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Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-44717 August 28, 1985
THE CHARTERED AN! EMPLO"EES ASSOC#AT#ON, petitioner,
vs.
HON. LAS $. OPLE, %& '%s ()*)(%t+ )s t', #&(u-.,&t S,(/,t)/+ o0 L).o/, )&1 THE CHARTERED
AN!,respondents.

GUT#ERRE2, 3R., J.:
This is a petition for certiorari seeking to annul the decision of the respondent ecretar!, no" Minister of #abor
"hich denied the petitioner$s clai% for holida! pa! and its clai% for pre%iu% and overti%e pa! differentials. The
petitioner clai%s that the respondent Minister of #abor acted contrar! to la" and &urisprudence and "ith grave
abuse of discretion in pro%ulgating ec. ', Rule (), Book ((( of the (ntegrated Rules and in issuing Polic!
(nstruction No. *, both referring to holida!s "ith pa!.
+n Ma! ',, -*./, the Chartered Bank E%plo!ees Association, in representation of its %onthl! paid
e%plo!ees0%e%bers, instituted a co%plaint "ith the Regional +ffice No. (), 1epart%ent of #abor, no" Ministr!
of #abor and E%plo!%ent 2M+#E3 against private respondent Chartered Bank, for the pa!%ent of ten 2-,3
un"orked legal holida!s, as "ell as for pre%iu% and overti%e differentials for "orked legal holida!s fro%
Nove%ber -, -*.4.
The %e%orandu% for the respondents su%%ari5es the ad%itted and0or undisputed facts as follo"s6
l. The "ork force of respondent bank consists of -4* regular e%plo!ees, all of "ho% are paid b!
the %onth7
'. 8nder their e9isting collective bargaining agree%ent, 2Art. )(( thereof3 said %onthl! paid
e%plo!ees are paid for overti%e "ork as follo"s6
ection l. The basic "ork "eek for all e%plo!ees e9cepting securit! guards "ho b! virtue of the
nature of their "ork are re:uired to be at their posts for ;</ da!s per !ear, shall be fort! 24,3
hours based on five 2/3 eight 2=3 hours da!s, Monda! to >rida!.
ection '. Ti%e and a :uarter hourl! rate shall be paid for authori5ed "ork perfor%ed in e9cess
of eight 2=3 hours fro% Monda! through >rida! and for an! hour of "ork perfor%ed on
aturda!s sub&ect to ection / hereof.
ection ;. Ti%e and a half hourl! rate shall be paid for authori5ed "ork perfor%ed on unda!s,
legal and special holida!s.
999 999 999
999 999 999
ection /. The provisions of ection ( above not"ithstanding the BAN? %a! revert to the si9 2<3
da!s "ork "eek, to include aturda! for a four 243 hour da!, in the event the Central Bank
should re:uire co%%ercial banks to open for business on aturda!.
;. (n co%puting overti%e pa! and pre%iu% pa! for "ork done during regular holida!s, the
divisor used in arriving at the dail! rate of pa! is '/- da!s although for%erl! the divisor used
"as ;,; da!s and this "as "hen the respondent bank "as still operating on a <@da! "ork "eek
basis. Ao"ever, for purposes of co%puting deductions corresponding to absences "ithout pa!
the divisor used is ;</ da!s.
4. All regular %onthl! paid e%plo!ees of respondent bank are receiving salaries "a! be!ond the
statutor! or %ini%u% rates and are a%ong the highest paid e%plo!ees in the banking industr!.
/. The salaries of respondent bank$s %onthl! paid e%plo!ees suffer no deduction for holida!s
occurring "ithin the %onth.
+n the bases of the foregoing facts, both the arbitrator and the National #abor Relations Co%%ission 2N#RC3
ruled in favor of the petitioners ordering the respondent bank to pa! its %onthl! paid e%plo!ees, holida! pa! for
the ten 2-,3 legal holida!s effective Nove%ber -, -*.4 and to pa! pre%iu% or overti%e pa! differentials to all
e%plo!ees "ho rendered "ork during said legal holida!s. +n appeal, the Minister of #abor set aside the decision
of the N#RC and dis%issed the petitioner$s clai% for lack of %erit basing its decision on ection ', Rule (),
Book (ll of the (ntegrated Rules and Polic! (nstruction No. *, "hich respectivel! provide6
ec. '. tatus of e%plo!ees paid b! the %onth. E%plo!ees "ho are unifor%l! paid b! the %onth,
irrespective of the nu%ber of "orking da!s therein, "ith a salar! of not less than the statutor! or
established %ini%u% "age shall be presu%ed to be paid for all da!s in the %onth "hether
"orked or not.
P+#(CB (NTR8CT(+N N+. *
T+6 All Regional 1irectors
8BCECT6 PA(1 #EDA# A+#(1AB
The rules i%ple%enting P1 =/, have clarified the polic! in the i%ple%entation of the ten 2-,3
paid legal holida!s. Before P1 =/,, the nu%ber of "orking da!s a !ear in a fir% "as considered
i%portant in deter%ining entitle%ent to the benefit. Thus, "here an e%plo!ee "as "orking for at
least ;-; da!s, he "as considered definitel! alread! paid. (f he "as "orking for less than ;-;,
there "as no certaint! "hether the ten 2-,3 paid legal holida!s "ere alread! paid to hi% or not.
The ten 2-,3 paid legal holida!s la", to start "ith, is intended to benefit principall! dail!
e%plo!ees. (n the case of %onthl!, onl! those "hose %onthl! salar! did not !et include pa!%ent
for the ten 2-,3 paid legal holida!s are entitled to the benefit.
8nder the rules i%ple%enting P1 =/,, this polic! has been full! clarified to eli%inate
controversies on the entitle%ent of %onthl! paid e%plo!ees. The ne" deter%ining rule is this6 $(f
the %onthl! paid e%plo!ee is receiving not less than P'4,, the %a9i%u% %onthl! %ini%u%
"age, and his %onthl! pa! is unifor% fro% Canuar! to 1ece%ber, he is presu%ed to be alread!
paid the ten 2-,3 paid legal holida!s. Ao"ever, if deductions are %ade fro% his %onthl! salar!
on account of holida!s in %onths "here the! occur, then he is still entitled to the ten 2-,3 paid
legal holida!s.
These ne" interpretations %ust be unifor%l! and consistentl! upheld.
This issuance shall take effect i%%ediatel!.
The issues are presented in the for% of the follo"ing assign%ents of errors6
>irst Error
Ehether or not the ecretar! of #abor erred and acted contrar! to la" in
pro%ulgating ec. ', Rule (), Book ((( of the (ntegrated Rules and Polic!
(nstruction No. *.
econd Error
Ehether or not the respondent ecretar! of #abor abused his discretion and
acted contrar! to la" in appl!ing ec. ', Rule () of the (ntegrated Rules and
Polic! (nstruction No. * abovestated to private respondent$s %onthl!@paid
e%plo!ees.
Third Error
Ehether or not the respondent ecretar! of #abor, in not giving due credence to
the respondent bank$s practice of pa!ing its e%plo!ees base pa! of -,,F and
pre%iu% pa! of /,F for "ork done during legal holida!s, acted contrar! to la"
and abused his discretion in den!ing the clai% of petitioners for un"orked
holida!s and pre%iu% and overti%e pa! differentials for "orked holida!s.
The petitioner contends that the respondent Minister of #abor gravel! abused his discretion in pro%ulgating
ection ', Rule (), Book ((( of the (ntegrated Rules and Polic! (nstruction No. * as guidelines for the
i%ple%entation of Articles =' and *4 of the #abor Code and in appl!ing said guidelines to this case. (t %aintains
that "hile it is true that the respondent Minister has the authorit! in the perfor%ance of his dut! to pro%ulgate
rules and regulations to i%ple%ent, construe and clarif! the #abor Code, such po"er is li%ited b! provisions of
the statute sought to be i%ple%ented, construed or clarified. According to the petitioner, the so@called
GguidelinesG pro%ulgated b! the respondent Minister totall! contravened and violated the Code b! e9cluding the
e%plo!ees0%e%bers of the petitioner fro% the benefits of the holida! pa!, "hen the Code itself did not provide
for their expanding the Code$s clear and concise conclusion and not"ithstanding the Code$s clear and concise
phraseolog! defining those e%plo!ees "ho are covered and those "ho are e9cluded fro% the benefits of holida!
pa!.
+n the other hand, the private respondent contends that the :uestioned guidelines did not deprive the petitioner$s
%e%bers of the benefits of holida! pa! but %erel! classified those %onthl! paid e%plo!ees "hose %onthl!
salar! alread! includes holida! pa! and those "hose do not, and that the guidelines did not deprive the
e%plo!ees of holida! pa!. (t states that the :uestion to be clarified is "hether or not the %onthl! salaries of the
petitioner$s %e%bers alread! includes holida! pa!. Thus, the guidelines "ere pro%ulgated to avoid confusion or
%isconstruction in the application of Articles =' and *4 of the #abor Code but not to violate the%. Respondent
e9plains that the rationale behind the pro%ulgation of the :uestioned guidelines is to benefit the dail! paid
"orkers "ho, unlike %onthl!@paid e%plo!ees, suffer deductions in their salaries for not "orking on holida!s.
Aence, the Aolida! Pa! #a" "as enacted precisel! to countervail the disparit! bet"een dail! paid "orkers and
%onthl!@paid e%plo!ees.
The decision in Insular Bank of Asia and America Employees' Union (IBAAEU) v. Inciong 2-;' CRA <<;3
resolved a si%ilar issue. ignificantl!, the petitioner in that case "as also a union of bank e%plo!ees. Ee ruled
that ection ', Rule (), Book ((( of the (ntegrated Rules and Polic! (nstruction No. *, are contrar! to the
provisions of the #abor Code and, therefore, invalid This Court stated6
(t is ele%entar! in the rules of statutor! construction that "hen the language of the la" is clear
and une:uivocal the la" %ust be taken to %ean e9actl! "hat it sa!s. (n the case at bar, the
provisions of the #abor Code on the entitle%ent to the benefits of holida! pa! are clear and
e9plicit it provides for both the coverage of and e9clusion fro% the benefit. (n Polic! (nstruction
No. *, the then ecretar! of #abor "ent as far as to categoricall! state that the benefit is
principall! intended for dail! paid e%plo!ees, "hen the la" clearl! states that ever! "orker
shall be paid their regular holida! pa!. This is flagrant violation of the %andator! directive of
Article 4 of the #abor Code, "hich states that $All doubts in the i%ple%entation and
interpretation of the provisions of this Code,including its implementing rules and
regulations shall be resolved in favor of labor.$ Moreover, it shall al"a!s be presu%ed that the
legislature intended to enact a valid and per%anent statute "hich "ould have the %ost beneficial
effect that its language per%its 2+rlosk! v. Aasken, -// A. --'3
+bviousl!, the ecretar! 2Minister3 of #abor had e9ceeded his statutor! authorit! granted b!
Article / of the #abor Code authori5ing hi% to pro%ulgate the necessar! i%ple%enting rules and
regulations.
Ee further ruled6
Ehile it is true that the conte%poraneous construction placed upon a statute b! e9ecutive
officers "hose dut! is to enforce it should be given great "eight b! the courts, still if such
construction is so erroneous, as in the instant case, the sa%e %ust be declared as null and void. (t
is the role of the Cudiciar! to refine and, "hen necessar! correct constitutional 2and0or statutor!3
interpretation, in the conte9t of the interactions of the three branches of the govern%ent, al%ost
al"a!s in situations "here so%e agenc! of the tate has engaged in action that ste%s ulti%atel!
fro% so%e legiti%ate area of govern%ental po"er 2The upre%e Court in Modern Role, C.B.
"isher -*/=, p. ;<3.
999 999 999
(n vie" of the foregoing, ection ', Rule (), Book ((( of the Rules to i%ple%ent the #abor Code
and Polic! (nstruction No. * issued b! the then ecretar! of #abor %ust be declared null and
void. Accordingl!l public respondent 1eput! Minister of #abor A%ado D. (nciong had no basis
at all to den! the %e%bers of petitioner union their regular holida! pa! as directed b! the #abor
Code.
ince the private respondent pre%ises its action on the invalidated rule and polic! instruction, it is clear that the
e%plo!ees belonging to the petitioner association are entitled to the pa!%ent of ten 2-,3 legal holida!s under
Articles =' and *4 of the #abor Code, aside fro% their %onthl! salar!. The! are not a%ong those e9cluded b!
la" fro% the benefits of such holida! pa!.
Presidential 1ecree No. =/, states "ho are e9cluded fro% the holida! provisions of that la". (t states6
ART. ='. !overage. The provision of this Title shall appl! to e%plo!ees in all establish%ents
and undertakings, "hether for profit or not, "ut not to government employees managerial
employees field personnel mem"ers of the family of the employer #ho are dependent on him for
support domestic helpers persons in the personal service of another and #orkers #ho are paid
"y results as determined "y the $ecretary of %a"or in appropriate regulations. 2E%phasis
supplied3.
The :uestioned ection ', Rule (), Book ((( of the (ntegrated Rules and the ecretar!$s Polic! (nstruction No. *
add another e9cluded group, na%el!, Ge%plo!ees "ho are unifor%l! paid b! the %onth.G Ehile the additional
e9clusion is onl! in the for% of a presu%ption that all %onthl! paid e%plo!ees have alread! been paid holida!
pa!, it constitutes a taking a"a! or a deprivation "hich %ust be in the la" if it is to be valid. An ad%inistrative
interpretation "hich di%inishes the benefits of labor %ore than "hat the statute deli%its or "ithholds is
obviousl! ultra vires.
(t is argued that even "ithout the presu%ption found in the rules and in the polic! instruction, the co%pan!
practice indicates that the %onthl! salaries of the e%plo!ees are so co%puted as to include the holida! pa!
provided b! la". The petitioner contends other"ise.
+ne strong argu%ent in favor of the petitioner$s stand is the fact that the Chartered Bank, in co%puting overti%e
co%pensation for its e%plo!ees, e%plo!s a GdivisorG of '/- da!s. The '/- "orking da!s divisor is the result of
subtracting all aturda!s, unda!s and the ten 2-,3 legal holida!s fro% the total nu%ber of calendar da!s in a
!ear. (f the e%plo!ees are alread! paid for all non@"orking da!s, the divisor should be ;</ and not '/-.
The situation is %uddled so%e"hat b! the fact that, in co%puting the e%plo!ees$ absences fro% "ork, the
respondent bank uses ;</ as divisor. An! slight doubts, ho"ever, %ust be resolved in favor of the "orkers. This
is in keeping "ith the constitutional %andate of pro%oting social &ustice and affording protection to labor
2ections < and *, Article ((, Constitution3. The #abor Code, as a%ended, itself provides6
ART. 4. !onstruction in favor of la"or. All doubts in the i%ple%entation and interpretation of
the provisions of this Code, including its i%ple%enting rules and regulations, shall be resolved in
favor of labor.
An! re%aining doubts "hich %a! arise fro% the conflicting or different divisors used in the co%putation of
overti%e pa! and e%plo!ees$ absences are resolved b! the %anner in "hich "ork actuall! rendered on holida!s
is paid. Thus, "henever %onthl! paid e%plo!ees "ork on a holida!, the! are given an additional -,,F base pa!
on top of a pre%iu% pa! of /,F. (f the e%plo!ees$ %onthl! pa! alread! includes their salaries for holida!s, the!
should be paid onl! pre%iu% pa! but not both base pa! and pre%iu% pa!.
The contention of the respondent that -,,F base pa! and /,F pre%iu% pa! for "ork actuall! rendered on
holida!s is given in addition to %onthl! salaries onl! because the collective bargaining agree%ent so provides is
itself an argu%ent in favor of the petitioner stand. (t sho"s that the Collective Bargaining Agree%ent alread!
conte%plated a divisor of '/- da!s for holida! pa! co%putations before the :uestioned presu%ption in the
(ntegrated Rules and the Polic! (nstruction "as for%ulated. There is further%ore a si%ilarit! bet"een overti%e
pa!, "hich is co%puted on the basis of '/- "orking da!s a !ear, and holida! pa!, "hich should be si%ilarl!
treated not"ithstanding the public respondents$ issuances. (n both cases overti%e "ork and holida! "ork@ the
e%plo!ee "orks "hen he is supposed to be resting. (n the absence of an e9press provision of the CBA or the la"
to the contrar!, the co%putation should be si%ilarl! handled.
Ee are not un%indful of the fact that the respondent$s e%plo!ees are a%ong the highest paid in the industr!. (t is
not the intent of this Court to i%pose an! undue burdens on an e%plo!er "hich is alread! doing its best for its
personnel. "e have to resolve the labor dispute in the light of the parties$ o"n collective bargaining agree%ent
and the benefits given b! la" to all "orkers. Ehen the la" provides benefits for Ge%plo!ees in all
establish%ents and undertakings, "hether for profit or notG and lists specificall! the e%plo!ees not entitled to
those benefits, the ad%inistrative agenc! i%ple%enting that la" cannot e9clude certain e%plo!ees fro% its
coverage si%pl! because the! are paid b! the %onth or because the! are alread! highl! paid. The re%ed! lies in
a clear redrafting of the collective bargaining agree%ent "ith a state%ent that %onthl! pa! alread! includes
holida! pa! or an a%end%ent of the la" to that effect but not an ad%inistrative rule or a polic! instruction.
EAERE>+RE, the epte%ber ., -*.< order of the public respondent is hereb! RE)ERE1 and ET A(1E.
The March '4, -*.< decision of the National #abor Relations Co%%ission "hich affir%ed the +ctober ;,, -*./
resolution of the #abor Arbiter but deleted interest pa!%ents is RE(NTATE1.
+ +R1ERE1.
&akasiar !.'. !oncepcion 'r. &elencio()errera *lana Escolin +elova ,e la -uente !uevas Alampay and
*ata.o ''. concur.
/eehankee '. in the result.
A0uino '. took no part.
SECOND DIVISION
[G.R. No. 146530. January 17, 2005]
PEDRO CHAVE, petitioner, vs. NA!"ONA# #A$OR RE#A!"ON% CO&&"%%"ON, %'PRE&E
PAC(AG"NG, "NC. an) A#V"N #EE, P*an+ &ana,-r, respondents.
D E C " % " O N
CA##EJO, %R., J..
Before the Court is the petition for review on certiorari of the Resolution[1] dated Dece!er 1"#
$%%% of the Court of &ppeals 'C&( reversin) its Decision dated &pril $*# $%%% in C&+,-R- S. No-
"$/*"- 0he assailed resolution reinstated the Decision dated 1ul2 1%# 133* of the National 4a!or
Relations Coission 'N4RC(# disissin) the coplaint for ille)al disissal filed !2 herein petitioner
.edro Chave5- 0he said N4RC decision siilarl2 reversed its earlier Decision dated 1anuar2 $6# 133*
which# affirin) that of the 4a!or &r!iter# ruled that the petitioner had !een ille)all2 disissed !2
respondents Supree .ac7a)in)# Inc- and 8r- &lvin 4ee-
0he case steed fro the followin) facts9
0he respondent copan2# Supree .ac7a)in)# Inc-# is in the !usiness of anufacturin) cartons
and other pac7a)in) aterials for e:port and distri!ution- It en)a)ed the services of the petitioner#
.edro Chave5# as truc7 driver on Octo!er $"# 13*/- &s such# the petitioner was tas7ed to deliver the
respondent copan2;s products fro its factor2 in 8ariveles# Bataan# to its various custoers# ostl2
in 8etro 8anila- 0he respondent copan2 furnished the petitioner with a truc7- 8ost of the
petitioner;s deliver2 trips were ade at ni)httie# coencin) at <9%% p-- fro 8ariveles# and
returnin) thereto in the afternoon two or three da2s after- 0he deliveries were ade in accordance
with the routin) slips issued !2 respondent copan2 indicatin) the order# tie and ur)enc2 of
deliver2- Initiall2# the petitioner was paid the su of .="%-%% per trip- 0his was later ad>usted
to ./*%-%% per trip and# at the tie of his alle)ed disissal# the petitioner was receivin) .3%%-%% per
trip-
Soetie in 133$# the petitioner e:pressed to respondent &lvin 4ee# respondent copan2;s plant
ana)er# his 'the petitioner;s( desire to avail hiself of the !enefits that the re)ular eplo2ees were
receivin) such as overtie pa2# ni)htshift differential pa2# and 1=th onth pa2# aon) others-
&lthou)h he proised to e:tend these !enefits to the petitioner# respondent 4ee failed to actuall2 do
so-
On ?e!ruar2 $%# 133"# the petitioner filed a coplaint for re)ulari5ation with the Re)ional
&r!itration Branch No- III of the N4RC in San ?ernando# .apan)a- Before the case could !e heard#
respondent copan2 terinated the services of the petitioner- Conse@uentl2# on 8a2 $"# 133"# the
petitioner filed an aended coplaint a)ainst the respondents for ille)al disissal# unfair la!or
practice and non+pa2ent of overtie pa2# ni)htshift differential pa2# 1=th onth pa2# aon) others-
0he case was doc7eted as N4RC Case No- R&B+III+%$+<1*1+3"-
0he respondents# for their part# denied the e:istence of an eplo2er+eplo2ee relationship
!etween the respondent copan2 and the petitioner- 0he2 averred that the petitioner was an
independent contractor as evidenced !2 the contract of service which he and the respondent copan2
entered into- 0he said contract provided as follows9
That the Principal Hreferring to upre%e Packaging, (nc.I, b! these presents, agrees to hire and the Contractor
Hreferring to Pedro Chave5I, b! nature of their speciali5ed line or service &obs, accepts the services to be
rendered to the Principal, under the follo"ing ter%s and covenants heretofore %entioned6
1- 0hat the inland transport deliver2Ahaulin) activities to !e perfored !2 the contractor to the
principal# shall onl2 cover travel route fro 8ariveles to 8etro 8anila- Otherwise# an2
chan)e to this travel route shall !e su!>ect to further a)reeent !2 the parties concerned-
$- 0hat the pa2ent to !e ade !2 the .rincipal for an2 haulin) or deliver2 transport
services full2 rendered !2 the Contractor shall !e on a per trip !asis dependin) on the si5e
or classification of the truc7 !ein) used in the transport service# to wit9
a3 (f the hauling or deliver! service shall re:uire a truck of si9 "heeler, the pa!%ent on a per trip
basis fro% Mariveles to Metro Manila shall be TAREE A8N1RE1 PE+ 2P;,,.,,3 and
E>>ECT()E 1ece%ber -/, -*=4.
b3 (f the hauling or deliver! service re:uire a truck of ten "heeler, the pa!%ent on a per trip basis,
follo"ing the sa%e route %entioned, shall be TAREE A8N1RE1 >(>TB 2P;/,.,,3 Pesos and
Effective 1ece%ber -/, -*=4.
