G.R. No. 119268           February 23, 2000ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE LOS ANGELES, JOEL ORDENIZA and AMADO CENTENO, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.) respondents.

QUISUMBING, J.:This special civil action for certiorari seeks to annul the decision1 of public respondent promulgated on October 28, 1994, in NLRC NCR CA No. 003883-92, and its resolution2 dated December 13, 1994 which denied petitioners motion for reconsideration.

Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent's taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners, daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests.

Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a decision3 dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit.

On appeal, the NLRC (public respondent herein), in a decision dated April 28, 1994, reversed and set aside the judgment of the labor arbiter. The labor tribunal declared that petitioners are employees of private respondent, and, as such, their dismissal must be for just cause and after due process. It disposed of the case as follows:

WHEREFORE, in view of all the foregoing considerations, the decision of the Labor Arbiter appealed from is hereby SET ASIDE and another one entered:1. Declaring the respondent company guilty of illegal dismissal and accordingly it is directed to reinstate the complainants, namely, Alberto A. Gonzales, Joel T. Morato, Gavino Panahon, Demetrio L. Calagos, Sonny M. Lustado, Romeo Q. Clariza, Luis de los Angeles, Amado Centino, Angel Jardin, Rosendo Marcos, Urbano Marcos, Jr., and Joel Ordeniza, to their former positions without loss of seniority and other privileges appertaining thereto; to pay the complainants full backwages and other benefits, less earnings elsewhere, and to reimburse the drivers the amount paid as washing charges; and2. Dismissing the charge of unfair [labor] practice for insufficiency of evidence.

SO ORDERED.4

Private respondent's first motion for reconsideration was denied. Remaining hopeful, private respondent filed another motion for reconsideration. This time, public respondent, in its decision5 dated October 28, 1994, granted aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code, and disposed of the case as follows:

VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion under reconsideration is hereby given due course.Accordingly, the Resolution of August 10, 1994, and the Decision of April 28, 1994 are hereby SET ASIDE. The Decision of the Labor Arbiter subject of the appeal is likewise SET ASIDE and a NEW ONE ENTERED dismissing the complaint for lack of jurisdiction.

No costs.SO ORDERED.6

Expectedly, petitioners sought reconsideration of the labor tribunal's latest decision which was denied. Hence, the instant petition.In this recourse, petitioners allege that public respondent acted without or in excess of jurisdiction, or with grave

abuse of discretion in rendering the assailed decision, arguing that:ITHE NLRC HAS NO JURISDICTION TO ENTERTAIN RESPONDENT'S SECOND MOTION FOR RECONSIDERATION WHICH IS ADMITTEDLY A PLEADING PROHIBITED UNDER THE NLRC RULES, AND TO GRANT THE SAME ON GROUNDS NOT EVEN INVOKED THEREIN.IITHE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES IS ALREADY A SETTLED ISSUE CONSTITUTING RES JUDICATA, WHICH THE NLRC HAS NO MORE JURISDICTION TO REVERSE, ALTER OR MODIFY.IIIIN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER SUPPORTS THE VIEW THAT PETITIONERS-TAXI DRIVERS ARE EMPLOYEES OF RESPONDENT TAXI COMPANY.7

The petition is impressed with merit.The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the jurisprudence of procedure. It means such capricious and whimsical exercise of judgment by the tribunal exercising judicial or quasi-judicial power as to amount to lack of power.8 In labor cases, this Court has declared in several instances that disregarding rules it is bound to observe constitutes grave abuse of discretion on the part of labor tribunal.

In Garcia vs. NLRC,9 private respondent therein, after receiving a copy of the labor arbiter's decision, wrote the labor arbiter who rendered the decision and expressed dismay over the judgment. Neither notice of appeal was filed nor cash or surety bond was posted by private respondent. Nevertheless, the labor tribunal took cognizance of the letter from private respondent and treated said letter as private respondent's appeal. In a certiorari action before this Court, we ruled that the labor tribunal acted with grave abuse of discretion in treating a mere letter from private respondent as private respondent's appeal in clear violation of the rules on appeal prescribed under Section 3(a), Rule VI of the New Rules of Procedure of NLRC.

In Philippine Airlines Inc. vs. NLRC,10 we held that the labor arbiter committed grave abuse of discretion when he failed to resolve immediately by written order a motion to dismiss on the ground of lack of jurisdiction and the supplemental motion to dismiss as mandated by Section 15 of Rule V of the New Rules of Procedure of the NLRC.

In Unicane Workers Union-CLUP vs. NLRC,11 we held that the NLRC gravely abused its discretion by allowing and deciding an appeal without an appeal bond having been filed as required under Article 223 of the Labor Code.In Mañebo vs. NLRC,12 we declared that the labor arbiter gravely abused its discretion in disregarding the rule governing position papers. In this case, the parties have already filed their position papers and even agreed to consider the case submitted for decision, yet the labor arbiter still admitted a supplemental position paper and memorandum, and by taking into consideration, as basis for his decision, the alleged facts adduced therein and the documents attached thereto.

In Gesulgon vs. NLRC,13 we held that public respondent gravely abused its discretion in treating the motion to set aside judgment and writ of execution as a petition for relief of judgment. In doing so, public respondent had, without sufficient basis, extended the reglementary period for filing petition for relief from judgment contrary to prevailing rule and case law.

In this case before us, private respondent exhausted administrative remedy available to it by seeking reconsideration of public respondent's decision dated April 28, 1994, which public respondent denied. With this motion for reconsideration, the labor tribunal had ample opportunity to rectify errors or mistakes it may have committed before resort to courts of justice can be had.14 Thus, when private respondent filed a second motion for reconsideration, public respondent should have forthwith denied it in accordance with Rule 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from the same party, thus:

Sec. 14. Motions for Reconsideration. — Motions for reconsideration of any order, resolution or decision of the Commission shall not be entertained except when based on palpable or patent errors, provided that the motion is under oath and filed within ten (10) calendar days from receipt of the order, resolution or decision with proof of service that a copy of the same has been furnished within the reglementary period the adverse party and provided further, that only one such motion from the same party shall be entertained. [Emphasis supplied]

The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry.15

As correctly pointed out by petitioner, the second motion for reconsideration filed by private respondent is indubitably a prohibited pleading16 which should have not been entertained at all. Public respondent cannot just disregard its own rules on the pretext of "satisfying the ends of justice",17 especially when its disposition of a legal controversy ran afoul with a clear and long standing jurisprudence in this jurisdiction as elucidated in the subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated by this Court is not a way of rectifying an error or mistake. In our view, public respondent gravely abused its discretion in taking cognizance and granting private respondent's second motion for reconsideration as it wrecks the orderly procedure in seeking reliefs in labor cases.

But, there is another compelling reason why we cannot leave untouched the flip-flopping decisions of the public respondent. As mentioned earlier, its October 28, 1994 judgment is not in accord with the applicable decisions of this Court. The labor tribunal reasoned out as follows:

On the issue of whether or not employer-employee relationship exists, admitted is the fact that complainants are taxi drivers purely on the "boundary system". Under this system the driver takes out his unit and pays the owner/operator a fee commonly called "boundary" for the use of the unit. Now, in the determination the existence of employer-employee relationship, the Supreme Court in the case of Sara, et al., vs. Agarrado, et al. (G.R. No. 73199, 26 October 1988) has applied the following four-fold test: "(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control the employees conduct."

"Among the four (4) requisites", the Supreme Court stresses that "control is deemed the most important that the other requisites may even be disregarded". Under the control test, an employer-employee relationship exists if the "employer" has reserved the right to control the "employee" not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. Otherwise, no such relationship exists. (Ibid.)

Applying the foregoing parameters to the case herein obtaining, it is clear that the respondent does not pay the drivers, the complainants herein, their wages. Instead, the drivers pay a certain fee for the use of the vehicle. On the matter of control, the drivers, once they are out plying their trade, are free to choose whatever manner they conduct their trade and are beyond the physical control of the owner/operator; they themselves determine the amount of revenue they would want to earn in a day's driving; and, more significantly aside from the fact that they pay for the gasoline they consume, they likewise shoulder the cost of repairs on damages sustained by the vehicles they are driving.

Verily, all the foregoing attributes signify that the relationship of the parties is more of a leasehold or one that is covered by a charter agreement under the Civil Code rather than the Labor Code.18

The foregoing ratiocination goes against prevailing jurisprudence.

In a number of cases decided by this Court,19 we ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the former exercise supervision and control over the latter. The management of the business is in the owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. We have applied by analogy the abovestated doctrine to the relationships between bus owner/operator and bus conductor,20 auto-calesa owner/operator and driver,21 and recently between taxi owners/operators and taxi drivers.22 Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer.

As consistently held by this Court, 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. The requirement of notice and hearing is set-out in Article 277 (b) of the said Code. Hence, petitioners, being employees of private respondent, can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case, private respondent had no valid cause to terminate the employment of petitioners. Neither were there two (2) written notices sent by private respondent informing each of the petitioners that they had been dismissed from work. These lack of valid cause and failure on the part of private respondent to comply with the twin-notice requirement underscored the illegality surrounding petitioners' dismissal.

Under the law, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.23 It must be emphasized, though, that recent judicial pronouncements24 distinguish between employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989, and those whose illegal dismissals were effected after such date. Thus, employees illegally dismissed prior to March 21, 1989, are entitled to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after that date are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. The legislative policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Considering that petitioners were terminated from work on August 1, 1991, they are entitled to full backwages on the basis of their last daily earnings.

With regard to the amount deducted daily by private respondent from petitioners for washing of the taxi units, we view the same as not illegal in the context of the law. We note that after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play. 25 Hence, the drivers are not entitled to reimbursement of washing charges.

WHEREFORE, the instant petition is GRANTED. The assailed DECISION of public respondent dated October 28, 1994, is hereby SET ASIDE. The DECISION of public respondent dated April 28, 1994, and its RESOLUTION dated December 13, 1994, are hereby REINSTATED subject to MODIFICATION. Private respondent is directed to reinstate petitioners to their positions held at the time of the complained dismissal. Private respondent is likewise ordered to pay petitioners their full backwages, to be computed from the date of dismissal until their actual reinstatement. However, the order of public respondent that petitioners be reimbursed the amount paid as washing charges is deleted. Costs against private respondents.

SO ORDERED.

G.R. Nos. 83380-81 November 15, 1989

MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter, Department of Labor and Employment, National Capital Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA, GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA ANGELES, respondents.

Ledesma, Saludo & Associates for petitioners.Pablo S. Bernardo for private respondents. FERNAN, C.J.:This petition for certiorari involving two separate cases filed by private respondents against herein petitioners assails the decision of respondent National Labor Relations Commission in NLRC CASE No. 7-2603-84 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Makati Haberdashery and/or Toppers Makati, et al." and NLRC CASE No. 2-428-85 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Toppers Makati, et al.", affirming the decision of the Labor Arbiter who jointly heard and decided aforesaid cases, finding: (a) petitioners guilty of illegal dismissal and ordering them to reinstate the dismissed workers and (b) the existence of employer-employee relationship and granting respondent workers by reason thereof their various monetary claims.

The undisputed facts are as follows:Individual complainants, private respondents herein, have been working for petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on a piece-rate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday.

Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday and during peak periods even on Sundays and holidays.

On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a complaint docketed as NLRC NCR Case No. 7-2603-84 for (a) underpayment of the basic wage; (b) underpayment of living allowance; (c) non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of service incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5. 1

During the pendency of NLRC NCR Case No. 7-2603-84, private respondent Dioscoro Pelobello left with Salvador Rivera, a salesman of petitioner Haberdashery, an open package which was discovered to contain a "jusi" barong tagalog. When confronted, Pelobello replied that the same was ordered by respondent Casimiro Zapata for his customer. Zapata allegedly admitted that he copied the design of petitioner Haberdashery. But in the afternoon, when again questioned about said barong, Pelobello and Zapata denied ownership of the same. Consequently a memorandum was issued to each of them to explain on or before February 4, 1985 why no action should be taken against them for accepting a job order which is prejudicial and in direct competition with the business of the company. 2 Both respondents allegedly did not submit their explanation and did not report for work. 3 Hence, they were dismissed by petitioners on February 4, 1985. They countered by filing a complaint for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 on February 5, 1985. 4

On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the dispositive portion of which reads:WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85 finding respondents guilty of illegal dismissal and ordering them to reinstate Dioscoro Pelobello and Casimiro Zapata to their respective or similar positions without loss of seniority rights, with full backwages from July 4, 1985 up to actual reinstatement. The charge of unfair labor practice is dismissed for lack of merit.

In NLRC NCR Case No. 7-26030-84, the complainants' claims for underpayment re violation of the minimum wage law is hereby ordered dismissed for lack of merit.

Respondents are hereby found to have violated the decrees on the cost of living allowance, service incentive leave pay and the 13th Month Pay. In view thereof, the economic analyst of the Commission is directed to compute the

monetary awards due each complainant based on the available records of the respondents retroactive as of three years prior to the filing of the instant case.

SO ORDERED. 5

From the foregoing decision, petitioners appealed to the NLRC. The latter on March 30, 1988 affirmed said decision but limited the backwages awarded the Dioscoro Pelobello and Casimiro Zapata to only one (1) year. 6

After their motion for reconsideration was denied, petitioners filed the instant petition raising the following issues:ITHE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN PETITIONER HABERDASHERY AND RESPONDENTS WORKERS.IITHE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS WORKERS ARE ENTITLED TO MONETARY CLAIMS DESPITE THE FINDING THAT THEY ARE NOT ENTITLED TO MINIMUM WAGE.IIITHE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS PELOBELLO AND ZAPATA WERE ILLEGALLY DISMISSED. 7

The first issue which is the pivotal issue in this case is resolved in favor of private respondents. We have repeatedly held in countless decisions that the test of employer-employee relationship is four-fold: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. It is the so called "control test" that is the most important element. 8 This simply means the determination of whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and method by which the same is to be accomplished. 9

The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from the operations of petitioner, when a customer enters into a contract with the haberdashery or its proprietor, the latter directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to take the customer's measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision is actively manifested in all these aspects — the manner and quality of cutting, sewing and ironing.

Furthermore, the presence of control is immediately evident in this memorandum issued by Assistant Manager Cecilio B. Inocencio, Jr. dated May 30, 1981 addressed to Topper's Makati Tailors which reads in part:4. Effective immediately, new procedures shall be followed:A. To follow instruction and orders from the undersigned Roger Valderama, Ruben Delos Reyes and Ofel Bautista. Other than this person (sic) must ask permission to the above mentioned before giving orders or instructions to the tailors.B. Before accepting the job orders tailors must check the materials, job orders, due dates and other things to maximize the efficiency of our production. The materials should be checked (sic) if it is matched (sic) with the sample, together with the number of the job order.C. Effective immediately all job orders must be finished one day before the due date. This can be done by proper scheduling of job order and if you will cooperate with your supervisors. If you have many due dates for certain day, advise Ruben or Ofel at once so that they can make necessary adjustment on due dates.D. Alteration-Before accepting alteration person attending on customs (sic) must ask first or must advise the tailors regarding the due dates so that we can eliminate what we call 'Bitin'.E. If there is any problem regarding supervisors or co-tailor inside our shop, consult with me at once settle the problem. Fighting inside the shop is strictly prohibited. Any tailor violating this memorandum will be subject to disciplinary action.

For strict compliance. 10

From this memorandum alone, it is evident that petitioner has reserved the right to control its employees not only as to the result but also the means and methods by which the same are to be accomplished. That private respondents are regular employees is further proven by the fact that they have to report for work regularly from 9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they report for work before 9:30 a.m. and which is forfeited when they arrive at or after 9:30 a.m. 11

Since private respondents are regular employees, necessarily the argument that they are independent contractors

must fail. As established in the preceding paragraphs, private respondents did not exercise independence in their own methods, but on the contrary were subject to the control of petitioners from the beginning of their tasks to their completion. Unlike independent contractors who generally rely on their own resources, the equipment, tools, accessories, and paraphernalia used by private respondents are supplied and owned by petitioners. Private respondents are totally dependent on petitioners in all these aspects.

Coming now to the second issue, there is no dispute that private respondents are entitled to the Minimum Wage as mandated by Section 2(g) of Letter of Instruction No. 829, Rules Implementing Presidential Decree No. 1614 and reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which explicitly states that, "All employees paid by the result shall receive not less than the applicable new minimum wage rates for eight (8) hours work a day, except where a payment by result rate has been established by the Secretary of Labor. ..." 12 No such rate has been established in this case.

But all these notwithstanding, the question as to whether or not there is in fact an underpayment of minimum wages to private respondents has already been resolved in the decision of the Labor Arbiter where he stated: "Hence, for lack of sufficient evidence to support the claims of the complainants for alleged violation of the minimum wage, their claims for underpayment re violation of the Minimum Wage Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must perforce fall." 13

The records show that private respondents did not appeal the above ruling of the Labor Arbiter to the NLRC; neither did they file any petition raising that issue in the Supreme Court. Accordingly, insofar as this case is concerned, that issue has been laid to rest. As to private respondents, the judgment may be said to have attained finality. For it is a well-settled rule in this jurisdiction that "an appellee who has not himself appealed cannot obtain from the appellate court-, any affirmative relief other than the ones granted in the decision of the court below. " 14

As a consequence of their status as regular employees of the petitioners, they can claim cost of living allowance. This is apparent from the provision defining the employees entitled to said allowance, thus: "... All workers in the private sector, regardless of their position, designation or status, and irrespective of the method by which their wages are paid. " 15

Private respondents are also entitled to claim their 13th Month Pay under Section 3(e) of the Rules and Regulations Implementing P.D. No. 851 which provides:Section 3. Employers covered. — The Decree shall apply to all employers except to:xxx xxx xxx(e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned. (Emphasis supplied.)

On the other hand, while private respondents are entitled to Minimum Wage, COLA and 13th Month Pay, they are not entitled to service incentive leave pay because as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code. For the same reason private respondents cannot also claim holiday pay (Section 1(e), Rule IV, Implementing Regulations, Book III, Labor Code).

With respect to the last issue, it is apparent that public respondents have misread the evidence, for it does show that a violation of the employer's rules has been committed and the evidence of such transgression, the copied barong tagalog, was in the possession of Pelobello who pointed to Zapata as the owner. When required by their employer to explain in a memorandum issued to each of them, they not only failed to do so but instead went on AWOL (absence without official leave), waited for the period to explain to expire and for petitioner to dismiss them.

They thereafter filed an action for illegal dismissal on the far-fetched ground that they were dismissed because of union activities. Assuming that such acts do not constitute abandonment of their jobs as insisted by private respondents, their blatant disregard of their employer's memorandum is undoubtedly an open defiance to the lawful orders of the latter, a justifiable ground for termination of employment by the employer expressly provided for in Article 283(a) of the Labor Code as well as a clear indication of guilt for the commission of acts inimical to the interests of the employer, another justifiable ground for dismissal under the same Article of the Labor Code, paragraph (c). Well established in our jurisprudence is the right of an employer to dismiss an employee whose continuance in the service is inimical to the employer's interest. 16

In fact the Labor Arbiter himself to whom the explanation of private respondents was submitted gave no credence to their version and found their excuses that said barong tagalog was the one they got from the embroiderer for the Assistant Manager who was investigating them, unbelievable.

Under the circumstances, it is evident that there is no illegal dismissal of said employees. Thus, We have ruled that:No employer may rationally be expected to continue in employment a person whose lack of morals, respect and loyalty to his employer, regard for his employer's rules, and appreciation of the dignity and responsibility of his office, has so plainly and completely been bared.

That there should be concern, sympathy, and solicitude for the rights and welfare of the working class, is meet and proper. That in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the former's favor, is not an unreasonable or unfair rule. But that disregard of the employer's own rights and interests can be justified by that concern and solicitude is unjust and unacceptable. (Stanford Microsystems, Inc. v. NLRC, 157 SCRA 414-415 [1988] ).

The law is protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer. 17

More importantly, while the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will automatically be decided in favor of labor. 18

Finally, it has been established that the right to dismiss or otherwise impose discriplinary sanctions upon an employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine the existence of said cause in accordance with the norms of due process. 19

There is no evidence that the employer violated said norms. On the contrary, private respondents who vigorously insist on the existence of employer-employee relationship, because of the supervision and control of their employer over them, were the very ones who exhibited their lack of respect and regard for their employer's rules.

Under the foregoing facts, it is evident that petitioner Haberdashery had valid grounds to terminate the services of private respondents.

WHEREFORE, the decision of the National Labor Relations Commission dated March 30, 1988 and that of the Labor Arbiter dated June 10, 1986 are hereby modified. The complaint filed by Pelobello and Zapata for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and legal bases. Award of service incentive leave pay to private respondents is deleted.

SO ORDERED.

[G.R. No. 113542. February 24, 1998]CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P. COSTALES, JR. in his capacity as

union president, petitioner, vs. UNDERSECRETARY BIENVENIDO E. LAGUESMA and CORFARM GRAINS, INC., respondents.

[G.R. No. 114911. February 24, 1998]CAURDANETAAN PIECE WORKERS ASSOCIATION as represented by JUANITO P. COSTALES, JR.,

president, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, CORFARM GRAINS, INC. and/or TEODY C. RAPISORA and HERMINIO RABANG, respondents.

