's concern with the rights and welfare of its employees under the
SS law, as amended. The unrebutted testimony of Col. Generoso A. Alejo
(Ret.) that the ID cards issued to the caddies merely intended to identify the
holders as accredited caddies of the club and privilege(d) to ply their trade
or occupation within its premises which could be withdrawn anytime for loss
of confidence. This gives us a reasonable ground to state that the defense
posture of respondent that petitioners were never its employees is well
taken.4
From this Resolution appeal was taken to the Intermediate appellate Court
by the union representing Llamar and Jomok. After the appeal was
docketed and some months before decision thereon was reached and
5
promulgated, Raymundo Jomok's appeal was dismissed at his instance,
leaving Fermin Llamar the lone appellant. 6
The appeal ascribed two errors to the SSC:
(1) refusing to suspend the proceedings to await judgment by the Labor
Relations Division of National Capital Regional Office in the certification
election case (R-4-LRD-M-10-504-78) supra, on the precise issue of the
existence of employer-employee relationship between the respondent club
and the appellants, it being contended that said issue was "a function of the
proper labor office"; and
(2) adjudicating that self same issue a manner contrary to the ruling of the
Director of the Bureau of Labor Relations, which "has not only become final
but (has been) executed or (become) res adjudicata." 7
The Intermediate Appellate Court gave short shirt to the first assigned error,
dismissing it as of the least importance. Nor, it would appear, did it find any
greater merit in the second alleged error. Although said Court reserved the
appealed SSC decision and declared Fermin Llamar an employee of the
Manila Gold and Country Club, ordering that he be reported as such for
social security coverage and paid any corresponding benefits, it 8
conspicuously ignored the issue of res adjudicata raised in said second
assignment. Instead, it drew basis for the reversal from this Court's ruling
in Investment Planning Corporation of the Philippines vs. Social Security
System, supra and declared that upon the evidence, the questioned
9
employer-employee relationship between the Club and Fermin Llamar
passed the so-called "control test," establishment in the case — i.e.,
"whether the employer controls or has reserved the right to control the
employee not only as to the result of the work to be done but also as to the
means and methods by which the same is to be accomplished," — the
Club's control over the caddies encompassing:
(a) the promulgation of no less than twenty-four (24) rules and regulations
just about every aspect of the conduct that the caddy must observe, or
avoid, when serving as such, any violation of any which could subject him
to disciplinary action, which may include suspending or cutting off his
access to the club premises;
(b) the devising and enforcement of a group rotation system whereby a
caddy is assigned a number which designates his turn to serve a player;
(c) the club's "suggesting" the rate of fees payable to the caddies.
Deemed of title or no moment by the Appellate Court was the fact that the
caddies were paid by the players, not by the Club, that they observed no
definite working hours and earned no fixed income. It quoted with approval
from an American decision to the effect that: "whether the club paid the
10
caddies and afterward collected in the first instance, the caddies were still
employees of the club." This, no matter that the case which produced this
ruling had a slightly different factual cast, apparently having involved a
claim for workmen's compensation made by a caddy who, about to leave
the premises of the club where he worked, was hit and injured by an
automobile then negotiating the club's private driveway.
That same issue of res adjudicata, ignored by the IAC beyond bare mention
thereof, as already pointed out, is now among the mainways of the private
respondent's defenses to the petition for review. Considered in the
perspective of the incidents just recounted, it illustrates as well as anything
can, why the practice of forum-shopping justly merits censure and punitive
sanction. Because the same question of employer-employee relationship
has been dragged into three different fora, willy-nilly and in quick
succession, it has birthed controversy as to which of the resulting
adjudications must now be recognized as decisive. On the one hand, there
is the certification case [R4-LRDX-M-10-504-78), where the decision of the
Med-Arbiter found for the existence of employer-employee relationship
between the parties, was affirmed by Director Carmelo S. Noriel, who
ordered a certification election held, a disposition never thereafter appealed
according to the private respondent; on the other, the compulsory
arbitration case (NCR Case No. AB-4-1771-79), instituted by or for the
same respondent at about the same time, which was dismissed for lack of
merit by the Labor Arbiter, which was afterwards affirmed by the NLRC
itself on the ground that there existed no such relationship between the
Club and the private respondent. And, as if matters were not already
complicated enough, the same respondent, with the support and assistance
of the PTCCEA, saw fit, also contemporaneously, to initiate still a third
proceeding for compulsory social security coverage with the Social Security
Commission (SSC Case No. 5443), with the result already mentioned.
Before this Court, the petitioner Club now contends that the decision of the
Med-Arbiter in the certification case had never become final, being in fact
the subject of three pending and unresolved motions for reconsideration, as
well as of a later motion for early resolution. Unfortunately, none of these
11
motions is incorporated or reproduced in the record before the Court. And,
for his part, the private respondent contends, not only that said decision
had been appealed to and been affirmed by the Director of the BLR, but
that a certification election had in fact been held, which resulted in the
PTCCEA being recognized as the sole bargaining agent of the caddies of
the Manila Golf and Country Club with respect to wages, hours of work,
terms of employment, etc. Whatever the truth about these opposing
12
contentions, which the record before the Court does not adequately
disclose, the more controlling consideration would seem to be that,
however, final it may become, the decision in a certification case, by the
very nature of that proceedings, is not such as to foreclose all further
dispute between the parties as to the existence, or non-existence, of
employer-employee relationship between them.
It is well settled that for res adjudicata, or the principle of bar by prior
judgment, to apply, the following essential requisites must concur: (1) there
must be a final judgment or order; (2) said judgment or order must be on the
merits; (3) the court rendering the same must have jurisdiction over the
subject matter and the parties; and (4) there must be between the two
cases identity of parties, identity of subject matter and identity of cause of
action.13
Clearly implicit in these requisites is that the action or proceedings in which
is issued the "prior Judgment" that would operate in bar of a subsequent
action between the same parties for the same cause, be adversarial, or
contentious, "one having opposing parties; (is) contested, as distinguished
from an ex parte hearing or proceeding. . . . of which the party seeking relief
has given legal notice to the other party and afforded the latter an
opportunity to contest it" and a certification case is not such a proceeding,
14
as this Court already ruled:
A certification proceedings is not a "litigation" in the sense in which the term
is commonly understood, but mere investigation of a non-adversary,
fact-finding character, in which the investigating agency plays the part of a
disinterested investigator seeking merely to ascertain the desires of the
employees as to the matter of their representation. The court enjoys a wide
discretion in determining the procedure necessary to insure the fair and free
choice of bargaining representatives by the employees. 15
Indeed, if any ruling or judgment can be said to operate as res
adjudicata on the contested issue of employer-employee relationship
between present petitioner and the private respondent, it would logically be
that rendered in the compulsory arbitration case (NCR Case No.
AB-4-771-79, supra), petitioner having asserted, without dispute from the
private respondent, that said issue was there squarely raised and litigated,
resulting in a ruling of the Arbitration Branch (of the same Ministry of Labor)
that such relationship did not exist, and which ruling was thereafter affirmed
by the National Labor Relations Commission in an appeal taken by said
respondent. 16
In any case, this Court is not inclined to allow private respondent the benefit
of any doubt as to which of the conflicting ruling just adverted to should be
accorded primacy, given the fact that it was he who actively sought them
simultaneously, as it were, from separate fora, and even if the graver
sanctions more lately imposed by the Court for forum-shopping may not be
applied to him retroactively.
Accordingly, the IAC is not to be faulted for ignoring private respondent's
invocation of res adjudicata; on contrary, it acted correctly in doing so.
Said Court’s holding that upon the facts, there exists (or existed) a
relationship of employer and employee between petitioner and private
respondent is, however, another matter. The Court does not agree that said
facts necessarily or logically point to such a relationship, and to the
exclusion of any form of arrangements, other than of employment, that
would make the respondent's services available to the members and guest
of the petitioner.
As long as it is, the list made in the appealed decision detailing the various
matters of conduct, dress, language, etc. covered by the petitioner's
regulations, does not, in the mind of the Court, so circumscribe the actions
or judgment of the caddies concerned as to leave them little or no freedom
of choice whatsoever in the manner of carrying out their services. In the
very nature of things, caddies must submit to some supervision of their
conduct while enjoying the privilege of pursuing their occupation within the
premises and grounds of whatever club they do their work in. For all that is
made to appear, they work for the club to which they attach themselves on
sufference but, on the other hand, also without having to observe any
working hours, free to leave anytime they please, to stay away for as long
they like. It is not pretended that if found remiss in the observance of said
rules, any discipline may be meted them beyond barring them from the
premises which, it may be supposed, the Club may do in any case even
absent any breach of the rules, and without violating any right to work on
their part. All these considerations clash frontally with the concept of
employment.
The IAC would point to the fact that the Club suggests the rate of fees
payable by the players to the caddies as still another indication of the
latter's status as employees. It seems to the Court, however, that the
intendment of such fact is to the contrary, showing that the Club has not the
measure of control over the incidents of the caddies' work and
compensation that an employer would possess.
The Court agrees with petitioner that the group rotation system so-called, is
less a measure of employer control than an assurance that the work is fairly
distributed, a caddy who is absent when his turn number is called simply
losing his turn to serve and being assigned instead the last number for the
day. 17
By and large, there appears nothing in the record to refute the petitioner's
claim that:
(Petitioner) has no means of compelling the presence of a caddy. A caddy
is not required to exercise his occupation in the premises of petitioner. He
may work with any other golf club or he may seek employment a caddy or
otherwise with any entity or individual without restriction by petitioner. . . .
. . . In the final analysis, petitioner has no was of compelling the presence of
the caddies as they are not required to render a definite number of hours of
work on a single day. Even the group rotation of caddies is not absolute
because a player is at liberty to choose a caddy of his preference
regardless of the caddy's order in the rotation.
It can happen that a caddy who has rendered services to a player on one
day may still find sufficient time to work elsewhere. Under such
circumstances, he may then leave the premises of petitioner and go to such
other place of work that he wishes (sic). Or a caddy who is on call for a
particular day may deliberately absent himself if he has more profitable
caddying, or another, engagement in some other place. These are things
beyond petitioner's control and for which it imposes no direct sanctions on
the caddies. . . .
18
WHEREFORE, the Decision of the Intermediate Appellant Court, review of
which is sought, is reversed and set aside, it being hereby declared that the
private respondent, Fermin Llamar, is not an employee of petitioner Manila
Golf and Country Club and that petitioner is under no obligation to report
him for compulsory coverage to the Social Security System. No R e s p o n d e n t s. September 5, 2006
pronouncement as to costs.
x----------------------------------
SO ORDERED. ------x

DECISION

CHICO-NAZARIO, J.:

The Case

This is a petition for review on certiorari under

Rule 45 of the Rules of Court seeking the reversal of
the Decision [ 1] dated 18 February 2002, and the
CEBU METAL G. R. No. 154463
Resolution [ 2] dated 27 June 2002, rendered by the
CORPORATION,
P e t i t i o n e r, Present: Court of Appeals in CA-G.R. SP No. 66480, which
annulled and set aside the decision [ 3] dated 9 October
PANGANIBAN, CJ, 2000, and resolution [ 4] dated 2 July 2001, of the
- versus - Chairman, National Labor Relations Commission (NLRC) in
YNARES-SANTIAGO
AUSTRIA-MARTINEZ, NLRC Case No.V-000840-99. In its decision, the
GREGORIO ROBERT CALLEJO, SR., and NLRC reversed and set aside the decision [ 5] dated 27
SALILING, ELIAS CHICO-NAZARIO, JJ. May 1999 of Labor Arbiter Jesus N. Rodriguez, Jr. in
BOLIDO, MANUEL favor of complainant employees, herein respondents
ALQUIZA, and Promulgated:
Gregorio Saliling, Elias Bolido, Manuel Alquiza and
BENJIE AMPARADO,
Benjie Amparado, RAB Case No. 06 -01-10019-97.

The Facts
Parties herein are somewhat at variance with
respect to the basic facts of the case at bar.
The facts of the case as recounted [ 6] by
petitioner Cebu Metal Corporation are as follows:
Respondent (Cebu Metal
Corporation) is a corporation
engage (sic) in buying and
selling of scrap iron x x x. In
the Bacolod Branch, it has three
regular (3) employees holding
such positions as
Officer-in-Charge, a scaler and
a yardman, x x x whose salaries
are paid directly by its main
office in Cebu while others are
undertaking pakiao work in the
unloading of scrap iron for
stockpiling.
Among those workers who presented
for work in the unloading of scrap iron in
the area are the unemployed persons or
trisicad drivers standing by in the vicinity
some of whom are the herein complainants
x x x Gregorio Robert Saliling, Elias
Bolido, Manuel Alquiza, Benjie Amparado
and non-complainants Arnel Allera, Eliseo
Torralba or any other p ersons who wanted
to augment their income aside from their
regular jobs. Robert Gregorio Saliling
started working in 1996, Elias Bolido on
(sic) October 1995 while Manuel Alquiza
and Benjie Amparado, on (sic) February
1996.
As compensation for their serv ices,
these workers including the herein
complainants are paid at the rate of P15.00
per ton for which each person can unload at
least two (2) to three (3) tons per hour or
can earn at least P240.00 to P360.00 in
eight (8) hours if work is only available
which payment necessarily includes cost of
living allowance (COLA) and 13 t h -month
pay.
xxxx
Petitioner company further elaborated [ 7] on the
nature of its business and the circumstances
surrounding the employment of respondent
complainants, to wit:
The Bacolod buying station is mainly
a stockyard where scrap metal delivered by
its suppliers are stockpiled.

The supply of scrap metal is n ot
steady as it depends upon many factors,
such as availability of supplies, price,
competition and demand among others.
There are therefore (sic) instances when in
a single week , one or two trucks of scrap
metal are delivered while there are weeks
when not a single truck of scrap metal are
delivered although there may also be weeks
when quite a number of trucks are
delivered to the stockyard x x x. The
arrivals of these trucks and the deliveries
of scrap metal are not regular and the
schedules of deliveries x x x to the
stockyard x x x are not known before hand
by the respondent (petitioner company).
x x x [t]he trucks used in the delivery
of scrap metal are owned and/or rented by
the different suppliers of scrap metal.
These trucks have their own driver and
truck boys employed by these different
suppliers. Sometimes, these trucks do not
have any truck boys, and in these instances,
the respondent hires the services of people
for the purpose of unloading the scrap
metal from these trucks.
It is for this reason that the unloaders
hired by the respondent to unload the scrap
metal from these trucks are basically
seasonal workers. They are hired only
whenever there are trucks of suppliers of
scrap metal that deliver scrap metal to the
yard of the respondent and these trucks
happen not to have any accompanying truck
boys. Whoever are available and whoever
are willing to help unload x x x on a
particular occasion are hired to unload x x
x.
Usually, there is a leader for a
particular group who is tasked to unload
the scrap metal from a particular truck. It is
this leader who distributes the individual
take of each member of the particular group
unloading the scrap metal from a particular
truck.
In contrast, respondent complainants, Gregorio
Saliling, Elias Bolido, Manuel Alquiza and Benjie
Amparado, in their position paper [ 8] submitted to the
Labor Arbiter, narrate:
1. That complainants Gregor io
Saliling was employed by defendant
Corporation x x x in 1988, complainant
Elias Bolido was hired in 1992 and
complainant Benjie Amparado was hired by
respondent in 1994; x x x.
 2. The aforesaid complainants, from P10.93 per hour in case of overtime work,
the time they were employed by respond ent, but they never received additional benefits
they received their salary on (sic) the in case, (sic) they worked on Saturdays,
following rate: Sundays, and Holidays;

GREGORIO ROBERT SALILING Complainants likewise never received

th
------- P5.00/hour in 1988 13 month pay, holiday pay, incentive
5.00/hour in 1989 leave pay, bonuses and other labor
6.00/hour in 1990 benefits;
7.00/hour in 1991
7.00/hour in 1992 4. Complainants were required to
7.00/hour in 1993 work from 8:00 A.M. to 12:00 noon and
7.00/hour in 1994 from 1:00 P.M. to 5:00 P.M. or for eight
7.50/hour in 1995 hours a day; seven day s a week and thirty
8.75/hour in 1996 days a month;

ELIAS BOLIDO ------- P100.00/day in 5. When these complainants

1992 demanded from respondent for the increase
7.00/hour in 1993 of their salary, respondent through Marlon
7.00/hour in 1994 got irritated and instructed complainants to
7.50/hour in 1995 stop working, thus, complainants, effective
8.75/hour in 1996 December 1996 were precluded from
entering respondent loading and unloading
BENJIE AMPARADO ------- P7.00/hour in compound x x x.
1994
7.50/hour in 1995 On 10 January 1997, respondent complainants
8.75/hour in 1996 filed a Complaint [ 9 ] before the Regional Arbitration
Branch No VI, Bacolod City for underpayment of
3. That the aforesaid complainants
wages and non-payment of the following benefits: 1)
never received any other benefits from the
13 t h month pay; 2) holiday pay; and 3) service
respondent, except the amount indicated
above; (sic) They received the sum of
incentive leave pay.
 B) 13 t h Month Pay ----- 7,912.34
On 6 March 1998, respondent complainants C) ERA ----- 1,139.83
manifested [ 1 0 ] that they were including in their D) COLA ----- 12,961.91
complaint against petitioner company, the claim for TOTAL ----- P64,252.38
illegal dismissal. Such belated filing was alleged to
3. Manuel Alquiza
have been due to the fact that they were only
A) Backwages ----- P42,238.30
dismissed after the filing of their complaint. B) 13 t h Month Pay ----- 7,912.34
C) ERA ----- 1,139.83
On 27 May 1999, the Labor Arbiter rendered a D) COLA ----- 12,961.91
decision [ 11 ] the dispositive of which reads: TOTAL ----- P64,252.38

CONFORMABLY TO THE 4. Benjie Amparado

FOREGOING, respondent Cebu Metal
Corporation, through its manager,
MARLON RADEN, is hereby ordered to
REINSTATE complainants to their former
positions with backwages limited to one (1)
year and 13 t h month pay, ERA and COLA
as follows:
NAME OF COMPLAINANTS:
1. Gregorio Robert Saliling
A) Backwages ----- P42,238.30
B) 13 t h Month Pay ----- 7,912.34
C) ERA ----- 1,139.83
D) COLA ----- 12,961.91
TOTAL ----- P64,252.38
2. Elias Bolido
A) Backwages ----- P42,238.30
A) Backwages ----- P42,238.30
B) 13 t h Month Pay ----- 7,912.34
C) ERA ----- 1,139.83
D) COLA ----- 12,961.91
TOTAL ----- P64,252.38
GRAND TOTAL -------- P257,009.52
In case reinstatement is no longer
feasible, complainants are to be given
separation pay equivalent to fifteen (15)
days to be given for every year of service.
Attorneys fees of five percent (5%) of
the total judgment award of the amount of
Twelve Thousand Eight Hundred fifty
Pesos and Forty-Eight Centavos
(P12,850.48) is also awarded.

