GR.
199166 subsequent daily airings in respondents’ TV
Nelson Benigno V. ABS-CBN Corp.
PEREZ, J.:
The existence of an employer-employee
relationship is at the heart of this Petition for
Review on Certiorari filed pursuant to Rule 45
of the Rules of Court, primarily assailing the 29
June 2011 Decision[1] rendered by the Fourth
Division of the Court of Appeals (CA) in CA-
G.R. SP No. 116928 which ruled out said
relationship between the parties.
The Facts
Respondent ABS-CBN Corporation (formerly
ABS-CBN Broadcasting Corporation) is a
television and radio broadcasting corporation
which, for its Regional Network Group in Naga
City, employed respondent Amalia Villafuerte
(Villafuerte) as Manager. There is no dispute
regarding the fact that, thru Villafuerte, ABS-
CBN engaged the services of petitioners
Nelson Begino (Begino) and Gener Del Valle
(Del Valle) sometime in 1996 as
Cameramen/Editors for TV Broadcasting.
Petitioners Ma. Cristina Sumayao (Sumayao)
and Monina Avila-Llorin (Llorin) were
likewise similarly engaged as reporters
sometime in 1996 and 2002, respectively. With
their services engaged by respondents thru
Talent Contracts which, though regularly
renewed over the years, provided terms ranging
from three (3) months to one (1) year,
petitioners were given Project Assignment
Forms which detailed, among other matters, the
duration of a particular project as well as the
budget and the daily technical requirements
thereof. In the aforesaid capacities, petitioners
were tasked with coverage of news items for
holiday pay, 13th month pay, service incentive
Patrol Bicol Program.[2]
While specifically providing that nothing
therein shall be deemed or construed to
establish an employer-employee relationship
between the parties, the aforesaid Talent
Contracts included, among other matters,
provisions on the following matters: (a) the
Talent’s creation and performance of work in
accordance with the ABS-CBN’s professional
standards and compliance with its policies and
guidelines covering intellectual property
creators, industry codes as well as the rules and
regulations of the Kapisanan ng mga
Broadcasters sa Pilipinas (KBP) and other
regulatory agencies; (b) the Talent’s non-
engagement in similar work for a person or
entity directly or indirectly in competition with
or adverse to the interests of ABS-CBN and
non-promotion of any product or service
without prior written consent; and (c) the
results-oriented nature of the talent’s work
which did not require them to observe normal
or fixed working hours.[3] Subjected to
contractor’s tax, petitioners’ remunerations
were denominated as Talent Fees which, as of
last renewal, were admitted to be pegged per
airing day at P273.35 for Begino, P302.92 for
Del Valle, P323.08 for Sumayao and P315.39
for Llorin.[4]
Claiming that they were regular employees of
ABS-CBN, petitioners filed against
respondents the complaint[5] docketed as Sub-
RAB 05-04-00041-07 before the National
Labor Relations Commission’s (NLRC) Sub-
Regional Arbitratio0n Branch No. 5, Naga
City. In support of their claims for
regularization, underpayment of overtime pay,
leave pay, damages and attorney's fees,
petitioners alleged that they performed
functions necessary and desirable in ABS-
CBN's business. Mandated to wear company
IDs and provided all the equipment they
needed, petitioners averred that they worked
under the direct control and supervision of
Villafuerte and, at the end of each day, were
informed about the news to be covered the
following day, the routes they were to take and,
whenever the subject of their news coverage is
quite distant, even the start of their workday.
Due to the importance of the news items they
covered and the necessity of their completion
for the success of the program, petitioners
claimed that, under pain of immediate
termination, they were bound by the company’s
policy on, among others, attendance and
punctuality.[6]
Aside from the constant evaluation of their
actions, petitioners were reportedly subjected to
an annual competency assessment alongside
other ABS-CBN employees, as condition for
their continued employment. Although their
work involved dealing with emergency
situations at any time of the day or night,
petitioners claimed that they were not paid the
labor standard benefits the law extends to
regular employees. To avoid paying what is
due them, however, respondents purportedly
resorted to the simple expedient of using said
Talent Contracts and/or Project Assignment
Forms which denominated petitioners as
talents, despite the fact that they are not actors
or TV hosts of special skills. As a result of this
iniquitous situation, petitioners asseverated that
they merely earned an average of P7,000.00 to
P8,000.00 per month, or decidedly lower than
the P21,773.00 monthly salary ABS-CBN paid
its regular rank-and-file employees.
Considering their repeated re-hiring by
respondents for ostensible fixed periods, this
situation had gone on for years since TV Patrol
Bicol has continuously aired from 1996
onwards.[7]
In refutation of the foregoing assertions, on the
other hand, respondents argued that, although it
occasionally engages in production and
generates programs thru various means, ABS-
CBN is primarily engaged in the business of
broadcasting television and radio content. Not
having the full manpower complement to
produce its own program, the company had
allegedly resorted to engaging independent
contractors like actors, directors, artists,
anchormen, reporters, scriptwriters and various
production and technical staff, who offered
their services in relation to a particular
program. Known in the industry as talents, such
independent contractors inform ABS- CBN of
their availability and were required to
accomplish Talent Information Forms to
facilitate their engagement for and appearance
on designated project days. Given the
unpredictability of viewer preferences,
respondents argued that the company cannot
afford to provide regular work for talents with
whom it negotiates specific or determinable
professional fees on a per project, weekly or
daily basis, usually depending on the budget
allocation for a project.[8]
Respondents insisted that, pursuant to their
Talent Contracts and/or Project Assignment
Forms, petitioners were hired as talents, to act
as reporters and/or cameramen for TV Patrol
Bicol for designated periods and rates. Fully
aware that they were not considered or to
consider themselves as employees of a
particular production or film outfit, petitioners
were supposedly engaged on the basis of the
skills, knowledge or expertise they already
possessed and, for said reason, required no
further training from ABS-CBN. Although
petitioners were inevitably subjected to some
degree of control, the same was allegedly
limited to the imposition of general guidelines
on conduct and performance, simply for the
purpose of upholding the standards of the
company and the strictures of the industry.
Never subjected to any control or restrictions
over the means and methods by which they
performed or discharged the tasks for which
their services were engaged, petitioners were,
at most, briefed whenever necessary regarding
the general requirements of the project to be
executed.[9]
Having been terminated during the pendency of
the case, Petitioners filed on 10 July 2007 a
second complaint against respondents, for
regularization, payment of labor standard
benefits, illegal dismissal and unfair labor
practice, which was docketed as Sub-RAB 05-
08-00107-07. Upon respondents’ motion, this
complaint was dismissed for violation of the
rules against forum shopping in view of the fact
that the determination of the issues in the
second case hinged on the resolution of those
raised in the first.[10] On 19 December 2007,
however, Labor Arbiter Jesus Orlando
Quiñones (Labor Arbiter Quiñones) resolved
Sub-RAB 05-04-00041-07 in favor of
petitioners who, having rendered services
necessary and related to ABS-CBN’s business
for more than a year, were determined to be its
regular employees. With said conclusion found
to be buttressed by, among others, the
exclusivity clause and prohibitions under
petitioners’ Talent Contracts and/or Project
Assignment Forms which evinced respondents’
control over them,[11] Labor Arbiter Quiñones
disposed of the case in the following wise:
WHEREFORE, finding merit in the causes of
action set forth by the complainants, judgment
is hereby rendered declaring complainants
MONINA AVILA-LLORIN, GENER L. DEL
VALLE, NELSON V. BEGINO and MA.
CRISTINA V. SUMAYAO, as regular
employees of respondent company, ABS-CBN
BROADCASTING CORPORATION.
Accordingly, respondent ABS-CBN
Broadcasting Corporation is hereby
ORDERED to pay complainants, subject to the
prescriptive period provided under Article 291
of the Labor Code, however applicable, the
total amount of Php2,440,908.36, representing
salaries/wage differentials, holiday pay, service
incentive leave pay and 13th month pay, to
include 10% of the judgment award as
attorney’s fees of the judgment award
(computation of the monetary awards are
attached hereto as integral part of this
decision).
Moreover, respondents are directed to admit
back complainants to work under the same
terms and conditions prevailing prior to their
separation or, at respondents' option, merely
reinstated in the payroll.
Other than the above, all other claims and
charges are ordered DISMISSED for lack of
merit.[12]
Aggrieved by the foregoing decision,
respondents elevated the case on appeal before
the NLRC, during the pendency of which
petitioners filed a third complaint against the
former, for illegal dismissal, regularization,
non- payment of salaries and 13th month pay,
unfair labor practice, damages and attorney’s
fees. In turn docketed as NLRC Case No. Sub-
RAB-V-05-03-00039-08, the complaint was
raffled to Labor Arbiter Quiñones who issued
an Order dated 30 April 2008, inhibiting
himself from the case and denying respondents’
motion to dismiss on the grounds of res
judicata and forum shopping.[13] Finding that
respondents’ control over petitioners was
indeed manifest from the exclusivity clause and
prohibitions in the Talent Contracts and/or
Project Assignment Forms, on the other hand,
the NLRC rendered a Decision dated 31 March
2010, affirming said Labor Arbiter’s appealed
decision.[14] Undeterred by the NLRC’s 31
August 2010 denial of their motion for
reconsideration,[15] respondents filed the Rule
65 petition for certiorari docketed before the
CA as CA-G.R. SP No. 116928 which, in
addition to taking exceptions to the findings of
the assailed decision, faulted petitioners for
violating the rule against forum shopping.[16]
On 29 June 2011, the CA rendered the herein
assailed decision, reversing the findings of the
Labor Arbiter and the NLRC. Ruling out the
existence of forum shopping on the ground that
petitioners' second and third complaints were
primarily anchored on their termination from
employment after the filing of their first
complaint, the CA nevertheless discounted the
existence of an employer-employee relation
between the parties upon the following findings
and conclusions: (a) petitioners, were engaged
by respondents as talents for periods, work and
the program specified in the Talent Contracts
and/or Project Assignment Forms concluded
between them; (b) instead of fixed salaries,
petitioners were paid talent fees depending on
the budget allocated for the program to which
they were assigned; (c) being mainly concerned
with the result, respondents did not exercise
control over the manner and method by which
petitioner accomplished their work and, at
most, ensured that they complied with the
standards of the company, the KBP and the
industry; and, (d) the existence of an employer-
employee relationship is not necessarily
established by the exclusivity clause and
prohibitions which are but terms and conditions
on which the parties are allowed to freely
stipulate.[17]
Petitioners’ motion for reconsideration of the
foregoing decision was denied in the CA's 3
October 2011 Resolution,[18] hence, this
petition.
The Issues
Petitioners seek the reversal of the CA’s
assailed Decision and
Resolution on the affirmative of the following
issues:
1. Whether or not the CA seriously and
reversibly erred in not dismissing respondents’
petition for certiorari in view of the fact that
they did file a Notice of Appeal at the NLRC
level and did not, by themselves or through
their duly authorized representative, verify and
certify the Memorandum of Appeal they filed
thereat, in accordance with the NLRC Rules of
Procedure; and
2. Whether or not the CA seriously and
reversibly erred in brushing aside the
determination made by both the Labor Arbiter
and the NLRC of the existence of an employer-
employee relationship between the parties,
despite established jurisprudence supporting
the same.
The Court's Ruling
The Court finds the petition impressed with
merit.
