labor cases 4

8/12/2019 Labor Cases 4

1/111

Republic of the PhilippinesSUPREME COURT

Manila

THIRD DIVISION

G.R. No. 111359 August 15, 1995CALTEX REGULAR EMPLOYEES AT MANILA OFFICE, LEGAZPI BULK DEPOT ANDMARINDUQUE BULK DEPOT-(MACLU),petitioners,vs.CALTEX (PHILIPPINES), INC. and NATIONAL LABOR RELATIONS COMMISSION (FIRSTDIVISION),respondents .

FELICIANO,J.:

In this petition for certiorari , petitioner Caltex Regular Employees Association at the Manila Office,Legazpi Bulk Depot and the Marinduque Bulk Depot (hereinafter referred to as "Union"), seeks to annuland set aside the decision of the National Labor Relations Commission ("NLRC"), promulgated on 5March 1993, which reversed the decision of Labor Arbiter Valentin Guanio.

On 12 December 1985, petitioner Union and private respondent Caltex (Philippines), Inc. ("Caltex")entered into a Collective Bargaining Agreement ("1985 CBA") which was to be in effect until midnight of31 December 1988. The CBA included, among others, the following provision:

ARTICLE III

HOURS OF WORK

In conformity with Presidential Decree 442, otherwise known as the Labor Code of the Philippines, asamended, the regular work week shall consist of eight (8) hours per day, seven (7) days, Mondaythrough Sunday, during which regular rates of pay shall be paid in accordance with Annex B and workon the employee's one "Day of Rest ," shall be considered a special work day, during which "Day ofRest " rates of pay shall be paid as provided in Annex B . Daily working schedules shall be establishedby management in accordance with the requirements of efficient operations on the basis of eight (8)hours per day for any five (5) days . Provided , however employees required to work in excess of forty(40) hours in any week shall be compensated in accordance with Annex B of thisAgreement. 1 (Emphasis supplied).

Pertinent portions of Annex "B" of the 1985 CBA are also quoted here as follows:

Annex "B"

Computation of:

Regular Day PayOvertime PayNight Shift Differential PayDay Off PayExcess of 40 hours within a calendar weekSunday Premium PayHoliday Premium Pay


2/111

Employee's Basic Hourly Wage Rate:

Monthly Base Pay

X = (21.667) (8)

A. Regular Pay

1) Hourly rate= X

2) OT Hourly Rate 12 MN= (X + 50% X)

3) NSD 6 PM - 12 MN= (X + 25% X)

4) OT Hourly Rate NSD 6 PM - 12 MN= (X + 25% X) + 50% (X + 25% X)

5) NSD 12 MN - 6 AM= (X + 50% X)

6) OT Hourly Rate NSD 12 MN - 6 AM= (X + 50% X) + 50% (X + 50% X)

B. Regular First Day Off

1. Hourly Rate= (X + 50% X)

2. OT Hourly Rate= (X + 50% X) + 50% (x + 50% X)

3. NSD 6 PM - 12 MN= [ (X + 50% X) + 25% (X + 50% X) ]

4. OT Hourly Rate NSD 6 PM - 12 MN= [ (X + 50% X) + 25% (X + 50% X) ] +50% [ (X + 50% X) + 25% (X + 50%) ]

5. NSD 12 MN - 6 AM= [ (X + 50% X) + 50% (X + 50% X) ]

6. OT Hourly Rate NSD 12 MN - 6 AM= [ (X + 50% X) + 50% (X + 50% X) ] +50% [ (X + 50% X) + 50% (X + 50% X) ]

C. Regular Second Day Off



3/111


4/111

5. NSD 12 MN - 6 AM= [ (X + 100% X) + 50% (X + 100% X) ]


F. Sunday as day off


2. OT Hourly Rate= (X + 100% X) + 50% (X + 100% X)

3. NSD 6 PM - 12 MN= [ (X + 100% X) + 25% (X+ 100% X) ]

4. OT Hourly Rate NSD 6 PM - 12 MN= [ (X + 100% X) + 25% (X + 100% X) ] +

50% [ (X+ 100% X) + 25% (X + 100% X) ]

5. NSD 12 MN - 6 AM= [ (X + 100% X) + 50% (X + 100% X) ]


G. Holiday as Normal Work Day

1. Hourly Rate

= (X + 150% X)


3. NSD 6 PM - 12 MN= [ (X + 150% X) + 25% (X + 150% X) ]

4. OT Hourly Rate NSD 6 PM - 12 MN= [ (X + 150% X) + 25% (X + 150% X) ] +50% [ (X + 150% X) + 25% (X + 150% X) ]

5. NSD 12 MN - 6 AM= [ (X + 150% X) + 50% (X + 150% X) ]


H. Holiday as Day Off



5/111


3. NSD 6 PM - 12 MN= [ (X + 150% X) + 25% (X + 150% X) ]

4. OT Hourly Rate NSD 6 PM - 12 MN= [ (X + 150% X) + 25% (X + 150% X) ] + 50%

[ (X + 150% X) + 25% (X + 150% X) ]

5. NSC 12 MN - 6 AM= [ (X + 150% X) + 50% (X + 150% X) ]

6. OT Hourly Rate= [ (X + 150% X) + 50% (X + 150% X) ] + 50%[ (X + 150% X) + 50% (X + 150% X) ]

7. *Hourly Rate for less than 8 hours= (150% X)

* For work of less than 8 hours, the employee will receive his basic daily rate (Monthly Base Pay)

21.667

plus the hourly rate multiplied by the number of hours worked. 2

Sometime in August 1986, the Union called Caltex's attention to alleged violations by Caltex of Annex "B"of the 1985 CBA, e .g . non-payment of night-shift differential, non-payment of overtime pay and non-payment at "first day-off rates" for work performed on a Saturday.

Caltex's Industrial Relations manager immediately evaluated petitioner's claims and accordingly informedpetitioner Union that differential payments would be timely implemented. In the implementation of the re-computed claims, however, no differential payment was made with respect to work performed on the first2 1/2 hours on a Saturday.

On 7 July 1987, the Union instituted a complaint for unfair labor practice against Caltex alleging violationof the provisions of the 1985 CBA. Petitioner Union charged Caltex with shortchanging its employeeswhen Caltex compensated work performed on the first 2 1/2 hours of Saturday, an employees' day ofrest, at regular rates, when it should be paying at "day of rest" or "day off" rates.

Caltex denied the accusations of the Union. It averred that Saturday was never designated as a day ofrest, much less a "day-off". It maintained that the 1985 CBA provided only 1 day of rest for employees atthe Manila Office, as well as employees similarly situated at the Legazpi and Marinduque Bulk Depots.This day of rest, according to Caltex, was Sunday.

In due time, the Labor Arbiter ruled in favor of petitioner Union, while finding at the same time that privaterespondent Caltex was not guilty of any unfair labor practice. Labor Arbiter Valentin C. Guanio,interpreting Article III and Annex "B" of the 1985 CBA, concluded that Caltex's employees had been giventwo (2) days (instead of one [1] day) of rest, with the result that work performed on the employee's firstday of rest, viz . Saturday, should be compensated at "First day-off" rates.

On appeal by Caltex, public respondent NLRC set aside the decision of Labor Arbiter Guanio. The NLRCfound that the conclusions of the Labor Arbiter were not supported by the evidence on record. The


6/111

NLRC, interpreting the provisions of the 1985 CBA, concluded that that CBA granted only one (1) day ofrest, e .g ., Sunday. The Union's motion for reconsideration was denied on 9 June 1993.

The controversy we must address in this Petition for Certiorari relates to the appropriate interpretation ofArticle III in relation to Annex "B" of the parties' 1985 CBA.

After carefully examining the language of Article III, in relation to Annex "B" of the 1985 CBA, quoted inlimine , as well as relevant portions of earlier CBAs between the parties, we agree with the NLRC that the

intention of the parties to the 1985 CBA was to provide the employees with only one (1) day of rest. Theplain and ordinary meaning of the language of Article III is that Caltex and the Union had agreed to pay"day of rest" rates for work performed on "an employee's one day of rest". To the Court's mind, the use ofthe word "one" describing the phrase "day of rest [of an employee]" emphasizes the fact that the partieshad agreed that only a single day of rest shall be scheduled and shall be provided to the employee.

It is useful to note that the contract clauses governing hours of work in previous CBAs executed betweenprivate respondent Caltex and petitioner Union in 1973, 1976, 1979 and 1982 contained provisionsparallel if not identical to those set out in Article III of the 1985 CBA here before us.

