Aniceto v. Lifestyle Therapy Systems, Inc.

THIRD DIVISION

[G.R. No. 209423. December 6, 2021.]

JOCELYN T. ANICETO, NORBAIDA P. BASCO, MARIA OLIVE M. PEÑAS, JOSEPHINE E. BERNABE, EVELYN C. REMANDO, PRESCILLE O. CARANI, MAE C. HERMOSO, RODEL Q. LOMUGDANG, NISA D. BUENAVISTA, ANTONETTE F. CONCEPCION, MARICEL L. MACTAL, MARICEL D. SADIA, RODELINE S. STA. CRUZ, MARY ANN G. GABALLO, RAMIL T. LERA, JR., NANITTE L. LENTIJAS, SYLVIA M. PAMPLONA, ELVIN D. MACTAL, GILBERT O. FRANCISCO, JAKE G. DONESA, RYAN C. PATA, JAY-AR M. PAMPLONA, WYNRED T. ALVAREZ, BILLY T. EVANGELISTA, ROGELIO T. DEL ROSARIO, JOHN LHESTER C. LUCAS, MARVIN G. PASTOLERO, and REINHARD F. TEMEÑA, petitioners,vs. LIFESTYLE THERAPY SYSTEMS, INC., EDA FRANCES GAISANO WONG, and DONNA T. SIA, respondents.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution datedDecember 6, 2021, which reads as follows:

"G.R. No. 209423(JOCELYN T. ANICETO, NORBAIDA P. BASCO, MARIA OLIVE M. PEÑAS, JOSEPHINE E. BERNABE, EVELYN C. REMANDO, PRESCILLE O. CARANI, MAE C. HERMOSO, RODEL Q. LOMUGDANG, NISA D. BUENAVISTA, ANTONETTE F. CONCEPCION, MARICEL L. MACTAL, MARICEL D. SADIA, RODELINE S. STA. CRUZ, MARY ANN G. GABALLO, RAMIL T. LERA, JR., NANITTE L. LENTIJAS, SYLVIA M. PAMPLONA, ELVIN D. MACTAL, GILBERT O. FRANCISCO, JAKE G. DONESA, RYAN C. PATA, JAY-AR M. PAMPLONA, WYNRED T. ALVAREZ, BILLY T. EVANGELISTA, ROGELIO T. DEL ROSARIO, JOHN LHESTER C. LUCAS, MARVIN G. PASTOLERO, and REINHARD F. TEMEÑA, petitioners v. LIFESTYLE THERAPY SYSTEMS, INC., EDA FRANCES GAISANO WONG, and DONNA T. SIA," respondents). — Respondents would have us believe that petitioners-massage therapists were not their regular employees but were independent contractors of the massage spa to which they rendered their services. The Court of Appeals agreed with them. CAIHTE

We reverse.

This Court resolves this Petition for Review on Certiorari1 filed by a group of massage therapists, who were the complainants in a suit for illegal dismissal, unfair labor practice, and non-payment of monetary benefits originating from the National Labor Relations Commission. They pray for the annulment of the Decision 2 and Resolution 3 of the Court of Appeals which reversed the Resolutions 4 of the National Labor Relations Commission that dismissed respondents' appeal for failure to file an appeal bond. The Labor Arbiter ruled that petitioners were illegally dismissed and were entitled to sums of money, moral and exemplary damages, and attorney's fees.

In 2002, Lifestyle Therapy Systems, Inc. (Lifestyle Therapy) was organized to operate a spa and gym facility under the business name City Lifestyle Spa and Fitness Center (City Lifestyle). 5

On various dates from January 2003 to December 2009, Lifestyle Therapy engaged the services of Jocelyn T. Aniceto, Norbaida P. Basco, Maria Olive M. Peñas, Josephine E. Bernabe, Evelyn C. Remando, Prescille O. Carani, Mae C. Hermoso, Rodel Q. Lomugdang, Nisa D. Buenavista, Antonette F. Concepcion, Maricel L. Mactal, Maricel D. Sadia, Rodeline S. Sta. Cruz, Mary Ann G. Gaballo, Ramil T. Lera, Jr., Nanitte L. Lentijas, Sylvia M. Pamplona, Elvin D. Mactal, Gilbert O. Francisco, Jake G. Donesa, Ryan C. Pata, Jay-ar M. Pamplona, Wynred T. Alvarez, Billy T. Evangelista, Rogelio T. Del Rosario, John Lhester C. Lucas, Marvin G. Pastolero, and Reinhard F. Temeña (Aniceto, et al.) 6 as massage therapists in City Lifestyle. 7 Lifestyle Therapy's agreements with the 28 therapists uniformly read:

NOW, THEREFORE, in consideration of mutual covenants and terms and conditions herein contained, the parties herein agree:

1. That the SECOND PARTY agrees to work exclusively as THERAPIST within the premises of the FIRST PARTY for a period of not less than one and a half year;

2. The SECOND PARTY shall perform the services to be provided herein for at least 8 hours a day;

3. That the SECOND PARTY shall receive a commission based on the rate and the number of services he/she could provide to the FIRST PARTY's customers/clients;

4. The work schedule shall be prepared by the FIRST PARTY x x x;

5. The FIRST PARTY reserves the right to discontinue or terminate this Agreement anytime it the SECOND PARTY's performance does not come to the expectation of the former;

6. The FIRST PARTY's rules and regulations shall be observed by the SECOND PARTY x x x;

7. The SECOND PARTY shall also observe all other rules and regulations that may be promulgated from time to time by the FIRST PARTY;

