Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. 81958 June 30, 1988
PHILIPPINE ASSOCIATION OF SERVICE EPORTERS, INC., petitioner,
vs.
HON. FRAN!LIN M. "RILON #$ Se%&e'#&( o) L#*o& #n+ E,-.o(,en', #n+
TOMAS ". ACHACOSO, #$ A+,/n/$'&#'o& o) '0e P0/./--/ne O1e&$e#$ E,-.o(,en'
A+,/n/$'&#'/on, respondents.
Gutierrez & Alo a! "f#ces for petitioner.

SARMIENTO, J.2
$he petitioner, Philippine Association of %ervice E&porters, 'nc. (PA%E', for short), a
#r* +en,a,ed principall- in the recruit*ent of .ilipino !or/ers, *ale and fe*ale, for
overseas place*ent,+ 1 challen,es the Constitutional validit- of 0epart*ent "rder No.
1, %eries of 1233, of the 0epart*ent of abor and E*plo-*ent, in the character of
+G4'0E'NE% G"5ERN'NG $6E $EMP"RAR7 %4%PEN%'"N ". 0EP"7MEN$ ".
.''P'N" 0"ME%$'C AN0 6"4%E6"0 8"R9ER%,+ in this petition for certiorari and
prohibition. %peci#call-, the *easure is assailed for +discri*ination a,ainst *ales or
fe*ales:+ 3 that it +does not appl- to all .ilipino !or/ers but onl- to do*estic helpers
and fe*ales !ith si*ilar s/ills:+ 3 and that it is violative of the ri,ht to travel. 't is held
li/e!ise to be an invalid e&ercise of the la!*a/in, po!er, police po!er bein,
le,islative, and not e&ecutive, in character.
'n its supple*ent to the petition, PA%E' invo/es %ection ;, of Article <''', of the
Constitution, providin, for !or/er participation +in polic- and decision=*a/in,
processes affectin, their ri,hts and bene#ts as *a- be provided b- la!.+ 4 0epart*ent
"rder No. 1, it is contended, !as passed in the absence of prior consultations. 't is
clai*ed, #nall-, to be in violation of the Charter>s non=i*pair*ent clause, in addition to
the +,reat and irreparable in?ur-+ that PA%E' *e*bers face should the "rder be
further enforced.
"n Ma- @A, 1233, the %olicitor General, on behalf of the respondents %ecretar- of
abor and Ad*inistrator of the Philippine "verseas E*plo-*ent Ad*inistration, #led
a Co**ent infor*in, the Court that on March 3, 1233, the respondent abor
%ecretar- lifted the deplo-*ent ban in the states of 'raB, Cordan, Datar, Canada,
6on,/on,, 4nited %tates, 'tal-, Nor!a-, Austria, and %!itzerland. 5 'n sub*ittin, the
validit- of the challen,ed +,uidelines,+ the %olicitor General invo/es the police po!er of
the Philippine %tate.
't is ad*itted that 0epart*ent "rder No. 1 is in the nature of a police po!er *easure.
$he onl- Buestion is !hether or not it is valid under the Constitution.
$he concept of police po!er is !ell=established in this ?urisdiction. 't has been de#ned
as the +state authorit- to enact le,islation that *a- interfere !ith personal libert- or
propert- in order to pro*ote the ,eneral !elfare.+ 5As de#ned, it consists of (1) an
i*position of restraint upon libert- or propert-, (@) in order to foster the co**on
,ood. 't is not capable of an e&act de#nition but has been, purposel-, veiled in ,eneral
ter*s to underscore its all=co*prehensive e*brace.
+'ts scope, ever=e&pandin, to *eet the e&i,encies of the ti*es, even to anticipate the
future !here it could be done, provides enou,h roo* for an ef#cient and Ee&ible
response to conditions and circu*stances thus assurin, the ,reatest bene#ts.+ 6
't #nds no speci#c Constitutional ,rant for the plain reason that it does not o!e its
ori,in to the Charter. Alon, !ith the ta&in, po!er and e*inent do*ain, it is inborn in
the ver- fact of statehood and soverei,nt-. 't is a funda*ental attribute of ,overn*ent
that has enabled it to perfor* the *ost vital functions of ,overnance. Marshall, to
!ho* the e&pression has been credited, 7 refers to it succinctl- as the plenar- po!er
of the %tate +to ,overn its citizens.+ 8
+$he police po!er of the %tate ... is a po!er coe&tensive !ith self= protection, and it is
not inaptl- ter*ed the +la! of over!hel*in, necessit-.+ 't *a- be said to be that
inherent and plenar- po!er in the %tate !hich enables it to prohibit all thin,s hurtful
to the co*fort, safet-, and !elfare of societ-.+ 9
't constitutes an i*plied li*itation on the Bill of Ri,hts. Accordin, to .ernando, it is
+rooted in the conception that *en in or,anizin, the state and i*posin, upon its
,overn*ent li*itations to safe,uard constitutional ri,hts did not intend thereb- to
enable an individual citizen or a ,roup of citizens to obstruct unreasonabl- the
enact*ent of such salutar- *easures calculated to ensure co**unal peace, safet-,
,ood order, and !elfare.+10 %i,ni#cantl-, the Bill of Ri,hts itself does not purport to be
an absolute ,uarant- of individual ri,hts and liberties +Even libert- itself, the ,reatest
of all ri,hts, is not unrestricted license to act accordin, to one>s !ill.+11 't is sub?ect to
the far *ore overridin, de*ands and reBuire*ents of the ,reater nu*ber.
Not!ithstandin, its e&tensive s!eep, police po!er is not !ithout its o!n li*itations.
.or all its a!eso*e conseBuences, it *a- not be e&ercised arbitraril- or unreasonabl-.
"ther!ise, and in that event, it defeats the purpose for !hich it is e&ercised, that is, to
advance the public ,ood. $hus, !hen the po!er is used to further private interests at
the e&pense of the citizenr-, there is a clear *isuse of the po!er. 13
'n the li,ht of the fore,oin,, the petition *ust be dis*issed.
As a ,eneral rule, of#cial acts en?o- a presu*ed vahdit-. 13 'n the absence of clear and
convincin, evidence to the contrar-, the presu*ption lo,icall- stands.
$he petitioner has sho!n no satisfactor- reason !h- the contested *easure should be
nulli#ed. $here is no Buestion that 0epart*ent "rder No. 1 applies onl- to +fe*ale
contract !or/ers,+ 14 but it does not thereb- *a/e an undue discri*ination bet!een
the se&es. 't is !ell=settled that +eBualit- before the la!+ under the
Constitution 15 does not i*port a perfect 'dentit- of ri,hts a*on, all *en and !o*en.
't ad*its of classi#cations, provided that (1) such classi#cations rest on substantial
distinctions: (@) the- are ,er*ane to the purposes of the la!: (;) the- are not con#ned
to e&istin, conditions: and (F) the- appl- eBuall- to all *e*bers of the sa*e class. 16
$he Court is satis#ed that the classi#cation *ade=the preference for fe*ale !or/ers G
rests on substantial distinctions.
As a *atter of ?udicial notice, the Court is !ell a!are of the unhapp- pli,ht that has
befallen our fe*ale labor force abroad, especiall- do*estic servants, a*id e&ploitative
!or/in, conditions *ar/ed b-, in not a fe! cases, ph-sical and personal abuse. $he
sordid tales of *altreat*ent suffered b- *i,rant .ilipina !or/ers, even rape and
various for*s of torture, con#r*ed b- testi*onies of returnin, !or/ers, are
co*pellin, *otives for ur,ent Govern*ent action. As precisel- the careta/er of
Constitutional ri,hts, the Court is called upon to protect victi*s of e&ploitation. 'n
ful#llin, that dut-, the Court sustains the Govern*ent>s efforts.
$he sa*e, ho!ever, cannot be said of our *ale !or/ers. 'n the #rst place, there is no
evidence that, e&cept perhaps for isolated instances, our *en abroad have been
afEicted !ith an 'dentical predica*ent. $he petitioner has proffered no ar,u*ent that
the Govern*ent should act si*ilarl- !ith respect to *ale !or/ers. $he Court, of
course, is not i*pressin, so*e *ale chauvinistic notion that *en are superior to
!o*en. 8hat the Court is sa-in, is that it !as lar,el- a *atter of evidence (that
!o*en do*estic !or/ers are bein, ill=treated abroad in *assive instances) and not
upon so*e fanciful or arbitrar- -ardstic/ that the Govern*ent acted in this case. 't is
evidence capable indeed of unBuestionable de*onstration and evidence this Court
accepts. $he Court cannot, ho!ever, sa- the sa*e thin, as far as *en are concerned.
$here is si*pl- no evidence to ?ustif- such an inference. %uf#ce it to state, then, that
insofar as classi#cations are concerned, this Court is content that distinctions are
borne b- the evidence. 0iscri*ination in this case is ?usti#ed.
As !e have further*ore indicated, e&ecutive deter*inations are ,enerall- #nal on the
Court. 4nder a republican re,i*e, it is the e&ecutive branch that enforces polic-. .or
their part, the courts decide, in the proper cases, !hether that polic-, or the *anner
b- !hich it is i*ple*ented, a,rees !ith the Constitution or the la!s, but it is not for
the* to Buestion its !isdo*. As a co=eBual bod-, the ?udiciar- has ,reat respect for
deter*inations of the Chief E&ecutive or his subalterns, especiall- !hen the
le,islature itself has speci#call- ,iven the* enou,h roo* on ho! the la! should be
effectivel- enforced. 'n the case at bar, there is no ,ainsa-in, the fact, and the Court
!ill deal !ith this at ,reater len,th shortl-, that 0epart*ent "rder No. 1 i*ple*ents
the rule=*a/in, po!ers ,ranted b- the abor Code. But !hat should be noted is the
fact that in spite of such a #ction of #nalit-, the Court is on its o!n persuaded that
prevailin, conditions indeed call for a deplo-*ent ban.
$here is li/e!ise no doubt that such a classi#cation is ,er*ane to the purpose behind
the *easure. 4nBuestionabl-, it is the avo!ed ob?ective of 0epart*ent "rder No. 1 to
+enhance the protection for .ilipino fe*ale overseas !or/ers+ 17 this Court has no
Buarrel that in the *idst of the terrible *istreat*ent .ilipina !or/ers have suffered
abroad, a ban on deplo-*ent !ill be for their o!n ,ood and !elfare.
$he "rder does not narro!l- appl- to e&istin, conditions. Rather, it is intended to
appl- inde#nitel- so lon, as those conditions e&ist. $his is clear fro* the "rder itself
(+Pendin, revie! of the ad*inistrative and le,al *easures, in the Philippines and in
the host countries . . .+ 18), *eanin, to sa- that should the authorities arrive at a
*eans i*pressed !ith a ,reater de,ree of per*anenc-, the ban shall be lifted. As a
stop=,ap *easure, it is possessed of a necessar- *alleabilit-, dependin, on the
circu*stances of each case. Accordin,l-, it providesH
2. '.$'NG ". %4%PEN%'"N. G $he %ecretar- of abor and E*plo-*ent
(0"E) *a-, upon reco**endation of the Philippine "verseas
E*plo-*ent Ad*inistration (P"EA), lift the suspension in countries
!here there areH
1. Bilateral a,ree*ents or understandin, !ith the Philippines, andIor,
@. E&istin, *echanis*s providin, for suf#cient safe,uards to ensure the
!elfare and protection of .ilipino !or/ers. 19
$he Court #nds, #nall-, the i*pu,ned ,uidelines to be applicable to all fe*ale do*estic
overseas !or/ers. $hat it does not appl- to +all .ilipina !or/ers+ 30 is not an
ar,u*ent for unconstitutionalit-. 6ad the ban been ,iven universal applicabilit-, then
it !ould have been unreasonable and arbitrar-. .or obvious reasons, not all of the*
are si*ilarl- circu*stanced. 8hat the Constitution prohibits is the sin,lin, out of a
select person or ,roup of persons !ithin an e&istin, class, to the pre?udice of such a
person or ,roup or resultin, in an unfair advanta,e to another person or ,roup of
persons. $o appl- the ban, sa- e&clusivel- to !or/ers deplo-ed b- A, but not to those
recruited b- B, !ould obviousl- clash !ith the eBual protection clause of the Charter. 't
!ould be a classic case of !hat Chase refers to as a la! that +ta/es propert- fro* A
and ,ives it to B.+ 31 't !ould be an unla!ful invasion of propert- ri,hts and freedo*
of contract and needless to state, an invalid act. 33 (.ernando sa-sH +8here the
classi#cation is based on such distinctions that *a/e a real difference as infanc-, se&,
and sta,e of civilization of *inorit- ,roups, the better rule, it !ould see*, is to
reco,nize its validit- onl- if the -oun,, the !o*en, and the cultural *inorities are
sin,led out for favorable treat*ent. $here !ould be an ele*ent of unreasonableness if
on the contrar- their status that calls for the la! *inisterin, to their needs is *ade
the basis of discri*inator- le,islation a,ainst the*. 'f such be the case, it !ould be
dif#cult to refute the assertion of denial of eBual protection.+ 33 'n the case at bar, the
assailed "rder clearl- accords protection to certain !o*en !or/ers, and not the
contrar-.)
't is incorrect to sa- that 0epart*ent "rder No. 1 prescribes a total ban on overseas
deplo-*ent. .ro* scattered provisions of the "rder, it is evident that such a total ban
has hot been conte*plated. 8e BuoteH
A. A4$6"R'JE0 0EP"7MEN$=$he deplo-*ent of do*estic helpers and
!or/ers of si*ilar s/ills de#ned herein to the follo!in, KsicL are
authorized under these ,uidelines and are e&e*pted fro* the suspension.
A.1 6irin,s b- i**ediate *e*bers of the fa*il- of 6eads of
%tate and Govern*ent:
A.@ 6irin,s b- Minister, 0eput- Minister and the other senior
,overn*ent of#cials: and
A.; 6irin,s b- senior of#cials of the diplo*atic corps and dul-
accredited international or,anizations.
A.F 6irin,s b- e*plo-ers in countries !ith !ho* the
Philippines have KsicL bilateral labor a,ree*ents or
understandin,.
&&& &&& &&&
M. 5ACA$'"N'NG 0"ME%$'C 6EPER% AN0 8"R9ER% ". %'M'AR
%9'%==5acationin, do*estic helpers andIor !or/ers of si*ilar s/ills
shall be allo!ed to process !ith the P"EA and leave for !or/site onl- if
the- are returnin, to the sa*e e*plo-er to #nish an e&istin, or partiall-
served e*plo-*ent contract. $hose !or/ers returnin, to !or/site to
serve a ne! e*plo-er shall be covered b- the suspension and the
provision of these ,uidelines.
&&& &&& &&&
2. '.$'NG ". %4%PEN%'"N=$he %ecretar- of abor and E*plo-*ent
(0"E) *a-, upon reco**endation of the Philippine "verseas
E*plo-*ent Ad*inistration (P"EA), lift the suspension in countries
!here there areH
1. Bilateral a,ree*ents or understandin, !ith the
Philippines, andIor,
@. E&istin, *echanis*s providin, for suf#cient safe,uards to
ensure the !elfare and protection of .ilipino !or/ers. 34
&&& &&& &&&
$he conseBuence the deplo-*ent ban has on the ri,ht to travel does not i*pair the
ri,ht. $he ri,ht to travel is sub?ect, a*on, other thin,s, to the reBuire*ents of +public
safet-,+ +as *a- be provided b- la!.+ 35 0epart*ent "rder No. 1 is a valid
i*ple*entation of the abor Code, in particular, its basic polic- to +afford protection to
labor,+ 36 pursuant to the respondent 0epart*ent of abor>s rule=*a/in, authorit-
vested in it b- the abor Code. 37 $he petitioner assu*es that it is unreasonable
si*pl- because of its i*pact on the ri,ht to travel, but as !e have stated, the ri,ht
itself is not absolute. $he disputed "rder is a valid Buali#cation thereto.
Neither is there *erit in the contention that 0epart*ent "rder No. 1 constitutes an
invalid e&ercise of le,islative po!er. 't is true that police po!er is the do*ain of the
le,islature, but it does not *ean that such an authorit- *a- not be la!full- dele,ated.
As !e have *entioned, the abor Code itself vests the 0epart*ent of abor and
E*plo-*ent !ith rule*a/in, po!ers in the enforce*ent !hereof. 38
$he petitioners>s reliance on the Constitutional ,uarant- of !or/er participation +in
polic- and decision=*a/in, processes affectin, their ri,hts and bene#ts+ 39 is not !ell=
ta/en. $he ri,ht ,ranted b- this provision, a,ain, *ust sub*it to the de*ands and
necessities of the %tate>s po!er of re,ulation.
$he Constitution declares thatH
%ec. ;. $he %tate shall afford full protection to labor, local and overseas,
or,anized and unor,anized, and pro*ote full e*plo-*ent and eBualit- of
e*plo-*ent opportunities for all. 30
+Protection to labor+ does not si,nif- the pro*otion of e*plo-*ent alone. 8hat
concerns the Constitution *ore para*ountl- is that such an e*plo-*ent be above all,
decent, ?ust, and hu*ane. 't is bad enou,h that the countr- has to send its sons and
dau,hters to stran,e lands because it cannot satisf- their e*plo-*ent needs at ho*e.
4nder these circu*stances, the Govern*ent is dut-=bound to insure that our toilin,
e&patriates have adeBuate protection, personall- and econo*icall-, !hile a!a- fro*
ho*e. 'n this case, the Govern*ent has evidence, an evidence the petitioner cannot
seriousl- dispute, of the lac/ or inadeBuac- of such protection, and as part of its dut-,
it has precisel- ordered an inde#nite ban on deplo-*ent.
$he Court #nds further*ore that the Govern*ent has not indiscri*inatel- *ade use
of its authorit-. 't is not contested that it has in fact re*oved the prohibition !ith
respect to certain countries as *anifested b- the %olicitor General.
$he non=i*pair*ent clause of the Constitution, invo/ed b- the petitioner, *ust -ield to
the loftier purposes tar,etted b- the Govern*ent. 31 .reedo* of contract and
enterprise, li/e all other freedo*s, is not free fro* restrictions, *ore so in this
?urisdiction, !here laissez faire has never been full- accepted as a controllin,
econo*ic !a- of life.
$his Court understands the ,rave i*plications the Buestioned "rder has on the
business of recruit*ent. $he concern of the Govern*ent, ho!ever, is not necessaril-
to *aintain pro#ts of business #r*s. 'n the ordinar- seBuence of events, it is pro#ts
that suffer as a result of Govern*ent re,ulation. $he interest of the %tate is to provide
a decent livin, to its citizens. $he Govern*ent has convinced the Court in this case
that this is its intent. 8e do not #nd the i*pu,ned "rder to be tainted !ith a ,rave
abuse of discretion to !arrant the e&traordinar- relief pra-ed for.
86ERE."RE, the petition is 0'%M'%%E0. No costs.
%" "R0ERE0.
7ap, C.C., .ernan, Narvasa, Melencio=6errera, Cruz, Paras, .eliciano, Ganca-co,
Padilla, Bidin, Cortes and GriNo=ABuino, CC., concur.
Gutierrez, Cr. and Medialdea, CC., are on leave.

Foo'no'e$
1 Rollo, ;.
@ 'd., 1@.
; 'd., 1;.
F C"N%$., Art <''', %ec. ;.
O Per reports, on Cune 1F, 1233, the Govern*ent is said to have lifted the
ban on #ve *ore countriesH Ne! Jealand Australia, %!eden, %pain, and
8est Ger*an-. (+Maid e&port ban lifted in A states,+ $he Manila Chronicle,
Cune 1F, 1233, p. 1M, col. @.)
A Edu v. Ericta, No. =;@P2Q, "ctober @F, 12MP, ;A %CRA F31, F3M.
Q %upra, F33.
M $R'BE, AMER'CAN C"N%$'$4$'"NA A8, ;@; (12M3).
3 'd.
2 Rubi v. Provincial Board of Mindoro, ;2 Phil. QQP, MP3 (1212).
1P Edu v. Ericta, supra.
11 Rubi v. Provincial Board of Mindoro, supra, MPF.
1@ 't is ,enerall- presu*ed, not!ithstandin, the plenar- character of the
la!*a/in, po!er, that the le,islature *ust act for public purposes.
'n Pascual v. %ecretar- of Public 8or/s K11P Phil. ;;1 (12QP)L, the Court
nulli#ed an act of Con,ress appropriatin, funds for a private purpose. $he
prohibition !as not e*bodied in the Constitution then in force, ho!ever, it
!as presu*ed that Con,ress could not do it.
1; Er*ita=Malate 6otel and Motel "perators Association, 'nc. v. Cit-
Ma-or of Manila, No. =@FQ2;, Cul- ;1, 12QM, @P %CRA 3F2.
1F 0ept. "rder No. 1 (0"E), .ebruar- 1P, 1233.
1A C"N%$., supra, Art. ''', %ec. 1.
1Q People v. Ca-at, Q3 Phil. 1@ (12;2).
1M 0ept. "rder No. 1, supra.
13 %upra.
12 %upra.
@P Rollo, 'd., 1;.
@1 %ee $R'BE, 'd., citin, Calder v. Bull, ; 4.%. ;3Q (1M23).
@@ 'd.
@; .ERNAN0", $6E C"N%$'$4$'"N ". $6E P6''PP'NE% AF2=AAP
(12MM).
@F 0ept. "rder No. 1, supra.
@A C"N%$., supra, Art. 'll, %ec. Q.
@Q Pres. 0ecree No. FF@, Art. ;.
@M %upra, Art. A.
@3 %upra.
@2 C"N%$., supra, Art. <''', %ec. ;.
;P %upra.
;1 6eirs of Cuancho Ardona v. Re-es, Nos. =QPAF2, QPAA;=QPAAA,
"ctober @Q, 123;, 1@A %CRA @@P.
Republic of the Philippines
SUPREME COURT
Manila
%EC"N0 0'5'%'"N
G.R. No. L84118383 A-&/. 16, 1988
"R. CARLOS L. SEVILLA #n+ LINA O. SEVILLA, petitioners=appellants,
vs.
THE COURT OF APPEALS, TOURIST 9ORL" SERVICE, INC., ELISEO S.CANILAO,
#n+ SEGUN"INA NOGUERA, respondents=appellees.

SARMIENTO , J.2
$he petitioners invo/e the provisions on hu*an relations of the Civil Code in this
appeal b- certiorari. $he facts are be-ond disputeH
&&& &&& &&&
"n the stren,th of a contract (E&hibit A for the appellant E&hibit @ for the
appellees) entered into on "ct. 12, 12QP b- and bet!een Mrs. %e,undina
No,uera, part- of the #rst part: the $ourist 8orld %ervice, 'nc.,
represented b- Mr. Eliseo Canilao as part- of the second part, and
hereinafter referred to as appellants, the $ourist 8orld %ervice, 'nc.
leased the pre*ises belon,in, to the part- of the #rst part at Mabini %t.,
Manila for the for*er=s use as a branch of#ce. 'n the said contract the
part- of the third part held herself solidaril- liable !ith the part- of the
part for the pro*pt pa-*ent of the *onthl- rental a,reed on. 8hen the
branch of#ce !as opened, the sa*e !as run b- the herein appellant 4na P.
%evilla pa-able to $ourist 8orld %ervice 'nc. b- an- airline for an- fare
brou,ht in on the efforts of Mrs. ina %evilla, FR !as to ,o to ina %evilla
and ;R !as to be !ithheld b- the $ourist 8orld %ervice, 'nc.
"n or about Nove*ber @F, 12Q1 (E&hibit 1Q) the $ourist 8orld %ervice,
'nc. appears to have been infor*ed that ina %evilla !as connected !ith a
rival #r*, the Philippine $ravel Bureau, and, since the branch of#ce !as
an-ho! losin,, the $ourist 8orld %ervice considered closin, do!n its
of#ce. $his !as #r*ed up b- t!o resolutions of the board of directors of
$ourist 8orld %ervice, 'nc. dated 0ec. @, 12Q1 (E&hibits 1@ and 1;), the
#rst abolishin, the of#ce of the *ana,er and vice=president of the $ourist
8orld %ervice, 'nc., Er*ita Branch, and the second,authorizin, the
corporate secretar- to receive the properties of the $ourist 8orld %ervice
then located at the said branch of#ce. 't further appears that on Can. ;,
12Q@, the contract !ith the appellees for the use of the Branch "f#ce
pre*ises !as ter*inated and !hile the effectivit- thereof !as Can. ;1,
12Q@, the appellees no lon,er used it. As a *atter of fact appellants used it
since Nov. 12Q1. Because of this, and to co*pl- !ith the *andate of the
$ourist 8orld %ervice, the corporate secretar- Gabino Canilao !ent over
to the branch of#ce, and, #ndin, the pre*ises loc/ed, and, bein, unable to
contact ina %evilla, he padloc/ed the pre*ises on Cune F, 12Q@ to protect
the interests of the $ourist 8orld %ervice. 8hen neither the appellant
ina %evilla nor an- of her e*plo-ees could enter the loc/ed pre*ises, a
co*plaint !all #led b- the herein appellants a,ainst the appellees !ith a
pra-er for the issuance of *andator- preli*inar- in?unction. Both
appellees ans!ered !ith counterclai*s. .or apparent lac/ of interest of
the parties therein, the trial court ordered the dis*issal of the case
!ithout pre?udice.
Noguera/Canilao
Sevilla
$he appellee %e,undina No,uera sou,ht reconsideration of the order
dis*issin, her counterclai* !hich the court a Buo, in an order dated Cune
3, 12Q;, ,ranted per*ittin, her to present evidence in support of her
counterclai*.
"n Cune 1M,12Q;, appellant ina %evilla re#led her case a,ainst the herein
appellees and after the issues !ere ?oined, the reinstated counterclai* of
%e,undina No,uera and the ne! co*plaint of appellant ina %evilla !ere
?ointl- heard follo!in, !hich the court a Buo ordered both cases dis*iss
for lac/ of *erit, on the basis of !hich !as elevated the instant appeal on
the follo!in, assi,n*ent of errorsH
'. $6E "8ER C"4R$ ERRE0 E5EN 'N APPREC'A$'NG $6E NA$4RE ".
PA'N$'..=APPEAN$ MR%. 'NA ". %E5'A>% C"MPA'N$.
''. $6E "8ER C"4R$ ERRE0 'N 6"0'NG $6A$ APPEAN$ MR%.
'NA P. %E5'A>% ARRANGEMEN$ (8'$6 APPEEE $"4R'%$ 8"R0
%ER5'CE, 'NC.) 8A% "NE MERE7 ". EMP"7ER=EMP"7EE REA$'"N
AN0 'N .A''NG $" 6"0 $6A$ $6E %A'0 ARRANGEMEN$ 8A% "NE ".
C"'N$ B4%'NE%% 5EN$4RE.
'''. $6E "8ER C"4R$ ERRE0 'N R4'NG $6A$ PA'N$'..=
APPEAN$ MR%. 'NA ". %E5'A '% E%$"PPE0 .R"M 0EN7'NG $6A$
%6E 8A% A MERE EMP"7EE ". 0E.EN0AN$=APPEEE $"4R'%$
8"R0 %ER5'CE, 'NC. E5EN A% AGA'N%$ $6E A$$ER.
'5. $6E "8ER C"4R$ ERRE0 'N N"$ 6"0'NG $6A$ APPEEE% 6A0
N" R'G6$ $" E5'C$ APPEAN$ MR%. 'NA ". %E5'A .R"M $6E A.
MAB'N' "..'CE B7 $A9'NG $6E A8 'N$" $6E'R "8N 6AN0%.
5. $6E "8ER C"4R$ ERRE0 'N N"$ C"N%'0ER'NG A$ .A APPEEE
N"G4ERA>% RE%P"N%'B''$7 ."R APPEAN$ 'NA ". %E5'A>%
."RC'BE 0'%P"%%E%%'"N ". $6E A. MAB'N' PREM'%E%.
5'. $6E "8ER C"4R$ ERRE0 'N .'N0'NG $6A$ APPEAN$
APPEAN$ MR%. 'NA ". %E5'A %'GNE0 MERE7 A% G4ARAN$"R
."R REN$A%.
"n the fore,oin, facts and in the li,ht of the errors asi,ned the issues to be resolved
areH
1. 8hether the appellee $ourist 8orld %ervice unilaterall- disco the
telephone line at the branch of#ce on Er*ita:
@. 8hether or not the padloc/in, of the of#ce b- the $ourist 8orld %ervice
!as actionable or not: and
;. 8hether or not the lessee to the of#ce pre*ises belon,in, to the
appellee No,uera !as appellees $8% or $8% and the appellant.
'n this appeal, appealant ina %evilla clai*s that a ?oint bussiness venture
!as entered into b- and bet!een her and appellee $8% !ith of#ces at the
Er*ita branch of#ce and that she !as not an e*plo-ee of the $8% to the
end that her relationship !ith $8% !as one of a ?oint business venture
appellant *ade declarations sho!in,H
1. Appellant Mrs. ina P. %evilla, a pro*inent #,ure and !ife
of an e*inent e-e, ear and nose specialist as !ell as a
i*ediatel- colu*nist had been in the travel business prior to
the establish*ent of the ?oint business venture !ith appellee
$ourist 8orld %ervice, 'nc. and appellee Eliseo Canilao, her
co*padre, she bein, the ,od*other of one of his children,
!ith her o!n clientele, co*in, *ostl- fro* her o!n social
circle (pp. ;=Q tsn. .ebruar- 1Q,12QA).
@. Appellant Mrs. %evilla !as si,nator- to a lease a,ree*ent
dated 12 "ctober 12QP (E&h. >A>) coverin, the pre*ises at A.
Mabini %t., she e&pressl- !arrantin, and holdin, KsicL herself
>solidaril-> liable !ith appellee $ourist 8orld %ervice, 'nc. for
the pro*pt pa-*ent of the *onthl- rentals thereof to other
appellee Mrs. No,uera (pp. 1F=1A, tsn. Can. 13,12QF).
;. Appellant Mrs. %evilla did not receive an- salar- fro*
appellee $ourist 8orld %ervice, 'nc., !hich had its o!n,
separate of#ce located at the $rade & Co**erce Buildin,: nor
!as she an e*plo-ee thereof, havin, no participation in nor
connection !ith said business at the $rade & Co**erce
Buildin, (pp. 1Q=13 tsn 'd.).
F. Appellant Mrs. %evilla earned co**issions for her o!n
passen,ers, her o!n boo/in,s her o!n business (and not for
an- of the business of appellee $ourist 8orld %ervice, 'nc.)
obtained fro* the airline co*panies. %he shared the MR
co**issions ,iven b- the airline co*panies ,ivin, appellee
$ourist 8orld %ervice, ic. ;R thereof aid retainin, FR for
herself (pp. 13 tsn. 'd.)
A. Appellant Mrs. %evilla li/e!ise shared in the e&penses of
*aintainin, the A. Mabini %t. of#ce, pa-in, for the salar- of
an of#ce secretar-, Miss "bieta, and other sundr- e&penses,
aside fro* desicion the of#ce furniture and suppl-in, so*e of
#ce furnishin,s (pp. 1A,13 tsn. April Q,12QA), appellee $ourist
8orld %ervice, 'nc. shoulderin, the rental and other e&penses
in consideration for the ;R split in the co procured b-
appellant Mrs. %evilla (p. ;A tsn .eb. 1Q,12QA).