=- 0hat for the aount involved# the Contractor will !e to [sic] provide for [sic] at least two '$(
helpersB
/- 0he Contractor shall e:ercise direct control and shall !e responsi!le to the .rincipal for
the cost of an2 daa)e to# loss of an2 )oods# car)oes# finished products or the li7e# while
the sae are in transit# or due to rec7less [sic] of its en utili5ed for the purpose a!ove
entionedB
"- 0hat the Contractor shall have a!solute control and disciplinar2 power over its en
wor7in) for hi su!>ect to this a)reeent# and that the Contractor shall hold the .rincipal
free and harless fro an2 lia!ilit2 or clai that a2 arise !2 virtue of the Contractor;s
non+copliance to the e:istin) provisions of the 8iniu Ca)e 4aw# the Eplo2ees
Copensation &ct# the Social Securit2 S2ste &ct# or an2 other such law or decree that
a2 hereafter !e enacted# it !ein) clearl2 understood that an2 truc7 drivers# helpers or
en wor7in) with and for the Contractor# are not eplo2ees who will !e indenified !2 the
.rincipal for an2 such clai# includin) daa)es incurred in connection therewithB
<- 0his contract shall ta7e effect iediatel2 upon the si)nin) !2 the parties# su!>ect to
renewal on a 2ear+to+2ear !asis-[$]
0his contract of service was dated Dece!er 1$# 13*/- It was su!se@uentl2 renewed twice# on
1ul2 1%# 13*3 and Septe!er $*# 133$- E:cept for the rates to !e paid to the petitioner# the ters of
the contracts were su!stantiall2 the sae- 0he relationship of the respondent copan2 and the
petitioner was alle)edl2 )overned !2 this contract of service-
0he respondents insisted that the petitioner had the sole control over the eans and ethods !2
which his wor7 was accoplished- De paid the wa)es of his helpers and e:ercised control over
the- &s such# the petitioner was not entitled to re)ulari5ation !ecause he was not an eplo2ee of
the respondent copan2- 0he respondents# li7ewise# aintained that the2 did not disiss the
petitioner- Rather# the severance of his contractual relation with the respondent copan2 was due to
his violation of the ters and conditions of their contract- 0he petitioner alle)edl2 failed to o!serve the
iniu de)ree of dili)ence in the proper aintenance of the truc7 he was usin)# there!2 e:posin)
respondent copan2 to unnecessar2 si)nificant e:penses of overhaulin) the said truc7-
&fter the parties had filed their respective pleadin)s# the 4a!or &r!iter rendered the Decision
dated ?e!ruar2 =# 1336# findin) the respondents )uilt2 of ille)al disissal- 0he 4a!or &r!iter declared
that the petitioner was a re)ular eplo2ee of the respondent copan2 as he was perforin) a service
that was necessar2 and desira!le to the latter;s !usiness- 8oreover# it was noted that the petitioner
had dischar)ed his duties as truc7 driver for the respondent copan2 for a continuous and
uninterrupted period of ore than ten 2ears-
0he contract of service invo7ed !2 the respondents was declared null and void as it constituted a
circuvention of the constitutional provision affordin) full protection to la!or and securit2 of tenure-
0he 4a!or &r!iter found that the petitioner;s disissal was anchored on his insistent deand to !e
re)ulari5ed- Dence# for lac7 of a valid and >ust cause therefor and for their failure to o!serve the due
process re@uireents# the respondents were found )uilt2 of ille)al disissal- 0he dispositive portion
of the 4a!or &r!iter;s decision states9
EAERE>+RE, in the light of the foregoing, &udg%ent is hereb! rendered declaring respondent 8PREME
PAC?AD(ND, (NC. and0or MR. A#)(N #EE, Plant Manager, "ith business address at BEPJ, Mariveles,
Bataan guilt! of illegal dis%issal, ordering said respondent to pa! co%plainant his separation pa! e:uivalent to
one 2-3 %onth pa! per !ear of service based on the average %onthl! pa! of P-,,=,,.,, in lieu of reinstate%ent
as his reinstate%ent back to "ork "ill not do an! good bet"een the parties as the e%plo!%ent relationship has
alread! beco%e strained and full back"ages fro% the ti%e his co%pensation "as "ithheld on >ebruar! ';, -**/
up to Canuar! ;-, -**. 2cut@off date3 until co%pliance, other"ise, his back"ages shall continue to run. Also to
pa! co%plainant his -;th %onth pa!, night shift differential pa! and service incentive leave pa! hereunder
co%puted as follo"s6
a3 Back"ages KKKKKKK.. P'4=,4,,.,,
b3 eparation Pa! KKKK.K... P-4,,4,,.,,
c3 -;th %onth pa! KKKK.KKP -,,=,,.,,
d3 ervice (ncentive #eave Pa! .. ',,4,.,,
T+TA# P4,-,<4,.,,
Respondent is also ordered to pa! ten 2-,F3 of the a%ount due the co%plainant as attorne!Ls fees.
+ +R1ERE1.[=]
0he respondents seasona!l2 interposed an appeal with the N4RC- Dowever# the appeal was
disissed !2 the N4RC in its Decision[/] dated 1anuar2 $6# 133*# as it affired in toto the decision
of the 4a!or &r!iter- In the said decision# the N4RC characteri5ed the contract of service !etween the
respondent copan2 and the petitioner as a EscheeF that was resorted to !2 the respondents who#
ta7in) advanta)e of the petitioner;s unfailiarit2 with the En)lish lan)ua)e andAor le)al niceties#
wanted to evade the effects and iplications of his !ecoin) a re)ulari5ed eplo2ee-["]
0he respondents sou)ht reconsideration of the 1anuar2 $6# 133* Decision of the N4RC- &ctin)
thereon# the N4RC rendered another Decision[<] dated 1ul2 1%# 133*# reversin) its earlier decision
and# this tie# holdin) that no eplo2er+eplo2ee relationship e:isted !etween the respondent
copan2 and the petitioner- In reconsiderin) its earlier decision# the N4RC stated that the
respondents did not e:ercise control over the eans and ethods !2 which the petitioner
accoplished his deliver2 services- It upheld the validit2 of the contract of service as it pointed out
that said contract was silent as to the tie !2 which the petitioner was to a7e the deliveries and that
the petitioner could hire his own helpers whose wa)es would !e paid fro his own account- 0hese
factors indicated that the petitioner was an independent contractor# not an eplo2ee of the respondent
copan2-
0he N4RC ruled that the contract of service was not intended to circuvent &rticle $*% of the
4a!or Code on the re)ulari5ation of eplo2ees- Said contract# includin) the fi:ed period of
eplo2ent contained therein# havin) !een 7nowin)l2 and voluntaril2 entered into !2 the parties
thereto was declared valid citin) Brent School, Inc. v. Zamora-[6] 0he N4RC# thus# disissed the
petitioner;s coplaint for ille)al disissal-
0he petitioner sou)ht reconsideration of the 1ul2 1%# 133* Decision !ut it was denied !2 the
N4RC in its Resolution dated Septe!er 6# 133*- De then filed with this Court a petition for certiorari#
which was referred to the C& followin) the rulin) in St. Martin Funeral Home v. NLRC-[*]
0he appellate court rendered the Decision dated &pril $*# $%%%# reversin) the 1ul2 1%# 133*
Decision of the N4RC and reinstatin) the decision of the 4a!or &r!iter- In the said decision# the C&
ruled that the petitioner was a re)ular eplo2ee of the respondent copan2 !ecause as its truc7
driver# he perfored a service that was indispensa!le to the latter;s !usiness- ?urther# he had !een
the respondent copan2;s truc7 driver for ten continuous 2ears- 0he C& also reasoned that the
petitioner could not !e considered an independent contractor since he had no su!stantial capital in the
for of tools and achiner2- In fact# the truc7 that he drove !elon)ed to the respondent copan2-
0he C& also o!served that the routin) slips that the respondent copan2 issued to the petitioner
showed that it e:ercised control over the latter- 0he routin) slips indicated the chronolo)ical order and
priorit2 of deliver2# the ur)enc2 of certain deliveries and the tie when the )oods were to !e delivered
to the custoers-
0he C&# li7ewise# dis!elieved the respondents; clai that the petitioner a!andoned his >o! notin)
that he >ust filed a coplaint for re)ulari5ation- 0his actuation of the petitioner ne)ated the
respondents; alle)ation that he a!andoned his >o!- 0he C& held that the respondents failed to
dischar)e their !urden to show that the petitioner;s disissal was for a valid and >ust cause-
&ccordin)l2# the respondents were declared )uilt2 of ille)al disissal and the decision of the 4a!or
&r!iter was reinstated-
In its &pril $*# $%%% Decision# the C& denounced the contract of service !etween the respondent
copan2 and the petitioner in this wise9
(n su%%ation, "e rule that "ith the proliferation of contracts seeking to prevent "orkers fro% attaining the
status of regular e%plo!%ent, it is but necessar! for the courts to scrutini5e "ith e9tre%e caution their legalit!
and &ustness. Ehere fro% the circu%stances it is apparent that a contract has been entered into to preclude
ac:uisition of tenurial securit! b! the e%plo!ee, the! should be struck do"n and disregarded as contrar! to
public polic! and %orals. (n this case, the Mcontract of serviceN is &ust another atte%pt to e9ploit the un"itting
e%plo!ee and deprive hi% of the protection of the #abor Code b! %aking it appear that the stipulations of the
parties "ere governed b! the Civil Code as in ordinar! transactions.[3]
Dowever# on otion for reconsideration !2 the respondents# the C& ade a coplete turn around
as it rendered the assailed Resolution dated Dece!er 1"# $%%% upholdin) the contract of service
!etween the petitioner and the respondent copan2- In reconsiderin) its decision# the C& e:plained
that the e:tent of control e:ercised !2 the respondents over the petitioner was onl2 with respect to the
result !ut not to the eans and ethods used !2 hi- 0he C& cited the followin) circustances9 '1(
the respondents had no sa2 on how the )oods were to !e delivered to the custoersB '$( the petitioner
had the ri)ht to eplo2 wor7ers who would !e under his direct controlB and '=( the petitioner had no
wor7in) tie-
0he fact that the petitioner had !een with the respondent copan2 for ore than ten 2ears was#
accordin) to the C&# of no oent !ecause his status was deterined not !2 the len)th of service !ut
!2 the contract of service- 0his contract# not !ein) contrar2 to orals# )ood custos# pu!lic order or
pu!lic polic2# should !e )iven the force and effect of law as !etween the respondent copan2 and the
petitioner- Conse@uentl2# the C& reinstated the 1ul2 1%# 133* Decision of the N4RC disissin) the
petitioner;s coplaint for ille)al disissal-
Dence# the recourse to this Court !2 the petitioner- De assails the Dece!er 1"# $%%% Resolution
of the appellate court alle)in) that9
'&(
0DE COGR0 O? &..E&4S CO88I00ED & ,R&VE &BGSE O? DISCRE0ION &8OGN0IN, 0O
EHCESS O? 1GRISDIC0ION IN ,IVIN, 8ORE CONSIDER&0ION 0O 0DE ECON0R&C0 O?
SERVICEF EN0ERED IN0O BI .E0I0IONER &ND .RIV&0E RES.ONDEN0 0D&N &R0IC4E
$*% O? 0DE 4&BOR CODE O? 0DE .DI4I..INES CDICD C&0E,ORIC&44I DE?INES &
RE,G4&R E8.4OI8EN0 NO0CI0DS0&NDIN, &NI CRI00EN &,REE8EN0 0O 0DE
CON0R&RI &ND RE,&RD4ESS O? 0DE OR&4 &,REE8EN0 O? 0DE .&R0IESB
'B(
0DE COGR0 O? &..E&4S CO88I00ED & ,R&VE &BGSE O? DISCRE0ION &8OGN0IN, 0O
EHCESS O? 1GRISDIC0ION IN REVERSIN, I0S OCN ?INDIN,S 0D&0 .E0I0IONER IS &
RE,G4&R E8.4OIEE &ND IN DO4DIN, 0D&0 0DERE EHIS0ED NO E8.4OIER+
E8.4OIEE RE4&0IONSDI. BE0CEEN .RIV&0E RES.ONDEN0 &ND .E0I0IONER IN &S
8GCD &S 0DE ECON0RO4 0ES0F CDICD IS CONSIDERED 0DE 8OS0 ESSEN0I&4
CRI0ERION IN DE0ER8ININ, 0DE EHIS0ENCE O? S&ID RE4&0IONSDI. IS NO0 .RESEN0-
[1%]
0he threshold issue that needs to !e resolved is whether there e:isted an eplo2er+eplo2ee
relationship !etween the respondent copan2 and the petitioner- Ce rule in the affirative-
0he eleents to deterine the e:istence of an eplo2ent relationship are9 '1( the selection and
en)a)eent of the eplo2eeB '$( the pa2ent of wa)esB '=( the power of disissalB and '/( the
eplo2er;s power to control the eplo2ee;s conduct-[11] 0he ost iportant eleent is the
eplo2er;s control of the eplo2ee;s conduct# not onl2 as to the result of the wor7 to !e done# !ut also
as to the eans and ethods to accoplish it-[1$] &ll the four eleents are present in this case-
?irst- Gndenia!l2# it was the respondents who en)a)ed the services of the petitioner without the
intervention of a third part2-
Second- Ca)es are defined as Ereuneration or earnin)s# however desi)nated# capa!le of !ein)
e:pressed in ters of one2# whether fi:ed or ascertained on a tie# tas7# piece or coission !asis#
or other ethod of calculatin) the sae# which is pa2a!le !2 an eplo2er to an eplo2ee under a
written or unwritten contract of eplo2ent for wor7 done or to !e done# or for service rendered or to
!e rendered-F[1=] 0hat the petitioner was paid on a per trip !asis is not si)nificant- 0his is erel2 a
ethod of coputin) copensation and not a !asis for deterinin) the e:istence or a!sence of
eplo2er+eplo2ee relationship- One a2 !e paid on the !asis of results or tie e:pended on the
wor7# and a2 or a2 not ac@uire an eplo2ent status# dependin) on whether the eleents of an
eplo2er+eplo2ee relationship are present or not-[1/] In this case# it cannot !e )ainsaid that the
petitioner received copensation fro the respondent copan2 for the services that he rendered to
the latter-
8oreover# under the Rules Ipleentin) the 4a!or Code# ever2 eplo2er is re@uired to pa2 his
eplo2ees !2 eans of pa2roll-[1"] 0he pa2roll should show# aon) other thin)s# the eplo2ee;s
rate of pa2# deductions ade# and the aount actuall2 paid to the eplo2ee- Interestin)l2# the
respondents did not present the pa2roll to support their clai that the petitioner was not their
eplo2ee# raisin) speculations whether this oission proves that its presentation would !e adverse to
their case-[1<]
0hird- 0he respondents; power to disiss the petitioner was inherent in the fact that the2
en)a)ed the services of the petitioner as truc7 driver- 0he2 e:ercised this power !2 terinatin) the
petitioner;s services al!eit in the )uise of Eseverance of contractual relationF due alle)edl2 to the
latter;s !reach of his contractual o!li)ation-
?ourth- &s earlier opined# of the four eleents of the eplo2er+eplo2ee relationship# the Econtrol
testF is the ost iportant- Copared to an eplo2ee# an independent contractor is one who carries
on a distinct and independent !usiness and underta7es to perfor the >o!# wor7# or service on its own
account and under its own responsi!ilit2 accordin) to its own anner and ethod# free fro the
control and direction of the principal in all atters connected with the perforance of the wor7 e:cept
as to the results thereof-[16] Dence# while an independent contractor en>o2s independence and
freedo fro the control and supervision of his principal# an eplo2ee is su!>ect to the eplo2er;s
power to control the eans and ethods !2 which the eplo2ee;s wor7 is to !e perfored and
accoplished-[1*]
&lthou)h the respondents denied that the2 e:ercised control over the anner and ethods !2
which the petitioner accoplished his wor7# a careful review of the records shows that the latter
perfored his wor7 as truc7 driver under the respondents; supervision and control- 0heir ri)ht of
control was anifested !2 the followin) attendant circustances9
-. The truck driven b! the petitioner belonged to respondent co%pan!7
'. There "as an e9press instruction fro% the respondents that the truck shall be used e9clusivel! to deliver
respondent co%pan!Ls goods7 [13]
;. Respondents directed the petitioner, after co%pletion of each deliver!, to park the truck in either of t"o
specific places onl!, to "it6 at its office in Metro Manila at ';', +s%eOa treet, Makati Cit! or at BEPJ,
Mariveles, Bataan7[$%] and
4. Respondents deter%ined ho", "here and "hen the petitioner "ould perfor% his task b! issuing to hi%
gate passes and routing slips. [$1]
a. The routing slips indicated on the colu%n REMAR?, the chronological order and priorit! of deliver!
such as -
st
drop, '
nd
drop, ;
rd
drop, etc. This %eant that the petitioner had to deliver the sa%e according to the
order of priorit! indicated therein.
b. The routing slips, like"ise, sho"ed "hether the goods "ere to be delivered urgentl! or not b! the "ord
R8A printed thereon.
c. The routing slips also indicated the e9act ti%e as to "hen the goods "ere to be delivered to the
custo%ers as, for e9a%ple, the "ords Mto%orro" %orningN "as "ritten on slip no. '..<.
0hese circustances# to the Court;s ind# prove that the respondents e:ercised control over the
eans and ethods !2 which the petitioner accoplished his wor7 as truc7 driver of the respondent
copan2- On the other hand# the Court is hard put to !elieve the respondents; alle)ation that the
petitioner was an independent contractor en)a)ed in providin) deliver2 or haulin) services when he
did not even own the truc7 used for such services- Evidentl2# he did not possess su!stantial
capitali5ation or investent in the for of tools# achiner2 and wor7 preises- 8oreover# the
petitioner perfored the deliver2 services e:clusivel2 for the respondent copan2 for a continuous
and uninterrupted period of ten 2ears-
0he contract of service to the contrar2 notwithstandin)# the factual circustances earlier
discussed indu!ita!l2 esta!lish the e:istence of an eplo2er+eplo2ee relationship !etween the
respondent copan2 and the petitioner- It !ears stressin) that the e:istence of an eplo2er+
eplo2ee relationship cannot !e ne)ated !2 e:pressl2 repudiatin) it in a contract and providin)
therein that the eplo2ee is an independent contractor when# as in this case# the facts clearl2 show
otherwise- Indeed# the eplo2ent status of a person is defined and prescri!ed !2 law and not !2
what the parties sa2 it should !e-[$$]
Davin) esta!lished that there e:isted an eplo2er+eplo2ee relationship !etween the respondent
copan2 and the petitioner# the Court shall now deterine whether the respondents validl2 disissed
the petitioner-
&s a rule# the eplo2er !ears the !urden to prove that the disissal was for a valid and >ust
cause-[$=] In this case# the respondents failed to prove an2 such cause for the petitioner;s disissal-
0he2 insinuated that the petitioner a!andoned his >o!- 0o constitute a!andonent# these two factors
ust concur9 '1( the failure to report for wor7 or a!sence without valid or >ustifia!le reasonB and '$( a
clear intention to sever eplo2er+eplo2ee relationship-[$/] O!viousl2# the petitioner did not intend to
sever his relationship with the respondent copan2 for at the tie that he alle)edl2 a!andoned his
>o!# the petitioner >ust filed a coplaint for re)ulari5ation# which was forthwith aended to one for
ille)al disissal- & char)e of a!andonent is totall2 inconsistent with the iediate filin) of a
coplaint for ille)al disissal# ore so when it includes a pra2er for reinstateent-[$"]
Neither can the respondents; clai that the petitioner was )uilt2 of )ross ne)li)ence in the proper
aintenance of the truc7 constitute a valid and >ust cause for his disissal- ,ross ne)li)ence iplies
a want or a!sence of or failure to e:ercise sli)ht care or dili)ence# or the entire a!sence of care- It
evinces a thou)htless disre)ard of conse@uences without e:ertin) an2 effort to avoid the-[$<] 0he
ne)li)ence# to warrant reoval fro service# should not erel2 !e gross !ut also habitual-[$6] 0he
sin)le and isolated act of the petitioner;s ne)li)ence in the proper aintenance of the truc7 alle)ed !2
the respondents does not aount to E)ross and ha!itual ne)lectF warrantin) his disissal-
0he Court a)rees with the followin) findin)s and conclusion of the 4a!or &r!iter9
K As against the gratuitous allegation of the respondent that co%plainant "as not dis%issed fro% the service but
due to co%plainantLs breach of their contractual relation, i.e., his violation of the ter%s and conditions of the
contract, "e are ver! %uch inclined to believe co%plainantLs stor! that his dis%issal fro% the service "as
anchored on his insistent de%and that he be considered a regular e%plo!ee. Because co%plainant in his right
senses "ill not &ust abandon for that reason alone his "ork especiall! so that it is onl! his &ob "here he depends
chiefl! his e9istence and support for his fa%il! if he "as not aggrieved b! the respondent "hen he "as told that
his services as driver "ill be ter%inated on >ebruar! ';, -**/.[$*]
0hus# the lac7 of a valid and >ust cause in terinatin) the services of the petitioner renders his
disissal ille)al- Gnder &rticle $63 of the 4a!or Code# an eplo2ee who is un>ustl2 disissed is
entitled to reinstateent# without loss of seniorit2 ri)hts and other privile)es# and to the pa2ent of full
!ac7wa)es# inclusive of allowances# and other !enefits or their onetar2 e@uivalent# coputed fro
the tie his copensation was withheld fro hi up to the tie of his actual reinstateent-
[$3] Dowever# as found !2 the 4a!or &r!iter# the circustances o!tainin) in this case do not warrant
the petitioner;s reinstateent- & ore e@uita!le disposition# as held !2 the 4a!or &r!iter# would !e an
award of separation pa2 e@uivalent to one onth for ever2 2ear of service fro the tie of his ille)al
disissal up to the finalit2 of this >ud)ent in addition to his full !ac7wa)es# allowances and other
!enefits-
/HERE0ORE# the instant petition is ,R&N0ED- 0he Resolution dated Dece!er 1"# $%%% of
the Court of &ppeals reversin) its Decision dated &pril $*# $%%% in C&+,-R- S. No- "$/*" is
REVERSED and SE0 &SIDE- 0he Decision dated ?e!ruar2 =# 1336 of the 4a!or &r!iter in N4RC
Case No- R&B+III+%$+<1*1+"# findin) the respondents )uilt2 of ille)all2 terinatin) the eplo2ent of
petitioner .edro Chave5# is REINS0&0ED-
%O ORDERED.
