Cases in Labor Law Review

1. Grepalife vs. Judico 180 SCRA 445.

2. Ruga vs. NLRC 181 SCRA 266.
3. Jo vs. NLRC 324 SCRA 437.
4. Paguio Transport vs. NLRC 294 SCRA 657.
5. Besa vs. Trajano 146 SCRA 501.
6. InsularLife vs. NLRC and Basiao 179 SCRA 459.
7. Encyclopedia Britannica vs. NLRC 264 SCRA 1.
8. Abante vs. La Madrid Bearings and Parts 430 SCRA 368
9. Filipinas Broadcasting vs. NLRC 287 SCRA 348.
10. Ushio Marketing vs. NLRC 294 SCRA 673.
11. Serrano vs. Gallant Maritime 167 SCRA 614.
12. Feagle Construction vs. Gayda 186 SCRA 589.
13. Ditan vs POEA 191 SCRA 823.
14. Prime Marine Services vs. NLRC 297 SCRA 394.
15. Ilas vs. NLRC 193 SCRA 682.
16. JMM Promotion vs. Court of Appeals 260 SCRA 319.
17. Gu-Miro vs. Adorable 437 SCRA 162.
18. Sameer Overseas Placement vs. NLRC 317 SCRA 120.
19. AMOS-RLC vs. Laguesma 239 SCRA 460.
20. Mercidar Fishing vs. NLRC 297 SCRA 440.
21. Ace Navigation vs. Court of Appeals 338 SCRA 70.
22. United CMC Textile Workers Union vs. Labor Arbiter 149 SCRA 424.
23. Universal Corn Products vs. NLRC 153 SCRA 191.
24. PACIWU-TUCP vs. NLRC 247 SCRA 256.
25. Philippine Duplicators vs. NLRC 241 SCRA 380.
26. Davao Fruits vs. ALU 225 SCRA 562.
27. Celestial vs. Southern Mindanao Experimental Station 106 Phil 696.
28. Millares vs. NLRC 300 SCRA 500.
29. Traders Royal Bank vs. NLRC 189 SCRA 274.
30. Globe MacKay vs. NLRC 163 SCRA 71.
31. Escario vs. NLRC 333 SCRA 287.
32. Mariveles Shipyards vs. Court of Appeals 415 SCRA 573.
33. Tabas vs. California Manufacturing 169 SCRA 497.
34. Delos Santos vs. NLRC 372 SCRA 723.
35. Valium Security vs. NLRC 224 SCRA 781.
36. Department of Agriculture vs. NLRC 227 SCRA 693.
37. Philippine Fisheries Development vs. NLRC 213 SCRA 621.
38. De Feria vs. NLRC 194 SCRA 525.
39. Rosewood Processing vs. NLRC 290 SCRA 408
40. Cagayan Sugar Milling vs. Secretary of Labor 284 SCRA 150
41. Bancard Employees Union vs. NLRC 423 SCRA 148
42. Manila Mandarin Employees Union vs. NLRC 264 SCRA 320
43. People’s Broadcasting vs. Secretary of Labor GR No. 179652

1
 G.R. No. 73887 December 21, 1989
GREAT PACIFIC LIFE ASSURANCE CORPORATION, petitioner, vs.
HONORATO JUDICO and NATIONAL LABOR RELATIONS
COMMISSION, respondents.

PARAS J.:

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

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

Both parties appealed to the NLRC when a decision was rendered by the Labor Arbiter dismissing the
complaint on the ground that the employer-employee relations did not exist between the parties but
ordered Grepalife to pay complainant the sum of Pl,000.00 by reason of Christian Charity.

On appeal, said decision was reversed by the NLRC ruling that complainant is a regular employee as
defined under Art. 281 of the Labor Code and declaring the appeal of Grepalife questioning the
legality of the payment of Pl,000.00 to complainant moot and academic. Nevertheless, for the
purpose of revoking the supersedeas bond of said company it ruled that the Labor Arbiter erred in
awarding Pl,000.00 to complainant in the absence of any legal or factual basis to support its payment.

Petitioner company moved to reconsider, which was denied, hence this petition for review raising four
legal issues to wit:

I. Whether the relationship between insurance agents and their principal, the insurance
company, is that of agent and principal to be governed by the Insurance Code and the
Civil Code provisions on agency, or one of employer-employee, to be governed by the
Labor Code.

II. Whether insurance agents are entitled to the employee benefits prescribed by the
Labor Code.

III. Whether the public respondent NLRC has jurisdiction to take cognizance of a
controversy between insurance agent and the insurance company, arising from their
agency relations.

2
 IV. Whether the public respondent acted correctly in setting aside the decision of Labor
Arbiter Vito J. Minoria and in ordering the case remanded to said Labor Arbiter for
further proceedings.(p. 159, Rollo)

The crux of these issues boil down to the question of whether or not employer-employee relationship
existed between petitioner and private respondent.

Petitioner admits that on June 9, 1976, private respondent Judico entered into an agreement of
agency with petitioner Grepalife to become a debit agent attached to the industrial life agency in Cebu
City. Petitioner defines a debit agent as "an insurance agent selling/servicing industrial life plans and
policy holders. Industrial life plans are those whose premiums are payable either daily, weekly or
monthly and which are collectible by the debit agents at the home or any place designated by the
policy holder" (p. 156, Rollo). Such admission is in line with the findings of public respondent that as
such debit agent, private respondent Judico had definite work assignments including but not limited to
collection of premiums from policy holders and selling insurance to prospective clients. Public
respondent NLRC also found out that complainant was initially paid P 200. 00 as allowance for
thirteen (13) weeks regardless of production and later a certain percentage denominated as sales
reserve of his total collections but not lesser than P 200.00. Sometime in September 1981,
complainant was promoted to the position of Zone Supervisor and was given additional (supervisor's)
allowance fixed at P110.00 per week. During the third week of November 1981, he was reverted to
his former position as debit agent but, for unknown reasons, not paid so-called weekly sales reserve
of at least P 200.00. Finally on June 28, 1982, complainant was dismissed by way of termination of
his agency contract.

Petitioner assails the findings of the NLRC that private respondent is an employee of the former.
Petitioner argues that Judico's compensation was not based on any fixed number of hours he was
required to devote to the service of petitioner company but rather it was the production or result of his
efforts or his work that was being compensated and that the so-called allowance for the first thirteen
weeks that Judico worked as debit agent, cannot be construed as salary but as a subsidy or a way of
assistance for transportation and meal expenses of a new debit agent during the initial period of his
training which was fixed for thirteen (13) weeks. Stated otherwise, petitioner contends that Judico's
compensation, in the form of commissions and bonuses, was based on actual production, (insurance
plans sold and premium collections).

Said contentions of petitioner are strongly rejected by private respondent. He maintains that he
received a definite amount as his Wage known as "sales reserve" the failure to maintain the same
would bring him back to a beginner's employment with a fixed weekly wage of P 200.00 regardless of
production. He was assigned a definite place in the office to work on when he is not in the field; and in
addition to canvassing and making regular reports, he was burdened with the job of collection and to
make regular weekly report thereto for which an anemic performance would mean dismissal. He
earned out of his faithful and productive service, a promotion to Zone Supervisor with additional
supervisor's allowance, (a definite or fixed amount of P110.00) that he was dismissed primarily
because of anemic performance and not because of the termination of the contract of agency
substantiate the fact that he was indeed an employee of the petitioner and not an insurance agent in
the ordinary meaning of the term.

That private respondent Judico was an agent of the petitioner is unquestionable. But, as We have
held in Investment Planning Corp. vs. SSS, 21 SCRA 294, an insurance company may have two
classes of agents who sell its insurance policies: (1) salaried employees who keep definite hours and
work under the control and supervision of the company; and (2) registered representatives who work
3
on commission basis. The agents who belong to the second category are not required to report for
work at anytime, they do not have to devote their time exclusively to or work solely for the company
since the time and the effort they spend in their work depend entirely upon their own will and initiative;
they are not required to account for their time nor submit a report of their activities; they shoulder their
own selling expenses as well as transportation; and they are paid their commission based on a
certain percentage of their sales. One salient point in the determination of employer-employee
relationship which cannot be easily ignored is the fact that the compensation that these agents on
commission received is not paid by the insurance company but by the investor (or the person
insured). After determining the commission earned by an agent on his sales the agent directly
deducts it from the amount he received from the investor or the person insured and turns over to the
insurance company the amount invested after such deduction is made. The test therefore is whether
the "employer" controls or has reserved the right to control the "employee" not only as to the result of
the work to be done but also as to the means and methods by which the same is to be accomplished.

Applying the aforementioned test to the case at bar, We can readily see that the element of control by
the petitioner on Judico was very much present. The record shows that petitioner Judico received a
definite minimum amount per week as his wage known as "sales reserve" wherein the failure to
maintain the same would bring him back to a beginner's employment with a fixed weekly wage of P
200.00 for thirteen weeks regardless of production. He was assigned a definite place in the office to
work on when he is not in the field; and in addition to his canvassing work he was burdened with the
job of collection. In both cases he was required to make regular report to the company regarding
these duties, and for which an anemic performance would mean a dismissal. Conversely faithful and
productive service earned him a promotion to Zone Supervisor with additional supervisor's allowance,
a definite amount of P110.00 aside from the regular P 200.00 weekly "allowance". Furthermore, his
contract of services with petitioner is not for a piece of work nor for a definite period.

On the other hand, an ordinary commission insurance agent works at his own volition or at his own
leisure without fear of dismissal from the company and short of committing acts detrimental to the
business interest of the company or against the latter, whether he produces or not is of no moment as
his salary is based on his production, his anemic performance or even dead result does not become a
ground for dismissal. Whereas, in private respondent's case, the undisputed facts show that he was
controlled by petitioner insurance company not only as to the kind of work; the amount of results, the
kind of performance but also the power of dismissal. Undoubtedly, private respondent, by nature of
his position and work, had been a regular employee of petitioner and is therefore entitled to the
protection of the law and could not just be terminated without valid and justifiable cause.

Premises considered, the appealed decision is hereby AFFIRMED in toto.

SO ORDERED.

Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ ., concur.

G.R. No. L-72654-61 January 22, 1990

ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN,
NICANOR FRANCISCO, PHILIP CERVANTES and ELEUTERIO BARBIN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES
and/or ARSENIO DE GUZMAN, respondents.
4
FERNAN, C.J.:

The issue to be resolved in the instant case is whether or not the fishermen-crew members of the
trawl fishing vessel 7/B Sandyman II are employees of its owner-operator, De Guzman Fishing
Enterprises, and if so, whether or not they were illegally dismissed from their employment.

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

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

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

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

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

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

After the parties failed to reach an amicable settlement, the Labor Arbiter scheduled the case for joint
hearing furnishing the parties with notice and summons. On December 27, 1983, after two (2)
previously scheduled joint hearings were postponed due to the absence of private respondent, one of
the petitioners herein, Alipio Ruga, the pilot/captain of the 7/B Sandyman II, testified, among others,
5
on the manner the fishing operations were conducted, mode of payment of compensation for services
rendered by the fishermen-crew members, and the circumstances leading to their dismissal. 4

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

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

On May 30, 1985, the National Labor Relations Commission promulgated its resolution 6 affirming the
decision of the labor arbiter that a "joint fishing venture" relationship existed between private
respondent and petitioners.

Hence, the instant petition.

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

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

Aside from seeking the dismissal of the petition on the ground that the decision of the labor arbiter is
now final and executory for failure of petitioners to file their appeal with the NLRC within 10 calendar
days from receipt of said decision pursuant to the doctrine laid down in Vir-Jen Shipping and Marine
Services, Inc. vs. NLRC, 115 SCRA 347 (1982), the Solicitor General claims that the ruling of public
respondent that a "joint fishing venture" exists between private respondent and petitioners rests on
the resolution of the Social Security System (SSS) in a 1968 case, Case No. 708 (De Guzman
Fishing Enterprises vs. SSS), exempting De Guzman Fishing Enterprises, private respondent herein,
from compulsory coverage of the SSS on the ground that there is no employer-employee relations
6
between the boat-owner and the fishermen-crew members following the doctrine laid down inPajarillo
vs. SSS, 17 SCRA 1014 (1966). In applying to the case at bar the doctrine in Pajarillo vs. SSS, supra,
that there is no employer-employee relationship between the boat-owner and the pilot and crew
members when the boat-owner supplies the boat and equipment while the pilot and crew members
contribute the corresponding labor and the parties get specific shares in the catch for their respective
contribution to the venture, the Solicitor General pointed out that the boat-owners in
the Pajarillo case, as in the case at bar, did not control the conduct of the fishing operations and the
pilot and crew members shared in the catch.

We rule in favor of petitioners.

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

Circumstances peculiar to some extent to fishermen-crew members of a fishing vessel regularly

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

Records reveal that petitioners were informed of the labor arbiter's decision of March 31, 1984 only
on July 3,1984 by their non-lawyer representative during the arbitration proceedings, Jose Dialogo
who received the decision eight (8) days earlier, or on June 25, 1984. As adverted to earlier, the
circumstances peculiar to petitioners' occupation as fishermen-crew members, who during the
pendency of the case understandably have to earn a living by seeking employment elsewhere,
impress upon Us that in the ordinary course of events, the information as to the adverse decision
against them would not reach them within such time frame as would allow them to faithfully abide by
the 10-calendar day appeal period. This peculiar circumstance and the fact that their representative is
a non-lawyer provide equitable justification to conclude that there is substantial compliance with the
ten-calendar day rule of filing of appeals with the NLRC when petitioners filed on July 10, 1984, or
seven (7) days after receipt of the decision, their appeal with the NLRC through registered mail.

We have consistently ruled that in determining the existence of an employer-employee relationship,

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

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

7
The case of Pajarillo vs. SSS, supra, invoked by the public respondent as authority for the ruling that
a "joint fishing venture" existed between private respondent and petitioners is not applicable in the
instant case. There is neither light of control nor actual exercise of such right on the part of the boat-
owners in the Pajarillo case, where the Court found that the pilots therein are not under the order of
the boat-owners as regards their employment; that they go out to sea not upon directions of the boat-
owners, but upon their own volition as to when, how long and where to go fishing; that the boat-
owners do not in any way control the crew-members with whom the former have no relationship
whatsoever; that they simply join every trip for which the pilots allow them, without any reference to
the owners of the vessel; and that they only share in their own catch produced by their own efforts.

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

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

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

While tenure or length of employment is not considered as the test of employment, nevertheless the
hiring of petitioners to perform work which is necessary or desirable in the usual business or trade of
private respondent for a period of 8-15 years since 1968 qualify them as regular employees within the
meaning of Article 281 of the Labor Code as they were indeed engaged to perform activities usually
necessary or desirable in the usual fishing business or occupation of private respondent. 14

Aside from performing activities usually necessary and desirable in the business of private
respondent, it must be noted that petitioners received compensation on a percentage commission
8
based on the gross sale of the fish-catch i.e. 13% of the proceeds of the sale if the total proceeds
exceeded the cost of the crude oil consumed during the fishing trip, otherwise only 10% of the
proceeds of the sale. Such compensation falls within the scope and meaning of the term "wage" as
defined under Article 97(f) of the Labor Code, thus:

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

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

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

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

We have examined the jurisprudence on the matter and find the same to be supportive of petitioners'
stand. InNegre vs. WCC 135 SCRA 653 (1985), we held that fishermen crew members who were
recruited by one master fisherman locally known as "maestro" in charge of recruiting others to
complete the crew members are considered employees, not industrial partners, of the boat-owners. In
9
an earlier case of Abong vs. WCC, 54 SCRA 379 (1973) where petitioner therein, Dr. Agustin Abong,
owner of the fishing boat, claimed that he was not the employer of the fishermen crew members
because of an alleged partnership agreement between him, as financier, and Simplicio Panganiban,
as his team leader in charge of recruiting said fishermen to work for him, we affirmed the finding of
the WCC that there existed an employer-employee relationship between the boat-owner and the
fishermen crew members not only because they worked for and in the interest of the business of the
boat-owner but also because they were subject to the control, supervision and dismissal of the boat-
owner, thru its agent, Simplicio Panganiban, the alleged "partner" of Dr. Abong; that while these
fishermen crew members were paid in kind, or by "pakiao basis" still that fact did not alter the
character of their relationship with Dr. Abong as employees of the latter.

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

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

SO ORDERED.

Gutierrez, Jr., Bidin and Cortés, JJ., concur.

Feliciano, J., concurs in the result.

G.R. No. 119500. August 28, 1998]

PAGUIO TRANSPORT CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION and WILFREDO MELCHOR, respondents.

DECISION
PANGANIBAN, J.:

In dismissing the petition, this Court reiterates the following doctrines: (1) the boundary system
used in taxi (and jeepney) operations presupposes an employer-employee relation; (2) the employer
must prove just (or authorized) cause and due process to justify dismissal of an employee; (3)
strained relations must be demonstrated as a fact; and (4) back wages and reinstatement are
necessary consequences of illegal dismissal.
The Case
Before us is a petition for certiorari and prohibition with preliminary injunction, assailing the
December 16, 1994 Decision of the National Labor Relations Commission [1] in NLRC NCR Case No.

