ChanRobles Virtual law Library

chanrobles.com - PHILIPPINE SUPREME COURT RESOLUTIONS - ON-LINE

cralaw_scresolutions_separator.NHAD

[G.R. No. 166318. March 7, 2005]

TOON CITY vs. NIEVA

THIRD DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated MAR 7 2005.

G.R. No. 166318 (Toon City Animation, Inc. and/or Colin Baker vs. Kenneth Nieva, Warlito Ballaran, Marlon Medel and Rolando Novicio.)

Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to nullify and set aside the following issuances of the Court of Appeals in CA-G.R. SP No. 81483, to wit:

1.���� Decision dated 29 September 2004 , [1] cralaw granting the petition for certiorari filed by herein respondents contra an earlier resolution dated 30 August 2002 of the National Labor Relations Commission (NLRC); and

2.���� Resolution dated 13 December 2004, [2] denying petitioner's motion for reconsideration.

The material facts may be briefly stated, as follows:

Petitioner Toon City Animation, Inc. is a corporation engaged in the business of producing cartoon illustrations and painted background for animated cartoon shows of its clients. From inception, petitioner had exclusively produced painted backgrounds for animated cartoon shows of Walt Disney Productions owing to its existing exclusive agreement with the latter.

On the other hand, respondents Kenneth Nieva, Warlito Ballaran, Marlon Medel and Rolando Novicio are animation artists employed by petitioner on various dates to create, draw and paint background pictures. The records show that they were hired and employed by the petitioner on the following dates with their respective monthly salaries, to wit:

Name

Date Hired

Monthly Salaries

1. Kenneth Nieva

May 1998

P 42,118.00

2. Warlito Ballaran

February 1998

P 21,370.00

3. Marlon Medel

March 1996

P 34,881.98

4. Rolando Novicio

May 1994

P 24,352.74.

While respondents have been employed with petitioner on the abovementioned dates, they were not made to sign any written contract of employment. It was only on 1 March 1999 that each of them separately entered into written contract. These employment contracts provided for a term of one (1) year. After the expiration of said term, petitioner again continued to engage their services without written employment agreement. Then, on 17 August 2001, respondents were given letters [3] cralaw notifying them of the termination of their employment.

On account thereof, respondents filed against petitioner a complaint for illegal dismissal with claims for regularization, 13th month pay, separation pay and moral and exemplary damages.

It is petitioner's posture that there existed no employer-employee relationship between it and respondents, reasoning out that the latter are self-employed individuals or independent contractors who had full control of their time and whereabouts and who are free to contract their services and skills with other companies. Further, petitioner claims that it never exercised control over the means and methods employed by respondents to generate the painted background pictures, adding that respondents were merely given incentives for submitting a specified number of painted works per month but were under no compulsion to do so.

After due deliberation, the Labor Arbiter rendered a decision on 8 February 2002 [4] cralaw dismissing, for lack of merit, respondents' complaint based on his finding that respondents are freelance independent contractors specifically tasked to do temporary service for the petitioner.

Respondents went on appeal to the National Labor Relations Commission (NLRC) which appeal was likewise dismissed in the Commission's resolution of 30 August 2002 for lack of merit. [5] cralaw A motion for reconsideration was thereafter filed by respondents, but it, too, was denied by the NLRC in its order of 27 October 2003.

Therefrom, respondents went to the Court of Appeals via a petition for certiorari under Rule 65 of the Rules of Court, thereat docketed as CA-G.R. SP No. 81483.

As stated at the threshold hereof, the Court of Appeals, in its Decision dated 29 September 2004, [6] granted the petition and accordingly reversed and set aside the NLRC's resolution of 30 August 2002 and its subsequent order of 27 October 2003. The appellate court declared that respondents were illegally dismissed from their employment and are, therefore, entitled to payment of full backwages and 13th month pay from the time of their dismissal up to the finality of its decision, "without deduction and qualification." In the same decision, the Court of Appeals remanded the case to the Labor Arbiter "for computation of the monetary benefits payable to the [respondents]."

In a resolution dated 13 December 2004, [7] cralaw the same court denied petitioner's motion for reconsideration.

Hence, petitioner's present recourse on the following submissions:

I.

THE COURT OF APPEALS GRAVELY ERRED IN NOT DISMISSING OUTRIGHT THE PETITION FOR CERTIORARI FILED BY RESPONDENTS FOR BEING FILED OUT OF TIME;

II.