Q. 't !as the understandin, bet!een the* that appellant Mrs.
%evilla !ould be ,iven the title of branch *ana,er for
appearance>s sa/e onl- (p. ;1 tsn. 'd.), appellee Eliseo Canilao
ad*it that it !as ?ust a title for di,nit- (p. ;Q tsn. Cune 13,
12QA= testi*on- of appellee Eliseo Canilao pp. ;3=;2 tsn April
Q12QA=testi*on- of corporate secretar- Gabino Canilao (pp=
@=A, Appellants> Repl- Brief)
4pon the other hand, appellee $8% contend that the appellant !as an
e*plo-ee of the appellee $ourist 8orld %ervice, 'nc. and as such !as
desi,nated *ana,er. 1
&&& &&& &&&
$he trial court 3 held for the private respondent on the pre*ise that the private
respondent, $ourist 8orld %ervice, 'nc., bein, the true lessee, it !as !ithin its
prero,ative to ter*inate the lease and padloc/ the pre*ises. 3 't li/e!ise found the
petitioner, ina %evilla, to be a *ere e*plo-ee of said $ourist 8orld %ervice, 'nc. and
as such, she !as bound b- the acts of her e*plo-er. 4 $he respondent Court of
Appeal 5 rendered an af#r*ance.
$he petitioners no! clai* that the respondent Court, in sustainin, the lo!er court,
erred. %peci#call-, the- stateH
'
$6E C"4R$ ". APPEA% ERRE0 "N A D4E%$'"N ". A8 AN0 GRA5E7 AB4%E0
'$% 0'%CRE$'"N 'N 6"0'NG $6A$ +$6E PA0"C9'NG ". $6E PREM'%E% B7
$"4R'%$ 8"R0 %ER5'CE 'NC. 8'$6"4$ $6E 9N"8E0GE AN0 C"N%EN$ ". $6E
APPEAN$ 'NA %E5'A ... 8'$6"4$ N"$'.7'NG MR%. 'NA ". %E5'A "R AN7
". 6ER EMP"7EE% AN0 8'$6"4$ 'N."RM'NG C"4N%E ."R $6E APPEAN$
(%E5''A), 86" 'MME0'A$E7 BE."RE $6E PA0"C9'NG 'NC'0EN$, 8A% 'N
C"N.ERENCE 8'$6 $6E C"RP"RA$E %ECRE$AR7 ". $"4R'%$ 8"R0 %ER5'CE
(A0M'$$E07 $6E PER%"N 86" PA0"C9E0 $6E %A'0 "..'CE), 'N $6E'R
A$$EMP AM'CAB7 %E$$E $6E C"N$R"5ER%7 BE$8EEN $6E APPEAN$
(%E5'A) AN0 $6E $"4R'%$ 8"R0 %ER5'CE ... (0'0 N"$) EN$'$E $6E A$$ER
$" $6E RE'E. ". 0AMAGE%+ (ANNE< +A+ PP. M,3 AN0 ANNE< +B+ P. @) 0EC'%'"N
AGA'N%$ 04E PR"CE%% 86'C6 A06ERE% $" $6E R4E ". A8.
''
$6E C"4R$ ". APPEA% ERRE0 "N A D4E%$'"N ". A8 AN0 GRA5E7 AB4%E0
'$% 0'%CRE$'"N 'N 0EN7'NG APPEAN$ %E5'A RE'E. BECA4%E %6E 6A0
+"..ERE0 $" 8'$60RA8 6ER C"MP PR"5'0E0 $6A$ A CA'M% AN0
C"4N$ERCA'M% "0GE0 B7 B"$6 APPEEE% 8ERE 8'$60RA8N.+ (ANNE< +A+
P. 3)
'''
$6E C"4R$ ". APPEA% ERRE0 "N A D4E%$'"N ". A8 AN0 GRA5E7 AB4%E0
'$% 0'%CRE$'"N 'N 0EN7'NG='N .AC$ N"$ PA%%'NG AN0 RE%"5'NG=APPEAN$
%E5'A% CA4%E ". AC$'"N ."4N0E0 "N AR$'CE% 12, @P AN0 @1 ". $6E C'5'
C"0E "N REA$'"N%.
'5
$6E C"4R$ ". APPEA% ERRE0 "N A D4E%$'"N ". A8 AN0 GRA5E7 AB4%E0
'$% 0'%CRE$'"N 'N 0EN7'NG APPEA APPEAN$ %E5'A RE'E. 7E$ N"$
RE%"5'NG 6ER CA'M $6A$ %6E 8A% 'N C"'N$ 5EN$4RE 8'$6 $"4R'%$ 8"R0
%ER5'CE 'NC. "R A$ EA%$ '$% AGEN$ C"4PE0 8'$6 AN 'N$ERE%$ 86'C6 C"40
N"$ BE $ERM'NA$E0 "R RE5"9E0 4N'A$ERA7 B7 $"4R'%$ 8"R0 %ER5'CE
'NC. 6
As a preli*inar- inBuir-, the Court is as/ed to declare the true nature of the relation
bet!een ina %evilla and $ourist 8orld %ervice, 'nc. $he respondent Court of see #t to
rule on the Buestion, the crucial issue, in its opinion bein, +!hether or not the
padloc/in, of the pre*ises b- the $ourist 8orld %ervice, 'nc. !ithout the /no!led,e
and consent of the appellant ina %evilla entitled the latter to the relief of da*a,es
pra-ed for and !hether or not the evidence for the said appellant supports the
contention that the appellee $ourist 8orld %ervice, 'nc. unilaterall- and !ithout the
consent of the appellant disconnected the telephone lines of the Er*ita branch of#ce of
the appellee $ourist 8orld %ervice, 'nc. 7 $ourist 8orld %ervice, 'nc., insists, on the
other hand, that ina %E5'A !as a *ere e*plo-ee, bein, +branch *ana,er+ of its
Er*ita +branch+ of#ce and that inferentiall-, she had no sa- on the lease e&ecuted !ith
the private respondent, %e,undina No,uera. $he petitioners contend, ho!ever, that
relation bet!een the bet!een parties !as one of ?oint venture, but concede
that +!hatever *i,ht have been the true relationship bet!een %evilla and $ourist
8orld %ervice,+ the Rule of a! en?oined $ourist 8orld %ervice and Canilao fro*
ta/in, the la! into their o!n hands, 8 in reference to the padloc/in, no! Buestioned.
$he Court #nds the resolution of the issue *aterial, for if, as the private respondent,
$ourist 8orld %ervice, 'nc., *aintains, that the relation bet!een the parties !as in the
character of e*plo-er and e*plo-ee, the courts !ould have been !ithout ?urisdiction
to tr- the case, labor disputes bein, the e&clusive do*ain of the Court of 'ndustrial
Relations, later, the Bureau "f abor Relations, pursuant to statutes then in force. 9
'n this ?urisdiction, there has been no unifor* test to deter*ine the evidence of an
e*plo-er=e*plo-ee relation. 'n ,eneral, !e have relied on the so=called ri,ht of control
test, +!here the person for !ho* the services are perfor*ed reserves a ri,ht to
control not onl- the end to be achieved but also the *eans to be used in reachin, such
end.+ 10 %ubseBuentl-, ho!ever, !e have considered, in addition to the standard of
ri,ht=of control, the e&istin, econo*ic conditions prevailin, bet!een the parties, li/e
the inclusion of the e*plo-ee in the pa-rolls, in deter*inin, the e&istence of an
e*plo-er=e*plo-ee relationship. 11
$he records !ill sho! that the petitioner, ina %evilla, !as not sub?ect to control b- the
private respondent $ourist 8orld %ervice, 'nc., either as to the result of the enterprise
or as to the *eans used in connection there!ith. 'n the #rst place, under the contract
of lease coverin, the $ourist 8orlds Er*ita of#ce, she had bound herself in solidu* as
and for rental pa-*ents, an arran,e*ent that !ould be li/e clai*s of a *aster=
servant relationship. $rue the respondent Court !ould later *ini*ize her
participation in the lease as one of *ere ,uarant-, 13 that does not *a/e her an
e*plo-ee of $ourist 8orld, since in an- case, a true e*plo-ee cannot be *ade to part
!ith his o!n *one- in pursuance of his e*plo-er>s business, or other!ise, assu*e an-
liabilit- thereof. 'n that event, the parties *ust be bound b- so*e other relation, but
certainl- not e*plo-*ent.
'n the second place, and as found b- the Appellate Court, >K!Lhen the branch of#ce !as
opened, the sa*e !as run b- the herein appellant ina ". %evilla pa-able to $ourist
8orld %ervice, 'nc. b- an- airline for an- fare brou,ht in on the effort of Mrs. ina
%evilla. 13 4nder these circu*stances, it cannot be said that %evilla !as under the
control of $ourist 8orld %ervice, 'nc. +as to the *eans used.+ %evilla in pursuin, the
business, obviousl- relied on her o!n ,ifts and capabilities.
't is further ad*itted that %evilla !as not in the co*pan->s pa-roll. .or her efforts, she
retained FR in co**issions fro* airline boo/in,s, the re*ainin, ;R ,oin, to $ourist
8orld. 4nli/e an e*plo-ee then, !ho earns a #&ed salar- usuall-, she earned
co*pensation in Euctuatin, a*ounts dependin, on her boo/in, successes.
$he fact that %evilla had been desi,nated >branch *ana,er+ does not *a/e her, er,o,
$ourist 8orld>s e*plo-ee. As !e said, e*plo-*ent is deter*ined b- the ri,ht=of=
control test and certain econo*ic para*eters. But titles are !ea/ indicators.
'n re?ectin, $ourist 8orld %ervice, 'nc.>s ar,u*ents ho!ever, !e are not, as a
conseBuence, acceptin, ina %evilla>s o!n, that is, that the parties had e*bar/ed on a
?oint venture or other!ise, a partnership. And apparentl-, %evilla herself did not
reco,nize the e&istence of such a relation. 'n her letter of Nove*ber @3, 12Q1, she
e&pressl- >concedes -our K$ourist 8orld %ervice, 'nc.>sL ri,ht to stop the operation of
-our branch of#ce 14 in effect, acceptin, $ourist 8orld %ervice, 'nc.>s control over the
*anner in !hich the business !as run. A ?oint venture, includin, a partnership,
presupposes ,enerall- a of standin, bet!een the ?oint co=venturers or partners, in
!hich each part- has an eBual proprietar- interest in the capital or propert-
contributed 15 and !here each part- e&ercises eBual ri,hts in the conduct of the
business. 16 further*ore, the parties did not hold the*selves out as partners, and the
buildin, itself !as e*bellished !ith the electric si,n +$ourist 8orld %ervice, 'nc. 17in
lieu of a distinct partnership na*e.
't is the Court>s considered opinion, that !hen the petitioner, ina %evilla, a,reed to
(!o)*an the private respondent, $ourist 8orld %ervice, 'nc.>s Er*ita of#ce, she *ust
have done so pursuant to a contract of a,enc-. 't is the essence of this contract that the
a,ent renders services +in representation or on behalf of another. 18 'n the case at bar,
%evilla solicited airline fares, but she did so for and on behalf of her principal, $ourist
8orld %ervice, 'nc. As co*pensation, she received FR of the proceeds in the concept of
co**issions. And as !e said, %evilla herself based on her letter of Nove*ber @3, 12Q1,
pre=assu*ed her principal>s authorit- as o!ner of the business underta/in,. 8e are
convinced, considerin, the circu*stances and fro* the respondent Court>s recital of
facts, that the ties had conte*plated a principal a,ent relationship, rather than a ?oint
*ana,a*ent or a partnership..
But unli/e si*ple ,rants of a po!er of attorne-, the a,enc- that !e hereb- declare to
be co*patible !ith the intent of the parties, cannot be revo/ed at !ill. $he reason is
that it is one coupled !ith an interest, the a,enc- havin, been created for *utual
interest, of the a,ent and the principal. 19 't appears that ina %evilla is a bona
#de travel a,ent herself, and as such, she had acBuired an interest in the business
entrusted to her. Moreover, she had assu*ed a personal obli,ation for the operation
thereof, holdin, herself solidaril- liable for the pa-*ent of rentals. %he continued the
business, usin, her o!n na*e, after $ourist 8orld had stopped further operations. 6er
interest, obviousl-, is not to the co**issions she earned as a result of her business
transactions, but one that e&tends to the ver- sub?ect *atter of the po!er of
*ana,e*ent dele,ated to her. 't is an a,enc- that, as !e said, cannot be revo/ed at the
pleasure of the principal. Accordin,l-, the revocation co*plained of should entitle the
petitioner, ina %evilla, to da*a,es.
As !e have stated, the respondent Court avoided this issue, con#nin, itself to the
telephone disconnection and padloc/in, incidents. Anent the disconnection issue, it is
the holdin, of the Court of Appeals that there is >no evidence sho!in, that the $ourist
8orld %ervice, 'nc. disconnected the telephone lines at the branch of#ce. 307et, !hat
cannot be denied is the fact that $ourist 8orld %ervice, 'nc. did not ta/e pains to have
the* reconnected. Assu*in,, therefore, that it had no hand in the disconnection no!
co*plained of, it had clearl- condoned it, and as o!ner of the telephone lines, it *ust
shoulder responsibilit- therefor.
$he Court of Appeals *ust li/e!ise be held to be in error !ith respect to the
padloc/in, incident. .or the fact that $ourist 8orld %ervice, 'nc. !as the lessee na*ed
in the lease con=tract did not accord it an- authorit- to ter*inate that contract
!ithout notice to its actual occupant, and to padloc/ the pre*ises in such fashion. As
this Court has ruled, the petitioner, ina %evilla, had acBuired a personal sta/e in the
business itself, and necessaril-, in the eBuip*ent pertainin, thereto. .urther*ore,
%evilla !as not a stran,er to that contract havin, been e&plicitl- na*ed therein as a
third part- in char,e of rental pa-*ents (solidaril- !ith $ourist 8orld, 'nc.). %he
could not be ousted fro* possession as su**aril- as one !ould e?ect an interloper.
$he Court is satis#ed that fro* the chronicle of events, there !as indeed so*e
*alevolent desi,n to put the petitioner, ina %evilla, in a bad li,ht follo!in,
disclosures that she had !or/ed for a rival #r*. $o be sure, the respondent court
spea/s of alle,ed business losses to ?ustif- the closure :31 but there is no clear sho!in,
that $ourist 8orld Er*ita Branch had in fact sustained such reverses, let alone, the
fact that %evilla had *oonlit for another co*pan-. 8hat the evidence discloses, on the
other hand, is that follo!in, such an infor*ation (that %evilla !as !or/in, for another
co*pan-), $ourist 8orld>s board of directors adopted t!o resolutions abolishin, the
of#ce of >*ana,er+ and authorizin, the corporate secretar-, the respondent Eliseo
Canilao, to effect the ta/eover of its branch of#ce properties. "n Canuar- ;, 12Q@, the
private respondents ended the lease over the branch of#ce pre*ises, incidentall-,
!ithout notice to her.
't !as onl- on Cune F, 12Q@, and after of#ce hours si,ni#cantl-, that the Er*ita of#ce
!as padloc/ed, personall- b- the respondent Canilao, on the prete&t that it !as
necessar- to Protect the interests of the $ourist 8orld %ervice. + 33 't is stran,e
indeed that $ourist 8orld %ervice, 'nc. did not #nd such a need !hen it cancelled the
lease #ve *onths earlier. 8hile $ourist 8orld %ervice, 'nc. !ould not pretend that it
sou,ht to locate %evilla to infor* her of the closure, but surel-, it !as a!are that after
of#ce hours, she could not have been an-!here near the pre*ises. Cappin, these
series of +offensives,+ it cut the of#ce>s telephone lines, paral-zin, co*pletel- its
business operations, and in the process, deprivin, %evilla articipation therein.
$his conduct on the part of $ourist 8orld %ervice, 'nc. betra-s a sinister effort to
punish %evillsa it had perceived to be dislo-alt- on her part. 't is offensive, in an-
event, to ele*entar- nor*s of ?ustice and fair pla-.
8e rule therefore, that for its un!arranted revocation of the contract of a,enc-, the
private respondent, $ourist 8orld %ervice, 'nc., should be sentenced to pa- da*a,es.
4nder the Civil Code, *oral da*a,es *a- be a!arded for +breaches of contract !here
the defendant acted ... in bad faith. 33
8e li/e!ise conde*n $ourist 8orld %ervice, 'nc. to pa- further da*a,es for the *oral
in?ur- done to ina %evilla fro* its brazen conduct subseBuent to the cancellation of
the po!er of attorne- ,ranted to her on the authorit- of Article @1 of the Civil Code, in
relation to Article @@12 (1P) thereof G
AR$. @1. An- person !ho !ilfull- causes loss or in?ur- to another in a
*anner that is contrar- to *orals, ,ood custo*s or public polic- shall
co*pensate the latter for the da*a,e. 34
AR$. @@12. Moral da*a,es 35 *a- be recovered in the follo!in, and
analo,ous casesH
&&& &&& &&&
(1P) Acts and actions refered into article @1, @Q, @M, @3, @2, ;P, ;@, ;F,
and ;A.
$he respondent, Eliseo Canilao, as a ?oint tortfeasor is li/e!ise hereb- ordered to
respond for the sa*e da*a,es in a solidar- capacit-.
'nsofar, ho!ever, as the private respondent, %e,undina No,uera is concerned, no
evidence has been sho!n that she had connived !ith $ourist 8orld %ervice, 'nc. in the
disconnection and padloc/in, incidents. %he cannot therefore be held liable as a
cotortfeasor.
$he Court considers the su*s of P@A,PPP.PP as and for *oral da*a,es,@F P1P,PPP.PP
as e&e*plar- da*a,es,35 and PA,PPP.PP as no*inal 36 andIor
te*perate 37 da*a,es, to be ?ust, fair, and reasonable under the circu*stances.
86ERE."RE, the 0ecision pro*ul,ated on Canuar- @;, 12MA as !ell as the
Resolution issued on Cul- ;1, 12MA, b- the respondent Court of Appeals is hereb-
RE5ER%E0 and %E$ A%'0E. $he private respondent, $ourist 8orld %ervice, 'nc., and
Eliseo Canilao, are "R0ERE0 ?ointl- and severall- to inde*nif- the petitioner, ina
%evilla, the su* of @A,PP.PP as and for *oral da*a,es, the su* of P1P,PPP.PP, as and
for e&e*plar- da*a,es, and the su* of PA,PPP.PP, as and for no*inal andIor
te*perate da*a,es.
Costs a,ainst said private respondents.
%" "R0ERE0.
7ap (Chair*an), Melencio=6errera, Paras and Padilla, CC., concur.

Foo'no'e$
1 Rollo, ;P=FA.
@ Court of .irst 'nstance of Manila, Branch <'< Montesa, A,ustin,
Presidin, Cud,e.
; Rollo, 'd AA: Record on Appeal, ;3.
F Record on Appeal, 'd., ;M=;3.
A Gaviola, Cr., RA*on, C., Re-es, uis, and 0e Castro, Paci#c, CC.,
Conccurrin,
Q Rollo, 'd., 1@F: Brief for Petitioners, 1=@.
M Rollo, 'd., ;Q.
3 'd., @1: e*phasis in the ori,inal.
2 %ee Rep. Act No. 3MA %ee also Rep. Act No. 1PA@, as a*ended b- Rep. Act
No. 1M3M.
1P 5N Pictures, 'nc. v. Philippine Musicians Guild, No. =1@A3@, Canuar-
@3,12Q1, 1 %CRA 1;@,1M; (12Q1): e*phasis in the ori,inal.
11 5isa-an %tevedore $rans. Co., et al. v. C.'.R., et al., No. =@1Q2Q,
.ebruar- @A,12QM,12 %CRA F@Q (12QM).
1@ Rollo, 'd., FP.
1; 'd ;1.
1F 'd., FM.
1A BA4$'%$A, $REA$'%E "N P6''PP'NE PAR$NER%6'P A8 ;F (12M3).
1Q "p cit ;M. 'n $uazon v. Balanos K2A Phil. 1PQ (12AF)L, this Court
distin,uished bet!een a ?oint venture and a partnership but this vie! has
since raised Buestions fro* authorities. Accordin, to Ca*pos, there see*s
to be no funda*ental distinction bet!een the t!o for*s of business
co*binations. CAMP"%, $6E C"RP"RA$'"N C"0E 1@ (1231).L .or p of
this case, !e use the ter*s of interchan,eable.
1M %ee rollo, id.
13 C'5' C"0E, art. 13Q3.
12 %ee 5' PA0'A, C'5' A8 ;AP (12MF).
@P Rollo, id., ;Q.
@1 'd, ;1.
@@ 'd.
@; C'5' C"0E, art. @@@P.
@F %upra.
@A %upra, art. @@;@.
@Q %upra art. @@@1.
@M %upra, art. @@@F.
Republic of the Philippines
SUPREME COURT
Manila
.'R%$ 0'5'%'"N
G.R. No. 170087 Au;u$' 31, 3006
ANGELINA FRANCISCO, Petitioner,
vs.
NATIONAL LA<OR RELATIONS COMMISSION, !ASEI CORPORATION,
SEIICHIRO TA!AHASHI, TIMOTEO ACE"O, "ELFIN LI=A, IRENE
<ALLESTEROS, TRINI"A" LI=A #n+ RAMON ESCUETA,Respondents.
0 E C ' % ' " N
>NARES8SANTIAGO, J.2
$his petition for revie! on certiorari under Rule FA of the Rules of Court see/s to
annul and set aside the 0ecision and Resolution of the Court of Appeals dated "ctober
@2, @PPF 1 and "ctober M, @PPA, @ respectivel-, in CA=G.R. %P No. M3A1A dis*issin, the
co*plaint for constructive dis*issal #led b- herein petitioner An,elina .rancisco. $he
appellate court reversed and set aside the 0ecision of the National abor Relations
Co**ission (NRC) dated April 1A, @PP;, ; in NRC NCR CA No. P;@MQQ=P@ !hich
af#r*ed !ith *odi#cation the decision of the abor Arbiter dated Cul- ;1, @PP@, F in
NRC=NCR Case No. ;P=1P=P=F32=P1, #ndin, that private respondents !ere liable for
constructive dis*issal.
'n 122A, petitioner !as hired b- 9asei Corporation durin, its incorporation sta,e. %he
!as desi,nated as Accountant and Corporate %ecretar- and !as assi,ned to handle all
the accountin, needs of the co*pan-. %he !as also desi,nated as iaison "f#cer to the
Cit- of Ma/ati to secure business per*its, construction per*its and other licenses for
the initial operation of the co*pan-. A
Althou,h she !as desi,nated as Corporate %ecretar-, she !as not entrusted !ith the
corporate docu*ents: neither did she attend an- board *eetin, nor reBuired to do so.
%he never prepared an- le,al docu*ent and never represented the co*pan- as its
Corporate %ecretar-. 6o!ever, on so*e occasions, she !as prevailed upon to si,n
docu*entation for the co*pan-. Q
'n 122Q, petitioner !as desi,nated Actin, Mana,er. $he corporation also hired Gerr-
Nino as accountant in lieu of petitioner. As Actin, Mana,er, petitioner !as assi,ned to
handle recruit*ent of all e*plo-ees and perfor* *ana,e*ent ad*inistration
functions: represent the co*pan- in all dealin,s !ith ,overn*ent a,encies, especiall-
!ith the Bureau of 'nternal Revenue (B'R), %ocial %ecurit- %-ste* (%%%) and in the
cit- ,overn*ent of Ma/ati: and to ad*inister all other *atters pertainin, to the
operation of 9asei Restaurant !hich is o!ned and operated b- 9asei Corporation. M
.or #ve -ears, petitioner perfor*ed the duties of Actin, Mana,er. As of 0ece*ber ;1,
@PPP her salar- !as P@M,APP.PP plus P;,PPP.PP housin, allo!ance and a 1PR share in
the pro#t of 9asei Corporation. 3
'n Canuar- @PP1, petitioner !as replaced b- iza R. .uentes as Mana,er. Petitioner
alle,ed that she !as reBuired to si,n a prepared resolution for her replace*ent but
she !as assured that she !ould still be connected !ith 9asei Corporation. $i*oteo
Acedo, the desi,nated $reasurer, convened a *eetin, of all e*plo-ees of 9asei
Corporation and announced that nothin, had chan,ed and that petitioner !as still
connected !ith 9asei Corporation as $echnical Assistant to %ei?i 9a*ura and in
char,e of all B'R *atters. 2
$hereafter, 9asei Corporation reduced her salar- b- P@,APP.PP a *onth be,innin,
Canuar- up to %epte*ber @PP1 for a total reduction of P@@,APP.PP as of %epte*ber
@PP1. Petitioner !as not paid her *id=-ear bonus alle,edl- because the co*pan- !as
not earnin, !ell. "n "ctober @PP1, petitioner did not receive her salar- fro* the
co*pan-. %he *ade repeated follo!=ups !ith the co*pan- cashier but she !as advised
that the co*pan- !as not earnin, !ell. 1P
"n "ctober 1A, @PP1, petitioner as/ed for her salar- fro* Acedo and the rest of the
of#cers but she !as infor*ed that she is no lon,er connected !ith the co*pan-. 11
%ince she !as no lon,er paid her salar-, petitioner did not report for !or/ and #led an
action for constructive dis*issal before the labor arbiter.
Private respondents averred that petitioner is not an e*plo-ee of 9asei Corporation.
$he- alle,ed that petitioner !as hired in 122A as one of its technical consultants on
accountin, *atters and act concurrentl- as Corporate %ecretar-. As technical
consultant, petitioner perfor*ed her !or/ at her o!n discretion !ithout control and
supervision of 9asei Corporation. Petitioner had no dail- ti*e record and she ca*e to
the of#ce an- ti*e she !anted. $he co*pan- never interfered !ith her !or/ e&cept
that fro* ti*e to ti*e, the *ana,e*ent !ould as/ her opinion on *atters relatin, to
her profession. Petitioner did not ,o throu,h the usual procedure of selection of
e*plo-ees, but her services !ere en,a,ed throu,h a Board Resolution desi,natin, her
as technical consultant. $he *one- received b- petitioner fro* the corporation !as
her professional fee sub?ect to the 1PR e&panded !ithholdin, ta& on professionals, and
that she !as not one of those reported to the B'R or %%% as one of the co*pan-Ss
e*plo-ees. 1@
PetitionerSs desi,nation as technical consultant depended solel- upon the !ill of
*ana,e*ent. As such, her consultanc- *a- be ter*inated an- ti*e considerin, that
her services !ere onl- te*porar- in nature and dependent on the needs of the
corporation.
$o prove that petitioner !as not an e*plo-ee of the corporation, private respondents
sub*itted a list of e*plo-ees for the -ears 1222 and @PPP dul- received b- the B'R
sho!in, that petitioner !as not a*on, the e*plo-ees reported to the B'R, as !ell as a
list of pa-ees sub?ect to e&panded !ithholdin, ta& !hich included petitioner. %%%
records !ere also sub*itted sho!in, that petitionerSs latest e*plo-er !as %ei?i
Corporation. 1;
$he abor Arbiter found that petitioner !as ille,all- dis*issed, thusH
86ERE."RE, pre*ises considered, ?ud,*ent is hereb- rendered as follo!sH
1. #ndin, co*plainant an e*plo-ee of respondent corporation:
@. declarin, co*plainantSs dis*issal as ille,al:
;. orderin, respondents to reinstate co*plainant to her for*er position !ithout loss of
seniorit- ri,hts and ?ointl- and severall- pa- co*plainant her *one- clai*s in
accordance !ith the follo!in, co*putationH
a. Bac/!a,es 1PI@PP1 T PMI@PP@ @MA,PPP.PP
(@M,APP & 1P *os.)
b. %alar- 0ifferentials (P1I@PP1 T P2I@PP1) @@,APP.PP
c. 6ousin, Allo!ance (P1I@PP1 T PMI@PP@) AM,PPP.PP
d. Mid-ear Bonus @PP1 @M,APP.PP
e. 1;th Month Pa- @M,APP.PP
LABOR
ARBITER
f. 1PR share in the pro#ts of 9asei
Corp. fro* 122Q=@PP1 ;Q1,1MA.PP
,. Moral and e&e*plar- da*a,es 1PP,PPP.PP
h. 1PR Attorne-Ss fees 3M,PMQ.AP
P2AM,MF@.AP
'f reinstate*ent is no lon,er feasible, respondents are ordered to pa- co*plainant
separation pa- !ith additional bac/!a,es that !ould accrue up to actual pa-*ent of
separation pa-.
%" "R0ERE0. 1F
"n April 1A, @PP;, the NRC af#r*ed !ith *odi#cation the 0ecision of the abor
Arbiter, the dispositive portion of !hich readsH
PREM'%E% C"N%'0ERE0, the 0ecision of Cul- ;1, @PP@ is hereb- M"0'.'E0 as
follo!sH
1) Respondents are directed to pa- co*plainant separation pa- co*puted at one
*onth per -ear of service in addition to full bac/!a,es fro* "ctober @PP1 to Cul- ;1,
@PP@:
@) $he a!ards representin, *oral and e&e*plar- da*a,es and 1PR share in pro#t in
the respective accounts of P1PP,PPP.PP and P;Q1,1MA.PP are deleted:
;) $he a!ard of 1PR attorne-Ss fees shall be based on salar- differential a!ard onl-:
F) $he a!ards representin, salar- differentials, housin, allo!ance, *id -ear bonus
and 1;th *onth pa- are A..'RME0.
%" "R0ERE0. 1A
"n appeal, the Court of Appeals reversed the NRC decision, thusH
86ERE."RE, the instant petition is hereb- GRAN$E0. $he decision of the National
abor Relations Co**issions dated April 1A, @PP; is hereb- RE5ER%E0 and %E$
A%'0E and a ne! one is hereb- rendered dis*issin, the co*plaint #led b- private
respondent a,ainst 9asei Corporation, et al. for constructive dis*issal.
%" "R0ERE0. 1Q
$he appellate court denied petitionerSs *otion for reconsideration, hence, the present
recourse.
$he core issues to be resolved in this case are (1) !hether there !as an e*plo-er=
e*plo-ee relationship bet!een petitioner and private respondent 9asei Corporation:
and if in the af#r*ative, (@) !hether petitioner !as ille,all- dis*issed.
Considerin, the conEictin, #ndin,s b- the abor Arbiter and the National abor
Relations Co**ission on one hand, and the Court of Appeals on the other, there is a
need to ree&a*ine the records to deter*ine !hich of the propositions espoused b- the
contendin, parties is supported b- substantial evidence. 1M
8e held in %evilla v. Court of Appeals 13 that in this ?urisdiction, there has been no
unifor* test to deter*ine the e&istence of an e*plo-er=e*plo-ee relation. Generall-,
courts have relied on the so=called ri,ht of control test !here the person for !ho* the
NLRC
CA!
services are perfor*ed reserves a ri,ht to control not onl- the end to be achieved but
also the *eans to be used in reachin, such end. 'n addition to the standard of ri,ht=of=
control, the e&istin, econo*ic conditions prevailin, bet!een the parties, li/e the
inclusion of the e*plo-ee in the pa-rolls, can help in deter*inin, the e&istence of an
e*plo-er=e*plo-ee relationship.
