G.R. No.

155207

August 13, 2008

WILHELMINA S. OROZCO, petitioner, vs. THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER, and LETICIA JIMENEZ MAGSANOC, respondents. NACHURA, J.: The case before this Court raises a novel question never before decided in our jurisdiction whether a newspaper columnist is an employee of the newspaper which publishes the column. In this Petition for Review under Rule 45 of the Revised Rules on Civil Procedure, petitioner Wilhelmina S. Orozco assails the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 50970 dated June 11, 2002 and its Resolution2 dated September 11, 2002 denying her Motion for Reconsideration. The CA reversed and set aside the Decision3 of the National Labor Relations Commission (NLRC), which in turn had affirmed the Decision4 of the Labor Arbiter finding that Orozco was an employee of private respondent Philippine Daily Inquirer (PDI) and was illegally dismissed as columnist of said newspaper. In March 1990, PDI engaged the services of petitioner to write a weekly column for its Lifestyle section. She religiously submitted her articles every week, except for a six-month stint in New York City when she, nonetheless, sent several articles through mail. She received compensation of P250.00 later increased to P300.00 for every column published.5 On November 7, 1992, petitioners column appeared in the PDI for the last time. Petitioner claims that her then editor, Ms. Lita T. Logarta,6 told her that respondent Leticia Jimenez Magsanoc, PDI Editor in Chief, wanted to stop publishing her column for no reason at all and advised petitioner to talk to Magsanoc herself. Petitioner narrates that when she talked to Magsanoc, the latter informed her that it was PDI Chairperson Eugenia Apostol who had asked to stop publication of her column, but that in a telephone conversation with Apostol, the latter said that Magsanoc informed her (Apostol) that the Lifestyle section already had many columnists.7 On the other hand, PDI claims that in June 1991, Magsanoc met with the Lifestyle section editor to discuss how to improve said section. They agreed to cut down the number of columnists by keeping only those whose columns were well-written, with regular feedback and following. In their

judgment, petitioners column failed to improve, continued to be superficially and poorly written, and failed to meet the high standards of the newspaper. Hence, they decided to terminate petitioners column.8 Aggrieved by the newspapers action, petitioner filed a complaint for illegal dismissal, backwages, moral and exemplary damages, and other money claims before the NLRC. On October 29, 1993, Labor Arbiter Arthur Amansec rendered a Decision in favor of petitioner, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered, finding complainant to be an employee of respondent company; ordering respondent company to reinstate her to her former or equivalent position, with backwages. Respondent company is also ordered to pay her 13th month pay and service incentive leave pay. Other claims are hereby dismissed for lack of merit. SO ORDERED.9 The Labor Arbiter found that: [R]espondent company exercised full and complete control over the means and method by which complainants work that of a regular columnist had to be accomplished. This control might not be found in an instruction, verbal or oral, given to complainant defining the means and method she should write her column. Rather, this control is manifested and certained (sic) in respondents admitted prerogative to reject any article submitted by complainant for publication. By virtue of this power, complainant was helplessly constrained to adopt her subjects and style of writing to suit the editorial taste of her editor. Otherwise, off to the trash can went her articles. Moreover, this control is already manifested in column title, "Feminist Reflection" allotted complainant. Under this title, complainants writing was controlled and limited to a womans perspective on matters of feminine interests. That respondent had

no control over the subject matter written by complainant is strongly belied by this observation. Even the length of complainants articles were set by respondents. Inevitably, respondents would have no control over when or where complainant wrote her articles as she was a columnist who could produce an article in thirty (3) (sic) months or three (3) days, depending on her mood or the amount of research required for an article but her actions were controlled by her obligation to produce an article a week. If complainant did not have to report for work eight (8) hours a day, six (6) days a week, it is because her task was mainly mental. Lastly, the fact that her articles were (sic) published weekly for three (3) years show that she was respondents regular employee, not a once-in-a-blue-moon contributor who was not under any pressure or obligation to produce regular articles and who wrote at his own whim and leisure.10 PDI appealed the Decision to the NLRC. In a Decision dated August 23, 1994, the NLRC Second Division dismissed the appeal thereby affirming the Labor Arbiters Decision. The NLRC initially noted that PDI failed to perfect its appeal, under Article 223 of the Labor Code, due to non-filing of a cash or surety bond. The NLRC said that the reason proffered by PDI for not filing the bond that it was difficult or impossible to determine the amount of the bond since the Labor Arbiter did not specify the amount of the judgment award was not persuasive. It said that all PDI had to do was compute based on the amount it was paying petitioner, counting the number of weeks from November 7, 1992 up to promulgation of the Labor Arbiters decision.11 The NLRC also resolved the appeal on its merits. It found no error in the Labor Arbiters findings of fact and law. It sustained the Labor Arbiters reasoning that respondent PDI exercised control over petitioners work. PDI then filed a Petition for Review12 before this Court seeking the reversal of the NLRC Decision. However, in a Resolution13 dated December 2, 1998, this Court referred the case to the Court of Appeals, pursuant to our ruling in St. Martin Funeral Homes v. National Labor Relations Commission.14 The CA rendered its assailed Decision on June 11, 2002. It set aside the NLRC Decision and dismissed petitioners Complaint. It held that the NLRC misappreciated the facts and rendered a ruling wanting in substantial evidence. The CA said:

The Court does not agree with public respondent NLRCs conclusion. First, private respondent admitted that she was and [had] never been considered by petitioner PDI as its employee. Second, it is not disputed that private respondent had no employment contract with petitioner PDI. In fact, her engagement to contribute articles for publication was based on a verbal agreement between her and the petitioners Lifestyle Section Editor. Moreover, it was evident that private respondent was not required to report to the office eight (8) hours a day. Further, it is not disputed that she stayed in New York for six (6) months without petitioners permission as to her leave of absence nor was she given any disciplinary action for the same. These undisputed facts negate private respondents claim that she is an employee of petitioner. Moreover, with regards (sic) to the control test, the public respondent NLRCs ruling that the guidelines given by petitioner PDI for private respondent to follow, e.g. in terms of space allocation and length of article, is not the form of control envisioned by the guidelines set by the Supreme Court. The length of the article is obviously limited so that all the articles to be featured in the paper can be accommodated. As to the topic of the article to be published, it is but logical that private respondent should not write morbid topics such as death because she is contributing to the lifestyle section. Other than said given limitations, if the same could be considered limitations, the topics of the articles submitted by private respondent were all her choices. Thus, the petitioner PDI in deciding to publish private respondents articles only controls the result of the work and not the means by which said articles were written. As such, the above facts failed to measure up to the control test necessary for an employer-employee relationship to exist.15 Petitioners Motion for Reconsideration was denied in a Resolution dated September 11, 2002. She then filed the present Petition for Review. In a Resolution dated April 29, 2005, the Court, without giving due course to the petition, ordered the Labor Arbiter to clarify the amount of the award due petitioner and, thereafter, ordered PDI to post the requisite bond. Upon compliance therewith, the petition would be given due course. Labor Arbiter Amansec clarified that the award under the Decision amounted to P15,350.00. Thus, PDI posted the requisite bond on January 25, 2007.16

We shall initially dispose of the procedural issue raised in the Petition. Petitioner argues that the CA erred in not dismissing outright PDIs Petition for Certiorari for PDIs failure to post a cash or surety bond in violation of Article 223 of the Labor Code. This issue was settled by this Court in its Resolution dated April 29, 2005.17 There, the Court held: But while the posting of a cash or surety bond is jurisdictional and is a condition sine qua non to the perfection of an appeal, there is a plethora of jurisprudence recognizing exceptional instances wherein the Court relaxed the bond requirement as a condition for posting the appeal. xxxx In the case of Taberrah v. NLRC, the Court made note of the fact that the assailed decision of the Labor Arbiter concerned did not contain a computation of the monetary award due the employees, a circumstance which is likewise present in this case. In said case, the Court stated, As a rule, compliance with the requirements for the perfection of an appeal within the reglamentary (sic) period is mandatory and jurisdictional. However, in National Federation of Labor Unions v. Ladrido as well as in several other cases, this Court relaxed the requirement of the posting of an appeal bond within the reglementary period as a condition for perfecting the appeal. This is in line with the principle that substantial justice is better served by allowing the appeal to be resolved on the merits rather than dismissing it based on a technicality. The judgment of the Labor Arbiter in this case merely stated that petitioner was entitled to backwages, 13th month pay and service incentive leave pay without however including a computation of the alleged amounts. xxxx In the case of NFLU v. Ladrido III, this Court postulated that "private respondents cannot be expected to post such appeal bond equivalent to the amount of the monetary award when the

amount thereof was not included in the decision of the labor arbiter." The computation of the amount awarded to petitioner not having been clearly stated in the decision of the labor arbiter, private respondents had no basis for determining the amount of the bond to be posted. Thus, while the requirements for perfecting an appeal must be strictly followed as they are considered indispensable interdictions against needless delays and for orderly discharge of judicial business, the law does admit of exceptions when warranted by the circumstances. Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties. But while this Court may relax the observance of reglementary periods and technical rules to achieve substantial justice, it is not prepared to give due course to this petition and make a pronouncement on the weighty issue obtaining in this case until the law has been duly complied with and the requisite appeal bond duly paid by private respondents.18 Records show that PDI has complied with the Courts directive fo r the posting of the bond;19 thus, that issue has been laid to rest. We now proceed to rule on the merits of this case. The main issue we must resolve is whether petitioner is an employee of PDI, and if the answer be in the affirmative, whether she was illegally dismissed. We rule for the respondents. The existence of an employer-employee relationship is essentially a question of fact.20 Factual findings of quasi-judicial agencies like the NLRC are generally accorded respect and finality if supported by substantial evidence.21 Considering, however, that the CAs findings are in direct conflict with those of the Labor Arbiter and NLRC, this Court must now make its own examination and evaluation of the facts of this case. It is true that petitioner herself admitted that she "was not, and [had] never been considered respondents employee because the terms of works were arbitrarily decided upon by the respondent."22 However, the employment status of a person is defined and prescribed by law and not by what the parties say it should be.23

This Court has constantly adhered to the "four-fold test" to determine whether there exists an employer-employee relationship between parties.24 The four elements of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct.25 Of these four elements, it is the power of control which is the most crucial26 and most determinative factor,27 so important, in fact, that the other elements may even be disregarded.28 As this Court has previously held: the significant factor in determining the relationship of the parties is the presence or absence of supervisory authority to control the method and the details of performance of the service being rendered, and the degree to which the principal may intervene to exercise such control.29 In other words, the test is whether the employer controls or has reserved the right to control the employee, not only as to the work done, but also as to the means and methods by which the same is accomplished.30 Petitioner argues that several factors exist to prove that respondents exercised control over her and her work, namely: a. As to the Contents of her Column The PETITIONER had to insure that the contents of her column hewed closely to the objectives of its Lifestyle Section and the over-all principles that the newspaper projects itself to stand for. As admitted, she wanted to write about death in relation to All Souls Day but was advised not to. b. As to Time Control The PETITIONER, as a columnist, had to observe the deadlines of the newspaper for her articles to be published. These deadlines were usually that time period when the Section Editor has to "close the pages" of the Lifestyle Section where the column in located. "To close the pages" means to prepare them for printing and publication. As a columnist, the PETITIONERs writings had a definite day on which it was going to appear. So she submitted her articles two days before the designated day on which the column would come out.

This is the usual routine of newspaper work. Deadlines are set to fulfill the newspapers obligations to the readers with regard to timeliness and freshness of ideas. c. As to Control of Space The PETITIONER was told to submit only two or three pages of article for the column, (sic) "Feminist Reflections" per week. To go beyond that, the Lifestyle editor would already chop off the article and publish the rest for the next week. This shows that PRIVATE RESPONDENTS had control over the space that the PETITIONER was assigned to fill. d. As to Discipline Over time, the newspaper readers eyes are trained or habituated to look for and read the works of their favorite regular writers and columnists. They are conditioned, based on their daily purchase of the newspaper, to look for specific spaces in the newspapers for their favorite write-ups/or opinions on matters relevant and significant issues aside from not being late or amiss in the responsibility of timely submission of their articles. The PETITIONER was disciplined to submit her articles on highly relevant and significant issues on time by the PRIVATE RESPONDENTS who have a say on whether the topics belong to those considered as highly relevant and significant, through the Lifestyle Section Editor. The PETITIONER had to discuss the topics first and submit the articles two days before publication date to keep her column in the newspaper space regularly as expected or without miss by its readers.31 Given this discussion by petitioner, we then ask the question: Is this the form of control that our labor laws contemplate such as to establish an employer-employee relationship between petitioner and respondent PDI? It is not. Petitioner has misconstrued the "control test," as did the Labor Arbiter and the NLRC. Not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. Rules which serve as general guidelines towards the achievement of the mutually desired result are not indicative of the power of control.32 Thus, this Court has explained:

It should, however, be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. x x x.33 The main determinant therefore is whether the rules set by the employer are meant to control not just the results of the work but also the means and method to be used by the hired party in order to achieve such results. Thus, in this case, we are to examine the factors enumerated by petitioner to see if these are merely guidelines or if they indeed fulfill the requirements of the control test. Petitioner believes that respondents acts are meant to control how she executes her work. We do not agree. A careful examination reveals that the factors enumerated by the petitioner are inherent conditions in running a newspaper. In other words, the so-called control as to time, space, and discipline are dictated by the very nature of the newspaper business itself. We agree with the observations of the Office of the Solicitor General that: The Inquirer is the publisher of a newspaper of general circulation which is widely read throughout the country. As such, public interest dictates that every article appearing in the newspaper should subscribe to the standards set by the Inquirer, with its thousands of readers in mind. It is not, therefore, unusual for the Inquirer to control what would be published in the newspaper. What is important is the fact that such control pertains only to the end result, i.e., the submitted articles. The Inquirer has no control over [petitioner] as to the means or method used by her in the

preparation of her articles. The articles are done by [petitioner] herself without any intervention from the Inquirer.34 Petitioner has not shown that PDI, acting through its editors, dictated how she was to write or produce her articles each week. Aside from the constraints presented by the space allocation of her column, there were no restraints on her creativity; petitioner was free to write her column in the manner and style she was accustomed to and to use whatever research method she deemed suitable for her purpose. The apparent limitation that she had to write only on subjects that befitted the Lifestyle section did not translate to control, but was simply a logical consequence of the fact that her column appeared in that section and therefore had to cater to the preference of the readers of that section. The perceived constraint on petitioners column was dictated by her own choice of her columns perspective. The column title "Feminist Reflections" was of her own choosing, as she herself admitted, since she had been known as a feminist writer.35 Thus, respondent PDI, as well as her readers, could reasonably expect her columns to speak from such perspective. Contrary to petitioners protestations, it does not appear that there was any actual restraint or limitation on the subject matter within the Lifestyle section that she could write about. Respondent PDI did not dictate how she wrote or what she wrote in her column. Neither did PDIs guidelines dictate the kind of research, time, and effort she put into each column. In fact, petitioner herself said that she received "no comments on her articlesexcept for her to shorten them to fit into the box allotted to her column." Therefore, the control that PDI exercised over petitioner was only as to the finished product of her efforts, i.e., the column itself, by way of either shortening or outright rejection of the column. The newspapers power to approve or reject publication of any specific article she wrote for her column cannot be the control contemplated in the "control test," as it is but logical that one who commissions another to do a piece of work should have the right to accept or reject the product. The important factor to consider in the "control test" is still the element of control over how the work itself is done, not just the end result thereof. In contrast, a regular reporter is not as independent in doing his or her work for the newspaper. We note the common practice in the newspaper business of assigning its regular reporters to cover specific subjects, geographical locations, government agencies, or areas of concern, more commonly referred to as "beats." A reporter must produce stories within his or her particular beat and cannot switch to another beat without permission from the editor. In most newspapers also, a reporter must

inform the editor about the story that he or she is working on for the day. The story or article must also be submitted to the editor at a specified time. Moreover, the editor can easily pull out a reporter from one beat and ask him or her to cover another beat, if the need arises. This is not the case for petitioner. Although petitioner had a weekly deadline to meet, she was not precluded from submitting her column ahead of time or from submitting columns to be published at a later time. More importantly, respondents did not dictate upon petitioner the subject matter of her columns, but only imposed the general guideline that the article should conform to the standards of the newspaper and the general tone of the particular section. Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, no employer-employee relationship exists.36 Aside from the control test, this Court has also used the economic reality test. The economic realities prevailing within the activity or between the parties are examined, taking into consideration the totality of circumstances surrounding the true nature of the relationship between the parties.37 This is especially appropriate when, as in this case, there is no written agreement or contract on which to base the relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible employment relationships for purposes of applying the Labor Code ought to be the economic dependence of the worker on his employer.38 Petitioners main occupation is not as a columnist for respondent but as a womens rights advocate working in various womens organizations.39 Likewise, she herself admits that she also contributes articles to other publications.40 Thus, it cannot be said that petitioner was dependent on respondent PDI for her continued employment in respondents line of business.41 The inevitable conclusion is that petitioner was not respondent PDIs employee but an independent contractor, engaged to do independent work. There is no inflexible rule to determine if a person is an employee or an independent contractor; thus, the characterization of the relationship must be made based on the particular circumstances of each case.42 There are several factors43 that may be considered by the courts, but as we already said, the right to control is the dominant factor in determining whether one is an employee or an independent contractor.44

In our jurisdiction, the Court has held that an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on ones own account and under ones own responsibility according to ones own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.45 On this point, Sonza v. ABS-CBN Broadcasting Corporation46 is enlightening. In that case, the Court found, using the four-fold test, that petitioner, Jose Y. Sonza, was not an employee of ABS-CBN, but an independent contractor. Sonza was hired by ABS-CBN due to his "unique skills, talent and celebrity status not possessed by ordinary employees," a circumstance that, the Court said, was indicative, though not conclusive, of an independent contractual relationship. Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees.47 The Court also found that, as to payment of wages, Sonzas talent fees were the result of negotiations between him and ABS-CBN.48 As to the power of dismissal, the Court found that the terms of Sonzas engagement were dictated by the contract he entered into with ABS-CBN, and the same contract provided that either party may terminate the contract in case of breach by the other of the terms thereof.49 However, the Court held that the foregoing are not determinative of an employer-employee relationship. Instead, it is still the power of control that is most important. On the power of control, the Court found that in performing his work, Sonza only needed his skills and talent how he delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control.50 Thus: We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZAs work. ABS -CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule "for more effective programming." ABS-CBNs sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of SONZAs work. SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the means and methods of the performance of his work. Although ABS-CBN did have the option not to broadcast SONZAs show, ABS-CBN was still obligated to pay SONZAs talent fees... Thus, even if ABS-CBN was completely dissatisfied with the means and methods of SONZAs performance of his work, or even with the quality or product of his work, ABS-

CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZAs show but ABS-CBN must still pay his talent fees in full. Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to continue paying in full SONZAs talent fees, did not amount to control over the means and methods of the performance of SONZAs work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of performance of his work - how he delivered his lines and appeared on television - did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited only to the result of SONZAs work, whether to broadcast the final product or not. In either case, ABS-CBN must still pay SONZAs talent fees in full until the expiry of the Agreement. In Vaughan, et al. v. Warner, et al., the United States Circuit Court of Appeals ruled that vaudeville performers were independent contractors although the management reserved the right to delete objectionable features in their shows. Since the management did not have control over the manner of performance of the skills of the artists, it could only control the result of the work by deleting objectionable features. SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel & Jay" programs. However, the equipment, crew and airtime are not the "tools and instrumentalities" SONZA needed to perform his job. What SONZA principally needed were his talent or skills and the costumes necessary for his appearance. Even though ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control his work. ABS-CBNs sole concern was for SONZA to display his talent during the airing of the programs. A radio broadcast specialist who works under minimal supervision is an independent contractor. SONZAs work as television and radio program host required special skills and talent, which SONZA admittedly possesses. The records do not show that ABSCBN exercised any supervision and control over how SONZA utilized his skills and talent in his shows.51

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

G.R. No. 138051

June 10, 2004 petitioner,

On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III, which reads: Dear Mr. Lopez, We would like to call your attention to the Agreement dated May 1994 entered into by your goodself on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA. As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning his programs and career. We consider these acts of the station violative of the Agreement and the station as in breach thereof. In this connection, we hereby serve notice of rescission of said Agreement at our instance effective as of date. Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement but reserves the right to seek recovery of the other benefits under said Agreement. Thank you for your attention. Very truly yours, (Sgd.) JOSE Y. President and Gen. Manager4

JOSE Y. SONZA, vs. ABS-CBN BROADCASTING CORPORATION, respondent. DECISION CARPIO, J.: The Case

Before this Court is a petition for review on certiorari1 assailing the 26 March 1999 Decision2 of the Court of Appeals in CA-G.R. SP No. 49190 dismissing the petition filed by Jose Y. Sonza ("SONZA"). The Court of Appeals affirmed the findings of the National Labor Relations Commission ("NLRC"), which affirmed the Labor Arbiters dismissal of the case for lack of jurisdiction. The Facts In May 1994, respondent ABS-CBN Broadcasting Corporation ("ABS-CBN") signed an Agreement ("Agreement") with the Mel and Jay Management and Development Corporation ("MJMDC"). ABS-CBN was represented by its corporate officers while MJMDC was represented by SONZA, as President and General Manager, and Carmela Tiangco ("TIANGCO"), as EVP and Treasurer. Referred to in the Agreement as "AGENT," MJMDC agreed to provide SONZAs services exclusively to ABS-CBN as talent for radio and television. The Agreement listed the services SONZA would render to ABSCBN, as follows: a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays; b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.3 ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 for the first year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month.

SONZA

On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan ("ESOP"). On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties. SONZA filed an Opposition to the motion on 19 July 1996. Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his account at PCIBank, Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the same bank where

ABS-CBN deposited SONZAs talent fees and other payments due him under the Agreement. In his Order dated 2 December 1996, the Labor Arbiter5 denied the motion to dismiss and directed the parties to file their respective position papers. The Labor Arbiter ruled: In this instant case, complainant for having invoked a claim that he was an employee of respondent company until April 15, 1996 and that he was not paid certain claims, it is sufficient enough as to confer jurisdiction over the instant case in this Office. And as to whether or not such claim would entitle complainant to recover upon the causes of action asserted is a matter to be resolved only after and as a result of a hearing. Thus, the respondents plea of lack of employer-employee relationship may be pleaded only as a matter of defense. It behooves upon it the duty to prove that there really is no employer-employee relationship between it and the complainant. The Labor Arbiter then considered the case submitted for resolution. The parties submitted their position papers on 24 February 1997. On 11 March 1997, SONZA filed a Reply to Respondents Position Paper with Motion to Expunge Respondents Annex 4 and Annex 5 from the Records. Annexes 4 and 5 are affidavits of ABS-CBNs witnesses Soccoro Vidanes and Rolando V. Cruz. These witnesses stated in their affidavits that the prevailing practice in the television and broadcast industry is to treat talents like SONZA as independent contractors. The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaint for lack of jurisdiction.6 The pertinent parts of the decision read as follows: xxx While Philippine jurisprudence has not yet, with certainty, touched on the "true nature of the contract of a talent," it stands to reason that a "talent" as above-described cannot be considered as an employee by reason of the peculiar circumstances surrounding the engagement of his services. It must be noted that complainant was engaged by respondent by reason of his peculiar skills and talent as a TV host and a radio broadcaster. Unlike an ordinary

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

26 March 1999, the Court of Appeals rendered a Decision dismissing the case.8 Hence, this petition. The Rulings of the NLRC and Court of Appeals The Court of Appeals affirmed the NLRCs finding that no employer employee relationship existed between SONZA and ABS-CBN. Adopting the NLRCs decision, the appellate court quoted the following findings of the NLRC: x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merely as an agent of complainant Sonza, the principal. By all indication and as the law puts it, the act of the agent is the act of the principal itself. This fact is made particularly true in this case, as admittedly MJMDC is a management company devoted exclusively to managing the careers of Mr. Sonza and his broadcast partner, Mrs. Carmela C. Tiangco. (Opposition to Motion to Dismiss) Clearly, the relations of principal and agent only accrues between complainant Sonza and MJMDC, and not between ABS-CBN and MJMDC. This is clear from the provisions of the May 1994 Agreement which specifically referred to MJMDC as the AGENT. As a matter of fact, when complainant herein unilaterally rescinded said May 1994 Agreement, it was MJMDC which issued the notice of rescission in behalf of Mr. Sonza, who himself signed the same in his capacity as President. Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that historically, the parties to the said agreements are ABS-CBN and Mr. Sonza. And it is only in the May 1994 Agreement, which is the latest Agreement executed between ABSCBN and Mr. Sonza, that MJMDC figured in the said Agreement as the agent of Mr. Sonza. We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-CBN such that there exist[s] employeremployee relationship between the latter and Mr. Sonza. On the contrary, We find it indubitable, that MJMDC is an agent, not of ABS-CBN, but of the talent/contractor Mr. Sonza, as expressly admitted by the latter and MJMDC in the May 1994 Agreement.

It may not be amiss to state that jurisdiction over the instant controversy indeed belongs to the regular courts, the same being in the nature of an action for alleged breach of contractual obligation on the part of respondent-appellee. As squarely apparent from complainant-appellants Position Paper, his claims for compensation for services, 13th month pay, signing bonus and travel allowance against respondent-appellee are not based on the Labor Code but rather on the provisions of the May 1994 Agreement, while his claims for proceeds under Stock Purchase Agreement are based on the latter. A portion of the Position Paper of complainant-appellant bears perusal: Under [the May 1994 Agreement] with respondent ABSCBN, the latter contractually bound itself to pay complainant a signing bonus consisting of shares of stockswith FIVE HUNDRED THOUSAND PESOS (P500,000.00). Similarly, complainant is also entitled to be paid 13th month pay based on an amount not lower than the amount he was receiving prior to effectivity of (the) Agreement. Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travel benefit amounting to at least One Hundred Fifty Thousand Pesos (P150,000.00) per year. Thus, it is precisely because of complainant-appellants own recognition of the fact that his contractual relations with ABS-CBN are founded on the New Civil Code, rather than the Labor Code, that instead of merely resigning from ABS-CBN, complainantappellant served upon the latter a notice of rescission of Agreement with the station, per his letter dated April 1, 1996, which asserted that instead of referring to unpaid employee benefits, he is waiving and renouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement but reserves the right to such recovery of the other benefits under said Agreement. (Annex 3 of the respondent ABS-CBNs Motion to Dismiss dated July 10, 1996). Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/or the Stock Purchase Agreement by respondent-appellee that complainant-appellant filed his complaint. Complainant-appellants claims being anchored on the

alleged breach of contract on the part of respondent-appellee, the same can be resolved by reference to civil law and not to labor law. Consequently, they are within the realm of civil law and, thus, lie with the regular courts. As held in the case of Dai-Chi Electronics Manufacturing vs. Villarama, 238 SCRA 267, 21 November 1994, an action for breach of contractual obligation is intrinsically a civil dispute.9 (Emphasis supplied) The Court of Appeals ruled that the existence of an employer-employee relationship between SONZA and ABS-CBN is a factual question that is within the jurisdiction of the NLRC to resolve.10 A special civil action for certiorari extends only to issues of want or excess of jurisdiction of the NLRC.11 Such action cannot cover an inquiry into the correctness of the evaluation of the evidence which served as basis of the NLRCs conclusion.12 The Court of Appeals added that it could not re-examine the parties evidence and substitute the factual findings of the NLRC with its own.13 The Issue In assailing the decision of the Court of Appeals, SONZA contends that: THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DECISION AND REFUSING TO FIND THAT AN EMPLOYEREMPLOYEE RELATIONSHIP EXISTED BETWEEN SONZA AND ABSCBN, DESPITE THE WEIGHT OF CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH A FINDING.14 The Courts Ruling We affirm the assailed decision. No convincing reason exists to warrant a reversal of the decision of the Court of Appeals affirming the NLRC ruling which upheld the Labor Arbiters dismissal of the case for lack of jurisdiction. The present controversy is one of first impression. Although Philippine labor laws and jurisprudence define clearly the elements of an employeremployee relationship, this is the first time that the Court will resolve the nature of the relationship between a television and radio station and one of its "talents." There is no case law stating that a radio and television program host is an employee of the broadcast station.

The instant case involves big names in the broadcast industry, namely Jose "Jay" Sonza, a known television and radio personality, and ABS-CBN, one of the biggest television and radio networks in the country. SONZA contends that the Labor Arbiter has jurisdiction over the case because he was an employee of ABS-CBN. On the other hand, ABS-CBN insists that the Labor Arbiter has no jurisdiction because SONZA was an independent contractor. Employee or Independent Contractor? The existence of an employer-employee relationship is a question of fact. Appellate courts accord the factual findings of the Labor Arbiter and the NLRC not only respect but also finality when supported by substantial evidence.15 Substantial evidence means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.16 A party cannot prove the absence of substantial evidence by simply pointing out that there is contrary evidence on record, direct or circumstantial. The Court does not substitute its own judgment for that of the tribunal in determining where the weight of evidence lies or what evidence is credible.17 SONZA maintains that all essential elements of an employer-employee relationship are present in this case. Case law has consistently held that the elements of an employer-employee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employee on the means and methods by which the work is accomplished.18 The last element, the so-called "control test", is the most important element.19 A. Selection and Engagement of Employee ABS-CBN engaged SONZAs services to co-host its television and radio programs because of SONZAs peculiar skills, talent and celebrity status. SONZA contends that the "discretion used by respondent in specifically selecting and hiring complainant over other broadcasters of possibly similar experience and qualification as complainant belies respondents claim of independent contractorship." Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique skills, talent

and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired him through its personnel department just like any other employee. In any event, the method of selecting and engaging SONZA does not conclusively determine his status. We must consider all the circumstances of the relationship, with the control test being the most important element. B. Payment of Wages ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out that ABSCBN granted him benefits and privileges "which he would not have enjoyed if he were truly the subject of a valid job contract." All the talent fees and benefits paid to SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBNs employee, there would be no need for the parties to stipulate on benefits such as "SSS, Medicare, x x x and 13th month pay"20 which the law automatically incorporates into every employer-employee contract.21 Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.22 SONZAs talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZAs unique skills, talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship. The payment of talent fees directly to SONZA and not to MJMDC does not negate the status of SONZA as an independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee accruing under the Agreement. C. Power of Dismissal