THE COURT OF APPEALS GRAVELY ERRED AND RULED CONTRARY TO LAW AND JURISPRUDENCE WHEN IT ACTED AS A TRIER OF FACTS AND DECLARED: (i) RESPONDENTS AS EMPLOYEES OF PETITIONER; (ii) RESPONDENTS [ARE] ILLEGALLY DISMISSED BY PETITIONER; AND (iii) DIRECTED PE1TIONER TO PAY RESPONDENTS FULL BACKWAGES AND 13TH MONTH PAY FROM THE TIME OF DISMISSAL UP TO THE FINALITY OF THE COURT OF APPEALS' DECISION.

We DENY.

To begin with, the procedural nicety raised by petitioner is wanting in merit. For, as held by us in City of Cebu vs. CA, et al.: [8]

One of the basic tenets of procedural law is a liberal interpretation of the Rules of Court in order to promote their object and to assist the parties in obtaining just, speedy, and inexpensive determination of every action and proceeding. Time and again, this Court has stressed that the primordial concern of rules of procedure is to secure substantial justice. Otherwise stated, they are but a means to an end. Hence, a rigid and technical enforcement of these rules which overrides the ends of justice shall not be countenanced. Substance cannot be subordinated to procedure when to do so would deprive a party of his day in court on the basis solely of a technicality. (Underscoring supplied)

Moreover, rules of procedure must not be rigidly applied in order not to frustrate the ends of substantial justice. More so must this be in labor cases. So it is that in Ablaza vs. CA, et al., [9] we ruled:

The controlling principle in the interpretation of procedural rules is one of liberality that they may promote their object and assist the parties in obtaining just, speedy, and inexpensive determination of every action and proceeding (Section 2, Rule 1, Rules of Court). When the rules are applied to labor cases, the interpretation must proceed in accordance with the liberal spirit of the labor laws. (Underscoring supplied)

We now dwell on the more important issues of substance.

As we see it, the pivotal issue in this case is whether or not petitioner illegally dismissed the respondents from their employment. To resolve this, however, we must first determine whether or not respondents were employees of the petitioner in view of the letter's denial of an employer-employee relationship between them.

In Ushio Marketing vs. NLRC and Antonio, [10] cralaw this Court has had the recent occasion to speak on the factors determinative of the existence of an employer-employee relationship. There, the Court stated:

The factors to be considered in determining the existence of an employer-employee relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. The so-called 'control test' is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employer-employee relationship. Under the control test, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end achieved, but also the manner and means to be used in reaching that end.

Again, in Maraguinot, Jr. and Enero vs. NLRC, et al., [11] we wrote:

VIVA'S control is evident in its mandate that the end result must be a 'quality film acceptable to the company.' The means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company; and the Supervising Producer, the 'eyes and ears' of VIVA and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems encountered in making the film.

Here, petitioner exercises control over respondents not only with respect to the end-work sought to be achieved but, more importantly, on the manner and means used in producing that end. As correctly found by the Court of Appeals:

It is undisputed that the first two elements are present in the instant petition and it is with respect to the third and fourth elements which require discussion.

x x x

In the assailed resolution dated August 30, 2002, the NLRC held that the petitioners [now respondents] are freelance artists and are deemed as independent contractors who are paid by results, i.e., a fixed amount for every painted background field per month for the duration of the contract. We do not agree. It has been ruled that payment by results is a method of compensation and does not define the essence of the relation. It is a method of computing compensation, not a basis for determining the existence or absence of employer-employee relationship. One may be paid on the basis of results or time expended on the work, and may or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not.

What is determinative of the existence of an employer-employee relationship is the fourth element or the 'control test.' x x x

Contrary to the findings of the public respondent [referring to the NLRC], We find that the private respondent [referring to herein petitioner] exercised the power of control over the means and methods employed by the petitioner [referring to herein respondents] to accomplish the desired results. Record shows that the petitioners worked in the company premises, and the periods they respectively spent therein were recorded in a document entitled 'Daily Hours in Studio'. Moreover, their total outputs per week ('work period' and 'pay period') were monitored, as shown by their respective 'Background Average Output Report.' In order to ensure the desired quality of the final output, the private respondent provided the materials and equipment used by the petitioners in their work. The petitioners were also subject to quality requirements or standards set by both the private respondent and Walt Disney Productions, which must be complied with as a condition for payment of their salaries. One need not surmise that in order to conform to such quality standards in producing these background illustrations, the petitioners had to follow certain specifications or instructions given by the private respondent on how and what images to render. In other words, the petitioners were not really given full discretion as to the manner and methods employed in producing the final output as alleged by the private respondent, and they were not completely free of the private respondent's super-vision. Hence, the element of control is present." (Italics supplied.)

In fine, we rule and so hold that the appellate court committed no reversible error in finding the existence of an employer-employee relationship between petitioner and the respondents.