6o!ever, in certain cases the control test is not suf#cient to ,ive a co*plete picture of
the relationship bet!een the parties, o!in, to the co*ple&it- of such a relationship
!here several positions have been held b- the !or/er. $here are instances !hen, aside
fro* the e*plo-erSs po!er to control the e*plo-ee !ith respect to the *eans and
*ethods b- !hich the !or/ is to be acco*plished, econo*ic realities of the
e*plo-*ent relations help provide a co*prehensive anal-sis of the true classi#cation
of the individual, !hether as e*plo-ee, independent contractor, corporate of#cer or
so*e other capacit-.
$he better approach !ould therefore be to adopt a t!o=tiered test involvin,H (1) the
putative e*plo-erSs po!er to control the e*plo-ee !ith respect to the *eans and
*ethods b- !hich the !or/ is to be acco*plished: and (@) the underl-in, econo*ic
realities of the activit- or relationship.
$his t!o=tiered test !ould provide us !ith a fra*e!or/ of anal-sis, !hich !ould ta/e
into consideration the totalit- of circu*stances surroundin, the true nature of the
relationship bet!een the parties. $his is especiall- appropriate in this case !here
there is no !ritten a,ree*ent or ter*s of reference to base the relationship on: and
due to the co*ple&it- of the relationship based on the various positions and
responsibilities ,iven to the !or/er over the period of the latterSs e*plo-*ent.
$he control test initiall- found application in the case of 5iaNa v. Al=a,adan and
Pi,a, 12 and latel- in eonardo v. Court of Appeals, @P !here !e held that there is an
e*plo-er=e*plo-ee relationship !hen the person for !ho* the services are perfor*ed
reserves the ri,ht to control not onl- the end achieved but also the *anner and *eans
used to achieve that end.
'n %evilla v. Court of Appeals, @1 !e observed the need to consider the e&istin,
econo*ic conditions prevailin, bet!een the parties, in addition to the standard of
ri,ht=of=control li/e the inclusion of the e*plo-ee in the pa-rolls, to ,ive a clearer
picture in deter*inin, the e&istence of an e*plo-er=e*plo-ee relationship based on
an anal-sis of the totalit- of econo*ic circu*stances of the !or/er.
$hus, the deter*ination of the relationship bet!een e*plo-er and e*plo-ee depends
upon the circu*stances of the !hole econo*ic activit-, @@ such asH (1) the e&tent to
!hich the services perfor*ed are an inte,ral part of the e*plo-erSs business: (@) the
e&tent of the !or/erSs invest*ent in eBuip*ent and facilities: (;) the nature and
de,ree of control e&ercised b- the e*plo-er: (F) the !or/erSs opportunit- for pro#t
and loss: (A) the a*ount of initiative, s/ill, ?ud,*ent or foresi,ht reBuired for the
success of the clai*ed independent enterprise: (Q) the per*anenc- and duration of
the relationship bet!een the !or/er and the e*plo-er: and (M) the de,ree of
dependenc- of the !or/er upon the e*plo-er for his continued e*plo-*ent in that
line of business. @;
$he proper standard of econo*ic dependence is !hether the !or/er is dependent on
the alle,ed e*plo-er for his continued e*plo-*ent in that line of business. @F 'n the
4nited %tates, the touchstone of econo*ic realit- in anal-zin, possible e*plo-*ent
relationships for purposes of the .ederal abor %tandards Act is dependenc-.@A B-
analo,-, the bench*ar/ of econo*ic realit- in anal-zin, possible e*plo-*ent
relationships for purposes of the abor Code ou,ht to be the econo*ic dependence of
the !or/er on his e*plo-er.
B- appl-in, the control test, there is no doubt that petitioner is an e*plo-ee of 9asei
Corporation because she !as under the direct control and supervision of %ei?i 9a*ura,
the corporationSs $echnical Consultant. %he reported for !or/ re,ularl- and served in
various capacities as Accountant, iaison "f#cer, $echnical Consultant, Actin,
Mana,er and Corporate %ecretar-, !ith substantiall- the sa*e ?ob functions, that is,
renderin, accountin, and ta& services to the co*pan- and perfor*in, functions
necessar- and desirable for the proper operation of the corporation such as securin,
business per*its and other licenses over an inde#nite period of en,a,e*ent.
4nder the broader econo*ic realit- test, the petitioner can li/e!ise be said to be an
e*plo-ee of respondent corporation because she had served the co*pan- for si& -ears
before her dis*issal, receivin, chec/ vouchers indicatin, her salariesI!a,es, bene#ts,
1;th *onth pa-, bonuses and allo!ances, as !ell as deductions and %ocial %ecurit-
contributions fro* Au,ust 1, 1222 to 0ece*ber 13, @PPP. @Q 8hen petitioner !as
desi,nated General Mana,er, respondent corporation *ade a report to the %%% si,ned
b- 'rene Ballesteros. PetitionerSs *e*bership in the %%% as *anifested b- a cop- of
the %%% speci*en si,nature card !hich !as si,ned b- the President of 9asei
Corporation and the inclusion of her na*e in the on=line inBuir- s-ste* of the %%%
evinces the e&istence of an e*plo-er=e*plo-ee relationship bet!een petitioner and
respondent corporation. @M
't is therefore apparent that petitioner is econo*icall- dependent on respondent
corporation for her continued e*plo-*ent in the latterSs line of business.
'n 0o*asi, v. National abor Relations Co**ission, @3 !e held that in a business
establish*ent, an identi#cation card is provided not onl- as a securit- *easure but
*ainl- to identif- the holder thereof as a bona #de e*plo-ee of the #r* that issues it.
$o,ether !ith the cash vouchers coverin, petitionerSs salaries for the *onths stated
therein, these *atters constitute substantial evidence adeBuate to support a
conclusion that petitioner !as an e*plo-ee of private respondent.
8e li/e!ise ruled in .lores v. Nuestro @2 that a corporation !ho re,isters its !or/ers
!ith the %%% is proof that the latter !ere the for*erSs e*plo-ees. $he covera,e of
%ocial %ecurit- a! is predicated on the e&istence of an e*plo-er=e*plo-ee
relationship.
.urther*ore, the af#davit of %ei?i 9a*ura dated 0ece*ber A, @PP1 has clearl-
established that petitioner never acted as Corporate %ecretar- and that her
desi,nation as such !as onl- for convenience. $he actual nature of petitionerSs ?ob !as
as 9a*uraSs direct assistant !ith the dut- of actin, as iaison "f#cer in representin,
the co*pan- to secure construction per*its, license to operate and other
reBuire*ents i*posed b- ,overn*ent a,encies. Petitioner !as never entrusted !ith
corporate docu*ents of the co*pan-, nor reBuired to attend the *eetin, of the
corporation. %he !as never priv- to the preparation of an- docu*ent for the
corporation, althou,h once in a !hile she !as reBuired to si,n prepared
docu*entation for the co*pan-. ;P
$he second af#davit of 9a*ura dated March M, @PP@ !hich repudiated the 0ece*ber
A, @PP1 af#davit has been alle,edl- !ithdra!n b- 9a*ura hi*self fro* the records of
the case. ;1 Re,ardless of this fact, !e are convinced that the alle,ations in the #rst
af#davit are suf#cient to establish that petitioner is an e*plo-ee of 9asei Corporation.
Grantin, ar,uendo, that the second af#davit validl- repudiated the #rst one, courts do
not ,enerall- loo/ !ith favor on an- retraction or recanted testi*on-, for it could have
been secured b- considerations other than to tell the truth and !ould *a/e sole*n
trials a *oc/er- and place the investi,ation of the truth at the *erc- of unscrupulous
!itnesses. ;@ A recantation does not necessaril- cancel an earlier declaration, but li/e
an- other testi*on- the sa*e is sub?ect to the test of credibilit- and should be
received !ith caution. ;;
Based on the fore,oin,, there can be no other conclusion that petitioner is an e*plo-ee
of respondent 9asei Corporation. %he !as selected and en,a,ed b- the co*pan- for
co*pensation, and is econo*icall- dependent upon respondent for her continued
e*plo-*ent in that line of business. 6er *ain ?ob function involved accountin, and
ta& services rendered to respondent corporation on a re,ular basis over an inde#nite
period of en,a,e*ent. Respondent corporation hired and en,a,ed petitioner for
co*pensation, !ith the po!er to dis*iss her for cause. More i*portantl-, respondent
corporation had the po!er to control petitioner !ith the *eans and *ethods b- !hich
the !or/ is to be acco*plished.
$he corporation constructivel- dis*issed petitioner !hen it reduced her salar- b-
P@,APP a *onth fro* Canuar- to %epte*ber @PP1. $his a*ounts to an ille,al
ter*ination of e*plo-*ent, !here the petitioner is entitled to full bac/!a,es. %ince
the position of petitioner as accountant is one of trust and con#dence, and under the
principle of strained relations, petitioner is further entitled to separation pa-, in lieu of
reinstate*ent. ;F
A di*inution of pa- is pre?udicial to the e*plo-ee and a*ounts to constructive
dis*issal. Constructive dis*issal is an involuntar- resi,nation resultin, in cessation
of !or/ resorted to !hen continued e*plo-*ent beco*es i*possible, unreasonable or
unli/el-: !hen there is a de*otion in ran/ or a di*inution in pa-: or !hen a clear
discri*ination, insensibilit- or disdain b- an e*plo-er beco*es unbearable to an
e*plo-ee. ;A 'n Globe $eleco*, 'nc. v. .lorendo=.lores, ;Q !e ruled that !here an
e*plo-ee ceases to !or/ due to a de*otion of ran/ or a di*inution of pa-, an
unreasonable situation arises !hich creates an adverse !or/in, environ*ent
renderin, it i*possible for such e*plo-ee to continue !or/in, for her e*plo-er.
6ence, her severance fro* the co*pan- !as not of her o!n *a/in, and therefore
a*ounted to an ille,al ter*ination of e*plo-*ent.
'n affordin, full protection to labor, this Court *ust ensure eBual !or/ opportunities
re,ardless of se&, race or creed. Even as !e, in ever- case, atte*pt to carefull- balance
the fra,ile relationship bet!een e*plo-ees and e*plo-ers, !e are *indful of the fact
that the polic- of the la! is to appl- the abor Code to a ,reater nu*ber of e*plo-ees.
$his !ould enable e*plo-ees to avail of the bene#ts accorded to the* b- la!, in line
!ith the constitutional *andate ,ivin, *a&i*u* aid and protection to labor,
pro*otin, their !elfare and reaf#r*in, it as a pri*ar- social econo*ic force in
furtherance of social ?ustice and national develop*ent.
9HEREFORE, the petition is GRANTE". $he 0ecision and Resolution of the Court of
Appeals dated "ctober @2, @PPF and "ctober M, @PPA, respectivel-, in CA=G.R. %P No.
M3A1A are ANNULLE" and SET ASI"E. $he 0ecision of the National abor Relations
Co**ission dated April 1A, @PP; in NRC NCR CA No. P;@MQQ=P@, isREINSTATE".
$he case is REMAN"E" to the abor Arbiter for the reco*putation of petitioner
An,elina .ranciscoSs full bac/!a,es fro* the ti*e she !as ille,all- ter*inated until
the date of #nalit- of this decision, and separation pa- representin, one=half *onth
pa- for ever- -ear of service, !here a fraction of at least si& *onths shall be
considered as one !hole -ear.
SO OR"ERE".
CONSUELO >NARES8SANTIAGO
Associate Custice
9E CONCURH
ARTEMIO V. PANGANI<AN
Chief Custice
Chairperson
MA. ALICIA AUSTRIA8MARTINE=
Associate Custice
ROMEO J. CALLEJO, SR.
Associate Custice
MINITA V. CHICO8NA=ARIO
Associate Custice
C E R $ ' . ' C A $ ' " N
Pursuant to %ection 1;, Article 5''' of the Constitution, it is hereb- certi#ed that the
conclusions in the above 0ecision !ere reached in consultation before the case !as
assi,ned to the !riter of the opinion of the CourtSs 0ivision.
ARTEMIO V. PANGANI<AN
Chief Custice
Foo'no'e$
1 Rollo, pp. 2=@@. Penned b- Associate Custice Elo- R. Bello, Cr. and concurred in
b- Associate Custices Re,alado E. Maa*bon, and ucenito N. $a,le.
@ 'd. at @F=@A.
; 'd. at 12;=123. Penned b- Presidin, Co**issioner ourdes C. Cavier and
concurred in b- Co**issioner $ito .. Genilo.
F 'd. at 1QF=1M;. Penned b- abor Arbiter Eduardo C. Carpio.
A 'd. at 32.
Q 'd. at 32=2P.
M 'd. at 2P.
3 'd.
2 'd. at 21.
1P 'd.
11 'd. at 21=2@.
1@ 'd. at 2@=2;.
1; 'd. at 2F.
1F 'd. at 1M@=1M;.
1A 'd. at 12M=123.
1Q 'd. at 1PP.
1M Abante, Cr. v. a*adrid Bearin, & Parts Corporation, G.R. No. 1A232P, Ma-
@3, @PPF, F;P %CRA ;Q3, ;M2.
13 G.R. Nos. =F113@=;, April 1A, 1233, 1QP %CRA 1M1, 1M2=13P, citin, 5isa-an
%tevedore $ransportation Co*pan- v. Court of 'ndustrial Relations, 1@A Phil.
31M, 3@P (12QM).
12 22 Phil. FP3 (12AQ).
@P G.R. No. 1A@FA2, Cune 1A, @PPQ.
@1 %upra note 13.
@@ Rutherford .ood Corporation v. McCo*b, ;;1 4.%. M@@, M@M (12FM): 21 .Ed.
1MM@, 1MMM (12FQ).
@; %ee Broc/ v. auritzen, Q@F ..%upp. 2QQ (E.0. 8isc. 123A): Real v. 0riscoll
%tra!berr- Associates, 'nc., QP; ..@d MF3 (2th Cir. 12M2): Goldber, v. 8hita/er
6ouse Cooperative, 'nc., ;QQ 4.%. @3, 31 %.Ct. 2;;, Q .Ed.@d 1PP (12Q1): Bartels
v. Bir*in,ha*, ;;@ 4.%. 1@Q, QM %.Ct. 1AFM, 21 .Ed. 12FM (12FM).
@F 6alfert- v. Pulse 0ru, Co*pan-, 3@1 ..@d @Q1 (Ath Cir. 123M).
@A 8eisel v. %in,apore Coint 5enture, 'nc., QP@ ..@d. 113A (Ath Cir. 12M2).
@Q Rollo, pp. ;PA=;@1.
@M 'd. at @QF=@QA.
@3 ;;P Phil. A13, A@F (122Q).
@2 G.R. No. QQ32P, April 1A, 1233, 1QP %CRA AQ3, AM1.
;P Rollo, pp. 1@P=1@1.
;1 'd. at AM.
;@ People v. Co-a, G.R. No. M2P2P, "ctober 1, 122;, @@M %CRA 2, @Q=@M.
;; People v. 0avatos, G.R. No. 2;;@@, .ebruar- F, 122F, @@2 %CRA QFM, QA1.
;F Globe=Mac/a- Cable and Radio Corporation v. National abor Relations
Co**ission, G.R. No. 3@A11, March ;, 122@, @PQ %CRA MP1, M11=M1@.
;A eonardo v. National abor Relations Co**ission, ;32 Phil. 113, 1@Q (@PPP).
;Q F;3 Phil. MAQ (@PP@).
Republic of the Philippines
SUPREME COURT
Manila
$6'R0 0'5'%'"N
G.R. No$. 83380881 No1e,*e& 15, 1989
MA!ATI HA<ER"ASHER>, INC., JORGE LE"ESMA #n+ CECILIO G.
INOCENCIO, petitioners,
vs.
NATIONAL LA<OR RELATIONS COMMISSION, CEFERINA J. "IOSANA ?L#*o&
A&*/'e&, "e-#&',en' o) L#*o& #n+ E,-.o(,en', N#'/on#. C#-/'#. Re;/on@,
SAN"IGAN NG MANGGAGA9ANG PILIPINO ?SAN"IGAN@8TUCP #n+ /'$
,e,*e&$, JACINTO GARCIANO, ALFRE"O C. <ASCO, VICTORIO >. LAURETO,
ESTER NARVAE=, EUGENIO L. RO<LES, <ELEN N. VISTA, ALEJAN"RO A.
ESTRA<O, VEVENCIO TIRO, CASIMIRO =APATA, GLORIA ESTRA<O, LEONORA
MEN"O=A, MACARIA G. "IMPAS, MERIL>N A. VIRA>, LIL> OPINA, JANET
SANG"ANG, JOSEFINA ALCOCE<A #n+ MARIA ANGELES,respondents.
edes*a, %aludo & Associates for petitioners.
Pablo %. Bernardo for private respondents.

FERNAN, C.J.2
$his petition for certiorari involvin, t!o separate cases #led b- private respondents
a,ainst herein petitioners assails the decision of respondent National abor Relations
Co**ission in NRC CA%E No. M=@QP;=3F entitled +%andi,an N, Man,,a,a!an,
Pilipino (%AN0'GAN)=$4CP etc., et al. v. Ma/ati 6aberdasher- andIor $oppers Ma/ati,
et al.+ and NRC CA%E No. @=F@3=3A entitled +%andi,an N, Man,,a,a!an, Pilipino
(%AN0'GAN)=$4CP etc., et al. v. $oppers Ma/ati, et al.+, af#r*in, the decision of the
abor Arbiter !ho ?ointl- heard and decided aforesaid cases, #ndin,H (a) petitioners
,uilt- of ille,al dis*issal and orderin, the* to reinstate the dis*issed !or/ers and
(b) the e&istence of e*plo-er=e*plo-ee relationship and ,rantin, respondent !or/ers
b- reason thereof their various *onetar- clai*s.
$he undisputed facts are as follo!sH
'ndividual co*plainants, private respondents herein, have been !or/in, for petitioner
Ma/ati 6aberdasher-, 'nc. as tailors, sea*stress, se!ers, basters (*anlililip) and
+plantsadoras+. $he- are paid on a piece=rate basis e&cept Maria An,eles and eonila
%era#na !ho are paid on a *onthl- basis. 'n addition to their piece=rate, the- are
,iven a dail- allo!ance of three (P ;.PP) pesos provided the- report for !or/ before
2H;P a.*. ever-da-.
Private respondents are reBuired to !or/ fro* or before 2H;P a.*. up to QHPP or MHPP
p.*. fro* Monda- to %aturda- and durin, pea/ periods even on %unda-s and holida-s.
"n Cul- @P, 123F, the %andi,an n, Man,,a,a!an, Pilipino, a labor or,anization of the
respondent !or/ers, #led a co*plaint doc/eted as NRC NCR Case No. M=@QP;=3F for
(a) underpa-*ent of the basic !a,e: (b) underpa-*ent of livin, allo!ance: (c) non=
pa-*ent of overti*e !or/: (d) non=pa-*ent of holida- pa-: (e) non=pa-*ent of
service incentive pa-: (f) 1;th *onth pa-: and (,) bene#ts provided for under 8a,e
"rders Nos. 1, @, ;, F and A. 1
0urin, the pendenc- of NRC NCR Case No. M=@QP;=3F, private respondent 0ioscoro
Pelobello left !ith %alvador Rivera, a sales*an of petitioner 6aberdasher-, an open
pac/a,e !hich !as discovered to contain a +?usi+ baron, ta,alo,. 8hen confronted,
Pelobello replied that the sa*e !as ordered b- respondent Casi*iro Japata for his
custo*er. Japata alle,edl- ad*itted that he copied the desi,n of petitioner
6aberdasher-. But in the afternoon, !hen a,ain Buestioned about said baron,,
Pelobello and Japata denied o!nership of the sa*e. ConseBuentl- a *e*orandu* !as
issued to each of the* to e&plain on or before .ebruar- F, 123A !h- no action should
be ta/en a,ainst the* for acceptin, a ?ob order !hich is pre?udicial and in direct
co*petition !ith the business of the co*pan-. 3 Both respondents alle,edl- did not
sub*it their e&planation and did not report for !or/. 3 6ence, the- !ere dis*issed b-
petitioners on .ebruar- F, 123A. $he- countered b- #lin, a co*plaint for ille,al
dis*issal doc/eted as NRC NCR Case No. @=F@3=3A on .ebruar- A, 123A. 4
"n Cune 1P, 123Q, abor Arbiter Ceferina C. 0iosana rendered ?ud,*ent, the
dispositive portion of !hich readsH
86ERE."RE, ?ud,*ent is hereb- rendered in NRC NCR Case No. @=F@3=
3A #ndin, respondents ,uilt- of ille,al dis*issal and orderin, the* to
reinstate 0ioscoro Pelobello and Casi*iro Japata to their respective or
si*ilar positions !ithout loss of seniorit- ri,hts, !ith full bac/!a,es fro*
Cul- F, 123A up to actual reinstate*ent. $he char,e of unfair labor
practice is dis*issed for lac/ of *erit.
'n NRC NCR Case No. M=@QP;P=3F, the co*plainants> clai*s for
underpa-*ent re violation of the *ini*u* !a,e la! is hereb- ordered
dis*issed for lac/ of *erit.
Respondents are hereb- found to have violated the decrees on the cost of
livin, allo!ance, service incentive leave pa- and the 1;th Month Pa-. 'n
vie! thereof, the econo*ic anal-st of the Co**ission is directed to
co*pute the *onetar- a!ards due each co*plainant based on the
available records of the respondents retroactive as of three -ears prior to
the #lin, of the instant case.
%" "R0ERE0. 5
.ro* the fore,oin, decision, petitioners appealed to the NRC. $he latter on March
;P, 1233 af#r*ed said decision but li*ited the bac/!a,es a!arded the 0ioscoro
Pelobello and Casi*iro Japata to onl- one (1) -ear. 6
After their *otion for reconsideration !as denied, petitioners #led the instant petition
raisin, the follo!in, issuesH
'
$6E %4BCEC$ 0EC'%'"N% ERR"NE"4%7 C"NC40E0 $6A$ AN EMP"7ER=
EMP"7EE REA$'"N%6'P E<'%$% BE$8EEN PE$'$'"NER 6ABER0A%6ER7 AN0
RE%P"N0EN$% 8"R9ER%.
''
$6E %4BCEC$ 0EC'%'"N% ERR"NE"4%7 C"NC40E0 $6A$ RE%P"N0EN$%
8"R9ER% ARE EN$'$E0 $" M"NE$AR7 CA'M% 0E%P'$E $6E .'N0'NG $6A$
$6E7 ARE N"$ EN$'$E0 $" M'N'M4M 8AGE.
'''
$6E %4BCEC$ 0EC'%'"N% ERR"NE"4%7 C"NC40E0 $6A$ RE%P"N0EN$%
PE"BE" AN0 JAPA$A 8ERE 'EGA7 0'%M'%%E0. 7
$he #rst issue !hich is the pivotal issue in this case is resolved in favor of private
respondents. 8e have repeatedl- held in countless decisions that the test of e*plo-er=
e*plo-ee relationship is four=foldH (1) the selection and en,a,e*ent of the e*plo-ee:
(@) the pa-*ent of !a,es: (;) the po!er of dis*issal: and (F) the po!er to control the
e*plo-ee>s conduct. 't is the so called +control test+ that is the *ost i*portant
ele*ent. 8$his si*pl- *eans the deter*ination of !hether the e*plo-er controls or
has reserved the ri,ht to control the e*plo-ee not onl- as to the result of the !or/ but
also as to the *eans and *ethod b- !hich the sa*e is to be acco*plished. 9
$he facts at bar indubitabl- reveal that the *ost i*portant reBuisite of control is
present. As ,leaned fro* the operations of petitioner, !hen a custo*er enters into a
contract !ith the haberdasher- or its proprietor, the latter directs an e*plo-ee !ho
*a- be a tailor, pattern *a/er, se!er or +plantsadora+ to ta/e the custo*er>s
*easure*ents, and to se! the pants, coat or shirt as speci#ed b- the custo*er.
%upervision is activel- *anifested in all these aspects G the *anner and Bualit- of
cuttin,, se!in, and ironin,.
.urther*ore, the presence of control is i**ediatel- evident in this *e*orandu*
issued b- Assistant Mana,er Cecilio B. 'nocencio, Cr. dated Ma- ;P, 1231 addressed to
$opper>s Ma/ati $ailors !hich reads in partH
F. Effective i**ediatel-, ne! procedures shall be follo!edH
A. $o follo! instruction and orders fro* the undersi,ned Ro,er
5aldera*a, Ruben 0elos Re-es and "fel Bautista. "ther than this person
(sic) *ust as/ per*ission to the above *entioned before ,ivin, orders or
instructions to the tailors.
B. Before acceptin, the ?ob orders tailors *ust chec/ the *aterials, ?ob
orders, due dates and other thin,s to *a&i*ize the ef#cienc- of our
production. $he *aterials should be chec/ed (sic) if it is *atched (sic)
!ith the sa*ple, to,ether !ith the nu*ber of the ?ob order.
C. Effective i**ediatel- all ?ob orders *ust be #nished one da- before the
due date. $his can be done b- proper schedulin, of ?ob order and if -ou !ill
cooperate !ith -our supervisors. 'f -ou have *an- due dates for certain
da-, advise Ruben or "fel at once so that the- can *a/e necessar-
ad?ust*ent on due dates.
0. Alteration=Before acceptin, alteration person attendin, on custo*s
(sic) *ust as/ #rst or *ust advise the tailors re,ardin, the due dates so
that !e can eli*inate !hat !e call >Bitin>.
E. 'f there is an- proble* re,ardin, supervisors or co=tailor inside our
shop, consult !ith *e at once settle the proble*. .i,htin, inside the shop
is strictl- prohibited. An- tailor violatin, this *e*orandu* !ill be
sub?ect to disciplinar- action.
.or strict co*pliance. 10
.ro* this *e*orandu* alone, it is evident that petitioner has reserved the ri,ht to
control its e*plo-ees not onl- as to the result but also the *eans and *ethods b-
!hich the sa*e are to be acco*plished. $hat private respondents are re,ular
e*plo-ees is further proven b- the fact that the- have to report for !or/ re,ularl-
fro* 2H;P a.*. to QHPP or MHPP p.*. and are paid an additional allo!ance of P ;.PP dail-
if the- report for !or/ before 2H;P a.*. and !hich is forfeited !hen the- arrive at or
after 2H;P a.*. 11
%ince private respondents are re,ular e*plo-ees, necessaril- the ar,u*ent that the-
are independent contractors *ust fail. As established in the precedin, para,raphs,
private respondents did not e&ercise independence in their o!n *ethods, but on the
contrar- !ere sub?ect to the control of petitioners fro* the be,innin, of their tas/s to
their co*pletion. 4nli/e independent contractors !ho ,enerall- rel- on their o!n
resources, the eBuip*ent, tools, accessories, and paraphernalia used b- private
respondents are supplied and o!ned b- petitioners. Private respondents are totall-
dependent on petitioners in all these aspects.
Co*in, no! to the second issue, there is no dispute that private respondents are
entitled to the Mini*u* 8a,e as *andated b- %ection @(,) of etter of 'nstruction No.
3@2, Rules '*ple*entin, Presidential 0ecree No. 1Q1F and reiterated in %ection ;(f),
Rules '*ple*entin, Presidential 0ecree 1M1; !hich e&plicitl- states that, +All
e*plo-ees paid b- the result shall receive not less than the applicable ne! *ini*u*
!a,e rates for ei,ht (3) hours !or/ a da-, e&cept !here a pa-*ent b- result rate has
been established b- the %ecretar- of abor. ...+ 13No such rate has been established in
this case.
But all these not!ithstandin,, the Buestion as to !hether or not there is in fact an
underpa-*ent of *ini*u* !a,es to private respondents has alread- been resolved in
the decision of the abor Arbiter !here he statedH +6ence, for lac/ of suf#cient
evidence to support the clai*s of the co*plainants for alle,ed violation of the
*ini*u* !a,e, their clai*s for underpa-*ent re violation of the Mini*u* 8a,e a!
under 8a,e "rders Nos. 1, @, ;, F, and A *ust perforce fall.+ 13
$he records sho! that private respondents did not appeal the above rulin, of the
abor Arbiter to the NRC: neither did the- #le an- petition raisin, that issue in the
%upre*e Court. Accordin,l-, insofar as this case is concerned, that issue has been laid
to rest. As to private respondents, the ?ud,*ent *a- be said to have attained #nalit-.
.or it is a !ell=settled rule in this ?urisdiction that +an appellee !ho has not hi*self
appealed cannot obtain fro* the appellate court=, an- af#r*ative relief other than the
ones ,ranted in the decision of the court belo!. + 14
As a conseBuence of their status as re,ular e*plo-ees of the petitioners, the- can
clai* cost of livin, allo!ance. $his is apparent fro* the provision de#nin, the
e*plo-ees entitled to said allo!ance, thusH +... All !or/ers in the private sector,
re,ardless of their position, desi,nation or status, and irrespective of the *ethod b-
!hich their !a,es are paid. + 15
Private respondents are also entitled to clai* their 1;th Month Pa- under %ection
;(e) of the Rules and Re,ulations '*ple*entin, P.0. No. 3A1 !hich providesH
%ection ;. E*plo-ers covered. G $he 0ecree shall appl- to all e*plo-ers
e&cept toH
&&& &&& &&&
(e) E*plo-ers of those !ho are paid on purel- co**ission, boundar-, or
tas/ basis, and those !ho are paid a #&ed a*ount for perfor*in, a speci#c
!or/, irrespective of the ti*e consu*ed in the perfor*ance
thereof, e&cept !here the !or/ers are paid on piece=rate basis in !hich
case the e*plo-er shall be covered b- this issuance insofar as such
!or/ers are concerned. (E*phasis supplied.)
"n the other hand, !hile private respondents are entitled to Mini*u* 8a,e, C"A
and 1;th Month Pa-, the- are not entitled to service incentive leave pa- because as
piece=rate !or/ers bein, paid at a #&ed a*ount for perfor*in, !or/ irrespective of
ti*e consu*ed in the perfor*ance thereof, the- fall under one of the e&ceptions
stated in %ection 1(d), Rule 5, '*ple*entin, Re,ulations, Boo/ ''', abor Code. .or the
sa*e reason private respondents cannot also clai* holida- pa- (%ection 1(e), Rule '5,
'*ple*entin, Re,ulations, Boo/ ''', abor Code).
8ith respect to the last issue, it is apparent that public respondents have *isread the
evidence, for it does sho! that a violation of the e*plo-er>s rules has been co**itted
and the evidence of such trans,ression, the copied baron, ta,alo,, !as in the
possession of Pelobello !ho pointed to Japata as the o!ner. 8hen reBuired b- their
e*plo-er to e&plain in a *e*orandu* issued to each of the*, the- not onl- failed to
do so but instead !ent on A8" (absence !ithout of#cial leave), !aited for the period
to e&plain to e&pire and for petitioner to dis*iss the*. $he- thereafter #led an action
for ille,al dis*issal on the far=fetched ,round that the- !ere dis*issed because of
union activities. Assu*in, that such acts do not constitute abandon*ent of their ?obs
as insisted b- private respondents, their blatant disre,ard of their e*plo-er>s
*e*orandu* is undoubtedl- an open de#ance to the la!ful orders of the latter, a
?usti#able ,round for ter*ination of e*plo-*ent b- the e*plo-er e&pressl- provided
for in Article @3;(a) of the abor Code as !ell as a clear indication of ,uilt for the
co**ission of acts ini*ical to the interests of the e*plo-er, another ?usti#able ,round
for dis*issal under the sa*e Article of the abor Code, para,raph (c). 8ell established
in our ?urisprudence is the ri,ht of an e*plo-er to dis*iss an e*plo-ee !hose
continuance in the service is ini*ical to the e*plo-er>s interest. 16
'n fact the abor Arbiter hi*self to !ho* the e&planation of private respondents !as
sub*itted ,ave no credence to their version and found their e&cuses that said baron,
ta,alo, !as the one the- ,ot fro* the e*broiderer for the Assistant Mana,er !ho !as
investi,atin, the*, unbelievable.
