G.R. No. 154448 August 15, 2003
00 from
DR. PEDRITO F. REYES, Petitioner,
vs.
COURT OF APPEALS, PHIL. MALAY POULTRY BREEDERS,
INC. and LEONG HUP POULTRY FARM SDN, BHD., Mr. Francis
T.N. Lau, President and Chairman of the Board and Mr. Chor
Tee Lim, Director, Respondents.
Labor Law; Labor Code; Labor laws mandate the speedy
disposition of cases, with the least attention to technicalities but
without sacrificing the fundamental requisites of due process.—
Labor laws mandate the speedy disposition of cases, with the least
attention to technicalities but without sacrificing the fundamental
requisites of due process. Remanding the case to the Court of
Appeals will only frustrate speedy justice and, in any event, would
be a futile exercise, as in all probability the case would end up with
this Court.
Same; Same; Attorney's Fees; In awarding attorney's fees, there
need only be a showing that the lawful wages were not paid
accordingly.—The afore-quoted Article 111 is an exception to the
declared policy of strict construction in the awarding of attorney’s
fees. Although an express finding of facts and law is still necessary
to prove the merit of the award, there need not be any showing that
the employer acted maliciously or in bad faith when it withheld the
wages. There need only be a showing that the lawful wages were
not paid accordingly, as in this case.
Same; Same; In carrying out and interpreting the labor codes
provisions and its implementing regulations, the employees welfare
should be the primordial and paramount consideration.—In carrying
out and interpreting the Labor Code’s provisions and its
implementing regulations, the employee’s welfare should be the
primordial and paramount consideration. This kind of interpretation
gives meaning and substance to the liberal and compassionate
spirit of the law as provided in Article 4 of the Labor Code which
states that “[a]ll doubts in the implementation and interpretation of
the provisions of [the Labor] Code including its implementing rules
and regulations, shall be resolved in favor of labor”, and Article
1702 of the Civil Code which provides that “[i]n case of doubt, all
labor legislation and all labor contracts shall be construed in favor
of the safety and decent living for the laborer.”
YNARES-SANTIAGO, J.:
Assailed in this petition for review under Rule 45 of the Revised
Rules of Court are the January 28, 20021 and July 22, 20022
Resolutions3 of the Court of Appeals in CA-G.R. SP No. 67431,
which dismissed the petition for certiorari filed by petitioner for
failure to attach to the petition the duplicate original or certified true
copy of the Labor Arbiter’s decision as well as the relevant
pleadings.
The facts show that on August 24, 1989, respondent Leong Hup
Poultry Farms SDN. BHD (Leung Hup) of Malaysia, thru its
Managing Director Francis T. Lau, appointed petitioner Pedrito F.
Reyes as Technical/Sales Manager with a net salary of
US$4,500.00 a month. His duties consisted of selling parent stock
day-old chicks and providing technical assistance to clients of the
company in Malaysia and other Asian countries.4 Sometime in
1992, the company formed Philippine Malay Poultry Breeders, Inc.,
(Philmalay) in the Philippines. Petitioner was appointed General
Manager thereof with a monthly salary of US$5,500.00.
In 1996-1997, respondents suffered losses which caused them to
reduce production and retrench employees in Philmalay. On June
30, 1997, petitioner gave verbal notice to respondent Francis T. Lau
that he will serve as General Manager of Philmalay until December
31, 1997 only.5 In a letter dated January 12, 1998, petitioner
confirmed his verbal notice of resignation and requested that he be
given the same benefits granted to retrenched and resigned
employees of the company, consisting of separation pay equivalent
to 1 month salary for every year of service and the monetary
equivalent of his sick leave and vacation leave. He likewise
requested for the following:
1. payment of underpaid salary for the period December 1989 –
December 31, 1997 together with the additional one month salary
payable in December of every year which was paid at the rate of
P26.00 instead of the floating rate;
2. brand new car (Galant Super Saloon) or its equivalent;
1
3. life insurance policy in the amount of US$100,000.
December 1, 1989 to December 31, 1997, or the premiums due
thereon;
4. office rentals at the rate of US$300.00 or its peso equivalent for
the use of his residence as office of Philmalay for the period
December 1, 1989 to July 1996; and
5. retention of the services of the law firm Quasha Ancheta Pena
and Nolasco Law Firm, which was hired by respondents to defend
him in the illegal recruitment case filed against him in connection
with his employment with respondents.6
In a letter dated January 19, 1998, respondent Philmalay
retrenched petitioner effective January 20, 1998 and promised to
pay him separation benefits pursuant to the provisions of the Labor
Code.7 He was, however, offered a separation pay equivalent to
four months only, or the total amount of P578,600.00 (P144,650 x
4). The offer was not accepted by petitioner and efforts to settle the
impasse proved futile.
Petitioner filed with the Arbitration Branch of the National Labor
Relations Commission a complaint8 for underpayment of wages
and non-payment of separation pay, sick leave, vacation leave and
other benefits against respondents.
On December 22, 1999, the Labor Arbiter rendered a decision9 in
favor of petitioner, the dispositive portion of which reads:
PREMISES CONSIDERED, judgment is hereby rendered in favor
of the complainant and against the respondents, as follows:
1. To order respondents to pay jointly and severally the
complainant, the following:
(a) Unpaid salary from January 1, 1998 to January 19, 1998, the
same to be computed in the following manner:
19 = days % 31 days of January ‘98
= 0.613 month x US$5,500.00
= US$3,370.00
(b) Underpayment of salary, the same to be computed at net
US$5,500.00 or its peso-equivalent from July 1, 1997 to December
31, 1997, together with the additional one (1) salary payable every
year, the same to be paid at the rate of P26.30 instead of the
following rate computed as follows:
July 1997 - P27.66 – P1.36 - P7, 480.00
August 1997 - 29.33 – 3.02 - 16, 665.00
September - 32.39 - 6.09 - 33, 495.00
October 1997 - 34.46 - 8.16 - 44, 880.00
November 1997 - 34.51 - 8.21 - 45, 155.00
December 1997 - 37.17 - 10.57- 59, 785.00
P207,460.00
(c) 13th month pay for December 1997 computed as follows:
December 1997 – P37.17 – P10.57 – P59,785.00.
2. To order respondents to pay jointly and severally the complainant
the following:
(a) Unused vacation and sick leaves from December 01, 1989 to
December 31, 1997 based on the same salary, to be computed as
follows:
i) Vacation Leave – Fifteen (15) days for every year of services x 9
years = 135 days
135 days % 26 working days a month
= 5.2 months
= US$28,600.00
ii) Sick Leave – Fifteen (15) Days for every [year] of service x 9
years = 135 days
135 days % 26 working days a month
= 5.2 months x US$5,500.00 / month
= US$28,600.00
3) To order respondents to pay jointly and severally the
complainant his separation pay equivalent to one (1) month pay for
very year of service at the rate of US $5,500.00 or its peso
equivalent from December 1, 1989 to January 19, 1998, computed
as follows:
9 years x US$5,500.00 = US$49,500.00
4) To order respondents to pay jointly and severally the
complainant’s other claims and benefits:
a) A brand new car (Galant super saloon) or its equivalent in the
sum of P945,100.00;
b) Office rentals for the use of his residence situated at No. 38 Don
Wilfredo St., Don Enrique Heights Diliman, Quezon City, [from] 01
December 1989 to July 1996 at the rate of US$300.00 or its peso
equivalent to US$23,700.00;
c) Life insurance policy for US$100,000.00 from December 1, 1989
to December 31, 1997, or if the same was not secured the
premiums due thereon for the above period, the same to be
computed as follows:
US$2,736.50 x 9 years = US$24,628.50
d) The services of the Law firm of Quasha Ancheta Peña and
Nolasco be continued to be retained by the two (2) companies to
represent complainant in the illegal recruitment case before the
Regional Trial Court of Quezon City, Branch 96, docketed as Crim.
Case No. Q-93-46421, entitled "People of the Philippines vs. Dr.
Antonio B. Mangahas, et al.," filed against … him in connection
with his employment by Leong Hup, or in default thereof to pay the
attorney’s fees of the new counsel, that may be hired by the
complainant to defend him in the said case estimated in the sum of
P200,000.00, more or less;
5) To order the respondents to pay jointly and severally the
complainant moral damages in the sum of P2.5 million and
exemplary damages of P2.5 million;
6) To order the respondents to pay jointly and severally the
complainant in the sum equivalent to ten percent (10%) of the total
claim as and for attorney’s fees.
7) Respondents’ counterclaims are hereby dismissed for lack of
merit.
SO ORDERED.10
On appeal by respondents to the National Labor Relations
Commission (NLRC), the Decision of the Labor Arbiter was
modified by deleting the awards of – (1) US$3,370.00 representing
unpaid salary for the period January 1, 1998 to January 19, 1998;
(2) US$28,600.00 as vacation leave; (3) brand new car or its
equivalent in the sum of P945,100.00; (4) US$23,700.00 as office
rentals for the period of December 1, 1989 to July 1996; (5)
US$100,000.00 life insurance policy or the equivalent premium in
the amount of US$24,628.50; (6) P2.5 million as moral damages;
and (7) P2.5 million as exemplary damages. The NLRC likewise
reduced the amount of petitioner’s separation pay to US$44,400.00
after adjusting its computation based on the length of service of
petitioner which it lowered from 9 years to 8 years; and by limiting
the basis of the 10% attorneys fees to the total of the awards of
underpayment of salary (P207,460.00), 13th month pay differential
(P59,785.00) and cash equivalent of sick leave (US$28,600.00)
only, and excluding therefrom the award of separation pay in the
amount of US$44,400.00. The decretal portion of the said
decision11 states:
WHEREORE, premises considered, the Decision dated December
22, 1999 is hereby MODIFIED as follows:
Respondents are hereby ordered to pay jointly and severally the
complainant, the following:
(a) underpayment of salary as computed in the appealed Decision
in the amount of P207, 460.00;
(b) 13th month pay differential as computed in the appealed
Decision in the amount of P59,785.00;
(c) monetary equivalent of complainant’s sick leave as computed in
the appealed Decision in the amount of US$28,600.00;
(d) separation pay in the amount of US$44,000.00 as earlier
computed in this Decision;
(e) attorney’s fees equivalent to ten (10%) percent of the total
award based on the awards representing underpayment of salary,
13th month pay, [and] cash equivalent of sick leave.
Respondents are likewise directed to provide legal counsel to
complainant as defendant in Criminal Case No. Q-93-46421.
The awards of unpaid wages from June 1-19, 1998, vacation leave
in the amount of US$28,600, P945,000 for car, US23,700.00, for
office rentals, life insurance policy in the amount of US$100,000.00
and moral and exemplary damages in the amount of 2.5 million
pesos are hereby DELETED on grounds above-discussed.
SO ORDERED.12
Petitioner filed a motion for reconsideration, however, the same
was denied.13 Undaunted, petitioner filed a petition for certiorari
with the Court of Appeals, which was dismissed on January 28,
2002 for failure to attach to the petition the following: "(1)
complainant’s (petitioner) Position Paper filed before the Labor
Arbiter; (2) Decision dated 22 December 1992 penned by Labor
Arbiter Ariel Cadiente Santos; and (3) Memorandum of Appeal filed
by the petitioner."14
2
On February 21, 2002, petitioner filed a motion for reconsideration,
attaching thereto a copy of the Labor Arbiter’s decision and the
pleadings he failed to attach to the petition. The Court of Appeals,
however, denied petitioner’s motion for reconsideration. Hence, the
instant petition based on the following grounds:
1. COURT OF APPEALS COMMITTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF OR IN EXCESS OF
JURISDICTION, IN ISSUING THE QUESTIONED RESOLUTION
DISMISSING THE PETITION FOR CERTIORARI BASED ON
TECHNICALITIES, THAT PETITIONER FAILED TO COMPLY
WITH SEC. 1, RULE 65, RULES OF CIVIL PROCEDURE FOR
FAILURE TO ATTACH THREE (3) DOCUMENTS CONSISTING
OF:
Complainant’s (petitioner) Position Paper filed before the labor
arbiter;
Decision dated 22 December 1999 penned by Labor Arbiter Ariel
Cadiente Santos; and
Memorandum of Appeal filed by the petitioner.
