In the case of Insular Life v. NLRC, the Supreme Court ruled that Melecio Basiao was not an employee but an independent contractor under his contract with the insurance company, which allowed him significant freedom in how he conducted his business. The court emphasized that the company's rules merely served as guidelines and did not create an employer-employee relationship. Consequently, Basiao's claim for unpaid commissions should have been pursued in a civil action rather than through labor jurisdiction, leading to the dismissal of his complaint.

1. Insular Life v. NLRC (Nov. 15, 1989)
FACTS:
Insular Life (company) and Basiao entered into a contract by which Basiao was authorized to solicit for insurance in accordance with
the rules of the company. He would also receive compensation, in the form of commissions. The contract also contained the relations
of the parties, duties of the agent and the acts prohibited to him including the modes of termination. After 4 years, the parties
entered into another contract – an Agency Manager’s Contact – and to implement this end of it, Basiao organized an agency while
concurrently fulfilling his commitment under the first contract. The company terminated the Agency Manager’s Contract. Basiao sued
the company in a civil action. Thus, the company terminated Basiao’s engagement under the first contract and stopped payment
of his commissions.
ISSUE:
W/N Basiao had become the company’s employee by virtue of the contract, thereby placing his claim for unpaid commissions
HELD:
No. Rules and regulations governing the conduct of the business are provided for in the Insurance Code. These rules merely serve as
guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it. Its aim is only to promote the result, thereby creating no employer-employee relationship. It is usual and expected for
an insurance company to promulgate a set of rules to guide its commission agents in selling its policies which prescribe the
qualifications of persons who may be insured. 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 justifiable be said to establish an employer-
employee relationship between Basiao and the company. The respondents limit themselves to pointing out that Basiao’s contract
with the company bound him observe and conform to such rules.
No showing that such rules were in fact promulgated which effectivelycontrolled or restricted his choice of methods of selling
insurance. Therefore, Basiao was not an employee of the petitioner, but a commission agent, an independent contract whose claim
for unpaid commissions should have been litigated in an ordinary civil action. Wherefore, the complain of Basiao is dismissed.
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.:
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

2. 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 directed payment of his unpaid commissions "... equivalent to the balance of the first year's
premium remaining unpaid, at the time of his termination, of all the insurance policies solicited by ... (him) in favor of the
respondent company ..." plus 10% attorney's fees. 6
This decision was, on appeal by the Company, affirmed by the National Labor Relations Commission. 7
Hence, the present petition
for certiorari and prohibition.
The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the Company's employee by virtue of the
contract invoked by him, thereby placing his claim for unpaid commissions within the original and exclusive jurisdiction of the Labor
Arbiter under the provisions of Section 217 of the Labor Code, 8
or, contrarily, as the Company would have it, that under said
contract Basiao's status was that of an independent contractor whose claim was thus cognizable, not by the Labor Arbiter in a labor
case, but by the regular courts in an ordinary civil action.
The Company's thesis, that no employer-employee relation in the legal and generally accepted sense existed between it and Basiao,
is drawn from the terms of the contract they had entered into, which, either expressly or by necessary implication, made Basiao the
master of his own time and selling methods, left to his judgment the time, place and means of soliciting insurance, set no
accomplishment quotas and compensated him on the basis of results obtained. He was not bound to observe any schedule of
working hours or report to any regular station; he could seek and work on his prospects anywhere and at anytime he chose to, and
was free to adopt the selling methods he deemed most effective.
Without denying that the above were indeed the expressed implicit conditions of Basiao's contract with the Company, the
respondents contend that they do not constitute the decisive determinant of the nature of his engagement, invoking precedents to
the effect that the critical feature distinguishing the status of an employee from that of an independent contractor is control, that is,
whether or not the party who engages the services of another has the power to control the latter's conduct in rendering such
services. Pursuing the argument, the respondents draw attention to the provisions of Basiao's contract obliging him to "... observe
and conform to all rules and regulations which the Company may from time to time prescribe ...," as well as to the fact that the
Company prescribed the qualifications of applicants for insurance, processed their applications and determined the amounts of
insurance cover to be issued as indicative of the control, which made Basiao, in legal contemplation, an employee of the Company. 9
It is true that the "control test" expressed in the following pronouncement of the Court in the 1956 case of Viana vs. Alejo Al-
Lagadan 10
... In determining the existence of employer-employee relationship, the following elements are generally
considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; and (4) the power to control the employees' conduct — although the latter is the most important
element (35 Am. Jur. 445). ...
has been followed and applied in later cases, some fairly recent. 11
Indeed, it is without question a valid test of the character of a
contract or agreement to render service. It should, however, be obvious that not every form of control that the hiring party reserves
to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an
employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the
recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare

3. contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance
of the engagement.
Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it. The distinction acquires particular
relevance in the case of an enterprise affected with public interest, as is the business of insurance, and is on that account subject to
regulation by the State with respect, not only to the relations between insurer and insured but also to the internal affairs of the
insurance company. 12
Rules and regulations governing the conduct of the business are provided for in the Insurance Code and
enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules
to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such
a character are the rules which prescribe the qualifications of persons who may be insured, subject insurance applications to
processing and approval by the Company, and also reserve to the Company the determination of the premiums to be paid and the
schedules of payment. None of these really invades the agent's contractual prerogative to adopt his own selling methods or to sell
insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee relationship between
him and the company.
There is no dearth of authority holding persons similarly placed as respondent Basiao to be independent contractors, instead of
employees of the parties for whom they worked. In Mafinco Trading Corporation vs. Ople,13
the Court ruled that a person engaged to
sell soft drinks for another, using a truck supplied by the latter, but with the right to employ his own workers, sell according to his
own methods subject only to prearranged routes, observing no working hours fixed by the other party and obliged to secure his own
licenses and defray his own selling expenses, all in consideration of a peddler's discount given by the other party for at least 250
cases of soft drinks sold daily, was not an employee but an independent contractor.
In Investment Planning Corporation of the Philippines us. Social Security System 14
a case almost on all fours with the present one,
this Court held that there was no employer-employee relationship between a commission agent and an investment company, but
that the former was an independent contractor where said agent and others similarly placed were: (a) paid compensation in the form
of commissions based on percentages of their sales, any balance of commissions earned being payable to their legal representatives
in the event of death or registration; (b) required to put up performance bonds; (c) subject to a set of rules and regulations
governing the performance of their duties under the agreement with the company and termination of their services for certain
causes; (d) not required to report for work at any time, nor to devote their time exclusively to working for the company nor to
submit a record of their activities, and who, finally, shouldered their own selling and transportation expenses.
More recently, in Sara vs. NLRC, 15
it was held that one who had been engaged by a rice miller to buy and sell rice and palay without
compensation except a certain percentage of what he was able to buy or sell, did work at his own pleasure without any supervision
or control on the part of his principal and relied on his own resources in the performance of his work, was a plain commission agent,
an independent contractor and not an employee.
The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to
such rules and regulations as the latter might from time to time prescribe. No showing has been made that any such rules or
regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or restricted his
choice of methods — or the methods themselves — of selling insurance. Absent such showing, the Court will not speculate that any
exceptions or qualifications were imposed on the express provision of the contract leaving Basiao "... free to exercise his own
judgment as to the time, place and means of soliciting insurance."
The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-five years.
Whatever this is meant to imply, the obvious reply would be that what is germane here is Basiao's status under the contract of July
2, 1968, not the length of his relationship with the Company.
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission
agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action. The
Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the respondent
NLRC in affirming the Arbiter's decision. This conclusion renders it unnecessary and premature to consider Basiao's claim for
commissions on its merits.
WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set aside, and that complaint of private
respondent Melecio T. Basiao in RAB Case No. VI-0010-83 is dismissed. No pronouncement as to costs.
SO ORDERED.
Cruz, Gancayco, Griño-Aquino, and Medialdea, JJ., concur.

4. PT&T vs. NLRC
272 SCRA 596
FACTS:
PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de Guzman specifically as “Supernumerary Project Worker”,
for a fixed period from November 21, 1990 until April 20, 1991 as reliever for C.F. Tenorio who went on maternity leave. She was
again invited for employment as replacement of Erlina F. Dizon who went on leave on 2 periods, from June 10, 1991 to July 1, 1991
and July 19, 1991 to August 8, 1991.
On September 2, 1991, de Guzman was again asked to join PT&T as a probationary employee where probationary period will cover
150 days. She indicated in the portion of the job application form under civil status that she was single although she had contracted
marriage a few months earlier. When petitioner learned later about the marriage, its branch supervisor, Delia M. Oficial, sent de
Guzman a memorandum requiring her to explain the discrepancy. Included in the memorandum, was a reminder about the
company’s policy of not accepting married women for employment. She was dismissed from the company effective January 29,
1992. Labor Arbiter handed down decision on November 23, 1993 declaring that petitioner illegally dismissed De Guzman, who had
already gained the status of a regular employee. Furthermore, it was apparent that she had been discriminated on account of her
having contracted marriage in violation of company policies.
ISSUE: Whether the alleged concealment of civil status can be grounds to terminate the services of an employee.
HELD:
Article 136 of the Labor Code, one of the protective laws for women, explicitly prohibits discrimination merely by reason of marriage
of a female employee. It is recognized that company is free to regulate manpower and employment from hiring to firing, according
to their discretion and best business judgment, except in those cases of unlawful discrimination or those provided by law.
PT&T’s policy of not accepting or disqualifying from work any woman worker who contracts marriage is afoul of the right against
discrimination provided to all women workers by our labor laws and by our Constitution. The record discloses clearly that de
Guzman’s ties with PT&T were dissolved principally because of the company’s policy that married women are not qualified for
employment in the company, and not merely because of her supposed acts of dishonesty.
The government abhors any stipulation or policy in the nature adopted by PT&T. As stated in the labor code:
“ART. 136. Stipulation against marriage. — It shall be unlawful for an employer to require as a condition of employment or
continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a
woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a
woman employee merely by reason of marriage.”
The policy of PT&T is in derogation of the provisions stated in Art.136 of the Labor Code on the right of a woman to be free from any
kind of stipulation against marriage in connection with her employment and it likewise is contrary to good morals and public policy,
depriving a woman of her freedom to choose her status, a privilege that is inherent in an individual as an intangible and inalienable
right. The kind of policy followed by PT&T strikes at the very essence, ideals and purpose of marriage as an inviolable social
institution and ultimately, family as the foundation of the nation. Such policy must be prohibited in all its indirect, disguised or
dissembled forms as discriminatory conduct derogatory of the laws of the land not only for order but also imperatively required.
G.R. No. 118978 May 23, 1997
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, * petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE GUZMAN, respondents.
REGALADO, J.:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine Telegraph and Telephone Company (hereafter, PT & T)
invokes the alleged concealment of civil status and defalcation of company funds as grounds to terminate the services of an
employee. That employee, herein private respondent Grace de Guzman, contrarily argues that what really motivated PT & T to
terminate her services was her having contracted marriage during her employment, which is prohibited by petitioner in its company
policies. She thus claims that she was discriminated against in gross violation of law, such a proscription by an employer being
outlawed by Article 136 of the Labor Code.
Grace de Guzman was initially hired by petitioner as a reliever, specifically as a "Supernumerary Project Worker," for a fixed period
from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave.1
Under the Reliever Agreement
which she signed with petitioner company, her employment was to be immediately terminated upon expiration of the agreed period.
Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondent's services as reliever
were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods. 2
After
August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated.
On September 2, 1991, private respondent was once more asked to join petitioner company as a probationary employee, the
probationary period to cover 150 days. In the job application form that was furnished her to be filled up for the purpose, she

5. indicated in the portion for civil status therein that she was single although she had contracted marriage a few months earlier, that
is, on May 26, 1991. 3
It now appears that private respondent had made the same representation in the two successive reliever agreements which she
signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor in Baguio
City, Delia M. Oficial, sent to private respondent a memorandum dated January 15, 1992 requiring her to explain the discrepancy. In
that memorandum, she was reminded about the company's policy of not accepting married women for employment. 4
In her reply letter dated January 17, 1992, private respondent stated that she was not aware of PT&T's policy regarding married
women at the time, and that all along she had not deliberately hidden her true civil status. 5
Petitioner nonetheless remained
unconvinced by her explanations. Private respondent was dismissed from the company effective January 29, 1992, 6
which she
readily contested by initiating a complaint for illegal dismissal, coupled with a claim for non-payment of cost of living allowances
(COLA), before the Regional Arbitration Branch of the National Labor Relations Commission in Baguio City.
At the preliminary conference conducted in connection therewith, private respondent volunteered the information, and this was
incorporated in the stipulation of facts between the parties, that she had failed to remit the amount of P2,380.75 of her collections.
She then executed a promissory note for that amount in favor of petitioner 7
. All of these took place in a formal proceeding and with
the agreement of the parties and/or their counsel.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision declaring that private respondent, who had
already gained the status of a regular employee, was illegally dismissed by petitioner. Her reinstatement, plus payment of the
corresponding back wages and COLA, was correspondingly ordered, the labor arbiter being of the firmly expressed view that the
ground relied upon by petitioner in dismissing private respondent was clearly insufficient, and that it was apparent that she had been
discriminated against on account of her having contracted marriage in violation of company rules.
On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor arbiter and, in its decision
dated April 29, 1994, it ruled that private respondent had indeed been the subject of an unjust and unlawful discrimination by her
employer, PT & T. However, the decision of the labor arbiter was modified with the qualification that Grace de Guzman deserved to
be suspended for three months in view of the dishonest nature of her acts which should not be condoned. In all other respects, the
NLRC affirmed the decision of the labor arbiter, including the order for the reinstatement of private respondent in her employment
with PT & T.
The subsequent motion for reconsideration filed by petitioner was rebuffed by respondent NLRC in its resolution of November 9,
1994, hence this special civil action assailing the aforestated decisions of the labor arbiter and respondent NLRC, as well as the
denial resolution of the latter.
1. Decreed in the Bible itself is the universal norm that women should be regarded with love and respect but, through the ages, men
have responded to that injunction with indifference, on the hubristic conceit that women constitute the inferior sex. Nowhere has that
prejudice against womankind been so pervasive as in the field of labor, especially on the matter of equal employment opportunities
and standards. In the Philippine setting, women have traditionally been considered as falling within the vulnerable groups or types of
workers who must be safeguarded with preventive and remedial social legislation against discriminatory and exploitative practices in
hiring, training, benefits, promotion and retention.
The Constitution, cognizant of the disparity in rights between men and women in almost all phases of social and political life,
provides a gamut of protective provisions. To cite a few of the primordial ones, Section 14, Article II 8
on the Declaration of Principles
and State Policies, expressly recognizes the role of women in nation-building and commands the State to ensure, at all times, the
fundamental equality before the law of women and men. Corollary thereto, Section 3 of Article XIII 9
(the progenitor whereof dates
back to both the 1935 and 1973 Constitution) pointedly requires the State to afford full protection to labor and to promote full
employment and equality of employment opportunities for all, including an assurance of entitlement to tenurial security of all
workers. Similarly, Section 14 of Article XIII 10
mandates that the State shall protect working women through provisions for
opportunities that would enable them to reach their full potential.
2. Corrective labor and social laws on gender inequality have emerged with more frequency in the years since the Labor Code was
enacted on May 1, 1974 as Presidential Decree No. 442, largely due to our country's commitment as a signatory to the United
Nations Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). 11
Principal among these laws are Republic Act No. 6727 12
which explicitly prohibits discrimination against women with respect to
terms and conditions of employment, promotion, and training opportunities; Republic Act No. 695513
which bans the "mail-order-
bride" practice for a fee and the export of female labor to countries that cannot guarantee protection to the rights of women
workers; Republic Act No. 7192 14
also known as the "Women in Development and Nation Building Act," which affords women equal
opportunities with men to act and to enter into contracts, and for appointment, admission, training, graduation, and commissioning
in all military or similar schools of the Armed Forces of the Philippines and the Philippine National Police; Republic Act No.
7322 15
increasing the maternity benefits granted to women in the private sector; Republic Act No. 7877 16
which outlaws and
punishes sexual harassment in the workplace and in the education and training environment; and Republic Act No. 8042, 17
or the
"Migrant Workers and Overseas Filipinos Act of 1995," which prescribes as a matter of policy, inter alia, the deployment of migrant
workers, with emphasis on women, only in countries where their rights are secure. Likewise, it would not be amiss to point out that
in the Family Code, 18
women's rights in the field of civil law have been greatly enhanced and expanded.

6. In the Labor Code, provisions governing the rights of women workers are found in Articles 130 to 138 thereof. Article 130 involves
the right against particular kinds of night work while Article 132 ensures the right of women to be provided with facilities and
standards which the Secretary of Labor may establish to ensure their health and safety. For purposes of labor and social legislation,
a woman working in a nightclub, cocktail lounge, massage clinic, bar or other similar establishments shall be considered as an
employee under Article 138. Article 135, on the other hand, recognizes a woman's right against discrimination with respect to terms
and conditions of employment on account simply of sex. Finally, and this brings us to the issue at hand, Article 136 explicitly
prohibits discrimination merely by reason of the marriage of a female employee.
3. Acknowledged as paramount in the due process scheme is the constitutional guarantee of protection to labor and security of
tenure. Thus, an employer is required, as a condition sine qua non prior to severance of the employment ties of an individual under
his employ, to convincingly establish, through substantial evidence, the existence of a valid and just cause in dispensing with the
services of such employee, one's labor being regarded as constitutionally protected property.
On the other hand, it is recognized that regulation of manpower by the company falls within the so-called management prerogatives,
which prescriptions encompass the matter of hiring, supervision of workers, work assignments, working methods and assignments,
as well as regulations on the transfer of employees, lay-off of workers, and the discipline, dismissal, and recall of employees. 19
As
put in a case, an employer is free to regulate, according to his discretion and best business judgment, all aspects of employment,
"from hiring to firing," except in cases of unlawful discrimination or those which may be provided by law. 20
In the case at bar, petitioner's policy of not accepting or considering as disqualified from work any woman worker who contracts
marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less
than the Constitution. Contrary to petitioner's assertion that it dismissed private respondent from employment on account of her
dishonesty, the record discloses clearly that her ties with the company were dissolved principally because of the company's policy
that married women are not qualified for employment in PT & T, and not merely because of her supposed acts of dishonesty.
That it was so can easily be seen from the memorandum sent to private respondent by Delia M. Oficial, the branch supervisor of the
company, with the reminder, in the words of the latter, that "you're fully aware that the company is not accepting married women
employee (sic), as it was verbally instructed to you." 21
Again, in the termination notice sent to her by the same branch supervisor,
private respondent was made to understand that her severance from the service was not only by reason of her concealment of her
married status but, over and on top of that, was her violation of the company's policy against marriage ("and even told you that
married women employees are not applicable [sic] or accepted in our company.") 22
Parenthetically, this seems to be the curious
reason why it was made to appear in the initiatory pleadings that petitioner was represented in this case only by its said supervisor
and not by its highest ranking officers who would otherwise be solidarily liable with the corporation. 23
Verily, private respondent's act of concealing the true nature of her status from PT & T could not be properly characterized as willful
or in bad faith as she was moved to act the way she did mainly because she wanted to retain a permanent job in a stable company.
In other words, she was practically forced by that very same illegal company policy into misrepresenting her civil status for fear of
being disqualified from work. While loss of confidence is a just cause for termination of employment, it should not be simulated. 24
It
must rest on an actual breach of duty committed by the employee and not on the employer's caprices. 25
Furthermore, it should
never be used as a subterfuge for causes which are improper, illegal, or unjustified. 26
In the present controversy, petitioner's expostulations that it dismissed private respondent, not because the latter got married but
because she concealed that fact, does have a hollow ring. Her concealment, so it is claimed, bespeaks dishonesty hence the
consequent loss of confidence in her which justified her dismissal.
Petitioner would asseverate, therefore, that while it has nothing against marriage, it nonetheless takes umbrage over the
concealment of that fact. This improbable reasoning, with interstitial distinctions, perturbs the Court since private respondent may
well be minded to claim that the imputation of dishonesty should be the other way around.
Petitioner would have the Court believe that although private respondent defied its policy against its female employees contracting
marriage, what could be an act of insubordination was inconsequential. What it submits as unforgivable is her concealment of that
marriage yet, at the same time, declaring that marriage as a trivial matter to which it supposedly has no objection. In other words,
PT & T says it gives its blessings to its female employees contracting marriage, despite the maternity leaves and other benefits it
would consequently respond for and which obviously it would have wanted to avoid. If that employee confesses such fact of
marriage, there will be no sanction; but if such employee conceals the same instead of proceeding to the confessional, she will be
dismissed. This line of reasoning does not impress us as reflecting its true management policy or that we are being regaled with
responsible advocacy.
This Court should be spared the ennui of strained reasoning and the tedium of propositions which confuse through less than candid
arguments. Indeed, petitioner glosses over the fact that it was its unlawful policy against married women, both on the aspects of
qualification and retention, which compelled private respondent to conceal her supervenient marriage. It was, however, that very
policy alone which was the cause of private respondent's secretive conduct now complained of. It is then apropos to recall the
familiar saying that he who is the cause of the cause is the cause of the evil caused.
Finally, petitioner's collateral insistence on the admission of private respondent that she supposedly misappropriated company funds,
as an additional ground to dismiss her from employment, is somewhat insincere and self-serving. Concededly, private respondent
admitted in the course of the proceedings that she failed to remit some of her collections, but that is an altogether different story.
The fact is that she was dismissed solely because of her concealment of her marital status, and not on the basis of that supposed
defalcation of company funds. That the labor arbiter would thus consider petitioner's submissions on this supposed dishonesty as a