Article III of the 1973 Collective Bargaining Agreement 3 provided as follows:

Article III

Hours of Work

Sec. 1. In conformity with Presidential Decree No. 143, the regular work week shall consist ofeight (8) hours per day, seven (7) days, Monday through Sunday, during which regular rates ofpay shall be paid in accordance with Article IV, Section 1 and work on the employee's one "Dayof Rest " shall be paid as provided in Article IV, Section 8 . Daily working schedules shall beestablished by management in accordance with the requirements of efficient operations on thebasis of eight (8) hours per day for any five (5) days ; provided, however, employees required towork in excess of forty (40) hours in any week shall be compensated in accordance with ArticleIV, Section 7 of this Agreement. (Emphasis supplied)

Article III of the 1976 Collective Bargaining Agreement 4 read:

Article III

Hours of Work

Sec. 1. In conformity with Presidential Decree No. 143, the regular work week shall consist ofeight (8) hours per day, seven (7) days, Monday through Sunday, during which regular rates ofpay shall be paid in accordance with Article IV, Section 1 and work on the employee's one "Dayof Rest " shall be paid as provided in Article IV, Section 8 . Daily working schedules shall beestablished by management in accordance with the requirements of efficient operations on thebasis of eight (8) hours per day for any five (5) days ; provided , however, employees required towork in excess of forty (40) hours in any week shall be compensated in accordance with ArticleIV, Section 7 of this Agreement. (Emphasis supplied)

Article III of the 1979 Collective Bargaining Agreement 5 said:

Article III

Hours of Work

Sec. 1. In conformity with Presidential Decree 442, otherwise known as the Labor Code of thePhilippines, as mended, the regular work week shall consist of eight (8) hours per day, seven (7)


7/111

days, Monday thru Sunday during which regular rates of pay shall be paid in accordance withArticle IV, Section 1 and work on the employee's one "Day of Rest" shall be paid as provided inArticle IV, Section 7 . Daily working schedules shall be established by management in accordancewith the requirements of efficient operations on the basis of eight hours per day for any five (5)days; provided, however, employees required to work in excess of forty (40) hours in any weekshall be compensated in accordance with Article IV, Section 6 of this Agreement. (Emphasissupplied).

Article III of the 1982 Collective Bargaining Agreement 6

also provided as follows:Article III

Hours of Work

Sec. 1. In conformity with Presidential Decree 442, otherwise known as the Labor Code of thePhilippines, as amended, the regular work week shall consist of eight (8) hours per day, seven (7)days, Monday thru Sunday, during which regular rates of pay shall be paid in accordance withArticle IV, Section 1 and work on the employee's one "Day of Rest " shall be paid as provided inArticle IV, Section 7 . Daily working schedules shall be established by management in accordancewith the requirements of efficient operations on the basis of eight hours per day for any five (5)days ;provided , however employees required to work in excess of forty (40) hours in anyweek shall be compensated in accordance with Article IV, Section 6 of this Agreement.(Emphasis supplied)

In all these CBAs (1973, 1976, 1979, 1982), Article III provide that only "work on an employee's one dayof rest "shall be paid on the basis of "day of rest rates". The relevant point here is that petitioner Unionhad never suggested that more than 1 day of rest had been agreed upon, and certainly Caltex had nevertreated Article III or any other portion of the CBAs as providing two (2) days of rest . It is well settled thatthe contemporaneous and subsequent conduct of the parties may be taken into account by a court calledupon to interpret and apply a contract entered into by them. 7

We note that Labor Arbiter Guanio surmised that the intention he implied from the contents of Annex "B"was in conflict with the intention expressed in Article III (which, the Labor Arbiter admitted, stipulated onlyone day of rest). According to the Labor Arbiter, when Annex "B" referred to "First Day-off Rates" and"Second Day-off Rates", these were meant to express an agreement that the parties intended to provideemployees two (2) days of rest . He then declared that Annex "B" should prevail over Article III becausethe former was a more specific provision than the latter.

An annex expresses the idea of joining a smaller or subordinate thing with another, larger or of higherimportance. 8 An annex has a subordinate role, without any independent significance separate from thatto which it is tacked on. Annex "B," in the case at bar, is one such document. It is not a memorandum ofamendments or a codicil containing additional or new terms or stipulations. Annex "B" cannot beconstrued as modifying or altering the terms expressed in the body of the agreement contained in the1985 CBA. It did not confer any rights upon employees represented by petitioner Union; neither did itimpose any obligations upon private respondent Caltex. In fact, the contents of Annex "B" have no

intelligible significance in and of themselves when considered separately from the 1985 CBA.

Moreover, we are persuaded by private respondent's argument that Annex "B" was intended to serve asa company wide guide in computing compensation for work performed by all its employees, including butnot limited to the Manila Office employees represented by petitioner Union. Private respondent alsopoints out that the mathematical formulae contained in Annex "B" are not all applicable to all classes ofemployees, there being some formulae applicable only to particular groups or classes of employees.Thus, "First Day-off rates" and "Second Day-off rates" are applicable only to employees stationed at therefinery and associated facilities like depots and terminals which must be in constant twenty-four (24)hours a day, seven (7) days a week, operation, hence necessitating the continuous presence ofoperations personnel. The work of such operations personnel required them to be on duty for six (6)consecutive days. Upon the other hand, "First Day-off rates" and "Second Day-off rates"


8/111

are not applicable to personnel of the Manila Office which consisted of other groups or categories ofemployees ( e .g ., office clerks, librarians, computer operators, secretaries, collectors, etc.), 9 since thenature of their work did not require them to be on duty for six (6) consecutive days .

We find, under the foregoing circumstances, that the purported intention inferred from Annex "B" by theLabor Arbiter was based merely on conjecture and speculation.

We also note that the Labor Arbiter merely suspected that the parties agreed to provide two (2) days of

rest on the ground that they had so stipulated in their 1970 CBA .10

A principal difficulty with this view isthat it disregards the fact that Article III of the 1985 CBA no longer contained a particular proviso found inthe 1970 CBA. In fact, all the CBAs subsequent to 1970 (1973, 1976, 1979, 1982) had similarly deletedthe proviso in the 1970 CBA providing for two (2) days-off. To the Court's mind, such deletion means onlyone thing that is the parties had agreed to remove such stipulation. Accordingly, the proviso foundin Article III of the 1970 CBA ceased to be a demandable obligation. Petitioner Union cannot nowunilaterally re-insert such a stipulation by strained inference from Annex "B." Upon the foregoingcircumstances, we must hold that the Labor Arbiter's suspicion is without basis in the facts of record.

Petitioner Union also contended that private respondent Caltex in the instant petition was violating thestatutory prohibition against off-setting undertime for overtime work on another day. 11 Union counselattempted to establish this charge by asserting that the employees had been required to render "overtimework" on a Saturday but compensated only at regular rates of pay, because they had not completed theeight (8)-hour work period daily from Monday thru Friday.

The Court finds petitioner's contention bereft of merit. Overtime work consists of hours worked on a givenday in excess of the applicable work period, which here is eight (8) hours. 12 It is not enough that thehours worked fall on disagreeable or inconvenient hours. In order that work may be considered asovertime work, the hours worked must be in excess of and in addition to the eight (8) hours workedduring the prescribed daily work period, or the forty (40) hours worked during the regular work weekMonday thru Friday.

In the present case, under the 1985 CBA, hours worked on a Saturday do not, by that fact alone ,necessarily constitute overtime work compensable at premium rates of pay, contrary to petitioner'sassertion. These are normal or regular work hours, compensable at regular rates of pay, as provided in

the 1985 CBA; under that CBA, Saturday is not a rest day or a "day off". It is only when an employee hasbeen required on a Saturday to render work in excess of the forty (40) hours which constitute the regularwork week that such employee may be considered as performing overtime work on that Saturday. Weconsider that the statutory prohibition against offsetting undertime one day with overtime another day hasno application in the case at bar. 13

Petitioner's counsel, in his final attempt to lay a basis for compelling private respondent to pay premiumrates of pay for all hours worked on a Saturday, regardless of the number of hours actually worked earlierduring the week, i .e ., on Monday to Friday, insists that private respondent cannot require its employeesto complete the 40-hour regular work week on a Saturday, after it has allowed its employees to renderonly 37-1/2 hours of work.

The company practice of allowing employees to leave thirty (30) minutes earlier than the scheduled off-time had been established primarily for the convenience of the employees most of whom have had tocommute from work place to home and in order that they may avoid the heavy rush hour vehicular traffic.There is no allegation here by petitioner Union that such practice was resorted to by Caltex in order toescape its contractual obligations. This practice, while it effectively reduced to 37-1/2 the number ofhours actually worked by employees who had opted to leave ahead of off-time, is not be construed asmodifying the other terms of the 1985 CBA. As correctly pointed out by private respondent, the shortenedwork period did not result in likewise shortening the work required for purposes of determining overtimepay, as well as for purposes of determining premium pay for work beyond forty (40) hours within thecalendar week. It follows that an employee is entitled to be paid premium rates, whether for work inexcess of eight (8) hours on any given day, or for work beyond the forty (40)-hour requirement for the


9/111

calendar week, only when the employee had, in fact already rendered the requisite number of hours 8or 40 prescribed in the 1985 CBA.