8. The SECOND PARTY shall provide all necessary documentation, such as TIN, occupational permit, community tax certificate, birth certificate, health certificate; and all income shall be subject to withholding tax; and

9. It is understood that there being no employer-employee relationship between the parties, the SECOND PARTY is not entitled to vacation or sick leave with pay, 13th month pay or bonus of any kind or nature, allowances[,] and other allied benefits except those specifically sated herein. 8

Sometime in November 2011, Lifestyle Therapy decided to close City Lifestyle citing substantial business losses. 9

Aniceto, et al., alleged that they were given a day's notice for the November 9, 2011 meeting with their human resource personnel. In the meeting, they were haphazardly informed that the business shall cease operations and they will be immediately dismissed. 10

Claiming that they were not paid benefits and were not properly informed that the business was closing, Aniceto, et al., filed a complaint for illegal dismissal, unfair labor practices, and non-payment of monetary benefits before the Labor Arbiter. They impleaded Lifestyle Therapy, Eda Francis G. Wong (Wong), and Donna T. Sia (Sia).

Lifestyle Therapy, Wong, and Sia countered that Aniceto, et al., were not Lifestyle Therapy's employees but were independent contractors. 11 They averred that the closure was due to the cut-throat competition in the industry which significantly affected City Lifestyle's profitability. Moreover, they discovered that one of their employees had misappropriated company funds for personal gain, 12 against whom they had filed a criminal complaint. 13

In its May 30, 2012 Decision, 14 the Labor Arbiter ruled in favor of Aniceto, et al. The dispositive portion of the Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered finding respondents (petitioners in this case) liable to pay the complainants in the following sums of money indicated opposite their names:

 

Jocelyn T. Aniceto	P349,126,72
Norbaida P. Basco	P349,126.72
Maria Olive M. Peñas	P349,126.72
Josephine E. Bernabe	P349,126.72
Evelyn C. Remando	P349,126.72
Prescille O. Carani	P337,572.32
Mae C. Hermoso	P337,572.32
Rodel Q. Lomugdang	P337,572.32
Nisa D. Buenavista	P326,017.92
Antonette F. Concepcion	P326,017.92
Maricel L. Mactal	P326,017.92
Maricel D. Sadia	P326,017.92
Rodeline S. Sta. Cruz	P326,017.92
Mary Ann C. Gaballo	P314,463.52
Ramil T. Lera, Jr.	P314,463.52
Nanitte L. /Lentijas/	P314,463.52
Sylvia M. Pamplona	P314,463.52
Elvin D. Mactal	P302,909.12
Gilbert O. Francisco	P302,909.12
Jake G. Donesa	P302,909.12
Ryan C. Pata	P291,354.72
Jay-ar M. Pamplona	P291,354.72
Wynred T. Alvarez	P291,354.72
Billy T. Evangelista	P291,354.72
Rogelio T. Del Rosario	P248,637.63
John Lhester C. Lucas	P248,637.63
Marvin G. Pastolero	P248,637.63
Reinhard F. Temeña	P248,637.63. 15

 

Further, respondents are assessed to pay complainants moral damages of P50,000.00 each and exemplary damages of P50,000.00 each as well as the payment of 10% attorney's fees of the judgment award.

All other claims are dismissed for lack of merit. DETACa

SO ORDERED.16

Lifestyle Therapy, Wong, and Sia filed a Memorandum of Appeal before the National Labor Relations Commission, along with a Motion to Reduce Appeal Bond. They claimed they had financial constraints and prayed to reduce the appeal bond amount to P500,000.00. 17

The National Labor Relations Commission denied the motion. It found no exceptional circumstance warranting the "relaxation of the bond requirement as a condition for perfecting an appeal." 18 Strictly applying the rules, it held that financial limitation does not justify reducing the appeal bond, considering an employer-applicant may post a cash bond or a surety bond which does not require payment of the award's full amount from the employer's end. 19 The dispositive portion of the Commission's October 25, 2012 Resolution 20 reads:

WHEREFORE, this appeal is denied for non-perfection.

SO ORDERED. 21

On January 17, 2013, the National Labor Relations Commission issued its Resolution 22 denying Lifestyle Therapy, Wong, and Sia's Motion for Reconsideration for lack of merit. 23

Undaunted, Lifestyle Therapy, Wong, and Sia challenged the National Labor Relations Commission's Resolutions through a Petition for Certiorari before the Court of Appeals. 24

The Court of Appeals granted the petition in its June 17, 2013 Decision, 25 and reversed the ruling of the National Labor Relations Commission. It held that the National Labor Relations Commission gravely abused its discretion by being overly stringent in the appeal bond amount. It found that Lifestyle Therapy substantially complied with the appeal bond requirement when it posted the P500,000.00 cash bond. 26

The Court of Appeals also found that no employee-employer relations existed between the massage therapists and Lifestyle Therapy. 27 It held that the therapists were independent contractors and that Lifestyle Therapy merely provided the venue where the therapists may practice their craft. 28

The dispositive portion of the Court of Appeals' June 17, 2013 Decision reads:

WHEREFORE, in view of the foregoing premises, the petition filed in this case is GRANTED. The Resolutions dated October 25, 2012 and January 17, 2013 are hereby REVERSED and SET ASIDE. The complaints for illegal dismissal and the private respondents' related money claims are DISMISSED for lack of merit. Finally, petitioners EDA FRANCIS G. WONG and DONNA T. SIA are ordered EXCLUDED and thereby DROPPED from the labor arbitration proceedings.