Petitioners preliminarily fault the CA for not
dismissing respondents’ Rule 65 petition
for certiorari in view of the fact that the latter
failed to file a Notice of Appeal from the Labor
Arbiter’s decision and to verify and certify the
Memorandum of Appeal they filed before the
NLRC. While concededly required under the
NLRC Rules of Procedure, however, these
matters should have been properly raised
during and addressed at the appellate stage
before the NLRC. Instead, the record shows
that the NLRC took cognizance of respondents’
appeal and proceeded to resolve the same in
favor of petitioners by affirming the Labor
Arbiter’s decision. Not having filed their own
petition for certiorari to take exception to the
liberal attitude the NLRC appears to have
adopted towards its own rules of procedure,
petitioners were hardly in the proper position to
raise the same before the CA or, for that matter,
before this Court at this late stage. Aside from
the settled rule that a party who has not
appealed is not entitled to affirmative relief
other than the ones granted in the
decision[19] rendered, liberal interpretation of
procedural rules on appeal had, on occasion,
been favored in the interest of substantive
justice.[20]
Although the existence of an employer-
employee relationship is, on the other hand, a
question of fact[21] which is ordinarily not the
proper subject of a Rule 45 petition for review
on certiorari like the one at bar, the conflicting
findings between the labor tribunals and the CA
justify a further consideration of the
matter.[22] To determine the existence of said
relation, case law has consistently applied the
four-fold test, to wit: (a) the selection and
engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d)
the employer's power to control the employee
on the means and methods by which the work
is accomplished.[23] Of these criteria, the so-
called “control test” is generally regarded as the
most crucial and determinative indicator of the
presence or absence of an employer-employee
relationship. Under this test, an employer-
employee relationship is said to exist where the
person for whom the services are performed
reserves the right to control not only the end
result but also the manner and means utilized to
achieve the same.[24]
In discounting the existence of said relationship
between the parties, the CA ruled that
Petitioners' services were, first and foremost,
engaged thru their Talent Contracts and/or
Project Assignment Forms which specified the
work to be performed by them, the project to
which they were assigned, the duration thereof
and their rates of pay according to the budget
therefor allocated. Because they are imbued
with public interest, it cannot be gainsaid,
however, that labor contracts are subject to the
police power of the state and are placed on a
higher plane than ordinary contracts. The
recognized supremacy of the law over the
nomenclature of the contract and the
stipulations contained therein is aimed at
bringing life to the policy enshrined in the
Constitution to afford protection to
labor.[25] Insofar as the nature of one’s
employment is concerned, Article 280 of the
Labor Code of the Philippines also provides as
follows:
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 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.
It has been ruled that the foregoing provision
contemplates four kinds of employees, namely:
(a) regular employees or those who have been
engaged to perform activities which are usually
necessary or desirable in the usual business or
trade of the employer; (b) project employees or
those 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;
(c) seasonal employees or those who work or
perform services which are seasonal in nature,
and the employment is for the duration of the
season; and (d) casual employees or those who
are not regular, project, or seasonal
employees.[26] To the foregoing classification of
employee, jurisprudence has added that of
contractual or fixed term employee which, if
not for the fixed term, would fall under the
category of regular employment in view of the
nature of the employee’s engagement, which is
to perform activity usually necessary or
desirable in the employer’s business.[27]
The Court finds that, notwithstanding the
nomenclature of their Talent Contracts and/or
Project Assignment Forms and the terms and
condition embodied therein, petitioners are
regular employees of ABS-CBN. Time and
again, it has been ruled that the test to
determine whether employment is regular or
not is the reasonable connection between the
activity performed by the employee in relation
to the business or trade of the employer.[28] As
cameramen/editors and reporters, petitioners
were undoubtedly performing functions
necessary and essential to ABS-CBN’s
business of broadcasting television and radio
content. It matters little that petitioners’
services were engaged for specified periods for
TV Patrol Bicol and that they were paid
according to the budget allocated therefor.
Aside from the fact that said program is a
regular weekday fare of the ABS-CBN’s
Regional Network Group in Naga City, the
record shows that, from their initial
engagement in the aforesaid capacities,
petitioners were continuously re-hired by
respondents over the years. To the mind of the
Court, respondents’ repeated hiring of
petitioners for its long-running news program
positively indicates that the latter were ABS-
CBN’s regular employees.
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 or continuing performance
as sufficient evidence of the necessity, if not
indispensability of that activity in the
business.[29] Indeed, an employment stops being
co-terminous with specific projects where the
employee is continuously re-hired due to the
demands of the employer’s business.[30] When
circumstances show, moreover, that
contractually stipulated periods of employment
have been imposed to preclude the acquisition
of tenurial security by the employee, this Court
has not hesitated in striking down such
arrangements as contrary to public policy,
morals, good customs or public order.[31] The
nature of the employment depends, after all, on
the nature of the activities to be performed by
the employee, considering the nature of the
employer’s business, the duration and scope to
be done, and, in some cases, even the length of
time of the performance and its continued
existence.[32] In the same manner that the
practice of having fixed-term contracts in the
industry does not automatically make all talent
contracts valid and compliant with labor law, it
has, consequently, been ruled that the assertion
that a talent contract exists does not necessarily
prevent a regular employment status.[33]
As cameramen/editors and reporters, it also
appears that petitioners were subject to the
control and supervision of respondents which,
first and foremost, provided them with the
equipments essential for the discharge of their
functions. Prepared at the instance of
respondents, petitioners’ Talent Contracts
tellingly provided that ABS-CBN retained “all
creative, administrative, financial and legal
control” of the program to which they were
assigned. Aside from having the right to require
petitioners “to attend and participate in all
promotional or merchandising campaigns,
activities or events for the Program,” ABS-
CBN required the former to perform their
functions “at such locations and
Performance/Exhibition Schedules” it provided
or, subject to prior notice, as it chose
determine, modify or change. Even if they were
unable to comply with said schedule,
petitioners were required to give advance
notice, subject to respondents’
approval.[34] However obliquely worded, the
Court finds the foregoing terms and conditions
demonstrative of the control respondents
exercised not only over the results of
petitioners’ work but also the means employed
to achieve the same.
In finding that petitioners were regular
employees, the NLRC further ruled that the
exclusivity clause and prohibitions in their
Talent Contracts and/or Project Assignment
Forms were likewise indicative of respondents’
control over them. Brushing aside said finding,
however, the CA applied the ruling in Sonza v.
ABS-CBN Broadcasting Corporation[35] where
similar restrictions were considered not
necessarily determinative of the existence of an
employer-employee relationship. Recognizing
that independent contractors can validly
provide his exclusive services to the hiring
party, said case enunciated that guidelines for
the achievement of mutually desired results are
not tantamount to control. As correctly pointed
out by petitioners, however, parallels cannot be
expediently drawn between this case and that
of Sonza case which involved a well-known
television and radio personality who was
legitimately considered a talent and amply
compensated as such. While possessed of skills
for which they were modestly recompensed by
respondents, petitioners lay no claim to fame
and/or unique talents for which talents like
actors and personalities are hired and generally
compensated in the broadcast industry.
Later echoed in Dumpit-Murillo v. Court of
Appeals,[36] this Court has rejected the
application of the ruling in the Sonza case to
employees similarly situated as petitioners
in ABS-CBN Broadcasting Corporation v.
Nazareno.[37] The following distinctions were
significantly observed between employees like
petitioners and television or radio personalities
like Sonza, to wit:
First. In the selection and engagement of
respondents, no peculiar or unique skill, talent
or celebrity status was required from them
because they were merely hired through
petitioner’s personnel department just like any
ordinary employee.
Second. The so-called "talent fees" of
respondents correspond to wages given as a
result of an employer-employee relationship.
Respondents did not have the power to bargain
for huge talent fees, a circumstance negating
independent contractual relationship.
Third. Petitioner could always discharge
respondents should it find their work
unsatisfactory, and respondents are highly
dependent on the petitioner for continued work.
Fourth. The degree of control and supervision
exercised by petitioner over respondents
through its supervisors negates the allegation
that respondents are independent contractors.
The presumption is that when the work done is
an integral part of the regular business of the
employer and when the worker, relative to the
employer, does not furnish an independent
business or professional service, such work is a
regular employment of such employee and not
an independent contractor. The Court will
peruse beyond any such agreement to examine
the facts that typify the parties’ actual
relationship.[38] (Emphasis omitted)
Rather than the project and/or independent
contractors respondents claim them to be, it is
evident from the foregoing disquisition that
petitioners are regular employees of ABS-
CBN. This conclusion is borne out by the
ineluctable showing that petitioners perform
functions necessary and essential to the
business of ABS-CBN which repeatedly
employed them for a long-running news
program of its Regional Network Group in
Naga City. In the course of said employment,
petitioners were provided the equipments they
needed, were required to comply with the
Company's policies which entailed prior
approval and evaluation of their performance.
Viewed from the prism of these considerations,
we find and so hold that the CA reversibly
erred when it overturned the NLRC's
affirmance of the Labor Arbiter's finding that
an employer-employee relationship existed
between the parties. Given the fact, however, DECISION
that Sub-RAB-V-05-03-00039-08 had not been
consolidated with this case and appears, for all NACHURA, J.:
intents and purposes, to be pending still, the
Court finds that the reinstatement of petitioners The case before this Court raises a
ordered by said labor officer and tribunal novel question never before decided in our
should, as a relief provided in case of illegal jurisdiction whether a newspaper columnist is an
dismissal, be left for determination in said case. employee of the newspaper which publishes the
column.
WHEREFORE, the Court of Appeals' assailed
Decision dated 29 June 2011 and Resolution In this Petition for Review under Rule
dated 3 October 2011 in CA-G.R. SP No. 45 of the Revised Rules on Civil Procedure,
116928 are REVERSED and SET ASIDE. petitioner Wilhelmina S. Orozco assails the
Except for the reinstatement of Nelson V. Decision[1] of the Court of Appeals (CA) in CA-
Begino, Gener Del Valle, Monina Avila-Llorin G.R. SP No. 50970 dated June 11, 2002 and its
and Ma. Cristina Sumayao, the National Labor Resolution[2] dated September 11, 2002 denying
and Relations· Commission's 31 March 2010 her Motion for Reconsideration. The CA
Decision is, accordingly, REINSTATED. reversed and set aside the Decision[3] of the
National Labor Relations Commission (NLRC),
SO ORDERED. which in turn had affirmed the Decision[4] of the
Labor Arbiter finding that Orozco was an
Sereno, C. J., (Chairperson), Leonardo-De employee of private respondent Philippine
Castro, Bersamin, and Perlas-Bernabe, JJ., Daily Inquirer (PDI) and was illegally
concur. dismissed as columnist of said newspaper.
In March 1990, PDI engaged the
WILHELMINA S. OROZCO, services of G.R. No. 155207
petitioner to write a weekly column
Petitioner,
for its Lifestyle section. She religiously
Present:
submitted her articles every week, except for a
- versus -
six-month stint in New York City when she,
YNARES-SANTIAGO, J.,
nonetheless, sent several articles through mail.
THE FIFTH DIVISION OF THE HONORABLE COURT Chairperson,
She received compensation of P250.00 later
OF APPEALS, PHILIPPINE DAILY INQUIRER, and AUSTRIA-MARTINEZ,
increased to P300.00 for every column
LETICIA JIMENEZ MAGSANOC, CHICO-NAZARIO,
[5]
published.
Respondents. NACHURA, and
REYES, JJ.
On November 7, 1992, petitioners
column appeared in the PDI for the last time.
Promulgated:
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
Review[12] before this Court seeking the reversal
of the NLRC Decision. However, in a
Resolution[13] 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 for 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 crucial[26] 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 factors[43] 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 Corporation[46] 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 ABS-CBN
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 cannot 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 CA-G.R. SP No. 50970 are
hereby AFFIRMED.
SO ORDERED.
GR NO. 138051
SONZA V. ABS-CBN
G.R. No. 138051 June 10, 2004
JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING
CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on
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 Arbiter’s 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 SONZA’s services
exclusively to ABS-CBN as talent for radio and
television. The Agreement listed the services
SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to
10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program,
5:30 to 7:00 p.m., Sundays.3
ABS-CBN agreed to pay for SONZA’s services
a monthly talent fee of ₱310,000 for the first
year and ₱317,000 for the second and third year
of the Agreement. ABS-CBN would pay the
talent fees on the 10th and 25th days of the
month.
On 1 April 1996, SONZA wrote a letter to ABS-
CBN’s President, Eugenio Lopez III, which
reads:
Dear Mr. Lopez,
We would like to call your
attention to the Agreement
dated May 1994 entered into
by your goodself on behalf of
ABS-CBN with our company
relative to our talent JOSE Y.
SONZA.
As you are well aware, Mr.
Sonza irrevocably resigned in
view of recent events
concerning his programs and
career. We consider these acts
of the station violative of the
 Agreement and the station as
in breach thereof. In this
connection, we hereby serve
notice of rescission of said
Agreement at our instance
effective as of date.
Mr. Sonza informed us that he
is waiving and renouncing
recovery of the remaining
amount stipulated in
paragraph 7 of the Agreement
but reserves the right to seek
recovery of the other benefits
under said Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.)
JOSE Y. SONZA
President and Gen. Manager4
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
SONZA’s 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 SONZA’s 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 respondent’s 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
Respondent’s Position Paper with Motion to
Expunge Respondent’s Annex 4 and Annex 5
from the Records. Annexes 4 and 5 are affidavits
of ABS-CBN’s 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
Sonza’s monthly talent fees amount to a
staggering ₱317,000. 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 respondent’s 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 Arbiter’s 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 NLRC’s
finding that no employer-employee relationship
existed between SONZA and ABS-CBN.