4nder the circu*stances, it is evident that there is no ille,al dis*issal of said
e*plo-ees. $hus, 8e have ruled thatH
No e*plo-er *a- rationall- be e&pected to continue in e*plo-*ent a
person !hose lac/ of *orals, respect and lo-alt- to his e*plo-er, re,ard
for his e*plo-er>s rules, and appreciation of the di,nit- and responsibilit-
of his of#ce, has so plainl- and co*pletel- been bared.
$hat there should be concern, s-*path-, and solicitude for the ri,hts and
!elfare of the !or/in, class, is *eet and proper. $hat in controversies
bet!een a laborer and his *aster, doubts reasonabl- arisin, fro* the
evidence, or in the interpretation of a,ree*ents and !ritin,s should be
resolved in the for*er>s favor, is not an unreasonable or unfair rule. But
that disre,ard of the e*plo-er>s o!n ri,hts and interests can be ?usti#ed
b- that concern and solicitude is un?ust and unacceptable. (%tanford
Micros-ste*s, 'nc. v. NRC, 1AM %CRA F1F=F1A K1233L ).
$he la! is protectin, the ri,hts of the laborer authorizes neither oppression nor self=
destruction of the e*plo-er.17 More i*portantl-, !hile the Constitution is co**itted
to the polic- of social ?ustice and the protection of the !or/in, class, it should not be
supposed that ever- labor dispute !ill auto*aticall- be decided in favor of labor.18
.inall-, it has been established that the ri,ht to dis*iss or other!ise i*pose
discriplinar- sanctions upon an e*plo-ee for ?ust and valid cause, pertains in the #rst
place to the e*plo-er, as !ell as the authorit- to deter*ine the e&istence of said cause
in accordance !ith the nor*s of due process. 19
$here is no evidence that the e*plo-er violated said nor*s. "n the contrar-, private
respondents !ho vi,orousl- insist on the e&istence of e*plo-er=e*plo-ee relationship,
because of the supervision and control of their e*plo-er over the*, !ere the ver-
ones !ho e&hibited their lac/ of respect and re,ard for their e*plo-er>s rules.
4nder the fore,oin, facts, it is evident that petitioner 6aberdasher- had valid ,rounds
to ter*inate the services of private respondents.
86ERE."RE, the decision of the National abor Relations Co**ission dated March
;P, 1233 and that of the abor Arbiter dated Cune 1P, 123Q are hereb- *odi#ed. $he
co*plaint #led b- Pelobello and Japata for ille,al dis*issal doc/eted as NRC NCR
Case No. @=F@3=3A is dis*issed for lac/ of factual and le,al bases. A!ard of service
incentive leave pa- to private respondents is deleted.
%" "R0ERE0.
Gutierrez, Cr., .eliciano, Bidin and Cortes, CC., concur.

Foo'no'e$
1 Rollo, p. @@.
@ Rollo, pp. 1PA=1PQ.
; Rollo, p. @M.
F Rollo, p. @;.
A Rollo, pp. @2=;P.
Q Rollo, pp. F2=AP.
M Rollo, p. 3.
3 Bautista v. 'ncion,, G.R. No. A@3@F, March 1Q, 1233: Continental Marble
Corporation, et al. v. NRC, G.R. No. F;3@A, Ma- 2, 1233: Asi* et al. v.
Castro, G.R. No. MAPQ;=QF, Cune ;P, 1233: Brotherhood abor 4nit- Mov>t
in the Philippines v. Ja*ora, 1FM %CRA F2 K123ML: 'nvest*ent Plannin,
Corp. of the Phil. v. %ocial %ecurit- %-ste*, @1 %CRA 2@F K12QML: Ma#nco
v. "ple, MP %CRA 1;2 K12MQL: Rosario Brothers v. "ple, =A;A2P, 1;1
%CRA M@ K123FL: %hipside, 'nc. v. NRC, G.R. No. AP;A3, 113 %CRA 22
K123@L: A*erican President ines v. Clave, et al., G.R. No. A1QF1, 11F
%CRA 3@Q K123@L.
2 %ocial %ecurit- %-ste* v. Court of Appeals, 1AQ %CRA ;3; K123ML.
1P Rollo, pp. 3P=31.
11 Rollo, p. FF.
1@ Rules and Re,ulations '*ple*entin, P.0. 2@3.
1; Rollo, p. @2.
1F Alba v. %antander, G.R. No. =@3FP2, April 1A, 1233.
1A %ection ;, Rules '*ple*entin, 8a,e No. 1: %ection 1 Chapter ; of the
Rules '*ple*entin, 8a,e No. @: %ection ' Chapter ; of the Rules
'*ple*entin, 8a,e No. A.
1Q %an Mi,uel Corporation v. NRC, 1F@ %CRA ;MM K123QL.
1M Manila $radin, & %uppl- Co. v. Julueta, Q2 Phil. F3A K12;2L: Allied
Ban/in, Corp. v. Castro, 1AQ %CRA M32, 3PP K123ML.
13 %osito v. A,uinaldo 0evelop*ent Corp., 1AQ %CRA ;2@, ;2Q K12M3L.
12 Richardson v. 0e*etriou 1F@ %CRA APA K123QL.
Republic of the Philippines
SUPREME COURT
Manila
%EC"N0 0'5'%'"N
G.R. No. 159333 Ju.( 31, 3006
ARSENIO T. MEN"IOLA, petitioner,
vs.
COURT OF APPEALS, NATIONAL LA<OR RELATIONS COMMISSION, PACIFIC
FOREST RESOURCES, PHILS., INC. #n+Ao& CELLMAR! A<, respondents.
0 E C ' % ' " N
PUNO, J.2
"n appeal are the 0ecision1 and Resolution@ of the Court of Appeals, dated Canuar-
;P, @PP; and Cul- ;P, @PP;, respectivel-, in CA=G.R. %P No. M1P@3, af#r*in, the
rulin,; of the National abor Relations Co**ission (NRC), !hich in turn set aside
the Cul- ;P, @PP1 0ecisionF of the labor arbiter. $he labor arbiter declared ille,al the
dis*issal of petitioner fro* e*plo-*ent and a!arded separation pa-, *oral and
e&e*plar- da*a,es, and attorne->s fees.
$he facts are as follo!sH
Private respondent Paci#c .orest Resources, Phils., 'nc. (Pacfor) is a corporation
or,anized and e&istin, under the la!s of California, 4%A. 't is a subsidiar- of Cellulose
Mar/etin, 'nternational, a corporation dul- or,anized under the la!s of %!eden, !ith
principal of#ce in Gothenbur,, %!eden.
Private respondent Pacfor entered into a +%ide A,ree*ent on Representative "f#ce
/no!n as Paci#c .orest Resources (Phils.), 'nc.+A !ith petitioner Arsenio $. Mendiola
(A$M), effective Ma- 1, 122A, +assu*in, that Pacfor=Phils. is alread- approved b- the
%ecurities and E&chan,e Co**ission K%ECL on the said date.+Q $he %ide A,ree*ent
outlines the business relationship of the parties !ith re,ard to the Philippine
operations of Pacfor. Private respondent !ill establish a Pacfor representative of#ce in
the Philippines, to be /no!n as Pacfor Phils, and petitioner A$M !ill be its President.
Petitioner>s base salar- and the overhead e&penditures of the co*pan- shall be borne
b- the representative of#ce and funded b- PacforIA$M, since Pacfor Phils. is eBuall-
o!ned on a AP=AP eBuit- b- A$M and Pacfor=usa.
"n Cul- 1F, 122A, the %EC ,ranted the application of private respondent Pacfor for a
license to transact business in the Philippines under the na*e of Pacfor or Pacfor
Phils.M 'n its application, private respondent Pacfor proposed to establish its
representative of#ce in the Philippines !ith the purpose of *onitorin, and
coordinatin, the *ar/et activities for paper products. 't also desi,nated petitioner as
its resident a,ent in the Philippines, authorized to accept su**ons and processes in
all le,al proceedin,s, and all notices affectin, the corporation.3
'n March 122M, the %ide A,ree*ent !as a*ended throu,h a +Revised "peratin, and
Pro#t %harin, A,ree*ent for the Representative "f#ce 9no!n as Paci#c .orest
Resources (Philippines),+2 !here the salar- of petitioner !as increased to UM3,PPP
per annu*. Both a,ree*ents sho! that the operational e&penses !ill be borne b- the
representative of#ce and funded b- all parties +as eBual partners,+ !hile the pro#ts
and co**issions !ill be shared a*on, the*.
'n Cul- @PPP, petitioner !rote 9evin 0ale-, 5ice President for Asia of Pacfor, see/in,
con#r*ation of his APR eBuit- of Pacfor Phils.1P Private respondent Pacfor, throu,h
8illia* Gleason, its President, replied that petitioner is not a part=o!ner of Pacfor
Phils. because the latter is *erel- Pacfor=4%A>s representative of#ce and not an entit-
separate and distinct fro* Pacfor=4%A. +'t>s si*pl- a >theoretical co*pan-> !ith the
purpose of dividin, the inco*e AP=AP.+11 Petitioner presu*abl- /ne! of this
arran,e*ent fro* the start, havin, been the one to propose to private respondent
Pacfor the settin, up of a representative of#ce, and +not a branch of#ce+ in the
Philippines to save on ta&es.1@
Petitioner clai*ed that he !as all alon, *ade to believe that he !as in a ?oint venture
!ith the*. 6e alle,ed he !ould have been better off re*ainin, as an independent
a,ent or representative of Pacfor=4%A as A$M Mar/etin, Corp.1; 6ad he /no!n that
no ?oint venture e&isted, he !ould not have allo!ed Pacfor to ta/e the pro#table
business of his o!n co*pan-, A$M Mar/etin, Corp.1F Petitioner raised other issues,
such as the rentals of of#ce furniture, salar- of the e*plo-ees, co*pan- car, as !ell as
co**issions alle,edl- due hi*. $he issues !ere not resolved, hence, in "ctober @PPP,
petitioner !rote Pacfor=4%A de*andin, pa-*ent of unpaid co**issions and of#ce
furniture and eBuip*ent rentals, a*ountin, to *ore than one *illion dollars.1A
"n Nove*ber @M, @PPP, private respondent Pacfor, throu,h counsel, ordered petitioner
to turn over to it all papers, docu*ents, #les, records, and other *aterials in his or
A$M Mar/etin, Corporation>s possession that belon, to Pacfor or Pacfor Phils.1Q "n
0ece*ber 13, @PPP, private respondent Pacfor also reBuired petitioner to re*it *ore
than three hundred thousand=peso Christ*as ,ivea!a- fund for clients of Pacfor
Phils.1M astl-, private respondent Pacfor !ithdre! all its offers of settle*ent and
ordered petitioner to transfer title and turn over to it possession of the service car.13
Private respondent Pacfor li/e!ise sent letters to its clients in the Philippines,
advisin, the* not to deal !ith Pacfor Phils. 'n its letter to 'ntercontinental Paper
'ndustries, 'nc., dated Nove*ber @1, @PPP, private respondent Pacfor statedH
4ntil further notice, please course all inBuiries and co**unications for Paci#c
.orest Resources (Philippines) toH
Paci #c .orest Resources
@PP $a*al Plaza, %uite @PP
Corte Madera, CA, 4%A 2F2@A
(F1A) 2@M 1MPP phone
(F1A) ;31 F;A3 fa&
Please do not send an- co**unication to Mr. Arsenio +Bo-+ $. Mendiola or to the
of#ces of A$M Mar/etin, Corporation at Roo* APF, Concorde Buildin,, e,aspi
5illa,e, Ma/ati Cit-, Philippines.12
'n another letter addressed to 0avao Corru,ated Carton Corp. (0A5C"R), dated
0ece*ber @PPP, private respondent directed said client +to please co**unicate
directl- !ith us on an- further Buestions associated !ith these pa-*ents or an-
future business. 0o not co**unicate !ith KPacforL andIor KA$ML.+@P
Petitioner construed these directives as a severance of the +unre,istered partnership+
bet!een hi* and Pacfor, and the ter*ination of his e*plo-*ent as resident *ana,er
of Pacfor Phils.@1 'n a *e*orandu* to the e*plo-ees of Pacfor Phils., dated Canuar-
@2, @PP1, he statedH
' received a letter fro* Paci#c .orest Resources, 'nc. de*andin, the turnover of
all records to the* effective 0ece*ber 12, @PPP. $he co*pan- records !ere
turned over onl- on Canuar- @Q, @PP1. $his *eans our ?obs !ith Paci#c .orest
!ere ter*inated effective 0ece*ber 12, @PPP. ' a* concerned about -our
!elfare. ' !ould li/e to help -ou b- offerin, -ou to !or/ !ith A$M Mar/etin,
Corporation.
Please let *e /no! if -ou are interested.@@
"n the basis of the +%ide A,ree*ent,+ petitioner insisted that he and Pacfor eBuall-
o!n Pacfor Phils. $hus, it follo!s that he and Pacfor li/e!ise o!n, on a APIAP basis,
Pacfor Phils.> of#ce furniture and eBuip*ent and the service car. 6e also reiterated his
de*and for unpaid co**issions, and proposed to offset these !ith the re*ainin,
Christ*as ,ivea!a- fund in his possession.@; .urther*ore, he did not rene! the lease
contract !ith Pulp and Paper, 'nc., the lessor of the of#ce pre*ises of Pacfor Phils.,
!herein he !as the si,nator- to the lease a,ree*ent.@F
"n .ebruar- @, @PP1, private respondent Pacfor placed petitioner on preventive
suspension and ordered hi* to sho! cause !h- no disciplinar- action should be ta/en
a,ainst hi*. Private respondent Pacfor char,ed petitioner !ith !illful disobedience
and serious *isconduct for his refusal to turn over the service car and the Christ*as
,ivea!a- fund !hich he applied to his alle,ed unpaid co**issions. Private respondent
also alle,ed loss of con#dence and ,ross ne,lect of dut- on the part of petitioner for
alle,edl- allo!in, another corporation o!ned b- petitioner>s relatives, 6i,h End
Products, 'nc. (6EP'), to use the sa*e telephone and facsi*ile nu*bers of Pacfor, to
possibl- steal and divert the sales and business of private respondent for 6EP'>s
principal, 'nternational .orest Products, a co*petitor of private respondent.@A
Petitioner denied the char,es. 6e reiterated that he considered the i*port of Pacfor
President 8illia* Gleason>s letters as a +cessation of his position and of the e&istence
of Pacfor Phils.+ 6e li/e!ise infor*ed private respondent Pacfor that A$M Mar/etin,
Corp. no! occupies Pacfor Phils.> of#ce pre*ises,@Q and de*anded pa-*ent of his
separation pa-.@M "n .ebruar- 1A, @PP1, petitioner #led his co*plaint for ille,al
dis*issal, recover- of separation pa-, and pa-*ent of attorne->s fees !ith the
NRC.@3
'n the *eanti*e, private respondent Pacfor lod,ed fresh char,es a,ainst petitioner. 'n
a *e*orandu* dated March A, @PP1, private respondent directed petitioner to
e&plain !h- he should not be disciplined for serious *isconduct and conEict of
interest. Private respondent char,ed petitioner ane! !ith serious *isconduct for the
latter>s alle,ed act of fraud and *isrepresentation in authorizin, the release of an
additional peso salar- for hi*self, besides the dollar salar- a,reed upon b- the parties.
Private respondent also accused petitioner of dislo-alt- and representation of
conEictin, interests for havin, continued usin, the Pacfor Phils.> of#ce for operations
of 6EP'. 'n addition, petitioner alle,edl- solicited business for 6EP' fro* a co*petitor
co*pan- of private respondent Pacfor.@2
abor Arbiter .elipe Pati ruled in favor of petitioner, #ndin, there !as constructive
dis*issal. B- directin, petitioner to turn over all of#ce records and *aterials,
re,ardless of !hether he *a- have retained copies, private respondent Pacfor
virtuall- deprived petitioner of his ?ob b- the ,radual di*inution of his authorit- as
resident *ana,er. Petitioner>s position as resident *ana,er !hose dut-, a*on, others,
!as to *aintain the securit- of its business transactions and co**unications !as
rendered *eanin,less. $he dispositive portion of the decision of the abor Arbiter
readsH
86ERE."RE, pre*ises considered, ?ud,*ent is hereb- rendered orderin,
herein respondents Cell*ar/ AB and Paci#c .orest Resources, 'nc., ?ointl- and
severall- to co*pensate co*plainant Arsenio $. Mendiola separation pa-
eBuivalent to at least one *onth for ever- -ear of service, !hichever is
hi,her(sic), as reinstate*ent is no lon,er feasible b- reason of the strained
relations of the parties eBuivalent to #ve (A) *onths in the a*ount of
U;@,PPP.PP plus the su* of P@AP,PPP.PP: pa- co*plainant the su*
ofPAPP,PPP.PP as *oral and e&e*plar- da*a,es and ten percent (1PR) of the
a*ounts a!arded as and for attorne->s fees.
All other clai*s are dis*issed for lac/ of basis.
%" "R0ERE0.;P
Private respondent Pacfor appealed to the NRC !hich ruled in its favor. "n 0ece*ber
@P, @PP1, the NRC set aside the Cul- ;P, @PP1 decision of the labor arbiter, for lac/ of
?urisdiction and lac/ of *erit.;1 't held there !as no e*plo-er=e*plo-ee relationship
bet!een the parties. Based on the t!o a,ree*ents bet!een the parties, it concluded
that petitioner is not an e*plo-ee of private respondent Pacfor, but a full co=o!ner
(APIAP eBuit-).
$he NRC denied petitioner>s Motion for Reconsideration.;@
Petitioner !as not successful on his appeal to the Court of Appeals. $he appellate court
upheld the rulin, of the NRC.
Petitioner>s Motion for Reconsideration;; of the decision of the Court of Appeals !as
denied.
6ence, this appeal.;F
Petitioner assi,ns the follo!in, errorsH
A. $he Respondent Court of Appeals co**itted reversible error and abused its
discretion in renderin, ?ud,*ent a,ainst petitioner since ?urisdiction has been
acBuired over the sub?ect *atter of the case as there e&ists e*plo-er=e*plo-ee
relationship bet!een the parties.
B. $he Respondent Court of Appeals co**itted reversible error and abused its
discretion in rulin, that ?urisdiction over the sub?ect *atter cannot be !aived
and *a- be alle,ed even for the #rst ti*e on appeal or considered b- the court
*otu propKrLio.;A
$he #rst issue is !hether an e*plo-er=e*plo-ee relationship e&ists bet!een petitioner
and private respondent Pacfor.
Petitioner ar,ues that he is an industrial partner of the partnership he for*ed !ith
private respondent Pacfor, and also an e*plo-ee of the partnership. Petitioner insists
that an industrial partner *a- at the sa*e ti*e be an e*plo-ee of the partnership,
provided there is such an a,ree*ent, !hich, in this case, is the +%ide A,ree*ent+ and
the +Revised "peratin, and Pro#t %harin, A,ree*ent.+ $he Court of Appeals denied
the appeal of petitioner, holdin, that +the le,al basis of the co*plaint is not
e*plo-*ent but perhaps partnership, co=o!nership, or independent contractorship.+
6ence, the abor Code cannot appl-.
8e hold that petitioner is an e*plo-ee of private respondent Pacfor and that no
partnership or co=o!nership e&ists bet!een the parties.
'n a partnership, the *e*bers beco*e co=o!ners of !hat is contributed to the #r*
capital and of all propert- that *a- be acBuired thereb- and throu,h the efforts of the
*e*bers.;Q $he propert- or stoc/ of the partnership for*s a co**unit- of ,oods, a
co**on fund, in !hich each part- has a proprietar- interest.;M 'n fact, the Ne! Civil
Code re,ards a partner as a co=o!ner of speci#c partnership propert-.;3 Each partner
possesses a ?oint interest in the !hole of partnership propert-. 'f the relation does not
have this feature, it is not one of partnership.;2 $his essential ele*ent, the
co**unit- of interest, or co=o!nership of, or ?oint interest in partnership propert- is
absent in the relations bet!een petitioner and private respondent Pacfor. Petitioner is
not a part=o!ner of Pacfor Phils. 8illia* Gleason, private respondent Pacfor>s
President established this fact !hen he said that Pacfor Phils. is si*pl- a +theoretical
co*pan-+ for the purpose of dividin, the inco*e AP=AP. 6e stressed that petitioner
/ne! of this arran,e*ent fro* the ver- start, havin, been the one to propose to
private respondent Pacfor the settin, up of a representative of#ce, and +not a branch
of#ce+ in the Philippines to save on ta&es. $hus, the parties in this case, *erel- shared
pro#ts. $his alone does not *a/e a partnership.FP
Besides, a corporation cannot beco*e a *e*ber of a partnership in the absence of
e&press authorization b- statute or charter.F1 $his doctrine is based on the follo!in,
considerationsH (1) that the *utual a,enc- bet!een the partners, !hereb- the
corporation !ould be bound b- the acts of persons !ho are not its dul- appointed and
authorized a,ents and of#cers, !ould be inconsistent !ith the polic- of the la! that
the corporation shall *ana,e its o!n affairs separatel- and e&clusivel-: and, (@) that
such an arran,e*ent !ould i*properl- allo! corporate propert- to beco*e sub?ect to
ris/s not conte*plated b- the stoc/holders !hen the- ori,inall- invested in the
corporation.F@ No such authorization has been proved in the case at bar.
Be that as it *a-, !e hold that on the basis of the evidence, an e*plo-er=e*plo-ee
relationship is present in the case at bar. $he ele*ents to deter*ine the e&istence of
an e*plo-*ent relationship areH (a) the selection and en,a,e*ent of the e*plo-ee: (b)
the pa-*ent of !a,es: (c) the po!er of dis*issal: and (d) the e*plo-er>s po!er to
control the e*plo-ee>s conduct. $he *ost i*portant ele*ent is the e*plo-er>s control
of the e*plo-ee>s conduct, not onl- as to the result of the !or/ to be done, but also as
to the *eans and *ethods to acco*plish it.F;
'n the instant case, all the fore,oin, ele*ents are present. .irst, it !as private
respondent Pacfor !hich selected and en,a,ed the services of petitioner as its resident
a,ent in the Philippines. %econd, as stipulated in their %ide A,ree*ent, private
respondent Pacfor pa-s petitioner his salar- a*ountin, to UQA,PPP per annu* !hich
!as later increased to UM3,PPP. $hird, private respondent Pacfor holds the po!er of
dis*issal, as *a- be ,leaned throu,h the various *e*oranda it issued a,ainst
petitioner, placin, the latter on preventive suspension !hile char,in, hi* !ith
various offenses, includin, !illful disobedience, serious *isconduct, and ,ross ne,lect
of dut-, and orderin, hi* to sho! cause !h- no disciplinar- action should be ta/en
a,ainst hi*.
astl- and *ost i*portant, private respondent Pacfor has the po!er of control over
the *eans and *ethod of petitioner in acco*plishin, his !or/.
$he po!er of control refers *erel- to the e&istence of the po!er, and not to the actual
e&ercise thereof. $he principal consideration is !hether the e*plo-er has the ri,ht to
control the *anner of doin, the !or/, and it is not the actual e&ercise of the ri,ht b-
interferin, !ith the !or/, but the ri,ht to control, !hich constitutes the test of the
e&istence of an e*plo-er=e*plo-ee relationship.FF 'n the case at bar, private
respondent Pacfor, as e*plo-er, clearl- possesses such ri,ht of control. Petitioner, as
private respondent Pacfor>s resident a,ent in the Philippines, is, e&actl- so, onl- an
a,ent of the corporation, a representative of Pacfor, !ho transacts business, and
accepts service on its behalf.
$his ri,ht of control !as e&ercised b- private respondent Pacfor durin, the period of
Nove*ber to 0ece*ber @PPP, !hen it directed petitioner to turn over to it all records
of Pacfor Phils.: !hen it ordered petitioner to re*it the Christ*as ,ivea!a- fund
intended for clients of Pacfor Phils.: and, !hen it !ithdre! all its offers of settle*ent
and ordered petitioner to transfer title and turn over to it the possession of the service
car. 't !as also durin, this period !hen private respondent Pacfor sent letters to its
clients in the Philippines, particularl- 'ntercontinental Paper 'ndustries, 'nc. and
0A5C"R, advisin, the* not to deal !ith petitioner andIor Pacfor Phils. 'n its letter to
0A5C"R, private respondent Pacfor replied to the client>s reBuest for an invoice
pa-*ent e&tension, and for*ulated a revised pa-*ent pro,ra* for 0A5C"R. $his is
one un*ista/able proof that private respondent Pacfor e&ercises control over the
petitioner.
Ne&t, !e shall deter*ine if petitioner !as constructivel- dis*issed fro* e*plo-*ent.
$he evidence sho!s that !hen petitioner insisted on his APR eBuit- in Pacfor Phils.,
and !ould not Buit ho!ever, private respondent Pacfor be,an to s-ste*aticall-
deprive petitioner of his duties and bene#ts to *a/e hi* feel that his presence in the
co*pan- !as no lon,er !anted. .irst, private respondent Pacfor directed petitioner to
turn over to it all records of Pacfor Phils. $his !ould certainl- *a/e the !or/ of
petitioner ver- dif#cult, if not i*possible. %econd, private respondent Pacfor ordered
petitioner to re*it the Christ*as ,ivea!a- fund intended for clients of Pacfor Phils.
$hen it ordered petitioner to transfer title and turn over to it the possession of the
service car. 't also advised its clients in the Philippines, particularl- 'ntercontinental
Paper 'ndustries, 'nc. and 0A5C"R, not to deal !ith petitioner andIor Pacfor Phils.
astl-, private respondent Pacfor appointed a ne! resident a,ent for Pacfor Phils.FA
Althou,h there is no reduction of the salar- of petitioner, constructive dis*issal is still
present because continued e*plo-*ent of petitioner is rendered, at the ver- least,
unreasonable.FQ $here is an act of clear discri*ination, insensibilit- or disdain b- the
e*plo-er that continued e*plo-*ent *a- beco*e so unbearable on the part of the
e*plo-ee so as to foreclose an- choice on his part e&cept to resi,n fro* such
e*plo-*ent.FM
$he harassin, acts of the private respondent are un?usti#ed. $he- !ere underta/en
!hen petitioner sou,ht clari#cation fro* the private respondent about his supposed
APR eBuit- on Pacfor Phils. Private respondent Pacfor invo/es its ri,hts as an o!ner.
Alle,edl-, its issuance of the fore,oin, directives a,ainst petitioner !as a valid
e&ercise of *ana,e*ent prero,ative. 8e re*ind private respondent Pacfor that the
e&ercise of *ana,e*ent prero,ative is not absolute. +B- its ver- nature, enco*passin,
as it could be, *ana,e*ent prero,ative *ust be e&ercised in ,ood faith and !ith due
re,ard to the ri,hts of labor T veril-, !ith the principles of fair pla- at heart and ?ustice
in *ind.+ $he e&ercise of *ana,e*ent prero,ative cannot be utilized as an i*ple*ent
to circu*vent our la!s and oppress e*plo-ees.F3
As resident a,ent of private respondent corporation, petitioner occupied a position
involvin, trust and con#dence. 'n the li,ht of the strained relations bet!een the
parties, the full restoration of an e*plo-*ent relationship based on trust and
con#dence is no lon,er possible. 6e should be a!arded separation pa-, in lieu of
reinstate*ent.
IN VIE9 9HEREOF, the petition is GRANTE". $he Court of Appeals> Canuar- ;P,
@PP; 0ecision in CA=G.R. %P No. M1P@3 and Cul- ;P, @PP; Resolution, af#r*in, the
0ece*ber @P, @PP1 0ecision of the National abor Relations Co**ission,
are ANNULE" and SET ASI"E. $he Cul- ;P, @PP1 0ecision of the abor Arbiter
isREINSTATE" !ith the MO"IFICATION that the a*ount of P@AP,PPP.PP
representin, an alle,ed increase in petitioner>s salar- shall be deducted fro* the
,rant of separation pa- for lac/ of evidence.
SO OR"ERE".
%andoval=Gutierrez, Corona, Azcuna, Garcia, C.C., concur.
Foo'no'e$
1 CA rollo, pp. 1PA3=1PM@.
@ 'd. at 11PA.
; 'd. at @3=;M.
F 'd. at 113=1;2.
A 'd. at Q3@=Q3;.
Q 'd. at Q3;.
M Rollo, p. Q;.
3 'd. at QF.
2 CA rollo, p. Q3F. "ther ter*s of the revised a,ree*ent includeH
a) A$M and Pacfor=4%A shall ?ointl- *ana,e Pacfor Phils.
b) Pacfor=Phils. !ill earn co**issions at 1.AR of ..".B. value, the
co*putation of !hich shall be sho!n in a credit *e*o issued b-
Cell*ar/IPacfor.
c) osses, if an-, !ill be rei*bursed b- Cell*ar/IPacfor to A$M for A$M>s
share of the loss, for t!o consecutive -ears be,innin, !ith the #rst -ear of
loss.
d) $he revised a,ree*ent shall ta/e effect on Canuar- 1, 122M.
e) Cash paid to the representative of#ce b- Paci#c Paper belon,s to Pacfor
and !ill be held in trust b- A$M.
1P 'd. at Q3A.
11 Rollo, p. A@3.
1@ 'd. at A@M.
1; 'bid.
1F 'd. at A;@.
1A 'd. at A;2.
1Q 'd. at AF1.
1M 'd. at AFF.
13 'd. at AFA.
12 CA rollo, p. 3@2.
@P 'd. at 3@3.
@1 Rollo, pp. AFQ=AAP.
@@ 'd. at AA;.
@; 'd. at AFQ=AAP.
@F 'd. at AQP.
@A 'd. at AAF=AA3.
@Q 'd. at AQP.
@M 'd. at AQ1.
@3 CA rollo, p. QA@.
@2 Rollo, pp. AQ@=AQ;.
;P 'd. at 1AP.
;1 'd. at @;1=@FP.
;@ CA rollo, pp. ;;;=;;A.
;; 'd. at 3F=3Q.
;F Rollo, pp. 1F=;Q.
;A 'd. at @M.
;Q Esteban B. Bautista, $reatise on Philippine Partnership a!, 12M3
ed., citin, Nelson v. Abraha*, 1MM P.@d 2;1 (12FM): 6enr- v. 0arnall, @FQ
'll.App. @AP (12@M), cited in Notes of 0ecisions, M 4..A. 1A (12F2).
;M Esteban B. Bautista, $reatise on Philippine Partnership a!, 12M3
ed., citin, 0arden v. Co&, 1@; %o.@d Q3 (12QP).
;3 Art. 1311 (1st par.).
;2 Esteban B. Bautista, $reatise on Philippine Partnership a!, 12M3 ed.
FP .ortis v. Gutierrez 6er*anos, Q Phil. 1PP (12PQ).
