Consolidated Broadcasting System, Inc. vs. Oberio

Radio drama talents engaged for prolonged periods are regular employees where the employer fails to produce the written contracts mandated by Policy Instruction No. 40 and exercises control over their work, discipline, and wages; their dismissal without proof of just cause is illegal, warranting separation pay in lieu of reinstatement when relations are strained.

Consolidated Broadcasting System, Inc. (CBSI) owns and operates DYWB-Bombo Radyo, a radio station in Bacolod City with sister stations in the Visayas and Mindanao. Respondents were engaged as drama talents for the station's drama productions, which were aired not only in Bacolod City but also in the sister stations across the Visayas and Mindanao regions. Some had been with the station since 1974, while the latest was hired in 1997. The dispute arose from the intersection of two separate legal remedies available under the Labor Code: the visitorial power of the Secretary of Labor to enforce labor standards under Article 128, and the jurisdiction of Labor Arbiters over termination disputes under Article 217.

Consolidated Broadcasting System, Inc. (CBSI) owns and operates DYWB-Bombo Radyo, a radio station based in Bacolod City with sister stations across the Visayas and Mindanao. Respondents — Danny Oberio, Elna de Pedro, Luisito Villamor, Wilma Sugaton, Rufo Deita Jr., Emily de Guzman, Caroline Ladrillo, Jose Roberto Regalado, Rosebel Narciso, and Ananita Tangete — were engaged as drama talents by the station. They reported for work daily, six days a week, and were required to record their drama productions in advance. Some had been employed since 1974, while the most recent was hired in 1997. Their drama programs were aired not only in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas.

Sometime in August 1998, petitioner reduced the number of its drama productions from fourteen to eleven, a move opposed by respondents. Negotiations failed, and respondents sought the intervention of the Department of Labor and Employment (DOLE). On November 12, 1998, the DOLE Regional Office conducted an inspection of the DYWB station, which revealed that petitioner was guilty of violations of labor standard laws, including underpayment of wages, non-payment of 13th month pay, non-payment of service incentive leave pay, and non-coverage of respondents under the Social Security System. Petitioner refused to submit payroll and daily time records despite a subpoena duces tecum issued by the DOLE Regional Director, contending that respondents were not its employees and that the case should be referred to the NLRC because the Regional Director lacked jurisdiction to determine the existence of an employer-employee relationship.

Petitioner allegedly pressured and intimidated respondents in retaliation for the complaint. Respondents Oberio and Delta were suspended for minor lapses, and the payment of their salaries was purportedly delayed. On February 3, 1999, pending the outcome of the inspection case, petitioner barred respondents from reporting for work, prompting the latter to claim constructive dismissal. On April 8, 1999, the DOLE Regional Director issued an order directing petitioner to pay respondents a total of P318,986.74 representing non-payment and underpayment of salary and benefits. On July 8, 1999, however, the Regional Director reconsidered and certified the records to the NLRC, Regional Arbitration Branch VI, for determination of the employer-employee relationship. Respondents appealed that order to the Secretary of Labor.

On October 12, 1999, respondents filed a case for illegal dismissal, underpayment and non-payment of wages and benefits, plus damages against petitioner. The Labor Arbiter dismissed the case without prejudice on April 10, 2000, pending the Secretary of Labor's decision on the existence of an employer-employee relationship. On appeal to the NLRC, respondents raised the issue of employer-employee relationship and submitted time cards, identification cards, payroll, a show cause order from the station manager to respondent Danny Oberio, and memoranda either noted or issued by said manager. Petitioner presented no documentary evidence, merely denying the allegations and claiming that the station paid for drama recorded by piece and exercised no control over respondents' conduct. The NLRC found respondents to be regular employees who were illegally dismissed, ordering reinstatement with full backwages. The Court of Appeals affirmed.