Puno, Chairman!, "ustria#Martine$, %inga, and Chico#Na$ario, &&., concur.
?IRS0 DIVISION
[G.R. No. 145443. &ar12 13, 2005]
RA4'E# P. CON%'#!A, petitioner, vs. CO'R! O0 APPEA#%, PA&ANA
PH"#"PP"NE%, "NC., RA'# . RE4'E%!O, an) A#E!A
!O#EN!"NO, respondents.
D E C " % " O N
CARP"O, J..
!2- Ca5-
0his is a petition for review[1] assailin) the Decision of $* &pril $%%% and
Resolution of 3 Octo!er $%%% proul)ated !2 the Court of &ppeals 'Eappellate
courtF([$] in C&+,-R- S. No- "%/<$- 0he appellate court reversed the Resolution
of the National 4a!or Relations Coission 'EN4RCF( which in turn affired the
4a!or &r!iter;s Decision-
!2- An+-1-)-n+ 0a1+5
.aana .hilippines# Inc- 'E.aanaF( is en)a)ed in health care !usiness-
Ra@uel .- Consulta 'EConsultaF( was a 8ana)in) &ssociate of .aana-
Consulta;s appointent dated 1 Dece!er 13*6 states9
Ee are pleased to for%all! confir% !our appoint%ent and confer upon !ou the authorit!
as MANAD(ND A+C(ATE 2MA3 effective on 1ece%ber -, -*=. up to Canuar! ',
-*==. Bour area of operation shall be "ithin Metro Manila.
(n this capacit!, !our principal responsibilit! is to organi5e, develop, %anage, and
%aintain a sales division and a full co%ple%ent of agencies and Aealth Consultants
2AealthCons3 and to sub%it such nu%ber of enroll%ents and revenue attain%ents as %a!
be re:uired of !our position in accordance "ith pertinent Co%pan! policies and
guidelines. (n pursuit of this ob&ective, !ou are hereb! tasked "ith the responsibilities of
recruiting, training and directing !our upervising Associates 2As3 and the Aealth
Consultants under their respective agencies, for the purpose of pro%oting our corporate
#ove Mission.
(n the perfor%ance of such duties, !ou are e9pected to uphold and pro%ote the
Co%pan!Ls interests and good i%age and to abide b! its principles and established
nor%s of conduct necessar! and appropriate in the discharge of !our functions. The
authorit! as MA like"ise vests upon !ou co%%and responsibilit! for the actions of !our
As and AealthCons7 the Co%pan! therefore reserves the right to debit !our account for
an! accountabilities0financial obligations arising therefro%.
B! !our acceptance of this appoint%ent, it is understood that !ou %ust represent the
Co%pan! on an e9clusive basis, and %ust not engage directl! or indirectl! in activities,
nor beco%e affiliated in official or unofficial capacit! "ith co%panies or organi5ations
"hich co%pete or have the sa%e business as Pa%ana. (t is further understood that his
HsicI self@inhibition shall be effective for a period of one !ear fro% date of official
ter%ination "ith the Co%pan! arising fro% an! cause "hatsoever.
(n consideration of !our undertaking the assign%ent and the acco%pan!ing duties and
responsibilities, !ou shall be entitled to co%pensation co%puted as follo"s6
+n (nitial Me%bership >ee Entrance >ee /F
Medical >ee <F
+n ubse:uent Me%bership >ee <F
Bou are like"ise entitled to participate in sales contests and such other incentives that
%a! be i%ple%ented b! the Co%pan!.
This appoint%ent is on a non@e%plo!er@e%plo!ee relationship basis, and shall be in
accordance "ith the Co%pan! Duidelines on Appoint%ent, Reclassification and Transfer
of ales Associates.[=]
Soetie in 13*6# Consulta ne)otiated with the ?ederation of ?ilipino
Civilian Eplo2ees &ssociation 'E??CE&F( wor7in) at the Gnited States Su!ic
Naval Base for a Dealth Care .lan for the ??CE& e!ers- .aana issued
Consulta a Certification[/] dated $= Nove!er 13*6# as follows9
This certifies that the E%erald Droup under Ms. Ra:uel P. Consulta, as Managing
Consultant, is dul! authori5ed to negotiate for and in behalf of PAMANA "ith the
>ederation of >ilipino Civilian E%plo!ees Association covering all 8.. facilities in the
Philippines, the coverage of >>CEA %e%bers under the Pa%ana Dolden Care Aealth
Plans.
8pon such negotiation and eventual e9ecution of the contract agree%ents, entitle%ents
of all benefits due the E%erald Droup in itLs HsicI entirel! including itLs HsicI upervising
Consultants and Aealth Consultants, b! of co%%issions, over@rides and other package of
benefits is hereb! affir%ed, obligated and confir%ed as long as the contracts negotiated
and e9ecuted are in full force and effect, including an! and all rene"als %ade. And
provided further that the herein authori5ed consultants re%ain in active status "ith the
Pa%ana Dolden Care sales group.["]
On / 8arch 13**# .aana and the G-S- Naval Suppl2 Depot si)ned the
??CE& account- Consulta# claiin) that .aana did not pa2 her coission
for the ??CE& account# filed a coplaint for unpaid wa)es or coission
a)ainst .aana# its .resident Ra5ul J- Re@uesto 'ERe@uestoF(# and its
E:ecutive Vice+.resident &leta 0olentino 'E0olentinoF(-
!2- Ru*6n,5 o7 +2- #a8or Ar86+-r an) +2- N#RC
In a Decision proul)ated on $= 1une 133=# 4a!or &r!iter &le: &rcadio
4ope5 ruled# as follows9
ACC+R1(ND#B, respondent is hereb! ordered to pa! co%plainant her unpaid
co%%ission to be co%puted as against actual transactions bet"een respondent
PAMANA and the contracting 1epart%ent of 8.. Naval uppl! 1epot upon
presentation of pertinent docu%ent.
Respondent is further ordered to pa! ten 2-,F3 percent attorne!Ls fees.
+ +R1ERE1.[<]
.aana# Re@uesto and 0olentino 'E.aana et al-F( appealed the Decision of
the 4a!or &r!iter-
In a Resolution[6] proul)ated on $$ 1ul2 133/# the N4RC disissed the
appeal and affired the Decision of the 4a!or &r!iter- In its Order proul)ated
on = Octo!er 133/# the N4RC denied the otion for reconsideration of
.aana et al.
.aana et al. filed a petition for certiorari !efore this Court- In copliance
with this Court;s resolution dated < ?e!ruar2 133"# the Office of the Solicitor
,eneral su!itted a 8anifestation in 4ieu of Coent pra2in) to )rant the
petition on the )round that Consulta was not an eplo2ee of .aana- On $=
Nove!er 133*# this Court referred the case to the appellate court pursuant
to St. Martin Funeral Home v. NLRC.[*]
!2- D-1656on o7 +2- A99-**a+- Cour+
In its Decision proul)ated on $* &pril $%%%# the appellate court reversed
the N4RC Decision- 0he appellate court ruled that Consulta was a coission
a)ent# not an eplo2ee of .aana- 0he appellate court also ruled that
Consulta should have liti)ated her clai for unpaid coission in an ordinar2
civil action-
Dence# Consulta;s recourse to this Court-
!2- "55u-5
0he issues are9
1- Chether Consulta was an eplo2ee of .aana-
$- Chether the 4a!or &r!iter had >urisdiction over Consulta;s clai for unpaid coission-
!2- Ru*6n, o7 +2- Cour+
Ce affir the Decision of the appellate court- Consulta was an independent
a)ent and not an eplo2ee of .aana-
The Four-Fold Test
In Viaa v. Al-Laadan#[3] the Court first laid down the four+fold test to
deterine the e:istence of an eplo2er+eplo2ee relationship- 0he four
eleents of an eplo2er+eplo2ee relationship# which have since !een adopted
in su!se@uent >urisprudence#[1%] are '1( the power to hireB '$( the pa2ent of
wa)esB '=( the power to disissB and '/( the power to control- 0he power to
control is the ost iportant of the four eleents-
In !nsular Li"e Assuran#e Co.$ Ltd. v. NLRC#[11] the Court e:plained the
scope of the power to control# thus9
9 9 9 (t should, ho"ever, be obvious that not ever! for% of control that the hiring part!
reserves to hi%self over the conduct of the part! hired in relation to the services
rendered %a! be accorded the effect of establishing an e%plo!er@e%plo!ee relationship
bet"een the% in the legal or technical sense of the ter%. A line %ust be dra"n
so%e"here, if the recogni5ed distinction bet"een an e%plo!ee and an individual
contractor is not to vanish altogether. Realisticall!, it "ould be a rare contract of service
that gives untra%%elled freedo% to the part! hired and esche"s an! intervention
"hatsoever in his perfor%ance of the engage%ent.
#ogicall!, the line should be dra"n bet"een rules that %erel! serve as guidelines
to"ards the achieve%ent of the %utuall! desired result "ithout dictating the %eans or
%ethods to be e%plo!ed in attaining it, and those that control or fi9 the %ethodolog!
and bind or restrict the part! hired to the use of such %eans. The first, "hich ai% onl!
to pro%ote the result, create no e%plo!er@e%plo!ee relationship unlike the second,
"hich address both the result and the %eans used to achieve it.
In the present case# the power to control is issin)- .aana tas7ed
Consulta to or)ani5e# develop# ana)e# and aintain a sales division# su!it a
nu!er of enrollents and revenue attainents in accordance with copan2
policies and )uidelines# and to recruit# train and direct her Supervisin)
&ssociates and Dealth Consultants-[1$] Dowever# the anner in which Consulta
was to pursue these activities was not su!>ect to the control of .aana-
Consulta failed to show that she had to report for wor7 at definite hours- 0he
aount of tie she devoted to solicitin) clients was left entirel2 to her
discretion- 0he eans and ethods of recruitin) and trainin) her sales
associates# as well as the developent# ana)eent and aintenance of her
sales division# were left to her sound >ud)ent-
Consulta clais that the docuents she su!itted show that .aana had
control on the conduct of her wor7 and the eans and ethods to accoplish
the wor7- Dowever# the docuents onl2 prove the a!sence of the power to
control- 0he 8inutes of the eetin) on =1 8a2 13** of the 8ana)in)
&ssociates with ?el2 Chitfield# Vice+.resident for Sales of .aana# reflect the
followin)9
At this point Mrs. Ehitfield g)4, so-, *o%&t,/s o& /,(/u%t-,&t )&1 s,55%&g
t,('&%6u,s and re%inded the group that the success of an agenc! is still people. The
%ore recruits !ou have the better is !our chance to achieve !our :uota.
he also announced Cune be %ade a recruit%ent %onth, and told the MAs to re%ind
their associates that if !ou cannot sell to a prospect then recruit hi% or her.
he also discussed e9tensivel! the surve! %ethod of selling and recruit%ent and that the
sales associates should be %ore aggressive in their da! to da! sales activit!. S',
/,-%&1,1 t', MAs to 0%55 u* t',%/ /,(/u%t-,&t /,6u%/,-,&ts to ., ).5, to
*)/t%(%*)t, %& t', -o&t'5+ )&1 6u)/t,/5+ (o&t,st.
9 9 9
4. Recruit%ent Ca%paign
(n connection "ith the Recruit%ent Ca%paign for Cune, Mr. R. Canon[1=] re:uested for
Manage%ent support. Ae suggested that a recruit%ent Advertise%ent be placed in a
leading Metropolitan dail! Ne"spaper. T', (ost o0 7'%(' 7)s u&)&%-ous5+ sugg,st,1
.+ MAs t')t M)&)g,-,&t s'ou51 s')/, )t 5,)st 589.
/. MAs agreed to *)+ %& )14)&(, t',%/ s')/, 0o/ t', s)5)/+ o0 t', MAs S,(/,t)/+.
[1/] 2E%phasis supplied3
0he 8inutes of the 6 1une 13** eetin) reflect the followin)9
III- .RODGC0ION K RECRGI08EN0 INCEN0IVES
To help the MAs in their recruit%ent drive Mrs. Ehitfield suggested so%e incentives to
be undertaken b! the MAs like 2-3 cash incentives for associates that bring in a recruit,
2'3 cash incentives based on production brought in b! these ne" recruits.
he said that MAs, as business%HeIn should invest ti%e, effort P %one! to their "ork,
because it "ill redo"n HsicI to their o"n good an!"a!, that the success of their agenc!
should not depend solel! on "hat %anage%ent could give as incentives but also on
incentives of MAs "ithin their agencies. (t should be a concerted effort.
After a thorough discussion on the pros P cons of the suggestions it "as agreed that
a P-,.,, per recruit be given to the associate that "ill recruit and an additional cash
pri5e based on production of these ne" recruits.[1"]
Clearl2# the 8ana)in) &ssociates onl2 received su))estions fro .aana
on how to )o a!out their recruitent and sales activities- 0he2 could adopt the
su))estions !ut the su))estions were not !indin) on the- 0he2 could adopt
other ethods that the2 deeed ore effective-
?urther# the 8ana)in) &ssociates had to as7 the 8ana)eent of .aana to
shoulder half of the advertiseent cost for their recruitent capai)n- 0he2
shelled out their own resources to !olster their recruitent- 0he2 shared in the
pa2ent of the salaries of their secretaries- 0he2 )ave cash incentives to their
sales associates fro their own poc7et- 0hese circustances show that the
8ana)in) &ssociates were independent contractors# not eplo2ees# of
.aana-
?inall2# .aana paid Consulta not for la!or she perfored !ut onl2 for the
results of her la!or-[1<] Cithout results# Consulta;s la!or was her own !urden and
loss- Der ri)ht to copensation# or to coission# depended on the tan)i!le
results of her wor7[16] + whether she !rou)ht in pa2in) recruits- Consulta;s
appointent paper provides9
(n consideration of !our undertaking the assign%ent and the acco%pan!ing duties and
responsibilities, !ou shall be entitled to co%pensation co%puted as follo"s6
+n (nitial Me%bership >ee Entrance >ee /F
Medical >ee <F
+n ubse:uent Me%bership >ee <F
Bou are like"ise entitled to participation in sales contests and such other incentives that
%a! be i%ple%ented b! the Co%pan!.[1*]
0he ,uidelines on &ppointent of &ssociates show that a 8ana)in)
&ssociate received the followin) coissions and !onuses9
;. Co%pensation Package of Regular MAs
Regular MAs shall be entitled to the follo"ing co%pensation and benefits6
;.- Co%pensation
a3 Personal Production
(ndividual0>a%il! (nstitutional Acct.
co%%ission ;,F ;,F
bonus 4,F @
b3 Droup Production
overriding co%%ission <F <F
bonus /F @
;.' Benefits
Participation in all sales contests corresponding to the MA position plus an! such other
benefits as %a! be provided for the MA on regular status.[13]
&side fro coissions# !onuses and other !enefits that depended solel2
on actual sales# .aana did not pa2 Consulta an2 copensation for ana)in)
her sales division# or for recruitin) and trainin) her sales consultants- &s a
8ana)in) &ssociate# she was onl2 entitled to coissions# !onuses and other
!enefits# which depended solel2 on her sales and on the sales of her )roup-
The %&#lusivit' (rovision
Consulta;s appointent had an e:clusivit2 provision- 0he appointent
provided that Consulta ust represent .aana on an e:clusive !asis- She ust
not en)a)e directl2 or indirectl2 in activities of other copanies that copete
with the !usiness of .aana- Dowever# the fact that the appointent re@uired
Consulta to solicit !usiness e:clusivel2 for .aana did not ean that .aana
e:ercised control over the eans and ethods of Consulta;s wor7 as the ter
control is understood in la!or >urisprudence-[$%] Neither did it a7e Consulta an
eplo2ee of .aana- .aana did not prohi!it Consulta fro en)a)in) in an2
other !usiness# or fro !ein) connected with an2 other copan2# for as lon) as
the !usiness or copan2 did not copete with .aana;s !usiness-
0he prohi!ition applied for one 2ear after the terination of the contract with
.aana- In one of their eetin)s# one of the 8ana)in) &ssociates reported
that he was transferrin) his sales force and account fro another copan2 to
.aana-[$1] 0he e:clusivit2 provision was a reasona!le restriction desi)ned to
prevent siilar acts pre>udicial to .aana;s !usiness interest- &rticle 1=%< of
the Civil Code provides that E[t]he contractin) parties a2 esta!lish such
stipulations# clauses# ters and conditions as the2 a2 dee convenient#
provided the2 are not contrar2 to law# orals# )ood custos# pu!lic order# or
pu!lic polic2-F
Jurisdi#tion over Claim "or )npaid Commission
0here !ein) no eplo2er+eplo2ee relationship !etween .aana and
Consulta# the 4a!or &r!iter and the N4RC had no >urisdiction to entertain and
rule on Consulta;s one2 clai-
&rticle $16 of the 4a!or Code provides9
ART. '-.. 'urisdiction of %a"or Ar"iters and the !ommission. @ 2a3 E9cept as
other"ise provided under this Code the #abor Arbiters shall have original and e9clusive
&urisdiction to hear and decide, "ithin thirt! 2;,3 calendar da!s after the sub%ission of
the case b! the parties for decision "ithout e9tension, even in the absence of
stenographic notes, the follo"ing cases involving all "orkers, "hether agricultural or
non@agricultural6
1- Gnfair la!or practice casesB
$- 0erination disputesB
=- If accopanied with a clai for reinstateent# those cases that wor7ers a2 file involvin)
wa)es# rates of pa2# hours of wor7 and other ters and conditions of eplo2entB
/- Clais for actual# oral# e:eplar2 and other fors of daa)es arisin) fro the
eplo2er+eplo2ee relationsB
"- Cases arisin) fro an2 violation of &rticle $</ of this Code# includin) @uestions involvin)
the le)alit2 of stri7es and loc7outsB and
<- E:cept clais for Eplo2ees Copensation# Social Securit2# 8edicare and aternit2
!enefits# all other clais# arisin) fro eplo2er+eplo2ee relations# includin) those of
persons in doestic or household service# involvin) an aount e:ceedin) five thousand
pesos '."#%%%-%%( re)ardless of whether accopanied with a clai for reinstateent-
2b3 The Co%%ission shall have e9clusive appellate &urisdiction over all cases decided
b! #abor Arbiters.
2c3 Cases arising fro% the interpretation or i%ple%entation of collective bargaining
agree%ents and those arising fro% the interpretation or enforce%ent of co%pan!
personnel policies shall be disposed of b! the #abor Arbiter b! referring the sa%e to the
grievance %achiner! and voluntar! arbitration as %a! be provided in said agree%ents.
Consulta filed her action under &rticle $16'a('<( of the 4a!or Code-
Dowever# since there was no eplo2er+eplo2ee relationship !etween .aana
and Consulta# the 4a!or &r!iter should have disissed Consulta;s clai for
unpaid coission- Consulta;s reed2 is to file an ordinar2 civil action to
liti)ate her clai-
/HERE0ORE# the petition is DIS8ISSED and the Decision of the Court of
&ppeals in C&+,-R- S. No- "%/<$ is &??IR8ED in toto-
%O ORDERED.
'avi(e, &r., C.&., Chairman!, )uisumbing, *nares#Santiago, and "$cuna,
&&., concur-
0DIRD DIVISION
[G.R. No. 157214. Jun- 7, 2005]
PH"#"PP"NE G#O$A# CO&&'N"CA!"ON%, "NC., petitioner$ vs. R"CARDO
DE VERA, respondent.
D E C " % " O N
GARC"A, J..
Before us is this appeal !2 wa2 of a petition for review on certiorari fro the 1$
Septe!er $%%$ Decision[1] and the 1= ?e!ruar2 $%%= Resolution[$] of the Court of &ppeals in
C&+,-R- S. No- <"16*# upholdin) the findin) of ille)al disissal !2 the National 4a!or
Relations Coission a)ainst petitioner-
&s culled fro the records# the pertinent facts are9
.etitioner .hilippine ,lo!al Counications# Inc- '.hilCo(# is a corporation en)a)ed in
the !usiness of counication services and allied activities# while respondent Ricardo De
Vera is a ph2sician !2 profession who petitioner enlisted to attend to the edical needs of
its eplo2ees- &t the cru: of the controvers2 is Dr- De Vera;s status vis a vis petitioner when
the latter terinated his en)a)eent-
It appears that on 1" 8a2 13*1# De Vera# via a letter dated 1" 8a2 13*1#[=] offered his
services to the petitioner# therein proposin) his plan of wor7s re@uired of a practitioner in
industrial edicine# to include the followin)9
-. Application of preventive %edicine including periodic check@up of
e%plo!ees7
'. Aolding of clinic hours in the %orning and afternoon for a total of five 2/3
hours dail! for consultation services to e%plo!ees7
;. Manage%ent and treat%ent of e%plo!ees that %a! necessitate hospitali5ation
including e%ergenc! cases and accidents7
4. Conduct pre@e%plo!%ent ph!sical check@up of prospective e%plo!ees "ith
no additional %edical fee7
/. Conduct ho%e visits "henever necessar!7
<. Attend to certain %edical ad%inistrative function such as acco%plishing
%edical for%s, evaluating conditions of e%plo!ees appl!ing for sick leave of
absence and subse:uentl! issuing proper certification, and all %atters referred
"hich are %edical in nature.
0he parties a)reed and forali5ed respondent;s proposal in a docuent denoinated
as RE!A"NER%H"P CON!RAC![/] which will !e for a period of one 2ear su!>ect to renewal# it
!ein) ade clear therein that respondent will cover Ethe retainership the Copan2 previousl2
had with Dr- L- EulauF and that respondent;s Eretainer feeF will !e at ./#%%%-%% a onth- Said
contract was renewed 2earl2-["] 0he retainership arran)eent went on fro 13*1 to 133/ with
chan)es in the retainer;s fee- Dowever# for the 2ears 133" and 133<# renewal of the contract
was onl2 ade ver!all2-
0he turnin) point in the parties; relationship surfaced in Dece!er 133< when .hilco#
thru a letter[<] !earin) on the su!>ect !oldl2 written as E0ER8IN&0ION M RE0&INERSDI.