F1 C.M. $uason v. Bolanos, 2A Phil. 1PQ (12AF): Esteban B. Bautista, $reatise on
Philippine Partnership a!, 12M3 ed., citin, QP A..R.@d 21M: Q .letcher,
C-clopedia of Corporations, %ec. @A@P (12AP).
F@ Esteban B. Bautista, $reatise on Philippine Partnership a!, 12M3
ed., citin, 1; A*.Cur. 3;P: QP A..R.@d 21;.
F; %- v. Court of Appeals, G.R. No. 1F@@2;, .ebruar- @M, @PP;, ;23 %CRA ;P1,
citin, Caurdanetaan Piece 8or/ers 4nion v. a,ues*a, @3Q %CRA FP1, F@P
(1223): Mara,uinot, Cr. v. NRC, @3F %CRA A;2, AA@ (1223): APP Mutual
Bene#t Association, 'nc. v. NRC, @QM %CRA FM, AM (122M): Aurora and
Pro?ects Corp. v. NRC, @QQ %CRA F3, A2 (122M): Enc-clopedia Britannica
(Phils.), 'nc. v. NRC, @QF %CRA 1, Q=M (122Q).
FF .eati 4niversit- v. Bautista, G.R. No. =@1@M3, 0ece*ber @M, 12QQ, 13 %CRA
1121, 1@1M, citin,A*al,a*ated Roo#n, Co. v. $ravelers> 'ns. Co., 1;; N.E. @A2,
@Q1: ;PP 'll. F3M.
FA CA rollo, pp. M@F=M;;.
FQ Philippine Capan Active Carbon Corp. v. NRC, G.R. No. 3;@;2, March 3,
1232, 1M1 %CRA 1QF.
FM 4nicorn %afet- Glass, 'nv. v. Basarte, G.R. No. 1AFQ32, Nove*ber @A, @PPF,
FFF %CRA @3M.
F3 'bid.
.'R%$ 0'5'%'"N
BG.R. No. 138051. C
JOSE >. SON=A, -e'/'/one&, 1$. A<S8C<N <ROA"CASTING
CORPORATION, &e$-on+en'.
" E C I S I O N
CARPIO, J.2
T0e C#$e
Before this Court is a petition for revie! on certiorariK1L assailin,
the 0ecisionK@L of the Court of Appeals in CA=G.R. %P No. F212P dis*issin, the
petition #led b- Cose 7. %onza (V%"NJAW). $he Court of Appeals af#r*ed the #ndin,s
of the National abor Relations Co**ission (VNRCW), !hich af#r*ed the abor
ArbiterSs dis*issal of the case for lac/ of ?urisdiction.
T0e F#%'$
'n Ma- 122F, respondent AB%=CBN Broadcastin, Corporation (VAB%=CBNW) si,ned
an A,ree*ent (VA,ree*entW) !ith the Mel and Ca- Mana,e*ent and 0evelop*ent
Corporation (VMCM0CW). AB%=CBN !as represented b- its corporate of#cers !hile
MCM0C !as represented b- %"NJA, as President and General Mana,er, and Car*ela
$ian,co (V$'ANGC"W), as E5P and $reasurer. Referred to in the A,ree*ent as
VAGEN$,W MCM0C a,reed to provide %"NJASs services e&clusivel- to AB%=CBN as
talent for radio and television. $he A,ree*ent listed the services %"NJA !ould
render to AB%=CBN, as follo!sH
a. Co=host for Mel & Ca- radio pro,ra*, , Monda-s to .rida-s:
b. Co=host for Mel & Ca- television pro,ra*, , %unda-s.K;L
AB%=CBN a,reed to pa- for %"NJASs services a *onthl- talent fee of P;1P,PPP for
the #rst -ear and P;1M,PPP for the second and third -ear of the A,ree*ent. AB%=CBN
!ould pa- the talent fees on the 1P
th
and @A
th
da-s of the *onth.
"n , %"NJA !rote a letter to AB%=CBNSs President, Eu,enio opez ''', !hich readsH
0ear Mr. opez,
8e !ould li/e to call -our attention to the A,ree*ent dated Ma- 122F entered into b-
-our ,oodself on behalf of AB%=CBN !ith our co*pan- relative to our talent C"%E 7.
%"NJA.
As -ou are !ell a!are, Mr. %onza irrevocabl- resi,ned in vie! of recent events
concernin, his pro,ra*s and career. 8e consider these acts of the station violative of
the A,ree*ent and the station as in breach thereof. 'n this connection, !e hereb-
serve notice of rescission of said A,ree*ent at our instance effective as of date.
Mr. %onza infor*ed us that he is !aivin, and renouncin, recover- of the re*ainin,
a*ount stipulated in para,raph M of the A,ree*ent but reserves the ri,ht to see/
recover- of the other bene#ts under said A,ree*ent.
$han/ -ou for -our attention.
5er- trul- -ours,
(%,d.)
C"%E 7. %"NJA
President and Gen. Mana,erKFL
"n , %"NJA #led a co*plaint a,ainst AB%=CBN before the 0epart*ent of abor and
E*plo-*ent, National Capital Re,ion in . %"NJA co*plained that AB%=CBN did not
pa- his salaries, separation pa-, service incentive leave pa-, 1;
th
*onth pa-, si,nin,
bonus, travel allo!ance and a*ounts due under the E*plo-ees %toc/ "ption Plan
(VE%"PW).
"n , AB%=CBN #led a Motion to 0is*iss on the ,round that no e*plo-er=e*plo-ee
relationship e&isted bet!een the parties. %"NJA #led an "pposition to the *otion on .
Mean!hile, AB%=CBN continued to re*it %"NJASs *onthl- talent fees throu,h his
account at PC'Ban/, Duezon Avenue Branch, . 'n Cul- 122Q, AB%=CBN opened a ne!
account !ith the sa*e ban/ !here AB%=CBN deposited %"NJASs talent fees and other
pa-*ents due hi* under the A,ree*ent.
'n his "rder dated , the abor ArbiterKAL denied the *otion to dis*iss and directed
the parties to #le their respective position papers. $he abor Arbiter ruledH
'n this instant case, co*plainant for havin, invo/ed a clai* that he !as an e*plo-ee
of respondent co*pan- until and that he !as not paid certain clai*s, it is suf#cient
enou,h as to confer ?urisdiction over the instant case in this "f#ce. And as to !hether
or not such clai* !ould entitle co*plainant to recover upon the causes of action
asserted is a *atter to be resolved onl- after and as a result of a hearin,. $hus, the
respondentSs plea of lac/ of e*plo-er=e*plo-ee relationship *a- be pleaded onl- as a
*atter of defense. 't behooves upon it the dut- to prove that there reall- is no
e*plo-er=e*plo-ee relationship bet!een it and the co*plainant.
$he abor Arbiter then considered the case sub*itted for resolution. $he parties
sub*itted their position papers on .
"n , %"NJA #led a Repl- to RespondentSs Position Paper !ith Motion to E&pun,e
RespondentSs Anne& F and Anne& A fro* the Records. Anne&es F and A are af#davits
of AB%=CBNSs !itnesses %occoro 5idanes and Rolando 5. Cruz. $hese !itnesses stated
in their af#davits that the prevailin, practice in the television and broadcast industr-
is to treat talents li/e %"NJA as independent contractors.
$he abor Arbiter rendered his 0ecision dated dis*issin, the co*plaint for lac/ of
?urisdiction.KQL $he pertinent parts of the decision read as follo!sH
& & &
8hile Philippine ?urisprudence has not -et, !ith certaint-, touched on the Vtrue nature
of the contract of a talent,W it stands to reason that a VtalentW as above=described
cannot be considered as an e*plo-ee b- reason of the peculiar circu*stances
surroundin, the en,a,e*ent of his services.
't *ust be noted that %o,-.#/n#n' D#$ en;#;e+ *( &e$-on+en' *( &e#$on o) 0/$
-e%u./#& $E/..$ #n+ '#.en' #$ # TV 0o$' #n+ # &#+/o *&o#+%#$'e&. Un./Ee #n o&+/n#&(
e,-.o(ee, 0e D#$ )&ee 'o -e&)o&, '0e $e&1/%e$ 0e un+e&'ooE 'o &en+e& /n
#%%o&+#n%e D/'0 0/$ oDn $'(.e. $he bene#ts conferred to co*plainant under the Ma-
122F A,ree*ent are certainl- ver- *uch hi,her than those ,enerall- ,iven to
e*plo-ees. .or one, co*plainant %onzaSs *onthl- talent fees a*ount to a
sta,,erin, P;1M,PPP. Moreover, his en,a,e*ent as a talent !as covered b- a speci#c
contract. i/e!ise, he !as not bound to render ei,ht (3) hours of !or/ per da- as he
!or/ed onl- for such nu*ber of hours as *a- be necessar-.
$he fact that per the Ma- 122F A,ree*ent co*plainant !as accorded so*e bene#ts
nor*all- ,iven to an e*plo-ee is inconseBuential. 90#'e1e& *eneF'$ %o,-.#/n#n'
enGo(e+ #&o$e )&o, $-e%/F% #;&ee,en' *( '0e -#&'/e$ #n+ no' *( &e#$on o)
e,-.o(e&8e,-.o(ee &e.#'/on$0/-. As correctl- put b- the respondent, VAll these
bene#ts are *erel- talent fees and other contractual bene#ts and should not be
dee*ed as Xsalaries, !a,es andIor other re*unerationS accorded to an e*plo-ee,
not!ithstandin, the no*enclature appended to these bene#ts. Apropos to this is the
rule that the ter* or no*enclature ,iven to a stipulated bene#t is not controllin,, but
the intent of the parties to the A,ree*ent conferrin, such bene#t.W
T0e )#%' '0#' %o,-.#/n#n' D#$ ,#+e $u*Ge%' 'o &e$-on+en'H$ Ru.e$ #n+
Re;u.#'/on$, ./EeD/$e, +oe$ no' +e'&#%' )&o, '0e #*$en%e o) e,-.o(e&8e,-.o(ee
&e.#'/on$0/-. As held b- the %upre*e Court, V$he line should be dra!n bet!een rules
that *erel- serve as ,uidelines to!ards the achieve*ent of the *utuall- desired
result !ithout dictatin, the *eans or *ethods to be e*plo-ed in attainin, it, and those
that control or #& the *ethodolo,- and bind or restrict the part- hired to the use of
such *eans. $he #rst, !hich ai* onl- to pro*ote the result, create no e*plo-er=
e*plo-ee relationship unli/e the second, !hich address both the result and the *eans
to achieve it.W ('nsular ife Assurance Co., td. vs. NRC, et al., G.R. No. 3FF3F,
Nove*ber 1A, 1232).
& & & (E*phasis supplied)KML
%"NJA appealed to the NRC. "n , the NRC rendered a 0ecision af#r*in, the
abor ArbiterSs decision. %"NJA #led a *otion for reconsideration, !hich the NRC
denied in its Resolution dated .
"n , %"NJA #led a special civil action for certiorari before the Court of Appeals
assailin, the decision and resolution of the NRC. "n , the Court of Appeals rendered a
0ecision dis*issin, the case.K3L
6ence, this petition.
T0e Ru./n;$ o) '0e NLRC #n+ Cou&' o) A--e#.$
$he Court of Appeals af#r*ed the NRCSs #ndin, that no e*plo-er=e*plo-ee
relationship e&isted bet!een %"NJA and AB%=CBN. Adoptin, the NRCSs decision, the
appellate court Buoted the follo!in, #ndin,s of the NRCH
& & & the Ma- 122F A,ree*ent !ill readil- reveal that MCM0C entered into the
contract *erel- as an a,ent of co*plainant %onza, the principal. B- all indication and
as the la! puts it, the act of the a,ent is the act of the principal itself. $his fact is *ade
particularl- true in this case, as ad*ittedl- MCM0C Xis a *ana,e*ent co*pan-
devoted e&clusivel- to *ana,in, the careers of Mr. %onza and his broadcast partner,
Mrs. Car*ela C. $ian,co.S ("pposition to Motion to 0is*iss)
Clearl-, the relations of principal and a,ent onl- accrues bet!een co*plainant %onza
and MCM0C, and not bet!een AB%=CBN and MCM0C. $his is clear fro* the provisions
of the Ma- 122F A,ree*ent !hich speci#call- referred to MCM0C as the XAGEN$S. As
a *atter of fact, !hen co*plainant herein unilaterall- rescinded said Ma- 122F
A,ree*ent, it !as MCM0C !hich issued the notice of rescission in behalf of Mr. %onza,
!ho hi*self si,ned the sa*e in his capacit- as President.
Moreover, previous contracts bet!een Mr. %onza and AB%=CBN reveal the fact that
historicall-, the parties to the said a,ree*ents are AB%=CBN and Mr. %onza. And it is
onl- in the Ma- 122F A,ree*ent, !hich is the latest A,ree*ent e&ecuted bet!een
AB%=CBN and Mr. %onza, that MCM0C #,ured in the said A,ree*ent as the a,ent of
Mr. %onza.
8e #nd it erroneous to assert that MCM0C is a *ere Xlabor=onl-S contractor of AB%=
CBN such that there e&istKsL e*plo-er=e*plo-ee relationship bet!een the latter and
Mr. %onza. "n the contrar-, 8e #nd it indubitable, that MCM0C is an a,ent, not of
AB%=CBN, but of the talentIcontractor Mr. %onza, as e&pressl- ad*itted b- the latter
and MCM0C in the Ma- 122F A,ree*ent.
't *a- not be a*iss to state that ?urisdiction over the instant controvers- indeed
belon,s to the re,ular courts, the sa*e bein, in the nature of an action for alle,ed
breach of contractual obli,ation on the part of respondent=appellee. As sBuarel-
apparent fro* co*plainant=appellantSs Position Paper, his clai*s for co*pensation for
services, X1;
th
*onth pa-S, si,nin, bonus and travel allo!ance a,ainst respondent=
appellee are not based on the abor Code but rather on the provisions of the Ma- 122F
A,ree*ent, !hile his clai*s for proceeds under %toc/ Purchase A,ree*ent are based
on the latter. A portion of the Position Paper of co*plainant=appellant bears perusalH
X4nder Kthe Ma- 122F A,ree*entL !ith respondent AB%=CBN, the latter contractuall-
bound itself to pa- co*plainant a si,nin, bonus consistin, of shares of stoc/sY!ith
.'5E 64N0RE0 $6"4%AN0 PE%"% (PAPP,PPP.PP).
%i*ilarl-, co*plainant is also entitled to be paid 1;
th
*onth pa- based on an a*ount
not lo!er than the a*ount he !as receivin, prior to effectivit- of (the) A,ree*entS.
4nder para,raph 2 of (the Ma- 122F A,ree*ent), co*plainant is entitled to a
co**utable travel bene#t a*ountin, to at least "ne 6undred .ift- $housand Pesos
(P1AP,PPP.PP) per -ear.S
$hus, it is precisel- because of co*plainant=appellantSs o!n reco,nition of the fact that
his contractual relations !ith AB%=CBN are founded on the Ne! Civil Code, rather than
the abor Code, that instead of *erel- resi,nin, fro* AB%=CBN, co*plainant=
appellant served upon the latter a Xnotice of rescissionS of A,ree*ent !ith the station,
per his letter dated April 1, 122Q, !hich asserted that instead of referrin, to unpaid
e*plo-ee bene#ts, Xhe is !aivin, and renouncin, recover- of the re*ainin, a*ount
stipulated in para,raph M of the A,ree*ent but reserves the ri,ht to such recover- of
the other bene#ts under said A,ree*ent.S (Anne& ; of the respondent AB%=CBNSs
Motion to 0is*iss dated Cul- 1P, 122Q).
Evidentl-, it is precisel- b- reason of the alle,ed violation of the Ma- 122F A,ree*ent
andIor the %toc/ Purchase A,ree*ent b- respondent=appellee that co*plainant=
appellant #led his co*plaint. Co*plainant=appellantSs clai*s bein, anchored on the
alle,ed breach of contract on the part of respondent=appellee, the sa*e can be resolved
b- reference to civil la! and not to labor la!. ConseBuentl-, the- are !ithin the real*
of civil la! and, thus, lie !ith the re,ular courts. As held in the case of 0ai=Chi
Electronics Manufacturin, vs. 5illara*a, @;3 %CRA @QM, , #n #%'/on )o& *&e#%0 o)
%on'&#%'u#. o*./;#'/on /$ /n'&/n$/%#..( # %/1/. +/$-u'e.K2L (E*phasis supplied)
$he Court of Appeals ruled that the e&istence of an e*plo-er=e*plo-ee
relationship bet!een %"NJA and AB%=CBN is a factual Buestion that is !ithin the
?urisdiction of the NRC to resolve.K1PL A special civil action for certiorari e&tends
onl- to issues of !ant or e&cess of ?urisdiction of the NRC.K11L %uch action cannot
cover an inBuir- into the correctness of the evaluation of the evidence !hich served as
basis of the NRCSs conclusion.K1@L $he Court of Appeals added that it could not re=
e&a*ine the partiesS evidence and substitute the factual #ndin,s of the NRC !ith its
o!n.K1;L
T0e I$$ue
'n assailin, the decision of the Court of Appeals, %"NJA contends thatH
$6E C"4R$ ". APPEA% GRA5E7 ERRE0 'N A..'RM'NG $6E NRCS% 0EC'%'"N
AN0 RE.4%'NG $" .'N0 $6A$ AN EMP"7ER=EMP"7EE REA$'"N%6'P E<'%$E0
BE$8EEN %"NJA AN0 AB%=CBN, 0E%P'$E $6E 8E'G6$ ". C"N$R"'NG A8,
C4R'%PR40ENCE AN0 E5'0ENCE $" %4PP"R$ %4C6 A .'N0'NG.K1FL
T0e Cou&'H$ Ru./n;
8e af#r* the assailed decision.
No convincin, reason e&ists to !arrant a reversal of the decision of the Court of
Appeals af#r*in, the NRC rulin, !hich upheld the abor ArbiterSs dis*issal of the
case for lac/ of ?urisdiction.
$he present controvers- is one of #rst i*pression. Althou,h Philippine labor la!s
and ?urisprudence de#ne clearl- the ele*ents of an e*plo-er=e*plo-ee relationship,
this is the #rst ti*e that the Court !ill resolve the nature of the relationship bet!een a
television and radio station and one of its Vtalents.W $here is no case la! statin, that a
radio and television pro,ra* host is an e*plo-ee of the broadcast station.
$he instant case involves bi, na*es in the broadcast industr-, na*el- Cose VCa-W
%onza, a /no!n television and radio personalit-, and AB%=CBN, one of the bi,,est
television and radio net!or/s in the countr-.
%"NJA contends that the abor Arbiter has ?urisdiction over the case because he
!as an e*plo-ee of AB%=CBN. "n the other hand, AB%=CBN insists that the abor
Arbiter has no ?urisdiction because %"NJA !as an independent contractor.
E,-.o(ee o& In+e-en+en' Con'&#%'o&I
$he e&istence of an e*plo-er=e*plo-ee relationship is a Buestion of fact. Appellate
courts accord the factual #ndin,s of the abor Arbiter and the NRC not onl- respect
but also #nalit- !hen supported b- substantial evidence.K1AL %ubstantial evidence
*eans such relevant evidence as a reasonable *ind *i,ht accept as adeBuate to
support a conclusion.K1QL A part- cannot prove the absence of substantial evidence b-
si*pl- pointin, out that there is contrar- evidence on record, direct or
circu*stantial. $he Court does not substitute its o!n ?ud,*ent for that of the tribunal
in deter*inin, !here the !ei,ht of evidence lies or !hat evidence is credible. K1ML
%"NJA *aintains that all essential ele*ents of an e*plo-er=e*plo-ee relationship
are present in this case. Case la! has consistentl- held that the ele*ents of an
e*plo-er=e*plo-ee relationship areH (a) the selection and en,a,e*ent of the
e*plo-ee: (b) the pa-*ent of !a,es: (c) the po!er of dis*issal: and (d) the e*plo-erSs
po!er to control the e*plo-ee on the *eans and *ethods b- !hich the !or/ is
acco*plished.K13L $he last ele*ent, the so=called V%on'&o. 'e$'W, is the *ost i*portant
ele*ent.K12L
A. Se.e%'/on #n+ En;#;e,en' o) E,-.o(ee
AB%=CBN en,a,ed %"NJASs services to co=host its television and radio pro,ra*s
because of %"NJASs peculiar s/ills, talent and celebrit- status. %"NJA contends that
the Vdiscretion used b- respondent in speci#call- selectin, and hirin, co*plainant
over other broadcasters of possibl- si*ilar e&perience and Buali#cation as
co*plainant belies respondentSs clai* of independent contractorship.W
'ndependent contractors often present the*selves to possess uniBue s/ills,
e&pertise or talent to distin,uish the* fro* ordinar- e*plo-ees. $he speci#c
selection and hirin, of %"NJA, *e%#u$e o) 0/$ un/Jue $E/..$, '#.en' #n+ %e.e*&/'(
$'#'u$ no' -o$$e$$e+ *( o&+/n#&( e,-.o(ee$, is a circu*stance indicative, but not
conclusive, of an independent contractual relationship. 'f %"NJA did not possess such
uniBue s/ills, talent and celebrit- status, AB%=CBN !ould not have entered into the
A,ree*ent !ith %"NJA but !ould have hired hi* throu,h its personnel depart*ent
?ust li/e an- other e*plo-ee.
'n an- event, the *ethod of selectin, and en,a,in, %"NJA does not conclusivel-
deter*ine his status. 8e *ust consider all the circu*stances of the relationship, !ith
the control test bein, the *ost i*portant ele*ent.
<. P#(,en' o) 9#;e$
AB%=CBN directl- paid %"NJA his *onthl- talent fees !ith no part of his fees ,oin,
to MCM0C. %"NJA asserts that this *ode of fee pa-*ent sho!s that he !as an
e*plo-ee of AB%=CBN. %"NJA also points out that AB%=CBN ,ranted hi* bene#ts and
privile,es V!hich he !ould not have en?o-ed if he !ere trul- the sub?ect of a valid ?ob
contract.W
All the talent fees and bene#ts paid to %"NJA !ere the result of ne,otiations that
led to the A,ree*ent. 'f %"NJA !ere AB%=CBNSs e*plo-ee, there !ould be no need for
the parties to stipulate on bene#ts such as V%%%, Medicare, & & & and 1;
th
*onth
pa-WK@PL !hich the la! auto*aticall- incorporates into ever- e*plo-er=e*plo-ee
contract.K@1L8hatever bene#ts %"NJA en?o-ed arose fro* contract and not because of
an e*plo-er=e*plo-ee relationship.K@@L
%"NJASs talent fees, a*ountin, to P;1M,PPP *onthl- in the second and third -ear,
are so hu,e and out of the ordinar- that the- indicate *ore an independent
contractual relationship rather than an e*plo-er=e*plo-ee relationship. AB%=CBN
a,reed to pa- %"NJA such hu,e talent fees precisel- because of %"NJASs uniBue s/ills,
talent and celebrit- status not possessed b- ordinar- e*plo-ees. "bviousl-, %"NJA
actin, alone possessed enou,h bar,ainin, po!er to de*and and receive such hu,e
talent fees for his services. $he po!er to bar,ain talent fees !a- above the salar-
scales of ordinar- e*plo-ees is a circu*stance indicative, but not conclusive, of an
independent contractual relationship.
$he pa-*ent of talent fees directl- to %"NJA and not to MCM0C does not ne,ate
the status of %"NJA as an independent contractor. $he parties e&pressl- a,reed on
such *ode of pa-*ent. 4nder the A,ree*ent, MCM0C is the AGEN$ of %"NJA, to
!ho* MCM0C !ould have to turn over an- talent fee accruin, under the A,ree*ent.
C. PoDe& o) "/$,/$$#.
.or violation of an- provision of the A,ree*ent, either part- *a- ter*inate their
relationship. %"NJA failed to sho! that AB%=CBN could ter*inate his services on
,rounds other than breach of contract, such as retrench*ent to prevent losses as
provided under labor la!s.K@;L
0urin, the life of the A,ree*ent, AB%=CBN a,reed to pa- %"NJASs talent fees as
lon, as VAGEN$ and Ca- %onza shall faithfull- and co*pletel- perfor* each condition
of this A,ree*ent.WK@FL Even if it suffered severe business losses, AB%=CBN could not
retrench %"NJA because AB%=CBN re*ained obli,ated to pa- %"NJASs talent fees
durin, the life of the A,ree*ent. $his circu*stance indicates an independent
contractual relationship bet!een %"NJA and AB%=CBN.
%"NJA ad*its that even after AB%=CBN ceased broadcastin, his pro,ra*s, AB%=
CBN still paid hi* his talent fees. Plainl-, AB%=CBN adhered to its underta/in, in the
A,ree*ent to continue pa-in, %"NJASs talent fees durin, the re*ainin, life of the
A,ree*ent even if AB%=CBN cancelled %"NJASs pro,ra*s throu,h no fault of %"NJA.
K@AL
%"NJA assails the abor ArbiterSs interpretation of his rescission of the
A,ree*ent as an ad*ission that he is not an e*plo-ee of AB%=CBN. $he abor Arbiter
stated that Vif it !ere true that co*plainant !as reall- an e*plo-ee, he !ould *erel-
resi,n, instead.W %"NJA did actuall- resi,n fro* AB%=CBN but he also, as president of
MCM0C, rescinded the A,ree*ent. %"NJASs letter clearl- bears this out.
K@QL 6o!ever, the *anner b- !hich %"NJA ter*inated his relationship !ith AB%=CBN
is i**aterial. 8hether %"NJA rescinded the A,ree*ent or resi,ned fro* !or/ does
not deter*ine his status as e*plo-ee or independent contractor.
". PoDe& o) Con'&o.
%ince there is no local precedent on !hether a radio and television pro,ra* host is
an e*plo-ee or an independent contractor, !e refer to forei,n case la! in anal-zin,
the present case. $he Court of Appeals, .irst Circuit, recentl- held in A.*e&'(8VK.eL 1.
Co&-o&#%/Mn "e Pue&'o R/%o P#&# L# "/)u$/Mn PN*./%# ?O9IPRP@K@ML that a
television pro,ra* host is an independent contractor. 8e Buote the follo!in, #ndin,s
of the courtH
%everal factors favor classif-in, Albert- as an independent contractor. F/&$', #
'e.e1/$/on #%'&e$$ /$ # $E/..e+ -o$/'/on &eJu/&/n; '#.en' #n+ '&#/n/n; no' #1#/.#*.e
on8'0e8Go*. & & & 'n this re,ard, Albert- possesses a *asterSs de,ree in public
co**unications and ?ournalis*: is trained in dance, sin,in,, and *odelin,: tau,ht
!ith the dra*a depart*ent at the 4niversit- of Puerto Rico: and acted in several
theater and television productions prior to her af#liation !ith V0esde Mi
Pueblo.W Se%on+, A.*e&'( -&o1/+e+ '0e O'oo.$ #n+ /n$'&u,en'#./'/e$P ne%e$$#&( )o&
0e& 'o -e&)o&,. %peci#call-, she provided, or obtained sponsors to provide, the
costu*es, ?e!elr-, and other i*a,e=related supplies and services necessar- for her
appearance. Albert- disputes that this factor favors independent contractor status
because 8'PR provided the VeBuip*ent necessar- to tape the sho!.W Albert-Ss
ar,u*ent is *isplaced. $he eBuip*ent necessar- for Albert- to conduct her ?ob as
host of V0esde Mi PuebloW related to her appearance on the sho!. "thers provided
eBuip*ent for #l*in, and producin, the sho!, but these !ere not the pri*ar- tools
that Albert- used to perfor* her particular function. 'f !e accepted this ar,u*ent,
independent contractors could never !or/ on collaborative pro?ects because other
individuals often provide the eBuip*ent reBuired for different aspects of the
collaboration. & & &
T0/&+, 9IPR %ou.+ no' #$$/;n A.*e&'( Do&E /n #++/'/on 'o F.,/n; O"e$+e M/
Pue*.o.W Albert-Ss contracts !ith 8'PR speci#call- provided that 8'PR hired her
Vprofessional services as 6ostess for the Pro,ra* 0esde Mi Pueblo.W $here is no
evidence that 8'PR assi,ned Albert- tas/s in addition to !or/ related to these
tapin,s. & & &K@3L (E*phasis supplied)
Appl-in, the %on'&o. 'e$' to the present case, !e #nd that %"NJA is not an
e*plo-ee but an independent contractor. $he control test is the ,o$' /,-o&'#n' test
our courts appl- in distin,uishin, an e*plo-ee fro* an independent contractor.
K@2L $his test is based on the e&tent of control the hirer e&ercises over a !or/er. $he
,reater the supervision and control the hirer e&ercises, the *ore li/el- the !or/er is
dee*ed an e*plo-ee. $he converse holds true as !ell T the less control the hirer
e&ercises, the *ore li/el- the !or/er is considered an independent contractor. K;PL
.irst, %"NJA contends that AB%=CBN e&ercised control over the *eans and
*ethods of his !or/.
%"NJASs ar,u*ent is *isplaced. AB%=CBN en,a,ed %"NJASs services speci#call-
to co=host the VMel & Ca-W pro,ra*s. AB%=CBN did not assi,n an- other !or/ to
%"NJA. $o perfor* his !or/, %"NJA onl- needed his s/ills and talent. 6o! %"NJA
delivered his lines, appeared on television, and sounded on radio !ere outside AB%=
CBNSs control. %"NJA did not have to render ei,ht hours of !or/ per da-. $he
A,ree*ent reBuired %"NJA to attend onl- rehearsals and tapin,s of the sho!s, as !ell
as pre= and post=production staff *eetin,s.K;1L AB%=CBN could not dictate the
contents of %"NJASs script. 6o!ever, the A,ree*ent prohibited %"NJA fro*
criticizin, in his sho!s AB%=CBN or its interests.K;@L $he clear i*plication is that
%"NJA had a free hand on !hat to sa- or discuss in his sho!s provided he did not
attac/ AB%=CBN or its interests.
8e #nd that AB%=CBN !as not involved in the actual perfor*ance that produced
the #nished product of %"NJASs !or/.K;;L AB%=CBN did not instruct %"NJA ho! to
perfor* his ?ob. AB%=CBN *erel- reserved the ri,ht to *odif- the pro,ra* for*at
and airti*e schedule Vfor *ore effective pro,ra**in,.WK;FL AB%=CBNSs sole concern
!as the Bualit- of the sho!s and their standin, in the ratin,s. Clearl-, AB%=CBN did
not e&ercise control over the *eans and *ethods of perfor*ance of %"NJASs !or/.
%"NJA clai*s that AB%=CBNSs po!er not to broadcast his sho!s proves AB%=CBNSs
po!er over the *eans and *ethods of the perfor*ance of his !or/. Althou,h AB%=
CBN did have the option not to broadcast %"NJASs sho!, AB%=CBN !as still obli,ated to
pa- %"NJASs talent fees. $hus, even if AB%=CBN !as co*pletel- dissatis#ed !ith the
*eans and *ethods of %"NJASs perfor*ance of his !or/, or even !ith the Bualit- or
product of his !or/, AB%=CBN could not dis*iss or even discipline %"NJA. All that
AB%=CBN could do is not to broadcast %"NJASs sho! but AB%=CBN *ust still pa- his
talent fees in full.K;AL
Clearl-, AB%=CBNSs ri,ht not to broadcast %"NJASs sho!, burdened as it !as b- the
obli,ation to continue pa-in, in full %"NJASs talent fees, did not a*ount to control over
the *eans and *ethods of the perfor*ance of %"NJASs !or/. AB%=CBN could not
ter*inate or discipline %"NJA even if the *eans and *ethods of perfor*ance of his
!or/ = ho! he delivered his lines and appeared on television = did not *eet AB%=CBNSs
approval. $his proves that AB%=CBNSs control !as li*ited onl- to the result of
%"NJASs !or/, !hether to broadcast the #nal product or not. 'n either case, AB%=CBN
*ust still pa- %"NJASs talent fees in full until the e&pir- of the A,ree*ent.