In recapitulation, the parties' 1985 CBA stipulated that employees at the Manila Office, as well as thosesimilarly situated at the Legazpi and Marinduque Bulk Depots, shall be provided only one (1) day of rest;Sunday, and not Saturday, was designated as this day of rest. Work performed on a Saturday isaccordingly to be paid at regular rates of pay, as a rule, unless the employee shall have been required torender work in excess of forty (40) hours in a calendar week. The employee must, however, have in fact

rendered work in excess of forty (40) hours before hours subsequently worked become payable atpremium rates. We conclude that the NLRC correctly set aside the palpable error committed by LaborArbiter Guanio, when the latter imposed upon one of the parties to the 1985 CBA, an obligation which ithad never assumed.

WHEREFORE, petitioner Union having failed to show grave abuse of discretion amounting to lack orexcess of jurisdiction on the part of public respondent National Labor Relations Commission in renderingits decision dated 5 March 1993, the Court Resolved to DISMISS the Petition for lack of merit.

SO ORDERED.


10/111

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

G.R. No. 172161 March 2, 2011

SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners,vs.NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ, EDGARDO ZUIGDANILO CAETE, Respondents.

D E C I S I O N

MENDOZA,J.:

Assailed in this petition for review on certiorari are the January 11, 2006 Decision 1 and the March 31, 2006Resolution 2 of the Court of Appeals (CA), in CA-G.R. SP No. 00598 which affirmed with modification the March31, 2004 Decision 3 and December 15, 2004 Resolution 4 of the National Labor Relations

Commission (NLRC). The NLRC Decision found the petitioners, SLL International Cables Specialist (SLL) and itsmanager, Sonny L. Lagon (petitioners), not liable for the illegal dismissal of Roldan Lopez, Danilo Caete andEdgardo Zuiga (private respondents) but held them jointly and severally liable for payment of certain monetaryclaims to said respondents.

A chronicle of the factual antecedents has been succinctly summarized by the CA as follows:

Sometime in 1996, and January 1997, private respondents Roldan Lopez (Lopez for brevity) and Danilo Caete(Caete for brevity), and Edgardo Zuiga (Zuiga for brevity) respectively, were hired by petitioner Lagon asapprentice or trainee cable/lineman. The three were paid the full minimum wage and other benefits but since theywere only trainees, they did not report for work regularly but came in as substitutes to the regular workers or inundertakings that needed extra workers to expedite completion of work. After their training, Zuiga, Caete andLopez were engaged as project employees by the petitioners in their Islacom project in Bohol. Privaterespondents started on March 15, 1997 until December 1997. Upon the completion of their project, theiremployment was also terminated. Private respondents received the amount of P145.00, the minimum prescribeddaily wage for Region VII. In July 1997, the amount of P145 was increased to P150.00 by the Regional WageBoard (RWB) and in October of the same year, the latter was increased to P155.00. Sometime in March 1998,Zuiga and Caete were engaged again by Lagon as project employees for its PLDT Antipolo, Rizal project,which ended sometime in (sic) the late September 1998. As a consequence, Zuiga and Caetes employmentwas terminated. For this project, Zuiga and Caete received only the wage of P145.00 daily. The minimumprescribed wage for Rizal at that time was P160.00.

Sometime in late November 1998, private respondents re-applied in the Racitelcom project of Lagon in Bulacan.Zuiga and Caete were re-employed. Lopez was also hired for the said specific project. For this, privaterespondents received the wage of P145.00. Again, after the completion of their project in March 1999, private

respondents went home to Cebu City.

On May 21, 1999, private respondents for the 4th time worked with Lagons project in Camarin, Caloocan Citywith Furukawa Corporation as the general contractor. Their contract would expire on February 28, 2000, theperiod of completion of the project. From May 21, 1997-December 1999, private respondents received the wageofP145.00. At this time, the minimum prescribed rate for Manila was P198.00. In January to February 28, thethree received the wage of P165.00. The existing rate at that time was P213.00.

For reasons of delay on the delivery of imported materials from Furukawa Corporation, the Camarin project wasnot completed on the scheduled date of completion. Face[d] with economic problem[s], Lagon was constrained tocut down the overtime work of its worker[s][,] including private respondents. Thus, when requested by private


11/111

respondents on February 28, 2000 to work overtime, Lagon refused and told private respondents that if theyinsist, they would have to go home at their own expense and that they would not be given anymore time norallowed to stay in the quarters. This prompted private respondents to leave their work and went home to Cebu.On March 3, 2000, private respondents filed a complaint for illegal dismissal, non-payment of wages, holidaypay, 13th month pay for 1997 and 1998 and service incentive leave pay as well as damages and attorneys fees.

In their answers, petitioners admit employment of private respondents but claimed that the latter were onlyproject employees[,] for their services were merely engaged for a specific project or undertaking and the same

were covered by contracts duly signed by private respondents. Petitioners further alleged that the food allowanceofP63.00 per day as well as private respondents allowance for lodging house, transportation, electricity, waterand snacks allowance should be added to their basic pay. With these, petitioners claimed that privaterespondents received higher wage rate than that prescribed in Rizal and Manila.

Lastly, petitioners alleged that since the workplaces of private respondents were all in Manila, the complaintshould be filed there. Thus, petitioners prayed for the dismissal of the complaint for lack of jurisdiction and utterlack of merit. (Citations omitted.)

On January 18, 2001, Labor Arbiter Reynoso Belarmino (LA) rendered his decision 5 declaring that his office had jurisdiction to hear and decide the complaint filed by private respondents. Referring to Rule IV, Sec. 1 (a) of theNLRC Rules of Procedure prevailing at that time, 6 the LA ruled that it had jurisdiction because the "workplace,"as defined in the said rule, included the place where the employee was supposed to report back after atemporary detail, assignment or travel, which in this case was Cebu.

As to the status of their employment, the LA opined that private respondents were regular employees becausethey were repeatedly hired by petitioners and they performed activities which were usual, necessary anddesirable in the business or trade of the employer.

With regard to the underpayment of wages, the LA found that private respondents were underpaid. It ruled thatthe free board and lodging, electricity, water, and food enjoyed by them could not be included in the computationof their wages because these were given without their written consent.

The LA, however, found that petitioners were not liable for illegal dismissal. The LA viewed private respondentsact of going home as an act of indifference when petitioners decided to prohibit overtime work. 7

In its March 31, 2004 Decision, the NLRC affirmed the findings of the LA. In addition, the NLRC noted that not asingle report of project completion was filed with the nearest Public Employment Office as requiredby the Department of Labor and Employment (DOLE) Department Order No. 19, Series of 1993. 8 The NLRC laterdenied 9 the motion for reconsideration 10 subsequently filed by petitioners.

When the matter was elevated to the CA on a petition for certiorari, it affirmed the findings that the privaterespondents were regular employees. It considered the fact that they performed functions which were the regularand usual business of petitioners. According to the CA, they were clearly members of a work pool from whichpetitioners drew their project employees.

The CA also stated that the failure of petitioners to comply with the simple but compulsory requirement to submit

a report of termination to the nearest Public Employment Office every time private respondents employment wasterminated was proof that the latter were not project employees but regular employees.

The CA likewise found that the private respondents were underpaid. It ruled that the board and lodging,electricity, water, and food enjoyed by the private respondents could not be included in the computation of theirwages because these were given without their written consent. The CA added that the private respondents wereentitled to 13th month pay.

The CA also agreed with the NLRC that there was no illegal dismissal. The CA opined that it was the petitionersprerogative to grant or deny any request for overtime work and that the private respondents act of leaving theworkplace after their request was denied was an act of abandonment.


12/111

In modifying the decision of the labor tribunal, however, the CA noted that respondent Roldan Lopez did not workin the Antipolo project and, thus, was not entitled to wage differentials. Also, in computing the differentials for theperiod January and February 2000, the CA disagreed in the award of differentials based on the minimum dailywage of P223.00, as the prevailing minimum daily wage then was only P213.00. Petitioners soughtreconsideration but the CA denied it in its March 31, 2006 Resolution. 11

In this petition for review on certiorari, 12 petitioners seek the reversal and setting aside of the CA decisionanchored on this lone:

GROUND/ASSIGNMENT OF ERROR

THE PUBLIC RESPONDENT NLRC COMMITTED A SERIOUS ERROR IN LAW IN AWARDING WAGEDIFFERENTIALS TO THE PRIVATE COMPLAINANTS ON THE BASES OF MERE TECHNICALITIES, THATIS, FOR LACK OF WRITTEN CONFORMITY x x x AND LACK OF NOTICE TO THE DEPARTMENT OF LABORAND EMPLOYMENT (DOLE)[,] AND THUS, THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMINGWITH MODIFICATION THE NLRC DECISION IN THE LIGHT OF THE RULING IN THE CASE OF JENNY M.AGABON and VIRGILIO AGABON vs, NLRC, ET AL., GR NO. 158963, NOVEMBER 17, 2004, 442 SCRA 573,[AND SUBSEQUENTLY IN THE CASE OF GLAXO WELLCOME PHILIPPINES, INC. VS. NAGAKAKAISANGEMPLEYADO NG WELLCOME-DFA (NEW DFA), ET AL., GR NO. 149349, 11 MARCH 2005], WHICH FINDSAPPLICATION IN THE INSTANT CASE BY ANALOGY. 13

Petitioners reiterated their position that the value of the facilities that the private respondents enjoyed should beincluded in the computation of the "wages" received by them. They argued that the rulings in Agabon v.NLRC 14and Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado Ng Wellcome-DFA 15 should beapplied by analogy, in the sense that the lack of written acceptance of the employees of the facilities enjoyed bythem should not mean that the value of the facilities could not be included in the computation of the privaterespondents "wages."