D E C I S I O N

PANGANIBAN, J.:The Court reiterates some fundamental labor doctrines: (1) this Court may review factual determinations where the findings of the med-arbiter conflict with those of the undersecretary of labor; (2) an employer-employee relationship may be established by substantial evidence; (3) procedural due process is satisfied by the grant of an opportunity to be heard and an actual adversarial-type trial is not required; (4) the NLRC commits grave abuse of discretion when it remands a case to the labor arbiter in spite of ample pieces of evidence on record which are sufficient to decide the case directly; and (5) where illegal dismissal is proven, the workers are entitled to back wages and other similar benefits without deductions or conditions.

Statement of the CaseThese doctrines are used by the Court in resolving these consolidated petitions for certiorari under Rule 65, challenging the resolutions of Undersecretary Bienvenido Laguesma and the National Labor Relations Commission.

First CaseIn G.R. No. 113542, hereafter referred to as the First Case, Petitioner Caurdanetaan Piece Workers Union/Association (CPWU) prays for the nullification and reversal of Undersecretary Laguesmas Order dated January 4, 1994 in OS-MA-A-8-119-93 (RO100-9207-RU-001), which granted Respondent Corfarms motion for reconsideration and dismissed petitioners prayer for certification election. The dispositive portion of the assailed Order reads as follows:

WHEREFORE, the questioned Order is hereby set aside and a new one issued dismissing the petition for certification election for lack of merit.

In his earlier Order dated September 7, 1993, Laguesma affirmed Med-Arbiter Sinamar E. Limos order of March 18, 1993 which disposed as follows:

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the above-entitled petition is hereby granted. Consequently, the motion to dismiss filed by Corfarm Grains, Inc. is denied.

Let a certification election be conducted among the rank-and-file employees of Corfarm Grains, Inc., within ten (10) days from receipt hereof, with the following choices:1. Caurdanetaan Piece Workers Union;2. No Union

A pre-election conference is hereby set on March 29, 1993 at 2:00 o clock in the afternoon at the DOLE, Dagupan District Office, Mayombo District, Dagupan City to thresh out the mechanics of the Certification Election. Employer Corfarm Grains, Inc. is hereby directed to present its employment records for the period covering January to June 1992 evidencing payment of salaries of its employees.

Let the parties be notified accordingly.

Aggrieved by Respondent Laguesmas subsequent Order dated January 27, 1994 denying its motion for reconsideration, petitioner filed this recourse before this Court.

Second CaseIn G.R. No. 114911, hereafter referred to as the Second Case, petitioner assails the Resolution promulgated on February 16, 1994 in NLRC CA No. L-001109 by the National Labor Relations Commission (Respondent NLRC the dispositive portion of which reads:

WHEREFORE, the Decision of the Labor Arbiter dated 14 September 1993 is hereby SET ASIDE. Let the records of the case be REMANDED to the Arbitration Branch of origin for immediate appropriate proceedings.

The labor arbiters decision that was reversed by Respondent NLRC disposed as follows:

WHEREFORE, judgment is hereby rendered as follows:1. Declaring individual complainants dismissal illegal;2. Declaring respondent guilty of unfair labor practice;3. Ordering respondent to pay the 92 complainants the following:a) 13th month pay limited to three years in the amount of P4,788.00 each;b) service incentive leave pay in the amount of P855.00 each for three years;c) underpaid wages covering the period June 1989 to June 1992 which amount to P47,040.00 each;d) backwages reckoned from June 1992, the date of dismissal[,] to September 1993, the date of promulgation of the decision or a period of 14 months, in the amount of P22,344.00 each;e) refund of P12.00/day deduction limited to three years which amounts to P12,096 each; andf) to pay the complainants P1,000.00 each as damages.4. To reinstate the complainants to their former position[s] immediately.

All other claims are hereby dismissed for lack of merit.

In a Resolution promulgated on March 28, 1994, Respondent NLRC denied petitioners motion for reconsideration.

The FactsIn his Consolidated Memorandum, the solicitor general recited the following pertinent facts, which we find amply supported by the records:[

Petitioner union has ninety-two (92) members who worked as cargador at the warehouse and ricemills of private respondent [referring to Respondent Corfarm] at Umingan, Pangasinan since 1982. As cargadores, they loaded, unloaded and piled sacks of palay from the warehouse to the cargo trucks and those brought by cargo trucks for delivery to different places. They were paid by private respondent on a piece rate basis. When private respondent denied some benefits to these cargadores, the latter organized petitioner union. Upon learning of its formation, private respondent barred its members from working with them and replaced [them] with non-members of the union sometime in the middle of 1992.

On July 9, 1992, petitioner filed [a petition] for certification election before the Regional Office No. I of the Department of Labor and Employment, San Fernando, La Union docketed as RO100-9207-RU-001.

While this petition for certification election was pending, petitioner also filed on November 16, 1992, a complaint for illegal dismissal, unfair labor practice, refund of illegal deductions, payment of wage differentials, various pecuniary benefits provided by laws, damages, legal interest, reinstatement and attorneys fees, against private respondent before the Regional Arbitration Branch No. 1 of Dagupan City, docketed as NLRC RAB Case No. 01-117-0184-92.

On November 24, 1992, Labor Arbiter Ricardo Olairez in NLRC Case No. Sub-Rab 01-117-0184-92, directed the parties to submit position paper on or before December 14, 1992, and to appear for hearing on the said date. Only the complainant petitioner submitted its position paper on December 3, 1992.

Likewise in the scheduled hearing on December 14, 1992, private respondent did not appear[;] thus Labor Arbiter Olairez allowed the president of petitioner union Juanito Costales to testify and present its evidence ex-parte.

On December 16 1992, another notice was sent to the parties to appear on [the] January 7, 1993 hearing by Labor Arbiter Emiliano de Asis.

Before the scheduled hearing on January 7, 1993, complainant petitioner filed a motion to amend complaint and to admit amended complaint. It also filed the following:1. Affidavit of Juanito Costales, Jr., dated November 24, 1992;2. Joint affidavit of Ricardo Aban, Armando Casing, Benjamin Corpuz, Danny Margadejas, Fidel Fortunato, Henry de los Reyes, Anthony de Luna, Warlito Arguilles, Dominador Aguda, Marcelino Cayuda, Jr., Jaime Costales and Juanito Mendenilla dated December 30, 1992;

3. Joint affidavit of Juanito Costales and Armando Casing dated January 7, 1993;4. Affidavit signed by individual union members.

On March 18, 1993, Med-Arbiter Sinamar E. Limos issued an Order granting the petition for certification election earlier filed.

Meanwhile, Labor Arbiter Rolando D. Gambito in the illegal dismissal case issued the May 20, 1993 Order, the dispositive portion [of] which reads:’WHEREFORE, respondents are hereby ordered to submit their position paper, together with their documentary evidence, if any, within TEN (10) days from receipt of the order, otherwise we will be constrained to resolve this case based on available evidence on record.

On September 7, 1993, public respondent Laguesma issued a Resolution denying the appeal filed by private respondent against the order of Med-Arbiter Limos granting the petition for certification election.

Acting on said denial, private respondent filed a motion for reconsideration which was granted in an Order dated January 4, 1994 by public respondent Laguesma dismissing the petition for certification election for lack of employer-employee relationship.

Petitioner in turn filed a motion for reconsideration of the January 4, 1994, Order but it was denied by public respondent Laguesma in his January 27, 1994 Order which reaffirmed the dismissal of petition for certification election.

Thus, the union filed its first petition for certiorari assailing the Orders of January 4 and 27, 1994 of public respondent Laguesma dismissing the petition for certification election. The said petition is captioned as Caurdanetaan Piece Workers Union, petitioner, vs. Hon. Bienvenido Laguesma, et al., respondents, docketed as G.R. No. 113542 and raffled to the Second Division of this Honorable Court.

On September 14, 1993, Labor Arbiter Rolando D. Gambito issued his decision finding the dismissal of petitioners members illegal. On appeal by both parties, Respondent NLRC -- as earlier stated -- set aside the appealed decision and remanded the case to the labor arbiter for further proceedings. Petitioners motion for reconsideration was later denied.

The solicitor general, who was supposed to represent both public respondents, joined petitioner and filed a Manifestation and Motion (In Lieu of Comment) dated July 25, 1994, praying that the petition in the First Case be granted and that judgment be rendered annulling the assailed Orders of Respondent Laguesma. The Republics counsel likewise filed another Manifestation and Motion (In Lieu of Comment) dated October 4, 1994 in the Second Case, praying that judgment be rendered annulling the resolution of Public Respondent NLRC dated February 16, 1994 and March 28, 1994 and order[ing] public respondent to proceed with the case instead of remanding the same to the labor arbiter of origin.

In a Resolution dated March 29, 1995, this Court ordered the consolidation of the two cases.

Public Respondents Rulings In the First CasePublic Respondent Laguesma premised the dismissal of the petition for certification election on the absence of an employer-employee relationship between petitioners members and private respondent. Professing reliance on the control test in determining employer-employee relationship, his Order dated January 4, 1994[ explained:

It is settled in this jurisdiction that the most important factor in determining the existence of employer-employee relationship is the control test or the question of whether or not the supposed employer exercises control over the means and methods by which the work is to be done. In the instant case, it is not disputed that movant does not exercise any degree of control over how the loading or unloading of cavans of palays to or from the trucks, to or from the rice mills. Movants only concern is that said cavans of palay are loaded/unloaded. Absent therefore, the power to control not only the end to be achieved but also the means to be used in reaching such end, no employer-employee relationship could be said to have been established. We also noted that some of petitioners members including its president, Juanito Costales, Jr., admitted in separate sworn statements that they offer and actually perform loading and unloading work for various rice mills in Pangasinan and that the performance of said work depends on the availability of work in said mills. They also categorically stated that there is no employer-employee

relationship between petitioner and movant. To our mind, said declarations being made against interest deserve much evidentiary weight. Considering therefore, the foregoing, we have no alternative but to dismiss the petition for lack of employer-employee relationship.

In the Second CaseOn the other hand, Respondent NLRC ordered the remand of the case to the arbitration branch for further proceedings because the issues at hand need further threshing out. Stressing the principle that allegations must be proved by competent and credible evidence, it held:

There is no question that under the Rules of the Commission, complaints may be resolved on the basis of the Position Papers submitted by the parties and that the parties may be deemed to have waived their right to present evidence after they have been given an opportunity to do so. These procedural rules, however should be read in conjunction with the time[-]honored principle that allegations must be proved and established by competent and credible evidence. In other words, mere allegations would not suffice despite the absence of evidence to the contrary.

In subject case, complainants-appellants allegations that they are laborers of respondents-appellants receiving P45.00 per days work of eight hours (p. 2, Amended Position Paper dated December 14, 1992, p. 31 Records; p. 2 Amended Complaint dated 16 December 1992, p. 70, Records) appears to be in conflict with their earlier assertions that they are paid on the basis of the number of cavans of palay moved, piled, hauled and unloaded from trucks or haulers multiplied by P0.12 [per] sack or cavan. And for the days earning respondents used to be obliged to pay P57.00 per days earning -- (p. 2, Position Paper dated 24 November 1992; p. 17, Records).

Similarly attached to the records is a narrative report of [the] DOLE inspector where it was mentioned that Juanito Costales, Jr., is the owner of Carcado Contracting Services and is not an employee of Corefarm [sic] Grains (Narrative Report dated August 4, 1992, p. 10 Records).

Another reason why subject case should be remanded to the Labor Arbiter below is the fact that the personality of complainant union has been raised in issue before the proper forum and adverse decision on the matter will definitely affect the whole proceedings.

Furthermore, records show that an Amended Complaint was filed on December 23, 1992. This amended complaint made no mention of the affidavits of Juanito Costales, Jr. and the 92 other workers which documents were filed in January 1993. Likewise, the amended complaint contains but a general statement that the 92 workers of Corefarm [sic] Grains have been employed since 1982 which was adopted by the Labor Arbiter below in his decision notwithstanding the fact that a number of these workers started working with respondent after 1982. Some of whom worked with the company in 1990 (Joint Affidavit dated 7 January 1993, pp. 96-98, Records). Notwithstanding this fact, the Labor Arbiter in the decision under consideration allowed refund of alleged deduction for a period of three years. In the same manner, payment of salary differential was also granted.

Indeed the issues at hand need further threshing out. Under the Rules, the Labor Arbiter is authorized to thresh out issues (sec. 4, Rule V). As it is, we are not convinced by the conclusions of the Labor Arbiter.

The ends of justice would better be served if all parties are granted further opportunity to ventilate their respective positions.

The IssuesIn its Consolidated Memorandum dated September 19, 1995 filed before us, petitioner raises the following grounds in support of its petition:

1. Grave abuse of discretion or acting in excess of jurisdiction, which is equivalent to lack of jurisdiction on the part of public respondent in setting aside the labor arbiters decision and in remanding this case to the office of origin for further proceedings is not necessary when in fact the mandatory requirements of due process have been observed by the labor arbiter in rendering decision on the case;2. Remand of the case to office of origin for further proceedings on matters already passed upon properly by the labor arbiter is contrary to the rule of speedy labor justice and the [sic] social justice and to afford protection to labor policy of the Philippine Constitution, which is a command that should not be disregarded by the courts in resolving labor cases;

3. Remand of the case to the labor arbiter would only prolong social unrest and the suffering of injurious effects of illegal dismissal by the 92 illegally dismissed workers[;] hence, said remand of the case without justification constitutes an oppressive act committed by public respondent.

Simply put, the issues are as follows:1. Whether Respondent Laguesma acted with grave abuse of discretion in ordering the dismissal of the petition for certification election2 Whether Respondent NLRC acted with grave abuse of discretion in remanding the illegal dismissal case to the labor arbiter for further proceedings.

The present controversy hinges on whether an employer-employee relationship between the CPWU members and Respondent Corfarm has been established by substantial evidence.

The Courts RulingThe two petitions are meritorious.

Main Issue: Employer-Employee RelationshipFirst Case: Certification ElectionPetitioner contends that Respondent Laguesma committed grave abuse of discretion in dismissing the petition for certification election by relying on private respondents bare allegation, in its motion for reconsideration, of lack of employer-employee relationship. According to petitioner, Respondent Laguesma cannot reverse his Decision in the absence of a concomitant change in his factual findings. Petitioner insists that all its members were employees of private respondent, viz.:

The 92 workers, who are all union members of petitioner herein, have been rendering actual manual services as cargadores in the warehouse and rice mills of private respondent, performing activities usually related to or desirable by [sic] the business or trade of private respondent who is engaged in the buy and sell of palay as well as warehousing of said commodity and milling the same for sale to customers in the form of milled rice. The 92 workers have performed their activities for the last ten (10) years prior to their having been illegally dismissed from employment on June 18, 1992 or thereabouts.

Petitioner adds that many of its members received Christmas bonuses from private respondent.

On the other hand, Respondent Corfarm describes the contentions of petitioner as off-tangent, if not irrelevant. –

First, the authority of the DOLE Secretary to decide appeals in representation cases is undeniable (see e.g., Sections 9 and 10 of Rule V, Book V, of the Implementing Rules and Regulations of the Labor Code; also Art. 259, appeal from certification election orders, labor code). Second, petitioner completely misses the point that the granting and denial of a motion for reconsideration involves the exercise of discretion. As submitted by the Public Respondent in its Comment, among the ends to which a Motion for Reconsideration is addressed, one is precisely to convince the court that its ruling is erroneous and improper, contrary to law or the evidence, x x x (Emphasis found in the original.)

Corfarm insists that the challenged Order of Respondent Laguesma dated January 4, 1994 rests on solid findings of fact which should be accorded respect and finality. It attacks the petitioners allegation -- that it has 92 workers who worked as cargador at its warehouses -- as gratuitous and not supported by any evidence x x x [because] as late as this time of day in the litigation of this case, who exactly are those 92 workers cannot be known from the records. (Emphasis in original.)

Private respondent further argues that RJL Martinez Fishing Corp. vs. NLRC, cited by the solicitor general, has a factual situation different from the case at bar. Waiting time, unlike that in RJL Martinez Fishing Corp., does not obtain here. Likewise allegedly inapplicable are the rulings in Villavilla vs. Court of Appeals and in Brotherhood Labor Unity Movement vs. Zamora.

Respondent Corfarm denies that it had the power of control, rationalizing that petitioners members were street-hired workers engaged from time to time to do loading and unloading work x x x[;] [t]here [was] no superintendent-in-charge x x x to give orders x x x[;] [and] there [were] no gate passes issued, nor tools, equipment and

paraphernalia issued by Corfarm for loading/unloading x x x It attributes error to the solicitor generals reliance on Article 280 of the Labor Code. Citing Brent School, Inc. vs. Zamora, private respondent asserts that a literal application of such article will result in absurdity, where petitioners members will be regular employees not only of respondents but also of several other rice mills, where they were allegedly also under service. Finally, Corfarm submits that the OSGs position is negated by the fact that petitioners members contracted for loading and unloading services with respondent company when such work was available and when they felt like it x x x.We rule for petitioners. Section 5, Rule 133 of the Rules of Court mandates that in cases filed before administrative or quasi-judicial bodies, like the Department of Labor, a fact may be established by substantial evidence, i.e. that amount of evidence which a reasonable mind might accept as adequate to justify a conclusion.Also fundamental is the rule granting not only respect but even finality to factual findings of the Department of Labor, if supported by substantial evidence. Such findings are binding upon this Court, unless petitioner is able to show that the secretary of labor (or the undersecretary acting in his place) has arbitrarily disregarded or misapprehended evidence before him to such an extent as to compel a contrary conclusion if such evidence were properly appreciated. This is rooted in the principle that this Court is not a trier of facts, and that the determinations made by administrative bodies on matters falling within their respective fields of specialization or expertise are accorded respect. Also well-settled is the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that the findings thereon by the labor authorities shall be accorded not only respect but even finality when supported by substantial evidence. Finally, in certiorari proceedings under Rule 65, this Court does not, as a rule, evaluate the sufficiency of evidence upon which the labor officials based their determinations. The inquiry is essentially limited to whether they acted without or in excess of jurisdiction or with grave abuse of discretion. However, this doctrine is not absolute. Where the labor officers findings are contrary to those of the med-arbiter, the Court -- in the exercise of its equity jurisdiction -- may wade into and reevaluate such findings, which we now embark on in this case.

To determine the existence of an employer-employee relation, this Court has consistently applied the four-fold test which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control -- the last being the most important element.

Our examination of the case records indubitably shows the presence of an employer-employee relationship. Relying on the evidence adduced by the petitioners, Respondent Laguesma himself affirmed the presence of such connection. Thus, in his Order dated September 7, 1993, he astutely held:

Anent the first issue, we find the annexes submitted by the respondent company not enough to prove that herein petitioner is indeed an independent contractor. The existence of an independent contractor relationship is generally established by the following criteria. The contractor is carrying on an independent business; [the] nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision over the workers; payment of the contractors workers; the control and the supervision over the workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and laborers, and the mode, manner and terms of payment. [Brotherhood Labor Unity Movement of the Philippines vs. Zamora, 147 SCRA 49 (198) [sic] ].

None of the above criteria exists in the case at bar. The absence of a written contract which specifies the performance of a specified piece of work, the nature and extent of the work and the term and duration of the relationship between herein petitioner and respondent company belies the latters [sic] allegation that the former is indeed and [sic] independent contractor.

Also, respondent failed to show by clear and convincing proof that herein respondent has the substantial capital or investment to qualify as an independent contractor under the law. The premises, tools, equipments [sic] and paraphernalia are all supplied by respondent company. It is only the manpower or labor force which the alleged contractor supplies, suggesting the existence of a labor only contracting scheme which is prohibited by law. Further, if herein petitioner is indeed an independent contractor, it should have offered its services to other companies and not to work [sic] exclusively for the respondent company. It is therefore, clear that the alleged J.P. Costales, Jr. Cargador Services cannot be considered as an independent contractor as defined by law.In his subsequent order, Respondent Laguesma inexplicably reversed his above ruling and held that there was no employer-employee relationship on the ground that Respondent Corfarm exercised no power of control over the alleged employees.

It may be asked, why the sudden change of mind on the part of Respondent Laguesma? No additional pieces of

evidence were adduced and no existing ones were identified by Laguesma to support such strange reversal. The unblemished fact is that private respondent was the recruiter and employer of petitioners members.

Shoppers Gain Supermart vs. NLRC provides the standard to determine whether a worker is an independent contractor:

The applicable law is not Article 280 of the Labor Code which is cited by petitioners, but Art. 106, which provides:Art. 106. Contractor or subcontractor. -- Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.

x x x x x x x x xx x x x x x x x xThere is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (emphasis supplied)

In accordance with the above provision, petitioner corporation is deemed the direct employer of the private respondents and thus liable for all benefits to which such workers are entitled, like wages, separation benefits and so forth. There is no denying the fact that private respondents work as merchandisers, cashiers, baggers, check-out personnel, sales ladies, warehousemen and so forth were directly related, necessary and vital to the day-to-day operations of the supermarket; their jobs involved normal and regular functions in the ordinary business of the petitioner corporation. Given the nature of their functions and responsibilities, it is improbable that petitioner did not exercise direct control over their work. Moreover, there is no evidence--as in fact, petitioners do not even allege--that aside from supplying the manpower, the labor agencies have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others.