10
00-02-01564-94 entitled Wilfredo Melchor vs. Paguio Transport Corporation/Serafin Paguio. The
dispositive portion of the challenged Decision reads:

WHEREFORE, premises considered, the appeal insofar as it seeks reversal of the finding on illegal
dismissal is denied for lack of merit. The decision declaring that complainant was illegally dismissed
is affirmed. The decision is however partially modified insofar as liability therefor is concerned. The
liability shall inure against PAGUIO TRANSPORT CORPORATION, subject to the provision of the
Corporation Code and the Rules of Court on matters taken herein. The backwages as computed in
the assailed decision is set aside, and a new one is hereby provided in the amount of P86,400.00 as
computed in the immediately preceding paragraph.

Petitioner also impugns the February 21, 1995 NLRC Resolution [2] denying the motion for
reconsideration.
The June 28, 1994 Decision of the labor arbiter, [3] which the NLRC modified as to the amount of
back wages, disposed as follows:

WHEREFORE, the respondents are hereby ordered to reinstate the complainant with full backwages
from the time his salaries were withheld from him until his actual reinstatement.

The respondents are further ordered to pay him his 13th month pay in the amount of P5,600.00.

Complainants backwages up to the date of this Decision as computed by LEILANI E. CALALANG of

the Commissions NLRC NCR Branch is:

11/28/93 - 6/28/94 = 7 mos.

P800.00 x 3 days x 4 weeks = P9,600.00

P9,600.00 x 7 mos. = P67,200.00

The aspect of reinstatement either in the job or payroll at the option of the employers being
immediately executory pursuant to Article 223 of the Labor Code, the respondents are hereby
directed to so reinstate him when he reports for work by virtue of this Decision.

Other claims are hereby dismissed for lack of evidence.

The Facts

The facts, as summarized in the challenged Decision, are as follows:

Complainant Wilfredo Melchor was hired by respondent company as a taxi driver on 25 December
1992 under the [b]oundary [s]ystem. He [was] engaged to drive the taxi unit assigned to him on a 24-
hour schedule per trip every two (2) days, for which he used to earn an average income from P500
to P700 per trip, exclusive of theP650.00 boundary and other deductions imposed on him. On 24 [sic]
November 1993, complainant allegedly met a vehicular accident along Quirino Avenue near the PNR
Station and Plaza Dilao when he accidentally bumped a car which stopped at the intersection even
when the traffic light was green and go. After he submitted the traffic accident report to the office of

11
respondents, he was allegedly advised to stop working and have a rest.After several days[,] he
allegedly reported for work only to be told that his service was no longer needed. Hence, the
complaint for illegal dismissal, among others.

Respondent[s] for their part maintained that complainant was not illegally dismissed, there being in
the first place no employer-employee relationship between them. In amplification, it was argued that
the element of control which [was] a paramount test to determine the existence of such a relationship
[was] lacking. So too, it argued the element of the payment of compensation. Considering that in lieu
of the latter, payment of boundary is instead made allegedly makes the relationship between them of
a wase-agreement [sic]. Respondents then argued that even if an employer-employee relationship
were to be presumed as present, still complainants termination arose out of a valid cause and after
he refused to articulate his stand on the investigation being conducted on him. Respondents then
harped on the supposed three occasions when complainant figured in a vehicular accident involving
the taxi unit he was driving, viz: On August 3, which resulted in damages to the respondent in the
amount of P150.00; On August 4 which again resulted [in] the damages to the respondent in the
amount of P615.00; and again on 4 November 1993, the mishap costing the respondents this
timeP25,370.00 in damages. As a result of the alleged compounded damages which the respondents
had to shoulder on account of the supposed reckless driving of the complainant, the former was
allegedly left with no alternative but to ask complainants explanation why he should still be allowed to
drive. Complainant, despite several chances, allegedly failed to do so. [4]

Ruling of the NLRC

The NLRC held that private respondent was an illegally dismissed employee of
petitioner. Upholding the existence of an employer-employee relationship, it cited Doce v. WCC,[5] in
which the Supreme Court ruled that the relationship created between the parties operating under a
boundary system is one of an employer and employee, and not of a lessor and a lessee.[6]
The NLRC sustained the ruling of the labor arbiter that the private respondent was illegally
dismissed, for he was not afforded the twin requirements of due process x x x. [7] It rejected petitioners
claim that private respondent had figured in three vehicular incidents because of his reckless
driving. It found that except for petitioners bare statements, no proof was presented to establish with
particularity the circumstances being claimed. x x x The guilt and culpability of [private respondent]
which would give [petitioner] valid ground to effect his dismissal cannot be established by a mere
allegation of his reckless driving.[8]
Public Respondent NLRC found petitioner liable for back wages in the amount of P86,400, and
not P67,200 as computed by the labor arbiter. It found, however, that this liability should be imposed
on Petitioner Corporation only, and not on its president who was also impleaded by private
respondent.
Hence, this petition.[9]
Issues
Petitioner raises the following issues:

a. Whether or not public respondent Commission acted in excess of jurisdiction and/or with grave
abuse of discretion amounting to lack of jurisdiction in ordering the reinstatement of private

12
respondent with full backwages, despite its strained relations with the petitioner and the reinstatement
would, in effect, be inimical to the interest of the latter in particular, and to the riding public in general;

b. Whether or not public respondent acted in excess of jurisdiction and/or with grave abuse of
discretion in refusing to reconsider its decision and resolution complained of despite the facts
prevailing to support the reconsideration.[10]

In resolving the petition, we shall address the following points: (1) employer-employee relation,
(2) presence of just cause, (3) due process, (4) strained relationship, and (5) propriety of
reinstatement and back wages.
The Court’s Ruling

The petition is not meritorious.

First Issue:
Employer-Employee Relation
Under the boundary system, private respondent was engaged to drive petitioners taxi unit on a
24-hour schedule every two days. On each such trip, private respondent remitted to petitioner a
boundary of P650. Whatever he earned in excess of that amount was considered his income.
Petitioner argues that under said arrangement, he had no control over the number of hours
private respondent had to work and the routes he had to take. Therefore, he concludes that the
employer-employee relationship cannot be deemed to exist.
Petitioners contention is not novel. In Martinez v. National Labor Relations Commission,[11] this
Court already ruled that the relationship of taxi owners and taxi drivers is the same as that between
jeepney owners and jeepney drivers under the boundary system. In both cases, the employer-
employee relationship was deemed to exist, viz.:

The relationship between jeepney owners/operators on one hand and jeepney drivers on the other
under the boundary system is that of employer-employee and not of lessor-lessee. x x x In the lease
of chattels[,] the lessor loses complete control over the chattel leased x x x. In the case of jeepney
owners/operators and jeepney drivers, the former exercise supervision and control over the latter.
The fact that the drivers do not receive fixed wages but get only the excess of that so-called boundary
they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of
employer and employee. The doctrine is applicable in the present case. Thus, private respondents
were employees x x x because they had been engaged to perform activities which were usually
necessary or desirable in the usual trade or business of the employer. [12]

Second Issue:
Just Cause
Petitioner also asserts that private respondents involvement in three vehicular accidents within a
span of several months constitutes just cause for his dismissal. It alleges that, according to the police
report concerning the most recent and serious vehicular mishap, it was private respondent who was
at fault and that the city prosecutor of Quezon City recommended that an Information for reckless
imprudence resulting in damage to property be filed against him. [13]
Petitioner, however, did not submit any proof to support these allegations. Well-settled is the rule
that the employer has the burden of proving that the dismissal of an employee is for a just cause. The
13
failure of the employer to discharge this burden means that the dismissal is not justified and that the
employee is entitled to reinstatement and back wages. [14] In this case, petitioner failed to prove any
just or authorized cause for his dismissal. Private respondent, therefore, must be deemed illegally
dismissed.[15]
Petitioner contends that he submitted and presented material and competent documentary
evidence consisting of police reports of vehicular accidents of taxicab units owned by petitioner and
driven by private respondent, the repairs and expenses suffered by the petitioner as a result thereof
and the resolution of the [c]ity [p]rosecutor of Quezon City finding private respondent at fault for the
November 4, 1993 vehicular accident caused by the latter. [16] Adding that the submission of these
documents only on appeal does not diminish their probative value, petitioner cites Article 221 of the
Labor Code which reads:

Article 221. Technical rules not binding and prior resort to amicable settlement. -- In any proceeding
before the Commission or any of the Labor Arbiters, the rules of procedure prevailing in courts of law
and equity shall not be controlling and it is the spirit and intention of the Code that the Commission
and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively without regard to technicalities of law and procedure, all in
the interest of due process. In any proceeding before the Commission or any Labor Arbiter, the
parties may be represented by legal counsel but it shall be the duty of the Chairman, any Presiding
Commissioner or Commissioner or any Labor Arbiter to exercise complete control of the proceedings
at all stages.

Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all efforts towards
[t]he amicable settlement of a labor dispute within his jurisdiction on or before the first hearing. The
same rule shall apply to the Commission in the exercise of its original jurisdiction.

However, a careful examination of both the original Complaint and the Petitioners Memorandum
of Appeal from the labor arbiters Decision reveals that said pieces of documentary evidence were not
mentioned or included therein,[17] but were submitted by petitioner only when he filed his present
petition with this Court. These pieces of evidence were attached and referred to as Annexes G, H, I,
J, K and L of the said petition. Such factual issues cannot be resolved in a petition for certiorari like
the present case, because the Courts review of NLRC decisions is limited to questions of jurisdiction
and grave abuse of discretion. In PMI Colleges v. NLRC,[18] the Court held:

This Court is definitely not the proper venue to consider this matter for it is not a trier of facts. x x x
Certiorari is a remedy narrow in its scope and inflexible in character. It is not a general utility tool in
the legal workshop. Factual issues are not a proper subject for certiorari, as the power of the
Supreme Court to review labor cases is limited to the issue of jurisdiction and grave abuse of
discretion. x x x.

Of the same tenor was our disquisition in Ilocos Sur Electric Cooperative, Inc. v. NLRC where we
made plain that:

In certiorari proceedings under Rule 65 of the Rules of Court, judicial review by this Court does not go
so far as to evaluate the sufficiency of evidence upon which the Labor Arbiter and the NLRC based
their determinations, the inquiry being limited essentially to whether or not said public respondents
had acted without or in excess of [their] jurisdiction or with grave abuse of discretion.

14
x x x Our deference to the expertise acquired by quasi-judicial agencies and the limited scope
granted us in the exercise of certiorari jurisdiction restrain us from going so far as to probe into the
correctness of a tribunals evaluation of evidence, unless there is a palpable mistake and complete
disregard thereof in which casecertiorari would be proper. In plain terms, in certiorari proceedings, we
are concerned with mere errors of jurisdiction and not errors of judgment.

Equally devoid of correctness is petitioners claim that the documents should be considered,
pursuant to Article 221 of the Labor Code which states that technical rules are not binding in
proceedings before the labor arbiters and the NLRC. The Supreme Court is not a trier of facts; as
earlier stated, its jurisdiction in a petition for certiorari, like the present case, is confined to questions
of jurisdiction and grave abuse of discretion. The unexplained failure of petitioner to present its
evidence before the labor arbiter and the NLRC cannot compel this Court to expand the scope of its
review. Indeed, petitioner has not proffered a sufficient reason for this Court to do so.
Petitioners reliance on Canete v. National Labor Relations Commission [19] is misplaced. In that
case, the documents were submitted to the NLRC before they were tackled by the Supreme Court.
Private respondents admission that he was involved in the November 4, 1993 accident did not
give petitioner a just cause to dismiss him. Mere involvement in an accident, absent any showing of
fault or recklessness on the part of an employee, is not a valid ground for dismissal.
Third Issue:
No Due Process
Petitioner insists that private respondent was accorded due process, because he was allowed to
explain his side and to show cause why he should still be allowed to act as one of petitioners drivers.
This does not persuade. The Court has consistently held that in the dismissal of employees, the
twin requirements of notice and hearing are essential elements of due process. The employer must
furnish the worker two written notices: (1) one to apprise him of the particular acts or omissions for
which his dismissal is sought; and (2) the other to inform him of his employers decision to dismiss
him. As to the requirement of a hearing, the essence of due process lies simply in an opportunity to
be heard, and not always and indispensably in an actual hearing. [20]
In the present case, petitioner failed to present proof, other than its bare allegations, that it had
complied with these requirements.[21]We reiterate: the burden of proof rests on the employer. Private
respondent, in fact, was not given notice that he was being dismissed.When ordered to explain the
vehicular accident that happened on November 4, 1993, he was not informed that petitioner was
contemplating his dismissal and that his involvement in said vehicular accident was the cause
thereof. Private respondent was merely asked to explain the vehicular accident per se, not his
defense against a charge of dismissal arising from the vehicular accident. He became aware of his
employers intention to dismiss him only when he was actually told not to report for work anymore.
Fourth Issue:
Strained Relations
Notwithstanding its failure to prove just cause and due process in the dismissal of private
respondent, petitioner seeks to bar his reinstatement by invoking the doctrine of strained relations. It
contends that as a result of private respondents reckless and incompetent manner of driving x x x,
compounded by the damages suffered by petitioner in terms of repairs, related expenses, and the
institution of the instant case, the relationship between the parties are so strained as to preclude a
harmonious working atmosphere to the prejudice of the petitioner as well as private respondent. [22]

15
 We are not persuaded. Strained relations must be demonstrated as a fact. Petitioner failed to do
so. Its allegation that private respondent was incompetent and reckless in his manner of driving,
which led to the his involvement in three vehicular accidents, is not supported by the records. As
earlier noted, no evidence was properly submitted by petitioner to prove or give credence to his
assertions.Thus, Respondent NLRC ruled:

Despite allegation on the matter, not an iota of proof was presented to establish the claim. This
observation equally applies to the allegation that complainants, in three (3) occasions had figured in
[a] vehicular accident due to his reckless driving x x x. [23]

Because the claim of petitioner has no factual basis, the doctrine on

strained relations cannot be applied in this case. Moreover, the filing of the Complaint for illegal
dismissal does not by itself justify the invocation of this doctrine. As the Court held in Capili vs.
NLRC:[24]

xxx [T]he doctrine on strained relations cannot be applied indiscriminately since every labor dispute
almost invariably results in strained relations; otherwise, reinstatement can never be possible simply
because some hostility is engendered between the parties as a result of their disagreement. That is
human nature.

Fifth Issue:
Reinstatement and Back Wages
Because he was illegally dismissed, private respondent is entitled to reinstatement and back
wages pursuant to Section 279 of the Labor Code, which reads:

Art. 279. Security of Tenure. -- In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was withheld from him up to the time
of his actual reinstatement.

Interpreting this provision, the Court held in Bustamante v. NLRC[25] that illegally dismissed
employees are entitled to full back wages without conditions or limitations, viz.:

xxx [A] closer adherence to the legislative policy behind Rep. Act No. 6715 points to full backwages
as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by
the concerned employee during the period of his illegal dismissal. In other words, the provision calling
for full backwages to illegally dismissed employees is clear, plain and free from ambiguity and,
therefore, must be applied without attempted or strained interpretation.

The labor arbiter awarded back wages in the sum of P67,200 based on the following
computation:

11/28/93 - 6/28/94 = 7 mos.

P800.00 x 3 days x 4 weeks = P9,600.00

P9,600 x 7 mos. = P67,200.00[26]

16
 In modifying the foregoing award, the NLRC relied on this other formula:

11/28/93 - 11/28/94 = 12 months

P600.00 x 3 days x 4 weeks = P 7,200.00

P7,200 x 12 months = P86,400.00.[27]

Although the NLRC adjusted the amount of private respondents monthly income and the period
during which back wages may be awarded, neither the petitioner nor the private respondent
questioned the new computation. Accordingly, we sustain the award but stress that the back wages
ought to be computed from the time of the illegal dismissal to the time of reinstatement, either actual
or in the payroll, without any deduction or qualification.
WHEREFORE, the petition is hereby DISMISSED for utter lack of merit, and the assailed
Decision and Resolution are hereby AFFIRMED. Costs against petitioners.
SO ORDERED.
Davide, Jr. (Chairman), Vitug and Quisumbing, JJ., concur.
Bellosillo, J., took no part. He did not participate in the deliberation.

[G.R. No. 121605. February 2, 2000]

PAZ MARTIN JO and CESAR JO, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION and PETER MEJILA,respondents.

DECISION

QUISUMBING, J.:

This petition for certiorari seeks to set aside the Decision[1] of National Labor Relations Commission
(Fifth Division) promulgated on November 21, 1994, and its Resolution dated June 7, 1995, which
denied petitioners motion for reconsideration.

Private respondent Peter Mejila worked as barber on a piece rate basis at Dinas Barber Shop. In
1970, the owner, Dina Tan, sold the barbershop to petitioners Paz Martin Jo and Cesar Jo. All the
employees, including private respondent, were absorbed by the new owners. The name of the
barbershop was changed to Windfield Barber Shop.