We now proceed to the principal question of whether petitioner's dismissal of the respondents is legal.

We resolve the issue in negative.

As this Court has repeatedly held, two (2) requisites need be complied with by an employer for a valid dismissal of its employees, namely: (a) the dismissal must be for a valid cause; and (b) the employee must be afforded due process. [12] cralaw

The valid causes for legally effecting the dismissal of an employee are enumerated under Articles 282 and 283 of the Labor Code, as amended, which respectively read:

Art. 282. Termination by employer. - An employer may terminate an employment for any of the following causes:

a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;

b) Gross and habitual neglect by the employee of his duties;

c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;

d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and

e) Other causes analogous to the foregoing.

Art. 283. Closure of establishment and reduction of personnel. -The employer may also terminate the employment of an employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent 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 Department of Labor and Employment at least one (1) month 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 at least 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 as one (1) whole year.

Here, petitioner was not able to sufficiently prove the existence of any of the just causes for termination under Article 282, nor any of the authorized causes under Article 283 of the Code. Well-settled it is that in termination cases, the burden of proving that the dismissal was for a just or authorized cause rests upon the employer. [13] cralaw And, we emphasize, the employer's failure to discharge such burden would only mean that the dismissal was not justified. [14] cralaw

Not only that, petitioner likewise failed to observe the notice requirements embodied in the Labor Code, which, we stress, are mandatory in character and, in fact, constitute parts of the constitutional guarantee to due process. [15] cralaw

It is observed that respondents were dismissed from their employment on the very day that they received their notice of termination. This is in direct contravention of the established rules in termination cases that: (1) if the termination is for a just cause under Article 282, the employer ought to furnish the employee with two written notices, one informing him of the ground for which his dismissal is sought, and the other, apprising him of the employer's decision to terminate his employment; [16] cralaw and (2) where the termination is for any of the authorized causes under Article 283, the employer ought to furnish both the employee and the Department of Labor and Employment with a written notice of his intention to dismiss the employee at least thirty days before the intended date of termination. [17] cralaw

With the realities that here, the dismissal is not for any of the just or authorized causes under Articles 282 and 283, supra, of the Labor Code, coupled by the fact that the termination of respondents' employment was effected without observance of due process requirement of notice, we rule and hold without hesitancy that petitioner's dismissal of the respondents is illegal.

WHEREFORE, the assailed decision of the Court of Appeals is hereby AFFIRMED and this petition DENIED.

SO ORDERED.

Very truly yours,

(Sgd.) LUCITA ABJELINA-SORIANO
Clerk of Court


Endnotes:

[1] cralaw Penned by Associate Justice Delilah Vidallon-Magtolis and concurred in by Associate Justices Eliezer R. De Los Santos and Arturo D. Brion.

[2] cralaw Rollo, p. 45.

[3] cralaw Rollo, pp. 131-134.

[4] cralaw Rollo, p. 164, et seq.

[5] cralaw Rollo, p. 189, et seq.

[6] cralaw Rollo, p. 47, et seq.

[7] cralaw Rollo, p. 45.

[8] cralaw 258 SCRA 175, 177 [1996].

[9] cralaw 126 SCRA 246, 253 [1983].

[10] cralaw 356 Phils. 174, 187 [1998].

[11] cralaw 348 Phils. 580, 598 [1998].

[12] cralaw Concorde Hotel vs. Court of Appeals, et al., 414 Phils. 897, 905 [2001].

[13] cralaw Anino, et al. vs. NLRC, et al., 352 Phils. 1098, 1113 [1998].

[14] cralaw Azcor Manufacturing, Inc. vs. NLRC, 362 Phils. 370, 380 [1999].

[15] cralaw Agabon vs. NLRC, G.R. No. 158693, November 17, 2004.

[16] cralaw Greenhills Products, Inc. and/or Yu vs. NLRC and Abajo, 350 Phils. 306, 312 [1998].

[17] cralaw Philippine Tobacco Flue-Curing and Redrying Corporation vs. NLRC, et al., 360 Phils. 218, 239 [1998]


Back to Home | Back to Main

 

CLICK HERE FOR THE LATEST SUPREME COURT JURISPRUDENCE

PHILIPPINE SUPREME COURT DECISIONS

QUICK SEARCH

cralaw

 







chanrobles.com

ChanRobles Legal Resources:

ChanRobles On-Line Bar Review

ChanRobles Internet Bar Review : www.chanroblesbar.com

ChanRobles MCLE On-line

ChanRobles Lawnet Inc. - ChanRobles MCLE On-line : www.chanroblesmcleonline.com