CON0R&C0F# infored De Vera of its decision to discontinue the latter;s Eretainer;s contract
with the Copan2 effective at the close of !usiness hours of Dece!er =1# 133<F !ecause
ana)eent has decided that it would !e ore practical to provide edical services to its
eplo2ees throu)h accredited hospitals near the copan2 preises-
On $$ 1anuar2 1336# De Vera filed a coplaint for ille)al disissal !efore the National
4a!or Relations Coission 'N4RC(# alle)in) that that he had !een actuall2 eplo2ed !2
.hilco as its copan2 ph2sician since 13*1 and was disissed without due process- De
averred that he was desi)nated as a Ecopan2 ph2sician on retainer !asisF for reasons
alle)edl2 7nown onl2 to .hilco- De li7ewise professed that since he was not conversant
with la!or laws# he did not )ive uch attention to the desi)nation as an2wa2 he wor7ed on a
full+tie !asis and was paid a !asic onthl2 salar2 plus frin)e !enefits# li7e an2 other re)ular
eplo2ees of .hilco-
On $1 Dece!er 133*# 4a!or &r!iter Raon Valentin C- Re2es cae out with a
decision[6] disissin) De Vera;s coplaint for lac7 of erit# on the rationale that as a Eretained
ph2sicianF under a valid contract utuall2 a)reed upon !2 the parties# De Vera was an
Eindependent contractorF and that he Ewas not disissed !ut rather his contract with
[.DI4CO8] ended when said contract was not renewed after Dece!er =1# 133<F-
On De Vera;s appeal to the N4RC# the latter# in a decision[*] dated $= Octo!er $%%%#
reversed 'the word used is EodifiedF( that of the 4a!or &r!iter# on a findin) that De Vera is
.hilco;s Ere)ular eplo2eeF and accordin)l2 directed the copan2 to reinstate hi to his
forer position without loss of seniorit2 ri)hts and privile)es and with full !ac7wa)es fro the
date of his disissal until actual reinstateent- Ce @uote the dispositive portion of the
decision9
EAERE>+RE, the assailed decision is %odified in that respondent is ordered to
reinstate co%plainant to his for%er position "ithout loss of seniorit! rights and
privileges "ith full back"ages fro% the date of his dis%issal until his actual
reinstate%ent co%puted as follo"s6
Back"ages6
a3 Basic alar!
>ro% 1ec. ;-, -**< to Apr. -,, ',,, Q ;*.;; %os.
P44,4,,.,, 9 ;*.;; %os. P-,./,,-=/.,,
b3 -;
th
Month Pa!6
-0-' of P-,./,,-=/.,, -4/,=4=../
c3 Travelling allo"ance6
P-,,,,.,, 9 ;*.;; %os. ;*,;;,.,,
DRAN1 T+TA# P-,*;/,;<;../
The decision stands in other aspects.
+ +R1ERE1.
Cith its otion for reconsideration havin) !een denied !2 the N4RC in its order of $6
?e!ruar2 $%%1#[3] .hilco then went to the Court of &ppeals on a petition for certiorari# thereat
doc7eted as CA:G.R. %P No. 65173# iputin) )rave a!use of discretion aountin) to lac7 or
e:cess of >urisdiction on the part of the N4RC when it reversed the findin)s of the la!or ar!iter
and awarded thirteenth onth pa2 and travelin) allowance to De Vera even as such award
had no !asis in fact and in law-
On 1$ Septe!er $%%$# the Court of &ppeals rendered a decision#[1%] odif2in) that of
the N4RC !2 deletin) the award of travelin) allowance# and orderin) pa2ent of separation
pa2 to De Vera in lieu of reinstateent# thus9
:HERE$ORE, pre%ises considered, the assailed &udg%ent of public respondent, dated
'; +ctober ',,,, is MOD#$#ED. The a"ard of traveling allo"ance is deleted as the
sa%e is hereb! 1E#ETE1. (nstead of reinstate%ent, private respondent shall be paid
separation pa! co%puted at one 2-3 %onth salar! for ever! !ear of service co%puted
fro% the ti%e private respondent co%%enced his e%plo!%ent in -*=- up to the actual
pa!%ent of the back"ages and separation pa!. The a"ards of back"ages and
-;
th
%onth pa! TAN1.
+ +R1ERE1.
In tie# .hilco filed a otion for reconsideration !ut was denied !2 the appellate court
in its resolution of 1= ?e!ruar2 $%%=-[11]
Dence# .hilco;s present recourse on its ain su!ission that +
TAE C+8RT +> APPEA# ERRE1 (N 8TA(N(ND TAE 1EC((+N +> TAE
NAT(+NA# #AB+R RE#AT(+N C+MM((+N AN1 REN1ER(ND TAE
R8ET(+NE1 1EC((+N AN1 RE+#8T(+N (N A EAB TAAT ( N+T (N
ACC+R1 E(TA TAE >ACT AN1 APP#(CAB#E #AE AN1 C8R(PR81ENCE
EA(CA 1(T(ND8(A #ED(T(MATE C+B C+NTRACT(ND ADREEMENT >R+M
TAE EMP#+BER@EMP#+BEE RE#AT(+NA(P.
Ce GRAN!-
Gnder Rule /" of the Rules of Court# onl2 @uestions of law a2 !e reviewed !2 this Court
in decisions rendered !2 the Court of &ppeals- 0here are instances# however# where the
Court departs fro this rule and reviews findin)s of fact so that su!stantial >ustice a2 !e
served- 0he e:ceptional instances are where9
M999 999 999 2-3 the conclusion is a finding grounded entirel! on speculation, sur%ise
and con&ecture7 2'3 the inference %ade is %anifestl! %istaken7 2;3 there is grave abuse of
discretion7 243 the &udg%ent is based on a %isapprehension of facts7 2/3 the findings of
fact are conflicting7 2<3 the Court of Appeals "ent be!ond the issues of the case and its
findings are contrar! to the ad%issions of both appellant and appellees7 2.3 the findings
of fact of the Court of Appeals are contrar! to those of the trial court7 2=3 said findings of
facts are conclusions "ithout citation of specific evidence on "hich the! are based7 2*3
the facts set forth in the petition as "ell as in the petitionerLs %ain and repl! briefs are
not disputed b! the respondents7 and 2-,3 the findings of fact of the Court of Appeals are
pre%ised on the supposed absence of evidence and contradicted b! the evidence on
record.N[1$]
&s we see it# the parties; respective su!issions revolve on the priordial issue of
whether an eplo2er+eplo2ee relationship e:ists !etween petitioner and respondent# the
e:istence of which is# in itself# a @uestion of fact[1=] well within the province of the N4RC-
Nonetheless# )iven the realit2 that the N4RC;s findin)s are at odds with those of the la!or
ar!iter# the Court# consistent with its rulin) in &imene$ vs. National Labor Relations
Commission,[1/] is constrained to loo7 deeper into the attendant circustances o!tainin) in
this case# as appearin) on record-
In a lon) line of decisions#[1"] the Court# in deterinin) the e:istence of an eplo2er+
eplo2ee relationship# has invaria!l2 adhered to the four+fold test# to wit9 [1] the selection and
en)a)eent of the eplo2eeB [$] the pa2ent of wa)esB [=] the power of disissalB and [/]
the power to control the eplo2ee;s conduct# or the so+called Econtrol testF# considered to !e
the ost iportant eleent-
&ppl2in) the four+fold test to this case# we initiall2 find that it was respondent hiself who
sets the paraeters of what his duties would !e in offerin) his services to petitioner- 0his is
!orne !2 no less than his 1" 8a2 13*1 letter[1<] which# in full# reads9
MMa! -/, -*=-
Mrs. Adela #. )icente
)ice President, (ndustrial Relations
PhilCo%, Paseo de Ro9as
Makati, Metro Manila
M a d a % 6
( shall have the ti%e and effort for the position of Co%pan! ph!sician "ith !our
corporation if !ou dee%ed it necessar!. ( have the necessar! :ualifications, training and
e9perience re:uired b! such position and ( a% confident that ( can serve the best
interests of !our e%plo!ees, %edicall!.
M! plan of "orks and targets shall cover the duties and responsibilities re:uired of a
practitioner in industrial %edicine "hich includes the follo"ing6
-. Application of preventive %edicine including periodic check@up of
e%plo!ees7
'. Aolding of clinic hours in the %orning and afternoon for a total of five 2/3
hours dail! for consultation services to e%plo!ees7
;. Manage%ent and treat%ent of e%plo!ees that %a! necessitate
hospitali5ation including e%ergenc! cases and accidents7
4. Conduct pre@e%plo!%ent ph!sical check@up of prospective e%plo!ees "ith
no additional %edical fee7
/. Conduct ho%e visits "henever necessar!7
<. Attend to certain %edical ad%inistrative functions such as acco%plishing
%edical for%s, evaluating conditions of e%plo!ees appl!ing for sick leave of
absence and subse:uentl! issuing proper certification, and all %atters
referred "hich are %edical in nature.
+n the sub&ect of co%pensation for the services that ( propose to render to the
corporation, !ou %a! state an offer based on !our belief that ( can ver! "ell :ualif! for
the &ob having "orked "ith !our organi5ation for so%eti%e no".
( shall be ver! grateful for "hatever kind attention !ou %a! e9tend on this %atter and
hoping that it "ill %erit acceptance, ( re%ain
)er! trul! !ours,
2signed3
R(CAR1+ ). 1E )ERA, M.1.N
Si)nificantl2# the fore)oin) letter was su!stantiall2 the !asis of the la!or ar!iter;s findin)
that there e:isted no eplo2er+eplo2ee relationship !etween petitioner and respondent# in
addition to the followin) factual settin)s9
The fact that the co%plainant "as not considered an e%plo!ee "as recogni5ed b! the
co%plainant hi%self in a signed letter to the respondent dated April '-, -*=' attached as
Anne9 D to the respondentLs Repl! and Re&oinder. Ruoting the pertinent portion of said
letter6
STo carr! out !our %e%o effectivel! and to provide a s!ste%atic and "orkable ti%e
schedule "hich "ill serve the best interests of both the present and absent e%plo!ee,
%a! ( propose an e9tended t"o@hour service 2-6,,@;6,, P.M.3 during "hich period ( can
devote a%ple ti%e to both groups depending upon the urgenc! of the situation. ( shall
read&ust %! private schedule to be available for the herein proposed e9tended hours,
should !ou consider this proposal.
As regards co%pensation for the additional ti%e and services that ( shall render to the
e%plo!ees, it is dependent on !our evaluation of the %erit of %! proposal and !our
confidence on %! abilit! to carr! out efficientl! said proposal.L
The tenor of this letter indicates that the co%plainant "as proposing to e9tend his ti%e
"ith the respondent and seeking additional co%pensation for said e9tension. This sho"s
that the respondent PA(#C+M did not have control over the schedule of the
co%plainant as it HisI the co%plainant "ho is proposing his o"n schedule and asking to
be paid for the sa%e. This is proof that the co%plainant understood that his relationship
"ith the respondent PA(#C+M "as a retained ph!sician and not as an e%plo!ee. (f he
"ere an e%plo!ee he could not negotiate as to his hours of "ork.
The co%plainant is a 1octor of Medicine, and presu%abl!, a "ell@educated person. Bet,
the co%plainant, in his position paper, is clai%ing that he is not conversant "ith the la"
and did not give %uch attention to his &ob title@ on a Sretainer basisL. But the sa%e
co%plainant ad%its in his affidavit that his service for the respondent "as covered b! a
retainership contract H"hichI "as rene"ed ever! !ear fro% -*=' to -**4. 8pon reading
the contract dated epte%ber <, -*=', signed b! the co%plainant hi%self 2Anne9 SCL of
RespondentLs Position Paper3, it clearl! states that is a retainership contract. The
retainer fee is indicated thereon and the duration of the contract for one !ear is also
clearl! indicated in paragraph / of the Retainership Contract. The co%plainant cannot
clai% that he "as una"are that the ScontractL "as good onl! for one !ear, as he signed
the sa%e "ithout an! ob&ections. The co%plainant also accepted its rene"al ever! !ear
thereafter until -**4. As a literate person and educated person, the co%plainant cannot
clai% that he does not kno" "hat contract he signed and that it "as rene"ed on a !ear to
!ear basis.[16]
0he la!or ar!iter added the in(icia, not disputed !2 respondent# that fro the tie he
started to wor7 with petitioner# he never was included in its pa2rollB was never deducted an2
contri!ution for reittance to the Social Securit2 S2ste 'SSS(B and was in fact su!>ected !2
petitioner to the ten '1%N( percent withholdin) ta: for his professional fee# in accordance with
the National Internal Revenue Code# atters which are sipl2 inconsistent with an eplo2er+
eplo2ee relationship- In the precise words of the la!or ar!iter9
M999 999 999 After %ore than ten !ears of services to PA(#C+M, the co%plainant
"ould have noticed that no deductions "ere %ade on his re%uneration or that the
respondent "as deducting the -,F ta9 for his fees and he surel! "ould have co%plained
about the% if he had considered hi%self an e%plo!ee of PA(#C+M. But he never
raised those issues. An ordinar! e%plo!ee "ould consider the pa!%ents i%portant
and thus %ake sure the! "ould be paid. The co%plainant never bothered to ask the
respondent to re%it his contributions. This clearl! sho"s that the co%plainant
never considered hi%self an e%plo!ee of PA(#C+M and thus, respondent need not
re%it an!thing to the in favor of the co%plainant.N[1*]
Clearl2# the eleents of an eplo2er+eplo2ee relationship are wantin) in this case- Ce
a2 add that the records are replete with evidence showin) that respondent had to !ill
petitioner for his onthl2 professional fees-[13] It sipl2 runs a)ainst the )rain of coon
e:perience to ia)ine that an ordinar2 eplo2ee has 2et to !ill his eplo2er to receive his
salar2-
Ce note# too# that the power to terinate the parties; relationship was utuall2 vested on
!oth- Either a2 terinate the arran)eent at will# with or without cause-[$%]
?inall2# rear7a!l2 a!sent fro the parties; arran)eent is the eleent of control#
where!2 the eplo2er has reserved the ri)ht to control the eplo2ee not onl2 as to the result
of the wor7 done !ut also as to the eans and ethods !2 which the sae is to !e
accoplished-[$1]
Dere# petitioner had no control over the eans and ethods !2 which respondent went
a!out perforin) his wor7 at the copan2 preises- De could even e!ar7 in the private
practice of his profession# not to ention the fact that respondent;s wor7 hours and the
additional copensation therefor were ne)otiated upon !2 the parties-[$$] In fine# the parties
theselves practicall2 a)reed on ever2 ters and conditions of respondent;s en)a)eent#
which there!2 ne)ates the eleent of control in their relationship- ?or sure# respondent has
never cited even a sin)le instance when petitioner interfered with his wor7-
Iet# despite the fore)oin)# all of which are e:tant on record# !oth the N4RC and the Court
of &ppeals ruled that respondent is petitioner;s re)ular eplo2ee at the tie of his separation-
.artl2 sa2s the appellate court in its assailed decision9
Be that as it %a!, it is ad%itted that private respondentLs "ritten Sretainer contractL "as
rene"ed annuall! fro% -*=- to -**4 and the alleged Srene"alL for -**/ and -**<, "hen
it "as allegedl! ter%inated, "as verbal.
Article '=, of the #abor code 2sic3 provides6
SThe provisions of "ritten agree%ent to the contrar! &ot7%t'st)&1%&g )&1 /,g)/15,ss
o0 t', o/)5 )g/,,-,&ts o0 t', *)/t%,s, an e%plo!%ent shall be dee%ed to be regular
"here the e%plo!ee has been engaged to perfor% in the usual business or trade of the
e%plo!er, e9cept "here the e%plo!%ent has been fi9ed for a specific pro&ect or
undertaking the co%pletion or ter%ination of "hich has been deter%ined at the ti%e of
the engage%ent of the e%plo!ee or "here the "ork or services to be perfor%ed is
seasonal in nature and the e%plo!%ent is for the duration of the season.L
SA& ,-*5o+-,&t s')55 ., 1,,-,1 to ., ()su)5 %0 %t %s &ot (o4,/,1 .+ t', */,(,1%&g
*)/)g/)*'; P/o4%1,1, T')t, )&+ ,-*5o+,, 7'o ')s /,&1,/,1 )t 5,)st o&, <1= +,)/ o0
s,/4%(,, "hether such is continuous or broken, s')55 ., (o&s%1,/,1 ) /,gu5)/ 7%t'
/,s*,(t to t', )(t%4%t+ %& 7'%(' ', %s ,-*5o+,1 and his e%plo!%ent shall continue
"hile such activit! e9ists.L
Parentheticall!, the position of co%pan! ph!sician, in the case of petitioner, is usuall!
necessar! and desirable because the need for %edical attention of e%plo!ees cannot be
foreseen, hence, it is necessar! to have a ph!sician at hand. (n fact, the i%portance and
desirabilit! of a ph!sician in a co%pan! pre%ises is recogni5ed b! Art. -/. of the #abor
Code, "hich re:uires the presence of a ph!sician depending on the nu%ber of
e%plo!ees and in the case at bench, in petitionerLs case, as found b! public respondent,
petitioner e%plo!s %ore than /,, e%plo!ees.
Doing back to Art. '=, of the #abor Code, it "as %ade therein clear that the provisions
of a "ritten agree%ent to the contrar! not"ithstanding or the e9istence of a %ere oral
agree%ent, if the e%plo!ee is engaged in the usual business or trade of the e%plo!er,
%ore so, that he rendered service for at least one !ear, such e%plo!ee shall be
considered as a /,gu5)/ e%plo!ee. Private respondent herein has been "ith petitioner
since -*=- and his e%plo!%ent "as not for a specific pro&ect or undertaking, the period
of "hich "as pre@deter%ined and neither the "ork or service of private respondent
seasonal. 2E%phasis b! the CA itself3.
Ce disa)ree to the fore)oin) ratiocination-
0he appellate court;s preise that re)ular eplo2ees are those who perfor activities
which are desira!le and necessar2 for the !usiness of the eplo2er is not deterinative in
this case- ?or# we ta7e it that an2 a)reeent a2 provide that one part2 shall render services
for and in !ehalf of another# no atter how necessar2 for the latter;s !usiness# -;-n <6+2ou+
8-6n, 26r-) a5 an -=9*oy--- 0his set+up is precisel2 true in the case of an independent
contractorship as well as in an a)enc2 a)reeent- Indeed# &rticle $*% of the 4a!or Code#
@uoted !2 the appellate court# is not the 2ardstic7 for deterinin) the e:istence of an
eplo2ent relationship- &s it is# the provision erel2 distin)uishes !etween two '$( 7inds of
eplo2ees# i.e.# re)ular and casual- It does not appl2 where# as here# the ver2 e:istence of
an eplo2ent relationship is in dispute-[$=]
Buttressin) his contention that he is a re)ular eplo2ee of petitioner# respondent invo7es
&rticle 1"6 of the 4a!or Code# and ar)ues that he satisfies all the re@uireents thereunder-
0he provision relied upon reads9
ART. -/.. Emergency medical and dental services. T (t shall be the dut! of ever!
e%plo!er to furnish his e%plo!ees in an! localit! "ith free %edical and dental
attendance and facilities consisting of6
2a3 The services of a full@ti%e registered nurse "hen the nu%ber of e%plo!ees
e9ceeds fift! 2/,3 but not %ore than t"o hundred 2',,3 e9cept "hen the
e%plo!er does not %aintain ha5ardous "orkplaces, in "hich case the
services of a graduate first@aider shall be provided for the protection of the
"orkers, "here no registered nurse is available. The ecretar! of #abor
shall provide b! appropriate regulations the services that shall be re:uired
"here the nu%ber of e%plo!ees does not e9ceed fift! 2/,3 and shall
deter%ine b! appropriate order ha5ardous "orkplaces for purposes of this
Article7
2b3 The services of a full@ti%e registered nurse, a part@ti%e ph!sician and
dentist, and an e%ergenc! clinic, "hen the nu%ber of e%plo!ees e9ceeds
t"o hundred 2',,3 but not %ore than three hundred 2;,,37 and
2c3 The services of a full@ti%e ph!sician, dentist and full@ti%e registered nurse
as "ell as a dental clinic, and an infir%ar! or e%ergenc! hospital "ith one
bed capacit! for ever! one hundred 2-,,3 e%plo!ees "hen the nu%ber of
e%plo!ees e9ceeds three hundred 2;,,3.
(n cases of ha5ardous "orkplaces, no e%plo!er shall engage the services of a ph!sician
or dentist "ho cannot sta! in the pre%ises of the establish%ent for at least t"o 2'3 hours,
in the case of those engaged on part@ti%e basis, and not less than eight 2=3 hours in the
case of those e%plo!ed on full@ti%e basis. Ehere the undertaking is nonha5ardous in
nature, the ph!sician and dentist %a! be engaged on retained basis, sub&ect to such
regulations as the ecretar! of #abor %a! prescribe to insure i%%ediate availabilit! of
%edical and dental treat%ent and attendance in case of e%ergenc!.
Dad onl2 respondent read carefull2 the ver2 statutor2 provision invo7ed !2 hi# he would
have noticed that in non+ha5ardous wor7places# the eplo2er a2 en)a)e the services of a
ph2sician Eon retained !asis-F &s correctl2 o!served !2 the petitioner# while it is true that the
provision re@uires eplo2ers to en)a)e the services of edical practitioners in certain
esta!lishents dependin) on the nu!er of their eplo2ees# nothin) is there in the law which
sa2s that edical practitioners so en)a)ed !e actuall2 hired as eplo2ees#[$/] addin) that the
law# as written# onl2 re@uires the eplo2er Eto retainF# not eplo2# a part+tie ph2sician who
needed to sta2 in the preises of the non+ha5ardous wor7place for two '$( hours-[$"]
Respondent ta7es no issue on the fact that petitioner;s !usiness of telecounications is
not ha5ardous in nature- &s such# what applies here is the last para)raph of &rticle 1"6
which# to stress# provides that the eplo2er a2 en)a)e the services of a ph2sician and
dentist Eon retained !asisF# su!>ect to such re)ulations as the Secretar2 of 4a!or a2
prescri!e- 0he successive EretainershipF a)reeents of the parties definitel2 hue to the ver2
statutor2 provision relied upon !2 respondent-
Deepl2 e!edded in our >urisprudence is the rule that courts a2 not construe a statute
that is free fro dou!t- Chere the law is clear and una!i)uous# it ust !e ta7en to ean
e:actl2 what it sa2s# and courts have no choice !ut to see to it that the andate is o!e2ed-
[$<] &s it is# &rticle 1"6 of the 4a!or Code clearl2 and une@uivocall2 allows eplo2ers in non+
ha5ardous esta!lishents to en)a)e Eon retained !asisF the service of a dentist or ph2sician-
Nowhere does the law provide that the ph2sician or dentist so en)a)ed there!2 !ecoes a
re)ular eplo2ee- 0he ver2 phrase that the2 a2 !e en)a)ed Eon retained !asisF# revolts
a)ainst the idea that this en)a)eent )ives rise to an eplo2er+eplo2ee relationship-
Cith the reco)nition of the fact that petitioner consistentl2 en)a)ed the services of
respondent on a retainer !asis# as shown !2 their various Eretainership contractsF# so can
petitioner put an end# with or without cause# to their retainership a)reeent as therein
provided-[$6]
Ce note# however# that even as the contracts entered into !2 the parties invaria!l2
provide for a <%+da2 notice re@uireent prior to terination# the sae was not coplied with
!2 petitioner when it terinated on 16 Dece!er 133< the ver!all2+renewed retainership
a)reeent# effective at the close of !usiness hours of =1 Dece!er 133<-
Be that as it a2# the record shows# and this is aditted !2 !oth parties# [$*] that e:ecution
of the N4RC decision had alread2 !een ade at the N4RC despite the pendenc2 of the
present recourse- ?or sure# accounts of petitioner had alread2 !een )arnished and released
to respondent despite the previous Status Ouo Order[$3] issued !2 this Court- 0o all intents
and purposes# therefore# the <%+da2 notice re@uireent has !ecoe oot and acadeic if
not waived !2 the respondent hiself-
/HERE0ORE# the petition is ,R&N0ED and the challen)ed decision of the Court of
&ppeals REVERSED and SE0 &SIDE- 0he $1 Dece!er 133* decision of the la!or ar!iter is
REINS0&0ED-
No pronounceent as to costs-
%O ORDERED.