SO ORDERED.29

Aniceto, et al., sought reconsideration, but it was denied in the Court of Appeals' September 24, 2013 Resolution. 30

Aniceto, et al., initially moved for an extended time to file a petition before this Court, 31 which was granted in a December 11, 2013 Resolution. 32 They then filed this Petition for Review on Certiorari on November 22, 2013. 33

In its January 22, 2014 Resolution, 34 this Court required Lifestyle Therapy, Wong, and Sia to comment on the Petition.

Having been granted additional time to file their comment, Lifestyle Therapy, Wong, and Sia filed their Comment, 35 which this Court noted in its June 30, 2014 Resolution. 36

In the same Resolution, this Court required Aniceto, et al., to file a Reply to the Comment. Accordingly, they filed their Reply, 37 which this Court noted in its December 1, 2014 Resolution. 38

Petitioners seek the reversal of the Court of Appeals decision and a reinstatement of the decision of the Labor Arbiter, as in effect affirmed by the National Labor Relations Commission when it denied respondents' appeal.

Petitioners contend that the Court of Appeals erred in reversing the National Labor Relations Commission's ruling on the requirement of an appeal bond. They argue that it erred in heavily relying on Garcia v. KJ Commercial, 39 where the employers eventually posted a surety bond that covered the total amount of the monetary award. They claim that since respondents did not attempt to post a surety bond but only an insufficient amount of cash deposit, Garcia does not apply here. 40

They assert that they were not independent contractors but were respondents' regular employees. Consequently, they are entitled to their money claims under the law. 41 They stress that they were not properly given a one-month notice despite their request. 42

On the other hand, respondents counter that the Court of Appeals correctly reversed the National Labor Relations Commission's ruling since it was based on a mere technicality, which this Court frowns upon. Considering that they had legitimate reasons for depositing P500,000.00 only, they posit that the National labor Relations Commission gravely abused its discretion when it denied their appeal for non-perfection. 43

Respondents also contend that the Court of Appeals correctly ruled that petitioners were their independent massage therapists and that the closure of their business was valid. They aver that they presented competent evidence, while petitioners' allegations were mainly unsubstantiated. 44

For this Court's resolution are the following issues:

First, whether or not the Court of Appeals erred in finding that the National Labor Relations Commission acted with grave abuse of discretion amounting to lack or excess of jurisdiction in denying respondents' appeal for non-perfection; and

Second, whether or not petitioners Aniceto, et al., were respondent Lifestyle Therapy's regular employees. aDSIHc

This Court grants the Petition.

I

Generally, a petition for review on certiorari must only raise questions of law and not factual issues requiring a re-assessment of the evidence on record. 45 This rule admits of exceptions, one of which is when the findings of the lower tribunals are contradictory, 46 as in this case.

In labor cases, a petition for review on certiorari "can prosper only if the Court of Appeals . . . fails to correctly determine whether the National Labor Relations Commission committed grave abuse of discretion." 47

Manggagawa ng Komunikasyon sa Pilipinas v. Philippine Long Distance Telephone Co., Inc.48 instructs:

A court or tribunal is said to have acted with grave abuse of discretion when it capriciously acts or whimsically exercises judgment to be "equivalent to lack of jurisdiction." Furthermore, the abuse of discretion must be so flagrant to amount to a refusal to perform a duty or to act as provided by law.

Career Philippines Shipmanagement, Inc. v. Serna, citing Montoya v. Transmed, provides the parameters of judicial review for a labor case under Rule 45:

As a rule, only questions of law may be raised in a Rule 45 petition. In one case, we discussed the particular parameters of a Rule 45 appeal from the CA's Rule 65 decision on a labor case, as follows:

In a Rule 45 review, we consider the correctness of the assailed CA decision, in contrast with the review for jurisdictional error that we undertake under Rule 65. Furthermore, Rule 45 limits us to the review of questions of law raised against the assailed CA decision. In ruling for legal correctness, we have to view the CA decision in the same context that the petition for certiorari it ruled upon was presented to it; we have to examine the CA decision from the prism of whether it correctly determined the presence or absence of grave abuse of discretion in the NLRC decision before it, not on the basis of whether the NLRC decision on the merits of the case was correct. In other words, we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision challenged before it.

Justice Arturo D. Brion's dissent in Abbot Laboratories, Philippines v. Alcaraz thereafter laid down the guidelines to be followed in reviewing a petition for review under Rule 45:

If the NLRC ruling has basis in the evidence and the applicable law and jurisprudence, then no grave abuse of discretion exists and the CA should so declare and, accordingly, dismiss the petition. If grave abuse of discretion exists, then the CA must grant the petition and nullify the NLRC ruling, entering at the same time the ruling that is justified under the evidence and the governing law, rules and jurisprudence. In our Rule 45 review, this Court must deny the petition if it finds that the CA correctly acted. 49 (Emphasis in the original and citations omitted)

The special civil action of certiorari under Rule 65 of the Rules of Court may strike down a court or tribunal's act when it is shown to be manifestly whimsical in its exercise of discretion. ETHIDa

Thus, the inquiry at this juncture is whether the Court of Appeals correctly acted on the Petition for Certiorari before it, when it determined that the National Labor Relations Commission committed grave abuse of discretion in denying respondents' Motion to Reduce Bond, reinstated respondents' appeal, and ruled in their favor.

II

The assailed act before the Court of Appeals was the National Labor Relations Commission's dismissal of respondent's appeal for failure to post sufficient bond. We find that the National Labor Relations Commission's ruling was proper and not in grave abuse of discretion.