7. mere afterthought, just to bolster its case for dismissal, is a perceptive conclusion born of experience in labor cases. For, there was
no showing that private respondent deliberately misappropriated the amount or whether her failure to remit the same was through
negligence and, if so, whether the negligence was in nature simple or grave. In fact, it was merely agreed that private respondent
execute a promissory note to refund the same, which she did, and the matter was deemed settled as a peripheral issue in the labor
case.
Private respondent, it must be observed, had gained regular status at the time of her dismissal. When she was served her walking
papers on January 29, 1992, she was about to complete the probationary period of 150 days as she was contracted as a
probationary employee on September 2, 1991. That her dismissal would be effected just when her probationary period was winding
down clearly raises the plausible conclusion that it was done in order to prevent her from earning security of tenure. 27
On the other
hand, her earlier stints with the company as reliever were undoubtedly those of a regular employee, even if the same were for fixed
periods, as she performed activities which were essential or necessary in the usual trade and business of PT & T. 28
The primary
standard of determining regular employment is the reasonable connection between the activity performed by the employee in
relation to the business or trade of the employer. 29
As an employee who had therefore gained regular status, and as she had been dismissed without just cause, she is entitled to
reinstatement without loss of seniority rights and other privileges and to full back wages, inclusive of allowances and other benefits
or their monetary equivalent. 30
However, as she had undeniably committed an act of dishonesty in concealing her status, albeit
under the compulsion of an unlawful imposition of petitioner, the three-month suspension imposed by respondent NLRC must be
upheld to obviate the impression or inference that such act should be condoned. It would be unfair to the employer if she were to
return to its fold without any sanction whatsoever for her act which was not totally justified. Thus, her entitlement to back wages,
which shall be computed from the time her compensation was withheld up to the time of her actual reinstatement, shall be reduced
by deducting therefrom the amount corresponding to her three months suspension.
4. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT & T. The Labor Code
state, in no uncertain terms, as follows:
Art. 136. Stipulation against marriage. — It shall be unlawful for an employer to require as a condition of
employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly
that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage.
This provision had a studied history for its origin can be traced to Section 8 of Presidential Decree No. 148, 31
better known as the
"Women and
Child Labor Law," which amended paragraph (c), Section 12 of Republic Act No. 679, 32
entitled "An Act to Regulate the Employment
of Women and Children, to Provide Penalties for Violations Thereof, and for Other Purposes." The forerunner to Republic Act No. 679,
on the other hand, was Act No. 3071 which became law on March 16, 1923 and which regulated the employment of women and
children in shops, factories, industrial, agricultural, and mercantile establishments and other places of labor in the then Philippine
Islands.
It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et al. vs. Philippine Air Lines, 33
a decision that
emanated from the Office of the President. There, a policy of Philippine Air Lines requiring that prospective flight attendants must be
single and that they will be automatically separated from the service once they marry was declared void, it being violative of the
clear mandate in Article 136 of the Labor Code with regard to discrimination against married women. Thus:
Of first impression is the incompatibility of the respondent's policy or regulation with the codal provision of law.
Respondent is resolute in its contention that Article 136 of the Labor Code applies only to women employed in
ordinary occupations and that the prohibition against marriage of women engaged in extraordinary occupations,
like flight attendants, is fair and reasonable, considering the pecularities of their chosen profession.
We cannot subscribe to the line of reasoning pursued by respondent. All along, it knew that the controverted policy
has already met its doom as early as March 13, 1973 when Presidential Decree No. 148, otherwise known as the
Women and Child Labor Law, was promulgated. But for the timidity of those affected or their labor unions in
challenging the validity of the policy, the same was able to obtain a momentary reprieve. A close look at Section 8
of said decree, which amended paragraph (c) of Section 12 of Republic Act No. 679, reveals that it is exactly the
same provision reproduced verbatim in Article 136 of the Labor Code, which was promulgated on May 1, 1974 to
take effect six (6) months later, or on November 1, 1974.
It cannot be gainsaid that, with the reiteration of the same provision in the new Labor Code, all policies and acts
against it are deemed illegal and therefore abrogated. True, Article 132 enjoins the Secretary of Labor to establish
standards that will ensure the safety and health of women employees and in appropriate cases shall by regulation
require employers to determine appropriate minimum standards for termination in special occupations, such as
those of flight attendants, but that is precisely the factor that militates against the policy of respondent. The
standards have not yet been established as set forth in the first paragraph, nor has the Secretary of Labor issued
any regulation affecting flight attendants.
It is logical to presume that, in the absence of said standards or regulations which are as yet to be established, the
policy of respondent against marriage is patently illegal. This finds support in Section 9 of the New Constitution,
which provides:

8. Sec. 9. The State shall afford protection to labor, promote full employment and equality in employment, ensure
equal work opportunities regardless of sex, race, or creed, and regulate the relations between workers and
employees. The State shall assure the rights of workers to self-organization, collective bargaining, security of
tenure, and just and humane conditions of work . . . .
Moreover, we cannot agree to the respondent's proposition that termination from employment of flight attendants
on account of marriage is a fair and reasonable standard designed for their own health, safety, protection and
welfare, as no basis has been laid therefor. Actually, respondent claims that its concern is not so much against the
continued employment of the flight attendant merely by reason of marriage as observed by the Secretary of Labor,
but rather on the consequence of marriage-pregnancy. Respondent discussed at length in the instant appeal the
supposed ill effects of pregnancy on flight attendants in the course of their employment. We feel that this needs no
further discussion as it had been adequately explained by the Secretary of Labor in his decision of May 2, 1976.
In a vain attempt to give meaning to its position, respondent went as far as invoking the provisions of Articles 52
and 216 of the New Civil Code on the preservation of marriage as an inviolable social institution and the family as a
basic social institution, respectively, as bases for its policy of non-marriage. In both instances, respondent
predicates absence of a flight attendant from her home for long periods of time as contributory to an unhappy
married life. This is pure conjecture not based on actual conditions, considering that, in this modern world,
sophisticated technology has narrowed the distance from one place to another. Moreover, respondent overlooked
the fact that married flight attendants can program their lives to adapt to prevailing circumstances and events.
Article 136 is not intended to apply only to women employed in ordinary occupations, or it should have
categorically expressed so. The sweeping intendment of the law, be it on special or ordinary occupations, is
reflected in the whole text and supported by Article 135 that speaks of non-discrimination on the employment of
women.
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial Corporation 34
considered as void a
policy of the same nature. In said case, respondent, in dismissing from the service the complainant, invoked a policy of the firm to
consider female employees in the project it was undertaking as separated the moment they get married due to lack of facilities for
married women. Respondent further claimed that complainant was employed in the project with an oral understanding that her
services would be terminated when she gets married. Branding the policy of the employer as an example of "discriminatory
chauvinism" tantamount to denying equal employment opportunities to women simply on account of their sex, the appellate court
struck down said employer policy as unlawful in view of its repugnance to the Civil Code, Presidential Decree No. 148 and the
Constitution.
Under American jurisprudence, job requirements which establish employer preference or conditions relating to the marital status of
an employee are categorized as a "sex-plus" discrimination where it is imposed on one sex and not on the other. Further, the same
should be evenly applied and must not inflict adverse effects on a racial or sexual group which is protected by federal job
discrimination laws. Employment rules that forbid or restrict the employment of married women, but do not apply to married men,
have been held to violate Title VII of the United States Civil Rights Act of 1964, the main federal statute prohibiting job
discrimination against employees and applicants on the basis of, among other things, sex. 35
Further, it is not relevant that the rule is not directed against all women but just against married women. And, where the employer
discriminates against married women, but not against married men, the variable is sex and the discrimination is unlawful. 36
Upon
the other hand, a requirement that a woman employee must remain unmarried could be justified as a "bona fide occupational
qualification," or BFOQ, where the particular requirements of the job would justify the same, but not on the ground of a general
principle, such as the desirability of spreading work in the workplace. A requirement of that nature would be valid provided it reflects
an inherent quality reasonably necessary for satisfactory job performance. Thus, in one case, a no-marriage rule applicable to both
male and female flight attendants, was regarded as unlawful since the restriction was not related to the job performance of the flight
attendants. 37
5. Petitioner's policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free
from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public
policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the
individual as an intangible and inalienable right. 38
Hence, while it is true that the parties to a contract may establish any
agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs,
public order, or public policy. 39
Carried to its logical consequences, it may even be said that petitioner's policy against legitimate
marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage.
Parenthetically, the Civil Code provisions on the contract of labor state that the relations between the parties, that is, of capital and
labor, are not merely contractual, impressed as they are with so much public interest that the same should yield to the common
good. 40
It goes on to intone that neither capital nor labor should visit acts of oppression against the other, nor impair the interest or
convenience of the public. 41
In the final reckoning, the danger of just such a policy against marriage followed by petitioner PT & T is
that it strikes at the very essence, ideals and purpose of marriage as an inviolable social institution and, ultimately, of the family as
the foundation of the nation. 42
That it must be effectively interdicted here in all its indirect, disguised or dissembled forms as
discriminatory conduct derogatory of the laws of the land is not only in order but imperatively required.
ON THE FOREGOING PREMISES, the petition of Philippine Telegraph and Telephone Company is hereby DISMISSED for lack of merit,
with double costs against petitioner.

9. [G.R. No. 118892. March 11, 1998]
FILIPINAS BROADCASTING NETWORK, INC., petitioner vs. NATIONAL LABOR RELATIONS COMMISION and SIMEON
MAPA JR., respondents.
D E C I S I O N
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 13th
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
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 respondent’s Station Manager, Mr. Plaridel Brocales, that complainant’s employment with
respondent is being blocked by Ms. Brenda Bayona of DZGB, complainant’s 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]
petitioner’s 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. People’s
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;

10. 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, Mapa’s former employer.’ This fact is supported by Mapa’s 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, Mapa’s 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. Mapa’s 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;
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 Mapa’s 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 Mapa’s 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 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:

11. 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 Mapa’s 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:
‘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
I’ll 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 13th
month pay for the period 28 February 1990 until January 16, 1992;”

12. 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 arbiter’s 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 employee’s conduct although the
latter is the most important element. (Rosario Brothers, Inc. vs. Ople, 131 SCRA 72)
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 petitioner’s 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 NLRC’s 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

13. 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.
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 respondent’s 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 respondent’s 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 respondent’s 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 him P300.00/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:
“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:

14. “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 I’ll 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 respondent’s 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]
Indeed, DZRC, the petitioner’s 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 petitioner’s 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

15. In its two-page[26]
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.
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 respondent’s complaint.
In sum, the evidence, which Public Respondent NLRC relies upon, does not justify the reversal of the labor arbiter’s 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.
SECOND DIVISION
[G.R. No. 127864. December 22, 1999]

16. TRADERS ROYAL BANK, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ROGELIO
ESPAÑOLA, respondent.
D E C I S I O N
BELLOSILLO, J.:
Whether an employer-employee relationship exists between petitioner Traders Royal Bank and private respondent Rogelio
Española - this is the issue on which hinges the fate of private respondent who after twenty (20) years of service found himself
"jobless" and deprived of his only means of livelihood.
On 27 June 1974 Agro-Commercial Security Services Agency Inc. (AGRO) assigned Rogelio Española to work as a janitor at the
Iloilo Branch of petitioner Traders Royal Bank (TRB). This assignment was covered by Mission Order No. 29 dated 26 June 1974
which was duly issued by the Administrative Officer of AGRO, Alberto G. Espinosa.[1]
Sometime in 1982 Española was informed that
he would be absorbed by a new agency, Royal Protective and Janitorial Services Inc. (ROYAL), and that he would perform the same
functions.[2]
However, since ROYAL was also managed and owned by the same people who previously handled AGRO, it did not give
him separation pay or any other benefits. ROYAL also appointed Alberto G. Espinosa, AGRO’s former Administrative Officer, as its
General Manager.[3]
On 15 July 1988 TRB and ROYAL executed a new service agreement whereby ROYAL would continue supplying janitorial
services TRB for one year, beginning 23 March 1988.[4]
The contract also stated that if there was no notice to terminate at the end of
the one (1) year period it would remain in force on a monthly basis.
When the service agreement expired on 23 March 1989 TRB did not issue a termination notice. Instead, it continued to avail of
ROYAL’s services on a monthly basis as stated in the contract. It was only on 4 February 1994 that TRB sent a letter to ROYAL
apprising the latter of its desire to terminate the service agreement effective 16 March 1994.[5]
In turn, ROYAL sent a notice to
private respondent Española informing him that due to TRB's decision to end their contract his services were no longer needed.
[6]
After being dismissed ROYAL declined to give him any further assignment since his job was allegedly coterminus with its contract
with TRB.
On 24 March 1994 Española filed a case against ROYAL, TRB and Alberto Espinosa for illegal dismissal, illegal deduction,
underpayment of wages, non-payment of overtime pay, premium pay for rest day, service incentive leave pay, 13th month pay and
night shift differentials with a prayer for reinstatement and back wages. He also claimed moral and exemplary damages as well as
attorney’s fees.[7]
On 20 December 1995 the Labor Arbiter ruled in favor of TRB holding that Española had no cause of action against it as there
was no employer-employee relationship between them. The Labor Arbiter further ruled that Española was ROYAL’s employee but he
was not entitled to any monetary award since he did not prove his claims of underpayment and illegal deductions against ROYAL.[8]
On appeal public respondent National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter and ruled
that Española was not an employee of ROYAL but of TRB. NLRC then ordered TRB to reinstate him and to pay him the total amount
of P110,829.78 broken down as follows: P81,265.90 for back wages, P736.92 for ERA, P15,698.08 for salary differentials, P3,143.45
for 13th month pay and P10,075.00 for attorney’s fees.[9]
After its motion for reconsideration was denied TRB filed this special civil action for certiorari contending that the NLRC gravely
abused its discretion in reversing the Labor Arbiter’s decision and declaring Española to be its employee.[10]
Who was Española’s real employer? If Española was ROYAL’s employee then he would have no recourse against TRB since his
dismissal was caused by the legitimate termination of a service contract. But if he was really TRB’s employee then he would be
entitled to reinstatement and full back wages as he was illegally dismissed.
To prove that Española was not its employee TRB cites Mission Order No. 29 signed by AGRO Administrative Officer Alberto G.
Espinosa. The order stated that Rogelio Española would be assigned as janitor to TRB’s Iloilo Branch. It also provided that his
employment would be from 26 January 1974 until revoked.[11]
TRB argues that this proves that AGRO was Española’s employer from
1974 to 1982. And when he agreed to be absorbed by ROYAL he became its employee from 1982 to 1994. Hence, he was never
employed by TRB. To bolster its contention TRB refers to the provisions of its service agreement with ROYAL, dated 15 July 1988,
which state that:
2. That the janitor and/or janitress assigned to the PARTY OF THE FIRST PART (petitioner) shall in no way be considered as
employees of the PARTY OF THE FIRST PART and the PARTY OF THE SECOND PART (ROYAL) shall be responsible for the conduct
and performance of its duties;
6. For and in consideration of the services to be rendered by he PARTY OF THE SECOND PART to the PARTY OF THE FIRST PART, the
latter shall pay to the PARTY OF THE SECOND PART (under this agreement) the amount of TWO THOUSAND TWO HUNDRED FIFTY
SEVEN & 32/100 ONLY (2,257.32), Philippine Currency, per month per janitress, the same payable in two (2) installments on the
15th
and last day of every month.
TRB asserts that aside from the agreement itself which reveals that it was ROYAL which provided the janitors’ salary, par. 2
thereof also states that the janitors were its own employees. Thus, Española’s dismissal was the result of a valid termination of its
service agreement with ROYAL.

17. We are not convinced. This Court has ruled that the existence of employer-employee relationship cannot be proved by merely
showing the agreement of the parties.[12]
It is a question of fact which should be supported by substantial evidence.[13]
And in
determining the existence of such relationship the elements usually considered are: (a) the selection of the employee; (b) the
payment of wages; (c) the power of dismissal; and, (d) the power to control the employee’s conduct, with the "control test"
generally assuming primacy in the overall consideration.[14]
Who then had control over Española's conduct? Was it ROYAL or TRB? Between the two, we believe it was TRB. Española
claimed in his position paper that -
Complainant, as previously stated, was required to work as a janitor and as a driver. Moreover, he was required to do his cleaning
chores at night in order not to disturb the transaction of business at the bank during office hours. Thus, every night from Sunday to
Thursday he was required to clean the bank premises of respondent TRB. From Monday to Friday he was required to drive TRB’s
armored car and pick up the children of respondent TRB’s manager, Mrs. Erlinda Ocampo, then drive them to Angelicum School in
Jaro, Iloilo City. Thereafter, he was required to stay in the bank premises until 5:00 P.M., except for lunch break, run errands and
discharge other tasks and chores assigned to him by respondent TRB’s employees. After 5:00 P.M. complainant was required to
drive the above named officers of respondent TRB home. He usually got back to the bank between 6:00 P.M. to 7:00 P.M. Upon his
arrival he would start cleaning the bank and, since the premises was big, it usually took about 2 hours or up to 9:00 P.M. to finish
his cleaning. Because he had to work late and start working early and since his residence was in Sta. Barbara, Iloilo, where there
was no public transportation at night, he had to sleep in the bank. His day-to-day work was monitored and supervised by
respondent TRB.[15]
The above allegations contained in the position paper of Española were never refuted. TRB could have easily presented
affidavits, written explanations or any other pleadings to defend itself and disprove Española’s claims.[16]
However, the only evidence
it ever presented was its service agreement with ROYAL. From the time TRB submitted its position paper to the Labor Arbiter up to
the time it submitted its memorandum to the Supreme Court, not once did it deny that it designated Española as its driver. On the
other hand, Española constantly reiterated in his pleadings that TRB supervised and controlled his work as its janitor-driver. The fact
that Española’s allegations were never controverted at any stage of the proceedings affirms that such averments were true.
[17]
Furthermore, Rule 9, Sec. 11, of the Rules of Court, which supplements the NLRC rules, also provides that an allegation which is
not specifically denied is deemed admitted.[18]
Besides, even if this Court relied on the service agreement, as espoused by TRB, it can still be seen that TRB was the one which
controlled and supervised Española. Paragraph 3 of the contract states -
3. That the PARTY OF THE FIRST PART shall have the direct control and supervision over their janitor’s and janitress’ conduct
and performance in consonance with the preceding paragraph, with minimum interference by the PARTY OF THE SECOND PART,
provided however, that discipline and administration of these janitors and janitresses shall conform with the standards and policies
of the PARTY OF THE FIRST PART x x x x
TRB should, under the foregoing, be obviously deemed as Española's employer.
Petitioner cites Filipino Synthetic Fiber Corp. (FILSYN) v. NLRC[19]
in an effort to persuade this Court that the doctrine therein
should be applied in the instant case. We do not agree. In FILSYN, the employees worked exclusively as janitors and were never
required by FILSYN to perform any other task. Furthermore, there was no proof that FILSYN controlled the manner they
worked. Hence, in that case, the Court ruled that the employer of the janitors was the De Lima Corporation, the janitorial agency,
and not FILSYN. In the present case, however, Española not only worked as a janitor but he was also TRB's driver. Since 1974 he
was required to drive TRB’s armored car, bring and fetch the children of the bank’s manager to and from school, drive for its officers,
and perform various errands assigned to him by TRB employees.
Furthermore, FILSYN presented substantial evidence that the janitorial agency was an independent contractor. It presented De
Lima's Articles of Incorporation and proof of its capitalization amounting to almost P2,000,000. This was not done by TRB. Instead,
it relied heavily on the aforementioned service agreement covering the period from 1988 to 1994. TRB did not even prove
sufficiently that it was not Española’s employer from 1974 to 1987.
As a matter of fact, it was ROYAL which submitted documents to establish that it was an independent contractor. However, it
alleged that it never knew that TRB utilized Española as its driver and compelled him to do other chores.[20]
ROYAL further claimed
that it was TRB which had control and supervision over Española.[21]
Again, TRB never refuted this statement. Neither did it prove
that ROYAL was the one which effectively controlled and supervised the manner Española worked.
The NLRC therefore did not abuse its discretion in ruling that Española was not the employee of ROYAL. On the contrary, it was
the Labor Arbiter who came up with the erroneous conclusion. He disregarded the uncontroverted allegations of Española and
hastily concluded that since ROYAL was an independent contractor, it was Española’s direct employer. While it may be that ROYAL
could very well be an independent contractor - although it did not establish this fact with competent evidence to qualify it as such -
and that Española’s name appeared in its payroll,[22]
nevertheless, whatever role ROYAL had in this case, it was certainly not as the
employer of Española. For the fact remains that it was TRB which had control and supervision over Española’s work. Consequently,
it should be considered as his employer.
Since Española was illegally dismissed he is entitled to reinstatement with full back wages.[23]
The NLRC erred in ruling that he
was only entitled to back wages from 16 March 1994 to 30 September 1996. An illegally dismissed employee is entitled to back
wages from the time he was dismissed to the time of his actual reinstatement.[24]
However, the NLRC’s ruling with regard to the
salary differentials and 13th month pay differentials must be sustained.
WHEREFORE, the petition is DISMISSED. The assailed Decision of public respondent National Labor Relations Commission
reversing that of the Labor Arbiter and ordering petitioner Traders Royal Bank to reinstate private respondent Rogelio Espanola and
to pay him salary differentials of P15,698.00, 13th month pay differentials of P3,143.45 and attorney's fees of P10,075.43 is