WHICH RESPONDENT COURT OF APPEALS CONSIDERED AS
MATERIAL PORTIONS OF THE RECORD DESPITE THE FACT
THAT THE SUBJECT DOCUMENTS SOUGHT TO BE
PRODUCED HAVE ACTUALLY BEEN REPRODUCED OR
SUBSTANTIALLY COVERED BY THE QUESTIONED JUDGMENT,
ORDER OR RESOLUTION FILED/SUBMITTED BEFORE IT.
2. COURT OF APPEALS COMMITTED A GRAVE ABUSE OF
DISCRETION IN DISMISSING THE PETITION, AND IN DENYING
THE MOTION FOR RECONSIDERATION THEREOF ON THE
GROUND THAT THERE IS NO COGENT REASON FOR IT TO
O V E RT U R N I T S D I S M I S S A L , D E S P I T E C L E A R A N D
CONVINCING EVIDENCE, EXTANT ON THE RECORDS
SHOWING THAT THE NATIONAL LABOR RELATIONS
COMMISSION’S (NLRC) DECISION AND RESOLUTION WERE
FLAWED, A PALPABLE OR PATENT ERROR, WHICH MAY BE
SUMMARIZED, TO WIT:
(A) IN DECLARING THAT PETITIONER HAD RESIGNED FROM
HIS EMPLOYMENT, AND NOT RETRENCHED OR TERMINATED
DESPITE A DOCUMENTARY EVIDENCE EXTANT ON THE
RECORD ISSUED BY PRIVATE RESPONDENTS DATED
JANUARY 19, 1998 GIVING "FORMAL NOTICE TO YOU
( P E T I T I O N E R ) O F Y O U R T E R M I N AT I O N D U E T O
RETRENCHMENT EFFECTIVE JANUARY 20, 1998".
(B) IN HOLDING AGAIN, AND DENYING PETITIONER’S VALID
CLAIMS DESPITE DOCUMENTARY EVIDENCE OR THE
EXISTENCE OF A CONTRACT OF EMPLOYMENT STATING
THAT:
(1) EMPLOYEES (INCLUDING PETITIONER AS GENERAL
MANAGER) AS A MATTER OF COMPANY POLICY AND/OR
PRACTICE) WHO ARE RETRENCHED ARE ENTITLED TO
INCENTIVES INCLUDING 15-DAYS VACATION LEAVE AND 15-
DAYS SICK LEAVE WITH PAY; A FACT ADMITTED NO LESS BY
PRIVATE RESPONDENTS’ OWN WITNESS, MS. MA. ROWENA
LOPEZ (FORMER PERSONNEL MANAGER OR PHILMALAY)
WHO EXECUTED AN AFFIDAVIT ADMITTING THE SAME.
(2) PETITIONER’S ENTITLEMENT AS PER CONTRACT TO A
BRAND NEW CAR (OR AT LEAST TO THE CASH EQUIVALENT
THEREOF); $100,000.00 LIFE INSURANCE POLICY (OR IN
DEFAULT THEREOF AT LEAST TO THE PREMIUMS THEREIN),
AND OFFICE RENTALS FOR THE USE OF THE PETITIONER’S
PRIVATE RESIDENCE AS OFFICE OF RESPONDENTS.
(3) PETITIONER IS ENTITLED, TO MORAL AND EXEMPLARY
DAMAGES DUE TO PRIVATE RESPONDENTS ACTS OF BAD
FAITH IN REQUIRING PETITIONER TO EXECUTE A LETTER OF
RESIGNATION, WHEN IN FACT HE WAS ADMITTEDLY
TERMINATED THRU RETRENCHMENT, AND ITS REFUSAL TO
PAY HIM HIS VALID CLAIMS, DESPITE HIS CONTRACT OF
EMPLOYMENT, COMPANY POLICY, AND LETTER OF
TERMINATION ISSUED BY PRIVATE RESPONDENTS.
(4) PETITIONER’S ENTITLEMENT TO 10% OF THE TOTAL
AMOUNT OF THE AWARD OF ATTORNEY’S FEES AS
PROVIDED FOR BY LAW AND AS PER PETITIONER’S
CONTRACT WITH COUNSEL, AND NOT ONLY 10% OF THE
TOTAL AWARD REPRESENTING UNDER PAYMENT OF
SALARY, 13th MONTH PAY, AND CASH EQUIVALENT OF SICK
LEAVE AND IN ORDERING PRIVATE RESPONDENT TO
PROVIDE LEGAL COUNSEL TO PETITIONER IN CRIM. CASE
NO. Q-93-46421, WHEN THE SUBJECT CASE HAD ALREADY
BEEN DISMISSED AT THE EXPENSE OF PETITIONER WHO
HAD PREVIOUSLY HIRED HIS OWN COUNSEL OF CHOICE
FOR THE PURPOSE.
The issues for resolution are: (1) whether or not the Court of
Appeals erred in dismissing the petition; and (2) whether or not the
decision of the Labor Arbiter should be reinstated.
The allowance of the petition on the ground of substantial
compliance with the Rules is not a novel occurrence in our
jurisdiction. As consistently held by the Court, rules of procedure
should not be applied in a very technical sense, for they are
adopted to help secure, not override, substantial justice.15 In
Ramos v. Court of Appeals,16 the Court of Appeals dismissed a
petition for review of the decision of the Regional Trial Court
because the petitioner failed to attach to the petition a certified true
copy of the Metropolitan Trial Court’s decision in addition to the
certified true copy of the assailed decision of the RTC. Holding that
the Court of Appeals should have given due course to the petition
considering that petitioner subsequently submitted a certified true
copy of the decision of the MeTC, we held:
Petitioner is right that the MeTC’s decision cannot be considered a
"disputed decision." The phrase is the equivalent of "ruling, order or
decision appealed from" in Rule 32, §2 of the 1964 Rules made
applicable to appeals from decisions of the then Courts of First
Instance to the Court of Appeals by R.A. No. 296, as amended by
R.A. No. 5433. Since petitioner was not appealing from the
decision of the MeTC in her favor, she was not required to attach a
certified true copy – but only a true or plain copy – of the aforesaid
decision of the MeTC. The reason is that inclusion of the decision is
part of the requirement to attach to the petition for review "other
material portion of the record as would support the allegations of
the petition." Indeed, petitioner referred to the MeTC decision in
many parts of her petition for review in the Court of Appeals for
support of her theory.
Nonetheless, the Court of Appeals should have reconsidered its
dismissal of petitioner’s appeal after petitioner submitted a certified
true copy of the MeTC’s decision. It was clear from the petition for
review that the RTC incurred serious errors in awarding damages
to private respondents which were made without evidence to
support the award and without any explanation…17
In Jaro v. Court of Appeals,18 we applied the rule on substantial
compliance because the petitioner amended his defective petition
and attached thereto the relevant annexes certified according to
the rules. Thus –
There is ample jurisprudence holding that the subsequent and
substantial compliance of an appellant may call for the relaxation of
the rules of procedure. In Cusi-Hernandez vs. Diaz and Piglas-
Kamao vs. National Labor Relations Commission, we ruled that the
subsequent submission of the missing documents with the motion
for reconsideration amounts to substantial compliance. The
reasons behind the failure of the petitioners in these two cases to
comply with the required attachments were no longer scrutinized.
What we found noteworthy in each case was the fact that the
petitioners therein substantially complied with the formal
requirements…19
The same leniency should be applied to the instant case
considering that petitioner subsequently submitted with his motion
for reconsideration the certified true copy of the Labor Arbiter’s
decision, the complainant’s position paper and the respondent’s
memorandum of appeal. Clearly, petitioner had demonstrated
willingness to comply with the requirements set by the rules. If we
are to apply the rules of procedure in a very rigid and technical
sense, as the Court of Appeals did in this case, the ends of justice
would be defeated.
The pleadings and documents filed extensively discussed the
issues raised by the parties. Such being the case, there is sufficient
basis to resolve the instant controversy.20 Labor laws mandate the
speedy disposition of cases, with the least attention to technicalities
but without sacrificing the fundamental requisites of due process.21
Remanding the case to the Court of Appeals will only frustrate
speedy justice and, in any event, would be a futile exercise, as in
all probability the case would end up with this Court.22 We shall
thus rule on the substantial claims of the parties.
Was the termination of petitioner’s employment caused by
retrenchment or by voluntary resignation?
3
The Court finds that petitioner’s dismissal from service was due to
retrenchment. This is evident from the termination letter sent by
Philmalay to petitioner, to wit –
We regret to inform you that in view of the prevailing market
conditions and the continuous losses being incurred by the
company, the management has decided to cut down on expenses
and prevent further losses through retrenchment of some of our
personnel effective January 19, 1998.
In compliance with the requirement of the law, this will serve as a
formal notice to you of your termination due to retrenchment
effective January 20, 1998. To provide you with sufficient time to
seek alternative employment, you need not report for work (unless
otherwise requested) starting January 20, 1998. Notwithstanding
the above mentioned affectivity date, you may come down to the
office and receive your separation benefits pursuant to the Labor
Code…23
While it is true that petitioner tendered his resignation letter to
respondents requesting that he be given the same benefits granted
by the company to resigned/retrenched employees, there is no
showing that respondents accepted his resignation. Acceptance of
a resignation tendered by an employee is necessary to make the
resignation effective.24 No such acceptance, however, was shown
in the instant case. What appears in the record is a letter
terminating the services of petitioner due to retrenchment effective
January 20, 1998. Verily, said letter should be interpreted as a non-
acceptance of petitioner’s resignation effective December 31, 1997.
As correctly pointed out by the Labor Arbiter, if respondents
considered petitioner resigned as of December 31, 1997, then
there would be no need to retrench him.
The length of service of petitioner, which the NLRC correctly
reduced to 8 years, as well as the solidary liability of respondent
corporations are no longer assailed here. Whether petitioner is
considered resigned on December 31, 1997 or retrenched on
January 20, 1998, his length of employment reckoned from August
24, 1989 would still be 8 years. Moreover, respondents did not
appeal from the decision of the NLRC and in fact sought its
affirmance in their Opposition to the motion for reconsideration25
and Comment to the motion for reconsideration26 filed before the
NLRC and the Court of Appeals, respectively. So also, petitioner is
estopped from claiming that he was illegally dismissed and that his
retrenchment was without basis. His request for benefits granted to
retrenched employees during such time when respondent was in
the process of retrenching its employees is tantamount to a
recognition of the existence of a valid cause for retrenchment.
What remains to be resolved by the Court is the validity of the
NLRC’s deletion/modification of the awards of – (1) unpaid salary;
(2) vacation leave; (3) car and insurance policy/premiums; (4)
moral and exemplary damages; (5) reimbursement for expenses
for legal services; (6) rental payment; and (7) attorney’s fees.
As regards the award of unpaid salary, the NLRC was correct in
holding that petitioner is not entitled to compensation from January
1, 1998 to January 19, 1998, because he was not able to prove
that he rendered services during said period. In the same vein,
there is no basis in awarding moral and exemplary damages,
inasmuch as respondents were not shown to have acted in bad
faith in initially refusing to award separation pay equivalent to 1
month salary for every year of service. Respondents even offered
to pay petitioner separation pay, albeit in an amount not acceptable
to petitioner. Moral damages are recoverable only where the act
complained of is tainted by bad faith or fraud, or where it is
oppressive to labor, and done in a manner contrary to morals, good
customs, or public policy. Exemplary damages may be awarded
only if the act was done in a wanton, oppressive, or malevolent
manner.27 None of these circumstances exist in the present case.
