[G.R. NO. 170734 : May 14, 2008] before the National Conciliation and Mediation Board (NCMB).

The
parties submitted the case for voluntary arbitration.
ARCO METAL PRODUCTS, CO., INC., and MRS. SALVADOR
UY, Petitioners, v. SAMAHAN NG MGA MANGGAGAWA SA The voluntary arbitrator, Apron M. Mangabat, ruled in favor of
ARCO METAL-NAFLU (SAMARM-NAFLU), Respondent. petitioner and found that the giving of the contested benefits in
full, irrespective of the actual service rendered within one year has
DECISION not ripened into a practice. He noted the affidavit of Joselito
Baingan, manufacturing group head of petitioner, which states that
TINGA, J.: the giving in full of the benefit was a mere error. He also
interpreted the phrase "for each year of service" found in the
pertinent CBA provisions to mean that an employee must have
This treats of the Petition for Review1 of the Resolution2 and
rendered one year of service in order to be entitled to the full
Decision3 of the Court of Appeals dated 9 December 2005 and 29
benefits provided in the CBA.5
September 2005, respectively in CA-G.R. SP No. 85089 entitled

Unsatisfied, respondent filed a Petition for Review6 under Rule 43

Samahan ng mga Manggagawa sa Arco Metal-NAFLU (SAMARM-
before the Court of Appeals, imputing serious error to Mangabat's
NAFLU) v. Arco Metal Products Co., Inc. and/or Mr. Salvador
conclusion. The Court of Appeals ruled that the CBA did not intend
Uy/Accredited Voluntary Arbitrator Apron M. Mangabat,4 which
to foreclose the application of prorated payments of leave benefits
ruled that the 13th month pay, vacation leave and sick leave
to covered employees. The appellate court found that petitioner,
conversion to cash shall be paid in full to the employees of
however, had an existing voluntary practice of paying the aforesaid
petitioner regardless of the actual service they rendered within a
benefits in full to its employees, thereby rejecting the claim that
year.
petitioner erred in paying full benefits to its seven employees. The
appellate court noted that aside from the affidavit of petitioner's
Petitioner is a company engaged in the manufacture of metal officer, it has not presented any evidence in support of its position
products, whereas respondent is the labor union of petitioner's that it has no voluntary practice of granting the contested benefits
rank and file employees. Sometime in December 2003, petitioner in full and without regard to the service actually rendered within
paid the 13th month pay, bonus, and leave encashment of three the year. It also questioned why it took petitioner eleven (11)
union members in amounts proportional to the service they years before it was able to discover the alleged error. The
actually rendered in a year, which is less than a full twelve (12) dispositive portion of the court's decision reads:
months. The employees were:
WHEREFORE, premises considered, the instant petition is
1. Rante Lamadrid Sickness 27 August 2003 to 27 February 2004 hereby GRANTED and the Decision of Accredited Voluntary Arbiter
2. Alberto Gamban Suspension 10 June 2003 to 1 July 2003 Apron M. Mangabat in NCMB-NCR Case No. PM-12-345-03, dated
June 18, 2004 is hereby AFFIRMED WITH MODIFICATION in
3. Rodelio Collantes Sickness August 2003 to February 2004 that the 13th month pay, bonus, vacation leave and sick leave
conversions to cash shall be paid to the employees in full,
Respondent protested the prorated scheme, claiming that on irrespective of the actual service rendered within a year. 7
several occasions petitioner did not prorate the payment of the
same benefits to seven (7) employees who had not served for the Petitioner moved for the reconsideration of the decision but its
full 12 months. The payments were made in 1992, 1993, 1994, motion was denied, hence this petition.
1996, 1999, 2003, and 2004. According to respondent, the
prorated payment violates the rule against diminution of benefits Petitioner submits that the Court of Appeals erred when it ruled
under Article 100 of the Labor Code. Thus, they filed a complaint that the grant of 13th month pay, bonus, and leave encashment in
full regardless of actual service rendered constitutes voluntary Section 2. Sick Leave will only be granted to actual sickness duly
employer practice and, consequently, the prorated payment of the certified by the Company physician or by a licensed physician.
said benefits does not constitute diminution of benefits under
Article 100 of the Labor Code.8 Section 3. All commutable earned leaves will be paid
proportionately upon retirement or separation.
The petition ultimately fails.
ARTICLE XVI - EMERGENCY LEAVE, ETC.
First, we determine whether the intent of the CBA provisions is to
grant full benefits regardless of service actually rendered by an Section 1. The Company shall grant six (6) days emergency leave
employee to the company. According to petitioner, there is a one- to employees covered by this agreement and if unused shall be
year cutoff in the entitlement to the benefits provided in the CBA converted into cash and become due and payable on the
which is evident from the wording of its pertinent provisions as well 1st Saturday of December each year.
as of the existing law.
Section 2. Employees/workers covered by this agreement who
We agree with petitioner on the first issue. The applicable CBA have rendered at least one (1) year of service shall be entitled to
provisions read: seven (7) days of Paternity Leave with pay in case the married
employee's legitimate spouse gave birth. Said benefit shall be non-
ARTICLE XIV-VACATION LEAVE cumulative and non-commutative and shall be deemed in
compliance with the law on the same.
Section 1. Employees/workers covered by this agreement who
have rendered at least one (1) year of service shall be entitled to Section 3. Maternity leaves for married female employees shall be
sixteen (16) days vacation leave with pay for each year of service. in accordance with the SSS Law plus a cash grant of P1,500.00 per
Unused leaves shall not be cumulative but shall be converted into month.
its cash equivalent and shall become due and payable every
1st Saturday of December of each year. xxx

However, if the 1st Saturday of December falls in December 1, ARTICLE XVIII - 13TH MONTH PAY & BONUS
November 30 (Friday) being a holiday, the management will give
the cash conversion of leaves in November 29. Section 1. The Company shall grant 13th Month Pay to all
employees covered by this agreement. The basis of computing
Section 2. In case of resignation or retirement of an employee, his such pay shall be the basic salary per day of the employee
vacation leave shall be paid proportionately to his days of service multiplied by 30 and shall become due and payable every
rendered during the year. 1st Saturday of December.

ARTICLE XV-SICK LEAVE Section 2. The Company shall grant a bonus to all employees as
practiced which shall be distributed on the 2nd Saturday of
Section 1. Employees/workers covered by this agreement who December.
have rendered at least one (1) year of service shall be entitled to
sixteen (16) days of sick leave with pay for each year of service. Section 3. That the Company further grants the amount of Two
Unused sick leave shall not be cumulative but shall be converted Thousand Five Hundred Pesos (P2,500.00) as signing bonus plus a
into its cash equivalent and shall become due and payable every free CBA Booklet.9 (Underscoring ours)
1st Saturday of December of each year.
There is no doubt that in order to be entitled to the full 1992, 1993, 1994, 1999, 2002 and 2003. According to petitioner,
monetization of sixteen (16) days of vacation and sick leave, one it was only in 2003 that the accounting department discovered the
must have rendered at least one year of service. The clear wording error "when there were already three (3) employees involved with
of the provisions does not allow any other interpretation. Anent the prolonged absences and the error was corrected by implementing
13th month pay and bonus, we agree with the findings of Mangabat the pro-rata payment of benefits pursuant to law and their existing
that the CBA provisions did not give any meaning different from CBA."12 It adds that the seven earlier cases of full payment of
that given by the law, thus it should be computed at 1/12 of the benefits went unnoticed considering the proportion of one
total compensation which an employee receives for the whole employee concerned (per year) vis à vis the 170 employees of the
calendar year. The bonus is also equivalent to the amount of the company. Petitioner describes the situation as a "clear oversight"
13th month pay given, or in proportion to the actual service which should not be taken against it.13 To further bolster its case,
rendered by an employee within the year. petitioner argues that for a grant of a benefit to be considered a
practice, it should have been practiced over a long period of time
On the second issue, however, petitioner founders. and must be shown to be consistent, deliberate and intentional,
which is not what happened in this case. Petitioner tries to make a
As a general rule, in petitions for review under Rule 45, the Court, case out of the fact that the CBA has not been modified to
not being a trier of facts, does not normally embark on a re- incorporate the giving of full benefits regardless of the length of
examination of the evidence presented by the contending parties service, proof that the grant has not ripened into company
during the trial of the case considering that the findings of facts of practice.
the Court of Appeals are conclusive and binding on the Court. 10 The
rule, however, admits of several exceptions, one of which is when We disagree.
the findings of the Court of Appeals are contrary to that of the
lower tribunals. Such is the case here, as the factual conclusions of Any benefit and supplement being enjoyed by employees cannot be
the Court of Appeals differ from that of the voluntary arbitrator. reduced, diminished, discontinued or eliminated by the
employer.14 The principle of non-diminution of benefits is founded
Petitioner granted, in several instances, full benefits to employees on the Constitutional mandate to "protect the rights of workers and
who have not served a full year, thus: promote their welfare,"15 and "to afford labor full
protection."16 Said mandate in turn is the basis of Article 4 of the
Labor Code which states that "all doubts in the implementation and
Name Reason Duration
interpretation of this Code, including its implementing rules and
1. Percival Bernas Sickness July 1992 to November 1992 regulations shall be rendered in favor of labor." Jurisprudence is
2. Cezar Montero Sickness 21 Dec. 1992 to February 1993 replete with cases which recognize the right of employees to
benefits which were voluntarily given by the employer and which
3. Wilson Sayod Sickness May 1994 to July 1994 ripened into company practice. Thus in Davao Fruits Corporation v.
4. Nomer Becina Suspension 1 Sept. 1996 to 5 Oct. 1996 Associated Labor Unions, et al.17 where an employer had freely and
continuously included in the computation of the 13 th month pay
5. Ronnie Licuan Sickness 8 Nov. 1999 to 9 Dec. 1999 those items that were expressly excluded by the law, we held that
6. Guilbert Villaruel Sickness 23 Aug. 2002 to 4 Feb. 2003 the act which was favorable to the employees though not
conforming to law had thus ripened into a practice and could not
7. Melandro Moque Sickness 29 Aug. 2003 to 30 Sept. 200311
be withdrawn, reduced, diminished, discontinued or eliminated.
In Sevilla Trading Company v. Semana,18 we ruled that the
Petitioner claims that its full payment of benefits regardless of the employer's act of including non-basic benefits in the computation
length of service to the company does not constitute voluntary of the 13th month pay was a voluntary act and had ripened into a
employer practice. It points out that the payments had been company practice which cannot be peremptorily withdrawn.
erroneously made and they occurred in isolated cases in the years Meanwhile in Davao Integrated Port Stevedoring Services v.
Abarquez,19 the Court ordered the payment of the cash equivalent Indeed, if petitioner wants to prove that it merely erred in giving
of the unenjoyed sick leave benefits to its intermittent workers full benefits, it could have easily presented other proofs, such as
after finding that said workers had received these benefits for the names of other employees who did not fully serve for one year
almost four years until the grant was stopped due to a different and thus were given prorated benefits. Experientially, a perfect
interpretation of the CBA provisions. We held that the employer attendance in the workplace is always the goal but it is seldom
cannot unilaterally withdraw the existing privilege of commutation achieved. There must have been other employees who had
or conversion to cash given to said workers, and as also noted that reported for work less than a full year and who, as a consequence
the employer had in fact granted and paid said cash equivalent of received only prorated benefits. This could have easily bolstered
the unenjoyed portion of the sick leave benefits to some petitioner's theory of mistake/error, but sadly, no evidence to that
intermittent workers. effect was presented.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner IN VIEW HEREOF, the petition is DENIED. The Decision of the
had adopted a policy of freely, voluntarily and consistently granting Court of Appeals in CA-G.R. SP No. 85089 dated 29 September
full benefits to its employees regardless of the length of service 2005 is and its Resolution dated 9 December 2005 are
rendered. True, there were only a total of seven employees who hereby AFFIRMED.
benefited from such a practice, but it was an established practice
nonetheless. Jurisprudence has not laid down any rule specifying a SO ORDERED.
minimum number of years within which a company practice must
be exercised in order to constitute voluntary company
practice.20 Thus, it can be six (6) years,21 three (3) years,22 or even
as short as two (2) years.23 Petitioner cannot shirk away from its
responsibility by merely claiming that it was a mistake or an error,
supported only by an affidavit of its manufacturing group head
portions of which read:

5. 13th month pay, bonus, and cash conversion of unused/earned

vacation leave, sick leave and emergency leave are computed and
paid in full to employees who rendered services to the company for
the entire year and proportionately to those employees who
rendered service to the company for a period less than one (1)
year or twelve (12) months in accordance with the CBA provision
relative thereto.