'n , e' #.. 1. 9#&ne&, e' #..,K;QL the 4nited %tates Circuit Court of Appeals ruled
that vaudeville perfor*ers !ere independent contractors althou,h the *ana,e*ent
reserved the ri,ht to delete ob?ectionable features in their sho!s. %ince the
*ana,e*ent did not have control over the *anner of perfor*ance of the s/ills of the
artists, it could onl- control the result of the !or/ b- deletin, ob?ectionable features.
K;ML
%"NJA further contends that AB%=CBN e&ercised control over his !or/ b-
suppl-in, all eBuip*ent and cre!. No doubt, AB%=CBN supplied the eBuip*ent, cre!
and airti*e needed to broadcast the VMel & Ca-W pro,ra*s. 6o!ever, the eBuip*ent,
cre! and airti*e are not the Vtools and instru*entalitiesW %"NJA needed to perfor*
his ?ob. 8hat %"NJA principall- needed !ere his talent or s/ills and the costu*es
necessar- for his appearance. K;3L Even thou,h AB%=CBN provided %"NJA !ith the
place of !or/ and the necessar- eBuip*ent, %"NJA !as still an independent
contractor since AB%=CBN did not supervise and control his !or/. AB%=CBNSs sole
concern !as for %"NJA to displa- his talent durin, the airin, of the pro,ra*s.K;2L
A radio broadcast specialist !ho !or/s under *ini*al supervision is an
independent contractor.KFPL %"NJASs !or/ as television and radio pro,ra* host
reBuired special s/ills and talent, !hich %"NJA ad*ittedl- possesses. $he records do
not sho! that AB%=CBN e&ercised an- supervision and control over ho! %"NJA
utilized his s/ills and talent in his sho!s.
%econd, %"NJA ur,es us to rule that he !as AB%=CBNSs e*plo-ee because AB%=
CBN sub?ected hi* to its rules and standards of perfor*ance. %"NJA clai*s that this
indicates AB%=CBNSs control Vnot onl- KoverL his *anner of !or/ but also the Bualit- of
his !or/.W
$he A,ree*ent stipulates that %"NJA shall abide !ith the rules and standards of
perfor*ance V%o1e&/n; '#.en'$WKF1L of AB%=CBN. $he A,ree*ent does not reBuire
%"NJA to co*pl- !ith the rules and standards of perfor*ance prescribed for
e*plo-ees of AB%=CBN. $he code of conduct i*posed on %"NJA under the A,ree*ent
refers to the V$elevision and Radio Code of the 9apisanan n, *,a Broadcaster sa
Pilipinas (9BP), !hich has been adopted b- the C"MPAN7 (AB%=CBN) as its Code of
Ethics.WKF@L $he 9BP code applies to broadcasters, not to e*plo-ees of radio and
television stations. Broadcasters are not necessaril- e*plo-ees of radio and television
stations. Clearl-, the rules and standards of perfor*ance referred to in the A,ree*ent
are those applicable to talents and not to e*plo-ees of AB%=CBN.
'n an- event, not all rules i*posed b- the hirin, part- on the hired part- indicate
that the latter is an e*plo-ee of the for*er.KF;L 'n this case, %"NJA failed to sho!
that these rules controlled his perfor*ance. 8e #nd that these ,eneral rules are
*erel- ;u/+e./ne$ to!ards the achieve*ent of the *utuall- desired result, !hich are
top=ratin, television and radio pro,ra*s that co*pl- !ith standards of the
industr-. 8e have ruled thatH
.urther, not ever- for* of control that a part- reserves to hi*self over the conduct of
the other part- in relation to the services bein, rendered *a- be accorded the effect of
establishin, an e*plo-er=e*plo-ee relationship. $he facts of this case fall sBuarel-
!ith the case of 'nsular ife Assurance Co., td. vs. NRC. 'n said case, !e held thatH
o,icall-, the line should be dra!n bet!een rules that *erel- serve as ,uidelines
to!ards the achieve*ent of the *utuall- desired result !ithout dictatin, the *eans or
*ethods to be e*plo-ed in attainin, it, and those that control or #& the *ethodolo,-
and bind or restrict the part- hired to the use of such *eans. $he #rst, !hich ai* onl-
to pro*ote the result, create no e*plo-er=e*plo-ee relationship unli/e the second,
!hich address both the result and the *eans used to achieve it.KFFL
$he case also held that one could still be an independent contractor althou,h the
hirer reserved certain supervision to insure the attain*ent of the desired result. $he
hirer, ho!ever, *ust not deprive the one hired fro* perfor*in, his services accordin,
to his o!n initiative.KFAL
astl-, %"NJA insists that the Ve&clusivit- clauseW in the A,ree*ent is the *ost
e&tre*e for* of control !hich AB%=CBN e&ercised over hi*.
$his ar,u*ent is futile. Bein, an e&clusive talent does not b- itself *ean that
%"NJA is an e*plo-ee of AB%=CBN. Even an independent contractor can validl-
provide his services e&clusivel- to the hirin, part-. 'n the broadcast industr-,
e&clusivit- is not necessaril- the sa*e as control.
$he hirin, of e&clusive talents is a !idespread and accepted practice in the
entertain*ent industr-.KFQL $his practice is not desi,ned to control the *eans and
*ethods of !or/ of the talent, but si*pl- to protect the invest*ent of the broadcast
station. $he broadcast station nor*all- spends substantial a*ounts of *one-, ti*e
and effort Vin buildin, up its talents as !ell as the pro,ra*s the- appear in and thus
e&pects that said talents re*ain e&clusive !ith the station for a co**ensurate period
of ti*e.WKFML Nor*all-, a *uch hi,her fee is paid to talents !ho a,ree to !or/
e&clusivel- for a particular radio or television station. 'n short, the hu,e talent fees
partiall- co*pensates for e&clusivit-, as in the present case.
MJM"C #$ A;en' o) SON=A
%"NJA protests the abor ArbiterSs #ndin, that he is a talent of MCM0C, !hich
contracted out his services to AB%=CBN. $he abor Arbiter ruled that as a talent of
MCM0C, %"NJA is not an e*plo-ee of AB%=CBN. %"NJA insists that MCM0C is a
Vlabor=onl-W contractor and AB%=CBN is his e*plo-er.
'n a labor=onl- contract, there are three parties involvedH (1) the Vlabor=onl-W
contractor: (@) the e*plo-ee !ho is ostensibl- under the e*plo- of the Vlabor=onl-W
contractor: and (;) the principal !ho is dee*ed the real e*plo-er. 4nder this
sche*e, '0e O.#*o&8on.(P %on'&#%'o& /$ '0e #;en' o) '0e -&/n%/-#.. $he la! *a/es
the principal responsible to the e*plo-ees of the Vlabor=onl- contractorW as if the
principal itself directl- hired or e*plo-ed the e*plo-ees.KF3L $hese circu*stances are
not present in this case.
$here are essentiall- onl- t!o parties involved under the A,ree*ent, na*el-,
%"NJA and AB%=CBN. MCM0C *erel- acted as %"NJASs a,ent. $he A,ree*ent
e&pressl- states that MCM0C acted as the VAGEN$W of %"NJA. $he records do not
sho! that MCM0C acted as AB%=CBNSs a,ent. MCM0C, !hich stands for Mel and Ca-
Mana,e*ent and 0evelop*ent Corporation, is a corporation or,anized and o!ned b-
%"NJA and $'ANGC". $he President and General Mana,er of MCM0C is %"NJA
hi*self. 't is absurd to hold that MCM0C, !hich is o!ned, controlled, headed and
*ana,ed b- %"NJA, acted as a,ent of AB%=CBN in enterin, into the A,ree*ent !ith
%"NJA, !ho hi*self is represented b- MCM0C. $hat !ould *a/e MCM0C the a,ent of
both AB%=CBN and %"NJA.
As %"NJA ad*its, MCM0C is a *ana,e*ent co*pan- devoted eQ%.u$/1e.( to
*ana,in, the careers of %"NJA and his broadcast partner, $'ANGC". MCM0C is not
en,a,ed in an- other business, not even ?ob contractin,. MCM0C does not have an-
other function apart fro* actin, as a,ent of %"NJA or $'ANGC" to pro*ote their
careers in the broadcast and television industr-.KF2L
Po./%( In$'&u%'/on No. 40
%"NJA ar,ues that Polic- 'nstruction No. FP issued b- then Minister of abor Blas
"ple on #nall- settled the status of !or/ers in the broadcast industr-. 4nder this
polic-, the t-pes of e*plo-ees in the broadcast industr- are the station and pro,ra*
e*plo-ees.
Polic- 'nstruction No. FP is a *ere e&ecutive issuance !hich does not have the
force and effect of la!. $here is no le,al presu*ption that Polic- 'nstruction No. FP
deter*ines %"NJASs status. A *ere e&ecutive issuance cannot e&clude independent
contractors fro* the class of service providers to the broadcast industr-. $he
classi#cation of !or/ers in the broadcast industr- into onl- t!o ,roups under Polic-
'nstruction No. FP is not bindin, on this Court, especiall- !hen the classi#cation has
no basis either in la! or in fact.
A)F+#1/'$ o) A<S8C<NH$ 9/'ne$$e$
%"NJA also faults the abor Arbiter for ad*ittin, the af#davits of %ocorro 5idanes
and Rolando Cruz !ithout ,ivin, his counsel the opportunit- to cross=e&a*ine these
!itnesses. %"NJA brands these !itnesses as inco*petent to attest on the prevailin,
practice in the radio and television industr-. %"NJA vie!s the af#davits of these
!itnesses as *isleadin, and irrelevant.
8hile %"NJA failed to cross=e&a*ine AB%=CBNSs !itnesses, he !as never
prevented fro* den-in, or refutin, the alle,ations in the af#davits. $he abor Arbiter
has the discretion !hether to conduct a for*al (trial=t-pe) hearin, after the
sub*ission of the position papers of the parties, thusH
%ection ;. %ub*ission of Position PapersIMe*orandu*
& & &
$hese veri#ed position papers shall cover onl- those clai*s and causes of action raised
in the co*plaint e&cludin, those that *a- have been a*icabl- settled, and shall be
acco*panied b- all supportin, docu*ents includin, the af#davits of their respective
!itnesses !hich shall ta/e the place of the latterSs direct testi*on-. & & &
%ection F. 0eter*ination of Necessit- of 6earin,. T '**ediatel- after the sub*ission
of the parties of their position papersI*e*orandu*, the abor Arbiter shall *otu
propio deter*ine !hether there is need for a for*al trial or hearin,. At this sta,e, he
*a-, at his discretion and for the purpose of *a/in, such deter*ination, as/
clari#cator- Buestions to further elicit facts or infor*ation, includin, but not li*ited
to the subpoena of relevant docu*entar- evidence, if an- fro* an- part- or !itness.
KAPL
$he abor Arbiter can decide a case based solel- on the position papers and the
supportin, docu*ents !ithout a for*al trial.KA1L $he holdin, of a for*al hearin, or
trial is so*ethin, that the parties cannot de*and as a *atter of ri,ht.KA@L 'f the abor
Arbiter is con#dent that he can rel- on the docu*ents before hi*, he cannot be faulted
for not conductin, a for*al trial, unless under the particular circu*stances of the
case, the docu*ents alone are insuf#cient. $he proceedin,s before a abor Arbiter are
non=liti,ious in nature. %ub?ect to the reBuire*ents of due process, the technicalities
of la! and the rules obtainin, in the courts of la! do not strictl- appl- in proceedin,s
before a abor Arbiter.
T#.en'$ #$ In+e-en+en' Con'&#%'o&$
AB%=CBN clai*s that there e&ists a prevailin, practice in the broadcast and
entertain*ent industries to treat talents li/e %"NJA as independent contractors.
%"NJA ar,ues that if such practice e&ists, it is void for violatin, the ri,ht of labor to
securit- of tenure.
$he ri,ht of labor to securit- of tenure as ,uaranteed in the
ConstitutionKA;L arises onl- if there is an e*plo-er=e*plo-ee relationship under labor
la!s. Not ever- perfor*ance of services for a fee creates an e*plo-er=e*plo-ee
relationship. $o hold that ever- person !ho renders services to another for a fee is an
e*plo-ee = to ,ive *eanin, to the securit- of tenure clause = !ill lead to absurd results.
'ndividuals !ith special s/ills, e&pertise or talent en?o- the freedo* to offer their
services as independent contractors. $he ri,ht to life and livelihood ,uarantees this
freedo* to contract as independent contractors. $he ri,ht of labor to securit- of
tenure cannot operate to deprive an individual, possessed !ith special s/ills, e&pertise
and talent, of his ri,ht to contract as an independent contractor. An individual li/e an
artist or talent has a ri,ht to render his services !ithout an- one controllin, the
*eans and *ethods b- !hich he perfor*s his art or craft. $his Court !ill not
interpret the ri,ht of labor to securit- of tenure to co*pel artists and talents to render
their services onl- as e*plo-ees. 'f radio and television pro,ra* hosts can render
their services onl- as e*plo-ees, the station o!ners and *ana,ers can dictate to the
radio and television hosts !hat the- sa- in their sho!s. $his is not conducive to
freedo* of the press.
"/))e&en' T#Q T&e#',en' o) T#.en'$ #n+ <&o#+%#$'e&$
$he National 'nternal Revenue Code (VN'RCW)KAFL in relation to Republic Act No.
MM1Q,KAAL as a*ended b- Republic Act No. 3@F1,KAQL treats talents, television and
radio broadcasters differentl-. 4nder the N'RC, these professionals are sub?ect to the
1PR value=added ta& (V5A$W) on services the- render. E&e*pted fro* the 5A$ are
those under an e*plo-er=e*plo-ee relationship.KAML $his different ta& treat*ent
accorded to talents and broadcasters bolters our conclusion that the- are independent
contractors, provided all the basic ele*ents of a contractual relationship are present
as in this case.
N#'u&e o) SON=AH$ C.#/,$
%"NJA see/s the recover- of alle,edl- unpaid talent fees, 1;
th
*onth pa-,
separation pa-, service incentive leave, si,nin, bonus, travel allo!ance, and a*ounts
due under the E*plo-ee %toc/ "ption Plan. 8e a,ree !ith the #ndin,s of the abor
Arbiter and the Court of Appeals that %"NJASs clai*s are #.. *#$e+ on '0e M#( 1994
A;&ee,en' #n+ $'o%E o-'/on -.#n, #n+ no' on '0e L#*o& Co+e. Clearl-, the present
case does not call for an application of the abor Code provisions but an interpretation
and i*ple*entation of the Ma- 122F A,ree*ent. 'n effect, %"NJASs cause of action is
for breach of contract !hich is intrinsicall- a civil dispute co,nizable b- the re,ular
courts.KA3L
9HEREFORE, !e 0EN7 the petition. $he assailed 0ecision of the Court of
Appeals dated in CA=G.R. %P No. F212P is A..'RME0. Costs a,ainst petitioner.
SO OR"ERE".
0avide, Cr., C.C., (Chair*an), Pan,aniban, 7nares=%antia,o, and Azcuna,
CC., concur.
K1L 4nder Rule FA of the Rules of Court.
K@L Penned b- Associate Custice Eu,enio %. abitoria !ith Associate Custices Cesus M.
Elbinias and Marina . Buzon concurrin,.
K;L Rollo, p. 1AP.
KFL 'bid., p. @PF.
KAL 0onato G. Duinto, Cr.
KQL Rollo, pp. 11F=1;P.
KML 'bid., pp. 1@;=1@A.
K3L 'bid., p. ;2.
K2L Rollo, pp. ;M=;2.
K1PL 'bid., p. ;2.
K11L 'bid.
K1@L 'bid.
K1;L 'bid.
K1FL 'bid., p. @Q2.
K1AL .leischer Co*pan-, 'nc. v . National abor Relations Co**ission, G.R. No. 1@1QP3 ,
@Q March @PP1, ;AA %CRA 1PA: A.P Mutual Bene#t Association, 'nc. v . NRC,
G.R. No. 1P@122, @3 Canuar- 122M, @QM %CRA FM: Cathedral %chool of
$echnolo,- v. NRC, G.R. No. 1P1F;3, 1; "ctober 122@, @1F %CRA AA1. %ee
also ',nacio v. Coca=Cola Bottlers Phils., 'nc., F1M Phil. MFM (@PP1): Gonzales v .
National abor Relations Co**ission, G.R. No. 1;1QA;, @Q March @PP1, ;AA
%CRA 12A: %andi,an %avin,s and oan Ban/, 'nc. v. NRC, ;@F Phil. ;F3
(122Q): Ma,nolia 0air- Products Corporation v. NRC, ;@@ Phil. AP3 (122Q).
K1QL Madlos v. NRC, ;@F Phil. F23 (122Q).
K1ML 0o*asi, v . National abor Relations Co**ission, G.R. No. 1131P1 , , @Q1 %CRA
MM2.
K13L 0e os %antos v. NRC, F@; Phil. 1P@P (@PP1): $raders Ro-al Ban/ v. NRC, ;M3
Phil. 1P31 (1222): Aboitiz %hippin, E*plo-ees Association v. National abor
Relations Co**ission, G.R. No. M3M11, @M Cune 122P, 13Q %CRA 3@A: Ru,a v.
National abor Relations Co**ission, G.R. Nos. M@QAF=Q1, @@ Canuar- 122P,
131 %CRA @QQ.
K12L 'bid.
K@PL Para,raph 1P of the A,ree*ent providesH V$he C"MPAN7 shall provide hi* !ith
the follo!in, bene#tsH %%%, Medicare, 6ealthcare, e&ecutive life and accident
insurance, and a 1;
th
=*onth pa- based on an a*ount not lo!er than the a*ount
he !as receivin, prior to the effectivit- of this A,ree*ent.W
K@1L Presidential 0ecree No. 3A1 (ReBuirin, All E*plo-ers to Pa- their E*plo-ees a
1;
th
=*onth Pa-) for the 1;
th
*onth pa-: Republic Act No. 11Q1 (%ocial %ecurit-
a!) for the %%% bene#ts: and Republic Act No. M3MA (National 6ealth
'nsurance Act of 122A) for the Philhealth insurance.
K@@L Article 11AM of the Civil Code e&plicitl- providesH
"bli,ations arise fro*H
(1) a!:
?3@ Con'&#%'$R
(;) Duasi=contracts:
(F) Acts or o*issions punished b- la!: and
(A) Duasi=delicts. (E*phasis supplied)
K@;L %ee Article @3;, abor Code.
K@FL Para,raph M of the A,ree*ent statesH VProvided that the AGEN$ and Ca- %onza
shall faithfull- and co*pletel- perfor* each condition of this A,ree*ent for and
in consideration of the aforesaid services b- the AGEN$ and its talent, the
C"MPAN7 a,rees to pa- the AGEN$ for the #rst -ear of this A,ree*ent the
a*ount of $6REE 64N0RE0 $EN $6"4%AN0 PE%"% "N7 (P;1P,PPP.PP) per
*onth, pa-able on the 1P
th
and @A
th
of each *onth. .or the second and third
-ear of this A,ree*ent, the C"MPAN7 shall pa- the a*ount of $6REE
64N0RE0 %E5EN$EEN $6"4%AN0 PE%"% "N7 (P;1M,PPP.PP) per *onth,
pa-able li/e!ise on the 1P
th
and @A
th
of the each *onth.W
K@AL Para,raph 11 of the A,ree*ent statesH V 'n the event of cancellation of this
A,ree*ent throu,h no fault of the AGEN$ and its talent, C"MPAN7 a,rees to
pa- the full a*ount speci#ed in this A,ree*ent for the re*ainin, period
covered b- this A,ree*ent, provided that the talent shall not render an-
service for or in an- other radio or television production of an- person, #r*,
corporation or an- entit- co*petin, !ith the C"MPAN7 until the e&pir-
hereof.W
K@QL $he openin, sentence of the second para,raph of %"NJASs letter readsH
VAs -ou are !ell a!are, M&. SonL# /&&e1o%#*.( &e$/;ne+ in vie! of recent events
concernin, his pro,ra*s and career. &&&W
K@ML ;Q1 ..;d 1, .
K@3L %ee also %pirides v. Reinhardt, F3Q .. %upp. Q3A (123P).
K@2L 'n the , aside fro* the ri,ht of control test, there are the Vecono*ic realit-W test
and the V*ulti=factor test.W $he tests are dra!n fro* statutes, re,ulations, rules,
policies, rulin,s, case la! and the li/e. $he Vri,ht of controlW test applies under
the federal 'nternal Revenue Code (V'RCW). $he Vecono*ic realit-W test applies to
the federal .air abor %tandards Act (V.%AW).K@2L $he California 0ivision of
abor %tandards Enforce*ent (V0%EW) uses a h-brid of these t!o tests often
referred to as the V*ulti=factor testW in deter*inin, !ho an e*plo-ee is.
Most courts in the have utilized the control test to deter*ine !hether one is an
e*plo-ee. 4nder this test, a court *ust consider the hirin, part-Ss ri,ht to
control the *anner and *eans b- !hich the product is acco*plished. A*on,
other factors relevant to this inBuir- are the s/ills reBuired: the source of the
instru*entalities and tools: the location of the !or/: the duration of the
relationship bet!een the parties: !hether the hirin, part- has the ri,ht to
assi,n additional pro?ects to the hired part-: the e&tent of the hired part-Ss
discretion over !hen and ho! lon, to !or/: the *ethod of pa-*ent: the hired
part-Ss role in hirin, and pa-in, assistants: !hether the !or/ is part of the
re,ular business of the hirin, part-: !hether the hirin, part- is in business: the
provision of e*plo-ee bene#ts: and the ta& treat*ent of the hired part-.
(!!!.pierce,or*an.co*, Buoted fro* the article entitled VMana,e*ent=side
e*plo-*ent la! advice for the entertain*ent industr-W !ith subtitle
VClassi#cation of 8or/ersH 'ndependent Contractors versus E*plo-eeW b- 0avid
Albert Pierce, EsB.)
K;PL !!!.pierce,or*an.co*, Buoted fro* the article entitled VMana,e*ent=side
e*plo-*ent la! advice for the entertain*ent industr-W !ith subtitle
VClassi#cation of 8or/ersH 'ndependent Contractors versus E*plo-eeW b- 0avid
Albert Pierce, EsB.
K;1L Para,raph F of the A,ree*ent providesH VAGEN$ !ill *a/e available Ca- %onza
for rehearsals and tapin,s of the Pro,ra*s on the da- and ti*e set b- the
producer and director of the Pro,ra*s and to attend pre and post production
staff *eetin,s.W
K;@L Para,raph 1A of the A,ree*ent providesH VAGEN$, talent shall not use the
Pro,ra*s as a venue to broadcast or announce an- criticis* on an- operational,
ad*inistrative, or le,al proble*s, situations or other *atter !hich *a- occur,
e&ist or alle,ed to have occurred or e&isted !ithin the C"MPAN7. i/e!ise,
AGEN$, talent shall, in accordance !ith ,ood broadcast *ana,e*ent and ethics,
ta/e up !ith the proper of#cers of the C"MPAN7 su,,estions or criticis*s on
an- *atter or condition affectin, the C"MPAN7 or its relation to the public or
third parties.W
K;;L 'n =0en;Q/n; 1. N#'0#n$on, @1A ..%upp.@d 11F, citin, Redd v. %u**ers, @;@
..;d 2;; (0.C. Cir.), plaintiffSs superior !as not involved in the actual
perfor*ance that produced the #nal product.
K;FL Para,raph ; of the A,ree*ent providesH V$he C"MPAN7 reserves the ri,ht to
*odif- the pro,ra* for*at and li/e!ise chan,e airti*e schedule for *ore
effective pro,ra**in,.W
K;AL $he ri,ht not to broadcast an independent contractorSs sho! also ,ives the radio
and television station protection in case it dee*s the contents of the sho!
libelous.
K;QL 1AM ..@d @Q, .
K;ML 'bid.
K;3L 'n =0en;Q/n; 1. N#'0#n$on, @1A ..%upp.@d 11F, , plaintiff !as also provided !ith
the place of !or/ and eBuip*ent to be used.
K;2L 'n the Albert- case, the 4% Court of Appeals re?ected Albert-Ss contention that
8'PR provided the VeBuip*ent necessar- to tape the sho!.W $he court held
there that Vthe eBuip*ent necessar- for Albert- to conduct her ?ob as pro,ra*
host related to her appearance on the sho!. "thers provided eBuip*ent for
#l*in, and producin, the sho!, but these !ere not the pri*ar- tools that
Albert- used to perfor* her particular function.W %ince Albert- provided, or
obtained sponsors to provide, the costu*es, ?e!elr-, and other i*a,e=related
supplies and services necessar- for her appearance, she provided the Vtools and
instru*entalitiesW necessar- for her to perfor*. $he 4% Court of Appeals added
that if it accepted Albert-Ss ar,u*ent, independent contractors could never
!or/ on collaborative pro?ects because other individuals often provide the
eBuip*ent reBuired for different aspects of the collaboration.
$he Albert- case further ruled that V!hile XcontrolS over the *anner, location, and
hours of !or/ is often critical to the independent contractorIe*plo-ee anal-sis,
it *ust be considered in li,ht of the !or/ perfor*ed and the industr- at issue.
Considerin, the tas/s that an actor perfor*s, the court does not believe that the
sort of control identi#ed b- Albert- necessaril- indicates e*plo-ee status.W
KFPL 'n =0en;Q/n;, a Chinese lan,ua,e broadcaster and translator !as dee*ed an
independent contractor because she !or/ed under *ini*al
supervision. $he court also found that plaintiff !as reBuired to possess
specialized /no!led,e before co**encin, her position as a broadcaster.
KF1L Para,raph 1; of the A,ree*ent providesH VAGEN$ a,rees that talent shall abide
b- the rules, re,ulations and standards of perfor*ance of the
C"MPAN7 %o1e&/n; '#.en'$, and that talent is bound to co*pl- !ith the
$elevision and Radio Code of the 9apisanan n, *,a Broadcaster sa Pilipinas
(9BP), !hich has been adopted b- the C"MPAN7 as its Code of Ethics. AGEN$
shall perfor* and /eep all of the duties and obli,ations assu*ed or entered b-
the AGEN$ hereunder usin, its best talents and abilities. An- violation of or
non=confor*it- !ith this provision b- talent shall be a valid and suf#cient
,round for the i**ediate ter*ination of the A,ree*ent.W (E*phasis supplied)
KF@L 'bid.
KF;L A.P Mutual Bene#t Association, 'nc. v. NRC, G.R. No. 1P@122, , @QM %CRA FM.
KFFL 'bid.
KFAL %upra note ;Q.
KFQL Rollo, p. ;P@.
KFML 'bid.
KF3L $he second para,raph of Article 1PQ of the abor Code readsH
$here is Vlabor=onl-W contractin, !here the person suppl-in, !or/ers to an e*plo-er
does not have substantial capital or invest*ent in the for* of tools, eBuip*ent,
*achineries, !or/ pre*ises, a*on, others, and the !or/ers recruited and
placed b- such persons are perfor*in, activities !hich are directl- related to
the principal business of such e*plo-er. 'n such cases, the person or
inter*ediar- shall be considered *erel- as an a,ent of the e*plo-er !ho shall
be responsible to the !or/ers in the sa*e *anner and e&tent as if the latter
!ere directl- e*plo-ed b- hi*.
KF2L Rollo, p. 2P.
KAPL Ne! Rules of Procedure of the National abor Relations Co**ission, as a*ended
b- Resolution ;=22, series of 1222.
KA1L 4niversit- of the '**aculate v. 4.'.C. $eachin, and Non=$eachin, Personnel and
E*plo-ees , F1F Phil. A@@ (@PP1).
KA@L Philippine Bus Corp. v. NRC, F1M Phil. 31 (@PP1).
KA;L %ection ;, Article <''' of the Constitution.
KAFL Republic Act No. 3F@F. B'R Revenue Re,ulations No. 12=22 also provides the
follo!in,H
%EC$'"N 1. %cope. G Pursuant to the provisions of %ections @FF and 1P3 of the
National 'nternal Revenue Code of 122M, in relation to %ection 1M of Republic Act
No. MM1Q, as a*ended b- %ection 11 of Republic Act 3@F1, these Re,ulations are
hereb- pro*ul,ated to ,overn the i*position of value=added ta& on sale of
services b- persons en,a,ed in the practice of profession or callin, and
professional services rendered b- ,eneral professional partnerships: $e&1/%e$
&en+e&e+ *( actors, actresses, '#.en'$, sin,ers and e*cees, &#+/o #n+
'e.e1/$/on *&o#+%#$'e&$ and choreo,raphers: *usical, radio, *ovie, television
and sta,e directors: and professional athletes.
%EC$'"N @. Covera,e. G Be,innin, , ,eneral professional partnerships,
professionals and persons described above shall be ,overned b- the provisions
of Revenue Re,ulation No. M=2A, as a*ended, other!ise /no!n as the
VConsolidated 5alue=Added $a& Re,ulationsW. &&&
KAAL "ther!ise /no!n as the E&panded 5alue=Added $a& a!.
KAQL Act a*endin, Republic Act No. MM1Q, other!ise /no!n as the E&panded 5alue=
Added $a& a! and other pertinent provisions of the National 'nternal Revenue
Code, as a*ended (0ece*ber @P, 122Q).
KAML %ection 1P2 of the N'RC providesH
E&e*pt transactions. T $he follo!in, shall be e&e*pt fro* the value=added ta&H
&&&
(o) %ervices rendered b- individuals pursuant to an e*plo-er=e*plo-ee
relationship: &&&
KA3L %in,apore Airlines td. v. 6on. Cruz, etc., et al., @PM Phil. A3A (123;).
.'R%$ 0'5'%'"N
BG.R. No. 98107. Au;u$' 18, 1997C
<ENJAMIN C. JUCO, -e'/'/one&, 1$. NATIONAL LA<OR RELATIONS
COMMISSION #n+ NATIONAL HOUSING CORPORATION,&e$-on+en'$.
" E C I S I O N
HERMOSISIMA, JR., J.2
$his is a petition for certiorari to set aside the 0ecision of the National abor
Relations Co**ission (NRC) dated March 1F, 1221, !hich reversed the 0ecision
dated Ma- @1, 122P of abor Arbiter Manuel R. Cada-, on the ,round of lac/ of
?urisdiction.
Petitioner Ben?a*in C. Cuco !as hired as a pro?ect en,ineer of respondent National
6ousin, Corporation (N6C) fro* Nove*ber 1Q, 12MP to Ma- 1F, 12MA. "n Ma- 1F,
12MA, he !as separated fro* the service for havin, been i*plicated in a cri*e of theft
andIor *alversation of public funds.