On November 29, 2006, the Court resolved to issue a Temporary Restraining Order (TRO) enjoining the publicrespondent from enforcing the NLRC and CA decisions until further orders from the Court.

After a thorough review of the records, however, the Court finds no merit in the petition.

This petition generally involves factual issues, such as, whether or not there is evidence on record to support thefindings of the LA, the NLRC and the CA that private respondents were project or regular employees and thattheir salary differentials had been paid. This calls for a re-examination of the evidence, which the Court cannotentertain. Settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise inmatters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind theCourt when supported by substantial evidence. It is not the Courts function to assess and evaluate the evidence

all over again, particularly where the findings of both the Labor tribunals and the CA concur. 16

As a general rule, on payment of wages, a party who alleges payment as a defense has the burden of provingit.17Specifically with respect to labor cases, the burden of proving payment of monetary claims rests on theemployer, the rationale being that the pertinent personnel files, payrolls, records, remittances and other similar

documents which will show that overtime, differentials, service incentive leave and other claims of workershave been paid are not in the possession of the worker but in the custody and absolute control of theemployer. 18

In this case, petitioners, aside from bare allegations that private respondents received wages higher than theprescribed minimum, failed to present any evidence, such as payroll or payslips, to support their defense ofpayment. Thus, petitioners utterly failed to discharge the onus probandi .

Private respondents, on the other hand, are entitled to be paid the minimum wage, whether they are regular ornon-regular employees.


13/111

Section 3, Rule VII of the Rules to Implement the Labor Code 19 specifically enumerates those who are notcovered by the payment of minimum wage. Project employees are not among them.

On whether the value of the facilities should be included in the computation of the "wages" received by privaterespondents, Section 1 of DOLE Memorandum Circular No. 2 provides that an employer may provide subsidizedmeals and snacks to his employees provided that the subsidy shall not be less that 30% of the fair andreasonable value of such facilities. In such cases, the employer may deduct from the wages of the employeesnot more than 70% of the value of the meals and snacks enjoyed by the latter, provided that such deduction is

with the written authorization of the employees concerned.

Moreover, before the value of facilities can be deducted from the employees wages, the following requisitesmust all be attendant: first, proof must be shown that such facilities are customarily furnished by the trade;s econd , the provision of deductible facilities must be voluntarily accepted in writing by the employee; and finally ,facilities must be charged at reasonable value. 20 Mere availment is not sufficient to allow deductions fromemployees wages. 21

These requirements, however, have not been met in this case. SLL failed to present any company policy orguideline showing that provisions for meals and lodging were part of the employees salaries. It also failed toprovide proof of the employees written authorization, much less show how they arrived at their valuations. At anyrate, it is not even clear whether private respondents actually enjoyed said facilities.

The Court, at this point, makes a distinction between "facilities" and "supplements." It is of the view that the foodand lodging, or the electricity and water allegedly consumed by private respondents in this case were notfacilities but supplements. In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co. ,22 the two terms weredistinguished from one another in this wise:

"Supplements," therefore, constitute extra remuneration or special privileges or benefits given to or received bythe laborers over and above their ordinary earnings or wages . "Facilities," on the other hand, are items ofexpense necessary for the laborer's and his family's existence and subsistence so that by express provision oflaw (Sec. 2[g]), they form part of the wage and when furnished by the employer are deductible therefrom, since ifthey are not so furnished, the laborer would spend and pay for them just the same.

In short, the benefit or privilege given to the employee which constitutes an extra remuneration above and overhis basic or ordinary earning or wage is supplement; and when said benefit or privilege is part of the laborers'basic wages, it is a facility. The distinction lies not so much in the kind of benefit or item (food, lodging, bonus orsick leave) given, but in the purpose for which it is given. 23 In the case at bench, the items provided were givenfreely by SLL for the purpose of maintaining the efficiency and health of its workers while they were working attheir respective projects. 1avvphi1

For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any rate, these were cases ofdismissal with just and authorized causes. The present case involves the matter of the failure of the petitioners tocomply with the payment of the prescribed minimum wage.

The Court sustains the deletion of the award of differentials with respect to respondent Roldan Lopez. Ascorrectly pointed out by the CA, he did not work for the project in Antipolo.

WHEREFORE, the petition is DENIED. The temporary restraining order issued by the Court on November 29,2006 is deemed, as it is hereby ordered, DISSOLVED.

SO ORDERED.


14/111

FIRST DIVISION

[G.R. No. 138051. June 10, 2004]

JOSE Y. SONZA,petitioner , vs . ABS-CBN BROADCASTINCORPORATION,respondent .

D E C I S I O NCARPIO,J .:

The Case

Before this Court is a petition for review on certiorari [1]

assailing the 26 March1999 Decision [2] of the Court of Appeals in CA-G.R. SP No. 49190 dismissing thepetition filed by Jose Y. Sonza (SONZA). The Court of Appeals affirmed the findingsof the National Labor Relations Commission (NLRC), which affirmed the LaborArbiters dismissal of the case for lack of jurisdiction.

The Facts

In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signedan Agreement (Agreement) with the Mel and Jay Management and DevelopmentCorporation (MJMDC). ABS-CBN was represented by its corporate officers whileMJMDC was represented by SONZA, as President and General Manager, and CarmelaTiangco (TIANGCO), as EVP and Treasurer. Referred to in the Agreement asAGENT, MJMDC agreed to provide SONZAs services exclusively to ABS-CBN astalent for radio and television. The Agreement listed the services SONZA would renderto ABS-CBN, as follows:

a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;

b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays. [3]

ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000 forthe first year and P317,000 for the second and third year of the Agreement. ABS-CBNwould pay the talent fees on the 10 th and 25 th days of the month.

On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III,which reads:


15/111

Dear Mr. Lopez,

We would like to call your attention to the Agreement dated May 1994 entered into by yourgoodself on behalf of ABS-CBN with our company relative to our talent JOSE Y. SONZA.

As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning hisprograms and career. We consider these acts of the station violative of the Agreement and thestation as in breach thereof. In this connection, we hereby serve notice of rescission of saidAgreement at our instance effective as of date.

Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining amountstipulated in paragraph 7 of the Agreement but reserves the right to seek recovery of the otherbenefits under said Agreement.

Thank you for your attention.

Very truly yours,

(Sgd.)JOSE Y. SONZA

President and Gen. Manager [4]

On 30 April 1996, SONZA filed a complaint against ABS-CBN before theDepartment of Labor and Employment, National Capital Region in QuezonCity. SONZA complained that ABS-CBN did not pay his salaries, separation pay,service incentive leave pay, 13 th month pay, signing bonus, travel allowance andamounts due under the Employees Stock Option Plan (ESOP).

On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that noemployer-employee relationship existed between the parties. SONZA filed anOpposition to the motion on 19 July 1996.

Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through hisaccount at PCIBank, Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBNopened a new account with the same bank where ABS-CBN deposited SONZAs talentfees and other payments due him under the Agreement.

In his Order dated 2 December 1996, the Labor Arbiter [5] denied the motion to

dismiss and directed the parties to file their respective position papers. The LaborArbiter ruled:

In this instant case, complainant for having invoked a claim that he was an employee ofrespondent company until April 15, 1996 and that he was not paid certain claims, it is sufficientenough as to confer jurisdiction over the instant case in this Office. And as to whether or notsuch claim would entitle complainant to recover upon the causes of action asserted is a matter tobe resolved only after and as a result of a hearing. Thus, the respondents plea of lack ofemployer-employee relationship may be pleaded only as a matter of defense. It behooves upon it


16/111

the duty to prove that there really is no employer-employee relationship between it and thecomplainant.

The Labor Arbiter then considered the case submitted for resolution. The partiessubmitted their position papers on 24 February 1997.

On 11 March 1997, SONZA filed a Reply to Respondents Position Paper with

Motion to Expunge Respondents Annex 4 and Annex 5 from the Records. Annexes 4and 5 are affidavits of ABS-CBNs witnesses Soccoro Vidanes and Rolando V. Cruz.These witnesses stated in their affidavits that the prevailing practice in the televisionand broadcast industry is to treat talents like SONZA as independent contractors.

The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the complaintfor lack of jurisdiction. [6] The pertinent parts of the decision read as follows:

x x x

While Philippine jurisprudence has not yet, with certainty, touched on the true nature of thecontract of a talent, it stands to reason that a talent as above-described cannot be consideredas an employee by reason of the peculiar circumstances surrounding the engagement of hisservices.