The NLRC also correctly ruled that the car and insurance benefits
are granted only during the course of employment; hence, they
should not be part of petitioner’s separation package. Likewise,
petitioner’s claim for payment of rental for the use of his house as
office of Philmalay should be denied for having been ventilated in
the wrong forum. Not all money claims that may be asserted by an
employee against his employer are within the jurisdiction of the
NLRC. Money claims of workers which fall within the jurisdiction of
Labor Arbiters are those which arise out of employer-employee
relationship. Obviously, the demand for rental payment is not a
labor dispute; rather, it is based on contractual relations
independent of employer-employee relationship. Hence, the additional compensation or as part thereof. The extraordinary
jurisdiction thereon is with the regular courts.28 concept of attorney’s fees is the one contemplated in Article 111 of
Since respondents did not appeal from the decision of the NLRC, it the Labor Code, which provides:
is presumed that they are satisfied with the adjudications therein, Art. 111. Attorney’s fees. – (a) In cases of unlawful withholding of
including the order of NLRC directing them to provide legal wages, the culpable party may be assessed attorney’s fees
services to petitioner in the illegal recruitment case filed against the equivalent to ten percent of the amount of wages recovered…
latter while he was still employed by respondents. This is in accord The afore-quoted Article 111 is an exception to the declared policy
with the doctrine that a party who has not appealed cannot obtain of strict construction in the awarding of attorney’s fees. Although an
from the appellate court any affirmative relief other than the ones express finding of facts and law is still necessary to prove the merit
granted in the appealed decision.29 Nonetheless, respondents of the award, there need not be any showing that the employer
cannot be ordered to reimburse the amount of P200,000.00 for the acted maliciously or in bad faith when it withheld the wages. There
legal services of the law firm allegedly hired by petitioner because need only be a showing that the lawful wages were not paid
he failed to establish that he indeed hired the services of a law firm accordingly, as in this case.33 1âwphi1
and that he spent P200,000.00 as a consequence thereof. In carrying out and interpreting the Labor Code's provisions and its
Petitioner is, however, entitled to the award of vacation leave as implementing regulations, the employee’s welfare should be the
part of respondents’ retrenchment incentives. In granting sick leave primordial and paramount consideration. This kind of interpretation
but deleting vacation leave benefits, the NLRC based its ruling on gives meaning and substance to the liberal and compassionate
the affidavit of one Ms. Rowena Lopez, a former personnel of spirit of the law as provided in Article 4 of the Labor Code which
Philmalay, viz: states that "[a]ll doubts in the implementation and interpretation of
3. That based on company policy and/or practice the rank-and-file the provisions of [the Labor] Code including its implementing rules
employees are entitled to 15-days vacation leave and 15-days sick and regulations, shall be resolved in favor of labor", and Article
leaves. However, the vacation leave must be availed of within the 1702 of the Civil Code which provides that "[i]n case of doubt, all
year or applied to the remaining period of employment for those labor legislation and all labor contracts shall be construed in favor
who resigned or go on terminal leave. In case of sick leaves all of the safety and decent living for the laborer."34
unused sick leaves are also commutable to cash; In the case at bar, what was withheld from petitioner was not only
4. That employees who were retrenched are entitled to the his salary, vacation and sick leave pay, and 13th month pay
following incentives: differential, but also his separation pay. Hence, pursuant to current
(a) One (1) month additional leave with pay effective after their last jurisprudence, separation pay must be included in the basis for the
day of employment to enable them to look for a new job; computation of attorney’s fees. Petitioner is entitled to attorney’s
(b) Plus one (1) month separation pay for every year of service; fees equivalent to 10% of his total monetary award.35
and WHEREFORE, in view of all the foregoing, the instant petition is
(c) 15-days vacation leave and 15-days sick leave with pay as GRANTED. The assailed Resolutions dated January 28, 2002 and
stated in paragraph 3 hereof.30 July 22, 2002 of the Court of Appeals in CA-G.R. SP No. 67431,
The foregoing expressly states that a retrenched employee is are REVERSED and SET ASIDE. The Decision of the National
entitled to 15-day vacation leave. Paragraph 4 is the retrenchment Labor Relations Commission in NLRC NCR CA 023679-2000, is
package granted to retrenched employees, whereas paragraph 3 MODIFIED. In addition to the awards of underpayment of salary,
refers to the feasibility of commutation of unused sick and vacation 13th month pay differential, sick leave pay and separation pay,
leaves. Except for the sentence entitling employees to vacation and respondents are ordered to pay petitioner vacation leave pay and
sick leaves, the last 2 sentences in paragraph 3 have nothing to do 10% attorney’s fees, the basis of which shall be the total monetary
with the retrenchment benefits in paragraph 4. Note that the 15-day award. Petitioner’s vacation leave and sick leave pay shall be
vacation and sick leave with pay in paragraph 4(c) are not qualified computed on the basis of his 8 years of service with respondents.
by the word "unused". The 15-day vacation and sick leaves are For this purpose, the case is ordered REMANDED to the Labor
granted to retrenched employees as part of the retrenchment Arbiter for the computation of the amounts due petitioner.
benefits regardless of whether or not they have unused sick and SO ORDERED.
vacation leaves at the time of the retrenchment. Moreover, the
applicability of the said provisions to petitioner was not disputed by
respondents. They even invoked the same in manifesting
conformity to the deletion by the NLRC of the award of 15-day
vacation leave for every year of service. At any rate, any ambiguity
therein must be resolved strictly against the respondents, who
drafted these provisions.31 Hence, petitioner is entitled not only to
15 days sick leave but also to 15 days vacation leave with pay
The Labor Arbiter’s computation of petitioner’s 15-day sick leave
pay must be modified. The NLRC, which affirmed the Labor
Arbiter’s decision, reduced petitioner’s number of years of service
from 9 to 8 years but it did not make the corresponding adjustment
in the determination of petitioner’s sick leave pay which used 9
years as the basis in the computation thereof. Accordingly, the
awards of 15-day sick leave and 15-day vacation leave for every
year of service must be computed using 8 years as its basis.
Finally, the award of attorney’s fees must also be modified. In
Traders Royal Bank Employees Union-Independent v. National
Labor Relations Commission,32 it was held that there are two
commonly accepted concepts of attorney's fees, the so-called
ordinary and extraordinary. In its ordinary concept, an attorney’s fee
is the reasonable compensation paid to a lawyer by his client for
the legal services he has rendered to the latter. The basis of this
compensation is the fact of his employment by and his agreement
with the client. In its extraordinary concept, attorney’s fees are
deemed indemnity for damages ordered by the court to be paid by
the losing party in a litigation. The instances where these may be
awarded are those enumerated in Article 2208 of the Civil Code,
specifically par. 7 thereof which pertains to actions for recovery of
wages, and is payable not to the lawyer but to the client, unless
they have agreed that the award shall pertain to the lawyer as

4
G.R. No. 158084 August 29, 2008
J.K. MERCADO & SONS AGRICULTURAL ENTERPRISES, INC.,
petitioner,
vs.
HON. PATRICIA A. STO. TOMAS, in her capacity as Secretary
of Labor and Employment
Labor Law; Labor Code; Wage Orders; Prescription; Article
291 of the Labor Code applies to money claims in general and
provides for a 3-year prescriptive period to file them; A claimant has
three years to press a money claim; Once a judgment is rendered
in her favor, she has five years to ask for execution of the
judgment, counted from its finality.—Art. 291 of the Labor Code
applies to money claims in general and provides for a 3-year
prescriptive period to file them. On the other hand, respondent
employees’ money claims in this case had been reduced to a
judgment, in the form of a Wage Order, which has become final and
executory. The prescription applicable, therefore, is not the general
one that applies to money claims, but the specific one applying to
judgments. Thus, the right to enforce the judgment, having been
exercised within five years, has not yet prescribed. Stated
otherwise, a claimant has three years to press a money claim.
Once judgment is rendered in her favor, she has five years to ask
for execution of the judgment, counted from its finality. This is
consistent with the rule on statutory construction that a general
provision should yield to a specific one and with the mandate of
social justice that doubts should be resolved in favor of labor.
AZCUNA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules
of Court.
The facts are stated in the Decision of the Court of Appeals in CA-
G.R. SP No. 70003 dated March 10, 2003:
On December 3, 1993, the Regional Tripartite Wages and
Productivity Board, Region XI, issued Wage Order No. RTWPB-
XI-03, granting a Cost of Living Allowance (COLA) to covered
workers.
On January 28, 1994, petitioner filed an application for exemption
from the coverage of the aforesaid wage order. Thus, however, was
denied by the regional wage board in an Order dated April 11,
1994, the dispositive portion of which states:
"WHEREFORE, premises considered, the application for
exemption from compliance with Wage Order No. RTWPB-XI-03 is
DENIED for Lack of Merit. Applicant J.K. MERCADO AND SONS
AGRICULTURAL ENTERPRISES, INCORPORATED is hereby
ordered to pay its covered workers the allowance prescribed under
said Wage Order plus interest of one percent (1%) per month
retroactive December 1, 1993.
Let copies of the Order be furnished the Regional Director of the
Department of Labor and Employment, Region XI to cause the
computation of the award and the issuance of writ of execution, the
parties concerned and the National Wages Productivity
Commission for their information and guidance.
Notwithstanding the said order, private respondents were not given
the benefits due them under Wage Order No. RTWPB-XI-03. On
July 10, 1998, private respondents filed an Urgent Motion for Writ
of Execution, and Writ of Garnishment in RTWPB-XI-03-CBBE-94
NWPBC Case No. E-95-087 Case No. R1100 seeking the
enforcement of subject wage order against several entities
including herein petitioner.
In reaction thereto, petitioner submitted an Inquiry dated August 13,
1998, stating that it is not a party to the aforesaid case and has not
entered appearance therein.
On October 7, 1998, the OIC-Regional Director, Region XI, issued
a Writ of Execution for the enforcement of the Order dated April 11,
1994 of the Regional Tripartite Wages and Productivity Board.
On November 17, 1998 and November 23, 1998, respectively,
petitioner filed a Motion to Quash the Writ of Execution and a
Supplemental Motion to the Motion to Quash. Petitioner argued
that herein private respondents’ right had already prescribed due to
their failure to move for the execution of the April 11, 1994 Order
within the period provided under Article 291 of the Labor Code, as
amended, or within three (3) years from the finality of the said
order.
5
Ruling that the benefits which remained unpaid have not prescribed
and that the private respondents need not file a claim to be entitled
thereto, the Regional Director denied the Motion to Quash in an
Order dated January 7, 1999.
Not satisfied with the denial of its motion to quash, petitioner filed a
Notice of Appeal on January 29, 1999.
Petitioner argued on appeal that the Regional Director abused his
discretion in issuing the writ of execution since it was not a party to
RTWPB-XI-03-CBBE-97-NWPC Case No. E-95-087. Petitioner
likewise argued that the Regional Director abused his discretion in
issuing the writ of execution in the absence of any motion filed by
private respondents. Petitioner likewise claimed that since more
than three (3) years have already elapsed from the time of the
finality of the order dated April 11, 1994, the right of private
respondents to claim the benefits under the same had already
prescribed.
Denying the appeal, the dispositive portion of the assailed order
dated February 2, 2001 reads:
"WHEREFORE, the Appeal is denied for lack of merit and the order
dated January 7, 1999, is affirmed."
On March 2, 2001, petitioner filed a Motion for Reconsideration but
the same was denied for lack of merit by public respondent in an
Order dated March 14, 2002.
The Court of Appeals stated the issues, thus:
Before us petitioner contends that:
"xxx the Honorable Undersecretary and Hon. Secretary of Labor
and Employment committed grave abuse of discretion amounting
to lack or excess of jurisdiction in issuing the assailed Orders
[Annexes A & B], as the same are contrary to Law and
Jurisprudence, in:
1. Declaring that an application for exemption from compliance with
Wage Orders before the Wage Board is equivalent to ‘money
claims’ provided for under Article 291 of the Labor Code.