The owners and the barbers shared in the earnings of the barber shop. The barbers got two-thirds
(2/3) of the fee paid for every haircut or shaving job done, while one-third (1/3) went to the owners of
the shop.

In 1977, petitioners designated private respondent as caretaker of the shop because the former
caretaker became physically unfit. Private respondents duties as caretaker, in addition to his being a
barber, were: (1) to report to the owners of the barbershop whenever the airconditioning units
malfunctioned and/or whenever water or electric power supply was interrupted; (2) to call the laundry
woman to wash dirty linen; (3) to recommend applicants for interview and hiring; (4) to attend to other
needs of the shop. For this additional job, he was given an honorarium equivalent to one-third (1/3) of
the net income of the shop.

17
When the building occupied by the shop was demolished in 1986, the barbershop closed. But soon a
place nearby was rented by petitioners and the barbershop resumed operations as Cesars Palace
Barbershop and Massage Clinic. In this new location, private respondent continued to be a barber
and caretaker, but with a fixed monthly honorarium as caretaker, to wit: from February 1986 to 1990 -
P700; from February 1990 to March 1991 - P800; and from July 1992 P1,300.

In November 1992, private respondent had an altercation with his co-barber, Jorge Tinoy. The
bickerings, characterized by constant exchange of personal insults during working hours, became
serious so that private respondent reported the matter to Atty. Allan Macaraya of the labor
department. The labor official immediately summoned private respondent and petitioners to a
conference. Upon investigation, it was found out that the dispute was not between private respondent
and petitioners; rather, it was between the former and his fellow barber. Accordingly, Atty. Macaraya
directed petitioners counsel, Atty. Prudencio Abragan, to thresh out the problem.

During the mediation meeting held at Atty. Abragans office a new twist was added. Despite the
assurance that he was not being driven out as caretaker-barber, private respondent demanded
payment for several thousand pesos as his separation pay and other monetary benefits. In order to
give the parties enough time to cool off, Atty. Abragan set another conference but private respondent
did not appear in such meeting anymore.

Meanwhile, private respondent continued reporting for work at the barbershop. But, on January 2,
1993, he turned over the duplicate keys of the shop to the cashier and took away all his belongings
therefrom. On January 8, 1993, he began working as a regular barber at the newly opened Goldilocks
Barbershop also in Iligan City.

On January 12, 1993, private respondent filed a complaint [2] for illegal dismissal with prayer for
payment of separation pay, other monetary benefits, attorneys fees and damages. Significantly, the
complaint did not seek reinstatement as a positive relief.

In a Decision dated June 15, 1993, the Labor Arbiter found that private respondent was an employee
of petitioners, and that private respondent was not dismissed but had left his job voluntarily because
of his misunderstanding with his co-worker.[3] The Labor Arbiter dismissed the complaint, but ordered
petitioners to pay private respondent his 13th month pay and attorneys fees.

Both parties appealed to the NLRC. In a Decision dated November 21, 1994, it set aside the labor
arbiters judgment. The NLRC sustained the labor arbiters finding as to the existence of employer-
employee relationship between petitioners and private respondent, but it ruled that private respondent
was illegally dismissed. Hence, the petitioners were ordered to reinstate private respondent and pay
the latters backwages, 13th month pay, separation pay and attorneys fees, thus:

"For failure of respondents to observe due process before dismissing the complainant,
We rule and hold that he was illegally terminated. Consequently, he should be
reinstated and paid his backwages starting from January 1, 1993 up to the time of his
reinstatement and payment of separation pay, should reinstatement not be feasible on
account of a strained employer-employee relationship.

As complainants income was mixed, (commission and caretaker), he becomes entitled

to 13th month pay only in his capacity as caretaker at the last rate of pay given to him.

18
 With respect to separation pay, even workers paid on commission are given separation
pay as they are considered employees of the company. Complainant should be
adjudged entitled to separation pay reckoned from 1970 up to the time he was
dismissed on December 31, 1992 at one-half month pay of his earning as a barber; and
as a caretaker the same should be reckoned from 1977 up to December 31, 1992.

As complainant has been assisted by counsel not only in the preparation of the
complaint, position paper but in hearings before the Labor Arbiter a quo, attorneys fees
equivalent to 10% of the money awards should likewise be paid to complainant.

WHEREFORE, the decision appealed from is Vacated and Set Aside and a new one
entered in accordance with the above-findings and awards.

SO ORDERED."[4]

Its motion for reconsideration having been denied in a Resolution dated June 7, 1995, petitioners filed
the instant petition.

The issues for resolution are as follows:

1. Whether or not there exists an employer-employee relationship between petitioners

and private respondent.

2. Whether or not private respondent was dismissed from or had abandoned his
employment.

Petitioners contend that public respondent gravely erred in declaring that private respondent was their
employee. They claim that private respondent was their "partner in trade" whose compensation was
based on a sharing arrangement per haircut or shaving job done. They argue that private
respondents task as caretaker could be considered an employment because the chores are very
minimal.

At the outset, we reiterate the doctrine that the existence of an employer-employee relationship is
ultimately a question of fact and that the findings thereon by the labor arbiter and the NLRC shall be
accorded not only respect but even finality when supported by ample evidence. [5]

In determining the existence of an employer-employee relationship, the following elements are

considered: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the payment
of wages by whatever means; and (4) the power to control the workers conduct, with the latter
assuming primacy in the overall consideration. The power of control refers to the existence of the
power and not necessarily to the actual exercise thereof. It is not essential for the employer to
actually supervise the performance of duties of the employee; it is enough that the employer has the
right to wield that power.[6]

Absent a clear showing that petitioners and private respondent had intended to pursue a relationship
of industrial partnership, we entertain no doubt that private respondent was employed by petitioners
as caretaker-barber. Initially, petitioners, as new owners of the barbershop, hired private respondent
as barber by absorbing the latter in their employ. Undoubtedly, the services performed by private
respondent as barber is related to, and in the pursuit of the principal business activity of petitioners.
Later on, petitioners tapped private respondent to serve concurrently as caretaker of the shop.
19
Certainly, petitioners had the power to dismiss private respondent being the ones who engaged the
services of the latter. In fact, private respondent sued petitioners for illegal dismissal, albeit contested
by the latter. As a caretaker, private respondent was paid by petitioners wages in the form of
honorarium, originally, at the rate of one-third (1/3) of the shops net income but subsequently pegged
at a fixed amount per month. As a barber, private respondent earned two-thirds (2/3) of the fee paid
per haircut or shaving job done. Furthermore, the following facts indubitably reveal that petitioners
controlled private respondents work performance, in that: (1) private respondent had to inform
petitioners of the things needed in the shop; (2) he could only recommend the hiring of barbers and
masseuses, with petitioners having the final decision; (3) he had to be at the shop at 9:00 a.m. and
could leave only at 9:00 p.m. because he was the one who opened and closed it, being the one
entrusted with the key.[7] These duties were complied with by private respondent upon instructions of
petitioners. Moreover, such task was far from being negligible as claimed by petitioners. On the
contrary, it was crucial to the business operation of petitioners as shown in the preceding discussion.
Hence, there was enough basis to declare private respondent an employee of petitioners.
Accordingly, there is no cogent reason to disturb the findings of the labor arbiter and NLRC on the
existence of employer-employee relationship between herein private parties.

With regard to the second issue, jurisprudence has laid out the rules regarding abandonment as a
just and valid ground for termination of employment. To constitute abandonment, there must be
concurrence of the intention to abandon and some overt acts from which it may be inferred that the
employee concerned has no more interest in working. [8] In other words, there must be a clear,
deliberate and unjustified refusal to resume employment and a clear intention to sever the employer-
employee relationship on the part of the employee. [9]

In the case at bar, the labor arbiter was convinced that private respondent was not dismissed but left
his work on his own volition because he could no longer bear the incessant squabbles with his co-
worker. Nevertheless, public respondent did not give credence to petitioners claim that private
respondent abandoned his job. On this score, public respondent gravely erred as hereunder
discussed.

At the outset, we must stress that where the findings of the NLRC contradict those of the labor arbiter,
the Court, in the exercise of its equity jurisdiction, may look into the records of the case and
reexamine the questioned findings.[10]

In this case, the following circumstances clearly manifest private respondents intention to sever his
ties with petitioners. First, private respondent even bragged to his co-workers his plan to quit his job
at Cesars Palace Barbershop and Massage Clinic as borne out by the affidavit executed by his
former co-workers.[11] Second, he surrendered the shops keys and took away all his things from the
shop. Third, he did not report anymore to the shop without giving any valid and justifiable reason for
his absence. Fourth, he immediately sought a regular employment in another barbershop, despite
previous assurance that he could remain in petitioners employ. Fifth, he filed a complaint for illegal
dismissal without praying for reinstatement.

Moreover, public respondents assertion that the institution of the complaint for illegal dismissal
manifests private respondents lack of intention to abandon his job [12] is untenable. The rule that
abandonment of work is inconsistent with the filing of a complaint for illegal dismissal is not applicable
in this case. Such rule applies where the complainant seeks reinstatement as a relief. Corollarily, it
has no application where the complainant does not pray for reinstatement and just asks for
separation pay instead[13] as in the present case. It goes without saying that the prayer for separation

20
pay, being the alternative remedy to reinstatement, [14] contradicts private respondents stance. That he
was illegally dismissed is belied by his own pleadings as well as contemporaneous conduct.

We are, therefore, constrained to agree with the findings of the Labor Arbiter that private respondent
left his job voluntarily for reasons not attributable to petitioners. It was error and grave abuse of
discretion for the NLRC to hold petitioners liable for illegal dismissal of private respondent.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of public respondent
NLRC are reversed and set aside. The decision of the Labor Arbiter dated June 15, 1993, is hereby
reinstated. No costs.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

G.R. No. 72409 December 29, 1986

MAMERTO S. BESA, doing business under the name and style of BESA'S
CUSTOMBUILT SHOES, vs.
THE HONORABLE CRESENCIANO B. TRAJANO, DIRECTOR OF THE BUREAU
OF LABOR RELATIONS, MINISTRY OF LABOR AND EMPLOYMENT, AND
KAISAHAN NG MANGGAGAWANG PILIPINO (KAMPIL-
KATIPUNAN), respondents.

PARAS, J.:

This petition questions the decision of the Director of the Bureau of Labor Relations in BLR Case No.
A-8-165-85, which affirmed the appealed order of the Med-Arbiter, Labor Relations Division, NCR in
NCR-LRD-M-1-044-85, a certification election case. More specifically, petitioner seeks the resolution
of the question as to whether or not an employer-employee relationship exists between herein
petitioner and the seventeen (17) shoeshiners-members of the respondent union, who, if the
relationship does exist, should be entitled to the rights, privileges and benefits of an employee as
provided in the Labor Code.

Sometime in January, 1985, private respondent Kaisahan ng Mangagawang Pilipino KAMPIL for
short) a legitimate labor union duly registered with the Ministry of Labor and Employment (MOLE, for
short), filed a Petition for Certification Election, docketed as NCR-LRD-M-1-044-85 in the National
Labor Relations Division of the National Capital Region. Petitioner opposed it alleging that —

1. There is no employer-employee relationship between Besa's and the petitioners-signatories

to the petition;

2. The subject of the present petition had previously been decided by the defunct Court of
Industrial Relations, and is therefore barred under the principle of res judicata;

3. The petition fails to comply with the mandatory formal requirements under Sec. 2, Book V, of
the Omnibus Rules Implementing the Labor Code; and

21
 4. This Hon. Commission has no jurisdiction over the subject matter and parties to the petition.

Acting on the Petition, the Opposition thereto, and the Reply to the Opposition, the Med-Arbiter on
June 27, 1985, issued an order declaring that there was an employer-employee relationship between
the parties and directed that an election be conducted.

Petitioner appealed the order to the Director of BLR citing among others the following reasons —

1. That the subject of the present petition has previously been decided by the defunct Court of
Industrial Relations, and is therefore barred under the principle of res judicata (CIR Case Nos.
2783, 2751 and 2949 ULP December 21, 1965);

2. That on May 28, 1985, Director Severo Pucan of the Ministry of Labor and Employment, in
dismissing the case for underpayment of commissions and non-payment of ECOLA, filed by
the shoeshiners against Besas Custombuilt Shoes, for lack of jurisdiction petition, declared
that there was no employer-employee relationship between the shoeshiners and petitioner
Besas (Order in NCR-LSED1-020-85);

Director Pucan's findings were based on a letter-opinion of the Director of the Bureau of
Working Conditions of the MOLE (Annex "B-2", Petition for Certiorari). The legal ground
therein cited was res judicata.

xxx xxx xxx

Appeal was dismissed by the Director of BLR as contained in his decision dated Sept. 27, 1985
upholding the finding of the Med-Arbiter that supervisors were appointed to oversee the bootblacks'
performance. It declared that such is a finding of fact that is entitled to respect and that res
judicata does not he as the parties and the causes of action in the certification election case are
different from the parties and causes of action in CIR Cases Nos. 2783-ULP 2751-ULP and 2949
ULP

Thus the Petition of the Union (KAMPIL) before the Med-Arbiter for the holding of the certification
election was granted. While the pre-election conference was in progress, petitioner herein BESAS
filed with Us with petition for certiorari with Prohibition and simultaneously filed with the Med-Arbiter a
motion to suspend the pre-election conference. The petition filed before Us was dismissed for lack of
merit but was reconsidered upon Motion of petitioner. In its Motion for Reconsideration, petitioner
raised the following grounds:

THE INSTANT PETITION PRESENTS QUESTIONS OF LAW AND SUBSTANCE TO MERIT

THE CONSIDERATION OF THIS HONORABLE COURT.

II

THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR WAS NOT

SUPPORTED BY SUBSTANTIAL EVIDENCE AND THE SAME IS PURELY BASED ON
SPECULATIONS, SURMISES AND CONJECTURES.

III
22
 THE QUESTIONED DECISION OF THE RESPONDENT DIRECTOR IS CONTRARY TO LAW
AND APPLICABLE DECI SIONS OF THE SUPREME COURT ON THE MATTER.

IV

THE PETITION FOR CERTIFICATION ELECTION FILED BY RESPONDENT UNION WITH

THE MINISTRY OF LABOR AND EMPLOYMENT FAILED TO COMPLY WITH THE
MANDATORY REQUIREMENTS UNDER ARTICLE 258 OF THE LABOR CODE, AS
AMENDED, AND ITS IMPLEMENTING RULES.

THE RESPONDENT DIRECTOR ACTED WITH GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION IN DECIDING THAT THERE EXISTS AN
EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PETITIONER AND THE
SHOESHINER-MEMBERS OF THE RESPONDENT UNION,

VI

THE RESPONDENT DIRECTOR ACTED WITHOUT JURISDICTION IN TAKING

COGNIZANCE OF THE BASIC PETITION CONSIDERING THAT THE SUBJECT MATTER
AND THE PARTIES THEREOF HAVE BEEN DECIDED BY THE DEFUNCT COURT OF
INDUSTRIAL RELATIONS AND IS THEREFORE BABRED BY THE PRINCIPLE OF RES
ADJUDICATA.

The main thrust of the instant petition is the question of employer-employee relationship between
petitioner BESAS and 17 of the members of the herein respondent Union who are designated as
shoeshiners. During the certification election held on Nov. 26, 1985 at BESAS of the 53 eligible
voters, 49 cast their votes. 33 voted for the union while 16 voted for no union. Among the 33 voters
who opted for a union 17 persons are shoeshiners while 16 persons are non-shoeshiners.

The question of employer-employee relationship became a primodial consideration in resolving

whether or not the subject shoeshiners have the juridical personality and standing to present a
petition for certification election as well as to vote i therein. It is the position of petitioner that if the
shoeshiners are not considered as employees of Besa's the basic petition for certification election
must necessarily be dismissed for failure to comply with the mandatory requirements of the Labor
Code, as amended, that at least thirty (30%) percent of the employees must support the petition for
certification election and that in order to be certified as the sole and exclusive bargaining agent, the
union must be obtained a majority of the valid votes cast by eligible voters. In the instant case, if the
17 shoeshiners are declared ineligible and their votes are consequently nullified the result of the
certification election would be 16 "Yes" votes (33 minus 17) and 16 "No" votes, which is a tie. Since
the respondent union did not obtain a clear majority for the "Yes" votes as required under Rule IV
Sec. 8(f) of the Omnibus Rules of the Labor Code, it necessarily follows that the respondent union
cannot be certified as the sole and exclusive bargaining agent of the workers of Besa's.

The present petition merits Our consideration. The records of the case reveal that an employer-
employee relationship does not exist between the 17 shoeshiners and petitioner.