6. It was never the intention much less the policy of the

management to grant the aforesaid benefits to the employees in
full regardless of whether or not the employee has rendered
services to the company for the entire year, otherwise, it would be
unjust and inequitable not only to the company but to other
employees as well.24

In cases involving money claims of employees, the employer has

the burden of proving that the employees did receive the wages
and benefits and that the same were paid in accordance with law. 25
G.R. No. 163210 August 13, 2008 At about 3:40 PM of September 15, 2000, while we were at the
Lepanto Security Investigation office, we received a report that the
LEPANTO CONSOLIDATED MINING COMPANY, petitioner, LMD Asst. Resident Manager, Mr. Dwayne Chambers saw and
vs. surprised several unidentified miners at 8K Stope, 850 level
MORENO DUMAPIS, ELMO TUNDAGUI and FRANCIS committing Highgrading activities therein;
LIAGAO, respondents.
Consequently, all miners assigned to work therein including their
DECISION supervisor and SG Ceasarion Damoslog, an element of the Mine
Security Patrol posted therein as stationary guard were called to this
AUSTRIA-MARTINEZ, J.: office for interrogation regarding this effect;

In the course of the investigation, we eventually learned that the

Before the Court is a Petition for Review on Certiorari under Rule 45 of the
highgrading event really transpired somewhere at the roadway of 8K
Rules of Court assailing the November 7, 2003 Decision 1 and April 15, 2004
Stope, 850 level at about 2:00 o’clock PM of September 15, 2000.
Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 75860.
That the involved participants were all miners assigned to work at 7K
Stope, 8K Stope, 240 E, Cross Cut South level drive, all located at
The antecedents of the case are as follows: 850 mine level. Likewise, the detailed stationary guard assigned
thereat and some mine supervisors were also directly involved in this
Lepanto Consolidated Mining Corporation (petitioner), a domestic juridical activity;
entity engaged in mining, employed Moreno Dumapis and Elmo Tundagui as
lead miners; and Francis Liagao, as load, haul and dump (LHD) machine Security Guard Ceasarion Damoslog honestly confessed his direct
operator (respondents).3 All three were assigned at the 850 level, participation then claimed that he was allegedly convinced by Mr.
underground, Victoria Area in Lepanto, Mankayan, Benguet. This is a known Joel Gumatin, one of the miners assigned at Panel No.1-est-North,
"highgrade" area where most of the ores mined are considered of high grade 8K Stope, 850 level to cooperate with them to commit Highgrading.
content.4 He revealed his companions to be all the miners assigned at 8K
stope, namely, Joel Gumatin, Brent Suyam, Maximo Madao, Elmo
In the afternoon of September 15, 2000, at 2:00 p.m., Dwayne Chambers Tundagui and Daniel Fegsar. He also included those who were
(Chambers), one of its foreign consultants who was then acting as Assistant assigned to work at 240 E, XCS, namely: Thomas Garcia (immediate
Resident Manager of the Mine, went underground at the 850 level to conduct supervisor), John Kitoyan, Moreno Dumapis, and Marolito Cativo. He
a routinary inspection of the workers and the working conditions therein. enumerated also messrs. Benedict Arocod, Samson Damian, and
When he went to the various stopes of the said level, he was surprised to Dionisio Bandoc, 7K Stope, 850 level assigned miners and shiftboss,
see that nobody was there. However, when he went to the 8k stope, he respectively;
noticed a group of workers sitting, sorting, and washing ores believed to be
"highgrade." Realizing that "highgrading" 5 was being committed, Chambers Mr. Pablo Daguio, the shiftboss of 240 E, XCS, 850 level also
shouted. Upon hearing his angry voice, the workers scampered in different positively confirmed the Highgrading activity. He added that actually
directions of the stope.6 Chambers then reported the incident to the security he came upon the group and even dispersed them when he went
investigation office.7 therein prior to the arrival of Mr. Chambers;

After investigating, Security Investigators Paul Pespes, Jr. and Felimon Furthermore, we also learned from the confession of Mr. Maximo
Ringor (Security Investigators) executed a Joint Affidavit, which reads as Madao that its was messrs. Joel Gumatin and Brent Suyam who took
follows: their issued rock drilling machine then drilled holes and blasted the
same at the 8K Stope roadway with the assistance of Thomas
xxxx Garcia, John Kitoyan, Benedict Arocod, Samsom Damian, Daniel
Fegsar and Francisco Liagao. That SG Ceasarion Damoslog was
 present on the area standing and watching the group during the Petitioner filed a motion for reconsideration which was denied for lack of
incident; merit by the NLRC in its Resolution dated on November 22, 2002. 12

That we are executing this joint affidavit to establish the foregoing Petitioner then filed a petition for certiorari under Rule 65 of the Rules of
facts and to support any complaint that may be filed against Court with the CA assailing the aforementioned decision and resolution of the
respondents; NLRC. The CA affirmed the decision of the NLRC13 and denied petitioner’s
Motion for Reconsideration.
IN WITNESS WHEREOF, we have hereunto set our hands and affix
our signature this 28th day of September 2000, at Lepanto, Hence, herein petition on the following grounds:
Mankayan, Benguet.8
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE
(Emphasis supplied) AND REVERSIBLE ERROR IN AFFIRMING THE NATIONAL
LABOR RELATIONS COMMISSION’S DECISION DATED
On October 24, 2000, petitioner issued a resolution finding respondents and AUGUST 30, 2002 WHICH DECLARED AS ILLEGAL THE
their co-accused guilty of the offense of highgrading and dismissing them DISMISSAL FROM SERVICE OF HEREIN RESPONDENTS.14
from their employment.9
A. The Court of Appeal’s strict application of the hearsay rule
On November 14, 2000, respondents together with the nine other miners, under Section 36, Rule 130 of the Rules of Court to the present
filed a Complaint for illegal dismissal with the Labor Arbiter (LA), docketed as case is uncalled for.
NLRC Case No. 11-0607-00 against petitioner.10 On August 21, 2001, the LA
dismissed the complaint for lack of merit. B. In cases of dismissal for breach of trust and confidence,
proof beyond doubt is not required, it being sufficient that the
On September 22, 2001, the miners appealed the decision of the LA to the employer has reasonable ground to believe that the employees
National Labor Relations Commission (NLRC). On August 30, 2002, the are responsible for the misconduct which renders them
NLRC rendered a Decision, declaring the dismissal of herein respondents as unworthy of the trust and confidence demanded by their
illegal, but affirming the dismissal of the nine other complainant miners. The position.15
dispositive portion of the NLRC Decision insofar as respondents are
concerned, reads: The petition is devoid of merit.

WHEREFORE, premises considered, the DECISION dated August In finding the dismissal of respondents illegal, the CA upheld the NLRC in
21, 2001 is hereby MODIFIED declaring the dismissal of considering the Joint Affidavit of the Security Investigators (Joint Affidavit) as
complainants [herein respondents] Moreno Dumapis, Elmo Tundagui hearsay and therefore inadmissible, to wit:
and Francis Liagao illegal and ordering respondent to pay them
backwages in the total amount of four hundred eighty thousand one We subscribed to the conclusion of the NLRC that the Joint Affidavit
hundred eighty two pesos and 63/100 (P480, 182.63) and separation of Security Investigators Paul D. Pespes, Jr. and Felimon Ringor is
pay in the total amount of four hundred seventeen thousand two hearsay and thus, inadmissible. Their narration of factual events was
hundred thirty pesos and 32/100 (P417,230.32) as computed in the not based on their personal knowledge but on disclosures made by
body of the decision. Chambers and Daguio. Section 36, Rule 130 of the Rules of Court
defined the nature of hearsay:
xxxx
Witness can testify only to those facts which he knows of his
SO ORDERED.11 personal knowledge, that is, which are derived from his own
perception, except as otherwise provided in these rules. 16
Arguing for the admissibility of the Joint Affidavit, petitioner cites Article 221 of evidence are to be considered at all, while probative value refers to the
of the Labor Code, as amended, which provides: question of whether the admitted evidence proves an issue. 22 Thus, a
particular item of evidence may be admissible, but its evidentiary weight
Article 221. Technical rules not binding and prior resort to amicable depends on judicial evaluation within the guidelines provided by the rules of
settlement. In any proceeding before the Commission or any evidence.23 The distinction is clearly laid out in Skippers United Pacific, Inc.
Labor Arbiters, the rules of evidence prevailing in courts of law v. National Labor Relations Commission.24 In finding that the Report of the
or equity shall not be controlling and it is the spirit and intention of Chief Engineer did not constitute substantial evidence to warrant the
the Code that the Commission and its members and the Labor dismissal of Rosaroso, this Court ruled:
Arbiters shall use every and all reasonable means to ascertain the
facts in each case speedily and objectively and without regard to According to petitioner, the foregoing Report established that
the technicalities of law or procedure, all in the interest of due respondent was dismissed for just cause. The CA, the NLRC and the
process. x x x (Emphasis supplied) Labor Arbiter, however, refused to give credence to the Report. They
are one in ruling that the Report cannot be given any probative value
We agree with the petitioner. as it is uncorroborated by other evidence and that it is merely
hearsay, having come from a source, the Chief Engineer, who did
Administrative bodies like the NLRC are not bound by the technical niceties not have any personal knowledge of the events reported therein.
of law and procedure and the rules obtaining in courts of law. Indeed, the
Revised Rules of Court and prevailing jurisprudence may be given only xxxx
stringent application, i.e., by analogy or in a suppletory character and
effect.17 The CA upheld these findings, succinctly stating as follows:

In a number of cases,18 this Court has construed Article 221 of the Labor Verily, the report of Chief Engineer Retardo is utterly bereft of
Code as permitting the NLRC or the LA to decide a case on the basis of probative value. It is not verified by an oath and, therefore, lacks any
position papers and other documents submitted without necessarily resorting guarantee of trusthworthiness. It is furthermore, and this is crucial,
to technical rules of evidence as observed in the regular courts of justice. not sourced from the personal knowledge of Chief Engineer Retardo.
Rules of evidence are not strictly observed in proceedings before It is rather based on the perception of "ATTENDING SUPT.
administrative bodies like the NLRC.19 ENGINEERS CONSTANTLY OBSERVING ALL PERSONNELS
ABILITY AND ATTITUDE WITH REGARDS TO OUR TECHNICAL
In Bantolino v. Coca-Coca Bottlers Phils., Inc.20 the Court ruled that although CAPABILITY AND BEHAVIOURS WITH EMPHASY [sic] ON
the affiants had not been presented to affirm the contents of their affidavits DISCIPLINE" who " NOTICED 3/E ROSAROSO AS BEING SLACK
and be cross-examined, their affidavits may be given evidentiary value; the AND NOT CARING OF HIS JOB AND DUTIES x x x." Accordingly,
argument that such affidavits were hearsay was not persuasive. Likewise, the report is plain hearsay. It is not backed up by the affidavit of any
in Rase v. National Labor Relations Commission,21 this Court ruled that it of the "Supt." Engineers who purportedly had first-hand knowledge of
was not necessary for the affiants to appear and testify and be cross- private respondents supposed "lack of discipline," "irresponsibility"
examined by counsel for the adverse party. To require otherwise would be to and "lack of diligence" which caused him to lose his job. x x x
negate the rationale and purpose of the summary nature of the proceedings
mandated by the Rules and to make mandatory the application of the The Courts finds no reason to reverse the foregoing
technical rules of evidence. findings.25 (Emphasis supplied)