The Labor Arbiter handed down a monetary award totaling P8,714,991.10 in petitioners' favor. 50 Respondents moved to reduce the amount of the cash bond to P500,000.00. The National Labor Relations Commission denied this motion and consequently denied the appeal for its non-perfection.

The Court of Appeals reversed the ruling and explained that the financial constraints respondent Lifestyle Therapy faced warranted relaxation of the rules. 51 Petitioners disagree and point out that respondents could have opted to post a surety bond to pay a smaller premium. 52

The Court of Appeals was mistaken.

Appeal is not a right but a mere statutory privilege. This is settled. Thus, a person intending to appeal must comply with the rules. Otherwise, the right to appeal is lost. 53

Under the 2011 National Labor Relations Commission Rules of Procedure, perfection of an appeal requires the posting of a cash or surety bond. 54 It mandates that the cash deposit or surety bond must be "equivalent in amount to the monetary award, exclusive of damages and attorney's fees":

SECTION 6. Bond. — In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorney's fees.

In case of surety bond, the same shall be issued by a reputable bonding company duly accredited by the Commission or the Supreme Court, and shall be accompanied by original or certified true copies of the following:

a) a joint declaration under oath by the employer, his/her counsel, and the bonding company, attesting that the bond posted is genuine, and shall be in effect until final disposition of the case;

b) an indemnity agreement between the employer-appellant and bonding company;

c) proof of security deposit or collateral securing the bond: provided, that a check shall not be considered as an acceptable security;

d) a certificate of authority from the Insurance Commission;

e) certificate of registration from the Securities and Exchange Commission;

f) certificate of accreditation and authority from the Supreme Court; and

g) notarized board resolution or secretary's certificate from the bonding company showing its authorized signatories and their specimen signatures.

The Commission through the Chairman may on justifiable grounds blacklist a bonding company, notwithstanding its accreditation by the Supreme Court.

A cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided, resolved or terminated, or the award satisfied. This condition shall be deemed incorporated in the terms and conditions of the surety bond, and shall be binding on the appellants and the bonding company.

The appellant shall furnish the appellee with a certified true copy of the said surety bond with all the above-mentioned supporting documents. The appellee shall verify the regularity and genuineness thereof and immediately report any irregularity to the Commission.

Upon verification by the Commission that the bond is irregular or not genuine, the Commission shall cause the immediate dismissal of the appeal, and censure the responsible parties and their counsels, or subject them to reasonable fine or penalty, and the bonding company may be blacklisted.

No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond in a reasonable amount in relation to the monetary award.

The mere filing of a motion to reduce bond without complying with the requisites in the preceding paragraphs shall not stop the running of the period to perfect an appeal. 55 (Emphasis supplied)

Under the 2011 NLRC Rules of Procedure, an appeal bond, which is equivalent to the entire amount of the award being contested, may be paid either in cash or through a surety bond. Jurisprudence explained that the bond is "to ensure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the aggrieved employees under the judgment if subsequently affirmed." 56 It is also to "discourage employers from using the appeal to delay, or even evade, their obligation to satisfy their employee's possible just and lawful claims." 57 For the appellants, posting the bond signifies "their good faith and willingness to recognize the outcome of their appeal." 58

McBurnie v. Ganzon59 determined that 10% of the monetary award is a reasonable amount that ought to be provisionally posted when a motion seeking to reduce the appeal bond is filed:

At the time of a motion to reduce appeal bond's filing, the question of what constitutes "a reasonable amount of bond" that must accompany the motion may be subject to differing interpretations of litigants. The judgment of the NLRC which has the discretion under the law to determine such amount cannot as yet be invoked by litigants until after their motions to reduce appeal bond are accepted.

Given these limitations, it is not uncommon for a party to unduly forfeit his opportunity to seek a reduction of the required bond and thus, to appeal, when the NLRC eventually disagrees will, the party's assessment. These have also resulted in the filing of numerous petitions against the NLRC, citing an alleged grave abuse of discretion on the part of the labor tribunal for its finding on the sufficiency or insufficiency of posted appeal bonds. cSEDTC

It is in this light that the Court finds it necessary to set a parameter for the litigants' and the NLRC's guidance on the amount of bond that shall hereafter be filed with a motion for a bond's reduction. To ensure that the provisions of Section 6, Rule VI of the NLRC Rules of Procedure that give parties the chance to seek a redaction of the appeal bond are effectively carried out, without however defeating the benefits of the bond requirement in favor or a winning litigant, all motions to reduce bond that are to be filed with the NLRC shall be accompanied by the posting of a cash or surety bond equivalent to 10% of the monetary award that is subject of the appeal, which shall provisionally be deemed the reasonable amount of the bond in the meantime that an appellant's motion is pending resolution by the Commission. In conformity with the NLRC Rules, the monetary award, for the purpose of computing the necessary appeal bond, shall exclude damages and attorney's fees. Only after the posting of a bond in the required percentage shall an appellant's period to perfect an appeal under the NLRC Rules be deemed suspended.

The foregoing shall not be misconstrued to unduly hinder the NLRC's exercise of its discretion, given that the percentage of bond that is set by this guideline shall be merely provisional. The NLRC retains its authority and duty to resolve the motion and determine the final amount of bond that shall be posted by the appellant, still in accordance with the standards of "meritorious grounds" and "reasonable amount." Should the NLRC, after considering the motion's merit, determine that a greater amount or the full amount of the bond needs to be posted by the appellant, then the party shall comply accordingly. The appellant shall be given a period of 10 days from notice of the NLRC order within which to perfect the appeal by posting the required appeal bond. 60 (Emphasis in the original and Citations omitted)

Respondents should have paid P8,714,991.10 in cash or applied for a surety bond with a reputable company covering this amount to secure the judgment in petitioners' favor. Instead, they moved to reduce the cash bond to P500,000.00, which is 5.7% of the judgment award. Accepting this drop defeats the purpose of the bond, especially accounting for the number of aggrieved employees here.