2. Deliberately refusing and failing to recognize that the prescriptive
period to file money claims under Article 291 of the Labor Code
applies to money claims for COLA granted under Wage Order No.
RTWPB-XI-03.
3. Ruling that DOLE Regional Directors can legally issue writs of
execution to enforce Wage Orders pursuant to Policy Instruction
No. 55, beyond the 3-year prescriptive period provided under
Article 291 of the Labor Code, pursuant to Section 1, Rule 39 of the
Revised Rules of Court.
The assailed Decision resolved the issues, as follows:
The petition is not meritorious.
It must be stressed at the outset that while the filing by herein
private respondents of the Urgent Motion for Writ of Execution and
Writ of Garnishment refer to recovery of benefits under the subject
Wage Order No. RTWPB-XI-03, which entitled respondents to a
cost of living allowance (COLA), Article 291 of the Labor Code finds
no application in the case at bar since what is being enforced is the
final order dated April 11, 1994 denying petitioner’s application for
exemption under the wage order. Being a final order, the same may
be the subject of execution motu proprio or upon motion by any of
the parties concerned.
The law is equivocal that a judgment may be executed on motion
within five (5) years from the date of its entry or from the date it
becomes final and executory. Hence, we see no basis for
petitioner’s insistence on the applicability of Article 291 of the Labor
Code in the instant case.
Arguing that a money claim must be filed by herein private
respondents to avail of the wage differential or COLA granted under
Wage Order No. 3, petitioner avers:
"The crux of the controversy in the case at bar is not when the writ
of execution issued by the Regional Director of Region XI can be
enforced, but rather, whether a money claim must be filed first by
private respondents against petitioner for the latter’s refusal to pay
the COLA granted under WO 03."
We are not persuaded.
Clearly, petitioner’s contention is premised on the mistaken belief
that the right of private respondents to recover their wage
differential or COLA under Wage Order No. 03 is still a contestable
issue.
It must be emphasized that the order dated April 11, 1994 had long
become final and executory. Petitioner did not appeal the said
order. Having failed to avail of the remedy of appeal of the said
order, petitioner cannot belatedly avoid its duty to comply with the
said order by insisting that a money claim must first be filed by
herein private respondents. A contrary ruling would result to
absurdity and would even unjustly benefit petitioner who for quite
sometime had exerted every effort to avoid the obligation of giving
the wage differential or COLA granted under Wage Order No. 3.
Petitioner now presents the following issues:
1. Whether or not the Honorable Court of Appeals committed an
error in holding that Article 291 of the Labor Code is not applicable
to recovery of benefits under the subject Wage Order No. RTWPB-
XI-03, which entitled respondents to a cost of living allowance
(COLA).
2. Whether or not the Court of Appeals committed an error in
holding that the cost of living allowance (COLA) granted by Wage
Order No. RTWPB-XI-03 can be enforced without the appropriate
case having been filed by herein private respondents within the
three (3) year prescriptive period.
3. Whether or not the claim of the private respondents for cost of
living allowance (COLA) pursuant to Wage Order No. RTWPB-
XI-03 has already prescribed because of the failure of the
respondents to make the appropriate claim within the three (3) year
prescriptive period provided by Article 291 of the Labor Code, as
amended.
The Court sees no error on the part of the Court of Appeals.
Art. 291 of the Labor Code applies to money claims in general and
provides for a 3-year prescriptive period to file them.
On the other hand, respondent employees’ money claims in this
case had been reduced to a judgment, in the form of a Wage
Order, which has become final and executory. The prescription
applicable, therefore, is not the general one that applies to money
claims, but the specific one applying to judgments. Thus, the right
to enforce the judgment, having been exercised within five years,
has not yet prescribed.
Stated otherwise, a claimant has three years to press a money
claim. Once judgment is rendered in her favor, she has five years
to ask for execution of the judgment, counted from its finality. This
is consistent with the rule on statutory construction that a general
provision should yield to a specific one and with the mandate of
social justice that doubts should be resolved in favor of labor.
WHEREFORE, the petition is DENIED.
No costs.
SO ORDERED.

6
G.R. No. L-52415 October 23, 1984
INSULAR BANK OF ASIA AND AMERICA EMPLOYEES' UNION
(IBAAEU), petitioner,
vs.
HON. AMADO G. INCIONG, Deputy Minister, Ministry of Labor
and INSULAR BANK OF ASIA AND AMERICA, respondents.
Labor Law; Administrative Law; Statutes; A labor regulation which
in effect amends the Labor Code is null and void.—WE agree with
the petitioner’s contention that Section 2, Rule IV, Book III of the
implementing rules and Policy Instruction No. 9 issued by the then
Secretary of Labor are null and void since in the guise of clarifying
the Labor Code’s provisions on holiday pay, they in effect amended
them by enlarging the scope of their exclusion.
Same; Same; Same; The nullity of the labor regulation on holiday
pay lies in its exclusion of monthly paid employees from the
coverage of holiday pay contrary to what the Labor Code provides.
—From the above-cited provisions, it is clear that monthly paid
employees are not excluded from the benefits of holiday pay.
However, the implementing rules on holiday pay promulgated by
the then Secretary of Labor excludes monthly paid employees from
the said benefits by inserting, under Rule IV, Book III of the
implementing rules, Section 2, which provides that: “employees
who are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all
days in the month whether worked or not.”
MAKASIAR, J.:ñé+.£ªwph!1
This is a petition for certiorari to set aside the order dated
November 10, 1979, of respondent Deputy Minister of Labor,
Amado G. Inciong, in NLRC case No. RB-IV-1561-76 entitled
"Insular Bank of Asia and America Employees' Union (complainant-
appellee), vs. Insular Bank of Asia and America" (respondent-
appellant), the dispositive portion of which reads as follows: têñ.
£îhqwâ£
xxx xxx xxx
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations Commission
dated 20 June 1978 be, as it is hereby, set aside and a new
judgment. promulgated dismissing the instant case for lack of merit
(p. 109 rec.).
The antecedent facts culled from the records are as follows:
On June 20, 1975, petitioner filed a complaint against the
respondent bank for the payment of holiday pay before the then
Department of Labor, National Labor Relations Commission,
Regional Office No. IV in Manila. Conciliation having failed, and
upon the request of both parties, the case was certified for
arbitration on July 7, 1975 (p. 18, NLRC rec.
On August 25, 1975, Labor Arbiter Ricarte T. Soriano rendered a
decision in the above-entitled case, granting petitioner's complaint
for payment of holiday pay. Pertinent portions of the decision read:
têñ.£îhqwâ£
xxx xxx xxx
The records disclosed that employees of respondent bank were not
paid their wages on unworked regular holidays as mandated by the
Code, particularly Article 208, to wit: têñ.£îhqwâ£
Art. 208. Right to holiday pay.
(a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly
employing less than 10 workers.
(b) The term "holiday" as used in this chapter, shall include: New
Year's Day, Maundy Thursday, Good Friday, the ninth of April the
first of May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth and the thirtieth of December and the
day designated by law for holding a general election.
xxx xxx xxx
This conclusion is deduced from the fact that the daily rate of pay
of the bank employees was computed in the past with the
unworked regular holidays as excluded for purposes of determining
the deductible amount for absences incurred Thus, if the employer
uses the factor 303 days as a divisor in determining the daily rate
of monthly paid employee, this gives rise to a presumption that the
monthly rate does not include payments for unworked regular
holidays. The use of the factor 303 indicates the number of ordinary
7
working days in a year (which normally has 365 calendar days),
excluding the 52 Sundays and the 10 regular holidays. The use of
251 as a factor (365 calendar days less 52 Saturdays, 52 Sundays,
and 10 regular holidays) gives rise likewise to the same
presumption that the unworked Saturdays, Sundays and regular
holidays are unpaid. This being the case, it is not amiss to state
with certainty that the instant claim for wages on regular unworked
holidays is found to be tenable and meritorious.
WHEREFORE, judgment is hereby rendered:
(a) xxx xxxx xxx
(b) Ordering respondent to pay wages to all its employees for all
regular h(olidays since November 1, 1974 (pp. 97-99, rec.,
underscoring supplied).
Respondent bank did not appeal from the said decision. Instead, it
complied with the order of Arbiter Ricarte T. Soriano by paying their
holiday pay up to and including January, 1976.
On December 16, 1975, Presidential Decree No. 850 was
promulgated amending, among others, the provisions of the Labor
Code on the right to holiday pay to read as follows: têñ.£îhqwâ£
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his
regular daily wages during regular holidays, except in retail and
service establishments regularly employing less than ten (10)
workers;
(b) The employer may require an employee to work on any holiday
but such employee shall be paid a compensation equivalent to
twice his regular rate and
(c) As used in this Article, "holiday" includes New Year's Day,
Maundy Thursday, Good Friday, the ninth of April, the first of May,
the twelfth of June, the fourth of July, the thirtieth of November, the
twenty-fifth and the thirtieth of December, and the day designated
by law for holding a general election.
Accordingly, on February 16, 1976, by authority of Article 5 of the
same Code, the Department of Labor (now Ministry of Labor)
promulgated the rules and regulations for the implementation of
holidays with pay. The controversial section thereof reads: têñ.
£îhqwâ£
Sec. 2. Status of employees paid by the month. — Employees who
are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all
days in the month whether worked or not.
For this purpose, the monthly minimum wage shall not be less than
the statutory minimum wage multiplied by 365 days divided by
twelve" (italics supplied).
On April 23, 1976, Policy Instruction No. 9 was issued by the then
Secretary of Labor (now Minister) interpreting the above-quoted
rule, pertinent portions of which read: têñ.£îhqwâ£
xxx xxx xxx
The ten (10) paid legal holidays law, to start with, is intended to
benefit principally daily employees. In the case of monthly, only
those whose monthly salary did not yet include payment for the ten
(10) paid legal holidays are entitled to the benefit.
Under the rules implementing P.D. 850, this policy has been fully
clarified to eliminate controversies on the entitlement of monthly
paid employees, The new determining rule is this: If the monthly
paid employee is receiving not less than P240, the maximum
monthly minimum wage, and his monthly pay is uniform from
January to December, he is presumed to be already paid the ten
(10) paid legal holidays. However, if deductions are made from his
monthly salary on account of holidays in months where they occur,
then he is still entitled to the ten (10) paid legal
holidays. ..." (emphasis supplied).
Respondent bank, by reason of the ruling laid down by the
aforecited rule implementing Article 94 of the Labor Code and by
Policy Instruction No. 9, stopped the payment of holiday pay to an
its employees.
On August 30, 1976, petitioner filed a motion for a writ of execution
to enforce the arbiter's decision of August 25, 1975, whereby the
respondent bank was ordered to pay its employees their daily wage
for the unworked regular holidays.
On September 10, 1975, respondent bank filed an opposition to the
motion for a writ of execution alleging, among others, that: (a) its
refusal to pay the corresponding unworked holiday pay in
accordance with the award of Labor Arbiter Ricarte T. Soriano
dated August 25, 1975, is based on and justified by Policy
Instruction No. 9 which interpreted the rules implementing P. D.
850; and (b) that the said award is already repealed by P.D. 850
which took effect on December 16, 1975, and by said Policy
Instruction No. 9 of the Department of Labor, considering that its
monthly paid employees are not receiving less than P240.00 and
their monthly pay is uniform from January to December, and that no
deductions are made from the monthly salaries of its employees on
account of holidays in months where they occur (pp. 64-65, NLRC
rec.).
On October 18, 1976, Labor Arbiter Ricarte T. Soriano, instead of
issuing a writ of execution, issued an order enjoining the
respondent bank to continue paying its employees their regular
holiday pay on the following grounds: (a) that the judgment is
already final and the findings which is found in the body of the
decision as well as the dispositive portion thereof is res judicata or
is the law of the case between the parties; and (b) that since the
decision had been partially implemented by the respondent bank,
appeal from the said decision is no longer available (pp. 100-103,
rec.).