Thus, the CA and the NLRC erred in ruling that the Joint Affidavit is While it is true that administrative or quasi-judicial bodies like the NLRC are
inadmissible for being hearsay. The Joint Affidavit of the Security not bound by the technical rules of procedure in the adjudication of cases,
Investigators is admissible for what it is, an investigation report. this procedural rule should not be construed as a license to disregard certain
fundamental evidentiary rules. The evidence presented must at least have a
However, the admissibility of evidence should not be confused with its modicum of admissibility for it to have probative value.26 Not only must there
probative value. Admissibility refers to the question of whether certain pieces be some evidence to support a finding or conclusion, but the evidence must
be substantial. Substantial evidence is more than a mere scintilla.27 It means 09. Ques - Did Gumatin specifically informed [sic] you his problem?
such relevant evidence as a reasonable mind might accept as adequate to
support a conclusion.28 Thus, even though technical rules of evidence are not Ans - I did not asked him honestly but he only insisted that he
strictly complied with before the LA and the NLRC, their decision must be needed an amount of money badly as I earlier said.
based on evidence that must, at the very least, be substantial.29
10. Ques - So just after telling his purpose did he started [sic] the
Pursuant to the aforementioned doctrines, we now look into the probative highgrading activity?
weight of the Joint Affidavit.
Ans - No, the highgrading scheme started at past 1300 Hrs.
An examination of the Joint Affidavit reveals that the facts alleged therein by
the Security Investigators are not of their own personal knowledge. They 11. Ques - How did it started [sic]?
simply referred to the facts allegedly relayed to them by Chambers,
Damoslog, Daguio, and Madao. Thus, there is a need to individually
scrutinize the statements and testimonies of the four sources of the Joint Ans - They started after they all finished their respective drilling
Affidavit in order to determine the latter’s probative weight. assignment. That while I was near the panel 2-West located at the
inner portion of 8K Stope, I observed the LHD unit coming from the
roadway near the 8K Eating station which was previously parked
The Joint Affidavit states that, "Mr. Dwayne Chambers saw and surprised thereat proceeded to the roadway of panel 1-West then started
several unidentified miners x x x."30 Chambers simply narrated to the cleaning and scraping said roadway. That after cleaning he parked it
Security Investigators what he saw but did not indicate herein respondents. at the inner portion of the roadway. Then afterwhich one among the
miner who was not assigned therein and I failed to identify his name
Also stated in the Joint Affidavit is the alleged confession of Damoslog shove two shovels on the roadway recently cleaned by the LHD then
wherein he named respondents Tundagui and Dumapis as his companions handed it to us with another man whom I don’t know his name but
in the act of highgrading .31 could recognize and identify him if I will meet him again then we
washed the same in the inner area of panel 2-West which is
Records show that Damoslog submitted two sworn statements. In his first adjacent. That after washing and sorting the same, we placed it atop
statement,32 Damoslog claimed that he was unaware of the act of highrading, of an spread cartoon [sic] sheet. That while we were busy washing
and denied any involvement therein. However, in his second and sorting, Mr. Gumatin also was fixing and spreading the airhose
statement,33 Damoslog claimed to have personally witnessed the act of for rockdrilling machine. That few moments thereafter, I heard the
highgrading and named the miners involved to wit: running engine of the drilling machine but I can not identify the
operator as my line of view was obstructed by the curbed angle of
07. Ques - Could you narrate briefly how it transpired then? the panel where we are washing the ores. That afterwhich I heard
somebody that they are now going to blast the drilled holes but we
remained in our place continuing washing the stones. That after the
Ans - On the first hour of this specific dated and shift at about
blast Mr. Garcia and one other companion whom I failed to identify
0800hrs, while we were at the 8K stope, 850 level, Mr. Joel
Gumatin approached me that he could not procure some needed due to foggy condition caused by the explosive blasting then handed
us the additional newly unearth ores for washing. That while were
amount of money and if possible we will commit highgrading for that
still busy washing, Gumatin approached us then told us that he will
effect to settle his problem. That because I pity him, I just answered
collect what was already washed and sorted and start to process the
that if they could manage to do it then they could do it.
same. That Gumatin took the items then started to pound the ores
atop of an LHD unit parked near the entrance of panel 2-East which
08. Ques - Who was the companion of Mr. Gumatin when he was not used during the shift. That after that, I stood up then
approached you? subsequently proceeded to panel 2-West then observed
messrs. Maximo Madao, Benedict Arocod, Brent Suyam, Daniel
Ans - He was alone. Fegsar, Thomas Garcia, Mariolito Cativo, John Kitoyna and
Samson Damian who acted as the look out at the junction of 240 E,
 XCS and 8K Stope. The enumerated miners except Damian were in Ans - Yes, that is true I saw Suyam and Gumatin transferred [sic]
squatting position in scattered adjacent places busy sorting ores. their assigned drilling machine at the said roadway and drilled the
Moments later Shift boss Dionisio Bandoc arrived then went to the area with the company of Garcia, Kitoyan, Arocod, Damian, Fegsar
place of Gumatin then told us that he will get a portion of the already and Liagao.39 (Emphasis supplied)
proceeded ores for the operator to handcarry so that he will not need
to come to 8K Stope, 850 level then after taking some of the loot he Nonetheless, the second sworn statement of Madao is not sufficient to find
proceeded out simultaneously uttering that he will check the look out Liagao guilty of highgrading. In a Joint Affidavit40 which he executed with
at the outer area of the mainline posted away from the 7K respondent Tundagui, Madao made the following declarations:
Stope.34 (Emphasis supplied)
When I, MAXIMO MADAO reported for work on September 16, 2000,
Evidently, Damoslog does not name respondents Dumapis and Tundagui as I am being required to appear at the security investigation office.
among the miners involved in the act of highgrading; neither does he mention After quitting time I went to the security office and was surprised to
respondent Liagao. learn that my name is among those listed persons who were seen by
Mr. Chambers committing acts of highgrading on September 15,
The Joint Affidavit also states that Daguio positively confirmed the act of 2000. However, when I quit work on September 20, 2000 I was again
highgrading. However, in his sworn statement, 35 Daguio claims that he did called through telephone to appear at the security office. Investigator
not recognize nor did he identify any of the miners, to wit: Felimon Ringor told me that I will give another statement and
convinced to tell me all the names of the persons assigned thereat
11. Ques - In your own honest observation, what could be the with the promise that I will report for work. With my limited education
estimate [sic] number of this group of miners doing highgrading having not finished grade 1, I was made to give my statement on
activities? questions and answers which are self-incriminating and knowingly
mentioned names of persons who are innocent. Worst, when I got
my copy and the contents were fully explained to me by our legal
Ans - I don’t know but obviously they were several as manifested by
counsel I was surprised that it was duly notarized when in fact and in
their number of cap lamplights. I also speculated that some of them
truth after I gave my statement I did not appear before Atty. Nina Fe
were hidden at the curved inner access of the roadway enroute to
Lazaga-Raffols for swearing. With this circumstances, I hereby
the inner area.
RETRACT my statement dated September 20, 2000 for being self
incriminatory unassisted by my counsel or union representative and
12. Ques - Did you recognize nor [sic] identify any of them? hereby ADAPTS [sic] and RETAINS my sworn statement dated
September 16, 2000.41 (Emphasis supplied)
Ans - Honestly, no.36 (Emphasis supplied)
In labor cases, in which technical rules of procedure are not to be strictly
Lastly, the Joint Affidavit also points to the confession of Madao wherein he applied if the result would be detrimental to the workingman, an affidavit of
particularly named respondent Liagao as one of the miners involved in the desistance gains added importance in the absence of any evidence on
act of highgrading. record explicitly showing that the dismissed employee committed the act
which caused the dismissal.42 Accordingly, the Court cannot turn a blind eye
Madao submitted two sworn statements. In his first sworn statement 37 dated and disregard Madao’s recantation, as it serves to cast doubt as to the guilt
September 16, 2000, Madao claimed his innocence. He did not incriminate of respondent Liagao.
any of the respondents. However, in his second sworn statement 38 dated
September 20, 2000, Madao claimed to have knowledge of the act of Based on the foregoing, the Court is convinced that the Joint Affidavit, being
highgrading and specifically named respondent Liagao as one of the miners sourced from Chambers, Damoslog, Daguio and Madao, has no probative
involved, to wit: value to support evidence to warrant the dismissal of the respondents.
Chambers and Daguio did not identify the miners involved in the act of
09. Ques - Do I understand that Mr. Suyam has companions and had highgrading. In addition, Damoslog’s first and second sworn statements did
drilled first the flooring of that roadway before blasting it? not implicate respondents, and Madao recanted his statement implicating
respondent Liagao. As earlier discussed, the sworn statements and joint
affidavits of the sources do not corroborate but actually cast doubt as to the present case. Under the doctrine of conclusiveness of judgment, which is
veracity of the statements in the Joint Affidavit. also known as "reclusion of issues" or "collateral estoppel," issues actually
and directly resolved in a former suit cannot again be raised in any future
The second ground is not plausible. case between the same parties involving a different cause of
action.51 Applied to the present case, the "former suit" refers to CA-G.R. SP
No. 75457 wherein the CA ordered separation pay instead of reinstatement
While the Court agrees that the job of the respondents, as miners, although
and G.R. No. 162554 wherein this Court denied the petition for review filed
generally described as menial, is nevertheless of such nature as to require a
by respondents together with other dismissed workers. The "future case" is
substantial amount of trust and confidence on the part of petitioner, 43 the rule
the present case in which the petitioner is Lepanto Consolidated Mining
that proof beyond reasonable doubt is not required to terminate an employee
Company assailing the validity of the CA Decision declaring the dismissal of
on the charge of loss of confidence, and that it is sufficient that there be
respondents to be illegal. Reinstatement was not an issue raised by herein
some basis for such loss of confidence, is not absolute. 44
petitioner. Respondents cannot now be allowed to raise the same in the
petition filed by petitioner, for that would circumvent the finality of judgment
The right of an employer to dismiss an employee on the ground that it has as to separation pay insofar as respondents are concerned.
lost its trust and confidence in him must not be exercised arbitrarily and
without just cause.45 In order that loss of trust and confidence may be
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals
considered as a valid ground for an employee’s dismissal, it must be
dated November 7, 2003 and its Resolution dated April 15, 2004 in CA-G.R.
substantial and not arbitrary, and must be founded on clearly established
SP No. 75860 are AFFIRMED.
facts sufficient to warrant the employee’s separation from work. 46

In the present case, the Court reiterates that the evidence is not Double costs against petitioner.
substantial to hold respondents guilty of highgrading so as to warrant the
dismissal of respondents. SO ORDERED.

Moreover, it is a well-settled doctrine that if doubts exist between the

evidence presented by the employer and the employee, the scales of justice
must be tilted in favor of the latter. It is a time-honored rule that in
controversies between a laborer and his master, doubts reasonably arising
from the evidence, or in the interpretation of agreements and writing, should
be resolved in the former’s favor. The policy is to extend the doctrine to a
greater number of employees who can avail themselves of the benefits under
the law, which is in consonance with the avowed policy of the State to give
maximum aid and protection to labor.47

Lastly, respondents’ prayer in their Comment48 and Memorandum,49 that the

CA Decision be modified by ordering their reinstatement to their former
positions without loss of seniority rights and with payment of full backwages
from their alleged dismissal up to date of reinstatement, deserves scant
consideration. Respondents are estopped from claiming their right to
reinstatement. Records show that respondents along with their co-accused,
filed an appeal with the CA docketed as CA-G.R. SP No. 75457 questioning
the decision of the NLRC. The said appeal was denied by the CA. The case
was then elevated to this Court through a petition for review, entitled Thomas
Garcia v. Court of Appeals, docketed as G.R. No. 162554. However, the
same was denied with finality for having been filed out of time.50 In effect, it
serves to estop the respondents from praying for their reinstatement in the
G.R. No. 78409 September 14, 1989 the employment contract by reducing his salary of US$800.00 per month to
US$560.00, causing him to request for his repatriation to the Philippines.
NORBERTO SORIANO, petitioner, Although repatriated, he claims that he failed to receive payment for the
vs. following:
OFFSHORE SHIPPING AND MANNING CORPORATION, KNUT
KNUTSEN O.A.S., and NATIONAL LABOR RELATIONS COMMISSION 1. Salary for November which is equivalent to US$800.00;
(Second Division), respondents.
2. Leave pay equivalent to his salary for 16.5 days in the
R. C. Carrera Law Firm for petitioner. sum of US$440.00;

Elmer V. Pormento for private respondents. 3. Salary differentials which is equivalent to US$240.00 a
month for four (4) months and one (1) week in the total sum
of US$1,020,00;