It is undeniable that petitioners members worked as cargadores for private respondent. They loaded, unloaded and piled sacks of palay from the warehouses to the cargo trucks and from the cargo trucks to the buyers. This work is directly related, necessary and vital to the operations of Corfarm. Moreover, Corfarm did not even allege, much less prove, that petitioners members have substantial capital or investment in the form of tools, equipment, machineries, [and] work premises, among others. Furthermore, said respondent did not contradict petitioners allegation that it paid wages directly to these workers without the intervention of any third-party independent contractor. It also wielded the power of dismissal over petitioners; in fact, its exercise of this power was the progenitor of the Second Case. Clearly, the workers are not independent contractors.

Applying Article 280 of the Labor Code, we hold that the CPWU members were regular employees of private respondent. Their tasks were essential in the usual business of private respondent.

As we have ruled in an earlier case, the question of whether an employer-employee relationship exists in a certain situation has bedevilled the courts. Businessmen, with the aid of lawyers, have tried to avoid or sidestep such relationship, because that juridical vinculum engenders obligations connected with workmens compensation, social security, medicare, minimum wage, termination pay and unionism. All too familiarly, Respondent Corfarm sought refuge from these obligations. However, the records of this case clearly support the existence of the juridical vinculum.

RJL Martinez Fishing Corporation cited by the solicitor general, is relevant because petitioners members were also made to wait for loading and unloading of cavans of palay to and from the storage areas and to and from the milling areas. This waiting time does not denigrate the regular employment of petitioners members. As ruled in that case]

x x x Besides, the continuity of employment is not the determining factor, but rather whether the work of the laborer is part of the regular business or occupation of the employer.( fn: Article 281, Labor Code, as amended; Philippine Fishing Boat Officers and Engineer[s] Union vs. Court of Industrial Relations, 112 SCRA 159 (1982). We are thus in accord with the findings of respondent NLRC in this regard.

Although it may be that private respondents alternated their employment on different vessels when they were not

assigned to petitioners boats, that did not affect their employee status. The evidence also establishes that petitioners had a fleet of fishing vessels with about 65 ship captains, and as private respondents contended, when they finished with one vessel they were instructed to wait for the next. As respondent NLRC had found:

We further find that the employer-employee relationship between the parties herein is not co-terminous with each loading and unloading job. As earlier shown, respondents are engaged in the business of fishing. For this purpose, they have a fleet of fishing vessels. Under this situation, respondents activity of catching fish is a continuous process and could hardly be considered as seasonal in nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish from respondents vessels and then loading the same to refrigerated vans, are necessary or desirable in the business of respondents. This circumstance makes the employment of complainants a regular one, in the sense that it does not depend on any specific project or seasonal activity. (fn: NLRC Decision, p. 94, Rollo.)

Alleged Admission of Lack of Employer-Employee RelationshipRespondent Corfarm argues that some of petitioners members including its president, Juanito P. Costales, Jr.[,] admitted that they work for various rice mills in Pangasinan and that there is no employer-employee relations between them and private respondents. It adds that the solicitor general, by arguing that there was an employer-employee relationship, attempts to substitute [his] judgment [with] that of public respondent undersecretary x x x who found such admissions against self-interest on the part of petitioners members x x x.

These arguments are negligible. The alleged admissions cannot be taken against petitioners cause. First, the contents of the admissions are highly suspect. The records reveal that the admissions of Juanito Costales, Jr., Carlito Costales and Juanito Medenilla were in the form of affidavits of adhesion which were identical in content, differentiated only by the typewritten names and the signatures of the workers. Second, only three of the workers executed such affidavits. Clearly, the admissions in such affidavits cannot work against petitioner unions cause.

Such pro forma and identical affidavits do not prove lack of employer-employee relationship against all members of petitioner. Third, the employer-employee relationship is clearly proven by substantial evidence. Corfarm sorely failed to show that petitioners members were independent contractors. We rule that no particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may show the relationship. If only documentary evidence would be required to demonstrate that relationship, no scheming employer would ever be brought before the bar of justice. Fourth, and in any event, the alleged admissions of the three workers that they worked with other rice mills do not work against them. Assuming arguendo that they did work with other rice mills, this was required by the imperative of meeting their basic needs.

The employer-employee relationship having been duly established, the holding of a certification election necessarily follows. It bears stressing that there should be no unnecessary obstacle to the holding of such election, for it is a statutory policy that should not be circumvented. We have held that, in the absence of a legal impediment, the holding of a certification election is the most democratic method of determining the employees choice of their bargaining representative. It is the best means to settle controversies and disputes involving union representation. Indeed, it is the keystone of industrial democracy.

Second Case: Illegal DismissalPetitioner assails the NLRC for setting aside the labor arbiters decision and remanding the case for further proceedings. Petitioner argues that the order of remand will only prolong the agony of the 92 union members and their families for living or existing without jobs and earnings to give them support. Further, petitioner contends:

The Labor Arbiter had rendered a decision (Annex D, Petition) on September 14, 1993 in favor of petitioner based on the available records of the case after giving more than ample opportunities to private respondents herein to submit their position paper and other pleadings alleging their evidences [sic] against the causes of action of petitioner alleged in the complaint for illegal dismissal, unfair labor practice, non-payment of various benefits granted by existing laws during their employment, illegal deductions or diminution of their underpaid daily wages, non-payment of wage increases and other causes of action pleaded by the complainant or herein petitioner.In short, Labor Arbiter Rolando Gambito rendered his decision based on the records of the case including evidence available on record and after observing due process of law.

To support his opposition against the remand of the case, petitioner recites the chronological events of the case, viz::

In the case at bar, private respondents were notified earlier in the latter part of 1992 regarding the pendency of the complaint for illegal dismissal, unfair labor practice, damages, etc., but said respondents did not appear during the initial hearing of the case [before] Labor Arbiter Ricardo Olairez, then the Arbiter handling the case. The case was re-set for hearing at some other dates. On April 22, 1993, Atty. Alfonso C. Bince, Jr. appeared as counsel for respondents at Dagupan City. Atty. Bince committed to the Labor Arbiter that the former will file the position paper for his clients (Corfarm Grains, Inc., et al .) within ten (10) days from April 22, 1993, but still private respondents Position Paper was not filed.

On May 20, 1993, Labor Arbiter Rolando Gambito, who took over the case for illegal dismissal, etc. filed by petitioner, issued an order to private respondents directing the latter (respondents) to submit their Position Paper together with THEIR DOCUMENTARY EXHIBITS, if any, within 10 days from receipt of the order. Still, private respondents counsel failed to submit private respondents Position Paper relative to the petitioners complaint for illegal dismissal, unfair labor practice, etc. which is involved in G.R. No. 114911 pending action by this Honorable Court.

Thus, the Labor Arbiter rendered his decision on the case in favor of petitioner and/or the 92 illegally dismissed workers based on the position paper filed by the latter and available records of the case. (Emphasis in original.)

On the other hand, Respondent Corfarm submits that the labor arbiters decision should be set aside not only for lack of competent and credible evidence but also for lack of procedural due process. Corfarm further contends that in spite of the pendency of its motions to cross-examine petitioners witnesses and to suspend proceedings, the labor arbiter ordered the submission of its position paper and documentary evidence within ten (10) days. Respondent Corfarm insists:

Indeed, although proceedings before a Labor Arbiter are supposed to be non-litigious and the technicalities in the courts of law need not be strictly applied, the proceedings should nevertheless be subject to the requirements of due process as provided in Section 7, Rule 7 of the NLRC Rules of Procedure. (See also Phil. Telegraph and Telephone Corp. vs. NLRC, 183 SCRA 451).

We agree with petitioner. Private respondent was not denied procedural due process, and the labor arbiters decision was based on competent, credible and substantial evidence.

Procedural Due Process ObservedPrivate respondent had been duly informed of the pendency of the illegal dismissal case, but it chose not to participate therein without any known justifiable cause. The labor arbiter sent notices of hearing or arbitration to the parties, requiring them to submit position papers at 1:30 p.m. on November 14, 1992. Respondent Corfarm did not attend the hearing. According to Respondent NLRC, there was no proof that Respondent Corfarm received such notice. In any case, petitioner filed a Motion to Admit Amended Complaint on December 23, 1992. Again, another notice for hearing or arbitration on January 7, 1993 was sent to the parties. This was received by petitioners counsel as evidenced by the registry return receipt duly signed by private respondents counsel, Atty. Alfonso Bince, Jr. It was only on January 28, 1993, however, that Atty. Bince entered his appearance as counsel for Respondent Corfarm. On May 10, 1993, Corfarm was again given a new period of ten (10) days within which to submit its position paper and documentary evidence; otherwise, [the labor arbiter] will be constrained to resolve this case based on available evidence on record. As evidenced by a registry return receipt, a copy of said directive was received by respondents counsel on May 25, 1993. Still and all, Corfarm failed to file its position paper. Clearly, private respondent was given an opportunity to present its evidence, but it failed or refused to avail itself of this opportunity without any legal reason. Due process is not violated where a person is given the opportunity to be heard, but chooses not to give his side of the case.

Labor Arbiters Decision Based on Credible, Competent and Substantial EvidenceContrary to the conclusions of the NLRC and the arguments of private respondent, the findings of the labor arbiter on the question of illegal dismissal were based on credible, competent and substantial evidence.

It is to be borne in mind that proceedings before labor agencies merely require the parties to submit their respective affidavits and position papers. Adversarial trial is addressed to the sound discretion of the labor arbiter. To establish a cause of action, only substantial evidence is necessary, i.e., such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine

otherwise. As ruled in Manalo vs. Roldan-Confesor::

Clear and convincing proof is x x x more than mere preponderance, but not to extent of such certainty as is required beyond reasonable doubt as in criminal cases x x x (fn: Blacks Law Dictionary, 5th Ed., p. 227, citing Fred C. Walker Agency, Inc. v. Lucas, 215 Va. 535, 211 S.E. 2d 88, 92) while substantial evidence x x x consists of more than a mere scintilla of evidence but may be somewhat less than a preponderance x x x x (fn: Ibid., p. 1281, citing Marker v. Finch, D.C. Del., 322 F. Supp. 905, 910) Consequently, in the hierarchy of evidentiary values, We find proof beyond reasonable doubt at the highest level, followed by clear and convincing evidence, preponderance of evidence, and substantial evidence, in that order.

Evidence to determine the validity of petitioners claims, which the labor arbiter relied upon, was available to Respondent NLRC. These pieces of evidence are in the case records, as aptly pointed out by the solicitor general:[Regarding] the quoted second sentence of public respondent NLRCs Resolution that allegations must be proved and established by competent evidence, and that mere allegations would not suffice despite the absence of evidence to the contrary, suffice it to say that there is ample evidence on record to support the Labor Arbiters decision, to wit: 1) Narrative report of DOLE inspector Crisanto Rey Dingle noting some violation of underpayment of minimum wage and underpayment of 13th month pay (page 10, record); 2) affidavit of union officers and individual union members, stating their various claims (page 80-195, Record). Despite such evidence and an opportunity afforded to private respondent to present its evidence and position paper as borne out by the notice of hearing issued by Labor Arbiter Olairez dated November 14, 1992, with advice to the parties to submit their position paper (p. 14 Record) and the Order issued by Labor Arbiter Gambito dated May 20, 1993; requiring private respondents to submit their position paper, together with their documentary evidence (p. 247, record), private respondent failed to submit its position paper and countervailing evidence which should have met squarely the allegations and evidence adduced by the petitioner. Thus, in the absence of private respondents position paper and countervailing evidence, the Labor Arbiter cannot be faulted in deciding the case based on the available evidence on record.

It must be stressed that labor laws mandate the speedy administration of justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process. In this light, the NLRC, like the labor arbiter, is authorized to decide cases based on the position papers and other documents submitted, without resorting to the technical rules of evidence. Verily, Respondent NLRC noted several documentary evidence sufficient to arrive at a just decision. Indeed, the evidence on record clearly supports the conclusion of the labor arbiter that the petitioners were employees of respondent, and that they were illegally dismissed.

The NLRC points to conflicts and inconsistencies in the evidence on record. We are not convinced. These alleged inconsistencies are too flimsy and too tenuous to preclude a just decision. The finding that Juanito Costales, Jr. was an employee of respondent was allegedly inconsistent with his admission that he was the owner of Carcado Contracting Services. As earlier observed, the inconsistency is irrelevant. Juan Costales, Jr. was an employee of Corfarm. Owning this alleged outfit is not inconsistent with such employment. The NLRC also questioned the amount of the employees compensation. In one instance, the workers stated that they were receiving P45.00 per days work of eight hours. In another, they claimed that they were paid P0.12 per sack or cavan. These allegedly differ from their allegation that Corfarm used to be obliged to pay P57.00 per days earning. The alleged inconsistencies are more apparent than real. Records reveal that the P57 was the promised compensation; however, there was an unauthorized deduction of P12; thus, the amount of P45 per day. The claim of P0.12 per sack or cavan is the basic computation of how workers or haulers earn their wage for the day. In any event, the alleged inconsistencies do not affect or diminish the established fact that petitioners members were regular employees who were illegally dismissed.

Why Respondent NLRC refused to rule directly on the appeal escapes us. The remand of a case or an issue to the labor arbiter for further proceedings is unnecessary, considering that the NLRC was in a position to resolve the dispute based on the records before it and particularly where the ends of justice would be served thereby. Remanding the case would needlessly delay the resolution of the case which has been pending since 1992. As already observed, the evidence on record clearly supports the findings of the labor arbiter.

Pursuant to the doctrine that this Court has a duty to settle, whenever possible, the entire controversy in a single proceeding, leaving no root or branch to bear the seeds of future litigation, we now resolve all issues.

It is axiomatic that in illegal dismissal cases, the employer always has the burden of proof and his failure to

discharge this duty results in a finding that the dismissal was unjustified. Having defaulted from filing its position paper, Respondent Corfarm is deemed to have waived its right to present evidence and counter the allegations of petitioners members.

In the same light, we sustain the labor arbiters holding in respect of unfair labor practice. As ruled by Labor Arbiter Rolando D. Gambito:

The last issue: Instead of sitting down with the individual complainants or the union officers to discuss their demands, respondents resorted to mass lay-off of all the members of the union and replaced them with outsiders. This is clearly a case of union busting which Art. 248 of the Labor Code prohibits. Art. 248 provides that It shall be unlawful for an employer to commit any of the following unfair labor practice (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; (b) x x x (c) To contract out service or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization.

In view of recent jurisprudence, we are correcting some items in the labor arbiters decision. The thirteenth month pay awarded should be computed for each year of service from the time each employee was hired up to the date of his actual reinstatement. The same computation applies to the award of the service incentive leave and underpaid wages. Each employee is to be paid the remaining underpaid wages from the date of his or her hiring in accordance with the then prevailing wage legislations. Likewise, a refund of P12 shall be computed for each day of service of each employee, to be reckoned from the date such employee was hired. The damages awarded should be sustained because the employer acted in bad faith. Back wages are to be computed from the date of dismissal up to the date of actual reinstatement without any deductions or conditions. This is in consonance with Fernandez, et al. vs. National Labor Relations Commission:

x x x Accordingly, the award to petitioners of backwages for three years should be modified in accordance with Article 279 of the Labor Code, as amended by R.A. 6715, by giving them full backwages without conditions and limitations, the dismissals having occurred after the effectivity of the amendatory law on March 21, 1989. Thus, the Court held in Bustamante:

The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under the Mercury Drug rule or the deduction of earnings elsewhere rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to full backwages as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal.

WHEREFORE, both petitions are GRANTED. In G.R. No. 113542, Respondent Laguesmas Orders dated January 4, 1994 and January 27, 1994 are REVERSED and SET ASIDE; whereas his Order dated September 7, 1993 is REINSTATED. In G.R. No. 114911, Respondent NLRCs Resolutions promulgated on February 16, 1994 and March 28, 1994 are likewise REVERSED AND SET ASIDE. The Labor Arbiters decision dated September 14, 1993 is reinstated with MODIFICATIONS as set out in this Decision. Respondent NLRC is ORDERED to COMPUTE the monetary benefits awarded in accordance with this Decision and to submit its compliance thereon within thirty days from notice of this Decision.

SO ORDERED.

G.R. No. L-72654-61 January 22, 1990ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN, NICANOR FRANCISCO, PHILIP CERVANTES and ELEUTERIO BARBIN, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARSENIO DE GUZMAN, respondents.

J.C. Espinas & Associates for petitioners.Tomas A. Reyes for private respondent. FERNAN, C.J.:The issue to be resolved in the instant case is whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of its owner-operator, De Guzman Fishing Enterprises, and if so, whether or not they were illegally dismissed from their employment.

Records show that the petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing business with port and office at Camaligan, Camarines Sur. Petitioners rendered service aboard said fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen.

For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they received thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the fishing trip, otherwise, they received ten percent (10%) of the total proceeds of the sale. The patron/pilot, chief engineer and master fisherman received a minimum income of P350.00 per week while the assistant engineer, second fisherman, and fisherman-winchman received a minimum income of P260.00 per week. 1

On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the charge claiming that the same was a countermove to their having formed a labor union and becoming members of Defender of Industrial Agricultural Labor Organizations and General Workers Union (DIALOGWU) on September 3, 1983.

During the investigation, no witnesses were presented to prove the charge against petitioners, and no criminal charges were formally filed against them. Notwithstanding, private respondent refused to allow petitioners to return to the fishing vessel to resume their work on the same day, September 11, 1983.

On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and non-payment of 13th month pay, emergency cost of living allowance and service incentive pay, with the then Ministry (now Department) of Labor and Employment, Regional Arbitration Branch No. V, Legaspi City, Albay, docketed as Cases Nos. 1449-83 to 1456-83. 2 They uniformly contended that they were arbitrarily dismissed without being given ample time to look for a new job.

On October 24, 1983, private respondent, thru its operations manager, Conrado S. de Guzman, submitted its position paper denying the employer-employee relationship between private respondent and petitioners on the theory that private respondent and petitioners were engaged in a joint venture. 3

After the parties failed to reach an amicable settlement, the Labor Arbiter scheduled the case for joint hearing furnishing the parties with notice and summons. On December 27, 1983, after two (2) previously scheduled joint hearings were postponed due to the absence of private respondent, one of the petitioners herein, Alipio Ruga, the pilot/captain of the 7/B Sandyman II, testified, among others, on the manner the fishing operations were conducted, mode of payment of compensation for services rendered by the fishermen-crew members, and the circumstances leading to their dismissal. 4

On March 31, 1984, after the case was submitted for resolution, Labor Arbiter Asisclo S. Coralde rendered a joint decision 5 dismissing all the complaints of petitioners on a finding that a "joint fishing venture" and not one of employer-employee relationship existed between private respondent and petitioners.

From the adverse decision against them, petitioners appealed to the National Labor Relations Commission.

On May 30, 1985, the National Labor Relations Commission promulgated its resolution 6 affirming the decision of

the labor arbiter that a "joint fishing venture" relationship existed between private respondent and petitioners.

Hence, the instant petition.Petitioners assail the ruling of the public respondent NLRC that what exists between private respondent and petitioners is a joint venture arrangement and not an employer-employee relationship. To stress that there is an employer-employee relationship between them and private respondent, petitioners invite attention to the following: that they were directly hired by private respondent through its general manager, Arsenio de Guzman, and its operations manager, Conrado de Guzman; that, except for Laurente Bautu, they had been employed by private respondent from 8 to 15 years in various capacities; that private respondent, through its operations manager, supervised and controlled the conduct of their fishing operations as to the fixing of the schedule of the fishing trips, the direction of the fishing vessel, the volume or number of tubes of the fish-catch the time to return to the fishing port, which were communicated to the patron/pilot by radio (single side band); that they were not allowed to join other outfits even the other vessels owned by private respondent without the permission of the operations manager; that they were compensated on percentage commission basis of the gross sales of the fish-catch which were delivered to them in cash by private respondent's cashier, Mrs. Pilar de Guzman; and that they have to follow company policies, rules and regulations imposed on them by private respondent.

Disputing the finding of public respondent that a "joint fishing venture" exists between private respondent and petitioners, petitioners claim that public respondent exceeded its jurisdiction and/or abused its discretion when it added facts not contained in the records when it stated that the pilot-crew members do not receive compensation from the boat-owners except their share in the catch produced by their own efforts; that public respondent ignored the evidence of petitioners that private respondent controlled the fishing operations; that public respondent did not take into account established jurisprudence that the relationship between the fishing boat operators and their crew is one of direct employer and employee.