18. AFFIRMED, but with the modification that petitioner should pay private respondent full back wages from 16 March 1994 up to his
actual reinstatement. Costs against petitioner.
[G.R. No. 142293. February 27, 2003]
VICENTE SY, TRINIDAD PAULINO, 6B’S TRUCKING CORPORATION, and SBT[1]
TRUCKING CORPORATION,petitioners, vs.
HON. COURT OF APPEALS and JAIME SAHOT, respondents.
D E C I S I O N
QUISUMBING, J.:
This petition for review seeks the reversal of the decision[2]
of the Court of Appeals dated February 29, 2000, in CA-G.R. SP No.
52671, affirming with modification the decision[3]
of the National Labor Relations Commission promulgated on June 20, 1996 in NLRC
NCR CA No. 010526-96. Petitioners also pray for the reinstatement of the decision[4]
of the Labor Arbiter in NLRC NCR Case No. 00-
09-06717-94.
Culled from the records are the following facts of this case:
Sometime in 1958, private respondent Jaime Sahot[5]
started working as a truck helper for petitioners’ family-owned trucking
business named Vicente Sy Trucking. In 1965, he became a truck driver of the same family business, renamed T. Paulino Trucking
Service, later 6B’s Trucking Corporation in 1985, and thereafter known as SBT Trucking Corporation since 1994. Throughout all
these changes in names and for 36 years, private respondent continuously served the trucking business of petitioners.
In April 1994, Sahot was already 59 years old. He had been incurring absences as he was suffering from various
ailments. Particularly causing him pain was his left thigh, which greatly affected the performance of his task as a driver. He inquired
about his medical and retirement benefits with the Social Security System (SSS) on April 25, 1994, but discovered that his premium
payments had not been remitted by his employer.
Sahot had filed a week-long leave sometime in May 1994. On May 27th
, he was medically examined and treated for EOR,
presleyopia, hypertensive retinopathy G II (Annexes “G-5” and “G-3”, pp. 48, 104, respectively),[6]
HPM, UTI, Osteoarthritis (Annex
“G-4”, p. 105),[7]
and heart enlargement (Annex G, p. 107).[8]
On said grounds, Belen Paulino of the SBT Trucking Service
management told him to file a formal request for extension of his leave. At the end of his week-long absence, Sahot applied for
extension of his leave for the whole month of June, 1994. It was at this time when petitioners allegedly threatened to terminate his
employment should he refuse to go back to work.
At this point, Sahot found himself in a dilemma. He was facing dismissal if he refused to work, But he could not retire on
pension because petitioners never paid his correct SSS premiums. The fact remained he could no longer work as his left thigh hurt
abominably. Petitioners ended his dilemma. They carried out their threat and dismissed him from work, effective June 30, 1994. He
ended up sick, jobless and penniless.
On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal, docketed as NLRC
NCR Case No. 00-09-06717-94. He prayed for the recovery of separation pay and attorneys fees against Vicente Sy and Trinidad
Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6B’s Trucking and SBT Trucking, herein petitioners.
For their part, petitioners admitted they had a trucking business in the 1950s but denied employing helpers and drivers. They
contend that private respondent was not illegally dismissed as a driver because he was in fact petitioner’s industrial partner. They
add that it was not until the year 1994, when SBT Trucking Corporation was established, and only then did respondent Sahot
become an employee of the company, with a monthly salary that reached P4,160.00 at the time of his separation.
Petitioners further claimed that sometime prior to June 1, 1994, Sahot went on leave and was not able to report for work for
almost seven days. On June 1, 1994, Sahot asked permission to extend his leave of absence until June 30, 1994. It appeared that
from the expiration of his leave, private respondent never reported back to work nor did he file an extension of his leave. Instead,
he filed the complaint for illegal dismissal against the trucking company and its owners.
Petitioners add that due to Sahot’s refusal to work after the expiration of his authorized leave of absence, he should be deemed
to have voluntarily resigned from his work. They contended that Sahot had all the time to extend his leave or at least inform
petitioners of his health condition. Lastly, they cited NLRC Case No. RE-4997-76, entitled “Manuelito Jimenez et al. vs. T. Paulino
Trucking Service,” as a defense in view of the alleged similarity in the factual milieu and issues of said case to that of Sahot’s, hence
they are in pari material and Sahot’s complaint ought also to be dismissed.
The NLRC NCR Arbitration Branch, through Labor Arbiter Ariel Cadiente Santos, ruled that there was no illegal dismissal in
Sahot’s case. Private respondent had failed to report to work. Moreover, said the Labor Arbiter, petitioners and private respondent
were industrial partners before January 1994. The Labor Arbiter concluded by ordering petitioners to pay “financial assistance” of
P15,000 to Sahot for having served the company as a regular employee since January 1994 only.
On appeal, the National Labor Relations Commission modified the judgment of the Labor Arbiter. It declared that private
respondent was an employee, not an industrial partner, since the start. Private respondent Sahot did not abandon his job but his
employment was terminated on account of his illness, pursuant to Article 284[9]
of the Labor Code. Accordingly, the NLRC ordered
petitioners to pay private respondent separation pay in the amount of P60,320.00, at the rate of P2,080.00 per year for 29 years of
service.
Petitioners assailed the decision of the NLRC before the Court of Appeals. In its decision dated February 29, 2000, the appellate
court affirmed with modification the judgment of the NLRC. It held that private respondent was indeed an employee of petitioners
since 1958. It also increased the amount of separation pay awarded to private respondent to P74,880, computed at the rate of
P2,080 per year for 36 years of service from 1958 to 1994. It decreed:

19. WHEREFORE, the assailed decision is hereby AFFIRMED with MODIFICATION. SB Trucking Corporation is hereby directed to pay
complainant Jaime Sahot the sum of SEVENTY-FOUR THOUSAND EIGHT HUNDRED EIGHTY (P74,880.00) PESOS as and for his
separation pay.[10]
Hence, the instant petition anchored on the following contentions:
I
RESPONDENT COURT OF APPEALS IN PROMULGATING THE QUESTION[ED] DECISION AFFIRMING WITH MODIFICATION THE
DECISION OF NATIONAL LABOR RELATIONS COMMISSION DECIDED NOT IN ACCORD WITH LAW AND PUT AT NAUGHT ARTICLE 402
OF THE CIVIL CODE.[11]
II
RESPONDENT COURT OF APPEALS VIOLATED SUPREME COURT RULING THAT THE NATIONAL LABOR RELATIONS COMMISSION IS
BOUND BY THE FACTUAL FINDINGS OF THE LABOR ARBITER AS THE LATTER WAS IN A BETTER POSITION TO OBSERVE THE
DEMEANOR AND DEPORTMENT OF THE WITNESSES IN THE CASE OF ASSOCIATION OF INDEPENDENT UNIONS IN THE PHILIPPINES
VERSUS NATIONAL CAPITAL REGION (305 SCRA 233).[12]
III
PRIVATE RESPONDENT WAS NOT DISMISS[ED] BY RESPONDENT SBT TRUCKING CORPORATION.[13]
Three issues are to be resolved: (1) Whether or not an employer-employee relationship existed between petitioners and
respondent Sahot; (2) Whether or not there was valid dismissal; and (3) Whether or not respondent Sahot is entitled to separation
pay.
Crucial to the resolution of this case is the determination of the first issue. Before a case for illegal dismissal can prosper, an
employer-employee relationship must first be established.[14]
Petitioners invoke the decision of the Labor Arbiter Ariel Cadiente Santos which found that respondent Sahot was not an
employee but was in fact, petitioners’ industrial partner.[15]
It is contended that it was the Labor Arbiter who heard the case and had
the opportunity to observe the demeanor and deportment of the parties. The same conclusion, aver petitioners, is supported by
substantial evidence.[16]
Moreover, it is argued that the findings of fact of the Labor Arbiter was wrongly overturned by the NLRC
when the latter made the following pronouncement:
We agree with complainant that there was error committed by the Labor Arbiter when he concluded that complainant was an
industrial partner prior to 1994. A computation of the age of complainant shows that he was only twenty-three (23) years when he
started working with respondent as truck helper. How can we entertain in our mind that a twenty-three (23) year old man, working
as a truck helper, be considered an industrial partner. Hence we rule that complainant was only an employee, not a partner of
respondents from the time complainant started working for respondent.[17]
Because the Court of Appeals also found that an employer-employee relationship existed, petitioners aver that the appellate
court’s decision gives an “imprimatur” to the “illegal” finding and conclusion of the NLRC.
Private respondent, for his part, denies that he was ever an industrial partner of petitioners. There was no written agreement,
no proof that he received a share in petitioners’ profits, nor was there anything to show he had any participation with respect to the
running of the business.[18]
The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee’s conduct.
The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done,
but also as to the means and methods to accomplish it.[19]
As found by the appellate court, petitioners owned and operated a trucking business since the 1950s and by their own
allegations, they determined private respondent’s wages and rest day.[20]
Records of the case show that private respondent actually
engaged in work as an employee. During the entire course of his employment he did not have the freedom to determine where he
would go, what he would do, and how he would do it. He merely followed instructions of petitioners and was content to do so, as
long as he was paid his wages. Indeed, said the CA, private respondent had worked as a truck helper and driver of petitioners not for
his own pleasure but under the latter’s control.
Article 1767[21]
of the Civil Code states that in a contract of partnership two or more persons bind themselves to contribute
money, property or industry to a common fund, with the intention of dividing the profits among themselves.[22]
Not one of these
circumstances is present in this case. No written agreement exists to prove the partnership between the parties. Private respondent
did not contribute money, property or industry for the purpose of engaging in the supposed business. There is no proof that he was
receiving a share in the profits as a matter of course, during the period when the trucking business was under operation. Neither is
there any proof that he had actively participated in the management, administration and adoption of policies of the business. Thus,
the NLRC and the CA did not err in reversing the finding of the Labor Arbiter that private respondent was an industrial partner from
1958 to 1994.
On this point, we affirm the findings of the appellate court and the NLRC. Private respondent Jaime Sahot was not an industrial
partner but an employee of petitioners from 1958 to 1994. The existence of an employer-employee relationship is ultimately a

20. question of fact[23]
and the findings thereon by the NLRC, as affirmed by the Court of Appeals, deserve not only respect but finality
when supported by substantial evidence. Substantial evidence is such amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion.[24]
Time and again this Court has said that “if doubt exists between the evidence presented by the employer and the employee,
the scales of justice must be tilted in favor of the latter.”[25]
Here, we entertain no doubt. Private respondent since the beginning was
an employee of, not an industrial partner in, the trucking business.
Coming now to the second issue, was private respondent validly dismissed by petitioners?
Petitioners contend that it was private respondent who refused to go back to work. The decision of the Labor Arbiter pointed out
that during the conciliation proceedings, petitioners requested respondent Sahot to report back for work. However, in the same
proceedings, Sahot stated that he was no longer fit to continue working, and instead he demanded separation pay. Petitioners then
retorted that if Sahot did not like to work as a driver anymore, then he could be given a job that was less strenuous, such as working
as a checker. However, Sahot declined that suggestion. Based on the foregoing recitals, petitioners assert that it is clear that Sahot
was not dismissed but it was of his own volition that he did not report for work anymore.
In his decision, the Labor Arbiter concluded that:
While it may be true that respondents insisted that complainant continue working with respondents despite his alleged illness, there
is no direct evidence that will prove that complainant’s illness prevents or incapacitates him from performing the function of a driver.
The fact remains that complainant suddenly stopped working due to boredom or otherwise when he refused to work as a checker
which certainly is a much less strenuous job than a driver.[26]
But dealing the Labor Arbiter a reversal on this score the NLRC, concurred in by the Court of Appeals, held that:
While it was very obvious that complainant did not have any intention to report back to work due to his illness which incapacitated
him to perform his job, such intention cannot be construed to be an abandonment. Instead, the same should have been considered
as one of those falling under the just causes of terminating an employment. The insistence of respondent in making complainant
work did not change the scenario.
It is worthy to note that respondent is engaged in the trucking business where physical strength is of utmost requirement (sic).
Complainant started working with respondent as truck helper at age twenty-three (23), then as truck driver since 1965. Complainant
was already fifty-nine (59) when the complaint was filed and suffering from various illness triggered by his work and age.
x x x[27]
In termination cases, the burden is upon the employer to show by substantial evidence that the termination was for lawful
cause and validly made.[28]
Article 277(b) of the Labor Code puts the burden of proving that the dismissal of an employee was for a
valid or authorized cause on the employer, without distinction whether the employer admits or does not admit the dismissal. [29]
For
an employee’s dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process.
[30]
Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease, viz:
Art. 284. Disease as a ground for termination- An employer may terminate the services of an employee who has been found to be
suffering from any disease and whose continued employment is prohibited by law or prejudicial to his health as well as the health of
his co-employees: xxx
However, in order to validly terminate employment on this ground, Book VI, Rule I, Section 8 of the Omnibus Implementing
Rules of the Labor Code requires:
Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a disease and his continued employment is prohibited by
law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is
a certification by competent public health authority that the disease is of such nature or at such a stage that it cannot be cured
within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the
employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee
to his former position immediately upon the restoration of his normal health. (Italics supplied).
As this Court stated in Triple Eight integrated Services, Inc. vs. NLRC,[31]
the requirement for a medical certificate under Article
284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the
employer of the gravity or extent of the employee’s illness and thus defeat the public policy in the protection of labor.
In the case at bar, the employer clearly did not comply with the medical certificate requirement before Sahot’s dismissal was
effected. In the same case of Sevillana vs. I.T. (International) Corp., we ruled:
Since the burden of proving the validity of the dismissal of the employee rests on the employer, the latter should likewise bear the
burden of showing that the requisites for a valid dismissal due to a disease have been complied with. In the absence of the required
certification by a competent public health authority, this Court has ruled against the validity of the employee’s dismissal. It is
therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not

21. dismissed, or if dismissed, that the dismissal was not illegal; otherwise, the dismissal would be unjustified. This Court will not
sanction a dismissal premised on mere conjectures and suspicions, the evidence must be substantial and not arbitrary and must be
founded on clearly established facts sufficient to warrant his separation from work.[32]
In addition, we must likewise determine if the procedural aspect of due process had been complied with by the employer.
From the records, it clearly appears that procedural due process was not observed in the separation of private respondent by
the management of the trucking company. The employer is required to furnish an employee with two written notices before the latter
is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his dismissal is sought, which is the
equivalent of a charge; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given
reasonable opportunity to answer and to be heard on his defense.[33]
These, the petitioners failed to do, even only for record
purposes. What management did was to threaten the employee with dismissal, then actually implement the threat when the occasion
presented itself because of private respondent’s painful left thigh.
All told, both the substantive and procedural aspects of due process were violated. Clearly, therefore, Sahot’s dismissal is
tainted with invalidity.
On the last issue, as held by the Court of Appeals, respondent Jaime Sahot is entitled to separation pay. The law is clear on the
matter. An employee who is terminated because of disease is entitled to “separation pay equivalent to at least one month salary or
to one-half month salary for every year of service, whichever is greater xxx.”[34]
Following the formula set in Art. 284 of the Labor
Code, his separation pay was computed by the appellate court at P2,080 times 36 years (1958 to 1994) or P74,880. We agree with
the computation, after noting that his last monthly salary was P4,160.00 so that one-half thereof is P2,080.00. Finding no reversible
error nor grave abuse of discretion on the part of appellate court, we are constrained to sustain its decision. To avoid further delay in
the payment due the separated worker, whose claim was filed way back in 1994, this decision is immediately executory. Otherwise,
six percent (6%) interest per annum should be charged thereon, for any delay, pursuant to provisions of the Civil Code.
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated February 29, 2000 is AFFIRMED.
Petitioners must pay private respondent Jaime Sahot his separation pay for 36 years of service at the rate of one-half monthly pay
for every year of service, amounting to P74,880.00, with interest of six per centum (6%) per annum from finality of this decision
until fully paid.
Costs against petitioners.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, and Callejo, Sr., JJ., concur.
Austria-Martinez, J., no part.

22. G.R. No. 122791 February 19, 2003
PLACIDO O. URBANES, JR., doing business under the name & style of CATALINA SECURITY AGENCY,petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT and SOCIAL SECURITY SYSTEM,respondents.
D E C I S I O N
CARPIO-MORALES, J.:
Before this Court is a Petition for Certiorari under Rule 65 of the Revised Rules of Court assailing the June 22, 1995 Order of the
Department of Labor and Employment (DOLE) Secretary which set aside the September 16, 1994 Order of the Regional Director,
National Capital Region (NCR).
The antecedent facts of the case are as follows:
Petitioner Placido O. Urbanes, Jr., doing business under the name and style of Catalina Security Agency, entered into an
agreement1
to provide security services to respondent Social Security System (SSS).
During the effectivity of the agreement, petitioner, by letter of May 16, 1994,2
requested the SSS for the upward adjustment of their
contract rate in view of Wage Order No. NCR-03 which was issued by the Regional Tripartite Wages and Productivity Board-NCR
pursuant to Republic Act 6727 otherwise known as the Wage Rationalization Act, the pertinent provision of which wage order reads:
Section 9. In the case of contracts for construction projects and for security, janitorial and similar services, the prescribed
amount set forth herein for covered workers shall be borne by the principals or the clientsof the construction/service
contractors and the contract shall be deemed amended accordingly. In the event, however, that the principal or client
failed to pay the prescribed increase, the construction/service contractors shall be jointly and severally liable with the
principal or client.(Emphasis and underscoring supplied.)
As his May 16, 1994 letter to the SSS remained unheeded, petitioner sent another letter,3
dated June 7, 1994, reiterating the
request, which was followed by still another letter,4
dated June 8, 1994.
On June 24, 1994, petitioner pulled out his agency’s services from the premises of the SSS and another security agency, Jaguar,
took over.5
On June 29, 1994, petitioner filed a complaint6
with the DOLE-NCR against the SSS seeking the implementation of Wage Order No.
NCR-03.
In its position paper,7
the SSS prayed for the dismissal of the complaint on the ground that petitioner is not the real party in interest
and has no legal capacity to file the same. In any event, it argued that if it had any obligation, it was to the security guards.
On the other hand, petitioner in his position paper,8
citing Eagle Security Agency, Inc. v. NLRC,9
contended that the security guards
assigned to the SSS do not have any legal basis to file a complaint against it for lack of contractual privity.
Finding for petitioner, the Regional Director of the DOLE-NCR issued an Order10
of September 16, 1994, the dispositive portion of
which reads, quoted verbatim:
WHEREFORE, premises considered, the respondent Social Security System (SSS) is hereby Ordered to pay Complainant the total
sum of ONE MILLION SIX HUNDRED THOUSAND EIGHT HUNDRED FIFTY EIGHT AND 46/100 (P 1,600,858.46) representing the wage
differentials under Wage Order No. NCR-03 of the ONE HUNDRED SIXTY EIGHT (168) Security Guards of Catalina Security Agency
covering the period from December 16, 1993 to June 24, 1994, inclusive within ten (10) days from receipt hereof, otherwise a writ of
execution shall be issued to enforce this Order.
The claims for the payment of interest and Attorney’s fees are hereby ordered dismissed for want of jurisdiction.
SO ORDERED.
The SSS moved to reconsider the September 16, 1994 Order of the Regional Director, praying that the computation be revised.11

23. By Order12
of December 9, 1994, the Regional Director modified his September 16, 1994 Order by reducing the amount payable by
the SSS to petitioner. The dispositive portion of the Regional Director’s Order of December 9, 1994 reads:
WHEREFORE, premises considered, the Order of this Office dated September 16, 1994 is hereby modified. Respondent Social
Security System is hereby ordered to pay complainant the amount of ONE MILLION TWO HUNDRED THIRTY SEVEN THOUSAND
SEVEN HUNDRED FORTY PESOS (P 1,237,740.00) representing the wage differentials under Wage Order No. NCR-03 of the one
hundred sixty-eight (168) security guards of Catalina Security Agency covering the period from December 16, 1993 to June 20,
1994, inclusive, within ten (10) days from receipt of this Order, otherwise, execution shall issue.
The SSS appealed13
to the Secretary of Labor upon the following assigned errors, quoted verbatim:
A. THE REGIONAL DIRECTOR HAS NO JURISDICTION OF THE CASE AT BAR.
B. THE HONORABLE REGIONAL DIRECTOR ERRED IN FINDING THAT COMPLAINANT IS THE REAL PARTY IN INTEREST AND
HAS LEGAL CAPACITY TO FILE THE CASE.
C. THE HONORABLE REGIONAL DIRECTOR ERRED IN ADOPTING COMPLAINANT’S COMPUTATION FOR WAGE ADJUSTMENT
UNDER WAGE ORDER NO. NCR-03 AS BASIS OF RESPONDENT’S LIABILITY.14
The Secretary of Labor, by Order15
of June 22, 1995, set aside the order of the Regional Director and remanded the records of the
case "for recomputation of the wage differentials using P 5,281.00 as the basis of the wage adjustment." And the Secretary held
petitioner’s security agency "JOINTLY AND SEVERALLY liable for wage differentials, the amount of which should be paid DIRECTLY to
the security guards concerned."
Petitioner’s Motion for Reconsideration of the DOLE Secretary’s Order of June 22, 1995 having been denied by Order16
of October 10,
1995, the present petition was filed, petitioner contending that the DOLE Secretary committed grave abuse of discretion when he:
1. . . . TOTALLY IGNORED THE PROVISION OF ARTICLE 129 OF THE LABOR CODE FOR PERFECTING AN APPEAL FROM THE
DECISION OF THE REGIONAL DIRECTOR UNDER ARTICLE 129 INVOKED BY RESPONDENT SSS;
2. . . . DISREGARDED THE PROVISION ON APPEALS FROM THE DECISIONS OR RESOLUTIONS OF THE REGIONAL DIRECTOR, DOLE,
UNDER ARTICLE 129 OF THE LABOR CODE, AS AMENDED BY REPUBLIC ACT NO. 6715;
3. . . . TOTALLY OVERLOOKED THE LAW AND PREVAILING JURISPRUDENCE WHEN IT ACTED ON THE APPEAL OF RESPONDENT
SSS.17
Petitioner asserts that the Secretary of Labor does not have jurisdiction to review appeals from decisions of the Regional Directors in
complaints filed under Article 129 of the Labor Code18
which provides:
ART. 129. RECOVERY OF WAGES, SIMPLE MONEY CLAIMS AND OTHER BENEFITS. – Upon complaint of any interested party, the
regional director of the Department of Labor and Employment or any duly authorized hearing officers of the Department is
empowered, through summary proceeding and after due notice, to hear and decide any matter involving the recovery of wages and
other monetary claims and benefits, including legal interest, owing to an employee or person employed in domestic or household
service or househelper under this Code, arising from employer-employee relations: Provided, That such complaint does not include a
claim for reinstatement; Provided, further, That the aggregate money claim of each employee or househelper does not exceed Five
Thousand pesos (P5,000.00). The regional director or hearing officer shall decide or resolve the complaint within thirty (30) calendar
days from the date of the filing of the same. Any sum thus recovered on behalf of any employee or househelper pursuant to this
Article shall be held in a special deposit account by, and shall be paid on order of, the Secretary of Labor and Employment or the
regional director directly to the employee or househelper concerned. Any such sum not paid to the employee or househelper,
because he cannot be located after diligent and reasonable effort to locate him within a period of three (3) years, shall be held as a
special fund of the Department of Labor and Employment to be used exclusively for the amelioration and benefit of workers.
Any decision or resolution of the regional director or officer pursuant to this provision may be appealed on the same grounds
provided in Article 223 of this Code, within five (5) calendar days from receipt of a copy of said decision or resolution, to the National
Labor Relations Commission which shall resolve the appeal within ten (10) calendar days from submission of the last pleading
required or allowed under its rules.
x x x (Emphasis supplied).
Petitioner thus contends that as the appeal of SSS was filed with the wrong forum, it should have been dismissed.19
The SSS, on the other hand, contends that Article 128, not Article 129, is applicable to the case. Article 128 provides:
ART. 128. VISITORIAL AND ENFORCEMENT POWERS –
x x x