FERNAN, C.J.: 4. Fixed overtime pay equivalent to US$240.00 a month for

four (4) months and one (1) week in the sum of
US$1,020.00;
This is a petition for certiorari seeking to annul and set aside the decision of
public respondent National Labor Relations Commission affirming the
decision of the Philippine Overseas Employment Administration in POEA 5. Overtime pay for 14 Sundays equivalent to US$484.99;
Case No. (M)85-12-0953 entitled "Norberto Soriano v. Offshore Shipping and
Manning Corporation and Knut Knutsen O.A.S.", which denied petitioner's 6. Repatriation cost of US$945.46;
claim for salary differential and overtime pay and limited the reimbursement
of his cash bond to P15,000.00 instead of P20,000.00. 7. Petitioner's cash bond of P20,000.00. 1

In search for better opportunities and higher income, petitioner Norberto In resolving aforesaid case, the Officer-in-Charge of the Philippine Overseas
Soriano, a licensed Second Marine Engineer, sought employment and was Employment Administration or POEA found that petitioner-complainant's total
hired by private respondent Knut Knutsen O.A.S. through its authorized monthly emolument is US$800.00 inclusive of fixed overtime as shown and
shipping agent in the Philippines, Offshore Shipping and Manning proved in the Wage Scale submitted to the Accreditation Department of its
Corporation. As evidenced by the Crew Agreement, petitioner was hired to Office which would therefore not entitle petitioner to any salary differential;
work as Third Marine Engineer on board Knut Provider" with a salary of that the version of complainant that there was in effect contract substitution
US$800.00 a month on a conduction basis for a period of fifteen (15) days. has no grain of truth because although the Employment Contract seems to
He admitted that the term of the contract was extended to six (6) months by have corrections on it, said corrections or alterations are in conformity with
mutual agreement on the promise of the employer to the petitioner that he the Wage Scale duly approved by the POEA; that the withholding of a certain
will be promoted to Second Engineer. Thus, while it appears that petitioner amount due petitioner was justified to answer for his repatriation expenses
joined the aforesaid vessel on July 23, 1985 he signed off on November 27, which repatriation was found to have been requested by petitioner himself as
1985 due to the alleged failure of private respondent-employer to fulfill its shown in the entry in his Seaman's Book; and that petitioner deposited a total
promise to promote petitioner to the position of Second Engineer and for the amount of P15,000.00 only instead of P20,000.00 cash bond.2
unilateral decision to reduce petitioner's basic salary from US$800.00 to
US$560.00. Petitioner was made to shoulder his return airfare to Manila. Accordingly, respondent POEA ruled as follows:

In the Philippines, petitioner filed with the Philippine Overseas Employment VIEWED IN THE LIGHT OF THE FOREGOING,
Administration (POEA for short), a complaint against private respondent for respondents are hereby ordered to pay complainant, jointly
payment of salary differential, overtime pay, unpaid salary for November, and severally within ten (10) days from receipt hereof the
1985 and refund of his return airfare and cash bond allegedly in the amount amount of P15,000.00 representing the reimbursement of
of P20,000.00 contending therein that private respondent unilaterally altered
 the cash bond deposited by complainant less US$285.83 (to As clearly explained by respondent NLRC, the correction was made only to
be converted to its peso equivalent at the time of actual specify the salary and the overtime pay to which petitioner is entitled under
payment). the contract. It was a mere breakdown of the total amount into US$560.00 as
basic wage and US$240.00 as overtime pay. Otherwise stated, with or
Further, attorney's fees equivalent to 10 % of the aforesaid without the amendments the total emolument that petitioner would receive
award is assessed against respondents. under the agreement as approved by the POEA is US$800.00 monthly with
wage differentials or overtime pay included. 10
All other claims are hereby dismissed for lack of merit.
Moreover, the presence of petitioner's signature after said items renders
improbable the possibility that petitioner could have misunderstood the
SO ORDERED. 3
amount of compensation he will be receiving under the contract. Nor has
petitioner advanced any explanation for statements contrary or inconsistent
Dissatisfied, both parties appealed the aforementioned decision of the POEA with what appears in the records. Thus, he claimed: [a] that private
to the National Labor Relations Commission. Complainant-petitioner's appeal respondent extended the duration of the employment contract
was dismissed for lack of merit while respondents' appeal was dismissed for indefinitely, 11 but admitted in his Reply that his employment contract was
having been filed out of time. extended for another six (6) months by agreement between private
respondent and himself: 12 [b] that when petitioner demanded for his overtime
Petitioner's motion for reconsideration was likewise denied. Hence this pay, respondents repatriated him 13 which again was discarded in his reply
recourse. stating that he himself requested for his voluntary repatriation because of the
bad faith and insincerity of private respondent; 14 [c] that he was required to
Petitioner submits that public respondent committed grave abuse of post a cash bond in the amount of P20,000.00 but it was found that he
discretion and/or acted without or in excess of jurisdiction by disregarding the deposited only the total amount of P15,000.00; [d] that his salary for
alteration of the employment contract made by private respondent. Petitioner November 1985 was not paid when in truth and in fact it was petitioner who
claims that the alteration by private respondent of his salary and overtime owes private respondent US$285.83 for cash advances 15 and on November
rate which is evidenced by the Crew Agreement and the exit pass constitutes 27, 1985 the final pay slip was executed and signed; 16 and [e] that he
a violation of Article 34 of the Labor Code of the Philippines. 6 finished his contract when on the contrary, despite proddings that he
continue working until the renewed contract has expired, he adamantly
On the other hand, public respondent through the Solicitor General, contends insisted on his termination.
that, as explained by the POEA: "Although the employment contract seems
to have corrections, it is in conformity with the Wage Scale submitted to said Verily, it is quite apparent that the whole conflict centers on the failure of
office. 7 respondent company to give the petitioner the desired promotion which
appears to be improbable at the moment because the M/V Knut Provider
Apparently, petitioner emphasizes the materiality of the alleged unilateral continues to be laid off at Limassol for lack of charterers. 17
alteration of the employment contract as this is proscribed by the Labor Code
while public respondent finds the same to be merely innocuous. We take a It is axiomatic that laws should be given a reasonable interpretation, not one
closer look at the effects of these alterations upon petitioner's right to which defeats the very purpose for which they were passed. This Court has
demand for his differential, overtime pay and refund of his return airfare to in many cases involving the construction of statutes always cautioned
Manila. against narrowly interpreting a statute as to defeat the purpose of the
legislator and stressed that it is of the essence of judicial duty to construe
A careful examination of the records shows that there is in fact no alteration statutes so as to avoid such a deplorable result (of injustice or absurdity) and
made in the Crew Agreement 8 or in the Exit Pass. 9 As the original data that therefore "a literal interpretation is to be rejected if it would be unjust or
appear, the figures US$800.00 fall under the column salary, while the word lead to absurd results."18
"inclusive" is indicated under the column overtime rate. With the supposed
alterations, the figures US$560.00 were handwritten above the figures There is no dispute that an alteration of the employment contract without the
US$800.00 while the figures US$240.00 were also written above the word approval of the Department of Labor is a serious violation of law.
"inclusive".
Specifically, the law provides: accorded not only respect but at times even finality if such findings are
supported by substantial evidence.21
Article 34 paragraph (i) of the Labor Code reads:
In fact since Madrigal v. Rafferty 22 great weight has been accorded to the
Prohibited Practices. — It shall be unlawful for any interpretation or construction of a statute by the government agency called
individual, entity, licensee, or holder of authority: upon to implement the same. 23

xxxx WHEREFORE, the instant petition is DENIED. The assailed decision of the
National Labor Relations Commission is AFFIRMED in toto.
(i) To substitute or alter employment contracts approved and
verified by the Department of Labor from the time of actual SO ORDERED.
signing thereof by the parties up to and including the period
of expiration of the same without the approval of the
Department of Labor.

In the case at bar, both the Labor Arbiter and the National Labor Relations
Commission correctly analyzed the questioned annotations as not
constituting an alteration of the original employment contract but only a
clarification thereof which by no stretch of the imagination can be considered
a violation of the above-quoted law. Under similar circumstances, this Court
ruled that as a general proposition, exceptions from the coverage of a statute
are strictly construed. But such construction nevertheless must be at all times
reasonable, sensible and fair. Hence, to rule out from the exemption
amendments set forth, although they did not materially change the terms and
conditions of the original letter of credit, was held to be unreasonable and
unjust, and not in accord with the declared purpose of the Margin Law. 19

The purpose of Article 34, paragraph 1 of the Labor Code is clearly the
protection of both parties. In the instant case, the alleged amendment served
to clarify what was agreed upon by the parties and approved by the
Department of Labor. To rule otherwise would go beyond the bounds of
reason and justice.

As recently laid down by this Court, the rule that there should be concern,
sympathy and solicitude for the rights and welfare of the working class, is
meet and proper. That in controversies between a laborer and his master,
doubts reasonably arising from the evidence or in the interpretation of
agreements and writings should be resolved in the former's favor, is not an
unreasonable or unfair rule. 20 But to disregard the employer's own rights and
interests solely on the basis of that concern and solicitude for labor is unjust
and unacceptable.

Finally, it is well-settled that factual findings of quasi-judicial agencies like the

National Labor Relations Commission which have acquired expertise
because their jurisdiction is confined to specific matters are generally
G.R. No. L-12582 January 28, 1961 Premised upon these allegations, the Guild prayed that it be certified as the
sole and exclusive bargaining agency for all musicians working in the
LVN PICTURES, INC., petitioner-appellant, aforementioned companies. In their respective answers, the latter denied that
vs. they have any musicians as employees, and alleged that the musical
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL numbers in the filing of the companies are furnished by independent
RELATIONS, respondents-appellees. contractors. The lower court, however, rejected this pretense and sustained
the theory of the Guild, with the result already adverted to. A reconsideration
of the order complained of having been denied by the Court en banc, LVN
x---------------------------------------------------------x
Pictures, inc., and Sampaguita Pictures, Inc., filed these petitions for review
for certiorari.
G.R. No. L-12598 January 28, 1961
Apart from impugning the conclusion of the lower court on the status of the
SAMPAGUITA PICTURES, INC., petitioner-appellant, Guild members as alleged employees of the film companies, the LVN
vs. Pictures, Inc., maintains that a petition for certification cannot be entertained
PHILIPPINE MUSICIANS Guild (FFW) and COURT OF INDUSTRIAL when the existence of employer-employee relationship between the parties is
RELATIONS, respondents-appellees. contested. However, this claim is neither borne out by any legal provision nor
supported by any authority. So long as, after due hearing, the parties are
Nicanor S. Sison for petitioner-appellant. found to bear said relationship, as in the case at bar, it is proper to pass upon
Jaime E. Ilagan for respondent-appellee Court of Agrarian Relations. the merits of the petition for certification.
Gerardo P. Cabo Chan for respondent-appellee Philippine Musicians Guild.
It is next urged that a certification is improper in the present case, because,
CONCEPCION, J.: "(a) the petition does not allege and no evidence was presented that the
alleged musicians-employees of the respondents constitute a proper
Petitioners herein, LVN Pictures, Inc. and Sampaguita Pictures, Inc. seek a bargaining unit, and (b) said alleged musicians-employees represent a
review by certiorari of an order of the Court of Industrial Relations in Case majority of the other numerous employees of the film companies constituting
No. 306-MC thereof, certifying the Philippine Musicians Guild (FFW), a proper bargaining unit under section 12 (a) of Republic Act No. 875."
petitioner therein and respondent herein, as the sole and exclusive
bargaining agency of all musicians working with said companies, as well as The absence of an express allegation that the members of the Guild
with the Premiere Productions, Inc., which has not appealed. The appeal of constitute a proper bargaining unit is fatal proceeding, for the same is not a
LVN Pictures, Inc., has been docketed as G.R. No. L-12582, whereas G.R. "litigation" in the sense in which this term is commonly understood, but a
No. L-12598 is the appeal of Sampaguita Pictures, Inc. Involving as they do mere investigation of a non-adversary, fact finding character, in which the
the same order, the two cases have been jointly heard in this Court, and will investigating agency plays the part of a disinterested investigator seeking
similarly be disposed of. merely to ascertain the desires of employees as to the matter of their
representation. In connection therewith, the court enjoys a wide discretion in
In its petition in the lower court, the Philippine Musicians Guild (FFW), determining the procedure necessary to insure the fair and free choice of
hereafter referred to as the Guild, averred that it is a duly registered bargaining representatives by employees. 1 Moreover, it is alleged in the
legitimate labor organization; that LVN Pictures, Inc., Sampaguita Pictures, petition that the Guild it a duly registered legitimate labor organization and
Inc., and Premiere Productions, Inc. are corporations, duly organized under that ninety-five (95%) percent of the musicians playing for all the musical
the Philippine laws, engaged in the making of motion pictures and in the recordings of the film companies involved in these cases are members of the
processing and distribution thereof; that said companies employ musicians Guild. Although, in its answer, the LVN Pictures, Inc. denied both allegations,
for the purpose of making music recordings for title music, background it appears that, at the hearing in the lower court it was merely the status of
music, musical numbers, finale music and other incidental music, without the musicians as its employees that the film companies really contested.
which a motion picture is incomplete; that ninety-five (95%) percent of all the Besides, the substantial difference between the work performed by said
musicians playing for the musical recordings of said companies are members musicians and that of other persons who participate in the production of a
of the Guild; and that the same has no knowledge of the existence of any film, and the peculiar circumstances under which the services of that former
other legitimate labor organization representing musicians in said companies. are engaged and rendered, suffice to show that they constitute a proper
bargaining unit. At this juncture, it should be noted that the action of the lower And even in the recording sessions and during the actual shooting of
court in deciding upon an appropriate unit for collective bargaining purposes a scene, the technicians, soundmen and other employees of the
is discretionary (N.L.R.B. v. May Dept. Store Co., 66 Sup. Ct. 468. 90 L. ed. company assist in the operation. Hence, the work of the musicians is
145) and that its judgment in this respect is entitled to almost complete an integral part of the entire motion picture since they not only
finality, unless its action is arbitrary or capricious (Marshall Field & Co. v. furnish the music but are also called upon to appear in the finished
N.L.R.B. [C.C.A. 19431, 135 F. 2d. 891), which is far from being so in the picture.
cases at bar.
The question to be determined next is what legal relationship exits
Again, the Guild seeks to be, and was, certified as the sole and exclusive between the musicians and the company in the light of the foregoing
bargaining agency for the musicians working in the aforesaid film companies. facts.
It does not intend to represent the other employees therein. Hence, it was not
necessary for the Guild to allege that its members constitute a majority of all We are thus called upon to apply R.A. Act 875. which is substantially
the employees of said film companies, including those who are not the same as and patterned after the Wagner Act substantially the
musicians. The real issue in these cases, is whether or not the musicians in same as a Act and the Taft-Hartley Law of the United States. Hence,
question are employees of the film companies. In this connection the lower reference to decisions of American Courts on these laws on the
court had the following to say: point-at-issue is called for.