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

Puerto Rico; and acted in several theater and television productions prior to her affiliation with "Desde Mi Pueblo." Second, Alberty provided the "tools and instrumentalities" necessary for her to perform. Specifically, she provided, or obtained sponsors to provide, the costumes, jewelry, and other image-related supplies and services necessary for her appearance. Alberty disputes that this factor favors independent contractor status because WIPR provided the "equipment necessary to tape the show." Albertys argument is misplaced. The equipment necessary for Alberty to conduct her job as host of "Desde Mi Pueblo" related to her appearance on the show. Others provided equipment for filming and producing the show, but these were not the primary tools that Alberty used to perform her particular function. If we accepted this argument, independent contractors could never work on collaborative projects because other individuals often provide the equipment required for different aspects of the collaboration. x x x Third, WIPR could not assign Alberty work in addition to filming "Desde Mi Pueblo." Albertys contracts with WIPR specifically provided that WIPR hired her "professional services as Hostess for the Program Desde Mi Pueblo." There is no evidence that WIPR assigned Alberty tasks in addition to work related to these tapings. x x x28 (Emphasis supplied) Applying the control test to the present case, we find that SONZA is not an employee but an independent contractor. The control test is the most important test our courts apply in distinguishing an employee from an independent contractor.29 This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely the worker is considered an independent contractor.30 First, SONZA contends that ABS-CBN exercised control over the means and methods of his work. SONZAs argument is misplaced. ABS-CBN engaged SONZAs services specifically to co-host the "Mel & Jay" programs. ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only needed his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were outside ABS-CBNs control. SONZA did not have to render eight hours of work per day. The Agreement required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and postproduction staff meetings.31 ABS-CBN could not dictate the contents of SONZAs script. However, the Agreement prohibited SONZA from criticizing

in his shows ABS-CBN or its interests.32 The clear implication is that SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN or its interests. We find that ABS-CBN was not involved in the actual performance that produced the finished product of SONZAs work.33 ABS-CBN did not instruct SONZA how to perform his job. ABS-CBN merely reserved the right to modify the program format and airtime schedule "for more effective programming."34 ABS-CBNs sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not exercise control over the means and methods of performance of SONZAs work. SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the means and methods of the performance of his work. Although ABS-CBN did have the option not to broadcast SONZAs show, ABS-CBN was still obligated to pay SONZAs talent fees... Thus, even if ABS-CBN was completely dissatisfied with the means and methods of SONZAs performance of his work, or even with the quality or product of his work, ABS-CBN could not dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast SONZAs show but ABS-CBN must still pay his talent fees in full.35 Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by the obligation to continue paying in full SONZAs talent fees, did not amount to control over the means and methods of the performance of SONZAs work. ABS-CBN could not terminate or discipline SONZA even if the means and methods of performance of his work - how he delivered his lines and appeared on television - did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited only to the result of SONZAs work, whether to broadcast the final product or not. In either case, ABSCBN must still pay SONZAs talent fees in full until the expiry of the Agreement. In Vaughan, et al. v. Warner, et al.,36 the United States Circuit Court of Appeals ruled that vaudeville performers were independent contractors although the management reserved the right to delete objectionable features in their shows. Since the management did not have control over the manner of performance of the skills of the artists, it could only control the result of the work by deleting objectionable features.37 SONZA further contends that ABS-CBN exercised control over his work by supplying all equipment and crew. No doubt, ABS-CBN supplied the equipment, crew and airtime needed to broadcast the "Mel & Jay" programs. However, the equipment, crew and airtime are not the "tools and instrumentalities" SONZA needed to perform his job. What SONZA

principally needed were his talent or skills and the costumes necessary for his appearance.38 Even though ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control his work. ABSCBNs sole concern was for SONZA to display his talent during the airing of the programs.39 A radio broadcast specialist who works under minimal supervision is an independent contractor.40 SONZAs work as television and radio program host required special skills and talent, which SONZA admittedly possesses. The records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and talent in his shows. Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules and standards of performance. SONZA claims that this indicates ABS-CBNs control "not only [over] his manner of work but also the quality of his work." The Agreement stipulates that SONZA shall abide with the rules and standards of performance "covering talents"41 of ABS-CBN. The Agreement does not require SONZA to comply with the rules and standards of performance prescribed for employees of ABS-CBN. The code of conduct imposed on SONZA under the Agreement refers to the "Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN) as its Code of Ethics."42 The KBP code applies to broadcasters, not to employees of radio and television stations. Broadcasters are not necessarily employees of radio and television stations. Clearly, the rules and standards of performance referred to in the Agreement are those applicable to talents and not to employees of ABS-CBN. In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former.43 In this case, SONZA failed to show that these rules controlled his performance. We find that these general rules are merely guidelines towards the achievement of the mutually desired result, which are top-rating television and radio programs that comply with standards of the industry. We have ruled that: Further, not every form of control that a party reserves to himself over the conduct of the other party in relation to the services being rendered may be accorded the effect of establishing an 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.44 The Vaughan case also held that one could still be an independent contractor although the hirer reserved certain supervision to insure the attainment of the desired result. The hirer, however, must not deprive the one hired from performing his services according to his own initiative.45 Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the most extreme form of control which ABS-CBN exercised over him. This argument is futile. Being an exclusive talent does not by itself mean that SONZA is an employee of ABS-CBN. Even an independent contractor can validly provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not necessarily the same as control. The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry.46 This practice is not designed to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. The broadcast station normally spends substantial amounts of money, time and effort "in building up its talents as well as the programs they appear in and thus expects that said talents remain exclusive with the station for a commensurate period of time."47 Normally, a much higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge talent fees partially compensates for exclusivity, as in the present case. MJMDC as Agent of SONZA SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, which contracted out his services to ABS-CBN. The Labor Arbiter ruled that as a talent of MJMDC, SONZA is not an employee of ABS-CBN. SONZA insists that MJMDC is a "labor-only" contractor and ABS-CBN is his employer. In a labor-only contract, there are three parties involved: (1) the "laboronly" contractor; (2) the employee who is ostensibly under the employ of the "labor-only" contractor; and (3) the principal who is deemed the real employer. Under this scheme, the "labor-only" contractor is the agent

of the principal. The law makes the principal responsible to the employees of the "labor-only contractor" as if the principal itself directly hired or employed the employees.48 These circumstances are not present in this case. There are essentially only two parties involved under the Agreement, namely, SONZA and ABS-CBN. MJMDC merely acted as SONZAs agent. The Agreement expressly states that MJMDC acted as the "AGENT" of SONZA. The records do not show that MJMDC acted as ABS-CBNs agent. MJMDC, which stands for Mel and Jay Management and Development Corporation, is a corporation organized and owned by SONZA and TIANGCO. The President and General Manager of MJMDC is SONZA himself. It is absurd to hold that MJMDC, which is owned, controlled, headed and managed by SONZA, acted as agent of ABS-CBN in entering into the Agreement with SONZA, who himself is represented by MJMDC. That would make MJMDC the agent of both ABS-CBN and SONZA. As SONZA admits, MJMDC is a management company devoted exclusively to managing the careers of SONZA and his broadcast partner, TIANGCO. MJMDC is not engaged in any other business, not even job contracting. MJMDC does not have any other function apart from acting as agent of SONZA or TIANGCO to promote their careers in the broadcast and television industry.49 Policy Instruction No. 40 SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas Ople on 8 January 1979 finally settled the status of workers in the broadcast industry. Under this policy, the types of employees in the broadcast industry are the station and program employees. Policy Instruction No. 40 is a mere executive issuance which does not have the force and effect of law. There is no legal presumption that Policy Instruction No. 40 determines SONZAs status. A mere executive issuance cannot exclude independent contractors from the class of service providers to the broadcast industry. The classification of workers in the broadcast industry into only two groups under Policy Instruction No. 40 is not binding on this Court, especially when the classification has no basis either in law or in fact. Affidavits of ABS-CBNs Witnesses SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro Vidanes and Rolando Cruz without giving his counsel the

opportunity to cross-examine these witnesses. SONZA brands these witnesses as incompetent to attest on the prevailing practice in the radio and television industry. SONZA views the affidavits of these witnesses as misleading and irrelevant. While SONZA failed to cross-examine ABS-CBNs witnesses, he was never prevented from denying or refuting the allegations in the affidavits. The Labor Arbiter has the discretion whether to conduct a formal (trial-type) hearing after the submission of the position papers of the parties, thus: Section 3. Submission of Position Papers/Memorandum xxx These verified position papers shall cover only those claims and causes of action raised in the complaint excluding those that may have been amicably settled, and shall be accompanied by all supporting documents including the affidavits of their respective witnesses which shall take the place of the latters direct testimony. x x x Section 4. Determination of Necessity of Hearing. Immediately after the submission of the parties of their position papers/memorandum, the Labor Arbiter shall motu propio determine whether there is need for a formal trial or hearing. At this stage, he may, at his discretion and for the purpose of making such determination, ask clarificatory questions to further elicit facts or information, including but not limited to the subpoena of relevant documentary evidence, if any from any party or witness.50 The Labor Arbiter can decide a case based solely on the position papers and the supporting documents without a formal trial.51 The holding of a formal hearing or trial is something that the parties cannot demand as a matter of right.52 If the Labor Arbiter is confident that he can rely on the documents before him, he cannot be faulted for not conducting a formal trial, unless under the particular circumstances of the case, the documents alone are insufficient. The proceedings before a Labor Arbiter are nonlitigious in nature. Subject to the requirements of due process, the technicalities of law and the rules obtaining in the courts of law do not strictly apply in proceedings before a Labor Arbiter. Talents as Independent Contractors

ABS-CBN claims that there exists a prevailing practice in the broadcast and entertainment industries to treat talents like SONZA as independent contractors. SONZA argues that if such practice exists, it is void for violating the right of labor to security of tenure. The right of labor to security of tenure as guaranteed in the Constitution53 arises only if there is an employer-employee relationship under labor laws. Not every performance of services for a fee creates an employer-employee relationship. To hold that every person who renders services to another for a fee is an employee - to give meaning to the security of tenure clause will lead to absurd results. Individuals with special skills, expertise or talent enjoy the freedom to offer their services as independent contractors. The right to life and livelihood guarantees this freedom to contract as independent contractors. The right of labor to security of tenure cannot operate to deprive an individual, possessed with special skills, expertise and talent, of his right to contract as an independent contractor. An individual like an artist or talent has a right to render his services without any one controlling the means and methods by which he performs his art or craft. This Court will not interpret the right of labor to security of tenure to compel artists and talents to render their services only as employees. If radio and television program hosts can render their services only as employees, the station owners and managers can dictate to the radio and television hosts what they say in their shows. This is not conducive to freedom of the press. Different Tax Treatment of Talents and Broadcasters The National Internal Revenue Code ("NIRC")54 in relation to Republic Act No. 7716,55 as amended by Republic Act No. 8241,56 treats talents, television and radio broadcasters differently. Under the NIRC, these professionals are subject to the 10% value-added tax ("VAT") on services they render. Exempted from the VAT are those under an employeremployee relationship.57 This different tax treatment accorded to talents and broadcasters bolters our conclusion that they are independent contractors, provided all the basic elements of a contractual relationship are present as in this case. Nature of SONZAs Claims SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive leave, signing bonus, travel allowance, and amounts due under the Employee Stock Option Plan. We agree with the findings of the Labor Arbiter and the Court o f Appeals that SONZAs claims are all based on the May 1994 Agreement and stock option

plan, and not on the Labor Code. Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and implementation of the May 1994 Agreement. In effect, SONZAs cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the regular courts.58 WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs against petitioner. SO ORDERED.

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.

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 overselling, 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

NARVASA, J.: On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao entered into a contract 1 by which: 1. Basiao was "authorized to solicit within the Philippines applications for insurance policies and annuities in accordance with the existing rules and regulations" of the Company; 2. he would receive "compensation, in the form of commissions ... as provided in the Schedule of Commissions" of the contract to "constitute a part of the consideration of ... (said) agreement;" and 3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and those which may from time to time be promulgated by it, ..." were made part of said contract. The contract also contained, among others, provisions governing the relations of the parties, the duties of the Agent, the acts prohibited to him, and the modes of termination of the agreement, viz.: RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. Nothing herein contained shall therefore be construed to create the relationship of employee and employer between the Agent and the Company. However, the Agent shall observe and conform

action and this, he was later to claim, prompted the latter to terminate also his engagement under the first contract and to stop payment of his commissions starting April 1, 1980. 3 Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and its president. Without contesting the termination of the first contract, the complaint sought to recover commissions allegedly unpaid thereunder, plus attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's employee, but an independent contractor and that the Company had no obligation to him for unpaid commissions under the terms and conditions of his contract. 5 The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the underwriting agreement had established an employeremployee relationship between him and the Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said official's decision directed payment of his unpaid commissions "... equivalent to the balance of the first year's premium remaining unpaid, at the time of his termination, of all the insurance policies solicited by ... (him) in favor of the respondent company ..." plus 10% attorney's fees. 6 This decision was, on appeal by the Company, affirmed by the National Labor Relations Commission. 7 Hence, the present petition for certiorari and prohibition. The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the Company's employee by virtue of the contract invoked by him, thereby placing his claim for unpaid commissions within the original and exclusive jurisdiction of the Labor Arbiter under the provisions of Section 217 of the Labor Code, 8 or, contrarily, as the Company would have it, that under said contract Basiao's status was that of an independent contractor whose claim was thus cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an ordinary civil action. The Company's thesis, that no employer-employee relation in the legal and generally accepted sense existed between it and Basiao, is drawn from the terms of the contract they had entered into, which, either expressly or by necessary implication, made Basiao the master of his own time and selling methods, left to his judgment the time, place and means of soliciting insurance, set no accomplishment quotas and compensated him on the basis of results obtained. He was not bound to observe any schedule of working hours or report to any regular station; he could seek and work on his prospects anywhere and at anytime he chose to, and was free to adopt the selling methods he deemed most effective.

Without denying that the above were indeed the expressed implicit conditions of Basiao's contract with the Company, the respondents contend that they do not constitute the decisive determinant of the nature of his engagement, invoking precedents to the effect that the critical feature distinguishing the status of an employee from that of an independent contractor is control, that is, whether or not the party who engages the services of another has the power to control the latter's conduct in rendering such services. Pursuing the argument, the respondents draw attention to the provisions of Basiao's contract obliging him to "... observe and conform to all rules and regulations which the Company may from time to time prescribe ...," as well as to the fact that the Company prescribed the qualifications of applicants for insurance, processed their applications and determined the amounts of insurance cover to be issued as indicative of the control, which made Basiao, in legal contemplation, an employee of the Company. 9 It is true that the "control test" expressed in the following pronouncement of the Court in the 1956 case of Viana vs. Alejo Al-Lagadan 10 ... In determining the existence of employer-employee relationship, the following elements are generally considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees' conduct although the latter is the most important element (35 Am. Jur. 445). ... has been followed and applied in later cases, some fairly recent. 11 Indeed, it is without question a valid test of the character of a contract or agreement to render service. It should, however, be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which

address both the result and the means used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the business of insurance, and is on that account subject to regulation by the State with respect, not only to the relations between insurer and insured but also to the internal affairs of the insurance company. 12 Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules which prescribe the qualifications of persons who may be insured, subject insurance applications to processing and approval by the Company, and also reserve to the Company the determination of the premiums to be paid and the schedules of payment. None of these really invades the agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee relationship between him and the company. There is no dearth of authority holding persons similarly placed as respondent Basiao to be independent contractors, instead of employees of the parties for whom they worked. In Mafinco Trading Corporation vs. Ople, 13 the Court ruled that a person engaged to sell soft drinks for another, using a truck supplied by the latter, but with the right to employ his own workers, sell according to his own methods subject only to prearranged routes, observing no working hours fixed by the other party and obliged to secure his own licenses and defray his own selling expenses, all in consideration of a peddler's discount given by the other party for at least 250 cases of soft drinks sold daily, was not an employee but an independent contractor. In Investment Planning Corporation of the Philippines us. Social Security System 14 a case almost on all fours with the present one, this Court held that there was no employer-employee relationship between a commission agent and an investment company, but that the former was an independent contractor where said agent and others similarly placed were: (a) paid compensation in the form of commissions based on percentages of their sales, any balance of commissions earned being payable to their legal representatives in the event of death or registration; (b) required to put up performance bonds; (c) subject to a set of rules and regulations governing the performance of their duties under the agreement with the company and termination of their services for certain causes; (d) not required to report for work at any time, nor to devote their time exclusively to working for the company nor to submit a record of their activities, and who, finally, shouldered their own selling and transportation expenses.

More recently, in Sara vs. NLRC, 15 it was held that one who had been engaged by a rice miller to buy and sell rice and palay without compensation except a certain percentage of what he was able to buy or sell, did work at his own pleasure without any supervision or control on the part of his principal and relied on his own resources in the performance of his work, was a plain commission agent, an independent contractor and not an employee. The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the latter might from time to time prescribe. No showing has been made that any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent such showing, the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting insurance." The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-five years. Whatever this is meant to imply, the obvious reply would be that what is germane here is Basiao's status under the contract of July 2, 1968, not the length of his relationship with the Company. The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision. This conclusion renders it unnecessary and premature to consider Basiao's claim for commissions on its merits. WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set aside, and that complaint of private respondent Melecio T. Basiao in RAB Case No. VI-0010-83 is dismissed. No pronouncement as to costs. SO ORDERED.

G.R. No. 170087 August 31, 2006 ANGELINA FRANCISCO, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA, Respondents. 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 permits, construction permits and other licenses for the initial operation of the company. 5 Although she was designated as Corporate Secretary, she was not entrusted with the corporate documents; neither did she attend any board meeting nor required to do so. She never prepared any legal document and never represented the company as its Corporate Secretary. However, on some occasions, she was prevailed upon to sign documentation for the company. 6 In 1996, petitioner was designated Acting Manager. The corporation also hired Gerry Nino as accountant in lieu of petitioner. As Acting Manager, petitioner was assigned to handle recruitment of all employees and perform management administration functions; represent the company in all dealings with government agencies, especially with the Bureau of Internal Revenue (BIR), Social Security System (SSS) and in the city government

of Makati; and to administer all other matters pertaining to the operation of Kasei Restaurant which is owned and operated by Kasei Corporation. 7 For five years, petitioner performed the duties of Acting Manager. As of December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit of Kasei Corporation. 8 In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was required to sign a prepared resolution for her replacement but she was assured that she would still be connected with Kasei Corporation. Timoteo Acedo, the designated Treasurer, convened a meeting of all employees of Kasei Corporation and announced that nothing had changed and that petitioner was still connected with Kasei Corporation as Technical Assistant to Seiji Kamura and in charge of all BIR matters. 9 Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001. Petitioner was not paid her mid-year bonus allegedly because the company was not earning well. On October 2001, petitioner did not receive her salary 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 employer was Seiji Corporation.
13

f. 10% share in the profits of Kasei Corp. from 1996-2001 361,175.00 g. Moral and exemplary damages 100,000.00 h. 10% Attorneys fees 87,076.50 P957,742.50 If reinstatement is no longer feasible, respondents are ordered to pay complainant separation pay with additional backwages that would accrue up to actual payment of separation pay. SO ORDERED.
14

The Labor Arbiter found that petitioner was illegally dismissed, thus: WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. finding complainant an employee of respondent corporation; 2. declaring complainants dismissal as illegal; 3. ordering respondents to reinstate complainant to her former position without loss of seniority rights and jointly and severally pay complainant her money claims in accordance with the following computation: a. Backwages 10/2001 07/2002 275,000.00 (27,500 x 10 mos.) b. Salary Differentials (01/2001 09/2001) 22,500.00 c. Housing Allowance (01/2001 07/2002) 57,000.00 d. Midyear Bonus 2001 27,500.00 e. 13th Month Pay 27,500.00

On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter, the dispositive portion of which reads: PREMISES CONSIDERED, the Decision of July 31, 2002 is hereby MODIFIED as follows: 1) Respondents are directed to pay complainant separation pay computed at one month per year of service in addition to full backwages from October 2001 to July 31, 2002; 2) The awards representing moral and exemplary damages and 10% share in profit in the respective accounts of P100,000.00 and P361,175.00 are deleted; 3) The award of 10% attorneys fees shall be based on salary differential award only; 4) The awards representing salary differentials, housing allowance, mid year bonus and 13th month pay are AFFIRMED. SO ORDERED.
15

On appeal, the Court of Appeals reversed the NLRC decision, thus:

WHEREFORE, the instant petition is hereby GRANTED. The decision of the National Labor Relations Commissions dated April 15, 2003 is hereby REVERSED and SET ASIDE and a new one is hereby rendered dismissing the complaint filed by private respondent against Kasei Corporation, et al. for constructive dismissal. SO ORDERED.
16

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. AlLagadan 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.

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

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 Commission, 28 we held that in a business establishment, an identification card is provided not only as a security measure but mainly to identify the holder thereof as a bona fide employee of the firm that issues it. Together with the cash vouchers covering petitioners salaries for the months stated therein, these matters constitute substantial evidence adequate to support a conclusion that petitioner was an employee of private respondent. We likewise ruled in Flores v. Nuestro 29 that a corporation who registers its workers with the SSS is proof that the latter were the formers employees. The coverage of Social Security 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. Florendo-Flores, 36 we ruled that where an employee ceases to work due to a demotion of rank or a diminution of pay, an unreasonable situation arises which creates an adverse working environment rendering it impossible for such employee to continue working for her employer. Hence, her severance from the company was not of her own making and therefore amounted to an illegal termination of employment. In affording full protection to labor, this Court must ensure equal work opportunities regardless of sex, race or creed. Even as we, in every case, attempt to carefully balance the fragile relationship between employees and employers, we are mindful of the fact that the policy of the 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 year of service, where a fraction of at least six months shall be considered as one whole year. SO ORDERED.

G.R. No. 102973 August 24, 1993 ROGELIO CARAMOL, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ATLANTIC GULF and PACIFIC CO. OF MANILA, INC., respondents. Ricardo C. Valmonte for petitioner. Arturo A. Alafriz & Associates for respondent Atlantic Gulf & Pacific Company of Manila, Inc.

latter, seeks the reversal of the decision of public respondent National Labor Relations Commission (NLRC) dated 31 October 1991 in NLRC NCR 00-01-04703-88 1 which reversed and set aside the decision of the Labor Arbiter. The Labor Arbiter had earlier declared respondent ATLANTIC GULF guilty of unfair labor practice, ordered it to cease and desist from further committing unfair labor practice against petitioner, declared illegal the constructive dismissal of petitioner and directed respondent ATLANTIC GULF to immediately reinstate petitioner to his former position without loss of seniority rights and with full back wages in the amount of P68,826.94 as of 29 November 1989. 2 The factual findings of the Labor Arbiter show that petitioner was hired by respondent ATLANTIC GULF on 2 June 1983 for the position of rigger. Until the occurence of the strike on 10 May 1986, his last assignment was at respondent ATLANTIC GULF's plant in Batangas. Petitioner claims that because of his involvement in unionism, particularly in actively manning the picket lines, he was among those who were not readmitted after the strike. On the other hand, respondent ATLANTIC GULF contends that petitioner was one of the several thousands of workers who were hired on a "projectto-project" basis and whose employment was covered by Project Employment Contract for a particular project and for a definite period of time. On 15 May 1986 private respondent dispensed with the services of petitioner claiming as justification the completion of the Nauru project to which petitioner was assigned and the consequent expiration of the employment contract. In reversing the Labor Arbiter, public respondent NLRC declared in the dispositive portion of its questioned decision thus WHEREFORE, based on the foregoing considerations, the decision appealed from is hereby REVERSED and SET ASIDE, and finding the claim of complainant to be without legal and factual basis. According to public respondent NLRC, petitioner is a project employee falling under the exception of Art. 280 of the Labor Code, as amended, explaining that

BELLOSILLO, J.: The controversy as to whether petitioner is a regular or casual employee arises from the conflicting interpretations by the parties of Art. 280 of the Labor Code, as amended. The article provides The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether, such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. Petitioner Rogelio Caramol, a worker hired by respondent Atlantic Gulf and Pacific Co. of Manila, Inc., (ATLANTIC GULF), on a "project-to-project" basis but whose employment was renewed forty-four (44) times by the

. . . As correctly asserted by respondent-company, Mr. Caramol's services have been fixed for a specific project shown in the contracts of employment. The principle of party autonomy must not be interfered with absent any showing of violation of law, public policy and jurisprudence. "A contract duly entered into should be respected, since a contract is the law between the parties" (Pakistan International Airlines Corp. v. Ople, G.R. No. 61594, Sept. 28, 1990). The exception under Article 280 of the Labor Code is precisely designed to meet an exigency like in the case at bar. . . . Under the Labor Code as well as the Civil Code of the Philippines, "the validity and propriety of contracts and obligation with a fixed or definite period are recognized, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, food or services, except the general admonition against stipulations contrary to law, morals, good custom, public order or public policy" (Brent School, Inc. v. Zamora, G.R. No. 48494, Feb. 5, 1990). . . . Contract workers are not considered regular. Their services depend upon availability of a project to be undertaken. Thus, it would be unjust to retain an employee in the payroll while waiting for another project. ... Petitioner now insists that public respondent NLRC gravely abused its discretion and committed serious errors of law and that its questioned decision is contrary to the jurisprudential doctrine enunciated in Magante v. NLRC 3 where it was held that the "project" employee therein was deemed a regular employee considering the attendant circumstances, i.e., the employee was assigned to perform tasks which are usually necessary or desirable in the usual business or trade of the employer; said assignments did not end on a project to project basis, although the contrary was made to appear through the signing of separate employment contracts; there were no reports of termination submitted to the nearest public employment office every time employment was terminated due to the completion of the project. We grant the petition.

There is no question that stipulation on employment contract providing for a fixed period of employment such as "project-to-project" contract is valid provided the period was agreed upon knowingly and voluntarily the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. 4 However, where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary tenurial security by the employee, they should be struck down as contrary to public policy, morals, good custom or public order. In the case before us, we find sufficiently established circumstances showing that the supposed fixed period of employment by way of a project-to-project contract has been imposed to preclude acquisition of tenurial security by the petitioner. Accordingly, such arrangement must be struck down as contrary to public policy. After a careful perusal of the records, we sustain the findings of the Labor Arbiter that . . . . The records of the case established the fact that during the employment of complainant with the respondent company he was made to sign a project employment contract. This practice started from the time he was hired in 1973 up to May 10, 1986 when the AG & P Workers and Employees Union staged a strike. Expressed differently this practice of the respondent insofar as the complainant is concerned has been going on continiously for thirteen (13) long years. This Office is of the considered belief that the nomenclature by which he was addressed by the respondent has already attained a regular status of employment. In addition to his length of service the documentary evidence on record established the fact that complainant's job is both necessary and desirable to the business engaged in by the respondent . . . . Admittedly, the "project-to-project" employment of petitioner was renewed several times, forty-four (44) project contracts 5 according to him. Private respondent points to this successive employment as evidence that petitioner is a project employee in its projects. It is asserted that being in the construction industry, it is not unusual for private respondent and other similar companies to hire employees or workers for a definite period only, or whose employment is co-terminus with the completion of a specific project as recognized by Art. 280 of the Labor Code.

However, with the successive contracts of employment where petitioner continued to perform the same kind of work, i.e., as rigger throughout his period of employment, it is clearly manifest that petitioner's tasks were usually necessary or desirable in the usual business or trade of private respondent. There can therefore be no escape from the conclusion that petitioner is a regular employee of private respondent ATLANTIC GULF. In this regard, we need only reiterate our ruling in Baguio Country Club Corporation v. NLRC 6 that . . . . The primary standard . . . of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence the employment is also considered regular, but only with respect to such activity and while such activity exists" (De Leon v. National Labor Relations Commission, G.R. No. 70705, August 21, 1989, 176 SCRA 615, 620-621) . . . . Such repeated rehiring and the continuing need for his service are sufficient evidence of the necessity and indispensability of his service to the petitioner's business or trade. . . . . the private respondent performed the said task which lasted for more than one year, . . . by this fact alone he is entitled by law to be considered a regular employee. Owing to private respondent's length of service with the petitioner corporation, he became a regular employee, by operation of law, one year after he was employed . . . .

It is of no moment that private respondent was told when he was hired that his employment would only be "on a day to day basis for a temporary period" and may be terminated at any time subject to the petitioner's discretion. Precisely, the law overrides such conditions which are prejudicial to the interest of the worker. Evidently, the employment contracts entered into by private respondent with the petitioner have the purpose of circumventing the employee's security of tenure. The Court, therefore, rigorously disapproves said contracts which demonstrate a clear attempt to exploit the employee and deprive him of the protection sanctioned by the Labor Code. It is noteworthy that what determines whether a certain employment is regular or casual is not the will and word of the employer, to which the desperate worker often accedes. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances, and in some cases the length of time of its performance and its continued existence (See De Leon v. NLRC, ibid). Moreover, notwithstanding its claim that petitioner was successively employed, private respondent failed to present any report of termination. On this point, the pronouncement in Magante v. NLRC 7 is of singular relevance to the instant case: Moreover, if petitioner were employed as a "project employee" private respondent should have submitted a report of termination to the nearest public employment office every time his employment is terminated due to completion of each construction project, as required by Policy Instruction No. 20, which provides: . . . Moreover, the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination. What is required of the company is a report to the nearest Public Employment Office for Statistical purposes (Emphasis Supplied). Throughout the duration of petitioner's employment, there should have been filed as many reports of

termination as there were construction projects actually finished if it were true that petitioner Telesforo Maganto was only a project worker. We thus hold significant as to prejudice the cause of private respondent the absence of any such termination reports. In ignoring or disregarding the existing jurisprudence on regular employment, particularly the Magante decision, by reversing the decision of the Labor Arbiter, public respondent NLRC gravely abused its discretion. Respondent further claims that since the appeal was filed twenty-nine (29) days from receipt of the NLRC decision by petitioner, the same should be dismissed as having been filed out of time, alluding to the penultimate paragraph of Art. 223 of the Labor Code which states that "[t]he decision of the Commission shall be final and executory after ten (10) calendar days from receipt thereof by the parties." This is not correct. On the contrary, the instant position is filed pursuant to Sec. 1, Rule 65, of the Rules of Court which may be done within a reasonable time from receipt of the subject decision, and a period of three (3) months is considered reasonable. 8 The fact that the assailed decision becomes final and executory after a ten day period does not preclude the adverse party from challenging it by way of an original action for certiorari under Rule 65 of the Rules of Court. He may even further pray for the issuance of a restraining order or a temporary injunction to prevent the immediate execution of the assailed decision. WHEREFORE, the petition is GRANTED. consequently, the decision of respondent National Labor Relations Commission dated 31 October 1991 is hereby REVERSED and SET ASIDE. The decision of the Labor Arbiter dated 29 November 1989 is AFFIRMED and REINSTATED. SO ORDERED.

G.R. No. 109902 August 2, 1994 ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I. FETALVERO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION (NSC), respondents. Leonard U. Sawal for petitioners. Saturnino Mejorada for private respondent.

9. 10. 11. 12. 13.

Russell Gacus 1-30-85 Engineer 1 6-30-92 Jose Garguena 3-02-81 Warehouseman to present Eusebio Mejos 11-17-82 Survey Aide 8-31-91 Bonifacio Mejos 11-17-82 Surv. Party Head 1992 Romeo Sarona 2-26-83 Machine Operator 8-31-91 2

On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City. The complaints were consolidated and after hearing, the Labor Arbiter in a Decision dated 7 June 1991, declared petitioners "regular project employees who shall continue their employment as such for as long as such [project] activity exists," but entitled to the salary of a regular employee pursuant to the provisions in the collective bargaining agreement. It also ordered payment of salary differentials. 3 Both parties appealed to the NLRC from that decision. Petitioners argued that they were regular, not project, employees. Private respondent, on the other hand, claimed that petitioners are project employees as they were employed to undertake a specific project NSC's Five Year Expansion Program (FAYEP I & II). The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed the Labor Arbiter's holding that petitioners were project employees since they were hired to perform work in a specific undertaking the Five Years Expansion Program, the completion of which had been determined at the time of their engagement and which operation was not directly related to the business of steel manufacturing. The NLRC, however, set aside the award to petitioners of the same benefits enjoyed by regular employees for lack of legal and factual basis. Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC in rendering its questioned resolutions of 8 January 1993 and 15 February 1993. The law on the matter is Article 280 of the Labor Code which reads in full: Art. 280. Regular and Casual Employment The provisions of the written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, and employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or

FELICIANO, J.: In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations Commission ("NLRC") dated 8 January 1993 which declared petitioners to be project employees of private respondent National Steel Corporation ("NSC"), and the NLRC's subsequent Resolution of 15 February 1993, denying petitioners' motion for reconsideration. Petitioners plead that they had been employed by respondent NSC in connection with its Five Year Expansion Program (FAYEP I & II) 1 for varying lengths of time when they were separated from NSC's service: Employee Date Nature of Separated Employed Employment 1. Alan Barinque 5-14-82 Engineer 1 8-31-91 2. Jerry Bontilao 8-05-85 Engineer 2 6-30-92 3. Edgar Bontuyan 11-03-82 Chairman to present 4. Osias Dandasan 9-21-82 Utilityman 1991 5. Leonido Echavez 6-16-82 Eng. Assistant 6-30-92 6. Darrell Eltagonde 5-20-85 Engineer 1 8-31-91 7. Gerry Fetalvero 4-08-85 Mat. Expediter regularized 8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-91

desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. (Emphasis supplied) Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are "necessary, desirable and work-related to private respondent's main business, steel-making"; and (ii) they have rendered service for six (6) or more years to private respondent NSC. 4 The basic issue is thus whether or not petitioners are properly characterized as "project employees" rather than "regular employees" of NSC. This issue relates, of course, to an important consequence: the services of project employees are co-terminous with the project and may be terminated upon the end or completion of the project for which they were hired. 5 Regular employees, in contract, are legally entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes of termination of service under the Labor Code. 6 It is evidently important to become clear about the meaning and scope of the term "project" in the present context. The "project" for the carrying out of which "project employees" are hired would ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project" undertaking might not have an ordinary or normal relationship to the usual business of the employer. In this latter case, the determination of the scope and parameeters of the "project" becomes fairly easy. It is unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship to the usual business of the company; thus, for instance, it would be an unusual steel-making company which would undertake the breeding and production of fish or the cultivation of vegetables. From the viewpoint, however, of the legal characterization problem here presented to the Court, there should be no difficulty in designating the employees who are retained or hired for the purpose of

undertaking fish culture or the production of vegetables as "project employees," as distinguished from ordinary or "regular employees," so long as the duration and scope of the project were determined or specified at the time of engagement of the "project employees." 7 For, as is evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees were engaged for that project. In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a particular construction job or project of a construction company. A construction company ordinarily carries out two or more discrete identifiable construction projects: e.g., a twenty-five- storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and their services may be lawfully terminated at completion of the project. The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. The case at bar presents what appears to our mind as a typical example of this kind of "project." NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of expanding the volume and increasing the kinds of products that it may offer for sale to the public. The Five Year Expansion Program had a number of component projects: e.g., (a) the setting up of a "Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead of contracting out to an outside or independent contractor the tasks of constructing the buildings with related civil and electrical works that would

house the new machinery and equipment, the installation of the newly acquired mill or plant machinery and equipment and the commissioning of such machinery and equipment, NSC opted to execute and carry out its Five Yeear Expansion Projects "in house," as it were, by administration. The carrying out of the Five Year Expansion Program (or more precisely, each of its component projects) constitutes a distinct undertaking identifiable from the ordinary business and activity of NSC. Each component project, of course, begins and ends at specified times, which had already been determined by the time petitioners were engaged. We also note that NSC did the work here involved the construction of buildings and civil and electrical works, installation of machinery and equipment and the commissioning of such machinery only for itself. Private respondent NSC was not in the business of constructing buildings and installing plant machinery for the general business community, i.e., for unrelated, third party, corporations. NSC did not hold itself out to the public as a construction company or as an engineering corporation. Which ever type of project employment is found in a particular case, a common basic requisite is that the designation of named employees as "project employees" and their assignment to a specific project, are effected and implemented in good faith, and not merely as a means of evading otherwise applicable requirements of labor laws. Thus, the particular component projects embraced in the Five Year Expansion Program, to which petitioners were assigned, were distinguishable from the regular or ordinary business of NSC which, of course, is the production or making and marketing of steel products. During the time petitioners rendered services to NSC, their work was limited to one or another of the specific component projects which made up the FAYEP I and II. There is nothing in the record to show that petitioners were hired for, or in fact assigned to, other purposes, e.g., for operating or maintaining the old, or previously installed and commissioned, steelmaking machinery and equipment, or for selling the finished steel products. We, therefore, agree with the basic finding of the NLRC (and the Labor Arbiter) that the petitioners were indeed "project employees:" It is well established by the facts and evidence on record that herein 13 complainants were hired and engaged for specific activities or undertaking the period of which has been determined at time of hiring or engagement. It is of public knowledge and which this Commission can safely take judicial notice that the expansion program (FAYEP) of respondent NSC consist of various phases [of] project

components which are being executed or implemented independently or simultaneously from each other . . . In other words, the employment of each "project worker" is dependent and co-terminous with the completion or termination of the specific activity or undertaking [for which] he was hired which has been pre-determined at the time of engagement. Since, there is no showing that they (13 complainants) were engaged to perform workrelated activities to the business of respondent which is steel-making, there is no logical and legal sense of applying to them the proviso under the second paragraph of Article 280 of the Labor Code, as amended. xxx xxx xxx The present case therefore strictly falls under the definition of "project employees" on paragraph one of Article 280 of the Labor Code, as amended. Moreover, it has been held that the length of service of a project employee is not the controlling test of employment tenure but whether or not "the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee". (See Hilario Rada v. NLRC, G.R. No. 96078, January 9, 1992; and Sandoval Shipping, Inc. v. NLRC, 136 SCRA 674 (1985). 9 Petitioners next claim that their service to NSC of more than six (6) years should qualify them as regular employees. We believe this claim is without legal basis. The simple fact that the employment of petitioners as project employees had gone beyond one (1) year, does not detract from, or legally dissolve, their status as project employees. 10 The second paragraph of Article 280 of the Labor Code, quoted above, providing that an employee who has served for at least one (1) year, shall be considered a regular employee, relates to casual employees, not to project employees. In the case of Mercado, Sr. vs. National Labor Relations Commission, 11 this Court ruled that the proviso in the second paragraph of Article 280 relates only to casual employees and is not applicable to those who fall within the definition of said Article's first paragraph, i.e., project employees. The familiar grammatical rule is that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to other sections thereof, unless the clear legislative intent is to restrict or qualify not only the phrase immediately

preceding the proviso but also earlier provisions of the statute or even the statute itself as a whole. No such intent is observable in Article 280 of the Labor Code, which has been quoted earlier. ACCORDINGLY, in view of the foregoing, the Petition for Certiorari is hereby DISMISSED for lack of merit. The Resolutions of the NLRC dated 8 January 1993 and 15 February 1993 are hereby AFFIRMED. No pronouncement as to costs. SO ORDERED.