Adopting the NLRC’s decision, the appellate
court quoted the following findings of the
NLRC:
x x x the May 1994 Agreement will readily
reveal that MJMDC entered into the contract
merely as an agent of complainant Sonza, the
principal. By all indication and as the law puts
it, the act of the agent is the act of the principal
itself. This fact is made particularly true in this
case, as admittedly MJMDC ‘is a management
company devoted exclusively to managing the
careers of Mr. Sonza and his broadcast partner,
Mrs. Carmela C. Tiangco.’ (Opposition to
Motion to Dismiss)
Clearly, the relations of principal and agent only
accrues between complainant Sonza and
MJMDC, and not between ABS-CBN and
MJMDC. This is clear from the provisions of the
May 1994 Agreement which specifically
referred to MJMDC as the ‘AGENT’. As a
matter of fact, when complainant herein
unilaterally rescinded said May 1994
Agreement, it was MJMDC which issued the
notice of rescission in behalf of Mr. Sonza, who
himself signed the same in his capacity as
President.
Moreover, previous contracts between Mr.
Sonza and ABS-CBN reveal the fact that
historically, the parties to the said agreements
are ABS-CBN and Mr. Sonza. And it is only in
the May 1994 Agreement, which is the latest
Agreement executed between ABS-CBN and
Mr. Sonza, that MJMDC figured in the said
Agreement as the agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is a
mere ‘labor-only’ contractor of ABS-CBN such
that there exist[s] employer-employee
relationship between the latter and Mr. Sonza.
On the contrary, We find it indubitable, that
MJMDC is an agent, not of ABS-CBN, but of
the talent/contractor Mr. Sonza, as expressly
admitted by the latter and MJMDC in the May
1994 Agreement.
It may not be amiss to state that jurisdiction over
the instant controversy indeed belongs to the
regular courts, the same being in the nature of an
action for alleged breach of contractual
obligation on the part of respondent-appellee.
As squarely apparent from complainant-
appellant’s Position Paper, his claims for
compensation for services, ‘13th month pay’,
signing bonus and travel allowance against
respondent-appellee are not based on the Labor
Code but rather on the provisions of the May
1994 Agreement, while his claims for proceeds
under Stock Purchase Agreement are based on
the latter. A portion of the Position Paper of
complainant-appellant bears perusal:
‘Under [the May 1994 Agreement] with
respondent ABS-CBN, the latter contractually
bound itself to pay complainant a signing bonus
consisting of shares of stocks…with FIVE
HUNDRED THOUSAND PESOS
(₱500,000.00).
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
(₱150,000.00) per year.’
Thus, it is precisely because of complainant-
appellant’s own recognition of the fact that his
contractual relations with ABS-CBN are
founded on the New Civil Code, rather than the
Labor Code, that instead of merely resigning
from ABS-CBN, complainant-appellant served
upon the latter a ‘notice of rescission’ of
Agreement with the station, per his letter dated
April 1, 1996, which asserted that instead of
referring to unpaid employee benefits, ‘he is
waiving and renouncing recovery of the
remaining amount stipulated in paragraph 7 of
the Agreement but reserves the right to such
recovery of the other benefits under said
Agreement.’ (Annex 3 of the respondent ABS-
CBN’s 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-appellant’s 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 NLRC’s 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 NLRC’S
DECISION AND REFUSING TO FIND THAT
AN EMPLOYER-EMPLOYEE
RELATIONSHIP EXISTED BETWEEN
SONZA AND ABS-CBN, DESPITE THE
WEIGHT OF CONTROLLING LAW,
JURISPRUDENCE AND EVIDENCE TO
SUPPORT SUCH A FINDING.14
The Court’s 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 Arbiter’s dismissal of the case for lack of
jurisdiction.
The present controversy is one of first
impression. Although Philippine labor laws and
jurisprudence define clearly the elements of an
employer-employee relationship, this is the first
time that the Court will resolve the nature of the
relationship between a television and radio
station and one of its "talents." There is no case
law stating that a radio and television program
host is an employee of the broadcast station.
The instant case involves big names in the
broadcast industry, namely Jose "Jay" Sonza, a
known television and radio personality, and
ABS-CBN, one of the biggest television and
radio networks in the country.
SONZA contends that the Labor Arbiter has
jurisdiction over the case because he was an
employee of ABS-CBN. On the other hand,
ABS-CBN insists that the Labor Arbiter has no
jurisdiction because SONZA was an
independent contractor.
Employee or Independent Contractor?
The existence of an employer-employee
relationship is a question of fact. Appellate
courts accord the factual findings of the Labor
Arbiter and the NLRC not only respect but also
finality when supported by substantial
evidence.15 Substantial evidence means such
relevant evidence as a reasonable mind might
accept as adequate to support a conclusion.16 A
party cannot prove the absence of substantial
evidence by simply pointing out that there is
contrary evidence on record, direct or
circumstantial. The Court does not substitute its
own judgment for that of the tribunal in
determining where the weight of evidence lies or
what evidence is credible.17
SONZA maintains that all essential elements of
an employer-employee relationship are present
in this case. Case law has consistently held that
the elements of an employer-employee
relationship are: (a) the selection and
engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the
employer’s 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 SONZA’s services to co-
host its television and radio programs because of
SONZA’s 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 respondent’s claim of
independent contractorship."
Independent contractors often present
themselves to possess unique skills, expertise or
talent to distinguish them from ordinary
employees. The specific selection and hiring of
SONZA, because of his unique skills, talent
and celebrity status not possessed by ordinary
employees, is a circumstance indicative, but not
conclusive, of an independent contractual
relationship. If SONZA did not possess such
unique skills, talent and celebrity status, ABS-
CBN would not have entered into the Agreement
with SONZA but would have hired him through
its personnel department just like any other
employee.
In any event, the method of selecting and
engaging SONZA does not conclusively
determine his status. We must consider all the
circumstances of the relationship, with the
control test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly
talent fees with no part of his fees going to
MJMDC. SONZA asserts that this mode of fee
payment shows that he was an employee of
ABS-CBN. SONZA also points out that ABS-
CBN granted him benefits and privileges "which
he would not have enjoyed if he were truly the
subject of a valid job contract."
All the talent fees and benefits paid to SONZA
were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBN’s
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
SONZA’s talent fees, amounting to ₱317,000
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 SONZA’s 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 SONZA’s 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 SONZA’s 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 SONZA’s talent fees during the
remaining life of the Agreement even if ABS-
CBN cancelled SONZA’s programs through no
fault of SONZA.25
SONZA assails the Labor Arbiter’s
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. SONZA’s 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-Vélez v.
Corporación De Puerto Rico Para La Difusión
Pública ("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 master’s 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." Alberty’s 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." Alberty’s 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.
SONZA’s argument is misplaced. ABS-CBN
engaged SONZA’s 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-CBN’s control.
SONZA did not have to render eight hours of
work per day. The Agreement required SONZA
to attend only rehearsals and tapings of the
shows, as well as pre- and post-production staff
meetings.31 ABS-CBN could not dictate the
contents of SONZA’s 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 SONZA’s 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-CBN’s 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 SONZA’s work.
SONZA claims that ABS-CBN’s power not to
broadcast his shows proves ABS-CBN’s power
over the means and methods of the performance
of his work. Although ABS-CBN did have the
option not to broadcast SONZA’s show, ABS-
CBN was still obligated to pay SONZA’s talent
fees... Thus, even if ABS-CBN was completely
dissatisfied with the means and methods of
SONZA’s 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 SONZA’s show but ABS-CBN must
still pay his talent fees in full.35
Clearly, ABS-CBN’s right not to broadcast
SONZA’s show, burdened as it was by the
obligation to continue paying in full SONZA’s
talent fees, did not amount to control over the
means and methods of the performance of
SONZA’s 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-CBN’s approval. This proves
that ABS-CBN’s control was limited only to the
result of SONZA’s work, whether to broadcast
the final product or not. In either case, ABS-
CBN must still pay SONZA’s 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.38Even 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-CBN’s
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 SONZA’s 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-CBN’s employee because ABS-CBN
subjected him to its rules and standards of
performance. SONZA claims that this indicates
ABS-CBN’s 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 Arbiter’s finding that
he is a talent of MJMDC, which contracted out
his services to ABS-CBN. The Labor Arbiter
ruled that as a talent of MJMDC, SONZA is not
an employee of ABS-CBN. SONZA insists that
MJMDC is a "labor-only" contractor and ABS-
CBN is his employer.
In a labor-only contract, there are three parties
involved: (1) the "labor-only" contractor; (2) the
employee who is ostensibly under the employ of
the "labor-only" contractor; and (3) the principal
who is deemed the real employer. Under this
scheme, the "labor-only" contractor is the
agent of the principal. The law makes the
principal responsible to the employees of the
"labor-only contractor" as if the principal itself
directly hired or employed the
employees.48 These circumstances are not
present in this case.
There are essentially only two parties involved
under the Agreement, namely, SONZA and
ABS-CBN. MJMDC merely acted as SONZA’s
agent. The Agreement expressly states that
MJMDC acted as the "AGENT" of SONZA.
The records do not show that MJMDC acted as
ABS-CBN’s 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 SONZA’s
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-CBN’s 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-
CBN’s 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 latter’s direct
testimony. x x x
Section 4. Determination of Necessity of
Hearing. – Immediately after the submission of
the parties of their position
papers/memorandum, the Labor Arbiter shall
motu propio determine whether there is need for
a formal trial or hearing. At this stage, he may,
at his discretion and for the purpose of making
such determination, ask clarificatory questions
to further elicit facts or information, including
but not limited to the subpoena of relevant
documentary evidence, if any from any party or
witness.50
The Labor Arbiter can decide a case based solely
on the position papers and the supporting
documents without a formal trial.51 The holding
of a formal hearing or trial is something that the
parties cannot demand as a matter of right.52 If
the Labor Arbiter is confident that he can rely on
the documents before him, he cannot be faulted
for not conducting a formal trial, unless under
the particular circumstances of the case, the
documents alone are insufficient. The
proceedings before a Labor Arbiter are non-
litigious in nature. Subject to the requirements
of due process, the technicalities of law and the
rules obtaining in the courts of law do not strictly
apply in proceedings before a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing
practice in the broadcast and entertainment
industries to treat talents like SONZA as
independent contractors. SONZA argues that if
such practice exists, it is void for violating the
right of labor to security of tenure.
The right of labor to security of tenure as
guaranteed in the 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 employer-
employee relationship.57 This different tax
treatment accorded to talents and broadcasters
bolters our conclusion that they are independent
contractors, provided all the basic elements of a
contractual relationship are present as in this
case.
Nature of SONZA’s Claims
SONZA seeks the recovery of allegedly unpaid
talent fees, 13th month pay, separation pay,
service incentive leave, signing bonus, travel
allowance, and amounts due under the
Employee Stock Option Plan. We agree with the
findings of the Labor Arbiter and the Court of
Appeals that SONZA’s claims are all based on which affirmed with modification the
the May 1994 Agreement and stock option Decision4 dated June 23, 2009 of the National
plan, and not on the Labor Code. Clearly, the Labor Relations Commission (NLRC) in NLRC
present case does not call for an application of LAC Case No. 07-002648-08.
the Labor Code provisions but an interpretation
and implementation of the May 1994 The Antecedent Facts
Agreement. In effect, SONZA’s cause of action
is for breach of contract which is intrinsically a On July 4, 2007, Bernard A. Tenazas (Tenazas)
civil dispute cognizable by the regular courts.58 and Jaime M. Francisco (Francisco) filed a
complaint for illegal dismissal against R.
WHEREFORE, we DENY the petition. The Villegas Taxi Transport and/or Romualdo
assailed Decision of the Court of Appeals dated Villegas (Romualdo) and Andy Villegas (Andy)
26 March 1999 in CA-G.R. SP No. 49190 (respondents). At that time, a similar case had
is AFFIRMED. Costs against petitioner. already been filed by Isidro G. Endraca
(Endraca) against the same respondents. The
SO ORDERED. two (2) cases were subsequently consolidated.5
Davide, Jr., Panganiban, Ynares- In their position paper,6 Tenazas, Francisco and
Santiago, and Azcuna, JJ., concur. Endraca (petitioners) alleged that they were
hired and dismissed by the respondents on the
following dates:
G.R. No. 192998 April 2, 2014
BERNARD A. TENAZAS, JAIME M. Date of Date of
FRANCISCO and ISIDRO G. Name Salary
Hiring Dismissal
ENDRACA, Petitioners,
vs.