In ordering the reinstatement of respondent
complainants, the Labor Arbiter found them to have
been illegally dismissed from their employment with
petitioner company. The decision explained that:
Regarding the second issue which is
illegal dismissal, we find the same
meritorious. Under Article 280 of the
Labor Code, complainants are regular
employees since they are engaged to
perform activities which are necessary and
desirable in the usual business or tr ade of
the employer, (sic) x x x. Complainants job
of loading, unloading and stockpiling scrap
iron is necessary and part of the business of
respondent. Since complainants were
dismissed without cause and due process of
law, they are entitled to reinstatem ent with
backwages limited to one (1) year.
Aggrieved, petitioner company appealed the
foregoing decision to the NLRC.
In a Decision [ 1 2] promulgated on 9 October
2000, the Fourth Division of the
NLRC reversed and set aside the ruling of the Labor
Arbiter. Instead, the Commission held that
respondent complainants were not regular employees
of petitioner company, thus, they could not have
been illegally dismissed. The order of reversal was
based on the Commissions finding that the petty cash
vouchers [ 1 3] submitted
by petitioner company confirmed the fact that
unloaders were paid on pakiao or task basis at
P15.00 per metric ton. The Commission further
rationalized that with the irregular nature of the work
involved, the stoppage and resumption of which
depended solely on the availability or supply of
scrap metal, it necessarily follows that after the job
of unloading was completed and unloaders were paid
the contract price, the latters working relationship
with petitioner company legally ended. They were
then free to offer their services to others.
As an aside, the Commission observed that it
was erroneous for the Labor Arbiter to rule on the
question of whether or not respondent complainants
were illegally dismissed since the complaint filed
on 10 January 1997 failed to include such matter. To
be sure, the complaint merely imputed the following
causes of action: 1) underpayment of wages; and 2)
non-payment of a) 13 t h month pay; b) holiday pay;
and c) service incentive leave pay. Nowhere was the
matter of illegal dismissal written on the same. The
issue was formally brought up only on 6 March
1998, via a Manifestation, long after the filing of the
parties respective position papers.
 In view of the above, the Commission declared of Public Respondent National Labor
that respondent complainants invalidly raised the Relations Commission is hereby
issue of illegal dismissal in the position paper they ANNULLED AND SET ASIDE AND THE
filed before the Labor Arbiter. JUDGMENT OF THE LABOR ARBITER
IN RAB-CASE No. 06-01-10019-97
REINSTATED. No costs.
Dissatisfied by the above, it was the turn of
respondent complainants to challenge the same but SO ORDERED.
this time before the Court of Appeals.

In a Decision dated 18 February 2002, the The Issues

Court of Appeals annulled and set aside the assailed
decision of the NLRC. Said Decision was Its Motion for Reconsideration having been
grounded exclusively on the argument that the denied [ 1 4] , petitioner company now comes to this
Commission committed grave abuse of discretion in Court imputing the following errors on the Court of
reversing and setting aside the Decision of the Labor Appeals:
Arbiter since petitioner company did not make an
issue out of the Labor Arbiters action in ruling on a
cause of action, i.e., illegal dismissal, not I.
specifically stated in the complaint. Stated
differently, the NLRC gravely abused its discretion THE COURT OF APPEALS ERRED IN
in ruling on an issue that was allegedly not raised on HOLDING THAT THE NATIONAL
appeal before it. LABOR RELATIONS COMMISSION
FOURTH DIVISION, CEBU CITY HAD
The Court of Appeals decision ended in this NO AUTHORITY TO DISMISS PRIVATE
RESPONDENTS CLAIMS FOR ILLEGAL
wise:
DISMISSAL AND OTHER MONEY
WHEREFORE, foregoing premises CLAIMS;
considered, the PETITION HAVING
MERIT is hereby GIVEN DUE COURSE. II.
RESULTANTLY, the challenged decision
 THE COURT OF APPEALS ERRED IN
HOLDING THAT THE NATIONAL
LABOR RELATIONS COMMISSION
FOURTH DIVISION, CEBU CITY HAD
NO AUTHORITY TO REVERSE THE
LABOR ARBITERS DECISION; and
III.
THE COURT OF APPEALS ERRED IN
GRANTING THE PETITION FOR
CERTIORARI IN CA G.R. SP. NO. 66480
AND IN ANNULING (sic) THE DECISION
OF THE NATIONAL LABOR RELATIONS
COMMISSION.
In essence, the issue for resolution in the case
at bar is whether or not the Court of Appeals
committed reversible error in ruling that the NLRC
had no authority to adjudicate on an issue not
properly raised in petitioner companys Memorandum
on Appeal.
Petitioner company posits that contrary to the
argument of the appellate court, the main or primary
reason for the reversal of the Labor Arbiters decision
was the finding that respondent complainants could
not be regarded, based on the facts of the case and
the evidence presented, as regular employees of
petitioner company.
Conversely, respondent complainants allege
that an appellate court has no power to resolve an
unassigned error that does not affect the courts
jurisdiction or is an error that is neither plain nor
clerical. Likewise, they contend that there is nothing
to show that petitioner company made an issue of the
Labor Arbiters action in ruling on a cause of action
not specifically stated in the complaint.
The Courts Ruling
We find merit in the petition.
It was plain error for the Court of Appeals to
annul and set aside the decision of the NLRC on the
lone reason that the latter dismissed Petitioners
appeal on the basis of an issue not raised by Private
Respondent in its appeal x x x. [ 15 ] A painstaking
review of the decision of the NLRC will readily
reveal that the Commissions finding that respondent
complainants were not regular employees was
the raison d'tre for the subsequent turnaround of the
state of affairs.
What the NLRC made use of to reverse the
Labor Arbiters decision was precisely the conclusion
of the latter that respondent complainants were
regular employees of petitioner company. According
to the Commission, such conclusion was predicated
merely on the consideration that respondent
complainants were performing activities necessary
and desirable to the business or trade of t heir
employer. Based on the facts of the case and the
evidence presented by the parties to the case at bar,
however, the NLRC arrived at a divergent conclusion,
which we fully agree in. We quote with approval its
disquisition:
It is interesting to note that the Labor
Arbiter had given credence and probative
value to the Petty Cash Vouchers submitted
by the respondents. Thus he said:
The petty cash vouchers
(Annexes 1 to1-A-62,
respondents position paper)
show that complainants are not
paid on hourly or daily basis as
they would like this office to
believe but on pakiao or task
basis at P15.00 per metric ton.
There is no basis then for
complainants to claim that they
are underpaid since there is no
minimum wage in this type of
work. Complainants earnings
depend upon their own
diligence and speed in
unloading and stockpiling scrap
iron . More importantly, it
depends upon the availability of
scrap iron to be unloaded and
stockpiled.
The above findings validate
respondents position as to the nature of
complainants work. Their services are
needed only when scrap metals are
delivered which occurs only one or twice a
week or sometimes no delivery at all in a
given week. The irregular nature of work,
stoppage of work and then work again
depending on the supply of scrap metal has
not been denied by complainants. On the
contrary they even admitted the same in
their Reply to respondents Appeal. x x x.
Indeed, it would be unjust to require
respondent to maintain complainants in the
payroll even if there is no more wor k to be
done. To do so would make complainants
privileged retainers who collect payment
from their employer for work not done.
This is extremely unfair and amount to
cuddling of labor at the expense of
management. [ 1 6 ]
It should be remembered that The Philippine
Constitution, while inexorably committed towards
the protection of the working class from exploitation
and unfair treatment, nevertheless mandates the
policy of social justice so as to strike a balance
between an avowed predilection for labor, on the one
hand, and the maintenance of the legal rights of
capital, the proverbial hen that lays the golden egg,
on the other. Indeed, we should not be unmindful of
the legal norm that justice is in every case for the
deserving, to be dispensed with in the light of
established facts, the applicable law, and existing
jurisprudence. [ 1 7]
Under the circumstances abovestated:
x x x there can be no illegal dismissal
to speak of. Besides, complainants cannot
claim regularity in the hiring every time a
truck comes loaded with scrap metal. This
is confirmed in the Petty cash Vouchers
which are in the names of different leaders
who apportion the amount earned among
his members. [ 1 8 ]
And, quite telling is the fact that not every
truck delivery of scrap metal requires the services of
respondent complainants when a particular truck is
accompanied by its own unloader. And whenever
required, respondent complainants were not always
the ones contracted to undertake the unloading of the
trucks since the work was offered to whomever were
available at a given time.
Finally, the judgment of the Commission that
the Labor Arbiter acted incorrectly in ruling on a
cause of action, i.e., illegal dismissal, not
specifically stated in the complaint, did not
constitute grave abuse of discretion on its part.
It is well settled that an act of a court or
tribunal may only be considered to have been done in
grave abuse of discretion when the same was
performed in a capricious or whimsical exercise of
judgment which is equivalent to lack of
jurisdiction. [ 1 9] The abuse of discretion must be so
patent and gross as to amount to an evasion of
positive duty or to a virtual refusal to perform a duty
enjoined or to a ct at all in contemplation of law, as
where the power is exercised in an arbitrary power
and despotic manner by reason of passion or personal
hostility. [ 2 0 ]
In the case at bar, from the preceding definition,
it is quite apparent that no grave abuse of discretion
can be attributed to the NLRC. Its decision simply
expressed an observation, to wit:
Moreover, We note that in the
complaint filed last January 10, 1997, the
issue of illegal dismissal was not raised as
 a cause of action although it was later SO ORDERED.
discussed in their position paper filed
on January 12, 1998. x x x. [Emphasis
supplied.]

The use of the word moreover clearly expresses

NLRCs position in treating the matter of the
non-inclusion of the issue of illegal dismissal in the
complaint merely as an add-on, adjunct or a
supplement to its finding that respondent
complainants were not regular employees
of petitioner company. ANGELINA FRANCISCO, G.R. No. 170087
Petitioner,
At any rate, the Court is clothed with authority Present:
to review matters, even if they are not assigned as Panganiban, C.J.
errors in their appeal, if it finds that their (Chairperson),
consideration is necessary in arriving at a just - versus - Ynares-Santiago,
decision of the case. [ 2 1 ] Austria-Martinez,
Callejo, Sr., and
WHEREFORE, in view of the foregoing, the Chico-Nazario, J
instant petition is GRANTED. The Decision J.
dated 18 February 2002, and the Resolution dated 27 NATIONAL LABOR RELATIONS
June 2002, both rendered by the Court of Appeals in COMMISSION, KASEI CORPORATION,
CA-G.R. SP No. 66480, are SEIICHIRO TAKAHASHI, TIMOTEO
hereby REVERSED and SET ASIDE. Accordingly, ACEDO, DELFIN LIZA, IRENE
the Decision of the NLRC dated 9 October BALLESTEROS, TRINIDAD LIZA Promulgated:
2000 is REINSTATED. Costs against respondent and RAMON ESCUETA,
complainants. Respondents.
August 31, 2006
x permits, construction permits and other licenses for the initial
--------------------------------------------------------------------------
-------------- x
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the
Rules of Court seeks to annul and set aside the Decision and
Resolution of the Court of Appeals dated October 29,
2004[1] and October 7, 2005,[2] respectively, in CA-G.R. SP
No. 78515 dismissing the complaint for constructive
dismissal filed by herein petitioner Angelina Francisco. The
appellate court reversed and set aside the Decision of the
National Labor Relations Commission (NLRC) dated April
15, 2003,[3] in NLRC NCR CA No. 032766-02 which
affirmed with modification the decision of the Labor Arbiter
dated July 31, 2002,[4] in NLRC-NCR Case No.
30-10-0-489-01, finding that private respondents were liable
for constructive dismissal.
In 1995, petitioner was hired by Kasei Corporation during its
incorporation stage. She was designated as Accountant and
Corporate Secretary and was assigned to handle all the
accounting needs of the company. She was also designated as
Liaison Officer to the City of Makati to secure business
operation of the company.[5]
Although she was designated as Corporate Secretary,
she was not entrusted with the corporate documents; neither
did she attend any board meeting nor required to do so. She
never prepared any legal document and never represented the
company as its Corporate Secretary. However, on some
occasions, she was prevailed upon to sign documentation for
the company.[6]
In 1996, petitioner was designated Acting
Manager. The corporation also hired Gerry Nino as
accountant in lieu of petitioner. As Acting Manager,
petitioner was assigned to handle recruitment of all
employees and perform management administration functions;
represent the company in all dealings with government
agencies, especially with the Bureau of Internal Revenue
(BIR), Social Security System (SSS) and in the city
government of Makati; and to administer all other matters
pertaining to the operation of Kasei Restaurant which is
owned and operated by Kasei Corporation.[7]
For five years, petitioner performed the duties of
Acting Manager. As of December 31, 2000 her salary was
P27,500.00 plus P3,000.00 housing allowance and a 10%
share in the profit of Kasei Corporation.[8]
 In January 2001, petitioner was replaced by Liza R.
Fuentes as Manager. Petitioner alleged that she was required
to sign a prepared resolution for her replacement but she was
assured that she would still be connected with Kasei
Corporation. Timoteo Acedo, the designated Treasurer,
convened a meeting of all employees of Kasei Corporation
and announced that nothing had changed and that petitioner
was still connected with Kasei Corporation as Technical
Assistant to Seiji Kamura and in charge of all BIR matters.[9]
Thereafter, Kasei Corporation reduced her salary by
P2,500.00 a month beginning January up to September 2001
for a total reduction of P22,500.00 as of September
2001. Petitioner was not paid her mid-year bonus allegedly
because the company was not earning well. On October 2001,
petitioner did not receive her salary from the company. She
made repeated follow-ups with the company cashier but she
was advised that the company was not earning well.[10]
On October 15, 2001, petitioner asked for her salary
from Acedo and the rest of the officers but she was informed
that she is no longer connected with the company.[11]
Since she was no longer paid her salary, petitioner did
not report for work and filed an action for constructive
dismissal before the labor arbiter.
Private respondents averred that petitioner is not an
employee of Kasei Corporation. They alleged that petitioner
was hired in 1995 as one of its technical consultants on
accounting matters and act concurrently as Corporate
Secretary. As technical consultant, petitioner performed her
work at her own discretion without control and supervision of
Kasei Corporation. Petitioner had no daily time record and
she came to the office any time she wanted. The company
never interfered with her work except that from time to time,
the management would ask her opinion on matters relating to
her profession. Petitioner did not go through the usual
procedure of selection of employees, but her services were
engaged through a Board Resolution designating her as
technical consultant. The money received by petitioner from
the corporation was her professional fee subject to the 10%
expanded withholding tax on professionals, and that she was
not one of those reported to the BIR or SSS as one of the
companys employees.[12]
Petitioners designation as technical consultant
depended solely upon the will of management. As such, her
consultancy may be terminated any time considering that her
services were only temporary in nature and dependent on the
needs of the corporation.
To prove that petitioner was not an employee of the
corporation, private respondents submitted a list of employees
for the years 1999 and 2000 duly received by the BIR
showing that petitioner was not among the employees
reported to the BIR, as well as a list of payees subject to
expanded withholding tax which included petitioner. SSS
records were also submitted showing that petitioners latest h. 10% Attorneys fees 87,076.50
employer was Seiji Corporation.[13] P957,742.50