Petitioners were magnanimous in pointing out that respondents could have posted a surety bond. They attached a sample computation of payment of premiums, at P38,133.83 per month from a reputable bonding company to cover the judgment in their favor. 61

Moreover, the National Labor Relations Commission's disposition was based on prevailing rules and jurisprudence. Citing Yanson v. Secretary of Labor and Employment, 62 it explained that liquidity problems should pose no obstacle to perfecting an appeal when posting a surety bond is allowed. 63 It also cited this Court's discussion:

While indeed the Court has relaxed the application of this requirement in cases where the failure to comply with the requirement was justified or where there was substantial compliance with the rules, the overpowering legislative intent of Article 223 remains to be for a strict application of the appeal bond requirement as a requisite for the perfection of an appeal anti as a burden imposed on the employer. As the Court held in the case of Borja Estate v. Ballad:

'The intention of the lawmakers to make the bond an indispensable requisite for the perfection of an appeal by the employer is underscored by the provision that an appeal may be perfected "only upon the posting of a cash or surety bond.' The word "only makes it perfectly clear that the LAWMAKERS intended the posting of a cash or surety bond by the employer to be the exclusive means by which an employer's appeal may be considered completed. The law however does not require its outright payment, but only the posting of a bond to ensure that the award will be eventually paid should the appeal fail. What petitioners have to pay is a moderate and reasonable sum for the premium of such bond. 64 (Citations omitted)

Indeed, substantial compliance to the requirement of an appeal bond may merit liberality in its application. 65 However, this liberality that respondents pray for is accorded to labor, in petitioners' favor, owing to the constitutionally mandated full protection to their sector:

ARTICLE XIII. SOCIAL JUSTICE AND HUMAN RIGHTS. —

xxx xxx xxx

LABOR

Section 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining and negotiations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. SDAaTC

The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace.

The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth. 66

Thus, contrary to the Court of Appeals decision, we find that the National Labor Relations Commission was reasonable in its ruling. Nothing was whimsical, capricious, or arbitrary in rejecting an appeal bond with a 94.3% discount. Exceptional circumstances must be present to justify leniency when weighed against a judgment in labor's favor.

III

Delving into the merits of the petition, we find that petitioners were respondents' regular employees.

In a petition for review on certiorari under Rule 45, this Court is generally limited to reviewing errors of law only. This Court enumerated several exceptions to this rule:

(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) The findings of the Court of Appeals are contrary to those of the trial court; (8) When the findings of fact are conclusions without citation of specific evidence on which they are based; (9) When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondents; and (10) The finding of fact of the Court of Appeals is premised on the supposed absence of evidence and is contradicted by the evidence on record.

These exceptions similarly apply in petitions for review filed before this court involving civil, labor, tax, or criminal cases. 67 (Citations omitted)

This Court "retains full discretion on whether to review the factual findings of the Court of Appeals." 68

The Court of Appeals concluded that petitioners were not respondents' employees but were independent contractors of respondent Lifestyle Therapy. It gave weight to the agreements executed between respondent Lifestyle Therapy and each therapist as evidence of their contractual relations. It also found that nothing in the record indicated that the establishment exercised disciplinary power over petitioner-therapists. 69

Per the Court of Appeals, respondents had no power of control over petitioners since they were given the freedom to apply their own means and method to carry out their functions, as long as they delivered the expected results. It explained that while the kinds of massages rendered in respondents' premises were limited to those offered by the establishment, this should not be construed as an exercise of control. These were guidelines to achieve the mutually desired result of satisfactory massage services. 70

We disagree.

As early as the 1956 case of Viaña v. Al-Lagadan71 to the recent Dusol v. Lazo, 72 the four-fold test to determine the existence of employer-employee relationship has remained the same. It involves an inquiry into:

(1) the selection and engagement of the employee;

(2) the payment of wages;

(3) the power of dismissal; and

(4) the power of control, which is the most important element. 73

Jurisprudence discussed that there are no strict rules in establishing the elements in the four-fold test:

There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidence to prove the relationship may be admitted. Identification cards, cash vouchers, social security registration, appointment letters or employment contracts, payrolls, organization charts, and personnel lists, serve as evidence of employee status. 74

In labor cases, substantial evidence is the quantum of proof required. It is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." 75

The Court of Appeals erred in heavily relying on the text of the agreements executed between each petitioner and respondent Lifestyle Therapy. It is elementary that the text of contracts cannot prevail over express provisions of law. 76 Apart from the constitutional mandate of full protection to labor, Article 1700 of the Civil Code provides:

ART. 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.

Courts must not read agreements in a vacuum, especially relations protected by overriding public policies geared towards social justice.

This Court finds that petitioners were respondents' employees.

First, respondents hired petitioners and had the power to select and engage them. They imposed standard requirements as preconditions for petitioners' employment, such as occupational permits and health certificates. 77 They also required petitioners to train for practical massages and customer relations when they engaged petitioners. 78 Contrary to the Court of Appeals' findings, we find that petitioners were hired as employees rather than independent contractors who were engaged for their "unique skills, expertise or talent." 79

Fuji Television Network, Inc. v. Espiritu80 extensively discussed the class of independent contractors: acEHCD

[A]n independent contractor is defined as:

. . . one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under one's own responsibility according to one's own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.