G.R. No. 192514

April 18, 2012

The Compulsory Arbitration Rulings In a decision dated May 27, 2002,7 Labor Arbiter Francisco A. Robles dismissed the complaint for lack of merit. He sustained DMCIs position that Jamin was a project employee whose services had been terminated due to the completion of the project where he was assigned. The labor arbiter added that everytime DMCI rehired Jamin, it entered into a contract of employment with him. Moreover, upon completion of the phase of the project for which Jamin was hired or upon completion of the project itself, the company served a notice of termination to him and a termination report to the DOLE Regional Office. The labor arbiter also noted that Jamin had to file an application if he wanted to be re-hired. On appeal by Jamin, the National Labor Relations Commission (NLRC), in its decision of April 18, 2007,8 dismissed the appeal and affirmed the labor arbiters finding that Jamin was a project employee. Jamin moved for reconsideration, but the NLRC denied the motion in a resolution dated May 30, 2007.9 Jamin sought relief from the CA through a petition for certiorari under Rule 65 of the Rules of Court. The CA Decision On February 26, 2010, the CA Special Fourth Division rendered the disputed decision10 reversing the compulsory arbitration rulings. It held that Jamin was a regular employee. It based its conclusion on: (1) Jamins repeated and successive rehiring in DMCIs various projects; and (2) the nature of his work in the projects he was performing activities necessary or desirable in DMCIs construction business. Invoking the Courts ruling in an earlier case,11 the CA declared that the pattern of Jamins rehiring and the recurring need for his services are sufficient evidence of the necessity and indispensability of such services to DMCIs business or trade, a key indicator of regular employment. It opined that although Jamin started as a project employee, the circumstances of his employment made it regular or, at the very least, has ripened into a regular employment. The CA considered the project employment contracts Jamin entered into with DMCI for almost 31 years not definitive of his actual status in the company. It stressed that the existence of such contracts is not always conclusive of a workers employment status as this Court explained in Liganza v. RBL Shipyard Corporation, et al.12 It found added support from Integrated Contractor and Plumbing Works, Inc. v. NLRC,13 where the Court said that while there were several employment contracts between the worker and the employer, in all of them, the worker performed tasks which were usually necessary or desirable in the usual business or trade of

D.M. CONSUNJI, INC. and/or DAVID M. CONSUNJI, Petitioners, vs. ESTELITO L. JAMIN, Respondent. DECISION BRION, J.: We resolve the present appeal1 from the decision2 dated February 26, 2010 and the resolution3 dated June 3, 2010 of the Court of Appeals (CA) in CAG.R. SP No. 100099. The Antecedents On December 17, 1968, petitioner D.M. Consunji, Inc. (DMCI), a construction company, hired respondent Estelito L. Jamin as a laborer. Sometime in 1975, Jamin became a helper carpenter. Since his initial hiring, Jamins employment contract had been renewed a number of times.4 On March 20, 1999, his work at DMCI was terminated due to the completion of the SM Manila project. This termination marked the end of his employment with DMCI as he was not rehired again. On April 5, 1999, Jamin filed a complaint5 for illegal dismissal, with several money claims (including attorneys fees), against DMCI and its President/General Manager, David M. Consunji. Jamin alleged that DMCI terminated his employment without a just and authorized cause at a time when he was already 55 years old and had no independent source of livelihood. He claimed that he rendered service to DMCI continuously for almost 31 years. In addition to the schedule of projects (where he was assigned) submitted by DMCI to the labor arbiter,6 he alleged that he worked for three other DMCI projects: Twin Towers, Ritz Towers, from July 29, 1980 to June 12, 1982; New Istana Project, B.S.B. Brunei, from June 23, 1982 to February 16, 1984; and New Istana Project, B.S.B. Brunei, from January 24, 1986 to May 25, 1986. DMCI denied liability. It argued that it hired Jamin on a project-to-project basis, from the start of his engagement in 1968 until the completion of its SM Manila project on March 20, 1999 where Jamin last worked. With the completion of the project, it terminated Jamins employment. It alleged that it submitted a report to the Department of Labor and Employment (DOLE) everytime it terminated Jamins services.

the employer and, a review of the workers assignments showed that he belonged to a work pool, making his employment regular. Contrary to DMCIs submission and the labor arbiters findings, the CA noted that DMCI failed to submit a report to the DOLE Regional Office everytime Jamins employment was terminated, as required by DOLE Policy Instructions No. 20. The CA opined that DMCIs failure to submit the reports to the DOLE is an indication that Jamin was not a project employee. It further noted that DOLE Department Order No. 19, Series of 1993, which superseded DOLE Policy Instructions No. 20, provides that the termination report is one of the indicators of project employment.14 Having found Jamin to be a regular employee, the CA declared his dismissal illegal as it was without a valid cause and without due process. It found that DMCI failed to provide Jamin the required notice before he was dismissed. Accordingly, the CA ordered Jamins immediate reinstatement with backwages, and without loss of seniority rights and other benefits. DMCI moved for reconsideration, but the CA denied the motion in its resolution of June 3, 2010.15 DMCI is now before the Court through a petition for review on certiorari under Rule 45 of the Rules of Court.16 The Petition DMCI seeks a reversal of the CA rulings on the ground that the appellate court committed a grave error in annulling the decisions of the labor arbiter and the NLRC. It presents the following arguments: 1. The CA misapplied the phrase "usually necessary or desirable in the usual business or trade of the employer" when it considered Jamin a regular employee. The definition of a regular employee under Article 280 of the Labor Code does not apply to project employment or "employment which has been fixed for a specific project," as interpreted by the Supreme Court in Fernandez v. National Labor Relations Commission17 and D.M. Consunji, Inc. v. NLRC.18 It maintains the same project employment methodology in its business operations and it cannot understand why a different ruling or treatment would be handed down in the present case. 2. There is no work pool in DMCIs roster of project employees. The CA erred in insinuating that Jamin belonged to a work pool when it cited Integrated Contractor and Plumbing Works, Inc. ruling.19 At any rate, Jamin presented no evidence to prove his membership in any work pool at DMCI.

3. The CA misinterpreted the rules requiring the submission of termination of employment reports to the DOLE. While the report is an indicator of project employment, as noted by the CA, it is only one of several indicators under the rules.20 In any event, the CA penalized DMCI for a few lapses in its submission of reports to the DOLE with a "very rigid application of the rule despite the almost unanimous proofs surrounding the circumstances of private respondent being a project employee as shown by petitioners documentary evidence."21 4. The CA erred in holding that Jamin was dismissed without due process for its failure to serve him notice prior to the termination of his employment. As Jamin was not dismissed for cause, there was no need to furnish him a written notice of the grounds for the dismissal and neither is there a need for a hearing. When there is no more job for Jamin because of the completion of the project, DMCI, under the law, has the right to terminate his employment without incurring any liability. Pursuant to the rules implementing the Labor Code,22 if the termination is brought about by the completion of the contract or phase thereof, no prior notice is required. Finally, DMCI objects to the CAs reversal of the findings of the labor arbiter and the NLRC in the absence of a showing that the labor authorities committed a grave abuse of discretion or that evidence had been disregarded or that their rulings had been arrived at arbitrarily. The Case for Jamin In his Comment (to the Petition),23 Jamin prays that the petition be denied for having been filed out of time and for lack of merit. He claims, in support of his plea for the petitions outright dismissal, that DMCI received a copy of the CA decision (dated February 26, 2010) on March 4, 2010, as stated by DMCI itself in its motion for reconsideration of the decision.24 Since DMCI filed the motion with the CA on March 22, 2010, it is obvious, Jamin stresses, that the motion was filed three days beyond the 15-day reglementary period, the last day of which fell on March 19, 2010. He maintains that for this reason, the CAs February 26, 2010 decision had become final and executory, as he argued before the CA in his Comment and Opposition (to DMCIs Motion for Reconsideration).25 On the merits of the case, Jamin submits that the CA committed no error in nullifying the rulings of the labor arbiter and the NLRC. He contends that DMCI misread this Courts rulings in Fernandez v. National Labor Relations

Commission, et al.26 and D.M. Consunji, Inc. v. NLRC,27 cited to support its position that Jamin was a project employee. Jamin argues that in Fernandez, the Court explained that the proviso in the second paragraph of Article 280 of the Labor Code relates only to casual employees who shall be considered regular employees if they have rendered at least one year of service, whether such service is continuous or broken. He further argues that in Fernandez, the Court held that inasmuch as the documentary evidence clearly showed gaps of a month or months between the hiring of Ricardo Fernandez in the numerous projects where he was assigned, it was the Courts conclusion that Fernandez had not continuously worked for the company but only intermittently as he was hired solely for specific projects.28 Also, in Fernandez, the Court affirmed its rulings in earlier cases that "the failure of the employer to report to the [nearest] employment office the termination of workers everytime a project is completed proves that the employees are not project employees."29 Jamin further explains that in the D.M. Consunji, Inc. case, the company deliberately omitted portions of the Courts ruling stating that the complainants were not claiming that they were regular employees; rather, they were questioning the termination of their employment before the completion of the project at the Cebu Super Block, without just cause and due process.30 In the matter of termination reports to the DOLE, Jamin disputes DMCIs submission that it committed only few lapses in the reportorial requirement. He maintains that even the NLRC noted that there were no termination reports with the DOLE Regional Office after every completion of a phase of work, although the NLRC considered that the report is required only for statistical purposes. He, therefore, contends that the CA committed no error in holding that DMCIs failure to submit reports to the DOLE was an indication that he was not a project employee. Finally, Jamin argues that as a regular employee of DMCI for almost 31 years, the termination of his employment was without just cause and due process. The Courts Ruling The procedural issue Was DMCIs appeal filed out of time, as Jamin claims, and should have been dismissed outright? The records support Jamins submission on the issue.

DMCI received its copy of the February 26, 2010 CA decision on March 4, 2010 (a Thursday), as indicated in its motion for reconsideration of the decision itself,31 not on March 5, 2010 (a Friday), as stated in the present petition.32 The deadline for the filing of the motion for reconsideration was on March 19, 2010 (15 days from receipt of copy of the decision), but it was filed only on March 22, 2010 or three days late. Clearly, the motion for reconsideration was filed out of time, thereby rendering the CA decision final and executory. Necessarily, DMCIs petition for review on certiorari is also late as it had only fifteen (15) days from notice of the CA decision to file the petition or the denial of its motion for reconsideration filed in due time.33 The reckoning date is March 4, 2010, since DMCIs motion for reconsideration was not filed in due time. We see no point in exercising liberality and disregarding the late filing as we did in Orozco v. Fifth Division of the Court of Appeals,34 where we ruled that "[t]echnicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties." The petition lacks merit for its failure to show that the CA committed any reversible error or grave abuse of discretion when it reversed the findings of the labor arbiter and the NLRC. As earlier mentioned, Jamin worked for DMCI for almost 31 years, initially as a laborer and, for the most part, as a carpenter. Through all those years, DMCI treated him as a project employee, so that he never obtained tenure. On the surface and at first glance, DMCI appears to be correct. Jamin entered into a contract of employment (actually an appointment paper to which he signified his conformity) with DMCI either as a field worker, a temporary worker, a casual employee, or a project employee everytime DMCI needed his services and a termination of employment paper was served on him upon completion of every project or phase of the project where he worked.35 DMCI would then submit termination of employment reports to the DOLE, containing the names of a number of employees including Jamin.36 The NLRC and the CA would later on say, however, that DMCI failed to submit termination reports to the DOLE. The CA pierced the cover of Jamins project employment contract and declared him a regular employee who had been dismissed without cause and without notice. To reiterate, the CAs findings were based on: (1) Jamins repeated and successive engagements in DMCIs construction projects, and (2) Jamins performance of activities necessary or desirable in DMCIs usual trade or business. We agree with the CA. In Liganza v. RBL Shipyard Corporation,37 the Court held that "[a]ssuming, without granting[,] that [the] petitioner was initially hired for specific projects or undertakings, the repeated re-hiring and continuing need for his services for over eight (8) years have undeniably

made him a regular employee." We find the Liganza ruling squarely applicable to this case, considering that for almost 31 years, DMCI had repeatedly, continuously and successively engaged Jamins services since he was hired on December 17, 1968 or for a total of 38 times 35 as shown by the schedule of projects submitted by DMCI to the labor arbiter38 and three more projects or engagements added by Jamin, which he claimed DMCI intentionally did not include in its schedule so as to make it appear that there were wide gaps in his engagements. One of the three projects was local, the Ritz Towers,39 from July 29, 1980 to June 12, 1982, while the other two were overseas the New Istana Project in Brunei, Darussalam, from June 23, 1982 to February 16, 1984;40 and again, the New Istana Project, from January 24, 1986 to May 25, 1986.41 We reviewed Jamins employment contracts as the CA did and we noted that while the contracts indeed show that Jamin had been engaged as a project employee, there was an almost unbroken string of Jamins rehiring from December 17, 1968 up to the termination of his employment on March 20, 1999. While the history of Jamins employment (schedule of projects)42 relied upon by DMCI shows a gap of almost four years in his employment for the period between July 28, 1980 (the supposed completion date of the Midtown Plaza project) and June 13, 1984 (the start of the IRRI Dorm IV project), the gap was caused by the companys omission of the three projects above mentioned. For not disclosing that there had been other projects where DMCI engaged his services, Jamin accuses the company of suppressing vital evidence that supports his contention that he rendered service in the companys construction projects continuously and repeatedly for more than three decades. The non-disclosure might not have constituted suppression of evidence it could just have been overlooked by the company but the oversight is unfair to Jamin as the non-inclusion of the three projects gives the impression that there were substantial gaps not only of several months but years in his employment with DMCI. Thus, as Jamin explains, the Ritz Tower Project (July 29, 1980 to June 12, 1982) and the New Istana Project (June 23, 1982 to February 16, 1984) would explain the gap between the Midtown Plaza project (September 3, 1979 to July 28, 1980) and the IRRI Dorm IV project (June 13, 1984 to March 12, 1985) and the other New Istana Project (January 24, 1986 to May 25, 1986) would explain the gap between P. 516 Hanger (September 13, 1985 to January 23, 1986) and P. 516 Maint (May 26, 1986 to November 18, 1987). To reiterate, Jamins employment history with DMCI stands out for his continuous, repeated and successive rehiring in the companys construction projects. In all the 38 projects where DMCI engaged Jamins services, the

tasks he performed as a carpenter were indisputably necessary and desirable in DMCIs construction business. He might not have been a member of a work pool as DMCI insisted that it does not maintain a work pool, but his continuous rehiring and the nature of his work unmistakably made him a regular employee. In Maraguinot, Jr. v. NLRC,43 the Court held that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, rehired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee. Further, as we stressed in Liganza,44 "[r]espondent capitalizes on our ruling in D.M. Consunji, Inc. v. NLRC which reiterates the rule that the length of service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specif ic project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee." "Surely, length of time is not the controlling test for project employment. Nevertheless, it is vital in determining if the employee was hired for a specific undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, [private] respondent had been a project employee several times over. His employment ceased to be coterminous with specific projects when he was repeatedly re-hired due to the demands of petitioners business."45 Without doubt, Jamins case fits squarely into the employment situation just quoted. The termination reports With our ruling that Jamin had been a regular employee, the issue of whether DMCI submitted termination of employment reports, pursuant to Policy Instructions No. 20 (Undated46), as superseded by DOLE Department Order No. 19 (series of 1993), has become academic. DOLE Policy Instructions No. 20 provides in part: Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain a clearance from the Secretary of Labor in connection with such termination. What is required of the company is a report to the nearest Public Employment Office for statistical purposes.47

To set the records straight, DMCI indeed submitted reports to the DOLE but as pointed out by Jamin, the submissions started only in 1992.48 DMCI explained that it submitted the earlier reports (1982), but it lost and never recovered the reports. It reconstituted the lost reports and submitted them to the DOLE in October 1992; thus, the dates appearing in the reports.49 Is David President/General for Jamins dismissal? M. Consunji, Manager, DMCIs liable

While there is no question that the company is liable for Jamins dismissal, we note that the CA made no pronouncement on whether DMCIs President/General Manager, a co-petitioner with the company, is also liable.50 Neither had the parties brought the matter up to the CA nor with this Court. As there is no express finding of Mr. Consunjis involvement in Jamins dismissal, we deem it proper to absolve him of liability in this case. As a final point, it is well to reiterate a cautionary statement we made in Maraguinot,51 thus: At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project employee even after completion of the project for which he was hired. The import of this decision is not to impose a positive and sweeping obligation upon the employer to re-hire project employees. What this decision merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable to the employers usual business or trade. In sum, we deny the present appeal for having been filed late and for lack of any reversible error.1wphi1 We see no point in extending any liberality by disregarding the late filing as the petition lacks merit. WHEREFORE, premises considered, the petition is hereby DENIED for late filing and for lack of merit. The decision dated February 26, 2010 and the resolution dated June 3, 2010 of the Court of Appeals are AFFIRMED. Petitioner David M. Consunji is absolved of liability in this case. SO ORDERED.

G.R. No. 79869 September 5, 1991 FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEO MERCADO and LEON SANTILLAN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR ARBITER LUCIANO AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE BORJA; and STO. NIO REALTY, INCORPORATED, respondents. Servillano S. Santillan for petitioners. Luis R. Mauricio for private respondents.

that, during the period of their employment, petitioners received the following daily wages: From 1962-1963 P1.50 1963-1965 P2.00 1965-1967 P3.00 1967-1970 P4.00 1970-1973 P5.00 1973-1975 P5.00 1975-1978 P6.00 1978-1979 P7.00 Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners were her regular employees and instead averred that she engaged their services, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in supplying the number of workers needed by owners of various farms, but only to do a particular phase of agricultural work necessary in rice production and/or sugar cane production, after which they would be free to render services to other farm owners who need their services. 2 The other private respondents denied having any relationship whatsoever with the petitioners and state that they were merely registered owners of the land in question included as corespondents in this case. 3 The dispute in this case revolves around the issue of whether or not petitioners are regular and permanent farm workers and therefore entitled to the benefits which they pray for. And corollary to this, whether or not said petitioners were illegally dismissed by private respondents. Respondent Labor Arbiter Luciano P. Aquino ruled in favor of private respondents and held that petitioners were not regular and permanent workers of the private respondents, for the nature of the terms and conditions of their hiring reveal that they were required to perform phases of agricultural work for a definite period of time after which their services would be available to any other farm owner. 4 Respondent Labor Arbiter deemed petitioners' contention of working twelve (12) hours a day the whole year round in the farm, an exaggeration, for the reason that the planting of lice and sugar cane does not entail a whole year as reported in the findings of the Chief of the NLRC Special Task Force. 5 Even the sworn statement of one of the petitioners, Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably show that said petitioners were hired only as casuals, on an "on and off" basis, thus,

PADILLA, J.:p Assailed in this petition for certiorari is the decision * of the respondent national Labor Relations Commission (NLRC) dated 8 August 1984 which affirmed the decision of respondent Labor Arbiter Luciano P. Aquino with the slight modification of deleting the award of financial assistance to petitioners, and the resolution of the respondent NLRC dated 17 August 1987, denying petitioners' motion for reconsideration. This petition originated from a complaint for illegal dismissal, underpayment of wages, non-payment of overtime pay, holiday pay, service incentive leave benefits, emergency cost of living allowances and 13th month pay, filed by above-named petitioners against private respondents Aurora L. Cruz, Francisco Borja, Leticia C. Borja and Sto. Nio Realty Incorporated, with Regional Arbitration Branch No. III, National Labor Relations Commission in San Fernando, Pampanga. 1 Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private respondents since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960 up to April 1979, when they were all allegedly dismissed from their employment; and

it was within the prerogative of private respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of agricultural work had been completed by them. 6 Respondent Labor Arbiter was also of the opinion that the real cause which triggered the filing of the complaint by the petitioners who are related to one another, either by consanguinity or affinity, was the filing of a criminal complaint for theft against Reynaldo Mercado, son of spouses Fortunate Mercado, Sr. and Rosa Mercado, for they even asked the help of Jesus David, Zone Chairman of the locality to talk to private respondent, Aurora Cruz regarding said criminal case. 7 In his affidavit, Jesus David stated under oath that petitioners were never regularly employed by private respondent Aurora Cruz but were, on-and-off hired to work and render services when needed, thus adding further support to the conclusion that petitioners were not regular and permanent employees of private respondent Aurora Cruz. 8 Respondent Labor Arbiter further held that only money claims from years 1976-1977, 1977-1978 and 1978-1979 may be properly considered since all the other money claims have prescribed for having accrued beyond the three (3) year period prescribed by law. 9 On grounds of equity, however, respondent Labor Arbiter awarded petitioners financial assistance by private respondent Aurora Cruz, in the amount of Ten Thousand Pesos (P10,000.00) to be equitably divided among an the petitioners except petitioner Fortunato Mercado, Jr. who had manifested his disinterest in the further prosecution of his complaint against private respondent. 10 Both parties filed their appeal with the National Labor Relations Commissions (NLRC). Petitioners questioned respondent Labor Arbiter's finding that they were not regular and permanent employees of private respondent Aurora Cruz while private respondents questioned the award of financial assistance granted by respondent Labor Arbiter. The NLRC ruled in favor of private respondents affirming the decision of the respondent Labor Arbiter, with the modification of the deletion of the award for financial assistance to petitioners. The dispositive portion of the decision of the NLRC reads: WHEREFORE, the Decision of Labor Arbiter Luciano P. Aquino dated March 3, 1983 is hereby modified in that the award of P10,000.00 financial assistance should be deleted. The said Decision is affirmed in all other aspects. SO ORDERED.
11

Petitioners filed a motion for reconsideration of the Decision of the Third Division of the NLRC dated 8 August 1984; however, the NLRC denied tills motion in a resolution dated 17 August 1987. 12 In the present Petition for certiorari, petitioners seek the reversal of the above-mentioned rulings. Petitioners contend that respondent Labor Arbiter and respondent NLRC erred when both ruled that petitioners are not regular and permanent employees of private respondents based on the terms and conditions of their hiring, for said findings are contrary to the provisions of Article 280 of the Labor Code. 13 They submit that petitioners' employment, even assuming said employment were seasonal, continued for so many years such that, by express provision of Article 280 of the Labor Code as amended, petitioners have become regular and permanent employees. 14 Moreover, they argue that Policy Instruction No. 12 15 of the Department of Labor and Employment clearly lends support to this contention, when it states: PD 830 has defined the concept of regular and casual employment. What determines regularity or casualness is not the employment contract, written or otherwise, but the nature of the job. If the job is usually necessary or desirable to the main business of the employer, then employment is regular. If not, then the employment is casual. Employment for a definite period which exceeds one (1) year shall be considered re for the duration of the definite period. This concept of re and casual employment is designed to put an end to casual employment in regular jobs which has been abused by many employers to prevent so-called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. This new concept should be strictly enforced to give meaning to the constitutional guarantee of employment tenure. 16 Tested under the laws invoked, petitioners submit that it would be unjust, if not unlawful, to consider them as casual workers since they have been doing all phases of agricultural work for so many years, activities which are undeniably necessary, desirable and indispensable in the rice and sugar cane production business of the private respondents. 17

In the Comment filed by private respondents, they submit that the decision of the Labor Arbiter, as aimed by respondent NLRC, that petitioners were only hired as casuals, is based on solid evidence presented by the parties and also by the Chief of the Special Task Force of the NLRC Regional Office and, therefore, in accordance with the rule on findings of fact of administrative agencies, the decision should be given great weight. 18 Furthermore, they contend that the arguments used by petitioners in questioning the decision of the Labor Arbiter were based on matters which were not offered as evidence in the case heard before the regional office of the then Ministry of Labor but rather in the case before the Social Security Commission, also between the same parties. 19 Public respondent NLRC filed a separate comment prepared by the Solicitor General. It submits that it has long been settled that findings of fact of administrative agencies if supported by substantial evidence are entitled to great weight. 20 Moreover, it argues that petitioners cannot be deemed to be permanent and regular employees since they fall under the exception stated in Article 280 of the Labor Code, which reads: The provisions of written agreements to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. 21 (emphasis supplied) The Court resolved to give due course to the petition and required the parties to submit their respective memoranda after which the case was deemed submitted for decision. The petition is not impressed with merit. The invariable rule set by the Court in reviewing administrative decisions of the Executive Branch of the Government is that the findings of fact made therein are respected, so long as they are supported by substantial evidence, even if not overwhelming or preponderant; 22 that it is not for the reviewing court to weigh the conflicting evidence, determine the credibility of the witnesses or otherwise substitute its own judgment for

that of the administrative agency on the sufficiency of the evidence; 23 that the administrative decision in matters within the executive's jurisdiction can only be set aside upon proof of gross abuse of discretion, fraud, or error of law. 24 The questioned decision of the Labor Arbiter reads: Focusing the spotlight of judicious scrutiny on the evidence on record and the arguments of both parties, it is our well-discerned opinion that the petitioners are not regular and permanent workers of the respondents. The very nature of the terms and conditions of their hiring reveal that the petitioners were required to perform p of cultural work for a definite period, after which their services are available to any farm owner. We cannot share the arguments of the petitioners that they worked continuously the whole year round for twelve hours a day. This, we feel, is an exaggeration which does not deserve any serious consideration inasmuch as the plan of rice and sugar cane does not entail a whole year operation, the area in question being comparatively small. It is noteworthy that the findings of the Chief of the Special Task Force of the Regional Office are similar to this. In fact, the sworn statement of one of the petitioners Fortunato Mercado, Jr., the son of spouses Fortunato Mercado, Sr. and Rosa Mercado, indubitably shows that said petitioners were only hired as casuals, on-and-off basis. With this kind of relationship between the petitioners and the respondent Aurora Cruz, we feel that there is no basis in law upon which the claims of the petitioners should be sustained, more specially their complaint for illegal dismissal. It is within the prerogative of respondent Aurora Cruz either to take in the petitioners to do further work or not after any single phase of agricultural work has been completed by them. We are of the opinion that the real cause which triggered the filing of this complaint by the petitioners who are related to one another, either by consanguinity or affinity was due to the filing of a criminal complaint by the respondent Aurora Cruz against Reynaldo Mercado, son of spouses Fortunato Mercado, Sr. and Rosa Mercado. In April 1979, according to Jesus David, Zone Chairman of the locality where the petitioners and respondent reside, petitioner Fortunato Mercado, Sr. asked for help

regarding the case of his son, Reynaldo, to talk with respondent Aurora Cruz and the said Zone Chairman also stated under oath that the petitioners were never regularly employed by respondent Aurora Cruz but were on-and-off hired to work to render services when needed.
25

activities in the usual business or trade of the employer, except for project employees. A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season 26 as in the present case. The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. Petitioners, in effect, contend that the proviso in the second paragraph of Art. 280 is applicable to their case and that the Labor Arbiter should have considered them regular by virtue of said proviso. The contention is without merit. The general rule is that the office of a proviso is to qualify or modify only the phrase immediately preceding it or restrain or limit the generality of the clause that it immediately follows. 27 Thus, it has been held that a proviso is to be construed with reference to the immediately preceding part of the provision to which it is attached, and not to the statute itself or to other sections thereof. 28 The only exception to this rule is where the clear legislative intent is to restrain or qualify not only the phrase immediately preceding it (the proviso) but also earlier provisions of the statute or even the statute itself as a whole. 29 Policy Instruction No. 12 of the Department of Labor and Employment discloses that the concept of regular and casual employees was designed to put an end to casual employment in regular jobs, which has been abused by many employers to prevent called casuals from enjoying the benefits of regular employees or to prevent casuals from joining unions. The same instructions show that the proviso in the second paragraph of Art. 280 was not designed to stifle small-scale businesses nor to oppress agricultural land owners to further the interests of laborers, whether agricultural or industrial. What it seeks to eliminate are abuses of employers against their employees and not, as petitioners would have us believe, to prevent smallscale businesses from engaging in legitimate methods to realize profit. Hence, the proviso is applicable only to the employees who are deemed

A careful examination of the foregoing statements reveals that the findings of the Labor Arbiter in the case are ably supported by evidence. There is, therefore, no circumstance that would warrant a reversal of the questioned decision of the Labor Arbiter as affirmed by the National Labor Relations Commission. The contention of petitioners that the second paragraph of Article 280 of the Labor Code should have been applied in their case presents an opportunity to clarify the afore-mentioned provision of law. Article 280 of the Labor Code reads in full: Article 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. The first paragraph answers the question of who are employees. It states that, regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable

"casuals" but not to the "project" employees nor the regular employees treated in paragraph one of Art. 280. Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal. 30 WHEREFORE, the petition is DISMISSED. The decision of the National Labor Relations Commission affirming that of the Labor Arbiter, under review, is AFFIRMED. No pronouncement as to costs. SO ORDERED.

G.R. No. 149440

January 28, 2003

HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA, petitioners, vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE, respondents. PANGANIBAN, J.: Although the employers have shown that respondents performed work that was seasonal in nature, they failed to prove that the latter worked only for the duration of one particular season. In fact, petitioners do not deny that these workers have served them for several years already. Hence, they are regular not seasonal employees. The Case Before the Court is a Petition for Review under Rule 45 of the Rules of Court, seeking to set aside the February 20, 2001 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 51033. The dispositive part of the Decision reads: "WHEREFORE, premises considered, the instant special civil action for certiorari is hereby DENIED." 2 On the other hand, the National Labor Relations Commission (NLRC) Decision, 3 upheld by the CA, disposed in this wise: "WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new one entered declaring complainants to have been illegally dismissed. Respondents are hereby ORDERED to reinstate complainants except Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva to their previous position and to pay full backwages from September 1991 until reinstated. Respondents being guilty of unfair labor practice are further ordered to pay complainant union the sum of P10,000.00 as moral damages and P5,000.00 as exemplary damages." 4 The Facts The facts are summarized in the NLRC Decision as follows:

"Contrary to the findings of the Labor Arbiter that complainants [herein respondents] refused to work and/or were choosy in the kind of jobs they wanted to perform, the records is replete with complainants' persistence and dogged determination in going back to work. "Indeed, it would appear that respondents did not look with favor workers' having organized themselves into a union. Thus, when complainant union was certified as the collective bargaining representative in the certification elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a collective bargaining agreement. Moreover, the workers including complainants herein were not given work for more than one month. In protest, complainants staged a strike which was however settled upon the signing of a Memorandum of Agreement which stipulated among others that: 'a) The parties will initially meet for CBA negotiations on the 11th day of January 1991 and will endeavor to conclude the same within thirty (30) days. 'b) The management will give priority to the women workers who are members of the union in case work relative . . . or amount[ing] to gahit and [dipol] arises. 'c) Ariston Eruela Jr. will be given back his normal work load which is six (6) days in a week. 'd) The management will provide fifteen (15) wagons for the workers and that existing workforce prior to the actual strike will be given priority. However, in case the said workforce would not be enough, the management can hire additional workers to supplement them. 'e) The management will not anymore allow the scabs, numbering about eighteen (18) workers[,] to work in the hacienda; and 'f) The union will immediately lift the picket upon signing of this agreement.' "However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit down and

bargain collectively. Instead, respondent employed all means including the use of private armed guards to prevent the organizers from entering the premises. "Moreover, starting September 1991, respondents did not any more give work assignments to the complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents which provides: 'Whereas the union staged a strike against management on January 2, 1992 grounded on the dismissal of the union officials and members; 'Whereas parties to the present dispute agree to settle the case amicably once and for all; 'Now therefore, in the interest of both labor and management, parties herein agree as follows: '1. That the list of the names of affected union members hereto attached and made part of this agreement shall be referred to the Hacienda payroll of 1990 and determine whether or not this concerned Union members are hacienda workers; '2. That in addition to the payroll of 1990 as reference, herein parties will use as guide the subjects of a Memorandum of Agreement entered into by and between the parties last January 4, 1990; '3. That herein parties can use other employment references in support of their respective claims whether or not any or all of the listed 36 union members are employees or hacienda workers or not as the case may be; '4. That in case conflict or disagreement arises in the determination of the status of the particular hacienda workers subject of this agreement herein parties further agree to submit the same to voluntary arbitration; '5. To effect the above, a Committee to be chaired by Rose Mengaling is hereby created to be composed of

three representatives each and is given five working days starting Jan. 23, 1992 to resolve the status of the subject 36 hacienda workers. (Union representatives: Bernardo Torres, Martin Alas-as, Ariston Arulea Jr.)" "Pursuant thereto, the parties subsequently met and the Minutes of the Conciliation Meeting showed as follows: 'The meeting started at 10:00 A.M. A list of employees was submitted by Atty. Tayko based on who received their 13th month pay. The following are deemed not considered employees: 1. Luisa Rombo 2. Ramona Rombo 3. Bobong Abrega 4. Boboy Silva 'The name Orencio Rombo shall be verified in the 1990 payroll. 'The following employees shall be reinstated immediately upon availability of work: 1. Jose Dagle 2. Rico Dagle 3. Ricardo Dagle 4. Jesus Silva 5. Fernando Silva 6. Ernesto Tejares 7. Alejandro Tejares 8. Gaudioso Rombo 9. Martin Alas-as Jr. 10. Cresensio Abrega 11. Ariston Eruela Sr. 12. Ariston Eruela Jr.' its commitment;

"When respondents again reneged on complainants filed the present complaint.