Be it noted that the defunct CIR in dismissing the cases for unfair labor practice filed by the
shoeshiners against herein petitioner BESA declared in its Decision dated December 21, 1965 that:
23
 The shoe shiner is distinct from a piece worker because while the latter is paid for work
accomplished, he does not, however, contribute anything to the capital of the employer other
than his service. It is the employer of the piece worker who pays his wages, while the shoe
shiner in this instance is paid directly by his customer. The piece worker is paid for work
accomplished without regard or concern to the profit as derived by his employer, but in the
case of the shoe shiners, the proceeds derived from the trade are always divided share and
share alike with respondent BESA. The shoe shiner can take his share of the proceeds
everyday if he wanted to or weekly as is the practice of qqqBesas The employer of the piece
worker supervises and controls his work, but in the case of the shoe shiner, respondent BESA
does not exercise any degree of control or supervision over their person and their work. All
these are not obtaining in the case of a piece worker as he is in fact an employee in
contemplation of law, distinct from the shoe shiner in this instance who, in relation to
respondent MAMERTO B. BESA, is a partner in the trade. Consequently, employer-employee
relationship between members of the Petitioning union and respondent MAMERTO B. BESA
being absent the latter could not be held guilty of the unfair tabor practice acts imputed against
him. (p. 6, Annex "B1 " of said Decision).<äre||anº•1àw>

Then too on Dec. 27, 1983, then Director Augusto Sanchez of the Bureau of Working Conditions,
MOLE, in response to a letter of petitioner relative to the implementation of wage Order No. 2 which
provided for an increase both in minimum wage and cost of living allowance, opined as follows:

Entitlement of the minimum requirements of the law particularly on wages and allowances
presupposes the existence of employer-employee relationship which is determined by the
concurrence of the following conditions:

1. right to hire

2. payment of wages

3. right to fire; and

4. control and supervision

The most important condition to be considered is the exercise of control and supervision over
the employees, per our conversation, the persons concerned under your query are the shoe
shiners and based on the decision rendered by Associate Judge Emiliano Tabigne of the
defunct Court of Industrial Relations, these shoe shiners are not employees of the company,
but are partners instead. This is due to the fact that the owner/manager does not exercise
control and supervision over the shoe shiners. That the shiners have their own customers from
whom they charge the fee and divide the proceeds equally with the owner, which make the
owner categorized them as on purely commission basis. The attendant circumstances clearly
show that there is no employer-employee relationship existing, and such the owner/manager is
not by law, under obligation to extend to those on purely commission basis the benefit of Wage
Order No. 2. However, the law does not preclude the employer in giving such benefit to all its
employees including those which may not be covered by the mandate of the law.

(Letter dated December 27, 1985 addressed to petitioner Annex B-2, Petition)

The Office of the Solicitor General as counsel for public respondent agrees that in the present case,
no employer-employee relationship exists.
24
The Supreme Court in the Rosario Brothers case ruled that;

A basic factor underlying the exercise of rights under the Labor Code is the status of
employment. It is important in the determination of who shall be included in a proposed
bargaining unit because it is sine qua non. The fundamental and essential condition that a
bargaining unit be composed of employees. Failure to establish this juridical relationship
between the union members and the employer affects the legality of the union itself. It means
the ineligibility of the union members to present a petition for certification election as well as to
vote therein.

Existence of employer-employee relationship is determined by the following elements, namely,

a] selection and engagement of the employee; b] payment of wages; c] powers of dismissal;
and d] power to control the employee's conduct although the latter is the most important
element (Rosario Brothers Inc, vs. Ople, 131 SCRA 72, 1984)

WHEREFORE, judgment is hereby rendered giving due course to the Petition and declaring VOID the
decision of the Director of the Bureau of Labor Relations dated September 27, 1985. The Petition in
BLR Case No. A-8-165-85 (NCR-LRD-M1-044-85) is therefore hereby DISMISSED.

SO ORDERED.

Feria (Chairman), Fernan, Alampay, Gutierrez, Jr., JJ., concur.

G.R. No. 84484 November 15, 1989

INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO,
respondents.

NARVASA, J.:

On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and
Melecio T. Basiao entered into a contract 1 by which:

1. Basiao was "authorized to solicit within the Philippines applications for insurance
policies and annuities in accordance with the existing rules and regulations" of the
Company;

2. he would receive "compensation, in the form of commissions ... as provided in the

Schedule of Commissions" of the contract to "constitute a part of the consideration of ...
(said) agreement;" and

3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its
circulars ... and those which may from time to time be promulgated by it, ..." were made
part of said contract.

The contract also contained, among others, provisions governing the relations of the parties, the
duties of the Agent, the acts prohibited to him, and the modes of termination of the agreement, viz.:

25
 RELATION WITH THE COMPANY. The Agent shall be free to exercise his own
judgment as to time, place and means of soliciting insurance. Nothing herein contained
shall therefore be construed to create the relationship of employee and employer
between the Agent and the Company. However, the Agent shall observe and conform to
all rules and regulations which the Company may from time to time prescribe.

ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving, directly
or indirectly, rebates in any form, or from making any misrepresentation or over-selling,
and, in general, from doing or committing acts prohibited in the Agent's Manual and in
circulars of the Office of the Insurance Commissioner.

TERMINATION. The Company may terminate the contract at will, without any previous
notice to the Agent, for or on account of ... (explicitly specified causes). ...

Either party may terminate this contract by giving to the other notice in writing to that
effect. It shall become ipso facto cancelled if the Insurance Commissioner should
revoke a Certificate of Authority previously issued or should the Agent fail to renew his
existing Certificate of Authority upon its expiration. The Agent shall not have any right to
any commission on renewal of premiums that may be paid after the termination of this
agreement for any cause whatsoever, except when the termination is due to disability or
death in line of service. As to commission corresponding to any balance of the first
year's premiums remaining unpaid at the termination of this agreement, the Agent shall
be entitled to it if the balance of the first year premium is paid, less actual cost of
collection, unless the termination is due to a violation of this contract, involving criminal
liability or breach of trust.

ASSIGNMENT. No Assignment of the Agency herein created or of commissions or

other compensations shall be valid without the prior consent in writing of the Company.
...

Some four years later, in April 1972, the parties entered into another contract — an Agency
Manager's Contract — and to implement his end of it Basiao organized an agency or office to which
he gave the name M. Basiao and Associates, while concurrently fulfilling his commitments under the
first contract with the Company. 2

In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a
reconsideration, Basiao sued the Company in a civil action and this, he was later to claim, prompted
the latter to terminate also his engagement under the first contract and to stop payment of his
commissions starting April 1, 1980. 3

Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and its
president. Without contesting the termination of the first contract, the complaint sought to recover
commissions allegedly unpaid thereunder, plus attorney's fees. The respondents disputed the
Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's employee, but an
independent contractor and that the Company had no obligation to him for unpaid commissions under
the terms and conditions of his contract. 5

The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the underwriting
agreement had established an employer-employee relationship between him and the Company, and
this conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said official's decision
26
directed payment of his unpaid commissions "... equivalent to the balance of the first year's premium
remaining unpaid, at the time of his termination, of all the insurance policies solicited by ... (him) in
favor of the respondent company ..." plus 10% attorney's fees. 6

This decision was, on appeal by the Company, affirmed by the National Labor Relations
Commission. 7 Hence, the present petition for certiorari and prohibition.

The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the Company's
employee by virtue of the contract invoked by him, thereby placing his claim for unpaid commissions
within the original and exclusive jurisdiction of the Labor Arbiter under the provisions of Section 217 of
the Labor Code, 8 or, contrarily, as the Company would have it, that under said contract Basiao's
status was that of an independent contractor whose claim was thus cognizable, not by the Labor
Arbiter in a labor case, but by the regular courts in an ordinary civil action.

The Company's thesis, that no employer-employee relation in the legal and generally accepted sense
existed between it and Basiao, is drawn from the terms of the contract they had entered into, which,
either expressly or by necessary implication, made Basiao the master of his own time and selling
methods, left to his judgment the time, place and means of soliciting insurance, set no
accomplishment quotas and compensated him on the basis of results obtained. He was not bound to
observe any schedule of working hours or report to any regular station; he could seek and work on
his prospects anywhere and at anytime he chose to, and was free to adopt the selling methods he
deemed most effective.

Without denying that the above were indeed the expressed implicit conditions of Basiao's contract
with the Company, the respondents contend that they do not constitute the decisive determinant of
the nature of his engagement, invoking precedents to the effect that the critical feature distinguishing
the status of an employee from that of an independent contractor is control, that is, whether or not the
party who engages the services of another has the power to control the latter's conduct in rendering
such services. Pursuing the argument, the respondents draw attention to the provisions of Basiao's
contract obliging him to "... observe and conform to all rules and regulations which the Company may
from time to time prescribe ...," as well as to the fact that the Company prescribed the qualifications of
applicants for insurance, processed their applications and determined the amounts of insurance cover
to be issued as indicative of the control, which made Basiao, in legal contemplation, an employee of
the Company. 9

It is true that the "control test" expressed in the following pronouncement of the Court in the 1956
case of Viana vs. Alejo Al-Lagadan 10

... In determining the existence of employer-employee relationship, the following

elements are generally considered, namely: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employees' conduct — although the latter is the most important element (35
Am. Jur. 445). ...

has been followed and applied in later cases, some fairly recent. 11 Indeed, it is without question a
valid test of the character of a contract or agreement to render service. It should, however, be obvious
that not every form of control that the hiring party reserves to himself over the conduct of the party
hired in relation to the services rendered may be accorded the effect of establishing an employer-
employee relationship between them in the legal or technical sense of the term. A line must be drawn
somewhere, if the recognized distinction between an employee and an individual contractor is not to
27
vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom
to the party hired and eschews any intervention whatsoever in his performance of the engagement.

Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use
of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it. The
distinction acquires particular relevance in the case of an enterprise affected with public interest, as is
the business of insurance, and is on that account subject to regulation by the State with respect, not
only to the relations between insurer and insured but also to the internal affairs of the insurance
company. 12 Rules and regulations governing the conduct of the business are provided for in the
Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for
an insurance company to promulgate a set of rules to guide its commission agents in selling its
policies that they may not run afoul of the law and what it requires or prohibits. Of such a character
are the rules which prescribe the qualifications of persons who may be insured, subject insurance
applications to processing and approval by the Company, and also reserve to the Company the
determination of the premiums to be paid and the schedules of payment. None of these really invades
the agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own
time and convenience, hence cannot justifiably be said to establish an employer-employee
relationship between him and the company.

There is no dearth of authority holding persons similarly placed as respondent Basiao to be

independent contractors, instead of employees of the parties for whom they worked. In Mafinco
Trading Corporation vs. Ople,13 the Court ruled that a person engaged to sell soft drinks for another,
using a truck supplied by the latter, but with the right to employ his own workers, sell according to his
own methods subject only to prearranged routes, observing no working hours fixed by the other party
and obliged to secure his own licenses and defray his own selling expenses, all in consideration of a
peddler's discount given by the other party for at least 250 cases of soft drinks sold daily, was not an
employee but an independent contractor.

In Investment Planning Corporation of the Philippines us. Social Security System 14 a case almost on
all fours with the present one, this Court held that there was no employer-employee relationship
between a commission agent and an investment company, but that the former was an independent
contractor where said agent and others similarly placed were: (a) paid compensation in the form of
commissions based on percentages of their sales, any balance of commissions earned being payable
to their legal representatives in the event of death or registration; (b) required to put up performance
bonds; (c) subject to a set of rules and regulations governing the performance of their duties under
the agreement with the company and termination of their services for certain causes; (d) not required
to report for work at any time, nor to devote their time exclusively to working for the company nor to
submit a record of their activities, and who, finally, shouldered their own selling and transportation
expenses.

More recently, in Sara vs. NLRC, 15 it was held that one who had been engaged by a rice miller to buy
and sell rice and palay without compensation except a certain percentage of what he was able to buy
or sell, did work at his own pleasure without any supervision or control on the part of his principal and
relied on his own resources in the performance of his work, was a plain commission agent, an
independent contractor and not an employee.

28
The respondents limit themselves to pointing out that Basiao's contract with the Company bound him
to observe and conform to such rules and regulations as the latter might from time to time prescribe.
No showing has been made that any such rules or regulations were in fact promulgated, much less
that any rules existed or were issued which effectively controlled or restricted his choice of methods
— or the methods themselves — of selling insurance. Absent such showing, the Court will not
speculate that any exceptions or qualifications were imposed on the express provision of the contract
leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting
insurance."

The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the
Company for twenty-five years. Whatever this is meant to imply, the obvious reply would be that what
is germane here is Basiao's status under the contract of July 2, 1968, not the length of his relationship
with the Company.

The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of
the petitioner, but a commission agent, an independent contractor whose claim for unpaid
commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in taking
cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the respondent
NLRC in affirming the Arbiter's decision. This conclusion renders it unnecessary and premature to
consider Basiao's claim for commissions on its merits.

WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set aside,
and that complaint of private respondent Melecio T. Basiao in RAB Case No. VI-0010-83 is
dismissed. No pronouncement as to costs.

SO ORDERED.

Cruz, Gancayco, Griño-Aquino, and Medialdea, JJ., concur.

[G.R. No. 159890. May 28, 2004]

EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS
CORP. and JOSE LAMADRID, President, respondents.

DECISION
YNARES-SANTIAGO, J.:

This is a petition for review under Rule 45 of the 1997 Revised Rules of Civil Procedure assailing
the Decision dated March 7, 2003 of the Court of Appeals in CA-G.R. SP No. 73102 which affirmed
the Resolution dated April 2, 2002 of the National Labor Relations Commission.
Petitioner was employed by respondent company Lamadrid Bearing and Parts Corporation
sometime in June 1985 as a salesman earning a commission of 3% of the total paid-up sales
covering the whole area of Mindanao. His average monthly income was more or less P16,000.00, but
later was increased to approximately P20,269.50. Aside from selling the merchandise of respondent
corporation, he was also tasked to collect payments from his various customers. Respondent
corporation had complete control over his work because its President, respondent Jose Lamadrid,
frequently directed him to report to a particular area for his sales and collection activities, and
occasionally required him to go to Manila to attend conferences regarding product competition,
prices, and other market strategies.
29
 Sometime in 1998, petitioner encountered five customers/clients with bad accounts, namely:
Customers/Clients Amount
1) A&B Engineering Services P 86,431.20
2) Emmanuel Engineering Services 126,858.50
3) Panabo Empire Marketing 226,458.76
4) Southern Fortune Marketing 191,208.00
5) Alreg Marketing 56, 901.18
Less Returns: 691.02 56, 210.16
Total Bad Accounts P
687,166.62

Petitioner was confronted by respondent Lamadrid over the bad accounts and warned that if he
does not issue his own checks to cover the said bad accounts, his commissions will not be released
and he will lose his job. Despite serious misgivings, he issued his personal checks in favor of
respondent corporation on condition that the same shall not be deposited for clearing and that they
shall be offset against his periodic commissions.[1]
Not contented with the issuance of the foregoing checks as security for the bad accounts,
respondents tricked petitioner into signing two documents, which he later discovered to be a
Promissory Note[2] and a Deed of Real Estate Mortgage.[3]
Pursuant to the parties agreement that the checks would not be deposited, as their corresponding
values would be offset from petitioners sales commissions, respondents returned the same to
petitioner as evidenced by the undeposited checks and respondent Lamadrids computations of
petitioners commissions.[4]
Due to financial difficulties, petitioner inquired about his membership with the Social Security
System in order to apply for a salary loan.To his dismay, he learned that he was not covered by the
SSS and therefore was not entitled to any benefit. When he brought the matter of his SSS coverage
to his employer, the latter berated and hurled invectives at him and, contrary to their agreement,
deposited the remaining checks which were dishonored by the drawee bank due to Account Closed.
On March 22, 2001, counsel for respondent corporation sent a letter to petitioner demanding that
he make good the dishonored checks or pay their cash equivalent. In response, petitioner sent a
letter addressed to Atty. Meneses, counsel for respondent corporation, which reads: [5]

This has reference to your demand letter dated March 22, 2001 which I received on March 30, 2001,
relative to the checks I issued to my employer LAMADRID BEARING PARTS CORPORATION.

May I respectfully request for a consideration as to the payment of the amount covered by the said
checks, as follows:

1. I have an earned commission in the amount of P33,412.39 as shown in the hereto attached
Summary of Sales as of February 28, 2001 (P22,748.60) and as of March 31, 2001 (P10,664.79),
which I offer to be charged or deducted as partial payment thereof;

2. I hereby commit One Hundred Percent (100%) of all my commission to be directly charged or
deducted as payment, from date onward, until such time that payment will be completed;

30
Sir, kindly convey my good faith to your client and my employer, as is shown by my willingness to
continue working as Commission Salesman, having served the Company for the last sixteen (16)
years.

Im sincerely appealing to my employer, through you, Sir, to settle these accountabilities which all
resulted from the checks issued by my customers which bounced and later charged to my account, in
the manner afore-cited.

May this request merit your kindest consideration, Sirs.

Thank you very much.

On April 2, 2001, petitioner sent another letter to respondent Lamadrid, to wit: [6]

Dear Mr. Lamadrid,

This is to inform your good office that if you pursue the case against me, I may refer this problem to
Mr. Paul Dominguez and Atty. Jesus Dureza to solicit proper legal advice. I may also file counter
charges against your company of (sic) unfair labor practice and unfair compensation of 3%
commission to my sales and commissions of more or less 90,000,000.00 (all collected and covered
with cleared check payments) for 16 years working with your company up to the present year 2001.