24. (b) Notwithstanding the provisions of Article 129 and 217 of this Code to the contrary, and in cases where the relationship of
employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power
to issue compliance orders to give effect to labor legislation based on the findings of labor employment and enforcement officers or
industrial safety engineers made in the course of inspection.
x x x
An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed
to the latter.
x x x (Emphasis supplied).
Neither the petitioner’s contention nor the SSS’s is impressed with merit. Lapanday Agricultural Development Corporation v. Court of
Appeals20
instructs so. In that case, the security agency filed a complaint before the Regional Trial Court (RTC) against the principal
or client Lapanday for the upward adjustment of the contract rate in accordance with Wage Order Nos. 5 and 6. Lapanday argued
that it is the National Labor Relations Commission, not the civil courts, which has jurisdiction to resolve the issue in the case, it
involving the enforcement of wage adjustment and other benefits due the agency’s security guards as mandated by several wage
orders. Holding that the RTC has jurisdiction over the controversy, this Court ruled:
We agree with the respondent that the RTC has jurisdiction over the subject matter of the present case. It is well settled in law
and jurisprudence that where no employer-employee relationship exists between the parties and no issue is involved
which may be resolved by reference to the Labor Code, other labor statutes or any collective bargaining agreement, it
is the Regional Trial Court that has jurisdiction. In its complaint, private respondent is not seeking any relief under the
Labor Code but seeks payment of a sum of money and damages on account of petitioner's alleged breach of its
obligation under their Guard Service Contract. The action is within the realm of civil law hence jurisdiction over the
case belongs to the regular courts. While the resolution of the issue involves the application of labor laws, reference to
the labor code was only for the determination of the solidary liability of the petitioner to the respondent where no
employer-employee relation exists.21
x x x (Emphasis and underscoring supplied).
In the case at bar, even if petitioner filed the complaint on his and also on behalf of the security guards,22
the relief sought has to do
with the enforcement of the contract between him and the SSS which was deemed amended by virtue of Wage Order No. NCR-03.
The controversy subject of the case at bar is thus a civil dispute, the proper forum for the resolution of which is the civil courts.
But even assuming arguendo that petitioner’s complaint were filed with the proper forum, for lack of cause of action it must be
dismissed.1awphi1.nét
Articles 106, 107 and 109 of the Labor Code provide:
ART. 106. CONTRACTOR OR SUBCONTRACTOR. – Whenever an employer enters into contract with another person for the
performance of the former’s work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in
accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wage of his employees in accordance with this Code, the employer
shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under
the contract, in the same manner and extent that he is liable to employees directly employed by him.
xxx (Emphasis and underscoring supplied)
ART. 107 INDIRECT EMPLOYER. – The provisions of the immediately preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work,
task, job or project.
ART. 109. SOLIDARY LIABILTY. – The provisions of existing laws to the contrary notwithstanding, every employer or indirect
employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes
of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers.(Emphasis supplied.)
In the case of Eagle Security Agency, Inc. v. NLRC,23
this Court held:
The Wage Orders are explicit that payment of the increases are "to be borne" by the principal or client. "To be borne", however, does
not mean that the principal, PTSI in this case, would directly pay the security guards the wage and allowance increases because
there is no privity of contract between them. The security guards' contractual relationship is with their immediate employer, EAGLE.
As an employer, EAGLE is tasked, among others, with the payment of their wages [See Article VII Sec. 3 of the Contract for Security
Services, supra and Bautista v. Inciong, G.R. No. 52824, March 16, 1988, 158 SCRA 665].

25. On the other hand, there existed a contractual agreement between PTSI and EAGLE wherein the former availed of the security
services provided by the latter. In return, the security agency collects from its client payment for its security services. This payment
covers the wages for the security guards and also expenses for their supervision and training, the guards' bonds, firearms with
ammunitions, uniforms and other equipments, accessories, tools, materials and supplies necessary for the maintenance of a security
force.
Premises considered, the security guards' immediate recourse for the payment of the increases is with their direct employer, EAGLE.
However, in order for the security agency to comply with the new wage and allowance rates it has to pay the security guards, the
Wage Orders made specific provision to amend existing contracts for security services by allowing the adjustment of the
consideration paid by the principal to the security agency concerned. What the Wage Orders require, therefore, is the amendment of
the contract as to the consideration to cover the service contractor's payment of the increases mandated. In the end, therefore,
ultimate liability for the payment of the increases rests with the principal.
In view of the foregoing, the security guards should claim the amount of the increases from EAGLE. Under the Labor Code, in case
the agency fails to pay them the amounts claimed, PTSI should be held solidarily liable with EAGLE [Articles 106, 107 and
109]. Should EAGLE pay, it can claim an adjustment from PTSI for an increase in consideration to cover the increases payable to the
security guards.
x x x (Emphasis and underscoring supplied).
Passing on the foregoing disquisition in Eagle, this Court, in Lapanday,24
held:
It is clear also from the foregoing that it is only when [the] contractor pays the increases mandated that it can claim an adjustment
from the principal to cover the increases payable to the security guards. The conclusion that the right of the contractor (as
principal debtor) to recover from the principal (as solidary co-debtor) arises only if he has paid the amounts for which
both of them are jointly and severally liable is in line with Article 1217 of the Civil Code which provides:
"Art. 1217. Payment made by one the solidary debtors extinguishes the obligation. If two or more solidary debtors offer to pay, the
creditor may choose which offer to accept.
He who made payment make claim from his co-debtors only the share which corresponds to each, with interest for the payment
already made. If the payment is made before the debt is due, no interest for the intervening period may be demanded. x x
x"25
(Emphasis and underscoring supplied).
In fine, the liability of the SSS to reimburse petitioner arises only if and when petitioner pays his employee-security guards "the
increases" mandated by Wage Order No. NCR-03.1awphi1.nét
The records do not show that petitioner has paid the mandated increases to the security guards. The security guards in fact have
filed a complaint26
with the NLRC against petitioner relative to, among other things, underpayment of wages.
WHEREFORE, the present petition is hereby DISMISSED, and petitioner’s complaint before the Regional Director is dismissed for lack
of jurisdiction and cause of action.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez and Corona, JJ., concur.

26. G.R. No. 147816 May 9, 2003
EFREN P. PAGUIO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, METROMEDIA TIMES CORPORATION, ROBINA Y. GOKONGWEI, LIBERATO
GOMEZ, JR., YOLANDA E. ARAGON, FREDERICK D. GO and ALDA IGLESIA,respondents.
VITUG, J.:
On 22 June 1992, respondent Metromedia Times Corporation entered, for the fifth time, into an agreement with petitioner Efren P.
Paguio, appointing the latter to be an account executive of the firm.1
Again, petitioner was to solicit advertisements for "The Manila
Times," a newspaper of general circulation, published by respondent company. Petitioner, for his efforts, was to receive
compensation consisting of a 15% commission on direct advertisements less withholding tax and a 10% commission on agency
advertisements based on gross revenues less agency commission and the corresponding withholding tax. The commissions, released
every fifteen days of each month, were to be given to petitioner only after the clients would have paid for the advertisements. Apart
from commissions, petitioner was also entitled to a monthly allowance of P2,000.00 as long as he met the P30,000.00-monthly
quota. Basically, the contentious points raised by the parties had something to do with the following stipulations of the
agreement; viz:
"12. You are not an employee of the Metromedia Times Corporation nor does the company have any obligations towards
anyone you may employ, nor any responsibility for your operating expenses or for any liability you may incur. The only
rights and obligations between us are those set forth in this agreement. This agreement cannot be amended or modified in
any way except with the duly authorized consent in writing of both parties.
"13. Either party may terminate this agreement at any time by giving written notice to the other, thirty (30) days prior to
effectivity of termination."2
On 15 August 1992, barely two months after the renewal of his contract, petitioner received the following notice from
respondent firm -
"Dear Mr. Paguio,
"Please be advised of our decision to terminate your services as Account Executive of Manila Times effective September 30,
1992.
"This is in accordance with our contract signed last July 1, 1992."3
Apart from vague allegations of misconduct on which he was not given the opportunity to defend himself, i.e., pirating clients from
his co-executives and failing to produce results, no definite cause for petitioner's termination was given. Aggrieved, petitioner filed a
case before the labor arbiter, asking that his dismissal be declared unlawful and that his reinstatement, with entitlement to
backwages without loss of seniority rights, be ordered. Petitioner also prayed that respondent company officials be held accountable
for acts of unfair labor practice, for P500,000.00 moral damages and for P200,000.00 exemplary damages.
In their defense, respondent Metromedia Times Corporation asserted that it did not enter into any agreement with petitioner outside
of the contract of services under Articles 1642 and 1644 of the Civil Code of the Philippines.4
Asserting their right to terminate the
contract with petitioner, respondents pointed to the last provision thereof stating that both parties could opt to end the contract
provided that either party would serve, thirty days prior to the intended date of termination, the corresponding notice to the other.
The labor arbiter found for petitioner and declared his dismissal illegal. The arbiter ordered respondent Metromedia Times
Corporation and its officers to reinstate petitioner to his former position, without loss of seniority rights, and to pay him his
commissions and other remuneration accruing from the date of dismissal on 15 August 1992 up until his reinstatement. He likewise
adjudged that Liberato I. Gomez, general manager of respondent corporation, be held liable to petitioner for moral damages in the
amount of P20,000.00.
On appeal, the National Labor Relations Commission (NLRC) reversed the ruling of the labor arbiter and declared the contractual
relationship between the parties as being for a fixed-term employment. The NLRC declared a fixed-term employment to be lawful as
long as "it was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought
to bear upon the worker and absent any other circumstances vitiating his consent."5
The finding of the NLRC was primarily hinged on
the assumption that petitioner, on account of his educated stature, having indeed personally prepared his pleadings without the aid
of counsel, was an unlikely victim of a lopsided contract. Rejecting the assertion of petitioner that he was a regular employee, the
NLRC held: "The decisive determinant would not be the activities that the employee (was) called upon to perform but rather, the day
certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being
understood to be that which (would) necessarily come, although it (might) not be known when."6

27. Petitioner appealed the ruling of the NLRC before the Court of Appeals which upheld in toto the findings of the commission. In his
petition for review on certiorari, petitioner raised the following issues for resolution:
"WHETHER OR NOT PETITIONER'S CONTRACT WITH PRIVATE RESPONDENT'S COMPANY IS FOR A FIXED PERIOD.
"WHETHER OR NOT PETITIONER'S DISMISSAL IS LEGAL.
"WHETHER OR NOT PETITIONER IS ENTITLED TO BACKWAGES AND MORAL DAMAGES."7
The crux of the matter would entail the determination of the nature of contractual relationship between petitioner and respondent
company - was it or was it not one of regular employment?
A "regular employment," whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence, of the following
factors - a) the manner of selection and engagement of the putative employee, b) the mode of payment of wages, c) the presence or
absence of the power of dismissal; and d) the presence or absence of the power to control the conduct of the putative employee or
the power to control the employee with respect to the means or methods by which his work is to be accomplished.8
The "control test"
assumes primacy in the overall consideration. Under this test, an employment relation obtains where work is performed or services
are rendered under the control and supervision of the party contracting for the service, not only as to the result of the work but also
as to the manner and details of the performance desired.9
An indicum of regular employment, rightly taken into account by the labor arbiter, was the reservation by respondent Metromedia
Times Corporation not only of the right to control the results to be achieved but likewise the manner and the means used in reaching
that end.10
Metromedia Times Corporation exercised such control by requiring petitioner, among other things, to submit a daily sales
activity report and also a monthly sales report as well. Various solicitation letters would indeed show that Robina Gokongwei,
company president, Alda Iglesia, the advertising manager, and Frederick Go, the advertising director, directed and monitored the
sales activities of petitioner.
The Labor Code, in Article 280 thereof, provides:
"ART. 280. Regular and Casual Employment. – The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has
been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
"An employment shall be deemed to be casual if it is not covered by the proceeding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered
a regular employee with respect to the activity in which he is employed and his employment shall continue while such
activity exists."
Thus defined, a regular employee is one who is engaged to perform activities which are necessary and desirable in the usual
business or trade of the employer as against those which are undertaken for a specific project or are seasonal. Even in these latter
cases, where such person has rendered at least one year of service, regardless of the nature of the activity performed or of whether
it is continuous or intermittent, the employment is considered regular as long as the activity exists, it not being indispensable that he
be first issued a regular appointment or be formally declared as such before acquiring a regular status.11
That petitioner performed activities which were necessary and desirable to the business of the employer, and that the same went on
for more than a year, could hardly be denied. Petitioner was an account executive in soliciting advertisements, clearly necessary and
desirable, for the survival and continued operation of the business of respondent corporation. Robina Gokongwei, its President,
herself admitted that the income generated from paid advertisements was the lifeblood of the newspaper's existence. Implicitly,
respondent corporation recognized petitioner's invaluable contribution to the business when it renewed, not just once but five times,
its contract with petitioner.
Respondent company cannot seek refuge under the terms of the agreement it has entered into with petitioner. The law, in defining
their contractual relationship, does so, not necessarily or exclusively upon the terms of their written or oral contract, but also on the
basis of the nature of the work petitioner has been called upon to perform.12
The law affords protection to an employee, and it will
not countenance any attempt to subvert its spirit and intent. A stipulation in an agreement can be ignored as and when it is utilized
to deprive the employee of his security of tenure.13
The sheer inequality that characterizes employer-employee relations, where the
scales generally tip against the employee, often scarcely provides him real and better options.
The real question that should thus be posed is whether or not petitioner has been justly dismissed from service. A lawful dismissal
must meet both substantive and procedural requirements; in fine, the dismissal must be for a just or authorized cause and must
comply with the rudimentary due process of notice and hearing. It is not shown that respondent company has fully bothered itself
with either of these requirements in terminating the services of petitioner. The notice of termination recites no valid or just cause for
the dismissal of petitioner nor does it appear that he has been given an opportunity to be heard in his defense.

28. The evidence, however, found by the appellate court is wanting that would indicate bad faith or malice on the part of respondents,
particularly by respondent Liberato I. Gomez, and the award of moral damages must thus be deleted.
WHEREFORE, the instant petition is GRANTED. The decision of the Court of Appeals in C.A. G.R. SP No. 527773 and that of the
National Labor Relations Commission are hereby SET ASIDE and that of the Labor Arbiter is REINSTATED except with respect to the
P20,000.00 moral damages adjudged against respondent Liberato I. Gomez which award is deleted.
G.R. No. 155731 September 3, 2007
LOLITA LOPEZ, petitioner,
vs.
BODEGA CITY (Video-Disco Kitchen of the Philippines) and/or ANDRES C. TORRES-YAP, respondents.
D E C I S I O N
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the July 18, 2002 Decision1
of the
Court of Appeals (CA) in CA-G.R. SP No. 66861, dismissing the petition for certiorari filed before it and affirming the Decision of the
National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 00-03-01729-95; and its Resolution dated October 16,
2002,2
denying petitioner's Motion for Reconsideration. The NLRC Decision set aside the Decision of the Labor Arbiter finding that
Lolita Lopez (petitioner) was illegally dismissed by Bodega City and/or Andres C. Torres-Yap (respondents).
Respondent Bodega City (Bodega City) is a corporation duly registered and existing under and by virtue of the laws of the Republic
of the Philippines, while respondent Andres C. Torres-Yap (Yap) is its owner/ manager. Petitioner was the "lady keeper" of Bodega
City tasked with manning its ladies' comfort room.
In a letter signed by Yap dated February 10, 1995, petitioner was made to explain why the concessionaire agreement between her
and respondents should not be terminated or suspended in view of an incident that happened on February 3, 1995, wherein
petitioner was seen to have acted in a hostile manner against a lady customer of Bodega City who informed the management that
she saw petitioner sleeping while on duty.
In a subsequent letter dated February 25, 1995, Yap informed petitioner that because of the incident that happened on February 3,
1995, respondents had decided to terminate the concessionaire agreement between them.
On March 1, 1995, petitioner filed with the Arbitration Branch of the NLRC, National Capital Region, Quezon City, a complaint for
illegal dismissal against respondents contending that she was dismissed from her employment without cause and due process.
In their answer, respondents contended that no employer-employee relationship ever existed between them and petitioner; that the
latter's services rendered within the premises of Bodega City was by virtue of a concessionaire agreement she entered into with
respondents.
The complaint was dismissed by the Labor Arbiter for lack of merit. However, on appeal, the NLRC set aside the order of dismissal
and remanded the case for further proceedings. Upon remand, the case was assigned to a different Labor Arbiter. Thereafter,
hearings were conducted and the parties were required to submit memoranda and other supporting documents.
On December 28, 1999, the Labor Arbiter rendered judgment finding that petitioner was an employee of respondents and that the
latter illegally dismissed her.3
Respondents filed an appeal with the NLRC. On March 22, 2001, the NLRC issued a Resolution, the dispositive portion of which reads
as follows:
WHEREFORE, premises duly considered, the Decision appealed from is hereby ordered SET ASIDE and VACATED, and in its
stead, a new one entered DISMISSING the above-entitled case for lack of merit.4
Petitioner filed a motion for reconsideration of the above-quoted NLRC Resolution, but the NLRC denied the same.
Aggrieved, petitioner filed a Petition for Certiorari with the CA. On July 18, 2002, the CA promulgated the presently assailed Decision
dismissing her special civil action for certiorari. Petitioner moved for reconsideration but her motion was denied.
Hence, herein petition based on the following grounds:
1. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RULING THAT THE NATIONAL LABOR RELATIONS COMMISSION

29. DID NOT COMMIT GRAVE ABUSE OF DISCRETION IN REVERSING THE DECISION OF THE LABOR ARBITER FINDING
PETITIONER TO HAVE BEEN ILLEGALLY DISMISSED BY PRIVATE RESPONDENTS.
2. WITH DUE RESPECT, PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR IN EXCESS OF JURISDICTION IN RULING THAT PETITIONER WAS NOT AN EMPLOYEE OF PRIVATE
RESPONDENTS.5
Petitioner contends that it was wrong for the CA to conclude that even if she did not sign the document evidencing the
concessionaire agreement, she impliedly accepted and thus bound herself to the terms and conditions contained in the said
agreement when she continued to perform the task which was allegedly specified therein for a considerable length of time. Petitioner
claims that the concessionaire agreement was only offered to her during her tenth year of service and after she organized a union
and filed a complaint against respondents. Prior to all these, petitioner asserts that her job as a "lady keeper" was a task assigned to
her as an employee of respondents.
Petitioner further argues that her receipt of a special allowance from respondents is a clear evidence that she was an employee of
the latter, as the amount she received was equivalent to the minimum wage at that time.
Petitioner also contends that her identification card clearly shows that she was not a concessionaire but an employee of respondents;
that if respondents really intended the ID card issued to her to be used simply for having access to the premises of Bodega City,
then respondents could have clearly indicated such intent on the said ID card.
Moreover, petitioner submits that the fact that she was required to follow rules and regulations prescribing appropriate conduct while
she was in the premises of Bodega City is clear evidence of the existence of an employer-employee relationship between her and
petitioners.
On the other hand, respondents contend that the present petition was filed for the sole purpose of delaying the proceedings of the
case; the grounds relied upon in the instant petition are matters that have been exhaustively discussed by the NLRC and the CA; the
present petition raises questions of fact which are not proper in a petition for review on certiorari under Rule 45 of the Rules of
Court; the respective decisions of the NLRC and the CA are based on evidence presented by both parties; petitioner's compliance
with the terms and conditions of the proposed concessionaire contract for a period of three years is evidence of her implied
acceptance of such proposal; petitioner failed to present evidence to prove her allegation that the subject concessionaire agreement
was only proposed to her in her 10th
year of employment with respondent company and after she organized a union and filed a labor
complaint against respondents; petitioner failed to present competent documentary and testimonial evidence to prove her contention
that she was an employee of respondents since 1985.
The main issue to be resolved in the present case is whether or not petitioner is an employee of respondents.
The issue of whether or not an employer-employee relationship exists in a given case is essentially a question of fact.6
While it is a settled rule that only errors of law are generally reviewed by this Court in petitions for review oncertiorari of CA
decisions,7
there are well-recognized exceptions to this rule, as in this case, when the factual findings of the NLRC as affirmed by the
CA contradict those of the Labor Arbiter.8
In that event, it is this Court's task, in the exercise of its equity jurisdiction, to re-evaluate
and review the factual issues by looking into the records of the case and re-examining the questioned findings.9
It is a basic rule of evidence that each party must prove his affirmative allegation.10
If he claims a right granted by law, he must
prove his claim by competent evidence, relying on the strength of his own evidence and not upon the weakness of that of his
opponent.11
The test for determining on whom the burden of proof lies is found in the result of an inquiry as to which party would be successful if
no evidence of such matters were given.12
In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee was for a valid
cause.13
However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be established.14
In filing a complaint before the Labor Arbiter for illegal dismissal based on the premise that she was an employee of respondent, it is
incumbent upon petitioner to prove the employee-employer relationship by substantial evidence.15
The NLRC and the CA found that petitioner failed to discharge this burden, and the Court finds no cogent reason to depart from their
findings.
The Court applies the four-fold test expounded in Abante v. Lamadrid Bearing and Parts Corp.,16
to wit:
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. The
so-called "control test" is commonly regarded as the most crucial and determinative indicator of the presence or absence of