"But for all their persistence, the risk they had to undergo in conducting a strike in the face of overwhelming odds, complainants in an ironic twist of fate now find themselves being accused of 'refusing to work and being choosy in the kind of work they have to perform'." 5 (Citations omitted)

Ruling of the Court of Appeals The CA affirmed that while the work of respondents was seasonal in nature, they were considered to be merely on leave during the off-season and were therefore still employed by petitioners. Moreover, the workers enjoyed security of tenure. Any infringement upon this right was deemed by the CA to be tantamount to illegal dismissal. The appellate court found neither "rhyme nor reason in petitioner's argument that it was the workers themselves who refused to or were choosy in their work." As found by the NLRC, the record of this case is "replete with complainants' persistence and dogged determination in going back to work." 6 The CA likewise concurred with the NLRC's finding that petitioners were guilty of unfair labor practice. Hence this Petition. Issues Petitioners raise the following issues for the Court's consideration: "A. Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code, which categorically state that seasonal employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees who have served for at least one year. "B. Whether or not the Court of Appeals erred in rejecting the ruling in Mercado, . . . and relying instead on rulings which are not directly applicable to the case at bench, viz, Philippine Tobacco, Bacolod-Murcia, and Gaco, . . . "C Whether or not the Court of Appeals committed grave abuse of discretion in upholding the NLRC's conclusion that private respondents were illegally dismissed, that petitioner[s were] guilty of unfair labor practice, and that the union be awarded moral and exemplary damages." 8
7

Consistent with the discussion in petitioners' Memorandum, we shall take up Items A and B as the first issue and Item C as the second. The Court's Ruling The Petition has no merit. First Issue: Regular Employment At the outset, we must stress that only errors of law are generally reviewed by this Court in petitions for review on certiorari of CA decisions. 9 Questions of fact are not entertained. 10 The Court is not a trier of facts and, in labor cases, this doctrine applies with greater force. 11 Factual questions are for labor tribunals to resolve. 12 In the present case, these have already been threshed out by the NLRC. Its findings were affirmed by the appellate court. Contrary to petitioners' contention, the CA did not err when it held that respondents were regular employees. Article 280 of the Labor Code, as amended, states: "Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. "An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exist." (Italics supplied)

For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable. In Abasolo v. National Labor Relations Commission, clarification:
13

the Court issued this

The CA did not err when it ruled that Mercado v. NLRC 15 was not applicable to the case at bar. In the earlier case, the workers were required to perform phases of agricultural work for a definite period of time, after which their services would be available to any other farm owner. They were not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof. On the other hand, herein respondents, having performed the same tasks for petitioners every season for several years, are considered the latter's regular employees for their respective tasks. Petitioners' eventual refusal to use their services even if they were ready, able and willing to perform their usual duties whenever these were available and hiring of other workers to perform the tasks originally assigned to respondents amounted to illegal dismissal of the latter. The Court finds no reason to disturb the CA's dismissal of what petitioners claim was their valid exercise of a management prerogative. The sudden changes in work assignments reeked of bad faith. These changes were implemented immediately after respondents had organized themselves into a union and started demanding collective bargaining. Those who were union members were effectively deprived of their jobs. Petitioners' move actually amounted to unjustified dismissal of respondents, in violation of the Labor Code. "Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause." 16 In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees. Second Issue: Unfair Labor Practice The NLRC also found herein petitioners guilty of unfair labor practice. It ruled as follows: "Indeed, from respondents' refusal to bargain, to their acts of economic inducements resulting in the promotion of those who withdrew from the union, the use of armed guards to prevent the organizers to come in, and the dismissal of union officials and members, one cannot but conclude that respondents did not want a union in their haciendaa clear interference in the right of the workers to self-organization." 17

"[T]he test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held: "The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. xxx xxx xxx

". . . [T]he fact that [respondents] do not work continuously for one whole year but only for the duration of the . . . season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until reemployed." 14

We uphold the CA's affirmation of the above findings. Indeed, factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality. Their findings are binding on the Supreme Court. 18 Verily, their conclusions are accorded great weight upon appeal, especially when supported by substantial evidence. 19 Consequently, the Court is not duty-bound to delve into the accuracy of their factual findings, in the absence of a clear showing that these were arbitrary and bereft of any rational basis." 20 The finding of unfair labor practice done in bad faith carries with it the sanction of moral and exemplary damages." 21 WHEREFORE, the Petition is hereby DENIED and the assailed Decision AFFIRMED. Costs against petitioners. SO ORDERED.

G.R. No. 150478. April 15, 2005 HACIENDA BINO/HORTENCIA STARKE, INC./HORTENCIA L. STARKE, Petitioners, vs. CANDIDO CUENCA, FRANCISCO ACULIT, ANGELINA ALMONIA, DONALD ALPUERTO, NIDA BANGALISAN, ROGELIO CHAVEZ, ELMO DULINGGIS, MERCEDES EMPERADO, TORIBIO EMPERADO, JULIANA ENCARNADO, REYNALDO ENCARNADO, GENE FERNANDO, JOVEN FERNANDO, HERNANI FERNANDO, TERESITA FERNANDO, BONIFACIO GADON, JOSE GALLADA, RAMONITO KILAYKO, ROLANDO KILAYKO, ALFREDO LASTIMOSO, ANTONIO LOMBO, ELIAS LOMBO, EMMA LOMBO, LAURENCIA LOMBO, LUCIA LOMBO, JOEL MALACAPAY, ADELA MOJELLO, ERNESTO MOJELLO, FRUCTOSO MOJELLO, JESSICA MOJELLO, JOSE MOJELLO, MARITESS MOJELLO, MERLITA MOJELLO, ROMEO MOJELLO, RONALDO MOJELLO, VALERIANA MOJELLO, JAIME NEMENZO, RODOLFO NAPABLE, SEGUNDIA OCDEN, JARDIOLINA PABALINAS, LAURO PABALINAS, NOLI PABALINAS, RUBEN PABALINAS, ZALDY PABALINAS, ALFREDO PANOLINO, JOAQUIN PEDUHAN, JOHN PEDUHAN, REYNALDO PEDUHAN, ROGELIO PEDUHAN, JOSEPHINE PEDUHAN, ANTONIO PORRAS, JR., LORNA PORRAS, JIMMY REYES, ALICIA ROBERTO, MARCOS ROBERTO, JR., MARIA SANGGA, RODRIGO SANGGA, ARGENE SERON, SAMUEL SERON, SR., ANGELINO SENELONG, ARMANDO SENELONG, DIOLITO SENELONG, REYNALDO SENELONG, VICENTE SENELONG, FEDERICO STA. ANA, ROGELIO SUASIM, EDNA TADLAS, ARTURO TITONG, JR., JOSE TITONG, JR., NANCY VINGNO, ALMA YANSON, JIMMY YANSON, MYRNA VILLANUEVA BELENARIO, SALVADOR MALACAPAY, and RAMELO TIONGCO, Respondents. DECISION CALLEJO, SR., J.: Before us is a petition for review of the Decision1 of the Court of Appeals (CA), dated July 31, 2001, and the Resolution dated September 24, 2001 denying the petitioners motion for reconsideration. The assailed decision modified the decision of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000099-98. Hacienda Bino is a 236-hectare sugar plantation located at Barangay Orong, Kabankalan City, Negros Occidental, and represented in this case by Hortencia L. Starke, owner and operator of the said hacienda.

The 76 individual respondents were part of the workforce of Hacienda Bino consisting of 220 workers, performing various works, such as cultivation, planting of cane points, fertilization, watering, weeding, harvesting, and loading of harvested sugarcanes to cargo trucks.2 On July 18, 1996, during the off-milling season, petitioner Starke issued an Order or Notice which stated, thus: To all Hacienda Employees: Please bear in mind that all those who signed in favor of CARP are expressing their desire to get out of employment on their own volition. Wherefore, beginning today, July 18, only those who did not sign for CARP will be given employment by Hda. Bino. (Sgd.) Hortencia Starke3 The respondents regarded such notice as a termination of their employment. As a consequence, they filed a complaint for illegal dismissal, wage differentials, 13th month pay, holiday pay and premium pay for holiday, service incentive leave pay, and moral and exemplary damages with the NLRC, Regional Arbitration Branch No. VI, Bacolod City, on September 17, 1996.4 In their Joint Sworn Statement, the respondents as complainants alleged inter alia that they are regular and permanent workers of the hacienda and that they were dismissed without just and lawful cause. They further alleged that they were dismissed because they applied as beneficiaries under the Comprehensive Agrarian Reform Program (CARP) over the land owned by petitioner Starke.5 For her part, petitioner Starke recounted that the companys Board of Directors petitioned the Sangguniang Bayan of Kabankalan for authority to re-classify, from agricultural to industrial, commercial and residential, the whole of Hacienda Bino, except the portion earmarked for the CARP. She asserted that half of the workers supported the re-classification but the others, which included the herein respondents, opted to become beneficiaries of the land under the CARP. Petitioner Starke alleged that in July 1996, there was little work in the plantation as it was off-season; and so, on account of the seasonal nature of the work, she issued the order giving preference to those who supported the re-classification. She pointed out that when the milling season began in October 1996, the work was plentiful again and she issued notices to all workers, including the

respondents, informing them of the availability of work. However, the respondents refused to report back to work. With respect to the respondents money claims, petitioner Starke submitted payrolls evidencing payment thereof. On October 6, 1997, Labor Arbiter Ray Allan T. Drilon rendered a Decision,6 finding that petitioner Starkes notice dated July 18, 1996 was tantamount to a termination of the respondents services, and holding that the petitioner company was guilty of illegal dismissal. The dispositive portion of the decision reads: WHEREFORE, premises considered, judgment is hereby rendered declaring the dismissal of the complainants illegal and ordering respondent Hortencia L. Starke, Inc. represented by Hortencia L. Starke, as President, to: 1. Reinstate the complainants to their former position without loss of seniority rights immediately upon receipt of this decision; 2. PAY the backwages and wage differentials of the complainants, to wit: in the total amount of Four Hundred Ninety-Five Thousand Eight Hundred Fifty-Two and 72/100 (P495,852.72) Pesos; and 3. TO PAY the complainants attorney's fee in the amount of Forty-Nine Thousand Five Hundred Eighty-Five and 27/100 (P49,585.27) Pesos. Respondents are further directed to deposit to this Office the total judgment award of FIVE HUNDRED FORTY-FIVE THOUSAND AND FOUR HUNDRED THIRTY-SEVEN AND 99/100 (P545,437.99) PESOS within ten (10) days from receipt of this decision. All other claims are hereby DISMISSED for lack of merit. SO ORDERED.7 Both the petitioners and the respondents appealed the case to the NLRC. On July 24, 1998, the NLRC affirmed with modification the decision of the Labor Arbiter. The dispositive part of its decision reads:

WHEREFORE, premises considered, the Decision of the Labor Arbiter is AFFIRMED WITH MODIFICATIONS. Respondent is further ordered to pay the complainants listed in the Holiday Pay Payroll the amounts due them. SO ORDERED.8 A motion for reconsideration of the said decision was denied by the NLRC.9 Dissatisfied, the respondents appealed the case to the CA where the following issues were raised: A. THE HONORABLE COMMISSION GRAVELY ABUSED ITS DISCRETION AND POWER BY VIOLATING THE DOCTRINE OF "STARE DECISIS" LAID DOWN BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO THE STATUS OF THE SUGAR WORKERS. B. THE HONORABLE COMMISSION COMMITTED SERIOUS ERRORS BY ADMITTING THE MOTION TO DISMISS AND/OR ANSWER TO PETITIONERS APPEAL MEMORANDUM DATED MARCH 26, 1998 FILED BY COUNSEL FOR THE HEREIN RESPONDENTS INSPITE OF THE FACT THAT IT WAS FILED WAY BEYOND THE REGLEMENTARY PERIOD. C. THE HONORABLE COMMISSION COMMITTED GRAVE ERROR IN GIVING CREDENCE TO THE SWEEPING ALLEGATIONS OF THE COMPLAINANTS AS TO THE AWARD OF BACKWAGES AND HOLIDAY PAY WITHOUT ANY BASIS.10 On July 31, 2001, the CA rendered a Decision,11 the dispositive portion of which reads: WHEREFORE, the decision of the National Labor Relations Commission is hereby MODIFIED by deleting the award for holiday pay and premium pay for holidays. The rest of the Decision is hereby AFFIRMED. SO ORDERED.12 The CA ruled that the concept of stare decisis is not relevant to the present case. It held that the ruling in Mercado, Sr. v. NLRC13 does not operate to abandon the settled doctrine that sugar workers are considered regular and permanent farm workers of a sugar plantation owner, considering that there are facts peculiar in that case which are not present in the case at bar. In the Mercado case, the farm laborers worked only for a definite period for a farm owner since the area of the land was comparatively small, after which they offer their services to other farm owners. In this

case, the area of the hacienda, which is 236 hectares, simply does not allow for the respondents to work for a definite period only. The CA also held that the petitioners reliance on Bacolod-Murcia Milling Co. Inc. v. NLRC14 was misplaced, as it in fact, bolstered the respondents' posture that they are regular employees. In that case, the Court held that a sugar worker may be considered as in regular employment even during those years when he is merely a seasonal worker where the issues concern the determination of an employer-employee relationship and security of tenure. Further, the CA held that the respondents appeal to the NLRC was not perfected since they failed to accompany their notice of appeal with a memorandum of appeal, or to timely file a memorandum of appeal. Thus, as to them, the decision of the Labor Arbiter became final and executory. The NLRC, therefore, gravely abused its discretion when it modified the decision of the Labor Arbiter and awarded to the respondents holiday pay and premium for holiday pay. Finally, the CA affirmed the award of backwages, finding no circumstance that would warrant a reversal of the findings of the Labor Arbiter and NLRC on this point. 15 On September 24, 2001, the CA denied the motion for reconsideration filed by the petitioners due to their failure to indicate the date of the receipt of the decision to determine the timeliness of the motion.16 Hence, this petition for review. The petitioners submit the following issues: A. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION AND POWER BY VIOLATING THE DOCTRINE OF "STARE DECISIS" LAID DOWN BY THE SUPREME COURT AND THE APPLICABLE LAWS AS TO THE STATUS OF THE SUGAR WORKERS. B. WHETHER OR NOT THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN DISMISSING THE MOTION FOR RECONSIDERATION FOR FAILURE TO STATE THE DATE OF THE RECEIPT OF THE DECISION IN THE MOTION FOR RECONSIDERATION.17 Petitioner Starke contends that the established doctrine that seasonal employees are regular employees had been overturned and abandoned by Mercado, Sr. v. NLRC.18 She stresses that in that case, the Court held that petitioners therein who were sugar workers, are seasonal employees and their employment legally ends upon completion of the project or the

season. Petitioner Starke argues that the CA violated the doctrine of stare decisis in not applying the said ruling. She asserts that the respondents, who are also sugar workers, are seasonal employees; hence, their employment can be terminated at the end of the season and such termination cannot be considered an illegal dismissal. Petitioner Starke maintains that the determination of whether the workers are regular or seasonal employees is not dependent on the number of hectares operated upon by them, or the number of workers, or the capitalization involved, but rather, in the nature of the work. She asserts that the respondents also made their services available to the neighboring haciendas. To buttress her contention that the respondents are seasonal employees, petitioner Starke cites Rep. Act 6982, An Act Strengthening the Social Amelioration Program in the Sugar Industry, Providing the Mechanics for its Implementation, and for other Purposes, which recognizes the seasonal nature of the work in the sugar industry.19 Petitioner Starke also takes exception to the denial of her motion for reconsideration due to failure to state the date of the receipt of the decision. She asserts that a denial of a motion for reconsideration due to such cause is merely directory and not mandatory on the part of the CA. Considering that the amount involved in this case and the fact that the motion was filed within the reglementary period, the CA should have considered the motion for reconsideration despite such procedural lapse.20 On the other hand, the respondents aver that the petitioners erroneously invoke the doctrine of stare decisis since the factual backdrop of this case and the Mercado case is not similar. The respondents posit that the Mercado case ruled on the status of employment of farm laborers who work only for a definite period of time for a farm owner, after which they offer their services to other farm owners. Contrarily, the respondents contend that they do not work for a definite period but throughout the whole year, and do not make their services available to other farm owners. Moreover, the land involved in the Mercado case is comparatively smaller than the sugar land involved in this case. The respondents insist that the vastness of the land involved in this case requires the workers to work on a year-round basis, and not on an "on-and-off" basis like the farm workers in the Mercado case. Finally, the respondents maintain that the requirement that the date of receipt of the decision should be indicated in the motion for reconsideration is mandatory and jurisdictional and, if not complied with, the court must deny the motion outright.21 The petition is without merit.

On the substantial issue of whether the respondents are regular or seasonal employees, the petitioners contend that the CA violated the doctrine of stare decisis by not applying the ruling in the Mercado case that sugar workers are seasonal employees. We hold otherwise. Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same.22 Where the facts are essentially different, however, stare decisis does not apply, for a perfectly sound principle as applied to one set of facts might be entirely inappropriate when a factual variance is introduced.23 The CA correctly found that the facts involved in this case are different from the Mercado case; therefore, the ruling in that case cannot be applied to the case at bar, thus: We do not find the concept of stare decisis relevant in the case at bench. For although in the Mercado case, the Supreme Court held the petitioners who were sugar workers not to be regular but seasonal workers, nevertheless, the same does not operate to abandon the settled doctrine of the High Court that sugar workers are considered regular and permanent farm workers of a sugar plantation owner, the reason being that there are facts present that are peculiar to the Mercado case. The disparity in facts between the Mercado case and the instant case is best exemplified by the fact that the former decision ruled on the status of employment of farm laborers, who, as found by the labor arbiter, work only for a definite period for a farm worker, after which they offer their services to other farm owners, considering the area in question being comparatively small, comprising of seventeen and a half (17) hectares of land, such that the planting of rice and sugar cane thereon could not possibly entail a whole year operation. The herein case presents a different factual condition as the enormity of the size of the sugar hacienda of petitioner, with an area of two hundred thirty-six (236) hectares, simply do not allow for private respondents to render work only for a definite period. Indeed, in a number of cases, the Court has recognized the peculiar facts attendant in the Mercado case. In Abasolo v. NLRC,24 and earlier, in Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC,25 the Court made the following observations: In Mercado, although respondent constantly availed herself of the petitioners services from year to year, it was clear from the facts therein that they were not in her regular employ. Petitioners therein performed different phases of agricultural work in a given year. However, during that period, they were free to work for other farm owners, and in fact they did. In other words, they worked for respondent, but were nevertheless free to contract their services with other farm owners. The Court was thus

emphatic when it ruled that petitioners were mere project employees, who could be hired by other farm owners.26 Recently, the Court reiterated the same observations in Hacienda Fatima v. National Federation of Sugarcane Workers-Food and General Trade27 and added that the petitioners in the Mercado case were "not hired regularly and repeatedly for the same phase/s of agricultural work, but on and off for any single phase thereof." In this case, there is no evidence on record that the same particulars are present. The petitioners did not present any evidence that the respondents were required to perform certain phases of agricultural work for a definite period of time. Although the petitioners assert that the respondents made their services available to the neighboring haciendas, the records do not, however, support such assertion. The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer.28 There is no doubt that the respondents were performing work necessary and desirable in the usual trade or business of an employer. Hence, they can properly be classified as regular employees. For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have been employed only for the duration of one season.29 While the records sufficiently show that the respondents work in the hacienda was seasonal in nature, there was, however, no proof that they were hired for the duration of one season only. In fact, the payrolls,30 submitted in evidence by the petitioners, show that they availed the services of the respondents since 1991. Absent any proof to the contrary, the general rule of regular employment should, therefore, stand. It bears stressing that the employer has the burden of proving the lawfulness of his employees dismissal.31 On the procedural issue, petitioner Starke avers that the CA should not have denied outright her motion for reconsideration, considering its timely filing and the huge amount involved. This contention is already moot. Petitioner Starke has already aired in this petition the arguments in her motion for reconsideration of the CA decision, which have been adequately addressed by this Court. Assuming arguendo that the CA indeed failed to consider the motion for reconsideration, petitioner Starke was not left without any other recourse.32

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the Court of Appeals, dated July 31, 2001, and its Resolution dated September 24, 2001 are hereby AFFIRMED. SO ORDERED. G.R. Nos. 83380-81 November 15, 1989 MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter, Department of Labor and Employment, National Capital Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA, GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA ANGELES, respondents. Ledesma, Saludo & Associates for petitioners. Pablo S. Bernardo for private respondents.

Individual complainants, private respondents herein, have been working for petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on a piece-rate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday. Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday and during peak periods even on Sundays and holidays. On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a complaint docketed as NLRC NCR Case No. 7-2603-84 for (a) underpayment of the basic wage; (b) underpayment of living allowance; (c) non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of service incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5. 1 During the pendency of NLRC NCR Case No. 7-2603-84, private respondent Dioscoro Pelobello left with Salvador Rivera, a salesman of petitioner Haberdashery, an open package which was discovered to contain a "jusi" barong tagalog. When confronted, Pelobello replied that the same was ordered by respondent Casimiro Zapata for his customer. Zapata allegedly admitted that he copied the design of petitioner Haberdashery. But in the afternoon, when again questioned about said barong, Pelobello and Zapata denied ownership of the same. Consequently a memorandum was issued to each of them to explain on or before February 4, 1985 why no action should be taken against them for accepting a job order which is prejudicial and in direct competition with the business of the company. 2 Both respondents allegedly did not submit their explanation and did not report for work. 3 Hence, they were dismissed by petitioners on February 4, 1985. They countered by filing a complaint for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 on February 5, 1985. 4 On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85 finding respondents guilty of illegal dismissal and ordering them to reinstate Dioscoro Pelobello and Casimiro Zapata to their respective or similar positions without loss of seniority rights, with full backwages from July 4, 1985 up to actual reinstatement.

FERNAN, C.J.: This petition for certiorari involving two separate cases filed by private respondents against herein petitioners assails the decision of respondent National Labor Relations Commission in NLRC CASE No. 7-2603-84 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Makati Haberdashery and/or Toppers Makati, et al." and NLRC CASE No. 2428-85 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Toppers Makati, et al.", affirming the decision of the Labor Arbiter who jointly heard and decided aforesaid cases, finding: (a) petitioners guilty of illegal dismissal and ordering them to reinstate the dismissed workers and (b) the existence of employer-employee relationship and granting respondent workers by reason thereof their various monetary claims. The undisputed facts are as follows:

The charge of unfair labor practice is dismissed for lack of merit. In NLRC NCR Case No. 7-26030-84, the complainants' claims for underpayment re violation of the minimum wage law is hereby ordered dismissed for lack of merit. Respondents are hereby found to have violated the decrees on the cost of living allowance, service incentive leave pay and the 13th Month Pay. In view thereof, the economic analyst of the Commission is directed to compute the monetary awards due each complainant based on the available records of the respondents retroactive as of three years prior to the filing of the instant case. SO ORDERED.
5

The first issue which is the pivotal issue in this case is resolved in favor of private respondents. We have repeatedly held in countless decisions that the test of employer-employee relationship is four-fold: (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. It is the so called "control test" that is the most important element. 8 This simply means the determination of 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 method by which the same is to be accomplished. 9 The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from the operations of petitioner, when a customer enters into a contract with the haberdashery or its proprietor, the latter directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to take the customer's measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision is actively manifested in all these aspects the manner and quality of cutting, sewing and ironing. Furthermore, the presence of control is immediately evident in this memorandum issued by Assistant Manager Cecilio B. Inocencio, Jr. dated May 30, 1981 addressed to Topper's Makati Tailors which reads in part: 4. Effective followed: immediately, new procedures shall be

From the foregoing decision, petitioners appealed to the NLRC. The latter on March 30, 1988 affirmed said decision but limited the backwages awarded the Dioscoro Pelobello and Casimiro Zapata to only one (1) year. 6 After their motion for reconsideration was denied, petitioners filed the instant petition raising the following issues: I THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN PETITIONER HABERDASHERY AND RESPONDENTS WORKERS. II THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS WORKERS ARE ENTITLED TO MONETARY CLAIMS DESPITE THE FINDING THAT THEY ARE NOT ENTITLED TO MINIMUM WAGE. III THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS PELOBELLO AND ZAPATA WERE ILLEGALLY DISMISSED. 7

A. To follow instruction and orders from the undersigned Roger Valderama, Ruben Delos Reyes and Ofel Bautista. Other than this person (sic) must ask permission to the above mentioned before giving orders or instructions to the tailors. B. Before accepting the job orders tailors must check the materials, job orders, due dates and other things to maximize the efficiency of our production. The materials should be checked (sic) if it is matched (sic) with the sample, together with the number of the job order. C. Effective immediately all job orders must be finished one day before the due date. This can be done by proper scheduling of job order and if you will cooperate with your supervisors. If you have many due dates for certain day, advise Ruben or Ofel at once so that they can make necessary adjustment on due dates.

D. Alteration-Before accepting alteration person attending on customs (sic) must ask first or must advise the tailors regarding the due dates so that we can eliminate what we call 'Bitin'. E. If there is any problem regarding supervisors or cotailor inside our shop, consult with me at once settle the problem. Fighting inside the shop is strictly prohibited. Any tailor violating this memorandum will be subject to disciplinary action. For strict compliance.
10

"Hence, for lack of sufficient evidence to support the claims of the complainants for alleged violation of the minimum wage, their claims for underpayment re violation of the Minimum Wage Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must perforce fall." 13 The records show that private respondents did not appeal the above ruling of the Labor Arbiter to the NLRC; neither did they file any petition raising that issue in the Supreme Court. Accordingly, insofar as this case is concerned, that issue has been laid to rest. As to private respondents, the judgment may be said to have attained finality. For it is a well-settled rule in this jurisdiction that "an appellee who has not himself appealed cannot obtain from the appellate court-, any affirmative relief other than the ones granted in the decision of the court below. " 14 As a consequence of their status as regular employees of the petitioners, they can claim cost of living allowance. This is apparent from the provision defining the employees entitled to said allowance, thus: "... All workers in the private sector, regardless of their position, designation or status, and irrespective of the method by which their wages are paid. " 15 Private respondents are also entitled to claim their 13th Month Pay under Section 3(e) of the Rules and Regulations Implementing P.D. No. 851 which provides: Section 3. Employers covered. The Decree shall apply to all employers except to: xxx xxx xxx (e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned. (Emphasis supplied.) On the other hand, while private respondents are entitled to Minimum Wage, COLA and 13th Month Pay, they are not entitled to service incentive leave pay because as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code. For the same reason

From this memorandum alone, it is evident that petitioner has reserved the right to control its employees not only as to the result but also the means and methods by which the same are to be accomplished. That private respondents are regular employees is further proven by the fact that they have to report for work regularly from 9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they report for work before 9:30 a.m. and which is forfeited when they arrive at or after 9:30 a.m. 11 Since private respondents are regular employees, necessarily the argument that they are independent contractors must fail. As established in the preceding paragraphs, private respondents did not exercise independence in their own methods, but on the contrary were subject to the control of petitioners from the beginning of their tasks to their completion. Unlike independent contractors who generally rely on their own resources, the equipment, tools, accessories, and paraphernalia used by private respondents are supplied and owned by petitioners. Private respondents are totally dependent on petitioners in all these aspects. Coming now to the second issue, there is no dispute that private respondents are entitled to the Minimum Wage as mandated by Section 2(g) of Letter of Instruction No. 829, Rules Implementing Presidential Decree No. 1614 and reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which explicitly states that, "All employees paid by the result shall receive not less than the applicable new minimum wage rates for eight (8) hours work a day, except where a payment by result rate has been established by the Secretary of Labor. ..." 12 No such rate has been established in this case. But all these notwithstanding, the question as to whether or not there is in fact an underpayment of minimum wages to private respondents has already been resolved in the decision of the Labor Arbiter where he stated:

private respondents cannot also claim holiday pay (Section 1(e), Rule IV, Implementing Regulations, Book III, Labor Code). With respect to the last issue, it is apparent that public respondents have misread the evidence, for it does show that a violation of the employer's rules has been committed and the evidence of such transgression, the copied barong tagalog, was in the possession of Pelobello who pointed to Zapata as the owner. When required by their employer to explain in a memorandum issued to each of them, they not only failed to do so but instead went on AWOL (absence without official leave), waited for the period to explain to expire and for petitioner to dismiss them. They thereafter filed an action for illegal dismissal on the far-fetched ground that they were dismissed because of union activities. Assuming that such acts do not constitute abandonment of their jobs as insisted by private respondents, their blatant disregard of their employer's memorandum is undoubtedly an open defiance to the lawful orders of the latter, a justifiable ground for termination of employment by the employer expressly provided for in Article 283(a) of the Labor Code as well as a clear indication of guilt for the commission of acts inimical to the interests of the employer, another justifiable ground for dismissal under the same Article of the Labor Code, paragraph (c). Well established in our jurisprudence is the right of an employer to dismiss an employee whose continuance in the service is inimical to the employer's interest. 16 In fact the Labor Arbiter himself to whom the explanation of private respondents was submitted gave no credence to their version and found their excuses that said barong tagalog was the one they got from the embroiderer for the Assistant Manager who was investigating them, unbelievable. Under the circumstances, it is evident that there is no illegal dismissal of said employees. Thus, We have ruled that: No employer may rationally be expected to continue in employment a person whose lack of morals, respect and loyalty to his employer, regard for his employer's rules, and appreciation of the dignity and responsibility of his office, has so plainly and completely been bared. That there should be concern, sympathy, and solicitude for the rights and welfare of the working class, is meet and proper. That in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the former's favor, is not an

unreasonable or unfair rule. But that disregard of the employer's own rights and interests can be justified by that concern and solicitude is unjust and unacceptable. (Stanford Microsystems, Inc. v. NLRC, 157 SCRA 414415 [1988] ). The law is protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer. 17 More importantly, 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 automatically be decided in favor of labor. 18 Finally, it has been established that the right to dismiss or otherwise impose discriplinary sanctions upon an employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine the existence of said cause in accordance with the norms of due process. 19 There is no evidence that the employer violated said norms. On the contrary, private respondents who vigorously insist on the existence of employer-employee relationship, because of the supervision and control of their employer over them, were the very ones who exhibited their lack of respect and regard for their employer's rules. Under the foregoing facts, it is evident that petitioner Haberdashery had valid grounds to terminate the services of private respondents. WHEREFORE, the decision of the National Labor Relations Commission dated March 30, 1988 and that of the Labor Arbiter dated June 10, 1986 are hereby modified. The complaint filed by Pelobello and Zapata for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and legal bases. Award of service incentive leave pay to private respondents is deleted. SO ORDERED.

G.R. No. 123938 May 21, 1998 LABOR CONGRESS OF THE PHILIPPINES (LCP) for and in behalf of its members, ANA MARIE OCAMPO, MARY INTAL, ANNABEL CARESO, MARLENE MELQIADES, IRENE JACINTO, NANCY GARCIA, IMELDA SARMIENTO, LENITA VIRAY, GINA JACINTO, ROSEMARIE DEL ROSARIO, CATHERINE ASPURNA, WINNIE PENA, VIVIAN BAA, EMILY LAGMAN, LILIAN MARFIL, NANCY DERACO, JANET DERACO, MELODY JACINTO, CAROLYN DIZON, IMELDA MANALOTO, NORY VIRAY, ELIZA SALAZAR, GIGI MANALOTO, JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA, MERLY CANLAS, ERLINDA MANALANG, ANGELINA QUIAMBAO, LANIE GARCIA, ELVIRA PIEDRA, LOURDES PANLILIO, LUISA PANLILIO, LERIZA PANLILIO, ALMA CASTRO, ALDA DAVID, MYRA T. OLALIA, MARIFE PINLAC, NENITA DE GUZMAN, JULIE GACAD, EVELYN MANALO, NORA PATIO, JANETH CARREON, ROWENA MENDOZA, ROWENA MANALO, LENY GARCIA, FELISISIMA PATIO, SUSANA SALOMON, JOYDEE LANSANGAN, REMEDIOS AGUAS, JEANIE LANSANGAN, ELIZABETH MERCADO, JOSELYN MANALESE, BERNADETH RALAR, LOLITA ESPIRITU, AGNES SALAS, VIRGINIA MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO, CORA PATIO, ANTONIA CALMA, AGNES CARESO, GEMMA BONUS, MARITESS OCAMPO, LIBERTY GELISANGA, JANETH MANARANG, AMALIA DELA CRUZ, EVA CUEVAS, TERESA MANIAGO, ARCELY PEREZ, LOIDA BIE, ROSITA CANLAS, ANALIZA ESGUERRA, LAILA MANIAGO, JOSIE MANABAT, ROSARIO DIMATULAC, NYMPA TUAZON, DAIZY TUASON, ERLINDA NAVARRO, EMILY MANARANG, EMELITA CAYANAN, MERCY CAYANAN, LUZVIMINDA CAYANAN, ANABEL MANALO, SONIA DIZON, ERNA CANLAS, MARIAN BENEDICTA, DOLORES DOLETIN, JULIE DAVID, GRACE VILLANUEVA, VIRGINIA MAGBAG, CORAZON RILLION, PRECY MANALILI, ELENA RONOZ, IMELDA MENDOZA, EDNA CANLAS and ANGELA CANLAS, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, its Proprietor/President & Manager, MR. GONZALO KEHYENG and MRS. EVELYN KEHYENG, respondents.

The antecedents of this case, as summarized by the Office of the Solicitor General in its Manifestation and Motion in Lieu of Comment, 3 are as follows: The 99 persons named as petitioners in this proceeding were rank-and-file employees of respondent Empire Food Products, which hired them on various dates (Paragraph 1, Annex "A" of Petition, Annex "B;" Page 2, Annex "F" of Petition). Petitioners filed against private respondents a complaint for payment of money claim[s] and for violation of labor standard[s] laws (NLRC Case No. RAB-111-10-1817-90). They also filed a petition for direct certification of petitioner Labor Congress of the Philippines as their bargaining representative (Case No. R0300-9010-RU005). On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products, Inc. entered into a Memorandum of Agreement which provided, among others, the following: 1. That in connection with the pending Petition for Direct Certification filed by the Labor Congress with the DOLE, Management of the Empire Food Products has no objection [to] the direct certification of the LCP Labor Congress and is now recognizing the Labor Congress of the Philippines (LCP) and its Local Chapter as the SOLE and EXCLUSIVE Bargaining Agent and Representative for all rank and file employees of the Empire Food Products regarding "WAGES, HOURS Of WORK, AND OTHER TERMS AND CONDITIONS OF EMPLOYMENT;" 2. That with regards [sic] to NLRC CASE NO. RAB-III-101817-90 pending with the NLRC parties jointly and mutually agreed that the issues thereof, shall be discussed by the parties and resolve[d] during the negotiation of the Collective Bargaining Agreement; 3. That Management of the Empire Food Products shall make the proper adjustment of the Employees Wages within fifteen (15) days from the signing of this

DAVIDE, JR., J.: In this special civil action for certiorari under Rule 65, petitioners seek to reverse the 29 March 1995 resolution 1 of the National Labor Relations Commission (NLRC) in NLRC RAB III Case No. 01-1964-91 which affirmed the Decision 2 of Labor Arbiter Ariel C. Santos dismissing their complaint for utter lack of merit.