R. VILLEGAS TAXI TRANSPORT and Bernard
Boundary
ROMUALDO VILLEGAS, Respondents. A. 10/1997 07/03/07
System
Tenazas
DECISION
Jaime M. Boundary
REYES, J.: 04/10/04 06/04/07
Francisco System
This is a petition for review on certiorari1 filed
under Rule 45 of the Rules of Court, assailing Isidro G. Boundary
04/2000 03/06/06
the Decision2 dated March 11, 2010 and Endraca System7
Resolution3 dated June 28, 2010 of the Court of
Appeals (CA) in CA-G.R. SP No. 111150,
Relaying the circumstances of his dismissal,
Tenazas alleged that on July 1, 2007, the taxi
unit assigned to him was sideswiped by another
vehicle, causing a dent on the left fender near the
driver seat. The cost of repair for the damage
was estimated at ₱500.00. Upon reporting the
incident to the company, he was scolded by
respondents Romualdo and Andy and was told
to leave the garage for he is already fired. He
was even threatened with physical harm should
he ever be seen in the company’s premises
again. Despite the warning, Tenazas reported for
work on the following day but was told that he
can no longer drive any of the company’s units
as he is already fired.8
Francisco, on the other hand, averred that his
dismissal was brought about by the company’s
unfounded suspicion that he was organizing a
labor union. He was instantaneously terminated,
without the benefit of procedural due process, on
June 4, 2007.9
Endraca, for his part, alleged that his dismissal
was instigated by an occasion when he fell short
of the required boundary for his taxi unit. He
related that before he was dismissed, he brought
his taxi unit to an auto shop for an urgent repair.
He was charged the amount of ₱700.00 for the
repair services and the replacement parts. As a
result, he was not able to meet his boundary for
the day. Upon returning to the company garage
and informing the management of the incident,
his driver’s license was confiscated and was told
to settle the deficiency in his boundary first
before his license will be returned to him. He
was no longer allowed to drive a taxi unit despite
his persistent pleas.10
For their part, the respondents admitted that
Tenazas and Endraca were employees of the
company, the former being a regular driver and
the latter a spare driver. The respondents,
however, denied that Francisco was an
employee of the company or that he was able to
drive one of the company’s units at any point in
time.11
The respondents further alleged that Tenazas
was never terminated by the company. They
claimed that on July 3, 2007, Tenazas went to
the company garage to get his taxi unit but was
informed that it is due for overhaul because of
some mechanical defects reported by the other
driver who takes turns with him in using the
same. He was thus advised to wait for further
notice from the company if his unit has already
been fixed. On July 8, 2007, however, upon
being informed that his unit is ready for release,
Tenazas failed to report back to work for no
apparent reason.12
As regards Endraca, the respondents alleged that
they hired him as a spare driver in February
2001. They allow him to drive a taxi unit
whenever their regular driver will not be able to
report for work. In July 2003, however, Endraca
stopped reporting for work without informing
the company of his reason. Subsequently, the
respondents learned that a complaint for illegal
dismissal was filed by Endraca against them.
They strongly maintained, however, that they
could never have terminated Endraca in March
2006 since he already stopped reporting for
work as early as July 2003. Even then, they
expressed willingness to accommodate Endraca
should he wish to work as a spare driver for the
company again since he was never really
dismissed from employment anyway.13
On May 29, 2008, the petitioners, by registered
mail, filed a Motion to Admit Additional
Evidence.14 They alleged that after diligent
efforts, they were able to discover new pieces of
evidence that will substantiate the allegations in
their position paper. Attached with the motion
are the following: (a) Joint Affidavit of the
petitioners;15 (2) Affidavit of Good Faith of
Aloney Rivera, a co-driver;16 (3) pictures of the
petitioners wearing company shirts;17 and (4)
Tenazas’ Certification/Record of Social
Security System (SSS) contributions.18
The Ruling of the Labor Arbiter
On May 30, 2008, the Labor Arbiter (LA)
rendered a Decision,19 which pertinently states,
thus:
In the case of complainant Jaime Francisco,
respondents categorically denied the existence
of an employer-employee relationship. In this
situation, the burden of proof shifts to the
complainant to prove the existence of a regular
employment. Complainant Francisco failed to
present evidence of regular employment
available to all regular employees, such as an
employment contract, company ID, SSS,
withholding tax certificates, SSS membership
and the like.
In the case of complainant Isidro Endraca,
respondents claim that he was only an extra
driver who stopped reporting to queue for
available taxi units which he could drive. In fact,
respondents offered him in their Position Paper
on record, immediate reinstatement as extra taxi
driver which offer he refused.
In case of Bernard Tenazas, he was told to wait
while his taxi was under repair but he did not
report for work after the taxi was repaired.
Respondents[,] in their Position Paper, on record
likewise, offered him immediate reinstatement,
which offer he refused.
We must bear in mind that the complaint herein
is one of actual dismissal. But there was no
formal investigations, no show cause memos,
suspension memos or termination memos were
never issued. Otherwise stated, there is no proof
of overt act of dismissal committed by herein
respondents.
We are therefore constrained to rule that there
was no illegal dismissal in the case at bar.
The situations contemplated by law for
entitlement to separation pay does [sic] not
apply.
WHEREFORE, premises considered, instant
consolidated complaints are hereby dismissed
for lack of merit.
SO ORDERED. 20
The Ruling of the NLRC
Unyielding, the petitioners appealed the
decision of the LA to the NLRC. Subsequently,
on June 23, 2009, the NLRC rendered a
Decision,21 reversing the appealed decision of
the LA, holding that the additional pieces of
evidence belatedly submitted by the petitioners
sufficed to establish the existence of employer-
employee relationship and their illegal
dismissal. It held, thus:
In the challenged decision, the Labor Arbiter
found that it cannot be said that the complainants
were illegally dismissed, there being no
showing, in the first place, that the respondent
[sic] terminated their services. A portion thereof
reads:
"We must bear in mind that the complaint herein
is one of actual dismissal. But there were no
formal investigations, no show cause memos,
suspension memos or termination memos were
never issued. Otherwise stated, there is no proof
of overt act of dismissal committed by herein
respondents.
We are therefore constrained to rule that there
was no illegal dismissal in the case at bar."
Issue: [W]hether or not the complainants were
illegally dismissed from employment.
It is possible that the complainants’ Motion to
Admit Additional Evidence did not reach the
Labor Arbiter’s attention because he had drafted
the challenged decision even before they
submitted it, and thereafter, his staff attended
only to clerical matters, and failed to bring the
motion in question to his attention. It is now up
to this Commission to consider the
complainants’ additional evidence. Anyway, if
this Commission must consider evidence
submitted for the first time on appeal (Andaya
vs. NLRC, G.R. No. 157371, July 15, 2005),
much more so must it consider evidence that was
simply overlooked by the Labor Arbiter.
Among the additional pieces of evidence
submitted by the complainants are the
following: (1) joint affidavit (records, p. 51-52)
of the three (3) complainants; (2) affidavit
(records, p. 53) of Aloney Rivera y Aldo; and (3)
three (3) pictures (records, p. 54) referred to by
the complainant in their joint affidavit showing
them wearing t-shirts bearing the name and logo
of the respondent’s company.
xxxx
WHEREFORE, the decision appealed from is
hereby REVERSED. Respondent Rom[u]aldo
Villegas doing business under the name and
style Villegas Taxi Transport is hereby ordered
to pay the complainants the following (1) full
backwages from the date of their dismissal (July
3, 2007 for Tena[z]as, June 4, 2004 for
Francisco, and March 6, 2006 for Endraca[)] up
to the date of the finality of this decision[;] (2)
separation pay equivalent to one month for every
year of service; and (3) attorney’s fees
equivalent to ten percent (10%) of the total
judgment awards.
SO ORDERED.22
On July 24, 2009, the respondents filed a motion
for reconsideration but the NLRC denied the
same in its Resolution23 dated September 23,
2009.
The Ruling of the CA
Unperturbed, the respondents filed a petition for
certiorari with the CA. On March 11, 2010, the
CA rendered a Decision,24 affirming with
modification the Decision dated June 23, 2009
of the NLRC. The CA agreed with the NLRC’s
finding that Tenazas and Endraca were
employees of the company, but ruled otherwise
in the case of Francisco for failing to establish
his relationship with the company. It also
deleted the award of separation pay and ordered
for reinstatement of Tenazas and Endraca. The
pertinent portions of the decision read as
follows:
At the outset, We declare that respondent
Francisco failed to prove that an employer-
employee relationship exists between him and
R. Transport. If there is no employer-employee
relationship in the first place, the duty of R.
Transport to adhere to the labor standards
provisions of the Labor Code with respect to
Francisco is questionable.
xxxx
Although substantial evidence is not a function
of quantity but rather of quality, the peculiar
environmental circumstances of the instant case
demand that something more should have been
proffered. Had there been other proofs of
employment, such as Francisco’s inclusion in
R.R.
Transport’s payroll, this Court would have
affirmed the finding of employer-employee
relationship.1âwphi1 The NLRC, therefore,
committed grievous error in ordering R.
Transport to answer for Francisco’s claims.
We now tackle R. Transport’s petition with
respect to Tenazas and Endraca, who are both
admitted to be R. Transport’s employees. In its
petition, R. Transport puts forth the theory that
it did not terminate the services of respondents
but that the latter deliberately abandoned their
work. We cannot subscribe to this theory.
xxxx
Considering that the complaints for illegal
dismissal were filed soon after the alleged dates
of dismissal, it cannot be inferred that
respondents Tenazas and Endraca intended to
abandon their employment. The complainants
for dismissal are, in themselves, pleas for the
continuance of employment. They are
incompatible with the allegation of
abandonment. x x x.
For R. Transport’s failure to discharge the
burden of proving that the dismissal of
respondents Tenazas and Endraca was for a just
cause, We are constrained to uphold the NLRC’s
conclusion that their dismissal was not justified
and that they are entitled to back wages. Because
they were illegally dismissed, private
respondents Tenazas and Endraca are entitled to
reinstatement and back wages x x x.
xxxx
However, R. Transport is correct in its
contention that separation pay should not be
awarded because reinstatement is still possible
and has been offered. It is well[-]settled that
separation pay is granted only in instances where
reinstatement is no longer feasible or
appropriate, which is not the case here.
xxxx
WHEREFORE, the Decision of the National
Labor Relations Commission dated 23 June
2009, in NLRC LAC Case No. 07-002648-08,
and its Resolution dated 23 September 2009
denying reconsideration thereof are
AFFIRMED with MODIFICATION in that the
award of Jaime Francisco’s claims is
DELETED. The separation pay granted in favor
of Bernard Tenazas and Isidro Endraca is,
likewise, DELETED and their reinstatement is
ordered instead.
SO ORDERED.25 (Citations omitted)
On March 19, 2010, the petitioners filed a
motion for reconsideration but the same was
denied by the CA in its Resolution26 dated June
28, 2010.
Undeterred, the petitioners filed the instant
petition for review on certiorari before this Court
on July 15, 2010.
The Ruling of this Court
The petition lacks merit.
Pivotal to the resolution of the instant case is the
determination of the existence of employer-
employee relationship and whether there was an
illegal dismissal. Remarkably, the LA, NLRC
and the CA had varying assessment on the
matters at hand. The LA believed that, with the
admission of the respondents, there is no longer
any question regarding the status of both
Tenazas and Endraca being employees of the
company. However, he ruled that the same
conclusion does not hold with respect to
Francisco whom the respondents denied to have
ever employed or known. With the respondents’
denial, the burden of proof shifts to Francisco to
establish his regular employment.
Unfortunately, the LA found that Francisco
failed to present sufficient evidence to prove
regular employment such as company ID, SSS
membership, withholding tax certificates or
similar articles. Thus, he was not considered an
employee of the company. Even then, the LA
held that Tenazas and Endraca could not have
been illegally dismissed since there was no overt
act of dismissal committed by the respondents.27
On appeal, the NLRC reversed the ruling of the
LA and ruled that the petitioners were all
employees of the company. The NLRC
premised its conclusion on the additional pieces
of evidence belatedly submitted by the
petitioners, which it supposed, have been
overlooked by the LA owing to the time when it
was received by the said office. It opined that the
said pieces of evidence are sufficient to establish
the circumstances of their illegal termination. In
particular, it noted that in the affidavit of the
petitioners, there were allegations about the
company’s practice of not issuing employment
records and this was not rebutted by the
respondents. It underscored that in a situation
where doubt exists between evidence presented
by the employer and the employee, the scales of
justice must be tilted in favor of the employee. It
awarded the petitioners with: (1) full backwages
from the date of their dismissal up to the finality
of the decision; (2) separation pay equivalent to
one month of salary for every year of service;
and (3) attorney’s fees.