It must be noted that complainant was engaged by respondent by reason of his peculiar skillsand talent as a TV host and a radio broadcaster. Unlike an ordinary employee, he was freeto perform the services he undertook to render in accordance with his own style. Thebenefits conferred to complainant under the May 1994 Agreement are certainly very muchhigher than those generally given to employees. For one, complainant Sonzas monthly talentfees amount to a staggering P317,000. Moreover, his engagement as a talent was covered by aspecific contract. Likewise, he was not bound to render eight (8) hours of work per day as heworked only for such number of hours as may be necessary.

The fact that per the May 1994 Agreement complainant was accorded some benefits normallygiven to an employee is inconsequential. Whatever benefits complainant enjoyed arose fromspecific agreement by the parties and not by reason of employer-employee relationship. Ascorrectly put by the respondent, All these benefits are merely talent fees and other contractualbenefits and should not be deemed as salaries, wages and/or other remuneration accorded to anemployee, notwithstanding the nomenclature appended to these benefits. Apropos to this is therule that the term or nomenclature given to a stipulated benefit is not controlling, but the intentof the parties to the Agreement conferring such benefit.

The fact that complainant was made subject to respondents Rules and Regulations,likewise, does not detract from the absence of employer-employee relationship . As held bythe Supreme Court, The line should be drawn between rules that merely serve as guidelinestowards the achievement of the mutually desired result without dictating the means or methodsto be employed in attaining it, and those that control or fix the methodology and bind or restrictthe party hired to the use of such means. The first, which aim only to promote the result, createno employer-employee relationship unlike the second, which address both the result and the


17/111

means to achieve it. (Insular Life Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484,November 15, 1989).

x x x (Emphasis supplied) [7]

SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered aDecision affirming the Labor Arbiters decision. SONZA filed a motion forreconsideration, which the NLRC denied in its Resolution dated 3 July 1998.

On 6 October 1998, SONZA filed a special civil action for certiorari before the Courtof Appeals assailing the decision and resolution of the NLRC. On 26 March 1999, theCourt of Appeals rendered a Decision dismissing the case. [8]

Hence, this petition.

The Rulings of the NLRC and Court of Appeals

The Court of Appeals affirmed the NLRCs finding that no employer-employeerelationship existed between SONZA and ABS-CBN. Adopting the NLRCs decision, theappellate court quoted the following findings of the NLRC:

x x x the May 1994 Agreement will readily reveal that MJMDC entered into the contract merelyas an agent of complainant Sonza, the principal. By all indication and as the law puts it, the actof the agent is the act of the principal itself. This fact is made particularly true in this case, asadmittedly MJMDC is a management company devoted exclusively to managing the careers ofMr. Sonza and his broadcast partner, Mrs. Carmela C. Tiangco. (Opposition to Motion to

Dismiss)Clearly, the relations of principal and agent only accrues between complainant Sonza andMJMDC, and not between ABS-CBN and MJMDC. This is clear from the provisions of theMay 1994 Agreement which specifically referred to MJMDC as the AGENT. As a matter offact, when complainant herein unilaterally rescinded said May 1994 Agreement, it was MJMDCwhich issued the notice of rescission in behalf of Mr. Sonza, who himself signed the same in hiscapacity as President.

Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact that historically,

the parties to the said agreements are ABS-CBN and Mr. Sonza. And it is only in the May 1994Agreement, which is the latest Agreement executed between ABS-CBN and Mr. Sonza, thatMJMDC figured in the said Agreement as the agent of Mr. Sonza.

We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-CBN suchthat there exist[s] employer-employee relationship between the latter and Mr. Sonza. On thecontrary, We find it indubitable, that MJMDC is an agent, not of ABS-CBN, but of thetalent/contractor Mr. Sonza, as expressly admitted by the latter and MJMDC in the May 1994Agreement.


18/111

It may not be amiss to state that jurisdiction over the instant controversy indeed belongs to theregular courts, the same being in the nature of an action for alleged breach of contractualobligation on the part of respondent-appellee. As squarely apparent from complainant-appellants Position Paper, his claims for compensation for services, 13 th month pay, signingbonus and travel allowance against respondent-appellee are not based on the Labor Code butrather on the provisions of the May 1994 Agreement, while his claims for proceeds under StockPurchase Agreement are based on the latter. A portion of the Position Paper of complainant-appellant bears perusal:

Under [the May 1994 Agreement] with respondent ABS-CBN, the latter contractually bounditself to pay complainant a signing bonus consisting of shares of stockswith FIVE HUNDREDTHOUSAND PESOS (P500,000.00).

Similarly, complainant is also entitled to be paid 13 th month pay based on an amount not lowerthan the amount he was receiving prior to effectivity of (the) Agreement.

Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a commutable travelbenefit amounting to at least One Hundred Fifty Thousand Pesos (P150,000.00) per year.

Thus, it is precisely because of complainant-appellants own recognition of the fact that hiscontractual relations with ABS-CBN are founded on the New Civil Code, rather than the LaborCode, that instead of merely resigning from ABS-CBN, complainant-appellant served upon thelatter a notice of rescission of Agreement with the station, per his letter dated April 1, 1996,which asserted that instead of referring to unpaid employee benefits, he is waiving andrenouncing recovery of the remaining amount stipulated in paragraph 7 of the Agreement butreserves the right to such recovery of the other benefits under said Agreement. (Annex 3 of therespondent ABS-CBNs Motion to Dismiss dated July 10, 1996).

Evidently, it is precisely by reason of the alleged violation of the May 1994 Agreement and/orthe Stock Purchase Agreement by respondent-appellee that complainant-appellant filed hiscomplaint. Complainant-appellants claims being anchored on the alleged breach of contract onthe part of respondent-appellee, the same can be resolved by reference to civil law and not tolabor law. Consequently, they are within the realm of civil law and, thus, lie with the regularcourts. As held in the case of Dai-Chi Electronics Manufacturing vs. Villarama, 238 SCRA267, 21 November 1994, an action for breach of contractual obligation is intrinsically a civildispute .[9] (Emphasis supplied)

The Court of Appeals ruled that the existence of an employer-employee relationshipbetween SONZA and ABS-CBN is a factual question that is within the jurisdiction of theNLRC to resolve. [10] A special civil action for certiorari extends only to issues of want orexcess of jurisdiction of the NLRC. [11] Such action cannot cover an inquiry into thecorrectness of the evaluation of the evidence which served as basis of the NLRCsconclusion. [12] The Court of Appeals added that it could not re-examine the partiesevidence and substitute the factual findings of the NLRC with its own. [13]


19/111

The Issue

In assailing the decision of the Court of Appeals, SONZA contends that:

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DECISIONAND REFUSING TO FIND THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP

EXISTED BETWEEN SONZA AND ABS-CBN, DESPITE THE WEIGHT OFCONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO SUPPORT SUCH AFINDING. [14]

The Courts Ruling

We affirm the assailed decision.

No convincing reason exists to warrant a reversal of the decision of the Court of

Appeals affirming the NLRC ruling which upheld the Labor Arbiters dismissal of thecase for lack of jurisdiction.

The present controversy is one of first impression. Although Philippine labor lawsand jurisprudence define clearly the elements of an employer-employee relationship,this is the first time that the Court will resolve the nature of the relationship between atelevision and radio station and one of its talents. There is no case law stating that aradio and television program host is an employee of the broadcast station.

The instant case involves big names in the broadcast industry, namely Jose JaySonza, a known television and radio personality, and ABS-CBN, one of the biggest

television and radio networks in the country.SONZA contends that the Labor Arbiter has jurisdiction over the case because he

was an employee of ABS-CBN. On the other hand, ABS-CBN insists that the LaborArbiter has no jurisdiction because SONZA was an independent contractor.

Employee or Independent Contractor?

The existence of an employer-employee relationship is a question of fact. Appellate

courts accord the factual findings of the Labor Arbiter and the NLRC not only respectbut also finality when supported by substantial evidence. [15] Substantial evidence meanssuch relevant evidence as a reasonable mind might accept as adequate to support aconclusion. [16] A party cannot prove the absence of substantial evidence by simplypointing out that there is contrary evidence on record, direct or circumstantial. TheCourt does not substitute its own judgment for that of the tribunal in determining wherethe weight of evidence lies or what evidence is credible. [17]

SONZA maintains that all essential elements of an employer-employee relationshipare present in this case. Case law has consistently held that the elements of an


20/111


21/111

SONZA such huge talent fees precisely because of SONZAs unique skills, talent andcelebrity status not possessed by ordinary employees. Obviously, SONZA acting alonepossessed enough bargaining power to demand and receive such huge talent fees forhis services. The power to bargain talent fees way above the salary scales of ordinaryemployees is a circumstance indicative, but not conclusive, of an independentcontractual relationship.

The payment of talent fees directly to SONZA and not to MJMDC does not negatethe status of SONZA as an independent contractor. The parties expressly agreed onsuch mode of payment. Under the Agreement, MJMDC is the AGENT of SONZA, towhom MJMDC would have to turn over any talent fee accruing under the Agreement.