Agreement and further employees with the SSS;

agreed

to

register

all

the

party in writing indicating said grievances before taking any action to another forum or government agencies; 8. That parties [to] this Memorandum of Agreement jointly and mutually agreed to respect, abide and comply with all the terms and conditions hereof. Further agreed that violation by the parties of any provision herein shall constitute an act of ULP. (Annex "A" of Petition). In an Order dated October 24, 1990, Mediator Arbiter Antonio Cortez approved the memorandum of agreement and certified LCP "as the sole and exclusive bargaining agent among the rank-and-file employee of Empire Food Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of employment" (Annex "B" of Petition). On November 9, 1990, petitioners through LCP President Navarro submitted to private respondents a proposal for collective bargaining (Annex "C" of Petition). On January 23, 1991, petitioners filed a complaint docketed as NLRC Case No. RAB-III-01-1964-91 against private respondents for: a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal; b. Union busting thru Harassments [sic], threats, and interfering with the rights of employees to selforganization; c. Violation of the Memorandum of Agreement dated October 23, 1990; d. Underpayment of Wages in violation of R.A. No. 6640 and R.A. No. 6727, such as Wages promulgated by the Regional Wage Board; e. Actual, Moral and Exemplary Damages. (Annex "D" of Petition)

4. That Employer, Empire Food Products thru its Management agreed to deduct thru payroll deduction UNION DUES and other Assessment[s] upon submission by the LCP Labor Congress individual Check-Off Authorization[s] signed by the Union Members indicating the amount to be deducted and further agreed all deduction[s] made representing Union Dues and Assessment[s] shall be remitted immediately to the LCP Labor Congress Treasurer or authorized representative within three (3) or five (5) days upon deductions [sic], Union dues not deducted during the period due, shall be refunded or reimbursed by the Employer/Management. Employer/Management further agreed to deduct Union dues from non-union members the same amount deducted from union members without need of individual Check-Off Authorizations [for] Agency Fee; 5. That in consideration [of] the foregoing covenant, parties jointly and mutually agreed that NLRC CASE NO. RAB-III-10-1817-90 shall be considered provisionally withdrawn from the Calendar of the National Labor Relations Commission (NLRC), while the Petition for direct certification of the LCP Labor Congress parties jointly move for the direct certification of the LCP Labor Congress; 6. That parties jointly and mutually agreed that upon signing of this Agreement, no Harassments [sic], Threats, Interferences [sic] of their respective rights under the law, no Vengeance or Revenge by each partner nor any act of ULP which might disrupt the operations of the business; 7. Parties jointly and mutually agreed that pending negotiations or formalization of the propose[d] CBA, this Memorandum of Agreement shall govern the parties in the exercise of their respective rights involving the Management of the business and the terms and condition[s] of employment, and whatever problems and grievances may arise by and between the parties shall be resolved by them, thru the most cordial and good harmonious relationship by communicating the other

After the submission by the parties of their respective position papers and presentation of testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the charges of unfair labor practice, union busting, violation of the memorandum of agreement, underpayment of wages and denied petitioners' prayer for actual, moral and exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of the individual complainants: The undersigned Labor Arbiter is not oblivious to the fact that respondents have violated a cardinal rule in every establishment that a payroll and other papers evidencing hours of work, payments, etc. shall always be maintained and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such penalty, respondents should not escape liability for this technicality, hence, it is proper that all individual complainants except those who resigned and executed quitclaim[s] and releases prior to the filing of this complaint should be reinstated to their former position[s] with the admonition to respondents that any harassment, intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. SO ORDERED. (Annex "G" of petition) On appeal, the National Labor Relations Commission vacated the Decision dated April 14, 1972 [sic] and remanded the case to the Labor Arbiter for further proceedings for the following reasons: The Labor Arbiter, through his decision, noted that ". . . complainant did not present any single witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan . . ." (p. 183, Records), that ". . . complainant before the National Labor Relations Commission must prove with definiteness and clarity the

offense charged. . . ." (Record, p. 183); that ". . . complainant failed to specify under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute unfair labor practice . . ." (Record, p. 183); that "complainants failed to present any witness who may describe in what manner respondents have committed unfair labor practice . . ." (Record, p. 185); that ". . . complainant LCP failed to present anyone of the so-called 99 complainants in order to testify who committed the threats and intimidation . . ." (Record, p. 185). Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses, namely, BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92, who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT, as Exhibit "A" and the annexes thereto as Exhibit "B", "B-1" to "B-9", inclusive. Minutes of the proceedings on record show that complainant further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENIE GARCIA (16 April 1991, Record, p. 96, see back portion thereof ; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103, 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by complainant on June 24, 1991 (Record, p. 106-109) The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on record. Other individual complainants should have been summoned with the end in view of receiving their testimonies. The complainants should be afforded the time and opportunity to fully substantiate their claims against the respondents. Judgment should be rendered only based on the conflicting positions of the parties. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties. Toward this end, therefore, it is Our considered view [that] the case should be remanded to the Labor Arbiter of origin for further proceedings. (Annex "H" of Petition) In a Decision dated July 27, 1994, Labor Arbiter Santos made the following determination:

Complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor practice. It is to be borne in mind that a declaration of unfair labor practice connotes a finding of prima facie evidence of probability that a criminal offense may have been committed so as to warrant the filing of a criminal information before the regular court. Hence, evidence which is more than a scintilla is required in order to declare respondents/employers guilty of unfair labor practice. Failing in this regard is fatal to the cause of complainants. Besides, even the charge of illegal lockout has no leg to stand on because of the testimony of respondents through their guard Orlando Cairo (TSN, July 31, 1991 hearing; p. 5-35) that on January 21, 1991, complainants refused and failed to report for work, hence guilty of abandoning their post without permission from respondents. As a result of complainants['] failure to report for work, the cheese curls ready for repacking were all spoiled to the prejudice of respondents. Under cross-examination, complainants failed to rebut the authenticity of respondents' witness testimony. As regards the issue of harassments [sic], threats and interference with the rights of employees to selforganization which is actually an ingredient of unfair labor practice, complainants failed to specify what type of threats or intimidation was committed and who committed the same. What are the acts or utterances constitutive of harassments [sic] being complained of? These are the specifics which should have been proven with definiteness and clarity by complainants who chose to rely heavily on its position paper through generalizations to prove their case. Insofar as violation of [the] Memorandum of Agreement dated October 23, 1990 is concerned, both parties agreed that: 2 That with regards [sic] to the NLRC Case No. RAB III-10-1817-90 pending with the NLRC, parties jointly and mutually agreed that the issues thereof shall be discussed by the parties and

resolve[d] during the negotiation of the CBA. The aforequoted provision does not speak of [an] obligation on the part of respondents but on a resolutory condition that may occur or may not happen. This cannot be made the basis of an imposition of an obligation over which the National Labor Relations Commission has exclusive jurisdiction thereof. Anent the charge that there was underpayment of wages, the evidence points to the contrary. The enumeration of complainants' wages in their consolidated Affidavits of merit and position paper which implies underpayment has no leg to stand on in the light of the fact that complainants' admission that they are piece workers or paid on a pakiao [basis] i.e. a certain amount for every thousand pieces of cheese curls or other products repacked. The only limitation for piece workers or pakiao workers is that they should receive compensation no less than the minimum wage for an eight (8) hour work [sic]. And compliance therewith was satisfactorily explained by respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30) during the July 31, 1991 hearing. On crossexamination, complainants failed to rebut or deny Gonzalo Kehyeng's testimony that complainants have been even receiving more than the minimum wage for an average workers [sic]. Certainly, a lazy worker earns less than the minimum wage but the same cannot be attributable to respondents but to the lazy workers. Finally, the claim for moral and exemplary damages has no leg to stand on when no malice, bad faith or fraud was ever proven to have been perpetuated by respondents. WHEREFORE, premises considered, the complaint is hereby DISMISSED for utter lack of merit. (Annex "I" of Petition). 4 On appeal, the NLRC, in its Resolution dated 29 March 1995, 5 affirmed in toto the decision of Labor Arbiter Santos. In so doing, the NLRC sustained the Labor Arbiter's findings that: (a) there was a dearth of evidence to prove the existence of unfair labor practice and union busting on the part of private respondents; (b) the agreement of 23 October 1990 could not be made the basis of an obligation within the ambit of the NLRC's jurisdiction,

as the provisions thereof, particularly Section 2, spoke of a resolutory condition which could or could not happen; (c) the claims for underpayment of wages were without basis as complainants were admittedly "pakiao" workers and paid on the basis of their output subject to the lone limitation that the payment conformed to the minimum wage rate for an eight-hour workday; and (d) petitioners were not underpaid. Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October 1995, 6 petitioners filed the instant special civil action for certiorari raising the following issues: I WHETHER OR NOT THE PUBLIC RESPONDENT NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION WHEN IT DISREGARDED OR IGNORED NOT ONLY THE EVIDENCE FAVORABLE TO HEREIN PETITIONERS, APPLICABLE JURISPRUDENCE BUT ALSO ITS OWN DECISIONS AND THAT OF THIS HONORABLE HIGHEST TRIBUNAL WHICH [WAS] TANTAMOUNT NOT ONLY TO THE DEPRIVATION OF PETITIONERS' RIGHT TO DUE PROCESS BUT WOULD RESULT [IN] MANIFEST INJUSTICE. II WHETHER OR NOT THE PUBLIC RESPONDENT GRAVELY ABUSED ITS DISCRETION WHEN IT DEPRIVED THE PETITIONERS OF THEIR CONSTITUTIONAL RIGHT TO SELF-ORGANIZATION, SECURITY OF TENURE, PROTECTION TO LABOR, JUST AND HUMANE CONDITIONS OF WORK AND DUE PROCESS. III WHETHER OR NOT THE PETITIONERS WERE ILLEGALLY EASED OUT [OF] OR CONSTRUCTIVELY DISMISSED FROM THEIR ONLY MEANS OF LIVELIHOOD. IV WHETHER OR NOT PETITIONERS SHOULD BE REINSTATED FROM THE DATE OF THEIR DISMISSAL UP TO THE TIME OF THEIR REINSTATEMENT, WITH

BACKWAGES, STATUTORY BENEFITS, DAMAGES AND ATTORNEY'S FEES. 7 We required Comments. respondents to file their respective

In their Manifestation and Comment, private respondents asserted that the petition was filed out of time. As petitioners admitted in their Notice to File Petition for Review on Certiorari that they received a copy of the resolution (denying their motion for reconsideration) on 13 December 1995, they had only until 29 December 1995 to file the petition. Having failed to do so, the NLRC thus already entered judgment in private respondents' favor. In their Reply, petitioners averred that Mr. Navarro, a non-lawyer who filed the notice to file a petition for review on their behalf, mistook which reglementary period to apply. Instead of using the "reasonable time" criterion for certiorari under Rule 65, he used the 15-day period for petitions for review on certiorari under Rule 45. They hastened to add that such was a mere technicality which should not bar their petition from being decided on the merits in furtherance of substantial justice, especially considering that respondents neither denied nor contradicted the facts and issues raised in the petition. In its Manifestation and Motion in Lieu of Comment, the Office of the Solicitor General (OSG) sided with petitioners. It pointed out that the Labor Arbiter, in finding that petitioners abandoned their jobs, relied solely on the testimony of Security Guard Rolando Cairo that petitioners refused to work on 21 January 1991, resulting in the spoilage of cheese curls ready for repacking. However, the OSG argued, this refusal to report for work for a single day did not constitute abandonment, which pertains to a clear, deliberate and unjustified refusal to resume employment, and not mere absence. In fact, the OSG stressed, two days after allegedly abandoning their work, petitioners filed a complaint for, inter alia, illegal lockout or illegal dismissal. Finally, the OSG questioned the lack of explanation on the part of Labor Arbiter Santos as to why he abandoned his original decision to reinstate petitioners. In view of the stand of the OSG, we resolved to require the NLRC to file its own Comment. In its Comment, the NLRC invokes the general rule that factual findings of an administrative agency bind a reviewing court and asserts that this case does not fall under the exceptions. The NLRC further argues that grave abuse of discretion may not be imputed to it, as it affirmed the factual findings and legal conclusions of the Labor Arbiter only after carefully

reviewing, weighing and evaluating the evidence in support thereof, as well as the pertinent provisions of law and jurisprudence. In their Reply, petitioners claim that the decisions of the NLRC and the Labor Arbiter were not supported by substantial evidence; that abandonment was not proved; and that much credit was given to selfserving statements of Gonzalo Kehyeng, owner of Empire Foods, as to payment of just wages. On 7 July 1997, we gave due course to the petition and required the parties to file their respective memoranda. However, only petitioners and private respondents filed their memoranda, with the NLRC merely adopting its Comment as its Memorandum. We find for petitioners. Invocation of the general rule that factual findings of the NLRC bind this Court is unavailing under the circumstances. Initially, we are unable to discern any compelling reason justifying the Labor Arbiter's volte face from his 14 April 1992 decision reinstating petitioners to his diametrically opposed 27 July 1994 decision, when in both instances, he had before him substantially the same evidence. Neither do we find the 29 March 1995 NLRC resolution to have sufficiently discussed the facts so as to comply with the standard of substantial evidence. For one thing, the NLRC confessed its reluctance to inquire into the veracity of the Labor Arbiter's factual findings, staunchly declaring that it was "not about to substitute [its] judgment on matters that are within the province of the trier of facts." Yet, in the 21 July 1992 NLRC resolution, 8 it chastised the Labor Arbiter for his errors both in judgment and procedure; for which reason it remanded the records of the case to the Labor Arbiter for compliance with the pronouncements therein. What cannot escape from our attention is that the Labor Arbiter did not heed the observations and pronouncements of the NLRC in its resolution of 21 July 1992, neither did he understand the purpose of the remand of the records to him. In said resolution, the NLRC summarized the grounds for the appeal to be: 1. that there is a prima facie evidence of abuse of discretion and acts of gross incompetence committed by the Labor Arbiter in rendering the decision. 2. that the Labor Arbiter in rendering the decision committed serious errors in the findings of facts.

After which, the NLRC observed and found: Complainant alleged that the Labor Arbiter disregarded the testimonies of the 99 complainants who submitted their Consolidated Affidavit of Merit and Position Paper which was adopted as direct testimonies during the hearing and cross-examined by respondents' counsel. The Labor Arbiter, through his decision, noted that ". . . complainant did not present any single witness while respondent presented four (4) witnesses in the persons of Gonzalo Kehyeng, Orlando Cairo, Evelyn Kehyeng and Elvira Bulagan . . ." (Records, p. 183), that ". . . complainant before the National Labor Relations Commission must prove with definiteness and clarity the offense charged. . . ." (Record, p. 183; that ". . . complainant failed to specify under what provision of the Labor Code particularly Art. 248 did respondents violate so as to constitute unfair labor practice . . ." (Record, p. 183); that "complainants failed to present any witness who may describe in what manner respondents have committed unfair labor practice . . ." (Record, p. 185); that ". . . complainant a [sic] LCP failed to present anyone of the so called 99 complainants in order to testify who committed the threats and intimidation . . ." (Record, p.185). Upon review of the minutes of the proceedings on record, however, it appears that complainant presented witnesses, namely BENIGNO NAVARRO, JR. (28 February 1991, RECORD, p. 91; 8 March 1991, RECORD, p. 92), who adopted its POSITION PAPER AND CONSOLIDATED AFFIDAVIT as Exhibit A and the annexes thereto as Exhibit B, B-1 to B-9, inclusive. Minutes of the proceedings on record show that complainant further presented other witnesses, namely: ERLINDA BASILIO (13 March 1991, RECORD, p. 93; LOURDES PANTILLO, MARIFE PINLAC, LENI GARCIA (16 April 1991, Record, p. 96, see back portion thereof; 2 May 1991, Record, p. 102; 16 May 1991, Record, p. 103; 11 June 1991, Record, p. 105). Formal offer of Documentary and Testimonial Evidence was made by the complainant on June 24, 1991 (Record, p.106-109). The Labor Arbiter must have overlooked the testimonies of some of the individual complainants which are now on

record. Other individual complainants should have been summoned with the end in view of receiving their testimonies. The complainants should [have been] afforded the time and opportunity to fully substantiate their claims against the respondents. Judgment should [have been] rendered only based on the conflicting positions of the parties. The Labor Arbiter is called upon to consider and pass upon the issues of fact and law raised by the parties. Toward this end, therefore, it is Our considered view the case should be remanded to the Labor Arbiter of origin for further proceedings. Further, We take note that the decision does not contain a dispositive portion or fallo. Such being the case, it may be well said that the decision does not resolve the issues at hand. On another plane, there is no portion of the decision which could be carried out by way of execution. It may be argued that the last paragraph of the decision may be categorized as the dispositive portion thereof: xxx xxx xxx The undersigned Labor Arbiter is not oblivious [to] the fact that respondents have violated a cardinal rule in every establishment that a payroll and other papers evidencing hour[s] of work, payment, etc. shall always be maintained and subjected to inspection and visitation by personnel of the Department of Labor and Employment. As such penalty, respondents should not escape liability for this technicality, hence, it is proper that all the individual complainants except those who resigned and executed quitclaim[s] and release[s] prior to the filing of this complaint should be reinstated to their former position with the admonition to respondents that any harassment, intimidation, coercion or any form of threat as a result of this immediately

executory reinstatement shall be dealt with accordingly. SO ORDERED. It is Our considered view that even assuming arguendo that the respondents failed to maintain their payroll and other papers evidencing hours of work, payment etc., such circumstance, standing alone, does not warrant the directive to reinstate complainants to their former positions. It is [a] well settled rule that there must be a finding of illegal dismissal before reinstatement be mandated. In this regard, the LABOR ARBITER is hereby directed to include in his clarificatory decision, after receiving evidence, considering and resolving the same, the requisite dispositive portion. 9 Apparently, the Labor Arbiter perceived that if not for petitioners, he would not have fallen victim to this stinging rebuke at the hands of the NLRC. Thus does it appear to us that the Labor Arbiter, in concluding in his 27 July 1994 Decision that petitioners abandoned their work, was moved by, at worst, spite, or at best, lackadaisically glossed over petitioner's evidence. On this score, we find the following observations of the OSG most persuasive: In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied on the testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners refused to work. As a result of their failure to work, the cheese curls ready for repacking on said date were spoiled. The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to abandonment of work. In fact two (2) days after the reported abandonment of work or on January 23, 1991, petitioners filed a complaint for, among others, unfair labor practice, illegal lockout and/or illegal dismissal. In several cases, this Honorable Court held that "one could not possibly abandon his work and shortly thereafter vigorously pursue his complaint for illegal dismissal (De Ysasi III v. NLRC, 231 SCRA 173; Ranara v. NLRC, 212 SCRA 631; Dagupan Bus Co. v. NLRC, 191 SCRA 328;

Atlas Consolidated Mining and Development Corp. v. NLRC, 190 SCRA 505; Hua Bee Shirt Factory v. NLRC, 186 SCRA 586; Mabaylan v. NLRC, 203 SCRA 570 and Flexo Manufacturing v. NLRC, 135 SCRA 145). In Atlas Consolidated, supra, this Honorable Court explicitly stated: It would be illogical for Caballo, to abandon his work and then immediately file an action seeking for his reinstatement. We can not believe that Caballo, who had worked for Atlas for two years and ten months, would simply walk away from his job unmindful of the consequence of his act. i.e. the forfeiture of his accrued employment benefits. In opting to finally to [sic] contest the legality of his dismissal instead of just claiming his separation pay and other benefits, which he actually did but which proved to be futile after all, ably supports his sincere intention to return to work, thus negating Atlas' stand that he had abandoned his job. In De Ysasi III v. NLRC (supra), this Honorable Court stressed that it is the clear, deliberate and unjustified refusal to resume employment and not mere absence that constitutes abandonment. The absence of petitioner employees for one day on January 21, 1991 as testified [to] by Security Guard Orlando Cairo did not constitute abandonment. In his first decision, Labor Arbiter Santos expressly directed the reinstatement of the petitioner employees and admonished the private respondents that "any harassment, intimidation, coercion or any form of threat as a result of this immediately executory reinstatement shall be dealt with accordingly. In his second decision, Labor Arbiter Santos did not state why he was abandoning his previous decision directing the reinstatement of petitioner employees.

By directing in his first decision the reinstatement of petitioner employees, the Labor Arbiter impliedly held that they did not abandon their work but were not allowed to work without just cause. That petitioner employees are "pakyao" or piece workers does not imply that they are not regular employees entitled to reinstatement. Private respondent Empire Food Products, Inc. is a food and fruit processing company. In Tabas v. California Manufacturing Co., Inc. (169 SCRA 497), this Honorable Court held that the work of merchandisers of processed food, who coordinate with grocery stores and other outlets for the sale of the processed food is necessary in the day-to-day operation[s] of the company. With more reason, the work of processed food repackers is necessary in the day-today operation[s] of respondent Empire Food Products. 10 It may likewise be stressed that the burden of proving the existence of just cause for dismissing an employee, such as abandonment, rests on the employer, 11 a burden private respondents failed to discharge. Private respondents, moreover, in considering petitioners' employment to have been terminated by abandonment, violated their rights to security of tenure and constitutional right to due process in not even serving them with a written notice of such termination. 12 Section 2, Rule XIV, Book V of the Omnibus Rules Implementing the Labor Code provides: Sec. 2. Notice of Dismissal Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. In cases of abandonment of work, the notice shall be served at the worker's last known address. Petitioners are therefore entitled to reinstatement with full back wages pursuant to Article 279 of the Labor Code, as amended by R.A. No. 6715. Nevertheless, the records disclose that taking into account the number of employees involved, the length of time that has lapsed since their dismissal, and the perceptible resentment and enmity between petitioners and private respondents which necessarily strained their relationship, reinstatement would be impractical and hardly promotive of the best interests of the parties. In lieu of reinstatement then, separation pay at the rate of one month for every year of service, with

a fraction of at least six (6) months of service considered as one (1) year, is in order. 13 That being said, the amount of back wages to which each petitioner is entitled, however, cannot be fully settled at this time. Petitioners, as piecerate workers having been paid by the piece, 14 there is need to determine the varying degrees of production and days worked by each worker. Clearly, this issue is best left to the National Labor Relations Commission. As to the other benefits, namely, holiday pay, premium pay, 13th month pay and service incentive leave which the labor arbiter failed to rule on but which petitioners prayed for in their complaint, 15 we hold that petitioners are so entitled to these benefits. Three (3) factors lead us to conclude that petitioners, although piece-rate workers, were regular employees of private respondents. First, as to the nature of petitioners' tasks, their job of repacking snack food was necessary or desirable in the usual business of private respondents, who were engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents throughout the year, their employment not having been dependent on a specific project or season; and third, the length of time 16 that petitioners worked for private respondents. Thus, while petitioners' mode of compensation was on a "per piece basis," the status and nature of their employment was that of regular employees. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave 17 and 13th month pay, 18 inter alia, "field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof." Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under the control of private respondents as their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. Further, in Section 8 (b), Rule IV, Book III which we quote hereunder, piece workers are specifically mentioned as being entitled to holiday pay. Sec. 8. Holiday pay of certain employees. (b) Where a covered employee is paid by results or output, such as payment on

piece work, his holiday pay shall not be less than his average daily earnings for the last seven (7) actual working days preceding the regular holiday: Provided, however, that in no case shall the holiday pay be less than the applicable statutory minimum wage rate. In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer of piece rate workers from those exempted from paying 13th month pay, to wit: 2. EXEMPTED EMPLOYERS The following employers are still not covered by P.D. No. 851: d. Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers. (emphasis supplied)

The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. 20 As to overtime pay, the rules, however, are different. According to Sec. 2(e), Rule I, Book III of the Implementing Rules, workers who are paid by results including those who are paid on piece-work, takay, pakiao, or task basis, if their output rates are in accordance with the standards prescribed under Sec. 8, Rule VII, Book III, of these regulations, or where such rates have been fixed by the Secretary of Labor in accordance with the aforesaid section, are not entitled to receive overtime pay. Here, private respondents did not allege adherence to the standards set forth in Sec. 8 nor with the rates prescribed by the Secretary of Labor. As such, petitioners are beyond the ambit of exempted persons and are therefore entitled to overtime pay. Once more, the National Labor Relations Commission would be in a better position to determine the exact amounts owed petitioners, if any. As to the claim that private respondents violated petitioners' right to selforganization, the evidence on record does not support this claim. Petitioners relied almost entirely on documentary evidence which, per se, did not prove any wrongdoing on private respondents' part. For example, petitioners presented their complaint 21 to prove the violation of labor laws committed by private respondents. The complaint, however, is merely "the pleading alleging the plaintiff's cause or causes of action." 22 Its contents are merely allegations, the verity of which shall have to be proved during the trial. They likewise offered their Consolidated Affidavit of Merit and Position Paper 23 which, like the offer of their Complaint, was a tautological exercise, and did not help nor prove their cause. In like manner, the petition for certification election 24 and the subsequent order of certification 25 merely proved that petitioners sought and acquired the status of bargaining agent for all rank-and-file employees. Finally, the existence of the memorandum of agreement 26 offered to substantiate private respondents' non-compliance therewith, did not prove either compliance or non-compliance, absent evidence of concrete, overt acts in contravention of the provisions of the memorandum. IN VIEW WHEREOF, the instant petition is hereby GRANTED. The Resolution of the National Labor Relations Commission of 29 March 1995 and the Decision of the Labor Arbiter of 27 July 1994 in NLRC Case No. RAB-III-01-1964-91 are hereby SET ASIDE, and another is hereby rendered: 1. DECLARING petitioners to have been illegally dismissed by private

respondents, thus entitled to full back wages and other privileges, and separation pay in lieu of reinstatement at the rate of one month's salary for every year of service with a fraction of six months of service considered as one year; 2. REMANDING the records of this case to the National Labor Relations Commission for its determination of the back wages and other benefits and separation pay, taking into account the foregoing observations; and 3. DIRECTING the National Labor Relations Commission to resolve the referred issues within sixty (60) days from its receipt of a copy of this decision and of the records of the case and to submit to this Court a report of its compliance hereof within ten (10) days from the rendition of its resolution. Costs against private respondents. SO ORDERED.

G.R. No. 111042 October 26, 1999 AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and J.C. TAILOR SHOP and/or JOHNNY CO, respondents. MENDOZA, J.: This is a petition for certiorari to set aside the decision 1 of the National Labor Relations Commission (NLRC) which reversed the awards made by the Labor Arbiter in favor of petitioners, except one for P4,992.00 to each, representing 13th month pay. The facts are as follows.

II. OVERTIME PAY 13,447.90 13,447.90 III. HOLIDAY PAY 1,399.30 1,399.30 IV. 13TH MONTH PAY 4,992.00 4,992.00 V. SEPARATION PAY 9,984.00 11,648.00 TOTAL P94,719.20 P96,383.20 = P191,102.40 Add: 10% Attorney's Fees 19,110.24

Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00. On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay, separation pay, 13th month pay, and attorneys fees.1wphi1.nt After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal dismissal and accordingly ordered them to pay petitioners claims. The dispositive portion of the Labor Arbiters decision reads: WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring the complainants to have been illegally dismissed and ordering the respondents to pay the complainants the following monetary awards: AVELINO LAMBO VICENTE BELOCURA I. BACKWAGES P64,896.00 P64,896.00

GRAND TOTAL P210,212.64 ========= or a total aggregate amount of TWO HUNDRED TEN THOUSAND TWO HUNDRED TWELVE AND 64/100 (P210,212.64). All other claims are dismissed for lack of merit. SO ORDERED.
2

On appeal by private respondents, the NLRC reversed the decision of the Labor Arbiter. It found that petitioners had not been dismissed from employment but merely threatened with a closure of the business if they insisted on their demand for a "straight payment of their minimum wage," after petitioners, on January 17, 1989, walked out of a meeting with private respondents and other employees. According to the NLRC, during that meeting, the employees voted to maintain the company policy of paying them according to the volume of work finished at the rate of P18.00 per dozen of tailored clothing materials. Only petitioners allegedly insisted that they be paid the minimum wage and other benefits. The NLRC held petitioners guilty of abandonment of work and accordingly dismissed their claims except that for 13th month pay. The dispositive portion of its decision reads:

WHEREFORE, in view of the foregoing, the appealed decision is hereby vacated and a new one entered ordering respondents to pay each of the complainants their 13th month pay in the amount of P4,992.00. All other monetary awards are hereby deleted. SO ORDERED.
3

Petitioners allege that they were dismissed by private respondents as they were about to file a petition with the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System (SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work. The petition is meritorious. First. There is no dispute that petitioners were employees of private respondents although they were paid not on the basis of time spent on the job but according to the quantity and the quality of work produced by them. There are two categories of employees paid by results: (1) those whose time and performance are supervised by the employer. (Here, there is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate worker belongs to this category especially if he performs his work in the company premises.); and (2) those whose time and performance are unsupervised. (Here, the employers control is over the result of the work. Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the company premises, while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify. 4 Petitioners belong to the first category, i.e., supervised employees. In determining the existence of an employer-employee relationship, the following elements must be considered: (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. 5 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. 6 In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked in the companys premises from

8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that they were paid on a piece-rate basis does not negate their status as regular employees of private respondents. The term "wage" is broadly defined in Art. 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. 7 Nor does the fact that petitioners are not covered by the SSS affect the employer-employee relationship. Indeed, the following factors show that petitioners, although piece-rate workers, were regular employees of private respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was necessary or desirable in the usual business of private respondents, which is engaged in the tailoring business; (2) petitioners worked for private respondents throughout the year, their employment not being dependent on a specific project or season; and, (3) petitioners worked for private respondents for more than one year. 8 Second. Private respondents contend, however, that petitioners refused to report for work after learning that the J.C. Tailoring and Dress Shop Employees Union had demanded their (petitioners) dismissal for conduct unbecoming of employees. In support of their claim, private respondents presented the affidavits 9 of Emmanuel Y. Caballero, president of the union, and Amado Cabaero, member, that petitioners had not been dismissed by private respondents but that practically all employees of the company, including the members of the union had asked management to terminate the services of petitioners. The employees allegedly said they were against petitioners request for change of the mode of payment of their wages, and that when a meeting was called to discuss this issue, a petition for the dismissal of petitioners was presented, prompting the latter to walk out of their jobs and instead file a complaint for illegal dismissal against private respondents on January 17, 1989, even before all employees could sign the petition and management could act upon the same.1wphi1.nt To justify a finding of abandonment of work, there must be proof of a deliberate and unjustified refusal on the part of an employee to resume his employment. The burden of proof is on the employer to show an unequivocal intent on the part of the employee to discontinue employment. 10 Mere absence is not sufficient. It must be accompanied by manifest acts unerringly pointing to the fact that the employee simply does not want to work anymore. 11 Private respondents failed to discharge this burden. Other than the selfserving declarations in the affidavits of their two employees, private

respondents did not adduce proof of overt acts of petitioners showing their intention to abandon their work. On the contrary, the evidence shows that petitioners lost no time in filing the case for illegal dismissal against private respondent. This fact negates any intention on their part to sever their employment relationship. 12 Abandonment is a matter of intention; it cannot be inferred or presumed from equivocal acts. 13 Third. Private respondents invoke the compromise agreement, 14 dated March 2, 1993, between them and petitioner Avelino Lambo, whereby in consideration of the sum of P10,000.00, petitioner absolved private respondents from liability for money claims or any other obligations. To be sure, not all quitclaims are per se invalid or against public policy. But those (1) where there is clear proof that the waiver was wangled from an unsuspecting or gullible person or (2) where the terms of settlement are unconscionable on their face are invalid. In these cases, the law will step in to annul the questionable transaction. 15 However, considering that the Labor Arbiter had given petitioner Lambo a total award of P94,719.20, the amount of P10,000.00 to cover any and all monetary claims is clearly unconscionable. As we have held in another case, 16 the subordinate position of the individual employee vis-a-vis management renders him especially vulnerable to its blandishments, importunings, and even intimidations, and results in his improvidently waiving benefits to which he is clearly entitled. Thus, quitclaims, waivers or releases are looked upon with disfavor for being contrary to public policy and are ineffective to bar claims for the full measure of the workers legal rights. 17 An employee who is merely constrained to accept the wages paid to him is not precluded from recovering the difference between the amount he actually received and that amount which he should have received. Fourth. The Labor Arbiter awarded backwages, overtime pay, holiday pay, 13th month pay, separation pay and attorneys fees, corresponding to 10% of the total monetary awards, in favor of petitioners. As petitioners were illegally dismissed, they are entitled to reinstatement with backwages. Considering that petitioners were dismissed from the service on January 17, 1989, i.e., prior to March 21, 1989, 18 the Labor Arbiter correctly applied the rule in the Mercury Drug case, 19 according to which the recovery of backwages should be limited to three years without qualifications or deductions. Any award in excess of three years is null and void as to the excess. 20 The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable time has lapsed since petitioners dismissal, so that reinstatement would now be impractical and hardly in the best interest of

the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate of one month salary for every year of service, with a fraction of at least six (6) months of service being considered as one (1) year. 21 The awards for overtime pay, holiday pay and 13th month pay are in accordance with our finding that petitioners are regular employees, although paid on a piece-rate basis. 22 These awards are based on the following computation of the Labor Arbiter: AVELINO LAMBO I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos. P 64.00/day x 26 days = 1,664.00/mo. x 36 mos. = P59,904.00 13th Mo. Pay: P1,664.00/yr. x 3 yrs. = 4,992.00 P64,896.00 II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89 Jan. 17/86 - April 30/87 = 15 mos. & 12 day = (15 mos. x 26 days + 12 days) = 402 days *2 hours = 25% 402 days x 2 hrs./days = 804 hrs. P 32.00/day 8 hrs. = 4.00/hr. x 25% = 1.00/hr. + P4.00/hr. =

5.00/hr. x 804 hrs. = 4,020.00 May 1/87 - Sept. 30/87 = 4 mos. & 26 days = (4 mos. x 26 days + 26 days) = 130 days 130 days x 2 hrs./day = 260 hrs. P 41.00/day 8 hrs. = 5.12/hr. x 25% = 1.28/hr. + P5.12/hr. = 6.40/hr. x 260 hrs. = P1,664.00 Oct. 1/87 - Dec. 13/87 = 2 mos. & 11 days = (2 mos. x 26 days + 11 days) = 63 days 63 days x 2 hrs./day = 126 hrs. P 49.00/day 8 hrs. = 6.12/hr. x 25% = 1.53/hr. + P6.12/hr. = 7.65/hr. x 126 hrs. = P963.90 Dec. 14/87 - Jan. 17/89 = 13 mos. & 2 days = (13 mos. x 26 days + 2 days) = 340 days 340 days x 2 hrs./day = 680 hrs. P 64.00/day 8 hrs. =

8.00/hr. x 25% = 2.00/hr. + P8.00/hr = 10.00/hr. x 680 hrs. = P6,800.00 P13,447.90 III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89 Jan. 17/86 - April 30/87 = 12 RHs; 8 SHs P 32.00/day x 200% = 64.00/day x 12 days = 768.00 32.00/day x 12 days = (384.00) P384.00 32.00/day x 30% = 9.60/day x 8 days = 76.80 460.80 May 1/87 - Sept. 30/87 = 3 RHs; 3 SHs P 41.00/day x 200% = 82.00/day 3 days = 246.00 41.00/day x 3 days = (123.00) P123.00 41.00/day x 30% = 12.30/day x 3 days = 36.90 159.90 Oct. 1/87 - Dec. 13/87 = 1 RH P 49.00/day x 200% =

98.00/day x 1 day = P98.00 49.00/day x 1 day = (49.00) 49.00 Dec. 14/87 - Jan. 17/89 = 9 RHs; 8 SHs P 64.00/day x 200% = 128.00/day x 9 days = P1,152.00 64.00/day P576.00 64.00/day x 30% = 19.20/day x 8 days = 153.60 729.60 1,399.30 IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 = 3 yrs. P 64.00/day x 26 days = 1,664.00/yr. x 3 yrs. = 4,992.00 V. SEPARATION PAY: Sept. 10/85 - Jan. 17/92 = 6 yrs. P1,664.00/mo. x 6 yrs. = 9,984.00 TOTAL AWARD OF AVELINO LAMBO P94,719.20 ======== VICENTE BELOCURA x 9 days = (576.00)

I. BACKWAGES: Jan. 17/89 - Jan. 17/92 = 36 mos. Same computation P64,896.00 as A. Lambo

II. OVERTIME PAY: Jan. 17/86 - Jan. 17/89 Same computation 13,447.90 as A. Lambo

III. HOLIDAY PAY: Jan. 17/86 - Jan. 17/89 Same computation 1,399.30 as A. Lambo

IV. 13TH MO. PAY: Jan. 17/86 - Jan. 17/89 Same computation 4,992.00 as A. Lambo

V. SEPARATION PAY: March 3/85 - Jan. 17/92 = 7 yrs. P1,664.00/mo. x 7 yrs. = 11,648.00 TOTAL AWARD OF VICENTE BELOCURA P96,383.20 ========= SUMMARY AVELINO LAMBO VICENTE BELOCURA I. BACKWAGES P64,896.00 P64,896.00 II. OVERTIME PAY 13,447.90 13,447.90

III. HOLIDAY PAY 1,399.30 1,399.30 IV. 13TH MO. PAY 4,992.00 4,992.00 V. SEPARATION PAY 9,984.00 11,648.00 TOTAL P94,719.20 P96,383.20 = P191,102.40 ADD: 10% Attorney's Fees 19,110.24 GRAND TOTAL P210,212.64 ========= Except for the award of attorneys fees in the amount of P19,110.24, the above computation is affirmed. The award of attorneys fees should be disallowed, it appearing that petitioners were represented by the Public Attorneys Office. With regard to petitioner Avelino Lambo, the amount of P10,000.00 paid to him under the compromise agreement should be deducted from the total award of P94,719.20. Consequently, the award to each petitioner should be as follows: AVELINO LAMBO VICENTE BELOCURA I. BACKWAGES P64,896.00 P64,896.00 II. OVERTIME PAY 13,447.90 13,447.90 III. HOLIDAY PAY 1,399.30 1,399.30 IV. 13TH MONTH PAY 4,992.00 4,992.00

V. SEPARATION PAY 9,984.00 11,648.00 P 94,719.20 Less 10,000.00 TOTAL P84,719.20 P96,383.20 GRAND TOTAL P181,102.40 ========= WHEREFORE, the decision of the National Labor Relations Commission is SET ASIDE and another one is RENDERED ordering private respondents to pay petitioners the total amount of One Hundred Eighty-One Thousand One Hundred Two Pesos and 40/100 (P181,102.40), as computed above.1wphi1.nt SO ORDERED.