On petition for certiorari, the CA affirmed with
modification the decision of the NLRC, holding
that there was indeed an illegal dismissal on the
part of Tenazas and Endraca but not with respect
to Francisco who failed to present substantial
evidence, proving that he was an employee of
the respondents. The CA likewise dismissed the
respondents’ claim that Tenazas and Endraca
abandoned their work, asseverating that
immediate filing of a complaint for illegal
dismissal and persistent pleas for continuance of
employment are incompatible with
abandonment. It also deleted the NLRC’s award
of separation pay and instead ordered that
Tenazas and Endraca be reinstated.28
"Well-settled is the rule that the jurisdiction of
this Court in a petition for review on certiorari
under Rule 45 of the Revised Rules of Court is
limited to reviewing only errors of law, not of
fact, unless the factual findings complained of
are completely devoid of support from the
evidence on record, or the assailed judgment is
based on a gross misapprehension of
facts."29 The Court finds that none of the
mentioned circumstances is present in this case.
In reviewing the decision of the NLRC, the CA
found that no substantial evidence was presented
to support the conclusion that Francisco was an
employee of the respondents and accordingly
modified the NLRC decision. It stressed that
with the respondents’ denial of employer-
employee relationship, it behooved Francisco to
present substantial evidence to prove that he is
an employee before any question on the legality
of his supposed dismissal becomes appropriate
for discussion. Francisco, however, did not offer
evidence to substantiate his claim of
employment with the respondents. Short of the
required quantum of proof, the CA correctly
ruled that the NLRC’s finding of illegal
dismissal and the monetary awards which
necessarily follow such ruling lacked factual and
legal basis and must therefore be deleted.
The action of the CA finds support in Anonas
Construction and Industrial Supply Corp., et al.
v. NLRC, et al.,30where the Court reiterated:
[J]udicial review of decisions of the NLRC via
petition for certiorari under Rule 65, as a general
rule, is confined only to issues of lack or excess
of jurisdiction and grave abuse of discretion on
the part of the NLRC. The CA does not assess
and weigh the sufficiency of evidence upon
which the LA and the NLRC based their
conclusions. The issue is limited to the
determination of whether or not the NLRC acted
without or in excess of its jurisdiction, or with
grave abuse of discretion in rendering the
resolution, except if the findings of the NLRC
are not supported by substantial
evidence.31 (Citation omitted and emphasis
ours)
It is an oft-repeated rule that in labor cases, as in
other administrative and quasi-judicial
proceedings, "the quantum of proof necessary is
substantial evidence, or such amount of relevant
evidence which a reasonable mind might accept
as adequate to justify a conclusion." 32 "[T]he
burden of proof rests upon the party who asserts
the affirmative of an issue."33 Corollarily, as
Francisco was claiming to be an employee of the
respondents, it is incumbent upon him to proffer
evidence to prove the existence of said
relationship.
"[I]n determining the presence or absence of an
employer-employee relationship, the Court has
consistently looked for the following incidents,
to wit: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer’s
power to control the employee on the means and
methods by which the work is accomplished.
The last element, the so-called control test, is the
most important element."34
There is no hard and fast rule designed to
establish the aforesaid elements. Any competent
and relevant evidence to prove the relationship
may be admitted. Identification cards, cash
vouchers, social security registration,
appointment letters or employment contracts,
payrolls, organization charts, and personnel
lists, serve as evidence of employee status.35
In this case, however, Francisco failed to present
any proof substantial enough to establish his
relationship with the respondents. He failed to
present documentary evidence like attendance
logbook, payroll, SSS record or any personnel
file that could somehow depict his status as an
employee. Anent his claim that he was not
issued with employment records, he could have,
at least, produced his social security records
which state his contributions, name and address
of his employer, as his co-petitioner Tenazas
did. He could have also presented testimonial
evidence showing the respondents’ exercise of
control over the means and methods by which he
undertakes his work. This is imperative in light
of the respondents’ denial of his employment
and the claim of another taxi operator,
Emmanuel Villegas (Emmanuel), that he was
his employer. Specifically, in his
Affidavit,36 Emmanuel alleged that Francisco
was employed as a spare driver in his taxi garage
from January 2006 to December 2006, a fact that
the latter failed to deny or question in any of the
pleadings attached to the records of this case.
The utter lack of evidence is fatal to Francisco’s
case especially in cases like his present
predicament when the law has been very lenient
in not requiring any particular form of evidence
or manner of proving the presence of employer-
employee relationship.
In Opulencia Ice Plant and Storage v.
NLRC,37 this Court emphasized, thus:
No particular form of evidence is required to
prove the existence of an employer-employee
relationship. Any competent and relevant
evidence to prove the relationship may be
admitted. For, if only documentary evidence
would be required to show that relationship, no
scheming employer would ever be brought
before the bar of justice, as no employer would
wish to come out with any trace of the illegality
he has authored considering that it should take
much weightier proof to invalidate a written
instrument.38
Here, Francisco simply relied on his allegation
that he was an employee of the company without
any other evidence supporting his claim.
Unfortunately for him, a mere allegation in the
position paper is not tantamount to
evidence.39 Bereft of any evidence, the CA
correctly ruled that Francisco could not be
considered an employee of the respondents.
The CA’s order of reinstatement of Tenazas and
Endraca, instead of the payment of separation
pay, is also well in accordance with prevailing
jurisprudence. In Macasero v. Southern
Industrial Gases Philippines,40 the Court
reiterated, thus:
[A]n illegally dismissed employee is entitled to
two reliefs: backwages and
reinstatement.1âwphi1 The two reliefs provided
are separate and distinct. In instances where
reinstatement is no longer feasible because of
strained relations between the employee and the
employer, separation pay is granted. In effect, an
illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and
backwages.
The normal consequences of respondents’
illegal dismissal, then, are reinstatement without
loss of seniority rights, and payment of
backwages computed from the time
compensation was withheld up to the date of
actual reinstatement. Where reinstatement is no
longer viable as an option, separation pay
equivalent to one (1) month salary for every year
of service should be awarded as an alternative.
The payment of separation pay is in addition to
payment of backwages.41 (Emphasis supplied)
Clearly, it is only when reinstatement is no
longer feasible that the payment of separation
pay is ordered in lieu thereof. For instance, if
reinstatement would only exacerbate the tension
and strained relations between the parties, or
where the relationship between the employer
and the employee has been unduly strained by
reason of their irreconcilable differences, it
would be more prudent to order payment of
separation pay instead of reinstatement.42
This doctrine of strained relations, however,
should not be used recklessly or applied
loosely43 nor be based on impression alone. "It
bears to stress that reinstatement is the rule and,
for the exception of strained relations to apply,
it should be proved that it is likely that if
reinstated, an atmosphere of antipathy and
antagonism would be generated as to adversely
affect the efficiency and productivity of the
employee concerned."44
Moreover, the existence of strained relations, it
must be emphasized, is a question of fact. In
Golden Ace Builders v. Talde,45 the Court
underscored:
Strained relations must be demonstrated as a
fact, however, to be adequately supported by
evidence—substantial evidence to show that the
relationship between the employer and the
employee is indeed strained as a necessary
consequence of the judicial
controversy.46 (Citations omitted and emphasis
ours)
After a perusal of the NLRC decision, this Court
failed to find the factual basis of the award of
separation pay to the petitioners. The NLRC
decision did not state the facts which
demonstrate that reinstatement is no longer a
feasible option that could have justified the
alternative relief of granting separation pay
instead.
The petitioners themselves likewise overlooked
to allege circumstances which may have
rendered their reinstatement unlikely or unwise
and even prayed for reinstatement alongside the
payment of separation pay in their position
paper.47 A bare claim of strained relations by
reason of termination is insufficient to warrant
the granting of separation pay. Likewise, the
filing of the complaint by the petitioners does
not necessarily translate to strained relations
between the parties. As a rule, no strained
relations should arise from a valid and legal act
asserting one’s right.48 Although litigation may
also engender a certain degree of hostility, the
understandable strain in the parties’ relation
would not necessarily rule out reinstatement
which would, otherwise, become the rule rather
the exception in illegal dismissal cases.49 Thus,
it was a prudent call for the CA to delete the
award of separation pay and order for
reinstatement instead, in accordance with the
general rule stated in Article 27950 of the Labor
Code.
Finally, the Court finds the computation of the
petitioners' backwages at the rate of ₱800.00
daily reasonable and just under the
circumstances. The said rate is consistent with
the ruling of this Court in Hyatt Taxi Services,
Inc. v. Catinoy,51 which dealt with the same
matter.
WHEREFORE, in view of the foregoing
disquisition, the petition for review on certiorari
is DENIED. The Decision dated March 11, 2010
and Resolution dated June 28, 2010 of the Court
of Appeals in CA-G.R. SP No. 111150 are
AFFIRMED.
SO ORDERED.
BIENVENIDO L. REYES
Associate Justice
G.R. No. 165881 April 19, 2006
OSCAR VILLAMARIA, JR. Petitioner,
vs.
COURT OF APPEALS and JERRY V.
BUSTAMANTE, Respondents
DECISION
CALLEJO, SR., J.:
Before us is a Petition for Review on Certiorari
under Rule 65 of the Revised Rules of Court
assailing the Decision1 and Resolution2 of the
Court of Appeals (CA) in CA-G.R. SP No.
78720 which set aside the Resolution3of the
National Labor Relations Commission (NLRC)
in NCR-30-08-03247-00, which in turn affirmed
the Decision4of the Labor Arbiter dismissing the
complaint filed by respondent Jerry V.
Bustamante.
Petitioner Oscar Villamaria, Jr. was the owner of
Villamaria Motors, a sole proprietorship
engaged in assembling passenger jeepneys with
a public utility franchise to operate along the
Baclaran-Sucat route. By 1995, Villamaria
stopped assembling jeepneys and retained only
nine, four of which he operated by employing
drivers on a "boundary basis." One of those
drivers was respondent Bustamante who drove
the jeepney with Plate No. PVU-660.
Bustamante remitted P450.00 a day to
Villamaria as boundary and kept the residue of
his daily earnings as compensation for driving
the vehicle. In August 1997, Villamaria verbally
agreed to sell the jeepney to Bustamante under
the "boundary-hulog scheme," where
Bustamante would remit to Villarama P550.00 a
day for a period of four years; Bustamante
would then become the owner of the vehicle and
continue to drive the same under Villamaria’s
franchise. It was also agreed that Bustamante
would make a downpayment of P10,000.00.
On August 7, 1997, Villamaria executed a
contract entitled "Kasunduan ng Bilihan ng
Sasakyan sa Pamamagitan ng Boundary-
Hulog"5 over the passenger jeepney with Plate
No. PVU-660, Chassis No. EVER95-38168-C
and Motor No. SL-26647. The parties agreed
that if Bustamante failed to pay the boundary-
hulog for three days, Villamaria Motors would
hold on to the vehicle until Bustamante paid his
arrears, including a penalty of P50.00 a day; in
case Bustamante failed to remit the daily
boundary-hulog for a period of one week, the
Kasunduan would cease to have legal effect and
Bustamante would have to return the vehicle to
Villamaria Motors.
Under the Kasunduan, Bustamante was
prohibited from driving the vehicle without prior
authority from Villamaria Motors. Thus,
Bustamante was authorized to operate the
vehicle to transport passengers only and not for
other purposes. He was also required to display
an identification card in front of the windshield
of the vehicle; in case of failure to do so, any fine
that may be imposed by government authorities
would be charged against his account.
Bustamante further obliged himself to pay for
the cost of replacing any parts of the vehicle that
would be lost or damaged due to his negligence.
In case the vehicle sustained serious damage,
Bustamante was obliged to notify Villamaria
Motors before commencing repairs. Bustamante
was not allowed to wear slippers, short pants or
undershirts while driving. He was required to be
polite and respectful towards the passengers. He
was also obliged to notify Villamaria Motors in
case the vehicle was leased for two or more days
and was required to attend any meetings which
may be called from time to time. Aside from the
boundary-hulog, Bustamante was also obliged
to pay for the annual registration fees of the
vehicle and the premium for the vehicle’s
comprehensive insurance. Bustamante promised
to strictly comply with the rules and regulations
imposed by Villamaria for the upkeep and
maintenance of the jeepney.