30. 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.17
To prove the element of payment of wages, petitioner presented a petty cash voucher showing that she received an allowance for
five (5) days.18
The CA did not err when it held that a solitary petty cash voucher did not prove that petitioner had been receiving
salary from respondents or that she had been respondents' employee for 10 years.
Indeed, if petitioner was really an employee of respondents for that length of time, she should have been able to present salary
vouchers or pay slips and not just a single petty cash voucher. The Court agrees with respondents that petitioner could have easily
shown other pieces of evidence such as a contract of employment, SSS or Medicare forms, or certificates of withholding tax on
compensation income; or she could have presented witnesses to prove her contention that she was an employee of respondents.
Petitioner failed to do so.
Anent the element of control, petitioner's contention that she was an employee of respondents because she was subject to their
control does not hold water.
Petitioner failed to cite a single instance to prove that she was subject to the control of respondents insofar as the manner in which
she should perform her job as a "lady keeper" was concerned.
It is true that petitioner was required to follow rules and regulations prescribing appropriate conduct while within the premises of
Bodega City. However, this was imposed upon petitioner as part of the terms and conditions in the concessionaire agreement
embodied in a 1992 letter of Yap addressed to petitioner, to wit:
January 6, 1992
Dear Ms. Lolita Lopez,
The new owners of Bodega City, 1121 Food Service Corporation offers to your goodself the concessionaire/contract to
provide independently, customer comfort services to assist users of the ladies comfort room of the Club to further enhance
its business, under the following terms and conditions:
1. You will provide at your own expense, all toilet supplies, useful for the purpose, such as toilet papers, soap, hair
pins, safety pins and other related items or things which in your opinion is beneficial to the services you will
undertake;
2. For the entire duration of this concessionaire contract, and during the Club's operating hours, you shall maintain
the cleanliness of the ladies comfort room. Provided, that general cleanliness, sanitation and physical maintenance
of said comfort rooms shall be undertaken by the owners of Bodega City;
3. You shall at all times ensure satisfaction and good services in the discharge of your undertaking. More
importantly, you shall always observe utmost courtesy in dealing with the persons/individuals using said comfort
room and shall refrain from doing acts that may adversely affect the goodwill and business standing of Bodega
City;
4. All remunerations, tips, donations given to you by individuals/persons utilizing said comfort rooms and/or guests
of Bodega City shall be waived by the latter to your benefit provided however, that if concessionaire receives tips
or donations per day in an amount exceeding 200% the prevailing minimum wage, then, she shall remit fifty
percent (50%) of said amount to Bodega City by way of royalty or concession fees;
5. This contract shall be for a period of one year and shall be automatically renewed on a yearly basis unless notice
of termination is given thirty (30) days prior to expiration. Any violation of the terms and conditions of this contract
shall be a ground for its immediate revocation and/or termination.
6. It is hereby understood that no employer-employee relationship exists between Bodega City and/or 1121
FoodService Corporation and your goodself, as you are an independent contractor who has represented to us that
you possess the necessary qualification as such including manpower compliment, equipment, facilities, etc. and
that any person you may engage or employ to work with or assist you in the discharge of your undertaking shall be
solely your own employees and/or agents.
1121 FoodService Corporation Bodega City
By:
(Sgd.) ANDRES C. TORRES-YAP

31. Conforme:
_______________
LOLITA LOPEZ19
Petitioner does not dispute the existence of the letter; neither does she deny that respondents offered her the subject concessionaire
agreement. However, she contends that she could not have entered into the said agreement with respondents because she did not
sign the document evidencing the same.
Settled is the rule that contracts are perfected by mere consent, upon the acceptance by the offeree of the offer made by the
offeror.20
For a contract, to arise, the acceptance must be made known to the offeror.21
Moreover, the acceptance of the thing and
the cause, which are to constitute a contract, may be express or implied as can be inferred from the contemporaneous and
subsequent acts of the contracting parties.22
A contract will be upheld as long as there is proof of consent, subject matter and cause;
it is generally obligatory in whatever form it may have been entered into.23
In the present case, the Court finds no cogent reason to disregard the findings of both the CA and the NLRC that while petitioner did
not affix her signature to the document evidencing the subject concessionaire agreement, the fact that she performed the tasks
indicated in the said agreement for a period of three years without any complaint or question only goes to show that she has given
her implied acceptance of or consent to the said agreement.
Petitioner is likewise estopped from denying the existence of the subject concessionaire agreement. She should not, after enjoying
the benefits of the concessionaire agreement with respondents, be allowed to later disown the same through her allegation that she
was an employee of the respondents when the said agreement was terminated by reason of her violation of the terms and conditions
thereof.
The principle of estoppel in pais applies wherein -- by one's acts, representations or admissions, or silence when one ought to speak
out -- intentionally or through culpable negligence, induces another to believe certain facts to exist and to rightfully rely and act on
such belief, so as to be prejudiced if the former is permitted to deny the existence of those facts.24
Moreover, petitioner failed to dispute the contents of the affidavit25
as well as the testimony26
of Felimon Habitan (Habitan), the
concessionaire of the men's comfort room of Bodega City, that he had personal knowledge of the fact that petitioner was the
concessionaire of the ladies' comfort room of Bodega City.
Petitioner also claims that the concessionaire agreement was offered to her only in her 10th year of service, after she organized a
union and filed a complaint against respondents. However, petitioner's claim remains to be an allegation which is not supported by
any evidence. It is a basic rule in evidence that each party must prove his affirmative allegation,27
that mere allegation is not
evidence.28
The Court is not persuaded by petitioner's contention that the Labor Arbiter was correct in concluding that there existed an
employer-employee relationship between respondents and petitioner. A perusal of the Decision29
of the Labor Arbiter shows that his
only basis for arriving at such a conclusion are the bare assertions of petitioner and the fact that the latter did not sign the letter of
Yap containing the proposed concessionaire agreement. However, as earlier discussed, this Court finds no error in the findings of the
NLRC and the CA that petitioner is deemed as having given her consent to the said proposal when she continuously performed the
tasks indicated therein for a considerable length of time. For all intents and purposes, the concessionaire agreement had been
perfected.
Petitioner insists that her ID card is sufficient proof of her employment. In Domasig v. National Labor Relations Commission,30
this
Court held that the complainant's ID card and the cash vouchers covering his salaries for the months indicated therein were
substantial evidence that he was an employee of respondents, especially in light of the fact that the latter failed to deny said
evidence. This is not the situation in the present case. The only evidence presented by petitioner as proof of her alleged employment
are her ID card and one petty cash voucher for a five-day allowance which were disputed by respondents.
As to the ID card, it is true that the words "EMPLOYEE'S NAME" appear printed below petitioner's name.31
However, she failed to
dispute respondents' evidence consisting of Habitan's testimony,32
that he and the other "contractors" of Bodega City such as the
singers and band performers, were also issued the same ID cards for the purpose of enabling them to enter the premises of Bodega
City.
The Court quotes, with approval, the ruling of the CA on this matter, to wit:
Nor can petitioners identification card improve her cause any better. It is undisputed that non-employees, such as Felimon
Habitan, an admitted concessionaire, musicians, singers and the like at Bodega City are also issued identification cards.
Given this premise, it appears clear to Us that petitioner's I.D. Card is incompetent proof of an alleged employer-employee
relationship between the herein parties. Viewed in the context of this case, the card is at best a "passport" from
management assuring the holder thereof of his unmolested access to the premises of Bodega City.33
With respect to the petty cash voucher, petitioner failed to refute respondent's claim that it was not given to her for services
rendered or on a regular basis, but simply granted as financial assistance to help her temporarily meet her family's needs.

32. Hence, going back to the element of control, the concessionaire agreement merely stated that petitioner shall maintain the
cleanliness of the ladies' comfort room and observe courtesy guidelines that would help her obtain the results they wanted to
achieve. There is nothing in the agreement which specifies the methods by which petitioner should achieve these results.
Respondents did not indicate the manner in which she should go about in maintaining the cleanliness of the ladies' comfort room.
Neither did respondents determine the means and methods by which petitioner could ensure the satisfaction of respondent
company's customers. In other words, petitioner was given a free hand as to how she would perform her job as a "lady keeper." In
fact, the last paragraph of the concessionaire agreement even allowed petitioner to engage persons to work with or assist her in the
discharge of her functions.34
Moreover, petitioner was not subjected to definite hours or conditions of work. The fact that she was expected to maintain the
cleanliness of respondent company's ladies' comfort room during Bodega City's operating hours does not indicate that her
performance of her job was subject to the control of respondents as to make her an employee of the latter. Instead, the requirement
that she had to render her services while Bodega City was open for business was dictated simply by the very nature of her
undertaking, which was to give assistance to the users of the ladies' comfort room.
In Consulta v. Court of Appeals,35
this Court held:
It should, however, be obvious that not every form of control that the hiring party reserves to himself over the conduct of
the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee
relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized
distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare
contract of service that gives untrammeled 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.36
Lastly, the Court finds that the elements of selection and engagement as well as the power of dismissal are not present in the instant
case.
It has been established that there has been no employer-employee relationship between respondents and petitioner. Their
contractual relationship was governed by the concessionaire agreement embodied in the 1992 letter. Thus, petitioner was not
dismissed by respondents. Instead, as shown by the letter of Yap to her dated February 15, 1995,37
their contractual relationship was
terminated by reason of respondents' termination of the subject concessionaire agreement, which was in accordance with the
provisions of the agreement in case of violation of its terms and conditions.
In fine, the CA did not err in dismissing the petition for certiorari filed before it by petitioner.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals areAFFIRMED. Costs
against petitioner.
SO ORDERED.
Ynares-Santiago, Chairperson, Chico-Nazario, Nachura, Reyes, JJ., concur.

33. PEOPLE’S BROADCASTING G.R. No. 179652
(BOMBO RADYO PHILS., INC.),
Petitioner, Present:
CARPIO MORALES, J.,*
Acting Chairperson,
- versus - TINGA,
VELASCO, JR.,
LEONARDO-DE CASTRO,**
and
BRION, JJ.
THE SECRETARY OF THE
DEPARTMENT OF LABOR AND Promulgated:
EMPLOYMENT, THE REGIONAL
DIRECTOR, DOLE REGION VII, May 8, 2009
and JANDELEON JUEZAN,
Respondents.
x----------------------------------------------------------------------------x
D E C I S I O N
TINGA, J.:
The present controversy concerns a matter of first impression, requiring as it does the determination of
the demarcation line between the prerogative of the Department of Labor and Employment (DOLE) Secretary and his duly
authorized representatives, on the one hand, and the jurisdiction of the National Labor Relations Commission, on the other, under
Article 128 (b) of the Labor Code in an instance where the employer has challenged the jurisdiction of the DOLE at the very first
level on the ground that no employer-employee relationship ever existed between the parties.
I.
The instant petition for certiorari under Rule 65 assails the decision and the resolution of the Court of Appeals dated 26
October 2006 and 26 June 2007, respectively, in C.A. G.R. CEB-SP No. 00855.[1]
The petition traces its origins to a complaint filed by Jandeleon Juezan (respondent) against People’s Broadcasting Service,
Inc. (Bombo Radyo Phils., Inc) (petitioner) for illegal deduction, non-payment of service incentive leave, 13th
month pay, premium
pay for holiday and rest day and illegal diminution of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and
Philhealth before the Department of Labor and Employment (DOLE) Regional Office No. VII, Cebu City.[2]
On the basis of the
complaint, the DOLE conducted a plant level inspection on 23 September 2003. In the Inspection Report Form,[3]
the Labor Inspector
wrote under the heading “Findings/Recommendations” “non-diminution of benefits” and “Note: Respondent deny employer-employee
relationship with the complainant- see Notice of Inspection results.” In the Notice of Inspection Results[4]
also bearing the date 23
September 2003, the Labor Inspector made the following notations:
Management representative informed that complainant is a drama talent hired on a per drama “
participation basis” hence no employer-employeeship [sic] existed between them. As proof of this, management
presented photocopies of cash vouchers, billing statement, employments of specific undertaking (a contract between
the talent director & the complainant), summary of billing of drama production etc. They (mgt.) has [sic] not control
of the talent if he ventures into another contract w/ other broadcasting industries.
On the other hand, complainant Juezan’s alleged violation of non-diminution of benefits is computed as
follows:
@ P 2,000/15 days + 1.5 mos = P 6,000
(August 1/03 to Sept 15/03)
Note: Recommend for summary investigation or whatever action deem proper.[5]
Petitioner was required to rectify/restitute the violations within five (5) days from receipt. No rectification was effected by
petitioner; thus, summary investigations were conducted, with the parties eventually ordered to submit their respective position
papers.[6]

34. In his Order dated 27 February 2004,[7]
DOLE Regional Director Atty. Rodolfo M. Sabulao (Regional Director) ruled that
respondent is an employee of petitioner, and that the former is entitled to his money claims amounting to P203,726.30. Petitioner
sought reconsideration of the Order, claiming that the Regional Director gave credence to the documents offered by respondent
without examining the originals, but at the same time he missed or failed to consider petitioner’s evidence. Petitioner’s motion for
reconsideration was denied.[8]
On appeal to the DOLE Secretary, petitioner denied once more the existence of employer-employee
relationship. In its Order dated 27 January 2005, the Acting DOLE Secretary dismissed the appeal on the ground that petitioner did
not post a cash or surety bond and instead submitted a Deed of Assignment of Bank Deposit.[9]
Petitioner elevated the case to the Court of Appeals, claiming that it was denied due process when the DOLE Secretary
disregarded the evidence it presented and failed to give it the opportunity to refute the claims of respondent. Petitioner maintained
that there is no employer-employee relationship had ever existed between it and respondent because it was the drama directors and
producers who paid, supervised and disciplined respondent. It also added that the case was beyond the jurisdiction of the DOLE and
should have been considered by the labor arbiter because respondent’s claim exceeded P5,000.00.
The Court of Appeals held that petitioner was not deprived of due process as the essence thereof is only an opportunity to be
heard, which petitioner had when it filed a motion for reconsideration with the DOLE Secretary. It further ruled that the latter had
the power to order and enforce compliance with labor standard laws irrespective of the amount of individual claims because the
limitation imposed by Article 29 of the Labor Code had been repealed by Republic Act No. 7730.[10]
Petitioner sought reconsideration
of the decision but its motion was denied.[11]
Before this Court, petitioner argues that the National Labor Relations Commission (NLRC), and not the DOLE Secretary, has
jurisdiction over respondent’s claim, in view of Articles 217 and 128 of the Labor Code.[12]
It adds that the Court of Appeals
committed grave abuse of discretion when it dismissed petitioner’s appeal without delving on the issues raised therein, particularly
the claim that no employer-employee relationship had ever existed between petitioner and respondent. Finally, petitioner avers that
there is no appeal, or any plain, speedy and adequate remedy in the ordinary course of law available to it.
On the other hand, respondent posits that the Court of Appeals did not abuse its discretion. He invokes Republic Act No. 7730,
which “removes the jurisdiction of the Secretary of Labor and Employment or his duly authorized representatives, from the effects of
the restrictive provisions of Article 129 and 217 of the Labor Code, regarding the confinement of jurisdiction based on the amount of
claims.”[13]
Respondent also claims that petitioner was not denied due process since even when the case was with the Regional
Director, a hearing was conducted and pieces of evidence were presented. Respondent stands by the propriety of the Court of
Appeals’ ruling that there exists an employer-employee relationship between him and petitioner. Finally, respondent argues that the
instant petition for certiorari is a wrong mode of appeal considering that petitioner had earlier filed a Petition for Certiorari,
Mandamus and Prohibition with the Court of Appeals; petitioner, instead, should have filed a Petition for Review.[14]
II.
The significance of this case may be reduced to one simple question—does the Secretary of Labor have the power to
determine the existence of an employer-employee relationship?
To resolve this pivotal issue, one must look into the extent of the visitorial and enforcement power of the DOLE found
in Article 128 (b) of the Labor Code, as amended by Republic Act 7730. It reads:
Article 128 (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in
cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or
his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor
standards provisions of this Code and other labor legislation based on the findings of labor employment and
enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly
authorized representative shall issue writs of execution to the appropriate authority for the enforcement of their
orders, except in cases where the employer contests the findings of the labor employment and enforcement officer
and raises issues supported by documentary proofs which were not considered in the course of inspection.
(emphasis supplied)
x x x
The provision is quite explicit that the visitorial and enforcement power of the DOLE comes into play only “in cases when the
relationship of employer-employee still exists.” It also underscores the avowed objective underlying the grant of power to the DOLE
which is “to give effect to the labor standard provision of this Code and other labor legislation.” Of course, a person’s entitlement to
labor standard benefits under the labor laws presupposes the existence of employer-employee relationship in the first place.
The clause “in cases where the relationship of employer-employee still exists” signifies that the employer-employee
relationship must have existed even before the emergence of the controversy. Necessarily, the DOLE’s power does not apply
in two instances, namely: (a) where the employer-employee relationship has ceased; and (b) where no such
relationship has ever existed.
The first situation is categorically covered by Sec. 3, Rule 11 of the Rules on the Disposition of Labor Standards
Cases[15]
issued by the DOLE Secretary. It reads:
Rule II MONEY CLAIMS ARISING FROM COMPLAINT/ROUTINE INSPECTION

35. Sec. 3. Complaints where no employer-employee relationship actually exists. Where employer-employee
relationship no longer exists by reason of the fact that it has already been severed, claims for payment of
monetary benefits fall within the exclusive and original jurisdiction of the labor arbiters. Accordingly, if on the
face of the complaint, it can be ascertained that employer-employee relationship no longer exists, the case,
whether accompanied by an allegation of illegal dismissal, shall immediately be endorsed by the Regional Director
to the appropriate branch of the National Labor Relations Commission (NLRC).
In the recent case of Bay Haven, Inc. v. Abuan,[16]
this Court recognized the first situation and accordingly ruled that a
complainant’s allegation of his illegal dismissal had deprived the DOLE of jurisdiction as per Article 217 of the Labor Code.[17]
In the first situation, the claim has to be referred to the NLRC because it is the NLRC which has jurisdiction in view of the
termination of the employer-employee relationship. The same procedure has to be followed in the second situation since it is the
NLRC that has jurisdiction in view of the absence of employer-employee relationship between the evidentiary parties from the start.
Clearly the law accords a prerogative to the NLRC over the claim when the employer-employee relationship has terminated
or such relationship has not arisen at all. The reason is obvious. In the second situation especially, the existence of an employer-
employee relationship is a matter which is not easily determinable from an ordinary inspection, necessarily so, because the elements
of such a relationship are not verifiable from a mere ocular examination. The intricacies and implications of an employer-employee
relationship demand that the level of scrutiny should be far above the cursory and the
mechanical. While documents, particularly documents found in the employer’s

36. office are the primary source materials, what may prove decisive are factors related to the history of the employer’s business
operations, its current state as well as accepted contemporary practices in the industry. More often than not, the question of
employer-employee relationship becomes a battle of evidence, the determination of which should be comprehensive and
intensive and therefore best left to the specialized quasi-judicial body that is the NLRC.
It can be assumed that the DOLE in the exercise of its visitorial and enforcement power somehow has to make a
determination of the existence of an employer-employee relationship. Such prerogatival determination, however,
cannot be coextensive with the visitorial and enforcement power itself. Indeed, such determination is merely
preliminary, incidental and collateral to the DOLE’s primary function of enforcing labor standards provisions. The
determination of the existence of employer-employee relationship is still primarily lodged with the NLRC. This is the
meaning of the clause “in cases where the relationship of employer-employee still exists” in Art. 128 (b).
Thus, before the DOLE may exercise its powers under Article 128, two important questions must be resolved: (1) Does the
employer-employee relationship still exist, or alternatively, was there ever an employer-employee relationship to speak of; and (2)
Are there violations of the Labor Code or of any labor law?
The existence of an employer-employee relationship is a statutory prerequisite to and a limitation on the
power of the Secretary of Labor, one which the legislative branch is entitled to impose. The rationale underlying this
limitation is to eliminate the prospect of competing conclusions of the Secretary of Labor and the NLRC, on a matter fraught with
questions of fact and law, which is best resolved by the quasi-judicial body, which is the NRLC, rather than an administrative official
of the executive branch of the government. If the Secretary of Labor proceeds to exercise his visitorial and enforcement powers
absent the first requisite, as the dissent proposes, his office confers jurisdiction on itself which it cannot otherwise acquire.
The approach suggested by the dissent is frowned upon by common law. To wit:
[I]t is a general rule, that no court of limited jurisdiction can give itself jurisdiction by a wrong
decision on a point collateral to the merits of the case upon which the limit to its jurisdiction depends;
and however its decision may be final on all particulars, making up together that subject matter which, if true, is
within its jurisdiction, and however necessary in many cases it may be for it to make a preliminary inquiry, whether
some collateral matter be or be not within the limits, yet, upon this preliminary question, its decision must always be
open to inquiry in the superior court.[18]