Aside from seeking the dismissal of the petition on the ground that the decision of the labor arbiter is now final and executory for failure of petitioners to file their appeal with the NLRC within 10 calendar days from receipt of said decision pursuant to the doctrine laid down in Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, 115 SCRA 347 (1982), the Solicitor General claims that the ruling of public respondent that a "joint fishing venture" exists between private respondent and petitioners rests on the resolution of the Social Security System (SSS) in a 1968 case, Case No. 708 (De Guzman Fishing Enterprises vs. SSS), exempting De Guzman Fishing Enterprises, private respondent herein, from compulsory coverage of the SSS on the ground that there is no employer-employee relations between the boat-owner and the fishermen-crew members following the doctrine laid down in Pajarillo vs. SSS, 17 SCRA 1014 (1966). In applying to the case at bar the doctrine in Pajarillo vs. SSS, supra, that there is no employer-employee relationship between the boat-owner and the pilot and crew members when the boat-owner supplies the boat and equipment while the pilot and crew members contribute the corresponding labor and the parties get specific shares in the catch for their respective contribution to the venture, the Solicitor General pointed out that the boat-owners in the Pajarillo case, as in the case at bar, did not control the conduct of the fishing operations and the pilot and crew members shared in the catch.

We rule in favor of petitioners.Fundamental considerations of substantial justice persuade Us to decide the instant case on the merits rather than to dismiss it on a mere technicality. In so doing, we exercise the prerogative accorded to this Court enunciated in Firestone Filipinas Employees Association, et al. vs. Firestone Tire and Rubber Co. of the Philippines, Inc., 61 SCRA 340 (1974), thus "the well-settled doctrine is that in labor cases before this Tribunal, no undue sympathy is to be accorded to any claim of a procedural misstep, the idea being that its power be exercised according to justice and equity and substantial merits of the controversy."

Circumstances peculiar to some extent to fishermen-crew members of a fishing vessel regularly engaged in trawl fishing, as in the case of petitioners herein, who spend one (1) whole week or more 7 in the open sea performing their job to earn a living to support their families, convince Us to adopt a more liberal attitude in applying to petitioners the 10-calendar day rule in the filing of appeals with the NLRC from the decision of the labor arbiter.

Records reveal that petitioners were informed of the labor arbiter's decision of March 31, 1984 only on July 3,1984 by their non-lawyer representative during the arbitration proceedings, Jose Dialogo who received the decision eight (8) days earlier, or on June 25, 1984. As adverted to earlier, the circumstances peculiar to petitioners' occupation as fishermen-crew members, who during the pendency of the case understandably have to earn a living by seeking employment elsewhere, impress upon Us that in the ordinary course of events, the information as to the adverse

decision against them would not reach them within such time frame as would allow them to faithfully abide by the 10-calendar day appeal period. This peculiar circumstance and the fact that their representative is a non-lawyer provide equitable justification to conclude that there is substantial compliance with the ten-calendar day rule of filing of appeals with the NLRC when petitioners filed on July 10, 1984, or seven (7) days after receipt of the decision, their appeal with the NLRC through registered mail.

We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that are generally considered are the following (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. 8 The employment relation arises from contract of hire, express or implied. 9 In the absence of hiring, no actual employer-employee relation could exist.

From the four (4) elements mentioned, We have generally relied on the so-called right-of-control test 10 where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. The test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. 11

The case of Pajarillo vs. SSS, supra, invoked by the public respondent as authority for the ruling that a "joint fishing venture" existed between private respondent and petitioners is not applicable in the instant case. There is neither light of control nor actual exercise of such right on the part of the boat-owners in the Pajarillo case, where the Court found that the pilots therein are not under the order of the boat-owners as regards their employment; that they go out to sea not upon directions of the boat-owners, but upon their own volition as to when, how long and where to go fishing; that the boat-owners do not in any way control the crew-members with whom the former have no relationship whatsoever; that they simply join every trip for which the pilots allow them, without any reference to the owners of the vessel; and that they only share in their own catch produced by their own efforts.

The aforementioned circumstances obtaining in Pajarillo case do not exist in the instant case. The conduct of the fishing operations was undisputably shown by the testimony of Alipio Ruga, the patron/pilot of 7/B Sandyman II, to be under the control and supervision of private respondent's operations manager. Matters dealing on the fixing of the schedule of the fishing trip and the time to return to the fishing port were shown to be the prerogative of private respondent. 12 While performing the fishing operations, petitioners received instructions via a single-side band radio from private respondent's operations manager who called the patron/pilot in the morning. They are told to report their activities, their position, and the number of tubes of fish-catch in one day. 13 Clearly thus, the conduct of the fishing operations was monitored by private respondent thru the patron/pilot of 7/B Sandyman II who is responsible for disseminating the instructions to the crew members.

The conclusion of public respondent that there had been no change in the situation of the parties since 1968 when De Guzman Fishing Enterprises, private respondent herein, obtained a favorable judgment in Case No. 708 exempting it from compulsory coverage of the SSS law is not supported by evidence on record. It was erroneous for public respondent to apply the factual situation of the parties in the 1968 case to the instant case in the light of the changes in the conditions of employment agreed upon by the private respondent and petitioners as discussed earlier.

Records show that in the instant case, as distinguished from the Pajarillo case where the crew members are under no obligation to remain in the outfit for any definite period as one can be the crew member of an outfit for one day and be the member of the crew of another vessel the next day, the herein petitioners, on the other hand, were directly hired by private respondent, through its general manager, Arsenio de Guzman, and its operations manager, Conrado de Guzman and have been under the employ of private respondent for a period of 8-15 years in various capacities, except for Laurente Bautu who was hired on August 3, 1983 as assistant engineer. Petitioner Alipio Ruga was hired on September 29, 1974 as patron/captain of the fishing vessel; Eladio Calderon started as a mechanic on April 16, 1968 until he was promoted as chief engineer of the fishing vessel; Jose Parma was employed on September 29, 1974 as assistant engineer; Jaime Barbin started as a pilot of the motor boat until he was transferred as a master fisherman to the fishing vessel 7/B Sandyman II; Philip Cervantes was hired as winchman on August 1, 1972 while Eleuterio Barbin was hired as winchman on April 15, 1976.

While tenure or length of employment is not considered as the test of employment, nevertheless the hiring of petitioners to perform work which is necessary or desirable in the usual business or trade of private respondent for a period of 8-15 years since 1968 qualify them as regular employees within the meaning of Article 281 of the Labor

Code as they were indeed engaged to perform activities usually necessary or desirable in the usual fishing business or occupation of private respondent. 14

Aside from performing activities usually necessary and desirable in the business of private respondent, it must be noted that petitioners received compensation on a percentage commission based on the gross sale of the fish-catch i.e. 13% of the proceeds of the sale if the total proceeds exceeded the cost of the crude oil consumed during the fishing trip, otherwise only 10% of the proceeds of the sale. Such compensation falls within the scope and meaning of the term "wage" as defined under Article 97(f) of the Labor Code, thus:

(f) "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered, and included the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. . . .

The claim of private respondent, which was given credence by public respondent, that petitioners get paid in the form of share in the fish-catch which the patron/pilot as head of the team distributes to his crew members in accordance with their own understanding 15 is not supported by recorded evidence. Except that such claim appears as an allegation in private respondent's position paper, there is nothing in the records showing such a sharing scheme as preferred by private respondent.

Furthermore, the fact that on mere suspicion based on the reports that petitioners allegedly sold their fish-catch at midsea without the knowledge and consent of private respondent, petitioners were unjustifiably not allowed to board the fishing vessel on September 11, 1983 to resume their activities without giving them the opportunity to air their side on the accusation against them unmistakably reveals the disciplinary power exercised by private respondent over them and the corresponding sanction imposed in case of violation of any of its rules and regulations. The virtual dismissal of petitioners from their employment was characterized by undue haste when less extreme measures consistent with the requirements of due process should have been first exhausted. In that sense, the dismissal of petitioners was tainted with illegality.

Even on the assumption that petitioners indeed sold the fish-catch at midsea the act of private respondent virtually resulting in their dismissal evidently contradicts private respondent's theory of "joint fishing venture" between the parties herein. A joint venture, including partnership, presupposes generally a parity of standing between the joint co-venturers or partners, in which each party has an equal proprietary interest in the capital or property contributed 16 and where each party exercises equal lights in the conduct of the business. 17 It would be inconsistent with the principle of parity of standing between the joint co-venturers as regards the conduct of business, if private respondent would outrightly exclude petitioners from the conduct of the business without first resorting to other measures consistent with the nature of a joint venture undertaking, Instead of arbitrary unilateral action, private respondent should have discussed with an open mind the advantages and disadvantages of petitioners' action with its joint co-venturers if indeed there is a "joint fishing venture" between the parties. But this was not done in the instant case. Petitioners were arbitrarily dismissed notwithstanding that no criminal complaints were filed against them. The lame excuse of private respondent that the non-filing of the criminal complaints against petitioners was for humanitarian reasons will not help its cause either.

We have examined the jurisprudence on the matter and find the same to be supportive of petitioners' stand. In Negre vs. WCC 135 SCRA 653 (1985), we held that fishermen crew members who were recruited by one master fisherman locally known as "maestro" in charge of recruiting others to complete the crew members are considered employees, not industrial partners, of the boat-owners. In an earlier case of Abong vs. WCC, 54 SCRA 379 (1973) where petitioner therein, Dr. Agustin Abong, owner of the fishing boat, claimed that he was not the employer of the fishermen crew members because of an alleged partnership agreement between him, as financier, and Simplicio Panganiban, as his team leader in charge of recruiting said fishermen to work for him, we affirmed the finding of the WCC that there existed an employer-employee relationship between the boat-owner and the fishermen crew members not only because they worked for and in the interest of the business of the boat-owner but also because they were subject to the control, supervision and dismissal of the boat-owner, thru its agent, Simplicio Panganiban, the alleged "partner" of Dr. Abong; that while these fishermen crew members were paid in kind, or by "pakiao basis" still that fact did not alter the character of their relationship with Dr. Abong as employees of the latter.

In Philippine Fishing Boat Officers and Engineers Union vs. Court of Industrial Relations, 112 SCRA 159 (1982), we held that the employer-employee relationship between the crew members and the owners of the fishing vessels engaged in deep sea fishing is merely suspended during the time the vessels are drydocked or undergoing repairs or being loaded with the necessary provisions for the next fishing trip. The said ruling is premised on the principle that all these activities i.e., drydock, repairs, loading of necessary provisions, form part of the regular operation of the company fishing business.

WHEREFORE, in view of the foregoing, the petition is GRANTED. The questioned resolution of the National Labor Relations Commission dated May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered to reinstate petitioners to their former positions or any equivalent positions with 3-year backwages and other monetary benefits under the law. No pronouncement as to costs.

SO ORDERED.

G.R. Nos. 82823-24 July 31, 1989AGRO COMMERCIAL SECURITY SERVICES AGENCY, INC., petitioner, vs.THE NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER BIENVENIDO V. HERMOGENES and MANUEL JIMENEZ. ET AL., respondents.

San Juan, Gonzalez, San Agustin & Sinense for petitioner.

Mauricio Law Office for private respondents. GANCAYCO, J.:Is there an employer-employee relationship between a security agency and its security guards? Is the so-called "floating status" of a security guard lawful and could such prolonged status amount to illegal dismissal? These are the issues raised in this petition for certiorari and prohibition with preliminary injunction questioning the resolution dated January 20, 1988 of public respondent National Labor Relations Commission (NLRC) affirming the decision of public respondent labor arbiter Bienvenido V. Hermogenes dated March 19, 1987 finding private respondents to have been illegally dismissed and ordering petitioner to pay them separation pay of one-half (1/2) month salary for every year of service, 13th month pay for the year 1986 and the money value of their respective service incentive leave amounting to fifteen (15) days salary each with allowances. The petition also assails the resolution of the respondent NLRC dated April 18, 1988 denying the motion for reconsideration filed by petitioner.

Private respondents, numbering forty-six (46) in all, worked as security guards and/or janitors under individual contracts with petitioner. They were assigned to firms and offices where petitioner had contracts providing security and janitorial services. Their service period and last rates of salary are stated in the decision of the labor arbiter. 1

Their individual contracts of employment provide, among others, as follows:3.d. That the security guard, agrees to temporary suspension of his employment completely to include such changes in his employment status with the Agency, in case of termination of contract between the Agency and its Client, or reduction in force of same;

In the early part of 1986, petitioner's service contracts with various corporations and government agencies to which private respondents were previously assigned had been terminated generally due to the sequestration of the said offices by the Presidential Commission on Good Government. Accordingly, many of the private respondents were placed on "floating status" on September 16, 1986. A number of them had been put on that status even earlier. "Floating status" means an indefinite period of time when private respondents do not receive any salary or financial benefit provided by law. A number of them later obtained employment in other security agencies.

On account of the uncertainty of their employment with the petitioner, on July 25, 1986, private respondents filed a complaint for illegal dismissal in the Arbitration Branch of the Department of Labor and Employment against petitioner. They sought the payment of their respective separation pay, 13th month pay for 1986 and service incentive leave pay. After due' proceedings where the parties were required to submit their position papers and stipulation of facts, the respondent labor arbiter ruled in favor of the private respondents whose decision as above-related was affirmed by the NLRC.

Hence, the herein petition alleging that the petitioner was denied due process of law by the NLRC and it committed a grave abuse of discretion in considering private respondents as employees of petitioner, in ruling that the "floating status" of private respondents amounted to an illegal dismissal, and in causing the execution of the judgment pending a complete and full adjudication of the issues.

Forthwith, the allegation of denial of due process is without basis. Petitioner was afforded the opportunity to file its position paper. It even entered into a stipulation of facts with private respondent.

As to the issue of employer-employee relationship, an examination of the records shows that private respondents are regular employees of petitioner. Their individual length of service ranges from four (4) to more than ten (10) years. In accordance with the stipulation of facts, it appears that private respondents worked with petitioner as security guards/janitors Their employment contracts provide, among others:

1. That the AGENCY hereby undertakes to look for, procure, and/or furnish the services of the SECURITY GUARD, with any individual, business establishment, residential houses or any entity whatsoever, and the SECURITY GUARD agrees to supply his services, assignments, position and undertaking, subject to the following conditions:a) That the SECURITY GUARD upon acceptance of his position or undertaking for employment, shall observe, follow and obey all rules, regulations, code of conduct required by the AGENCY and any of its contracted client, in accordance with the provisions of RA 5487 and its implement Rules and Regulations;b) That the AGENCY shall pay the SECURITY GUARD a monthly salary of P _______/day payable on the 5th and 20th of the month;c) That the AGENCY shall have the exclusive right to withdraw or re-assign the SECURITY GUARD;d) That the SECURITY GUARD, agrees to temporary suspension of his employment completely to include such

changes; in bis employment status with the AGENCY, in case of termination of contract between the AGENCY and its client, or reduction in force of same;e) That the AGENCY may terminate or dismiss the SECURITY GUARD, if, after proper and due investigation it is shown that the SECURITY GUARD has violated any rule, regulation, code of conduct and discipline, imposed by the AGENCY;f) That the terms and conditions pertinent to service and discipline embodied in the Agreement executed between the AGENCY and any person, establishment, or entity with whom the SECURITY GUARD is going to serve or is assigned shall be considered part of this Agreement and therefore binding on SECURITY GUARD. 2

It was petitioner who determined how much private respondents received as their monthly salary, overtime/night differential pay, mid-year and Christmas bonus and 13th month pay, uniforms and meal allowances and other benefits mandated by law. Private respondents were reported by the petitioner as its employees for purposes of social security coverage. Petitioner remitted their withholding taxes to the Bureau of Internal Revenue and made monthly contributions to the Pag-ibig fund for their benefit. It was petitioner who determined and decided on the assignments, promotions and salary increases of private respondents, their working hours, the firearms to be issued to them and janitorial devices and tools to be used. Likewise, it was petitioner who imposed the appropriate disciplinary measures on private respondents by way of reprimand, suspension and dismissal.

In determining the existence of an employee-employer relationship, the following elements are generally considered:1) the selection and engagement of the employees;2) payment of wages;3) the power of dismissal and4) the power to control the employees' conduct . 3

It is clear, therefore, that private respondents are petitioner's regular employees who enjoy security of tenure and who cannot be dismissed except for cause . 4

As to the alleged illegal dismissal of private respondents, the records show that they filed their complaint against petitioner on July 25, 1986. At the time they filed their complaint, most of them were still on the job or on assignments and it was only in September 1986 when most of them were placed on "floating status."

Obviously, the filing of the complaint was premature. Apparently, this issue was not raised at all and so it is deemed waived. Thus, when the labor arbiter rendered his decision, he considered those who have been out of work or "floating status" for a period exceeding six (6) months to have been terminated from the service without just cause thus entitling them to the corresponding benefits for such separation. We agree.

Under Article 286 of the Labor Code it is provided as follows:ART. 286. When employment not deemed terminated. — The bonafide suspension of the operation of a business or undertaking for a period not exceeding six months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one month from the resumption of operations of his employer or from his relief from the military or civic duty.

From the foregoing it is clear that when the bonafide suspension of the operation of a business or undertaking exceeds six (6) months then the employment of the employee shall be deemed terminated. By the same token and applying the said rule by analogy to security guards, if they remained without work or assignment that is in "floating status" for a period exceeding six (6) months, then they are in effect constructively dismissed.

The labor arbiter disagreed with the representations of petitioner that the private respondents who accepted assignments in other security agencies without previously resigning should be considered to have been dismissed with just cause. In the stipulation of facts, the parties admitted that the disciplinary rules promulgated by petitioner for its employees provide that acceptance by an employee of other employment without first resigning from the agency is a cause for dismissal.

In this case, it appears that twenty-seven (27) of the private respondents violated this rule by accepting employment in other security agencies without previously resigning from employment with petitioner. No doubt, this is a just cause for termination of their services and as such they are not entitled to any separation pay. 5

As regards the other seventeen (17) private respondents, they admittedly remained in "floating status" for more than six (6) months. Such a 'floating status" is not unusual for security guards employed in security agencies as their assignments primarily depend on the contracts entered into by the agency with third parties. Such a stipulated status is, therefore, lawful.

The "floating status" of such an employee should last only for a reasonable time. In this case, respondent labor arbiter correctly held that when the "floating status" of said employees lasts for more than six (6) months, they may be considered to have been illegally dismissed from the service. Thus, they are entitled to the corresponding benefits for their separation.

WHEREFORE, the petition is GRANTED insofar as the twenty- seven (27) private respondents are concerned who have accepted employment elsewhere. The questioned resolutions of the NLRC dated January 29, 1988 and April 18, 1988 are hereby modified as to said twenty-seven (27) private respondents in that their complaint is hereby dismissed for lack of merit. The questioned resolutions are hereby affirmed in all other respects as to the other private respondents. No pronouncement as to costs.

SO ORDERED.

G.R. No. 120969 January 22, 1998ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FIMS, respondents. 

DAVIDE, JR., J.:By way of this special civil action for certiorari under Rule 65 of the Rules of Court, petitioners seek to annul the 10 February 1995 Decision 1 of the National Labor Relations Commission (hereafter NLRC), and its 6 April 1995 Resolution 2 denying the motion to reconsider the former in NLRC-NCR-CA No. 006195-94. The decision reversed that of the Labor Arbiter in NLRC-NCR-Case No. 00-07-03994-92.

The parties present conflicting sets of facts.Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18 July 1989 as part of the filming crew with a salary of P375.00 per week. About four months later, he was designated Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00 in May 1990. In June 1991, he was promoted to the rank of Electrician with a weekly salary of P475.00, which was increased to P539.00 in September 1991.

Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 as a member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 in May 1991, then to P475.00 on 21 December 1991. 3

Petitioners' tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films' warehouse, assisting in the "fixing" of the lighting system, and performing other tasks that the cameraman and/or director may assign. 4

Sometime in May 1992, petitioners sought the assistance of their supervisors, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. He was again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services on 20 July 1992. 5 Petitioners thus sued for illegal dismissal 6 before the Labor Arbiter.

On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name of Viva Productions, Inc., and that it is primarily engaged in the distribution and exhibition of movies — but not in the business of making movies; in the same vein, private respondent Vic del Rosario is merely an executive producer, i.e., the financier who invests a certain sum of money for the production of movies distributed and exhibited by VIVA. 7

Private respondents assert that they contract persons called "producers" — also referred to as "associate producers" 8 — to "produce" or make movies for private respondents; and contend that petitioners are project employees of the association producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship between petitioners and private respondents.

Private respondents further contend that it was the associate producer of the film "Mahirap Maging Pogi," who hired petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was only then that Maraguinot was released upon payment of his last salary, as his services were no longer needed. Anent petitioner Enero, he was hired for the movie entitled "Sigaw ng Puso," later re-tired "Narito and Puso." He went on vacation on 8 June 1992, and by the time he reported for work on 20 July 1992, shooting for the movie had already been completed. 9

After considering both versions of the facts, the Labor Arbiter found as follows:On the first issue, this Office rules that complainants are the employees of the respondents. The producer cannot be considered as an independent contractor but should be considered only as a labor-only contractor and as such, acts as a mere agent of the real employer, the herein respondent. Respondents even failed to name and specify who are the producers. Also, it is an admitted fact that the complainants received their salaries from the respondents. The case cited by the respondents, Rosario Brothers, Inc. vs. Ople, 131 SCRA 72 does not apply in this case.

It is very clear also that complainants are doing activities which are necessary and essential to the business of the respondents, that of movie-making. Complainant Maraguinot worked as an electrician while complainant Enero worked as a crew [member]. 10

Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:WHEREFORE, judgment is hereby rendered declaring that complainants were illegally dismissed.