As a normal and usual course of procedure employed by the Statutes are to be construed in the light of purposes achieved and
companies when a picture is to be made, the producer invariably the evils sought to be remedied. (U.S. vs. American Tracking
chooses, from the musical directors, one who will furnish the musical Association, 310 U.S. 534, 84 L. ed. 1345.) .
background for a film. A price is agreed upon verbally between the
producer and musical director for the cost of furnishing such musical In the case of National Labor Relations Board vs. Hearts Publication,
background. Thus, the musical director may compose his own music 322 U.S. 111, the United States Supreme Court said the Wagner Act
specially written for or adapted to the picture. He engages his own was designed to avert the 'substantial obstruction to the free flow of
men and pays the corresponding compensation of the musicians commerce which results from strikes and other forms of industrial
under him. unrest by eliminating the causes of the unrest. Strikes and industrial
unrest result from the refusal of employers' to bargain collectively
When the music is ready for recording, the musicians are summoned and the inability of workers to bargain successfully for improvement
through 'call slips' in the name of the film company (Exh 'D'), which in their working conditions. Hence, the purposes of the Act are to
show the name of the musician, his musical instrument, and the encourage collective bargaining and to remedy the workers' inability
date, time and place where he will be picked up by the truck of the to bargaining power, by protecting the exercise of full freedom of
film company. The film company provides the studio for the use of association and designation of representatives of their own choosing,
the musicians for that particular recording. The musicians are also for the purpose of negotiating the terms and conditions of their
provided transportation to and from the studio by the company. employment.'
Similarly, the company furnishes them meals at dinner time.
The mischief at which the Act is aimed and the remedies it offers are
During the recording sessions, the motion picture director, who is an not confined exclusively to 'employees' within the traditional legal
employee of the company, supervises the recording of the musicians distinctions, separating them from 'independent contractor'. Myriad
and tells what to do in every detail. He solely directs the performance forms of service relationship, with infinite and subtle variations in the
of the musicians before the camera as director, he supervises the term of employment, blanket the nation's economy. Some are within
performance of all the action, including the musicians who appear in this Act, others beyond its coverage. Large numbers will fall clearly
the scenes so that in the actual performance to be shown on the on one side or on the other, by whatever test may be applied.
screen, the musical director's intervention has stopped. Inequality of bargaining power in controversies of their wages, hours
and working conditions may characterize the status of one group as
of the other. The former, when acting alone may be as helpless in
dealing with the employer as dependent on his daily wage and as The primary consideration is whether the declared policy and
unable to resist arbitrary and unfair treatment as the latter.' purpose of the Act can be effectuated by securing for the individual
worker the rights and protection guaranteed by the Act. The matter is
To eliminate the causes of labor dispute and industrial strike, not conclusively determined by a contract which purports to establish
Congress thought it necessary to create a balance of forces in the status of the worker, not as an employee.
certain types of economic relationship. Congress recognized those
economic relationships cannot be fitted neatly into the containers The work of the musical director and musicians is a functional and
designated as 'employee' and 'employer'. Employers and employees integral part of the enterprise performed at the same studio
not in proximate relationship may be drawn into common substantially under the direction and control of the company.
controversies by economic forces and that the very dispute sought to
be avoided might involve 'employees' who are at times brought into In other words, to determine whether a person who performs work
an economic relationship with 'employers', who are not their for another is the latter's employee or an independent contractor, the
'employers'. In this light, the language of the Act's definition of National Labor Relations relies on 'the right to control' test. Under
'employee' or 'employer' should be determined broadly in doubtful this test an employer-employee relationship exist where the person
situations, by underlying economic facts rather than technically and for whom the services are performed reserves the right to control not
exclusively established legal classifications. (NLRB vs. Blount, 131 F only the end to be achieved, but also the manner and means to be
[2d] 585.) used in reaching the end. (United Insurance Company, 108, NLRB
No. 115.).
In other words, the scope of the term 'employee' must be understood
with reference to the purposes of the Act and the facts involved in Thus, in said similar case of Connor Lumber Company, the Supreme
the economic relationship. Where all the conditions of relation Court said:.
require protection, protection ought to be given .
'We find that the independent contractors and persons
By declaring a worker an employee of the person for whom he works working under them are employees' within the meaning of
and by recognizing and protecting his rights as such, we eliminate Section 2 (3) of its Act. However, we are of the opinion that
the cause of industrial unrest and consequently we promote the independent contractors have sufficient authority over
industrial peace, because we enable him to negotiate an agreement the persons working under their immediate supervision to
which will settle disputes regarding conditions of employment, warrant their exclusion from the unit. We shall include in the
through the process of collective bargaining. unit the employees working under the supervision of the
independent contractors, but exclude the contractors.'
The statutory definition of the word 'employee' is of wide scope. As
used in the Act, the term embraces 'any employee' that is all 'Notwithstanding that the employees are called independent
employees in the conventional as well in the legal sense expect contractors', the Board will hold them to be employees under the Act
those excluded by express provision. (Connor Lumber Co., 11 NLRB where the extent of the employer's control over them indicates that
776.). the relationship is in reality one of employment. (John Hancock
Insurance Co., 2375-D, 1940, Teller, Labor Dispute Collective
It is the purpose of the policy of Republic Act 875; (a) To eliminate Bargaining, Vol.).
the causes of industrial unrest by protecting the exercise of their right
to self-organization for the purpose of collective bargaining. (b) To The right of control of the film company over the musicians is shown
promote sound stable industrial peace and the advancement of the (1) by calling the musicians through 'call slips' in 'the name of the
general welfare, and the best interests of employers and employees company; (2) by arranging schedules in its studio for recording
by the settlement of issues respecting terms and conditions of sessions; (3) by furnishing transportation and meals to musicians;
employment through the process of collective bargaining between and (4) by supervising and directing in detail, through the motion
employers and representatives of their employees. picture director, the performance of the musicians before the
 camera, in order to suit the music they are playing to the picture "pakiao" system, the "parers" and "shellers" in the case were, not
which is being flashed on the screen. independent contractor, but employees of said company, because "the
requirement imposed on the 'parers' to the effect that 'the nuts are pared
Thus, in the application of Philippine statutes and pertinent decisions whole or that there is not much meat wasted,' in effect limits or controls the
of the United States Courts on the matter to the facts established in means or details by which said workers are to accomplish their services" —
this case, we cannot but conclude that to effectuate the policies of as in the cases before us.
the Act and by virtue of the 'right of control' test, the members of the
Philippine Musicians Guild are employees of the three film The nature of the relation between the parties was not settled in
companies and, therefore, entitled to right of collective bargaining the Viana case, the same having been remanded to the Workmen's
under Republic Act No. 875. Compensation Commission for further evidence.

In view of the fact that the three (3) film companies did not question The case of the Philippine Manufacturing Co. involved a contract between
the union's majority, the Philippine Musicians Guild is hereby said company and Eliano Garcia, who undertook to paint a tank of the
declared as the sole collective bargaining representative for all the former. Garcia, in turn engaged the services of Arcadio Geronimo, a laborer,
musicians employed by the film companies." who fell while painting the tank and died in consequence of the injuries thus
sustained by him. Inasmuch as the company was engaged in the
We are fully in agreement with the foregoing conclusion and the reasons manufacture of soap, vegetable lard, cooking oil and margarine, it was held
given in support thereof. Both are substantially in line with the spirit of our that the connection between its business and the painting aforementioned
decision in Maligaya Ship Watchmen Agency vs. Associated Watchmen and was purely casual; that Eliano Garcia was an independent contractor; that
Security Union, L-12214-17 (May 28, 1958). In fact, the contention of the Geronimo was not an employee of the company; and that the latter was not
employers in the Maligaya cases, to the effect that they had dealt with bound, therefore, to pay the compensation provided in the Workmen's
independent contractors, was stronger than that of the film companies in Compensation Act. Unlike the Philippine Manufacturing case, the relation
these cases. The third parties with whom the management and the workers between the business of herein petitioners-appellants and the work of the
contracted in the Maligaya cases were agencies registered with the Bureau musicians is not casual. As held in the order appealed from which, in this
of Commerce and duly licensed by the City of Manila to engage in the respect, is not contested by herein petitioners-appellants — "the work of the
business of supplying watchmen to steamship companies, with permits to musicians is an integral part of the entire motion picture." Indeed, one can
engage in said business issued by the City Mayor and the Collector of hardly find modern films without music therein. Hence, in the Caro case
Customs. In the cases at bar, the musical directors with whom the film (supra), the owner and operator of buildings for rent was held bound to pay
companies claim to have dealt with had nothing comparable to the business the indemnity prescribed in the Workmen's Compensation Act for the injury
standing of said watchmen agencies. In this respect, the status of said suffered by a carpenter while working as such in one of said buildings even
musical directors is analogous to that of the alleged independent contractor though his services had been allegedly engaged by a third party who had
in Caro vs. Rilloraza, L-9569 (September 30, 1957), with the particularity that directly contracted with said owner. In other words, the repair work had not
the Caro case involved the enforcement of the liability of an employer under merely a casual connection with the business of said owner. It was a
the Workmen's Compensation Act, whereas the cases before us are merely necessary incident thereof, just as music is in the production of motion
concerned with the right of the Guild to represent the musicians as a pictures.
collective bargaining unit. Hence, there is less reason to be legalistic and
technical in these cases, than in the Caro case. The case of Josefa Vda. de Cruz vs. The Manila Hotel Co., L-9110 (April 30,
1957) differs materially from the present cases. It involved the interpretation
Herein, petitioners-appellants cite, in support of their appeal, the cases of Republic Act No. 660, which amends the law creating and establishing the
of Sunripe Coconut Product Co., Inc vs. CIR (46 Off. Gaz., 5506, Government Service Insurance System. No labor law was sought to be
5509), Philippine Manufacturing Co. vs. Santos Vda. de Geronimo, L-6968 construed in that case. In act, the same was originally heard in the Court of
(November 29, 1954), Viana vs. Al-Lagadan, L-8967 (May 31, 1956), First Instance of Manila, the decision of which was, on appeal, affirmed by
and Josefa Vda. de Cruz vs. The Manila Hotel Co. (53 Off. Gaz., 8540). the Supreme Court. The meaning or scope if the term "employee," as used in
Instead of favoring the theory of said petitioners-appellants, the case of the Industrial Peace Act (Republic Act No. 875), was not touched therein.
the Sunripe Coconut Product Co., Inc. is authority for herein respondents- Moreover, the subject matter of said case was a contract between the
appellees. It was held that, although engaged as piece-workers, under the management of the Manila Hotel, on the one hand, and Tirso Cruz, on the
other, whereby the latter greed to furnish the former the services of his WHEREFORE, the order appealed from is hereby affirmed, with costs
orchestra, consisting of 15 musicians, including Tirso Cruz, "from 7:30 p.m. against petitioners herein. It is so ordered.
to closing time daily." In the language of this court in that case, "what pieces
the orchestra shall play, and how the music shall be arranged or directed, the Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Reyes, J.B.L.,
intervals and other details — such are left to the leader's discretion." Barrera, Paredes and Dizon, JJ., concur.
Gutierrez David, J., took no part.
This is not situation obtaining in the case at bar. The musical directors above
referred to have no such control over the musicians involved in the present
case. Said musical directors control neither the music to be played, nor the
musicians playing it. The film companies summon the musicians to work,
through the musical directors. The film companies, through the musical
directors, fix the date, the time and the place of work. The film companies,
not the musical directors, provide the transportation to and from the studio.
The film companies furnish meal at dinner time.