37. A more liberal interpretative mode, “pragmatic or functional analysis,” has also emerged in ascertaining the jurisdictional
boundaries of administrative agencies whose jurisdiction is established by statute. Under this approach, the Court examines the
intended function of the tribunal and decides whether a particular provision falls within or outside that function, rather than making
the provision itself the determining centerpiece of the analysis.[19]
Yet even under this more expansive approach, the dissent fails.
A reading of Art. 128 of the Labor Code reveals that the Secretary of Labor or his authorized representatives was granted
visitorial and enforcement powers for the purpose of determining violations of, and enforcing, the Labor Code and any labor law,
wage order, or rules and regulations issued pursuant thereto. Necessarily, the actual existence of an employer-employee
relationship affects the complexion of the putative findings that the Secretary of Labor may determine, since employees are entitled
to a different set of rights under the Labor Code from the employer as opposed to non-employees. Among these differentiated rights
are those accorded by the “labor standards” provisions of the Labor Code, which the Secretary of Labor is mandated to enforce. If
there is no employer-employee relationship in the first place, the duty of the employer to adhere to those labor standards with
respect to the non-employees is questionable.
This decision should not be considered as placing an undue burden on the Secretary of Labor in the exercise of visitorial and
enforcement powers, nor seen as an unprecedented diminution of the same, but rather a recognition of the statutory limitations
thereon. A mere assertion of absence of employer-employee relationship does not deprive the DOLE of jurisdiction over the claim
under Article 128 of the Labor Code. At least a prima facie showing of such absence of relationship, as in this case, is needed to
preclude the DOLE from the exercise of its power. The Secretary of Labor would not have been precluded from exercising the
powers under Article 128 (b) over petitioner if another person with better-grounded claim of employment than that which
respondent had. Respondent, especially if he were an employee, could have very well enjoined other employees to complain with
the DOLE, and, at the same time, petitioner could ill-afford to disclaim an employment relationship with all of the people under its
aegis.
Without a doubt, petitioner, since the inception of this case had been consistent in maintaining that respondent is not its
employee. Certainly, a preliminary determination, based on the evidence offered, and noted by the Labor Inspector during the
inspection as well as submitted during the proceedings before the Regional Director puts in genuine doubt the existence of employer-
employee relationship. From that point on, the prudent recourse on the part of the DOLE should have been to refer respondent to
the NLRC for the proper dispensation of his claims. Furthermore, as discussed earlier, even the evidence relied on by the Regional
Director in his order are mere self-serving declarations of respondent, and hence cannot be relied upon as proof of employer-
employee relationship.
III.
Aside from lack of jurisdiction, there is another cogent reason to to set aside the Regional Director’s 27 February
2004 Order. A careful study of the case reveals that the said Order, which found respondent as an employee of petitioner and
directed the payment of respondent’s money claims, is not supported by substantial evidence, and was even made in disregard of
the evidence on record.
It is not enough that the evidence be simply considered. The standard is substantial evidence as in all other quasi-judicial
agencies. The standard employed in the last sentence of Article 128(b) of the Labor Code that the documentary proofs be
“considered in the course of inspection” does not apply. It applies only to issues other than the fundamental issue of existence of
employer-employee relationship. A contrary rule would lead to controversies on the part of labor officials in resolving the issue of
employer-employee relationship. The onset of arbitrariness is the advent of denial of substantive due process.
As a general rule, the Supreme Court is not a trier of facts. This applies with greater force in cases before quasi-judicial
agencies whose findings of fact are accorded great respect and even finality. To be sure, the same findings should be supported by
substantial evidence from which the said tribunals can make its own independent evaluation of the facts. Likewise, it must not be
rendered with grave abuse of discretion; otherwise, this Court will not uphold the tribunals’ conclusion.[20]
In the same manner, this
Court will not hesitate to set aside the labor tribunal’s findings of fact when it is clearly shown that they were arrived at arbitrarily or
in disregard of the evidence on record or when there is showing of fraud or error of law.[21]
At the onset, it is the Court’s considered view that the existence of employer- employee relationship could have been easily
resolved, or at least prima facie determined by the labor inspector, during the inspection by looking at the records of petitioner which
can be found in the work premises. Nevertheless, even if the labor inspector had noted petitioner’s manifestation and documents in
the Notice of Inspection Results, it is clear that he did not give much credence to said evidence, as he did not find the need to
investigate the matter further. Considering that the documents shown by petitioner, namely: cash vouchers, checks and
statements of account, summary billings evidencing payment to the alleged real employer of respondent, letter-contracts
denominated as “Employment for a Specific Undertaking,” prima facie negate the existence of employer-employee relationship, the
labor inspector could have exerted a bit more effort and looked into petitioner’s payroll, for example, or its roll of employees, or
interviewed other employees in the premises. After all, the labor inspector, as a labor regulation officer is given “access to
employer’s records and premises at any time of day or night whenever work is being undertaken therein, and the right to copy
therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations
or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations pursuant
thereto.”[22]
Despite these far-reaching powers of labor regulation officers, records reveal that no additional efforts were exerted in
the course of the inspection.
The Court further examined the records and discovered to its dismay that even the Regional Director turned a blind eye to
the evidence presented by petitioner and relied instead on the self-serving claims of respondent.

38. In his position paper, respondent claimed that he was hired by petitioner in September 1996 as a radio talent/spinner,
working from 8:00 am until 5 p.m., six days a week, on a gross rate of P60.00 per script, earning an average of P15,0000.00 per
month, payable on a semi-monthly basis. He added that the payment of wages was delayed; that he was not given any service
incentive leave or its monetary commutation, or his 13th
month pay; and that he was not made a member of the Social Security
System (SSS), Pag-Ibig and PhilHealth. By January 2001, the number of radio programs of which respondent was a talent/spinner
was reduced, resulting in the reduction of his monthly income from P15,000.00 to only P4,000.00, an amount he could barely live
on. Anent the claim of petitioner that no employer-employee relationship ever existed, respondent argued that that he was hired by
petitioner, his wages were paid under the payroll of the latter, he was under the control of petitioner and its agents, and it was
petitioner who had the power to dismiss him from his employment.[23]
In support of his position paper, respondent attached a
photocopy of an identification card purportedly issued by petitioner, bearing respondent’s picture and name with the designation
“Spinner”; at the back of the I.D., the following is written: “ This certifies that the card holder is a duly Authorized MEDIA
Representative of BOMBO RADYO PHILIPPINES … THE NO.1 Radio Network in the Country ***BASTA RADYO
BOMBO***”[24]
Respondent likewise included a Certification which reads:
This is to certify that MR. JANDELEON JUEZAN is a program employee of PEOPLE’S BROADCASTING
SERVICES, INC. (DYMF- Bombo Radyo Cebu) since 1990 up to the present.
Furtherly certifies that Mr. Juezan is receiving a monthly salary of FIFTEEN THOUSAND (P15,000.00)
PESOS.
This certification is issued upon the request of the above stated name to substantiate loan requirement.
Given this 18th
day of April 2000, Cebu City , Philippines.
(signed)
GREMAN B. SOLANTE
Station Manager
On the other hand, petitioner maintained in its position paper that respondent had never been its employee. Attached as
annexes to its position paper are photocopies of cash vouchers it issued to drama producers, as well as letters of employment
captioned “Employment for a Specific Undertaking”, wherein respondent was appointed by different drama directors as
spinner/narrator for specific radio programs.[25]
In his Order, the Regional Director merely made a passing remark on petitioner’s claim of lack of employer-employee
relationship—a token paragraph—and proceeded to a detailed recitation of respondent’s allegations. The documents introduced by
petitioner in its position paper and even those presented during the inspection were not given an iota of credibility. Instead, full
recognition and acceptance was accorded to the claims of respondent—from the hours of work to his monthly salary, to his alleged
actual duties, as well as to his alleged “evidence.” In fact, the findings are anchored almost verbatim on the self-serving allegations
of respondent.
Furthermore, respondent’s pieces of evidence—the identification card and the certification issued by petitioner’s Greman
Solante— are not even determinative of an employer-employee relationship. The certification, issued upon the request of
respondent, specifically stated that “MR. JANDELEON JUEZAN is a program employee of PEOPLE’S BROADCASTING SERVICES, INC.
(DYMF- Bombo Radyo Cebu),” it is not therefore “crystal clear that complainant is a station employee rather than a program
employee hence entitled to all the benefits appurtenant thereto,”[26]
as found by the DOLE Regional Director. Respondent should be
bound by his own evidence. Moreover, the classification as to whether one is a “station employee” and “program employee,” as
lifted from Policy Instruction No. 40,[27]
dividing the workers in the broadcast industry into only two groups is not binding on this
Court, especially when the classification has no basis either in law or in fact.[28]
Even the identification card purportedly issued by petitioner is not proof of employer-employee relationship since it only
identified respondent as an “Authorized Representative of Bombo Radyo…,” and not as an employee. The phrase gains significance
when compared vis a vis the following notation in the sample identification cards presented by petitioner in its motion for
reconsideration:
1. This is to certify that the person whose picture and signature appear hereon is an employee of
Bombo Radio Philippines.
2. This ID must be worn at all times within Bombo Radyo Philippines premises for proper identification and
security. Furthermore, this is the property of Bombo Radyo Philippines and must be surrendered upon
separation from the company.
HUMAN RESOURCE DEPARMENT
(Signed)
JENALIN D. PALER
HRD HEAD

39. Respondent tried to address the discrepancy between his identification card and the standard identification cards issued
by petitioner to its employees by arguing that what he annexed to his position paper was the old identification card issued to him by
petitioner. He then presented a photocopy of another “old” identification card, this time purportedly issued to one of the employees
who was issued the new identification card presented by petitioner.[29]
Respondent’s argument does not convince. If it were true that
he is an employee of petitioner, he would have been issued a new identification card similar to the ones presented by petitioner, and
he should have presented a copy of such new identification card. His failure to show a new identification card merely demonstrates
that what he has is only his “Media” ID, which does not constitute proof of his employment with petitioner.
It has long been established that in administrative and quasi-judicial proceedings, substantial evidence is sufficient as a basis
for judgment on the existence of employer-employee relationship. Substantial evidence, which is the quantum of proof required in
labor cases, is “that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.”[30]
No
particular form of evidence is required to prove the existence of such employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be admitted.[31]
Hence, while no particular form of evidence is required, a finding that such
relationship exists must still rest on some substantial evidence. Moreover, the substantiality of the evidence depends on its
quantitative as well as its qualitative aspects.[32]
In the instant case, save for respondent’s self-serving allegations and self-defeating evidence, there is no substantial basis
to warrant the Regional Director’s finding that respondent is an employee of petitioner. Interestingly, the Order of the Secretary of
Labor denying petitioner’s appeal dated 27 January 2005, as well as the decision of the Court of Appeals dismissing the petition for
certiorari, are silent on the issue of the existence of an employer-employee relationship, which further suggests that no real and
proper determination the existence of such relationship was ever made by these tribunals. Even the dissent skirted away from the
issue of the existence of employer-employee relationship and conveniently ignored the dearth of evidence presented by respondent.
Although substantial evidence is not a function of quantity but rather of quality, the peculiar environmental circumstances of
the instant case demand that something more should have been proffered.[33]
Had there been other proofs of employment, such as
respondent’s inclusion in petitioner’s payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-
employee relationship. The Regional Director, therefore, committed grievous error in ordering petitioner to answer for respondent’s
claims. Moreover, with the conclusion that no employer-employee relationship has ever existed between petitioner and respondent,
it is crystal-clear that the DOLE Regional Director had no jurisdiction over respondent’s complaint. Thus, the improvident exercise of
power by the Secretary of Labor and the Regional Director behooves the court to subject their actions for review and to invalidate all
the subsequent orders they issued.
IV.
The records show that petitioner’s appeal was denied because it had allegedly failed to post a cash or surety bond. What it
attached instead to its appeal was the Letter Agreement[34]
executed by petitioner and its bank, the cash voucher,[35]
and the Deed
of Assignment of Bank Deposits.[36]
According to the DOLE, these documents do not constitute the cash or surety bond
contemplated by law; thus, it is as if no cash or surety bond was posted when it filed its appeal.
The Court does not agree.
The provision on appeals from the DOLE Regional Offices to the DOLE Secretary is in the last paragraph of Art. 128 (b) of the
Labor Code, which reads:
An order issued by the duly authorized representative of the Secretary of Labor and Employment under this
article may be appealed to the latter. In case said order involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent
to the monetary award in the order appealed from. (emphasis supplied)
While the requirements for perfecting an appeal must be strictly followed as they are considered indispensable interdictions
against needless delays and for orderly discharge of judicial business, the law does admit exceptions when warranted by the
circumstances. Technicality should not be allowed to stand in the way of equitably and completely resolving the rights and
obligations of the parties.[37]
Thus, in some cases, the bond requirement on appeals involving monetary awards had been relaxed,
such as when (i) there was substantial compliance with the Rules; (ii) the surrounding facts and circumstances constitute
meritorious ground to reduce the bond; (iii) a liberal interpretation of the requirement of an appeal bond would serve the desired
objective of resolving controversies on the merits; or (iv) the appellants, at the very least exhibited their willingness and/or good
faith by posting a partial bond during the reglementary period.[38]
A review of the documents submitted by petitioner is called for to determine whether they should have been admitted as or in
lieu of the surety or cash bond to sustain the appeal and serve the ends of substantial justice.
The Deed of Assignment reads:
DEED OF ASSIGNMENT OF BANK DEPOSIT
WITH SPECIAL POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:

40. That I, GREMAN B. SOLANTE in my capacity as Station Manager of DYMF Cebu City, PEOPLE’S
BROADCASTING SERVICES, INC., a corporation duly authorized and existing under and by virtue of the laws of
the Philippines, for and in consideration of the sum of PESOS: TWO HUNDRED THREE THOUSAND SEVEN
HUNDRED TWENTY SIX PESOS & 30/100 ONLY (P203,726.30) Phil. Currency, as CASH BOND GUARANTEE for the
monetary award in favor to the Plaintiff in the Labor Case docketed as LSED Case No. R0700-2003-09-CI-09,
now pending appeal.
That Respondent-Appellant do hereby undertake to guarantee available and sufficient funds covered by
Platinum Savings Deposit (PSD) No. 010-8-00038-4 of PEOPLE’S BROADCASTING SERVICES, INC. in the
amount of PESOS: TWO HUNDRED THREE THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY
(P203,726.30) payable to Plaintiff-Appellee/Department of Labor and Employment Regional Office VII at Queen
City Development Bank, Cebu Branch, Sanciangko St. Cebu City.
It is understood that the said bank has the full control of Platinum Savings Deposit (PSD) No. 010-8-
00038-4 from and after this date and that said sum cannot be withdrawn by the Plaintiff-Appellee/ Department of
Labor and Employment Regional Office VII until such time that a Writ of Execution shall be ordered by the
Appellate Office.
FURTHER, this Deed of Assignment is limited to the principal amount of PESOS: TWO HUNDRED THREE
THOUSAND SEVEN HUNDRED TWENTY SIX PESOS & 30/100 ONLY (P203,726.30) Phil. Currency, therefore, any
interest to be earned from the said Deposit will be for the account holder.
IN WITNESS WHEREOF, I have hereunto affixed my signature this 18th
day if June, 2004, in the City of
Cebu, Philippines.
PEOPLE’S BROADCASTING SERVICES, INC.
By:
(Signed)
GREMAN B. SOLANTE
Station Manager
As priorly mentioned, the Deed of Assignment was accompanied by a Letter Agreement between Queen City Development
Bank and petitioner concerning Platinum Savings Deposit (PSD) No. 010-8-00038-4,[39]
and a Cash Voucher issued by petitioner
showing the amount of P203,726.30 deposited at the said bank.
Casting aside the technical imprecision and inaptness of words that mark the three documents, a liberal reading reveals the
documents petitioner did assign, as cash bond for the monetary award in favor of respondent in LSED Case NO. RO700-2003-CI-09,
the amount of P203,726.30 covered by petitioner’s PSD Account No. 010-8-00038-4 with the Queen City Development Bank at
Sanciangko St. Cebu City, with the depositary bank authorized to remit the amount to, and upon withdrawal by respondent and or
the Department of Labor and Employment Regional Office VII, on the basis of the proper writ of execution. The Court finds that the
Deed of Assignment constitutes substantial compliance with the bond requirement.
The purpose of an appeal bond is to ensure, during the period of appeal, against any occurrence that would defeat or
diminish recovery by the aggrieved employees under the judgment if subsequently affirmed.[40]
The Deed of Assignment in the
instant case, like a cash or surety bond, serves the same purpose. First, the Deed of Assignment constitutes not just a partial
amount, but rather the entire award in the appealed Order. Second, it is clear from the Deed of Assignment that the entire amount
is under the full control of the bank, and not of petitioner, and is in fact payable to the DOLE Regional Office, to be withdrawn by the
same office after it had issued a writ of execution. For all intents and purposes, the Deed of Assignment in tandem with the Letter
Agreement and Cash Voucher is as good as cash. Third, the Court finds that the execution of the Deed of Assignment, the Letter
Agreement and the Cash Voucher were made in good faith, and constituted clear manifestation of petitioner’s willingness to pay
the judgment amount.
The Deed of Assignment must be distinguished from the type of bank certification submitted by appellants in Cordova v.
Keysa’s Boutique,[41]
wherein this Court found that such bank certification did not come close to the cash or surety bond required by
law. The bank certification in Cordova merely stated that the employer maintains a depository account with a balance
ofP23,008.19, and that the certification was issued upon the depositor’s request for whatever legal purposes it may serve. There
was no indication that the said deposit was made specifically for the pending appeal, as in the instant case. Thus, the Court ruled
that the bank certification had not in any way ensured that the award would be paid should the appeal fail. Neither was the appellee
in the case prevented from making withdrawals from the savings account. Finally, the amount deposited was measly compared to
the total monetary award in the judgment.[42]
V.
Another question of technicality was posed against the instant petition in the hope that it would not be given due
course. Respondent asserts that petitioner pursued the wrong mode of appeal and thus the instant petition must be
dismissed. Once more, the Court is not convinced.
A petition for certiorari is the proper remedy when any tribunal, board or officer exercising judicial or quasi-judicial functions
has acted without or in excess of its jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and

41. there is no appeal, nor any plain speedy, and adequate remedy at law. There is “grave abuse of discretion” when respondent acts in
a capricious or whimsical manner in the exercise of its judgment as to be equivalent to lack of jurisdiction.[43]
Respondent may have a point in asserting that in this case a Rule 65 petition is a wrong mode of appeal, as indeed the
writ of certiorari is an extraordinary remedy, and certiorari jurisdiction is not to be equated with appellate
jurisdiction. Nevertheless, it is settled, as a general proposition, that the availability of an appeal does not foreclose recourse to the
extraordinary remedies, such ascertiorari and prohibition, where appeal is not adequate or equally beneficial, speedy and
sufficient, as where the orders of the trial court were issued in excess of or without jurisdiction, or there is need to promptly relieve
the aggrieved party from the injurious effects of the acts of an inferior court or tribunal, e.g., the court has authorized execution of
the judgment.[44]
This Court has even recognized that a recourse to certiorari is proper not only where there is a clear deprivation
of petitioner’s fundamental right to due process, but so also where other special circumstances warrant immediate and more direct
action.[45]
In one case, it was held that the extraordinary writ of certiorari will lie if it is satisfactorily established that the tribunal
acted capriciously and whimsically in total disregard of evidence material to or even decisive of the controversy,[46]
and if it is shown
that the refusal to allow a Rule 65 petition would result in the infliction of an injustice on a party by a judgment that evidently was
rendered whimsically and capriciously, ignoring and disregarding uncontroverted facts and familiar legal principles without any valid
cause whatsoever.[47]
It must be remembered that a wide breadth of discretion is granted a court of justice in certiorari proceedings.[48]
The Court
has not too infrequently given due course to a petition for certiorari, even when the proper remedy would have been an appeal,
where valid and compelling considerations would warrant such a recourse.[49]
Moreover, the Court allowed a Rule 65 petition, despite
the availability of plain, speedy or adequate remedy, in view of the importance of the issues raised therein.[50]
The rules
were also relaxed by the Court after considering the public interest involved in the case;[51]
when public welfare and the advancement
of public policy dictates; when the broader interest of justice so requires; when the writs issued are null and void; or when the
questioned order amounts to an oppressive exercise of judicial authority.[52]
“The peculiar circumstances of this case warrant, as we held in Republic v. Court of Appeals, 107 SCRA 504, 524, the
‘exercise once more of our exclusive prerogative to suspend our own rules or to exempt a particular case from its operation as in x
xRepublic of the Philippines v. Court of Appeals, et al., (83 SCRA 453, 478-480 [1978]), thus: ‘ x x The Rules have been drafted with
the primary objective of enhancing fair trials and expediting justice. As a corollary, if their applications and operation tend to subvert
and defeat instead of promote and enhance it, their suspension is justified.”[53]
The Regional Director fully relied on the self-serving allegations of respondent and misinterpreted the documents presented
as evidence by respondent. To make matters worse, DOLE denied petitioner’s appeal based solely on petitioner’s alleged failure to
file a cash or surety bond, without any discussion on the merits of the case. Since the petition for certiorari before the Court of
Appeals sought the reversal of the two aforesaid orders, the appellate court necessarily had to examine the evidence anew to
determine whether the conclusions of the DOLE were supported by the evidence presented. It appears, however, that the Court of
Appeals did not even review the assailed orders and focused instead on a general discussion of due process and the jurisdiction of
the Regional Director. Had the appellate court truly reviewed the records of the case, it would have seen that there existed valid
and sufficient grounds for finding grave abuse of discretion on the part of the DOLE Secretary as well the Regional Director. In
ruling and acting as it did, the Court finds that the Court of Appeals may be properly subjected to its certiorari jurisdiction. After
all, this Court has previously ruled that the extraordinary writ of certiorari will lie if it is satisfactorily
established that the tribunal had acted capriciously and whimsically in total disregard of evidence material to or even decisive of the
controversy.[54]
The most important consideration for the allowance of the instant petition is the opportunity for the Court not
only to set the demarcation between the NLRC’s jurisdiction and the DOLE’s prerogative but also the procedure
when the case involves the fundamental challenge on the DOLE’s prerogative based on lack of employer-employee
relationship. As exhaustively discussed here, the DOLE’s prerogative hinges on the existence of employer-employee
relationship, the issue is which is at the very heart of this case. And the evidence clearly indicates private respondent
has never been petitioner’s employee. But the DOLE did not address, while the Court of Appeals glossed over, the
issue. The peremptory dismissal of the instant petition on a technicality would deprive the Court of the opportunity to
resolve the novel controversy.
WHEREFORE, the petition is GRANTED. The Decision dated 26 October 2006 and the Resolution dated 26 June 2007 of
the Court of Appeals in C.A. G.R. CEB-SP No. 00855 are REVERSED and SET ASIDE. The Order of the then Acting Secretary of the
Department of Labor and Employment dated 27 January 2005 denying petitioner’s
appeal, and the Orders of the Director, DOLE Regional Office No. VII, dated 24 May 2004 and 27 February 2004, respectively,
areANNULLED. The complaint against petitioner is DISMISSED.
SO ORDERED.