C. Power of Dismissal

For violation of any provision of the Agreement, either party may terminate theirrelationship. SONZA failed to show that ABS-CBN could terminate his services ongrounds other than breach of contract, such as retrenchment to prevent losses asprovided under labor laws. [23]

During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees aslong as AGENT and Jay Sonza shall faithfully and completely perform each conditionof this Agreement. [24] Even if it suffered severe business losses, ABS-CBN could notretrench SONZA because ABS-CBN remained obligated to pay SONZAs talent feesduring the life of the Agreement. This circumstance indicates an independentcontractual relationship between SONZA and ABS-CBN.

SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its undertaking in theAgreement to continue paying SONZAs talent fees during the remaining life of theAgreement even if ABS-CBN cancelled SONZAs programs through no fault ofSONZA. [25]

SONZA assails the Labor Arbiters interpretation of his rescission of the Agreementas an admission that he is not an employee of ABS-CBN. The Labor Arbiter stated thatif it were true that complainant was really an employee, he would merely resign,instead. SONZA did actually resign from ABS-CBN but he also, as president ofMJMDC, rescinded the Agreement. SONZAs letter clearly bears this out. [26] However,the manner by which SONZA terminated his relationship with ABS-CBN isimmaterial. Whether SONZA rescinded the Agreement or resigned from work does notdetermine his status as employee or independent contractor.

D. Power of Control

Since there is no local precedent on whether a radio and television program host isan employee or an independent contractor, we refer to foreign case law in analyzing the


22/111


23/111

shows ABS-CBN or its interests. [32]The clear implication is that SONZA had a free handon what to say or discuss in his shows provided he did not attack ABS-CBN or itsinterests.

We find that ABS-CBN was not involved in the actual performance that producedthe finished product of SONZAs work. [33] ABS-CBN did not instruct SONZA how toperform his job. ABS-CBN merely reserved the right to modify the program format and

airtime schedule for more effective programming. [34] ABS-CBNs sole concern was thequality of the shows and their standing in the ratings. Clearly, ABS-CBN did notexercise control over the means and methods of performance of SONZAs work.

SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-CBNs power over the means and methods of the performance of his work. AlthoughABS-CBN did have the option not to broadcast SONZAs show, ABS-CBN was stillobligated to pay SONZAs talent fees. Thus, even if ABS-CBN was completelydissatisfied with the means and methods of SONZAs performance of his work, or evenwith the quality or product of his work, ABS-CBN could not dismiss or even discipline

SONZA. All that ABS-CBN could do is not to broadcast SONZAs show but ABS-CBNmust still pay his talent fees in full. [35]

Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was bythe obligation to continue paying in full SONZAs talent fees, did not amount to controlover the means and methods of the performance of SONZAs work. ABS-CBN couldnot terminate or discipline SONZA even if the means and methods of performance ofhis work - how he delivered his lines and appeared on television - did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited only to the result ofSONZAs work, whether to broadcast the final product or not. In either case, ABS-CBNmust still pay SONZAs talent fees in full until the expiry of the Agreement.

In Vaughan, et al. v. Warner, et al. ,[36] the United States Circuit Court of Appealsruled that vaudeville performers were independent contractors although themanagement reserved the right to delete objectionable features in their shows. Sincethe management did not have control over the manner of performance of the skills ofthe artists, it could only control the result of the work by deleting objectionablefeatures. [37]

SONZA further contends that ABS-CBN exercised control over his work bysupplying all equipment and crew. No doubt, ABS-CBN supplied the equipment, crewand airtime needed to broadcast the Mel & Jay programs. However, the equipment,crew and airtime are not the tools and instrumentalities SONZA needed to perform his

job. What SONZA principally needed were his talent or skills and the costumesnecessary for his appearance. [38] Even though ABS-CBN provided SONZA with theplace of work and the necessary equipment, SONZA was still an independentcontractor since ABS-CBN did not supervise and control his work. ABS-CBNs soleconcern was for SONZA to display his talent during the airing of the programs. [39]

A radio broadcast specialist who works under minimal supervision is an independentcontractor. [40] SONZAs work as television and radio program host required special skills


24/111

and talent, which SONZA admittedly possesses. The records do not show that ABS-CBN exercised any supervision and control over how SONZA utilized his skills andtalent in his shows.

Second , SONZA urges us to rule that he was ABS-CBNs employee because ABS-CBN subjected him to its rules and standards of performance. SONZA claims that thisindicates ABS-CBNs control not only [over] his manner of work but also the quality of

his work.The Agreement stipulates that SONZA shall abide with the rules and standards of

performance covering talents [41] of ABS-CBN. The Agreement does not requireSONZA to comply with the rules and standards of performance prescribed foremployees of ABS-CBN. The code of conduct imposed on SONZA under theAgreement refers to the Television and Radio Code of the Kapisanan ng mgaBroadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-CBN)as its Code of Ethics. [42] The KBP code applies to broadcasters, not to employees ofradio and television stations. Broadcasters are not necessarily employees of radio and

television stations. Clearly, the rules and standards of performance referred to in theAgreement are those applicable to talents and not to employees of ABS-CBN.

In any event, not all rules imposed by the hiring party on the hired party indicate thatthe latter is an employee of the former. [43] In this case, SONZA failed to show that theserules controlled his performance. We find that these general rules aremerely guidelines towards the achievement of the mutually desired result, which aretop-rating television and radio programs that comply with standards of the industry. Wehave ruled that:

Further, not every form of control that a party reserves to himself over the conduct of the otherparty in relation to the services being rendered may be accorded the effect of establishing anemployer-employee relationship. The facts of this case fall squarely with the case of Insular LifeAssurance Co., Ltd. vs. NLRC. In said case, we held that:

Logically, the line should be drawn between rules that merely serve as guidelines towards theachievement of the mutually desired result without dictating the means or methods to beemployed in attaining it, and those that control or fix the methodology and bind or restrict theparty hired to the use of such means. The first, which aim only to promote the result, create noemployer-employee relationship unlike the second, which address both the result and the meansused to achieve it. [44]

The Vaughan case also held that one could still be an independent contractoralthough the hirer reserved certain supervision to insure the attainment of the desiredresult. The hirer, however, must not deprive the one hired from performing his servicesaccording to his own initiative. [45]

Lastly , SONZA insists that the exclusivity clause in the Agreement is the mostextreme form of control which ABS-CBN exercised over him.


25/111

This argument is futile. Being an exclusive talent does not by itself mean thatSONZA is an employee of ABS-CBN. Even an independent contractor can validlyprovide his services exclusively to the hiring party. In the broadcast industry, exclusivityis not necessarily the same as control.

The hiring of exclusive talents is a widespread and accepted practice in theentertainment industry. [46] This practice is not designed to control the means and

methods of work of the talent, but simply to protect the investment of the broadcaststation. The broadcast station normally spends substantial amounts of money, time andeffort in building up its talents as well as the programs they appear in and thus expectsthat said talents remain exclusive with the station for a commensurate period oftime. [47] Normally, a much higher fee is paid to talents who agree to work exclusively fora particular radio or television station. In short, the huge talent fees partiallycompensates for exclusivity, as in the present case.

MJMDC as Agent of SONZA

SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, whichcontracted out his services to ABS-CBN. The Labor Arbiter ruled that as a talent ofMJMDC, SONZA is not an employee of ABS-CBN. SONZA insists that MJMDC is alabor-only contractor and ABS-CBN is his employer.

In a labor-only contract, there are three parties involved: (1) the labor-onlycontractor; (2) the employee who is ostensibly under the employ of the labor-onlycontractor; and (3) the principal who is deemed the real employer. Under thisscheme, the labor-only contractor is the agent of the principal . The law makesthe principal responsible to the employees of the labor-only contractor as if theprincipal itself directly hired or employed the employees. [48] These circumstances are notpresent in this case.

There are essentially only two parties involved under the Agreement, namely,SONZA and ABS-CBN. MJMDC merely acted as SONZAs agent. The Agreementexpressly states that MJMDC acted as the AGENT of SONZA. The records do notshow that MJMDC acted as ABS-CBNs agent. MJMDC, which stands for Mel and JayManagement and Development Corporation, is a corporation organized and owned bySONZA and TIANGCO. The President and General Manager of MJMDC is SONZA

himself. It is absurd to hold that MJMDC, which is owned, controlled, headed andmanaged by SONZA, acted as agent of ABS-CBN in entering into the Agreement withSONZA, who himself is represented by MJMDC. That would make MJMDC the agentof both ABS-CBN and SONZA.

As SONZA admits, MJMDC is a management company devoted exclusively tomanaging the careers of SONZA and his broadcast partner, TIANGCO. MJMDC is notengaged in any other business, not even job contracting. MJMDC does not have anyother function apart from acting as agent of SONZA or TIANGCO to promote theircareers in the broadcast and television industry. [49]


26/111

Policy Instruction No. 40

SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor BlasOple on 8 January 1979 finally settled the status of workers in the broadcastindustry. Under this policy, the types of employees in the broadcast industry are thestation and program employees.