Respondents are hereby ordered to reinstate complainant to their former positions without loss [of] seniority rights and pay their backwages starting July 21, 1992 to December 31, 1993 temporarily computed in the amount of P38,000.00 for complainant Paulino Enero and P46,000.00 for complainant Alejandro Maraguinot, Jr. and thereafter until actually reinstated.

Respondents are ordered to pay also attorney's fees equivalent to ten (10%) and/or P8,400.00 on top of the award. 11

Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its decision 12 of 10 February 1995, the NLRC found the following circumstances of petitioners' work "clearly established:"

1. Complainants [petitioners herein] were hired for specific movie projects and their employment was co-terminus with each movie project the completion/termination of which are pre-determined, such fact being made known to complainants at the time of their engagement.xxx xxx xxx2 Each shooting unit works on one movie project at a time. And the work of the shooting units, which work independently from each other, are not continuous in nature but depends on the availability of movie projects.3. As a consequence of the non-continuous work of the shooting units, the total working hours logged by complainants in a month show extreme variations. . . For instance, complainant Maraguinot worked for only 1.45 hours in June 1991 but logged a total of 183.25 hours in January 1992. Complainant Enero logged a total of only 31.57 hours in September 1991 but worked for 183.35 hours the next month, October 1991.4. Further shown by respondents is the irregular work schedule of complainants on a daily basis. Complainant Maraguinot was supposed to report on 05 August 1991 but reported only on 30 August 1991, or a gap of 25 days. Complainant Enero worked on 10 September 1991 and his next scheduled working day was 28 September 1991, a gap of 18 days.5. The extremely irregular working days and hours of complainants' work explain the lump sum payment for complainants' services for each movie project. Hence, complainants were paid a standard weekly salary regardless of the number of working days and hours they logged in. Otherwise, if the principle of "no work no pay" was strictly applied, complainants' earnings for certain weeks would be very negligible.6. Respondents also alleged that complainants were not prohibited from working with such movie companies like Regal, Seiko and FPJ Productions whenever they are not working for the independent movie producers engaged by respondents . . . This allegation was never rebutted by complainants and should be deemed admitted.

The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken together, indicated that complainants (herein petitioners) were "project employees."

After their motion for reconsideration was denied by the NLRC in its Resolution 13 of 6 April 1995, petitioners filed the instant petition, claiming that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in: (1) finding that petitioners were project employees; (2) ruling that petitioners were not illegally dismissed; and (3) reversing the decision of the Labor Arbiter.

To support their claim that they were regular (and not project) employees of private respondents, petitioners cited their performance of activities that were necessary or desirable in the usual trade or business of private respondents and added that their work was continuous, i.e., after one project was completed they were assigned to another project. Petitioners thus considered themselves part of a work pool from which private respondents drew workers for assignment to different projects. Petitioners lamented that there was no basis for the NLRC's conclusion that they were project employees, while the associate producers were independent contractors; and thus reasoned that as regular employees, their dismissal was illegal since the same was premised on a "false cause," namely, the completion of a project, which was not among the causes for dismissal allowed by the Labor Code.

Private respondents reiterate their version of the facts and stress that their evidence supports the view that petitioners are project employees; point to petitioners' irregular work load and work schedule; emphasize the NLRC's finding that petitioners never controverted the allegation that they were not prohibited from working with other movie companies; and ask that the facts be viewed in the context of the peculiar characteristics of the movie

industry.

The Office of the Solicitor General (OSG) is convinced that this petition is improper since petitioners raise questions of fact, particularly, the NLRC's finding that petitioners were project employees, a finding supported by substantial evidence; and submits that petitioners' reliance on Article 280 of the Labor Code to support their contention that they should be deemed regular employees is misplaced, as said section "merely distinguishes between two types of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits."

The OSG likewise rejects petitioners' contention that since they were hired not for one project, but for a series of projects, they should be deemed regular employees. Citing Mamansag v. NLRC, 14 the OSG asserts that what matters is that there was a time-frame for each movie project made known to petitioners at the time of their hiring. In closing, the OSG disagrees with petitioners' claim that the NLRC's classification of the movie producers as independent contractors had no basis in fact and in law, since, on the contrary, the NLRC "took pains in explaining its basis" for its decision.

As regards the propriety of this action, which the Office of the Solicitor General takes issue with, we rule that a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the NLRC acted in total disregard of evidence material to or decisive of the controversy. 15 In the instant case, petitioners allege that the NLRC's conclusions have no basis in fact and in law, hence the petition may not be dismissed on procedural or jurisdictional grounds.

The judicious resolution of this case hinges upon, first, the determination of whether an employer-employee relationship existed between petitioners and private respondents or any one of private respondents. If there was none, then this petition has no merit; conversely, if the relationship existed, then petitioners could have been unjustly dismissed.

A related question is whether private respondents are engaged in the business of making motion pictures. Del Rosario is necessarily engaged in such business as he finances the production of movies. VIVA, on the other hand, alleges that it does not "make" movies, but merely distributes and exhibits motion pictures. There being no further proof to this effect, we cannot rely on this self-serving denial. At any rate, and as will be discussed below, private respondents' evidence even supports the view that VIVA is engaged in the business of making movies.

We now turn to the critical issues. Private respondents insist that petitioners are project employees of associate producers who, in turn, act as independent contractors. It is settled that the contracting out of labor is allowed only in case of job contracting. Section 8, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code describes permissible job contracting in this wise:

Sec. 8. Job contracting. — There is job contracting permissible under the Code if the following conditions are met:(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business.

Assuming that the associate producers are job contractors, they must then be engaged in the business of making motion pictures. As such, and to be a job contractor under the preceding description, associate producers must have tools, equipment, machinery, work premises, and other materials necessary to make motion pictures. However, the associate producers here have none of these. Private respondents' evidence reveals that the movie-making equipment are supplied to the producers and owned by VIVA. These include generators, 16 cables and wooden platforms, 17 cameras and "shooting equipment;" 18 in fact, VIVA likewise owns the trucks used to transport the equipment. 19 It is thus clear that the associate producer merely leases the equipment from VIVA. 20 Indeed, private respondents' Formal Offer of Documentary Evidence stated one of the purposes of Exhibit "148" as:To prove further that the independent Producers rented Shooting Unit No. 2 from Viva to finish their films. 21

While the purpose of Exhibits "149," "149-A" and "149-B" was:[T]o prove that the movies of Viva Films were contracted out to the different independent Producers who rented Shooting Unit No. 3 with a fixed budget and time-frame of at least 30 shooting days or 45 days whichever comes

first. 22

Private respondent further narrated that VIVA's generators broke down during petitioners' last movie project, which forced the associate producer concerned to rent generators, equipment and crew from another company. 23 This only shows that the associate producer did not have substantial capital nor investment in the form of tools, equipment and other materials necessary for making a movie. Private respondents in effect admit that their producers, especially petitioners' last producer, are not engaged in permissible job contracting.

If private respondents insist that the associate producers are labor contractors, then these producers can only be "labor-only" contractors, defined by the Labor Code as follows:Art. 106. Contractor or subcontractor. — . . .There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code:Sec. 9. Labor-only contracting. — (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person:(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and(2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers.

As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an "available group of free-lance workers which includes the complainants Maraguinot and Enero." 24 And in their Memorandum, private respondents declared that the associate producer "hires the services of . . . 6) camera crew which includes (a) cameraman; (b) the utility crew; (c) the technical staff; (d) generator man and electrician; (e) clapper; etc. . . . ." 25 This clearly showed that the associate producers did not supply the workers required by the movie project.

The relationship between VIVA and its producers or associate producers seems to be that of agency, 26 as the latter make movies on behalf of VIVA, whose business is to "make" movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer.

The employer-employee relationship between petitioners and VIVA can further be established by the "control test." While four elements are usually considered in determining the existence of an employment relationship, namely: (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 of the employee's conduct, the most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done but also as to the means and methods to accomplish the same. 27 These four elements are present here. In their position paper submitted to the Labor Arbiter, private respondents narrated the following circumstances:[T]he PRODUCER has to work within the limits of the budget he is given by the company, for as long as the ultimate finish[ed] product is acceptable to the company . . .

The ensure that qualify films are produced by the PRODUCER who is an independent contractor, the company likewise employs a Supervising PRODUCER, a Project accountant and a Shooting unit supervisor. The Company's Supervising PRODUCER is Mr. Eric Cuatico, the Project accountant varies from time to time, and the Shooting Unit Supervisor is Ms. Alejandria Cesario.

The Supervising PRODUCER acts as the eyes and ears of the company and of the Executive Producer to monitor the progress of the PRODUCER's work accomplishment. He is there usually in the field doing the rounds of inspection to see if there is any problem that the PRODUCER is encountering and to assist in threshing out the same so that the film project will be finished on schedule. He supervises about 3 to 7 movie projects simultaneously [at] any given time by coordinating with each film "PRODUCER". The Project Accountant on the other hand assists the PRODUCER in monitoring the actual expenses incurred because the company wants to insure that any additional budget requested by the PRODUCER is really justified and warranted especially when there is a change of original plans to suit the tast[e] of the company on how a certain scene must be presented to make the film more interesting and more commercially viable. (emphasis supplied).

VIVA's control is evident in its mandate that the end result must be a "quality film acceptable to the company." The means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company; and the Supervising Producer, the "eyes and ears" of VIVA and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems encountered in making the film.

It may not be validly argued then that petitioners are actually subject to the movie director's control, and not VIVA's direction. The director merely instructs petitioners on how to better comply with VIVA's requirements to ensure that a quality film is completed within schedule and without exceeding the budget. At bottom, the director is akin to a supervisor who merely oversees the activities of rank-and-file employees with control ultimately resting on the employer.

Moreover, appointment slips 28 issued to all crew members state:During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management.

The words "supervisors" and "Top Management" can only refer to the "supervisors" and "Top Management" of VIVA. By commanding crew members to observe the rules and regulations promulgated by VIVA, the appointment slips only emphasize VIVA's control over petitioners.

Aside from control, the element of selection and engagement is likewise present in the instant case and exercised by VIVA. A sample appointment slip offered by private respondents "to prove that members of the shooting crew except the driver are project employees of the Independent Producers" 29 reads as follows:

VIVA PRODUCTIONS, INC.16 Sct. Albano St.Diliman, Quezon CityPEDRO NICOLAS Date: June 15, 1992 APPOINTMENT SLIPYou are hereby appointed as SOUNDMAN for the film project entitled "MANAMBIT". This appointment shall be effective upon the commencement of the said project and shall continue to be effective until the completion of the same.For your services you shall receive the daily/weekly/monthly compensation of P812.50.During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management.

Very truly yours,(an illegible signature)CONFORME:_________________

Name of appointeeSigned in the presence of:___________________

Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer who hired the crew members; moreover, it is VIVA's corporate name which appears on the heading of the appointment slip. What likewise tells against VIVA is that it paid petitioners' salaries as evidenced by vouchers, containing VIVA's letterhead, for that purpose. 30

All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the inevitable conclusion is that petitioners are employees only of VIVA.

The next issue is whether petitioners were illegally dismissed. Private respondents contend that petitioners were project employees whose employment was automatically terminated with the completion of their respective projects. Petitioners assert that they were regular employees who were illegally dismissed.

It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a work pool; 31 and, while petitioners were initially hired possibly as project employees, they had attained the status of regular employees in view if VIVA's conduct.

A project employee or a member of a work pool may acquire the status of a regular employee when the following concur:1) There is a continuous rehiring of project employees even after cessation of a project; 32 and2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. 33

However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment. 34

In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3) years and worked on at least twenty-three (23) projects. 35 Moreover, as petitioners' tasks involved, among other chores, the loading, unloading and

FILM DATE STARTED

DATE COMPLETED

ASSOCIATE PRODUCER

LOVE AT FIRST SIGHT 1/3/90 2/16/90 MARIVIC ONG

PAIKOT-IKOT 1/26/90 3/11/90 EDITH MANUEL

ROCKY & ROLLY 2/13/90 3/29/90 M. ONG

PAIKOT-IKOT (addl. 1/2) 3/12/90 4/3/90 E. MANUEL

ROCKY & ROLLY (2nd contract) 4/6/90 5/20/90 M. ONG

NARDONG TOOTHPICK 4/4/90 5/18/90 JUN CHING

BAKIT KAY TAGAL NG SANDALI 6/26/90 10/20/90 E. MANUEL

BAKIT KAY TAGAL (2nd contract) 8/10/90 9/23/90 E. MANUEL

HINUKAY KO NA ANG LIBINGAN MO 9/6/90 10/20/90 JUN CHING

MAGING SINO KA MAN 10/25/90 12/8/90 SANDY STA. MARIA

M. SINO KA MAN (2nd contract) 12/9/90 1/22/91 SANDY S

NOEL JUICO 1/29/91 3/14/90 JUN CHING

NOEL JUICO (2nd contract) 3/15/91 4/6/91 JUN CHING

ROBIN GOOD 5/7/91 6/20/91 M. ONG

UTOL KONG HOODLUM # 1 6/23/91 8/6/91 JUN CHING

KAPUTOL NG ISANG AWIT 8/18/91 10/2/91 SANDY S.

DARNA 10/4/91 11/18/91 E. MANUEL

DARNA (addl. 1/2) 11/20/91 12/12/91 E. MANUEL

MAGNONG REHAS 12/13/91 1/27/92 BOBBY GRIMALT

M. REHAS (2nd contract) 1/28/92 3/12/92 B. GRIMALT

HIRAM NA MUKHA 3/15/92 4/29/92 M. ONG

HIRAM (2nd contract) 5/1/92 6/14/92 M. ONG

KAHIT AKO'Y BUSABOS 5/28/92 7/7/92 JERRY OHARA

SIGAW NG PUSO 7/1/92 8/4/92 M. ONG

SIGAW (addl. 1/2) 8/15/92 9/5/92 M. ONG

NGAYON AT KAILANMAN 9/6/92 10/20/92 SANDY STA. MARIA

While Maraguinot was a member of Shooting Unit III, which made the following movies (Annex "4-A" of Respondents' Position Paper; OR, 29):

FILM DATE STARTED DATE COMPLETED ASSOCIATE PRODUCER

GUMAPANG KA SA LUSAK 1/27/90 3/12/90 JUN CHING

PETRANG KABAYO 2/19/90 4/4/90 RUTH GRUTA

LUSAK (2nd contract) 3/14/90 4/27/90 JUN CHING

P. KABAYO (Addl 1/2 contract) 4/21/90 5/13/90 RUTH GRUTA

BADBOY 6/15/90 7/29/90 EDITH MANUEL

BADBOY (2nd contract) 7/30/90 8/21/90 E. MANUEL

ANAK NI BABY AMA 9/2/90 10/16/90 RUTH GRUTA

A.B. AMA (addl 1/2) 10/17/90 11/8/90 RUTH GRUTA

A.B. AMA (addl 2nd 1/2) 11/9/90 12/1/90 R. GRUTA

BOYONG MANALAC 11/30/90 1/14/91 MARIVIC ONG

HUMANAP KA NG PANGET 1/20/91 3/5/91 EDITH MANUEL

H. PANGET(2nd contract) 3/10/91 4/23/91 E. MANUEL

B. MANALAC (2nd contract) 5/22/91 7/5/91 M. ONG

ROBIN GOOD (2nd contract) 7/7/91 8/20/91 M. ONG

PITONG GAMOL 8/30/91 10/13/91 M. ONG

P. GAMOL (2nd contract) 10/14/91 11/27/91 M. ONG

GREASE GUN GANG 12/28/91 2/10/92 E. MANUEL

ALABANG GIRLS (1/2 contract) 3/4/92 3/26/92 M. ONG

BATANG RILES 3/9/92 3/30/92 BOBBY GRIMALT

UTOL KONG HOODLUM (part 2) 3/22/92 5/6/92 B. GRIMALT

UTOL (addl. 1/2 contract) 5/7/92 5/29/92 B. GRIMALT

MANDURUGAS (2nd contract) 5/25/92 7/8/92 JERRY OHARA

MAHIRAP MAGING POGI 7/2/92 8/15/92 M. ONG

arranging of movie equipment in the shooting area as instructed by the cameramen, returning the equipment to the Viva Films' warehouse, and assisting in the "fixing" of the lighting system, it may not be gainsaid that these tasks were vital, necessary and indispensable to the usual business or trade of the employer. As regards the underscored phrase, it has been held that this is ascertained by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. 36

A recent pronouncement of this Court anent project or work pool employees who had attained the status of regular employees proves most instructive:

The denial by petitioners of the existence of a work pool in the company because their projects were not continuous is amply belied by petitioners themselves who admit that: . . .A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report of a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time enables the workers to attain the status of regular employees. Clearly, the continuous rehiring of the same set of employees within the framework of the Lao Group of Companies is strongly indicative that private respondents were an integral part of a work pool from which petitioners drew its workers for its various projects.

In a final attempt to convince the Court that private respondents were indeed project employees, petitioners point out that the workers were not regularly maintained in the payroll and were free to offer their services to other companies when there were no on-going projects. This argument however cannot defeat the workers' status of regularity. We apply by analogy the vase of Industrial-Commercial-Agricultural Workers Organization v. CIR [16 SCRA 526, 567-568 (1966)] which deals with regular seasonal employees. There we held: . . .

Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of work . Of course, no compensation can be demanded from the employer because the stoppage of operations at the end of a project and before the start of a new one is regular and expected by both parties to the labor relations . Similar to

the case of regular seasonal employees, the employment relation is not severed by merely being suspended. [citing Manila Hotel Co. v. CIR, 9 SCRA 186 (1963)] The employees are, strictly speaking, not separated from services but merely on leave of absence without pay until they are reemployed. Thus we cannot affirm the argument that non-payment of salary or non-inclusion in the payroll and the opportunity to seek other employment denote project employment. 37 (emphasis supplied)

While Lao admittedly involved the construction industry, to which Policy Instruction No. 20/Department Order No. 19 38 regarding work pools specifically applies, there seems to be no impediment to applying the underlying principles to industries other than the construction industry. 39 Neither may it be argued that a substantial distinction exists between the projects undertaken in the construction industry and the motion picture industry. On the contrary, the raison d' etre of both industries concern projects with a foreseeable suspension of work.

At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project employee even after completion of the project for which he was hired. The import of this decision is not to impose a positive and sweeping obligation upon the employer to re-hire project employees. What this decision merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable to the employer's usual business or trade. Let it not be said that this decision "coddles" labor, for as Lao has ruled, project or work pool employees who have gained the status of regular employees are subject to the "no work-no pay" principle, to repeat:

A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of "coddling labor at the expense of capital" and at the same time enables the workers to attain the status of regular employees.

The Court's ruling here is meant precisely to give life to the constitutional policy of strengthening the labor sector, 40

but, we stress, not at the expense of management. Lest it be misunderstood, this ruling does not mean that simply because an employee is a project or work pool employee even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool employees who have already gained the status of regular employees by the employer's conduct.

In closing then, as petitioners had already gained the status of regular employees, their dismissal was unwarranted, for the cause invoked by private respondents for petitioners' dismissal, viz.: completion of project, was not, as to them, a valid cause for dismissal under Article 282 of the Labor Code. As such, petitioners are now entitled to back wages and reinstatement, without loss of seniority rights and other benefits that may have accrued. 41 Nevertheless, following the principles of "suspension of work" and "no pay" between the end of one project and the start of a new one, in computing petitioners' back wages, the amounts corresponding to what could have been earned during the periods from the date petitioners were dismissed until their reinstatement when petitioners' respective Shooting Units were not undertaking any movie projects, should be deducted.

Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already in effect. Pursuant to Section 34 thereof which amended Section 279 of the Labor Code of the Philippines and Bustamante v. NLRC, 42

petitioners are entitled to receive full back wages from the date of their dismissal up to the time of their reinstatement, without deducting whatever earnings derived elsewhere during the period of illegal dismissal, subject however, to the above observations.

WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations Commission in NLRC NCR CA No. 006195-94 dated 01 February 1995, as well as its Resolution dated 6 April 1995, are hereby ANNULLED and SET ASIDE for having been rendered with grave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 00-07-03994-92 is REINSTATED, subject, however, to the

modification above mentioned in the computation of back wages.

No pronouncement as to costs.

SO ORDERED.

G.R. No. L-52824 March 16, 88REYNALDO BAUTISTA, petitioner, vs.HON. AMADO C. INCIONG, in his capacity as Deputy Minister of Labor and ASSOCIATED LABOR UNIONS (ALU), respondents. GUTIERREZ, JR., J.:This is an illegal dismissal case. The respondent Deputy Minister dismissed the complaint of herein petitioner principally on the ground that no employer-employee relationship existed between the petitioner and respondent Associated Labor Unions (ALU).