• No Employer-Employee Relationship: Petitioner contended that respondents were not its employees but piece-rate contractors paid by results, and that the radio station had no control over the conduct of respondents.
• Forum Shopping: Petitioner argued that respondents violated the rule on forum shopping by filing separate cases before the DOLE Regional Director and the Labor Arbiter.
• Procedural Impropriety — NLRC Should Remand: Petitioner maintained that the NLRC should have remanded the case to the Labor Arbiter rather than ruling on the merits, and refused to present evidence before the NLRC on the erroneous contention that doing so would constitute a waiver of the right to question the NLRC's jurisdiction.
• No Illegal Dismissal: Petitioner alleged that it was respondents who ceased reporting for work, implying abandonment rather than dismissal.

• Regular Employment: Respondents argued that they were regular employees of petitioner, having been hired on various dates from 1974 to 1997, reporting for work daily six days a week, and performing work necessary and indispensable to petitioner's broadcasting business.
• No Forum Shopping: Respondents maintained that the two complaints involved different causes of action — one for violation of labor standard laws and the other for illegal dismissal — filed before different fora as provided by law, and that respondent Danny Oberio disclosed the pendency of the wage differential case in the verification and position paper.
• Illegal Dismissal: Respondents claimed they were constructively dismissed when petitioner barred them from reporting for work on February 3, 1999, after subjecting them to pressure, intimidation, suspension, and delayed salary payments.

• Forum Shopping: Whether respondents violated the rule on forum shopping by filing separate complaints before the DOLE Regional Director and the Labor Arbiter.
• NLRC Authority to Rule on the Merits: Whether the NLRC correctly ruled on the merits of the case instead of remanding it to the Labor Arbiter.
• Employer-Employee Relationship: Whether respondents were employees of petitioner.
• Illegal Dismissal: Whether respondents' dismissal was illegal.

• Forum Shopping: No. The two complaints involved distinct causes of action arising at different times and falling under the jurisdiction of different tribunals — labor standards enforcement under Article 128 and termination disputes under Article 217 — so filing separate cases did not constitute forum shopping.
• NLRC Authority to Rule on the Merits: Yes. The NLRC correctly ruled on the merits because respondents specifically raised the issue of employer-employee relationship and petitioner refused to present evidence, resorting instead to technicalities; labor tribunals are not bound by technical rules of procedure.
• Employer-Employee Relationship: Yes. Respondents were regular employees of petitioner, the four-fold test being satisfied by evidence of hiring, payment of wages through petitioner's payroll, and the station manager's exercise of control and disciplinary power, coupled with petitioner's failure to produce the written contracts required under Policy Instruction No. 40.
• Illegal Dismissal: Yes. The dismissal was illegal because petitioner failed to discharge its burden of proving a just cause, merely alleging abandonment without presenting substantial evidence.

• Forum Shopping: The causes of action in the two complaints were different — one for violation of labor standard laws under Article 128, which vests the Secretary of Labor or duly authorized representatives with visitorial and enforcement power, and the other for illegal dismissal under Article 217, which grants Labor Arbiters original and exclusive jurisdiction over termination disputes. The entitlement to relief in both cases hinged on the existence of an employer-employee relationship, but the law itself provides for two separate remedies for distinct causes of action. The inspection case preceded the termination; the illegal dismissal case was filed only after respondents were barred from work. It would be unjust to charge respondents with forum shopping when the remedy available at the time their causes of action arose was to file separate cases before different fora. Moreover, respondent Danny Oberio disclosed the pendency of the wage differential case in the verification and discussed it in detail in the position paper, negating any intent to mislead. The Court drew an analogy to Benguet Management Corporation vs. Court of Appeals, where separate injunction actions before different RTCs were not considered forum shopping because the issuing court's enforceability was limited to its territorial jurisdiction.

• NLRC Authority to Rule on the Merits: Respondents specifically raised the issue of employer-employee relationship before the NLRC, but petitioner refused to submit evidence to disprove such relationship, erroneously contending that doing so would waive its right to question the NLRC's jurisdiction. This was inconsistent with petitioner's earlier position in the DOLE inspection case, where it argued the case should be certified to the NLRC for resolution of the same issue. Petitioner refused to meet the substantial aspect of the controversy and resorted to technicalities to delay disposition. Labor tribunals are not bound by technical rules, and due process is not violated where a party is given the opportunity to be heard but chooses not to present its side. Petitioner never claimed it was denied due process; it had opportunities to present evidence before the labor tribunals, the Court of Appeals, and the Supreme Court, but chose not to do so.