Policy Instruction No. 40 is a mere executive issuance which does not have theforce and effect of law. There is no legal presumption that Policy Instruction No. 40determines SONZAs status. A mere executive issuance cannot exclude independentcontractors from the class of service providers to the broadcast industry. Theclassification of workers in the broadcast industry into only two groups under PolicyInstruction No. 40 is not binding on this Court, especially when the classification has nobasis either in law or in fact.

Affidavits of ABS-CBNs Witnesses

SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro Vidanesand Rolando Cruz without giving his counsel the opportunity to cross-examine thesewitnesses. SONZA brands these witnesses as incompetent to attest on the prevailingpractice in the radio and television industry. SONZA views the affidavits of thesewitnesses as misleading and irrelevant.

While SONZA failed to cross-examine ABS-CBNs witnesses, he was neverprevented from denying or refuting the allegations in the affidavits. The Labor Arbiterhas the discretion whether to conduct a formal (trial-type) hearing after the submissionof the position papers of the parties, thus:

Section 3. Submission of Position Papers/Memorandum

x x x

These verified position papers shall cover only those claims and causes of action raised in thecomplaint excluding those that may have been amicably settled, and shall be accompanied by allsupporting documents including the affidavits of their respective witnesses which shall take theplace of the latters direct testimony. x x x

Section 4. Determination of Necessity of Hearing. Immediately after the submission of theparties of their position papers/memorandum, the Labor Arbiter shall motu propio determinewhether there is need for a formal trial or hearing. At this stage, he may, at his discretion and forthe purpose of making such determination, ask clarificatory questions to further elicit facts orinformation, including but not limited to the subpoena of relevant documentary evidence, if anyfrom any party or witness. [50]


27/111

The Labor Arbiter can decide a case based solely on the position papers and thesupporting documents without a formal trial. [51] The holding of a formal hearing or trial issomething that the parties cannot demand as a matter of right. [52] If the Labor Arbiter isconfident that he can rely on the documents before him, he cannot be faulted for notconducting a formal trial, unless under the particular circumstances of the case, thedocuments alone are insufficient. The proceedings before a Labor Arbiter are non-litigious in nature. Subject to the requirements of due process, the technicalities of lawand the rules obtaining in the courts of law do not strictly apply in proceedings before aLabor Arbiter.

Talents as Independent Contractors

ABS-CBN claims that there exists a prevailing practice in the broadcast andentertainment industries to treat talents like SONZA as independent contractors.SONZA argues that if such practice exists, it is void for violating the right of labor to

security of tenure.The right of labor to security of tenure as guaranteed in the Constitution [53] arises only

if there is an employer-employee relationship under labor laws. Not every performanceof services for a fee creates an employer-employee relationship. To hold that everyperson who renders services to another for a fee is an employee - to give meaning tothe security of tenure clause - will lead to absurd results.

Individuals with special skills, expertise or talent enjoy the freedom to offer theirservices as independent contractors. The right to life and livelihood guarantees thisfreedom to contract as independent contractors. The right of labor to security of tenure

cannot operate to deprive an individual, possessed with special skills, expertise andtalent, of his right to contract as an independent contractor. An individual like an artistor talent has a right to render his services without any one controlling the means andmethods by which he performs his art or craft. This Court will not interpret the right oflabor to security of tenure to compel artists and talents to render their services only asemployees. If radio and television program hosts can render their services only asemployees, the station owners and managers can dictate to the radio and televisionhosts what they say in their shows. This is not conducive to freedom of the press.

Different Tax Treatment of Talents and Broadcasters

The National Internal Revenue Code (NIRC) [54] in relation to Republic Act No.7716, [55] as amended by Republic Act No. 8241, [56] treats talents, television and radiobroadcasters differently. Under the NIRC, these professionals are subject to the 10%value-added tax (VAT) on services they render. Exempted from the VAT are thoseunder an employer-employee relationship. [57] This different tax treatment accorded totalents and broadcasters bolters our conclusion that they are independent contractors,provided all the basic elements of a contractual relationship are present as in this case.


28/111

Nature of SONZAs Claims

SONZA seeks the recovery of allegedly unpaid talent fees, 13 th month pay,separation pay, service incentive leave, signing bonus, travel allowance, and amountsdue under the Employee Stock Option Plan. We agree with the findings of the LaborArbiter and the Court of Appeals that SONZAs claims are all based on the May 1994

Agreement and stock option plan, and not on the Labor Code. Clearly, the presentcase does not call for an application of the Labor Code provisions but an interpretationand implementation of the May 1994 Agreement. In effect, SONZAs cause of action isfor breach of contract which is intrinsically a civil dispute cognizable by the regularcourts. [58]

WHEREFORE, we DENY the petition. The assailed Decision of the Court ofAppeals dated 26 March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs againstpetitioner.

SO ORDERED.


29/111


30/111

d. Promotional Increase.

A promotional increase was asked by the petitioner for fifteen (15) of its memberswho were given or assigned new job classifications. According to petitioner, the new jobclassifications were in the nature of a promotion, necessitating the grant of an increasein the salaries of the said 15 members.

On 21 June 2001, a Submission Agreement was filed by the parties before theOffice for Voluntary Arbitration. Assigned as Voluntary Arbitrator was Angel A. Ancheta.

On 04 July 2001, the parties simultaneously filed their respective position paperswith the Office of the Voluntary Arbitrator, NCMB, and DOLE.

On 25 September 2001, a Decision [5] was rendered by Voluntary Arbitrator Angel A.Ancheta in favor of the private respondent. The dispositive portion of the said Decisionis quoted hereunder:

WHEREFORE , with all the foregoing considerations, it is hereby declared that the Company is

not guilty of violating Article 100 of the Labor Code, as amended, or specifically forwithdrawing the service award, Christmas party and 35% premium for work rendered duringHoly Week and Christmas season and for not granting any promotional increase to the allegedfifteen (15) Daily-Rated Union Members in the absence of a promotion. The Company however,is directed to grant the service award to deserving employees in amounts and extent at itsdiscretion, in consultation with the Unions on grounds of equity and fairness. [6]

A motion for reconsideration was filed by both unions [7] where they alleged that theVoluntary Arbitrator manifestly erred in finding that the company did not violate Article100 of the Labor Code, as amended, when it unilaterally withdrew the subject benefits,

and when no promotional increase was granted to the affected employees.On 05 November 2001, an Order [8] was issued by Voluntary Arbitrator Angel A.

Ancheta. Part of the Order is quoted hereunder:

Considering that the issues raised in the instant case were meticulously evaluated and length[i]lydiscussed and explained based on the pleadings and documentary evidenc[e] adduced by thecontending parties, we find no cogent reason to change, modify, or disturb said decision.

WHEREFORE, let the instant MOTION[S] FOR RECONSIDERATION be, as they are hereby,denied for lack of merit. Our decision dated 25 September 2001 is affirmed en toto. [9]

An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by theDaily-Rated Union before the Court of Appeals [10] and docketed as CA-G.R. SP No.68182. The petitioner averred that Voluntary Arbitrator Angel A. Ancheta erred in findingthat the company did not violate Article 100 of the Labor Code, as amended, when thesubject benefits were unilaterally withdrawn. Further, they assert, the VoluntaryArbitrator erred in adopting the companys unaudited Revenues and ProfitabilityAnalysis for the years 1996-2000 in justifying the latters withdrawal of the questionedbenefits. [11]


31/111


32/111

III

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICEAWARD IS NOT DEPENDENT ON PROFIT BUT ON SERVICE AND THUS, CANNOT BEUNILATERALLY WITHDRAWN BY RESPONDENT COMPANY.

ISSUE

Synthesized, the solitary issue that must be addressed by this Court is whether ornot private respondent is guilty of violating Article 100 of the Labor Code, as amended,when the benefits/entitlements given to the members of petitioner union werewithdrawn.

THE COURTS RULING

Before we address the sole issue presented in the instant case, it is best to firstdiscuss a matter which was raised by the private respondent in its Comment. Theprivate respondent contends that this case should have been dismissed outrightbecause of petitioners error in the mode of appeal. According to it, the petitioner shouldhave elevated the instant case to this Court through a petition for reviewon certiorari under Rule 45, and not through a special civil action for certiorari underRule 65, of the 1997 Rules on Civil Procedure. [17]

Assuming arguendo that the mode of appeal taken by the petitioner is improper,there is no question that the Supreme Court has the discretion to dismiss it if it isdefective. However, sound policy dictates that it is far better to dispose the case on themerits, rather than on technicality. [18]

The Supreme Court may brush aside the procedural barrier and take cognizance ofthe petition as it raises an issue of paramount importance. The Court shall resolve thesolitary issue on the merits for future guidance of the bench and bar. [19]

With that out of the way, we shall now resolve whether or not the respondentcompany is guilty of violating Article 100 of the Labor Code, as amended.