What is more — in the language of the order appealed from — "during the
recording sessions, the motion picture director who is an employee of the
company" — not the musical director — "supervises the recording of the
musicians and tells them what to do in every detail". The motion picture
director — not the musical director — "solely directs and performance of the
musicians before the camera". The motion picture director "supervises the
performance of all the actors, including the musicians who appear in the
scenes, so that in the actual performance to be shown in the screen, the
musical director's intervention has stopped." Or, as testified to in the lower
court, "the movie director tells the musical director what to do; tells the music
to be cut or tells additional music in this part or he eliminates the entire music
he does not (want) or he may want more drums or move violin or piano, as
the case may be". The movie director "directly controls the activities of the
musicians." He "says he wants more drums and the drummer plays more" or
"if he wants more violin or he does not like that.".

It is well settled that "an employer-employee relationship exists . . .where the

person for whom the services are performed reserves a right to control not
only the end to be achieved but also the means to be used in reaching such
end . . . ." (Alabama Highway Express Co., Express Co., v. Local 612, 108S.
2d. 350.) The decisive nature of said control over the "means to be used", is
illustrated in the case of Gilchrist Timber Co., et al., Local No. 2530 (73
NLRB No. 210, pp. 1197, 1199-1201), in which, by reason of said control, the
employer-employee relationship was held to exist between the management
and the workers, notwithstanding the intervention of an alleged independent
contractor, who had, and exercise, the power to hire and fire said workers.
The aforementioned control over the means to be used" in reading the
desired end is possessed and exercised by the film companies over the
musicians in the cases before us.
G.R. No. L-9110 April 30, 1957 The defendant filed a motion to dismiss alleging that plaintiffs were not its
employees, under the terms of the contract whereby they had rendered
JOSEFA VDA. DE CRUZ, ET AL., plaintiffs-appellants, services to the hotel, copy of which was attached as Exhibit 1. It also alleged
vs. plaintiffs did not fall within the terms of Annex A because they were not, and
THE MANILA HOTEL COMPANY, defendant-appellee. never had been members of the Government Service Insurance System.
Plaintiffs replied to the motion, did not deny the terms of Exhibit 1, nor the
allegations of non-membership in the Government Service Insurance
Javier and Javier for appellants.
System; but insisted they were employees of the Hotel.
Government Corporate Counsel Ambrosio Padilla and Panfilo B. Morales for
appellee.
The controversy could therefore be decided and it was decide in the light of
BENGZON, J.: the terms of Exhibit 1 and Annex A, plus the factual allegations expressly or
impliedly admitted by the contending parties.
On May 22, 1954 and for several years before, Tirso Cruz with his orchestra
At the outset the following consideration presents itself: plaintiffs' right is not
furnished music to the Manila Hotel under the arrangement hereafter to be
set forth. On that date the corporation owning the Hotel gave written notice to predicated on some statutory provision, but upon the offer or promise
contained in Annex A. Such offer or promise having been written by the
its employees that beginning July 1, 1954 the Hotel would be leased to the
defendant, it is logical to regard said defendant to in the best position to
Bay View Hotel, and that those employees to be laid off would be granted a
state who were the employees contemplated in the aforesaid Annex A. The
separation gratuity computed according to specified terms and conditions.
defendant asserts these musicians were not included; therefore such
assertion should be persuasive, if not conclusive. Let it be emphasized that
Cruz and his musicians claimed the gratuity; but the Manila Hotel Annex A is not a contract, but a mere offer of gratuity, the beneficiaries of
management denied their claim saying they were not its employees. which normally depended upon the free selection of the offeror.
Wherefore they instituted this action in the Manila court of first instance in
December 1954.
Independently however of the Hotel's interpretation of its own
announcement, and analyzing the terms of Annex A, we notice that it
On motion by defendant and after hearing the parties, the Hon. Francisco E. extends to those employees of the Hotel who were "not yet entitled to either
Jose, Judge, issued an order dismissing the complaint on the ground that the optional or compulsory retirement insurance provided under Republic Act
plaintiffs had no cause of action against defendant since they were not its No. 660". And then we read that retirement insurance under Republic Act No.
employees. Hence this appeal directly to this Court, involving only questions 660 is given only to those insured with the Government Service Insurance
of law. In the meantime Tirso Cruz the band leader died; he is now System or the G.S.I.S.; and that the herein plaintiffs were never members of
substituted by his legal heirs. However for convenience we shall refer to him (insured with) such Insurance System. Wherefore the inevitable conclusion
as if he were still a party to the proceedings. flows that even if these plaintiffs were "employees" of the Hotel in general,
they cannot claim to be beneficiaries under Annex A, because they could not
The complaint alleged that plaintiffs "were members of the orchestra which qualify as employees "who were not yet entitled to retirement insurance
had been employed by the defendant to furnish music in the Manila Hotel"; under the G.S.I.S." The quoted portion of the announcement implied
that they were employees of the Hotel, and that contrary to the reference to employees insured by the Government Insurance System.
announcement (Annex A) promising gratuities to its "employees" the Hotel
Management had refused to pay plaintiffs. The complaint attached a Copy of Still going further, are these plaintiffs "employees" of the Hotel? None of
the announcement which partly reads as follows: them except Tirzo Cruz and Ric Cruz, is mentioned in the contract Exhibit 1.
None has submitted any contract or appointment except said Exhibit 1.
. . . . It is for this reason that the necessary authority has already Obviously their connection with the Hotel was only thru Tirso Cruz who was
been secured for the payment of separation gratuity to the the leader of the orchestra; and they couldn't be in a better class than Tirso
employees to be laid off as a result of the lease and who are not yet Cruz who dealt with the Hotel. Was Tirso Cruz an employee? Or was he an
entitled to either the optional or compulsory retirement insurance independent contractor, as held by the trial court?
provided under Republic Act No. 660, as amended, . . . .
It will be observed that by Annex 1 the Manila Hotel contracted or engaged material and labor; and the mode, manner, and terms of payment.
the "services of your orchestra" (of Tirso Cruz) composed of fifteen (56 C. J. S. p. 46.) (Emphasis ours.)
musicians including yourself plus Ric Cruz as vocalist" at P250 per day, said
orchestra to "play from 7:30 p.m. to closing time daily". What pieces the Not being employees of the Manila Hotel, the plaintiff's have no cause of
orchestra shall play, and how the music shall be arranged or directed, the action against the latter under Annex A. The order of dismissal is therefore
intervals and other details — such are left to the leader's discretion. The affirmed, with costs against them. So ordered.
music instruments, the music papers and other paraphernalia are not
furnished by the Hotel, they belong to the orchestra, which in turn belongs to
Tirso Cruz — not to the Hotel. The individual musicians, and the instruments
they have not been selected by the Hotel. It reserved no power to discharge
any musician. How much salary is given to the individual members is left
entirely to "the orchestra" or the leader. Payment of such salary is not made
by the Hotel to the individual musicians, but only a lump-sum compensation
is given weekly to Tirso Cruz.

Considering the above features of the relationship, in connection with the

tests indicated by numerous authorities, it is our opinion that Tirso Cruz was
not an employee of the Manila Hotel, but one engaged to furnish music to
said hotel for the price of P250.00 daily, in other words, an independent
contractor1 within the meaning of the law of master and servant.

An independent contractor is one who in rendering services,

exercises an independent employment or occupation and represents
the will of his employer only as to the results of his work and not as
to the means whereby it is accomplished; one who exercising an
independent employment, contracts to do a piece of work according
to his own methods, without being subject to the control of his
employer except as to the result of his work; and who engages to
perform a certain service for another, according to his own manner
and methods, without being subject to the control of his employer
except as to the result of his work; and who engages to perform a
certain service for another, according to his own manner and
method, free from the control and direction of his employer in all
matters connected with the performance of the service, except as to
the result of the work. (56 C. J. S. pp. 41-43.)

Among the factors to be considered are whether the contractor

is carrying on an independent business; whether the work is part of
the employer's general business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the right
to assign the performance of the work to another; the power to
terminate the relationship; the existence of a contract for the
performance of a specified piece of work; the control and supervision
of the work; the employer's powers and duties with respect to the
hiring, firing, and payment of the contractor's servants; the control of
the premises; the duty to supply the premises, tools, appliances,
G.R. No. L-19187 February 28, 1963 Complainant filed a motion to reconsider the decision, raising the question as
to whether she is an employee or an independent contractor. The lower court
STERLING PRODUCTS INTERNATIONAL, INC. and V. SAN reversed the decision of Judge Tabigne, ruling that complainant was an
PEDRO, petitioners, employee and not an independent contractor, and ordered her reinstatement
vs. with back wages. The lower court further ruled that respondent firm was
LORETA C. SOL and COURT OF INDUSTRIAL RELATIONS, respondents. guilty of unfair labor practice. In arriving at this ruling it considered the
following circumstances: (1) Complainant was given an identification card
stating that "Bearer Loreta C. Sol is a bona fide employee of this Company;"
Chuidian Law Office for petitioners.
(2) when she applied for purchase of a lot from the PHHC, she was given a
Gregorio E. Fajardo for respondent Loreta C. Sol.
certificate to show that she was indeed an employee of the respondent
Mariano B. Tuason for respondent Court of Industrial Relations.
company for the last five years or six years; and (3) as such employee, she
enjoyed the privilege of borrowing money from the Employees Loan
LABRADOR, J.: Association of the firm.

This is a petition to review on certiorari the resolution of the Court of The court further found that the company's control over respondent's work is
Industrial Relations, dated June 23, 1961 in Case No. 2292-ULP, ordering shown by the fact that she can not listen to broadcasts other than those that
the herein petitioners to reinstate complainant-respondent Loreta C. Sol, with were contained in the schedule given to her by the company. Supervision
back wages from the date of her dismissal until her reinstatement. and control of her work could be done by checking or verifying the contents
of her reports on said broadcasts, said the court.
Loreta C. Sol charged the herein petitioners Sterling Products International
and its Radio Director V. San Pedro with having committed an unfair labor Wherefore, the parties respectfully pray that the foregoing stipulation of facts
practice act. In her complaint she alleged among others that she has been a be admitted and approved by this Honorable Court, without prejudice to the
regular Radio Monitor of respondents-petitioners; that on January 8, 1960, parties adducing other evidence to prove their case not covered by this
she filed a complaint against the said firm for underpayment, money stipulation of facts. 1äwphï1.ñët
equivalent of her vacation leave from 1952 to 1959, and Christmas bonus for
1959, equivalent to one month salary. The complaint resulted in her
Further discussing the question the court states:
dismissal, without just cause, on December 16, 1960.