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

as sales personnel) from the award of the holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime, night differential, vacation and sick leave benefits due to the use of 251 divisor. (Rollo, pp. 138-145) Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that their sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee benefit which cannot be diminished. On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that the company's sales personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days' holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement of overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251 days as divisor. Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which issued a resolution dated May 25, 1987 remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263 of the Labor Code as amended by Section 10, Batas Pambansa Blg. 130 and as implemented by Section 5 of the rules implementing B.P. Blg. 130. However, in a letter dated July 6, 1987, the respondent arbitrator refused to take cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had resigned from service effective May 1, 1986. Hence, this petition. The petitioner union raises the following issues: 1) Whether or not Nestle's sales personnel are entitled to holiday pay; and 2) Whether or not, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days and whether or not the previous use of 251 as divisor resulted in overpayment for overtime, night differential, vacation and sick leave pay.

GUTIERREZ, JR., J.: This labor dispute stems from the exclusion of sales personnel from the holiday pay award and the change of the divisor in the computation of benefits from 251 to 261 days. On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday pay in the light of the Court's decision in Chartered Bank Employees Association v. Ople (138 SCRA 273 [1985]). Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to: pay its monthly paid employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal restrictions as are provided for in the Code. (Rollo, p. 31) Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to

The petitioner insists that respondent's sales personnel are not field personnel under Article 82 of the Labor Code. The respondent company controverts this assertion. Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-agritultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty." The controversy centers on the interpretation of the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based. The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which can be determined with reasonable certainty. The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m, really spend the hours in between in actual field work. We concur with the following disquisition by the respondent arbitrator: The requirement for the salesmen and other similarly situated employees to report for work at the office at 8:00 a.m. and return at 4:00 or 4:30 p.m. is not within the realm of work in the field as defined in the Code but an exercise of purely management prerogative of providing administrative control over such personnel. This does not in any manner provide a reasonable level of determination on the actual field work of the employees which can be reasonably ascertained. The theoretical analysis that salesmen and other similarly-situated workers regularly report for work at 8:00 a.m. and return to their home station at 4:00 or 4:30 p.m., creating the assumption that their field work is supervised, is surface projection. Actual field work begins after 8:00 a.m., when the sales personnel follow their field itinerary, and ends immediately before 4:00 or 4:30 p.m. when they report

back to their office. The period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours of work in the field, the extent or scope and result of which are subject to their individual capacity and industry and which "cannot be determined with reasonable certainty." This is the reason why effective supervision over field work of salesmen and medical representatives, truck drivers and merchandisers is practically a physical impossibility. Consequently, they are excluded from the ten holidays with pay award. (Rollo, pp. 36-37) Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides: Rule IV Holidays with Pay Sec. 1. Coverage This rule shall apply to all employees except: xxx xxx xxx (e) Field personnel and other employees whose time and performance is unsupervised by the employer . . . (Emphasis supplied) While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless attempted to show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the company's sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 5355). Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly supervised by the employer.

The SOD schedule adverted to by the petitioner does not in the least signify that these sales personnel's time and performance are supervised. The purpose of this schedule is merely to ensure that the sales personnel are out of the office not later than 8:00 a.m. and are back in the office not earlier than 4:00 p.m. Likewise, the Court fails to see how the company can monitor the number of actual hours spent in field work by an employee through the imposition of sanctions on absenteeism contained in the company circular of March 15, 1984. The petitioner claims that the fact that these sales personnel are given incentive bonus every quarter based on their performance is proof that their actual hours of work in the field can be determined with reasonable certainty. The Court thinks otherwise. The criteria for granting incentive bonus are: (1) attaining or exceeding sales volume based on sales target; (2) good collection performance; (3) proper compliance with good market hygiene; (4) good merchandising work; (5) minimal market returns; and (6) proper truck maintenance. (Rollo, p. 190). The above criteria indicate that these sales personnel are given incentive bonuses precisely because of the difficulty in measuring their actual hours of field work. These employees are evaluated by the result of their work and not by the actual hours of field work which are hardly susceptible to determination. In San Miguel Brewery, Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated: The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day.

While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale for their exclusion as field personnel from holiday pay benefits also applies. The petitioner union also assails the respondent arbitrator's ruling that, concomitant with the award of holiday pay, the divisor should be changed from 251 to 261 days to include the additional 10 holidays and the employees should reimburse the amounts overpaid by Filipro due to the use of 251 days' divisor. Arbitrator Vivar's rationale for his decision is as follows: . . . The new doctrinal policy established which ordered payment of ten holidays certainly adds to or accelerates the basis of conversion and computation by ten days. With the inclusion of ten holidays as paid days, the divisor is no longer 251 but 261 or 262 if election day is counted. This is indeed an extremely difficult legal question of interpretation which accounts for what is claimed as falling within the concept of "solutio indebti." When the claim of the Union for payment of ten holidays was granted, there was a consequent need to abandon that 251 divisor. To maintain it would create an impossible situation where the employees would benefit with additional ten days with pay but would simultaneously enjoy higher benefits by discarding the same ten days for purposes of computing overtime and night time services and considering sick and vacation leave credits. Therefore, reimbursement of such overpayment with the use of 251 as divisor arises concomitant with the award of ten holidays with pay. (Rollo, p. 34) The divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee's salary and in the computation of his daily rate. This is the thrust of our pronouncement in Chartered Bank Employees Association v. Ople (supra). In that case, We held: It is argued that even without the presumption found in the rules and in the policy instruction, the company practice indicates that the monthly salaries of the employees are so computed as to include the holiday pay provided by law. The petitioner contends otherwise.

One strong argument in favor of the petitioner's stand is the fact that the Chartered Bank, in computing overtime compensation for its employees, employs a "divisor" of 251 days. The 251 working days divisor is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days in a year. If the employees are already paid for all nonworking days, the divisor should be 365 and not 251. In the petitioner's case, its computation of daily ratio since September 1, 1980, is as follows: monthly rate x 12 months 251 days Following the criterion laid down in the Chartered Bank case, the use of 251 days' divisor by respondent Filipro indicates that holiday pay is not yet included in the employee's salary, otherwise the divisor should have been 261. It must be stressed that the daily rate, assuming there are no intervening salary increases, is a constant figure for the purpose of computing overtime and night differential pay and commutation of sick and vacation leave credits. Necessarily, the daily rate should also be the same basis for computing the 10 unpaid holidays. The respondent arbitrator's order to change the divisor from 251 to 261 days would result in a lower daily rate which is violative of the prohibition on non-diminution of benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 days, then the dividend, which represents the employee's annual salary, should correspondingly be increased to incorporate the holiday pay. To illustrate, if prior to the grant of holiday pay, the employee's annual salary is P25,100, then dividing such figure by 251 days, his daily rate is P100.00 After the payment of 10 days' holiday pay, his annual salary already includes holiday pay and totals P26,100 (P25,100 + 1,000). Dividing this by 261 days, the daily rate is still P100.00. There is thus no merit in respondent Nestle's claim of overpayment of overtime and night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily rate, since the daily rate is still the same before and after the grant of holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor must fail in light of the Labor Code mandate that "all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations, shall be resolved in favor of labor." (Article 4). Moreover, prior to September 1, 1980, when the company was on a 6-day working schedule, the divisor used by the company was 303, indicating that the 10 holidays were likewise not paid. When Filipro shifted to a 5-day working schebule on September 1, 1980, it had the chance to rectify its error, if ever there was one but did not do so. It is now too late to allege payment by mistake. Nestle also questions the voluntary arbitrator's ruling that holiday pay should be computed from November 1, 1974. This ruling was not questioned by the petitioner union as obviously said decision was favorable to it. Technically, therefore, respondent Nestle should have filed a separate petition raising the issue of effectivity of the holiday pay award. This Court has ruled that an appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but he cannot seek modification or reversal of the judgment or affirmative relief unless he has also appealed. (Franco v. Intermediate Appellate Court, 178 SCRA 331 [1989], citing La Campana Food Products, Inc. v. Philippine Commercial and Industrial Bank, 142 SCRA 394 [1986]). Nevertheless, in order to fully settle the issues so that the execution of the Court's decision in this case may not be needlessly delayed by another petition, the Court resolved to take up the matter of effectivity of the holiday pay award raised by Nestle. Nestle insists that the reckoning period for the application of the holiday pay award is 1985 when the Chartered Bank decision, promulgated on August 28, 1985, became final and executory, and not from the date of effectivity of the Labor Code. Although the Court does not entirely agree with Nestle, we find its claim meritorious. In Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong, 132 SCRA 663 [1984], hereinafter referred to as the IBAA case, the Court declared that Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor on February 16, 1976 and April 23, 1976, respectively, and which excluded monthly paid employees from holiday pay benefits, are null and void. The Court therein reasoned that, in the guise of clarifying the Labor Code's provisions on holiday pay, the aforementioned implementing rule and policy instruction amended them by enlarging the scope of their exclusion. The Chartered Bank case reiterated the above ruling and added the "divisor" test.

However, prior to their being declared null and void, the implementing rule and policy instruction enjoyed the presumption of validity and hence, Nestle's non-payment of the holiday benefit up to the promulgation of the IBAA case on October 23, 1984 was in compliance with these presumably valid rule and policy instruction. In the case of De Agbayani v. Philippine National Bank, 38 SCRA 429 [1971], the Court discussed the effect to be given to a legislative or executive act subsequently declared invalid: xxx xxx xxx . . . It does not admit of doubt that prior to the declaration of nullity such challenged legislative or executive act must have been in force and had to be complied with. This is so as until after the judiciary, in an appropriate case, declares its invalidity, it is entitled to obedience and respect. Parties may have acted under it and may have changed their positions. What could be more fitting than that in a subsequent litigation regard be had to what has been done while such legislative or executive act was in operation and presumed to be valid in all respects. It is now accepted as a doctrine that prior to its being nullified, its existence as a fact must be reckoned with. This is merely to reflect awareness that precisely because the judiciary is the government organ which has the final say on whether or not a legislative or executive measure is valid, a period of time may have elapsed before it can exercise the power of judicial review that may lead to a declaration of nullity. It would be to deprive the law of its quality of fairness and justice then, if there be no recognition of what had transpired prior to such adjudication. In the language of an American Supreme Court decision: "The actual existence of a statute, prior to such a determination of [unconstitutionality], is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official." (Chicot County Drainage Dist. v. Baxter States Bank, 308 US 371, 374 [1940]). This language has been quoted with approval in a resolution in Araneta v. Hill (93

Phil. 1002 [1952]) and the decision in Manila Motor Co., Inc. v. Flores (99 Phil. 738 [1956]). An even more recent instance is the opinion of Justice Zaldivar speaking for the Court in Fernandez v. Cuerva and Co. (21 SCRA 1095 [1967]. (At pp. 434-435) The "operative fact" doctrine realizes that in declaring a law or rule null and void, undue harshness and resulting unfairness must be avoided. It is now almost the end of 1991. To require various companies to reach back to 1975 now and nullify acts done in good faith is unduly harsh. 1984 is a fairer reckoning period under the facts of this case. Applying the aforementioned doctrine to the case at bar, it is not farfetched that Nestle, relying on the implicit validity of the implementing rule and policy instruction before this Court nullified them, and thinking that it was not obliged to give holiday pay benefits to its monthly paid employees, may have been moved to grant other concessions to its employees, especially in the collective bargaining agreement. This possibility is bolstered by the fact that respondent Nestle's employees are among the highest paid in the industry. With this consideration, it would be unfair to impose additional burdens on Nestle when the non-payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's fault. The Court thereby resolves that the grant of holiday pay be effective, not from the date of promulgation of the Chartered Bank case nor from the date of effectivity of the Labor Code, but from October 23, 1984, the date of promulgation of the IBAA case. WHEREFORE, the order of the voluntary arbitrator in hereby MODIFIED. The divisor to be used in computing holiday pay shall be 251 days. The holiday pay as above directed shall be computed from October 23, 1984. In all other respects, the order of the respondent arbitrator is hereby AFFIRMED. SO ORDERED.

G.R. No. 156367

May 16, 2005 SYSTEMS, INC., petitioner,

AUTO BUS TRANSPORT vs. ANTONIO BAUTISTA, respondent. DECISION CHICO-NAZARIO, J.:

Petitioner, on the other hand, maintained that respondents employment was replete with offenses involving reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents wherein respondent was involved. Furthermore, petitioner avers that in the exercise of its management prerogative, respondents employment was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000. On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision,4 the dispositive portion of which reads: WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED. However, still based on the above-discussed premises, the respondent must pay to the complainant the following: a. his 13th month pay from the date of his hiring to the date of his dismissal, presently computed at P78,117.87; b. his service incentive leave pay for all the years he had been in service with the respondent, presently computed at P13,788.05. All other claims of both complainant and respondent are hereby dismissed for lack of merit.5 Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads: [T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides: "Section 3. Employers covered. The Decree shall apply to all employers except to: xxx xxx xxx

Before Us is a Petition for Review on Certiorari assailing the Decision1 and Resolution2 of the Court of Appeals affirming the Decision3 of the National Labor Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor Arbiter (finding respondent entitled to the award of 13th month pay and service incentive leave pay) by deleting the award of 13 th month pay to respondent. THE FACTS Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis. On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning. Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondents pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter of termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13 th month pay and service incentive leave pay against Autobus.

e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific work, irrespective of the time consumed in the performance thereof. xxx." Records show that complainant, in his position paper, admitted that he was paid on a commission basis. In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of 13th month pay to the complainant. WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13th month pay. The other findings are AFFIRMED.6 In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October 2001. Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion of which reads: WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed Decision of respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No costs.7 Hence, the instant petition. ISSUES 1. Whether or not respondent is entitled to service incentive leave; 2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondents claim of service incentive leave pay.

RULING OF THE COURT The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides: Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. Book III, Rule V: SERVICE INCENTIVE LEAVE SECTION 1. Coverage. This rule shall apply to all employees except: (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; . . . A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty."8 The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow.9 Hence, employees engaged on task or contract

basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel. Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave just because he was paid on purely commission basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel. According to Article 82 of the Labor Code, "field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association10 which states that: As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. [Emphasis ours] To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no employee would ever be considered a field personnel because every employer, in one way or another, exercises control over his employees. Petitioner further argues that the only criterion that should be considered is the nature of work of the employee in that, if the employees job requires that he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel. We are not persuaded. At this point, it is necessary to stress that the definition of a "field personnel" is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employees performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with

reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and performance are constantly supervised by the employer. As observed by the Labor Arbiter and concurred in by the Court of Appeals: It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductors reports. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. These, are present in the case at bar. The driver, the complainant herein, was therefore under constant supervision while in the performance of this work. He cannot be considered a field personnel.11 We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioners business. Accordingly, respondent is entitled to the grant of service incentive leave. The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to. The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year prescriptive period under Article 291 of the Labor Code is applicable to respondents claim of service incentive leave pay. Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred.

In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of action for money claims accrue in order to determine the reckoning date of the three-year prescriptive period. It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.12 To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a determination must be made as to the period when the act constituting a violation of the workers right to the benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with Article 291.13 Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint.14 It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year.15 Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC:16 The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that "[e]very employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay." Service incentive

leave is a right which accrues to every employee who has served "within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year." It is also "commutable to its money equivalent if not used or exhausted at the end of the year." In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.17 [Italics supplied] Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment. Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employees services, as the case may be. The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingmans welfare should be the primordial and paramount consideration.18 The policy is to extend the applicability of the decree 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 to labor.19 In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service incentive leave pay at the time of his dismissal. It was

only upon his filing of a complaint for illegal dismissal, one month from the time of his dismissal, that respondent demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated leave credits. Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code. WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs. SO ORDERED.

G.R. No. 112574 October 8, 1998 MERCIDAR FISHING CORPORATION represented by its President DOMINGO B. NAVAL, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and FERMIN AGAO, JR., respondents.

respondent asked for a certificate of employment on September 6 on the pretext that he was applying to another fishing company. On September 10, 1990, he refused to get the certificate and resign unless he was given separation pay. 3 On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a decision disposing of the case as follows: ACCORDINGLY, respondents are ordered to reinstate complainant with backwages, pay him his 13th month pay and incentive leave pay for 1990. All other claims are dismissed. SO ORDERED. Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the appeal for lack of merit. The NLRC dismissed petitioner's claim that it cannot be held liable for service incentive leave pay by fishermen in its employ as the latter supposedly are "field personnel" and thus not entitled to such pay under the Labor Code. 4 The NLRC likewise denied petitioner's motion for reconsideration of its decision in its order dated October 25, 1993. Hence, this petition. Petitioner contends: I THE RESPONDENT COMMISSION PALPABLY ERRED IN RULING AND SUSTAINING THE VIEW THAT FISHING CREW MEMBERS. LIKE FERMIN AGAO, JR., CANNOT BE CLASSIFIED AS FIELD PERSONNEL UNDER ARTICLE 82 OF THE LABOR CODE. II THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT UPHELD THE FINDINGS OF THE LABOR ARBITER THAT HEREIN PETITIONER HAD CONSTRUCTIVELY DISMISSED FERMIN AGAO, JR., FROM EMPLOYMENT.

MENDOZA, J.: This is a petition for certiorari to set aside the decision, dated August 30, 1993, of the National Labor Relations Commission dismissing the appeal of petitioner Mercidar Fishing Corporation from the decision of the Labor Arbiter in NLRC NCR Case No. 09-05084-90, as well as the resolution dated October 25, 1993, of the NLRC denying reconsideration. This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr. against petitioner for illegal dismissal, violation of P.D. No. 851, and non-payment of five days service incentive leave for 1990. Private respondent had been employed as a "bodegero" or ship's quartermaster on February 12, 1988. He complained that he had been constructively dismissed by petitioner when the latter refused him assignments aboard its boats after he had reported to work on May 28, 1990. 1 Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month from April 28, 1990 but that when he reported to work at the end of such period with a health clearance, he was told to come back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give him work. For this reason, private respondent asked for a certificate of employment from petitioner on September 6, 1990. However, when he came back for the certificate on September 10, petitioner refused to issue the certificate unless he submitted his resignation. Since private respondent refused to submit such letter unless he was given separation pay, petitioner prevented him from entering the premises. 2 Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. It claimed that the latter failed to report for work after his leave had expired and was, in fact, absent without leave for three months until August 28, 1998. Petitioner further claims that, nonetheless, it assigned private respondent to another vessel, but the latter was left behind on September 1, 1990. Thereafter, private

The petition has no merit. Art. 82 of the Labor Code provides: Art. 82. Coverage. The provisions of this Title [Working Conditions and Rest Periods] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. xxx xxx xxx "Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Petitioner argues essentially that since the work of private respondent is performed away from its principal place of business, it has no way of verifying his actual hours of work on the vessel. It contends that private respondent and other fishermen in its employ should be classified as "field personnel" who have no statutory right to service incentive leave pay. In the case of Union of Pilipro Employees (UFE) v. Vicar, 5 this Court explained the meaning of the phrase "whose actual hours of work in the field cannot be determined with reasonable certainty" in Art. 82 of the Labor Code, as follows: Moreover, the requirement that "actual hours of work in the field cannot be determined with reasonable certainty" must be read in conjunction with Rule IV, Book III of the Implementing Rules which provides: Rule IV Holidays with Pay Sec. 1. Coverage This rule shall apply to all employees except:

xxx xxx xxx (e) Field personnel and other employees whose time and performance is unsupervised by the employer . . . (Emphasis supplied). While contending that such rule added another element not found in the law (Rollo, p. 13), the petitioner nevertheless attempted to show that its affected members are not covered by the abovementioned rule. The petitioner asserts that the company's sales personnel are strictly supervised as shown by the SOD (Supervisor of the Day) schedule and the company circular dated March 15, 1984 (Annexes 2 and 3, Rollo, pp. 53-55). Contrary to the contention of the petitioner, the Court finds that the aforementioned rule did not add another element to the Labor Code definition of field personnel. The clause "whose time and performance is unsupervised by the employer" did not amplify but merely interpreted and expounded the clause "whose actual hours of work in the field cannot be determined with reasonable certainty." The former clause is still within the scope and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an employee's actual working hours in the field can be determined with reasonable certainty, query must be made as to whether or not such employee's time and performance is constantly supervised by the employer. 6 Accordingly, it was held in the aforementioned case that salesmen of Nestle Philippines, Inc. were field personnel: It is undisputed that these sales personnel start their field work at 8:00 a.m. after having reported to the office and come back to the office at 4:00 p.m. or 4:30 p.m. if they are Makati-based. The petitioner maintains that the period between 8:00 a.m. to 4:00 or 4:30 p.m. comprises the sales personnel's working hours which can be determined with reasonable certainty.

The Court does not agree. The law requires that the actual hours of work in the field be reasonably ascertained. The company has no way of determining whether or not these sales personnel, even if they report to the office before 8:00 a.m. prior to field work and come back at 4:30 p.m., really spend the hours in between in actual field work. 7 In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioner's business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessel's patron or master as the NLRC correctly held. 8 Neither did petitioner gravely abuse its discretion in ruling that private respondent had constructively been dismissed by petitioner. Such factual finding of both the NLRC and the Labor Arbiter is based not only on the pleadings of the parties but also on a medical certificate of fitness which, contrary to petitioner's claim private respondent presented when he reported to work on May 28, 1990. 9 As the NLRC held: Anent grounds (a) and (b) of the appeal, the respondent, in a nutshell, would like us to believe that the Arbiter abused his discretion (or seriously erred in his findings of facts) in giving credence to the factual version of the complainant. But it is settled that "(W)hen confronted with conflicting versions of factual matters," the Labor Arbiter has the "discretion to determine which party deserves credence on the basis of evidence received." [Gelmart Industries (Phils.), Inc. vs. Leogardo, 155 SCRA 403, 309, L-70544, November 5, 1987]. And besides, it is settled in this jurisdiction that "to constitute abandonment of position, there must be concurrence of the intention to abandon and some overt acts from which it may be inferred that the employee concerned has no more interest in working" (Dagupan Bus Co., Inc. vs. NLRC, 191 SCRA 328), and that the filing of the complaint which asked for reinstatement plus backwages (Record, p. 20) is inconsistent with respondents' defense of abandonment (Hua Bee Shirt Factory vs. NLRC, 188 SCRA 586). 10 It is trite to say that the factual findings of quasi-judicial bodies are generally binding as long as they are supported substantially by evidence

in the record of the case. 11 This is especially so where, as here, the agency and its subordinate who heard the case in the first instance are in full agreement as to the facts. 12 As regards the labor arbiter's award which was affirmed by respondent NLRC, there is no reason to apply the rule that reinstatement may not be ordered if, as a result of the case between the parties, their relation is strained. 13 Even at this late stage of this dispute, petitioner continues to reiterate its offer to reinstate private respondent. 14 WHEREFORE, the petition is DISMISSED. SO ORDERED.

G.R. No. 160325

October 4, 2007

ROQUE S. DUTERTE, petitioner, vs. KINGSWOOD TRADING CO., INC., FILEMON LIM and NATIONAL LABOR RELATIONS COMMISSION, respondents. DECISION GARCIA, J.: By this petition for review on certiorari, petitioner Roque S. Duterte seeks the review and setting aside of the decision1 dated June 20, 2003 of the Court of Appeals (CA) in CA-G.R. SP No. 71729, as reiterated in its resolution2 of October 5, 2003, affirming an earlier resolution3 of the National Labor Relations Commission (NLRC) which ruled that petitioner was not illegally dismissed from employment due to disease under Article 284 of the Labor Code. The facts: In September 1993, petitioner was hired as truck/trailer driver by respondent Kingswood Trading Company, Inc. (KTC) of which corespondent Filemon Lim is the President. Petitioner was on the 6:00 a.m. 6:00 p.m. shift. He averaged 21 trips per month, getting P700 per trip. When not driving, petitioner was assigned to clean and maintain respondent KTCs equipment and vehicles for which he was paid P125 per day. Regularly, petitioner would be seconded by respondent Filemon Lim to drive for one of KTCs clients, the Philippine National Oil Corporation, but always subject to respondents convenience. On November 8, 1998, petitioner had his first heart attack and was confined for two weeks at the Philippine Heart Center (PHC). This was confirmed by respondent KTC which admitted that petitioner was declared on sick leave with corresponding notification. A month later, petitioner returned to work armed with a medical certificate signed by his attending physician at the PHC, attesting to petitioners fitness to work. However, said certificate was not honored by the respondents who refused to allow petitioner to work. In February 1999, petitioner suffered a second heart attack and was again confined at the PHC. Upon release, he stayed home and spent time to recuperate.

In June 1999, petitioner attempted to report back to work but was told to look for another job because he was unfit. Respondents refused to declare petitioner fit to work unless physically examined by the company physician. Respondents promise to pay petitioner his separation pay turned out to be an empty one. Instead, petitioner was presented, for his signature, a document as proof of his receipt of the amount of P14,375.00 as first installment of his Social Security System (SSS) benefits. Having received no such amount, petitioner refused to affix his signature thereon and instead requested for the necessary documents from respondents to enable him to claim his SSS benefits, but the latter did not heed his request. On November 11, 1999, petitioner filed against his employer a complaint for illegal dismissal and damages. In a decision4 dated September 26, 2000, the labor arbiter found for the petitioner. However, while categorically declaring that petitioners dismissal was illegal, the labor arbiter, instead of applying Article 2795 of the Labor Code on illegal dismissals, applied Article 284 on Disease as ground for termination on the rationale that since the respondents admitted that petitioner could not be allowed back to work because of the latters disease, the case fell within the ambit of Article 284. We quote the fallo of the labor arbiters decision: WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring complainant to have been terminated from employment on the ground that he has been suffering from a disease. Respondents are hereby directed to pay complainant as follows: 1. Separation pay equivalent to one-half (1/2) month salary for every year of service computed at six (6) years of service in the amount of Forty-Two Thousand (P42,000.00) Pesos. 2. Holiday pay for three (3) years in the amount of Twenty-One Thousand (P21,000.00) Pesos; and 3. Service Incentive Leave pay for three (3) years in the amount of Ten Thousand (P10,000.00) Pesos. All other claims herein sought are hereby denied for lack of merit and factual basis.

SO ORDERED. On respondents appeal, the NLRC, in its Resolution6 of April 24, 2002, set aside the labor arbiters decision, ruling that Article 284 of the Labor Code has no application to this case, there being "no illegal dismissal to speak of." The NLRC accordingly dismissed petitioners complaint for ille gal dismissal, thus: WHEREFORE, the decision appealed from is VACATED and SET ASIDE.7 A new one is hereby entered DISMISSING the instant case for lack of merit. Therefrom, petitioner went on certiorari to the CA in CA-G.R. SP No. 71729. In the herein assailed decision dated June 20, 2003, the CA upheld the NLRC Resolution, saying that the Commission committed no grave abuse of discretion in holding that petitioner was not illegally dismissed and could not be granted any relief. With his motion for a reconsideration having been denied by the CA in its resolution of October 5, 2003, petitioner is now with this Court via the present recourse. We REVERSE. At bottom, this case involves the simple issue of the legality of ones termination from employment made complicated, however, by over analysis. Simply put, the question at hand pivots on who has the onus of presenting the necessary medical certificate to justify what would otherwise be classified as legal or illegal, as the case may be, dismissal from the service. The following may be another formulation of the issue: For purposes of Article 284 of the Labor Code, would the dismissal of an employee on the ground of disease under the said Article 284 still require the employer to present a certification from a competent public health authority that the disease is of such a nature that it could not be cured within a period of six months even with proper medical treatment? To both the NLRC and the CA, a dismissal on the ground of disease under Article 284 of the Code is illegal only if the employee himself presents the required certification from the proper health authority. Since, as in this case, petitioner failed to produce such certification, his dismissal could not be illegal. In the precise words of the NLRC which the CA effectively affirmed: Neither can it be gainsaid that Article 284 of the Labor Code applies in the instant case since the complainant [petitioner] failed to establish that he is suffering from a disease and his continued employment is prohibited by law or

prejudicial to his health or to the health of his co-employees nor was he able to prove that his illness is of such nature or at such stage that it cannot be cured within a period of six months even with proper treatment.8 In order for the complainant to be covered by Article 284 of the Labor Code, he must first present a certification by a competent public health authority that his continued employment will result in the aforesaid consequences, but unfortunately for the complainant, we find none in the instant case. For the respondents to require the complainant to submit a medical certificate showing that he is already physically fit as a condition of his continued employment under the prevailing circumstance cannot be considered as neither harsh nor oppressive. xxx Prescinding from the above, there is no illegal dismissal to speak of. This finding is further strengthened by the fact that no termination letter or formal notice of dismissal was adduced to prove that complainants services have been terminated. Considering that no illegal dismissal took place, the complainants claim that his right to due process of law had been violated finds no application to the case at bar. (Emphasis added). The Court disagrees with the NLRC and CA. Article 284 of the Labor Code explicitly provides: Art. 284. DISEASE AS GROUND FOR TERMINATION. -- An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year. Corollarily, in order to validly terminate employment on the basis of disease, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires: Disease as a ground for dismissal. -- Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees,

the employer shall not terminate his employment unless there is a certification by a competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. (Book VI, Rule 1, Sec. 8 of the Implementing Rules) In a very real sense, both the NLRC and the appellate court placed on the petitioner the burden of establishing, by a certification of a competent public authority, that his ailment is such that it cannot be cured within a period of six months even with proper medical treatment. And pursuing their logic, petitioner could not claim having been illegally dismissed due to disease, failing, as he did, to present such certification. To be sure, the NLRCs above posture is, to say the least, without basis in law and jurisprudence. And when the CA affirmed the NLRC, the appellate court in effect placed on the petitioner the onus of proving his entitlement to separation pay and thereby validated herein respondents act of dismissing him from employment even without proof of existence of a legal ground for dismissal. The law is unequivocal: the employer, before it can legally dismiss its employee on the ground of disease, must adduce a certification from a competent public authority that the disease of which its employee is suffering is of such nature or at such a stage that it cannot be cured within a period of six months even with proper treatment. Here, the record does not contain the required certification. And when the respondents asked the petitioner to look for another job because he was unfit to work, such unilateral declaration, even if backed up by the findings of its company doctors, did not meet the quantum requirement mandated by the law, i.e., there must be a certification by a competent public authority.9 For sure, the posture taken by both the NLRC and the CA is inconsistent with this Courts pronouncement in Tan v. National Labor Relations Commission,10 thus: Consistent with the Labor Code state policy of affording protection to labor and of liberal construction of labor laws in favor of the working class, Sec. 8, Rule 1, Book VI, of the Omnibus Rules

Implementing the Labor Code provides Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his coemployees, the employer shall not terminate his employment, unless there is a certification by a competent public authority that the disease is of such nature or at such a stage, that it cannot be cured within a period of six (6) months even with proper medical treatment.. There is absolutely nothing on record to show that such a certification was ever obtained by [the employer] much less that one was issued by a competent public authority [o]n the contrary, what appears on record is a Medical Certificate dated May 5, 1999 issued by Dr. Lenita C. de Castro certifying to the contrary, i.e., that [the employee] was in fact already fit to return to work. However, [the employer] did not accept the certificate and insisted that [the employee] present one issued by a government physician. For his failure to present such a certificate, [the employee] was penalized with dismissal. Obviously, the condition imposed by [the employer] finds no basis under the law. To reiterate, contrary to [the employers] insistence that [the employee] first obtain a medical certificate attesting that he was already cured of pulmonary tuberculosis, the abovequoted Sec. 9, Rule 1, Book VI, of the Omnibus Rules is clear that the burden is upon [the employer] not [the employee] to justify the dismissal with a certificate public authority that [the employees] disease is at such stage or of such nature that it cannot be cured within six (6) months even with proper medical treatment. For [the employers] blatant failure to present one, we can only rule that [the employees] dismissal, like that of Garrido, is illegal, invalid and unjustified. (Emphasis and words in brackets supplied.) In Triple Eight Integrated Services, Inc. v. NLRC,11 the Court explains why the submission of the requisite medical certificate is for the employers compliance, thus: The requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public policy on the protection of labor. In thus ruling out an illegal dismissal situation in the instant case, the CA effectively agreed with the NLRCs view that the fact of dismissal must be evidenced by positive and overt acts, citing Veterans Phil. Scout Security Agency v. NLRC.12 Said case, however, is not on all fours with the present

one. In Veterans, the employer offered the complainant-employee a monthly cash allowance and other benefit pending a new assignment. Therein, the employee was not forthrightly nor constructively dismissed. In fact, the employee in Veterans was found to be in bad faith as he filed his complaint for illegal dismissal the day immediately after he accepted the companys offer of employment benefits. Hence, the Courts ruling in Veterans that the fact of dismissal must be evidenced by positive and overt acts indicating the intention to dismiss. These considerations do not obtain here. Petitioner was not allowed back to work. Neither did he receive any monetary assistance from his employer, and, worse, respondents refused to give him the necessary documents to enable him to claim his SSS benefits. Much was made by the NLRC and the CA about petitioners refusal to comply with respondents order to submit a medical certificate irresistibly implying that such refusal is what constrained them to refuse to take petitioner back in. We are not persuaded. Even assuming, in gratia argumenti, that petitioner committed what may be considered an act of insubordination for refusing to present a medical certificate, such offense, without more, certainly did not warrant the latters placement in a floating status, a veritable dismissal, and deprived of his only source of livelihood. We are not unmindful of the connection between the nature of petitioners disease and his job as a truck/trailer driver. We are also fully aware that petitioners job places at stake the safety of the public. However, we do not agree with the NLRC that petitioner was validly dismissed because his continued employment was prohibited by the basic legal mandate that reasonable diligence must be exercised to prevent prejudice to the public, which justified respondents in refusing work to petitioner. Petitioner could have been admitted back to work performing other tasks, such as cleaning and maintaining respondent companys machine and transportation assets. As a final consideration, the Court notes that the NLRC, as sustained by the CA, considered the petitioner as a field worker and, on that basis, denied his claim for benefits under Articles 9413 to 9514 of the Labor Code, such as holiday pay and service incentive leave pay. Article 82 of the Code lists personnel who are not entitled to the benefits aforementioned.15 Among the excluded group are "field personnel," referring to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty . As a

general proposition, field personnel are those whose job/service are not or cannot be effectively monitored by the employer or his representative, their workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty. Field personnel are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees, including drivers, cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employer. Thus, to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and performance are constantly supervised by the employer.16 Guided by the foregoing norms, petitioner was definitely a regular employee of respondent company and not its field personnel, as the term is used in the Labor Code. As it were, he was based at the principal office of the respondent company. His actual work hours, i.e., from 6:00 a.m. to 6:00 p.m., were ascertainable with reasonable certainty. He averaged 21 trips per month. And if not driving for the company, he was paid P125.00 per day for cleaning and maintaining KTCs equipment. Not falling under the category of field personnel, petitioner is consequently entitled to both holiday pay and service incentive leave pay, as mandated by Articles 94 and 95 of the Labor Code. All told, we rule and so hold that petitioners dismissal did not comply with both the substantive and procedural aspects of due process. Clearly, his dismissal is tainted with invalidity.17 WHEREFORE, the assailed decision of the CA in CA-G.R. SP No. 71729 is REVERSED and SET ASIDE. Respondents are declared guilty of illegal dismissal and are ordered to pay petitioner separation pay equivalent to one (1) month pay for every year of service, in lieu of his reinstatement, plus his full backwages from the time his employment was terminated up to the time this Decision becomes final. For this purpose, let this case be REMANDED to the labor arbiter for the computation of petitioners separation pay, backwages and other monetary awards due him. Costs against respondents. SO ORDERED.

