FACTS:

The petitioner company, Television and Production Exponents, Inc. (TAPE), is engaged in the production of television programs. The respondent, Roberto Servaña, was a security guard for TAPE from March 1987 until he was terminated on 3 March 2000. He filed a complaint for illegal dismissal and nonpayment of benefits, claiming that he was a regular employee of TAPE. TAPE, on the other hand, argued that there was no employer-employee relationship between them and that the respondent was an independent contractor falling under the talent group category.

The Labor Arbiter ruled in favor of the respondent, declaring him as a regular employee of TAPE. The NLRC, however, reversed the decision and considered the respondent as a mere program employee. The Labor Arbiter's ruling was based on the finding that the respondent's work as a security guard was necessary and desirable to TAPE's business. The NLRC, on the other hand, stated that security services may not be necessary and desirable in the usual business of TAPE.

The petitioner filed a motion for reconsideration with the Labor Arbiter, but it was denied. Thus, the petitioner filed a petition for certiorari with the Court of Appeals, arguing that the NLRC had acted with grave abuse of discretion in reversing the Labor Arbiter's decision. The Court of Appeals agreed with the NLRC and affirmed the respondent's regular employment status. The petitioner's motion for reconsideration was also denied by the Court of Appeals.

As a last recourse, the petitioner filed a petition for review with the Supreme Court, raising the issue of whether an employer-employee relationship existed between the parties. The Supreme Court noted that the existence of an employer-employee relationship is a question of fact, and the Court of Appeals and the Labor Arbiter had conflicting findings on this issue. The Court applied the control test as the most important factor in determining an employer-employee relationship. It cited the Court of Appeals' application of the four-fold test, which found that the petitioner had control over the respondent.

ISSUES:

1. Whether there exists an employer-employee relationship between TAPE and the respondent.

2. Whether the respondent is an independent contractor or employee.

3. Whether or not the respondent qualifies as a program employee or independent contractor.

4. Whether or not the respondent is a regular employee.

5. Whether or not the termination of the respondent was valid.

6. Whether the dismissal of the employee is valid despite the lack of due process.

7. Whether the employer should be held liable for non-compliance with procedural requirements of due process.

8. Whether the amount of nominal damages awarded is proper.

9. Whether the president of the company should be held solidarily liable with the company.

RULING:

1. The Court of Appeals found that an employer-employee relationship exists between TAPE and the respondent. This is based on the application of the four-fold test, where the court considered the elements of selection and hiring, payment of wages, control, and the power to dismiss. The court found that TAPE selected and hired the respondent, paid him a monthly salary, exercised control over him through the use of bundy cards, and had the power to dismiss him as evidenced by the Memorandum.

2. The Court of Appeals rejected TAPE's argument that the respondent is an independent contractor. The court found that TAPE failed to establish that the respondent possessed substantial capital or investment, conducted a distinct and independent business, and performed the work free from the control and direction of TAPE. TAPE also failed to present a written contract specifying the nature and extent of the work and the duration of the relationship between the parties.

3. The respondent cannot be classified as an independent contractor because an independent contractor is not an employee of the employer, while a program employee is considered an employee. Moreover, the petitioner failed to comply with the requirements laid down in Policy Instruction No. 40, including the registration of the contract with the Broadcast Media Council.

4. Regardless of the classification as a program employee or independent contractor, the respondent is considered a regular employee as he had been continuously employed by the petitioner for five years. Under Article 280 of the Labor Code, an employment shall be deemed regular when the employee has been engaged to perform activities that are usually necessary or desirable in the usual business or trade of the employer, unless the employment is fixed for a specific project or undertaking.

5. The termination of the respondent was deemed valid due to redundancy. However, the petitioner failed to comply with the requirement of serving a written notice to the Department of Labor and Employment at least one month prior to the intended date of retrenchment. Therefore, the termination was not in accordance with the law.

6. The dismissal for an authorized cause can be upheld even if due process was not observed.

7. However, the employer should be held liable for non-compliance with the procedural requirements of due process.

8. The amount of P10,000.00 as nominal damages is deemed proper in this case.

9. The president of the company cannot be held solidarily liable in the absence of malice or bad faith in terminating the employee.

PRINCIPLES:

• The "four-fold test" is used to determine the existence of an employer-employee relationship. The elements of selection and hiring, payment of wages, control, and the power to dismiss are considered.

• An identification card can serve as evidence of the employment relationship between an employer and an employee.

• Wages, as defined in the Labor Code, refer to remuneration or earnings capable of being expressed in terms of money, whether fixed or ascertained, payable by an employer to an employee under a contract of employment for work done or to be done.

• To establish the status of an independent contractor, the contractor must possess substantial capital or investment, conduct a distinct and independent business, and perform the work free from the control and direction of the principal. A written contract specifying the nature and extent of the work and the duration of the relationship is also required.

• Compliance with policy instructions and regulations is necessary for the proper classification of employees.

• The length of employment is a factor in determining the regularity of an employee's status.

• Termination for an authorized cause requires the payment of separation pay and compliance with procedural requirements, including the serving of written notice to the Department of Labor and Employment.

• Dismissal for an authorized cause but with lack of due process may still be upheld but the employer should be liable for non-compliance with procedural requirements of due process.

• The amount of nominal damages for violation of the right to statutory due process may be fixed by the court based on its sound discretion, taking into account the relevant circumstances.

• The liability of a company president in cases of dismissal is determined by whether there is malice or bad faith in terminating the employee.