In their answer petitioners herein denied the charges and by way of In the case at bar, the company not only hired and fired Mrs. Sol,
without third party intervention, but also reserved to itself, possessed
affirmative defenses, alleged that complainant is an independent contractor
and exercised its right to control 'the end' to be achieved and 'the
whose services were retained by petitioners to submit reports of radio
monitoring work performed outside of their (petitioners') office; that means' to be used in reaching such end, namely, the schedule and
petitioners no longer required complainant's services and therefore, it gave other instructions by which the monitor shall be guided, and the
reports with specifications by which the company observes and
her notice of termination, as it did in fact terminate her services, as an
verifies the performance of her work.
independent contractor; that petitioners terminated the services of
complainant-respondent for good and justifiable reasons and in accordance
with business requirements; that the complaint states no cause of action and In consequence the court held that the respondent was an employee. It also
that petitioners did not and are not engaged in unfair labor practice acts found that the petitioners herein are guilty of unfair labor practice, so it
against the complainant within the meaning of Sec. 4(a), subsection 5 of the ordered petitioners to reinstate respondent Loreta C. Sol, with back wages
Industrial Peace Act. from the date of her dismissal until her reinstatement. Two judges dissented
to this decision.
Judge Tabigne of the Court of Industrial Relations in a decision dated
October 8, 1960 held that the complainant is not an employee of the In the petition now brought to Us by certiorari it is urged that respondent Sol
respondent firm but only an independent contractor and that respondent firm was an independent contractor because in the performance of her work, the
was justified in dismissing the complainant due to economic reasons. elements of control and direction are lacking, hence, no relationship of
employer and employee must have existed, citing in support of this
contention Section 3, 35 Am. Jur. 445-446; and that since respondent was employer or the employee may terminate at any time the
employed to work according to her own methods and without being subject to employment with just cause; or without just cause in the case of an
control except as to its final result, she may not be considered as an employee by serving written notice on the employer at least one
employee. (Ibid.) We cannot accept this argument. Respondent Sol was month in advance, or in the case of an employer, by serving such
directed to listen to certain broadcasts, directing her, in the instructions given notice to the employee at least one month in advance or one-half
her, when to listen and what to listen, petitioners herein naming the stations month for every year of service of the employee, whichever is longer,
to be listened to, the hours of broadcasts, and the days when listening was to a fraction of at least six months being considered as one whole year.
be done. Respondent Sol had to follow these directions. The mere fact that
while performing the duties assigned to her she was not under the The employer upon whom no such notice was served in case of
supervision of the petitioners does not render her a contractor, because what termination of employment without just cause may hold the
she has to do, the hours that she has to work and the report that she has to employee liable for damages.
submit all — these are according to instructions given by the employer. It is
not correct to say, therefore, that she was an independent contractor, for an xxx xxx xxx
independent contractor is one who does not receive instructions as to what to
do, how to do, without specific instructions.
The following are just causes for terminating an employment without
a definite period:
Finally, the very act of respondent Sol in demanding vacation leave,
Christmas bonus and additional wages shows that she considered herself an
employee. A contractor is not entitled to a vacation leave or to a bonus nor to 1. By the employer —
a minimum wage. This act of hers in demanding these privileges are
inconsistent with the claim that she was an independent contractor. a. The closing or cessation of operation of the establishment
or enterprise, unless the closing is for the purpose of
The next point at issue is whether or not the petitioners herein are guilty of defeating the intention of this law.
unfair labor practice. Petitioners claim that under the decision rendered by Us
in the case of Royal Interocean Lines, et al. vs. Court of Industrial Relations, The contract between the petitioners and the respondent Sol providing that
et al., G.R. No. L-11745, Oct. 31, 1960, as respondent Sol was merely an the respondent Sol can be dismissed upon fifteen days' notice is therefore
employee and was not connected with any labor union, the company cannot null and void. Inasmuch as respondent Sol was employed since the year
be considered as having committed acts constituting unfair labor practice as 1952 and was in the employment of the petitioners from that time up to 1959,
defined in the Industrial Peace Act, Rep. Act 875. We find this contention to or a period of seven years, she is entitled to three and one-half months pay
be well-founded. The term unfair labor practice has been defined as any of in accordance with the above quoted section 1 of the Act.
those acts listed in See. 4 of the Act. The respondent Sol has never been
found to commit any of the acts mentioned in paragraph (a) of Sec. 4. WHEREFORE, that portion of the decision finding the petitioners herein
Respondent Sol was not connected with any labor organization, nor has she guilty of unfair labor practice and sentencing petitioners to reinstate
ever attempted to join a labor organization, or to assist, or contribute to a respondent Sol in her former work is hereby set aside, and the petitioners are
labor organization. The company cannot, therefore, be considered as having sentenced to pay, as separation pay, three and one-half months' pay to
committed an unfair labor practice. respondent Sol. In all other respects the decision is affirmed. No costs.

The court below found that there is an employment contract (Exhibit "3")
between petitioners and respondent Sol in which it was expressly agreed that
Sol could be dismissed upon fifteen days' advance notice, if petitioners
herein desire. Respondent Sol was dismissed on January 13, 1959 and
therefore the dismissal should be governed by the provisions of Republic Act
1787, which took effect on June 21, 1957. Section 1 of the Act provides:

SECTION 1. In cases of employment, without a definite period, in a

commercial, industrial, or agricultural establishment or enterprise, the
G.R. No. L-32245 May 25, 1979 RESPONDENT COURT ERRED IN DECLARING PETITIONER GUILTY OF
UNFAIR LABOR PRACTICE ACTS AS ALLEGED AND DESCRIBED IN THE
DY KEH BENG, Petitioner, vs. INTERNATIONAL LABOR and MARINE COMPLAINT.
UNION OF THE PHILIPPINES, ET AL., Respondents.
V
A. M Sikat for petitioner.chanrobles virtual law library
RESPONDENT COURT ERRED IN PETITIONER TO REINSTATE
D. A. Hernandez for respondents. RESPONDENTS TO THEIR FORMER JOBS WITH BACKWAGES FROM
THEIR RESPECTIVE DATES OF DISMISSALS UNTIL FINALLY
DE CASTRO, J.: REINSTATED WITHOUT LOSS TO THEIR RIGHT OF SENIORITY AND OF
SUCH OTHER RIGHTS ALREADY ACQUIRED BY THEM AND/OR
ALLOWED BY LAW.
Petitioner Dy Keh Beng seeks a review by certiorari of the decision of the Court
of Industrial Relations dated March 23, 1970 in Case No. 3019-ULP and the
Court's Resolution en banc of June 10, 1970 affirming said decision. The Court The facts as found by the Hearing Examiner are as follows:
of Industrial Relations in that case found Dy Keh Beng guilty of the unfair labor
practice acts alleged and order him to reinstate Carlos Solano and Ricardo A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of
Tudla to their former jobs with backwages from their respective dates of a basket factory, for discriminatory acts within the meaning of Section 4(a),
dismissal until fully reinstated without loss to their right of seniority and of such sub-paragraph (1) and (4). Republic Act No. 875, by dismissing on September
other rights already acquired by them and/or allowed by law. 28 and 29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their
union activities. After preliminary investigation was conducted, a case was filed
in the Court of Industrial Relations for in behalf of the International Labor and
Now, Dy Keh Beng assigns the following errors as having been committed by
Marine Union of the Philippines and two of its members, Solano and Tudla In
the Court of Industrial Relations:
his answer, Dy Keh Beng contended that he did not know Tudla and that
Solano was not his employee because the latter came to the establishment
I only when there was work which he did on pakiaw basis, each piece of work
being done under a separate contract. Moreover, Dy Keh Beng countered with
RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS a special defense of simple extortion committed by the head of the labor union,
SOLANO AND TUDLA WERE EMPLOYEES OF PETITIONERS. Bienvenido Onayan.

II After trial, the Hearing Examiner prepared a report which was subsequently
adopted in toto by the Court of Industrial Relations. An employee-employer
RESPONDENT COURT ERRED IN FINDING THAT RESPONDENTS relationship was found to have existed between Dy Keh Beng and
SOLANO AND TUDLA WERE DISMISSED FROM THEIR EMPLOYMENT BY complainants Tudla and Solano, although Solano was admitted to have
PETITIONER. worked on piece basis. The issue therefore centered on whether there existed
an employee employer relation between petitioner Dy Keh Beng and the
III respondents Solano and Tudla .

RESPONDENT COURT ERRED IN FINDING THAT THE TESTIMONIES According to the Hearing Examiner, the evidence for the complainant Union
ADDUCED BY COMPLAINANT ARE CONVINCING AND DISCLOSES (SIC) tended to show that Solano and Tudla became employees of Dy Keh Beng
A PATTERN OF DISCRIMINATION BY THE PETITIONER HEREIN. from May 2, 1953 and July 15, 1955, respectively, and that except in the event
of illness, their work with the establishment was continuous although their
services were compensated on piece basis. Evidence likewise showed that at
IV
times the establishment had eight (8) workers and never less than five (5);
including the complainants, and that complainants used to receive ?5.00 a
day. sometimes less.
According to Dy Keh Beng, however, Solano was not his employee for the The test ... of the existence of employee and employer relationship is whether
following reasons: there is an understanding between the parties that one is to render personal
services to or for the benefit of the other and recognition by them of the right
(1) Solano never stayed long enought at Dy's establishment; chanrobles virtual of one to order and control the other in the performance of the work and to
law library direct the manner and method of its performance.

(2) Solano had to leave as soon as he was through with the chanrobles virtual Petitioner contends that the private respondents "did not meet the control test
law library in the fight of the ... definition of the terms employer and employee, because
there was no evidence to show that petitioner had the right to direct the manner
and method of respondent's work. Moreover, it is argued that petitioner's
(3) order given him by Dy; chanrobles virtual law library
evidence showed that "Solano worked on a pakiaw basis" and that he stayed
in the establishment only when there was work.
(4) When there were no orders needing his services there was nothing for him
to do; chanrobles virtual law library
While this Court upholds the control test under which an employer-employee
relationship exists "where the person for whom the services are performed
(5) When orders came to the shop that his regular workers could not fill it was reserves a right to control not only the end to be achieved but also the means
then that Dy went to his address in Caloocan and fetched him for these orders; to be used in reaching such end,” it finds no merit with petitioner's arguments
and chanrobles virtual law library as stated above. It should be borne in mind that the control test calls merely
for the existence of the right to control the manner of doing the work, not the
(6) Solano's work with Dy's establishment was not continuous. , chanrobles actual exercise of the right. Considering the finding by the Hearing Examiner
virtual law library that the establishment of Dy Keh Beng is "engaged in the manufacture of
baskets known as kaing, it is natural to expect that those working under Dy
According to petitioner, these facts show that respondents Solano and Tudla would have to observe, among others, Dy's requirements of size and quality
are only piece workers, not employees under Republic Act 875, where an of the kaing. Some control would necessarily be exercised by Dy as the
employee 8 is referred to as making of the kaing would be subject to Dy's specifications.

shall include any employee and shag not be limited to the employee of a Parenthetically, since the work on the baskets is done at Dy's establishments,
particular employer unless the Act explicitly states otherwise and shall include it can be inferred that the proprietor Dy could easily exercise control on the
any individual whose work has ceased as a consequence of, or in connection men he employed. As to the contention that Solano was not an employee
with any current labor dispute or because of any unfair labor practice and who because he worked on piece basis, this Court agrees with the Hearing
has not obtained any other substantially equivalent and regular employment. Examiner that circumstances must be construed to determine indeed if
payment by the piece is just a method of compensation and does not define
While an employer: the essence of the relation. Units of time ... and units of work are in
establishments like respondent (sic) just yardsticks whereby to determine rate
of compensation, to be applied whenever agreed upon. We cannot construe
includes any person acting in the interest of an employer,
payment by the piece where work is done in such an establishment so as to
directly or indirectly but shall not include any labor organization (otherwise than
put the worker completely at liberty to turn him out and take in another at
when acting as an employer) or anyone acting in the capacity of officer or
pleasure.
agent of such labor organization.
At this juncture, it is worthy to note that Justice Perfecto, concurring with Chief
Petitioner really anchors his contention of the non-existence of employee-
Justice Ricardo Paras who penned the decision in "Sunrise Coconut Products
employer relationship on the control test. He points to the case of Madrigal
Co. v. Court of Industrial Relations" (83 Phil..518, 523), opined that judicial
Shipping Co., Inc. v. Nieves Baens del Rosario, et al., L-13130, October 31,
notice of the fact that the so-called "pakyaw" system mentioned in this case as
1959, where the Court ruled that:
generally practiced in our country, is, in fact, a labor contract -between
employers and employees, between capitalists and laborers.
Insofar as the other assignments of errors are concerned, there is no showing
that the Court of Industrial Relations abused its discretion when it concluded
that the findings of fact made by the Hearing Examiner were supported by
evidence on the record. Section 6, Republic Act 875 provides that in unfair
labor practice cases, the factual findings of the Court of Industrial Relations
are conclusive on the Supreme Court, if supported by substantial evidence.
This provision has been put into effect in a long line of decisions where the
Supreme Court did not reverse the findings of fact of the Court of Industrial
Relations when they were supported by substantial evidence.