42. G.R. No. 167622 June 29, 2010
GREGORIO V. TONGKO, Petitioner,
vs.
THE MANUFACTURERS LIFE INSURANCE CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS,Respondents.
R E S O L U T I O N
BRION, J.:
This resolves the Motion for Reconsideration1
dated December 3, 2008 filed by respondent The Manufacturers Life Insurance Co.
(Phils.), Inc. (Manulife) to set aside our Decision of November 7, 2008. In the assailed decision, we found that an employer-
employee relationship existed between Manulife and petitioner Gregorio Tongko and ordered Manulife to pay Tongko backwages and
separation pay for illegal dismissal.
The following facts have been stated in our Decision of November 7, 2008, now under reconsideration, but are repeated, simply for
purposes of clarity.
The contractual relationship between Tongko and Manulife had two basic phases. The first or initial phase began on July 1, 1977,
under a Career Agent’s Agreement (Agreement) that provided:
It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be construed or
interpreted as creating an employer-employee relationship between the Company and the Agent.
x x x x
a) The Agent shall canvass for applications for Life Insurance, Annuities, Group policies and other products offered by the Company,
and collect, in exchange for provisional receipts issued by the Agent, money due to or become due to the Company in respect of
applications or policies obtained by or through the Agent or from policyholders allotted by the Company to the Agent for servicing,
subject to subsequent confirmation of receipt of payment by the Company as evidenced by an Official Receipt issued by the
Company directly to the policyholder.
x x x x
The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the Agent by giving
written notice to the Agent within fifteen (15) days from the time of the discovery of the breach. No waiver, extinguishment,
abandonment, withdrawal or cancellation of the right to terminate this Agreement by the Company shall be construed for any
previous failure to exercise its right under any provision of this Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the other party fifteen (15)
days notice in writing.2
Tongko additionally agreed (1) to comply with all regulations and requirements of Manulife, and (2) to maintain a standard of
knowledge and competency in the sale of Manulife’s products, satisfactory to Manulife and sufficient to meet the volume of the new
business, required by his Production Club membership.3
The second phase started in 1983 when Tongko was named Unit Manager in Manulife’s Sales Agency Organization. In 1990, he
became a Branch Manager. Six years later (or in 1996), Tongko became a Regional Sales Manager.4
Tongko’s gross earnings consisted of commissions, persistency income, and management overrides. Since the beginning, Tongko
consistently declared himself self-employed in his income tax returns. Thus, under oath, he declared his gross business income and
deducted his business expenses to arrive at his taxable business income. Manulife withheld the corresponding 10% tax on Tongko’s
earnings.5
In 2001, Manulife instituted manpower development programs at the regional sales management level. Respondent Renato Vergel de
Dios wrote Tongko a letter dated November 6, 2001 on concerns that were brought up during the October 18, 2001 Metro North
Sales Managers Meeting. De Dios wrote:

43. The first step to transforming Manulife into a big league player has been very clear – to increase the number of agents to at least
1,000 strong for a start. This may seem diametrically opposed to the way Manulife was run when you first joined the organization.
Since then, however, substantial changes have taken place in the organization, as these have been influenced by developments both
from within and without the company.
x x x x
The issues around agent recruiting are central to the intended objectives hence the need for a Senior Managers’ meeting earlier last
month when Kevin O’Connor, SVP-Agency, took to the floor to determine from our senior agency leaders what more could be done to
bolster manpower development. At earlier meetings, Kevin had presented information where evidently, your Region was the lowest
performer (on a per Manager basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the laggards in this
area.
While discussions, in general, were positive other than for certain comments from your end which were perceived to be uncalled for,
it became clear that a one-on-one meeting with you was necessary to ensure that you and management, were on the same plane.
As gleaned from some of your previous comments in prior meetings (both in group and one-on-one), it was not clear that we were
proceeding in the same direction.
Kevin held subsequent series of meetings with you as a result, one of which I joined briefly. In those subsequent meetings you
reiterated certain views, the validity of which we challenged and subsequently found as having no basis.
With such views coming from you, I was a bit concerned that the rest of the Metro North Managers may be a bit confused as to the
directions the company was taking. For this reason, I sought a meeting with everyone in your management team, including you, to
clear the air, so to speak.
This note is intended to confirm the items that were discussed at the said Metro North Region’s Sales Managers meeting held at the
7/F Conference room last 18 October.
x x x x
Issue # 2: "Some Managers are unhappy with their earnings and would want to revert to the position of agents."
This is an often repeated issue you have raised with me and with Kevin. For this reason, I placed the issue on the table before the
rest of your Region’s Sales Managers to verify its validity. As you must have noted, no Sales Manager came forward on their own to
confirm your statement and it took you to name Malou Samson as a source of the same, an allegation that Malou herself denied at
our meeting and in your very presence.
This only confirms, Greg, that those prior comments have no solid basis at all. I now believe what I had thought all along, that these
allegations were simply meant to muddle the issues surrounding the inability of your Region to meet its agency development
objectives!
Issue # 3: "Sales Managers are doing what the company asks them to do but, in the process, they earn less."
x x x x
All the above notwithstanding, we had your own records checked and we found that you made a lot more money in the Year 2000
versus 1999. In addition, you also volunteered the information to Kevin when you said that you probably will make more money in
the Year 2001 compared to Year 2000. Obviously, your above statement about making "less money" did not refer to you but the way
you argued this point had us almost believing that you were spouting the gospel of truth when you were not. x x x
x x x x
All of a sudden, Greg, I have become much more worried about your ability to lead this group towards the new direction that we
have been discussing these past few weeks, i.e., Manulife’s goal to become a major agency-led distribution company in the
Philippines. While as you claim, you have not stopped anyone from recruiting, I have never heard you proactively push for greater
agency recruiting. You have not been proactive all these years when it comes to agency growth.
x x x x
I cannot afford to see a major region fail to deliver on its developmental goals next year and so, we are making the following
changes in the interim:
1. You will hire at your expense a competent assistant who can unload you of much of the routine tasks which can be easily
delegated. This assistant should be so chosen as to complement your skills and help you in the areas where you feel "may not be
your cup of tea."

44. You have stated, if not implied, that your work as Regional Manager may be too taxing for you and for your health. The above could
solve this problem.
x x x x
2. Effective immediately, Kevin and the rest of the Agency Operations will deal with the North Star Branch (NSB) in autonomous
fashion. x x x
I have decided to make this change so as to reduce your span of control and allow you to concentrate more fully on overseeing the
remaining groups under Metro North, your Central Unit and the rest of the Sales Managers in Metro North. I will hold you solely
responsible for meeting the objectives of these remaining groups.
x x x x
The above changes can end at this point and they need not go any further. This, however, is entirely dependent upon you. But you
have to understand that meeting corporate objectives by everyone is primary and will not be compromised. We are meeting tough
challenges next year, and I would want everybody on board. Any resistance or holding back by anyone will be dealt with
accordingly.6
Subsequently, de Dios wrote Tongko another letter, dated December 18, 2001, terminating Tongko’s services:
It would appear, however, that despite the series of meetings and communications, both one-on-one meetings between yourself and
SVP Kevin O’Connor, some of them with me, as well as group meetings with your Sales Managers, all these efforts have failed in
helping you align your directions with Management’s avowed agency growth policy.
x x x x
On account thereof, Management is exercising its prerogative under Section 14 of your Agents Contract as we are now issuing this
notice of termination of your Agency Agreement with us effective fifteen days from the date of this letter.7
Tongko responded by filing an illegal dismissal complaint with the National Labor Relations Commission (NLRC) Arbitration Branch.
He essentially alleged – despite the clear terms of the letter terminating his Agency Agreement – that he was Manulife’s employee
before he was illegally dismissed.8
Thus, the threshold issue is the existence of an employment relationship. A finding that none exists renders the question of illegal
dismissal moot; a finding that an employment relationship exists, on the other hand, necessarily leads to the need to determine the
validity of the termination of the relationship.
A. Tongko’s Case for Employment Relationship
Tongko asserted that as Unit Manager, he was paid an annual over-rider not exceeding P50,000.00, regardless of production levels
attained and exclusive of commissions and bonuses. He also claimed that as Regional Sales Manager, he was given a travel and
entertainment allowance of P36,000.00 per year in addition to his overriding commissions; he was tasked with numerous
administrative functions and supervisory authority over Manulife’s employees, aside from merely selling policies and recruiting
agents for Manulife; and he recommended and recruited insurance agents subject to vetting and approval by Manulife. He further
alleges that he was assigned a definite place in the Manulife offices when he was not in the field – at the 3rd Floor, Manulife Center,
108 Tordesillas corner Gallardo Sts., Salcedo Village, Makati City – for which he never paid any rental. Manulife provided the office
equipment he used, including tables, chairs, computers and printers (and even office stationery), and paid for the electricity, water
and telephone bills. As Regional Sales Manager, Tongko additionally asserts that he was required to follow at least three codes of
conduct.9
B. Manulife’s Case – Agency Relationship with Tongko
Manulife argues that Tongko had no fixed wage or salary. Under the Agreement, Tongko was paid commissions of varying amounts,
computed based on the premium paid in full and actually received by Manulife on policies obtained through an agent. As sales
manager, Tongko was paid overriding sales commission derived from sales made by agents under his unit/structure/branch/region.
Manulife also points out that it deducted and withheld a 10% tax from all commissions Tongko received; Tongko even declared
himself to be self-employed and consistently paid taxes as such—i.e., he availed of tax deductions such as ordinary and necessary
trade, business and professional expenses to which a business is entitled.
Manulife asserts that the labor tribunals have no jurisdiction over Tongko’s claim as he was not its employee as characterized in the
four-fold test and our ruling in Carungcong v. National Labor Relations Commission.10
The Conflicting Rulings of the Lower Tribunals

45. The labor arbiter decreed that no employer-employee relationship existed between the parties. However, the NLRC reversed the
labor arbiter’s decision on appeal; it found the existence of an employer-employee relationship and concluded that Tongko had been
illegally dismissed. In the petition for certiorari with the Court of Appeals (CA), the appellate court found that the NLRC gravely
abused its discretion in its ruling and reverted to the labor arbiter’s decision that no employer-employee relationship existed between
Tongko and Manulife.
Our Decision of November 7, 2008
In our Decision of November 7, 2008, we reversed the CA ruling and found that an employment relationship existed between Tongko
and Manulife. We concluded that Tongko is Manulife’s employee for the following reasons:
1. Our ruling in the first Insular11
case did not foreclose the possibility of an insurance agent becoming an employee of an
insurance company; if evidence exists showing that the company promulgated rules or regulations that effectively controlled
or restricted an insurance agent’s choice of methods or the methods themselves in selling insurance, an employer-employee
relationship would be present. The determination of the existence of an employer-employee relationship is thus on a case-
to-case basis depending on the evidence on record.
2. Manulife had the power of control over Tongko, sufficient to characterize him as an employee, as shown by the following
indicators:
2.1 Tongko undertook to comply with Manulife’s rules, regulations and other requirements, i.e., the different codes
of conduct such as the Agent Code of Conduct, the Manulife Financial Code of Conduct, and the Financial Code of
Conduct Agreement;
2.2 The various affidavits of Manulife’s insurance agents and managers, who occupied similar positions as Tongko,
showed that they performed administrative duties that established employment with Manulife;12
and
2.3 Tongko was tasked to recruit some agents in addition to his other administrative functions. De Dios’ letter
harped on the direction Manulife intended to take, viz., greater agency recruitment as the primary means to sell
more policies; Tongko’s alleged failure to follow this directive led to the termination of his employment with
Manulife.
The Motion for Reconsideration
Manulife disagreed with our Decision and filed the present motion for reconsideration on the following GROUNDS:
1. The November 7[, 2008] Decision violates Manulife’s right to due process by: (a) confining the review only to the issue of
"control" and utterly disregarding all the other issues that had been joined in this case; (b) mischaracterizing the divergence
of conclusions between the CA and the NLRC decisions as confined only to that on "control"; (c) grossly failing to consider
the findings and conclusions of the CA on the majority of the material evidence, especially [Tongko’s] declaration in his
income tax returns that he was a "business person" or "self-employed"; and (d) allowing [Tongko] to repudiate his sworn
statement in a public document.
2. The November 7[, 2008] Decision contravenes settled rules in contract law and agency, distorts not only the legal
relationships of agencies to sell but also distributorship and franchising, and ignores the constitutional and policy context of
contract law vis-à-vis labor law.
3. The November 7[, 2008] Decision ignores the findings of the CA on the three elements of the four-fold test other than
the "control" test, reverses well-settled doctrines of law on employer-employee relationships, and grossly misapplies the
"control test," by selecting, without basis, a few items of evidence to the exclusion of more material evidence to support its
conclusion that there is "control."
4. The November 7[, 2008] Decision is judicial legislation, beyond the scope authorized by Articles 8 and 9 of the Civil Code,
beyond the powers granted to this Court under Article VIII, Section 1 of the Constitution and contravenes through judicial
legislation, the constitutional prohibition against impairment of contracts under Article III, Section 10 of the Constitution.
5. For all the above reasons, the November 7[, 2008] Decision made unsustainable and reversible errors, which should be
corrected, in concluding that Respondent Manulife and Petitioner had an employer-employee relationship, that Respondent
Manulife illegally dismissed Petitioner, and for consequently ordering Respondent Manulife to pay Petitioner backwages,
separation pay, nominal damages and attorney’s fees.13
THE COURT’S RULING
A. The Insurance and the Civil Codes;
the Parties’ Intent and Established
Industry Practices

46. We cannot consider the present case purely from a labor law perspective, oblivious that the factual antecedents were set in the
insurance industry so that the Insurance Code primarily governs. Chapter IV, Title 1 of this Code is wholly devoted to "Insurance
Agents and Brokers" and specifically defines the agents and brokers relationship with the insurance company and how they are
governed by the Code and regulated by the Insurance Commission.
The Insurance Code, of course, does not wholly regulate the "agency" that it speaks of, as agency is a civil law matter governed by
the Civil Code. Thus, at the very least, three sets of laws – namely, the Insurance Code, the Labor Code and the Civil Code – have to
be considered in looking at the present case. Not to be forgotten, too, is the Agreement (partly reproduced on page 2 of this Dissent
and which no one disputes) that the parties adopted to govern their relationship for purposes of selling the insurance the company
offers. To forget these other laws is to take a myopic view of the present case and to add to the uncertainties that now exist in
considering the legal relationship between the insurance company and its "agents."
The main issue of whether an agency or an employment relationship exists depends on the incidents of the relationship. The Labor
Code concept of "control" has to be compared and distinguished with the "control" that must necessarily exist in a principal-agent
relationship. The principal cannot but also have his or her say in directing the course of the principal-agent relationship, especially in
cases where the company-representative relationship in the insurance industry is an agency.
a. The laws on insurance and agency
The business of insurance is a highly regulated commercial activity in the country, in terms particularly of who can be in the
insurance business, who can act for and in behalf of an insurer, and how these parties shall conduct themselves in the insurance
business. Section 186 of the Insurance Code provides that "No person, partnership, or association of persons shall transact any
insurance business in the Philippines except as agent of a person or corporation authorized to do the business of insurance in the
Philippines." Sections 299 and 300 of the Insurance Code on Insurance Agents and Brokers, among other provisions, provide:
Section 299. No insurance company doing business in the Philippines, nor any agent thereof, shall pay any commission or other
compensation to any person for services in obtaining insurance, unless such person shall have first procured from the Commissioner
a license to act as an insurance agent of such company or as an insurance broker as hereinafter provided.
No person shall act as an insurance agent or as an insurance broker in the solicitation or procurement of applications for insurance,
or receive for services in obtaining insurance, any commission or other compensation from any insurance company doing business in
the Philippines or any agent thereof, without first procuring a license so to act from the Commissioner x x x The Commissioner shall
satisfy himself as to the competence and trustworthiness of the applicant and shall have the right to refuse to issue or renew and to
suspend or revoke any such license in his discretion.1avvphi1.net
Section 300. Any person who for compensation solicits or obtains insurance on behalf of any insurance company or transmits for a
person other than himself an application for a policy or contract of insurance to or from such company or offers or assumes to act in
the negotiating of such insurance shall be an insurance agent within the intent of this section and shall thereby become liable to all
the duties, requirements, liabilities and penalties to which an insurance agent is subject.
The application for an insurance agent’s license requires a written examination, and the applicant must be of good moral character
and must not have been convicted of a crime involving moral turpitude.14
The insurance agent who collects premiums from an
insured person for remittance to the insurance company does so in a fiduciary capacity, and an insurance company which delivers an
insurance policy or contract to an authorized agent is deemed to have authorized the agent to receive payment on the company’s
behalf.15
Section 361 further prohibits the offer, negotiation, or collection of any amount other than that specified in the policy and
this covers any rebate from the premium or any special favor or advantage in the dividends or benefit accruing from the policy.
Thus, under the Insurance Code, the agent must, as a matter of qualification, be licensed and must also act within the parameters of
the authority granted under the license and under the contract with the principal. Other than the need for a license, the agent is
limited in the way he offers and negotiates for the sale of the company’s insurance products, in his collection activities, and in the
delivery of the insurance contract or policy. Rules regarding the desired results (e.g., the required volume to continue to qualify as a
company agent, rules to check on the parameters on the authority given to the agent, and rules to ensure that industry, legal and
ethical rules are followed) are built-in elements of control specific to an insurance agency and should not and cannot be read as
elements of control that attend an employment relationship governed by the Labor Code.
On the other hand, the Civil Code defines an agent as a "person [who] binds himself to render some service or to do something in
representation or on behalf of another, with the consent or authority of the latter."16
While this is a very broad definition that on its
face may even encompass an employment relationship, the distinctions between agency and employment are sufficiently established
by law and jurisprudence.
Generally, the determinative element is the control exercised over the one rendering service. The employer controls the employee
both in the results and in the means and manner of achieving this result. The principal in an agency relationship, on the other hand,
also has the prerogative to exercise control over the agent in undertaking the assigned task based on the parameters outlined in the
pertinent laws.
Under the general law on agency as applied to insurance, an agency must be express in light of the need for a license and for the
designation by the insurance company. In the present case, the Agreement fully serves as grant of authority to Tongko as Manulife’s
insurance agent.17
This agreement is supplemented by the company’s agency practices and usages, duly accepted by the agent in

47. carrying out the agency.18
By authority of the Insurance Code, an insurance agency is for compensation,19
a matter the Civil Code
Rules on Agency presumes in the absence of proof to the contrary.20
Other than the compensation, the principal is bound to advance
to, or to reimburse, the agent the agreed sums necessary for the execution of the agency.21
By implication at least under Article
1994 of the Civil Code, the principal can appoint two or more agents to carry out the same assigned tasks,22
based necessarily on the
specific instructions and directives given to them.
With particular relevance to the present case is the provision that "In the execution of the agency, the agent shall act in accordance
with the instructions of the principal."23
This provision is pertinent for purposes of the necessary control that the principal exercises
over the agent in undertaking the assigned task, and is an area where the instructions can intrude into the labor law concept of
control so that minute consideration of the facts is necessary. A related article is Article 1891 of the Civil Code which binds the agent
to render an account of his transactions to the principal.
B. The Cited Case
The Decision of November 7, 2008 refers to the first Insular and Grepalife cases to establish that the company rules and regulations
that an agent has to comply with are indicative of an employer-employee relationship.24
The Dissenting Opinions of Justice Presbitero
Velasco, Jr. and Justice Conchita Carpio Morales also cite Insular Life Assurance Co. v. National Labor Relations Commission (second
Insular case)25
to support the view that Tongko is Manulife’s employee. On the other hand, Manulife cites the Carungcong case and
AFP Mutual Benefit Association, Inc. v. National Labor Relations Commission (AFPMBAI case)26
to support its allegation that Tongko
was not its employee.
A caveat has been given above with respect to the use of the rulings in the cited cases because none of them is on all fours with the
present case; the uniqueness of the factual situation of the present case prevents it from being directly and readily cast in the mold
of the cited cases. These cited cases are themselves different from one another; this difference underscores the need to read and
quote them in the context of their own factual situations.
The present case at first glance appears aligned with the facts in the Carungcong, the Grepalife, and the second Insular Life cases. A
critical difference, however, exists as these cited cases dealt with the proper legal characterization of a subsequent management
contract that superseded the original agency contract between the insurance company and its agent. Carungcong dealt with a
subsequent Agreement making Carungcong a New Business Manager that clearly superseded the Agreement designating Carungcong
as an agent empowered to solicit applications for insurance. The Grepalife case, on the other hand, dealt with the proper legal
characterization of the appointment of the Ruiz brothers to positions higher than their original position as insurance agents. Thus,
after analyzing the duties and functions of the Ruiz brothers, as these were enumerated in their contracts, we concluded that the
company practically dictated the manner by which the Ruiz brothers were to carry out their jobs. Finally, the second Insular Life case
dealt with the implications of de los Reyes’ appointment as acting unit manager which, like the subsequent contracts in the
Carungcong and the Grepalife cases, was clearly defined under a subsequent contract. In all these cited cases, a determination of
the presence of the Labor Code element of control was made on the basis of the stipulations of the subsequent contracts.
In stark contrast with the Carungcong, the Grepalife, and the second Insular Life cases, the only contract or document extant and
submitted as evidence in the present case is the Agreement – a pure agency agreement in the Civil Code context similar to the
original contract in the first Insular Life case and the contract in the AFPMBAI case. And while Tongko was later on designated unit
manager in 1983, Branch Manager in 1990, and Regional Sales Manager in 1996, no formal contract regarding these undertakings
appears in the records of the case. Any such contract or agreement, had there been any, could have at the very least provided the
bases for properly ascertaining the juridical relationship established between the parties.
These critical differences, particularly between the present case and the Grepalife and the second Insular Life cases, should therefore
immediately drive us to be more prudent and cautious in applying the rulings in these cases.
C. Analysis of the Evidence
c.1. The Agreement
The primary evidence in the present case is the July 1, 1977 Agreement that governed and defined the parties’ relations until the
Agreement’s termination in 2001. This Agreement stood for more than two decades and, based on the records of the case, was
never modified or novated. It assumes primacy because it directly dealt with the nature of the parties’ relationship up to the very
end; moreover, both parties never disputed its authenticity or the accuracy of its terms.
By the Agreement’s express terms, Tongko served as an "insurance agent" for Manulife, not as an employee. To be sure, the
Agreement’s legal characterization of the nature of the relationship cannot be conclusive and binding on the courts; as the dissent
clearly stated, the characterization of the juridical relationship the Agreement embodied is a matter of law that is for the courts to
determine. At the same time, though, the characterization the parties gave to their relationship in the Agreement cannot simply be
brushed aside because it embodies their intent at the time they entered the Agreement, and they were governed by this
understanding throughout their relationship. At the very least, the provision on the absence of employer-employee relationship
between the parties can be an aid in considering the Agreement and its implementation, and in appreciating the other evidence on
record.
The parties’ legal characterization of their intent, although not conclusive, is critical in this case because this intent is not illegal or
outside the contemplation of law, particularly of the Insurance and the Civil Codes. From this perspective, the provisions of the