• Employer-Employee Relationship: Respondents' employment passed the four-fold test: (1) selection and engagement — petitioner failed to controvert with substantial evidence the allegation that respondents were hired on various dates from 1974 to 1997; if the director alone chose the talents, petitioner, being in possession of the records, could have produced a contract to that effect but did not; (2) payment of wages — petitioner paid the salaries as shown by the payroll bearing the petitioner company's name in the heading; (3) power of dismissal and disciplinary measures — proven by memoranda from the station manager calling the attention of the Drama Department to tardiness and absences, directing respondent Oberio to explain an infraction, and suspending him for six days; and (4) power of control — the same memoranda showed petitioner possessed control over respondents' work and the power to discipline them through fines and suspension. Under Policy Instruction No. 40, petitioner was obliged to execute written contracts specifying the nature of work, rates of pay, and programs, and to register them with the Broadcast Media Council. Petitioner's failure to produce any such contract — or to show compliance with the requirement of filing reports after each engagement — was indicative that respondents were regular employees, not program employees. The engagement of respondents for two to twenty-five years and the airing of their programs across sister stations showed their work was necessary and indispensable to petitioner's business. Even if initially hired as project or contractual employees, the repeated and continuing need for their services over years justified classification as regular employees.

• Illegal Dismissal: In labor cases, the employer bears the burden of proving that dismissal was for a just cause; failure to show this necessarily means the dismissal was illegal. Petitioner merely contended that respondents ceased reporting for work and never presented substantial evidence to support that allegation. Petitioner therefore failed to discharge its burden. Where doubts exist between the evidence of employer and employee, the scales must be tilted in favor of the latter, consistent with the State's policy to give maximum aid and protection to labor. Reinstatement was no longer viable due to strained relations, as admitted by respondents — the complaint filed before the DOLE strained relations with petitioner, who eventually dismissed them. Separation pay was thus ordered in lieu of reinstatement, computed at one month pay or one-half month pay for every year of service, whichever is higher, reckoned from the first day of employment up to the finality of the decision. Full backwages were computed from the date of dismissal until the finality of the decision.

• Four-Fold Test for Employer-Employee Relationship — The existence of an employer-employee relationship is determined by four criteria: (1) the selection and engagement of the employee, or the power to hire; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. All four elements were found present through payroll records, memoranda from the station manager imposing discipline, and the failure of petitioner to produce contrary evidence.

• Policy Instruction No. 40 — Program Employees vs. Regular Employees — Program employees are those engaged for a particular or specific program, not required to observe normal working hours, and allowed to enter into employment contracts with other entities. Their engagement must be under a written contract specifying the nature of work, rates of pay, and programs, duly registered with the Broadcast Media Council. Failure of the employer to produce such contracts is indicative that the so-called talents or project workers are in reality regular employees.

• Regular Employment Based on Necessity and Indispensability — The test for regular employment is the reasonable connection between the particular activity performed by the employee and the usual business or trade of the employer. If the employee has performed the job for at least one year, even intermittently, the repeated and continuing need for its performance is sufficient evidence of the necessity, if not indispensability, of that activity to the business.

• Burden of Proof in Illegal Dismissal — The employer has the burden of proving that dismissal was for a just cause; failure to do so necessarily means the dismissal was unjustified and illegal. Doubts between the evidence of employer and employee must be resolved in favor of the latter.

• Strained Relations Doctrine — Reinstatement is no longer viable where relations between employer and employee are strained, in which case separation pay is awarded in lieu of reinstatement. Separation pay is computed at one month pay or one-half month pay for every year of service, whichever is higher, reckoned from the first day of employment up to the finality of the decision; full backwages are computed from the date of dismissal until the finality of the decision.