In view of the "distinct and independent business" of independent contractors, no employer-employee relationship exists between independent contractors and their principals.

Independent contractors are recognized under Article 106 of the Labor Code:

Art. 106. Contractor or subcontractor. — Whenever an employer enters into a contract with another person for the performance of the former's work, the employees of the contractor and of the latter's subcontractor, if any, shall be paid in accordance with the provisions of this Code.

xxx xxx xxx

The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code.

There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

In Department Order No. 18-A, Series of 2011, of the Department of Labor and Employment, a contractor is defined as having:

Section 3. . . .

xxx xxx xxx

(c) . . . an arrangement whereby a principal agrees to put out or farm out with a contractor the performance or completion of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.

This department order also states that there is a trilateral relationship in legitimate job contracting and subcontracting arrangements among the principal, contractor, and employees of the contractor. There is no employer-employee relationship between the contractor and principal who engages the contractor's services, but there is an employer-employee relationship between the contactor and workers hired to accomplish the work for the principal. SDHTEC

Jurisprudence has recognized another kind of independent contractor: individuals with unique skills and talents that set them apart from ordinary employees. There is no trilateral relationship in this case because the independent contractor himself or herself performs the work for the principal. In other words, the relationship is bilateral.

In Orozco v. Court of Appeals, Wilhelmina Orozco was a columnist for the Philippine Daily Inquirer. This court ruled that she was an independent contractor because of her "talent, skill, experience, and her unique viewpoint as a feminist advocate." In addition, the Philippine Daily Inquirer did not have the power of control over Orozco, and she worked at her own pleasure.

Semblante v. Court of Appeals involved a masiador and a sentenciador. This court ruled that "petitioners performed their functions as masiador and sentenciador free from the direction and control of respondents" and that the masiador and sentenciador "relied mainly on their 'expertise that is characteristic of the cockfight gambling.'" Hence, no employer-employee relationship existed.

Bernarte v. Philippine Basketball Association involved a basketball referee. This court ruled that "a referee is an independent contractor, whose special skills and independent judgment are required specifically for such position and cannot possibly be controlled by the hiring party."

In these cases, the workers were found to be independent contractors because of their unique skills and talents and the lack of control over the means and methods in the performance of their work.

In other words, these are different kinds of independent contractors: those engaged in legitimate job contracting and those who have unique skills and talents that set them apart from ordinary employees.

Since no employer-employee relationship exists between independent contractors and their principals, their contracts are governed by the Civil Code provisions on contracts and other applicable laws. 81 (Citations Omitted)

Here, petitioners were unable to make demands upon respondents, or make an independent judgment in performing their duties as massage therapists. They were obliged to perform the signature massages that the establishment offered. Petitioners claimed that most of them were in their twenties and had no previous work experience when they were hired, which respondents did not dispute. 82 These are clear indications that they were not the independent contractors that jurisprudence recognized.

Second, the Court of Appeals found that the therapists were not paid wages, but commissions at P100.00 per massage or P120.00 when done in VIP rooms. 83 However, the designation of the payments is immaterial. The Labor Code specifically mentions commission basis among those that constitute wage or anything paid as remuneration of earnings to employees covered by the Labor Code. 84 The amount respondent paid petitioners also indicated the nature of the relationship of the parties. In Fuji Television Network:

Indeed, wages may indicate whether one is an independent contractor. Wages may also indicate that an employee is able to bargain with the employer for better pay. However, wages should not be the conclusive factor in determining whether one is an employee or an independent contractor. 85

Third, the Court of Appeals lamented the absence of evidence to show respondents' power to dismiss petitioners. 86 It glossed over how respondents had the power to dismiss petitioners, under paragraph 5 of their uniform contracts which text it accorded credence. 87 Company policies stress that "failure to comply with the rules and regulations will entail harsh penalties and can be subjected to termination or dismissal." 88 Further, petitioners submitted reprimand letters that they received from respondents' management over tardiness and being noisy, with stern warnings of penalties should conduct not change. 89 These indicated respondents' power to dismiss petitioners.

Finally, the most important element stressed by jurisprudence is the power of control, described in this manner:

. . . [T]he power to control refers to the existence of the power and not necessarily to the actual exercise thereof, nor is it essential for the employer to actually supervise the performance of duties of the employee. It is enough that the employer has the right to wield that power. 90 (Citations omitted).

Petitioners submitted company policies detailing the specific rules for therapists. 91 In an attempt to downplay the rules and deny their apparent control over petitioners, respondents described them as mere guidelines to promote order in the business's day-to-day operations.

Respondents mandate that petitioners work nine-hour shifts, six days a week, wear the complete uniform, bring a time card and use the bundy clock, ensure that another therapist is ready to replace them in the rotation, apply for leaves and notify them of their absences, and exclusively work for respondent Lifestyle Therapy. Their work schedules made it impossible for them to work elsewhere. 92 These are hardly trivial reminders for independent contractors. These are hard rules that need to be followed on pain of disciplinary action from management. These precisely describe the power of control. AScHCD

Further, we find that petitioners were respondents' regular employees.

Under Article 295 of the Labor Code, employees may be classified into regular, project, seasonal, or casual:

ARTICLE 295. Regular and casual employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph; Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exist (Emphasis supplied)

"The test for determining regular employment is whether there is a reasonable connection between the employee's activities and the usual business of the employer." 93 Respondents did not allege whether petitioners' employment was fixed for a specific project or undertaking, or that their work is seasonal. They did not have to, for it offends reason to believe that massage therapists were not selected as employees of an establishment that precisely offers massage therapy to the public. Undoubtedly, the services that petitioners performed was pursuant to respondents' principal business, and this need not be belabored.