If I am not wrong your company did not exactly declare the correct amount of P90,000,000.00 more
or less representing my sales and collections (all collected and covered with cleared check payments
to the Bureau of Internal Revenue [BIR] for tax declaration purposes). In short your company profited
large amount of money to (sic) the above-mentioned sales and collections of P90,000,000.00 more or
less for 16 years working with your company.

I remember that upon my employment with your company last 1985 up to the present year 2001 as
commission basis salesman, I have not signed any contract with your company stating that all
uncollected accounts including bounced checks from Lamadrid Bearing & Parts Corp. will be charged
to me. I wonder why your company forcibly instructed me to secure checking account to pay and
issue check payment of P15,000.00 per month to cover your companys bad accounts in which this
amount is too heavy on my part paying a total bad accounts of more than P650,000.00 for my 16
years employment with your company as commission basis salesman.

Recalling your visit here at my Davao City residence, located at Zone 1 2nd Avenue, San Vicente
Buhangin Davao City, way back 1998, you even forced me to sign mortgage contract of my house
and lot located at Zone 1 2nd Avenue, San Vicente, Buhangin, Davao City, according to Mr. Jose
Lamadrid this mortgage contract of my house and lot will serve as guarantee to the uncollected and
bounced checks from Lamadrid Bearing and Parts Corp., customers. I have asked 1 copy of the
mortgage contract I have signed but Mr. Jose C. Lamadrid never furnished me a copy.

Very truly yours,

(Sgd) Empermaco B. Abante, Jr.

While doing his usual rounds as commission salesman, petitioner was handed by his customers a
letter from the respondent company warning them not to deal with petitioner since it no longer
recognized him as a commission salesman.

31
 In the interim, petitioner received a subpoena from the Office of the City Prosecutor of Manila for
violations of Batas Pambansa Blg. 22 filed by respondent Lamadrid.
Petitioner thus filed a complaint for illegal dismissal with money claims against respondent
company and its president, Jose Lamadrid, before the NLRC Regional Arbitration Branch No.
XI, Davao City.
By way of defense, respondents countered that petitioner was not its employee but a freelance
salesman on commission basis, procuring and purchasing auto parts and supplies from the latter on
credit, consignment and installment basis and selling the same to his customers for profit and
commission of 3% out of his total paid-up sales. Respondents cite the following as indicators of the
absence of an employer-employee relationship between them:
(1) petitioner constantly admitted in all his acts, letters, communications with the respondents
that his relationship with the latter was strictly commission basis salesman;
(2) he does not have a monthly salary nor has he received any benefits accruing to regular
employment;
(3) he was not required to report for work on a daily basis but would occasionally drop by
the Manila office when he went to Manila for some other purpose;
(4) he was not given the usual pay-slip to show his monthly gross compensation;
(5) neither has the respondent withheld his taxes nor was he enrolled as an employee of the
respondent under the Social Security System and Philhealth;
(6) he was in fact working as commission salesman of five other companies, which are
engaged in the same line of business as that of respondent, as shown by certifications
issued by the said companies;[7]
(7) if respondent owed petitioner his alleged commissions, he should not have executed the
Promissory Note and the Deed of Real Estate Mortgage. [8]
Finding no necessity for further hearing the case after the parties submitted their respective
position papers, the Labor Arbiter rendered a decision dated November 29, 2001, the decretal portion
of which reads:[9]

WHEREFORE, premises considered judgment is hereby rendered DECLARING respondents

LAMADRID BEARING & PARTS CORPORATION AND JOSE LAMADRID to pay jointly and severally
complainant EMPERMACO B. ABANTE, JR., the sum of PESOS ONE MILLION THREE HUNDRED
THIRTY SIX THOUSAND SEVEN HUNDRED TWENTY NINE AND 62/100 ONLY (P1,336,729.62)
representing his awarded separation pay, back wages (partial) unpaid commissions, refund of
deductions, damages and attorneys fees.

SO ORDERED.

On appeal, the National Labor Relations Commission reversed the decision of the Labor Arbiter
in a Resolution dated April 5, 2002, the dispositive portion of which reads: [10]

WHEREFORE, the Appeal is GRANTED. Accordingly, the appealed decision is Set Aside and
Vacated. In lieu thereof, a new judgment is entered dismissing the instant case for lack of cause of
action.

32
SO ORDERED.

Petitioner challenged the decision of the NLRC before the Court of Appeals, which rendered the
assailed judgment on March 7, 2003, the dispositive portion of which reads: [11]

WHEREFORE, premises considered, petition is hereby DENIED. Let the supersedeas bond dated 09
January 2002, issued the Philippine Charter Insurance Corporation be cancelled and released.

SO ORDERED.

Upon denial of his motion for reconsideration, petitioner filed the instant appeal based on the
following grounds:
I

THE HONORABLE COURT OF APPEALS IN GRAVE ABUSE OF DISCRETION MODIFIED THE

IMPORT OF THE RELEVANT ANTECEDENTS AS ITS PREMISE IN ITS QUESTIONED DECISION
CAUSING IT TO ARRIVE AT ERRONEOUS CONCLUSIONS OF FACT AND LAW.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN APPRECIATING THE TRUE

FACTS OF THIS CASE THEREBY IT MADE A WRONG CONCLUSION BY STATING THAT THE
FOURTH ELEMENT FOR DETERMINING EMPLOYER-EMPLOYEE RELATIONSHIP, WHICH IS
THE CONTROL TEST, IS WANTING IN THIS CASE.

III

THE HONORABLE COURT OF APPEALS IS AT WAR WITH THE EVIDENCE PRESENTED IN

THIS CASE AS WELL AS WITH THE APPLICABLE LAW AND ESTABLISHED RULINGS OF THIS
HONORABLE COURT.

Initially, petitioner challenged the statement by the appellate court that petitioner, who was
contracted a 3% of the total gross sales as his commission, was tasked to sell private respondents
merchandise in the Mindanao area and to collect payments of his sales from the customers. He
argues that this statement, which suggests contracting or subcontracting under Department Order
No. 10-97 Amending the Rules Implementing Books III and VI of the Labor Code, is erroneous
because the circumstances to warrant such conclusion do not exist.Not being an independent
contractor, he must be a regular employee pursuant to Article 280 of the Labor Code because an
employment shall be deemed to be regular where the employee has been engaged to perform
activities which are usually necessary or desirable in the usual business or trade of the employer.
Petitioner likewise disputes the finding of the appellate court that no employer-employee
relationship exists between him and respondent corporation since the power of control, which is the
most decisive element to determine such relationship, is wanting. He argues that the following
circumstances show that he was in truth an employee of the respondent corporation:

(1) As salesman of the private respondents, petitioner was also the one collecting payment of his
sales from various customers. Thus, he was bringing with him Provisional Receipts, samples of which
are attached to his Position Paper filed with the Labor Arbiter.

33
(2) Private respondents had complete control over the work of the petitioner. From time to time,
respondent JOSE LAMADRID was directing him to report to a particular area in Mindanao for his
sales and collection activities, and sometimes he was required to go to Manila for a conference
regarding competitions, new prices (if any), special offer (if competitors gave special offer or
discounts), and other selling/marketing strategy. In other words, respondent JOSE LAMADRID was
closely monitoring the sales and collection activities of the petitioner.

Petitioner further contends that it was illogical for the appellate court to conclude that since he
was not required to report for work on a daily basis, the power of control is absent. He reasons that
being a field personnel, as defined under Article 82 of the Labor Code, who is covering
the Mindanao area, it would be impractical for him to report to the respondents office in Manila in
order to keep tab of his actual working hours.
Well-entrenched is the doctrine that the existence of an employer-employee relationship is
ultimately a question of fact and that the findings thereon by the Labor Arbiter and the National Labor
Relations Commission shall be accorded not only respect but even finality when supported by
substantial evidence. The decisive factor in such finality is the presence of substantial evidence to
support said finding, otherwise, such factual findings cannot be accorded finality by this
Court.[12] Considering the conflicting findings of fact by the Labor Arbiter and the NLRC as well as the
Court of Appeals, there is a need to reexamine the records to determine with certainty which of the
propositions espoused by the contending parties is supported by substantial evidence.
We are called upon to resolve the issue of whether or not petitioner, as a commission salesman,
is an employee of respondent corporation. To ascertain the existence of an employer-employee
relationship, jurisprudence has invariably applied the four-fold test, namely: (1) the manner of
selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of
dismissal; and (4) the presence or absence of the power of control. Of these four, the last one is the
most important.[13] The so-called control test is commonly regarded as the most crucial and
determinative indicator of the presence or absence of an employer-employee relationship.Under the
control test, an employer-employee relationship exists where the person for whom the services
are performed reserves the right to control not only the end achieved, but also the manner and means
to be used in reaching that end.
Applying the aforementioned test, an employer-employee relationship is notably absent in this
case. It is undisputed that petitioner Abante was a commission salesman who received 3%
commission of his gross sales. Yet no quota was imposed on him by the respondent; such that a
dismal performance or even a dead result will not result in any sanction or provide a ground for
dismissal. He was not required to report to the office at any time or submit any periodic written report
on his sales performance and activities. Although he had the whole ofMindanao as his base of
operation, he was not designated by respondent to conduct his sales activities at any particular or
specific place.He pursued his selling activities without interference or supervision from respondent
company and relied on his own resources to perform his functions. Respondent company did not
prescribe the manner of selling the merchandise; he was left alone to adopt any style or strategy to
entice his customers. While it is true that he occasionally reported to the Manila office to attend
conferences on marketing strategies, it was intended not to control the manner and means to be used
in reaching the desired end, but to serve as a guide and to upgrade his skills for a more efficient
marketing performance. As correctly observed by the appellate court, reports on sales, collection,
competitors, market strategies, price listings and new offers relayed by petitioner during his
conferences to Manila do not indicate that he was under the control of respondent. [14] Moreover,
petitioner was free to offer his services to other companies engaged in similar or related marketing
activities as evidenced by the certifications issued by various customers. [15]
34
 In Encyclopedia Britannica (Philippines), Inc. v. NLRC,[16] we reiterated the rule that there could
be no employer-employee relationship where the element of control is absent. Where a person who
works for another does so more or less at his own pleasure and is not subject to definite hours or
conditions of work, and in turn is compensated according to the result of his efforts and not the
amount thereof, no relationship of employer-employee exists.
We do not agree with petitioners contention that Article 280 [17] is a crucial factor in determining
the existence of an employment relationship. It merely distinguishes between two kinds of
employees, i.e., regular employees and casual employees, for purposes of determining their rights to
certain benefits, such as to join or form a union, or to security of tenure. Article 280 does not apply
where the existence of an employment relationship is in dispute. [18]
Neither can we subscribe to petitioners misplaced reliance on the case of Songco v.
NLRC.[19] While in that case the term commission under Article 96 of the Labor Code was construed
as being included in the definition of the term wage available to employees, there is no categorical
pronouncement that the payment of compensation on commission basis is conclusive proof of the
existence of an employer-employee relationship. After all, commission, as a form of remuneration,
may be availed of by both an employee or a non-employee.
Petitioner decried the alleged intimidation and trickery employed by respondents to obtain from
him a Promissory Note and to issue forty-seven checks as security for the bad accounts incurred by
five customers.
While petitioner may have been coerced into executing force to issue the said documents, it may
equally be true that petitioner did so in recognition of a valid financial obligation. He who claims that
force or intimidation was employed upon him lies the onus probandi. He who asserts must prove. It is
therefore incumbent upon petitioner to overcome the disputable presumption that private transactions
have been prosecuted fairly and regularly, and that there is sufficient consideration for every
contract.[20] A fortiori, it is difficult to imagine that petitioner, a salesman of long standing, would
accede without raising a protest to the patently capricious and oppressive demand by respondent of
requiring him to assume bad accounts which, as he contended, he had not incurred. This lends
credence to the respondents assertion that petitioner procured the goods from the said company on
credit, consignment or installment basis and then sold the same to various customers. In the scheme
of things, petitioner, having directly contracted with the respondent company, becomes responsible
for the amount of merchandise he took from the respondent, and in turn, the customer/s would be
liable for their respective accounts to the seller,i.e., the petitioner, with whom they contracted the sale.
All told, we sustain the factual and legal findings of the appellate court and accordingly, find no
cogent reason to overturn the same.
WHEREFORE, in view of the foregoing, the Decision of the Court of Appeals dated March 7,
2003 in CA-G.R. SP No. 73102, which denied the petition of Empermaco B. Abante, is AFFIRMED in
toto.
SO ORDERED.
Panganiban, (Working Chairman), Carpio, and Azcuna, JJ., concur.
Davide, Jr., C.J., (Chairman), on official leave.

[G.R. No. 87098. November 4, 1996]

35
 ENCYCLOPAEDIA BRITANNICA (PHILIPPINES), INC., petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION, HON. LABOR ARBITER TEODORICO L.
DOGELIO and BENJAMIN LIMJOCO, respondents.

DECISION
TORRES, JR., J.:

Encyclopaedia Britannica (Philippines), Inc. filed this petition for certiorari to annul and set aside
the resolution of the National Labor Relations Commission, Third Division, in NLRC Case No. RB IV-
5158-76, dated December 28, 1988, the dispositive portion of which reads:

WHEREFORE, in view of all the foregoing, the decision dated December 7, 1982 of then Labor
Arbiter Teodorico L. Dogelio is hereby AFFIRMED, and the instant appeal is hereby DISMISSED for
lack of merit.

SO ORDERED.[1]

Private respondent Benjamin Limjoco was a Sales Division Manager of petitioner Encyclopaedia
Britannica and was in charge of selling petitioners products through some sales representatives. As
compensation, private respondent received commissions from the products sold by his agents. He
was also allowed to use petitioners name, goodwill and logo. It was, however, agreed upon that office
expenses would be deducted from private respondents commissions. Petitioner would also be
informed about appointments, promotions, and transfers of employees in private respondents district.
On June 14, 1974, private respondent Limjoco resigned from office to pursue his private
business. Then on October 30, 1975, he filed a complaint against petitioner Encyclopaedia Britannica
with the Department of Labor and Employment, claiming for non-payment of separation pay and other
benefits, and also illegal deduction from his sales commissions.
Petitioner Encyclopaedia Britannica alleged that complainant Benjamin Limjoco (Limjoco, for
brevity) was not its employee but an independent dealer authorized to promote and sell its products
and in return, received commissions therefrom. Limjoco did not have any salary and his income from
the petitioner company was dependent on the volume of sales accomplished. He also had his own
separate office, financed the business expenses, and maintained his own workforce. The salaries of
his secretary, utility man, and sales representatives were chargeable to his commissions. Thus,
petitioner argued that it had no control and supervision over the complainant as to the manner and
means he conducted his business operations. The latter did not even report to the office of the
petitioner and did not observe fixed office hours. Consequently, there was no employer-employee
relationship.
Limjoco maintained otherwise. He alleged that he was hired by the petitioner in July 1970, was
assigned in the sales department, and was earning an average of P4,000.00 monthly as his sales
commission. He was under the supervision of the petitioners officials who issued to him and his other
personnel, memoranda, guidelines on company policies, instructions and other orders. He was,
however, dismissed by the petitioner when the Laurel-Langley Agreement expired. As a result
thereof, Limjoco asserts that in accordance with the established company practice and the provisions
of the collective bargaining agreement, he was entitled to termination pay equivalent to one month
salary, the unpaid benefits (Christmas bonus, midyear bonus, clothing allowance, vacation leave, and
sick leave), and the amounts illegally deducted from his commissions which were then used for the
payments of office supplies, office space, and overhead expenses.
36
 On December 7, 1982, Labor Arbiter Teodorico Dogelio, in a decision ruled that Limjoco was an
employee of the petitioner company.Petitioner had control over Limjoco since the latter was required
to make periodic reports of his sales activities to the company. All transactions were subject to the
final approval of the petitioner, an evidence that petitioner company had active control on the sales
activities. There was therefore, an employer-employee relationship and necessarily, Limjoco was
entitled to his claims. The decision also ordered petitioner company to pay the following:

1. To pay complainant his separation pay in the total amount of P16,000.00;

2. To pay complainant his unpaid Christmas bonus for three years or the amount of P12,000.00;

3. To pay complainant his unpaid mid-year bonus equivalent to one-half month pay or the total
amount ofP6,000.00;

4. To pay complainant his accrued vacation leave equivalent to 15 days per year of service, or the
total amount ofP6,000.00;

5. To pay complainant his unpaid clothing allowance in the total amount of P600.00; and

6. To pay complainant his accrued sick leave equivalent to 15 days per year of service or the total
amount ofP6,000.00.[2]

On appeal, the Third Division of the National Labor Relations Commission affirmed the assailed
decision. The Commission opined that there was no evidence supporting the allegation that Limjoco
was an independent contractor or dealer. The petitioner still exercised control over Limjoco through
its memoranda and guidelines and even prohibitions on the sale of products other than those
authorized by it. In short, the petitioner company dictated how and where to sell its products. Aside
from that fact, Limjoco passed the costs to the petitioner chargeable against his future
commissions. Such practice proved that he was not an independent dealer or contractor for it is
required by law that an independent contractor should have substantial capital or investment.
Dissatisfied with the outcome of the case, petitioner Encyclopaedia Britannica now comes to us in
this petition for certiorari and injunction with prayer for preliminary injunction. On April 3, 1989, this
Court issued a temporary restraining order enjoining the enforcement of the decision dated December
7, 1982.
The following are the arguments raised by the petitioner:
I

The respondent NLRC gravely abused its discretion in holding that appellants contention that
appellee was an independent contractor is not supported by evidence on record.