The Labor Arbiter found that petitioner was illegally If reinstatement is no longer feasible, respondents
are ordered to pay complainant separation pay
dismissed, thus:
with additional backwages that would accrue up to
actual payment of separation pay.
WHEREFORE, premises considered, judgment is
hereby rendered as follows:
SO ORDERED.[14]
1. finding complainant an employee of
respondent corporation; On April 15, 2003, the NLRC affirmed with
2. declaring complainants dismissal as modification the Decision of the Labor Arbiter, the
illegal; dispositive portion of which reads:
3. ordering respondents to reinstate
complainant to her former position without loss of PREMISES CONSIDERED, the Decision
seniority rights and jointly and severally pay of July 31, 2002 is hereby MODIFIED as follows:
complainant her money claims in accordance with
the following computation: 1) Respondents are directed to pay
complainant separation pay computed at one
a. Backwages 10/2001 07/2002 275,000.00 month per year of service in addition to full
(27,500 x 10 mos.) backwages from October 2001 to July 31, 2002;
b. Salary Differentials (01/2001
09/2001) 22,500.00 2) The awards representing moral and
c. Housing Allowance (01/2001 exemplary damages and 10% share in profit in the
07/2002) 57,000.00 respective accounts of P100,000.00 and
d. Midyear Bonus 2001 27,500.00 P361,175.00 are deleted;
e. 13th Month Pay 27,500.00
f. 10% share in the profits of Kasei 3) The award of 10% attorneys fees shall be
Corp. from 1996-2001 361,175.00 based on salary differential award only;
g. Moral and exemplary
damages 100,000.00
 4) The awards representing salary
differentials, housing allowance, mid year bonus
and 13th month pay are AFFIRMED.
SO ORDERED.[15]
On appeal, the Court of Appeals reversed the NLRC decision,
thus:
WHEREFORE, the instant petition is hereby
GRANTED. The decision of the National Labor
Relations Commissions dated April 15, 2003 is
hereby REVERSED and SET ASIDE and a new
one is hereby rendered dismissing the complaint
filed by private respondent against Kasei
Corporation, et al. for constructive dismissal.
SO ORDERED.[16]
The appellate court denied petitioners motion for
reconsideration, hence, the present recourse.
The core issues to be resolved in this case are (1)
whether there was an employer-employee relationship
between petitioner and private respondent Kasei Corporation;
and if in the affirmative, (2) whether petitioner was illegally
dismissed.
Considering the conflicting findings by the Labor
Arbiter and the National Labor Relations Commission on one
hand, and the Court of Appeals on the other, there is a need to
reexamine the records to determine which of the propositions
espoused by the contending parties is supported by substantial
evidence.[17]
We held in Sevilla v. Court of Appeals[18] that in this
jurisdiction, there has been no uniform test to determine the
existence of an employer-employee relation. Generally,
courts have relied on the so-called right of control test where
the person for 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.
However, in certain cases the control test is not
sufficient to give a complete picture of the relationship
between the parties, owing to the complexity of such a
relationship where several positions have been held by the
worker. There are instances when, aside from the employers
power to control the employee with respect to the means and
methods by which the work is to be accomplished, economic
realities of the employment relations help provide a
comprehensive analysis of the true classification of the
individual, whether as employee, independent contractor,
corporate officer or some other capacity.
 The better approach would therefore be to adopt a
two-tiered test involving: (1) the putative employers power to
control the employee with respect to the means and methods
by which the work is to be accomplished; and (2) the
underlying economic realities of the activity or relationship.
This two-tiered test would provide us with a framework
of analysis, which would take into consideration the totality
of circumstances surrounding the true nature of the
relationship between the parties. This is especially
appropriate in this case where there is no written agreement
or terms of reference to base the relationship on; and due to
the complexity of the relationship based on the various
positions and responsibilities given to the worker over the
period of the latters employment.
The control test initially found application in the case
of Viaa v. Al-Lagadan and Piga,[19] and lately in Leonardo v.
Court of Appeals,[20] where we held that there is an
employer-employee relationship when the person for whom
the services are performed reserves the right to control not
only the end achieved but also the manner and means used to
achieve that end.
In Sevilla v. Court of Appeals,[21] we observed the need
to consider the existing economic conditions prevailing
between the parties, in addition to the standard of
right-of-control like the inclusion of the employee in the
payrolls, to give a clearer picture in determining the existence
of an employer-employee relationship based on an analysis of
the totality of economic circumstances of the worker.
Thus, the determination of the relationship between
employer and employee depends upon the circumstances of
the whole economic activity,[22] such as: (1) the extent to
which the services performed are an integral part of the
employers business; (2) the extent of the workers investment
in equipment and facilities; (3) the nature and degree of
control exercised by the employer; (4) the workers
opportunity for profit and loss; (5) the amount of initiative,
skill, judgment or foresight required for the success of the
claimed independent enterprise; (6) the permanency and
duration of the relationship between the worker and the
employer; and (7) the degree of dependency of the worker
upon the employer for his continued employment in that line
of business.[23]
The proper standard of economic dependence is
whether the worker is dependent on the alleged employer for
his continued employment in that line of business.[24] In the
United States, the touchstone of economic reality in analyzing
possible employment relationships for purposes of the Federal
Labor Standards Act is dependency.[25] By analogy, the
benchmark of economic reality in analyzing possible
employment relationships for purposes of the Labor Code
ought to be the economic dependence of the worker on his
employer.
 By applying the control test, there is no doubt that
petitioner is an employee of Kasei Corporation because she
was under the direct control and supervision of Seiji Kamura,
the corporations Technical Consultant. She reported for work
regularly and served in various capacities as Accountant,
Liaison Officer, Technical Consultant, Acting Manager and
Corporate Secretary, with substantially the same job functions,
that is, rendering accounting and tax services to the company
and performing functions necessary and desirable for the
proper operation of the corporation such as securing business
permits and other licenses over an indefinite period of
engagement.
Under the broader economic reality test, the petitioner
can likewise be said to be an employee of respondent
corporation because she had served the company for six years
before her dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security
contributions from August 1, 1999 to December 18,
2000.[26] When petitioner was designated General Manager,
respondent corporation made a report to the SSS signed by
Irene Ballesteros. Petitioners membership in the SSS as
manifested by a copy of the SSS specimen signature card
which was signed by the President of Kasei Corporation and
the inclusion of her name in the on-line inquiry system of the
SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation.[27]
It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued
employment in the latters line of business.
In Domasig v. National Labor Relations
[28]
Commission, we held that in a business establishment, an
identification card is provided not only as a security measure
but mainly to identify the holder thereof as a bona fide
employee of the firm that issues it. Together with the cash
vouchers covering petitioners salaries for the months stated
therein, these matters constitute substantial evidence adequate
to support a conclusion that petitioner was an employee of
private respondent.
We likewise ruled in Flores v. Nuestro[29] that a
corporation who registers its workers with the SSS is proof
that the latter were the formers employees. The coverage of
Social Security Law is predicated on the existence of an
employer-employee relationship.
Furthermore, the affidavit of Seiji Kamura dated
December 5, 2001 has clearly established that petitioner never
acted as Corporate Secretary and that her designation as such
was only for convenience. The actual nature of petitioners job
was as Kamuras direct assistant with the duty of acting as
Liaison Officer in representing the company to secure
construction permits, license to operate and other
requirements imposed by government agencies. Petitioner
was never entrusted with corporate documents of the
company, nor required to attend the meeting of the
corporation. She was never privy to the preparation of any
document for the corporation, although once in a while she
was required to sign prepared documentation for the
company.[30]
The second affidavit of Kamura dated March 7, 2002
which repudiated the December 5, 2001 affidavit has been
allegedly withdrawn by Kamura himself from the records of
the case.[31] Regardless of this fact, we are convinced that the
allegations in the first affidavit are sufficient to establish that
petitioner is an employee of Kasei Corporation.
Granting arguendo, that the second affidavit validly
repudiated the first one, courts do not generally look with
favor on any retraction or recanted testimony, for it could
have been secured by considerations other than to tell the
truth and would make solemn trials a mockery and place the
investigation of the truth at the mercy of unscrupulous
witnesses.[32] A recantation does not necessarily cancel an
earlier declaration, but like any other testimony the same is
subject to the test of credibility and should be received with
caution.[33]
Based on the foregoing, there can be no other
conclusion that petitioner is an employee of respondent Kasei
Corporation. She was selected and engaged by the company
for compensation, and is economically dependent upon
respondent for her continued employment in that line of
business. Her main job function involved accounting and tax
services rendered to respondent corporation on a regular basis
over an indefinite period of engagement. Respondent
corporation hired and engaged petitioner for compensation,
with the power to dismiss her for cause. More importantly,
respondent corporation had the power to control petitioner
with the means and methods by which the work is to be
accomplished.
The corporation constructively dismissed petitioner
when it reduced her salary by P2,500 a month from January
to September 2001. This amounts to an illegal termination of
employment, where the petitioner is entitled to full
backwages. Since the position of petitioner as accountant is
one of trust and confidence, and under the principle of
strained relations, petitioner is further entitled to separation
pay, in lieu of reinstatement.[34]
A diminution of pay is prejudicial to the employee and
amounts to constructive dismissal. Constructive dismissal is
an involuntary resignation resulting in cessation of work
resorted to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or
a diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable
to an employee.[35] In Globe Telecom, Inc. v.
[36]
Florendo-Flores, we ruled that where an employee ceases
to work due to a demotion of rank or a diminution of pay, an
unreasonable situation arises which creates an adverse
working environment rendering it impossible for such
employee to continue working for her employer. Hence, her
severance from the company was not of her own making and SO ORDERED.
therefore amounted to an illegal termination of employment.

In affording full protection to labor, this Court must

ensure equal work opportunities regardless of sex, race or
creed. Even as we, in every case, attempt to carefully balance
the fragile relationship between employees and employers,
we are mindful of the fact that the policy of the law is to
apply the Labor Code to a greater number of employees. This
would enable employees to avail of the benefits accorded to
them by law, in line with the constitutional mandate giving
maximum aid and protection to labor, promoting their welfare
and reaffirming it as a primary social economic force in
furtherance of social justice and national development.

WHEREFORE, the petition is GRANTED. The

Decision and Resolution of the Court of Appeals dated
October 29, 2004 and October 7, 2005, respectively, in
CA-G.R. SP No. 78515 are ANNULLED and SET
ASIDE. The Decision of the National Labor Relations
Commission dated April 15, 2003 in NLRC NCR CA No.
032766-02, is REINSTATED. The case is REMANDED to
the Labor Arbiter for the recomputation of petitioner
Angelina Franciscos full backwages from the time she was
illegally terminated until the date of finality of this decision,
and separation pay representing one-half month pay for every
CHARLIE JAO, G.R. No. 163700
year of service, where a fraction of at least six months shall
Petitioner,
be considered as one whole year.
Present:
 CORONA, C.J.,
- versus - Chairperson, Antecedents
LEONARDO-DE
CASTRO, Petitioner maintained that respondent BCC Product Sales Inc.
BERSAMIN, (BCC) and its President, respondent Terrance Ty (Ty),
DEL CASTILLO, and employed him as comptroller starting from September 1995
BCC PRODUCTS SALES VILLARAMA, JR., JJ. with a monthly salary of P20,000.00 to handle the financial
INC., aspect of BCCs business;[2] that on October 19,1995, the
and TERRANCE TY, Promulgated: security guards of BCC, acting upon the instruction of Ty,
Respondents. April 18, 2012 barred him from entering the premises of BCC where he then
x------------------------------------------------------------------------- worked; that his attempts to report to work in November and
----------------x December 12, 1995 were frustrated because he continued to
be barred from entering the premises of BCC;[3] and that he
DECISION filed a complaint dated December 28, 1995 for illegal
dismissal, reinstatement with full backwages, non-payment of
BERSAMIN, J.: wages, damages and attorneys fees.[4]