Bustamante continued driving the jeepney under
the supervision and control of Villamaria. As
agreed upon, he made daily remittances of
P550.00 in payment of the purchase price of the
vehicle. Bustamante failed to pay for the annual
registration fees of the vehicle, but Villamaria
allowed him to continue driving the jeepney.
In 1999, Bustamante and other drivers who also
had the same arrangement with Villamaria
Motors failed to pay their respective boundary-
hulog. This prompted Villamaria to serve a
"Paalala,"6 reminding them that under the
Kasunduan, failure to pay the daily boundary-
hulog for one week, would mean their respective
jeepneys would be returned to him without any
complaints. He warned the drivers that the
Kasunduan would henceforth be strictly
enforced and urged them to comply with their
obligation to avoid litigation.
On July 24, 2000, Villamaria took back the
jeepney driven by Bustamante and barred the
latter from driving the vehicle.
On August 15, 2000, Bustamante filed a
Complaint7 for Illegal Dismissal against
Villamaria and his wife Teresita. In his Position
Paper,8 Bustamante alleged that he was
employed by Villamaria in July 1996 under the
boundary system, where he was required to
remit P450.00 a day. After one year of
continuously working for them, the spouses
Villamaria presented the Kasunduan for his
signature, with the assurance that he
(Bustamante) would own the jeepney by March
2001 after paying P550.00 in daily installments
and that he would thereafter continue driving the
vehicle along the same route under the same
franchise. He further narrated that in July 2000,
he informed the Villamaria spouses that the
surplus engine of the jeepney needed to be
replaced, and was assured that it would be done.
However, he was later arrested and his driver’s
license was confiscated because apparently, the
replacement engine that was installed was taken
from a stolen vehicle. Due to negotiations with
the apprehending authorities, the jeepney was
not impounded. The Villamaria spouses took the
jeepney from him on July 24, 2000, and he was
no longer allowed to drive the vehicle since then
unless he paid them P70,000.00.
Bustamante prayed that judgment be rendered in
his favor, thus:
WHEREFORE, in the light of the foregoing, it
is most respectfully prayed that judgment be
rendered ordering the respondents, jointly and
severally, the following:
1. Reinstate complainant to his former position
without loss of seniority rights and execute a
Deed of Sale in favor of the complainant relative
to the PUJ with Plate No. PVU-660;
2. Ordering the respondents to pay backwages in
the amount of P400.00 a day and other benefits
computed from July 24, 2000 up to the time of
his actual reinstatement;
3. Ordering respondents to return the amount of
P10,000.00 and P180,000.00 for the expenses
incurred by the complainant in the repair and
maintenance of the subject jeep;
4. Ordering the respondents to refund the
amount of One Hundred (P100.00) Pesos per
day counted from August 7, 1997 up to June
2000 or a total of P91,200.00;
5. To pay moral and exemplary damages of not
less than P200,000.00;
6. Attorney’s fee[s] of not less than 10% of the
monetary award.
Other just and equitable reliefs under the
premises are also being prayed for.9
In their Position Paper,10 the spouses Villamaria
admitted the existence of the Kasunduan, but
alleged that Bustamante failed to pay the
P10,000.00 downpayment and the vehicle’s
annual registration fees. They further alleged
that Bustamante eventually failed to remit the
requisite boundary-hulog of P550.00 a day,
which prompted them to issue the Paalaala.
Instead of complying with his obligations,
Bustamante stopped making his remittances
despite his daily trips and even brought the
jeepney to the province without permission.
Worse, the jeepney figured in an accident and its
license plate was confiscated; Bustamante even
abandoned the vehicle in a gasoline station in
Sucat, Parañaque City for two weeks. When the
security guard at the gasoline station requested
that the vehicle be retrieved and Teresita
Villamaria asked Bustamante for the keys,
Bustamante told her: "Di kunin ninyo." When
the vehicle was finally retrieved, the tires were
worn, the alternator was gone, and the battery
was no longer working.
Citing the cases of Cathedral School of
Technology v. NLRC11 and Canlubang Security
Agency Corporation v. NLRC,12 the spouses
Villamaria argued that Bustamante was not
illegally dismissed since the Kasunduan
executed on August 7, 1997 transformed the
employer-employee relationship into that of
vendor-vendee. Hence, the spouses concluded,
there was no legal basis to hold them liable for
illegal dismissal. They prayed that the case be
dismissed for lack of jurisdiction and patent lack
of merit.
In his Reply,13 Bustamante claimed that
Villamaria exercised control and supervision
over the conduct of his employment. He
maintained that the rulings of the Court in
National Labor Union v. Dinglasan,14 Magboo
v. Bernardo,15 and Citizen's League of Free
Workers v. Abbas16 are germane to the issue as
they define the nature of the owner/operator-
driver relationship under the boundary system.
He further reiterated that it was the Villamaria
spouses who presented the Kasunduan to him
and that he conformed thereto only upon their
representation that he would own the vehicle
after four years. Moreover, it appeared that the
Paalala was duly received by him, as he,
together with other drivers, was made to affix his
signature on a blank piece of paper purporting to
be an "attendance sheet."
On March 15, 2002, the Labor Arbiter rendered
judgment17 in favor of the spouses Villamaria
and ordered the complaint dismissed on the
following ratiocination:
Respondents presented the contract of
Boundary-Hulog, as well as the PAALALA, to
prove their claim that complainant violated the
terms of their contract and afterwards
abandoned the vehicle assigned to him. As
against the foregoing, [the] complaint’s (sic)
mere allegations to the contrary cannot prevail.
Not having been illegally dismissed,
complainant is not entitled to damages and
attorney's fees.18
Bustamante appealed the decision to the
NLRC,19 insisting that the Kasunduan did not
extinguish the employer-employee relationship
between him and Villamaria. While he did not
receive fixed wages, he kept only the excess of
the boundary-hulog which he was required to
remit daily to Villamaria under the agreement.
Bustamante maintained that he remained an
employee because he was engaged to perform
activities which were necessary or desirable to
Villamaria’s trade or business.
The NLRC rendered judgment20 dismissing the
appeal for lack of merit, thus:
WHEREFORE, premises considered,
complainant's appeal is hereby DISMISSED for
reasons not stated in the Labor Arbiter's decision
but mainly on a jurisdictional issue, there being
none over the subject matter of the
controversy.21
The NLRC ruled that under the Kasunduan, the Bustamante insisted that despite the Kasunduan,
juridical relationship between Bustamante and the relationship between him and Villamaria
Villamaria was that of vendor and vendee, continued to be that of employer-employee and
hence, the Labor Arbiter had no jurisdiction over as such, the Labor Arbiter had jurisdiction over
the complaint. Bustamante filed a Motion for his complaint. He further alleged that it is
Reconsideration, which the NLRC resolved to common knowledge that operators of passenger
deny on May 30, 2003.22 jeepneys (including taxis) pay their drivers not
on a regular monthly basis but on commission or
Bustamante elevated the matter to the CA via boundary basis, or even the boundary-hulog
Petition for Certiorari, alleging that the NLRC system. Bustamante asserted that he was
erred dismissed from employment without any lawful
or just cause and without due notice.
I In its Decision25 dated August 30, 2004, the CA
For his part, Villamaria averred that Bustamante
failed to adduce proof of their employer-
IN DISMISSING
employee relationship. He further pointed out
PETITIONER’S APPEAL
that the Dinglasan case pertains to the boundary
"FOR REASON NOT
system and not the boundary-hulog system,
STATED IN THE LABOR
ARBITER’S DECISION, hence inapplicable in the instant case. He argued
BUT MAINLY ON that upon the execution of the Kasunduan, the
juridical tie between him and Bustamante was
JURISDICTIONAL ISSUE;"
transformed into a vendor-vendee relationship.
Noting that he was engaged in the manufacture
II
and sale of jeepneys and not in the business of
transporting passengers for consideration,
IN DISREGARDING THE Villamaria contended that the daily fees which
LAW AND PREVAILING Bustmante paid were actually periodic
JURISPRUDENCE WHEN installments for the the vehicle and were not the
IT DECLARED THAT THE
same fees as understood in the boundary system.
RELATIONSHIP WHICH He added that the boundary-hulog plan was
WAS ESTABLISHED basically a scheme to help the driver-buyer earn
BETWEEN PETITIONER money and eventually pay for the unit in full,
AND THE PRIVATE and for the owner to profit not from the daily
RESPONDENT WAS earnings of the driver-buyer but from the
DEFINITELY A MATTER purchase price of the unit sold. Villamaria
WHICH IS BEYOND THE further asserted that the apparently restrictive
PROTECTIVE MANTLE OF conditions in the Kasunduan did not mean that
OUR LABOR LAWS.23 the means and method of driver-buyer’s conduct
was controlled, but were mere ways to preserve
the vehicle for the benefit of both parties:
Villamaria would be able to collect the agreed
purchase price, while Bustamante would be
assured that the vehicle would still be in good
running condition even after four years.
Moreover, the right of vendor to impose certain
conditions on the buyer should be respected until
full ownership of the property is vested on the
latter. Villamaria insisted that the parallel
circumstances obtaining in Singer Sewing
Machine Company v. Drilon24 has analogous
application to the instant issue.
reversed and set aside the NLRC decision. The
fallo of the decision reads:
UPON THE VIEW WE TAKE IN THIS CASE,
THUS, the impugned resolutions of the NLRC
must be, as they are hereby are, REVERSED
AND SET ASIDE, and judgment entered in
favor of petitioner:
1. Sentencing private respondent Oscar
Villamaria, Jr. to pay petitioner Jerry
Bustamante separation pay computed from the
time of his employment up to the time of
termination based on the prevailing minimum
wage at the time of termination; and,
2. Condemning private respondent Oscar
Villamaria, Jr. to pay petitioner Jerry
Bustamante back wages computed from the time
of his dismissal up to March 2001 based on the
prevailing minimum wage at the time of his
dismissal.
Without Costs.
SO ORDERED.26
The appellate court ruled that the Labor Arbiter
had jurisdiction over Bustamante’s complaint.
Under the Kasunduan, the relationship between
him and Villamaria was dual: that of vendor-
vendee and employer-employee. The CA
ratiocinated that Villamaria’s exercise of control
over Bustamante’s conduct in operating the
jeepney is inconsistent with the former’s claim
that he was not engaged in the transportation
business. There was no evidence that petitioner
was allowed to let some other person drive the
jeepney.
The CA further held that, while the power to
dismiss was not mentioned in the Kasunduan, it
did not mean that Villamaria could not exercise
it. It explained that the existence of an
employment relationship did not depend on how
the worker was paid but on the presence or
absence of control over the means and method
of the employee’s work. In this case,
Villamaria’s directives (to drive carefully, wear
an identification card, don decent attire, park the
vehicle in his garage, and to inform him about
provincial trips, etc.) was a means to control the
way in which Bustamante was to go about his
work. In view of Villamaria’s supervision and
control as employer, the fact that the "boundary"
represented installment payments of the
purchase price on the jeepney did not remove the
parties’ employer-employee relationship.
While the appellate court recognized that a
week’s default in paying the boundary-hulog
constituted an additional cause for terminating
Bustamante’s employment, it held that the latter
was illegally dismissed. According to the CA,
assuming that Bustamante failed to make the
required payments as claimed by Villamaria, the
latter nevertheless failed to take steps to recover
the unit and waited for Bustamante to abandon
it. It also pointed out that Villamaria neither
submitted any police report to support his claim
that the vehicle figured in a mishap nor
presented the affidavit of the gas station guard to
substantiate the claim that Bustamante
abandoned the unit.
Villamaria received a copy of the decision on
September 8, 2004, and filed, on September 17,
2004, a motion for reconsideration thereof. The
CA denied the motion in a Resolution27 dated
November 2, 2004, and Villamaria received a
copy thereof on November 8, 2004.
Villamaria, now petitioner, seeks relief from this
Court via petition for review on certiorari under
Rule 65 of the Rules of Court, alleging that the
CA committed grave abuse of its discretion
amounting to excess or lack of jurisdiction in
reversing the decision of the Labor Arbiter and
the NLRC. He claims that the CA erred in ruling
that the juridical relationship between him and
respondent under the Kasunduan was a
combination of employer-employee and vendor-
vendee relationships. The terms and conditions
of the Kasunduan clearly state that he and
respondent Bustamante had entered into a
conditional deed of sale over the jeepney; as
such, their employer-employee relationship had
been transformed into that of vendor-vendee.