Panganiban, Chairman!, Corona, and Car+io#Morales, &&., concur.
San(oval#,utierre$, &., on official leave-
Republic of the Philippines
SUPREME COURT
Manila
>(RT 1()((+N
G.R. No. 14>989 $,./u)/+ 7, 2887
MELENC#O GAR#EL, /,*/,s,&t,1 .+ su/4%4%&g s*ous,, $LORDEL#2A ?.
GAR#EL, Petitioner,
vs.
NELSON #LON, ANGEL RA2#L AND ERNESTO PAGA"GA", Respondents.
1 E C ( ( + N
A2CUNA, J.:
This is a petition for revie" on certiorari1 assailing the 1ecision and Resolution of the
Court of Appeals, respectivel! dated August 4, ',,, and >ebruar! ., ',,-, in CA@D.R.
P No. /',,- entitled GNelson Bilon, et al. v. National #abor Relations Co%%ission, et
al.G
The challenged decision reversed and set aside the decision$ of the National #abor
Relations Co%%ission 2N#RC3 dis%issing respondentsL co%plaint for illegal dis%issal
and illegal deductions, and reinstating the decision of the #abor Arbiter finding
petitioner guilt! of illegal dis%issal but not of illegal deductions sub&ect to the
%odification that respondents be i%%ediatel! reinstated to their for%er positions
"ithout loss of seniorit! rights and privileges instead of being paid separation pa!.
Petitioner, represented b! his surviving spouse, >lordeli5a ). Dabriel, "as the o"ner@
operator of a public transport business, GDabriel Ceepne!,G "ith a fleet of /4 &eepne!s
pl!ing the Baclaran@1ivisoria@Tondo route. Petitioner had a pool of drivers, "hich
included respondents, operating under a Gboundar! s!ste%G of P4,, per da!.
The facts= are as follo"s6
+n Nove%ber -/, -**/, respondents filed their separate co%plaints for illegal dis%issal,
illegal deductions, and separation pa! against petitioner "ith the National #abor
Relations Co%%ission 2N#RC3. These "ere consolidated and docketed as N#RC@NCR
Case No. ,,@--@,.4',@*/./
+n 1ece%ber -/, -**/, the co%plaint "as a%ended, i%pleading as part! respondent the
Bacoor Transport ervice Cooperative, (nc., as both parties are %e%bers of the
cooperative.
Respondents alleged the follo"ing6
-3 That the! "ere regular drivers of Dabriel Ceepne!, driving their respective units
bearing Plate Nos. PAE //;, NU8 -//, and NEE //., under a boundar! s!ste%
of P4,, per da!, pl!ing Baclaran to 1ivisoria via Tondo, and vice versa, since
1ece%ber -**,, Nove%ber -*=4 and Nove%ber -**-, respectivel!, up to April
;,, -**/," driving five da!s a "eek, "ith average dail! earnings of P4,,7
'3 That the! "ere re:uired0forced to pa! additional P//.,, per da! for the
follo"ing6 a3 P',.,, police protection7 b3 P',.,, "ashing7 c3 P-,.,, deposit7 and
Hd3I P/.,, garage fees7
;3 That there is no la" providing the operator to re:uire the drivers to pa! police
protection, deposit, "ashing, and garage fees.
43 That on April ;,, -**/, petitioner told the% not to drive an!%ore, and "hen
the! "ent to the garage to report for "ork the ne9t da!, the! "ere not given a unit
to drive7 and
/3 That the boundar! drivers of passenger &eepne!s are considered regular
e%plo!ees of the &eepne! operators. Being such, the! are entitled to securit! of
tenure. Petitioner, ho"ever, dis%issed the% "ithout factual and legal basis, and
"ithout due process.
+n his part, petitioner contended that6
-3 Ae does not re%e%ber if the respondents "ere ever under his e%plo! as drivers
of his passenger &eepne!s. Certain, ho"ever, is the fact that neither the
respondents nor other drivers "ho "orked for hi% "ere ever dis%issed b! hi%.
As a %atter of fact, so%e of his for%er drivers &ust stopped reporting for "ork,
either because the! found so%e other e%plo!%ent or drove for other operators,
and like the respondents, the ne9t ti%e he heard fro% the% "as "hen the! started
fabricating unfounded co%plaints against hi%7
'3 Ae %ade sure that none of the &eepne!s "ould sta! idle even for a da! so he
could collect his earnings7 hence, it had been his practice to establish a pool of
drivers. Aad respondents %anifested their desire to drive his units, it "ould have
been i%%aterial "hether the! "ere his for%er drivers or not. As long as the!
obtained the necessar! licenses and references, the! "ould have been
acco%%odated and placed on schedule7
;3 Ehile he "as penali5ed or %ade to pa! a certain a%ount in connection "ith
si%ilar co%plaints b! other drivers in a previous case before this, it "as not
because his culpabilit! "as established, but due to technicalities involving
oversight and negligence on his part b! not participating in an! stage of the
investigation thereof7 and
43 RespondentsL clai% that certain a%ounts, as enu%erated in the co%plaint, "ere
deducted fro% their da!Ls earnings is preposterous. (ndeed, there "ere ti%es "hen
deductions "ere %ade fro% the da!Ls earnings of so%e drivers, but such "ere
install%ent pa!%ents for the a%ount previousl! advanced to the%. Most drivers,
"hen the! got involved in accidents or violations of traffic regulations, %anaged
to settle the%, and in the process the! had to spend so%e %one!, but %ost of the
ti%e the! did not have the needed a%ount so the! secured cash advances fro%
hi%, "ith the understanding that the sa%e should be paid back b! install%ents
through deductions fro% their dail! earnings or boundar!.
+n the other hand, Bacoor Transport ervice Cooperative, (nc. 2BTC(3 declared that it
should not be %ade a part! to the case because6 -3 H(It has nothing to do "ith the
e%plo!%ent of its %e%ber@drivers. The %atter is bet"een the %e%ber@operator and
their respective %e%ber@drivers. The %e%ber@driversL tenure of e%plo!%ent,
co%pensation, "ork conditions, and other aspects of e%plo!%ent are %atters of
arrange%ent bet"een the% and the %e%ber@operators concerned, and the BTC( has
nothing to do "ith it, as can be inferred fro% the Manage%ent Agree%ent bet"een
BTC( and the %e%ber@operators7 and '3 HTIhe a%ount allegedl! deducted fro%
respondents and the purpose for "hich the! "ere applied "ere %atters that the
cooperative "as not a"are of, and %uch less i%posed on the%.
+n epte%ber -., -**<, respondents filed a %otion to re@raffle the case for the reason
that the #abor Arbiter 2Aon. Roberto (. antos3 failed Gto render his decision "ithin
thirt! 2;,3 calendar da!s, "ithout e9tension, after the sub%ission of the case for
decision.G
+n epte%ber -=, -**<, said #abor Arbiter inhibited hi%self fro% further handling the
case due to Gpersonal reasons.G
+n Nove%ber =, -**<, #abor Arbiter Ricardo C. Nora, to "ho% the case "as re@raffled,
ordered the parties to file their respective %e%oranda "ithin ten da!s, after "hich the
case "as dee%ed sub%itted for resolution.
+n March -., -**., the #abor Arbiter 2Aon. Ricardo C. Nora3 handed do"n his
decision, the dispositive portion of "hich is "orded as follo"s6
EAERE>+RE, pre%ises considered, &udg%ent is hereb! rendered declaring the
illegalit! of HrespondentsLI dis%issal and ordering HpetitionerI Melencio Dabriel to pa!
the HrespondentsI the total a%ount of +NE M(##(+N TA(RTB >+8R TA+8AN1
PE+ HP-,,;4,,,,,I representing HrespondentsLI back"ages and separation pa! as
follo"s6
-. Nelson Bilon
Back"ages P '=4,=,,
eparation Pa! '<,4,, P ;'-,',,
'. Angel Bra5il
Back"ages P '*4,=,,
eparation Pa! *<,=,, ;*-,<,,
;. Ernesto Paga!ga!
Back"ages P '*4,=,,
eparation Pa! '<,4,, ;'-,',,
P -,,;4,,,,
HPetitionerI Melencio Dabriel is like"ise ordered to pa! attorne!Ls fees e:uivalent to
five percent 2/F3 of the &udg%ent a"ard or the a%ount of P/-,.,, "ithin ten 2-,3 da!s
fro% receipt of this 1ecision.
All other issues are dis%issed for lack of %erit.
+ +R1ERE1.<
(ncidentall!, on April 4, -**., petitioner passed a"a!. +n April -=, -**., a cop! of the
above decision "as delivered personall! to petitionerLs house. According to respondents,
petitionerLs surviving spouse, >lordeli5a Dabriel, and their daughter, after reading the
contents of the decision and after the! had spoken to their counsel, refused to receive the
sa%e. Nevertheless, Bailiff Alfredo ). Estonactoc left a cop! of the decision "ith
petitionerLs "ife and her daughter but the! both refused to sign and ackno"ledge receipt
of the decision.6
The labor arbiterLs decision "as subse:uentl! served b! registered %ail at petitionerLs
residence and the sa%e "as received on Ma! '=, -**..
+n Ma! -<, -**., counsel for petitioner filed an entr! of appearance "ith %otion to
dis%iss the case for the reason that petitioner passed a"a! last April 4, -**..
+n Cune /, -**., petitioner appealed the labor arbiterLs decision to the National #abor
Relations Co%%ission, >irst 1ivision, contending that the labor arbiter erred6
-. (n holding that HpetitionerI Dabriel dis%issed the co%plainants, Arb. Nora
co%%itted a serious error in the findings of fact "hich, if not corrected, "ould
cause grave or irreparable da%age or in&ur! to HpetitionerI Dabriel7
'. (n holding that Sstrained relationsL alread! e9ist bet"een the parties, &ustif!ing
an a"ard of separation pa! in lieu of reinstate%ent, Arb. Nora not onl! co%%itted
a serious error in the findings of fact, but he also abused his discretion7
;. (n co%puting the a%ount of back"ages allegedl! due HrespondentsI fro% ;,
April -**/ to -/ March -**., Arb. Nora abused his discretion, considering that
the case had been sub%itted for decision as earl! as - March -**< and that the
sa%e should have been decided as earl! as ;- March -**<7
4. (n using SP4,,.,,L and S'' da!sL as factors in co%puting the a%ount of
back"ages allegedl! due HrespondentsI, Arb. Nora abused his discretion and
co%%itted a serious error in the findings of fact, considering that there "as no
factual or evidentiar! basis therefor7
/. (n using S;;./ %onthsL as factor in the co%putation of the a%ount of back"ages
allegedl! due HrespondentsI, Arb. Nora co%%itted a serious error in the findings
of factH,I because even if it is assu%ed that back"ages are due fro% ;, April -**/
to -/ March -**., the period bet"een the t"o dates is onl! ''V %onths, and not
;;V %onths as stated in the appealed decision7 and
<. (n not dis%issing the caseH,I despite notice of the death of HpetitionerI Dabriel
before final &udg%ent, Arb. Nora abused his discretion and co%%itted a serious
error of la".*
+n Cul! ;, -**., respondents filed a %otion to dis%iss petitionerLs appeal on the ground
that the Gsuret! bond is defectiveG and the appeal "as Gfiled out of ti%e,G "hich %ove
"as opposed b! petitioner.
ubse:uentl!, on April '=, -**=, the N#RC pro%ulgated its first decision, the
dispositive portion of "hich reads6
EAERE>+RE, pre%ises considered, the appealed decision is hereb! reversed and set
aside. The above@entitled case is hereb! dis%issed for lack of e%plo!er@e%plo!ee
relationship.
+ +R1ERE1.3
Respondents filed a %otion for reconsideration. The! clai%ed that the decision did not
discuss the issue of the ti%eliness of the appeal. The lack of e%plo!er@e%plo!ee
relationship "as %entioned in the dispositive portion, "hich issue "as not raised before
the labor arbiter or discussed in the bod! of the :uestioned decision. (n vie" of the
issues raised b! respondents in their %otion, the N#RC rendered its second decision on
+ctober '*, -**=. The pertinent portions are hereb! :uoted thus6
K (n the case at bar, HpetitionerI Melencio Dabriel "as not represented b! counsel
during the pendenc! of the case. A decision "as rendered b! the #abor Arbiter a 0uo on
March -., -**. "hile Mr. Dabriel passed a"a! on April 4, -**. "ithout having
received a cop! thereof during his lifeti%e. The decision "as onl! served on April -=,
-**. "hen he "as no longer around to receive the sa%e. Ais surviving spouse and
daughter cannot auto%aticall! substitute the%selves as part! respondents. Thus, "hen
the bailiff tendered a cop! of the decision to the%, the! "ere not in a position to receive
the%. The re:uire%ent of leaving a cop! at the part!Ls residence is not applicable in the
instant case because this presupposes that the part! is still living and is &ust not available
to receive the decision.
The preceding considered, the decision of the labor arbiter has not beco%e final because
there "as no proper service of cop! thereof to HpetitionerI K.
8ndoubtedl!, this case is for recover! of %one! "hich does not survive, and considering
that the decision has not beco%e final, the case should have been dis%issed and the
appeal no longer entertainedK.
EAERE>+RE, in vie" of the foregoing, the 1ecision of April '=, -**= is set aside and
vacated. >urther%ore, the instant case is dis%issed and co%plainants are directed to
pursue their clai% against the proceedings for the settle%ent of the estate of the deceased
Melencio Dabriel.
+ +R1ERE1.1%
Aggrieved b! the decision of the N#RC, respondents elevated the case to the Court of
Appeals 2CA3 b! "a! of a petition for certiorari. +n August 4, ',,,, the CA reversed
the decisions of the N#RC6
K
Article ''; of the #abor Code categoricall! %andates that Gan appeal b! the e%plo!er
%a! be perfected onlyupon the posting of a cash bond or suret! bond 9 9 9.G (t is be!ond
peradventure then that the non@co%pliance "ith the above conditio sine 0ua non plus
the fact that the appeal "as filed be!ond the regle%entar! period, should have been
enough reasons to dis%iss the appeal.
(n an! event, even conceding ex gratia that such procedural infir%it! H"ereI ine9istent,
this petition "ould still be tenable based on substantive aspects.
The public respondentLs decision, dated April '=, -**=, is egregiousl! "rong insofar as
it "as anchored on the absence of an e%plo!er@e%plo!ee relationship. Eell@settled is the
rule that the boundar! s!ste% used in &eepne! and 2ta9i3 operations presupposes an
e%plo!er@e%plo!ee relationship 2National #abor 8nion v. 1inglasan, *= Phil. <4*3 K.
The N#RC ostensibl! tried to redee% itself b! vacating the decision April '=, -**=K.
B! so doing, ho"ever, it did not actuall! resolve the %atter definitivel!. (t %erel!
relieved itself of such burden b! suggesting that the petitioners Gpursue their clai%
against the proceedings for the settle%ent of the estate of the deceased Melencio
DabrielK.G
(n the instant case, the decision 2dated March -., -**.3 of the #abor Arbiter beca%e
final and e9ecutor! on account of the failure of the private respondent to perfect his
appeal on ti%eK.
Thus, "e disagree "ith the ratiocination of the N#RC that the death of the private
respondent on April 4, -**.ipso facto negates recover! of the %one! clai% against the
successors@in@interest K. Rather, this situation co%es "ithin the aegis of ection ;, Rule
((( of the N#RC Manual on E9ecution of Cudg%ent, "hich provides6
ECT(+N ;. Execution in !ase of ,eath of *arty. T Ehere a part! dies after the finalit!
of the decision0entr! of &udg%ent of order, e9ecution thereon %a! issue or one alread!
issued %a! be enforced in the follo"ing cases6
a3 9 9 9 7
b3 (n case of death of the losing part!, against his successor@in@interest, e9ecutor
or ad%inistrator7
c3 (n case of death of the losing part! after e9ecution is actuall! levied upon an!
of his propert!, the sa%e %a! be sold for the satisfaction thereof, and the sheriff
%aking the sale shall account to his successor@in@interest, e9ecutor or
ad%inistrator for an! surplus in his hands.
Not"ithstanding the foregoing dis:uisition though, Ee are not entirel! in accord "ith
the labor arbiterLs decision a"arding separation pa! in favor of the petitioners. (n this
regard, it HisI "orth %entioning that in Kiamco v. NLRC,11 citing Globe-Mackay Cable
and Radio Corp. v. NLRC,1$ the upre%e Court :ualified the application of the
Gstrained relationsG principle "hen it held @@
G(f in the "isdo% of the Court, there %a! be a ground or grounds for the non@application
of the above@cited provision 2Art. '.*, #abor Code3 this should be b! "a! of e9ception,
such as "hen the reinstate%ent %a! be inad%issible due to ensuing strained relations
bet"een the e%plo!er and e%plo!ee.
(n such cases, it should be proved that the e%plo!ee concerned occupies a position
"here he en&o!s the trust and confidence of his e%plo!er, and that it is likel! that if
reinstated, an at%osphere of antipath! and antagonis% %a! be generated as to adversel!
affect the efficienc! and productivit! of the e%plo!ee concerned 9 9 9 +bviousl!, the
principle of Sstrained relationsL cannot be applied indiscri%inatel!. +ther"ise,
reinstate%ent can never be possible si%pl! because so%e hostilit! is invariabl!
engendered bet"een the parties as a result of litigation. That is hu%an nature.
Besides, no strained relations should arise fro% a valid legal act of asserting oneLs right7
other"iseH,I an e%plo!ee "ho shall assert his right could be easil! separated fro% the
service b! %erel! pa!ing his separation pa! on the prete9t that his relationship "ith his
e%plo!er had alread! beco%e strained.G
Anent the a"ard of back"ages, the #abor Arbiter erred in co%puting the sa%e fro% the
date the petitioners "ere illegall! dis%issed 2i.e. April ;,, -**/3 up to March -/, -**.,
that is t"o 2'3 da!s prior to the rendition of his decision 2i.e. March -., -**.3.
K
EAERE>+RE, pre%ises considered, the petition is DRANTE1, hereb! RE)ER(ND
and ETT(ND A(1E the assailed decisions of the National #abor Relations
Co%%ission, dated April '=, -**= ans +ctober '*, -**=. Conse:uentl!, the decision of
the #abor Arbiter, dated March -., -**., is hereb! RE(NTATE1, sub&ect to the
M+1(>(CAT(+N that the private respondent is +R1ERE1 to i%%ediatel!
RE(NTATE petitioners Nelson Bilon, Angel Bra5il and Ernesto Paga!ga! to their
for%er position "ithout loss of seniorit! rights and privileges, "ith full back"ages fro%
the date of their dis%issal until their actual reinstate%ent. Costs against private
respondent.
+ +R1ERE1.1=
Petitioner filed a %otion for reconsideration but the sa%e "as denied b! the CA in a
resolution dated >ebruar! ., ',,-.
Aence, this petition raising the follo"ing issues61/
(
TAE C+8RT +> APPEA# ERRE1 (N >(N1(ND TAAT PET(T(+NERL
APPEA# T+ TAE NAT(+NA# #AB+R RE#AT(+N C+MM((+N EA
>(#E1 +8T +> T(ME.
((
TAE C+8RT +> APPEA# ERRE1 (N A+#1(ND TAAT TAE A##EDE1
1E>ECT (N PET(T(+NERL APPEA# B+N1 EERE +> 8CA
DRA)(TB A T+ PRE)ENT TAE APPEA# >R+M BE(ND PER>ECTE1.
(((
TAE C+8RT +> APPEA# ERRE1 (N DRANT(ND REP+N1ENTL
PET(T(+N >+R CERT(+RAR( 1EP(TE TAE >ACT TAAT TAE AME
AA(#E1 A 1EC((+N EA(CA AA1 BEEN )ACATE1 (N >A)+R +> A
NEE +NE EA(CA, (N T8RN, AA +#(1 #EDA# BA(.
()
TAE C+8RT +> APPEA# ERRE1 (N APP#B(ND ECT(+N ;, R8#E (((,
+> TAE MAN8A# +N EUEC8T(+N +> C81DMENT +> TAE
NAT(+NA# #AB+R RE#AT(+N C+MM((+N EA(CA, BB (T +EN
EUPRE TERM, ( N+T APP#(CAB#E.
A resolution of the case re:uires a brief discussion of t"o issues "hich touch upon the
procedural and substantial aspects of the case thus6 a3 "hether petitionerLs appeal "as
filed out of ti%e7 and b3 "hether the clai% survives.
As regards the first issue, the Court considers the service of cop! of the decision of the
labor arbiter to have been validl! %ade on Ma! '=, -**. "hen it "as received through
registered %ail. As correctl! pointed out b! petitionerLs "ife, service of a cop! of the
decision could not have been validl! effected on April -=, -**. because petitioner
passed a"a! on April 4, -**..
ection 4, Rule ((( of the Ne" Rules of Procedure of the N#RC provides6
EC. 4. S,/4%(, o0 Not%(,s )&1 R,so5ut%o&s. T 2a3 Notices or su%%ons and copies of
orders, resolutions or decisions shall be served on the parties to the case personall! b!
the bailiff or authori5ed public officer "ithin three 2;3 da!s fro% receipt thereof or b!
registered %ail7 Provided, That "here a part! is represented b! counsel or authori5ed
representative, service shall be %ade on such counsel or authori5ed representative7
Provided further, That in cases of decision and final a"ards, copies thereof shall be
served on both parties and their counsel K.
>or the purpose of co%puting the period of appeal, the sa%e shall be counted fro%
receipt of such decisions, a"ards or orders b! the counsel of record.