II

Respondent NLRC committed grave abuse of discretion in not passing upon the validity of the
pronouncement of the respondent Labor Arbiter granting private respondents claim for payment of
Christmas bonus, Mid-year bonus, clothing allowance and the money equivalent of accrued and
unused vacation and sick leave.

37
 The NLRC ruled that there existed an employer-employee relationship and petitioner failed to
disprove this finding. We do not agree.
In determining the existence of an employer-employee relationship the following elements must
be present: 1) selection and engagement of the employee; 2) payment of wages; 3) power of
dismissal; and 4) the power to control the employees conduct. Of the above, control of employees
conduct is commonly regarded as the most crucial and determinative indicator of the presence or
absence of an employer-employee relationship.[3] Under the control test, an employer-employee
relationship exists where the person for whom the services are performed reserves the right to control
not only the end to be achieved, but also the manner and means to be used in reaching that end. [4]
The fact that petitioner issued memoranda to private respondents and to other division sales
managers did not prove that petitioner had actual control over them. The different memoranda were
merely guidelines on company policies which the sales managers follow and impose on their
respective agents. It should be noted that in petitioners business of selling encyclopedias and books,
the marketing of these products was done through dealership agreements. The sales operations were
primarily conducted by independent authorized agents who did not receive regular compensations but
only commissions based on the sales of the products. These independent agents hired their own
sales representatives, financed their own office expenses, and maintained their own staff. Thus, there
was a need for the petitioner to issue memoranda to private respondent so that the latter would be
apprised of the company policies and procedures. Nevertheless, private respondent Limjoco and the
other agents were free to conduct and promote their sales operations. The periodic reports to the
petitioner by the agents were but necessary to update the company of the latters performance and
business income.
Private respondent was not an employee of the petitioner company. While it was true that the
petitioner had fixed the prices of the products for reason of uniformity and private respondent could
not alter them, the latter, nevertheless, had free rein in the means and methods for conducting the
marketing operations. He selected his own personnel and the only reason why he had to notify the
petitioner about such appointments was for purpose of deducting the employees salaries from his
commissions. This he admitted in his testimonies, thus:
Q. Yes, in other words you were on what is known as P&L basis or profit and loss basis?
A. That is right.
Q. If for an instance, just example your sales representative in any period did not produce
any sales, you would not get any money from Britannica, would you?
A. No, sir.
Q. In fact, Britannica by doing the accounting for you as division manager was merely making
it easy for you to concentrate all your effort in selling and you dont worry about
accounting, isnt that so?
A. Yes, sir.
Q. In fact whenever you hire a secretary or trainer you merely hire that person and notify
Britannica so that Encyclopaedia Britannica will give the salaries and deduct it from your
earnings, isnt that so?
A. In certain cases I just hired people previously employed by Encyclopaedia Britannica.
xxx

38
 Q. In this Exhibit 2 you were informing Encyclopaedia Britannica that you have hired a certain
person and you were telling Britannica how her salary was going to be taken cared of, is
it not?
A. Yes, sir.
Q. You said here, please be informed that we have appointed Miss Luz Villan as division
trainer effective May 1, 1971 at P550.00 per month her salary will be chargeable to the
Katipunan and Bayanihan Districts, signed by yourself. What is the Katipunan and
Bayanihan District?
A. Those were districts under my division.
Q. In effect you were telling Britannica that you have hired this person and you should charge
her salary to me, is that right?
A. Yes, sir.[5]
Private respondent was merely an agent or an independent dealer of the petitioner. He was free
to conduct his work and he was free to engage in other means of livelihood. At the time he was
connected with the petitioner company, private respondent was also a director and later the president
of the Farmers Rural Bank. Had he been an employee of the company, he could not be employed
elsewhere and he would be required to devote full time for petitioner. If private respondent was
indeed an employee, it was rather unusual for him to wait for more than a year from his separation
from work before he decided to file his claims. Significantly, when Limjoco tendered his resignation to
petitioner on June 14, 1974, he stated, thus:

"Re: Resignation

I am resigning as manager of the EB Capitol Division effective 16 June 1974.

This decision was brought about by conflict with other interests which lately have increasingly
required my personal attention. I feel that in fairness to the company and to the people under my
supervision I should relinquish the position to someone who can devote full-time to the Division.

I wish to thank you for all the encouragement and assistance you have extended to me and to my
group during my long association with Britannica.

Evidently, Limjoco was aware of conflict with other interests which xxx have increasingly required
my personal attention (p. 118, Records). At the very least, it would indicate that petitioner has no
effective control over the personal activities of Limjoco, who as admitted by the latter had other
conflict of interest requiring his personal attention.
In ascertaining whether the relationship is that of employer-employee or one of independent
contractor, each case must be determined by its own facts and all features of the relationship are to
be considered.[6] The records of the case at bar showed that there was no such employer-employee
relationship.
As stated earlier, the element of control is absent; where a person who works for another does so
more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn
is compensated according to the result of his efforts and not the amount thereof, we should not find
that the relationship of employer and employee exists. [7] In fine, there is nothing in the records to

39
show or would indicate that complainant was under the control of the petitioner in respect of the
means and methods[8] in the performance of complainants work.
Consequently, private respondent is not entitled to the benefits prayed for.
In view of the foregoing premises, the petition is hereby GRANTED, and the decision of the
NLRC is hereby REVERSED AND SET ASIDE.
SO ORDERED.
Regalado (Chairman), Romero, Puno, and Mendoza, JJ., concur.

[G.R. No. 124551. August 28, 1998]

USHIO MARKETING, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and SEVERINO ANTONIO,respondents.

DECISION
DAVIDE, JR., J.:

Petitioner urges us to annul the decision of 31 May 1995 of the National Labor Relations
Commission (NLRC) in NLRC NCR CA No. 008495-95[1] which reversed the Labor Arbiter's 13
January 1995 decision in NLRC NCR Case No. 08-06147-94 and the NLRCs Order[2] of 29 February
1996 which denied petitioners motion for reconsideration.
The factual and procedural antecedents are summarized by the public respondent NLRC in its
Comment as follows:

Private respondent Severino Antonio was an electrician who worked within the premises of petitioner
Ushios car accessory shop in Banawe, Quezon City. On August 22, 1994, private respondent filed a
complaint for illegal dismissal, non-payment of overtime pay, holiday pay, and other benefits against
petitioner Ushio Marketing which was docketed as NLRC NCR Case No. 08-06147-94 and assigned
to Labor Arbiter Facundo L. Leda.

On October 13, 1994, Labor Arbiter Leda directed the parties to file their respective papers within a
non-extendible period of twenty-five (25) days. On November 4, 1994, petitioner filed a motion to
dismiss, while private respondent failed to file his position paper.

In Petitioners Motion to Dismiss, she alleged that it was a single proprietorship engaged in the
business of selling automobile spare parts and accessories. Petitioner claimed that private
respondent was not among her employees but a free lance operator who wait[ed] on the shops
customers should the latter require his services.Petitioner further alleges in her Motion to Dismiss the
following:

5.0 In pursuit of its trading business, the company employs a handful of regular employees such
as sales persons, clerks, account officers and the like. These employees are on the Company payroll
and are provided with all the privileges and benefits accorded by law to regular employees. These
employees were selected and engaged by the management of the company and are paid their
respective salaries regularly. They also have fixed working days and hours and are subject to
disciplinary measures (such as reprimand, suspension or dismissal) should they violate company
policies on tardiness, absences and general employment conduct.Simply put, the Company has full
control over the manner by which the said employees perform their jobs.
40
6.0 In stark contrast to the Companys regular employees, there are independent, free lance operators
who are permitted by the Company to position themselves proximate to the Company premises.
These independent operators are allowed by the Company to wait on Company customers who
would be requiring their services. In exchange for the privileges of favorable recommendation by the
Company and immediate access to customers in need of their services, these independent operators
allow the Company to collect their service fee from the customer and this fee is given back to the
independent operator at the end of the week. In effect, they do not earn fixed wages from the
Company as their variable fees are earned by them from the customers of the Company. The
Company has no control over and does not restrict the methodology or the means and manner by
which these operators perform their work. These operators are not supervised by any employee of
the Company since the results of their work is controlled by the customers who hire them. Likewise,
the Company has no control as an employer over these operators. They are not subject to regular
hours and days of work and may come and go as they wish. They are not subject to any disciplinary
measures from the Company, save merely for the inherent rules of general behavior and good
conduct.

7.0 Complainant was one such independent, free lance operator. He was allowed by the Company to
provide his services to the customers of the Company who were in need of such services. He
received his fees indirectly from the Company out of the fees paid by the customers during a given
week. In doing his job, he was under the direct supervision and control of the customer. He was
under no compulsion whatsoever to report to the Company on a regular basis. He was not subject to
any disciplinary measures for his work conduct.Furthermore, he was free to position himself near
other car accessory shops to offer his services to customers of said shops, as he is [sic] in fact had
done on various occasions prior to the filing of this complaint.

Attached to the motion of the petitioner is an affidavit executed by Ms. Caroline Tan To, Assistant
Manager of Share Motor Sales, also engaged in the business of selling car spare parts and
accessories along Banawe Street, attesting to the following : that in the pursuit of the said business, it
allows independent and free lance operators, such as electricians, to wait on customers who would
want them to perform their services; and that she knows one independent operator by the name of
Severino Antonio, as the latter had performed jobs [for] itscustomers.

On January 13, 1995, Labor Arbiter Facundo L. Leda premising on the allegations contained in the
Motion to Dismiss submitted by the petitioner Company, issued an order dismissing the complaint of
private respondent Severino Antonio against petitioner Ushio Marketing Corp.

On February 28, 1995, private respondent assisted by the Public Attorneys Office, appealed the order
of the Honorable Labor Arbiter to the Commission. In his memorandum, private respondent alleged
that Ushio Marketing hired his services on 15 November 1981 until July 3, 1994 as an electrician with
a daily salary of one hundred thirty two pesos (P132.00) per day. He further alleged that:

During the employ of herein complainant with the respondents, he performed his job religiously and
faithfully, in fact he was the most trusted employee in the company. For instance, Mrs. Tan, the
employer, would ask him to go to the bank and withdraw money and deliver the purchased spare
parts/accessories to the customer. If there was no driver, or they needed [a] handyman in the office
and even in their household, Mrs. Tan would call for the complainant. He could be called, the
employers personal assistant. However, despite his devotion and loyalty to his work as well as to his
employer, his services were terminated by the respondents without legal grounds. When he reported
for work on 3 July 1994, his employer would not let him inside the office because he was already

41
dismissed from his job. He came [sic] back to the office for a number of times but his efforts proved
futile. Hence, he instituted a complaint with this Honorable Office.

Attached to the private respondents Memorandum of Appeal were affidavits of his co-electricians who
worked with Ushio Marketing namely: Roberto Lopez and Narcing Pascua, corroborating the
allegation that Mr. Severino Antonio worked with the petitioner Company as an electrician for the past
four years when they have been working with the same Company; they were receiving One Hundred
Thirty Two (P132.00) per day from Mrs. Tan, that they cannot be absent from work without the
permission of Mrs. Tan; and that it was Mrs. Tan who gave them work when a client comes in. To
quote:

4. Na ang suweldo ko at ni Severino na P132.00 isang araw ay kay Gng. Tan nanggagaling at hindi
direktang ibinibigay ng kliyente;

5. Na hindi kami maaring lumiban sa aming trabaho nang hindi nagpapa[a]lam kay Gng. Tan;

6. Na si Gng. Tan ang nagbibigay sa amin ng trabaho kung mayroong dumarating na kliyente.

On May 31, 1995, the National Labor Relations Commission issued its decision holding that
complainant is respondents employee and that he was illegally dismissed. The dispositive portion of
the decision reads as follows:

WHEREFORE, the appealed Order dated January 13, 1995 is hereby set aside. The respondent is
directed to reinstate complainant with full backwages computed from August 3, 1994 until he is
actually reinstated. Complainants monetary claims presented as third issue on appeal is however
remanded for further arbitration there being no substantial basis to grant or deny the same. (p. 6
NLRCs Decision)[3]