The facts as found by the National Capital Region Director of the then ministry of Labor (MOL) Region IV are as follows:Complainant (petitioner) was employed by ALU as 'Organizer' in 1972 with a starting salary of P250.00 a month. As such he paid his monthly SSS contributions, with the respondent as his employer. On March 15, 1979, He was left in the office of ALU while his other co-organizers were in Cainta, Rizal attending a certification election at Chrysler

Philippines, as he was not the organizer assigned in said company. On March 16, 1979, he went on sick leave for ten (10) days. His SSS sickness benefit application form signed by ALU's physician was given to ALU for submission to the SSS. On March 16, 1979, complainant reported back for work upon expiration of his leave but was informed by ALU's Area Vice-President for Luzon of his termination effective March 15, 1979. Hence, this complaint filed on March 28, 1979. On April 18, 1979, however, ALU filed a clearance application to terminate complainant's services effective March 16, 1979 on the ground of abandonment of work. (p. 48, Rollo)

Based on these findings, the Director ruled in favor of the petitioner and ordered the respondent Union to reinstate the petitioner to his former position with full backwages and to pay him emergency allowance, 13th month pay and to refund his Mutual Aid Fund Deposit in the amount of P 370.00.

Respondent ALU appealed to the Ministry of Labor. On October 23,1979, the respondent Deputy Minister set aside the order of the Director and dismissed the petitioner's complaint for lack of merit. In his order, the Deputy Minister found that the petitioner was merely accomodated by the respondent union after he was dismissed by his former employer sometime in 1972 and that his membership coverage with the SSS which shows that respondent ALU is the one paying the employer's share in the premiums is not conclusive proof that respondent is the petitioner's employer because such payments were performed by the respondent as a favor for all those who were performing full time union activities with it to entitle them to SSS benefits. The Deputy Minister further ruled that the non-existence of an employer-employee relationship between the parties is bolstered by the fact that respondent ALU is not an entity for profit but a duly registered labor union whose sole purpose is the representation of its bona fide organization units where it is certified as such.

In this petition, the petitioner contends that the respondent Deputy minister committed grave abuse of discretion in holding that there was no employer-employee relationship between him and the respondent union so much so that he is not entitled to the benefits that he is praying for.

We agree with the petitioner.

There is nothing in the records which support the Deputy minister's conclusion that the petitioner is not an employee of respondent ALU. The mere fact that the respondent is a labor union does not mean that it cannot be considered an employer of the persons who work for it. Much less should it be exempted from the very labor laws which it espouses as labor organization. In case of es v. Brotherhood Labor Unity Movement in the Phillipines Zamora, , (147 SCRA 49, 54), we outlined the factors in ascertaining an employer-employee realtionship:

In determining the existence of an employer-employee relationship, the elements that are generally considered are the following : (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. It is the so-called 'control test' that is the most important element (Investment Planning Corp. of the Phils. v. The Social Security System, 21 SCRA 492; Mafinco Trading Corp. v. Ople, supra, and Rosario Brothers, Inc. v. Ople, 131 SCRA 72)

In the case at bar, the Regional director correctly found that the petitioner was an employee of the respondent union as reflected in the latter's individual payroll sheets and shown by the petitioner's membership with the Social Security System (SSS) and the respondent union's share of remittances in the petitioner's favor. Even more significant, is the respondent union's act of filing a clearance application with the MOL to terminate the petitioner's services. Bautista was selected and hired by the Union. He was paid wages by the Union. ALU had the power to dismiss him as indeed it dismissed him. And definitely, the Union tightly controlled the work of Bautista as one of its organizers. There is absolutely no factual or legal basis got deputy Minister Inciong's decision.

We are, thus, constrained to reverse the findings of the respondent Deputy Minister. However, the records show that antipathy and antagonism between the petitioner and the respondent union militate against the former's reinstatement. ALU would not want to have a union organizer whom it does not trust and who could sabotage its efforts to unionize commercial and industrial establishments. Severance pay, therefore, is more proper in order. As we have ruled in the case of Asiaworld Publishing House, Inc. v. Hon. Blas Ople, et al., (G.R. No. 56398, July 23, 1987) quoting the cast of Balaquezon EWTU v. Zamora, (97 SCRA 5,8):

It should be underscored that the backwages are being awarded on the basis of equity or in the nature of severance pay. This means that a monetary award is to be paid to the employees as an alternative to reinstatement

which can no longer be effected in view of the long passage of time or because of the realities of the situation. (Emphasis supplied)

WHEREFORE, the petition is hereby GRANTED and the decision of the respondent Deputy Minister is ANNULLED and SET ASIDE. The Order of Regional Director Francisco L. Estrella is REINSTATED and ordered executed but instead of returning the petitioner to his former position, the private respondent is ordered to pay him an amount equal to his backwages for only three years and the separation pay to which he may be entitled as of the end of the three year period under the applicable law or collective bargaining agreement.

SO ORDERED.

G.R. No. 195466               July 2, 2014ARIEL L. DAVID, doing business under the name and style "YIELS HOG DEALER," Petitioner, vs.JOHN G. MACASIO, Respondent.

D E C I S I O N

BRION, J.:We resolve in this petition for review on certiorari1 the challenge to the November 22, 2010 decision2 and the January 31, 2011 resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 116003. The CA decision annulled and set aside the May 26, 2010 decision4 of the National Labor Relations Commission (NLRC)5 which, in turn, affirmed the April 30, 2009 Decision6 of the Labor Arbiter (LA). The LA's decision dismissed respondent John G. Macasio's monetary claims.

The Factual AntecedentsIn January 2009, Macasio filed before the LA a complaint7 against petitioner Ariel L. David, doing business under

the name and style "Yiels Hog Dealer," for non-payment of overtime pay, holiday pay and 13th month pay. He also claimed payment for moral and exemplary damages and attorney’s fees. Macasio also claimed payment for service incentive leave (SIL).8

Macasio alleged9 before the LA that he had been working as a butcher for David since January 6, 1995. Macasio claimed that David exercised effective control and supervision over his work, pointing out that David: (1) set the work day, reporting time and hogs to be chopped, as well as the manner by which he was to perform his work; (2) daily paid his salary of P700.00, which was increased from P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that David owned the hogs delivered for chopping, as well as the work tools and implements; the latter also rented the workplace. Macasio further claimed that David employs about twenty-five (25) butchers and delivery drivers.

In his defense,10 David claimed that he started his hog dealer business in 2005 and that he only has ten employees. He alleged that he hired Macasio as a butcher or chopper on "pakyaw" or task basis who is, therefore, not entitled to overtime pay, holiday pay and 13th month pay pursuant to the provisions of the Implementing Rules and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or earlier, depending on the volume of the delivered hogs; (2) received the fixed amount of P700.00 per engagement, regardless of the actual number of hours that he spent chopping the delivered hogs; and (3) was not engaged to report for work and, accordingly, did not receive any fee when no hogs were delivered.

Macasio disputed David’s allegations.11 He argued that, first, David did not start his business only in 2005. He pointed to the Certificate of Employment12 that David issued in his favor which placed the date of his employment, albeit erroneously, in January 2000. Second, he reported for work every day which the payroll or time record could have easily proved had David submitted them in evidence.

Refuting Macasio’s submissions,13 David claims that Macasio was not his employee as he hired the latter on "pakyaw" or task basis. He also claimed that he issued the Certificate of Employment, upon Macasio’s request, only for overseas employment purposes. He pointed to the "Pinagsamang Sinumpaang Salaysay,"14 executed by Presbitero Solano and Christopher (Antonio Macasio’s co-butchers), to corroborate his claims.

In the April 30, 2009 decision,15 the LA dismissed Macasio’s complaint for lack of merit. The LA gave credence to David’s claim that he engaged Macasio on "pakyaw" or task basis. The LA noted the following facts to support this finding: (1) Macasio received the fixed amount of P700.00 for every work done, regardless of the number of hours that he spent in completing the task and of the volume or number of hogs that he had to chop per engagement; (2) Macasio usually worked for only four hours, beginning from 10:00 p.m. up to 2:00 a.m. of the following day; and (3) the P700.00 fixed wage far exceeds the then prevailing daily minimum wage of P382.00. The LA added that the nature of David’s business as hog dealer supports this "pakyaw" or task basis arrangement.

The LA concluded that as Macasio was engaged on "pakyaw" or task basis, he is not entitled to overtime, holiday, SIL and 13th month pay.

The NLRC’s RulingIn its May 26, 2010 decision,16 the NLRC affirmed the LA ruling.17 The NLRC observed that David did not require Macasio to observe an eight hour work schedule to earn the fixed P700.00 wage; and that Macasio had been performing a non-time work, pointing out that Macasio was paid a fixed amount for the completion of the assigned task, irrespective of the time consumed in its performance. Since Macasio was paid by result and not in terms of the time that he spent in the workplace, Macasio is not covered by the Labor Standards laws on overtime, SIL and holiday pay, and 13th month pay under the Rules and Regulations Implementing the 13th month pay law.18

Macasio moved for reconsideration19 but the NLRC denied his motion in its August 11, 2010 resolution,20 prompting Macasio to elevate his case to the CA via a petition for certiorari.21

The CA’s RulingIn its November 22, 2010 decision,22 the CA partly granted Macasio’s certiorari petition and reversed the NLRC’s ruling for having been rendered with grave abuse of discretion.

While the CA agreed with the LAand the NLRC that Macasio was a task basis employee, it nevertheless found

Macasio entitled to his monetary claims following the doctrine laid down in Serrano v. Severino Santos Transit. 23

The CA explained that as a task basis employee, Macasio is excluded from the coverage of holiday, SIL and 13th month pay only if he is likewise a "field personnel." As defined by the Labor Code, a "field personnel" is one who performs the work away from the office or place of work and whose regular work hours cannot be determined with reasonable certainty. In Macasio’s case, the elements that characterize a "field personnel" are evidently lacking as he had been working as a butcher at David’s "Yiels Hog Dealer" business in Sta. Mesa, Manila under David’s supervision and control, and for a fixed working schedule that starts at 10:00 p.m.

Accordingly, the CA awarded Macasio’s claim for holiday, SIL and 13th month pay for three years, with 10% attorney’s fees on the total monetary award. The CA, however, denied Macasio’s claim for moral and exemplary damages for lack of basis.

David filed the present petition after the CA denied his motion for reconsideration24 in the CA’s January 31, 2011 resolution.25

The PetitionIn this petition,26 David maintains that Macasio’s engagement was on a "pakyaw" or task basis. Hence, the latter is excluded from the coverage of holiday, SIL and 13th month pay. David reiterates his submissions before the lower tribunals27 and adds that he never had any control over the manner by which Macasio performed his work and he simply looked on to the "end-result." He also contends that he never compelled Macasio to report for work and that under their arrangement, Macasio was at liberty to choose whether to report for work or not as other butchers could carry out his tasks. He points out that Solano and Antonio had, in fact, attested to their (David and Macasio’s) established "pakyawan" arrangement that rendered a written contract unnecessary. In as much as Macasio is a task basis employee – who is paid the fixed amount of P700.00 per engagement regardless of the time consumed in the performance – David argues that Macasio is not entitled to the benefits he claims. Also, he posits that because he engaged Macasio on "pakyaw" or task basis then no employer-employee relationship exists between them.

Finally, David argues that factual findings of the LA, when affirmed by the NLRC, attain finality especially when, as in this case, they are supported by substantial evidence. Hence, David posits that the CA erred in reversing the labor tribunals’ findings and granting the prayed monetary claims.

The Case for the RespondentMacasio counters that he was not a task basis employee or a "field personnel" as David would have this Court believe.28 He reiterates his arguments before the lower tribunals and adds that, contrary to David’s position, the P700.00 fee that he was paid for each day that he reported for work does not indicate a "pakyaw" or task basis employment as this amount was paid daily, regardless of the number or pieces of hogs that he had to chop. Rather, it indicates a daily-wage method of payment and affirms his regular employment status. He points out that David did not allege or present any evidence as regards the quota or number of hogs that he had to chop as basis for the "pakyaw" or task basis payment; neither did David present the time record or payroll to prove that he worked for less than eight hours each day. Moreover, David did not present any contract to prove that his employment was on task basis. As David failed to prove the alleged task basis or "pakyawan" agreement, Macasio concludes that he was David’s employee. Procedurally, Macasio points out that David’s submissions in the present petition raise purely factual issues that are not proper for a petition for review on certiorari. These issues – whether he (Macasio) was paid by result or on "pakyaw" basis; whether he was a "field personnel"; whether an employer-employee relationship existed between him and David; and whether David exercised control and supervision over his work – are all factual in nature and are, therefore, proscribed in a Rule 45 petition. He argues that the CA’s factual findings bind this Court, absent a showing that such findings are not supported by the evidence or the CA’s judgment was based on a misapprehension of facts. He adds that the issue of whether an employer-employee relationship existed between him and David had already been settled by the LA29 and the NLRC30 (as well as by the CA per Macasio’s manifestation before this Court dated November 15, 2012),31 in his favor, in the separate illegal case that he filed against David.

The IssueThe issue revolves around the proper application and interpretation of the labor law provisions on holiday, SIL and 13th month pay to a worker engaged on "pakyaw" or task basis. In the context of the Rule 65 petition before the CA, the issue is whether the CA correctly found the NLRC in grave abuse of discretion in ruling that Macasio is entitled to these labor standards benefits.

The Court’s RulingWe partially grant the petition.

Preliminary considerations: the Montoya ruling and the factual-issue-bar ruleIn this Rule 45 petition for review on certiorari of the CA’s decision rendered under a Rule 65 proceeding, this Court’s power of review is limited to resolving matters pertaining to any perceived legal errors that the CA may have committed in issuing the assailed decision. This is in contrast with the review for jurisdictional errors, which we undertake in an original certiorari action. In reviewing the legal correctness of the CA decision, we examine the CA decision based on how it determined the presence or absence of grave abuse of discretion in the NLRC decision before it and not on the basis of whether the NLRC decision on the merits of the case was correct.32 In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it.33

Moreover, the Court’s power in a Rule 45 petition limits us to a review of questions of law raised against the assailed CA decision.34

In this petition, David essentially asks the question – whether Macasio is entitled to holiday, SIL and 13th month pay. This one is a question of law. The determination of this question of law however is intertwined with the largely factual issue of whether Macasio falls within the rule on entitlement to these claims or within the exception. In either case, the resolution of this factual issue presupposes another factual matter, that is, the presence of an employer-employee relationship between David and Macasio.

In insisting before this Court that Macasio was not his employee, David argues that he engaged the latter on "pakyaw" or task basis. Very noticeably, David confuses engagement on "pakyaw" or task basis with the lack of employment relationship. Impliedly, David asserts that their "pakyawan" or task basis arrangement negates the existence of employment relationship.

At the outset, we reject this assertion of the petitioner. Engagement on "pakyaw" or task basis does not characterize the relationship that may exist between the parties, i.e., whether one of employment or independent contractorship. Article 97(6) of the Labor Code defines wages as "xxx the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered[.]"35 In relation to Article 97(6), Article 10136 of the Labor Code speaks of workers paid by results or those whose pay is calculated in terms of the quantity or quality of their work output which includes "pakyaw" work and other non-time work.

More importantly, by implicitly arguing that his engagement of Macasio on "pakyaw" or task basis negates employer-employee relationship, David would want the Court to engage on a factual appellate review of the entire case to determine the presence or existence of that relationship. This approach however is not authorized under a Rule 45 petition for review of the CA decision rendered under a Rule 65 proceeding.First, the LA and the NLRC denied Macasio’s claim not because of the absence of an employer-employee but because of its finding that since Macasio is paid on pakyaw or task basis, then he is not entitled to SIL, holiday and 13th month pay. Second, we consider it crucial, that in the separate illegal dismissal case Macasio filed with the LA, the LA, the NLRC and the CA uniformly found the existence of an employer-employee relationship.37

In other words, aside from being factual in nature, the existence of an employer-employee relationship is in fact a non-issue in this case. To reiterate, in deciding a Rule 45 petition for review of a labor decision rendered by the CA under 65, the narrow scope of inquiry is whether the CA correctly determined the presence or absence of grave abuse of discretion on the part of the NLRC. In concrete question form, "did the NLRC gravely abuse its discretion in denying Macasio’s claims simply because he is paid on a non-time basis?"

At any rate, even if we indulge the petitioner, we find his claim that no employer-employee relationship exists baseless. Employing the control test,38 we find that such a relationship exist in the present case.Even a factual review shows that Macasio is David’s employee.

To determine the existence of an employer-employee relationship, four elements generally need to be considered,

namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct. These elements or indicators comprise the so-called "four-fold" test of employment relationship. Macasio’s relationship with David satisfies this test.

First, David engaged the services of Macasio, thus satisfying the element of "selection and engagement of the employee." David categorically confirmed this fact when, in his "Sinumpaang Salaysay," he stated that "nag apply po siya sa akin at kinuha ko siya na chopper[.]"39 Also, Solano and Antonio stated in their "Pinagsamang Sinumpaang Salaysay"40 that "[k]ami po ay nagtratrabaho sa Yiels xxx na pag-aari ni Ariel David bilang butcher" and "kilalanamin si xxx Macasio na isa ring butcher xxx ni xxx David at kasama namin siya sa aming trabaho."

Second, David paid Macasio’s wages.Both David and Macasio categorically stated in their respective pleadings before the lower tribunals and even before this Court that the former had been paying the latter P700.00 each day after the latter had finished the day’s task. Solano and Antonio also confirmed this fact of wage payment in their "Pinagsamang Sinumpaang Salaysay."41 This satisfies the element of "payment of wages."

Third, David had been setting the day and time when Macasio should report for work. This power to determine the work schedule obviously implies power of control. By having the power to control Macasio’s work schedule, David could regulate Macasio’s work and could even refuse to give him any assignment, thereby effectively dismissing him.

And fourth, David had the right and power to control and supervise Macasio’s work as to the means and methods of performing it. In addition to setting the day and time when Macasio should report for work, the established facts show that David rents the place where Macasio had been performing his tasks. Moreover, Macasio would leave the workplace only after he had finished chopping all of the hog meats given to him for the day’s task. Also, David would still engage Macasio’s services and have him report for work even during the days when only few hogs were delivered for butchering.

Under this overall setup, all those working for David, including Macasio, could naturally be expected to observe certain rules and requirements and David would necessarily exercise some degree of control as the chopping of the hog meats would be subject to his specifications. Also, since Macasio performed his tasks at David’s workplace, David could easily exercise control and supervision over the former. Accordingly, whether or not David actually exercised this right or power to control is beside the point as the law simply requires the existence of this power to control 4243 or, as in this case, the existence of the right and opportunity to control and supervise Macasio.44

In sum, the totality of the surrounding circumstances of the present case sufficiently points to an employer-employee relationship existing between David and Macasio.

Macasio is engaged on "pakyaw" or task basis.At this point, we note that all three tribunals – the LA, the NLRC and the CA – found that Macasio was engaged or paid on "pakyaw" or task basis. This factual finding binds the Court under the rule that factual findings of labor tribunals when supported by the established facts and in accord with the laws, especially when affirmed by the CA, is binding on this Court.A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to straight-hour wage payment, is the non-consideration of the time spent in working. In a task-basis work, the emphasis is on the task itself, in the sense that payment is reckoned in terms of completion of the work, not in terms of the number of time spent in the completion of work.45 Once the work or task is completed, the worker receives a fixed amount as wage, without regard to the standard measurements of time generally used in pay computation.

In Macasio’s case, the established facts show that he would usually start his work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at the workplace or of the total number of the hogs assigned to him for chopping, Macasio would receive the fixed amount of P700.00 once he had completed his task. Clearly, these circumstances show a "pakyaw" or task basis engagement that all three tribunals uniformly found.

In sum, the existence of employment relationship between the parties is determined by applying the "four-fold" test; engagement on "pakyaw" or task basis does not determine the parties’ relationship as it is simply a method of pay computation. Accordingly, Macasio is David’s employee, albeit engaged on "pakyaw" or task basis.

As an employee of David paid on pakyaw or task basis, we now go to the core issue of whether Macasio is entitled

to holiday, 13th month, and SIL pay.

On the issue of Macasio’s entitlement to holiday, SIL and 13th month payThe LA dismissed Macasio’s claims pursuant to Article 94 of the Labor Code in relation to Section 1, Rule IV of the IRR of the Labor Code, and Article 95 of the Labor Code, as well as Presidential Decree (PD) No. 851. The NLRC, on the other hand, relied on Article 82 of the Labor Code and the Rules and Regulations Implementing PD No. 851. Uniformly, these provisions exempt workers paid on "pakyaw" or task basis from the coverage of holiday, SIL and 13th month pay.

In reversing the labor tribunals’ rulings, the CA similarly relied on these provisions, as well as on Section 1, Rule V of the IRR of the Labor Code and the Court’s ruling in Serrano v. Severino Santos Transit.46 These labor law provisions, when read together with the Serrano ruling, exempt those engaged on "pakyaw" or task basis only if they qualify as "field personnel."

In other words, what we have before us is largely a question of law regarding the correct interpretation of these labor code provisions and the implementing rules; although, to conclude that the worker is exempted or covered depends on the facts and in this sense, is a question of fact: first, whether Macasio is a "field personnel"; and second, whether those engaged on "pakyaw" or task basis, but who are not "field personnel," are exempted from the coverage of holiday, SIL and 13th month pay.

To put our discussion within the perspective of a Rule 45 petition for review of a CA decision rendered under Rule 65 and framed in question form, the legal question is whether the CA correctly ruled that it was grave abuse of discretion on the part of the NLRC to deny Macasio’s monetary claims simply because he is paid on a non-time basis without determining whether he is a field personnel or not.