2b3 The bailiff or officer personall! serving the notice, order, resolution or decision shall
sub%it his return "ithin t"o 2'3 da!s fro% date of service thereof, stating legibl! in his
return, his na%e, the na%es of the persons served and the date of receipt "hich return
shall be i%%ediatel! attached and shall for% part of the records of the case. (f no service
"as effected, the serving officer shall state the reason therefore in the return.
ection <, Rule -; of the Rules of Court "hich is suppletor! to the N#RC Rules of
Procedure states that6 GHsIervice of the papers %a! be %ade b! delivering personall! a
cop! to the part! or his counsel, or b! leaving it in his office "ith his clerk or "ith a
person having charge thereof. (f no person is found in his office, or his office is not
kno"n, or he has no office, then b! leaving the cop!, bet"een the hours of eight in the
%orning and si9 in the evening, at the part!Ls or counselLs residence, if kno"n, "ith a
person of sufficient age and discretion then residing therein.G
The foregoing provisions conte%plate a situation "herein the part! to the action is alive
upon the deliver! of a cop! of the tribunalLs decision. (n the present case, ho"ever,
petitioner died before a cop! of the labor arbiterLs decision "as served upon hi%. Aence,
the above provisions do not appl!. As aptl! stated b! the N#RC6
K (n the case at bar, respondent Melencio Dabriel "as not represented b! counsel during
the pendenc! of the case. A decision "as rendered b! the #abor Arbiter a 0uo on March
-., -**. "hile Mr. Dabriel passed a"a! on April 4, -**., "ithout having received a
cop! thereof during his lifeti%e. The decision "as onl! served on April -=, -**. "hen
he "as no longer around to receive the sa%e. Ais surviving spouse and daughter cannot
auto%aticall! substitute the%selves as part! respondents. Thus, "hen the bailiff
tendered a cop! of the decision to the%, the! "ere not in a position to receive the%. The
re:uire%ent of leaving a cop! at the part!Ls residence is not applicable in the instant
case because this presupposes that the part! is still living and is not &ust available to
receive the decision.
The preceding considered, the decision of the #abor Arbiter has not beco%e final
because there "as no proper service of cop! thereof to part! respondentK.1"
Thus, the appeal filed on behalf of petitioner on Cune /, -**. after receipt of a cop! of
the decision viaregistered %ail on Ma! '=, -**. "as "ithin the ten@da! regle%entar!
period prescribed under ection ''; of the #abor Code.
+n the :uestion "hether petitionerLs suret! bond "as defective, ection <, Rule )( of
the Ne" Rules of Procedure of the N#RC provides6
EC. <. o&1. T (n case the decision of a #abor Arbiter K involves %onetar! a"ard, an
appeal b! the e%plo!er shall be perfected onl! upon the posting of a cash or suret! bond
issued b! a reputable bonding co%pan! dul! accredited b! the Co%%ission or the
upre%e Court in an a%ount e:uivalent to the %onetar! a"ard, e9clusive of %oral and
e9e%plar! da%ages and attorne!Ls fees.
The e%plo!er as "ell as counsel shall sub%it a &oint declaration under oath attesting that
the suret! bond posted is genuine and that it shall be in effect until final disposition of
the case.
The Co%%ission %a!, in %eritorious cases and upon Motion of the Appellant, reduce
the a%ount of the bond. 2As a%ended on Nov. /, -**;3.
The Court believes that petitioner "as able to co%pl! substantiall! "ith the
re:uire%ents of the above Rule. As correctl! pointed out b! the N#RC6
Ehile "e agree "ith co%plainants@appellees that the posting of the suret! bond is
&urisdictional, Ee do not believe that the GdefectsG i%puted to the suret! bond posted for
and in behalf of respondent@appellant Dabriel are of such character as to affect the
&urisdiction of this Co%%ission to entertain the instant appeal.
(t %atters not that, b! the ter%s of the bond posted, the G#iabilit! of the suret! herein
shall e9pire on Cune /, -**= and this bond shall be auto%aticall! cancelled ten 2-,3 da!s
after the e9piration.G After all, the bond is acco%panied b! the &oint declaration under
oath of respondent@appellantLs surviving spouse and counsel attesting that the suret!
bond is genuine and shall be in effect until the final disposition of the case.
Anent co%plainants@appellees contention that the suret! bond posted is defective for
being in the na%e of BTC( "hich did not appeal and for having been entered into b!
Mrs. Dabriel "ithout BTC(Ls authorit!, the sa%e has been rendered %oot and acade%ic
b! the certification issued b! Dil CC. an Cuan, )ice@President of the bonding co%pan!
to the effect that GEastern Assurance and uret! Corporation Bond No. '.4* "as posted
for and on behalf appellant Melencio Dabriel and0or his heirsG and that G2T3he na%e
GBacoor Transport ervice Cooperative, (nc.G "as indicated in said bond due %erel! in
2sic3 advertence.G
At an! rate, the upre%e Court has ti%e and again ruled that "hile Article ''; of the
#abor Code, as a%ended re:uiring a cash or suret! bond in the a%ount e:uivalent to the
%onetar! a"ard in the &udg%ent appealed fro% for the appeal to be perfected, %a! be
considered a &urisdictional re:uire%ent, nevertheless, adhering to the principle that
substantial &ustice is better served b! allo"ing the appeal on the %erits threshed out b!
this Aonorable Co%%ission, the foregoing re:uire%ent of the la" should be given a
liberal interpretation 2Pantranco North E9press, (nc. v. ison, -4* CRA ';=7 C.E. Tan
Mfg. v. N#RC, -., CRA '4,7 BB# v. N#RC, -*, CRA -<,7 Rada v. N#RC, ',/
CRA <*7 tar Angel Aandicraft v. N#RC, ';< CRA /=,3.1<
+n the other hand, "ith regard to the substantive aspect of the case, the Court agrees
"ith the CA that an e%plo!er@e%plo!ee relationship e9isted bet"een petitioner and
respondents. (n &artine1 v. 2ational %a"or +elations !ommission,16 citing 2ational
%a"or Union v. ,inglasan1* the Court ruled that6
HTIhe relationship bet"een &eepne! o"ners0operators and &eepne! drivers under the
boundar! s!ste% is that of e%plo!er@e%plo!ee and not of lessor@lessee because in the
lease of chattels the lessor loses co%plete control over the chattel leased although the
lessee cannot be reckless in the use thereof, other"ise he "ould be responsible for the
da%ages to the lessor. (n the case of &eepne! o"ners0operators and &eepne! drivers, the
for%er e9ercises supervision and control over the latter. The fact that the drivers do not
receive fi9ed "ages but get onl! that in e9cess of the so@called Gboundar!G HthatI the!
pa! to the o"ner0operator is not sufficient to "ithdra" the relationship bet"een the%
fro% that of e%plo!er and e%plo!ee. Thus, private respondents "ere e%plo!ees K
because the! had been engaged to perfor% activities "hich "ere usuall! necessar! or
desirable in the usual business or trade of the e%plo!er.13
The sa%e principle "as reiterated in the case of *aguio /ransport !orporation v.
2%+!.$%
The Court also agrees "ith the labor arbiter and the CA that respondents "ere illegall!
dis%issed b! petitioner. Respondents "ere not accorded due process.$1 Moreover,
petitioner failed to sho" that the cause for ter%ination falls under an! of the grounds
enu%erated in Article '='
2then Article '=;3$$ of the #abor Code.$= Conse:uentl!, respondents are entitled to
reinstate%ent "ithout loss of seniorit! rights and other privileges and to their full
back"ages co%puted fro% the date of dis%issal up to the ti%e of their actual
reinstate%ent in accordance "ith Article '.* of the #abor Code.
Reinstate%ent is obtainable in this case because it has not been sho"n that there is an
ensuing Gstrained relationsG bet"een petitioner and respondents. This is pursuant to the
principle laid do"n in 3lo"e(&ackay !a"le and +adio !orporation v. 2%+!$/ as
:uoted earlier in the CA decision.
Eith regard to respondentsL %onetar! clai%, the sa%e shall be governed b! ection ',
2then ection '-3, Rule ; of the Rules of Court "hich provides6-a"phi-.net
EC. ',. Action on contractual money claims. T Ehen the action is for recover! of
%one! arising fro% contract, e9press or i%plied, and the defendant dies before entr! of
final &udg%ent in the court in "hich the action "as pending at the ti%e of such death, it
shall not be dis%issed but shall instead be allo"ed to continue until entr! of final
&udg%ent. A favorable &udg%ent obtained b! the plaintiff therein shall be enforced in the
%anner provided in these Rules for prosecuting clai%s against the estate of a deceased
person. 2'-a3
(n relation to this, ection /, Rule =< of the Rules of Court states6
EC. /. Clai%s "hich %ust be filed under the notice. (f not filed, barred 7 e9ceptions. T
All clai%s for %one! against the decedent arising fro% contract, e9press or i%plied,
"hether the sa%e be due, not due, or contingent, ... and &udg%ent for %one! against the
decedent, %ust be filed "ithin the ti%e li%ited in the notice7 other"ise the! are barred
forever, e9cept that the! %a! be set forth as counterclai%s in an! action that the
e9ecutor or ad%inistrator %a! bring against the clai%antsK.
Thus, in accordance "ith the above Rules, the %one! clai%s of respondents %ust be
filed against the estate of petitioner Melencio Dabriel.$"
EAERE>+RE, the petition is 1EN(E1. The 1ecision and Resolution of the Court of
Appeals dated August 4, ',,, and >ebruar! ., ',,-, respectivel!, in CA@D.R. P No.
/',,- are A>>(RME1 but "ith the M+1(>(CAT(+N that the %one! clai%s of
respondents should be filed against the estate of Melencio Dabriel, "ithin such
reasonable ti%e fro% the finalit! of this 1ecision as the estate court %a! fi9.
No costs.
+ +R1ERE1.
ADOL$O S. A2CUNA
Associate Custice
:E CONCUR;
RE"NATO S. PUNO
Chairperson
Chief Custice
ANGEL#NA SANDO?AL-GUT#ERRE2
Associate Custice
RENATO C. CORONA
Asscociate Custice
CANC#O C. GARC#A
Associate Custice
C E R T # $ # C A T # O N
Pursuant to ection -;, Article )((( of the Constitution, it is hereb! certified that the
conclusions in the above 1ecision had been reached in consultation before the case "as
assigned to the "riter of the opinion of the CourtLs 1ivision.
RE"NATO S. PUNO
Chief Custice
Republic of the Philippines
SUPREME COURT
Manila
>(RT 1()((+N

G.R. No. 111878 3u&, @8, 1994
A#R MATER#AL :#NG SA?#NGS AND LOAN ASSOC#AT#ON, #NC., petitioner,
vs.
NAT#ONAL LAOR RELAT#ONS COMM#SS#ON, ,t )5., respondents.
'erry ,. Banares for petitioner.
*erdrelito 4. A0uino for private respondent.

CRU2, J.:
Private respondent #uis . alas "as appointed Gnotarial and legal counselG for
petitioner Air Material Eings avings and #oan Association 2AME#A(3 in -*=,. The
appoint%ent "as rene"ed for three !ears in an i%ple%enting order dated Canuar! ';,
-*=., reading as follo"s6
8BCECT6 (%ple%enting +rder on the Reappoint%ent of the #egal +fficer
T+6 ATTB. #8( . A#A
Per approval of the Board en "anc in a regular %eeting held on Canuar! '-,
-*=., !ou are hereb! reappointed as Notarial and #egal Counsel of this
association for a ter% of three 2;3 !ears effective March -, -*=., unless
sooner ter%inated fro% office for cause or as %a! be dee%ed necessar! b!
the Board for the interest and protection of the association.
Aside fro% notari5ation of loan P other legal docu%ents, !our duties and
responsibilities are hereb! enu%erated in the attached sheet, per Articles (U,
ection -@d of the b!@la"s and those approved b! the Board en "anc.
Bour %onthl! co%pensation0retainer$s fee re%ains the sa%e.
This shall for% part of !our ',- file.
BB A8TA+R(TB +> TAE B+AR16
#8)(N . MANAB
President P Chief of the
Board
+n Canuar! *, -**,, the petitioner issued another order re%inding alas of the
approaching ter%ination of his legal services under their contract. This pro%pted alas
to lodge a co%plaint against AME#A( for separation pa!, vacation and sick leave
benefits, cost of living allo"ances, refund of pre%iu%s, %oral and e9e%plar!
da%ages, pa!%ent of notarial services rendered fro% >ebruar! -, -*=, to March ',
-**,, and attorne!$s fees.
(nstead of filing an ans"er, AME#A( %oved to dis%iss for lack of &urisdiction. (t
averred that there "as no e%plo!er@e%plo!ee relationship bet"een it and alas and that
his %onetar! clai%s properl! fell "ithin the &urisdiction of the regular courts. alas
opposed the %otion and presented docu%entar! evidence to sho" that he "as indeed an
e%plo!ee of AME#A(.
The %otion "as denied and both parties "ere re:uired to sub%it their position papers.
AME#A( filed a %otion for reconsideration ad cautelam, "hich "as also denied. The
parties "ere again ordered to sub%it their position papers but AME#A( did not
co%pl!. Nevertheless, %ost of alas$ clai%s "ere dis%issed b! the labor arbiter in his
decision dated Nove%ber '-, -**-. 1
(t "as there held that alas "as not illegall! dis%issed and so not entitled to collect
separation benefits. Ais clai%s for vacation leave, sick leave, %edical and dental
allo"ances and refund of pre%iu%s "ere re&ected on the ground that he "as a
%anagerial e%plo!ee. Ae "as also denied %oral and e9e%plar! da%ages for lack of
evidence of bad faith on the part of AME#A(. Neither "as he allo"ed to collect his
notarial fees fro% -*=, up to -*=< because the clai% therefor had alread! prescribed.
Ao"ever, the petitioner "as ordered to pa! alas his notarial fees fro% -*=. up to
March ', -**,, and attorne!$s fee e:uivalent to -,F of the &udg%ent a"ard.
+n appeal, the decision "as affir%ed in toto b! the respondent Co%%ission, pro%pting
the petitioner to seek relief in this Court. 2
The threshold issue in this case is "hether or not alas can be considered an e%plo!ee
of the petitioner co%pan!.
Ee have held in a long line of decisions that the ele%ents of an e%plo!er@e%plo!ee
relationship are6 2-3 selection and engage%ent of the e%plo!ee7 2'3 pa!%ent of "ages7
2;3 po"er of dis%issal7 and 243 e%plo!er$s o"n po"er to control e%plo!ee$s conduct. @
The e9istence of such a relationship is essentiall! a factual :uestion. The findings of the
N#RC on this %atter are accorded great respect and even finalit! "hen the sa%e are
supported b! substantial evidence. 4
The ter%s and conditions set out in the letter@contract entered into b! the parties on
Canuar! ';, -*=., clearl! sho" that alas "as an e%plo!ee of the petitioner. Ais
selection as the co%pan! counsel "as done b! the board of directors in one of its regular
%eetings. The petitioner paid hi% a %onthl! co%pensation0retainer$s fee for his services.
Though his appoint%ent "as for a fi9ed ter% of three !ears, the petitioner reserved its
po"er of dis%issal for cause or as it %ight dee% necessar! for its interest and protection.
No less i%portantl!, AME#A( also e9ercised its po"er of control over alas b!
defining his duties and functions as its legal counsel, to "it6
-. To act on all legal %atters pertinent to his +ffice.
'. To seek re%edies to effect collection of overdue accounts of %e%bers
"ithout pre&udice to initiating court action to protect the interest of the
association.
;. To defend b! all %eans all suit against the interest of the Association. 5
(n the earlier case of )ydro +esources !ontractors !orp. v.
*agalilauan, > this Court observed that6
A la"!er, like an! other professional, %a! ver! "ell be an e%plo!ee of a
private corporation or even of the govern%ent. (t is not unusual for a big
corporation to hire a staff of la"!ers as its in@house counsel, pa! the%
regular salaries, rank the% in its table of organi5ation, and other"ise treat
the% like its other officers and e%plo!ees. At the sa%e ti%e, it %a! also
contract "ith a la" fir% to act as outside counsel on a retainer basis. The
t"o classes of la"!ers often "ork closel! together but one group is %ade
up of e%plo!ees "hile the other is not. A si%ilar arrange%ent %a! e9ist as
to doctors, nurses, dentists, public relations practitioners and other
professionals.
Ee hold, therefore, that the public respondent co%%itted no grave abuse of discretion in
ruling that an e%plo!er@e%plo!ee relationship e9isted bet"een the petitioner and the
private respondent.
Ee %ust disagree "ith the N#RC, ho"ever, on alas$ clai%s for notarial fees.
The petitioner contends that the public respondents are not e%po"ered to ad&udicate
clai%s for notarial fees. +n the other hand, the olicitor Deneral believes that the N#RC
acted correctl! "hen it took cogni5ance of the clai% because it arose out of alas$
e%plo!%ent contract "ith the petitioner "hich assigned hi% the dut! to notari5e loan
agree%ents and other legal docu%ents. Moreover, ection * of Rule -4- of the Rules of
Court does not restrict or prevent the labor arbiter and the N#RC fro% deter%ining
clai%s for notarial fees.
#abor arbiters have the original and e9clusive &urisdiction over %one! clai%s of "orkers
"hen such clai%s have so%e reasonable connection "ith the e%plo!er@e%plo!ee
relationship. The %one! clai%s of "orkers referred to in paragraph ; of Article '-. of
the #abor Code are those arising out of or in connection "ith the e%plo!er@e%plo!ee
relationship or so%e aspect or incident of such relationship.
alas$ clai% for notarial fees is based on his e%plo!%ent as a notarial officer of the
petitioner and thus co%es under the &urisdiction of the labor arbiter.
The public respondents agreed that alas "as entitled to collect notarial fees fro% -*=.
to -**, b! virtue of his having been assigned as notarial officer. Ee feel, ho"ever, that
there is no substantial evidence to support this finding.
The letter@contract of Canuar! ';, -*=., does not contain an! stipulation for the separate
pa!%ent of notarial fees to alas in addition to his basic salar!. +n the contrar!, it "ould
appear that his notarial services "ere part of his regular functions and "ere thus alread!
covered b! his %onthl! co%pensation. (t is true that the notarial fees "ere paid b!
%e%bers@borro"ers of the petitioner for its o"n account and not of alas. Ao"ever, this
is not a sufficient basis for his clai% to such fees in the absence of an! agree%ent to that
effect.
ACC+R1(ND#B, the appealed &udg%ent of the N#RC is A>>(RME1, "ith the
%odification that the a"ard of notarial fees and attorne!$s fees is disallo"ed. (t is so
ordered.
,avide 'r. Bellosillo 4uiason and 5apunan ''. concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19124 No4,-.,/ 18, 19>7
#N?ESTMENT PLANN#NG CORPORAT#ON O$ THE PH#L#PP#NES, petitioner@
appellant,
vs.
SOC#AL SECUR#T" S"STEM, respondent@appellee.
MA!AL#NTAL, J.:
Petitioner is a do%estic corporation engaged in business %anage%ent and the sale of
securities. (t has t"o classes of agents "ho sell its invest%ent plans6 2-3 salaried
e%plo!ees "ho keep definite hours and "ork under the control and supervision of the
co%pan!7 and 2'3 registered representatives "ho "ork on co%%ission basis.
+n August '., -*<, petitioner, through counsel, applied to respondent ocial ecurit!
Co%%ission for e9e%ption of its so@called registered representatives fro% the
co%pulsor! coverage of the ocial ecurit! Act. The application "as denied in a letter
signed b! the ecretar! to the Co%%ission on Canuar! -<, -*<-. A %otion to reconsider
"as filed and also denied, after hearing, b! the Co%%ission itself in its resolution dated
epte%ber =, -*<-. The %atter "as thereafter elevated to this Court for revie".
The issue sub%itted for decision here is "hether petitioner$s registered representatives
are e%plo!ees "ithin the %eaning of the ocial ecurit! Act 2R.A. No. --<- as
a%ended3. ection = 2d3 thereof defines the ter% Ge%plo!eeG W for purposes of the Act
W as Gan! person "ho perfor%s services for an $e%plo!er$ in "hich either or both
%ental and ph!sical efforts are used and "ho receives co%pensation for such services,
"here there is, e%plo!er@e%plo!ee relationship.G 2As a%ended b! ec.4, R.A. No.
'</=3. These representatives are in realit! co%%ission agents. The uncontradicted
testi%on! of petitioner$s lone "itness, "ho "as its assistant sales director, is that these
agents are recruited and trained b! hi% particularl! for the &ob of selling G$>ilipinos
Mutual >undG shares, %ade to undergo a test after such training and, if successful, are
given license to practice b! the ecurities and E9change Co%%ission. The! then
e9ecute an agree%ent "ith petitioner "ith respect to the sale of >M> shares to the
general public. A%ong the features of said agree%ent "hich respondent Co%%ission
considered pertinent to the issue are6 2a3 an agent is paid co%pensation for services in
the for% of co%%ission7 2b3 in the event of death or resignation he or his legal
representative shall be paid the balance of the co%%ission corresponding to hi%7 2c3 he
is sub&ect to a set of rules and regulations governing the perfor%ance of his duties under
the agree%ent7 2d3 he is re:uired to put up a perfor%ance bond7 and 2e3 his services %a!
be ter%inated for certain causes. At the sa%e ti%e the Co%%ission found fro% the
evidence and so stated in its resolution that the agents Gare not re:uired to report 2for
"ork3 at an! ti%e7 the! do not have to devote their ti%e e9clusivel! to or "ork solel! for
petitioner7 the ti%e and the effort the! spend in their "ork depend entirel! upon their
o"n "ill and initiative7 the! are not re:uired to account for their ti%e nor sub%it a
record of their activities7 the! shoulder their o"n selling e9penses as "ell as
transportation7 and the! are paid their co%%ission based on a certain percentage of their
sales.G The record also reveals that the co%%ission earned b! an agent on his sales is
directl! deducted b! hi% fro% the a%ount he receives fro% the investor and turns over
to the co%pan! the a%ount invested after such deduction is %ade. The %a&orit! of the
agents are regularl! e%plo!ed else"here W either in the govern%ent or in private
enterprises.
+f the three re:uire%ents under ection = 2d3 of the ocial ecurit! Act it is ad%itted
that the first is present in respect of the agents "hose status is in :uestion. The! e9ert
both %ental and ph!sical efforts in the perfor%ance of their services. The co%pensation
the! receive, ho"ever, is not necessaril! for those efforts but rather for the results
thereof, that is, for actual sales that the! %ake. This point is relevant in the
deter%ination of "hether or not the third re:uisite is also present, na%el!, the e9istence
of e%plo!er@e%plo!ee relationship. Petitioner points out that in effect such
co%pensation is paid not b! it but b! the investor, as sho"n b! the basis on "hich the
a%ount of the co%%ission is fi9ed and the %anner in "hich it is collected.