G.R. No. 162994

September 17, 2004

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES, INC., Respondent. RESOLUTION TINGA, J.: Confronting the Court in this petition is a novel question, with constitutional overtones, involving the validity of the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company. This is a Petition for Review on Certiorari assailing the Decision1 dated May 19, 2003 and the Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R. SP No. 62434.2 Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as medical representative on October 24, 1995, after Tecson had undergone training and orientation. Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company. The Employee Code of Conduct of Glaxo similarly provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies. If management perceives a conflict of interest or a potential conflict between such relationship and the employees employment with the company, the management and the employee will explore the possibility of a "transfer to another department in a noncounterchecking position" or preparation for employment outside the company after six months. Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte sales area.

Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals3 (Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in Albay. She supervised the district managers and medical representatives of her company and prepared marketing strategies for Astra in that area. Even before they got married, Tecson received several reminders from his District Manager regarding the conflict of interest which his relationship with Bettsy might engender. Still, love prevailed, and Tecson married Bettsy in September 1998. In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecsons superiors reminded him that he and Bettsy should decide which one of them would resign from their jobs, although they told him that they wanted to retain him as much as possible because he was performing his job well. Tecson requested for time to comply with the company policy against entering into a relationship with an employee of a competitor company. He explained that Astra, Bettsys employer, was planning to merge with Zeneca, another drug company; and Bettsy was planning to avail of the redundancy package to be offered by Astra. With Bettsys separation from her company, the potential conflict of interest would be eliminated. At the same time, they would be able to avail of the attractive redundancy package from Astra. In August 1999, Tecson again requested for more time resolve the problem. In September 1999, Tecson applied for a transfer in Glaxos milk division, thinking that since Astra did not have a milk division, the potential conflict of interest would be eliminated. His application was denied in view of Glaxos "least-movement-possible" policy. In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied. Tecson sought Glaxos reconsideration regarding his transfer and brought the matter to Glaxos Grievance Committee. Glaxo, however, remained firm in its decision and gave Tescon until February 7, 2000 to comply with the transfer order. Tecson defied the transfer order and continued acting as medical representative in the Camarines Sur-Camarines Norte sales area. During the pendency of the grievance proceedings, Tecson was paid his salary, but was not issued samples of products which were competing with

similar products manufactured by Astra. He was also not included in product conferences regarding such products. Because the parties failed to resolve the issue at the grievance machinery level, they submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-half () month pay for every year of service, or a total of P50,000.00 but he declined the offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxos policy on relationships between its employees and persons employed with competitor companies, and affirming Glaxos right to transfer Tecson to another sales territory. Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the NCMB Decision. On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for Review on the ground that the NCMB did not err in rendering its Decision. The appellate court held that Glaxos policy prohibiting its employees from having personal relationships with employees of competitor companies is a valid exercise of its management prerogatives.4 Tecson filed a Motion for Reconsideration of the appellate courts Decision, but the motion was denied by the appellate court in its Resolution dated March 26, 2004.5 Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals erred in affirming the NCMBs finding that the Glaxos policy prohibiting its employees from marrying an employee of a competitor company is valid; and (ii) the Court of Appeals also erred in not finding that Tecson was constructively dismissed when he was transferred to a new sales territory, and deprived of the opportunity to attend products seminars and training sessions.6 Petitioners contend that Glaxos policy against employees marrying employees of competitor companies violates the equal protection clause of the Constitution because it creates invalid distinctions among employees on account only of marriage. They claim that the policy restricts the employees right to marry.7 They also argue that Tecson was constructively dismissed as shown by the following circumstances: (1) he was transferred from the Camarines SurCamarines Norte sales area to the Butuan-Surigao-Agusan sales area, (2) he suffered a diminution in pay, (3) he was excluded from attending seminars and training sessions for medical representatives, and (4) he was

prohibited from promoting respondents products which were competing with Astras products.8 In its Comment on the petition, Glaxo argues that the company policy prohibiting its employees from having a relationship with and/or marrying an employee of a competitor company is a valid exercise of its management prerogatives and does not violate the equal protection clause; and that Tecsons reassignment from the Camarines NorteCamarines Sur sales area to the Butuan City-Surigao City and Agusan del Sur sales area does not amount to constructive dismissal.9 Glaxo insists that as a company engaged in the promotion and sale of pharmaceutical products, it has a genuine interest in ensuring that its employees avoid any activity, relationship or interest that may conflict with their responsibilities to the company. Thus, it expects its employees to avoid having personal or family interests in any competitor company which may influence their actions and decisions and consequently deprive Glaxo of legitimate profits. The policy is also aimed at preventing a competitor company from gaining access to its secrets, procedures and policies.10 It likewise asserts that the policy does not prohibit marriage per se but only proscribes existing or future relationships with employees of competitor companies, and is therefore not violative of the equal protection clause. It maintains that considering the nature of its business, the prohibition is based on valid grounds.11 According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra, posed a real and potential conflict of interest. Astras products were in direct competition with 67% of the products sold by Glaxo. Hence, Glaxos enforcement of the foregoing policy in Tecsons case was a valid exercise of its management prerogatives.12 In any case, Tecson was given several months to remedy the situation, and was even encouraged not to resign but to ask his wife to resign form Astra instead.13 Glaxo also points out that Tecson can no longer question the assailed company policy because when he signed his contract of employment, he was aware that such policy was stipulated therein. In said contract, he also agreed to resign from respondent if the management finds that his relationship with an employee of a competitor company would be detrimental to the interests of Glaxo.14 Glaxo likewise insists that Tecsons reassignment to another sales area and his exclusion from seminars regarding respondents new products did not amount to constructive dismissal.

It claims that in view of Tecsons refusal to resign, he was relocated from the Camarines Sur-Camarines Norte sales area to the Butuan City-Surigao City and Agusan del Sur sales area. Glaxo asserts that in effecting the reassignment, it also considered the welfare of Tecsons family. Since Tecsons hometown was in Agusan del Sur and his wife traces her roots to Butuan City, Glaxo assumed that his transfer from the Bicol region to the Butuan City sales area would be favorable to him and his family as he would be relocating to a familiar territory and minimizing his travel expenses.15 In addition, Glaxo avers that Tecsons exclusion from the seminar concerning the new anti-asthma drug was due to the fact that said product was in direct competition with a drug which was soon to be sold by Astra, and hence, would pose a potential conflict of interest for him. Lastly, the delay in Tecsons receipt of his sales paraphernalia was due to the mix-up created by his refusal to transfer to the Butuan City sales area (his paraphernalia was delivered to his new sales area instead of Naga City because the supplier thought he already transferred to Butuan).16 The Court is tasked to resolve the following issues: (1) Whether the Court of Appeals erred in ruling that Glaxos policy against its employees marrying employees from competitor companies is valid, and in not holding that said policy violates the equal protection clause of the Constitution; (2) Whether Tecson was constructively dismissed. The Court finds no merit in the petition. The stipulation in Tecsons contract of employment with Glaxo being questioned by petitioners provides: 10. You agree to disclose to management any existing or future relationship you may have, either by consanguinity or affinity with co-employees or employees of competing drug companies. Should it pose a possible conflict of interest in management discretion, you agree to resign voluntarily from the Company as a matter of Company policy. 17 The same contract also stipulates that Tescon agrees to abide by the existing company rules of Glaxo, and to study and become acquainted with

such policies.18 In this regard, the Employee Handbook of Glaxo expressly informs its employees of its rules regarding conflict of interest: 1. Conflict of Interest Employees should avoid any activity, investment relationship, or interest that may run counter to the responsibilities which they owe Glaxo Wellcome. Specifically, this means that employees are expected: a. To avoid having personal or family interest, financial or otherwise, in any competitor supplier or other businesses which may consciously or unconsciously influence their actions or decisions and thus deprive Glaxo Wellcome of legitimate profit. b. To refrain from using their position in Glaxo Wellcome or knowledge of Company plans to advance their outside personal interests, that of their relatives, friends and other businesses. c. To avoid outside employment or other interests for income which would impair their effective job performance. d. To consult with Management on such activities or relationships that may lead to conflict of interest. 1.1. Employee Relationships Employees with existing or future relationships either by consanguinity or affinity with co-employees of competing drug companies are expected to disclose such relationship to the Management. If management perceives a conflict or potential conflict of interest, every effort shall be made, together by management and the employee, to arrive at a solution within six (6) months, either by transfer to another department in a noncounter checking position, or by career preparation toward outside employment after Glaxo Wellcome. Employees must be prepared for possible resignation within six (6) months, if no other solution is feasible.19

No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxos policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry. The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth.20 Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play.21 As held in a Georgia, U.S.A case,22 it is a legitimate business practice to guard business confidentiality and protect a competitive position by evenhandedly disqualifying from jobs male and female applicants or employees who are married to a competitor. Consequently, the court ruled than an employer that discharged an employee who was married to an employee of an active competitor did not violate Title VII of the Civil Rights Act of 1964.23 The Court pointed out that the policy was applied to men and women equally, and noted that the employers business was highly competitive and that gaining inside information would constitute a competitive advantage. The challenged company policy does not violate the equal protection clause of the Constitution as petitioners erroneously suggest. It is a settled principle that the commands of the equal protection clause are addressed only to the state or those acting under color of its authority.24 Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the equal protection clause erects no shield against merely private conduct, however, discriminatory or wrongful.25 The only exception occurs when the

state29 in any of its manifestations or actions has been found to have become entwined or involved in the wrongful private conduct.27 Obviously, however, the exception is not present in this case. Significantly, the company actually enforced the policy after repeated requests to the employee to comply with the policy. Indeed, the application of the policy was made in an impartial and even-handed manner, with due regard for the lot of the employee. In any event, from the wordings of the contractual provision and the policy in its employee handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships. As succinctly explained by the appellate court, thus: The policy being questioned is not a policy against marriage. An employee of the company remains free to marry anyone of his or her choosing. The policy is not aimed at restricting a personal prerogative that belongs only to the individual. However, an employees personal decision does not detract the employer from exercising management prerogatives to ensure maximum profit and business success. . .28 The Court of Appeals also correctly noted that the assailed company policy which forms part of respondents Employee Code of Conduct and of its contracts with its employees, such as that signed by Tescon, was made known to him prior to his employment. Tecson, therefore, was aware of that restriction when he signed his employment contract and when he entered into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of employment with Glaxo, the stipulations therein have the force of law between them and, thus, should be complied with in good faith."29 He is therefore estopped from questioning said policy. The Court finds no merit in petitioners contention that Tescon was constructively dismissed when he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City-Agusan del Sur sales area, and when he was excluded from attending the companys seminar on new products which were directly competing with similar products manufactured by Astra. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the

employee.30 None of these conditions are present in the instant case. The record does not show that Tescon was demoted or unduly discriminated upon by reason of such transfer. As found by the appellate court, Glaxo properly exercised its management prerogative in reassigning Tecson to the Butuan City sales area: . . . In this case, petitioners transfer to another place of assignment was merely in keeping with the policy of the company in avoidance of conflict of interest, and thus validNote that [Tecsons] wife holds a sensitive supervisory position as Branch Coordinator in her employer-company which requires her to work in close coordination with District Managers and Medical Representatives. Her duties include monitoring sales of Astra products, conducting sales drives, establishing and furthering relationship with customers, collection, monitoring and managing Astras inventoryshe therefore takes an active participation in the market war characterized as it is by stiff competition among pharmaceutical companies. Moreover, and this is significant, petitioners sales territory covers Camarines Sur and Camarines Norte while his wife is supervising a branch of her employer in Albay. The proximity of their areas of responsibility, all in the same Bicol Region, renders the conflict of interest not only possible, but actual, as learning by one spouse of the others market strategies in the region would be inevitable. [Managements] appreciation of a conflict of interest is therefore not merely illusory and wanting in factual basis31 In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,32 which involved a complaint filed by a medical representative against his employer drug company for illegal dismissal for allegedly terminating his employment when he refused to accept his reassignment to a new area, the Court upheld the right of the drug company to transfer or reassign its employee in accordance with its operational demands and requirements. The ruling of the Court therein, quoted hereunder, also finds application in the instant case: By the very nature of his employment, a drug salesman or medical representative is expected to travel. He should anticipate reassignment according to the demands of their business. It would be a poor drug corporation which cannot even assign its representatives or detail men to new markets calling for opening or expansion or to areas where the need for pushing its products is great. More so if such reassignments are part of the employment contract.33

As noted earlier, the challenged policy has been implemented by Glaxo impartially and disinterestedly for a long period of time. In the case at bar, the record shows that Glaxo gave Tecson several chances to eliminate the conflict of interest brought about by his relationship with Bettsy. When their relationship was still in its initial stage, Tecsons supervisors at Glaxo constantly reminded him about its effects on his employment with the company and on the companys interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict by either resigning from the company or asking his wife to resign from Astra. Glaxo even expressed its desire to retain Tecson in its employ because of his satisfactory performance and suggested that he ask Bettsy to resign from her company instead. Glaxo likewise acceded to his repeated requests for more time to resolve the conflict of interest. When the problem could not be resolved after several years of waiting, Glaxo was constrained to reassign Tecson to a sales area different from that handled by his wife for Astra. Notably, the Court did not terminate Tecson from employment but only reassigned him to another area where his home province, Agusan del Sur, was included. In effecting Tecsons transfer, Glaxo even considered the welfare of Tecsons family. Clearly, the foregoing dispels any suspicion of unfairness and bad faith on the part of Glaxo.34 WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners. SO ORDERED.

G.R. No. 155831

February 18, 2008 DOMINGO, petitioner,

National Labor Relations Commission (NLRC) Chairman Rogelio I. Rayala (Rayala) for disgraceful and immoral conduct. All three petitions stem from the same factual antecedents. On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then Stenographic Reporter III at the NLRC, filed a Complaint for sexual harassment against Rayala before Secretary Bienvenido Laguesma of the Department of Labor and Employment (DOLE). To support the Complaint, Domingo executed an Affidavit narrating the incidences of sexual harassment complained of, thus: xxxx 4. Sa simula ay pabulong na sinasabihan lang ako ni Chairman Rayala ng mga salitang "Lot, gumaganda ka yata?" 5. Sa ibang mga pagkakataon nilalapitan na ako ni Chairman at hahawakan ang aking balikat sabay pisil sa mga ito habang ako ay nagta-type at habang nagbibigay siya ng diktasyon. Sa mga pagkakataong ito, kinakabahan ako. Natatakot na baka mangyari sa akin ang mga napapabalitang insidente na nangyari na noon tungkol sa mga sekretarya niyang nagbitiw gawa ng mga mahahalay na panghihipo ni Chairman. 6. Noong ika-10 ng Setyembre, 1998, nang ako ay nasa 8th Floor, may nagsabi sa akin na kailangan akong bumaba sa 7th Floor kung nasaan ang aming opisina dahil sa may koreksyon daw na gagawin sa mga papel na tinayp ko. Bumaba naman ako para gawin ito. Habang ginagawa ko ito, lumabas si Chairman Rayala sa silid ni Mr. Alex Lopez. Inutusan ako ni Chairman na sumunod sa kaniyang silid. Nang nasa silid na kami, sinabi niya sa akin: Chairman: Lot, I like you a lot. Naiiba ka sa lahat. At pagkatapos ako ay kaniyang inusisa tungkol sa mga personal na bagay sa aking buhay. Ang ilan dito ay tungkol sa aking mga magulang, kapatid, pag-aaral at kung may boyfriend na raw ba ako. Chairman: May boyfriend ka na ba?

MA. LOURDES T. vs. ROGELIO I. RAYALA, respondent. x-------------------------x G.R. No. 155840

February 18, 2008

ROGELIO I. RAYALA, petitioner, vs. OFFICE OF THE PRESIDENT; RONALDO V. ZAMORA, in his capacity as Executive Secretary; ROY V. SENERES, in his capacity as Chairman of the National Labor Relations Commission (in lieu of RAUL T. AQUINO, in his capacity as Acting Chairman of the National labor Relations Commission); and MA. LOURDES T. DOMINGO, respondents. x-------------------------x G.R. No. 158700 February 18, 2008

The REPUBLIC OF THE PHILIPPINES, represented by the OFFICE OF THE PRESIDENT; and ALBERTO G. ROMULO, in his capacity as Executive Secretary, petitioners, vs. ROGELIO I. RAYALA, respondent. DECISION NACHURA, J.: Sexual harassment is an imposition of misplaced "superiority" which is enough to dampen an employees spirit and her capacity for advancement. It affects her sense of judgment; it changes her life.1 Before this Court are three Petitions for Review on Certiorari assailing the October 18, 2002 Resolution of the CAs Former Ninth Division2 in CA-G.R. SP No. 61026. The Resolution modified the December 14, 2001 Decision3 of the Court of Appeals Eleventh Division, which had affirmed the Decision of the Office of the President (OP) dismissing from the service then

Lourdes: Dati nagkaroon po. Chairman: Nasaan na siya? Lourdes: Nag-asawa na ho. Chairman: Bakit hindi kayo nagkatuluyan? Lourdes: Nainip po. Chairman: Pagkatapos mo ng kurso mo ay kumuha ka ng Law at ako ang bahala sa iyo, hanggang ako pa ang Chairman dito. Pagkatapos ay kumuha siya ng pera sa kaniyang amerikana at inaabot sa akin. Chairman: Kuhanin mo ito. Lourdes: Huwag na ho hindi ko kailangan.

tatlong libong piso (PHP 3,000). Sinabi ni Agnes na isauli ko raw ang pera, pero ang sabi ko ay natatakot ako baka magalit si Sir. Nagsabi agad kami kay EC Perlita Velasco at sinalaysay ko ang nangyari. Sinabi niya na isauli ko ang pera at noong araw ding iyon ay nagpasiya akong isauli na nga ito ngunit hindi ako nagkaroon ng pagkakataon dahil marami siyang naging bisita. Isinauli ko nga ang pera noong Lunes, Setyembre 14, 1998. 7. Noong huling linggo ng Setyembre, 1998, ay may tinanong din sa akin si Chairman Rayala na hindi ko masikmura, at sa aking palagay at tahasang pambabastos sa akin. Chairman: Lot, may ka live-in ka ba? Lourdes: Sir, wala po. Chairman: Bakit malaki ang balakang mo? Lourdes: Kayo, Sir ha! Masama sa amin ang may ka livein. Chairman: Bakit, ano ba ang relihiyon ninyo?

Chairman: Hindi sige, kuhanin mo. Ayusin mo ang dapat ayusin. Tinanggap ko po ang pera ng may pag-aalinlangan. Natatakot at kinakabahan na kapag hindi ko tinanggap ang pera ay baka siya magagalit kasabay na rito ang pagtapon sa akin kung saan-saan opisina o kaya ay tanggalin ako sa posisyon. Chairman: Paglabas mo itago mo ang pera. Ayaw ko ng may makaka-alam nito. Just the two of us. Lourdes: Bakit naman, Sir? Chairman: Basta. Maraming tsismosa diyan sa labas. But I dont give them a damn. Hindi ako mamatay sa kanila. Tumayo na ako at lumabas. Pumanhik na ako ng 8th Floor at pumunta ako sa officemate ko na si Agnes Magdaet. Ikinwento ko ang nangyari sa akin sa opisina ni Chairman. Habang kinikwento ko ito kay Agnes ay binilang namin ang pera na nagkakahalaga ng

Lourdes: Catholic, Sir. Kailangan ikasal muna. Chairman: Bakit ako, hindi kasal. Lourdes: Sir, di magpakasal kayo. Chairman: Huh. Ibahin na nga natin ang usapan. 8. Noong Oktubre 29, 1998, ako ay pumasok sa kwarto ni Chairman Rayala. Ito ay sa kadahilanang ang fax machine ay nasa loob ng kaniyang kwarto. Ang nag-aasikaso nito, si Riza Ocampo, ay naka-leave kaya ako ang nag-asikaso nito noong araw na iyon. Nang mabigyan ko na ng fax tone yung kausap ko, pagharap ko sa kanan ay nakaharang sa dadaanan ko si Chairman Rayala. Tinitingnan ako sa mata at ang titig niya ay umuusad mula ulo hanggang dibdib tapos ay ngumiti na may mahalay na pakahulugan.

9. Noong hapon naman ng pareho pa ring petsa, may nag-aapply na sekretarya sa opisina, sinabi ko ito kay Chairman Rayala: Lourdes: Sir, si Pinky po papainterview po yata sa inyo. yung applicant, mag-

Executive Secretary Ronaldo Zamora, ordered Secretary Laguesma to investigate the allegations in the Complaint and create a committee for such purpose. On December 4, 1998, Secretary Laguesma issued Administrative Order (AO) No. 280, Series of 1998,5 constituting a Committee on Decorum and Investigation (Committee) in accordance with Republic Act (RA) 7877, the Anti-Sexual Harassment Act of 1995.6 The Committee heard the parties and received their respective evidence. On March 2, 2000, the Committee submitted its report and recommendation to Secretary Laguesma. It found Rayala guilty of the offense charged and recommended the imposition of the minimum penalty provided under AO 250, which it erroneously stated as suspension for six (6) months. The following day, Secretary Laguesma submitted a copy of the Committee Report and Recommendation to the OP, but with the recommendation that the penalty should be suspension for six (6) months and one (1) day, in accordance with AO 250. On May 8, 2000, the OP, through Executive Secretary Zamora, issued AO 119,7 the pertinent portions of which read: Upon a careful scrutiny of the evidence on record, I concur with the findings of the Committee as to the culpability of the respondent [Rayala], the same having been established by clear and convincing evidence. However, I disagree with the recommendation that respondent be meted only the penalty of suspension for six (6) months and one (1) day considering the circumstances of the case. What aggravates respondents situation is the undeniable circumstance that he took advantage of his position as the superior of the complainant. Respondent occupies the highest position in the NLRC, being its Chairman. As head of said office, it was incumbent upon respondent to set an example to the others as to how they should conduct themselves in public office, to see to it that his subordinates work efficiently in accordance with Civil Service Rules and Regulations, and to provide them with healthy working atmosphere wherein co-workers treat each other with respect, courtesy and cooperation, so that in the end the public interest will be benefited (City Mayor of Zamboanga vs. Court of Appeals, 182 SCRA 785 [1990]). What is more, public service requires the utmost integrity and strictest discipline (Gano vs. Leonen, 232 SCRA 99 [1994]). Thus,

Chairman: Sabihin mo magpa-pap smear muna siya Chairman: O sige, i-refer mo kay Alex. (Alex Lopez, Chief of Staff). 10. Noong Nobyembre 9, 1998, ako ay tinawag ni Chairman Rayala sa kaniyang opisina upang kuhanin ko ang diktasyon niya para kay ELA Oscar Uy. Hindi pa kami nakakatapos ng unang talata, may pumasok na bisita si Chairman, si Baby Pangilinan na sinamahan ni Riza Ocampo. Pinalabas muna ako ni Chairman. Nang maka-alis na si Ms. Pangilinan, pinapasok na niya ako ulit. Umupo ako. Lumapit sa likuran ko si Chairman, hinawakan ang kaliwang balikat ko na pinipisil ng kanang kamay niya at sinabi: Chairman: Saan na ba tayo natapos? Palakad-lakad siya sa aking likuran habang nag-didikta. Huminto siya pagkatapos, at nilagay niya ang kanang kamay niya sa aking kanang balikat at pinisil-pisil ito pagkatapos ay pinagapang niya ito sa kanang bahagi ng aking leeg, at pinagapang hanggang kanang tenga at saka kiniliti. Dito ko inalis ang kaniyang kamay sa pamamagitan ng aking kaliwang kamay. At saka ko sinabi: Lourdes: Sir, yung kamay ninyo alisin niyo! Natapos ko rin ang liham na pinagagawa niya pero halos hindi ko na maintindihan ang na-isulat ko dahil sa takot at inis na nararamdaman ko.4 After the last incident narrated, Domingo filed for leave of absence and asked to be immediately transferred. Thereafter, she filed the Complaint for sexual harassment on the basis of Administrative Order No. 250, the Rules and Regulations Implementing RA 7877 in the Department of Labor and Employment. Upon receipt of the Complaint, the DOLE Secretary referred the Complaint to the OP, Rayala being a presidential appointee. The OP, through then

a public servant must exhibit at all times the highest sense of honesty and integrity, and "utmost devotion and dedication to duty" (Sec. 4 (g), RA 6713), respect the rights of others and shall refrain from doing acts contrary to law, and good morals (Sec. 4(c)). No less than the Constitution sanctifies the principle that a public office is a public trust, and enjoins all public officers and employees to serve with the highest degree of responsibility, integrity, loyalty and efficiency (Section 1, Article XI, 1987 Constitution). Given these established standards, I see respondents acts not just [as] a failure to give due courtesy and respect to his coemployees (subordinates) or to maintain good conduct and behavior but defiance of the basic norms or virtues which a government official must at all times uphold, one that is contrary to law and "public sense of morality." Otherwise stated, respondent to whom stricter standards must apply being the highest official [of] the NLRC had shown an attitude, a frame of mind, a disgraceful conduct, which renders him unfit to remain in the service. WHEREFORE, in view of the foregoing, respondent Rogelio I. Rayala, Chairman, National Labor Relations Commission, is found guilty of the grave offense of disgraceful and immoral conduct and is hereby DISMISSED from the service effective upon receipt of this Order. SO ORDER[ED]. Rayala filed a Motion for Reconsideration, which the OP denied in a Resolution8 dated May 24, 2000. He then filed a Petition for Certiorari and Prohibition with Prayer for Temporary Restraining Order under Rule 65 of the Revised Rules on Civil Procedure before this Court on June 14, 2000.9 However, the same was dismissed in a Resolution dated June 26, 2000 for disregarding the hierarchy of courts.10 Rayala filed a Motion for Reconsideration11 on August 15, 2000. In its Resolution12 dated September 4, 2000, the Court recalled its June 26 Resolution and referred the petition to the Court of Appeals (CA) for appropriate action. The CA rendered its Decision13 on December 14, 2001. It held that there was sufficient evidence on record to create moral certainty that Rayala committed the acts he was charged with. It said:

The complainant narrated her story complete with details. Her straightforward and uninhibited testimony was not emasculated by the declarations of Commissioner Rayala or his witnesses. x x x Moreover, Commissioner Rayala has not proven any vicious motive for Domingo and her witnesses to invent their stories. It is very unlikely that they would perjure themselves only to accommodate the alleged conspiracy to oust petitioner from office. Save for his empty conjectures and speculations, Rayala failed to substantiate his contrived conspiracy. It is a hornbook doctrine that conspiracy must be proved by positive and convincing evidence (People v. Noroa, 329 SCRA 502 [2000]). Besides, it is improbable that the complainant would concoct a story of sexual harassment against the highest official of the NLRC and thereby expose herself to the possibility of losing her job, or be the subject of reprisal from her superiors and perhaps public ridicule if she was not telling the truth. It also held that Rayalas dismissal was proper. The CA pointed out that Rayala was dismissed for disgraceful and immoral conduct in violation of RA 6713, the Code of Conduct and Ethical Standards for Public Officials and Employees. It held that the OP was correct in concluding that Rayalas acts violated RA 6713: Indeed, [Rayala] was a public official, holding the Chairmanship of the National Labor Relations Commission, entrusted with the sacred duty of administering justice. Occupying as he does such an exalted position, Commissioner Rayala must pay a high price for the honor bestowed upon him. He must comport himself at all times in such a manner that the conduct of his everyday life should be beyond reproach and free from any impropriety. That the acts complained of were committed within the sanctuary of [his] office compounded the objectionable nature of his wrongdoing. By daring to violate the complainant within the solitude of his chambers, Commissioner Rayala placed the integrity of his office in disrepute. His disgraceful and immoral conduct warrants his removal from office.14 Thus, it dismissed the petition, to wit: IN VIEW OF ALL THE FOREGOING, the instant petition is hereby DISMISSED and Administrative Order No. 119 as well [as] the Resolution of the Office of the President in O.P. Case No. 00-E9118 dated May 24, 2000 are AFFIRMED IN TOTO. No cost.