To resolve these issues, we need tore-visit the provisions involved.

Provisions governing SIL and holiday payArticle 82 of the Labor Code provides the exclusions from the coverage of Title I, Book III of the Labor Code - provisions governing working conditions and rest periods.

Art. 82. Coverage.— The provisions of [Title I] shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.xxxx"Field personnel" shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. [emphases and underscores ours]

Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and SIL pay (under Article 95 of the Labor Code). Under Article 82,"field personnel" on one hand and "workers who are paid by results" on the other hand, are not covered by the Title I provisions. The wordings of Article82 of the Labor Code additionally categorize workers "paid by results" and "field personnel" as separate and distinct types of employees who are exempted from the Title I provisions of the Labor Code.

The pertinent portion of Article 94 of the Labor Code and its corresponding provision in the IRR47 reads:Art. 94. Right to holiday pay. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than (10) workers[.] [emphasis ours]xxxxSECTION 1. Coverage. – This Rule shall apply to all employees except:xxxx(e)Field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. [emphases ours]

On the other hand, Article 95 of the Labor Code and its corresponding provision in the IRR48 pertinently provides:Art. 95. Right to service incentive. (a) Every employee who has rendered at least one year of service shall be

entitled to a yearly service incentive leave of five days with pay.(b) This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment. [emphases ours]xxxxSection 1. Coverage. – This rule shall apply to all employees except:xxxx(e) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. [emphasis ours]

Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees. To be excluded from their coverage, an employee must be one of those that these provisions expressly exempt, strictly in accordance with the exemption. Under the IRR, exemption from the coverage of holiday and SIL pay refer to "field personnel and other employees whose time and performance is unsupervised by the employer including those who are engaged on task or contract basis[.]" Note that unlike Article 82 of the Labor Code, the IRR on holiday and SIL pay do not exclude employees "engaged on task basis" as a separate and distinct category from employees classified as "field personnel." Rather, these employees are altogether merged into one classification of exempted employees.

Because of this difference, it may be argued that the Labor Code may be interpreted to mean that those who are engaged on task basis, per se, are excluded from the SIL and holiday payment since this is what the Labor Code provisions, in contrast with the IRR, strongly suggest. The arguable interpretation of this rule may be conceded to be within the discretion granted to the LA and NLRC as the quasi-judicial bodies with expertise on labor matters.

However, as early as 1987 in the case of Cebu Institute of Technology v. Ople 49 the phrase "those who are engaged on task or contract basis" in the rule has already been interpreted to mean as follows:[the phrase] should however, be related with "field personnel" applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow xxx Clearly, petitioner's teaching personnel cannot be deemed field personnel which refers "to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. [Par. 3, Article 82, Labor Code of the Philippines]. Petitioner's claim that private respondents are not entitled to the service incentive leave benefit cannot therefore be sustained.

In short, the payment of an employee on task or pakyaw basis alone is insufficient to exclude one from the coverage of SIL and holiday pay. They are exempted from the coverage of Title I (including the holiday and SIL pay) only if they qualify as "field personnel." The IRR therefore validly qualifies and limits the general exclusion of "workers paid by results" found in Article 82 from the coverage of holiday and SIL pay. This is the only reasonable interpretation since the determination of excluded workers who are paid by results from the coverage of Title I is "determined by the Secretary of Labor in appropriate regulations."The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus Transport Systems, Inc., v. Bautista:A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as "field personnel." The phrase "other employees whose performance is unsupervised by the employer" must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the definition of field personnel under the Labor Code as those "whose actual hours of work in the field cannot be determined with reasonable certainty."

The same is true with respect to the phrase "those who are engaged on task or contract basis, purely commission basis." Said phrase should be related with "field personnel," applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow.

The Autobus ruling was in turn the basis of Serrano v. Santos Transit which the CA cited in support of granting Macasio’s petition.

In Serrano, the Court, applying the rule on ejusdem generis50 declared that "employees engaged on task or contract basis xxx are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel."51 The Court explained that the phrase "including those who are engaged on task or contract basis, purely commission basis" found in Section 1(d), Rule V of Book III of the IRR should not be understood as a separate classification of employees to which SIL shall not be granted. Rather, as with its preceding phrase - "other employees whose performance is unsupervised by the employer" - the phrase "including those who are engaged on task or contract basis" serves to amplify the interpretation of the Labor Code definition of "field personnel" as those "whose actual hours of work in the field cannot be determined with reasonable certainty."

In contrast and in clear departure from settled case law, the LA and the NLRC still interpreted the Labor Code provisions and the IRR as exempting an employee from the coverage of Title I of the Labor Code based simply and solely on the mode of payment of an employee. The NLRC’s utter disregard of this consistent jurisprudential ruling is a clear act of grave abuse of discretion.52 In other words, by dismissing Macasio’s complaint without considering whether Macasio was a "field personnel" or not, the NLRC proceeded based on a significantly incomplete consideration of the case. This action clearly smacks of grave abuse of discretion.

Entitlement to holiday payEvidently, the Serrano ruling speaks only of SIL pay. However, if the LA and the NLRC had only taken counsel from Serrano and earlier cases, they would have correctly reached a similar conclusion regarding the payment of holiday pay since the rule exempting "field personnel" from the grant of holiday pay is identically worded with the rule exempting "field personnel" from the grant of SIL pay. To be clear, the phrase "employees engaged on task or contract basis "found in the IRR on both SIL pay and holiday pay should be read together with the exemption of "field personnel."

In short, in determining whether workers engaged on "pakyaw" or task basis" is entitled to holiday and SIL pay, the presence (or absence) of employer supervision as regards the worker’s time and performance is the key: if the worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless exempted from the exceptions specifically provided under Article 94 (holiday pay) and Article95 (SIL pay) of the Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the meaning of "field personnel" under the law, then he is not entitled to these monetary benefits.

Macasio does not fall under the classification of "field personnel"Based on the definition of field personnel under Article 82, we agree with the CA that Macasio does not fall under the definition of "field personnel." The CA’s finding in this regard is supported by the established facts of this case: first, Macasio regularly performed his duties at David’s principal place of business; second, his actual hours of work could be determined with reasonable certainty; and, third, David supervised his time and performance of duties. Since Macasio cannot be considered a "field personnel," then he is not exempted from the grant of holiday, SIL pay even as he was engaged on "pakyaw" or task basis.

Not being a "field personnel," we find the CA to be legally correct when it reversed the NLRC’s ruling dismissing Macasio’s complaint for holiday and SIL pay for having been rendered with grave abuse of discretion.

Entitlement to 13th month payWith respect to the payment of 13th month pay however, we find that the CA legally erred in finding that the NLRC gravely abused its discretion in denying this benefit to Macasio.

The governing law on 13th month pay is PD No. 851.53As with holiday and SIL pay, 13th month pay benefits generally cover all employees; an employee must be one of those expressly enumerated to be exempted. Section 3 of the Rules and Regulations Implementing P.D. No. 85154

enumerates the exemptions from the coverage of 13th month pay benefits. Under Section 3(e), "employers of those who are paid on xxx task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof"55 are exempted.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations Implementing PD No. 851 exempts employees "paid on task basis" without any reference to "field personnel." This could only mean that insofar as payment of the 13th month pay is concerned, the law did not intend to qualify the exemption from its coverage with the requirement that the task worker be a "field personnel" at the same time.

WHEREFORE, in light of these considerations, we hereby PARTIALLY GRANT the petition insofar as the payment of 13th month pay to respondent is concerned. In all other aspects, we AFFIRM the decision dated November 22, 2010 and the resolution dated January 31, 2011 of the Court of Appeals in CA-G.R. SP No. 116003.

SO ORDERED.

G.R. No. L-53515 February 8, 1989SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO), petitioner, vs.HON. BLAS F. OPLE, as Minister of Labor and SAN MIGUEL CORPORATION, respondents.Lorenzo F. Miravite for petitioner.Isidro D. Amoroso for New San Miguel Corp. Sales Force Union.Siguion Reyna, Montecillo & Ongsiako for private respondent. GRIÑO-AQUINO, J.:This is a petition for review of the Order dated February 28, 1980 of the Minister of Labor in Labor Case No. AJML-069-79, approving the private respondent's marketing scheme, known as the "Complementary Distribution System" (CDS) and dismissing the petitioner labor union's complaint for unfair labor practice.

On April 17, 1978, a collective bargaining agreement (effective on May 1, 1978 until January 31, 1981) was entered into by petitioner San Miguel Corporation Sales Force Union (PTGWO), and the private respondent, San Miguel Corporation, Section 1, of Article IV of which provided as follows:

Art. IV, Section 1. Employees within the appropriate bargaining unit shall be entitled to a basic monthly compensation plus commission based on their respective sales. (p. 6, Annex A; p. 113, Rollo.)

In September 1979, the company introduced a marketing scheme known as the "Complementary Distribution System" (CDS) whereby its beer products were offered for sale directly to wholesalers through San Miguel's sales offices.

The labor union (herein petitioner) filed a complaint for unfair labor practice in the Ministry of Labor, with a notice of strike on the ground that the CDS was contrary to the existing marketing scheme whereby the Route Salesmen were assigned specific territories within which to sell their stocks of beer, and wholesalers had to buy beer products from them, not from the company. It was alleged that the new marketing scheme violates Section 1, Article IV of the collective bargaining agreement because the introduction of the CDS would reduce the take-home pay of the salesmen and their truck helpers for the company would be unfairly competing with them.

The complaint filed by the petitioner against the respondent company raised two issues: (1) whether the CDS violates the collective bargaining agreement, and (2) whether it is an indirect way of busting the union.

In its order of February 28, 1980, the Minister of Labor found:... We see nothing in the record as to suggest that the unilateral action of the employer in inaugurating the new sales scheme was designed to discourage union organization or diminish its influence, but rather it is undisputable that the establishment of such scheme was part of its overall plan to improve efficiency and economy and at the same time gain profit to the highest. While it may be admitted that the introduction of new sales plan somewhat disturbed the present set-up, the change however was too insignificant as to convince this Office to interpret that the innovation interferred with the worker's right to self-organization.

Petitioner's conjecture that the new plan will sow dissatisfaction from its ranks is already a prejudgment of the plan's viability and effectiveness. It is like saying that the plan will not work out to the workers' [benefit] and therefore management must adopt a new system of marketing. But what the petitioner failed to consider is the fact that corollary to the adoption of the assailed marketing technique is the effort of the company to compensate whatever loss the workers may suffer because of the new plan over and above than what has been provided in the collective bargaining agreement. To us, this is one indication that the action of the management is devoid of any anti-union hues. (pp. 24-25, Rollo.)

The dispositive part of the Minister's Order reads:WHEREFORE, premises considered, the notice of strike filed by the petitioner, San Miguel Brewery Sales Force Union-PTGWO is hereby dismissed. Management however is hereby ordered to pay an additional three (3) months back adjustment commissions over and above the adjusted commission under the complementary distribution system. (p. 26, Rollo.)

The petition has no merit.

Public respondent was correct in holding that the CDS is a valid exercise of management prerogatives:Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of work. ... (NLU vs. Insular La Yebana Co., 2 SCRA 924; Republic Savings Bank vs. CIR 21 SCRA 226, 235.) (Perfecto V. Hernandez, Labor Relations Law, 1985 Ed., p. 44.) (Emphasis ours.)

Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed towards that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713, We ruled:... Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied.

So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them (LVN Pictures Workers vs. LVN, 35 SCRA 147; Phil.

American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634; Phil. Refining Co. vs. Garcia, 18 SCRA 110). San Miguel Corporation's offer to compensate the members of its sales force who will be adversely affected by the implementation of the CDS by paying them a so-called "back adjustment commission" to make up for the commissions they might lose as a result of the CDS proves the company's good faith and lack of intention to bust their union.

WHEREFORE, the petition for certiorari is dismissed for lack of merit.

SO ORDERED.

G.R. No. 138051             June 10, 2004JOSE Y. SONZA, petitioner, vs.ABS-CBN BROADCASTING CORPORATION, respondent.

D E C I S I O N

CARPIO, J.:The CaseBefore 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 FactsIn 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 P310,000 for the first year and P317,000 for the second and third year of the Agreement. ABS-CBN would pay the talent fees on the 10th and 25th days of the month.

On 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. SONZAPresident 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:x x xWhile 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 P317,000. Moreover, his engagement as a talent was covered by a specific contract. Likewise, he was not bound to render eight (8) hours of work per day as he worked only for such number of hours as may be necessary.

The fact that per the May 1994 Agreement complainant was accorded some benefits normally given to an employee is inconsequential. Whatever benefits complainant enjoyed arose from specific agreement by the parties and not by reason of employer-employee relationship. As correctly put by the respondent, "All these benefits are merely talent fees and other contractual benefits and should not be deemed as ‘salaries, wages and/or other remuneration’ accorded to an employee, notwithstanding the nomenclature appended to these benefits. Apropos to this is the rule that the term or nomenclature given to a stipulated benefit is not controlling, but the intent of the parties to the Agreement conferring such benefit."

The fact that complainant was made subject to 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 AppealsThe 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 (P500,000.00).

Similarly, complainant is also entitled to be paid 13th month pay based on an amount not lower than the amount he was receiving prior to effectivity of (the) Agreement’.

Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travel benefit amounting to at least One Hundred Fifty Thousand Pesos (P150,000.00) per year.’

Thus, it is precisely because of complainant-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 IssueIn 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 RulingWe 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 EmployeeABS-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 WagesABS-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 P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of 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 DismissalFor 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 ControlSince 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. 38

Even though ABS-CBN provided SONZA with the place of work and the necessary equipment, SONZA was still an independent contractor since ABS-CBN did not supervise and control his work. 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 SONZASONZA 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. 40SONZA 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 WitnessesSONZA 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/Memorandumx x xThese 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 xSection 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 ContractorsABS-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 BroadcastersThe 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 ClaimsSONZA 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 the May 1994 Agreement and stock option plan, and not on the Labor Code. Clearly, the present case does not call for an application of the Labor Code provisions but an interpretation and implementation of the May 1994 Agreement. In effect, SONZA’s cause of action is for breach of contract which is intrinsically a civil dispute cognizable by the regular courts.58

WHEREFORE, we DENY the petition. The assailed Decision of the Court of Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs against petitioner.

SO ORDERED.

G.R. No. 164156             September 26, 2006ABS-CBN BROADCASTING CORPORATION, petitioner, vs.MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE LERASAN, respondents.

D E C I S I O N

CALLEJO, SR., J.:Before us is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 76582 and the Resolution denying the motion for reconsideration thereof. The CA affirmed the Decision2 and Resolution3 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000762-2001 (RAB Case No. VII-10-1661-2001) which likewise affirmed, with modification, the decision of the Labor Arbiter declaring the respondents Marlyn Nazareno, Merlou Gerzon, Jennifer Deiparine and Josephine Lerasan as regular employees.

The Antecedents

Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is engaged in the broadcasting business and owns a network of television and radio stations, whose operations revolve around the broadcast, transmission, and relay of

telecommunication signals. It sells and deals in or otherwise utilizes the airtime it generates from its radio and television operations. It has a franchise as a broadcasting company, and was likewise issued a license and authority to operate by the National Telecommunications Commission.

Petitioner employed respondents Nazareno, Gerzon, Deiparine, and Lerasan as production assistants (PAs) on different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000. They were issued ABS-CBN employees’ identification cards and were required to work for a minimum of eight hours a day, including Sundays and holidays. They were made to perform the following tasks and duties:

a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN;b) Coordinate, arrange personalities for air interviews;c) Coordinate, prepare schedule of reporters for scheduled news reporting and lead-in or incoming reports;d) Facilitate, prepare and arrange airtime schedule for public service announcement and complaints;e) Assist, anchor program interview, etc; andf) Record, log clerical reports, man based control radio.4

Their respective working hours were as follows:Name Time No. of Hours1. Marlene Nazareno 4:30 A.M.-8:00 A.M. 7 ½8:00 A.M.-12:00 noon2. Jennifer Deiparine 4:30 A.M.-12:00M.N. (sic) 7 ½3. Joy Sanchez 1:00 P.M.-10:00 P.M.(Sunday) 9 hrs.9:00 A.M.-6:00 P.M. (WF) 9 hrs.4. Merlou Gerzon 9:00 A.M.-6:00 P.M. 9 hrs.5

The PAs were under the control and supervision of Assistant Station Manager Dante J. Luzon, and News Manager Leo Lastimosa.

On December 19, 1996, petitioner and the ABS-CBN Rank-and-File Employees executed a Collective Bargaining Agreement (CBA) to be effective during the period from December 11, 1996 to December 11, 1999. However, since petitioner refused to recognize PAs as part of the bargaining unit, respondents were not included to the CBA.6

On July 20, 2000, petitioner, through Dante Luzon, issued a Memorandum informing the PAs that effective August 1, 2000, they would be assigned to non-drama programs, and that the DYAB studio operations would be handled by the studio technician. Thus, their revised schedule and other assignments would be as follows:Monday – Saturday4:30 A.M. – 8:00 A.M. – Marlene Nazareno.Miss Nazareno will then be assigned at the Research Dept.From 8:00 A.M. to 12:004:30 P.M. – 12:00 MN – Jennifer DeiparineSunday5:00 A.M. – 1:00 P.M. – Jennifer Deiparine1:00 P.M. – 10:00 P.M. – Joy Sanchez

Respondent Gerzon was assigned as the full-time PA of the TV News Department reporting directly to Leo Lastimosa.

On October 12, 2000, respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the petitioner before the NLRC. The Labor Arbiter directed the parties to submit their respective position papers. Upon respondents’ failure to file their position papers within the reglementary period, Labor Arbiter Jose G. Gutierrez issued an Order dated April 30, 2001, dismissing the complaint without prejudice for lack of interest to pursue the case. Respondents received a copy of the Order on May 16, 2001. 7 Instead of re-filing their complaint with the NLRC within 10 days from May 16, 2001, they filed, on June 11, 2001, an Earnest Motion to Refile Complaint with Motion to Admit Position Paper and Motion to Submit Case For Resolution.8 The Labor Arbiter granted this motion in an Order dated June 18, 2001, and forthwith admitted the position paper of the complainants.

Respondents made the following allegations:

1. Complainants were engaged by respondent ABS-CBN as regular and full-time employees for a continuous period of more than five (5) years with a monthly salary rate of Four Thousand (P4,000.00) pesos beginning 1995 up until the filing of this complaint on November 20, 2000.Machine copies of complainants’ ABS-CBN Employee’s Identification Card and salary vouchers are hereto attached as follows, thus:I. Jennifer Deiparine:Exhibit "A" - ABS-CBN Employee’s Identification CardExhibit "B", - ABS-CBN Salary Voucher from Nov.Exhibit "B-1" & 1999 to July 2000 at P4,000.00Exhibit "B-2"Date employed: September 15, 1995Length of service: 5 years & nine (9) monthsII. Merlou Gerzon - ABS-CBN Employee’s Identification CardExhibit "C"Exhibit "D"Exhibit "D-1" &Exhibit "D-2" - ABS-CBN Salary Voucher from March1999 to January 2001 at P4,000.00Date employed: September 1, 1995Length of service: 5 years & 10 monthsIII. Marlene NazarenoExhibit "E" - ABS-CBN Employee’s Identification CardExhibit "E" - ABS-CBN Salary Voucher from Nov.Exhibit "E-1" & 1999 to December 2000Exhibit :E-2"Date employed: April 17, 1996Length of service: 5 years and one (1) monthIV. Joy Sanchez LerasanExhibit "F" - ABS-CBN Employee’s Identification CardExhibit "F-1" - ABS-CBN Salary Voucher from Aug.Exhibit "F-2" & 2000 to Jan. 2001Exhibit "F-3"Exhibit "F-4" - Certification dated July 6, 2000Acknowledging regular status ofComplainant Joy Sanchez LerasanSigned by ABS-CBN AdministrativeOfficer May Kima HifeDate employed: April 15, 1998Length of service: 3 yrs. and one (1) month9

Respondents insisted that they belonged to a "work pool" from which petitioner chose persons to be given specific assignments at its discretion, and were thus under its direct supervision and control regardless of nomenclature.

They prayed that judgment be rendered in their favor, thus:WHEREFORE, premises considered, this Honorable Arbiter is most respectfully prayed, to issue an order compelling defendants to pay complainants the following:1. One Hundred Thousand Pesos (P100,000.00) eachand by way of moral damages;2. Minimum wage differential;3. Thirteenth month pay differential;4. Unpaid service incentive leave benefits;5. Sick leave;6. Holiday pay;7. Premium pay;8. Overtime pay;9. Night shift differential.

Complainants further pray of this Arbiter to declare them regular and permanent employees of respondent ABS-CBN as a condition precedent for their admission into the existing union and collective bargaining unit of respondent company where they may as such acquire or otherwise perform their obligations thereto or enjoy the benefits due therefrom.