Petitioner sub%its that its co%%ission agents, engaged under the ter%s and conditions
alread! enu%erated, are not e%plo!ees but independent contractors, as defined in Article
-.-; of the Civil Code, "hich provides6
Art. -.-;. B! the contract for a piece of "ork the contractor binds hi%self to
e9ecute a piece of "ork for the e%plo!er, in consideration of a certain price or
co%pensation. The contractor %a! either e%plo! onl! his labor or skill, or also
furnish the %aterial.
Ee are convinced fro% the facts that the "ork of petitioner$s agents or registered
representatives %ore nearl! appro9i%ates that of an independent contractor than that of
an e%plo!ee. The latter is paid for the labor he perfor%s, that is, for the acts of "hich
such labor consists7 the for%er is paid for the result thereof. This Court has recogni5ed
the distinction in !hartered Bank et al. vs. !onstantino, /< Phil. .-., "here it said6
+n this point, the distinguished co%%entator Manresa in referring to Article -/==
of the 2panish3 Civil Code has the follo"ing to sa!. . . .
The code does not begin b! giving a general idea of the sub&ect %atter, but b!
fi9ing its t"o distinguishing characteristics.
But such an idea "as not absolutel! necessar! because the difference bet"een the
lease of "ork b! contract or for a fi9ed price and the lease of services of hired
servants or laborers is sufficientl! clear. (n the latter, the direct ob&ect of the
contract is the lessor$s labor7 the acts in "hich such labor consists, perfor%ed for
the benefit of the lessee, are taken into account i%%ediatel!. (n "ork done b!
contract or for a fi9ed price, the lessor$s labor is indeed an i%portant, a %ost
i%portant factor7 but it is not the direct ob&ect of the contract, nor is it i%%ediatel!
taken into account. The ob&ect "hich the parties consider, "hich the! bear in %ind
in order to deter%ine the cause of the contract, and upon "hich the! reall! give
their consent, is not the labor but its result, the co%plete and finished "ork, the
aggregate of the lessor$s acts e%bodied in so%ething %aterial, "hich is the useful
ob&ect of the contract. . . . 2Manresa Co%%entarios al Codigo Civil, )ol. U, ed.,
pp. ..4@../.3
Even if an agent of petitioner should devote all of his ti%e and effort tr!ing to sell its
invest%ent plans "ould not necessaril! be entitled to co%pensation therefor. Ais right to
co%pensation depends upon and is %easured b! the tangible results he produces.
The specific :uestion of "hen there is Ge%plo!er@e%plo!ee relationshipG for purposes of
the ocial ecurit! Act has not !et been settled in this &urisdiction b! an! decision of this
Court. But in other connections "herein the ter% is used the test that has been generall!
applied is the so@called control test, that is, "hether the Ge%plo!erG controls or has
reserved the right to control the Ge%plo!eeG not onl! as to the result of the "ork to be
done but also as to the %eans and %ethods b! "hich the sa%e is to be acco%plished.
Thus in *hilippine &anufacturing !ompany vs. 3eronimo et al., #@<*<=, Nove%ber '*,
-*/4, involving the Eork%en$s Co%pensation Act, "e read6
. . . Darcia, a painting contractor, had a contract undertaken to paint a "ater tank
belonging to the Co%pan! Gin accordance "ith specifications and price
stipulated,G and "ith Gthe actual supervision of the "ork 2being3 taken care of b!G
hi%self. Clearl!, this %ade Darcia an independent contractor, for "hile the
co%pan! prescribed "hat should be done, the doing of it and the supervision
thereof "as left entirel! to hi%, all of "hich %eant that he "as free to do the &ob
according to his o"n %ethod "ithout being sub&ect to the control of the co%pan!
e9cept as to the result.
!ru1 et al. vs. /he &anila )otel !ompany, #@*--,, April ;,, -*/., presented the issue
of "ho "ere to be considered e%plo!ees of the defendant fir% for purposes of
separation gratuit!. %62 *ictures Inc. vs. *hil. &usicians 3uild et al., #@-'/=',
Canuar! '=, -*<-, involved the status of certain %usicians for purposes of deter%ining
the appropriate bargaining representative of the e%plo!ees. (n both instances the
GcontrolG test "as follo"ed. 2ee also Mansal vs. P.P. Docheco #u%ber Co., #@=,-.,
April ;,, -*//7 and )iana vs. Allagadan, et al., #@=*<., Ma! ;-, -*/<.3
(n the 8nited tates, the >ederal ocial ecurit! Act of -*;/ set forth no definition of
the ter% $e%plo!ee$ other than that it $includes an officer of a corporation.$ 8nder that
Act the 8.. upre%e Court adopted for a ti%e and in several cases the so@called
$econo%ic@realit!$ test instead of the $control$ test. 28.. vs. ilk and Aarrison, *- #a"
Ed. -./.7 Bartels vs. Bir%ingha%, I"id, -*4., both decided in Cune -*4.3. (n the Bartels
case the Court said6
(n 8nited tates v. ilk, No. ;-', ;;- 8 .,4, ante, -*/., <. Ct -4<;, supra, "e
held that the relationship of e%plo!er@e%plo!ee, "hich deter%ines the liabilit! for
e%plo!%ent ta9es under the ocial ecurit! Act "as not to be deter%ined solel!
b! the idea of control "hich an alleged e%plo!er %a! or could e9ercise over the
details of the service rendered to his business b! the "orker or "orkers.
+bviousl! control is characteristicall! associated "ith the e%plo!er@e%plo!ee
relationship, but in the application of social legislation e%plo!ees are those "ho
as a %atter of econo%ic realit! are dependent upon the business to "hich the!
render service. (n ilk, "e pointed out that per%anenc! of the relation, the skill
re:uired, the invest%ent in the facilities for "ork and opportunities for profit or
less fro% the activities "ere also factors that should enter into &udicial
deter%ination as to the coverage of the ocial ecurit! Act. (t is the total situation
that controls. The standards are as i%portant in the entertain%ent field as "e have
&ust said, in ilk, that the! "ere in that of distribution and transportation. 2*- #a",
Ed. -*4., -*/;73
Ao"ever, the $econo%ic@realit!$ test "as subse:uentl! abandoned as not reflective of the
intention of Congress in the enact%ent of the original ecurit! Act of -*;/. The change
"as acco%plished b! %eans of an a%endator! Act passed in -*4=, "hich "as construed
and applied in later cases. (n Benson vs. $ocial $ecurity Board, -.' >. 'd. <=', the 8..
upre%e Court said6
After the decision b! the upre%e Court in the ilk case, the Treasur! 1epart%ent
reva%ped its Regulation, -' >ed. Reg. .*<<, using the test set out in the ilk case
for deter%ining the e9istence of an e%plo!er@e%plo!ee relationship. Apparentl!
this "as not the concept of such a relationship that Congress had in %ind in the
passage of such re%edial acts as the one involved here because thereafter on Cune
-4, -*4=, Congress enacted Public #a" <4', 4' 8. C.A. ec. -;,- 2a3 2<3.
ection --,-2a3 2<3 of the ocial ecurit! Act "as a%ended to read as follo"s6
The ter% Ge%plo!eeG includes an officer of a corporation, but such ter%
does not include 2-3 an! individual "ho, under the usual co%%on@la" rules
applicable in deter%ining the e%plo!er@e%plo!ee relationship, has the
status of an independent contractor or 2'3 an! individual 2e9cept an officer
of a corporation3 "ho is not an e%plo!ee under such co%%on la" rules.
Ehile it is not necessar! to e9plore the full effect of this enact%ent in the
deter%ination of the e9istence of e%plo!er@e%plo!ee relationships arising in the
future, "e think it can fairl! be said that the intent of Congress "as to sa! that in
deter%ining in a given case "hether under the ocial ecurit! Act such a
relationship e9ists, the co%%on@la" ele%ents of such a relationship, as
recogni5ed and applied b! the courts generall! at the ti%e of the passage of the
Act, "ere the standard to be used . . . .
The co%%on@la" principles e9pressl! adopted b! the 8nited tates Congress are
su%%ari5ed in Corpus Curis ecundu% as follo"s6
8nder the co%%on@la" principles as to tests of the independent contractor
relationship, discussed in Master and ervant, and applicable in deter%ining
coverage under the ocial ecurit! Act and related ta9ing provisions, the
significant factor in deter%ining the relationship of the parties is the presence or
absence of a supervisor! po"er to control the %ethod and detail of perfor%ance of
the service, and the degree to "hich the principal %a! intervene to e9ercise such
control, the presence of such po"er of control being indicative of an e%plo!%ent
relationship and the absence of such po"er being indicative of the relationship of
independent contractor. (n other "ords, the test of e9istence of the relationship of
independent contractor, "hich relationship is not ta9able under the ocial ecurit!
Act and related provisions, is "hether the one "ho is clai%ed to be an
independent contractor has contracted to do the "ork according to his o"n
%ethods and "ithout being sub&ect to the control of the e%plo!er e9cept as to the
result of the "ork. 2=- C.C.. ec. /, pp. '4@'/37 ee also Millard$s (nc. vs. 8nited
tates, 4< >. upp. ;=/7 ch%idt vs. E"ing, -,= >. upp. /,/7 Ra%blin vs. E"ing,
-,< >. upp. '<=.
(n the case last cited 2Ra%bin v. E"ing3 the :uestion presented "as "hether the plaintiff
there, "ho "as a sales representative of a cos%etics fir% "orking on a co%%ission
basis, "as to be considered an e%plo!ee. aid the Court6
Plaintiff$s onl! re%uneration "as her co%%ission of 4,F, plus X/ e9tra for ever!
X'/, of sales. Plaintiff "as not guaranteed an! %ini%u% co%pensation and she
"as not allo"ed a dra"ing account or advance of an! kind against unearned
co%%issions. Plaintiff paid all of her traveling e9penses and she even had to pa!
the postage for sending orders to Avon.
The onl! office "hich Avon %aintained in hreveport "as an office for the cit!
%anager. Plaintiff "orked fro% her o"n ho%e and she "as never furnished an!
leads. The relationship bet"een plaintiff and Avon "as ter%inable at "ill . . .
999 999 999
. . . A long line of decisions holds that co%%ission sales representatives are not
e%plo!ees "ithin the coverage of the ocial ecurit! Act. The underl!ing
circu%stances of the relationship bet"een the sales representatives and co%pan!
often var! "idel! fro% case to case, but co%%ission sales representatives have
unifor%l! been held to be outside the ocial ecurit! Act.
Considering the si%ilarit! bet"een the definition of Ge%plo!eeG in the >ederal ocial
ecurit! Act 28..3 as a%ended and its definitions in our o"n ocial ecurit! Act, and
considering further that the local statute is ad%ittedl! patterned after that of the 8nited
tates, the decisions of A%erican courts on the %atter before us %a! "ell be accorded
persuasive force. The logic of the situation indeed dictates that "here the ele%ent of
control is absent7 "here a person "ho "orks for another does so %ore or less at his o"n
pleasure and is not sub&ect to definite hours or conditions of "ork, and in turn is
co%pensated according to the result of his efforts and not the a%ount thereof, "e should
not find that the relationship of e%plo!er and e%plo!ee e9ists.
Ee have e9a%ined the contract for% bet"een petitioner and its registered
representatives and found nothing therein "hich "ould indicate that the latter are under
the control of the for%er in respect of the %eans and %ethods the! e%plo! in the
perfor%ance of their "ork. The fact that for certain specified causes the relationship %a!
be ter%inated 2e.g., failure to %eet the annual :uota of sales, inabilit! to %ake an! sales
production during a si9@%onth period, conduct detri%ental to petitioner, etc.3 does not
%ean that such control e9ists, for the causes of ter%ination thus specified have no
relation to the %eans and %ethods of "ork that are ordinaril! re:uired of or i%posed
upon e%plo!ees.
(n vie" of the foregoing considerations, the resolution of respondent ocial ecurit!
Co%%ission sub&ect of this appeal is reversed and set aside, "ithout pronounce%ent as
to costs.
+eyes '.B.%. ,i1on Beng1on '.*. 7aldivar $anche1 !astro Angeles and -ernando
''. concur.
!oncepcion !.'. took no part part.
Republic of the Philippines
SUPREME COURT
Manila
TA(R1 1()((+N

G.R. No. 75112 August 17, 1992
$#LAMER CHR#ST#AN #NST#TUTE, petitioner,
vs.
HON. #NTERMED#ATE APPELLATE COURT, HON. ENR#AUE P. SUPL#CO, %&
'%s ()*)(%t+ )s 3u1g, o0 t', R,g%o&)5 T/%)5 Cou/t, /)&(' B#?, RoC)s C%t+ )&1
POTENC#ANO !APUNAN, SR., respondents.
Bedona 8 Bedona %a# 9ffice for petitioner.
+hodora 3. 5apunan for private respondents.

GUT#ERRE2, 3R., J.:
The private respondents, heirs of the late Potenciano ?apunan, seek reconsideration of
the decision rendered b! this Court on +ctober -<, -**, 2>ila%er Christian (nstitute v.
Court of Appeals, -*, CRA 4..3 revie"ing the appellate court$s conclusion that there
e9ists an e%plo!er@e%plo!ee relationship bet"een the petitioner and its co@defendant
>untecha. The Court ruled that the petitioner is not liable for the in&uries caused b!
>untecha on the grounds that the latter "as not an authori5ed driver for "hose acts the
petitioner shall be directl! and pri%aril! ans"erable, and that >untecha "as %erel! a
"orking scholar "ho, under ection -4, Rule U, Book ((( of the Rules and Regulations
(%ple%enting the #abor Code is not considered an e%plo!ee of the petitioner.
The private respondents assert that the circu%stances obtaining in the present case call
for the application of Article '-=, of the Civil Code since >untecha is no doubt an
e%plo!ee of the petitioner. The private respondents %aintain that under Article '-=, an
in&ured part! shall have recourse against the servant as "ell as the petitioner for "ho%,
at the ti%e of the incident, the servant "as perfor%ing an act in furtherance of the
interest and for the benefit of the petitioner. >untecha allegedl! did not steal the school
&eep nor use it for a &o! ride "ithout the kno"ledge of the school authorities.
After a re@e9a%ination of the la"s relevant to the facts found b! the trial court and the
appellate court, the Court reconsiders its decision. Ee reinstate the Court of Appeals$
decision penned b! the late Custice 1esiderio Curado and concurred in b! Custices Cose
C. Ca%pos, Cr. and erafin E. Ca%ilon. Appl!ing Civil Code provisions, the appellate
court affir%ed the trial court decision "hich ordered the pa!%ent of the P',,,,,.,,
liabilit! in the Jenith (nsurance Corporation polic!, P-,,,,,.,, %oral da%ages,
P4,,,,.,, litigation and actual e9penses, and P;,,,,.,, attorne!$s fees.
(t is undisputed that >untecha "as a "orking student, being a part@ti%e &anitor and a
scholar of petitioner >ila%er. Ae "as, in relation to the school, an e%plo!ee even if he
"as assigned to clean the school pre%ises for onl! t"o 2'3 hours in the %orning of each
school da!.
Aaving a student driver$s license, >untecha re:uested the driver, Allan Masa, and "as
allo"ed, to take over the vehicle "hile the latter "as on his "a! ho%e one late
afternoon. (t is significant to note that the place "here Allan lives is also the house of his
father, the school president, Agustin Masa. Moreover, it is also the house "here
>untecha "as allo"ed free board "hile he "as a student of >ila%er Christian (nstitute.
Allan Masa turned over the vehicle to >untecha onl! after driving do"n a road,
negotiating a sharp dangerous curb, and vie"ing that the road "as clear. 2TN, April 4,
-*=;, pp. .=@.*3 According to Allan$s testi%on!, a fast %oving truck "ith glaring lights
nearl! hit the% so that the! had to s"erve to the right to avoid a collision. 8pon
s"erving, the! heard a sound as if so%ething had bu%ped against the vehicle, but the!
did not stop to check. Actuall!, the Pino! &eep s"erved to"ards the pedestrian,
Potenciano ?apunan "ho "as "alking in his lane in the direction against vehicular
traffic, and hit hi%. Allan affir%ed that >untecha follo"ed his advise to s"erve to the
right. 2I"id., p. .*3 At the ti%e of the incident 2<6;, P.M.3 in Ro9as Cit!, the &eep had
onl! one functioning headlight.
Allan testified that he "as the driver and at the sa%e ti%e a securit! guard of the
petitioner@school. Ae further said that there "as no specific ti%e for hi% to be off@dut!
and that after driving the students ho%e at /6,, in the afternoon, he still had to go back
to school and then drive ho%e using the sa%e vehicle.
1riving the vehicle to and fro% the house of the school president "here both Allan and
>untecha reside is an act in furtherance of the interest of the petitioner@school. Allan$s
&ob de%ands that he drive ho%e the school &eep so he can use it to fetch students in the
%orning of the ne9t school da!.
(t is indubitable under the circu%stances that the school president had kno"ledge that
the &eep "as routinel! driven ho%e for the said purpose. Moreover, it is not i%probable
that the school president also had kno"ledge of >untecha$s possession of a student
driver$s license and his desire to undergo driving lessons during the ti%e that he "as not
in his classroo%s.
(n learning ho" to drive "hile taking the vehicle ho%e in the direction of Allan$s house,
>untecha definitel! "as not having a &o! ride. >untecha "as not driving for the purpose
of his en&o!%ent or for a Gfrolic of his o"nG but ulti%atel!, for the service for "hich the
&eep "as intended b! the petitioner school. 2ee #. Battistoni v. Tho%as, Can C -44, -
1.#.R. /.., =, A#R .'' H-*;'I7 ee also Association of Baptists for Eorld Evangelis%,
(nc. v. >ield%en$s (nsurance Co., (nc. -'4 CRA <-= H-*=;I3. Therefore, the Court is
constrained to conclude that the act of >untecha in taking over the steering "heel "as
one done for and in behalf of his e%plo!er for "hich act the petitioner@school cannot
den! an! responsibilit! b! arguing that it "as done be!ond the scope of his &anitorial
duties. The clause G"ithin the scope of their assigned tasksG for purposes of raising the
presu%ption of liabilit! of an e%plo!er, includes an! act done b! an e%plo!ee, in
furtherance of the interests of the e%plo!er or for the account of the e%plo!er at the
ti%e of the infliction of the in&ur! or da%age. 2Manuel Casada, -*, )a *,<, /* E 'd 4.
H-*/,I3 Even if so%eho", the e%plo!ee driving the vehicle derived so%e benefit fro%
the act, the e9istence of a presu%ptive liabilit! of the e%plo!er is deter%ined b!
ans"ering the :uestion of "hether or not the servant "as at the ti%e of the accident
perfor%ing an! act in furtherance of his %aster$s business. 2?ohl%an v. A!land, '-,
NE <4;, /, A#R -4;. H-*'<I7 Ca%eson v. Davett, .- P 'd *;. H-*;.I3
ection -4, Rule U, Book ((( of the Rules i%ple%enting the #abor Code, on "hich the
petitioner anchors its defense, "as pro%ulgated b! the ecretar! of #abor and
E%plo!%ent onl! for the purpose of ad%inistering and enforcing the provisions of the
#abor Code on conditions of e%plo!%ent. Particularl!, Rule U of Book ((( provides
guidelines on the %anner b! "hich the po"ers of the #abor ecretar! shall be e9ercised7
on "hat records should be kept7 %aintained and preserved7 on pa!roll7 and on the
e9clusion of "orking scholars fro%, and inclusion of resident ph!sicians in the
e%plo!%ent coverage as far as co%pliance "ith the substantive labor provisions on
"orking conditions, rest periods, and "ages, is concerned.
(n other "ords, Rule U is %erel! a guide to the enforce%ent of the substantive la" on
labor. The Court, thus, %akes the distinction and so holds that ection -4, Rule U, Book
((( of the Rules is not the decisive la" in a civil suit for da%ages instituted b! an in&ured
person during a vehicular accident against a "orking student of a school and against the
school itself.
The present case does not deal "ith a labor dispute on conditions of e%plo!%ent
bet"een an alleged e%plo!ee and an alleged e%plo!er. (t invokes a clai% brought b!
one for da%ages for in&ur! caused b! the patentl! negligent acts of a person, against
both doer@e%plo!ee and his e%plo!er. Aence, the reliance on the i%ple%enting rule on
labor to disregard the pri%ar! liabilit! of an e%plo!er under Article '-=, of the Civil
Code is %isplaced. An i%ple%enting rule on labor cannot be used b! an e%plo!er as a
shield to avoid liabilit! under the substantive provisions of the Civil Code.
There is evidence to sho" that there e9ists in the present case an e9tra@contractual
obligation arising fro% the negligence or reckless i%prudence of a person G"hose acts or
o%issions are i%putable, b! a legal fiction, to other2s3 "ho are in a position to e9ercise
an absolute or li%ited control over 2hi%3.G 2Bahia v. #iton&ua and #e!nes, ;, Phil. <'4
H-*-/I3
>untecha is an e%plo!ee of petitioner >ila%er. Ae need not have an official appoint%ent
for a driver$s position in order that the petitioner %a! be held responsible for his grossl!
negligent act, it being sufficient that the act of driving at the ti%e of the incident "as for
the benefit of the petitioner. Aence, the fact that >untecha "as not the school driver or
"as not acting "ithin the scope of his &anitorial duties does not relieve the petitioner of
the burden of rebutting the presu%ption .uris tantum that there "as negligence on its
part either in the selection of a servant or e%plo!ee, or in the supervision over hi%. The
petitioner has failed to sho" proof of its having e9ercised the re:uired diligence of a
good father of a fa%il! over its e%plo!ees >untecha and Allan.
The Court reiterates that supervision includes the for%ulation of suitable rules and
regulations for the guidance of its e%plo!ees and the issuance of proper instructions
intended for the protection of the public and persons "ith "ho% the e%plo!er has
relations through his e%plo!ees. 2Bahia v. #iton&ua and #e!nes, supra at p. <'=7
Phoeni9 Construction, v. (nter%ediate Appellate Court, -4= CRA ;/; H-*=.I3
An e%plo!er is e9pected to i%pose upon its e%plo!ees the necessar! discipline called
for in the perfor%ance of an! act indispensable to the business and beneficial to their
e%plo!er.
(n the present case, the petitioner has not sho"n that it has set forth such rules and
guidelines as "ould prohibit an! one of its e%plo!ees fro% taking control over its
vehicles if one is not the official driver or prohibiting the driver and son of the >ila%er
president fro% authori5ing another e%plo!ee to drive the school vehicle. >urther%ore,
the petitioner has failed to prove that it had i%posed sanctions or "arned its e%plo!ees
against the use of its vehicles b! persons other than the driver.