The issue is whether petitioner was respondents
employee or not. Respondents denied an employer-employee
relationship with petitioner, who insisted the contrary.
Through his petition for review on certiorari, petitioner
appeals the decision promulgated by the Court of Appeals
(CA) on February 27, 2004,[1] finding no employee-employer
relationship between him and respondents, thereby reversing
the ruling by the National Labor Relations Commission
(NLRC) to the effect that he was the employee of
respondents.
Respondents countered that petitioner was not their employee
but the employee of Sobien Food Corporation (SFC), the
major creditor and supplier of BCC; and that SFC had posted
him as its comptroller in BCC to oversee BCCs finances and
business operations and to look after SFCs interests or
investments in BCC.[5]
Although Labor Arbiter Felipe Pati ruled in favor of
petitioner on June 24, 1996,[6] the NLRC vacated the ruling
and remanded the case for further proceedings.[7]Thereafter,
Labor Arbiter Jovencio Ll. Mayor rendered a new decision
on September 20, 2001, dismissing petitioners complaint for
want of an employer-employee relationship between the
parties.[8] Petitioner appealed the September 20, 2001 decision
of Labor Arbiter Mayor.
On July 31, 2002, the NLRC rendered a decision
reversing Labor Arbiter Mayors decision, and declaring that
petitioner had been illegally dismissed. It ordered the
payment of unpaid salaries, backwages and 13th month pay,
separation pay and attorneys fees.[9] Respondents moved for
the reconsideration of the NLRC decision, but their motion
for reconsideration was denied on September 30,
2002.[10] Thence, respondents assailed the NLRC decision
on certiorari in the CA.
Ruling of the CA
On February 27, 2004, the CA promulgated its assailed
decision,[11] holding:
After a judicious review of the records vis--vis the
respective posturing of the contending parties, we
agree with the finding that no employer-employee
relationship existed between petitioner BCC and
the private respondent. On this note, the
conclusion of the public respondent must be
reversed for being issued with grave abuse of
discretion.
Etched in an unending stream of cases are the four
(4) standards in determining the existence of an
employer-employee relationship, namely, (a) the
manner of selection and engagement of the
putative employee; (b) the mode of payment of
wages; (c) the presence or absence of power of
dismissal; and, (d) the presence or absence of
control of the putative employees conduct. Of
these powers the power of control over the
employees conduct is generally regarded as
determinative of the existence of the relationship.
Apparently, in the case before us, all these four
elements are absent. First, there is no proof that the
services of the private respondent were engaged to
perform the duties of a comptroller in the
petitioner company. There is no proof that the
private respondent has undergone a selection
procedure as a standard requisite for employment,
especially with such a delicate position in the
company. Neither is there any proof of his
appointment nor is there any showing that the
parties entered into an employment contract,
stipulating thereof that he will receive
P20,000.00/month salary as comptroller, before
the private respondent commenced with his work
as such. Second, as clearly established on record,
the private respondent was not included in the
petitioner companys payroll during the time of his
alleged employment with the former. True, the
name of the private respondent Charlie Jao appears
in the payroll however it does not prove that he has
received his remuneration for his services. Notably,
his name was not among the employees who will
receive their salaries as represented by the
payrolls. Instead, it appears therein as a
comptroller who is authorized to approve the
same. Suffice it to state that it is rather obscure for
a certified public accountant doing the functions of
a comptroller from September 1995 up to
December 1995 not to receive his salary during the
said period. Verily, such scenario does not
conform with the usual and ordinary experience of
man. Coming now to the most controlling factor,
the records indubitably reveal the undisputed fact
that the petitioner company did not have nor did
not exercise the power of control over the private
respondent. It did not prescribe the manner by
which the work is to be carried out, or the time by
which the private respondent has to report for and
leave from work. As already stated, the power of
control is such an important factor that other
requisites may even be disregarded. In Sevilla v.
Court of Appeals, the Supreme Court emphatically
held, thus:
The control test, under which the
person for whom the services are
rendered reserves the right to direct not
only the end to be achieved but also the
means for reaching such end, is
generally relied on by the courts.
We have carefully examined the evidence
submitted by the private respondent in the formal
offer of evidence and unfortunately, other than the
bare assertions of the private respondent which he
miserably failed to substantiate, we find nothing
therein that would decisively indicate that the
petitioner BCC exercised the fundamental power
of control over the private respondent in relation to
his employmentnot even the ID issued to the
private respondent and the affidavits executed by
Bertito Jemilla and Rogelio Santias. At best, these
pieces of documents merely suggest the existence
of employer-employee relationship as intimated by
the NLRC. On the contrary, it would appear that
the said sworn statement provided a substantial
basis to support the contention that the private
respondent worked at the petitioner BCC as SFCs
representative, being its major creditor and
supplier of goods and merchandise. Moreover, as
clearly pointed out by the petitioner in his Reply to
the private respondents Comment, it is unnatural
for SFC to still employ the private respondent to
oversee and supervise collections of account
receivables due SFC from its customers or clients
like the herein petitioner BCC on a date later than
December, 1995 considering that a criminal
complaint has already been instituted against him.
Sadly, the private respondent failed to sufficiently
discharge the burden of showing with legal
certainty that employee-employer relationship
existed between the parties. On the other hand, it
was clearly shown by the petitioner that it neither
exercised control nor supervision over the conduct
of the private respondents employment. Hence, the
 allegation that there is employer-employee
relationship must necessarily fail.
Consequently, a discussion on the issue of illegal
dismissal therefore becomes unnecessary.
WHEREFORE, premises considered, the
petition is GRANTED. The assailed Decision of
the public respondent NLRC dated July 31,
2002 and the Resolution dated September 30,
2002are REVERSED and SET ASIDE.
Accordingly, the decision of the Labor Arbiter
dated September 20, 2001 is hereby
REINSTATED.
SO ORDERED.
After the CA denied petitioners motion for reconsideration
on May 14, 2004,[12] he filed a motion for extension to file
petition for review, which the Court denied through the
resolution dated July 7, 2004 for failure to render an
explanation on why the service of copies of the motion for
extension on respondents was not personally made.[13] The
denial notwithstanding, he filed his petition for review
on certiorari. The Court denied the petition on August 18,
2004 in view of the denial of the motion for extension of time
and the continuing failure of petitioner to render the
explanation as to the non-personal service of the petition on
respondents.[14] However, upon a motion for reconsideration,
the Court reinstated the petition for review on certiorari and
required respondents to comment.[15]
Issue
The sole issue is whether or not an employer-employee
relationship existed between petitioner and BCC. A finding
on the existence of an employer-employee relationship will
automatically warrant a finding of illegal dismissal,
considering that respondents did not state any valid grounds
to dismiss petitioner.
Ruling
The petition lacks merit.
The existence of an employer-employee relationship is a
question of fact. Generally, a re-examination of factual
findings cannot be done by the Court acting on a petition for
review on certiorari because the Court is not a trier of facts
but reviews only questions of law. Nor may the Court be
bound to analyze and weigh again the evidence adduced and
considered in the proceedings below.[16] This rule is not
absolute, however, and admits of exceptions. For one, the
Court may look into factual issues in labor cases when the
factual findings of the Labor Arbiter, the NLRC, and the CA
are conflicting.[17]
Here, the findings of the NLRC differed from those of the
Labor Arbiter and the CA. This conflict among such
adjudicating offices compels the Courts exercise of its
authority to review and pass upon the evidence presented and
to draw its own conclusions therefrom.
To prove his employment with BCC, petitioner offered the
following: (a) BCC Identification Card (ID) issued to him
stating his name and his position as comptroller, and bearing
his picture, his signature, and the signature of Ty; (b) a
payroll of BCC for the period of October 1-15, 1996 that
petitioner approved as comptroller; (c) various bills and
receipts related to expenditures of BCC bearing the signature
of petitioner; (d) various checks carrying the signatures of
petitioner and Ty, and, in some checks, the signature of
petitioner alone; (e) a court order showing that the issuing
court considered petitioners ID as proof of his employment
with BCC; (f) a letter of petitioner dated March 1, 1997 to the
Department of Justice on his filing of a criminal case
for estafa against Ty for non-payment of wages; (g) affidavits
of some employees of BCC attesting that petitioner was their
co-employee in BCC; and (h) a notice of raffle dated
December 5, 1995 showing that petitioner, being an employee
of BCC, received the notice of raffle in behalf of BCC.[18]
Respondents denied that petitioner was BCCs employee.
They affirmed that SFC had installed petitioner as its
comptroller in BCC to oversee and supervise SFCs
collections and the account of BCC to protect SFCs interest;
that their issuance of the ID to petitioner was only for the
purpose of facilitating his entry into the BCC premises in
relation to his work of overseeing the financial operations of
BCC for SFC; that the ID should not be considered as
evidence of petitioners employment in BCC;[19] that petitioner
executed an affidavit in March 1996,[20] stating, among others,
as follows:
1. I am a CPA (Certified Public Accountant) by
profession but presently associated with, or
employed by, Sobien Food Corporation with
the same business address as abovestated;
2. In the course of my association with, or
employment by, Sobien Food
Corporation (SFC, for short), I have been
entrusted by my employer to oversee and
supervise collections on account of
receivables due SFC from its customers or
clients; for instance, certain checks due and
turned over by one of SFCs customers is
BCC Product Sales, Inc., operated or run by
one Terrance L. Ty, (President and General
manager), pursuant to, or in accordance
with, arrangements or agreement thereon;
such arrangement or agreement is duly
confirmed by said Terrance Ty, as shown or
admitted by him in a public instrument
executed therefor, particularly par. 2 of that
certain Counter-Affidavit executed and
subscribed on December 11, 1995, xerox copy
 of which is hereto attached, duly marked as
Annex A and made integral part hereof.
3. Despite such admission of an arrangement,
or agreement insofar as BCC-checks
were delivered to, or turned over in favor of
SFC, Mr. Terrance Ty, in a desire to blemish
my reputation or to cause me dishonor as well
as to impute unto myself the commission of a
crime, state in another public instrument
executed therefor in that:
3. That all the said 158 checks were
unlawfully appropriated by a certain
Charlie Jao absolutely without any
authority from BCC and the same were
reportedly turned over by said Mr. Jao to
a person who is not an agent or is not
authorized representative of BCC.
xerox copy of which document (Affidavit) is
hereto attached, duly marked as Annex B and
made integral part hereof. (emphasis supplied)
and that the affidavit constituted petitioners admission of the
arrangement or agreement between BCC and SFC for the
latter to appoint a comptroller to oversee the formers
operations.
Petitioner counters, however, that the affidavit did not
establish the absence of an employer-employee relationship
between him and respondents because it had been executed in
March 1996, or after his employment with respondents had
been terminated on December 12, 1995; and that the affidavit
referred to his subsequent employment by SFC following the
termination of his employment by BCC.[21]
We cannot side with petitioner.
Our perusal of the affidavit of petitioner compels a
conclusion similar to that reached by the CA and the Labor
Arbiter to the effect that the affidavit actually supported the
contention that petitioner had really worked in BCC as SFCs
representative. It does seem more natural and more believable
that petitioners affidavit was referring to his employment by
SFC even while he was reporting to BCC as a comptroller in
behalf of SFC. As respondents pointed out, it was implausible
for SFC to still post him to oversee and supervise the
collections of accounts receivables due from BCC beyond
December 1995 if, as he insisted, BCC had already illegally
dismissed him and had even prevented him from entering the
premises of BCC. Given the patent animosity and strained
relations between him and respondents in such circumstances,
indeed, how could he still efficiently perform in behalf of
SFC the essential responsibility to oversee and supervise
collections at BCC? Surely, respondents would have
vigorously objected to any arrangement with SFC involving
him.
 We note that petitioner executed the affidavit in March
1996 to refute a statement Ty himself made in his own
affidavit dated December 11, 1995 to the effect that petitioner
had illegally appropriated some checks without authority
from BCC.[22] Petitioner thereby sought to show that he had
the authority to receive the checks pursuant to the
arrangements between SFC and BCC. This showing would
aid in fending off the criminal charge respondents filed
against him arising from his mishandling of the checks.
Naturally, the circumstances petitioner adverted to in his
March 1996 affidavit concerned those occurring
before December 11, 1995, the same period when he actually
worked as comptroller in BCC.
Further, an affidavit dated September 5, 2000 by
Alfredo So, the President of SFC, whom petitioner offered as
a rebuttal witness, lent credence to respondents denial of
petitioners employment. So declared in that affidavit, among
others, that he had known petitioner for being earlier his
retained accountant having his own office but did not hold
office in SFCs premises; that Ty had approached him (So)
looking for an accountant or comptroller to be employed by
him (Ty) in [BCCs] distribution business of SFCs general
merchandise, and had later asked him on his opinion about
petitioner; and that he (So) had subsequently learned that Ty
had already employed [petitioner] as his comptroller as of
September 1995.[23]
The statements of So really supported respondents
position in that petitioners association with SFC prior to his
supposed employment by BCC went beyond mere
acquaintance with So. That So, who had earlier merely
retained petitioner as his accountant, thereafter employed
petitioner as a retained accountant after his supposed illegal
dismissal by BCC raised a doubt as to his employment by
BCC, and rather confirmed respondents assertion of petitioner
being an employee of SFC while he worked at BCC.
Moreover, in determining the presence or absence of an
employer-employee relationship, the Court has consistently
looked for the following incidents, to wit: (a) the selection
and engagement of the employee; (b) the payment of wages;
(c) the power of dismissal; and (d) the employers power to
control the employee on the means and methods by which the
work is accomplished. The last element, the so-called control
test, is the most important element.[24]
Hereunder are some of the circumstances and incidents
occurring while petitioner was supposedly employed by BCC
that debunked his claim against respondents.
It can be deduced from the March 1996 affidavit of petitioner
that respondents challenged his authority to deliver some 158
checks to SFC. Considering that he contested respondents
challenge by pointing to the existing arrangements between
BCC and SFC, it should be clear that respondents did not
exercise the power of control over him, because he thereby
acted for the benefit and in the interest of SFC more than of
BCC.
In addition, petitioner presented no document setting forth the
terms of his employment by BCC. The failure to present such
agreement on terms of employment may be understandable
and expected if he was a common or ordinary laborer who
would not jeopardize his employment by demanding such
document from the employer, but may not square well with
his actual status as a highly educated professional.
Petitioners admission that he did not receive his salary
for the three months of his employment by BCC, as his
complaint for illegal dismissal and non-payment of
wages[25] and the criminal case for estafa he later filed against
the respondents for non-payment of wages[26] indicated,
further raised grave doubts about his assertion of employment
by BCC. If the assertion was true, we are puzzled how he
could have remained in BCCs employ in that period of time
despite not being paid the first salary of P20,000.00/month.
Moreover, his name did not appear in the payroll of BCC
despite him having approved the payroll as comptroller.
Lastly, the confusion about the date of his alleged illegal
dismissal provides another indicium of the insincerity of
petitioners assertion of employment by BCC. In the petition
for review on certiorari, he averred that he had been barred
from entering the premises of BCC on October 19,
1995,[27] and thus was illegally dismissed. Yet, his complaint
for illegal dismissal stated that he had been illegally
dismissed on December 12, 1995 when respondents security
guards barred him from entering the premises of
BCC,[28] causing him to bring his complaint only on
December 29, 1995, and after BCC had already filed the
criminal complaint against him. The wide gap
between October 19, 1995 and December 12, 1995 cannot be
dismissed as a trivial inconsistency considering that the
several incidents affecting the veracity of his assertion of
employment by BCC earlier noted herein transpired in that
interval.
With all the grave doubts thus raised against petitioners claim,
we need not dwell at length on the other proofs he presented,
like the affidavits of some of the employees of BCC, the ID,
and the signed checks, bills and receipts. Suffice it to be
stated that such other proofs were easily explainable by
respondents and by the aforestated circumstances showing
him to be the employee of SFC, not of BCC.
WHEREFORE, the Court AFFIRMS the decision of the
Court of Appeals; and ORDERS petitioner to pay the costs of
suit.
SO ORDERED.
 x
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--------------x

DECISION

MENDOZA, J.:

BITOY JAVIER G.R. No. 192558 This is a petition under Rule 45 of the Rules of Civil
(DANILO P. JAVIER), Procedure assailing the March 18, 2010 Decision[1] of the
Petitioner, Present: Court of Appeals (CA) and its June 7, 2010 Resolution,[2]in
CA-G.R. SP No. 109975, which reversed the May 28, 2009
CARPIO, J., Decision[3] of the National Labor Relations
Commission (NLRC) in the case entitled Bitoy Javier v. Fly
PERALTA, Acting Chairperson,
ABAD, Ace/Flordelyn Castillo,[4] holding that petitioner Bitoy
- versus - PEREZ,*** and Javier (Javier) was illegally dismissed from employment and
MENDOZA, JJ. ordering Fly Ace Corporation (Fly Ace) to pay backwages
and separation pay in lieu of reinstatement.

FLY ACE CORPORATION/ Promulgated: Antecedent Facts

FLORDELYN CASTILLO,
Respondents. February 15, 2012
 On May 23, 2008, Javier filed a complaint before the without notice; and that he was neither given the opportunity
NLRC for underpayment of salaries and other labor standard to refute the cause/s of his dismissal from work.
benefits. He alleged that he was an employee of Fly Ace since
September 2007, performing various tasks at the respondents To support his allegations, Javier presented an affidavit
warehouse such as cleaning and arranging the canned items of one Bengie Valenzuela who alleged that Javier was a
before their delivery to certain locations, except in instances stevedore or pahinante of Fly Ace from September 2007 to
when he would be ordered to accompany the companys January 2008. The said affidavit was subscribed before the
delivery vehicles, as pahinante; that he reported for work Labor Arbiter (LA).[7]
from Monday to Saturday from 7:00 oclock in the morning to
5:00 oclock in the afternoon; that during his employment, he
For its part, Fly Ace averred that it was engaged in the
was not issued an identification card and payslips by the
business of importation and sales of groceries. Sometime in
company; that on May 6, 2008, he reported for work but he
December 2007, Javier was contracted by its employee, Mr.
was no longer allowed to enter the company premises by the
Ong, as extra helper on a pakyaw basis at an agreed rate of
security guard upon the instruction of Ruben Ong (Mr. Ong),
₱300.00 per trip, which was later increased to ₱325.00 in
his superior;[5] that after several minutes of begging to the
January 2008. Mr. Ong contracted Javier roughly 5 to 6 times
guard to allow him to enter, he saw Ong whom he approached
only in a month whenever the vehicle of its contracted hauler,
and asked why he was being barred from entering the
Milmar Hauling Services, was not available. On April 30,
premises; that Ong replied by saying, Tanungin mo anak
2008, Fly Ace no longer needed the services of
mo; [6] that he then went home and discussed the matter with
Javier. Denying that he was their employee, Fly Ace insisted
his family; that he discovered that Ong had been courting his
that there was no illegal dismissal.[8] Fly Ace submitted a
daughter Annalyn after the two met at a fiesta celebration in
copy of its agreement with Milmar Hauling Services and
Malabon City; that Annalyn tried to talk to Ong and convince
copies of acknowledgment receipts evidencing payment to
him to spare her father from trouble but he refused to accede;
Javier for his contracted services bearing the words, daily
that thereafter, Javier was terminated from his employment
manpower (pakyaw/piece rate pay) and the latters
signatures/initials.

Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the
complaint for lack of merit on the ground that Javier failed to
present proof that he was a regular employee of Fly Ace. He
wrote:
Complainant has no employee ID showing his
employment with the Respondent nor any
document showing that he received the benefits
accorded to regular employees of the Respondents.
His contention that Respondent failed to give him
said ID and payslips implies that indeed he was not
a regular employee of Fly Ace considering that
complainant was a helper and that Respondent
company has contracted a regular trucking for the
delivery of its products.
Respondent Fly Ace is not engaged in
trucking business but in the importation and sales
of groceries. Since there is a regular hauler to
deliver its products, we give credence to
Respondents claim that complainant was
contracted on pakiao basis.
As to the claim for underpayment of salaries,
the payroll presented by the Respondents showing
salaries of workers on pakiao basis has evidentiary
weight because although the signature of the
complainant appearing thereon are not uniform,
they appeared to be his true signature.
xxxx
Hence, as complainant received the rightful
salary as shown by the above described payrolls,
Respondents are not liable for salary differentials. [9]
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled
that the LA skirted the argument of Javier and immediately
concluded that he was not a regular employee simply because
he failed to present proof. It was of the view that
a pakyaw-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. In this case, the NLRC held
that substantial evidence was sufficient basis for judgment on
the existence of the employer-employee relationship. Javier
was a regular employee of Fly Ace because there was
reasonable connection between the particular activity
performed by the employee (as a pahinante) in relation to the
usual business or trade of the employer (importation, sales
and delivery of groceries). He may not be considered as an
independent contractor because he could not exercise any
judgment in the delivery of company products. He was only
engaged as a helper.
Ruling of the Court of Appeals
Finding Javier to be a regular employee, the NLRC On March 18, 2010, the CA annulled the NLRC
ruled that he was entitled to a security of tenure. For failing to findings that Javier was indeed a former employee of Fly Ace
present proof of a valid cause for his termination, Fly Ace and reinstated the dismissal of Javiers complaint as ordered
was found to be liable for illegal dismissal of Javier who was by the LA. The CA exercised its authority to make its own
likewise entitled to backwages and separation pay in lieu of factual determination anent the issue of the existence of an
reinstatement. The NLRC thus ordered: employer-employee relationship between the
WHEREFORE, premises considered, parties.According to the CA:
complainants appeal is partially GRANTED. The
assailed Decision of the labor arbiter is VACATED xxx
and a new one is hereby entered holding respondent
FLY ACE CORPORATION guilty of illegal dismissal
and non-payment of 13th month pay. Consequently, In an illegal dismissal case the onus
it is hereby ordered to pay complainant DANILO probandi rests on the employer to prove that its
Bitoy JAVIER the following: dismissal was for a valid cause. However, before a
case for illegal dismissal can prosper, an
employer-employee relationship must first be
established. x x x it is incumbent upon private
1. Backwages -₱45,770.83 respondent to prove the employee-employer
2. Separation pay, in lieu of relationship by substantial evidence.
reinstatement - 8,450.00
3. Unpaid 13th month pay xxx
(proportionate) - 5,633.33
TOTAL -₱59,854.16 It is incumbent upon private respondent to
prove, by substantial evidence, that he is an
employee of petitioners, but he failed to discharge
his burden. The non-issuance of a company-issued
All other claims are dismissed for lack of
identification card to private respondent supports
merit.
petitioners contention that private respondent was
not its employee.[12]
SO ORDERED.[11]
The CA likewise added that Javiers failure to present salary
vouchers, payslips, or other pieces of evidence to bolster his
contention, pointed to the inescapable conclusion that he was
not an employee of Fly Ace. Further, it found that Javiers
work was not necessary and desirable to the business or trade
of the company, as it was only when there were scheduled
deliveries, which a regular hauling service could not deliver,
that Fly Ace would contract the services of Javier as an extra
helper. Lastly, the CA declared that the facts alleged by
Javier did not pass the control test.
He contracted work outside the company premises; he was
not required to observe definite hours of work; he was not
required to report daily; and he was free to accept other work
elsewhere as there was no exclusivity of his contracted
service to the company, the same being co-terminous with
the trip only.[13] Since no substantial evidence was presented
to establish an employer-employee relationship, the case for
illegal dismissal could not prosper.
The petitioners moved for reconsideration, but to no
avail.
Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF
APPEALS ERRED IN HOLDING THAT THE
PETITIONER WAS NOT A REGULAR
EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF
APPEALS ERRED IN HOLDING THAT THE
PETITIONER IS NOT ENTITLED TO HIS
MONETARY CLAIMS.[14]
The petitioner contends that other than its bare
allegations and self-serving affidavits of the other employees,
Fly Ace has nothing to substantiate its claim that Javier was
engaged on a pakyaw basis. Assuming that Javier was indeed
hired on a pakyaw basis, it does not preclude his regular
employment with the company. Even the acknowledgment
receipts bearing his signature and the confirming receipt of
his salaries will not show the true nature of his employment
as they do not reflect the necessary details of the
commissioned task. Besides, Javiers tasks as pahinante are
related, necessary and desirable to the line of business by Fly
Ace which is engaged in the importation and sale of grocery
items. On days when there were no scheduled deliveries, he
worked in petitioners warehouse, arranging and cleaning the
stored cans for delivery to clients.[15] More importantly, Javier
was subject to the control and supervision of the company, as
he was made to report to the office from Monday to Saturday,
from 7:00 oclock in the morning until 5:00 oclock in the
afternoon. The list of deliverable goods, together with the
corresponding clients and their respective purchases and
addresses, would necessarily have been prepared by Fly Ace.
Clearly, he was subjected to compliance with company rules
and regulations as regards working hours, delivery schedule
and output, and his other duties in the warehouse.[16]
 The petitioner chiefly relied on Chavez v.
NLRC,[17] where the Court ruled that payment to a worker on
a per trip basis is not significant because this is merely a
method of computing compensation and not a basis for
determining the existence of employer-employee relationship.
Javier likewise invokes the rule that, in controversies between
a laborer and his master, x x x doubts reasonably arising from
the evidence should be resolved in the formers favour. The
policy is reflected is no less than the Constitution, Labor
Code and Civil Code.[18]
Claiming to be an employee of Fly Ace, petitioner
asserts that he was illegally dismissed by the latters failure to
observe substantive and procedural due process. Since his
dismissal was not based on any of the causes recognized by
law, and was implemented without notice, Javier is entitled to
separation pay and backwages.
In its Comment,[19] Fly Ace insists that there was no
substantial evidence to prove employer-employee relationship.
Having a service contract with Milmar Hauling Services for
the purpose of transporting and delivering company products
to customers, Fly Ace contracted Javier as an extra helper
or pahinante on a mere per trip basis. Javier, who was
actually a loiterer in the area, only accompanied and assisted
the company driver when Milmar could not deliver or when
the exigency of extra deliveries arises for roughly five to six
times a month. Before making a delivery, Fly Ace would turn
over to the driver and Javier the delivery vehicle with its
loaded company products. With the vehicle and products in
their custody, the driver and Javier would leave the company
premises using their own means, method, best judgment and
discretion on how to deliver, time to deliver, where and
[when] to start, and manner of delivering the products.[20]
Fly Ace dismisses Javiers claims of employment as
baseless assertions. Aside from his bare allegations, he
presented nothing to substantiate his status as an employee. It
is a basic rule of evidence that each party must prove his
affirmative allegation. If he claims a right granted by law, he
must prove his claim by competent evidence, relying on the
strength of his own evidence and not upon the weakness of
his opponent.[21] Invoking the case of Lopez v. Bodega
City,[22] Fly Ace insists that in an illegal dismissal case, the
burden of proof is upon the complainant who claims to be an
employee. It is essential that an employer-employee
relationship be proved by substantial evidence. Thus, it cites:
In an illegal dismissal case, the onus
probandi rests on the employer to prove that its
dismissal of an employee was for a valid cause.
However, before a case for illegal dismissal can
prosper, an employer-employee relationship must
first be established.
Fly Ace points out that Javier merely offers factual
assertions that he was an employee of Fly Ace, which are
unfortunately not supported by proof, documentary or
otherwise.[23] Javier simply assumed that he was an employee
of Fly Ace, absent any competent or relevant evidence to
support it. He performed his contracted work outside the
premises of the respondent; he was not even required to report
to work at regular hours; he was not made to register his time
in and time out every time he was contracted to work; he was
not subjected to any disciplinary sanction imposed to other
employees for company violations; he was not issued a
company I.D.; he was not accorded the same benefits given to
other employees; he was not registered with the Social
Security System (SSS) as petitioners employee; and, he was
free to leave, accept and engage in other means of livelihood
as there is no exclusivity of his contracted services with the
petitioner, his services being co-terminus with the trip only.
All these lead to the conclusion that petitioner is not an
employee of the respondents.[24]
Moreover, Fly Ace claims that it had no right to control
the result, means, manner and methods by which Javier would
perform his work or by which the same is to be
accomplished.[25] In other words, Javier and the company
driver were given a free hand as to how they would perform
their contracted services and neither were they subjected to
definite hours or condition of work.
Fly Ace likewise claims that Javiers function as
a pahinante was not directly related or necessary to its
principal business of importation and sales of groceries. Even
without Javier, the business could operate its usual course as it
did not involve the business of inland transportation. Lastly,
the acknowledgment receipts bearing Javiers signature and
words pakiao rate, referring to his earned salaries on a per trip
basis, have evidentiary weight that the LA correctly
considered in arriving at the conclusion that Javier was not an
employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javiers alleged illegal
dismissal is anchored on the existence of an
employer-employee relationship between him and Fly Ace.
This is essentially a question of fact. Generally, the Court
does not review errors that raise factual questions. However,
when there is conflict among the factual findings of the
antecedent deciding bodies like the LA, the NLRC and the
CA, it is proper, in the exercise of Our equity jurisdiction, to
review and re-evaluate the factual issues and to look into the
records of the case and re-examine the questioned
findings.[26] In dealing with factual issues in labor cases,
substantial evidence that amount of relevant evidence which a
reasonable mind might accept as adequate to justify a
conclusion is sufficient.[27]
As the records bear out, the LA and the CA found
Javiers claim of employment with Fly Ace as wanting and
deficient. The Court is constrained to agree. Although Section
10, Rule VII of the New Rules of Procedure of the
NLRC[28] allows a relaxation of the rules of procedure and
evidence in labor cases, this rule of liberality does not mean a
complete dispensation of proof. Labor officials are enjoined
to use reasonable means to ascertain the facts speedily and
objectively with little regard to technicalities or formalities
but nowhere in the rules are they provided a license to
completely discount evidence, or the lack of it. The quantum
of proof required, however, must still be satisfied. Hence,
when confronted with conflicting versions on factual matters,
it is for them in the exercise of discretion to determine which
party deserves credence on the basis of evidence received,
subject only to the requirement that their decision must be
supported by substantial evidence.[29] Accordingly, the
petitioner needs to show by substantial evidence that he was
indeed an employee of the company against which he claims
illegal dismissal.
Expectedly, opposing parties would stand poles apart
and proffer allegations as different as chalk and cheese. It is,
therefore, incumbent upon the Court to determine whether the
party on whom the burden to prove lies was able to hurdle the
same. No particular form of evidence is required to prove the
existence of such employer-employee relationship. Any
competent and relevant evidence to prove the relationship
may be admitted. Hence, while no particular form of evidence
is required, a finding that such relationship exists must still
rest on some substantial evidence. Moreover, the
substantiality of the evidence depends on its quantitative as
well as its qualitative aspects.[30]Although substantial
evidence is not a function of quantity but rather of quality, the
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. Hence, the
Court sees no reason to depart from the findings of the CA.
While Javier remains firm in his position that as an
employed stevedore of Fly Ace, he was made to work in the
company premises during weekdays arranging and cleaning
grocery items for delivery to clients, no other proof was
submitted to fortify his claim. The lone affidavit executed by
one Bengie Valenzuela was unsuccessful in strengthening
Javiers cause. In said document, all Valenzuela attested to
was that he would frequently see Javier at the workplace
where the latter was also hired as stevedore.[34]Certainly, in
gauging the evidence presented by Javier, the Court cannot
ignore the inescapable conclusion that his mere presence at
the workplace falls short in proving employment therein. The
supporting affidavit could have, to an extent, bolstered Javiers
claim of being tasked to clean grocery items when there were
no scheduled delivery trips, but no information was offered in
this subject simply because the witness had no personal
knowledge of Javiers employment status in the company.
Verily, the Court cannot accept Javiers statements, hook, line
and sinker.
The Court is of the considerable 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. 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
a pakyaw basis. The Court cannot fail to note that Fly Ace
presented documentary proof that Javier was indeed paid on
a pakyaw basis per the acknowledgment receipts admitted as
competent evidence by the LA. Unfortunately for Javier, his
mere denial of the signatures affixed therein cannot
automatically sway us to ignore the documents because
forgery cannot be presumed and must be proved by clear,
positive and convincing evidence and the burden of proof lies
on the party alleging forgery.[36]
Considering the above findings, the Court does not see
the necessity to resolve the second issue presented.
One final note. The Courts decision does not contradict
the settled rule that payment by the piece is just a method of
compensation and does not define the essence of the
relation.[37] Payment on a piece-rate basis does not negate
regular employment. The term wage is broadly defined in
Article 97 of the Labor Code as remuneration or earnings,
capable of being expressed in terms of money whether fixed
or ascertained on a time, task, piece or commission basis.
Payment by the piece is just a method of compensation and
does not define the essence of the relations. Nor does the fact
that the petitioner is not covered by the SSS affect the
employer-employee relationship. However, in determining
whether the relationship is that of employer and employee or
one of an independent contractor, each case must be
determined on its own facts and all the features of the
relationship are to be considered.[38] Unfortunately for Javier,
the attendant facts and circumstances of the instant case do
not provide the Court with sufficient reason to uphold his
claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of
social justice and the protection of the working class, it
should not be supposed that every labor dispute will be
automatically decided in favor of labor. Management also has
its rights which are entitled to respect and enforcement in the
interest of simple fair play. Out of its concern for the less
privileged in life, the Court has inclined, more often than not, WILMER D. GENOVIA, November 23, 2011
toward the worker and upheld his cause in his conflicts with Respondent.
the employer. Such favoritism, however, has not blinded the x-------------------------------------------------------------------------
Court to the rule that justice is in every case for the deserving, ---------------x
to be dispensed in the light of the established facts and the
applicable law and doctrine.[39]
DECISION

WHEREFORE, the petition is DENIED. The March

18, 2010 Decision of the Court of Appeals and its June 7, PERALTA, J.:
2010 Resolution, in CA-G.R. SP No. 109975, are
hereby AFFIRMED.
SO ORDERED.
This is a petition for review on certiorari of the
decision of the Court of Appeals in CA-G.R. SP No. 88899
dated August 4, 2005 and its Resolution dated September 21,
2005, denying petitioners motion for reconsideration.

The Court of Appeals reversed and set aside the

resolution of the NLRC, and reinstated the decision of the
CESAR C. LIRIO, doing business G.R. No. 169757 Labor Arbiter with modification, finding that respondent is an
under the name and style of employee of petitioner, and that respondent was illegally
CELKOR AD SONICMIX, Present:
dismissed and entitled to the payment of backwages and
Petitioner,
separation pay in lieu of reinstatement.
VELASCO, JR., J., Chairperson,
PERALTA, The facts are as follows:
ABAD,
- versus - PEREZ,* and On July 9, 2002, respondent Wilmer D. Genovia filed a
MENDOZA, JJ. complaint against petitioner Cesar Lirio and/or Celkor Ad
Sonicmix Recording Studio for illegal dismissal,
Promulgated:
non-payment of commission and award of moral and
exemplary damages.
In his Position Paper,[1] respondent Genovia alleged,
among others, that on August 15, 2001, he was hired as
studio manager by petitioner Lirio, owner of Celkor Ad
Sonicmix Recording Studio (Celkor). He was employed to
manage and operate Celkor and to promote and sell the
recording studio's services to music enthusiasts and other
prospective clients. He received a monthly salary
of P7,000.00. They also agreed that he was entitled to an
additional commission of P100.00 per hour as recording
technician whenever a client uses the studio for recording,
editing or any related work. He was made to report for work
from Monday to Friday from 9:00 a.m. to 6 p.m. On
Saturdays, he was required to work half-day only, but most
of the time, he still rendered eight hours of work or more. All
the employees of petitioner, including respondent, rendered
overtime work almost everyday, but petitioner never kept a
daily time record to avoid paying the employees overtime
pay.
Respondent stated that a few days after he started
working as a studio manager, petitioner approached him and
told him about his project to produce an album for his
15-year-old daughter, Celine Mei Lirio, a former talent of
ABS-CBN Star Records. Petitioner asked respondent to
compose and arrange songs for Celine and promised that he
(Lirio) would draft a contract to assure respondent of his
compensation for such services. As agreed upon, the
additional services that respondent would render included
composing and arranging musical scores only, while the
technical aspect in producing the album, such as digital
editing, mixing and sound engineering would be performed
by respondent in his capacity as studio manager for which he
was paid on a monthly basis. Petitioner instructed respondent
that his work on the album as composer and arranger would
only be done during his spare time, since his other work as
studio manager was the priority. Respondent then started
working on the album.
Respondent alleged that before the end of September
2001, he reminded petitioner about his compensation as
composer and arranger of the album. Petitioner verbally
assured him that he would be duly compensated. By
mid-November 2001, respondent finally finished the
compositions and musical arrangements of the songs to be
included in the album. Before the month ended, the lead and
back-up vocals in the ten (10) songs were finally recorded
and completed. From December 2001 to January 2002,
respondent, in his capacity as studio manager, worked on
digital editing, mixing and sound engineering of the vocal
and instrumental audio files.
Thereafter, respondent was tasked by petitioner to
prepare official correspondence, establish contacts and
negotiate with various radio stations, malls, publishers,
record companies and manufacturers, record bars and other
outlets in preparation for the promotion of the said album. By
early February 2002, the album was in its manufacturing
stage. ELECTROMAT, manufacturer of CDs and cassette
tapes, was tapped to do the job. The carrier single of the
album, which respondent composed and arranged, was finally
aired over the radio on February 22, 2002.
On February 26, 2002, respondent again reminded
petitioner about the contract on his compensation as
composer and arranger of the album. Petitioner told
respondent that since he was practically a nobody and had
proven nothing yet in the music industry, respondent did not
deserve a high compensation, and he should be thankful that
he was given a job to feed his family. Petitioner informed
respondent that he was entitled only to 20% of the net profit,
and not of the gross sales of the album, and that the salaries
he received and would continue to receive as studio manager
of Celkor would be deducted from the said 20% net profit
share. Respondent objected and insisted that he be properly
compensated. On March 14, 2002, petitioner verbally
terminated respondents services, and he was instructed not to
report for work.
Respondent asserts that he was illegally dismissed as
he was terminated without any valid grounds, and no hearing
was conducted before he was terminated, in violation of his
constitutional right to due process. Having worked for more
than six months, he was already a regular employee.
Although he was a so called studio manager, he had no
managerial powers, but was merely an ordinary employee.
Respondent prayed for his reinstatement without loss
of seniority rights, or, in the alternative, that he be paid
separation pay, backwages and overtime pay; and that he be
awarded unpaid commission in the amount of P2,000.00 for
services rendered as a studio technician as well as moral and
exemplary damages.
Respondents evidence consisted of the Payroll dated
July 31, 2001 to March 15, 2002, which was certified correct
by petitioner,[2] and Petty Cash Vouchers[3] evidencing receipt
of payroll payments by respondent from Celkor.
In defense, petitioner stated in his Position Paper[4] that
respondent was not hired as studio manager, composer,
technician or as an employee in any other capacity of Celkor.
Respondent could not have been hired as a studio manager,
since the recording studio has no personnel except petitioner.
Petitioner further claimed that his daughter Celine Mei Lirio,
a former contract artist of ABS-CBN Star Records, failed to
come up with an album as the latter aborted its project to
produce one. Thus, he decided to produce an album for his
daughter and established a recording studio, which he named
Celkor Ad Sonicmix Recording Studio. He looked for a
composer/arranger who would compose the songs for the said
album. In July 2001, Bob Santiago, his son-in-law,
introduced him to respondent, who claimed to be an amateur
composer, an arranger with limited experience and musician
without any formal musical training. According to petitioner,
respondent had no track record as a composer, and he was not
known in the field of music. Nevertheless, after some
discussion, respondent verbally agreed with petitioner to
co-produce the album based on the following terms and
conditions: (1) petitioner shall provide all the financing,
equipment and recording studio; (2) Celine Mei Lirio shall
sing all the songs; (3) respondent shall act as composer and
arranger of all the lyrics and the music of the five songs he
already composed and the revival songs; (4) petitioner shall
have exclusive right to market the album; (5) petitioner was
entitled to 60% of the net profit, while respondent and Celine
Mei Lirio were each entitled to 20% of the net profit; and (6)
respondent shall be entitled to draw advances of P7,000.00 a
month, which shall be deductible from his share of the net
profits and only until such time that the album has been
produced.
According to petitioner, they arrived at the foregoing
sharing of profits based on the mutual understanding
that respondent was just an amateur composer with no track
record whatsoever in the music industry, had no definite
source of income, had limited experience as an arranger, had
no knowledge of the use of sound mixers or digital arranger
and that petitioner would help and teach him how to use the
studio equipment; that petitioner would shoulder all the
expenses of production and provide the studio and equipment
as well as his knowledge in the use thereof; and Celine Mei
Lirio would sing the songs. They embarked on the production
of the album on or about the third week of August 2002.
Petitioner asserted that from the aforesaid terms and
conditions, his relationship with respondent is one of an
informal partnership under Article 1767[5] of the New Civil
Code, since they agreed to contribute money, property or
industry to a common fund with the intention of dividing the
profits among themselves. Petitioner had no control over the
time and manner by which respondent composed or arranged
the songs, except on the result thereof. Respondent reported
to the recording studio between 10:00 a.m. and 12:00 noon.
Hence, petitioner contended that no employer-employee
relationship existed between him and the respondent, and
there was no illegal dismissal to speak of.
On October 31, 2003, Labor Arbiter Renaldo O.
Hernandez rendered a decision,[6] finding that an
employer-employee relationship existed between petitioner
and respondent, and that respondent was illegally
dismissed. The dispositive portion of the decision reads:
WHEREFORE, premises considered, we
find that respondents CELKOR AD SONICMIX
RECORDING STUDIO and/ or CESAR C.
LIRIO (Owner), have illegally dismissed
complainant in his status as regular employee and,
consequently, ORDERING said respondents:
1) To pay him full backwages
from date of illegal dismissal
on March 14, 2002 until
finality of this decision and, in
lieu of reinstatement, to [pay]
 his separation pay of one (1)
month pay per year of service
reckoned from [the] date of
hire on August 15, 2001 until
finality of this decision, which
as of date amounts to full
backwages total of
145,778.6 (basic P7,000.00 x
19.6 mos.=P133,000.00 + 1/12
thereof as 13th month pay
of P11,083.33 + SILP P7,000/
32.62 days=P214.59/day x
5=P1,072.96 x 1.58
yrs.=P1,695.27); separation
pay of P22,750.00 (P7,000.00
x 3.25 yrs.);
2) To pay complainant's unpaid
commission of P2,000.00;
3) To pay him moral and exemplary
damages in the combined amount
of P75,000.00.
Other monetary claims of complainant are
dismissed for lack of merit.[7]
The Labor Arbiter stated that petitioners denial of the
employment relationship cannot overcome respondents
positive assertion and documentary evidence proving that
petitioner hired respondent as his employee.[8]
Petitioner appealed the decision of the Labor Arbiter to
the National Labor Relations Commission (NLRC).
In a Resolution7 dated October 14, 2004, the NLRC
reversed and set aside the decision of the Labor Arbiter. The
dispositive portion of the Resolution reads:
WHEREFORE, premises considered, the
Appeal is GRANTED. Accordingly, the Decision
appealed from is REVERSED and, hence, SET
ASIDE and a new one ENTERED dismissing the
instant case for lack of merit.[9]
The NLRC stated that respondent failed to prove his
employment tale with substantial evidence. Although the
NLRC agreed that respondent was able to prove that he
received gross pay less deduction and net pay, with the
corresponding Certification of Correctness by petitioner,
covering the period from July 31, 2001 to March 15, 2002,
the NLRC held that respondent failed to proved with
substantial evidence that he was selected and engaged by
petitioner, that petitioner had the power to dismiss him, and
that they had the power to control him not only as to the result
of his work, but also as to the means and methods of
accomplishing his work.
Respondents motion for reconsideration was denied by
the NLRC in a Resolution9 dated December 14, 2004.