48. Insurance Code cannot be disregarded as this Code (as heretofore already noted) expressly envisions a principal-agent relationship
between the insurance company and the insurance agent in the sale of insurance to the public.1awph!1 For this reason, we can take
judicial notice that as a matter of Insurance Code-based business practice, an agency relationship prevails in the insurance industry
for the purpose of selling insurance. The Agreement, by its express terms, is in accordance with the Insurance Code model when it
provided for a principal-agent relationship, and thus cannot lightly be set aside nor simply be considered as an agreement that does
not reflect the parties’ true intent. This intent, incidentally, is reinforced by the system of compensation the Agreement provides,
which likewise is in accordance with the production-based sales commissions the Insurance Code provides.
Significantly, evidence shows that Tongko’s role as an insurance agent never changed during his relationship with Manulife. If
changes occurred at all, the changes did not appear to be in the nature of their core relationship. Tongko essentially remained an
agent, but moved up in this role through Manulife’s recognition that he could use other agents approved by Manulife, but operating
under his guidance and in whose commissions he had a share. For want of a better term, Tongko perhaps could be labeled as a "lead
agent" who guided under his wing other Manulife agents similarly tasked with the selling of Manulife insurance.
Like Tongko, the evidence suggests that these other agents operated under their own agency agreements. Thus, if Tongko’s
compensation scheme changed at all during his relationship with Manulife, the change was solely for purposes of crediting him with
his share in the commissions the agents under his wing generated. As an agent who was recruiting and guiding other insurance
agents, Tongko likewise moved up in terms of the reimbursement of expenses he incurred in the course of his lead agency, a
prerogative he enjoyed pursuant to Article 1912 of the Civil Code. Thus, Tongko received greater reimbursements for his expenses
and was even allowed to use Manulife facilities in his interactions with the agents, all of whom were, in the strict sense, Manulife
agents approved and certified as such by Manulife with the Insurance Commission.
That Tongko assumed a leadership role but nevertheless wholly remained an agent is the inevitable conclusion that results from the
reading of the Agreement (the only agreement on record in this case) and his continuing role thereunder as sales agent, from the
perspective of the Insurance and the Civil Codes and in light of what Tongko himself attested to as his role as Regional Sales
Manager. To be sure, this interpretation could have been contradicted if other agreements had been submitted as evidence of the
relationship between Manulife and Tongko on the latter’s expanded undertakings. In the absence of any such evidence, however, this
reading – based on the available evidence and the applicable insurance and civil law provisions – must stand, subject only to
objective and evidentiary Labor Code tests on the existence of an employer-employee relationship.
In applying such Labor Code tests, however, the enforcement of the Agreement during the course of the parties’ relationship should
be noted. From 1977 until the termination of the Agreement, Tongko’s occupation was to sell Manulife’s insurance policies and
products. Both parties acquiesced with the terms and conditions of the Agreement. Tongko, for his part, accepted all the benefits
flowing from the Agreement, particularly the generous commissions.
Evidence indicates that Tongko consistently clung to the view that he was an independent agent selling Manulife insurance products
since he invariably declared himself a business or self-employed person in his income tax returns. This consistency with, and
action made pursuant to the Agreement were pieces of evidence that were never mentioned nor considered in our
Decision of November 7, 2008. Had they been considered, they could, at the very least, serve as Tongko’s admissions against his
interest. Strictly speaking, Tongko’s tax returns cannot but be legally significant because he certified under oath the amount he
earned as gross business income, claimed business deductions, leading to his net taxable income. This should be evidence of the first
order that cannot be brushed aside by a mere denial. Even on a layman’s view that is devoid of legal considerations, the extent of his
annual income alone renders his claimed employment status doubtful.27
Hand in hand with the concept of admission against interest in considering the tax returns, the concept of estoppel – a legal and
equitable concept28
– necessarily must come into play. Tongko’s previous admissions in several years of tax returns as an
independent agent, as against his belated claim that he was all along an employee, are too diametrically opposed to be simply
dismissed or ignored. Interestingly, Justice Velasco’s dissenting opinion states that Tongko was forced to declare himself a business
or self-employed person by Manulife’s persistent refusal to recognize him as its employee.29
Regrettably, the dissent has shown
no basis for this conclusion, an understandable omission since no evidence in fact exists on this point in the records of
the case. In fact, what the evidence shows is Tongko’s full conformity with, and action as, an independent agent until his
relationship with Manulife took a bad turn.
Another interesting point the dissent raised with respect to the Agreement is its conclusion that the Agreement negated any
employment relationship between Tongko and Manulife so that the commissions he earned as a sales agent should not be considered
in the determination of the backwages and separation pay that should be given to him. This part of the dissent is correct although it
went on to twist this conclusion by asserting that Tongko had dual roles in his relationship with Manulife; he was an agent, not an
employee, in so far as he sold insurance for Manulife, but was an employee in his capacity as a manager. Thus, the dissent
concluded that Tongko’s backwages should only be with respect to his role as Manulife’s manager.
The conclusion with respect to Tongko’s employment as a manager is, of course, unacceptable for the legal, factual and practical
reasons discussed in this Resolution. In brief, the factual reason is grounded on the lack of evidentiary support of the conclusion
that Manulife exercised control over Tongko in the sense understood in the Labor Code. The legal reason, partly based on the lack
of factual basis, is the erroneous legal conclusion that Manulife controlled Tongko and was thus its employee. The practical reason,
on the other hand, is the havoc that the dissent’s unwarranted conclusion would cause the insurance industry that, by the law’s own
design, operated along the lines of principal-agent relationship in the sale of insurance.
c.2. Other Evidence of Alleged Control

49. A glaring evidentiary gap for Tongko in this case is the lack of evidence on record showing that Manulife ever exercised means-and-
manner control, even to a limited extent, over Tongko during his ascent in Manulife’s sales ladder. In 1983, Tongko was appointed
unit manager. Inexplicably, Tongko never bothered to present any evidence at all on what this designation meant. This also holds
true for Tongko’s appointment as branch manager in 1990, and as Regional Sales Manager in 1996. The best evidence of control –
the agreement or directive relating to Tongko’s duties and responsibilities – was never introduced as part of the records of the case.
The reality is, prior to de Dios’ letter, Manulife had practically left Tongko alone not only in doing the business of selling insurance,
but also in guiding the agents under his wing. As discussed below, the alleged directives covered by de Dios’ letter, heretofore
quoted in full, were policy directions and targeted results that the company wanted Tongko and the other sales groups to realign
with in their own selling activities. This is the reality that the parties’ presented evidence consistently tells us.
What, to Tongko, serve as evidence of labor law control are the codes of conduct that Manulife imposes on its agents in the sale of
insurance. The mere presentation of codes or of rules and regulations, however, is not per se indicative of labor law control as the
law and jurisprudence teach us.
As already recited above, the Insurance Code imposes obligations on both the insurance company and its agents in the performance
of their respective obligations under the Code, particularly on licenses and their renewals, on the representations to be made to
potential customers, the collection of premiums, on the delivery of insurance policies, on the matter of compensation, and on
measures to ensure ethical business practice in the industry.
The general law on agency, on the other hand, expressly allows the principal an element of control over the agent in a manner
consistent with an agency relationship. In this sense, these control measures cannot be read as indicative of labor law control.
Foremost among these are the directives that the principal may impose on the agent to achieve the assigned tasks, to the extent
that they do not involve the means and manner of undertaking these tasks. The law likewise obligates the agent to render an
account; in this sense, the principal may impose on the agent specific instructions on how an account shall be made, particularly on
the matter of expenses and reimbursements. To these extents, control can be imposed through rules and regulations without
intruding into the labor law concept of control for purposes of employment.
From jurisprudence, an important lesson that the first Insular Life case teaches us is that a commitment to abide by the rules and
regulations of an insurance company does not ipso facto make the insurance agent an employee. Neither do guidelines somehow
restrictive of the insurance agent’s conduct necessarily indicate "control" as this term is defined in jurisprudence. Guidelines
indicative of labor law "control," as the first Insular Life case tells us, should not merely relate to the mutually
desirable result intended by the contractual relationship; they must have the nature of dictating the means or methods to
be employed in attaining the result, or of fixing the methodology and of binding or restricting the party hired to the use of these
means. In fact, results-wise, the principal can impose production quotas and can determine how many agents, with specific
territories, ought to be employed to achieve the company’s objectives. These are management policy decisions that the labor law
element of control cannot reach. Our ruling in these respects in the first Insular Life case was practically reiterated in Carungcong.
Thus, as will be shown more fully below, Manulife’s codes of conduct,30
all of which do not intrude into the insurance agents’ means
and manner of conducting their sales and only control them as to the desired results and Insurance Code norms, cannot be used as
basis for a finding that the labor law concept of control existed between Manulife and Tongko.
The dissent considers the imposition of administrative and managerial functions on Tongko as indicative of labor law control; thus,
Tongko as manager, but not as insurance agent, became Manulife’s employee. It drew this conclusion from what the other Manulife
managers disclosed in their affidavits (i.e., their enumerated administrative and managerial functions) and after comparing these
statements with the managers in Grepalife. The dissent compared the control exercised by Manulife over its managers in the present
case with the control the managers in the Grepalife case exercised over their employees by presenting the following matrix:31
Duties of Manulife’s Manager Duties of Grepalife’s Managers/Supervisors
- to render or recommend prospective agents to be
licensed, trained and contracted to sell Manulife
products and who will be part of my Unit
- train understudies for the position of district manager
- to coordinate activities of the agents under [the
managers’] Unit in [the agents’] daily, weekly and
monthly selling activities, making sure that their
respective sales targets are met;
- to conduct periodic training sessions for [the]
agents to further enhance their sales skill; and
- to assist [the] agents with their sales activities by
way of joint fieldwork, consultations and one-on-
one evaluation and analysis of particular accounts
- properly account, record and document the
company’s funds, spot-check and audit the work of the
zone supervisors, x x x follow up the submission of
weekly remittance reports of the debit agents and zone
supervisors
- direct and supervise the sales activities of the debit
agents under him, x x x undertake and discharge the
functions of absentee debit agents, spot-check the
record of debit agents, and insure proper
documentation of sales and collections of debit agents.
Aside from these affidavits however, no other evidence exists regarding the effects of Tongko’s additional roles in Manulife’s sales
operations on the contractual relationship between them.
To the dissent, Tongko’s administrative functions as recruiter, trainer, or supervisor of other sales agents constituted a substantive
alteration of Manulife’s authority over Tongko and the performance of his end of the relationship with Manulife. We could not deny

50. though that Tongko remained, first and foremost, an insurance agent, and that his additional role as Branch Manager did not lessen
his main and dominant role as insurance agent; this role continued to dominate the relations between Tongko and Manulife even
after Tongko assumed his leadership role among agents. This conclusion cannot be denied because it proceeds from the undisputed
fact that Tongko and Manulife never altered their July 1, 1977 Agreement, a distinction the present case has with the contractual
changes made in the second Insular Life case. Tongko’s results-based commissions, too, attest to the primacy he gave to his role as
insurance sales agent.
The dissent apparently did not also properly analyze and appreciate the great qualitative difference that exists between:
• the Manulife managers’ role is to coordinate activities of the agents under the managers’ Unit in the agents’ daily, weekly,
and monthly selling activities, making sure that their respective sales targets are met.
• the District Manager’s duty in Grepalife is to properly account, record, and document the company's funds, spot-check
and audit the work of the zone supervisors, conserve the company's business in the district through "reinstatements," follow
up the submission of weekly remittance reports of the debit agents and zone supervisors, preserve company property in
good condition, train understudies for the position of district managers, and maintain his quota of sales (the failure of which
is a ground for termination).
• the Zone Supervisor’s (also in Grepalife) has the duty to direct and supervise the sales activities of the debit agents
under him, conserve company property through "reinstatements," undertake and discharge the functions of absentee debit
agents, spot-check the records of debit agents, and insure proper documentation of sales and collections by the debit
agents.
These job contents are worlds apart in terms of "control." In Grepalife, the details of how to do the job are specified and pre-
determined; in the present case, the operative words are the "sales target," the methodology being left undefined except to the
extent of being "coordinative." To be sure, a "coordinative" standard for a manager cannot be indicative of control; the standard only
essentially describes what a Branch Manager is – the person in the lead who orchestrates activities within the group. To "coordinate,"
and thereby to lead and to orchestrate, is not so much a matter of control by Manulife; it is simply a statement of a branch
manager’s role in relation with his agents from the point of view of Manulife whose business Tongko’s sales group carries.
A disturbing note, with respect to the presented affidavits and Tongko’s alleged administrative functions, is the selective citation of
the portions supportive of an employment relationship and the consequent omission of portions leading to the contrary conclusion.
For example, the following portions of the affidavit of Regional Sales Manager John Chua, with counterparts in the other affidavits,
were not brought out in the Decision of November 7, 2008, while the other portions suggesting labor law control were highlighted.
Specifically, the following portions of the affidavits were not brought out:32
1.a. I have no fixed wages or salary since my services are compensated by way of commissions based on the computed
premiums paid in full on the policies obtained thereat;
1.b. I have no fixed working hours and employ my own method in soliticing insurance at a time and place I see fit;
1.c. I have my own assistant and messenger who handle my daily work load;
1.d. I use my own facilities, tools, materials and supplies in carrying out my business of selling insurance;
x x x x
6. I have my own staff that handles the day to day operations of my office;
7. My staff are my own employees and received salaries from me;
x x x x
9. My commission and incentives are all reported to the Bureau of Internal Revenue (BIR) as income by a self-employed
individual or professional with a ten (10) percent creditable withholding tax. I also remit monthly for professionals.
These statements, read with the above comparative analysis of the Manulife and the Grepalife cases, would have readily yielded the
conclusion that no employer-employee relationship existed between Manulife and Tongko.
Even de Dios’ letter is not determinative of control as it indicates the least amount of intrusion into Tongko’s exercise of his role as
manager in guiding the sales agents. Strictly viewed, de Dios’ directives are merely operational guidelines on how Tongko could align
his operations with Manulife’s re-directed goal of being a "big league player." The method is to expand coverage through the use of
more agents. This requirement for the recruitment of more agents is not a means-and-method control as it relates, more than
anything else, and is directly relevant, to Manulife’s objective of expanded business operations through the use of a bigger sales
force whose members are all on a principal-agent relationship. An important point to note here is that Tongko was not supervising
regular full-time employees of Manulife engaged in the running of the insurance business; Tongko was effectively guiding his corps of
sales agents, who are bound to Manulife through the same Agreement that he had with Manulife, all the while sharing in these

51. agents’ commissions through his overrides. This is the lead agent concept mentioned above for want of a more appropriate term,
since the title of Branch Manager used by the parties is really a misnomer given that what is involved is not a specific regular branch
of the company but a corps of non-employed agents, defined in terms of covered territory, through which the company sells
insurance. Still another point to consider is that Tongko was not even setting policies in the way a regular company manager does;
company aims and objectives were simply relayed to him with suggestions on how these objectives can be reached through the
expansion of a non-employee sales force.
Interestingly, a large part of de Dios’ letter focused on income, which Manulife demonstrated, in Tongko’s case, to be unaffected by
the new goal and direction the company had set. Income in insurance agency, of course, is dependent on results, not on the means
and manner of selling – a matter for Tongko and his agents to determine and an area into which Manulife had not waded.
Undeniably, de Dios’ letter contained a directive to secure a competent assistant at Tongko’s own expense. While couched in terms
of a directive, it cannot strictly be understood as an intrusion into Tongko’s method of operating and supervising the group of agents
within his delineated territory. More than anything else, the "directive" was a signal to Tongko that his results were unsatisfactory,
and was a suggestion on how Tongko’s perceived weakness in delivering results could be remedied. It was a solution, with an eye on
results, for a consistently underperforming group; its obvious intent was to save Tongko from the result that he then failed to grasp
– that he could lose even his own status as an agent, as he in fact eventually did.
The present case must be distinguished from the second Insular Life case that showed the hallmarks of an employer-employee
relationship in the management system established. These were: exclusivity of service, control of assignments and removal of
agents under the private respondent’s unit, and furnishing of company facilities and materials as well as capital described as Unit
Development Fund. All these are obviously absent in the present case. If there is a commonality in these cases, it is in the collection
of premiums which is a basic authority that can be delegated to agents under the Insurance Code.
As previously discussed, what simply happened in Tongko’s case was the grant of an expanded sales agency role that recognized him
as leader amongst agents in an area that Manulife defined. Whether this consequently resulted in the establishment of an
employment relationship can be answered by concrete evidence that corresponds to the following questions:
• as lead agent, what were Tongko’s specific functions and the terms of his additional engagement;
• was he paid additional compensation as a so-called Area Sales Manager, apart from the commissions he received from the
insurance sales he generated;
• what can be Manulife’s basis to terminate his status as lead agent;
• can Manulife terminate his role as lead agent separately from his agency contract; and
• to what extent does Manulife control the means and methods of Tongko’s role as lead agent?
The answers to these questions may, to some extent, be deduced from the evidence at hand, as partly discussed above. But strictly
speaking, the questions cannot definitively and concretely be answered through the evidence on record. The concrete evidence
required to settle these questions is simply not there, since only the Agreement and the anecdotal affidavits have been marked and
submitted as evidence.
Given this anemic state of the evidence, particularly on the requisite confluence of the factors determinative of the existence of
employer-employee relationship, the Court cannot conclusively find that the relationship exists in the present case, even if such
relationship only refers to Tongko’s additional functions. While a rough deduction can be made, the answer will not be fully supported
by the substantial evidence needed.
Under this legal situation, the only conclusion that can be made is that the absence of evidence showing Manulife’s control over
Tongko’s contractual duties points to the absence of any employer-employee relationship between Tongko and Manulife. In the
context of the established evidence, Tongko remained an agent all along; although his subsequent duties made him a lead agent
with leadership role, he was nevertheless only an agent whose basic contract yields no evidence of means-and-manner control.
This conclusion renders unnecessary any further discussion of the question of whether an agent may simultaneously assume
conflicting dual personalities. But to set the record straight, the concept of a single person having the dual role of agent and
employee while doing the same task is a novel one in our jurisprudence, which must be viewed with caution especially when it is
devoid of any jurisprudential support or precedent. The quoted portions in Justice Carpio-Morales’ dissent,33
borrowed from both the
Grepalife and the second Insular Life cases, to support the duality approach of the Decision of November 7, 2008, are regrettably far
removed from their context – i.e., the cases’ factual situations, the issues they decided and the totality of the rulings in these cases
– and cannot yield the conclusions that the dissenting opinions drew.
The Grepalife case dealt with the sole issue of whether the Ruiz brothers’ appointment as zone supervisor and district manager made
them employees of Grepalife. Indeed, because of the presence of the element of control in their contract of engagements, they were
considered Grepalife’s employees. This did not mean, however, that they were simultaneously considered agents as well as
employees of Grepalife; the Court’s ruling never implied that this situation existed insofar as the Ruiz brothers were concerned. The
Court’s statement – the Insurance Code may govern the licensing requirements and other particular duties of insurance agents, but
it does not bar the application of the Labor Code with regard to labor standards and labor relations – simply means that when an
insurance company has exercised control over its agents so as to make them their employees, the relationship between the parties,

52. which was otherwise one for agency governed by the Civil Code and the Insurance Code, will now be governed by the Labor Code.
The reason for this is simple – the contract of agency has been transformed into an employer-employee relationship.
The second Insular Life case, on the other hand, involved the issue of whether the labor bodies have jurisdiction over an illegal
termination dispute involving parties who had two contracts – first, an original contract (agency contract), which was undoubtedly
one for agency, and another subsequent contract that in turn designated the agent acting unit manager (a management contract).
Both the Insular Life and the labor arbiter were one in the position that both were agency contracts. The Court disagreed with this
conclusion and held that insofar as the management contract is concerned, the labor arbiter has jurisdiction. It is in this light that we
remanded the case to the labor arbiter for further proceedings. We never said in this case though that the insurance agent had
effectively assumed dual personalities for the simple reason that the agency contract has been effectively superseded by the
management contract. The management contract provided that if the appointment was terminated for any reason other than for
cause, the acting unit manager would be reverted to agent status and assigned to any unit.
The dissent pointed out, as an argument to support its employment relationship conclusion, that any doubt in the existence of an
employer-employee relationship should be resolved in favor of the existence of the relationship.34
This observation, apparently drawn
from Article 4 of the Labor Code, is misplaced, as Article 4 applies only when a doubt exists in the "implementation and application"
of the Labor Code and its implementing rules; it does not apply where no doubt exists as in a situation where the claimant clearly
failed to substantiate his claim of employment relationship by the quantum of evidence the Labor Code requires.
On the dissent’s last point regarding the lack of jurisprudential value of our November 7, 2008 Decision, suffice it to state that, as
discussed above, the Decision was not supported by the evidence adduced and was not in accordance with controlling jurisprudence.
It should, therefore, be reconsidered and abandoned, but not in the manner the dissent suggests as the dissenting opinions are as
factually and as legally erroneous as the Decision under reconsideration.
In light of these conclusions, the sufficiency of Tongko’s failure to comply with the guidelines of de Dios’ letter, as a ground for
termination of Tongko’s agency, is a matter that the labor tribunals cannot rule upon in the absence of an employer-employee
relationship. Jurisdiction over the matter belongs to the courts applying the laws of insurance, agency and contracts.
WHEREFORE, considering the foregoing discussion, we REVERSE our Decision of November 7, 2008, GRANTManulife’s motion for
reconsideration and, accordingly, DISMISS Tongko’s petition. No costs.
SO ORDERED.