Thus, this Court reverses the Court of Appeals Decision, and reinstates the May 30, 2012 Decision of the Labor Arbiter, as affirmed by the October 25, 2012 and January 17, 2013 Resolutions of the National Labor Relations Commission.

IV

Since the Court of Appeals ruled that petitioners were not employees of respondent, it also erroneously held that they were not entitled to a notice of the spa and fitness center's closure. 94 Having found that an employee-employer relationship exists here, We rule that petitioners should have been amply notified of the closure.

Article 298 of the Labor Code, 95 as amended, states:

ARTICLE 298. Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to present losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) months before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year. (Emphasis supplied)

JAKA Food Processing Corp. v. Pacot96 held that when an employee is denied notice of termination due to an authorized cause, the employee is entitled to nominal damages of P50,000.00 for noncompliance with statutory due process.

Here, the Court of Appeals did not discuss whether petitioners were informed of the impending closure. Respondents claimed that they informed their employees in a meeting and posted a notice on their bulletin board. On the other hand, petitioners alleged that this notice pertained to their non-therapist employees, as respondents have adopted the consistent stand that petitioners are not their employees.

What appears is that respondents did not inform petitioners of the closure of business operations, as outlined in the Labor Code. It requires the employer to serve a written notice on the workers themselves and the Department of Labor and Employment. Thus, respondents are also liable to pay nominal damages of P50,000.00 to each petitioner on the company's failure to observe statutory due process in informing them of the business closure.

Finally, in view of Nacar v. Gallery Frames, 97 legal interest shall be 6% per annum from the date of promulgation of this judgment until fully paid.

WHEREFORE, the petition is GRANTED. The Court of Appeals June 17, 2013 Decision and September 24, 2013 Resolution in CA-G.R, SP No. 128788 are REVERSED and SET ASIDE.

The May 30, 2012 Decision of the Labor Arbiter is REINSTATED. Respondents Lifestyle Therapy Systems, Inc., Eda Frances G. Wong, and Donna T. Sia are liable to pay the petitioners:

 

Jocelyn T. Aniceto	P349,126.72
Norbaida P. Basco	P349,126.72
Maria Olive M. Peñas	P349,126.72
Josephine E. Bernabe	P349,126.72
Evelyn C. Remando	P349,126.72
Prescille O. Carani	P337,572.32
Mae C. Hermoso	P337,572.32
Rodel Q. Lomugdang	P337,572.32
Nisa D. Buenavista	P326,017.92
Antonette F. Concepcion	P326,017.92
Maricel L. Mactal	P326,017.92
Maricel L. Sadia	P326,017.92
Rodeline S. Sta. Cruz	P326,017.92
Mary Ann C. Gaballo	P314,463.52
Ramil T. Lera, Jr.	P314,463.52
Nanitte L. Lentijas	P314,463.52
Sylvia M. Pamplona	P314,463.52
Elvin D. Mactal	P302,909.12
Gilbert O. Francisco	P302,909.12
Jake G. Donesa	P302,909.12
Ryan C. Pata	P291,354.72
Jay-ar M. Pamplona	P291,354.72
Wynred T. Alvarez	P291,354.72
Billy T. Evangelista	P291,354.72
Rogelio T. Del Rosario	P248,637.63
John Lhester C. Lucas	P248,637.63
Marvin G. Pastolero	P248,637.63
Reinhard F. Temeña	P248,637.63

 

Respondents are also liable to pay each petitioner moral damages and exemplary damages of P50,000.00 each, and 10% of the judgment award as attorney's fees.

In addition, each petitioner is entitled to P50,000.00 as nominal damages. AcICHD

All damages awarded shall be subject to interest at the rate of 6% per annum from the finality of this Resolution until their full satisfaction. 98

SO ORDERED."

By authority of the Court:

(SGD.) MISAEL DOMINGO C. BATTUNG IIIDivision Clerk of Court

Footnotes

1. Rollo, pp. 3-38.

2. Id. at 39-58. The Decision dated June 17, 2013 in CA-G.R. SP No. 128788 was penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Michael P. Elbinias and Nina G. Antonio-Valenzuela of the Thirteenth Division of the Court of Appeals, Manila.

3. Id. at 59-61. The Resolution dated September 24, 2013 in CA-G.R. SP No. 128788 was penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Michael P. Elbinias and Nina G. Antonio-Valenzuela of the Thirteenth Division of the Court of Appeals, Manila.

4. Id. at 39. The Resolutions dated October 25, 2012 and January 17, 2013 in NLRC LAC No. 08-002402-12 were penned by Labor Arbiter Fedriel S. Panganiban of the National Labor Relations Commission.

5. Id. at 40.

6. Id. at 9-10.

7. Id. at 40.

8. Id. at 40-41.

9. Id. at 41.

10. Id. at 11.

11. Id. at 41.

12. Id.

13. Rollo, p. 150.

14. The decision was not in the rollo. None of the parties attached it to their pleadings.

15. Rollo, pp. 13-14 and p. 152.

16. Id. at 42.

17. Id.

18. Id. at 43.

19. Id. at 43.

20. The resolution was not attached in any of the pleadings.

21. Rollo, p. 44.

22 The resolution was not attached in any of the pleadings.

23. Rollo, p. 44.

24. Id.

25. Id. at 39-58.

26. Id. at 50.

27. Id.

28. Id.

29. Id. at 58.

30. Id. at 59-61.

31. Id. at 3-5.

32. Id. at 132.

33. Id. at 7-38.

34. Id. at 134-A.

35. Id. at 147-166.

36. Id. at 166-A.

37. Id. at 180-198.

38. unpaginated.