On November 17, 1976, respondent bank appealed from the
above-cited order of Labor Arbiter Soriano to the National Labor
Relations Commission, reiterating therein its contentions averred in
its opposition to the motion for writ of execution. Respondent bank
further alleged for the first time that the questioned order is not
supported by evidence insofar as it finds that respondent bank
discontinued payment of holiday pay beginning January, 1976 (p.
84, NLRC rec.).
On June 20, 1978, the National Labor Relations Commission
promulgated its resolution en banc dismissing respondent bank's
appeal, the dispositive portion of which reads as follows: têñ.
£îhqwâ£
In view of the foregoing, we hereby resolve to dismiss, as we
hereby dismiss, respondent's appeal; to set aside Labor Arbiter
Ricarte T. Soriano's order of 18 October 1976 and, as prayed for by
complainant, to order the issuance of the proper writ of execution
(p. 244, NLRC rec.).
Copies of the above resolution were served on the petitioner only
on February 9, 1979 or almost eight. (8) months after it was
promulgated, while copies were served on the respondent bank on
February 13, 1979.
On February 21, 1979, respondent bank filed with the Office of the
Minister of Labor a motion for reconsideration/appeal with urgent
prayer to stay execution, alleging therein the following: (a) that
there is prima facie evidence of grave abuse of discretion,
amounting to lack of jurisdiction on the part of the National Labor
Relations Commission, in dismissing the respondent's appeal on
pure technicalities without passing upon the merits of the appeal
and (b) that the resolution appealed from is contrary to the law and
jurisprudence (pp. 260-274, NLRC rec.).
On March 19, 1979, petitioner filed its opposition to the respondent
bank's appeal and alleged the following grounds: (a) that the office
of the Minister of Labor has no jurisdiction to entertain the instant
appeal pursuant to the provisions of P. D. 1391; (b) that the labor
arbiter's decision being final, executory and unappealable,
execution is a matter of right for the petitioner; and (c) that the
decision of the labor arbiter dated August 25, 1975 is supported by
the law and the evidence in the case (p. 364, NLRC rec.).
On July 30, 1979, petitioner filed a second motion for execution
pending appeal, praying that a writ of execution be issued by the
National Labor Relations Commission pending appeal of the case
with the Office of the Minister of Labor. Respondent bank filed its
opposition thereto on August 8, 1979.
On August 13, 1979, the National Labor Relations Commission
issued an order which states: têñ.£îhqwâ£
The Chief, Research and Information Division of this Commission
is hereby directed to designate a Socio-Economic Analyst to
compute the holiday pay of the employees of the Insular Bank of
Asia and America from April 1976 to the present, in accordance
with the Decision of the Labor Arbiter dated August 25, 1975" (p.
80, rec.).
On November 10, 1979, the Office of the Minister of Labor, through
Deputy Minister Amado G. Inciong, issued an order, the dispositive
portion of which states: têñ.£îhqwâ£
ALL THE FOREGOING CONSIDERED, let the appealed
Resolution en banc of the National Labor Relations Commission
8
dated 20 June 1978 be, as it is hereby, set aside and a new
judgment promulgated dismissing the instant case for lack of merit
(p. 436, NLRC rec.).
Hence, this petition for certiorari charging public respondent Amado
G. Inciong with abuse of discretion amounting to lack or excess of
jurisdiction.
The issue in this case is: whether or not the decision of a Labor
Arbiter awarding payment of regular holiday pay can still be set
aside on appeal by the Deputy Minister of Labor even though it has
already become final and had been partially executed, the finality of
which was affirmed by the National Labor Relations Commission
sitting en banc, on the basis of an Implementing Rule and Policy
Instruction promulgated by the Ministry of Labor long after the said
decision had become final and executory.
WE find for the petitioner.
I
WE agree with the petitioner's contention that Section 2, Rule IV,
Book III of the implementing rules and Policy Instruction No. 9
issued by the then Secretary of Labor are null and void since in the
guise of clarifying the Labor Code's provisions on holiday pay, they
in effect amended them by enlarging the scope of their exclusion
(p. 1 1, rec.).
Article 94 of the Labor Code, as amended by P.D. 850, provides:
têñ.£îhqwâ£
Art. 94. Right to holiday pay. — (a) Every worker shall be paid his
regular daily wage during regular holidays, except in retail and
service establishments regularly employing less than ten (10)
workers. ...
The coverage and scope of exclusion of the Labor Code's holiday
pay provisions is spelled out under Article 82 thereof which reads:
têñ.£îhqwâ£
Art. 82. Coverage. — The provision of this Title shall apply to
employees in all establishments and undertakings, whether for
profit or not, but not to government employees, managerial
employees, field personnel members of the family of the employer
who are dependent on him for support domestic helpers, persons
in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate
regulations.
... (emphasis supplied).
From the above-cited provisions, it is clear that monthly paid
employees are not excluded from the benefits of holiday pay.
However, the implementing rules on holiday pay promulgated by
the then Secretary of Labor excludes monthly paid employees from
the said benefits by inserting, under Rule IV, Book Ill of the
implementing rules, Section 2, which provides that: "employees
who are uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the statutory or
established minimum wage shall be presumed to be paid for all
days in the month whether worked or not. "
Public respondent maintains that "(T)he rules implementing P. D.
850 and Policy Instruction No. 9 were issued to clarify the policy in
the implementation of the ten (10) paid legal holidays. As
interpreted, 'unworked' legal holidays are deemed paid insofar as
monthly paid employees are concerned if (a) they are receiving not
less than the statutory minimum wage, (b) their monthly pay is
uniform from January to December, and (c) no deduction is made
from their monthly salary on account of holidays in months where
they occur. As explained in Policy Instruction No, 9, 'The ten (10)
paid legal holidays law, to start with, is intended to benefit
principally daily paid employees. In case of monthly, only those
whose monthly salary did not yet include payment for the ten (10)
paid legal holidays are entitled to the benefit' " (pp. 340-341, rec.).
This contention is untenable.
It is elementary in the rules of statutory construction that when the
language of the law is clear and unequivocal the law must be taken
to mean exactly what it says. In the case at bar, the provisions of
the Labor Code on the entitlement to the benefits of holiday pay are
clear and explicit - it provides for both the coverage of and
exclusion from the benefits. In Policy Instruction No. 9, the then
Secretary of Labor went as far as to categorically state that the
benefit is principally intended for daily paid employees, when the
law clearly states that every worker shall be paid their regular
holiday pay. This is a flagrant violation of the mandatory directive of
Article 4 of the Labor Code, which states that "All doubts in the
implementation and interpretation of the provisions of this Code,
including its implementing rules and regulations, shall be resolved
in favor of labor." Moreover, it shall always be presumed that the
legislature intended to enact a valid and permanent statute which
would have the most beneficial effect that its language permits
(Orlosky vs. Haskell, 155 A. 112.)
Obviously, the Secretary (Minister) of Labor had exceeded his
statutory authority granted by Article 5 of the Labor Code
authorizing him to promulgate the necessary implementing rules
and regulations.
Public respondent vehemently argues that the intent and spirit of
the holiday pay law, as expressed by the Secretary of Labor in the
case of Chartered Bank Employees Association v. The Chartered
Bank (NLRC Case No. RB-1789-75, March 24, 1976), is to correct
the disadvantages inherent in the daily compensation system of
employment — holiday pay is primarily intended to benefit the daily
paid workers whose employment and income are circumscribed by
the principle of "no work, no pay." This argument may sound
meritorious; but, until the provisions of the Labor Code on holiday
pay is amended by another law, monthly paid employees are
definitely included in the benefits of regular holiday pay. As earlier
stated, the presumption is always in favor of law, negatively put, the
Labor Code is always strictly construed against management.
While it is true that the contemporaneous construction placed upon
a statute by executive officers whose duty is to enforce it should be
given great weight by the courts, still if such construction is so
erroneous, as in the instant case, the same must be declared as
null and void. It is the role of the Judiciary to refine and, when
necessary, correct constitutional (and/or statutory) interpretation, in
the context of the interactions of the three branches of the
government, almost always in situations where some agency of the
State has engaged in action that stems ultimately from some
legitimate area of governmental power (The Supreme Court in
Modern Role, C. B. Swisher 1958, p. 36).
Thus. in the case of Philippine Apparel Workers Union vs. National
Labor Relations Commission (106 SCRA 444, July 31, 1981) where
the Secretary of Labor enlarged the scope of exemption from the
coverage of a Presidential Decree granting increase in emergency
allowance, this Court ruled that: têñ.£îhqwâ£
... the Secretary of Labor has exceeded his authority when he
included paragraph (k) in Section 1 of the Rules implementing P. D.
1 1 23.
xxx xxx xxx
Clearly, the inclusion of paragraph k contravenes the statutory
authority granted to the Secretary of Labor, and the same is
therefore void, as ruled by this Court in a long line of cases . . . ..
têñ.£îhqwâ£
The recognition of the power of administrative officials to
promulgate rules in the administration of the statute, necessarily
limited to what is provided for in the legislative enactment, may be
found in the early case of United States vs. Barrios decided in
1908. Then came in a 1914 decision, United States vs. Tupasi
Molina (29 Phil. 119) delineation of the scope of such competence.
Thus: "Of course the regulations adopted under legislative authority
by a particular department must be in harmony with the provisions
of the law, and for the sole purpose of carrying into effect its
general provisions. By such regulations, of course, the law itself
cannot be extended. So long, however, as the regulations relate
solely to carrying into effect the provisions of the law, they are
valid." In 1936, in People vs. Santos, this Court expressed its
disapproval of an administrative order that would amount to an
excess of the regulatory power vested in an administrative official
We reaffirmed such a doctrine in a 1951 decision, where we again
made clear that where an administrative order betrays
inconsistency or repugnancy to the provisions of the Act, 'the
mandate of the Act must prevail and must be followed. Justice
Barrera, speaking for the Court in Victorias Milling inc. vs. Social
Security Commission, citing Parker as well as Davis did tersely
sum up the matter thus: "A rule is binding on the Courts so long as
the procedure fixed for its promulgation is followed and its scope is
within the statutory authority granted by the legislature, even if the
courts are not in agreement with the policy stated therein or its
innate wisdom. ... On the other hand, administrative interpretation
of the law is at best merely advisory, for it is the courts that finally
determine chat the law means."
9
"It cannot be otherwise as the Constitution limits the authority of the
President, in whom all executive power resides, to take care that
the laws be faithfully executed. No lesser administrative executive
office or agency then can, contrary to the express language of the
Constitution assert for itself a more extensive prerogative.
Necessarily, it is bound to observe the constitutional mandate.
There must be strict compliance with the legislative enactment. Its
terms must be followed the statute requires adherence to, not
departure from its provisions. No deviation is allowable. In the terse
language of the present Chief Justice, an administrative agency
"cannot amend an act of Congress." Respondents can be
sustained, therefore, only if it could be shown that the rules and
regulations promulgated by them were in accordance with what the
Veterans Bill of Rights provides" (Phil. Apparel Workers Union vs.
National Labor Relations Commission, supra, 463, 464, citing
Teozon vs. Members of the Board of Administrators, PVA 33 SCRA
585; see also Santos vs. Hon. Estenzo, et al, 109 Phil. 419; Hilado
vs. Collector of Internal Revenue, 100 Phil. 295; Sy Man vs. Jacinto
& Fabros, 93 Phil. 1093; Olsen & Co., Inc. vs. Aldanese and
Trinidad, 43 Phil. 259).
This ruling of the Court was recently reiterated in the case of
American Wire & Cable Workers Union (TUPAS) vs. The National
Labor Relations Commission and American Wire & Cable Co., Inc.,
G.R. No. 53337, promulgated on June 29, 1984.