Petitioner insists that he had the right to reserve
his title on the jeepney until after the purchase
price thereof had been paid in full.
In his Comment on the petition, respondent
avers that the appropriate remedy of petitioner
was an appeal via a petition for review on
certiorari under Rule 45 of the Rules of Court
and not a special civil action of certiorari under
Rule 65. He argues that petitioner failed to
establish that the CA committed grave abuse of
its discretion amounting to excess or lack of
jurisdiction in its decision, as the said ruling is
in accord with law and the evidence on record.
Respondent further asserts that the Kasunduan
presented to him by petitioner which provides
for a boundary-hulog scheme was a devious
circumvention of the Labor Code of the
Philippines. Respondent insists that his juridical
relationship with petitioner is that of employer-
employee because he was engaged to perform
activities which were necessary or desirable in
the usual business of petitioner, his employer.
In his Reply, petitioner avers that the Rules of
Procedure should be liberally construed in his
favor; hence, it behooves the Court to resolve the
merits of his petition.
We agree with respondent’s contention that the
remedy of petitioner from the CA decision was
to file a petition for review on certiorari under
Rule 45 of the Rules of Court and not the
independent action of certiorari under Rule 65.
Petitioner had 15 days from receipt of the CA
resolution denying his motion for the
reconsideration within which to file the petition
under Rule 45.28 But instead of doing so, he filed
a petition for certiorari under Rule 65 on
November 22, 2004, which did not, however,
suspend the running of the 15-day reglementary
period; consequently, the CA decision became
final and executory upon the lapse of the
reglementary period for appeal. Thus, on this
procedural lapse, the instant petition stands to be
dismissed.29
It must be stressed that the recourse to a special
civil action under Rule 65 of the Rules of Court
is proscribed by the remedy of appeal under
Rule 45. As the Court elaborated in Tomas
Claudio Memorial College, Inc. v. Court of
Appeals:30
We agree that the remedy of the aggrieved party
from a decision or final resolution of the CA is
to file a petition for review on certiorari under
Rule 45 of the Rules of Court, as amended, on
questions of facts or issues of law within fifteen
days from notice of the said resolution.
Otherwise, the decision of the CA shall become
final and executory. The remedy under Rule 45
of the Rules of Court is a mode of appeal to this
Court from the decision of the CA. It is a
continuation of the appellate process over the
original case. A review is not a matter of right
but is a matter of judicial discretion. The
aggrieved party may, however, assail the
decision of the CA via a petition for certiorari
under Rule 65 of the Rules of Court within sixty
days from notice of the decision of the CA or its
resolution denying the motion for
reconsideration of the same. This is based on the
premise that in issuing the assailed decision and
resolution, the CA acted with grave abuse of
discretion, amounting to excess or lack of
jurisdiction and there is no plain, speedy and
adequate remedy in the ordinary course of law.
A remedy is considered plain, speedy and
adequate if it will promptly relieve the petitioner
from the injurious effect of the judgment and the
acts of the lower court.
The aggrieved party is proscribed from filing a
petition for certiorari if appeal is available, for
the remedies of appeal and certiorari are
mutually exclusive and not alternative or
successive. The aggrieved party is, likewise,
barred from filing a petition for certiorari if the
remedy of appeal is lost through his negligence.
A petition for certiorari is an original action and
does not interrupt the course of the principal
case unless a temporary restraining order or a
writ of preliminary injunction has been issued
against the public respondent from further
proceeding. A petition for certiorari must be
based on jurisdictional grounds because, as long
as the respondent court acted within its
jurisdiction, any error committed by it will
amount to nothing more than an error of
judgment which may be corrected or reviewed
only by appeal.31
However, we have also ruled that a petition for
certiorari under Rule 65 may be considered as
filed under Rule 45, conformably with the
principle that rules of procedure are to be
construed liberally, provided that the petition is
filed within the reglementary period under
Section 2, Rule 45 of the Rules of Court, and
where valid and compelling circumstances
warrant that the petition be resolved on its
merits.32 In this case, the petition was filed
within the reglementary period and petitioner
has raised an issue of substance: whether the
existence of a boundary-hulog agreement
negates the employer-employee relationship
between the vendor and vendee, and, as a
corollary, whether the Labor Arbiter has
jurisdiction over a complaint for illegal
dismissal in such case.
We resolve these issues in the affirmative.
The rule is that, the nature of an action and the
subject matter thereof, as well as, which court or
agency of the government has jurisdiction over
the same, are determined by the material
allegations of the complaint in relation to the law
involved and the character of the reliefs prayed
for, whether or not the complainant/plaintiff is
entitled to any or all of such reliefs.33 A prayer
or demand for relief is not part of the petition of
the cause of action; nor does it enlarge the cause
of action stated or change the legal effect of what
is alleged.34 In determining which body has
jurisdiction over a case, the better policy is to
consider not only the status or relationship of the
parties but also the nature of the action that is the
subject of their controversy.35
Article 217 of the Labor Code, as amended,
vests on the Labor Arbiter exclusive original
jurisdiction only over the following:
x x x (a) Except as otherwise provided under this
Code, the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decide, within
thirty (30) calendar days after the submission of
the case by the parties for decision without
extension, even in the absence of stenographic
notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for
reinstatement, those cases that workers may file
involving wage, rates of pay, hours of work, and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other
forms of damages arising from the employer-
employee relations;
5. Cases arising from violation of Article 264 of
this Code, including questions involving the
legality of strikes and lockouts; and
6. Except claims for Employees Compensation,
Social Security, Medicare and maternity
benefits, all other claims, arising from
employer-employee relationship, including
those of persons in domestic or household
service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for
reinstatement.
(b) The Commission shall have exclusive
appellate jurisdiction over all cases decided by
Labor Arbiters.
(c) Cases arising from the interpretation or
implementation of collective bargaining
agreements, and those arising from the
interpretation or enforcement of company
personnel policies shall be disposed of by the
Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration
as may be provided in said agreements.
In the foregoing cases, an employer-employee
relationship is an indispensable jurisdictional
requisite.36 The jurisdiction of Labor Arbiters
and the NLRC under Article 217 of the Labor
Code is limited to disputes arising from an
employer-employee relationship which can only
be resolved by reference to the Labor Code,
other labor statutes or their collective bargaining
agreement.37 Not every dispute between an
employer and employee involves matters that
only the Labor Arbiter and the NLRC can
resolve in the exercise of their adjudicatory or
quasi-judicial powers. Actions between
employers and employees where the employer-
employee relationship is merely incidental is
within the exclusive original jurisdiction of the
regular courts.38 When the principal relief is to
be granted under labor legislation or a collective
bargaining agreement, the case falls within the
exclusive jurisdiction of the Labor Arbiter and
the NLRC even though a claim for damages
might be asserted as an incident to such claim.39
We agree with the ruling of the CA that, under
the boundary-hulog scheme incorporated in the
Kasunduan, a dual juridical relationship was
created between petitioner and respondent: that
of employer-employee and vendor-vendee. The
Kasunduan did not extinguish the employer-
employee relationship of the parties extant
before the execution of said deed.
As early as 1956, the Court ruled in National
Labor Union v. Dinglasan40 that the jeepney
owner/operator-driver relationship under the
boundary system is that of employer-employee
and not lessor-lessee. This doctrine was
affirmed, under similar factual settings, in
Magboo v. Bernardo41 and Lantaco, Sr. v.
Llamas,42 and was analogously applied to
govern the relationships between auto-calesa
owner/operator and driver,43 bus owner/operator
and conductor,44 and taxi owner/operator and
driver.45
The boundary system is a scheme by an
owner/operator engaged in transporting
passengers as a common carrier to primarily
govern the compensation of the driver, that is,
the latter’s daily earnings are remitted to the
owner/operator less the excess of the boundary
which represents the driver’s compensation.
Under this system, the owner/operator exercises
control and supervision over the driver. It is
unlike in lease of chattels where the lessor loses
complete control over the chattel leased but the
lessee is still ultimately responsible for the
consequences of its use. The management of the
business is still in the hands of the
owner/operator, who, being the holder of the
certificate of public convenience, must see to it
that the driver follows the route prescribed by
the franchising and regulatory authority, and the
rules promulgated with regard to the business
operations. The fact that the driver does not
receive fixed wages but only the excess of the
"boundary" given to the owner/operator is not
sufficient to change the relationship between
them. Indubitably, the driver performs activities
which are usually necessary or desirable in the
usual business or trade of the owner/operator.46
Under the Kasunduan, respondent was required
to remit P550.00 daily to petitioner, an amount
which represented the boundary of petitioner as
well as respondent’s partial payment (hulog) of
the purchase price of the jeepney.
Respondent was entitled to keep the excess of
his daily earnings as his daily wage. Thus, the
daily remittances also had a dual purpose: that
of petitioner’s boundary and respondent’s
partial payment (hulog) for the vehicle. This
dual purpose was expressly stated in the
Kasunduan. The well-settled rule is that an
obligation is not novated by an instrument that
expressly recognizes the old one, changes only
the terms of payment, and adds other obligations
not incompatible with the old provisions or
where the new contract merely supplements the
previous one. 47 The two obligations of the
respondent to remit to petitioner the boundary-
hulog can stand together.
In resolving an issue based on contract, this
Court must first examine the contract itself,
keeping in mind that when the terms of the
agreement are clear and leave no doubt as to the
intention of the contracting parties, the literal
meaning of its stipulations shall prevail.48 The
intention of the contracting parties should be
ascertained by looking at the words used to
project their intention, that is, all the words, not
just a particular word or two or more words
standing alone. The various stipulations of a
contract shall be interpreted together, attributing
to the doubtful ones that sense which may result
from all of them taken jointly.49 The parts and
clauses must be interpreted in relation to one
another to give effect to the whole. The legal
effect of a contract is to be determined from the
whole read together.50
Under the Kasunduan, petitioner retained
supervision and control over the conduct of the
respondent as driver of the jeepney, thus:
Ang mga patakaran, kaugnay ng bilihang ito sa
pamamagitan ng boundary hulog ay ang mga
sumusunod:
1. Pangangalagaan at pag-iingatan ng TAUHAN
NG IKALAWANG PANIG ang sasakyan
ipinagkatiwala sa kanya ng TAUHAN NG
UNANG PANIG.
2. Na ang sasakyan nabanggit ay gagamitin
lamang ng TAUHAN NG IKALAWANG
PANIG sa paghahanapbuhay bilang pampasada
o pangangalakal sa malinis at maayos na
pamamaraan.
3. Na ang sasakyan nabanggit ay hindi
gagamitin ng TAUHAN NG IKALAWANG
PANIG sa mga bagay na makapagdudulot ng
kahihiyan, kasiraan o pananagutan sa TAUHAN
NG UNANG PANIG.
4. Na hindi ito mamanehohin ng hindi
awtorisado ng opisina ng UNANG PANIG.
5. Na ang TAUHAN NG IKALAWANG
PANIG ay kinakailangang maglagay ng ID Card
sa harap ng windshield upang sa pamamagitan
nito ay madaliang malaman kung ang
nagmamaneho ay awtorisado ng
VILLAMARIA MOTORS o hindi.
6. Na sasagutin ng TAUHAN NG
IKALAWANG PANIG ang [halaga ng] multa
kung sakaling mahuli ang sasakyang ito na hindi
nakakabit ang ID card sa wastong lugar o
anuman kasalanan o kapabayaan.
7. Na sasagutin din ng TAUHAN NG
IKALAWANG PANIG ang materyales o piyesa
na papalitan ng nasira o nawala ito dahil sa
kanyang kapabayaan.
8. Kailangan sa VILLAMARIA MOTORS pa
rin ang garahe habang hinuhulugan pa rin ng
TAUHAN NG IKALAWANG PANIG ang
nasabing sasakyan.
9. Na kung magkaroon ng mabigat na kasiraan
ang sasakyang ipinagkaloob ng TAUHAN NG
UNANG PANIG, ang TAUHAN NG
IKALAWANG PANIG ay obligadong itawag
ito muna sa VILLAMARIA MOTORS bago
ipagawa sa alin mang Motor Shop na awtorisado
ng VILLAMARIA MOTORS.