39. 683 Phil. 376 (2012) [Second Division, Per J. Carpio].

40. Rollo, pp. 19-20.

41. Id. at 20-32.

42. Id. at 11-12.

43. Id. at 154-156.

44. Id. at 157-161.

45. See RULES OF COURT, Rule 45, Sec. 1. See also Goduco v. Court of Appeals, 119 Phil. 531, 538 (1961) [Per J. Paredes, En Banc].

46. See Pascual v. Burgos, 776 Phil. 167, 182 (2016) [Per J. Leonen, Second Division] citing Medina v. Mayor Asistio, Jr., 269 Phil. 225 (1990) [Per J. Bidin, Third Division].

47. Philippine Airlines v. Dawal, 781 Phil. 474, 528 [Per J. Leonen, Second Division].

48. 809 Phil. 106 (2017) [Per J. Leonen, Second Division].

49. Id. at 120-122.

50. Rollo, p. 14 and p. 153.

51. Id. at 50-51.

52. Id. at 180-198.

53. Gatmaytan v. Dolor, 806 Phil. 1, 8 (2017) [Per J. Leonen, Second Division].

54. The 2011 NLRC Rules of Procedure, Rule VI, Sec. 4 (5) (ii).

55. The 2011 NLRC Rules of Procedure, Rule VI, Sec. 6.

56. U-Bix Corporation v. Hollero, 763 Phil. 668, 683 (2015) [Per J. Del Castillo, Second Division] citing Cordova v. Keysa's Boutique, 507 Phil. 147, 158 (2005).

57. Id.

58. McBurnie v. Ganzon, 719 Phil. 680, 713 (2013) [Per J. Reyes, En Banc].

59. 719 Phil. 680, (2013) [Per J. Reyes, En Banc].

60. Id. at 713-714.

61. Rollo, p. 19 and p. 181.

62. 568 Phil. 243 (2008) [Per J. Austria-Martinez, Third Division].

63. Rollo, pp. 18-20.

64. Roos Industrial Construction, Inc. v. NLRC, 567 Phil. 631, 638-639 (2008) [Per J. Tinga, Second Division].

65. Malcaba v. ProHealth Pharma Philippines, Inc., G.R. No. 209085, June 6, 2018 <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/64254> [Per J. Leonen, Third Division].

66. CONST., Art. XIII, Section 3.

67. Pascual v. Burgos, 776 Phil. 167, 182-183 (2016) [Per J. Leonen, Second Division].

68. Id. at 169.

69. Rollo, pp. 53-54.

70. Id. at 54-57.

71. 99 Phil. 408, 411-412 (1956) [Per J. Concepcion, En Banc].

72. G.R. No. 200555, January 20, 2021 <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/67052> [Per J.M.V. Lopez, Second Division].

73. Fuji Television Network, Inc. v. Espiritu, 749 Phil. 385, (2014) [Per J. Leonen, Second Division] citing Cesar C. Lirio, doing business under the name and style of Celkor Ad Sonicmix v. Wilmer D. Genovia, 667 Phil. 134-151 (2011) [Per J. Peralta, Third Division].

74. Tenazas v. R. Villegas Taxi Transport, 731 Phil. 217 (2014) [Per J. Reyes, First Division] citing Meteoro v. Creative Creatures, Inc., 610 Phil. 150, 161 (2009) [Per J. Nachura, Third Division].

75. Ang Tibay v. CIR, 69 Phil. 635, 642-643 (1940) [Per J. Laurel, En Banc], citing Appalachian Electric Power v. National Labor Relations Board, 4 Cir., 93 F. 2d 985, 989; National Labor Relations Board v. Thompson Products, 6 Cir., 97 F. 2d 13, 15; Ballston-Stillwater Knitting Co. v. National Labor Relations Board, 2 Cir., 98 F. 2d 758, 760.

76. New Civil Code, Art. 1306 provides:

Art. 1306. The contracting parties may establish such stipulations, clause, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

77. Rollo, pp. 40-41.

78. Id. at 11.

79. Sonza v. ABS-CBN, 475 Phil. 539, 551 (2004) [Per J. Carpio, First Division].

80. 749 Phil. 388 (2014) [Per J. Leonen, Second Division].

81. Fuji Television Network, Inc. v. Espiritu, 749 Phil. 388, 424-427 (2014) [Per J. Leonen, Second Division].

82. Rollo, pp. 30-32.

83. Id. at 53-54.

84. Labor Code, Art. 97 (f).

85. Fuji Television Network, Inc. v. Espiritu, 749 Phil. 388, 433 (2014) [Per J. Leonen, Second Division].

86. Rollo, pp. 53-59.

87. Id. at 40-41.

88. Id. at 29.

89. Id. at 28-30.

90. Corporal, Sr. v. National Labor Relations Commission, 395 Phil. 890, 900 (2000) [Per J. Quisumbing, Second Division].

91. Rollo, p. 29.

92. Id. at 10 and 27-28.

93. Fuji Television Network, Inc. v. Espiritu, 749 Phil. 388 (2014) [Per J. Leonen, Second Division].

94. Rollo, p. 56.

95. Republic Act No. 10151 renumbered Article 283 of the Labor Code to Article 298. This was reiterated in DOLE Department Advisory No. 1, series of 2015.

96. 494 Phil. 114, 122-123 (2005) [Per J. Garcia, En Banc].

97. 716 Phil. 267 (2013) [Per J. Peralta En Banc].

98. Id.