Respondent filed a petition for certiorari before the
Court of Appeals.
On August 4, 2005, the Court of Appeals rendered a
decision[10] reversing and setting aside the resolution of the
NLRC, and reinstating the decision of the Labor Arbiter, with
modification in regard to the award of commission and
damages. The Court of Appeals deleted the award of
commission, and moral and exemplary damages as the same
were not substantiated. The dispositive portion of the Court of
Appeals decision reads:
WHEREFORE, the petition is GRANTED and
the assailed resolutions dated October 14, 2004 and
December 14, 2004 are hereby REVERSED and SET
ASIDE. Accordingly, the decision dated October 31,
2003 of the Labor Arbiter is REINSTATED, with
the modification that the awards of commission and
damages are deleted.[11] (Emphasis supplied.)
Petitioners motion for reconsideration was denied for
lack of merit by the Court of Appeals in its
Resolution[12] dated September 21, 2005.
Hence, petitioner Lirio filed this petition.
Petitioner states that respondent appealed to the Court
of Appeals via a petition for certiorari under Rule 65, which
will prosper only if there is a showing of grave abuse of
discretion or an act without or in excess of jurisdiction on the
part of the NLRC.[13] However, petitioner contends that the
Court of Appeals decided the case not in accordance with law
and applicable rulings of this Court as petitioner could not
find any portion in the Decision of the Court of Appeals
ruling that the NLRC acted without or in excess of
jurisdiction or with grave abuse of discretion amounting to
lack or excess of jurisdiction. Petitioner submits that the
Court of Appeals could not review an error of judgment by
the NLRC raised before it on a petition for certiorari under
Rule 65 of the 1997 Rules of Civil Procedure. Moreover,
petitioner contends that it was error on the part of the Court of
Appeals to review the finding of facts of the NLRC on
whether there exists an employer-employee relationship
between the parties.
Petitioners argument lacks merit.
It is noted that respondent correctly sought judicial
review of the decision of the NLRC via a petition
for certiorari under Rule 65 of the Rules of Court filed before
the Court of Appeals in accordance with the decision of the
Court in St. Martin Funeral Home v. NLRC,[14] which held:
Therefore, all references in the amended Section
9 of B.P. No. 129 to supposed appeals from the NLRC
to the Supreme Court are interpreted and hereby
declared to mean and refer to petitions
for certiorari under Rule 65. Consequently, all such
petitions should henceforth be initially filed in the
Court of Appeals in strict observance of the doctrine on
the hierarchy of courts as the appropriate forum for the
relief desired.[15]
 The Court of Appeals stated in its decision that the facts of the NLRC and the evidence of the parties to
issue it had to resolve was whether or not the public determine whether the NLRC gravely abused its discretion in
respondent [NLRC] committed grave abuse of finding that no employer-employee relationship existed
discretion when it declared that no employer-employee between petitioner and respondent.[21]
relationship exists between the petitioner and the private
respondents, since the petitioner failed to prove such fact by Respondent raised before the Court of Appeals the
substantial evidence.[16] following issues:
Errors of judgment, as distinguished from errors of
jurisdiction, are not within the province of a special civil I. RESPONDENT NATIONAL LABOR
action for certiorari, which is merely confined to issues of RELATIONS COMMISSION COMMITTED
jurisdiction or grave abuse of discretion.[17] By grave abuse of GRAVE ABUSE OF DISCRETION IN
discretion is meant such capricious and whimsical exercise of SHIFTING THE BURDEN OF PROVING THAT
judgment as is equivalent to lack of jurisdiction, and it must EMPLOYMENT RELATIONS EXISTED
be shown that the discretion was exercised arbitrarily or BETWEEN THE PETITIONER AND THE
despotically.[18] PRIVATE RESPONDENTS TO THE FORMER,
IN VIOLATION OF ESTABLISHED
PROVISION OF LAWS AND
JURISPRUDENCE.
The Court of Appeals, therefore, could grant the
petition for certiorari if it finds that the NLRC, in its assailed
decision or resolution, committed grave abuse of discretion II. RESPONDENT NATIONAL LABOR
by capriciously, whimsically, or arbitrarily disregarding RELATIONS COMMISSION COMMITTED
evidence that is material to or decisive of the controversy; and GRAVE ABUSE OF DISCRETION IN
it cannot make this determination without looking into the HOLDING THAT NO EMPLOYER-EMPLOYEE
evidence of the parties.[19] Necessarily, the appellate court can RELATIONSHIP EXISTED BETWEEN THE
only evaluate the materiality or significance of the evidence, PETITIONER AND THE PRIVATE
which is alleged to have been capriciously, whimsically, or RESPONDENTS.
arbitrarily disregarded by the NLRC, in relation to all other
evidence on record.[20] Thus, contrary to the contention of III. RESPONDENT NATIONAL LABOR
petitioner, the Court of Appeals can review the finding of RELATIONS COMMISSION COMMITTED
 GRAVE ABUSE OF DISCRETION IN
DISREGARDING THE PETITIONER'S
PAYROLL AND THE PETTY CASH
VOUCHERS AS AN INDICIA OF
EMPLOYMENT RELATIONS BETWEEN
PETITIONER AND THE PRIVATE
[22]
RESPONDENTS.
Between the documentary evidence presented by
respondent and the mere allegation of petitioner without any
proof by way of any document evincing their alleged
partnership agreement, the Court of Appeals agreed with the
Labor Arbiter that petitioner failed to substantiate his claim
that he had a partnership with respondent, citing the Labor
Arbiters finding, thus:
In this case, complainant's evidence is
substantial enough to prove the employment
relationship that on August 14, 2001, he was hired
as 'Studio manager' by respondent Lirio to manage
and operate the recording studio and to promote
and sell its services to music enthusiasts and
clients, proven by his receipt for this purpose from
said respondent a fixed monthly compensation
of P7,000.00, with commission of P100.00 per
hour when serving as recording technician, shown
by the payroll from July 31, 2001-March 15, 2002.
The said evidence points to complainant's hiring as
employee so that the case comes within the
purview of our jurisdiction on labor disputes
between an employer and an employee. x x x.
Respondent Lirio's so-called existence of a
partnership agreement was not substantiated and
his assertion thereto, in the face of complainant's
evidence, constitute but a self-serving assertion,
without probative value, a mere
invention to justify the illegal dismissal.
xxxx
Indeed, we find credible that what caused
complainant's dismissal on March 14, 2002 was
due to his refusal to respondent's Lirio's
insistences on merely giving him 20% based on
net profit on sale of the album which he composed
and arranged during his free time and, moreover,
that salaries which he received would be deducted
therefrom, which obviously, soured the relations
from the point of view of respondent Lirio.[23]
Hence, based on the finding above and the doctrine that
if doubt exists between the evidence presented by the
employer and the employee, the scales of justice must be
tilted in favor of the latter,[24] the Court of Appeals reversed
the resolution of the NLRC and reinstated the decision of the
Labor Arbiter with modification. Even if the Court of
Appeals was remiss in not stating it in definite terms, it is
implied that the Court of Appeals found that the NLRC
gravely abused its discretion in finding that no
employer-employee relationship existed between petitioner
and respondent based on the evidence on record.
 We now proceed to the main issue raised before this
Court: Whether or not the decision of the Court of Appeals is
in accordance with law, or whether or not the Court of
Appeals erred in reversing and setting aside the decision of
the NLRC, and reinstating the decision of the Labor Arbiter
with modification.
In petitions for review, only errors of law are generally
reviewed by this Court. This rule, however, is not
ironclad.[25] Where the issue is shrouded by a conflict of
factual perceptions by the lower court or the lower
administrative body, in this case, the NLRC, this Court is
constrained to review the factual findings of the Court of
Appeals.[26]
Before a case for illegal dismissal can prosper, it must
first be established that an employer-employee relationship
existed between petitioner and respondent.[27]
The elements to determine the existence of an
employment relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employers power to
control the employees conduct. The most important element
is the employers control of the employees conduct, not only
as to the result of the work to be done, but also as to the
means and methods to accomplish it.[28]
It is settled that no particular form of evidence is
required to prove the existence of an employer-employee
relationship.[29] Any competent and relevant evidence to
prove the relationship may be admitted.[30]
In this case, the documentary evidence presented by
respondent to prove that he was an employee of petitioner are
as follows: (a) a document denominated as "payroll" (dated
July 31, 2001 to March 15, 2002) certified correct by
petitioner,[31] which showed that respondent received a
monthly salary of P7,000.00 (P3,500.00 every 15th of the
month and another P3,500.00 every 30th of the month) with
the corresponding deductions due to absences incurred by
respondent; and (2) copies of petty cash vouchers,[32]showing
the amounts he received and signed for in the payrolls.
The said documents showed that petitioner hired
respondent as an employee and he was paid monthly wages
of P7,000.00. Petitioner wielded the power to dismiss as
respondent stated that he was verbally dismissed by petitioner,
and respondent, thereafter, filed an action for illegal dismissal
against petitioner. The power of control refers merely to the
existence of the power.[33] It is not essential for the employer
to actually supervise the performance of duties of the
employee, as it is sufficient that the former has a right to
wield the power.[34] Nevertheless, petitioner stated in his
Position Paper that it was agreed that he would help and teach
respondent how to use the studio equipment. In such case,
petitioner certainly had the power to check on the progress
and work of respondent.

On the other hand, petitioner failed to prove that his
relationship with respondent was one of partnership. Such
claim was not supported by any written agreement. The Court
notes that in the payroll dated July 31, 2001 to March 15,
2002,[35] there were deductions from the wages of respondent
for his absence from work, which negates petitioners claim
that the wages paid were advances for respondents work in
the partnership. In Nicario v. National Labor Relations
Commission,[36] the Court held:
It is a well-settled doctrine, that if doubts exist
between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of
the latter. It is a time-honored rule that in controversies
between a laborer and his master, doubts reasonably
arising from the evidence, or in the interpretation of
agreements and writing should be resolved in the formers
favor. The policy is to extend the doctrine to a greater
number of employees who can avail of the benefits under
the law, which is in consonance with the avowed policy
of the State to give maximum aid and protection of labor.
This rule should be applied in the case at bar, especially
since the evidence presented by the private respondent
company is not convincing. x x x[37]
Based on the foregoing, the Court agrees with the
Court of Appeals that the evidence presented by the parties
showed that an employer-employee relationship existed
between petitioner and respondent.
In termination cases, the burden is upon the employer
to show by substantial evidence that the termination was for
lawful cause and validly made.[38] Article 277 (b) of the Labor
Code[39] puts the burden of proving that the dismissal of an
employee was for a valid or authorized cause on the employer,
without distinction whether the employer admits or does not
admit the dismissal.[40] For an employees dismissal to be valid,
(a) the dismissal must be for a valid cause, and (b) the
employee must be afforded due process.[41] Procedural due
process requires the employer to furnish an employee with
two written notices before the latter is dismissed: (1) the
notice to apprise the employee of the particular acts or
omissions for which his dismissal is sought, which is the
equivalent of a charge; and (2) the notice informing the
employee of his dismissal, to be issued after the employee has
been given reasonable opportunity to answer and to be heard
on his defense.[42] Petitioner failed to comply with these legal
requirements; hence, the Court of Appeals correctly affirmed
the Labor Arbiters finding that respondent was illegally
dismissed, and entitled to the payment of backwages, and
separation pay in lieu of reinstatement.
WHEREFORE, the petition is DENIED. The
Decision of the Court of Appeals in CA-G.R. SP No. 88899,
dated August 4, 2005, and its Resolution dated September 21,
2005, are AFFIRMED.
No costs.
SO ORDERED.
GREGORIO V. TONGKO, G.R. No. 167622
Petitioner,
Present:

CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
- versus - LEONARDO-DE
CASTRO,
BRION,
PERALTA,
BERSAMIN,
 DEL CASTILLO, administrative functions and exercised supervisory authority
ABAD, over employees and agents of Manulife, in addition to his
VILLARAMA, JR., insurance agent functions.[4] In these 19 years, he was
PEREZ, designated as a Unit Manager, a Branch Manager and a
THE MANUFACTURERS MENDOZA, and Regional Sales Manager, and now posits that he was not only
LIFE INSURANCE CO. SERENO, JJ. an insurance agent for Manulife but was its employee as well.
(PHILS.), INC. and RENATO Promulgated:
A. VERGEL DE DIOS, We find no basis or any error to merit the
Respondents. January 25, 2011
reconsideration of our June 29, 2010 Resolution.
x------------------------------------------------------------------------
A. Labor Law Control = Employment Relationship
-----------------x
Control over the performance of the task of one
RESOLUTION providing service both with respect to the means and manner,
and the results of the service is the primary element in
BRION, J.: determining whether an employment relationship exists. We
resolve the petitioners Motion against his favor since he failed
We resolve petitioner Gregorio V. Tongkos bid, to show that the control Manulife exercised over him was the
through his Motion for Reconsideration,[1] to set aside our control required to exist in an employer-employee
June 29, 2010 Resolution that reversed our Decision of relationship; Manulifes control fell short of this norm and
November 7, 2008.[2] With the reversal, the assailed June 29, carried only the characteristic of the relationship between an
2010 Resolution effectively affirmed the Court of Appeals insurance company and its agents, as defined by the Insurance
ruling[3] in CA-G.R. SP No. 88253 that the petitioner was an Code and by the law of agency under the Civil Code.
insurance agent, not the employee, of the respondent The
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife). The petitioner asserts in his Motion that Manulifes
labor law control over him was demonstrated (1) when it set
In his Motion for Reconsideration, petitioner reiterates the objectives and sales targets regarding production,
the arguments he had belabored in his petition and various recruitment and training programs; and (2) when it prescribed
other submissions. He argues that for 19 years, he performed the Code of Conduct for Agents and the Manulife Financial
Code of Conduct to govern his activities.[5] We find no merit
in these contentions.
In our June 29, 2010 Resolution, we noted that there
are built-in elements of control specific to an insurance
agency, which do not amount to the elements of control that
characterize an employment relationship governed by the
Labor Code. The Insurance Code provides definite
parameters in the way an agent negotiates for the sale of the
companys insurance products, his collection activities and his
delivery of the insurance contract or policy.[6] In addition, the
Civil Code defines an agent as a person who binds himself to
do something in behalf of another, with the consent or
authority of the latter.[7] Article 1887 of the Civil Code also
provides that in the execution of the agency, the agent shall
act in accordance with the instructions of the principal.
All these, read without any clear understanding of fine
legal distinctions, appear to speak of control by the insurance
company over its agents. They are, however, controls aimed
only at specific results in undertaking an insurance agency,
and are, in fact, parameters set by law in defining an
insurance agency and the attendant duties and responsibilities
an insurance agent must observe and undertake. They do not
reach the level of control into the means and manner of doing
an assigned task that invariably characterizes an employment
relationship as defined by labor law. From this perspective,
the petitioners contentions cannot prevail.
To reiterate, guidelines indicative of labor law control
do not merely relate to the mutually desirable result intended
by the contractual relationship; they must have the nature of
dictating the means and methods to be employed in attaining
the result.[8] Tested by this norm, Manulifes instructions
regarding the objectives and sales targets, in connection with
the training and engagement of other agents, are among the
directives that the principal may impose on the agent to
achieve the assigned tasks. They are targeted results that
Manulife wishes to attain through its agents. Manulifes codes
of conduct, likewise, do not necessarily intrude into the
insurance agents means and manner of conducting their sales.
Codes of conduct are norms or standards of behavior rather
than employer directives into how specific tasks are to be
done. These codes, as well as insurance industry rules and
regulations, are not per se indicative of labor law control
under our jurisprudence.[9]
The duties[10] that the petitioner enumerated in his Motion are
not supported by evidence and, therefore, deserve scant
consideration. Even assuming their existence, however, they
mostly pertain to the duties of an insurance agent such as
remitting insurance fees to Manulife, delivering policies to
the insured, and after-sale services. For agents leading other
agents, these include the task of overseeing other insurance
agents, the recruitment of other insurance agents engaged by
Manulife as principal, and ensuring that these other agents
comply with the paperwork necessary in selling
insurance. That Manulife exercises the power to assign and
remove agents under the petitioners supervision is in keeping
with its role as a principal in an agency relationship; they are
Manulife agents in the same manner that the petitioner had all
along been a Manulife agent.
The petitioner also questions Manulifes act of investing
him with different titles and positions in the course of their
relationship, given the respondents position that he simply
functioned as an insurance agent.[11] He also considers it an
unjust and inequitable situation that he would be unrewarded
for the years he spent as a unit manager, a branch manager,
and a regional sales manager.[12]
Based on the evidence on record, the petitioners
occupation was to sell Manulifes insurance policies and
products from 1977 until the termination of the Career Agents
Agreement (Agreement). The evidence also shows that
through the years, Manulife permitted him to exercise guiding
authority over other agents who operate under their own
agency agreements with Manulife and whose commissions he
shared.[13] Under this scheme an arrangement that pervades
the insurance industry petitioner in effect became a lead agent
and his own commissions increased as they included his share
in the commissions of the other agents;[14] he also received
greater reimbursements for expenses and was allowed to use
Manulifes facilities. His designation also changed from unit
manager to branch manager and then to regional sales
manager, to reflect the increase in the number of agents he
recruited and guided, as well as the increase in the area where
these agents operated.
As our assailed Resolution concluded and as we now
similarly conclude, these arrangements, and the titles and
positions the petitioner was invested with, did not change his
status from the insurance agent that he had always been (as
evidenced by the Agreement that governed his relationship
with Manulife from the start to its disagreeable end).The
petitioner simply progressed from his individual agency to
being a lead agent who could use other agents in selling
insurance and share in the earnings of these other agents.
In sum, we find absolutely no evidence of labor law
control, as extensively discussed in our Resolution of June 29,
2010, granting Manulifes motion for reconsideration.The
Dissent, unfortunately, misses this point.
B. No Resulting Inequity
We also do not agree that our assailed Resolution has
the effect of fostering an inequitable or unjust situation. The
records show that the petitioner was very amply paid for his
services as an insurance agent, who also shared in the
commissions of the other agents under his guidance. In 1997,
his income was P2,822,620; in 1998, P4,805,166.34; in
1999, P6,797,814.05; in 2001, P6,214,737.11; and in
2002, P8,003,180.38. All these he earned as an insurance
agent, as he failed to ever prove that he earned these sums as
an employee. In technical terms, he could not have earned all
these as an employee because he failed to provide the
substantial evidence required in administrative cases to
support the finding that he was a Manulife employee. No
inequity results under this legal situation; what would be
unjust is an award of backwages and separation pay amounts
that are not due him because he was never an employee.
The Dissents discussion on this aspect of the case
begins with the wide disparity in the status of the parties that
Manulife is a big Canadian insurance company while Tongko
is but a single agent of Manulife. The Dissent then went on to
say that [i]f is but just, it is but right, that the Court interprets
the relationship between Tongko and Manulife as one of
employment under labor laws and to uphold his
constitutionally protected right, as an employee, to security of
tenure and entitlement to monetary award should such right
be infringed.[15] We cannot simply invoke the magical
formula by creating an employment relationship even when
there is none because of the unavoidable and inherently weak
position of an individual over a giant corporation.
The Dissent likewise alluded to an ambiguity in the
true relationship of the parties after Tongkos successive
appointments. We already pointed out that the legal
significance of these appointments had not been sufficiently
explained and that it did not help that Tongko never bothered
to present evidence on this point. The Dissent recognized this
but tried to excuse Tongko from this failure in the subsequent
discussion, as follows:
[o]ther evidence was adduced to show such
duties and responsibilities. For one, in his letter
of November 6, 2001, respondent De Dios
addressed petitioner as sales manager. And as I
wrote in my Dissent to the June 29,
2010 Resolution, it is difficult to imagine that
Manulife did not issue promotional appointments
to petitioner as unit manager, branch manager,
and, eventually, regional sales manager. Sound
management practice simply requires an
appointment for any upward personnel
movement, particularly when additional
functions and the corresponding increase in
compensation are involved. Then, too, the
adverted affidavits of the managers of Manulife
as to the duties and responsibilities of a unit
manager, such as petitioner, point to the
conclusion that these managers were employees
of Manulife, applying the four-fold test.[16]
This Court (and all adjudicators for that matter)
cannot and should not fill in the evidentiary gaps in a partys
case that the party failed to support; we cannot and should
not take the cudgels for any party. Tongko failed to support
his cause and we should simply view him and his case as they
are; our duty is to sit as a judge in the case that he and the
respondent presented.
To support its arguments on equity, the Dissent uses
the Constitution and the Civil Code, using provisions and
principles that are all motherhood statements. The mandate of
the Court, of course, is to decide cases based on the facts and
the law, and not to base its conclusions on fundamental
precepts that are far removed from the particular case
presented before it. When there is no room for their
application, of capacity of principles, reliance on the
application of these fundamental principles is misplaced.
C. Earnings were Commissions
That his earnings were agents commissions arising
from his work as an insurance agent is a matter that the
petitioner cannot deny, as these are the declarations and
representations he stated in his income tax returns through
the years. It would be doubly unjust, particularly to the
government, if he would be allowed at this late point to turn
around and successfully claim that he was merely an
employee after he declared himself, through the years, as an
independent self-employed insurance agent with the privilege
of deducting business expenses. This aspect of the case alone
considered together with the probative value of income tax
declarations and returns filed prior to the present controversy
should be enough to clinch the present case against the
petitioners favor.
D. The Dissents Solution:
Unwieldy and Legally Infirm
The Dissent proposes that Tongko should be
considered as part employee (as manager) and part insurance
agent; hence, the original decision should be modified to
pertain only to the termination of his employment as a
manager and not as an insurance agent. Accordingly, the
backwages component of the original award to him should
not include the insurance sales commissions. This solution,
according to the line taken by the Dissent then, was justified
on the view that this was made on a case-to-case basis.
Decisions of the Supreme Court, as the Civil Code
provides, form part of the law of the land. When the Court
states that the determination of the existence of an
employment relationship should be on a case-to-case basis,
this does not mean that there will be as many laws on the
issue as there are cases. In the context of this case, the
four-fold test is the established standard for determining
employer-employee relationship and the existence of these
elements, most notably control, is the basis upon which a
conclusion on the absence of employment relationship was
anchored. This simply means that a conclusion on whether
employment relationship exists in a particular case largely
depends on the facts and, in no small measure, on the parties
evidence vis--vis the clearly defined jurisprudential
standards. Given that the parties control what and how the
facts will be established in a particular case and/or how a
particular suit is to be litigated, deciding the issues on a
case-to-case basis becomes an imperative.
Another legal reality, a more important one, is that the
duty of a court is to say what the law is.[17] This is the same
duty of the Supreme Court that underlies the stare
decisis principle. This is how the public, in general and the
insurance industry in particular, views the role of this Court
and courts in general in deciding cases. The lower courts and
the bar, most specially, look up to the rulings of this Court for
guidance. Unless extremely unavoidable, the Court must, as a
matter of sound judicial policy, resist the temptation of
branding its ruling pro hac vice.
The compromise solution of declaring Tongko both an
employee and an agent is legally unrealistic, unwieldy and is,
in fact, legally infirm, as it goes against the above basic
principles of judicial operation. Likewise, it does not and
cannot realistically solve the problem/issue in this case; it
actually leaves more questions than answers.
As already pointed out, there is no legal basis (be it
statutory or jurisprudential) for the
part-employee/part-insurance agent status under an essentially
principal-agent contractual relation which the Dissent
proposes to accord to Tongko. If the Dissent intends to
establish one, this is highly objectionable for this would
amount to judicial legislation. A legal relationship, be it one
of employment or one based on a contract other than
employment, exists as a matter of law pursuant to the facts,
incidents and legal consequences of the relationship; it cannot
exist devoid of these legally defined underlying facts and
legal consequences unless the law itself creates the
relationship an act that is beyond the authority of this Court to
do.
Additionally, the Dissents conclusion completely
ignores an unavoidable legal reality that the parties are bound
by a contract of agency that clearly subsists notwithstanding
the successive designation of Tongko as a unit manager, a
branch manager and a regional sales manager. (As already
explained in our Resolution granting Manulifes motion for
reconsideration, no evidence on record exists to provide the
Court with clues as to the precise impact of all these
designations on the contractual agency relationship.) The
Dissent, it must be pointed out, concludes that Tongkos
employment as manager was illegally terminated; thus, he
should be accordingly afforded relief therefor. But, can
Tongko be given the remedies incidental to his dismissal as
manager separately from his status as an insurance agent? In
other words, since the respondents terminated all
relationships with Tongko through the termination letter, can
we simply rule that his role as a manager was illegally
terminated without touching on the consequences of this
ruling on his status as an insurance agent? Expressed in these
terms, the inseparability of his contract as agent with any
other relationship that springs therefrom can thus be seen as
an insurmountable legal obstacle.
The Dissents compromise approach would also
sanction split jurisdiction. The labor tribunals shall have
jurisdiction over Tongkos employment as manager while
another entity shall decide the issues/cases arising from the
agency relationship. If the managerial employment is
anchored on the agency, how will the labor tribunals decide
an issue that is inextricably linked with a relationship that is
outside the loop of their jurisdiction? As already mentioned in
the Resolution granting Manulifes reconsideration,
the DOMINANT relationship in this case is agency and no
other.
E. The Dissents Cited Cases
The Dissent cites the cases of Great Pacific Life
Assurance Corporation v. National Labor Relations
Commission[18] and Insular Life Assurance Co., Ltd. v.
National Labor Relations Commission[19] to support the
allegation that Manulife exercised control over the petitioner
as an employer.
In considering these rulings, a reality that cannot but be
recognized is that cases turn and are decided on the basis of
their own unique facts; the ruling in one case cannot simply
be bodily lifted and applied to another, particularly when
notable differences exist between the cited cases and the case
under consideration; their respective facts must be strictly
examined to ensure that the ruling in one applies to
another. This is particularly true in a comparison of the cited
cases with the present case. Specifically, care should be taken
in reading the cited cases and applying their rulings to the
present case as the cited cases all dealt with the proper legal
characterization of subsequent management contracts that
superseded the original agency contract between the
insurance company and the agent.
In Great Pacific Life, the Ruiz brothers were appointed
to positions different from their original positions as
insurance agents, whose duties were clearly defined in a
subsequent contract. Similarly, in Insular, de los Reyes, a
former insurance agent, was appointed as acting unit manager
based on a subsequent contract. In both cases, the Court
anchored its findings of labor control on the stipulations of
these subsequent contracts.
In contrast, the present case is remarkable for the
absence of evidence of any change in the nature of the
petitioners employment with Manulife. As previously stated
above and in our assailed Resolution, the petitioner had
always been governed by the Agreement from the start until
the end of his relationship with Manulife. His agency status
never changed except to the extent of being a lead
agent. Thus, the cited cases where changes in company-agent
relationship expressly changed and where the subsequent
contracts were the ones passed upon by the Court cannot be
totally relied upon as authoritative.
We cannot give credit as well to the petitioners claim
of employment based on the affidavits executed by other
Manulife agents describing their duties, because these same
affidavits only affirm their status as independent agents, not
as employees. To quote these various claims:[20]
1.a. I have no fixed wages or salary since my
services are compensated by way of commissions
based on the computed premiums paid in full on
the policies obtained thereat;
1.b. I have no fixed working hours and employ my
own method in soliciting insurance at a time and
place I see fit;
1.c. I have my own assistant and messenger who
handle my daily work load;
1.d. I use my own facilities, tools, materials and
supplies in carrying out my business of selling
insurance;
xxxx
6. I have my own staff that handles day to day
operations of my office;
7. My staff are my own employees and received
salaries from me;
xxxx
9. My commission and incentives are all reported
to the Bureau of Internal Revenue (BIR) as income
by a self-employed individual or professional with
a ten (10) percent creditable withholding tax. I also
remit monthly for professionals.
The petitioner cannot also rely on the letter written by
respondent Renato Vergel de Dios to prove that Manulife
exercised control over him. As we already explained in the
assailed Resolution:
Even de Dios letter is not determinative of
control as it indicates the least amount of intrusion
into Tongkos exercise of his role as manager in
guiding the sales agents. Strictly viewed, de Dios
directives are merely operational guidelines on
how Tongko could align his operations with
Manulifes re-directed goal of being a big league
player. The method is to expand coverage through
the use of more agents. This requirement for the
recruitment of more agents is not a
means-and-method control as it relates, more than
anything else, and is directly relevant, to
Manulifes objective of expanded business
operations through the use of a bigger sales force
whose members are all on a principal-agent
 relationship. An important point to note here is was considered as an indication of employment. Our ruling in
that Tongko was not supervising regular full-time the present case is specific to the insurance industry, where
employees of Manulife engaged in the running of the law permits an insurance company to exercise control
the insurance business; Tongko was effectively over its agents within the limits prescribed by law, and to
guiding his corps of sales agents, who are bound to
engage independent agents for several transactions and within
Manulife through the same agreement that he had
an unlimited period of time without the relationship
with manulife, all the while sharing in these agents
commissions through his overrides.[21]
amounting to employment. In light of these realities, the
petitioners arguments on his last argument must also fail.
Lastly, in assailing the Agreement between him and
The dissent also erroneously cites eight other cases Social
Manulife, the petitioner cites Paguio v. National Labor
Security System v. Court of Appeals,[23] Cosmopolitan
Relations Commission[22] on the claim that the agreement that
Funeral Homes, Inc. v. Maalat,[24] Algon Engineering
the parties signed did not conclusively indicate the legal
Construction Corporation v. National Labor Relations
relationship between them.
Commission,[25] Equitable Banking Corporation v. National
Labor Relations Commission,[26] Lazaro v. Social Security
The evidentiary situation in the present case, however,
Commission,[27] Dealco Farms, Inc. v. National Labor
shows that despite the petitioners insistence that the
Relations Commission,[28] South Davao Development
Agreement was no longer binding between him and Manulife,
Company, Inc. v. Gamo,[29] and Abante, Jr. v. Lamadrid
no evidence was ever adduced to show that their relationship
Bearing & Parts Corporation.[30] The dissent cited these
changed so that Manulife at some point controlled the means
cases to support its allegation that labor laws and
and method of the petitioners work. In fact, his evidence only
jurisprudence should be applied in cases, to the exclusion of
further supports the conclusion that he remained an
other laws such as the Civil Code or the Insurance Code, even
independent insurance agent a status he admits, subject only
when the latter are also applicable.
to the qualification that he is at the same time an
employee. Thus, we can only conclude that the Agreement
In Social Security System, Cosmopolitan Funeral
governed his relations with Manulife.
Homes, Dealco Farms, and South Davao Development, the
issue that repeats itself is whether complainants were
Additionally, it is not lost on us that Paguio is a ruling
employees or independent contractors; the legal relationships
based on a different factual setting; it involves a publishing
involved are both labor law concepts and make no reference
firm and an account executive, whose repeated engagement
to the Civil Code (or even the Insurance Code). The
provisions cited in the Dissent Articles 1458-1637 of the Civil
Code[31] and Articles 1713-1720 of the Civil Code [32] do not
even appear in the decisions cited.
In Algon, the issue was whether the lease contract
should dictate the legal relationship between the parties, when
there was proof of an employer-employee relationship. In the
cited case, the lease provisions on termination were thus
considered irrelevant because of a substantial evidence of an
employment relationship. The cited case lacks the complexity
of the present case; Civil Code provisions on lease do not
prescribe that lessees exercise control over their lessors in the
way that the Insurance Code and the Civil provide that
insurance companies and principals exercised control over
their agents.
The issue in Equitable, on the other hand, is whether a
lawyer-client relationship or an employment relationship
governs the legal relation between parties. Again, this case is
inapplicable as it does not illustrate the predominance of labor
laws and jurisprudence over other laws, in general, and the
Insurance Code and Civil Code, in particular. It merely
weighed the evidence in favor of an employment relationship
over that of a lawyer-client relationship. Similarly in Lazaro,
the Court found ample proof of control determinative of an
employer-employee relationship. Both cases are not
applicable to the present case, which is attended by totally
different factual considerations as the petitioner had not
offered any evidence of the companys control in the means
and manner of the performance of his work.
On the other hand, we find it strange that the dissent
cites Abante as a precedent, since the Court, in this case, held
that an employee-employer relationship is notably absent in
this case as the complainant was a sales agent. This case
better supports the majoritys position that a sales agent, who
fails to show control in the concept of labor law, cannot be
considered an employee, even if the company exercised
control in the concept of a sales agent.[33]
It bears stressing that our ruling in this case is not about
which law has primacy over the other, but that we should be
able to reconcile these laws. We are merely saying that where
the law makes it mandatory for a company to exercise control
over its agents, the complainant in an illegal dismissal case
cannot rely on these legally prescribed control devices as
indicators of an employer-employee relationship. As shown
in our discussion, our consideration of the Insurance Code
and Civil Code provisions does not negate the application of
labor laws and jurisprudence; ultimately, we dismissed the
petition because of its failure to comply with the control test.
WHEREFORE, premises considered, we
hereby DENY the Motion for Reconsideration WITH
FINALITY for lack of merit. No further pleadings shall be
entertained. Let entry of judgment proceed in due course.
SO ORDERED.
 DISSENTING OPINION
VELASCO, JR., J.:
By Decision dated November 7, 2008, the Court, on the finding that
petitioner Gregorio V. Tongko was illegally dismissed as employee of
respondent Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife),
awarded him full backwages and separation benefits, in lieu of
reinstatement.
Manulife, via this Motion for Reconsideration, urges the Court to reconsider
and set aside its aforementioned Decision by declaring, in effect, that
Tongko had never been its employee.1 As Manulife avers, the subject
Decision effectively "converted agency contracts of life insurance agents to
contracts of regular employment."2 It thus warns that the ruling, if not
reconsidered, would apply to all 41,853 life insurance agents spread across
the country, thrusting in the process the insurance industry in the
Philippines into a crisis.3
The majority seems to agree with the grim possibilities thus painted by
Manulife.
As was before the National Labor Relations Commission (NLRC), then the
Court of Appeals and as it is before the Court, the critical issue in the
present case is the same: whether or not Tongko––during all the time he
was directly or indirectly connected with the company, first as an agent,
pursuant to a Career Agent’s Agreement (Agreement), and then as unit,
branch and eventually regional sales manager of Manulife’s Sales Agency
Organization––was an employee of Manulife. In resolving the issue of
whether an employer-employee tie obtains, attention was focused, as
jurisprudential trend dictates, on the four-fold test on employment
developed and invariably invoked by labor officials and this Court as a
guiding, if not governing norm, to determine, based on the facts and
circumstances involved in a given situation, whether such relationship
exists. These four elements are: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
control test.4 And as stressed in the Decision subject of this recourse, of the
four, the control test––meaning whether or not the employer controls or has
reserved the right to control the employee not only as to the result of the
work to be done but also the means and methods employed in reaching
that end––constitutes the most important index of the existence of an
employer-employee relationship. And as also there emphasized, the
security of tenure of a regular employee flowing from employment cannot
be defeated by any contract, for the law defines the employment status of a
person.5 Article 280 of the Labor Code provides that "[t]he provisions of
written agreement to the contrary notwithstanding and regardless of oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer."
From the evidence on record, it appears that Manulife had control over the
work of Tongko after his appointment as manager of the company’s
insurance sales force, indubitably implying the existence of an
employer-employee relationship between them.
It cannot be over-emphasized enough that in Great Pacific Life Assurance
Corporation v. NLRC, Ernesto Ruiz and Rodrigo Ruiz6 (Grepalife), the
Court considered respondents Ruizes, then district managers, as
employees of Grepalife, taking into account their duties and undertakings.
Some excerpts from Grepalife:
x x x A cursory reading of their respective functions as enumerated in their
contracts reveals that the company practically dictates the manner by which
their jobs are to be carried out. For instance, the District Manager must
properly account, record and document the company’s funds, spot-check
and audit the work of the zone supervisors, conserve the company’s
business in the district through ‘reinstatements’, follow up the submission of
weekly remittance reports of the debit agents and zone supervisors,
preserve company property in good condition, train understudies for the
position of district manager, and maintain his quota of sales (the failure of
which is a ground for termination). On the other hand, a zone supervisor
must direct and supervise the sales activities of the debit agents under him,
conserve company property through "reinstatements", undertake and
discharge the functions of absentee debit agents, spot-check the records of
debit agents, and insure proper documentation of sales and collections by
the debit agents.7 (Emphasis supplied.)
A comparative look at the duties of the Ruizes, as set forth in the decision
in Grepalife, and those of Tongko, as may be deduced from affidavits8 of
insurance managers of Manulife, would reveal a striking similarity in their
respective duties as would adequately support a similar finding on the Code shall primary govern in determining the element of control and
question of whether the petitioner, like the Ruizes, is an employee of necessarily whether an employer-employee existed between Tongko and
Manulife just as the Ruizes were Grepalife’s. Consider: Manulife. The ponencia also went on to state that the Agreement, which
provided that "the Agent is an independent contractor x x x and nothing
herein shall be construed as creating an employer-employee relationship
Duties of Grepalife’s between the Company and Agent," embodies the intent of Manulife and
Duties of Manulife’s Managers
Managers/Supervisors Tongko at the time they executed the Agreement and they were governed
by this understanding throughout their relationship.
- train understudies for the position
- to render or recommend of district manager I beg to disagree.
prospective agents to be licensed,
trained and contracted to sell First, the suggestion in the ponencia that the characterization the parties
Manulife products, and who will be gave their relationship cannot simply be brushed aside runs counter against
part of the managers’ Unit established jurisprudence. As it were, the question of the existence of an
employer-employee relationship is a matter of public concern, never left, if
ever, for the parties to peremptorily determine. To borrow from Insular Life
- to coordinate activities of the - properly account, record and Assurance Co., Ltd. v. NLRC (4th Division)9 (Insular Life II), neither can
agents under [the managers’] Unit in document the company’s funds, such existence be negated by expressly repudiating it in the management
[the agents’] daily, weekly and spot-check and audit the work of the contract and providing therein, as here, that the employee is an
monthly selling activities, making zone supervisors, x x x follow up the independent contractor. For, as earlier indicated, the law defines and
sure that their respective sales submission of weekly remittance prescribes the employment status of a person, not what the clashing parties
targets are met; reports of the debit agents and zone chose to call it or say it should be.10 We said as much in Servidad v.
supervisors National Labor Relations Commission:11
- to conduct periodic training
sessions for [the] agents to further - direct and supervise the sales The private agreement of the parties cannot prevail over Article 1700 of the
enhance their sales skills; and activities of the debit agents under Civil Code, which provides:
him, x x x undertake and discharge
- to assist [the] agents with their the functions of absentee debit Art. 1700. The relations between capital and labor are not merely
sales activities by way of joint agents, spot-check the records of contractual. They are so impressed with public interest that labor contracts
fieldwork, consultations and debit agents, and insure proper must yield to the common good. Therefore, such contracts are subject to
one-on-one evaluation and analysis documentation of sales and special laws on labor unions, collective bargaining, strikes and lockouts,
of particular accounts collections by the debit agents. closed shops, wages, working conditions, hours of labor and similar
subjects.