The NLRC reversed the Labor Arbiter. It adopted private respondent's allegations in his complaint
that he had "worked for respondent since '1981' as [an] 'electrician' [and] paid 'weekly every Sunday'
at the rate of '132' pesos per day;" and concluded that petitioner's arrangement as regards the mode
of payment of private respondent's wages was "nothing but an evasive attempt to hide the real
employment status of [private respondent]," considering that it could not understand why private
respondent could not directly collect his earnings from a customer, immediately after private
respondent accomplished a job for which he was hired; and why private respondent's proceeds from
jobs rendered on a daily basis could only be paid to him on a weekly basis.
Petitioners motion for reconsideration having been denied by the NLRC in its resolution of 29
February 1996 for lack of palpable and patent errors, petitioner filed the instant petition, ascribing to
the NLRC the commission of grave abuse of discretion in: (1) declaring private respondent as a
regular employee; and (2) ignoring the accepted industry practices of car spare parts shop owners
which are not contrary to law, public order and public policy.
Petitioner maintains that as it was private respondent who alleged the existence of an employer-
employee relationship, the burden to prove the same by credible and relevant evidence thus lay with
private respondent, especially since petitioner staunchly and consistently denied the same. Petitioner
insists that the nature of its operations, as collaborated by the sworn statement of the assistant
manager of a rival establishment, sufficiently established the real status of private respondent as a
free lance operator performing assorted services like electrical jobs, installation of accessories and
spare parts, and some minor repairs for petitioner's customers. Petitioner then concludes that the
basic issue of whether private respondent was an employee should be resolved in the negative,
42
considering that: (1) petitioner had no part in the selection and engagement of private respondent, its
role merely limited to recommending private respondent's services to the formers customers; (2)
private respondent was not paid a fixed regular wage, but only a service fee collected by petitioner
from its customers and paid to private respondent at the end of the week; (3) private respondent was
not included in petitioners payroll and neither was the former reported as petitioners employee to the
Social Security System or the Bureau of Internal Revenue, citing Continental Marble Corporation v.
NLRC (161 SCRA 151, 157 [1988]); (4) petitioner had no occasion to exercise its power to dismiss
since petitioner never hired private respondent; and (5) petitioner did not exercise control and
supervision over the means and methods by which private respondent performed his job, as private
respondent practiced independent judgment as to the time and place of work and was not required to
report on a regular basis and even allowed to service the customers of other auto supply shops.
Additionally, petitioner had no liability, on account of private respondent's poor workmanship, to
customers who chose to avail of private respondent's services and regulated his performance.
Petitioner further argues that it was a recognized and accepted trade practice peculiar to the auto
spare parts shop industry operating along the stretch of Banawe Street, Quezon City, that shop
owners would collect the service fees from its customers and disburse the same to the independent
contractor at the end of a week. In fine, the shop owner and the independent contractor were partners
in trade, both benefiting from the proceeds of their joint efforts. This mutual cooperation between
petitioner and private respondent could then be likened to that of a shoe shiner and a shoe shop
owner in Besa v. Trajano,[4] or that of a caddy and the golf club in Manila Golf Club, Inc. v.
Intermediate Appellate Court.[5]
In his comment, private respondent reiterates his arguments that he was an employee of
petitioner, having worked for petitioner as an electrician from 15 November 1991 until 3 July 1994
with the following salary, to wit: 1981- P20.00/day; 1983- P21.00/day; 1989-P75.00/day; 1990-
P100.00/day; 1991-1994- P132/day. Likewise, during private respondent's employ, he carried out
various tasks as a driver, handyman, and personal assistant of petitioner. Private respondent could
not be regarded an independent contractor since there was no written proof to support such a
conclusion; his services as a handyman and an electrician for 13 years, more or less, were necessary
in the operation of petitioners business; he received a fixed salary instead of a commission; and he
was dismissed and subjected to control by petitioner. Moreover, private respondent claims that the
factual settings of Besa and Manila Golf and Country Club preclude their application to the instant
case.
In its Manifestation in Lieu of Comment, the Office of the Solicitor General (OSG) supports the
stand of petitioner and recommends the reversal of the challenged decision. The OSG asserts that
there was no employer-employee relationship between the parties because the control test, being the
most important element of an employer-employee relationship, was absent. The OSG then points out
that there was no showing that petitioner supplied private respondent with equipment and tools; apart
from private respondents bare allegation that he could not leave the premises without petitioners
permission, it was not established that private respondent was under the control and supervision of
petitioner or of its personnel; private respondent's admission that Mrs. Caroline Tan To referred jobs
directly to him supports the notion that private respondent was not an employee, otherwise, Mrs. Tan
To would have coursed the job orders for private respondent through petitioner; and the arrangement
that petitioner would receive the service fees of private respondent from customers was not adequate
to establish an employer-employee relationship.
In view of the stand of the OSG, we required the NLRC to file its Comment, if it so desired.
In its Comment filed on 1 August 1997, the NLRC argues, through its Legal and Enforcement
Division, that it did not err in finding that there existed an employee-employer relationship between
43
petitioner and private respondent for [u]ndisputed are the facts that private respondent worked as an
electrician within the premises of the petitioners shop and would serve its customers when the latter
so requires [and] [h]e was the one who closed and opened the shop of the petitioner and sometimes
even asked to withdraw money and deliver purchased spare parts to petitioners clients; [and] [h]e
could be practically described as the personal assistant of the manager, Mrs. Lilybeth Tan. Moreover,
the NLRC derides petitioners reliance on Besa v. Trajano, as the shoe shiners there collected their
fees directly from the customers, which could not be said of private respondent here. Finally, the
NLRC takes petitioner to task for attempting to capitalize on its failure to submit its payroll or Social
Security remittances to refute private respondents claims.
There is merit in the petition.
It is not disputed that on 13 October 1994, Labor Arbiter Leda directed the parties to file their
respective position papers within a non-extendible period of 25 days. Private respondent, however,
failed to comply with this order. As to him then, there was no evidence extant on record to
substantiate his allegations. On the other hand, on 4 November 1994, private respondent filed its
motion to dismiss, duly verified by its sole proprietor, Lilybeth Tan. Said motion contained a statement
of the case, a statement of facts, a statement of the issues involved, coupled with petitioners position
thereon and the arguments in support thereof. Moreover, attached to the motion and forming an
integral part thereof was the affidavit of petitioners business competitor, Mrs. Carolina Tan To, who
corroborated private respondents allegations as regards the nature of the automobile spare parts
business and that private respondent was indeed an independent operator. For all legal intents and
purposes, the motion to dismiss sufficiently served as petitioner's position paper.
Under Section 3, Rule V of the New Rules of Procedure of the NLRC, should the parties fail to
reach an amicable settlement, either in whole or in part, during the conference mandated by Section
2 thereof, the Labor Arbiter shall, inter alia, direct the parties to simultaneously file their respective
verified position papers covering only those claims and causes of action raised in the complaint, but
excluding those which may have been amicably settled, and shall be accompanied by all supporting
documents including the affidavits of their respective witnesses to take the place of the affiants direct
testimony. Thereafter, the parties shall not be allowed to allege facts, or present evidence to prove
facts not referred to and any cause or causes of action not raised in the complaint or position papers,
affidavits and other documents.
For failure then of private respondent to file his position paper, the Labor Arbiter acted correctly in
taking into account only petitioners motion to dismiss and thereafter dismissing private respondent's
complaint.
It follows that in the exercise of its appellate jurisdiction, the NLRC cannot go beyond the
pleadings and evidence submitted by the parties before the Labor Arbiter. However, we have
sustained the action of the NLRC in allowing the parties to submit additional evidence even during the
pendency of an appeal,[6] in light of Article 221 of the Labor Code which provides that rules of
evidence prevailing in courts of law or equity do not control the proceedings before Labor Arbiters and
NLRC and that the Labor Arbiters and the NLRC should use every and all reasonable means to
ascertain the facts in each case speedily and objectively and without regard for the technicalities of
law or procedure.
Here, on appeal to the NLRC, private respondent alleged that his failure to submit his position
paper before the Labor Arbiter was due to private respondents having fallen victim to petitioners
misrepresentations as to the possibility of arriving at an amicable settlement. To this end, private
respondent submitted the affidavits[7] of Roberto Lopez and Narcing Pascua which, pursuant to Article
221 of the Labor Code discussed above, were properly admitted by the NLRC. A perusal of these
affidavits, however, plainly shows that the avowals therein had no connection whatsoever with private
44
respondents claim of denial of procedural due process before the Labor Arbiter. Moreover, said
affidavits, having been admitted by the NLRC on appeal, any defect in procedural due process must
be deemed cured. Finally as to these affidavits, in the same vein as the rest of private respondents
cause, the declarations of the affiants were but mere sweeping statements, unsubstantiated and
unsupportive of private respondents allegations.
If only to underscore the paucity, if not absence, of evidence of private respondent, certainly
falling short of the standard of substantial evidence governing proceedings before quasi-judicial
bodies, we note that private respondent himself did not execute any affidavit, despite submitting the
affidavits of Lopez and Pascua on appeal to the NLRC. Notably, neither did private respondent verify
his Memorandum on Appeal filed with the NLRC, as only his counsel signed the Memorandum. All
told, private respondents dereliction of his duty to furnish some measure of probative value to his
allegations mandates the grant of this petition.
Turning to the challenged decision and resolution of the NLRC, we note that in stark contrast to
private respondents perfunctory advocacy, petitioner submitted a verified opposition [8]to private
respondents Memorandum, which reiterated petitioners arguments in its Motion to Dismiss. To this,
private respondent filed a reply[9]to the opposition, to which private respondent filed a rejoinder. [10]
The foregoing pleadings notwithstanding, the NLRC, in passing upon the merits of the case,
failed to refer to any of the arguments raised therein, opting, instead, to confine its discussion solely
to the assertions in the complaint and the motion to dismiss. Initially, as adverted to earlier, it would
seem that the NLRC, in ruling for private respondent, merely took at face value and indiscriminately
adopted private respondents allegations that he had worked for respondent since 1981 as [an]
electrician [and] paid weekly every Sunday at the rate of 132 pesos per day, despite private
respondent not having substantiated his allegations in the least.
What is most telling, however, is the NLRCs observation that there [were] so many unexplained
kinks in [petitioners] theory of denial on [the existence of an] employer-employee relationship that we
have no recourse but to rule that [private respondent] is [petitioners employee]. Clearly, this
observation cannot but be characterized as having been attended by grave abuse of
discretion. Under the fact pattern of the instant petition, more so, the dearth of evidence in private
respondents favor, the NLRC should not have so readily afforded private respondent a presumption
of the existence of an employer-employee relationship. The bare allegations in the complaint, the
absence of an affidavit from private respondent, and the barren affidavits of Lopez and Pascua, could
not, by any stretch, have furnished the particulars to justify the NLRCs conclusion. That private
respondents espousal failed to meet the standard of substantial evidence becomes all the more too
painfully evident when considered in light of petitioners arguments in its verified motion to dismiss and
the supporting affidavit of petitioners business competitor, akin to an admission against interest.
We hasten to add, however, that even if the NLRC had taken into account the various pleadings
filed before it, as the same malady characterized those filed by private respondent, the conclusion
would still be inevitable that the existence of an employer-employee relationship between the parties
here was not proven by substantial evidence.
The factors to be considered in determining the existence of an employer-employee relationship
are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power to control the employees conduct. The so-called "control test" is
commonly regarded as the most crucial and determinative indicator of the presence or absence of an
employer-employee relationship. Under the control test, an employer-employee relationship exists
where the person for whom the services are performed reserves the right to control not only the end
achieved, but also the manner and means to be used in reaching that end. [11]

45
 We agree with the Office of the Solicitor General that here, the power to control the employees
conduct, i.e., the conduct of private respondent, is absent, thus:

First, private respondent contends that he worked as an electrician and personal assistant at
petitioners store.As [an] electrician, private respondent may be presumed to have used equipment or
tools in rendering electrical services. If it is true that private respondent was an employee of
petitioner, he would have used equipment or tools supplied and owned by his employer. However,
private respondent failed to allege and present proof that petitioner supplied him equipment and tools.

Second, the conduct of private respondent was not subject to the control and supervision of petitioner
or any of its personnel. There was no allegation of this, nor was evidence presented to prove it other
than the bare allegation of private respondent that he could not leave the work premises without
permission from petitioner.Private respondent himself decided how he would render electrical
services to customers. If it is true that private respondent was hired as [an] electrician, petitioner
would have exercised supervision and control over the means and manner he performed his electrical
services for, otherwise, if private respondents work was unsatisfactory, it would reflect on the
business of petitioner.

Third, private respondent was free to offer his services to other stores along Banaue, Quezon City, as
evidenced by the affidavit of Caroline Tan To, Assistant Manager of Share Motor Sales (Annex B,
Reply to Private Respondents Comment dated August 5, 1996) and private respondents own
admission. But although private respondent admits that he rendered electrical services to the
customers of other stores, he claims that petitioner allowed him to do so. If private respondent was an
employee of petitioner, it was unthinkable for petitioner to allow private respondent to render electrical
services to three other stores selling automobile spare parts and accessories who were its
competitors.

Fourth, private respondent admits that [i]t was Mrs. Tan who refers electrical and other jobs to private
respondent (p. 6, Private Respondents Comment dated August 5, 1996). If private respondent was an
employee of petitioner, Tan could not have referred electrical work directly to him. She would have to
course job orders to petitioner. The fact that she dealt directly with private respondent means that she
did not consider private respondent an employee of petitioner.

It is clear that petitioner did not have the power to control private respondent [w]ith respect to the
means and methods by which his work was to be accomplished (Continental Marble Corporation, et
al. vs. National Labor Relations Commission, 161 SCRA 151, 158 [1988]).

Lastly, private respondent allowed petitioner to collect service fees from his customers. He received
said fees on a weekly basis. This arrangement, albeit peculiar, does not prove the existence of an
employer-employee relationship. In Besa vs. Trajano, 146 SCRA 501, 506 [1986], the shoe shiner
rendering services in the premises of Besa, received from Besa the payments for his services on a
weekly basis. Yet the shoe shiner was not considered an employee of Besa. This is the same
arrangement between petitioner and private respondent. [12]

WHEREFORE, judgment is hereby rendered GRANTING the petition, REVERSING the

challenged decision and resolution of the National Labor Relations Commission in NLRC-NCR CA
No. 008495-95 and REINSTATING the Order of 13 January 1995 of the Labor Arbiter in NLRC-NCR
Case No. 08-06147-94.
No pronouncement as to costs.
46
 SO ORDERED.
Bellosillo, Vitug, Panganiban and Quisumbing, JJ., concur.

[G.R. No. 118892. March 11, 1998]

FILIPINAS BROADCASTING NETWORK, INC., petitioner vs. NATIONAL LABOR
RELATIONS COMMISION and SIMEON MAPA JR., respondents.

DECISION
PANGANIBAN, J.:

As a rule, factual findings of the NLRC are binding on his Court. However, when the findings of
the NLRC and the labor arbiter are contradictory, this Court may review questions of facts. Where the
evidence clearly shows the absence of an employer-employee relationship, a claim for unpaid wages,
thirteenth month pay, holiday and rest pay and other employment benefits must necessarily fail.
The Case
Before us is a petition for certiorari assailing the April 29, 1994 Decision of the National Labor
Relations Commission,[1] in Case No. 05-08-00348-92, entitled Simeon M. Mapa Jr., v. DZRC Radio
Station. The dispositive portion of the challenged Decision reads:

WHEREFORE, premises considered, the appealed decision is set aside, and a new judgment is
entered, declaring that complainant is an employee of the respondent and is entitled to his claims for
the payment of his services from March 11, 1990 to January 16, 1992. [2]

Petitioner also impugns the November 9, 1994 Resolution [3] f the NLRC denying the motion for
reconsideration.
The October 13, 1993 decision of the labor arbiter, [4] which the NLRC reversed and set aside,
disposed as follows:

This Arbitration Branch, based on the facts and circumstances established by the parties in this case
is inclined to believe that complaint Simeon M. Mapa, Jr., had not been an employee of the
respondent DZRC Radio Station before February 16, 1992. [5] He was but a volunteer reporter when
accommodated to air his report on the respondent radio station as his application for employment
with the respondent radio station as his application for employment with the respondent as fieled
reporter had not been accepted yet or approved before February, 1992. There was no employer-
employee relations that existed between the complainant and the respondent since March 11, 1990
until February 16, 1992. The complainant is not entitled to his claim for any salaries, premium pay for
holiday and rest day, holiday pay and the 13 th month pay against the respondent DZRC Radio
Station/Salvo Fortuno.

WHEREFORE, in the light of the foregoing premises, judgment is hereby rendered dismissing the
complaint in his case for lack of merit. [6]

The Facts
Version of Private Respondent

47
 Petitioner and private respondent submitted different versions of the facts. The facts as viewed by
private respondent are as follows:[7]

The complainant (herein private respondent) began to work for the respondent as a radio reporter
starting March 11, 1990. On May 14, 1990, upon being informed by then respondents Station
Manager, Mr. Plaridel Brocales, that complainants employment with respondent is being blocked by
Ms. Brenda Bayona of DZGB, complainants previous employer, the said complainant took a leave of
absence. In the first week of June, 1990, the respondent thru Mr. Antonio Llarena, then an employee
of the respondent, asked the complainant to return to work even as he was assured that his salaries
will be paid to him already. Thus, the complainant continued to work for the respondent since then.
On September 5, 1991, again the complainant took a leave of absence because of his desperation
over the failure of respondent to make good its promise of payment of salaries. He was reinstated on
January 16, 1992 and resigned on February 27, 1992 when he decided to run for an elective office in
the town of Daraga, albay. Unfortunately, the respondent paid salary to the complainant only for the
period from January 16, 1992 up to February 27, 1992. Respondent did not pay the complainant for
all the services rendered by the latter from March 11, 1990 up to January 16, 1992.

As may be glened from its memorandum,[8] petitioners version of the facts is as follows:

1. On or before April 1990, Mapa was dismissed from his employment with PBN-DZGB Legaspi. At
the time, Mapa filed a case for illegal dismissal against PBN-DZGB Legaspi docketed as RAV V.
Case No. 05-04-00120-90 entitled Simeon Mapa, Jr. v. Peoples Broadcasting Network-DZGB
Legaspi, Jorge Bayona and Arturo Osia.

2. On or about May 1990, Mapa sought employment from DZRC as a radio reporter. However, DZRC
required of private respondent the submission of a clearance from his former employer. Otherwise,
his apllication would not be acted upon;

3.On May 14, 1990, Mapa was informed by DZRC's then station manager, Mr. Plaridel Larry
Brocales, that his application for employment was being blocked by Ms. Brenda Bayona of DZGB,
Mapas former employer. This fact is supported by Mapas position paper before the Honorable Labor
Arbiter xxx;

4. Taking pity on Mapa and pending the issuance of the clearance from PBN-DZGB Legaspi, Mr.
Larry Brocales granted the request of Mapa to be accomodated only as a volunteer reporter of DZRC
on a part-time basis. As a volunteer reporter, Mapa was not to be paid wages as an employee of
DZRC but he was permitted to find sponsors whose business establishments will be advertised every
time he goes on the air. Most importantly, Mapas only work consisted of occasional newsbits or on-
the spot reporting of consisted of occasional newsbits or on-the spot reporting of incidents or
newsworthy occurances, which was very seldom.

5. Mapas friends who were also in the same situation as he was, declared in an affidavit dated June
10, 1993 that:

WE, ALLAN ALMARIO and ELMER ANONUEVO, of legal age, single, with postal address at
Washington Drive, Legaspi City, under oath, depose and state:

1. We personally know Simeon Jun Mapa, a former volunteer reporter at DZRC just like us;

48
2. As volunteer reporters we know that we will not receive any salary or allowance from DZRC
because our work was purely voluntary;

3. As incentive for us, the management of DZRC allowed us to get our own sponsors whose business
establishment we mention[ed] every after field report was made by us;

4. The management did not require or oblige us to render a report. We were on our own. We ma[d]e
or render[ed] a report as we [saw]fit;

5. During our stint as volunteer reporters we had several sponsors each who paid us P300.00 per
month (each).

xxx xxx xxx

6. Having no radio gadgets to begin with, DZRC loaned Mapa the necessary equipment such as
handheld radios and reporting gadgets. Mapa was to do occasional reporting only, i.e., a few minutes
each day at an irregular time period at Mapas own convinience. Mapa advertised his sponsors and
pocketed the payment of these sponsors for his advertising services. In addition, DZRC had no
control over the manner by [sic] which he was to make his reports. Nor were the said reports subject
to editing by DZRC;

7. In an Affidavit dated June 10, 1993 executed by one of Mapas sponsors, the same reads as
follows:

I, CARLITO V. BAYLON, of legal age, married, resident of Dona Maria Subdivision, Daraga, Albay,
under oath, despose and state:

1. I am a lawyer by profession. At the same time, I am owner of Kusina ni Manoy a restaurant

situated in Daraga, Albay;

2. I personally know Simeon Jun Mapa. Sometime in May, 1990 he went to make and asked if I could
be one of his sponsors because he was accomodated by DZRC as volunteer reporter. He explained
to me that, he will not be receiving any salary from DZRC[;] hence, he was soliciting any support;

3. Taking pity on him, I agreed to be one of his sponsors. The condition was, I will have to pay him
P300.00/month. In exchange thereto, he will have to mention the name of the name of my restaurant
every time he renders a report on the air;

4. My sponsorship lasted for about (5) months after which I discontinued it when I rarely heard Jun
Mapa in DZRC program.

xxx xxx xxx

8. On November 7, 1990, in his testimony against his former employer, Mapa declared under oath. To
wit:

ATTY. LOBRIGO:

On paragraph 14 of the same affidavit it states and I quote: 13. Having been left with an empty
stomach, I was compelled to apply for employment with another radio station. On March 11, 1990, I
49
applied for employment with DZRC. Unfortunately, my application would not yet be acted [upon]
favorably because of the malicious and oppressive imputations to me by my former employer.