"n March @A, 12MM, petitioner #led a co*plaint for ille,al dis*issal a,ainst the
NLRC- lack of jurisdiction
N6C !ith the 0epart*ent of abor.
"n %epte*ber 1M, 12MM, the abor Arbiter rendered a decision dis*issin, the
co*plaint on the ,round that the NRC had no ?urisdiction over the case.K1L
Petitioner then elevated the case to the NRC !hich rendered a decision on
0ece*ber @3, 123@, reversin, the decision of the abor Arbiter.K@L
0issatis#ed !ith the decision of the NRC, respondent N6C appealed before this
Court and on Canuar- 1M, 123A, !e rendered a decision, the dispositive portion thereof
reads as follo!sH
V86ERE."RE, the petition is hereb- GRAN$E0. $he Buestioned decision of the
respondent National abor Relations Co**ission is %E$ A%'0E. $he decision of the
abor Arbiter dis*issin, the case before it for lac/ of ?urisdiction is RE'N%$A$E0.WK;L
"n Canuar- Q, 1232, petitioner #led !ith the Civil %ervice Co**ission a co*plaint
for ille,al dis*issal, !ith preli*inar- *andator- in?unction.KFL
"n .ebruar- Q, 1232, respondent N6C *oved for the dis*issal of the co*plaint on
the ,round that the Civil %ervice Co**ission has no ?urisdiction over the case.KAL
"n April 11, 1232, the Civil %ervice Co**ission issued an order dis*issin, the
co*plaint for lac/ of ?urisdiction. 't ratiocinated thatH
V$he Board #nds the co**ent andIor *otion to dis*iss *eritorious. 't !as not
disputed that N6C is a ,overn*ent corporation !ithout an ori,inal charter but
or,anizedIcreated under the Corporate Code.
Article '<, %ection @ (1) of the 123M Constitution providesH
X$he civil service e*braces all branches, subdivisions, instru*entalities and a,encies
of the ,overn*ent, includin, ,overn*ent o!ned and controlled corporations !ith
ori,inal charters.S (underscorin, supplied)
.ro* the aforeBuoted constitutional provision, it is clear that respondent N6C is not
!ithin the scope of the civil service and is therefore be-ond the ?urisdiction of this
board. Moreover, it is pertinent to state that the 123M Constitution !as rati#ed and
beca*e effective on .ebruar- @, 123M.
86ERE."RE, for lac/ of ?urisdiction, the instant co*plaint is hereb- dis*issed.WKQL
"n April @3, 1232, petitioner #led !ith respondent NRC a co*plaint for ille,al
dis*issal !ith preli*inar- *andator- in?unction a,ainst respondent N6C.KML
"n Ma- @1, 122P, respondent NRC thru abor Arbiter Manuel R. Cada- ruled that
petitioner !as ille,all- dis*issed fro* his e*plo-*ent b- respondent as there !as
evidence in the record that the cri*inal case a,ainst hi* !as purel- fabricated,
pro*ptin, the trial court to dis*iss the char,es a,ainst hi*. 6ence, he concluded that
the dis*issal !as ille,al as it !as devoid of basis, le,al or factual.
6e further ruled that the co*plaint is not barred b- prescription considerin, that
LABOR
ARBITER
the period fro* !hich to rec/on the re,le*entar- period of four -ears should be fro*
the date of the receipt of the decision of the Civil %ervice Co**ission pro*ul,ated on
April 11, 1232. 6e also ratiocinated thatH
V't appears & & & co*plainant #led the co*plaint for ille,al dis*issal !ith the Civil
%ervice Co**ission on Canuar- Q, 1232 and the sa*e !as dis*issed on April 11,
1232 after !hich on April @3, 1232, this case !as #led b- the co*plainant. Prior to
that, this case !as ruled upon b- the %upre*e Court on Canuar- 1M, 123A !hich
en?oined the co*plainant to ,o to the Civil %ervice Co**ission !hich in fact,
co*plainant did. 4nder the circu*stances, there is *erit on the contention that the
runnin, of the re,le*entar- period of four (F) -ears !as suspended !ith the #lin, of
the co*plaint !ith the said Co**ission. 5eril-, it !as not the fault of the respondent
for failin, to #le the co*plaint as alle,ed b- the respondent but due to, in the !ords of
the co*plainant, a Xle,al /notS that has to be untan,led.WK3L
$hereafter, the abor Arbiter rendered a decision, the dispositive portion of !hich
readsH
+Pre*ises considered, ?ud,*ent is hereb- rendered declarin, the dis*issal of the
co*plainant as ille,al and orderin, the respondent to i**ediatel- reinstate hi* to his
for*er position !ithout loss of seniorit- ri,hts !ith full bac/ !a,es inclusive of
allo!ance and to his other bene#ts or eBuivalent co*puted fro* the ti*e it is !ithheld
fro* hi* !hen he !as dis*issed on March @M, 12MM, until actuall- reinstated.WK2L
"n Cune 1, 122P, respondent N6C #led its appeal before the NRC and on March
1F, 1221, the NRC pro*ul,ated a decision !hich reversed the decision of abor
Arbiter Manuel R. Cada- on the ,round of lac/ of ?urisdiction.K1PL
$he pri*ordial issue that confronts us is !hether or not public respondent
co**itted ,rave abuse of discretion in holdin, that petitioner is not ,overned b- the
abor Code.
4nder the la!s then in force, e*plo-ees of ,overn*ent=o!ned and Ior controlled
corporations !ere ,overned b- the Civil %ervice a! and not b- the abor Code.
6ence,
Article @MM of the abor Code (P0 FF@) then providedH
+$he ter*s and conditions of e*plo-*ent of all ,overn*ent e*plo-ees, includin,
e*plo-ees of ,overn*ent=o!ned and controlled corporations shall be ,overned b- the
Civil %ervice a!, rules and re,ulations & & &.W
$he 12M; Constitution, Article ''=B, %ection 1(1), on the other hand providedH
V$he Civil %ervice e*braces ever- branch, a,enc-, subdivision and instru*entalit- of
the ,overn*ent, includin, ,overn*ent=o!ned or controlled corporations.W
Althou,h !e had earlier ruled in National 6ousin, Corporation v. Cuco,K11L that
e*plo-ees of ,overn*ent=o!ned andIor controlled corporations, !hether created b-
special la! or for*ed as subsidiaries under the ,eneral Corporation a!, are ,overned
b- the Civil %ervice a! and not b- the abor Code, this rulin, has been supplanted b-
the 123M Constitution. $hus, the said Constitution no! providesH
V$he civil service e*braces all branches, subdivision, instru*entalities, and a,encies
of the Govern*ent, includin, ,overn*ent o!ned or controlled corporations
!ith ori,inal charter.W (Article '<=B, %ection @K1L)
'n National %ervice Corporation (NA%EC") v. National abor Relations
Co**ission,K1@L !e had the occasion to appl- the present Constitution in decidin,
!hether or not the e*plo-ees of NA%EC" are covered b- the Civil %ervice a! or the
abor Code not!ithstandin, that the case arose at the ti*e !hen the 12M;
Constitution !as still in effect. 8e ruled that the NRC has ?urisdiction over the
e*plo-ees of NA%EC" on the ,round that it is the 123M Constitution that ,overns
because it is the Constitution in place at the ti*e of the decision. .urther*ore, !e
ruled that the ne! phrase V!ith ori,inal charterW *eans that ,overn*ent=o!ned and
controlled corporations refer to corporations chartered b- special la! as distin,uished
fro* corporations or,anized under the Corporation Code. $hus, NA%EC" !hich had
been or,anized under the ,eneral incorporation stature and a subsidiar- of the
National 'nvest*ent 0evelop*ent Corporation, !hich in turn !as a subsidiar- of the
Philippine National Ban/, is e&cluded fro* the purvie! of the Civil %ervice
Co**ission.
8e see no co,ent reason to depart fro* the rulin, in the aforesaid case.
'n the case at bench, the National 6ousin, Corporation is a ,overn*ent o!ned
corporation or,anized in 12A2 in accordance !ith E&ecutive "rder No. ;22, other!ise
/no!n as the 4nifor* Charter of Govern*ent Corporation, dated Canuar- 1, 12A2. 'ts
shares of stoc/ are and have been one hundred percent (1PPR) o!ned b- the
Govern*ent fro* its incorporation under Act 1FA2, the for*er corporation la!. $he
,overn*ent entities that o!n its shares of stoc/ are the Govern*ent %ervice
'nsurance %-ste*, the %ocial %ecurit- %-ste*, the 0evelop*ent Ban/ of the
Philippines, the National 'nvest*ent and 0evelop*ent Corporation and the PeopleSs
6o*esite and 6ousin, Corporation.K1;LConsiderin, the fact that the N6A had been
incorporated under act 1FA2, the for*er corporation la!, it is but correct to sa- that it
is a ,overn*ent=o!ned or controlled corporation !hose e*plo-ees are sub?ect to the
provisions of the abor Code. $his observation is reiterated in recent case of $rade
4nion of the Philippines and Allied %ervices ($4PA%) v. National 6ousin, Corporation,
K1FL !here !e held that the N6A is no! !ithin the ?urisdiction of the 0epart*ent of
abor and E*plo-*ent, it bein, a ,overn*ent=o!ned andIor controlled corporation
!ithout an ori,inal charter. .urther*ore, !e also held that the !or/ers or e*plo-ees
of the N6C (no! N6A) undoubtedl- have the ri,ht to for* unions or e*plo-eeSs
or,anization and that there is no i*pedi*ent to the holdin, of a certi#cation election
a*on, the* as the- are covered b- the abor Code.
$hus, the NRC erred in dis*issin, petitionerSs co*plaint for lac/ of ?urisdiction
because the rule no! is that the Civil %ervice no! covers onl- ,overn*ent=o!ned or
controlled corporations !ith ori,inal charters.K1AL 6avin, been incorporated under
the Corporation a!, its relations !ith its personnel are ,overned b- the abor Code
and co*e under the ?urisdiction of the National abor Relations Co**ission.
"ne #nal point. Petitioners have been tossed fro* one foru* to another for a
si*ple ille,al dis*issal case. 't is but apt that !e put an end to his dile**a in the
interest of ?ustice.
9HEREFORE, the decision of the NRC in NRC NCR=PF=P@P;QP32 dated March
1F, 1221 is hereb- RE5ER%E0 and the 0ecision of the abor Arbiter dated Ma- @1,
122P is RE'N%$A$E0.
SO OR"ERE".
Padilla, (Chair*an), Bellosillo, 5itu,, and 9apunan, CC., concur.
K1L Rollo, pp. @P=@1.
K@L 'd., pp. @@=@Q.
K;L 'd., pp. @M=;M.
KFL 'd., pp. ;3=F@.
KAL 'd., pp. F;=FM.
KQL 'd., p. A@.
KML 'd., pp. A;=A3.
K3L 'd., p. Q3.
K2L 'd., p. Q2.
K1PL 'd., pp. M3=3Q.
K11L 1;F %CRA 1M@ (123A).
K1@L 1Q3 %CRA 1@@ K1233L.
K1;L National 6ousin, Corporation vs. Cuco, 1;F %CRA 1M@ (123A).
K1FL 1M; %CRA ;; (1232).
K1AL PN"C=Ener,- 0evelop*ent Corporation v. NRC, @P1 %CRA F3M 1221 $he N6C
(no! N6A)
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L869870 No1e,*e& 39, 1988
NATIONAL SERVICE CORPORATION ?NASECO@ AN" ARTURO L.
PERE=, petitioners,
vs.
THE HONORA<LE THIR" "IVISION, NATIONAL LA<OR RELATIONS
COMMISSION, MINISTR> OF LA<OR AN" EMPLO>MENT, MANILA AN"
EUGENIA C. CRE"O, respondents.
G.R. No. 70395 No1e,*e& 39,1988
EUGENIA C. CRE"O, petitioner,
vs.
NATIONAL LA<OR RELATIONS COMMISSION, NATIONAL SERVICES
CORPORATION AN" ARTURO L. PERE=, respondents.
$he Chief e,al Counsel for respondents NA%EC" and Arturo . Perez.
Melchor R. .lores for petitioner Eu,enia C. Credo.

PA"ILLA, J.2
Consolidated special civil actions for certiorari see/in, to revie! the decision 5 of the
$hird 0ivision, National abor Relations Co**ission in Case No. 11=F2FF=3; dated @3
Nove*ber 123F and its resolution dated 1Q Canuar- 123A den-in, *otions for
reconsideration of said decision.
Eu,enia C. Credo !as an e*plo-ee of the National %ervice Corporation (NA%EC"), a
do*estic corporation !hich provides securit- ,uards as !ell as *essen,erial,
?anitorial and other si*ilar *anpo!er services to the Philippine National Ban/ (PNB)
and its a,encies. %he !as #rst e*plo-ed !ith NA%EC" as a lad- ,uard on 13 Cul-
12MA. $hrou,h the -ears, she !as pro*oted to Cler/ $-pist, then Personnel Cler/ until
she beca*e Chief of Propert- and Records, on 1P March 123P. 1
%o*eti*e before M Nove*ber 123;, Credo !as ad*inistrativel- char,ed b- %isinio %.
loren, Mana,er of .inance and %pecial Pro?ect and Evaluation 0epart*ent of
NA%EC", ste**in, fro* her non=co*pliance !ith loren>s *e*orandu*, dated 11
"ctober 123;, re,ardin, certain entr- procedures in the co*pan->s %tate*ent of
Billin,s Ad?ust*ent. %aid char,es alle,ed that Credo +did not co*pl- !ith loren>s
instructions to place so*e correctionsIadditional re*ar/s in the %tate*ent of Billin,s
Ad?ust*ent: and !hen KCredoL !as called b- loren to his of#ce to e&plain further the
said instructions, KCredoL sho!ed resent*ent and behaved in a scandalous *anner b-
shoutin, and utterin, re*ar/s of disrespect in the presence of her co=e*plo-ees.+ 3
"n M Nove*ber 123;, Credo !as called to *eet Arturo . Perez, then Actin, General
Mana,er of NA%EC", to e&plain her side before Perez and NA%EC">s Co**ittee on
Personnel Affairs in connection !ith the ad*inistrative char,es #led a,ainst her. After
said *eetin,, on the sa*e date, Credo !as placed on +.orced eave+ status for 1 A da-s,
effective 3 Nove*ber 123;. 3
Before the e&piration of said 1A=da- leave, or on 13 Nove*ber 123;, Credo #led a
co*plaint, doc/eted as Case No. 11F2FF=3;, !ith the Arbitration Branch, National
Capital Re,ion, Ministr- of abor and E*plo-*ent, Manila, a,ainst NA%EC" for
placin, her on forced leave, !ithout due process. 4
i/e!ise, !hile Credo !as on forced leave, or on @@ Nove*ber 123;, NA%EC">s
Co**ittee on Personnel Affairs deliberated and evaluated a nu*ber of past acts of
*isconduct or infractions attributed to her. 5 As a result of this deliberation, said
co**ittee resolvedH
1. $hat, respondent KCredoL co**itted the follo!in, offenses in the Code
of 0iscipline, vizH
"..EN%E vs. Co*pan- 'nterest & Policies
No. ; G An- discourteous act to custo*er, of#cer and e*plo-ee of client
co*pan- or of#cer of the Corporation.
"..EN%E vs. Public Moral
No. M G E&hibit *ar/ed discourtes- in the course of of#cial duties or use of
profane or insultin, lan,ua,e to an- superior of#cer.
"..EN%E vs. Authorit-
No. ; G .ailure to co*pl- !ith an- la!ful order or an- instructions of a
superior of#cer.
@. $hat, Mana,e*ent has alread- ,iven due consideration to respondent>s
KCredoL scandalous actuations for several ti*es in the past. Records also
sho! that she !as repri*anded for so*e offense and did not Buestion it.
Mana,e*ent at this ?uncture, has alread- *et its *a&i*u* tolerance
point so it has decided to put an end to respondent>s KCredoL bein, an
undesirable e*plo-ee. 6
$he co**ittee reco**ended Credo>s ter*ination, !ith forfeiture of bene#ts. 7
"n 1 0ece*ber 123;, Credo !as called a,e to the of#ce of Perez to be infor*ed that she
!as bein, char,ed !ith certain offenses. Notabl-, these offenses !ere those !hich
NA%EC">s Co**ittee on Personnel Affairs alread- resolved, on @@ Nove*ber 123; to
have been co**itted b- Credo.
'n Perez>s of#ce, and in the presence of NA%EC">s Co**ittee on Personnel Affairs,
Credo !as *ade to e&plain her side in connection !ith the char,es #led a,ainst her:
ho!ever, due to her failure to do so, 8 she !as handed a Notice of $er*ination, dated
@F Nove*ber 123;, and *ade effective 1 0ece*ber 123;. 9 6ence, on Q 0ece*ber
123;, Credo #led a supple*ental co*plaint for ille,al dis*issal in Case No. 11=F2FF=
3;, alle,in, absence of ?ust or authorized cause for her dis*issal and lac/ of
opportunit- to be heard. 10
After both parties had sub*itted their respective position papers, af#davits and other
docu*entar- evidence in support of their clai*s and defenses, on 2 Ma- 123F, the
labor arbiter rendered a decisionH 1) dis*issin, Credo>s co*plaint, and @) directin,
NA%EC" to pa- Credo separation pa- eBuivalent to one half *onth>s pa- for ever- -ear
of service. 11
Both parties appealed to respondent National abor Relations Co**ission (NRC)
!hich, on @3 Nove*ber 123F, rendered a decisionH 1) directin, NA%EC" to reinstate
Credo to her for*er position, or substantiall- eBuivalent position, !ith si& (Q) *onths>
bac/!a,es and !ithout loss of seniorit- ri,hts and other privile,es appertainin,
thereto, and @) dis*issin, Credo>s clai* for attorne->s fees, *oral and e&e*plar-
da*a,es. As a conseBuence, both parties #led their respective *otions for
reconsideration, 13 !hich the NRC denied in a resolution of 1Q Canuar- 123A. 13
6ence, the present recourse b- both parties. 'n G.R. No. Q32MP, petitioners challen,e
as ,rave abuse of discretion the dispositive portion of the @3 Nove*ber 123F decision
!hich ordered Credo>s reinstate*ent !ith bac/!a,es. 14 Petitioners contend that in
arrivin, at said Buestioned order, the NRC acted !ith ,rave abuse of discretion in
#ndin, thatH 1) petitioners violated the reBuire*ents *andated b- la! on ter*ination,
@) petitioners failed in the burden of provin, that the ter*ination of Credo !as for a
valid or authorized cause, ;) the alle,ed infractions co**itted b- Credo !ere not
proven or, even if proved, could be considered to have been condoned b- petitioners,
and F) the ter*ination of Credo !as not for a valid or authorized cause. 15
"n the other hand, in G.R. No. MP@2A, petitioner Credo challen,es as ,rave abuse of
discretion the dispositive portion of the @3 Nove*ber 123F decision !hich dis*issed
her clai* for attorne->s fees, *oral and e&e*plar- da*a,es and li*ited her ri,ht to
bac/!a,es to onl- si& (Q) *onths. 16
As ,uidelines for e*plo-ers in the e&ercise of their po!er to dis*iss e*plo-ees for ?ust
causes, the la! provides thatH
%ection @. Notice of dis*issal. G An- e*plo-er !ho see/s to dis*iss a
!or/er shall furnish hi* a !ritten notice statin, the particular acts or
o*ission constitutin, the ,rounds for his dis*issal.
&&& &&& &&&
%ection A. Ans!er and 6earin,. G $he !or/er *a- ans!er the alle,ations
stated a,ainst hi* in the notice of dis*issal !ithin a reasonable period
fro* receipt of such notice. $he e*plo-er shall afford the !or/er a*ple
opportunit- to be heard and to defend hi*self !ith the assistance of his
representative, if he so desires.
%ection Q. 0ecision to dis*iss. G $he e*plo-er shall i**ediatel- notif- a
!or/er in !ritin, of a decision to dis*iss hi* statin, clearl- the reasons
therefor. 17
$hese ,uidelines *andate that the e*plo-er furnish an e*plo-ee sou,ht to be
dis*issed t!o (@) !ritten notices of dis*issal before a ter*ination of e*plo-*ent can
be le,all- effected. $hese are the notice !hich apprises the e*plo-ee of the particular
acts or o*issions for !hich his dis*issal is sou,ht and the subseBuent notice !hich
infor*s the e*plo-ee of the e*plo-er>s decision to dis*iss hi*.
1
2
i/e!ise, a readin, of the ,uidelines in consonance !ith the e&press provisions of la!
on protection to labor 18(!hich enco*passes the ri,ht to securit- of tenure) and the
broader dictates of procedural due process necessaril- *andate that notice of the
e*plo-er>s decision to dis*iss an e*plo-ee, !ith reasons therefor, can onl- be issued
after the e*plo-er has afforded the e*plo-ee concerned a*ple opportunit- to be
heard and to defend hi*self.
'n the case at bar, NA%EC" did not co*pl- !ith these ,uidelines in effectin, Credo>s
dis*issal. Althou,h she !as apprised and +,iven the chance to e&plain her side+ of the
char,es #led a,ainst her, this chance !as ,iven so perfunctoril-, thus renderin,
illusor- Credo>s ri,ht to securit- of tenure. $hat Credo !as not ,iven a*ple
opportunit- to be heard and to defend herself is evident fro* the fact that the
co*pliance !ith the in?unction to apprise her of the char,es #led a,ainst her and to
afford her a chance to prepare for her defense !as dispensed in onl- a da-. $his is not
effective co*pliance !ith the le,al reBuire*ents afore*entioned.
$he fact also that the Notice of $er*ination of Credo>s e*plo-*ent (or the decision to
dis*iss her) !as dated @F Nove*ber 123; and *ade effective 1 0ece*ber 123;
sho!s that NA%EC" !as alread- bent on ter*inatin, her services !hen she !as
infor*ed on 1 0ece*ber 123; of the char,es a,ainst her, and that an- hearin, !hich
NA%EC" thou,ht of affordin, her after @F Nove*ber 123; !ould *erel- be pro for*a
or an e&ercise in futilit-.
Besides, Credo>s *ere non=co*pliance !ith orens *e*orandu* re,ardin, the entr-
procedures in the co*pan->s %tate*ent of Billin,s Ad?ust*ent did not !arrant the
severe penalt- of dis*issal of the NRC correctl- held thatH
... on the char,e of ,ross discourtes-, the CPA found in its Report, dated @@
Nove*ber 123; that, +'n the process of her testi*on-Ie&planations she
a,ain e&hibited a conduct unbeco*in, in front of NA%EC" "f#cers and
ar,ued to Mr. %. %. loren in a sarcastic and discourteous *anner,
not!ithstandin,, the fact that she !as inside the of#ce of the Acct,.
General Mana,er.+ et it be noted, ho!ever, that the Report did not even
describe ho! the so called +conduct unbeco*in,+ or +discourteous *anner+
!as done b- co*plainant. Anent the +sarcastic+ ar,u*ent of co*plainant,
the purported transcript 19 of the *eetin, held on M Nove*ber 123; does
not indicate an- sarcas* on the part of co*plainant. At the *ost,
co*plainant *a- have sounded insistent or e*phatic about her !or/
bein, *ore co*plete than the !or/ of Ms. de Castro, -et, the co*plainin,
of#cer si,ned the !or/ of Ms. de Castro and did not si,n hers.
As to the char,e of insubordination, it *a- be conceded, albeit unclear,
that co*plainant failed to place sa*e correctionsIadditional re*ar/s in
the %tate*ent of Billin,s Ad?ust*ents as instructed. 6o!ever, under the
circu*stances obtainin,, !here co*plainant stron,l- felt that she !as
bein, discri*inated a,ainst b- her superior in relation to other
e*plo-ees, !e are of the considered vie! and so hold, that a repri*and
!ould have suf#ced for the infraction, but certainl- not ter*ination fro*
services. 30
As this Court has ruledH
... !here a penalt- less punitive !ould suf#ce, !hatever *issteps *a- be
co**itted b- labor ou,ht not to be visited !ith a conseBuence so severe.
't is not onl- because of the la!>s concern for the !or/in, *an. $here is, in
addition, his fa*il- to consider. 4ne*plo-*ent brin,s untold hardships
and sorro!s on those dependent on the !a,e=earner. 31
"f course, in ?ustif-in, Credo>s ter*ination of e*plo-*ent, NA%EC" clai*s as
additional la!ful causes for dis*issal Credo>s previous and repeated acts of
insubordination, discourtes- and sarcas* to!ards her superior of#cers, alle,ed to
have been co**itted fro* 123P to Cul- 123;. 33
'f such acts of *isconduct !ere indeed co**itted b- Credo, the- are dee*ed to have
been condoned b- NA%EC". .or instance, so*eti*e in 123P, !hen Credo alle,edl-
+reacted in a scandalous *anner and raised her voice+ in a discussion !ith NA%EC">s
Actin, head of the Personnel Ad*inistration 33 no disciplinar- *easure !as ta/en or
*eted a,ainst her. Nor !as she even repri*anded !hen she alle,edl- tal/ed >in a
shoutin, or -ellin, *anner+ !ith the Actin, Mana,er of NA%EC">s Buildin,
Maintenance and %ervices 0epart*ent in 123P 34 or !hen she alle,edl- +shouted+ at
NA%EC">s Corporate Auditor +in front of his subordinates displa-in, arro,ance and
unrul- behavior+ in 123P, or !hen she alle,edl- shouted at NA%EC">s 'nternal Control
Consultant in 1231. 35 But then, in sharp contrast to NA%EC">s penchant for i,norin,
the aforesaid acts of *isconduct, !hen Credo co**itted freBuent tardiness in Au,ust
and %epte*ber 123;, she !as repri*anded. 36
Even if the alle,ations of i*proper conduct (discourtes- to superiors) !ere
satisfactoril- proven, NA%EC">s condonation thereof is ,leaned fro* the fact that on F
"ctober 123;, Credo !as ,iven a salar- ad?ust*ent for havin, perfor*ed in the ?ob +at
least Ksatisfactoril-L+ 37 and she !as then rated +5er- %atisfactor-+ 38as re,ards ?ob
perfor*ance, particularl- in ter*s of Bualit- of !or/, Buantit- of !or/, dependabilit-,
cooperation, resourcefulness and attendance.
Considerin, that the acts or o*issions for !hich Credo>s e*plo-*ent !as sou,ht to be
le,all- ter*inated !ere insuf#cientl- proved, as to ?ustif- dis*issal, reinstate*ent is
proper. .or +absent the reason !hich ,ave rise to Kthe e*plo-ee>sL separation fro*
e*plo-*ent, there is no intention on the part of the e*plo-er to dis*iss the e*plo-ee
concerned.+ 39 And, as a result of havin, been !ron,full- dis*issed, Credo is entitled
to three (;) -ears of bac/!a,es !ithout deduction and Buali#cation. 30
6o!ever, !hile Credo>s dis*issal !as effected !ithout procedural fairness, an a!ard
of e&e*plar- da*a,es in her favor can onl- be ?usti#ed if her dis*issal !as effected in
a !anton, fraudulent, oppressive or *alevolent *anner. 31 A ?udicious e&a*ination of
the record *anifests no such conduct on the part of *ana,e*ent. 6o!ever, in vie! of
the attendant circu*stances in the case, i.e., lac/ of due process in effectin, her
dis*issal, it is reasonable to a!ard her *oral da*a,es. And, for havin, been
co*pelled to liti,ate because of the unla!ful actuations of NA%EC", a reasonable
a!ard for attorne->s fees in her favor is in order.
'n NA%EC">s co**ent 33 in G.R. No. MP@2A, it is belatedl- ar,ued that the NRC has
no ?urisdiction to order Credo>s reinstate*ent. NA%EC" clai*s that, as a ,overn*ent
corporation (b- virtue of its bein, a subsidiar- of the National 'nvest*ent and
0evelop*ent Corporation (N'0C), a subsidiar- !holl- o!ned b- the Philippine
National Ban/ (PNB), !hich in turn is a ,overn*ent o!ned corporation), the ter*s
and conditions of e*plo-*ent of its e*plo-ees are ,overned b- the Civil %ervice a!,
rules and re,ulations. 'n support of this ar,u*ent, NA%EC" cites National 6ousin,
Corporation vs. C4C", 33 !here this Court held that +$here should no lon,er be an-
Buestion at this ti*e that e*plo-ees of ,overn*ent=o!ned or controlled corporations
are ,overned b- the civil service la! and civil service riEes and re,ulations.+
't !ould appear that, in the interest of ?ustice, the holdin, in said case should not be
,iven retroactive effect, that is, to cases that arose before its pro*ul,ation on 1M
Canuar- 123A. $o do other!ise !ould be oppressive to Credo and other e*plo-ees
si*ilarl- situated, because under the sa*e 12M; Constitution ,but prior to the rulin,
in National 6ousin, Corporation vs. Cuco, this Court had reco,nized the applicabilit-
of the abor Code to, and the authorit- of the NRC to e&ercise ?urisdiction over,
disputes involvin, ter*s and conditions of e*plo-*ent in ,overn*ent o!ned or
controlled corporations, a*on, the*, the National %ervice Corporation
(NA%EC").Z[re\\an]^1_!` 34
.urther*ore, in the *atter of covera,e b- the civil service of ,overn*ent=o!ned or
controlled corporations, the 123M Constitution star/l- varies fro* the 12M;
Constitution, upon !hich National 6ousin, Corporation vs. Cucois based. 4nder the
12M; Constitution, it !as provided thatH
$he civil service e*braces ever- branch, a,enc-, subdivision, and
instru*entalit- of the Govern*ent, includin, ever- ,overn*ent=o!ned
or controlled corporation. ... 35
"n the other hand, the 123M Constitution provides thatH
$he civil service e*braces all branches, subdivisions, instru*entalities,
and a,encies of the Govern*ent, includin, ,overn*ent=o!ned or
controlled corporations !ith ori,inal charter. 36 (E*phasis supplied)
$hus, the situations sou,ht to be avoided b- the 12M; Constitution and e&pressed b-
the Court in the National 6ousin, . Corporation case in the follo!in, *anner G
$he in#r*it- of the respondents> position lies in its per*ittin, a
circu*vention or e*asculation of %ection 1, Article <''=B of the
constitution. 't !ould be possible for a re,ular *inistr- of ,overn*ent to
create a host of subsidiar- corporations under the Corporation Code
funded b- a !illin, le,islature. A ,overn*ent=o!ned corporation could
create several subsidiar- corporations. $hese subsidiar- corporations
!ould en?o- the best of t!o !orlds. $heir of#cials and e*plo-ees !ould be
privile,ed individuals, free fro* the strict accountabilit- reBuired b- the
Civil %ervice 0ecree and the re,ulations of the Co**ission on Audit. $heir
inco*es !ould not be sub?ect to the co*petitive restrains of the open
*ar/et nor to the ter*s and conditions of civil service e*plo-*ent.
Conceivabl-, all ,overn*ent=o!ned or controlled corporations could be
created, no lon,er b- special charters, but throu,h incorporations under
the ,eneral la!. $he Constitutional a*end*ent includin, such
corporations in the e*brace of the civil service !ould cease to have
application. Certainl-, such a situation cannot be allo!ed to e&ist. 37
appear rele,ated to relative insi,ni#cance b- the 123M Constitutional provision that
the Civil %ervice e*braces ,overn*ent=o!ned or controlled corporations !ith ori,inal
charter: and, therefore, b- clear i*plication, the Civil %ervice does not include
,overn*ent=o!ned or controlled corporations !hich are or,anized as subsidiaries of
,overn*ent=o!ned or controlled corporations under the ,eneral corporation la!.