In view of the foregoing, Section 2, Rule IV, Book III of the Rules to
implement the Labor Code and Policy instruction No. 9 issued by
the then Secretary of Labor must be declared null and void.
Accordingly, public respondent Deputy Minister of Labor Amado G.
Inciong had no basis at all to deny the members of petitioner union
their regular holiday pay as directed by the Labor Code.
II
It is not disputed that the decision of Labor Arbiter Ricarte T.
Soriano dated August 25, 1975, had already become final, and
was, in fact, partially executed by the respondent bank.
However, public respondent maintains that on the authority of De
Luna vs. Kayanan, 61 SCRA 49, November 13, 1974, he can annul
the final decision of Labor Arbiter Soriano since the ensuing
promulgation of the integrated implementing rules of the Labor
Code pursuant to P.D. 850 on February 16, 1976, and the issuance
of Policy Instruction No. 9 on April 23, 1976 by the then Secretary
of Labor are facts and circumstances that transpired subsequent to
the promulgation of the decision of the labor arbiter, which renders
the execution of the said decision impossible and unjust on the part
of herein respondent bank (pp. 342-343, rec.).
This contention is untenable.
To start with, unlike the instant case, the case of De Luna relied
upon by the public respondent is not a labor case wherein the
express mandate of the Constitution on the protection to labor is
applied. Thus Article 4 of the Labor Code provides that, "All doubts
in the implementation and interpretation of the provisions of this
Code, including its implementing rules and regulations, shall be
resolved in favor of labor and Article 1702 of the Civil Code
provides that, " In case of doubt, all labor legislation and all labor
contracts shall be construed in favor of the safety and decent living
for the laborer.
Consequently, contrary to public respondent's allegations, it is
patently unjust to deprive the members of petitioner union of their
vested right acquired by virtue of a final judgment on the basis of a
labor statute promulgated following the acquisition of the "right".
On the question of whether or not a law or statute can annul or
modify a judicial order issued prior to its promulgation, this Court,
through Associate Justice Claro M. Recto, said: têñ.£îhqwâ£
xxx xxx xxx
We are decidedly of the opinion that they did not. Said order, being
unappealable, became final on the date of its issuance and the
parties who acquired rights thereunder cannot be deprived thereof
by a constitutional provision enacted or promulgated subsequent
thereto. Neither the Constitution nor the statutes, except penal laws
favorable to the accused, have retroactive effect in the sense of
annulling or modifying vested rights, or altering contractual
obligations" (China Ins. & Surety Co. vs. Judge of First Instance of
Manila, 63 Phil. 324, emphasis supplied).
In the case of In re: Cunanan, et al., 19 Phil. 585, March 18, 1954,
this Court said: "... when a court renders a decision or promulgates
a resolution or order on the basis of and in accordance with a
certain law or rule then in force, the subsequent amendment or
even repeal of said law or rule may not affect the final decision,
order, or resolution already promulgated, in the sense of revoking
or rendering it void and of no effect." Thus, the amendatory rule
(Rule IV, Book III of the Rules to Implement the Labor Code)
cannot be given retroactive effect as to modify final judgments. Not
even a law can validly annul final decisions (In re: Cunanan, et al.,
Ibid).
Furthermore, the facts of the case relied upon by the public
respondent are not analogous to that of the case at bar. The case
of De Luna speaks of final and executory judgment, while iii the
instant case, the final judgment is partially executed. just as the
court is ousted of its jurisdiction to annul or modify a judgment the
moment it becomes final, the court also loses its jurisdiction to
annul or modify a writ of execution upon its service or execution;
for, otherwise, we will have a situation wherein a final and executed
judgment can still be annulled or modified by the court upon mere
motion of a panty This would certainly result in endless litigations
thereby rendering inutile the rule of law.
Respondent bank counters with the argument that its partial
compliance was involuntary because it did so under pain of levy
and execution of its assets (p. 138, rec.). WE find no merit in this
argument. Respondent bank clearly manifested its voluntariness in
complying with the decision of the labor arbiter by not appealing to
the National Labor Relations Commission as provided for under the
Labor Code under Article 223. A party who waives his right to
appeal is deemed to have accepted the judgment, adverse or not,
as correct, especially if such party readily acquiesced in the
judgment by starting to execute said judgment even before a writ of
execution was issued, as in this case. Under these circumstances,
to permit a party to appeal from the said partially executed final
judgment would make a mockery of the doctrine of finality of
judgments long enshrined in this jurisdiction.
Section I of Rule 39 of the Revised Rules of Court provides that "...
execution shall issue as a matter of right upon the expiration of the
period to appeal ... or if no appeal has been duly perfected." This
rule applies to decisions or orders of labor arbiters who are
exercising quasi-judicial functions since "... the rule of execution of
judgments under the rules should govern all kinds of execution of
judgment, unless it is otherwise provided in other laws" Sagucio vs.
Bulos 5 SCRA 803) and Article 223 of the Labor Code provides that
"... decisions, awards, or orders of the Labor Arbiter or compulsory
arbitrators are final and executory unless appealed to the
Commission by any or both of the parties within ten (10) days from
receipt of such awards, orders, or decisions. ..."
Thus, under the aforecited rule, the lapse of the appeal period
deprives the courts of jurisdiction to alter the final judgment and the
judgment becomes final ipso jure (Vega vs. WCC, 89 SCRA 143,
citing Cruz vs. WCC, 2 PHILAJUR 436, 440, January 31, 1978; see
also Soliven vs. WCC, 77 SCRA 621; Carrero vs. WCC and Regala
vs. WCC, decided jointly, 77 SCRA 297; Vitug vs. Republic, 75
SCRA 436; Ramos vs. Republic, 69 SCRA 576).
In Galvez vs. Philippine Long Distance Telephone Co., 3 SCRA
422, 423, October 31, 1961, where the lower court modified a final
order, this Court ruled thus: têñ.£îhqwâ£
xxx xxx xxx
The lower court was thus aware of the fact that it was thereby
altering or modifying its order of January 8, 1959. Regardless of the
excellence of the motive for acting as it did, we are constrained to
hold however, that the lower court had no authorities to make said
alteration or modification. ...
xxx xxx xxx
The equitable considerations that led the lower court to take the
action complained of cannot offset the dem ands of public policy
and public interest — which are also responsive to the tenets of
equity — requiring that an issues passed upon in decisions or final
orders that have become executory, be deemed conclusively
disposed of and definitely closed for, otherwise, there would be no
end to litigations, thus setting at naught the main role of courts of
justice, which is to assist in the enforcement of the rule of law and
the maintenance of peace and order, by settling justiciable
controversies with finality.
xxx xxx xxx
In the recent case of Gabaya vs. Mendoza, 113 SCRA 405, 406,
March 30, 1982, this Court said: têñ.£îhqwâ£
10
xxx xxx xxx
In Marasigan vs. Ronquillo (94 Phil. 237), it was categorically
stated that the rule is absolute that after a judgment becomes final
by the expiration of the period provided by the rules within which it
so becomes, no further amendment or correction can be made by
the court except for clerical errors or mistakes. And such final
judgment is conclusive not only as to every matter which was
offered and received to sustain or defeat the claim or demand but
as to any other admissible matter which must have been offered for
that purpose (L-7044, 96 Phil. 526). In the earlier case of Contreras
and Ginco vs. Felix and China Banking Corp., Inc. (44 O.G. 4306),
it was stated that the rule must be adhered to regardless of any
possible injustice in a particular case for (W)e have to subordinate
the equity of a particular situation to the over-mastering need of
certainty and immutability of judicial pronouncements
xxx xxx xxx
III
The despotic manner by which public respondent Amado G.
Inciong divested the members of the petitioner union of their rights
acquired by virtue of a final judgment is tantamount to a deprivation
of property without due process of law Public respondent
completely ignored the rights of the petitioner union's members in
dismissing their complaint since he knew for a fact that the
judgment of the labor arbiter had long become final and was even
partially executed by the respondent bank.
A final judgment vests in the prevailing party a right recognized and
protected by law under the due process clause of the Constitution
(China Ins. & Surety Co. vs. Judge of First Instance of Manila, 63
Phil. 324). A final judgment is "a vested interest which it is right and
equitable that the government should recognize and protect, and of
which the individual could no. be deprived arbitrarily without
injustice" (Rookledge v. Garwood, 65 N.W. 2d 785, 791).
lt is by this guiding principle that the due process clause is
interpreted. Thus, in the pithy language of then Justice, later Chief
Justice, Concepcion "... acts of Congress, as well as those of the
Executive, can deny due process only under pain of nullity, and
judicial proceedings suffering from the same flaw are subject to the
same sanction, any statutory provision to the contrary
notwithstanding (Vda. de Cuaycong vs. Vda. de Sengbengco 110
Phil. 118, emphasis supplied), And "(I)t has been likewise
established that a violation of a constitutional right divested the
court of jurisdiction; and as a consequence its judgment is null and
void and confers no rights" (Phil. Blooming Mills Employees
Organization vs. Phil. Blooming Mills Co., Inc., 51 SCRA 211, June
5, 1973).
Tested by and pitted against this broad concept of the constitutional
guarantee of due process, the action of public respondent Amado
G. Inciong is a clear example of deprivation of property without due
process of law and constituted grave abuse of discretion,
amounting to lack or excess of jurisdiction in issuing the order
dated November 10, 1979.
WHEREFORE, THE PETITION IS HEREBY GRANTED, THE
ORDER OF PUBLIC RESPONDENT IS SET ASIDE, AND THE
DECISION OF LABOR ARBITER RICARTE T. SORIANO DATED
AUGUST 25, 1975, IS HEREBY REINSTATED.
COSTS AGAINST PRIVATE RESPONDENT INSULAR BANK OF
ASIA AND AMERICA
SO ORDERED.
G.R. No. 157376 October 2, 2007
CORAZON C. SIM, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and EQUITABLE
PCI-BANK, respondents*.
Labor Law; Dismissals; Loss of Trust and Confidence; Managerial
Employees; When an employee accepts a promotion to a
managerial position or to an office requiring full trust and
confidence, she gives up some of the rigid guaranties available to
ordinary workers—infractions which if committed by others would
be overlooked or condoned or penalties mitigated may be visited
with more severe disciplinary action.—Petitioner does not deny
having withdrawn the amount of P3,000,000.00 lire from the bank’s
account. What petitioner submits is that she used said amount for
the Radio Pilipinas sa Roma radio program of the company.
Respondent, however, countered that at the time she withdrew said
amount, the radio program was already off the air. Respondent is a
managerial employee. Thus, loss of trust and confidence is a valid
ground for her dismissal. The mere existence of a basis for
believing that a managerial employee has breached the trust of the
employer would suffice for his/her dismissal. [w]hen an employee
accepts a promotion to a managerial position or to an office
requiring full trust and confidence, she gives up some of the rigid
guaranties available to ordinary workers. Infractions which if
committed by others would be overlooked or condoned or penalties
mitigated may be visited with more severe disciplinary action. A
company’s resort to acts of self-defense would be more easily
justified.
AUSTRIA-MARTINEZ, J.:
Corazon Sim (petitioner) filed a case for illegal dismissal with the
Labor Arbiter, alleging that she was initially employed by Equitable
PCI-Bank (respondent) in 1990 as Italian Remittance Marketing
Consultant to the Frankfurt Representative Office. Eventually, she
was promoted to Manager position, until September 1999, when
she received a letter from Remegio David -- the Senior Officer,
European Head of PCIBank, and Managing Director of PCIB-
Europe -- informing her that she was being dismissed due to loss of
trust and confidence based on alleged mismanagement and
misappropriation of funds.
Respondent denied any employer-employee relationship between
them, and sought the dismissal of the complaint.
On September 3, 2001, the Labor Arbiter rendered its Decision
dismissing the case for want of jurisdiction and/or lack of merit.1
According to the Labor Arbiter:
It should be stressed at this juncture that the labor relations system
in the Philippines has no extra-territorial jurisdiction. It is limited to
the relationship between labor and capital within the Philippines.