The petitioner, thus, has an obligation to pa! da%ages for in&ur! arising fro% the
unskilled %anner b! "hich >untecha drove the vehicle. 2Cangco v. Manila Railroad Co.,
;= Phil. .<=, ..' H-*-=I3. (n the absence of evidence that the petitioner had e9ercised
the diligence of a good father of a fa%il! in the supervision of its e%plo!ees, the la"
i%poses upon it the vicarious liabilit! for acts or o%issions of its e%plo!ees. 28%ali v.
Bacani, <* CRA '<; H-*.<I7 Poblete v. >abros, *; CRA ',, H-*.*I7 ?apalaran Bus
#iner v. Coronado, -.< CRA .*' H-*=*I7 >ranco v. (nter%ediate Appellate Court, -.=
CRA ;;- H-*=*I7 Pantranco North E9press, (nc. v. Baesa, -.* CRA ;=4 H-*=*I3 The
liabilit! of the e%plo!er is, under Article '-=,, pri%ar! and solidar!. Ao"ever, the
e%plo!er shall have recourse against the negligent e%plo!ee for "hatever da%ages are
paid to the heirs of the plaintiff.
(t is an ad%itted fact that the actual driver of the school &eep, Allan Masa, "as not %ade
a part! defendant in the civil case for da%ages. This is :uite understandable considering
that as far as the in&ured pedestrian, plaintiff Potenciano ?apunan, "as concerned, it "as
>untecha "ho "as the one driving the vehicle and presu%abl! "as one authori5ed b!
the school to drive. The plaintiff and his heirs should not no" be left to suffer "ithout
si%ultaneous recourse against the petitioner for the conse:uent in&ur! caused b! a &anitor
doing a driving chore for the petitioner even for a short "hile. >or the purpose of
recovering da%ages under the prevailing circu%stances, it is enough that the plaintiff
and the private respondent heirs "ere able to establish the e9istence of e%plo!er@
e%plo!ee relationship bet"een >untecha and petitioner >ila%er and the fact that
>untecha "as engaged in an act not for an independent purpose of his o"n but in
furtherance of the business of his e%plo!er. A position of responsibilit! on the part of
the petitioner has thus been satisfactoril! de%onstrated.
EAERE>+RE, the %otion for reconsideration of the decision dated +ctober -<, -**, is
hereb! DRANTE1. The decision of the respondent appellate court affir%ing the trial
court decision is RE(NTATE1.
+ +R1ERE1.
-eliciano Bidin ,avide 'r. and +omero ''. concur.
Republic of the Philippines
SUPREME COURT
Manila
EC+N1 1()((+N

G.R. No. >4948 S,*t,-.,/ 27, 1994
MAN#LA GOL$ D COUNTR" CLU, #NC., petitioner,
vs.
#NTERMED#ATE APPELLATE COURT )&1 $ERM#N LLAMAR, respondents.
Bito &isa 8 %o1ada for petitioner.
+em"erto 7. Evio for private respondent.

NAR?ASA, C.J.:
The :uestion before the Court here is "hether or not persons rendering cadd!ing
services for %e%bers of golf clubs and their guests in said clubs$ courses or pre%ises are
the e%plo!ees of such clubs and therefore "ithin the co%pulsor! coverage of the ocial
ecurit! !ste% 23.
That :uestion appears to have been involved, either directl! or peripherall!, in three
separate proceedings, all initiated b! or on behalf of herein private respondent and his
fello" caddies. That "hich gave rise to the present petition for revie" "as originall!
filed "ith the ocial ecurit! Co%%ission 2C3 via petition of seventeen 2-.3 persons
"ho st!led the%selves GCaddies of Manila Dolf and Countr! Club@PTCCEAG for
coverage and avail%ent of benefits under the ocial ecurit! Act as a%ended,
GPTCCEAG being
the acron!% of a labor organi5ation, the GPhilippine Technical, Clerical, Co%%ercial
E%plo!ees Association,G "ith "hich the petitioners clai%ed to be affiliated. The
petition, docketed as C Case No. /44;, alleged in essence that although the petitioners
"ere e%plo!ees of the Manila Dolf and Countr! Club, a do%estic corporation, the latter
had not registered the% as such "ith the .
At about the sa%e ti%e, t"o other proceedings bearing on the sa%e :uestion "ere filed
or "ere pending7 these "ere6
2-3 a certification election case filed "ith the #abor Relations 1ivision of
the Ministr! of #abor b! the PTCCEA on behalf of the sa%e caddies of the
Manila Dolf and Countr! Club, the case being titled GPhilippine Technical,
Clerical, Co%%ercial Association vs. Manila Dolf and Countr! ClubG and
docketed as Case No. R4@#R1U@M@-,@/,4@.=7 it appears to have been
resolved in favor of the petitioners therein b! Med@Arbiter +rlando . Ro&o
"ho "as thereafter upheld b! 1irector Car%elo . Noriel, den!ing the
Club$s %otion for reconsideration7 1
2'3 a co%pulsor! arbitration case initiated before the Arbitration Branch of the Ministr! of #abor b! the
sa%e labor organi5ation, titled GPhilippine Technical, Clerical, Co%%ercial E%plo!ees Association
2PTCCEA3, >er%in #a%ar and Ra!%undo Co%ok vs. Manila Dolf and Countr! Club, (nc., Miguel
Celdran, Aenr! #i% and Deroni%o Ale&o7G it "as dis%issed for lack of %erit b! #abor Arbiter Cornelio T.
#insangan, a decision later affir%ed on appeal b! the National #abor Relations Co%%ission on the ground
that there "as no e%plo!er@e%plo!ee relationship bet"een the petitioning caddies and the respondent
Club. 2
(n the case before the C, the respondent Club filed ans"er pra!ing for the dis%issal of
the petition, alleging in substance that the petitioners, caddies b! occupation, "ere
allo"ed into the Club pre%ises to render services as such to the individual %e%bers and
guests pla!ing the Club$s golf course and "ho the%selves paid for such services7 that as
such caddies, the petitioners "ere not sub&ect to the direction and control of the Club as
regards the %anner in "hich the! perfor%ed their "ork7 and hence, the! "ere not the
Club$s e%plo!ees.
ubse:uentl!, all but t"o of the seventeen petitioners of their o"n accord "ithdre" their
clai% for social securit! coverage, avo"edl! co%ing to reali5e that indeed there "as no
e%plo!%ent relationship bet"een the% and the Club. The case continued, and "as
eventuall! ad&udicated b! the C after protracted proceedings onl! as regards the t"o
holdouts, >er%in #la%ar and Ra!%undo Co%ok. The Co%%ission dis%issed the petition
for lack of %erit, @ ruling6
. . . that the cadd!$s fees "ere paid b! the golf pla!ers the%selves and not
b! respondent club. >or instance, petitioner Ra!%undo Co%ok averred that
for their services as caddies a cadd!$s Clai% tub 2E9h. G-@AG3 is issued b!
a pla!er "ho "ill in turn hand over to %anage%ent the other portion of the
stub kno"n as Cadd! Ticket 2E9h. G-G3 so that b! this arrange%ent
%anage%ent "ill kno" ho" %uch a cadd! "ill be paid 2TN, p. =,, Cul!
';, -*=,3. #ike"ise, petitioner >er%in #la%ar ad%itted that cadd! "orks
on his o"n in accordance "ith the rules and regulations 2TN, p. '4,
>ebruar! '<, -*=,3 but petitioner Co%ok could not state an! polic! of
respondent that directs the %anner of cadd!ing 2TN, pp. .<@.., Cul! ';,
-*=,3. Ehile respondent club pro%ulgates rules and regulations on the
assign%ent, deport%ent and conduct of caddies 2E9h. GCG3 the sa%e are
designed to i%pose personal discipline a%ong the caddies but not to direct
or conduct their actual "ork. (n fact, a golf pla!er is at libert! to choose a
cadd! of his preference regardless of the respondent club$s group rotation
s!ste% and has the discretion on "hether or not to pa! a cadd!. As testified
to b! petitioner #la%ar that their inco%e depends on the nu%ber of pla!ers
engaging their services and liberalit! of the latter 2TN, pp. -,@--, >eb. '<,
-*=,3. This lends credence to respondent$s assertion that the caddies are
never their e%plo!ees in the absence of t"o ele%ents, na%el!, 2-3 pa!%ent
of "ages and 2'3 control or supervision over the%. (n this connection, our
upre%e Court ruled that in the deter%ination of the e9istence of an
e%plo!er@e%plo!ee relationship, the Gcontrol testG shall be considered
decisive 2Philippine Manufacturing Co. vs. Deroni%o and Darcia, *< Phil.
'.<7 Mansal vs. P.P. Coheco #u%ber Co., *< Phil. *4-7 )iana vs.
Al@lagadan, et al., ** Phil. 4,=7 )da, de Ang, et al. vs. The Manila Aotel
Co., -,- Phil. ;/=, #)N Pictures (nc. vs. Phil. Musicians Duild, et al.,
#@-'/=', Canuar! '=, -*<-, - CRA -;'. . . . 2reference being %ade also to
(nvest%ent Planning Corporation Phil. vs. '- CRA *'/3.
Records sho" the respondent club had reported for coverage Draciano
A"it and 1aniel Rui&ano, as bat unloader and helper, respectivel!, including
their ground %en, house and ad%inistrative personnel, a situation indicative
of the latter$s concern "ith the rights and "elfare of its e%plo!ees under the
la", as a%ended. The unrebutted testi%on! of Col. Deneroso A. Ale&o
2Ret.3 that the (1 cards issued to the caddies %erel! intended to identif! the
holders as accredited caddies of the club and privilege2d3 to pl! their trade
or occupation "ithin its pre%ises "hich could be "ithdra"n an!ti%e for
loss of confidence. This gives us a reasonable ground to state that the
defense posture of respondent that petitioners "ere never its e%plo!ees is
"ell taken. 4
>ro% this Resolution appeal "as taken to the (nter%ediate appellate Court b! the union
representing #la%ar and Co%ok. After the appeal "as docketed 5 and so%e %onths before
decision thereon "as reached and pro%ulgated, Ra!%undo Co%ok$s appeal "as dis%issed at his instance, leaving >er%in
#la%ar the lone appellant. >
The appeal ascribed t"o errors to the C6
2-3 refusing to suspend the proceedings to a"ait &udg%ent b! the #abor
Relations 1ivision of National Capital Regional +ffice in the certification
election case 2R@4@#R1@M@-,@/,4@.=3 supra, on the precise issue of the
e9istence of e%plo!er@e%plo!ee relationship bet"een the respondent club
and the appellants, it being contended that said issue "as Ga function of the
proper labor officeG7 and
2'3 ad&udicating that self sa%e issue a %anner contrar! to the ruling of the
1irector of the Bureau of #abor Relations, "hich Ghas not onl! beco%e
final but 2has been3 e9ecuted or 2beco%e3 res ad.udicata.G 7
The (nter%ediate Appellate Court gave short shirt to the first assigned error, dis%issing
it as of the least i%portance. Nor, it "ould appear, did it find an! greater %erit in the
second alleged error. Although said Court reserved the appealed C decision and
declared >er%in #la%ar an e%plo!ee of the Manila Dold and Countr! Club, ordering
that he be reported as such for social securit! coverage and paid an! corresponding
benefits, 8 it conspicuousl! ignored the issue of res ad.udicata raised in said second assign%ent. (nstead, it dre" basis
for the reversal fro% this Court$s ruling in Investment *lanning !orporation of the *hilippines vs. $ocial $ecurity
$ystem, supra9 and declared that upon the evidence, the :uestioned e%plo!er@e%plo!ee relationship bet"een the Club and
>er%in #la%ar passed the so@called Gcontrol test,G establish%ent in the case W i.e., G"hether the e%plo!er controls or has
reserved the right to control the e%plo!ee not onl! as to the result of the "ork to be done but also as to the %eans and
%ethods b! "hich the sa%e is to be acco%plished,G W the Club$s control over the caddies enco%passing6
2a3 the pro%ulgation of no less than t"ent!@four 2'43 rules and regulations
&ust about ever! aspect of the conduct that the cadd! %ust observe, or
avoid, "hen serving as such, an! violation of an! "hich could sub&ect hi%
to disciplinar! action, "hich %a! include suspending or cutting off his
access to the club pre%ises7
2b3 the devising and enforce%ent of a group rotation s!ste% "hereb! a
cadd! is assigned a nu%ber "hich designates his turn to serve a pla!er7
2c3 the club$s GsuggestingG the rate of fees pa!able to the caddies.
1ee%ed of title or no %o%ent b! the Appellate Court "as the fact that the caddies "ere
paid b! the pla!ers, not b! the Club, that the! observed no definite "orking hours and
earned no fi9ed inco%e. (t :uoted "ith approval fro% an A%erican decision 18 to the effect
that6 G"hether the club paid the caddies and after"ard collected in the first instance, the caddies "ere still e%plo!ees of the
club.G This, no %atter that the case "hich produced this ruling had a slightl! different factual cast, apparentl! having
involved a clai% for "ork%en$s co%pensation %ade b! a cadd! "ho, about to leave the pre%ises of the club "here he
"orked, "as hit and in&ured b! an auto%obile then negotiating the club$s private drive"a!.
That sa%e issue of res ad.udicata, ignored b! the (AC be!ond bare %ention thereof, as
alread! pointed out, is no" a%ong the %ain"a!s of the private respondent$s defenses to
the petition for revie". Considered in the perspective of the incidents &ust recounted, it
illustrates as "ell as an!thing can, "h! the practice of foru%@shopping &ustl! %erits
censure and punitive sanction. Because the sa%e :uestion of e%plo!er@e%plo!ee
relationship has been dragged into three different fora, "ill!@nill! and in :uick
succession, it has birthed controvers! as to "hich of the resulting ad&udications %ust
no" be recogni5ed as decisive. +n the one hand, there is the certification case HR4@
#R1U@M@-,@/,4@.=3, "here the decision of the Med@Arbiter found for the e9istence of
e%plo!er@e%plo!ee relationship bet"een the parties, "as affir%ed b! 1irector Car%elo
. Noriel, "ho ordered a certification election held, a disposition never thereafter
appealed according to the private respondent7 on the other, the co%pulsor! arbitration
case 2NCR Case No. AB@4@-..-@.*3, instituted b! or for the sa%e respondent at about
the sa%e ti%e, "hich "as dis%issed for lack of %erit b! the #abor Arbiter, "hich "as
after"ards affir%ed b! the N#RC itself on the ground that there e9isted no such
relationship bet"een the Club and the private respondent. And, as if %atters "ere not
alread! co%plicated enough, the sa%e respondent, "ith the support and assistance of the
PTCCEA, sa" fit, also conte%poraneousl!, to initiate still a third proceeding for
co%pulsor! social securit! coverage "ith the ocial ecurit! Co%%ission 2C Case
No. /44;3, "ith the result alread! %entioned.
Before this Court, the petitioner Club no" contends that the decision of the Med@Arbiter
in the certification case had never beco%e final, being in fact the sub&ect of three
pending and unresolved %otions for reconsideration, as "ell as of a later %otion for
earl! resolution. 11 8nfortunatel!, none of these %otions is incorporated or reproduced in the record before the
Court. And, for his part, the private respondent contends, not onl! that said decision had been appealed to and been affir%ed
b! the 1irector of the B#R, but that a certification election had in fact been held, "hich resulted in the PTCCEA being
recogni5ed as the sole bargaining agent of the caddies of the Manila Dolf and Countr! Club "ith respect to "ages, hours of
"ork, ter%s of e%plo!%ent, etc. 12 Ehatever the truth about these opposing contentions, "hich the record before the Court
does not ade:uatel! disclose, the %ore controlling consideration "ould see% to be that, ho"ever, final it %a! beco%e, the
decision in a certification case, b! the
ver! nature of that proceedings, is not such as to foreclose all further dispute bet"een the parties as to the e9istence, or non@
e9istence, of e%plo!er@e%plo!ee relationship bet"een the%.
(t is "ell settled that for res ad.udicata, or the principle of bar b! prior &udg%ent, to
appl!, the follo"ing essential re:uisites %ust concur6 2-3 there %ust be a final &udg%ent
or order7 2'3 said &udg%ent or order %ust be on the %erits7 2;3 the court rendering the
sa%e %ust have &urisdiction over the sub&ect %atter and the parties7 and 243 there %ust
be bet"een the t"o cases identit! of parties, identit! of sub&ect %atter and identit! of
cause of action. 1@
Clearl! i%plicit in these re:uisites is that the action or proceedings in "hich is issued the
Gprior Cudg%entG that "ould operate in bar of a subse:uent action bet"een the sa%e
parties for the sa%e cause, be adversarial, or contentious, Gone having opposing parties7
2is3 contested, as distinguished fro% an ex parte hearing or proceeding. . . . of "hich the
part! seeking relief has given legal notice to the other part! and afforded the latter an
opportunit! to contest itG 14 and a certification case is not such a proceeding, as this Court alread! ruled6
A certification proceedings is not a GlitigationG in the sense in "hich the
ter% is co%%onl! understood, but %ere investigation of a non@adversar!,
fact@finding character, in "hich the investigating agenc! pla!s the part of a
disinterested investigator seeking %erel! to ascertain the desires of the
e%plo!ees as to the %atter of their representation. The court en&o!s a "ide
discretion in deter%ining the procedure necessar! to insure the fair and free
choice of bargaining representatives b! the e%plo!ees. 15
(ndeed, if an! ruling or &udg%ent can be said to operate as res ad.udicata on the
contested issue of e%plo!er@e%plo!ee relationship bet"een present petitioner and the
private respondent, it "ould logicall! be that rendered in the co%pulsor! arbitration case
2NCR Case No. AB@4@..-@.*, supra3, petitioner having asserted, "ithout dispute fro%
the private respondent, that said issue "as there s:uarel! raised and litigated, resulting in
a ruling of the Arbitration Branch 2of the sa%e Ministr! of #abor3 that such relationship
did not e9ist, and "hich ruling "as thereafter affir%ed b! the National #abor Relations
Co%%ission in an appeal taken b! said respondent. 1>
(n an! case, this Court is not inclined to allo" private respondent the benefit of an!
doubt as to "hich of the conflicting ruling &ust adverted to should be accorded pri%ac!,
given the fact that it "as he "ho activel! sought the% si%ultaneousl!, as it "ere, fro%
separate fora, and even if the graver sanctions %ore latel! i%posed b! the Court for
foru%@shopping %a! not be applied to hi% retroactivel!.
Accordingl!, the (AC is not to be faulted for ignoring private respondent$s invocation
of res ad.udicata7 on contrar!, it acted correctl! in doing so.
aid CourtLs holding that upon the facts, there e9ists 2or e9isted3 a relationship of
e%plo!er and e%plo!ee bet"een petitioner and private respondent is, ho"ever, another
%atter. The Court does not agree that said facts necessaril! or logicall! point to such a
relationship, and to the e9clusion of an! for% of arrange%ents, other than of
e%plo!%ent, that "ould %ake the respondent$s services available to the %e%bers and
guest of the petitioner.
As long as it is, the list %ade in the appealed decision detailing the various %atters of
conduct, dress, language, etc. covered b! the petitioner$s regulations, does not, in the
%ind of the Court, so circu%scribe the actions or &udg%ent of the caddies concerned as
to leave the% little or no freedo% of choice "hatsoever in the %anner of carr!ing out
their services. (n the ver! nature of things, caddies %ust sub%it to so%e supervision of
their conduct "hile en&o!ing the privilege of pursuing their occupation "ithin the
pre%ises and grounds of "hatever club the! do their "ork in. >or all that is %ade to
appear, the! "ork for the club to "hich the! attach the%selves on sufference but, on the
other hand, also "ithout having to observe an! "orking hours, free to leave an!ti%e
the! please, to sta! a"a! for as long the! like. (t is not pretended that if found re%iss in
the observance of said rules, an! discipline %a! be %eted the% be!ond barring the%
fro% the pre%ises "hich, it %a! be supposed, the Club %a! do in an! case even absent
an! breach of the rules, and "ithout violating an! right to "ork on their part. All these
considerations clash frontall! "ith the concept of e%plo!%ent.
The (AC "ould point to the fact that the Club suggests the rate of fees pa!able b! the
pla!ers to the caddies as still another indication of the latter$s status as e%plo!ees. (t
see%s to the Court, ho"ever, that the intend%ent of such fact is to the contrar!, sho"ing
that the Club has not the %easure of control over the incidents of the caddies$ "ork and
co%pensation that an e%plo!er "ould possess.
The Court agrees "ith petitioner that the group rotation s!ste% so@called, is less a
%easure of e%plo!er control than an assurance that the "ork is fairl! distributed, a
cadd! "ho is absent "hen his turn nu%ber is called si%pl! losing his turn to serve and
being assigned instead the last nu%ber for the da!. 17
B! and large, there appears nothing in the record to refute the petitioner$s clai% that6
2Petitioner3 has no %eans of co%pelling the presence of a cadd!. A cadd! is
not re:uired to e9ercise his occupation in the pre%ises of petitioner. Ae %a!
"ork "ith an! other golf club or he %a! seek e%plo!%ent a cadd! or
other"ise "ith an! entit! or individual "ithout restriction b! petitioner. . . .
. . . (n the final anal!sis, petitioner has no "as of co%pelling the presence of
the caddies as the! are not re:uired to render a definite nu%ber of hours of
"ork on a single da!. Even the group rotation of caddies is not absolute
because a pla!er is at libert! to choose a cadd! of his preference regardless
of the cadd!$s order in the rotation.
(t can happen that a cadd! "ho has rendered services to a pla!er on one da!
%a! still find sufficient ti%e to "ork else"here. 8nder such circu%stances,
he %a! then leave the pre%ises of petitioner and go to such other place of
"ork that he "ishes 2sic3. +r a cadd! "ho is on call for a particular da!
%a! deliberatel! absent hi%self if he has %ore profitable cadd!ing, or
another, engage%ent in so%e other place. These are things be!ond
petitioner$s control and for "hich it i%poses no direct sanctions on the
caddies. . . . 18
EAERE>+RE, the 1ecision of the (nter%ediate Appellant Court, revie" of "hich is
sought, is reversed and set aside, it being hereb! declared that the private respondent,
>er%in #la%ar, is not an e%plo!ee of petitioner Manila Dolf and Countr! Club and that
petitioner is under no obligation to report hi% for co%pulsor! coverage to the ocial
ecurit! !ste%. No pronounce%ent as to costs.
+ +R1ERE1.
+egalado and &endo1a ''. concur.
*adilla '. is on leave.
*uno '. took no part.