The ponencia would altogether deny Tongko––either while serving as
insurance agent or underwriter pursuant to the Agreement, or as appointed
manager––the status of Manulife’s employee. It added the observation that
the factual antecedents in this case were set in the insurance industry and,
hence, the Insurance Code and the industry practices instead of the Labor
Similarly telling is the case of Pakistan Airlines Corporation vs. Pole, et al.
There, it was said:
xxx provisions of applicable law, especially provisions relating to matters
affected with public policy, are deemed written into the contract. Put a little
differently, the governing principle is that the parties may not contract away
applicable provisions of law especially peremptory provisions dealing with
matters heavily impressed with public interest. The law relating to labor and
employment is clearly such an area and parties are not at liberty to insulate
themselves and their relationships from the impact of labor laws and
regulations by simply contracting with each other. . .
Of the same tenor is the Court’s fairly recent holding in Paguio v. National
Labor Relations Commission:12
Respondent company cannot seek refuge under the terms of the
agreement it has entered into with petitioner. The law, in defining their
contractual relationship, does so, not necessarily or exclusively upon the
terms of their written or oral contract, but also on the basis of the nature of
the work petitioner has been called upon to perform. The law affords
protection to an employee, and it will not countenance any attempt to
subvert its spirit and intent. A stipulation in an agreement can be ignored as
and when it is utilized to deprive the employee of his security of tenure. The
sheer inequality that characterizes employer-employee relations, where the
scales generally tip against the employee, often scarcely provides him real
and better options. (Emphasis supplied.)
Second, and in relation to the first reason, the fact that the Agreement was
subsisting even after Tongko’s appointment as manager does not militate
against a conclusion that Tongko was Manulife’s employee, at least during
his stint as such manager. To be sure, an insurance agent may at the same
time be an employee of an insurance company. Or to put it a bit differently,
an employee-manager may be given the privilege of soliciting insurance, as
agent, and earn in the process commission for every contract concluded as
a result of such solicitation. The reality of two personalities–– one as
employee and the other as non-employee of an insurance company,
coinciding in one person––was acknowledged in Insular Life II, in which the
Court wrote:
Parenthetically, both petitioner and respondent NLRC treated the agency
contract and the management contract entered into between [Insular Life]
and [respondent] De Los Reyes as contracts of agency. We however hold
otherwise. Unquestionably there exist major distinctions between the two
agreements. While the first has the earmarks of an agency contract, the
second is far removed from the concept of agency in that provided therein
are conditionalities that indicate an employer-employee relationship. The
NLRC therefore was correct in finding that private respondent was an
employee of petitioner, but this holds true only insofar the management
contract is concerned.13 x x x
Grepalife may also be cited where we declared:
True, it cannot be denied that based on the definition of an "insurance
agent" in the Insurance Code some of the functions performed by private
respondent were those of insurance agents. Nevertheless, it does not
follow that they are not employees of Grepalife. The Insurance Code may
govern the licensing requirements and other particular duties of insurance
agents, but it does not bar the application of the Labor Code with regard to
labor standards and labor relations.14
The ponencia points out that Grepalife and Insular Life II factually differ
with the instant case in that: "these cited cases dealt with the proper legal
characterization of a subsequent management contract that superseded
the original agency contract between the insurance company and its
agent." In other words, the majority opinion distinguishes the instant case
from Grepalife and Insular Life II in the lack of a written management
contract between Tongko and Manulife.
The cited difference does not, for that reason alone, pose a plausible bar to
the application of Grepalife and Insular Life II to the instant case. In fact, the
absence of a written agreement to memorialize the naming and assumption
of Tongko as unit and later branch manager is irrelevant to the issue of the
presence of an employer-employee relationship. A management contract,
for purposes of determining the relationship between the worker and the
employer, is simply an evidence to support a conclusion either way. Such
document, or the absence thereof, would not influence the conclusion on
the issue of employment. The presence of a management contract would
merely simplify the issue as to the duties and responsibilities of the
employee concerned as they would then be defined more clearly.
Manulife’s decision not to execute a management contract with Tongko
was well within its discretion. However, the fact of Manulife and Tongko not
having inked a management contract, if this were the case, did not reduce
the petitioner to a mere "lead agent," as the ponencia would have it. While
there was perhaps no written management contract whence Tongko’s
rights, duties and functions as unit/branch manager may easily be fleshed
out as a prelude to determining if an employer-employee relationship with
Manulife did exist, other evidence was adduced to show such duties and
responsibilities. For one, in his letter15 of November 6, 2001, respondent de
Dios distinctly referred to Tongko as sales manager. For another, it is well
nigh inconceivable that Manulife issued no promotional appointments to
petitioner as unit manager, branch manager and eventually regional sales
manager. Basic and sound management practice simply requires an
appointment for any upward personnel movement, particularly when
additional duties and compensation are involved. Then, too, the
aforementioned affidavits of the managers of Manulife as to the duties and
responsibilities of a unit manager, such as Tongko, point to the conclusion
that these managers were employees of Manulife, applying the four-fold
test.
To my mind, Grepalife and Insular Life II bear obvious parallelism to the
instant case vis-à-vis the facts against which they are cast. Too, the parties
are similarly situated in point of positions occupied, the agreed exclusivity of
service and functional profiles to warrant the application of the stare
decisis doctrine. The Latin maxim stare decisis et non quieta
movere, translates "stand by the thing and do not disturb the calm." It
requires that high courts must follow, as a matter of sound policy, its own
precedents, or respect settled jurisprudence absent compelling reason to
do otherwise.16 Put a bit differently, the doctrine holds that when a court has
laid down a principle of law as applicable to a certain set of facts, it will
abide with that principle in future cases in which the facts are substantially
the same.17 In the view I take of this case, there is absolutely nothing
in Grepalife and Insular Life II which may be viewed as plainly
unreasonable as to justify withholding from them the stare decisis effect.
And lest it be overlooked, both Grepalife and Insular Life II appreciated and
applied the element of control––the most crucial and determinative
indicator of an employer-employee relationship––as a labor law concept.
The Labor Code and other labor relations laws, some of which have been
incorporated in the Civil Code, regulate the relationship between labor and
capital or between worker and employer in the private sector. The
Insurance Code, on the other hand, governs the licensing requirements and
other particular duties of insurance agents;18 it also regulates not only the
relationship between the insurer and the insured but also the internal affairs
of the insurance company.19 These are the particular areas of operation of
the aforementioned laws. To argue then that the Insurance Code and
insurance industry practice shall determine the existence of an
employer-employee relationship in the case at bench is, it is submitted,
simplistic if not downright erroneous. Both law and jurisprudence do not
support the contention on the primacy of the Insurance Code and insurance
usages in determining said relationship. As a matter of fact, the Court, in a
string of cases involving corporations engaged in non-insurance activities
as well as those into the insurance business, notably in Grepalife, Insular
Life I20 and II, Great Pacific Life Assurance Corporation v. Judico,21 and
AFP Mutual Benefit Association v. NLRC,22 held that the determination of
the existence of an employer-employee relationship lies in the four-fold test.
An examination of these cases yields no indication that a separate law,
other than the Labor Code and labor law concepts, was ever considered by
the Court in determining the existence of an employer-employee
relationship.
There can be no quibbling that Tongko, as unit, branch and regional sales
manager, was without a fixed salary, but earned his income strictly on
commission basis. However, how and when he was paid his compensation
is, without more, not an argument against a finding that he was an
employee of Manulife. For, the phrase "wage paid," as a component of
employment and as an element of the four-fold test, is defined under Art.
97(f) of the Labor Code 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 rendered."23 Lazaro v.
Social Security Commission24 is emphatic on this point:
Lazaro’s arguments may be dispensed with by applying precedents. Suffice
it to say, the fact that Laudato was paid by way of commission does not
preclude the establishment of an employer-employee relationship. In
Grepalife v. Judico, the Court upheld the existence of an
employer-employee relationship between the insurance company and its
agents, despite the fact that the compensation that the agents on
commission received was not paid by the company but by the investor or
the person insured. The relevant factor remains, as stated earlier, whether
the "employer" controls or has reserved the right to control the "employee"
not only as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished. (Emphasis supplied.)
Much has been made in the ponencia, following Manulife’s line, of Tongko’s
income tax returns (ITRs), in which he described himself to be
"self-employed." It must be stressed in this regard, however, that he had no
other choice but to do so, for the following reasons: (1) Manulife had
refused to consider him as its employee; and (2) Manulife withheld 10% of
his income as an agent as taxes. Tongko had no other viable alternative but
to make use of the withholding tax certificates issued by Manulife in paying
his taxes. Thus, petitioner could not have really been faulted for including in
his ITRs an entry declaring himself as self-employed. While perhaps not on
all fours here, because its issue revolved around estoppel instead of
declaration against interest made in an ITR, Philippine National
Construction Corporation v. NLRC25 is nonetheless most instructive:
Time honored is the precept that quitclaims are ineffective in barring
recovery for the full measure of the worker's rights and that acceptance of
benefits therefrom does not amount to estoppel. In Lopez Sugar
Corporation vs. Federation of Free Workers, the Court explained:
Acceptance of those benefits would not amount to estoppel. The reason is
plain. Employer and employee, obviously do not stand on the same footing.
The employer drove the employee to the wall. The latter must have to get
hold of money. Because, out of the job, he has to face harsh necessities of
life. He thus found himself in no position to resist money proffered. His, then,
is a case of adherence, not of choice. One thing sure, however, is that
petitioners did not relent their claim. They pressed it. They are deemed not
to have waived any of their rights. x x x
It may be noted at this juncture that Manulife has changed its stance on the
issue of illegal dismissal. In its Position Paper with Motion to Dismiss filed
before the Labor Arbiter, in its Motion for Reconsideration (Re: Decision
dated 27 September 2004) dated October 11, 2004 filed before the NLRC,
and in its Comment dated August 5, 2006 filed before the Court, Manulife
had consistently assumed the posture that the dismissal of petitioner was a
proper exercise of termination proviso under the Agreement.26 In this
motion, however, Manulife, in a virtual acknowledgment of Tongko being its
employee, contends that he was "dismissed for a just and lawful cause – for
gross and habitual neglect of duties, inefficiency and willful disobedience of
the lawful orders."27 Manulife adds that:
Respondents presented an abundance of evidence demonstrating how
termination happened only after failure to meet company goals, after all
remedial efforts to correct the inefficiency of Petitioner failed and after
Petitioner, as found by the CA, created dissension in Respondent Manulife
when he refused to accept the need for improvement in his area and
continued to spread the bile of discontent and rebellion that he had
generated among the other agents.28
If Manulife claimed at every possible turn that Tongko was never an
employee of the insurance company, why take a formal action of dismissal
with a statement of the grounds therefor?
No less than the Constitution itself guarantees protection to labor:
ARTICLE XIII
LABOR
Section 3. The State shall afford full protection to labor,
local and overseas, organized and unorganized, and
promote full employment and equality of employment
opportunities for all.
xxxx
The State shall promote the principle of shared responsibility between
workers and employers and the preferential use of voluntary modes in
settling disputes, including conciliation, and shall enforce their mutual
compliance therewith to foster industrial peace.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns to investments, and to
expansion and growth.
Complementing the foregoing guarantee provisions is Article 1702 of the
Civil Code mandating that, in case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living for the
laborer. Along side with the Civil Code command is Art. 4 of the Labor Code
providing:
ART. 4. Construction in favor of labor.––All doubts in the implementation
and interpretation of the provisions of this Code, including its implementing
rules and regulations, shall be resolved in favor of labor.
The fairly recent Dealco Farms, Inc. v. National Labor Relations
Commission (5th Division)29 is reflective of the statutory bias in favor of the
working class and the need to give labor the benefit of the doubt, thus:

Having failed to substantiate its allegation on the relationship between the

parties, we stick to the settled rule in controversies between a laborer and
his master that doubts reasonably arising from the evidence should be
resolved in the former’s favor. (Emphasis supplied.)

In the instant case, doubts as to the true relationship between Tongko and
Manulife should be resolved in favor of the former and for employment.

Lest it be misunderstood, this dissent proposes only to affirm the underlying

Decision of the Court dated November 7, 2008, but only insofar as it
considered Tongko Manulife’s employee following his hiring as manager,
first as unit manager, then branch manager and ultimately as regional sales
manager. For, it was only after such engagement that Manulife exercised
effective control not only over the results of his works, but also over the
means and methods by which it is to be accomplished; it was then that
Tongko was tasked to perform administrative duties. As to Tongko’s stint as
insurance agent, an employer-employee relationship cannot be posited in
light of the paucity of evidence to support the proposition.

In view of the foregoing, I vote to partially grant the motion for

reconsideration but only in the sense that petitioner Tongko shall only be
considered as employee of respondent Manulife only after his engagement
as manager of the company. Accordingly, his entitlement to backwages and
separation benefits shall be reckoned from that point in time and the
amount shall correspond to his commission earned as such manager only,
subject to the usual accounting requirements.

PRESBITERO J. VELASCO, JR.

Associate Justice