Complainants pray for such other reliefs as are just and equitable under the premises.10

For its part, petitioner alleged in its position paper that the respondents were PAs who basically assist in the conduct of a particular program ran by an anchor or talent. Among their duties include monitoring and receiving incoming calls from listeners and field reporters and calls of news sources; generally, they perform leg work for the anchors during a program or a particular production. They are considered in the industry as "program employees" in that, as distinguished from regular or station employees, they are basically engaged by the station for a particular or specific program broadcasted by the radio station. Petitioner asserted that as PAs, the complainants were issued talent information sheets which are updated from time to time, and are thus made the basis to determine the programs to which they shall later be called on to assist. The program assignments of complainants were as follows:a. Complainant Nazareno assists in the programs:1) Nagbagang Balita (early morning edition)2) Infor Hayupan3) Arangkada (morning edition)4) Nagbagang Balita (mid-day edition)b. Complainant Deiparine assists in the programs:1) Unzanith2) Serbisyo de Arevalo3) Arangkada (evening edition)4) Balitang K (local version)5) Abante Subu6) Pangutana Langc. Complainant Gerzon assists in the program:1) On Mondays and Tuesdays:(a) Unzanith(b) Serbisyo de Arevalo(c) Arangkada (evening edition)(d) Balitang K (local version)(e) Abante Sugbu(f) Pangutana Lang2) On ThursdaysNagbagang Balita3) On Saturdays(a) Nagbagang Balita(b) Info Hayupan(c) Arangkada (morning edition)(d) Nagbagang Balita (mid-day edition)4) On Sundays:(a) Siesta Serenata(b) Sunday Chismisan(c) Timbangan sa Hustisya(d) Sayri ang Lungsod(e) Haranahan11

Petitioner maintained that PAs, reporters, anchors and talents occasionally "sideline" for other programs they produce, such as drama talents in other productions. As program employees, a PA’s engagement is coterminous with the completion of the program, and may be extended/renewed provided that the program is on-going; a PA may also be assigned to new programs upon the cancellation of one program and the commencement of another. As such program employees, their compensation is computed on a program basis, a fixed amount for performance services irrespective of the time consumed. At any rate, petitioner claimed, as the payroll will show, respondents were paid all salaries and benefits due them under the law.12

Petitioner also alleged that the Labor Arbiter had no jurisdiction to involve the CBA and interpret the same, especially since respondents were not covered by the bargaining unit.

On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents, and declared that they were regular employees of petitioner; as such, they were awarded monetary benefits. The fallo of the decision reads:WHEREFORE, the foregoing premises considered, judgment is hereby rendered declaring the complainants regular employees of the respondent ABS-CBN Broadcasting Corporation and directing the same respondent to pay complainants as follows:I - Merlou A. Gerzon P12,025.00II - Marlyn Nazareno 12,025.00III - Jennifer Deiparine 12,025.00IV - Josephine Sanchez Lerazan 12,025.00_________P48,100.00plus ten (10%) percent Attorney’s Fees or a TOTAL aggregate amount of PESOS: FIFTY TWO THOUSAND NINE HUNDRED TEN (P52,910.00).Respondent Veneranda C. Sy is absolved from any liability.SO ORDERED.13

However, the Labor Arbiter did not award money benefits as provided in the CBA on his belief that he had no jurisdiction to interpret and apply the agreement, as the same was within the jurisdiction of the Voluntary Arbitrator as provided in Article 261 of the Labor Code.

Respondents’ counsel received a copy of the decision on August 29, 2001. Respondent Nazareno received her copy on August 27, 2001, while the other respondents received theirs on September 8, 2001. Respondents signed and filed their Appeal Memorandum on September 18, 2001.

For its part, petitioner filed a motion for reconsideration, which the Labor Arbiter denied and considered as an appeal, conformably with Section 5, Rule V, of the NLRC Rules of Procedure. Petitioner forthwith appealed the decision to the NLRC, while respondents filed a partial appeal.

In its appeal, petitioner alleged the following:1. That the Labor Arbiter erred in reviving or re-opening this case which had long been dismissed without prejudice for more than thirty (30) calendar days;2. That the Labor Arbiter erred in depriving the respondent of its Constitutional right to due process of law;3. That the Labor Arbiter erred in denying respondent’s Motion for Reconsideration on an interlocutory order on the ground that the same is a prohibited pleading;4. That the Labor Arbiter erred when he ruled that the complainants are regular employees of the respondent;5. That the Labor Arbiter erred when he ruled that the complainants are entitled to 13th month pay, service incentive leave pay and salary differential; and6. That the Labor Arbiter erred when he ruled that complainants are entitled to attorney’s fees.14

On November 14, 2002, the NLRC rendered judgment modifying the decision of the Labor Arbiter. The fallo of the decision reads:

WHEREFORE, premises considered, the decision of Labor Arbiter Jose G. Gutierrez dated 30 July 2001 is SET ASIDE and VACATED and a new one is entered ORDERING respondent ABS-CBN Broadcasting Corporation, as follows:

1. To pay complainants of their wage differentials and other benefits arising from the CBA as of 30 September 2002 in the aggregate amount of Two Million Five Hundred, Sixty-One Thousand Nine Hundred Forty-Eight Pesos and 22/100 (P2,561,948.22), broken down as follows:a. Deiparine, Jennifer - P 716,113.49b. Gerzon, Merlou - 716,113.49c. Nazareno, Marlyn - 716,113.49d. Lerazan, Josephine Sanchez - 413,607.75Total - P 2,561,948.22

2. To deliver to the complainants Two Hundred Thirty-Three (233) sacks of rice as of 30 September 2002 representing their rice subsidy in the CBA, broken down as follows:a. Deiparine, Jennifer - 60 Sacksb. Gerzon, Merlou - 60 Sacksc. Nazareno, Marlyn - 60 Sacksd. Lerazan, Josephine Sanchez - 53 SacksTotal 233 Sacks; and3. To grant to the complainants all the benefits of the CBA after 30 September 2002.SO ORDERED.15

The NLRC declared that the Labor Arbiter acted conformably with the Labor Code when it granted respondents’ motion to refile the complaint and admit their position paper. Although respondents were not parties to the CBA between petitioner and the ABS-CBN Rank-and-File Employees Union, the NLRC nevertheless granted and computed respondents’ monetary benefits based on the 1999 CBA, which was effective until September 2002. The NLRC also ruled that the Labor Arbiter had jurisdiction over the complaint of respondents because they acted in their individual capacities and not as members of the union. Their claim for monetary benefits was within the context of Article 217(6) of the Labor Code. The validity of respondents’ claim does not depend upon the interpretation of the CBA.

The NLRC ruled that respondents were entitled to the benefits under the CBA because they were regular employees who contributed to the profits of petitioner through their labor. The NLRC cited the ruling of this Court in New Pacific Timber & Supply Company v. National Labor Relations Commission.16

Petitioner filed a motion for reconsideration, which the NLRC denied.

Petitioner thus filed a petition for certiorari under Rule 65 of the Rules of Court before the CA, raising both procedural and substantive issues, as follows: (a) whether the NLRC acted without jurisdiction in admitting the appeal of respondents; (b) whether the NLRC committed palpable error in scrutinizing the reopening and revival of the complaint of respondents with the Labor Arbiter upon due notice despite the lapse of 10 days from their receipt of the July 30, 2001 Order of the Labor Arbiter; (c) whether respondents were regular employees; (d) whether the NLRC acted without jurisdiction in entertaining and resolving the claim of the respondents under the CBA instead of referring the same to the Voluntary Arbitrators as provided in the CBA; and (e) whether the NLRC acted with grave abuse of discretion when it awarded monetary benefits to respondents under the CBA although they are not members of the appropriate bargaining unit.

On February 10, 2004, the CA rendered judgment dismissing the petition. It held that the perfection of an appeal shall be upon the expiration of the last day to appeal by all parties, should there be several parties to a case. Since respondents received their copies of the decision on September 8, 2001 (except respondent Nazareno who received her copy of the decision on August 27, 2001), they had until September 18, 2001 within which to file their Appeal Memorandum. Moreover, the CA declared that respondents’ failure to submit their position paper on time is not a ground to strike out the paper from the records, much less dismiss a complaint.

Anent the substantive issues, the appellate court stated that respondents are not mere project employees, but regular employees who perform tasks necessary and desirable in the usual trade and business of petitioner and not just its project employees. Moreover, the CA added, the award of benefits accorded to rank-and-file employees under the 1996-1999 CBA is a necessary consequence of the NLRC ruling that respondents, as PAs, are regular employees.

Finding no merit in petitioner’s motion for reconsideration, the CA denied the same in a Resolution 17 dated June 16, 2004.

Petitioner thus filed the instant petition for review on certiorari and raises the following assignments of error:1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT JURISDICTION AND GRAVELY ERRED IN UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION NOTWITHSTANDING THE PATENT NULLITY OF THE LATTER’S DECISION AND RESOLUTION.2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC FINDING RESPONDENTS REGULAR EMPLOYEES.3. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC

AWARDING CBA BENEFITS TO RESPONDENTS.18

Considering that the assignments of error are interrelated, the Court shall resolve them simultaneously.

Petitioner asserts that the appellate court committed palpable and serious error of law when it affirmed the rulings of the NLRC, and entertained respondents’ appeal from the decision of the Labor Arbiter despite the admitted lapse of the reglementary period within which to perfect the same. Petitioner likewise maintains that the 10-day period to appeal must be reckoned from receipt of a party’s counsel, not from the time the party learns of the decision, that is, notice to counsel is notice to party and not the other way around. Finally, petitioner argues that the reopening of a complaint which the Labor Arbiter has dismissed without prejudice is a clear violation of Section 1, Rule V of the NLRC Rules; such order of dismissal had already attained finality and can no longer be set aside.

Respondents, on the other hand, allege that their late appeal is a non-issue because it was petitioner’s own timely appeal that empowered the NLRC to reopen the case. They assert that although the appeal was filed 10 days late, it may still be given due course in the interest of substantial justice as an exception to the general rule that the negligence of a counsel binds the client. On the issue of the late filing of their position paper, they maintain that this is not a ground to strike it out from the records or dismiss the complaint.

We find no merit in the petition.

We agree with petitioner’s contention that the perfection of an appeal within the statutory or reglementary period is not only mandatory, but also jurisdictional; failure to do so renders the assailed decision final and executory and deprives the appellate court or body of the legal authority to alter the final judgment, much less entertain the appeal. However, this Court has time and again ruled that in exceptional cases, a belated appeal may be given due course if greater injustice may occur if an appeal is not given due course than if the reglementary period to appeal were strictly followed.19 The Court resorted to this extraordinary measure even at the expense of sacrificing order and efficiency if only to serve the greater principles of substantial justice and equity.20

In the case at bar, the NLRC did not commit a grave abuse of its discretion in giving Article 22321 of the Labor Code a liberal application to prevent the miscarriage of justice. Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties.22 We have held in a catena of cases that technical rules are not binding in labor cases and are not to be applied strictly if the result would be detrimental to the workingman.23

Admittedly, respondents failed to perfect their appeal from the decision of the Labor Arbiter within the reglementary period therefor. However, petitioner perfected its appeal within the period, and since petitioner had filed a timely appeal, the NLRC acquired jurisdiction over the case to give due course to its appeal and render the decision of November 14, 2002. Case law is that the party who failed to appeal from the decision of the Labor Arbiter to the NLRC can still participate in a separate appeal timely filed by the adverse party as the situation is considered to be of greater benefit to both parties.24

We find no merit in petitioner’s contention that the Labor Arbiter abused his discretion when he admitted respondents’ position paper which had been belatedly filed. It bears stressing that the Labor Arbiter is mandated by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without technicalities of law or procedure, all in the interest of due process.25 Indeed, as stressed by the appellate court, respondents’ failure to submit a position paper on time is not a ground for striking out the paper from the records, much less for dismissing a complaint.26 Likewise, there is simply no truth to petitioner’s assertion that it was denied due process when the Labor Arbiter admitted respondents’ position paper without requiring it to file a comment before admitting said position paper. The essence of due process in administrative proceedings is simply an opportunity to explain one’s side or an opportunity to seek reconsideration of the action or ruling complained of. Obviously, there is nothing in the records that would suggest that petitioner had absolute lack of opportunity to be heard.27 Petitioner had the right to file a motion for reconsideration of the Labor Arbiter’s admission of respondents’ position paper, and even file a Reply thereto. In fact, petitioner filed its position paper on April 2, 2001. It must be stressed that Article 280 of the Labor Code was encoded in our statute books to hinder the circumvention by unscrupulous employers of the employees’ right to security of tenure by indiscriminately and absolutely ruling out all written and oral agreements inharmonious with the concept of regular employment defined therein.28

We quote with approval the following pronouncement of the NLRC:The complainants, on the other hand, contend that respondents assailed the Labor Arbiter’s order dated 18 June

2001 as violative of the NLRC Rules of Procedure and as such is violative of their right to procedural due process. That while suggesting that an Order be instead issued by the Labor Arbiter for complainants to refile this case, respondents impliedly submit that there is not any substantial damage or prejudice upon the refiling, even so, respondents’ suggestion acknowledges complainants right to prosecute this case, albeit with the burden of repeating the same procedure, thus, entailing additional time, efforts, litigation cost and precious time for the Arbiter to repeat the same process twice. Respondent’s suggestion, betrays its notion of prolonging, rather than promoting the early resolution of the case.

Although the Labor Arbiter in his Order dated 18 June 2001 which revived and re-opened the dismissed case without prejudice beyond the ten (10) day reglementary period had inadvertently failed to follow Section 16, Rule V, Rules Procedure of the NLRC which states:"A party may file a motion to revive or re-open a case dismissed without prejudice within ten (10) calendar days from receipt of notice of the order dismissing the same; otherwise, his only remedy shall be to re-file the case in the arbitration branch of origin."

the same is not a serious flaw that had prejudiced the respondents’ right to due process. The case can still be refiled because it has not yet prescribed. Anyway, Article 221 of the Labor Code provides:"In any proceedings before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process."

The admission by the Labor Arbiter of the complainants’ Position Paper and Supplemental Manifestation which were belatedly filed just only shows that he acted within his discretion as he is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process. Indeed, the failure to submit a position paper on time is not a ground for striking out the paper from the records, much less for dismissing a complaint in the case of the complainant. (University of Immaculate Conception vs. UIC Teaching and Non-Teaching Personnel Employees, G.R. No. 144702, July 31, 2001).

"In admitting the respondents’ position paper albeit late, the Labor Arbiter acted within her discretion. In fact, she is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without technicalities of law or procedure, all in the interest of due process". (Panlilio vs. NLRC, 281 SCRA 53).

The respondents were given by the Labor Arbiter the opportunity to submit position paper. In fact, the respondents had filed their position paper on 2 April 2001. What is material in the compliance of due process is the fact that the parties are given the opportunities to submit position papers.

"Due process requirements are satisfied where the parties are given the opportunities to submit position papers". (Laurence vs. NLRC, 205 SCRA 737).Thus, the respondent was not deprived of its Constitutional right to due process of law.29

We reject, as barren of factual basis, petitioner’s contention that respondents are considered as its talents, hence, not regular employees of the broadcasting company. Petitioner’s claim that the functions performed by the respondents are not at all necessary, desirable, or even vital to its trade or business is belied by the evidence on record.

Case law is that this Court has always accorded respect and finality to the findings of fact of the CA, particularly if they coincide with those of the Labor Arbiter and the National Labor Relations Commission, when supported by substantial evidence.30 The question of whether respondents are regular or project employees or independent contractors is essentially factual in nature; nonetheless, the Court is constrained to resolve it due to its tremendous effects to the legions of production assistants working in the Philippine broadcasting industry.

We agree with respondents’ contention that where a person has rendered at least one year of service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the employment is considered regular as long as the activity exists, the reason being that a customary appointment is not indispensable before one may be formally declared as having attained regular status. Article 280 of the Labor Code provides:ART. 280. REGULAR AND CASUAL EMPLOYMENT.—The provisions of written agreement to the contrary

notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

In Universal Robina Corporation v. Catapang,31 the Court reiterated the test in determining whether one is a regular employee:The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.32

As elaborated by this Court in Magsalin v. National Organization of Working Men:33

Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a "regular" worker’s security of tenure, however, can hardly be doubted. In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade. But, although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The employment of such person is also then deemed to be regular with respect to such activity and while such activity exists.34

Not considered regular employees are "project employees," the completion or termination of which is more or less determinable at the time of employment, such as those employed in connection with a particular construction project, and "seasonal employees" whose employment by its nature is only desirable for a limited period of time. Even then, any employee who has rendered at least one year of service, whether continuous or intermittent, is deemed regular with respect to the activity performed and while such activity actually exists.

It is of no moment that petitioner hired respondents as "talents." The fact that respondents received pre-agreed "talent fees" instead of salaries, that they did not observe the required office hours, and that they were permitted to join other productions during their free time are not conclusive of the nature of their employment. Respondents cannot be considered "talents" because they are not actors or actresses or radio specialists or mere clerks or utility employees. They are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors.

Thus, there are two kinds of regular employees under the law: (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed.35

The law overrides such conditions which are prejudicial to the interest of the worker whose weak bargaining situation necessitates the succor of the State. What determines whether a certain employment is regular or otherwise is not the will or word of the employer, to which the worker oftentimes acquiesces, much less the procedure of hiring the employee or the manner of paying the salary or the actual time spent at work. It is the character of the activities performed in relation to the particular trade or business taking into account all the circumstances, and in some cases the length of time of its performance and its continued existence. 36 It is obvious that one year after they were employed by petitioner, respondents became regular employees by operation of law.37

Additionally, respondents cannot be considered as project or program employees because no evidence was presented to show that the duration and scope of the project were determined or specified at the time of their engagement. Under existing jurisprudence, project could refer to two distinguishable types of activities. First, a project may refer to a particular job or undertaking that is within the regular or usual business of the employer, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Second, the term project may also refer to a particular job or undertaking that is not within the regular business of the employer. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times.38

The principal test is whether or not the project employees were assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employees were engaged for that project.39

In this case, it is undisputed that respondents had continuously performed the same activities for an average of five years. Their assigned tasks are necessary or desirable in the usual business or trade of the petitioner. The persisting need for their services is sufficient evidence of the necessity and indispensability of such services to petitioner’s business or trade.40 While length of time may not be a sole controlling test for project employment, it can be a strong factor to determine whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the usual trade or business of the employer.41 We note further that petitioner did not report the termination of respondents’ employment in the particular "project" to the Department of Labor and Employment Regional Office having jurisdiction over the workplace within 30 days following the date of their separation from work, using the prescribed form on employees’ termination/ dismissals/suspensions.42

As gleaned from the records of this case, petitioner itself is not certain how to categorize respondents. In its earlier pleadings, petitioner classified respondents as program employees, and in later pleadings, independent contractors. Program employees, or project employees, are different from independent contractors because in the case of the latter, no employer-employee relationship exists.

Petitioner’s reliance on the ruling of this Court in Sonza v. ABS-CBN Broadcasting Corporation43 is misplaced. In that case, the Court explained why Jose Sonza, a well-known television and radio personality, was an independent contractor and not a regular employee:

A. Selection and Engagement of EmployeeABS-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 WagesABS-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 which the law automatically incorporates into every employer-employee

contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.

SONZA’s talent fees, amounting to P317,000 monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of 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.44

In the case at bar, however, the employer-employee relationship between petitioner and respondents has been proven.

First. In the selection and engagement of respondents, no peculiar or unique skill, talent or celebrity status was required 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.45 The Court will peruse beyond any such agreement to examine the facts that typify the parties’ actual relationship.46

It follows then that respondents are entitled to the benefits provided for in the existing CBA between petitioner and its rank-and-file employees. As regular employees, respondents are entitled to the benefits granted to all other regular employees of petitioner under the CBA.47 We quote with approval the ruling of the appellate court, that the reason why production assistants were excluded from the CBA is precisely because they were erroneously classified and treated as project employees by petitioner:

x x x The award in favor of private respondents of the benefits accorded to rank-and-file employees of ABS-CBN under the 1996-1999 CBA is a necessary consequence of public respondent’s ruling that private respondents as production assistants of petitioner are regular employees. The monetary award is not considered as claims involving the interpretation or implementation of the collective bargaining agreement. The reason why production assistants were excluded from the said agreement is precisely because they were classified and treated as project employees by petitioner.

As earlier stated, it is not the will or word of the employer which determines the nature of employment of an employee but the nature of the activities performed by such employee in relation to the particular business or trade of the employer. Considering that We have clearly found that private respondents are regular employees of petitioner, their exclusion from the said CBA on the misplaced belief of the parties to the said agreement that they are project employees, is therefore not proper. Finding said private respondents as regular employees and not as mere project employees, they must be accorded the benefits due under the said Collective Bargaining Agreement.

A collective bargaining agreement is a contract entered into by the union representing the employees and the

employer. However, even the non-member employees are entitled to the benefits of the contract. To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against non-members. A collective bargaining agreement is binding on all employees of the company. Therefore, whatever benefits are given to the other employees of ABS-CBN must likewise be accorded to private respondents who were regular employees of petitioner.48

Besides, only talent-artists were excluded from the CBA and not production assistants who are regular employees of the respondents. Moreover, under Article 1702 of the New Civil Code: "In case of doubt, all labor legislation and all labor contracts shall be construed in favor of the safety and decent living of the laborer."

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 76582 are AFFIRMED. Costs against petitioner.

SO ORDERED.