Article 100 of the Labor Code provides:

ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OFBENEFITS . Nothing in this Book shall be construed to eliminate or in any way diminishsupplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

The petitioner submits that the withdrawal of the private respondent of the 35%premium pay for selected days during the Holy Week and Christmas season, theholding of the Christmas Party and its incidental benefits, and the giving of serviceawards violated Article 100 of the Labor Code. The grant of these benefits was a


33/111

customary practice that can no longer be unilaterally withdrawn by private respondentwithout the tacit consent of the petitioner. The benefits in question were given by therespondent to the petitioner consistently, deliberately, and unconditionally since timeimmemorial. The benefits/entitlements were not given to petitioner due to an error ininterpretation, or a construction of a difficult question of law, but simply, the grant hasbeen a practice over a long period of time. As such, it cannot be withdrawn from thepetitioner at respondents whim and caprice, and without the consent of the former. Thebenefits given by the respondent cannot be considered as a bonus as they are notfounded on profit. Even assuming that it can be treated as a bonus, the grant of thesame, by reason of its long and regular concession, may be regarded as part of regularcompensation. [20]

With respect to the fifteen (15) employees who are members of petitioner union thatwere given new job classifications, it asserts that a promotional increase in their salarieswas in order. Salary adjustment is a must due to their promotion. [21]

On respondent companys Revenues and Profitability Analysis for the years 1996-

2000, the petitioner insists that since the former was unaudited, it should not have justified the companys sudden withdrawal of the benefits/entitlements. The normaland/or legal method for establishing profit and loss of a company is through a financialstatement audited by an independent auditor. [22]

The petitioner cites our ruling in the case of Saballa v. NLRC ,[23] where we heldthat financial statements audited by independent auditors constitute the normal methodof proof of the profit and loss performance of the company. Our ruling in the caseof Bogo-Medellin Sugarcane Planters Association, Inc., et al. v. NLRC, et al . [24] waslikewise invoked. In this case, we held:

The Court has previously ruled that financial statements audited by independent externalauditors constitute the normal method of proof of the profit and loss performance of a company.

On the matter of the withdrawal of the service award, the petitioner argues that it isthe employees length of service which is taken as a factor in the grant of this benefit,and not whether the company acquired profit or not. [25]

In answer to all these, the respondent corporation avers that the grant of all subjectbenefits has not ripened into practice that the employees concerned can claim ademandable right over them. The grant of these benefits was conditional based upon

the financial performance of the company and that conditions/circumstances thatexisted before have indeed substantially changed thereby justifying the discontinuanceof said grants. The companys financial performance was affected by the recentpolitical turmoil and instability that led the entire nation to a bleeding economy. Hence,it only necessarily follows that the companys financial situation at present is alreadyvery much different from where it was three or four years ago. [26]

On the subject of the unaudited financial statement presented by the privaterespondent, the latter contends that the cases cited by the petitioner indeed uniformlyruled that financial statements audited by independent external auditors constitute the


34/111

normal method of proof of the profit and loss performance of a company. However,these cases do not require that the only legal method to ascertain profit and loss isthrough an audited financial statement. The cases only provide that an audited financialstatement is the normal method. [27]

The respondent company likewise asseverates that the 15 members of petitionerunion were not actually promoted. There was only a realignment of positions. [28]

From the foregoing contentions, it appears that for the Court to resolve the issuepresented, it is critical that a determination must be first made on whether thebenefits/entitlements are in the nature of a bonus or not, and assuming they are so,whether they are demandable and enforceable obligations.

In the case of Producers Bank of the Philippines v. NLRC [29] we have characterizedwhat a bonus is, viz :

A bonus is an amount granted and paid to an employee for his industry and loyalty whichcontributed to the success of the employers business and made possible the realization of

profits. It is an act of generosity granted by an enlightened employer to spur the employee togreater efforts for the success of the business and realization of bigger profits. The granting of abonus is a management prerogative, something given in addition to what is ordinarily receivedby or strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation,except when it is made part of the wage, salary or compensation of the employee.

Based on the foregoing pronouncement, it is obvious that the benefits/entitlementssubjects of the instant case are all bonuses which were given by the private respondentout of its generosity and munificence. The additional 35% premium pay for work doneduring selected days of the Holy Week and Christmas season, the holding of Christmas

parties with raffle, and the cash incentives given together with the service awards are allin excess of what the law requires each employer to give its employees. Since they areabove what is strictly due to the members of petitioner-union, the granting of the samewas a management prerogative, which, whenever management sees necessary, maybe withdrawn, unless they have been made a part of the wage or salary orcompensation of the employees.

The consequential question therefore that needs to be settled is if the subjectbenefits/entitlements, which are bonuses, are demandable or not. Stated another way,can these bonuses be considered part of the wage or salary or compensation making

them enforceable obligations?The Court does not believe so.

For a bonus to be enforceable, it must have been promised by the employer andexpressly agreed upon by the parties, [30] or it must have had a fixed amount [31] and hadbeen a long and regular practice on the part of the employer. [32]

The benefits/entitlements in question were never subjects of any express agreementbetween the parties. They were never incorporated in the Collective BargainingAgreement (CBA). As observed by the Voluntary Arbitrator, the records reveal that


35/111

these benefits/entitlements have not been subjects of any express agreement betweenthe union and the company, and have not yet been incorporated in the CBA. In fact, thepetitioner has not denied having made proposals with the private respondent for theservice award and the additional 35% premium pay to be made part of the CBA. [33]

The Christmas parties and its incidental benefits, and the giving of cash incentivetogether with the service award cannot be said to have fixed amounts. What is clear

from the records is that over the years, there had been a downtrend in the amount givenas service award. [34] There was also a downtrend with respect to the holding of theChristmas parties in the sense that its location changed from paid venues to one whichwas free of charge, [35] evidently to cut costs. Also, the grant of these two aforementionedbonuses cannot be considered to have been the private respondents long and regularpractice. To be considered a regular practice, the giving of the bonus should havebeen done over a long period of time, and must be shown to have been consistent anddeliberate. [36] The downtrend in the grant of these two bonuses over the yearsdemonstrates that there is nothing consistent about it. Further, as held by the Court ofAppeals:

Anent the Christmas party and raffle of prizes, We agree with the Voluntary Arbitrator that thesame was merely sponsored by the respondent corporation out of generosity and that the same isdependent on the financial performance of the company for a particular year [37]

The additional 35% premium pay for work rendered during selected days of the HolyWeek and Christmas season cannot be held to have ripened into a company practicethat the petitioner herein have a right to demand. Aside from the general averment ofthe petitioner that this benefit had been granted by the private respondent since timeimmemorial , there had been no evidence adduced that it had been a regular practice.As propitiously observed by the Court of Appeals:

. . . [N]otwithstanding that the subject 35% premium pay was deliberately given and the samewas in excess of that provided by the law, the same however did not ripen into a companypractice on account of the fact that it was only granted for two (2) years and with the expressreservation from respondent corporations owner that it cannot continue to rant the same in viewof the companys current financial situation. [38]

To hold that an employer should be forced to distribute bonuses which it granted outof kindness is to penalize him for his past generosity. [39]

Having thus ruled that the additional 35% premium pay for work rendered duringselected days of the Holy Week and Christmas season, the holding of Christmas partieswith its incidental benefits, and the grant of cash incentive together with the serviceaward are all bonuses which are neither demandable nor enforceable obligations of theprivate respondent, it is not necessary anymore to delve into the Revenues andProfitability Analysis for the years 1996-2000 submitted by the private respondent.


36/111

On the alleged promotion of 15 members of the petitioner union that should warrantan increase in their salaries, the factual finding of the Voluntary Arbitrator isrevealing, viz :

Considering that the Union was unable to adduce proof that a promotion indeed occur[ed]with respect to the 15 employees, the Daily Rated Unions claim for promotional increaselikewise fall[s] there being no promotion established under the records at hand. [40]

WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution ofthe Court of Appeals dated 06 March 2002 and 12 July 2002, respectively, whichaffirmed and upheld the decision of the Voluntary Arbitrator, are hereby AFFIRMED.No pronouncement as to costs.

SO ORDERED.


37/111

THIRD DIVISION

AKLAN COLLEGE, INC., Petitioner,

- versus -

PERPETUO ENERO, ARLYNCASTIGADOR, NUENA SERMONand JOCELYN ZOLINA,

Respondents.

G.R. No. 178309

Present:

AUSTRIA-MARTINEZ, J., Acting Chairperson, TINGA, * CHICO-NAZARIO, NACHURA, and LEONARDO-DE CASTRO, ** JJ.

Promulgated:

January 27, 2009

x------------------------------------------------------------------------------------x

DECISION

NACHURA, J .:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules ofCourt assailing the Decision [1] dated October 27, 2006 and the Resolution [2] dated June 6,2007 of the Court of Appeals (CA) in CA-G.R. SP No. 85997.


38/111

The Facts

The facts of the case are as follows:

Petitioner [3] is an educational institution in Kalibo, Aklan, while respondents were highschool teachers of petitioner. On November 15, 16 and 17, 1994 and on January 6, 10 and 11,1995, high school students of the College held mass actions against the principal of the highschool department at the public plaza opposite the school. The demonstrations were held withvalidly issued permits fr

labor cases 4

Documents