10. Na hindi pahihintulutan ng TAUHAN NG
IKALAWANG PANIG sa panahon ng
pamamasada na ang nagmamaneho ay naka-
tsinelas, naka short pants at nakasando lamang.
Dapat ang nagmamaneho ay laging nasa maayos
ang kasuotan upang igalang ng mga pasahero.
11. Na ang TAUHAN NG IKALAWANG
PANIG o ang awtorisado niyang driver ay
magpapakita ng magandang asal sa mga
pasaheros at hindi dapat magsasalita ng masama
kung sakali man may pasaherong pilosopo
upang maiwasan ang anumang kaguluhan na
maaaring kasangkutan.
12. Na kung sakaling hindi makapagbigay ng
BOUNDARY HULOG ang TAUHAN NG
IKALAWANG PANIG sa loob ng tatlong (3)
araw ay ang opisina ng VILLAMARIA
MOTORS ang may karapatang mangasiwa ng
nasabing sasakyan hanggang matugunan ang
lahat ng responsibilidad. Ang halagang dapat
bayaran sa opisina ay may karagdagang multa
ng P50.00 sa araw-araw na ito ay nasa
pangangasiwa ng VILLAMARIA MOTORS.
13. Na kung ang TAUHAN NG IKALAWANG
PANIG ay hindi makapagbigay ng
BOUNDARY HULOG sa loob ng isang linggo
ay nangangahulugan na ang kasunduang ito ay
wala ng bisa at kusang ibabalik ng TAUHAN
NG IKALAWANG PANIG ang nasabing
sasakyan sa TAUHAN NG UNANG PANIG.
14. Sasagutin ng TAUHAN NG IKALAWANG
PANIG ang bayad sa rehistro, comprehensive
insurance taon-taon at kahit anong uri ng
aksidente habang ito ay hinuhulugan pa sa
TAUHAN NG UNANG PANIG.
15. Na ang TAUHAN NG IKALAWANG
PANIG ay obligadong dumalo sa
pangkalahatang pagpupulong ng
VILLAMARIA MOTORS sa tuwing tatawag
ang mga tagapangasiwa nito upang maipaabot
ang anumang mungkahi sa ikasusulong ng
samahan.
16. Na ang TAUHAN NG IKALAWANG
PANIG ay makikiisa sa lahat ng mga patakaran
na magkakaroon ng pagbabago o karagdagan sa
mga darating na panahon at hindi magiging
hadlang sa lahat ng mga balakin ng
VILLAMARIA MOTORS sa lalo pang
ipagtatagumpay at ikakatibay ng Samahan.
17. Na ang TAUHAN NG IKALAWANG
PANIG ay hindi magiging buwaya sa pasahero
upang hindi kainisan ng kapwa driver at
maiwasan ang pagkakasangkot sa anumang
gulo.
18. Ang nasabing sasakyan ay hindi
kalilimutang siyasatin ang kalagayan lalo na sa
umaga bago pumasada, at sa hapon o gabi
naman ay sisikapin mapanatili ang kalinisan
nito.
19. Na kung sakaling ang nasabing sasakyan ay
maaarkila at aabutin ng dalawa o higit pang araw
sa lalawigan ay dapat lamang na ipagbigay alam
muna ito sa VILLAMARIA MOTORS upang
maiwasan ang mga anumang suliranin.
20. Na ang TAUHAN NG IKALAWANG
PANIG ay iiwasan ang pakikipag-unahan sa
kaninumang sasakyan upang maiwasan ang
aksidente.
21. Na kung ang TAUHAN NG IKALAWANG
PANIG ay mayroon sasabihin sa
VILLAMARIA MOTORS mabuti man or
masama ay iparating agad ito sa kinauukulan at
iwasan na iparating ito kung [kani-kanino]
lamang upang maiwasan ang anumang usapin.
Magsadya agad sa opisina ng VILLAMARIA
MOTORS.
22. Ang mga nasasaad sa KASUNDUAN ito ay
buong galang at puso kong sinasang-ayunan at
buong sikap na pangangalagaan ng TAUHAN
NG IKALAWANG PANIG ang nasabing
sasakyan at gagamitin lamang ito sa
paghahanapbuhay at wala nang iba pa.51
The parties expressly agreed that petitioner, as
vendor, and respondent, as vendee, entered into
a contract to sell the jeepney on a daily
installment basis of P550.00 payable in four
years and that petitioner would thereafter
become its owner. A contract is one of
conditional sale, oftentimes referred to as
contract to sell, if the ownership or title over the
property sold is retained by the vendor, and is
not passed to the vendee unless and until there is
full payment of the purchase price and/or upon
faithful compliance with the other terms and
conditions that may lawfully be
stipulated.52 Such payment or satisfaction of
other preconditions, as the case may be, is a
positive suspensive condition, the failure of
which is not a breach of contract, casual or
serious, but simply an event that would prevent
the obligation of the vendor to convey title from
acquiring binding force.53 Stated differently, the
efficacy or obligatory force of the vendor's
obligation to transfer title is subordinated to the
happening of a future and uncertain event so that
if the suspensive condition does not take place,
the parties would stand as if the conditional
obligation had never existed.54 The vendor may
extrajudicially terminate the operation of the
contract, refuse conveyance, and retain the sums
or installments already received, where such
rights are expressly provided for.55
Under the boundary-hulog scheme, petitioner
retained ownership of the jeepney although its
material possession was vested in respondent as
its driver. In case respondent failed to make his
P550.00 daily installment payment for a week,
the agreement would be of no force and effect
and respondent would have to return the jeepney
to petitioner; the employer-employee
relationship would likewise be terminated
unless petitioner would allow respondent to
continue driving the jeepney on a boundary basis
of P550.00 daily despite the termination of their
vendor-vendee relationship.
The juridical relationship of employer-employee
between petitioner and respondent was not
negated by the foregoing stipulation in the
Kasunduan, considering that petitioner retained
control of respondent’s conduct as driver of the
vehicle. As correctly ruled by the CA:
The exercise of control by private respondent
over petitioner’s conduct in operating the
jeepney he was driving is inconsistent with
private respondent’s claim that he is, or was, not
engaged in the transportation business; that,
even if petitioner was allowed to let some other
person drive the unit, it was not shown that he
did so; that the existence of an employment
relation is not dependent on how the worker is
paid but on the presence or absence of control
over the means and method of the work; that the
amount earned in excess of the "boundary
hulog" is equivalent to wages; and that the fact
that the power of dismissal was not mentioned
in the Kasunduan did not mean that private
respondent never exercised such power, or could
not exercise such power.
Moreover, requiring petitioner to drive the unit
for commercial use, or to wear an identification
card, or to don a decent attire, or to park the
vehicle in Villamaria Motors garage, or to
inform Villamaria Motors about the fact that the
unit would be going out to the province for two
days of more, or to drive the unit carefully, etc.
necessarily related to control over the means by
which the petitioner was to go about his work;
that the ruling applicable here is not Singer
Sewing Machine but National Labor Union
since the latter case involved jeepney
owners/operators and jeepney drivers, and that
the fact that the "boundary" here represented
installment payment of the purchase price on the
jeepney did not withdraw the relationship from
that of employer-employee, in view of the overt
presence of supervision and control by the
employer.56
Neither is such juridical relationship negated by
petitioner’s claim that the terms and conditions
in the Kasunduan relative to respondent’s
behavior and deportment as driver was for his
and respondent’s benefit: to insure that
respondent would be able to pay the requisite
daily installment of P550.00, and that the vehicle
would still be in good condition despite the lapse
of four years. What is primordial is that
petitioner retained control over the conduct of
the respondent as driver of the jeepney.
Indeed, petitioner, as the owner of the vehicle
and the holder of the franchise, is entitled to
exercise supervision and control over the
respondent, by seeing to it that the route
provided in his franchise, and the rules and
regulations of the Land Transportation
Regulatory Board are duly complied with.
Moreover, in a business establishment, an
identification card is usually provided not just as
a security measure but to mainly identify the
holder thereof as a bona fide employee of the
firm who issues it.57
As respondent’s employer, it was the burden of
petitioner to prove that respondent’s termination
from employment was for a lawful or just cause,
or, at the very least, that respondent failed to
make his daily remittances of P550.00 as
boundary. However, petitioner failed to do so.
As correctly ruled by the appellate court:
It is basic of course that termination of
employment must be effected in accordance
with law. The just and authorized causes for
termination of employment are enumerated
under Articles 282, 283 and 284 of the Labor
Code.
Parenthetically, given the peculiarity of the
situation of the parties here, the default in the
remittance of the boundary hulog for one week
or longer may be considered an additional cause
for termination of employment. The reason is
because the Kasunduan would be of no force and
effect in the event that the purchaser failed to
remit the boundary hulog for one week. The
Kasunduan in this case pertinently stipulates:
13. Na kung ang TAUHAN NG IKALAWANG
PANIG ay hindi makapagbigay ng
BOUNDARY HULOG sa loob ng isang linggo
ay NANGANGAHULUGAN na ang
kasunduang ito ay wala ng bisa at kusang
ibabalik ng TAUHAN NG IKALAWANG
PANIG ang nasabing sasakyan sa TAUHAN
NG UNANG PANIG na wala ng paghahabol pa.
Moreover, well-settled is the rule that, the
employer has the burden of proving that the
dismissal of an employee is for a just cause. The
failure of the employer to discharge this burden
means that the dismissal is not justified and that
the employee is entitled to reinstatement and
back wages.
In the case at bench, private respondent in his
position paper before the Labor Arbiter, alleged
that petitioner failed to pay the miscellaneous
fee of P10,000.00 and the yearly registration of
the unit; that petitioner also stopped remitting
the "boundary hulog," prompting him (private
respondent) to issue a "Paalala," which
petitioner however ignored; that petitioner even
brought the unit to his (petitioner’s) province
without informing him (private respondent)
about it; and that petitioner eventually
abandoned the vehicle at a gasoline station after
figuring in an accident. But private respondent
failed to substantiate these allegations with
solid, sufficient proof. Notably, private
respondent’s allegation viz, that he retrieved the
vehicle from the gas station, where petitioner
abandoned it, contradicted his statement in the
Paalala that he would enforce the provision (in
the Kasunduan) to the effect that default in the
remittance of the boundary hulog for one week
would result in the forfeiture of the unit. The
Paalala reads as follows:
"Sa lahat ng mga kumukuha ng sasakyan
"Sa pamamagitan ng ‘BOUNDARY HULOG’
"Nais ko pong ipaalala sa inyo ang Kasunduan
na inyong pinirmahan particular na ang
paragrapo 13 na nagsasaad na kung hindi kayo
makapagbigay ng Boundary Hulog sa loob ng
isang linggo ay kusa ninyong ibabalik and
nasabing sasakyan na inyong hinuhulugan ng
wala ng paghahabol pa.
"Mula po sa araw ng inyong pagkatanggap ng
Paalala na ito ay akin na pong ipatutupad ang
nasabing Kasunduan kaya’t aking pinaaalala sa
inyong lahat na tuparin natin ang nakalagay sa
kasunduan upang maiwasan natin ito.
"Hinihiling ko na sumunod kayo sa hinihingi ng
paalalang ito upang hindi na tayo makaabot pa
sa korte kung sakaling hindi ninyo isasauli ang
inyong sasakyan na hinuhulugan na ang mga
magagastos ay kayo pa ang magbabayad
sapagkat ang hindi ninyo pagtupad sa kasunduan
ang naging dahilan ng pagsampa ng kaso.
"Sumasainyo
"Attendance: 8/27/99
"(The Signatures appearing herein
include (sic) that of petitioner’s) (Sgd.)
OSCAR VILLAMARIA, JR."
If it were true that petitioner did not remit the
boundary hulog for one week or more, why did
private respondent not forthwith take steps to
recover the unit, and why did he have to wait for
petitioner to abandon it?1avvphil.net
On another point, private respondent did not
submit any police report to support his claim that
petitioner really figured in a vehicular mishap.
Neither did he present the affidavit of the guard
from the gas station to substantiate his claim that
petitioner abandoned the unit there.58
Petitioner’s claim that he opted not to terminate
the employment of respondent because of
magnanimity is negated by his (petitioner’s)
own evidence that he took the jeepney from the
respondent only on July 24, 2000.
IN LIGHT OF ALL THE FOREGOING, the
petition is DENIED. The decision of the Court
of Appeals in CA-G.R. SP No. 78720 is
AFFIRMED. Costs against petitioner.
SO ORDERED.
ROMEO J. CALLEJO, SR.
Associate Justice