SO ORDERED.15 Rayala timely filed a Motion for Reconsideration. Justices Vasquez and Tolentino voted to affirm the December 14 Decision. However, Justice Reyes dissented mainly because AO 250 states that the penalty imposable is suspension for six (6) months and one (1) day.16 Pursuant to the internal rules of the CA, a Special Division of Five was constituted.17 In its October 18, 2002 Resolution, the CA modified its earlier Decision: ACCORDINGLY, the Decision dated December [14], 2001 is MODIFIED to the effect that the penalty of dismissal is DELETED and instead the penalty of suspension from service for the maximum period of one (1) year is HEREBY IMPOSED upon the petitioner. The rest of the challenged decision stands. SO ORDERED. Domingo filed a Petition for Review18 before this Court, which we denied in our February 19, 2003 Resolution for having a defective verification. She filed a Motion for Reconsideration, which the Court granted; hence, the petition was reinstated. Rayala likewise filed a Petition for Review19 with this Court essentially arguing that he is not guilty of any act of sexual harassment. Meanwhile, the Republic filed a Motion for Reconsideration of the CAs October 18, 2002 Resolution. The CA denied the same in its June 3, 2003 Resolution, the dispositive portion of which reads: ACCORDINGLY, by a majority vote, public respondents Motion for Reconsideration, (sic) is DENIED. SO ORDERED. The Republic then filed its own Petition for Review.20 On June 28, 2004, the Court directed the consolidation of the three (3) petitions. G.R. No. 155831

Domingo assails the CAs resolution modifying the penalty imposed by the Office of the President. She raises this issue: The Court of Appeals erred in modifying the penalty for the respondent from dismissal to suspension from service for the maximum period of one year. The President has the prerogative to determine the proper penalty to be imposed on an erring Presidential appointee. The President was well within his power when he fittingly used that prerogative in deciding to dismiss the respondent from the service.21 She argues that the power to remove Rayala, a presidential appointee, is lodged with the President who has control of the entire Executive Department, its bureaus and offices. The OPs decision was arrived at after affording Rayala due process. Hence, his dismissal from the service is a prerogative that is entirely with the President.22 As to the applicability of AO No. 250, she argues that the same was not intended to cover cases against presidential appointees. AO No. 250 refers only to the instances wherein the DOLE Secretary is the disciplining authority, and thus, the AO does not circumscribe the power of the President to dismiss an erring presidential appointee. G.R. No. 155840 In his petition, Rayala raises the following issues: I. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, THE ACTS OF HEREIN PETITIONER DO NOT CONSTITUTE SEXUAL HARASSMENT AS LAID DOWN BY THE En Banc RULING IN THE CASE OF AQUINO vs. ACOSTA, ibid., AS WELL AS IN THE APPLICATION OF EXISTING LAWS. II. CONTRARY TO THE FINDINGS OF THE HONORABLE COURT OF APPEALS, INTENT IS AN INDISPENSABLE ELEMENT IN A CASE FOR SEXUAL HARASSMENT. THE HONORABLE COURT ERRED IN ITS FINDING THAT IT IS AN OFFENSE THAT IS MALUM PROHIBITUM. III. THE INVESTIGATION COMMITTEE, THE OFFICE OF THE PRESIDENT, AND NOW, THE HONORABLE COURT OF APPEALS, HAS MISAPPLIED AND EXPANDED THE DEFINITION OF SEXUAL HARASSMENT IN THE WORKPLACE

UNDER R.A. No. 7877, BY APPLYING DOLE A.O. 250, WHICH RUNS COUNTER TO THE RECENT PRONOUNCEMENTS OF THIS HONORABLE SUPREME COURT.23 Invoking Aquino v. Acosta,24 Rayala argues that the case is the definitive ruling on what constitutes sexual harassment. Thus, he posits that for sexual harassment to exist under RA 7877, there must be: (a) demand, request, or requirement of a sexual favor; (b) the same is made a precondition to hiring, re-employment, or continued employment; or (c) the denial thereof results in discrimination against the employee. Rayala asserts that Domingo has failed to allege and establish any sexual favor, demand, or request from petitioner in exchange for her continued employment or for her promotion. According to Rayala, the acts imputed to him are without malice or ulterior motive. It was merely Domingos perception of malice in his alleged acts a "product of her own imagination"25 that led her to file the sexual harassment complaint. Likewise, Rayala assails the OPs interpretation, as upheld by the CA, that RA 7877 is malum prohibitum such that the defense of absence of malice is unavailing. He argues that sexual harassment is considered an offense against a particular person, not against society as a whole. Thus, he claims that intent is an essential element of the offense because the law requires as a conditio sine qua non that a sexual favor be first sought by the offender in order to achieve certain specific results. Sexual harassment is committed with the perpetrators deliberate intent to commit the offense.26 Rayala next argues that AO 250 expands the acts proscribed in RA 7877. In particular, he assails the definition of the forms of sexual harassment: Rule IV FORMS OF SEXUAL HARASSMENT Section 1. Forms of Sexual Harassment. Sexual harassment may be committed in any of the following forms: a) Overt sexual advances; b) Unwelcome or improper gestures of affection; c) Request or demand for sexual favors including but not limited to going out on dates, outings or the like for the same purpose;

d) Any other act or conduct of a sexual nature or for purposes of sexual gratification which is generally annoying, disgusting or offensive to the victim.27 He posits that these acts alone without corresponding demand, request, or requirement do not constitute sexual harassment as contemplated by the law.28 He alleges that the rule-making power granted to the employer in Section 4(a) of RA 7877 is limited only to procedural matters. The law did not delegate to the employer the power to promulgate rules which would provide other or additional forms of sexual harassment, or to come up with its own definition of sexual harassment.29 G.R. No. 158700 The Republic raises this issue: Whether or not the President of the Philippines may validly dismiss respondent Rayala as Chairman of the NLRC for committing acts of sexual harassment.30 The Republic argues that Rayalas acts constitute sexual harassment under AO 250. His acts constitute unwelcome or improper gestures of affection and are acts or conduct of a sexual nature, which are generally annoying or offensive to the victim.31 It also contends that there is no legal basis for the CAs reduction of the penalty imposed by the OP. Rayalas dismissal is valid and warranted under the circumstances. The power to remove the NLRC Chairman solely rests upon the President, limited only by the requirements under the law and the due process clause. The Republic further claims that, although AO 250 provides only a one (1) year suspension, it will not prevent the OP from validly imposing the penalty of dismissal on Rayala. It argues that even though Rayala is a presidential appointee, he is still subject to the Civil Service Law. Under the Civil Service Law, disgraceful and immoral conduct, the acts imputed to Rayala, constitute grave misconduct punishable by dismissal from the service.32 The Republic adds that Rayalas position is invested with public trust and his acts violated that trust; thus, he should be dismissed from the service. This argument, according to the Republic, is also supported by Article 215 of the Labor Code, which states that the Chairman of the NLRC holds office until he reaches the age of 65 only during good behavior.33 Since Rayalas

security of tenure is conditioned upon his good behavior, he may be removed from office if it is proven that he has failed to live up to this standard. All the issues raised in these three cases can be summed up in two ultimate questions, namely: (1) Did Rayala commit sexual harassment? (2) If he did, what is the applicable penalty? Initially, however, we must resolve a procedural issue raised by Rayala. He accuses the Office of the Solicitor General (OSG), as counsel for the Republic, of forum shopping because it filed a motion for reconsideration of the decision in CA-G.R. SP No. 61026 and then filed a comment in G.R. No. 155840 before this Court. We do not agree. Forum shopping is an act of a party, against whom an adverse judgment or order has been rendered in one forum, of seeking and possibly securing a favorable opinion in another forum, other than by appeal or special civil action for certiorari.34 It consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment.35 There is forum shopping when the following elements concur: (1) identity of the parties or, at least, of the parties who represent the same interest in both actions; (2) identity of the rights asserted and relief prayed for, as the latter is founded on the same set of facts; and (3) identity of the two preceding particulars such that any judgment rendered in the other action will amount to res judicata in the action under consideration or will constitute litis pendentia.36 Reviewing the antecedents of these consolidated cases, we note that the CA rendered the assailed Resolution on October 18, 2002. The Republic filed its Motion for Reconsideration on November 22, 2002. On the other hand, Rayala filed his petition before this Court on November 21, 2002. While the Republics Motion for Reconsideration was pending resolution before the CA, on December 2, 2002, it was directed by this Court to file its Comment on Rayalas petition, which it submitted on June 16, 2003. When the CA denied the Motion for Reconsideration, the Republic filed its own Petition for Review with this Court on July 3, 2003. It cited in its

"Certification and Verification of a Non-Forum Shopping" (sic), that there was a case involving the same facts pending before this Court denominated as G.R. No. 155840. With respect to Domingos petition, the same had already been dismissed on February 19, 2003. Domingos petition was reinstated on June 16, 2003 but the resolution was received by the OSG only on July 25, 2003, or after it had filed its own petition.37 Based on the foregoing, it cannot be said that the OSG is guilty of forum shopping. We must point out that it was Rayala who filed the petition in the CA, with the Republic as the adverse party. Rayala himself filed a motion for reconsideration of the CAs December 21, 2001 Decision, which led to a more favorable ruling, i.e., the lowering of the penalty from dismissal to one-year suspension. The parties adversely affected by this ruling (Domingo and the Republic) had the right to question the same on motion for reconsideration. But Domingo directly filed a Petition for Review with this Court, as did Rayala. When the Republic opted to file a motion for reconsideration, it was merely exercising a right. That Rayala and Domingo had by then already filed cases before the SC did not take away this right. Thus, when this Court directed the Republic to file its Comment on Rayalas petition, it had to comply, even if it had an unresolved motion for reconsideration with the CA, lest it be cited for contempt. Accordingly, it cannot be said that the OSG "file[d] multiple suits involving the same parties for the same cause of action, either simultaneously or successively, for the purpose of obtaining a favorable judgment." We now proceed to discuss the substantive issues. It is noteworthy that the five CA Justices who deliberated on the case were unanimous in upholding the findings of the Committee and the OP. They found the assessment made by the Committee and the OP to be a "meticulous and dispassionate analysis of the testimonies of the complainant (Domingo), the respondent (Rayala), and their respective witnesses." 38 They differed only on the appropriate imposable penalty. That Rayala committed the acts complained of and was guilty of sexual harassment is, therefore, the common factual finding of not just one, but three independent bodies: the Committee, the OP and the CA. It should be remembered that when supported by substantial evidence, factual findings made by quasi-judicial and administrative bodies are accorded great respect and even finality by the courts.39 The principle, therefore, dictates that such findings should bind us.40 Indeed, we find no reason to deviate from this rule. There appears no valid ground for this Court to review the factual findings of the CA, the OP, and

the Investigating Committee. These findings are now conclusive on the Court. And quite significantly, Rayala himself admits to having committed some of the acts imputed to him. He insists, however, that these acts do not constitute sexual harassment, because Domingo did not allege in her complaint that there was a demand, request, or requirement of a sexual favor as a condition for her continued employment or for her promotion to a higher position.41 Rayala urges us to apply to his case our ruling in Aquino v. Acosta.42 We find respondents insistence unconvincing. Basic in the law of public officers is the three-fold liability rule, which states that the wrongful acts or omissions of a public officer may give rise to civil, criminal and administrative liability. An action for each can proceed independently of the others.43 This rule applies with full force to sexual harassment. The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof defines work-related sexual harassment in this wise: Sec. 3. Work, Education or Training-related Sexual Harassment Defined. Work, education or training-related sexual harassment is committed by an employer, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment, demands, requests or otherwise requires any sexual favor from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of said Act. (a) In a work-related or employment environment, sexual harassment is committed when: (1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or continued employment of said individual, or in granting said individual favorable compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in a way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee;

(2) The above acts would impair the employees rights or privileges under existing labor laws; or (3) The above acts would result in an intimidating, hostile, or offensive environment for the employee. This section, in relation to Section 7 on penalties, defines the criminal aspect of the unlawful act of sexual harassment. The same section, in relation to Section 6, authorizes the institution of an independent civil action for damages and other affirmative relief. Section 4, also in relation to Section 3, governs the procedure for administrative cases, viz.: Sec. 4. Duty of the Employer or Head of Office in a Work-related, Education or Training Environment. It shall be the duty of the employer or the head of the work-related, educational or training environment or institution, to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, settlement or prosecution of acts of sexual harassment. Towards this end, the employer or head of office shall: (a) Promulgate appropriate rules and regulations in consultation with and jointly approved by the employees or students or trainees, through their duly designated representatives, prescribing the procedure for the investigation or sexual harassment cases and the administrative sanctions therefor. Administrative sanctions shall not be a bar to prosecution in the proper courts for unlawful acts of sexual harassment. The said rules and regulations issued pursuant to this section (a) shall include, among others, guidelines on proper decorum in the workplace and educational or training institutions. (b) Create a committee on decorum and investigation of cases on sexual harassment. The committee shall conduct meetings, as the case may be, with other officers and employees, teachers, instructors, professors, coaches, trainors and students or trainees to increase

understanding and prevent incidents of sexual harassment. It shall also conduct the investigation of the alleged cases constituting sexual harassment. In the case of a work-related environment, the committee shall be composed of at least one (1) representative each from the management, the union, if any, the employees from the supervisory rank, and from the rank and file employees. In the case of the educational or training institution, the committee shall be composed of at least one (1) representative from the administration, the trainors, teachers, instructors, professors or coaches and students or trainees, as the case maybe. The employer or head of office, educational or training institution shall disseminate or post a copy of this Act for the information of all concerned. The CA, thus, correctly ruled that Rayalas culpability is not to be determined solely on the basis of Section 3, RA 7877, because he is charged with the administrative offense, not the criminal infraction, of sexual harassment.44 It should be enough that the CA, along with the Investigating Committee and the Office of the President, found substantial evidence to support the administrative charge. Yet, even if we were to test Rayalas acts strictly by the standards set in Section 3, RA 7877, he would still be administratively liable. It is true that this provision calls for a "demand, request or requirement of a sexual favor." But it is not necessary that the demand, request or requirement of a sexual favor be articulated in a categorical oral or written statement. It may be discerned, with equal certitude, from the acts of the offender. Holding and squeezing Domingos shoulders, running his fingers across her neck and tickling her ear, having inappropriate conversations with her, giving her money allegedly for school expenses with a promise of future privileges, and making statements with unmistakable sexual overtones all these acts of Rayala resound with deafening clarity the unspoken request for a sexual favor. Likewise, contrary to Rayalas claim, it is not essential that the demand, request or requirement be made as a condition for continued employment or for promotion to a higher position. It is enough that the respondents acts result in creating an intimidating, hostile or offensive environment for the employee.45 That the acts of Rayala generated an intimidating and hostile environment for Domingo is clearly shown by the common factual

finding of the Investigating Committee, the OP and the CA that Domingo reported the matter to an officemate and, after the last incident, filed for a leave of absence and requested transfer to another unit. Rayalas invocation of Aquino v. Acosta46 is misplaced, because the factual setting in that case is different from that in the case at bench. In Aquino, Atty. Susan Aquino, Chief of the Legal and Technical Staff of the Court of Tax Appeals (CTA), charged then CTA Presiding Judge (now Presiding Justice) Ernesto Acosta of sexual harassment. She complained of several incidents when Judge Acosta allegedly kissed her, embraced her, and put his arm around her shoulder. The case was referred to CA Justice Josefina G. Salonga for investigation. In her report, Justice Salonga found that "the complainant failed to show by convincing evidence that the acts of Judge Acosta in greeting her with a kiss on the cheek, in a `beso-beso fashion, were carried out with lustful and lascivious desires or were motivated by malice or ill motive. It is clear from the circumstances that most of the kissing incidents were done on festive and special occasions," and they "took place in the presence of other people and the same was by reason of the exaltation or happiness of the moment." Thus, Justice Salonga concluded: In all the incidents complained of, the respondent's pecks on the cheeks of the complainant should be understood in the context of having been done on the occasion of some festivities, and not the assertion of the latter that she was singled out by Judge Acosta in his kissing escapades. The busses on her cheeks were simply friendly and innocent, bereft of malice and lewd design. The fact that respondent judge kisses other people on the cheeks in the 'beso-beso' fashion, without malice, was corroborated by Atty. Florecita P. Flores, Ms. Josephine Adalem and Ms. Ma. Fides Balili, who stated that they usually practice 'beso-beso' or kissing on the cheeks, as a form of greeting on occasions when they meet each other, like birthdays, Christmas, New Year's Day and even Valentine's Day, and it does not matter whether it is Judge Acosta's birthday or their birthdays. Theresa Cinco Bactat, a lawyer who belongs to complainant's department, further attested that on occasions like birthdays, respondent judge would likewise greet her with a peck on the cheek in a 'beso-beso' manner. Interestingly, in one of several festive occasions, female employees of the CTA pecked respondent judge on the cheek where Atty. Aquino was one of Judge Acosta's well wishers. In sum, no sexual harassment had indeed transpired on those six occasions. Judge Acosta's acts of bussing Atty. Aquino on her cheek were merely forms of greetings, casual and customary in nature. No evidence of intent to sexually harass complainant was

apparent, only that the innocent acts of 'beso-beso' were given malicious connotations by the complainant. In fact, she did not even relate to anyone what happened to her. Undeniably, there is no manifest sexual undertone in all those incidents.47 This Court agreed with Justice Salonga, and Judge Acosta was exonerated. To repeat, this factual milieu in Aquino does not obtain in the case at bench. While in Aquino, the Court interpreted the acts (of Judge Acosta) as casual gestures of friendship and camaraderie, done during festive or special occasions and with other people present, in the instant case, Rayalas acts of holding and squeezing Domingos shoulders, running his fingers across her neck and tickling her ear, and the inappropriate comments, were all made in the confines of Rayalas office when no other members of his staff were around. More importantly, and a circumstance absent in Aquino, Rayalas acts, as already adverted to above, produced a hostile work environment for Domingo, as shown by her having reported the matter to an officemate and, after the last incident, filing for a leave of absence and requesting transfer to another unit. Rayala also argues that AO 250 does not apply to him. First, he argues that AO 250 does not cover the NLRC, which, at the time of the incident, was under the DOLE only for purposes of program and policy coordination. Second, he posits that even assuming AO 250 is applicable to the NLRC, he is not within its coverage because he is a presidential appointee. We find, however, that the question of whether or not AO 250 covers Rayala is of no real consequence. The events of this case unmistakably show that the administrative charges against Rayala were for violation of RA 7877; that the OP properly assumed jurisdiction over the administrative case; that the participation of the DOLE, through the Committee created by the Secretary, was limited to initiating the investigation process, reception of evidence of the parties, preparation of the investigation report, and recommending the appropriate action to be taken by the OP. AO 250 had never really been applied to Rayala. If it was used at all, it was to serve merely as an auxiliary procedural guide to aid the Committee in the orderly conduct of the investigation. Next, Rayala alleges that the CA erred in holding that sexual harassment is an offense malum prohibitum. He argues that intent is an essential element in sexual harassment, and since the acts imputed to him were done allegedly without malice, he should be absolved of the charges against him.

We reiterate that what is before us is an administrative case for sexual harassment. Thus, whether the crime of sexual harassment is malum in se or malum prohibitum is immaterial. We also reject Rayalas allegations that the charges were filed because of a conspiracy to get him out of office and thus constitute merely political harassment. A conspiracy must be proved by clear and convincing evidence. His bare assertions cannot stand against the evidence presented by Domingo. As we have already ruled, the acts imputed to Rayala have been proven as fact. Moreover, he has not proven any ill motive on the part of Domingo and her witnesses which would be ample reason for her to conjure stories about him. On the contrary, ill motive is belied by the fact that Domingo and her witnesses all employees of the NLRC at that time stood to lose their jobs or suffer unpleasant consequences for coming forward and charging their boss with sexual harassment. Furthermore, Rayala decries the alleged violation of his right to due process. He accuses the Committee on Decorum of railroading his trial for violation of RA 7877. He also scored the OPs decision finding him guilty of "disgraceful and immoral conduct" under the Revised Administrative Code and not for violation of RA 7877. Considering that he was not tried for "disgraceful and immoral conduct," he argues that the verdict is a "sham and total nullity." We hold that Rayala was properly accorded due process. In previous cases, this Court held that: [i]n administrative proceedings, due process has been recognized to include the following: (1) the right to actual or constructive notice of the institution of proceedings which may affect a respondents legal rights; (2) a real opportunity to be heard personally or with the assistance of counsel, to present witnesses and evidence in ones favor, and to defend ones rights; (3) a tribunal vested with competent jurisdiction and so constituted as to afford a person charged administratively a reasonable guarantee of honesty as well as impartiality; and (4) a finding by said tribunal which is supported by substantial evidence submitted for consideration during the hearing or contained in the records or made known to the parties affected.48 The records of the case indicate that Rayala was afforded all these procedural due process safeguards. Although in the beginning he questioned the authority of the Committee to try him,49 he appeared, personally and with counsel, and participated in the proceedings.

On the other point raised, this Court has held that, even in criminal cases, the designation of the offense is not controlling, thus: What is controlling is not the title of the complaint, nor the designation of the offense charged or the particular law or part thereof allegedly violated, these being mere conclusions of law made by the prosecutor, but the description of the crime charged and the particular facts therein recited. The acts or omissions complained of must be alleged in such form as is sufficient to enable a person of common understanding to know what offense is intended to be charged, and enable the court to pronounce proper judgment. No information for a crime will be sufficient if it does not accurately and clearly allege the elements of the crime charged. Every element of the offense must be stated in the information. What facts and circumstances are necessary to be included therein must be determined by reference to the definitions and essentials of the specified crimes. The requirement of alleging the elements of a crime in the information is to inform the accused of the nature of the accusation against him so as to enable him to suitably prepare his defense.50 It is noteworthy that under AO 250, sexual harassment amounts to disgraceful and immoral conduct.51 Thus, any finding of liability for sexual harassment may also be the basis of culpability for disgraceful and immoral conduct. With the foregoing disquisitions affirming the finding that Rayala committed sexual harassment, we now determine the proper penalty to be imposed. Rayala attacks the penalty imposed by the OP. He alleges that under the pertinent Civil Service Rules, disgraceful and immoral conduct is punishable by suspension for a period of six (6) months and one (1) day to one (1) year. He also argues that since he is charged administratively, aggravating or mitigating circumstances cannot be appreciated for purposes of imposing the penalty. Under AO 250, the penalty for the first offense is suspension for six (6) months and one (1) day to one (1) year, while the penalty for the second offense is dismissal.52 On the other hand, Section 22(o), Rule XVI of the Omnibus Rules Implementing Book V of the Administrative Code of 198753 and Section 52 A(15) of the Revised Uniform Rules on Administrative Cases in the Civil Service54 both provide that the first offense of disgraceful and immoral conduct is punishable by suspension of six (6) months and one (1) day to one (1) year. A second offense is punishable by dismissal.

Under the Labor Code, the Chairman of the NLRC shall hold office during good behavior until he or she reaches the age of sixty-five, unless sooner removed for cause as provided by law or becomes incapacitated to discharge the duties of the office.55 In this case, it is the President of the Philippines, as the proper disciplining authority, who would determine whether there is a valid cause for the removal of Rayala as NLRC Chairman. This power, however, is qualified by the phrase "for cause as provided by law." Thus, when the President found that Rayala was indeed guilty of disgraceful and immoral conduct, the Chief Executive did not have unfettered discretion to impose a penalty other than the penalty provided by law for such offense. As cited above, the imposable penalty for the first offense of either the administrative offense of sexual harassment or for disgraceful and immoral conduct is suspension of six (6) months and one (1) day to one (1) year. Accordingly, it was error for the Office of the President to impose upon Rayala the penalty of dismissal from the service, a penalty which can only be imposed upon commission of a second offense. Even if the OP properly considered the fact that Rayala took advantage of his high government position, it still could not validly dismiss him from the service. Under the Revised Uniform Rules on Administrative Cases in the Civil Service,56 taking undue advantage of a subordinate may be considered as an aggravating circumstance57 and where only aggravating and no mitigating circumstances are present, the maximum penalty shall be imposed.58 Hence, the maximum penalty that can be imposed on Rayala is suspension for one (1) year. Rayala holds the exalted position of NLRC Chairman, with the rank equivalent to a CA Justice. Thus, it is not unavailing that rigid standards of conduct may be demanded of him. In Talens-Dabon v. Judge Arceo,59 this Court, in upholding the liability of therein respondent Judge, said: The actuations of respondent are aggravated by the fact that complainant is one of his subordinates over whom he exercises control and supervision, he being the executive judge. He took advantage of his position and power in order to carry out his lustful and lascivious desires. Instead of he being in loco parentis over his subordinate employees, respondent was the one who preyed on them, taking advantage of his superior position. In yet another case, this Court declared: As a managerial employee, petitioner is bound by more exacting work ethics. He failed to live up to his higher standard of

responsibility when he succumbed to his moral perversity. And when such moral perversity is perpetrated against his subordinate, he provides a justifiable ground for his dismissal for lack of trust and confidence. It is the right, nay, the duty of every employer to protect its employees from oversexed superiors.60 It is incumbent upon the head of office to set an example on how his employees should conduct themselves in public office, so that they may work efficiently in a healthy working atmosphere. Courtesy demands that he should set a good example.61 Rayala has thrown every argument in the book in a vain effort to effect his exoneration. He even puts Domingos character in question and casts doubt on the morality of the former President who ordered, albeit erroneously, his dismissal from the service. Unfortunately for him, these are not significant factors in the disposition of the case. It is his character that is in question here and sadly, the inquiry showed that he has been found wanting. WHEREFORE, the foregoing premises considered, the October 18, 2002 Resolution of the Court of Appeals in CA-G.R. SP No. 61026 is AFFIRMED. Consequently, the petitions in G.R. Nos. 155831, 155840, and 158700 are DENIED. No pronouncement as to costs. SO ORDERED.

G.R. No. L-48494 February 5, 1990 BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE, petitioners, vs. RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and DOROTEO R. ALEGRE, respondents. Quasha, Asperilla, Ancheta, Pea & Nolasco for petitioners. Mauricio G. Domogon for respondent Alegre.

the status of a regular employee and could not be removed except for valid cause. 6 The Regional Director considered Brent School's report as an application for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages. The Director pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools. 7 Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the case to the Secretary of Labor for review. 8 The latter sustained the Regional Director. 9 Brent appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who could not be dismissed except for just cause, and expiration of the employment contract was not one of the just causes provided in the Labor Code for termination of services. 10 The School is now before this Court in a last attempt at vindication. That it will get here. The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did not come into effect until November 1, 1974, some three years after the perfection of the employment contract, and rights and obligations thereunder had arisen and been mutually observed and enforced. At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A. 1052, 11 as amended by R.A. 1787. 12 Basically, this statute provided that In cases of employment, without a definite period, in a commercial, industrial, or agricultural establishment or enterprise, the employer or the employee may terminate at any time the employment with just cause; or without just cause in the case of an employee by serving written notice on the employer at least one month in advance, or in the case of an employer, by serving such notice to the employee at least one month in advance or one-half month for every year of service of the employee,

NARVASA, J.: The question presented by the proceedings at bar 1 is whether or not the provisions of the Labor Code, 2 as amended, 3 have anathematized "fixed period employment" or employment for a term. The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. 4 The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971. 5 Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The stated ground for the termination was "completion of contract, expiration of the definite period of employment." And a month or so later, on May 26, 1976, Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract." However, at the investigation conducted by a Labor Conciliator of said report of termination of his services, Alegre protested the announced termination of his employment. He argued that although his contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his employer, and his employment had lasted for five years, he had acquired

whichever is longer, a fraction of at least six months being considered as one whole year. The employer, upon whom no such notice was served in case of termination of employment without just cause, may hold the employee liable for damages. The employee, upon whom no such notice was served in case of termination of employment without just cause, shall be entitled to compensation from the date of termination of his employment in an amount equivalent to his salaries or wages corresponding to the required period of notice. There was, to repeat, clear albeit implied recognition of the licitness of term employment. RA 1787 also enumerated what it considered to be just causes for terminating an employment without a definite period, either by the employer or by the employee without incurring any liability therefor. Prior, thereto, it was the Code of Commerce which governed employment without a fixed period, and also implicitly acknowledged the propriety of employment with a fixed period. Its Article 302 provided that In cases in which the contract of employment does not have a fixed period, any of the parties may terminate it, notifying the other thereof one month in advance. The factor or shop clerk shall have a right, in this case, to the salary corresponding to said month. The salary for the month directed to be given by the said Article 302 of the Code of Commerce to the factor or shop clerk, was known as the mesada (from mes, Spanish for "month"). When Article 302 (together with many other provisions of the Code of Commerce) was repealed by the Civil Code of the Philippines, Republic Act No. 1052 was enacted avowedly for the precise purpose of reinstating the mesada. Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a period in section 2, Chapter 3, Title I, Book IV; and with contracts of labor and for a piece of work, in Sections 2 and 3, Chapter 3, Title VIII, respectively, of Book IV. No prohibition against term-or fixed-period

employment is contained in any of its articles or is otherwise deducible therefrom. It is plain then that when the employment contract was signed between Brent School and Alegre on July 18, 1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly recognized as valid by this Court, for instance, in Biboso v. Victorias Milling Co., Inc., promulgated on March 31, 1977, 13 and J. Walter Thompson Co. (Phil.) v. NLRC, promulgated on December 29, 1983. 14 The Thompson case involved an executive who had been engaged for a fixed period of three (3) years. Biboso involved teachers in a private school as regards whom, the following pronouncement was made: What is decisive is that petitioners (teachers) were well aware an the time that their tenure was for a limited duration. Upon its termination, both parties to the employment relationship were free to renew it or to let it lapse. (p. 254) Under American law 15 the principle is the same. "Where a contract specifies the period of its duration, it terminates on the expiration of such period." 16 "A contract of employment for a definite period terminates by its own terms at the end of such period." 17 The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of term employment began to take place at about this time Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination of employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." The asserted objective to was "prevent the circumvention of the right of the employee to be secured in their employment as provided . . . (in the Code)." Article 321 prescribed the just causes for which an employer could terminate "an employment without a definite period." And Article 319 undertook to define "employment without a fixed period" in the following manner: 18

An employment shall be deemed to be without a definite period for purposes of this Chapter where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. The question immediately provoked by a reading of Article 319 is whether or not a voluntary agreement on a fixed term or period would be valid where the employee "has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer." The definition seems a non sequitur. From the premise that the duties of an employee entail "activities which are usually necessary or desirable in the usual business or trade of the employer the" conclusion does not necessarily follow that the employer and employee should be forbidden to stipulate any period of time for the performance of those activities. There is nothing essentially contradictory between a definite period of an employment contract and the nature of the employee's duties set down in that contract as being "usually necessary or desirable in the usual business or trade of the employer." The concept of the employee's duties as being "usually necessary or desirable in the usual business or trade of the employer" is not synonymous with or identical to employment with a fixed term. Logically, the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be "that which must necessarily come, although it may not be known when." 19 Seasonal employment, and employment for a particular project are merely instances employment in which a period, where not expressly set down, necessarily implied. Of course, the term period has a definite and settled signification. It means, "Length of existence; duration. A point of time marking a termination as of a cause or an activity; an end, a limit, a bound; conclusion; termination. A series of years, months or days in which something is completed. A time of definite length. . . . the period from one fixed date to another fixed date . . ." 20 It connotes a "space of time which has an influence on an obligation as a result of a juridical act, and either suspends its demandableness or produces its extinguishment." 21 It should be apparent that this settled and familiar notion of a period, in the context of a contract of employment, takes no account at all of the nature of the duties of the employee; it has absolutely no relevance to the character of

his duties as being "usually necessary or desirable to the usual business of the employer," or not. Subsequently, the foregoing articles regarding employment with "a definite period" and "regular" employment were amended by Presidential Decree No. 850, effective December 16, 1975. Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to persons "employed with a fixed period," and was renumbered (becoming Article 271). The article 22 now reads: . . . Probationary employment.Probationary employment shall not exceed six months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged in a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Also amended by PD 850 was Article 319 (entitled "Employment with a fixed period," supra) by (a) deleting mention of employment with a fixed or definite period, (b) adding a general exclusion clause declaring irrelevant written or oral agreements "to the contrary," and (c) making the provision treat exclusively of "regular" and "casual" employment. As revised, said article, renumbered 270, 23 now reads: . . . Regular and Casual Employment.The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to he casual if it is not covered by the preceding paragraph: provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. The first paragraph is identical to Article 319 except that, as just mentioned, a clause has been added, to wit: "The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties . . ." The clause would appear to be addressed inter alia to agreements fixing a definite period for employment. There is withal no clear indication of the intent to deny validity to employment for a definite period. Indeed, not only is the concept of regular employment not essentially inconsistent with employment for a fixed term, as above pointed out, Article 272 of the Labor Code, as amended by said PD 850, still impliedly acknowledged the propriety of term employment: it listed the "just causes" for which "an employer may terminate employment without a definite period," thus giving rise to the inference that if the employment be with a definite period, there need be no just cause for termination thereof if the ground be precisely the expiration of the term agreed upon by the parties for the duration of such employment. Still later, however, said Article 272 (formerly Article 321) was further amended by Batas Pambansa Bilang 130, 24 to eliminate altogether reference to employment without a definite period. As lastly amended, the opening lines of the article (renumbered 283), now pertinently read: "An employer may terminate an employment for any of the following just causes: . . . " BP 130 thus completed the elimination of every reference in the Labor Code, express or implied, to employment with a fixed or definite period or term. It is in the light of the foregoing description of the development of the provisions of the Labor Code bearing on term or fixed-period employment that the question posed in the opening paragraph of this opinion should now be addressed. Is it then the legislative intention to outlaw stipulations in employment contracts laying down a definite period therefor? Are such stipulations in essence contrary to public policy and should not on this account be accorded legitimacy? On the one hand, there is the gradual and progressive elimination of references to term or fixed-period employment in the Labor Code, and the specific statement of the rule 25 that

. . . Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be employed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, goods or services, except the general admonition against stipulations contrary to law, morals, good customs, public order or public policy. 26 Under the Civil Code, therefore, and as a general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with pre-determined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination. Some familiar examples may be cited of employment contracts which may be neither for seasonal work nor for specific projects, but to which a fixed term is an essential and natural appurtenance: overseas employment contracts, for one, to which, whatever the nature of the engagement, the concept of regular employment will all that it implies does not appear ever to have been applied, Article 280 of the Labor Code not withstanding; also appointments to the positions of dean, assistant dean, college secretary, principal, and other administrative offices in educational institutions, which are by practice or tradition rotated among the faculty members, and where fixed terms are a necessity, without which no reasonable rotation would be possible. Similarly, despite the provisions of Article 280, Policy, Instructions No. 8 of the Minister of Labor 27 implicitly recognize that certain company officials may be elected for what would amount to fixed periods, at the

expiration of which they would have to stand down, in providing that these officials," . . . may lose their jobs as president, executive vice-president or vice-president, etc. because the stockholders or the board of directors for one reason or another did not re-elect them." There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist, e.g., where it is indeed the employee himself who insists upon a period or where the nature of the engagement is such that, without being seasonal or for a specific project, a definite date of termination is a sine qua non, would an agreement fixing a period be essentially evil or illicit, therefore anathema? Would such an agreement come within the scope of Article 280 which admittedly was enacted "to prevent the circumvention of the right of the employee to be secured in . . . (his) employment?" As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head. It is a salutary principle in statutory construction that there exists a valid presumption that undesirable consequences were never intended by a legislative measure, and that a construction of which the statute is fairly susceptible is favored, which will avoid all objecionable mischievous, undefensible, wrongful, evil and injurious consequences. 28 Nothing is better settled than that courts are not to give words a meaning which would lead to absurd or unreasonable consequences. That s a principle that does back to In re Allen decided oil October 27, 1903, where it was held that a literal interpretation is to be rejected if it

would be unjust or lead to absurd results. That is a strong argument against its adoption. The words of Justice Laurel are particularly apt. Thus: "The fact that the construction placed upon the statute by the appellants would lead to an absurdity is another argument for rejecting it. . . ." 29 . . . We have, here, then a case where the true intent of the law is clear that calls for the application of the cardinal rule of statutory construction that such intent of spirit must prevail over the letter thereof, for whatever is within the spirit of a statute is within the statute, since adherence to the letter would result in absurdity, injustice and contradictions and would defeat the plain and vital purpose of the statute. 30 Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. Such interpretation puts the seal on Bibiso 31 upon the effect of the expiry of an agreed period of employment as still good rulea rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held: Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a

definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the nonrenewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination. The interpretation that the notice is only a reminder is consistent with the court's finding in Labajo supra. ... 32 Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied. WHEREFORE, the public respondent's Decision complained of is REVERSED and SET ASIDE. Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement and the other relief awarded and confirmed on appeal in the proceedings below. No pronouncement as to costs. SO ORDERED.