• Forum Shopping in Labor Cases — Filing separate cases before different fora for distinct causes of action arising at different times — one for labor standards enforcement under Article 128 and another for illegal dismissal under Article 217 — does not constitute forum shopping, especially where the law itself provides for separate remedies and the party disclosed the pendency of the other case in the verification and position paper.

• "Policy Instruction No. 40 pertinently provides: Program employees are those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours such that on some days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies. The engagement of program employees, including those hired by advertising or sponsoring companies, shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay, and the programs in which they will work." — This passage sets out the regulatory framework distinguishing program employees from regular employees and was central to the Court's finding that respondents were regular employees due to petitioner's failure to produce the mandated written contracts.

• "The test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business." — This formulation of the regular employment test was applied to hold that respondents' two-to-twenty-five-year engagement in drama production, aired across multiple stations, was necessary and indispensable to petitioner's broadcasting business.

• "In labor cases, the employer has the burden of proving that the dismissal was for a just cause; failure to show this would necessarily mean that the dismissal was unjustified and, therefore, illegal." — This statement of the burden of proof rule was the basis for finding the dismissal illegal, petitioner having merely alleged abandonment without substantial evidence.

• ABS-CBN vs. Marquez, G.R. No. 167638, June 22, 2005 — Followed. The Court relied on this case for the proposition that the failure of an employer to produce the contract mandated by Policy Instruction No. 40 is indicative that the so-called talents or project workers are in reality regular employees. It was also cited for the principle that the power of control, dismissal, and imposition of disciplinary measures are indicative of an employer-employee relationship.

• Benguet Management Corporation vs. Court of Appeals, G.R. No. 153571, September 18, 2003 — Followed by analogy. The Court cited this case to support its finding of no forum shopping, drawing a parallel between filing separate injunction actions before different RTCs due to territorial jurisdiction limits and filing separate labor cases before different fora due to statutory jurisdictional divisions.

• Integrated Contractor and Plumbing Works, Inc. vs. National Labor Relations Commission, G.R. No. 152427, August 9, 2005 — Followed. Cited for the doctrine that even if employees were initially hired as project or contractual employees, engagement of services for prolonged periods justifies classification as regular employees where the services are indispensable to the employer's business.

• Pascua vs. National Labor Relations Commission, G.R. No. 123518, March 13, 1998 — Followed. Cited for the rule that the employer bears the burden of proving just cause for dismissal and that allowing dismissal based on mere allegations would unduly emasculate the right to security of tenure.

• Mayon Hotel and Restaurant vs. Adana, G.R. No. 157634, May 16, 2005 — Followed. Cited for the time-honored rule that in controversies between laborer and master, doubts reasonably arising from the evidence should be resolved in favor of the former.

• Caurdanetaan Piece Workers Union vs. Laguesma, G.R. Nos. 113542 and 114911, February 24, 1998 — Followed. Cited for the propositions that labor tribunals are not bound by technical rules and that due process is not violated where a party is given the opportunity to be heard but chooses not to present its side.

• F.F. Marine Corporation vs. National Labor Relations Commission, G.R. No. 152039, April 8, 2005 — Followed. Cited for the rule on computation of backwages and separation pay for illegally dismissed employees.

• Article 217, Labor Code — Grants Labor Arbiters original and exclusive jurisdiction over termination disputes. Applied to establish that the illegal dismissal case was properly filed before the Labor Arbiter, a jurisdiction distinct from the DOLE Regional Director's visitorial power.

• Article 128, Labor Code — Vests the Secretary of Labor or duly authorized representatives with visitorial and enforcement power to inspect employer records and determine compliance with labor standard laws. Applied to establish that the labor standards inspection case was properly before the DOLE Regional Director, and that the exercise of this power is exclusive to cases where the employer-employee relationship still exists.

• Policy Instruction No. 40 — Requires that the engagement of program employees be under a written contract specifying the nature of work, rates of pay, and programs, duly registered with the Broadcast Media Council. Applied as the benchmark for determining whether respondents were program employees or regular employees; petitioner's failure to produce such contracts was held indicative of regular employment.

Ma. Alicia Austria-Martinez, Minita V. Chico-Nazario, Antonio Eduardo B. Nachura.