Since complainant was hired and assigned in a foreign land,
although by a Philippine Corporation, it follows that the law that
govern their relationship is the law of the place where the
employment was executed and her place of work or assignment.
On this premise, the Italian law allegedly provides severance pay
which was applied and extended to herein complainant (Annex "P",
respondent's position paper).
As can be gleaned from the foregoing, a further elucidation on the
matter would be an exercise in futility. Hence, this case should be
dismissed for want of jurisdiction.
Assuming for the sake of argument that this Office has jurisdiction
over this case, still, this Office is inclined to rule in favor of the
respondent.
Complainant, as General Manager is an employee whom the
respondent company reposed its trust and confidence. In other
words, she held a position of trust. It is well-settled doctrine that the
basic premise for dismissal on the ground of loss of confidence is
that the employee concerned holds a position of trust and
confidence. (National Sugar Refineries Corporation vs. NLRC, 286
SCRA 478.)
xxx
In this case, the respondent company had strong reason to believe
that the complainant was guilty of the offense charged against her.2
On appeal, the National Labor Relations Commission (NLRC)
affirmed the Labor Arbiter's Decision and dismissed petitioner's
appeal for lack of merit.3
11
Without filing a motion for reconsideration with the NLRC, petitioner
went to the Court of Appeals (CA) via a petition for certiorari under
Rule 65 of the Rules of Court.
In a Resolution dated October 29, 2002, the CA4 dismissed the
petition due to petitioner's non-filing of a motion for reconsideration
with the NLRC.5
Petitioner filed a motion for reconsideration but it was nonetheless
denied by the CA per Resolution dated February 26, 2003.
Hence, the present recourse under Rule 45 of the Rules of Court.
Petitioner alleges that:
I. The Court of Appeals departed from the accepted and usual
concepts of remedial law when it ruled that the petitioner should
have first filed a Motion for Reconsideration with the National Labor
Relations Commission.
II. The National Labor Relations Commission decided a question of
jurisdiction heretofore not yet determined by the Court and decided
the same in a manner not in accord with law when it ruled that it
had no jurisdiction over a labor dispute between a Philippine
corporation and its employee which it assigned to work for a foreign
land.6
The pivotal question that needs to be resolved is whether or not a
prior motion for reconsideration is indispensable for the filing of a
petition for certiorari under Rule 65 of the Rules of Court with the
CA.
Under Rule 65, the remedy of filing a special civil action for
certiorari is available only when there is no appeal; or any plain,
speedy, and adequate remedy in the ordinary course of law.7 A
"plain" and "adequate remedy" is a motion for reconsideration of
the assailed order or resolution, the filing of which is an
indispensable condition to the filing of a special civil action for
certiorari.8 This is to give the lower court the opportunity to correct
itself.9
There are, of course, exceptions to the foregoing rule, to wit:
(a) where the order is a patent nullity, as where the court a quo has
no jurisdiction;
(b) where the questions raised in the certiorari proceedings have
been duly raised and passed upon by the lower court, or are the
same as those raised and passed upon in the lower court;
(c) where there is an urgent necessity for the resolution of the
question and any further delay would prejudice the interests of the
Government or of the petitioner or the subject matter of the action
is perishable;
(d) where, under the circumstances, a motion for reconsideration
would be useless;
(e) where petitioner was deprived of due process and there is
extreme urgency for relief;
(f) where, in a criminal case, relief from an order of arrest is urgent
and the granting of such relief by the trial court is improbable;
(g) where the proceedings in the lower court are a nullity for lack of
due process;
(h) where the proceeding was ex parte or in which the petitioner
had no opportunity to object; and
(i) where the issue raised is one purely of law or public interest is
involved.10
Petitioner, however, failed to qualify her case as among the few
exceptions. In fact, the Court notes that the petition filed before the
CA failed to allege any reason why a motion for reconsideration
was dispensed with by petitioner. It was only in her motion for
reconsideration of the CA's resolution of dismissal and in the
petition filed in this case that petitioner justified her non-filing of a
motion for reconsideration.
Petitioner argues that filing a motion for reconsideration with the
NLRC would be merely an exercise in futility and useless. But it is
not for petitioner to determine whether it is so. As stressed in
Cervantes v. Court of Appeals:
It must be emphasized that a writ of certiorari is a prerogative writ,
never demandable as a matter of right, never issued except in the
exercise of judicial discretion. Hence, he who seeks a writ of
certiorari must apply for it only in the manner and strictly in
accordance with the provisions of the law and the Rules. Petitioner
may not arrogate to himself the determination of whether a
motion for reconsideration is necessary or not. To dispense
with the requirement of filing a motion for reconsideration,
petitioner must show a concrete, compelling, and valid reason
for doing so, which petitioner failed to do. Thus, the Court of
Appeals correctly dismissed the petition.11 (Emphasis supplied)
Petitioner also contends that the issue at bench is purely a
question of law, hence, an exception to the rule. A reading of the
petition filed with the CA shows otherwise. The issues raised in this
case are mixed questions of fact and law. There is a question of
fact when doubt or difference arises as to the truth or falsehood of
the alleged facts, and there is a question of law where the doubt or
difference arises as to what the law is on a certain state of facts.12
Petitioner, aside from questioning the ruling of the NLRC sustaining
the Labor Arbiter's view that it does not have any jurisdiction over
the case, also questions the NLRC's ruling affirming the Labor
Arbiter's conclusion that she was validly dismissed by respondent.
The legality of petitioner's dismissal hinges on the question of
whether there was an employer-employee relationship, which was
denied by respondent; and, if in the affirmative, whether petitioner,
indeed, committed a breach of trust and confidence justifying her
dismissal. These are mixed questions of fact and law and, as such,
do not fall within the exception from the filing of a motion for
reconsideration.
Consequently, the CA was not in error when it dismissed the
petition. More so since petitioner failed to show any error on the
part of the Labor Arbiter and the NLRC in ruling that she was
dismissed for cause.
The rule is that the Court is bound by the findings of facts of the
Labor Arbiter or the NLRC, unless it is shown that grave abuse of
discretion or lack or excess of jurisdiction has been committed by
said quasi-judicial bodies.13 The Court will not deviate from said
doctrine without any clear showing that the findings of the Labor
Arbiter, as affirmed by the NLRC, are bereft of sufficient
substantiation.
Petitioner does not deny having withdrawn the amount of
P3,000,000.00 lire from the bank's account. What petitioner
submits is that she used said amount for the Radio Pilipinas sa
Roma radio program of the company. Respondent, however,
countered that at the time she withdrew said amount, the radio
program was already off the air. Respondent is a managerial
employee. Thus, loss of trust and confidence is a valid ground for
her dismissal.14 The mere existence of a basis for believing that a
managerial employee has breached the trust of the employer would
suffice for his/her dismissal.15
[w]hen an employee accepts a promotion to a managerial position
or to an office requiring full trust and confidence, she gives up
some of the rigid guaranties available to ordinary workers.
Infractions which if committed by others would be overlooked or
condoned or penalties mitigated may be visited with more severe
disciplinary action. A company's resort to acts of self-defense would
be more easily justified.16
The Court notes, however, a palpable error in the Labor Arbiter's
disposition of the case, which was affirmed by the NLRC, with
regard to the issue on jurisdiction. It was wrong for the Labor
Arbiter to rule that "labor relations system in the Philippines has no
extra-territorial jurisdiction."17
Article 217 of the Labor Code provides for the jurisdiction of the
Labor Arbiter and the National Labor Relations Commission, viz.:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. – (a)
Except as otherwise provided under this Code the Labor Arbiters
shall have original and exclusive jurisdiction to hear and decide,
within thirty (30) calendar days after the submission of the case by
the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers,
whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that
workers may file involving wage, rates of pay, hours of work and
other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages
arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code,
including questions involving the legality of strikes and lockouts;
and
6. Except claims for Employees Compensation, Social Security,
Medicare and maternity benefits, all other claims, arising from
employer-employee relations, including those of persons in
12
domestic or household service, involving an amount of exceeding
five thousand pesos (P5,000.00) regardless of whether
accompanied with a claim for reinstatement.
(b) The commission shall have exclusive appellate jurisdiction over
all cases decided by Labor Arbiters.
Moreover, Section 10 of Republic Act (R.A.) No. 8042, or the
Migrant Workers and Overseas Filipinos Act of 1995,18 provides:
SECTION 10. Money Claims. — Notwithstanding any provision of
law to the contrary, the Labor Arbiters of the National Labor
Relations Commission (NLRC) shall have the original and
exclusive jurisdiction to hear and decide, within ninety (90)
calendar days after the filing of the complaint, the claims arising out
of an employer-employee relationship or by virtue of any law or
contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of
damages.
Also, Section 62 of the Omnibus Rules and Regulations
Implementing R.A. No. 804219 provides that the Labor Arbiters of
the NLRC shall have the original and exclusive jurisdiction to hear
and decide all claims arising out of employer-employee relationship
or by virtue of any law or contract involving Filipino workers for
overseas deployment including claims for actual, moral, exemplary
and other forms of damages, subject to the rules and procedures of
the NLRC.
Under these provisions, it is clear that labor arbiters have original
and exclusive jurisdiction over claims arising from employer-
employee relations, including termination disputes involving all
workers, among whom are overseas Filipino workers.20 In
Philippine National Bank v. Cabansag, the Court pronounced:
x x x Whether employed locally or overseas, all Filipino
workers enjoy the protective mantle of Philippine labor and
social legislation, contract stipulations to the contrary
notwithstanding. This pronouncement is in keeping with the basic
public policy of the State to afford protection to labor, promote full
employment, ensure equal work opportunities regardless of sex,
race or creed, and regulate the relations between workers and
employers. For the State assures the basic rights of all workers to
self-organization, collective bargaining, security of tenure, and just
and humane conditions of work [Article 3 of the Labor Code of the
Philippines; See also Section 18, Article II and Section 3, Article
XIII, 1987 Constitution]. This ruling is likewise rendered imperative
by Article 17 of the Civil Code which states that laws "which have
for their object public order, public policy and good customs shall
not be rendered ineffective by laws or judgments promulgated, or
by determination or conventions agreed upon in a foreign
country."21 (Emphasis supplied)
In any event, since the CA did not commit any error in dismissing
the petition before it for failure to file a prior motion for
reconsideration with the NLRC, and considering that the Labor
Arbiter and the NLRC's factual findings as regards the validity of
petitioner's dismissal are accorded great weight and respect and
even finality when the same are supported by substantial evidence,
the Court finds no compelling reason to relax the rule on the filing
of a motion for reconsideration prior to the filing of a petition for
certiorari.
WHEREFORE, the petition is DENIED.
Costs against petitioner.
SO ORDERED.
G.R. No. 79182 September 11, 1991
PNOC-ENERGY DEVELOPMENT CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (Third Division)
and DANILO MERCADO, respondents.
Labor Law; Dismissal; While Ioss of trust or breach of confidence is
a valid ground for dismissing an employee, such loss or breach of
trust must have some basis.—While it is true that loss of trust or
breach of confidence is a valid ground for dismissing an employee,
such loss or breach of trust must have some basis (Gubac v.
NLRC, 187 SCRA 412 [July 13, 1990]). As found by the Labor
Arbiter, the accusations of petitioner PNOC-EDC against private
respondent Mercado have no basis. Mrs. Leonardo Nodado, from
whom the nipa shingles were purchased, sufficiently explained in
her affidavit (Rollo, p. 36) that the total purchase price of P1,680.00
was paid by respondent Mercado as agreed upon. The alleged
discount given by Mrs. Nodado is not supported by evidence as
well as the alleged appropriation of P8.66 from the cost of
fabrication of rubber stamps. The Labor Arbiter, likewise, found no
evidence to support the alleged violation of company rules. On the
contrary, he found respondent Mercado’s explanation in his affidavit
(Rollo, pp. 38–40) as to the alleged violations to be satisfactory.