$he proceedin,s in the 123Q Constitutional Co**ission also shed li,ht on the
Constitutional intent and *eanin, in the use of the phrase +!ith ori,inal charter.+
$hus
$6E PRE%'0'NG "..'CER (Mr. $renas) Co**issioner
Ro*ulo is reco,nized.
MR. R"M4". ' be, the indul,ence of the Co**ittee. ' !as
readin, the !ron, provision.
' refer to %ection 1, subpara,raph ' !hich readsH
$he Civil %ervice e*braces all branches, subdivisions, instru*entalities,
and a,encies of the ,overn*ent, includin, ,overn*ent=o!ned or
controlled corporations.
M- Buer-H 's Philippine Airlines covered b- this provisiona MR. ."J. 8ill
the Co**issioner please state his previous Buestiona
MR. R"M4". $he phrase on line F of %ection 1,
subpara,raph 1, under the Civil %ervice Co**ission, sa-sH
+includin, ,overn*ent=o!ned or controlled corporations.>
0oes that include a corporation, li/e the Philippine Airlines
!hich is ,overn*ent=o!ned or controlleda
MR. ."J. ' !ould li/e to thro! a Buestion to the
Co**issioner. 's the Philippine Airlines controlled b- the
,overn*ent in the sense that the *a?orit- of stoc/s are
o!ned b- the ,overn*enta
MR. R"M4". 't is o!ned b- the G%'%. %o, this is !hat !e
*i,ht call a tertiar- corporation. $he G%'% is o!ned b- the
,overn*ent. 8ould this be covered because the provision
sa-s +includin, ,overn*ent=o!ned or controlled
corporations.+
MR. ."J. $he Philippine Airlines !as established as a private
corporation. ater on, the ,overn*ent, throu,h the G%'%,
acBuired the controllin, stoc/s. 's that not the correct
situationa
MR. R"M4". $hat is true as Co**issioner "ple is about to
e&plain. $here !as apparentl- a %upre*e Court decision that
destro-ed that distinction bet!een a ,overn*ent=o!ned
corporation created under the Corporation a! and a
,overn*ent=o!ned corporation created b- its o!n charter.
MR. ."J. 7es, !e recall the %upre*e Court decision in the
case of N6A vs. Cuco to the effect that all ,overn*ent
corporations irrespective of the *anner of creation, !hether
b- special charter or b- the private Corporation a!, are
dee*ed to be covered b- the civil service because of the !ide=
e*bracin, de#nition *ade in this section of the e&istin, 12M;
Constitution. But !e recall the response to the Buestion of
Co**issioner "ple that our intend*ent in this provision is
?ust to ,ive a ,eneral description of the civil service. 8e are
not here to *a/e an- declaration as to !hether e*plo-ees of
,overn*ent=o!ned or controlled corporations are barred
fro* the operation of la!s, such as the abor Code of the
Philippines.
MR. R"M4". 7es.
MR. "PE. Ma- ' be reco,nized, Mr. Presidin, "f#cer, since
*- na*e has been *entioned b- both sides.
MR. R"M4". ' -ield part of *- ti*e.
$6E PRE%'0'NG "..'CER (Mr.$renas). Co**issioner "ple is
reco,nized.
MR. "PE. 'n connection !ith the covera,e of the Civil
%ervice a! in %ection 1 (1), *a- ' volunteer so*e
infor*ation that *a- be helpful both to the interpellator and
to the Co**ittee. .ollo!in, the procla*ation of *artial la!
on %epte*ber @1, 12M@, this issue of the covera,e of the abor
Code of the Philippines and of the Civil %ervice a! al*ost
i**ediatel- arose. ' a*, in particular, referrin, to the period
follo!in, the co*in, into force and effect of the Constitution
of 12M;, !here the Article on the Civil %ervice !as supposed
to ta/e i**ediate force and effect. 'n the case of 4J$E5EC",
there !as a stri/e at the ti*e. $his !as a ,overn*ent=
controlled and ,overn*ent=o!ned corporation. ' thin/ it !as
o!ned b- the PN"C !ith ?ust the *inuscule private shares
left. %o, the %ecretar- of Custice at that ti*e, %ecretar- Abad
%antos, and *-self sat do!n, and the result of that *eetin,
!as an opinion of the %ecretar- of Custice !hich 2 beca*e
bindin, i**ediatel- on the ,overn*ent that ,overn*ent
corporations !ith ori,inal charters, such as the G%'%, !ere
covered b- the Civil %ervice a! and corporations spun off
fro* the G%'%, !hich !e called second ,eneration
corporations functionin, as private subsidiaries, !ere
covered b- the abor Code. %a*ples of such second
,eneration corporations !ere the Philippine Airlines, the
Manila
6otel and the 6-att. And that de*arcation !or/ed ver- !ell. 'n fact, all of
these co*panies ' have *entioned as e&a*ples, e&cept for the Manila
6otel, had collective bar,ainin, a,ree*ents. 'n the Philippine Airlines,
there !ere, in fact, three collective bar,ainin, a,ree*ents: one, for the
,round people or the PA'A one, for the Ei,ht attendants or the PA%AC
and one for the pilots of the APAC 6o! then could a corporation li/e that
be covered b- the Civil %ervice la!a But, as the Chair*an of the
Co**ittee pointed out, the %upre*e Court decision in the case of N6A vs.
Cuco unrobed the !hole thin,. Accordin,l-, the Philippine Airlines, the
Manila 6otel and the 6-att are no! considered under that decision
covered b- the Civil %ervice a!. ' also recall that in the e*er,enc-
*eetin, of the Cabinet convened for this purpose at the initiative of the
Chair*an of the Reor,anization Co**ission, Ar*and .abella, the-
a,reed to allo! the CBA>s to lapse before appl-in, the full force and effect
of the %upre*e Court decision. %o, !e !ere in the a!/!ard situation !hen
the ne! ,overn*ent too/ over. ' can a,ree !ith Co**issioner Ro*ulo
!hen he said that this is a proble* !hich ' a* not e&actl- sure !e should
address in the deliberations on the Civil %ervice a! or !hether !e should
be content !ith !hat the Chair*an said that %ection 1 (1) of the Article
on the Civil %ervice is ?ust a ,eneral description of the covera,e of the Civil
%ervice and no *ore.
$han/ -ou, Mr. Presidin, "f#cer.
MR. R"M4". Mr. Presidin, "f#cer, for the *o*ent, ' !ould
be satis#ed if the Co**ittee puts on records that it is not
their intent b- this provision and the phrase +includin,
,overn*ent=o!ned or controlled corporations+ to cover such
co*panies as the Philippine Airlines.
MR. ."J. Personall-, that is *- vie!. As a *atter of fact,
!hen this draft !as *ade, *- proposal !as reall- to
eli*inate, to drop fro* the provision, the phrase +includin,
,overn*ent= o!ned or controlled corporations.+
MR. R"M4". 8ould the Co**ittee indicate that is the intent
of this provisiona
MR. M"N%"0. Mr. Presidin, "f#cer, ' do not thin/ the
Co**ittee can *a/e such a state*ent in the face of an
absolute e&clusion of ,overn*ent=o!ned or controlled
corporations. 6o!ever, this does not preclude the Civil
%ervice a! to prescribe different rules and procedures,
includin, e*olu*ents for e*plo-ees of proprietar-
corporations, ta/in, into consideration the nature of their
operations. %o, it is a ,eneral covera,e but it does not preclude
a distinction of the rules bet!een the t!o t-pes of enterprises.
MR. ."J. 'n other !ords, it is so*ethin, that should be left to
the le,islature to decide. As ' said before, this is ?ust a ,eneral
description and !e are not *a/in, an- declaration
!hatsoever.
MR. M"N%"0. Perhaps if Co**issioner Ro*ulo !ould li/e a
de#nitive understandin, of the covera,e and the Gentle*an
!ants to e&clude ,overn*ent=o!ned or controlled
corporations li/e Philippine Airlines, then the recourse is to
offer an a*end*ent as to the covera,e, if the Co**issioner
does not accept the e&planation that there could be a
distinction of the rules, includin, salaries and e*olu*ents.
MR. R"M4". %o as not to dela- the proceedin,s, ' !ill
reserve *- ri,ht to sub*it such an a*end*ent.
&&& &&& &&&
$6E PRE%'0'NG "..'CE (Mr. $renas) Co**issioner Ro*ulo
is reco,nized.
MR. R"M4". "n pa,e @, line A, ' su,,est the follo!in,
a*end*ent after +corporations+H Add a co**a (,) and the
phrase E<CEP$ $6"%E E<ERC'%'NG PR"PR'E$AR7
.4NC$'"N%.
$6E PRE%'0'NG "..'CER (Mr. $renas). 8hat does the
Co**ittee sa-a
%4%PEN%'"N ". %E%%'"N
MR. M"N%"0. Ma- !e have a suspension of the sessiona
$6E PRE%'0'NG "..'CER (Mr. $renas). $he session is
suspended.
't !as MH1Q p.*.
RE%4MP$'"N ". %E%%'"N
At MH@1 p.*., the session !as resu*ed.
$6E PRE%'0'NG "..'CER (Mr. $renas). $he session is resu*ed.
Co**issioner Ro*ulo is reco,nized.
MR. R"M4". Mr. Presidin, "f#cer, ' a* a*endin, *- ori,inal proposed
a*end*ent to no! read as follo!sH +includin, ,overn*ent=o!ned or
controlled corporations 8'$6 "R'G'NA C6AR$ER%.+ $he purpose of this
a*end*ent is to indicate that ,overn*ent corporations such as the G%'%
and %%%, !hich have ori,inal charters, fall !ithin the a*bit of the civil
service. 6o!ever, corporations !hich are subsidiaries of these chartered
a,encies such as the Philippine Airlines, Manila 6otel and 6-att are
e&cluded fro* the covera,e of the civil service.
$6E PRE%'0'NG "..'CER (Mr. $renas). 8hat does the
Co**ittee sa-a
MR. ."J. Cust one Buestion, Mr. Presidin, "f#cer. B- the ter*
+ori,inal charters,+ !hat e&actl- do !e *eana
MR. R"M4". 8e *ean that the- !ere created b- la!, b- an
act of Con,ress, or b- special la!.
MR. ."J. And not under the ,eneral corporation la!.
MR. R"M4". $hat is correct. Mr. Presidin, "f#cer.
MR. ."J. 8ith that understandin, and clari#cation, the
Co**ittee accepts the a*end*ent.
MR. NA$'5'0A0. Mr. Presidin, of#cer, so those created b- the
,eneral corporation la! are out.
MR. R"M4". $hat is correctH 38
"n the pre*ise that it is the 123M Constitution that ,overns the instant case because it
is the Constitution in place at the ti*e of decision thereof, the NRC has ?urisdiction to
accord relief to the parties. As an ad*itted subsidiar- of the N'0C, in turn a subsidiar-
of the PNB, the NA%EC" is a ,overn*ent=o!ned or controlled corporation !ithout
ori,inal charter.
0r. Cor,e Bocobo, in his Cult of e,alis*, cited b- Mr. Custice Perfecto in his
concurrin, opinion in Go*ez vs. Govern*ent 'nsurance Board (=QP@, March ;1,
12FM, FF ".G. No. 3, pp. @Q3M, @Q2F: also published in M3 Phil. @@1) on the effectivit- of
the principle of social ?ustice e*bodied in the 12;A Constitution, saidH
Certainl-, this principle of social ?ustice in our Constitution as ,enerousl-
conceived and so tersel- phrased, !as not included in the funda*ental
la! as a *ere popular ,esture. 't !as *eant to (be) a vital, articulate,
co*pellin, principle of public polic-. 't should be observed in the
interpretation not onl- of future le,islation, but also of all la!s alread-
e&istin, on Nove*ber 1A, 12;A. 't !as intended to chan,e the spirit of our
la!s, present and future. $hus, all the la!s !hich on the ,reat historic
event !hen the Co**on!ealth of the Philippines !as born, !ere
susceptible of t!o interpretations strict or liberal, a,ainst or in favor of
social ?ustice, no! have to be construed broadl- in order to pro*ote and
achieve social ?ustice. $his *a- see* novel to our friends, the advocates of
le,alis* but it is the onl- !a- to ,ive life and si,ni#cance to the above=
Buoted principle of the Constitution. 'f it !as not desi,ned to appl- to
these e&istin, la!s, then it !ould be necessar- to !ait for ,enerations
until all our codes and all our statutes shall have been co*pletel- charred
b- re*ovin, ever- provision ini*ical to social ?ustice, before the polic- of
social ?ustice can beco*e reall- effective. $hat !ould be an absurd
conclusion. 't is *ore reasonable to hold that this constitutional principle
applies to all le,islation in force on Nove*ber 1A, 12;A, and all la!s
thereafter passed.
86ERE."RE, in vie! of the fore,oin,, the challen,ed decision of the NRC is
A..'RME0 !ith *odi#cations. Petitioners in G.R. No. Q23MP, !ho are the private
respondents in G.R. No. MP@2A, are ordered toH 1) reinstate Eu,enia C. Credo to her
for*er position at the ti*e of her ter*ination, or if such reinstate*ent is not possible,
to place her in a substantiall- eBuivalent position, !ith three (;) -ears bac/!a,es,
fro* 1 0ece*ber 123;, !ithout Buali#cation or deduction, and !ithout loss of
seniorit- ri,hts and other privile,es appertainin, thereto, and @) pa- Eu,enia C. Credo
PA,PPP.PP for *oral da*a,es and PA,PPP.PP for attorne->s fees.
'f reinstate*ent in an- event is no lon,er possible because of supervenin, events,
petitioners in G.R. No. Q23MP, !ho are the private respondents in G.R. No. MP@2A are
ordered to pa- Eu,enia C. Credo, in addition to her bac/!a,es and da*a,es as above
described, separation pa- eBuivalent to one=half *onth>s salar- for ever- -ear of
service, to be co*puted on her *onthl- salar- at the ti*e of her ter*ination on 1
0ece*ber 123;.
%" "R0ERE0.
.ernan, C.C., Melencio=6errera, Paras, .eliciano, Ganca-co, Bidin, %ar*iento, Cortes,
GriNo=ABuino, Medialdea and Re,alado, CC., concur.
Narvasa, C., is on leave.
Gutierrez, Cr., C., in the result.


Se-#&#'e O-/n/on$

CRU=, J., concurrin,H
8hile concurrin, !ith Mr. Custice Padilla>s !ell=researched ponencia, ' have to
e&press once a,ain *- disappoint*ent over still another avoidable a*bi,uit- in the
123M Constitution.
't is clear no! fro* the debates of the Constitutional Co**ission that the
,overn*ent=o!ned or controlled corporations included in the Civil %ervice are those
!ith le,islative charters. E&cluded are its subsidiaries or,anized under the
Corporation Code.
'f that !as the intention, the lo,ical thin,, ' should i*a,ine, !ould have been to si*pl-
sa- so. $his !ould have avoided the su,,estion that there are corporations !ith
duplicate charters as distin,uished fro* those !ith ori,inal charters.
All charters are ori,inal re,ardless of source unless the- are a*ended. $hat is the
acceptable distinction. 4nder the provision, ho!ever, the charter is still and al!a-s
ori,inal even if a*ended as lon, it !as ,ranted b- the le,islature.
't !ould have been clearer, ' thin/, to sa- +includin, ,overn*ent o!ned or controlled
corporations !ith le,islative charters.+ 8h- this thou,ht did not occur to the
Constitutional Co**ission places one a,ain in needless puzzle*ent.


Se-#&#'e O-/n/on$
CRU=, J., concurrin,H
8hile concurrin, !ith Mr. Custice Padilla>s !ell=researched ponencia, ' have to
e&press once a,ain *- disappoint*ent over still another avoidable a*bi,uit- in the
123M Constitution.
't is clear no! fro* the debates of the Constitutional Co**ission that the
,overn*ent=o!ned or controlled corporations included in the Civil %ervice are those
!ith le,islative charters. E&cluded are its subsidiaries or,anized under the
Corporation Code.
'f that !as the intention, the lo,ical thin,, ' should i*a,ine, !ould have been to si*pl-
sa- so. $his !ould have avoided the su,,estion that there are corporations !ith
duplicate charters as distin,uished fro* those !ith ori,inal charters.
All charters are ori,inal re,ardless of source unless the- are a*ended. $hat is the
acceptable distinction. 4nder the provision, ho!ever, the charter is still and al!a-s
ori,inal even if a*ended as lon, it !as ,ranted b- the le,islature.
't !ould have been clearer, ' thin/, to sa- +includin, ,overn*ent o!ned or controlled
corporations !ith le,islative charters.+ 8h- this thou,ht did not occur to the
Constitutional Co**ission places one a,ain in needless puzzle*ent.
Foo'no'e$
O %i,ned b- Guiller*o C. Medina, Presidin, Co**issioner, Gabriel M.
Gatchalian and Mi,uel B. 5arela, Co**issioners: the last one concurrin,
in the result.
1 Rollo (G.R. No. Q23MP), p. 1@@
@ 'bid., p. 1@;.
; 'bid.
F 'bid., p. @@.
A 'bid., p. Q@.
Q 'bid., p. Q;.
M 'bid.
3 'bid., p. QQ.
2 'bid., p. QA.
1P 'bid., p. @A.
11 'bid., p. 1PF.
1@ 'bid., p. 1@Q.
1; 'bid., p. 1F3.
1F 'bid., p. 3.
1A 'bid.
1Q Rollo, (G.R. No. MP@2A), p. 3.
1M Rule <'5, Boo/ 5, '*ple*entin, Rules and Re,ulations.
13 Constitution (12M;), Art. '', %ec. 2: Constitution (1 23M), Art. '', %ec.
13: abor Code, Art. '''.
12 Rollo, (G.R. No. Q23MP), p. AM=A2.
@P 'bid., p. 1@A.
@1 Al*ira vs. B... Goodrich Philippine, 'nc., A3 %CRA 1@P.
@@ Rollo, (G.R. No. Q23MP), p. @=A.
@; 'bid., p. 1;.
@F 'bid.
@A 'bid.
@Q 'bid.
@M 'bid., p. 21.
@3 'bid., p. M3.
@2 Pepito vs. %ecretar- of abor, 23 %CRA FAF.
;P 'bid.
;1 Civil Code, Art. @@;@.
;@ Rollo (G.R. No. MP@2A), p. 1@A.
;; 1;F %CRA 1M@.
;F Philippine Air ine, 'nc. vs. NRC, 1@F %CRA A3;: Philippine Air ines,
'nc. vs. NRC, 1@Q %CRA @@; and National %ervice Corporation vs.
eo,ardo, Cr., 1;P %CRA AP@.
;A Constitution, 12M;, Art. ''=B, %ec. '(1).
;Q Constitution (123M), Art. '<=B, %ec. @(l).
;M 1;F %CRA 13@=13;.
;3 Record of the Constitutional Co**ission, 5ol. ', pp. A3;=A3A.
Republic of the Philippines
SUPREME COURT
Manila
.'R%$ 0'5'%'"N
G.R. No. 78763 Ju.( 13,1989
MANILA ELECTRIC COMPAN>, petitioner,
vs.
THE NATIONAL LA<OR RELATIONS COMMISSION, #n+ APOLINARIO M.
SIGNO, respondents.
An,ara, Abello, Concepcion, Re,ala & Cruz for petitioner.
0o*inador Ma,lalan, for private respondent.

ME"IAL"EA, J.2
$his is a petition for certiorari under Rule QA of the Rules of Court see/in, the
annul*ent of the resolution of the respondent National abor Relations Co**ission
dated March 1@, 123M (p. @3, Rollo) in NRC Case No. NCR=3=;3P3=3;,
entitled, +Apolinario M. %i,no, Co*plainant, versus Manila Electric Co*pan-,
Respondents+, af#r*in, the decision of the abor Arbiter !hich ordered the
reinstate*ent of private respondent herein, Apolinario %i,no, to his for*er position
!ithout bac/!a,es.
$he antecedent facts are as follo!sH
Private respondent %i,no !as e*plo-ed in petitioner co*pan- as supervisor=lead*an
since Canuar- 12Q; up to the ti*e !hen his services !ere ter*inated on Ma- 13,
123;.
'n 1231, a certain .ernando de ara #led an application !ith the petitioner co*pan-
for electrical services at his residence at PeNafrancia %ubdivision, Marcos 6i,h!a-,
Antipolo, Rizal. Private respondent %i,no facilitated the processin, of the said
application as !ell as the reBuired docu*entation for said application at the
Municipalit- of Antipolo, Rizal. 'n consideration thereof, private respondent received
fro* .ernando de ara the a*ount of PM,PPP.PP. %i,no thereafter #led the application
for electric services !ith the Po!er %ales 0ivision of the co*pan-.
't !as established that the area !here the residence of de ara !as located is not -et
!ithin the serviceable point of Meralco, because the place !as be-ond the ;P=*eter
distance fro* the nearest e&istin, Meralco facilities. 'n order to e&pedite the electrical
connections at de ara>s residence, certain e*plo-ees of the co*pan-, includin,
respondent %i,no, *ade it appear in the application that the sari=sari store at the
corner of Marcos 6i,h!a-, an entrance to the subdivision, is applicant de ara>s
establish*ent, !hich, in realit- is not o!ned b- the latter.
As a result of this sche*e, the electrical connections to de ara>s residence !ere
installed and *ade possible. 6o!ever, due to the fault of the Po!er %ales 0ivision of
petitioner co*pan-, .ernando de ara !as not billed for *ore than a -ear.
Petitioner co*pan- conducted an investi,ation of the *atter and found respondent
%i,no responsible for the said irre,ularities in the installation. $hus, the services of
the latter !ere ter*inated on Ma- 13, 123;.
"n Au,ust 1P 123;, respondent %i,no #led a co*plaint for ille,al dis*issal, unpaid
!a,es, and separation pa-.
After the parties had sub*itted their position papers, the abor Arbiter rendered a
decision (p. M2, Rollo) on April @2, 123A, !hich stated, inter aliaH
5eril-, co*plainant>s act of inducin, the Meralco e*plo-ees to effectuate
the installation on En,r. de ara>s residence pre?udiced the respondent,
and therefore, co*plainant hi*self had indeed beca*e a participant in
the transactions, althou,h not directl-, !hich turned out to be ille,al, not
to *ention that so*e of the *aterials used therein belon,s to Meralco,
so*e of !hich !ere inferior Bualit-. . . .
8hile co*plainant *a- den- the violation, he cannot do a!a- !ith
co*pan->s Code on E*plo-ee 0iscipline, *ore particularl- %ection M, par.
3 and %ection Q, par. @F thereof 6o!ever, as ad*itted b- the respondent,
the infraction of the above cited Code is punishable b- repri*and to
dis*issal.+
... . And in this case, !hile considerin, that co*plainant indeed co**itted
the above=cited infractions of co*pan- Code of E*plo-ee 0iscipline, 8e
shall also consider his records of uninterrupted t!ent- (@P) -ears of
30 meters
distance
from
nearest
Labor arbiter
service coupled !ith t!o (@) co**endations for honest-. i/e!ise, 8e
shall ta/e note that sub?ect offense is his #rst, and therefore, to i*pose the
e&tre*e penalt- of dis*issal is certainl- too drastic. A penalt- short of
dis*issal is *ore in /eepin, !ith ?ustice, and adherence to co*passionate
societ-.
86ERE."RE, respondent Meralco is hereb- directed to reinstate
co*plainant Apolinario M. %i,no to his for*er position as %upervisor
ead*an !ithout bac/!a,es, considerin, that he is not at all faultless. 6e
is ho!ever, here !arned, that co**ission of si*ilar offense in the future,
shall be dealt !ith *ore severel-.
%" "R0ERE0.
Both parties appealed fro* the decision to the respondent Co**ission. "n March 1@,
123M, the respondent Co**ission dis*issed both appeals for lac/ of *erit and
af#r*ed in toto the decision of the abor Arbiter.
"n Cune @;, 123M, the instant petition !as #led !ith the petitioner contendin, that the
respondent Co**ission co**itted ,rave abuse of discretion in af#r*in, the decision
of the abor Arbiter. A te*porar- restrainin, order !as issued b- this Court on
Au,ust ;, 123M, en?oinin, the respondents fro* enforcin, the Buestioned resolution of
the respondent Co**ission.
$he issue to resolve in the instant case is !hether or not respondent %i,no should be
dis*issed fro* petitioner co*pan- on ,rounds of serious *isconduct and loss of trust
and con#dence.
Petitioner contends that respondent %i,no violated %ections Q and M of the co*pan->s
Code on E*plo-ee 0iscipline, !hich provideH
%ection Q, Par. @FGEncoura,in,, inducin, or threatenin, another
e*plo-ee to perfor* an act constitutin, a violation of this Code or of
co*pan- !or/, rules or an offense in connection !ith the of#cial duties of
the latter, or allo!in, hi*self to be persuaded, induced or inEuenced to
co**it such offense.
Penalt-GRepri*and to dis*issal, dependin, upon the ,ravit- of the
offense.
%ection M, Par. 3G%olicitin, or receivin, *one-, ,ift, share, percenta,e or
bene#ts fro* an- person, personall- or throu,h the *ediation of another,
to perfor* an act pre?udicial to the Co*pan-.
Penalt-G0is*issal. (pp. 1;=1F, Rollo)
Petitioner further ar,ues that the acts of private respondent constituted breach of
trust and caused the petitioner co*pan- econo*ic losses resultin, fro* the unbilled
electric consu*ption of de ara: that in vie! thereof, the dis*issal of private
respondent %i,no is proper considerin, the circu*stances of the case.
$he po!er to dis*iss is the nor*al prero,ative of the e*plo-er. An e*plo-er,
,enerall-, can dis*iss or la-=off an e*plo-ee for ?ust and authorized causes
enu*erated under Articles @3@ and @3; of the abor Code. 6o!ever, the ri,ht of an
e*plo-er to freel- dischar,e his e*plo-ees is sub?ect to re,ulation b- the %tate,
NLRC
basicall- in the e&ercise of its para*ount police po!er. $his is so because the
preservation of the lives of the citizens is a basic dut- of the %tate, *ore vital than the
preservation of corporate pro#ts (Euro=inea, Phil. 'nc. v. NRC, G.R. No. MAM3@,
0ece*ber 1, 123M,1AQ %CRA M3).
$here is no Buestion that herein respondent %i,no is ,uilt- of breach of trust and
violation of co*pan- rules, the penalt- for !hich ran,es fro* repri*and to dis*issal
dependin, on the ,ravit- of the offense. 6o!ever, as earlier stated, the respondent
Co**ission and the abor Arbiter found that dis*issal should not be *eted to
respondent %i,no considerin, his t!ent- (@P) -ears of service in the e*plo- of
petitioner, !ithout an- previous dero,ator- record, in addition to the fact that
petitioner co*pan- had a!arded hi* in the past, t!o (@) co**endations for honest-.
'f ever the petitioner suffered losses resultin, fro* the unlisted electric consu*ption
of de ara, this !as found to be the fault of petitioner>s Po!er %ales 0ivision.
8e #nd no reason to disturb these #ndin,s. 8ell=established is the principle that
#ndin,s of ad*inistrative a,encies !hich have acBuired e&pertise because their
?urisdiction is con#ned to speci#c *atters are ,enerall- accorded not onl- respect but
even #nalit-. Cudicial revie! b- this Court on labor cases does not ,o so far as to
evaluate the suf#cienc- of the evidence upon !hich the proper labor of#cer or of#ce
based his or its deter*ination but is li*ited to issues of ?urisdiction or ,rave abuse of
discretion (%pecial Events and Central %hippin, "f#ce 8or/ers 4nion v. %an Mi,uel
Corporation, G.R. Nos. =A1PP@=PQ, Ma- ;P,123;,1@@ %CRA AAM).
$his Court has held ti*e and a,ain, in a nu*ber of decisions, that not!ithstandin, the
e&istence of a valid cause for dis*issal, such as breach of trust b- an e*plo-ee,
nevertheless, dis*issal should not be i*posed, as it is too severe a penalt- if the latter
has been e*plo-ed for a considerable len,th of ti*e in the service of his e*plo-er.
('to,on=%u-oc Mines, 'nc. v. NRC, et al., G.R. No. = AF@3P, %epte*ber ;P,123@,11M
%CRA A@;: Meracap v. 'nternational Cera*ics Manufacturin, Co., 'nc., et al., G.R. Nos.
=F3@;A=;Q, Cul- ;P,12M2, 2@ %CRA F1@: %a*pan, v. 'ncion,, G.R. No. AP22@, Cune
12,123A,1;M %CRA AQ: 0e eon v. NRC, G.R. No. =A@PAQ, "ctober ;P,123P, 1PP %CRA
Q21: Philippine Airlines, 'nc. v. PAEA, G.R. No. =@FQ@Q, Cune @3, 12MF, AM %CRA
F32).
'n a si*ilar case, this Court ruledH
As repeatedl- been held b- this Court, an e*plo-er cannot le,all- be
co*pelled to continue !ith the e*plo-*ent of a person !ho ad*ittedl-
!as ,uilt- of breach of trust to!ards his e*plo-er and !hose continuance
in the service of the latter is patentl- ini*ical to its interest. $he la! in
protectin, the ri,hts of the laborers, authorized neither oppression nor
self= destruction of the e*plo-er.
6o!ever, ta/in, into account private respondent>s >t!ent-=three (@;)
-ears of service !hich undisputedl- is unble*ished b- an- previous
dero,ator- record> as found b- the respondent Co**ission itself, and
since he has been under preventive suspension durin, the pendenc- of
this case, in the absence of a sho!in, that the continued e*plo-*ent of
private respondent !ould result in petitioner>s oppression or self=
destruction, 8e are of the considered vie! that his dis*issal is a drastic
punish*ent. ... .
&&& &&& &&&
$he ends of social and co*passionate ?ustice !ould therefore be served if
private respondent is reinstated but !ithout bac/!a,es in vie! of
petitioner>s obvious ,ood faith. ('to,on= %u-oc Mines, 'nc. v. NRC, et al.,
11 M %CRA A@3)
.urther, in carr-in, out and interpretin, the abor Code>s provisions and its
i*ple*entin, re,ulations, the !or/in,*an>s !elfare should be the pri*ordial and
para*ount consideration. $his /ind of interpretation ,ives *eanin, and substance to
the liberal and co*passionate spirit of the la! as provided for in Article F of the Ne!
abor Code !hich states that +all doubts in the i*ple*entation and interpretation of
the provisions of the abor Code includin, its i*ple*entin, rules and re,ulations shall
be resolved in favor of labor+ (Abella v. NRC, G.R. No. M131@, Cul- ;P,123M,1A@ %CRA
1FP).
'n vie! of the fore,oin,, reinstate*ent of respondent %i,no is proper in the instant
case, but !ithout the a!ard of bac/!a,es, considerin, the ,ood faith of the e*plo-er
in dis*issin, the respondent.
ACC"R0'NG7, pre*ises considered, the petition is hereb- 0'%M'%%E0 and the
assailed decision of the National abor Relations Co**ission dated March 1@, 123M is
A..'RME0. $he te*porar- restrainin, order issued on Au,ust ;, 123M is lifted.
%" "R0ERE0.
Narvasa, Cruz, Ganca-co and GriNo=ABuino, CC., concur.