Nevertheless, considering that about eighteen (18) years have already

elapsed from the time the complainants were dismissed, and that the decision
being appealed ordered the payment of backwages to the employees from
their respective dates of dismissal until finally reinstated, it is fitting to apply in
this connection the formula for backwages worked out by Justice Claudio
Teehankee in "cases not terminated sooner." The formula cans for fixing the
award of backwages without qualification and deduction to three years,
"subject to deduction where there are mitigating circumstances in favor of the
employer but subject to increase by way of exemplary damages where there
are aggravating circumstances. Considering there are no such circumstances
in this case, there is no reason why the Court should not apply the
abovementioned formula in this instance.

WHEREFORE; the award of backwages granted by the Court of Industrial

Relations is herein modified to an award of backwages for three years without
qualification and deduction at the respective rates of compensation the
employees concerned were receiving at the time of dismissal. The execution
of this award is entrusted to the National Labor Relations Commission. Costs
against petitioner.

SO ORDERED.
G.R. Nos. L-63550-51 January 31, 1984 The claims for overtime pay and premium pay for holiday
and rest day are dismissed.
RJL MARTINEZ FISHING CORPORATION and/or PENINSULA FISHING
CORPORATION, petitioners, SO ORDERED. 1
vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTONIO This case was originally assigned to the Second Division but because of the
BOTICARIO, ISIDRO FARIOLAN, FERNANDO SEVILLA, TOTONG pendency of a lower-numbered case, G.R. No. 63474, entitled RJL Martinez
ROLDAN, ROGER ESQUILLA, MARIO MIRANDA, EDUARDO ESPINOSA, Fishing Corporation vs. National Labor Relations Commission, et als. before
ALBERTO NOVERA, ANTONIO PATERNO, MARCIANO PIADORA, the First Division, involving the same petitioners and their workers (albeit a
MARIO ROMERO, CLINITO ESQUILLA, ALEJO BATOY, BOBBY different group and not exactly Identical issues), this case was transferred to
QUITREZA, ROLANDO DELA TORRE, HERNANI REVATEZ, RODOLFO the latter, Division for proper action and determination. G.R. No. 63474 was
SEVILLA, ROLANDO ANG, JUANITO PONPON, HOSPINIANO dismissed by the First Division on August 17, 1983 for lack of merit.
CALINDEZ, JOSE MABULA, DEONG DE LEON, MELENCIO CONEL and
ALFREDO BULAONG, respondents.
Petitioner corporations are principally engaged in the deep-sea fishing
business. Since 1978, private respondents were employed by them as
Martinez, Bermudez & Associates for petitioners. stevedores at Navotas Fish Port for the unloading of tuna fish catch from
petitioners' vessels and then loading them on refrigerated vans for shipment
The Solicitor General for respondent NLRC. abroad.

On March 27, 1981, private respondents Antonio Boticario, and thirty (30)
others, upon the premise that they are petitioners' regular employees, filed a
MELENCIO-HERRERA, J.: complaint against petitioners for non-payment of overtime pay, premium pay,
legal holiday pay, emergency allowance under P.D. Nos. 525, 1123, 1614,
1634, 1678, 1713, 1751, 13th month pay (P.D. 851), service incentive leave
Petition for Certiorari, Prohibition and mandamus assailing the Decision of
pay and night shift differential. 2
respondent National Labor Relations Commission (NLRC) in Cases Nos. AB-
4-11054-81 and AB-8-12354-81 entitled Antonio Boticario, et al. vs. RJL
Fishing Corporation and/or Peninsula Fishing Corporation, dated November Claiming that they were dismissed from employment on March 29, 1981 as a
26, 1982, as well as the Order, dated February 14, denying petitioners' retaliatory measure for their having failed the said complaint private
Manifestation and Omnibus Motion to dismiss private respondents' appeal. respondents filed on the said complaint, private respondents filed on April 21,
The dispositive portion of the challenged resolution reads: 1981 another complaint against petitioners for Illegal Dismissal and for
Violation of Article 118 of the Labor Code, as amended. 3 Upon petitioners'
motion, these two cases were consolidated and tried jointly.
WHEREFORE, in view of the foregoing considerations, the
Decision appealed from is hereby set aside and another one
entered, directing respondents-appellees: (1) to reinstate In disputing any employer-employee relationship between them, petitioners
complainants-appellants to their former work, without loss of contend that private respondents are contract laborers whose work
seniority rights and other privileges appertaining thereto; (2) terminated upon completion of each unloading, and that in the absence of
to pay complainants-appellants full backwages computed any boat arrivals, private respondents did not work for petitioners but were
from the date they were dismissed up to the date they are free to work or seek employment with other fishing boat operators.
actually reinstated; (3) to pay complainants-appellants legal
holiday pay, emergency living allowance and 13th month pay On February 25, 1982, the Labor Arbiter upheld petitioners' position ruling
in accordance with law; and (4) to pay complainants- that the latter are extra workers, who were hired to perform specific tasks on
appellants who are entitled to incentive leave pay, as herein contractual basis; that their work is intermittent depending on the arrival of
above determined, according to law. fishing vessels; that if there are no fish to unload and load, they work for
some other fishing boat operators; that private respondent Antonio Boticario
had executed an employment contract under which he agreed to act as a
labor contractor and that the other private respondents are his men; that time considering that they received copy of the same on April 1, 1982 but
even assuming that private respondents are employees of petitioners, their that they filed their appeal only on April 19, 1982, or 18 days later. If we were
employer-employee relation is co-terminous with each unloading and loading to reckon the 10-day reglementary period to appeal as calendar days, as
job; that in the same manner, petitioners are not under any obligation to hire held in the case of Vir-Jen Shipping and Marine Services, Inc. vs. NLRC, et
petitioners exclusively, hence, when they were not given any job on March al. 5 , private respondents' appeal was, indeed, out of time. However, it was
29, 1981, no dismissal was effected but that they were merely not rehired. 4 clear from Vir-Jen that the calendar day basis of computation would apply
only "henceforth" or to future cases. That ruling was not affected by this
On April 1, 1982, private respondents received the Decision of the Labor Court's Resolution of November 18, 1983 reconsidering its Decision of July
Arbiter dismissing their complaints. On April 19, 1982, they filed an appeal 20, 1982. When the appeal herein was filed on April 19, 1982, the governing
before respondent NLRC, which took cognizance thereof. proviso was found in Section 7, Rule XIII of the Rules and Regulations
implementing the Labor Code along with NLRC Resolution No. 1, Series of
1977, which based the computation on "working days". They very face of the
In its Decision of November 26, 1982, the NLRC reversed the findings of the
Notice of Decision itself 6 indicated aggrieved party could appeal within 10
Labor Arbiter, and resolved, as previously stated, to uphold the existence of
"working days" from receipt of copy of the resolution appealed from. From
employer-employee relationship between the parties.
April 1 to April 19, 1982 is exactly ten (10) working days considering the Holy
Week and the two Saturdays and Sundays that supervened in between that
Petitioners resorted to a "Manifestation and Omnibus Motion to Dismiss period. In other words, private respondents' appeal, having been filed during
Appeal and to Vacate and/or to Declare Null and Void the Decision of this the time that the prevailing period of appeal was ten (10) working days and
Honorable Commission Promulgated on November 25 (should be 26), 1982" prior to the Vir-Jen case promulgated on July 20, 1982, it must be held to
but the same was denied, hence, the instant recourse. have been timely filed.

As prayed for, a Temporary Restraining Order to enjoin the enforcement of 2. Anent the failure of private respondents to furnish petitioners with a copy
the questioned decision of respondent NLRC was issued on April 20, 1983, of their memorandum on appeal, suffice it to state that the same is not fatal
and on August 15, 1983, the Petition was given due course by the Second to the appeal. 7
Division.
3. The issue of the existence of an employer-employee relationship between
Petitioners submit the following issues for resolution: the parties is actually a question of fact, and the finding of the NLRC on this
point is bonding upon us, the exceptions to the general rule being absent in
I. Whether or not the appeal from the decision of Labor this case. Besides the continuity of employment is not the determining factor,
Arbiter filed by private respondents is within the l0-day but rather whether the work of the laborer is part of the regular business or
reglementary period; occupation of the employer. 8 We are thus in accord with the findings of
respondent NLRC in this regard.
II. Whether or not respondent NLRC erred in reversing the
decision of the Labor Arbiter despite the failure to furnish Although it may be that private respondents alternated their employment on
petitioners with a copy of the appeal; different vessels when they were not assigned to petitioners' boats, that did
not affect their employee status. The evidence also establishes that
III. Whether or not there is an employer-employee petitioners had a fleet of fishing vessels with about 65 ship captains, and as
relationship between the parties; private respondents contended, when they finished with one vessel, they
were instructed to wait for the next. As respondent NLRC had found:
IV. Whether or not private respondents are entitled to legal
holiday pay, emergency living allowance, thirteenth month We further find that the employer-employee relationship
pay and incentive leave pay. between the parties herein is not co-terminous with each
loading and unloading job. As earlier shown, respondents
1. Petitioners, joined by the Solicitor General, contend that the appeal filed by are engaged in the business of fishing. For this purpose,
private respondents from the Decision of the Labor Arbiter was filed out of they have a fleet of fishing vessels. Under this situation,
respondents' activity of catching fish is a continuous process
 and could hardly be considered as seasonal in nature. So SO ORDERED.
that the activities performed by herein complainants, i.e.
unloading the catch of tuna fish from respondents' vessel
and then loading the same to refrigerated vans, are
necessary or desirable in the business of respondents. This
circumstances makes the employment of complainants a
regular one, in the sense that it does not depend on any
specific project or seasonal activity. 9

The employment contract signed by Antonio Boticario, 10 which described

him as "labor contractor", is not really so inasmuch as wages continued to be
paid by petitioners and he and the other workers were uniformly paid. He
was merely asked the petitioners to recruit other workers. Besides, labor-
contracting is prohibited under Sec. 9(b), Rule VIII, Book III — Rules and
Regulations Implementing the Labor Code as amended. 11 Directly in point
and controlling is the ruling in an analogous case, Philippine Fishing Boat
Officers and Engineers Union vs. CIR, 12 reading:

The Court holds, therefore, that the employer-employee

relationship existed between the parties notwithstanding
evidence to the fact that petitioners Visayas and Bergado,
even during the time that they worked with respondent
company alternated their employment on different vessels
when they were not assigned on the company's vessels. For,
as was stressed in the above-quoted case of Industrial-
Commercial-Agricultural Workers Organization vs. CIR, 16
SCRA 562 [1966], "that during the temporary layoff the
laborers are considered free to seek other employment is
natural, since the laborers are not being paid, yet must find
means of support" and such temporary cessation of
operations "should not mean starvation for employees and
their families."

4. Indeed, considering the length of time that private respondents have

worked for petitioner — since 1978 — there is justification to conclude that
they were engaged to perform activities usually necessary or desirable in the
usual business or trade of petitioners and are, therefore, regular
employees. 13 As such, they are entitled to the benefits awarded them by
respondent NLRC.

WHEREFORE, the instant Petition for Certiorari, Prohibition and Mandamus

is hereby dismissed and the Temporary Restraining Order heretofore issued
is hereby dissolved.

Costs against petitioners.