My question is what is now the status of your employment with DZRC?

WITNESS:

I am at present on a volunteer status because my former employer at DZGB did not give me
clearance and I am required to submit that clearance to DZRC. (Underlining supplied).

See p. 2 of Position Paper of DZRC before the Labor Arbiter and pp. 4-5 of the Transcript of
Stenographer Notes dated November 7, 1990, attached and marked as Annex F and Annex F-1,
Petition for Certiorari;

9. It cannot be overstressed that Mapas application for employment could not have been acted upon
because of the lack of the pre-requisite clearance.

10. Lacking in sponsors, Mapa soon failed to provide petitioner with newsbits, finding it unprofitable to
continue since he had no available sources of funding. Sometime in September 1991, Mapa quit his
part-time endeavor with DZRC, as attested to by the Office of Supervisor/Traffic Manager Ignacio
Casi in an Affidavit dated June 10, 1992, to wit:

1. I am the Office Supervisor/Traffic Manager of DZRC-AM;

2. Sometime in May, 1990 Simeon Jun Mapa went to my office inside our radio station. He
asked me if he could be accomodated as Radio Reporter of DZRC, as he was dismissed
from DZGB. I referred him to Larry Brocales, our Station Manager then;
3. Larry Brocales told Jun Mapa that he cannot be accomodated because he has no
clearance from DZGB. Jun Mapa, almost teary eyed, pleaded to Larry Brocales that he be
accomodated as volunteer reporter, that is, he will not receive any salary but that he
intimated that he be allowed to look for sponsors whose business establishment, for a fee,
will have to be mentioned after every report is made. Larry Brocales took pity on Jun Mapa
and accomodated him;
4. Jun Mapa, just like the other volunteer reporters, was not obliged to render field reports, at
a particular time and in a particular program. They render report as they wish or see fit;
5. The management (DZRC) does not collect anything from the sponsors of Jun Mapa. They
(sponsors) pay directly to him;
6. Being the Office Supervisor, I know for a fact that Jun Mapa seldom renders report on the
air. He has no assigned program either. He was on and off the air, so to speak;
7. Finally, some time in September, 1991, Jun Mapa told me that he is quitting already
because his sponsors were no longer paying him of his monthly contract with
them. (Underscoring supplied)(See Annex G, Petition for Certiorari);

11. Subsequently, Mapa sent a letter dated October 7, 1991 to Ms. Diana C. Gozum, General
Manager of petitioner FBN. In the said letter, Mapa wrote and admitted that:

50
I am [sic] Mr. Simeon Mapa, Jr. respectfully request your good office to reconsider my previous
application submitted last March 1990 as a reporter of DZRC AM.

May I inform you that since the submission of such application I worked until September 6, 1991 for
free services [sic]. Hoping that Ill be given the chance to be recognized as a regular reporter.

With this, I respectfully wish to follow up my application for recognition.

May I also inform you that the case I have with my previous job with the other company has
commenced.

Attached herewith is my resume.

I am once again submitting myself for an interview with your office at a time convenient to you.

Thank you.

(See Annex H, Petition for Certiorari);

12. Reacting to the letter mentioned in the immediately preceding paragraph, DZRC favorably acted
upn the application of Mapa and accepted him as a radio reporter on January 16, 1992;

13. On February 27, 1992, Mapa resigned as a radio reporter in order to run for an elective office in
the May 1992 elections and was paid all his salaries and benefits for the period of his employment
commencing from January 16, 1992 until February 27, 1992;

14. Having no work to do and no employment in sight, Mapa filed a complaint against FBN-DZRC on
August 1992, claiming the payment of salaries, premium pay, holiday pay as well as 13 th month pay
for the period 28 February 1990 until January 16, 1992;

On October 13, 1993, Labor Arbiter Emeterio Ranola dismissed the complaint for lack of merit,
finding that no employer-employee relationship existed between Mapa and DZRC during the period
March 11, 1990 to February 16, 1992. [9]
Findings of the NLRC
In holding that there was an employer-employee relationship, the NLRC set aside the labor
arbiters findings:

In his appeal, complainant insists that there was an employer-employee relationship between him and
the respondent. In support of his contention, he cites the payroll for February 16 to 29, 1992, the ID
card issued to him as employee and regular reporter by the respondent: [sic] the program schedules
of DZRC showing the regular program of the station indicating his name: [sic] the affidavit of Antonio
Llarena, program supervisor of DZRCM, stating that he [was] a regular reporter underhis supervision
and the list of reporting gadgets issued to regular reporter.

The existence of employer employee relationship is determined by the following elements, namely: 1)
selection and engagement of the employee; 2) the payment of wages; 3) the power of dismissal; and
4) the power to control employees conduct although the latter is the most important element. (Rosario
Brothers, Inc. vs. Ople, 131 SCRA 72)

51
Considering the totality of the evidence adduced by the parties, we are of the opinion that the
complainant is a regular reporter of the respondent. Firstly, the work of the complainant is being
supervised by the program supervisor of the respondent; secondly, the complainant uses the
reporting gadgets of the respondent. Thirdly, he has no reporting gadgets of his own; Fourthly, the
program schedule is prepared by the respondent; and Lastly, he was paid salary for the period for the
period from February 16 to 29, 1992 and covered under the Social Security System. There is no
showing in the record that his work from February 16, 1992 was different from his work before the
said period.[10]

The NLRC subsequently denied petitioners motion for reconsideration [11] on November 9,
1994.[12] Hence this petition.[13]
Issue
Petitioner alleges that Public Respondent NLRC committed grave abuse of discretion as
follows:[14]
I

xxx in declaring Mapa as an employee of petitioner before January 16, 1992. The test of an
employer-employee relationship was erroneously applied to the facts of this case.

II

xxx in disregarding significant facts which clearly and convincingly show that the private respondent
was not an employee of the petitioner before 16 January 1992.

In the main, the issue in this case is whether private respondent was an employee of petitioner for
the period March 11, 1990 to January 15, 1992.
The Court’s Ruling
The petition is meritorious.
Main Issue:
Private Respondent Was Not an Employee During the Period in Controversy
As a rule, the NLRCs findings are accorded great respect, even finality, by this Court. This rule,
however, is not without qualification.This Court held in Jimenez v. NLRC:[15]

The review of labor cases elevated to us on certiorari is confined to questions of jurisdiction or grave
abuse of discretion.[16] As a rule, this Court does not review supposed errors in the decision of the
NLRC which raise factual issues, because factual finding of agencies exercising quasi-judicial
functions are accorded not only respect but even finality, aside from the consideration that the Court
is essentially not a trier of facts. However, in the case at bar, a review of the records thereof with an
assessment of the facts is necessary since the factual findings of the NLRC and the labor arbiter are
at odds with each other.[17]

In the present case, a review of the factual findings of the public respondent is in order, for said
findings differ from those of the labor arbiter. [18] Worse the facts alleged by the private respondent
and relied upon by the public respondent do not prove an employer-employee relationship.[19] In this
light, we will review and overrule the findings of the NLRC.

52
 The following are generally considered in the determination of the existence of an employer-
employee relationship: (1) the manner of selection and engagement, (2) the payment of wages, (3)
the presence or absence of the power of dismissal, and (4) the presence or absence of the power of
control; of these four, the last one is the most important. [20]
Engagement and Payment of Wages
Let us consider the circumstances of the private respondents engagement in DZRC before
January 16, 1992. Petitioner did not act on his application for employment as a radio reporter
because private respondent admittedly failed to present a clearance from his former employer.
Nevertheless, private respondent volunteered his services, knowing that he would not be paid wages,
and that he had to rely on financial sponsorships of business establishments that would be advertised
in his reports. In other words, private respondent willingly acted as a volunteer reporter, fully
cognizant that he was not an employee and that he would not receive any compensation directly from
the petitioner, but only from his own advertising sponsors.
The nature of private respondents engagement is evident from the affidavit of Allan Almario and
Elmer Anonuevo who served under identical circumstances. The two affirmed the following:

1. We personally know Simeon Jun Mapa, a volunteer reporter at DZRC just like us;

2. As a volunteer reporters we know [sic] that we will not receive any salary or allowance from DZRC
because our work was purely voluntary;

3. As incentive for us, the management of DZRC allowed us to get our own sponsors whose business
establishments we mention every after [sic] field report was made by us;

xxx xxx xxx

4. During our stint as volunteer reporters we had several sponsors each who paid us P300.00 per
month.[21]

The above statement is corroborated by Carlito Baylon, one of private respondents advertising
sponsors. In his affidavit dated June 10, 1993, he averred:

2. I personally know Simeon Jun Mapa.

Sometime in May, 1990, he went to me and asked if I could be one of his sponsors because he was
accomodated by DZRC as volunteer reporter. He explained to me that, he will not be receiving any
salary from DZRC[,] hence, he was soliciting my support;

3. Taking pity on him, I agreed to be one of his sponsors. The condition was, I will have to pay
himP300.00/month. In exchange thereto, he will have to mention the name of my restaurant
everytime he renders a report on the air;

4. My sponsorship lasted for about five (5) months after which I discontinued it when I rarely heard
Jun Mapa in DZRC program.[22]

Indeed, private respondent himself admitted tat he worked under the said circumstances. The
bio-data sheet signed by Mapa himself, in which he acknowledged that he was not an employee,
states in part:
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Work experiences:

DWGW . Reporter/Newscaster 1970-1980

DZGB . Reporter 1983-1990

DZRC . Reporter 1990-1991

for free not recognized due to no appointment.[23]

(Underscoring supplied.)

In his letter dated October 7, 1991, which he sent to the general manager of Filipinas
Broadcasting Network (owner of DZRC), Mapa again acknowledged in the following words that he
was not an employee:

I am [sic] Mr. Simeon Mapa, Jr. respectfully request your good office to reconsider my previous
application submitted last March 1990 as a reporter of DZRC AM.

May I inform you that since the submission of such application I worked until September 6, 1991 for
free of services [sic]. Hoping that Ill be given the chance to be recognized as a regular reporter.

With this, I respectfully wish to follow up my application for recognition. (Italics supplied.)

There is no indication that these two circumstances were made under duress. Indeed, private
respondent himself did not dispute their voluntariness or veracity. It is clear that he rendered services
knowing that he was not an employee. Aware that he would not be paid wages, he described himself
as a volunteer reporter who was, as evident from his letter, hoping for the chance to be recognized as
a regular reporter. In fact, petitioner acted favorably on this letter and accepted his application as an
employee effective on January 16, 1992.
Power of Dismissal
Likewise, the evidence on record shows that petitioner did not exercise the power to dismiss
private respondent during the period in question. in September 1991, Private Respondent Mapa
ceased acting as a volunteer reporter, not because he was fired , but because he stopped sending
his reports. Ignacio Casi, Office Supervisor of DZRC, declared in his affidavit that Mapa told him that
he [was] quitting already because his sponsors were no longer paying him of [sic] his monthly
contract with them. Mapa did not controvert this statement. In fact, his aforesaid letter of October 17,
1991 expressed his hope of being given the chance to be recognized as a regular reporter. Private
respondents attitude in said letter is inconsistent with the notion that he had been dismissed.
Mapa Was Not Subject to Control of Petitioner
The most crucial test the control test demonstrates all too clearly the absence of an employee-
employee relationship. No one at the DZRC had the power to regulate or control private respondents
activities or inputs. Unlike the regular reporters, he was not subject to any supervision by petitioner or
its officials. Regular reporters are required by the petitioner to adhere to a program schedule
which delineates the time when they are to render their reports, as well as the topic to be reported
upon. The substance of their reports are [sic] oftentimes screened by the station prior to [their] actual
airing. In contrast, volunteer reporters are never given such a program schedule but are merely
advised to inform the station of the reports they would make from time to time. [24]

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 Indeed, DZRC, the petitioners radio station , exercised no editorial rights over his reports. He had
no fixed day or time for making his reports; in fact, he was not required to report anything at all.
Whether he would air anything depended entirely on him and his convenience.
The absence of petitioners control over private respondent is manifest from the sworn statement
of the traffic manager of petitioner, Ignacio Casi, who deposed in part:
xxx xxx xxx

4. Jun Mapa, just like the other volunteer reporters, was not obliged to render field reports, at a
particular time and in a particular program. They render report as they wish or see fit;

5. The management (DZRC) does not collect anything from the sponsors of Jun Mapa. They
(sponsors) pay directly to him;

6. Being the Office Supervisor, I know for a fact that Jun Mapa seldom renders report on the air. He
has no assigned program either. He was on and off the air, so to speak;

7. Finally, some time in September, 1991, Jun Mapa told me that he is quitting already because his
sponsors were no longer paying him of his monthly contract with them.

In Encyclopedia Britannica (Philippines) Inc., v. NLRC, [25] we reiterated that there could be no
employer-employee relationship where the element of control is absent; where a person who works
for another does so more or less at his own pleasure and is not subject to definite hours or conditions
of work[;] and in turn is compensated according to the result of his efforts and not the amount thereof,
we should not find that the relationship of employer-employee exists. In the present case, private
respondent worked at his own pleasure and [was] not subject to definite hours or conditions of work.

Evidence Found by NLRC Not Applicable

[26]
In its two-page holding that there was an employer-employee relationship, the NLRC relied on
the following:

(1) the payroll for February 16 to 29, 1992,

(2) the ID card issued to him as employee and regular reporter by the respondent,

(3) the program schedules of DZRC showing the regular program of the station indicating
his name:

(4) the affidavit of Antonio Llarena, program supervisor of DZRC, stating that he [was] under
his supervision, and

(5) the list of reporting gadgets issued to a regular reporter.

Other than the items enumerated above, no other document was considered by the NLRC. In
other words, its conclusion was based solely on these alleged pieces of evidence. It clearly
committed grave abuse of discretion in its factual findings, because all the above documents relate to
the period January 16, 1992 to February 28, 1992 and not to the period March 11, 1990 to January
15, 1992 which are inclusive dates in controversy.

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 The payroll[27] from February 16, 1992 to February 27, 1992 does not demonstrate that private
respondent was an employee prior to said period. Lest it be forgotten, the question in this case
pertains to the status of private respondent from March 11, 1990 to January 15, 1992. The said
payroll may prove that private respondent was an employee during said days in February 1992, but
not for the period which is the subject of the present controversy.
Furthermore, neither the identification cards nor the SSS number printed at the back thereof
indicate the date of issuance. Likewise, the SSS number does not show that he was a member during
the period in controversy; much less, that he became so by reason of his employment with petitioner.
Similarly inapplicable is the program schedule [28] which allegedly showed the regular program of
the station and indicated the name of private respondent as an employee. The document is a mere
photocopy of a typewritten schedule. There is absolutely no indicium of its authenticity. Moreover, it is
undated; hence, it does not indicate whether such schedule pertained to the period in disupte, that is,
March 11, 1990 to January 15, 1992. Worse, the heading thereof was entitled Radio DZRC
Programming Proposal. [italics supplied] A proposal is put forth merely for consideration and
acceptance.[29] It cannot, by itself, prove that such program was implemented and that private
respondent acted as an employee of petitioner.
Neither does the list of returned gadgets support the conclusion of the NLRC. It must be stressed
that such gadgets were essential to enable the private respondent to access the specific radio
frequency and fcailities of the radio station. Being exclusive properties of the radio station, such
gadgets could not have been purchased, as they were not commercially available. In any event, the
list of returned gadgets was dated February 27, 1997 -- again, a date not in controversy. Such
document, by itself, does not prove that private respondent was an employee from March 20, 1990 to
January 15, 1992.
The affidavit of Antonio Llarena[30], an employee of DZRC, stating that the private respondent
was under his supervision, is vague, even misleading; it declaring merely that Llarena was in charge
of said respondent. Such language could not be construed to mean that he exercised supervision and
control over private respondent.
Indubitably, the NLRC based its findings of employer-employee relationship from the
circumstances attendant when private respondent was already a regular employee. Uncontroverted is
the statement that the private respondent was a regular employee from January 16, 1992 to February
28, 1992, for which period he received all employee benefits. But such period, it must be stressed
again, is not covered by private respondents complaint.
In sum, the evidence, which Public Respondent NLRC relies upon, does not justify the reversal of
the labor arbiters ruling which, in turn, we find amply supported by the records. Clearly, private
respondent was not an employee during the period in question.
WHEREFORE, the petition is hereby GRANTED and the assailed Decision and Resolution are
hereby SET ASIDE. The Order of the Labor Arbiter dated October 13, 1993 dismissing the case for
lack of merit is hereby REINSTATED. No costs.
SO ORDERED.
Davide,Jr., (Chairman), Bellosillo, Vitug, and Quisumbing, JJ., concur.

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