Moreover, these findings were never contradicted by petitioner
PNOC-EDC.
PARAS, J.:
This is a petition for certiorari to set aside the Resolution * dated
July 3, 1987 of respondent National Labor Relations Commission
(NLRC for brevity) which affirmed the decision dated April 30, 1986
of Labor Arbiter Vito J. Minoria of the NLRC, Regional Arbitration
Branch No. VII at Cebu City in Case No. RAB-VII-0556-85 entitled
"Danilo Mercado, Complainant, vs. Philippine National Oil
Company-Energy Development Corporation, Respondent",
ordering the reinstatement of complainant Danilo Mercado and the
award of various monetary claims.
The factual background of this case is as follows:
Private respondent Danilo Mercado was first employed by herein
petitioner Philippine National Oil Company-Energy Development
Corporation (PNOC-EDC for brevity) on August 13, 1979. He held
various positions ranging from clerk, general clerk to shipping clerk
during his employment at its Cebu office until his transfer to its
establishment at Palimpinon, Dumaguete, Oriental Negros on
September 5, 1984. On June 30, 1985, private respondent
Mercado was dismissed. His last salary was P1,585.00 a month
basic pay plus P800.00 living allowance (Labor Arbiter's Decision,
Annex "E" of Petition, Rollo, p. 52).
The grounds for the dismissal of Mercado are allegedly serious
acts of dishonesty committed as follows:
1. On ApriI 12, 1985, Danilo Mercado was ordered to purchase
1,400 pieces of nipa shingles from Mrs. Leonardo Nodado of
Banilad, Dumaguete City, for the total purchase price of Pl,680.00.
Against company policy, regulations and specific orders, Danilo
Mercado withdrew the nipa shingles from the supplier but paid the
amount of P1,000.00 only. Danilo Mercado appropriated the
balance of P680.00 for his personal use;
2. In the same transaction stated above, the supplier agreed to give
the company a discount of P70.00 which Danilo Mercado did not
report to the company;
3. On March 28, 1985, Danilo Mercado was instructed to contract
the services of Fred R. Melon of Dumaguete City, for the fabrication
of rubber stamps, for the total amount of P28.66. Danilo Mercado
paid the amount of P20.00 to Fred R. Melon and appropriated for
his personal use the balance of P8.66.
In addition, private respondent, Danilo Mercado violated company
rules and regulations in the following instances:
1. On June 5, 1985, Danilo Mercado was absent from work without
leave, without proper turn-over of his work, causing disruption and
delay of company work activities;
2. On June 15, 1985, Danilo Mercado went on vacation leave
without prior leave, against company policy, rules and regulations.
(Petitioner's Memorandum, Rollo, p. 195).
On September 23, 1985, private respondent Mercado filed a
complaint for illegal dismissal, retirement benefits, separation pay,
unpaid wages, etc. against petitioner PNOC-EDC before the NLRC
13
Regional Arbitration Branch No. VII docketed as Case No. RAB-
VII-0556-85.
After private respondent Mercado filed his position paper on
December 16, 1985 (Annex "B" of the Petition, Rollo, pp. 28-40),
petitioner PNOC-EDC filed its Position Paper/Motion to Dismiss on
January 15, 1986, praying for the dismissal of the case on the
ground that the Labor Arbiter and/or the NLRC had no jurisdiction
over the case (Annex "C" of the Petition, Rollo, pp. 41-45), which
was assailed by private respondent Mercado in his Opposition to
the Position Paper/Motion to Dismiss dated March 12, 1986 (Annex
"D" of the Petition, Rollo, pp. 46-50).
The Labor Arbiter ruled in favor of private respondent Mercado. The
dispositive onion of said decision reads as follows:
WHEREFORE, in view of the foregoing, respondents are hereby
ordered:
1) To reinstate complainant to his former position with full back
wages from the date of his dismissal up to the time of his actual
reinstatement without loss of seniority rights and other privileges;
2) To pay complainant the amount of P10,000.00 representing his
personal share of his savings account with the respondents;
3) To pay complainants the amount of P30,000.00 moral damages;
P20,000.00 exemplary damages and P5,000.00 attorney's fees;
4) To pay complainant the amount of P792.50 as his proportionate
13th month pay for 1985.
Respondents are hereby further ordered to deposit the
aforementioned amounts with this Office within ten days from
receipt of a copy of this decision for further disposition.
SO ORDERED.
(Labor Arbiter's Decision, Rollo, p. 56)
The appeal to the NLRC was dismissed for lack of merit on July 3,
1987 and the assailed decision was affirmed.
Hence, this petition.
The issues raised by petitioner in this instant petition are:
1. Whether or not matters of employment affecting the PNOC-EDC,
a government-owned and controlled corporation, are within the
jurisdiction of the Labor Arbiter and the NLRC.
2. Assuming the affirmative, whether or not the Labor Arbiter and
the NLRC are justified in ordering the reinstatement of private
respondent, payment of his savings, and proportionate 13th month
pay and payment of damages as well as attorney's fee.
Petitioner PNOC-EDC alleges that it is a corporation wholly owned
and controlled by the government; that the Energy Development
Corporation is a subsidiary of the Philippine National Oil Company
which is a government entity created under Presidential Decree
No. 334, as amended; that being a government-owned and
controlled corporation, it is governed by the Civil Service Law as
provided for in Section 1, Article XII-B of the 1973 Constitution,
Section 56 of Presidential Decree No. 807 (Civil Service Decree)
and Article 277 of Presidential Decree No. 442, as amended (Labor
Code).
The 1973 Constitution provides:
The Civil Service embraces every branch, agency, subdivision and
instrumentality of the government including government-owned or
controlled corporations.
Petitioner PNOC-EDC argued that since Labor Arbiter Minoria
rendered the decision at the time when the 1973 Constitution was
in force, said decision is null and void because under the 1973
Constitution, government-owned and controlled corporations were
governed by the Civil Service Law. Even assuming that PNOC-
EDC has no original or special charter and Section 2(i), Article IX-B
of the 1987 Constitution provides that:
The Civil Service embraces all branches, subdivision,
instrumentalities and agencies of the Government, including
government-owned or controlled corporations with original charters.
such circumstances cannot give validity to the decision of the Labor
Arbiter (Ibid., pp. 192-193).
This issue has already been laid to rest in the case of PNOC-EDC
vs. Leogardo, 175 SCRA 26 (July 5, 1989), involving the same
petitioner and the same issue, where this Court ruled that the
doctrine that employees of government-owned and/or con
controlled corporations, whether created by special law or formed
as subsidiaries under the General Corporation law are governed by
the Civil Service Law and not by the Labor Code, has been
supplanted by the present Constitution. "Thus, under the present
state of the law, the test in determining whether a government-
owned or controlled corporation is subject to the Civil Service Law as to the alleged violations to be satisfactory. Moreover, these
are the manner of its creation, such that government corporations findings were never contradicted by petitioner petitioner PNOC-
created by special charter are subject to its provisions while those EDC.
incorporated under the General Corporation Law are not within its PREMISES CONSIDERED, the petition is DENIED and the
coverage." resolution of respondent NLRC dated July 3, 1987 is AFFIRMED
Specifically, the PNOC-EDC having been incorporated under the with the modification that the moral damages are reduced to Ten
General Corporation Law was held to be a government owned or Thousand (P10,000.00) Pesos, and the exemplary damages
controlled corporation whose employees are subject to the reduced to Five Thousand (P5,000.00) Pesos.
provisions of the Labor Code (Ibid.). SO ORDERED.
The fact that the case arose at the time when the 1973 Constitution
was still in effect, does not deprive the NLRC of jurisdiction on the
premise that it is the 1987 Constitution that governs because it is
the Constitution in place at the time of the decision (NASECO v.
NLRC, G.R. No. 69870, 168 SCRA 122 [1988]).
In the case at bar, the decision of the NLRC was promulgated on
July 3, 1987. Accordingly, this case falls squarely under the rulings
of the aforementioned cases.
As regards the second issue, the record shows that PNOC-EDC's
accusations of dishonesty and violations of company rules are not
supported by evidence. Nonetheless, while acknowledging the rule
that administrative bodies are not governed by the strict rules of
evidence, petitioner PNOC-EDC alleges that the labor arbiter's
propensity to decide the case through the position papers
submitted by the parties is violative of due process thereby
rendering the decision null and void (Ibid., p. 196).
On the other hand, private respondent contends that as can be
seen from petitioner's Motion for Reconsideration and/or Appeal
dated July 28, 1986 (Annex "F" of the Petition, Rollo, pp. 57- 64),
the latter never questioned the findings of facts of the Labor Arbiter
but simply limited its objection to the lack of legal basis in view of
its stand that the NLRC had no jurisdiction over the case (Private
Respondent's Memorandum, Rollo, p. 104).
Petitioner PNOC-EDC filed its Position Paper/Motion to Dismiss
dated January 15, 1986 (Annex "C" of the Petition Rollo, pp. 41-45)
before the Regional Arbitration Branch No. VII of Cebu City and its
Motion for Reconsideration and/or Appeal dated July 28, 1986
(Annex "F" of the Petition, Rollo, pp. 57-64) before the NLRC of
Cebu City. Indisputably, the requirements of due process are
satisfied when the parties are given an opportunity to submit
position papers. What the fundamental law abhors is not the
absence of previous notice but rather the absolute lack of
opportunity to ventilate a party's side. There is no denial of due
process where the party submitted its position paper and flied its
motion for reconsideration (Odin Security Agency vs. De la Serna,
182 SCRA 472 [February 21, 1990]). Petitioner's subsequent
Motion for Reconsideration and/or Appeal has the effect of curing
whatever irregularity might have been committed in the
proceedings below (T.H. Valderama and Sons, Inc. vs. Drilon, 181
SCRA 308 [January 22, 1990]).
Furthermore, it has been consistently held that findings of
administrative agencies which have acquired expertise because
their jurisdiction is confined to specific matters are accorded not
only respect but even finality (Asian Construction and Development
Corporation vs. NLRC, 187 SCRA 784 [July 27, 1990]; Lopez
Sugar Corporation vs. Federation of Free Workers, 189 SCRA 179
[August 30, 1990]). Judicial review by this Court does not go so far
as to evaluate the sufficiency of the evidence but is limited to
issues of jurisdiction or grave abuse of discretion (Filipinas
Manufacturers Bank vs. NLRC, 182 SCRA 848 [February 28,
1990]). A careful study of the records shows no substantive reason
to depart from these established principles.
While it is true that loss of trust or breach of confidence is a valid
ground for dismissing an employee, such loss or breach of trust
must have some basis (Gubac v. NLRC, 187 SCRA 412 [July 13,
1990]). As found by the Labor Arbiter, the accusations of petitioner
PNOC-EDC against private respondent Mercado have no basis.
Mrs. Leonardo Nodado, from whom the nipa shingles were
purchased, sufficiently explained in her affidavit (Rollo, p. 36) that
the total purchase price of P1,680.00 was paid by respondent
Mercado as agreed upon. The alleged discount given by Mrs.
Nodado is not supported by evidence as well as the alleged
appropriation of P8.66 from the cost of fabrication of rubber
stamps. The Labor Arbiter, likewise, found no evidence to support
the alleged violation of company rules. On the contrary, he found
respondent Mercado's explanation in his affidavit (Rollo, pp. 38-40)

14
G.R. No. 85750 September 28, 1990
INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION,
petitioner
vs
HON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF
THE BUREAU OF LABOR RELATIONS AND TRADE UNIONS
OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU
respondents.
Same; Same; IRRI employees have recourse to the Council of lRRI
Employees and Management (CIEM) in cases affecting employer-
employee relations.—Neither are the employees of IRRI without
remedy in case of dispute with management as, in fact, there had
been organized a forum for better management-employee
relationship as evidenced by the formation of the Council of IRRI
Employees and Management (CIEM) wherein "both management
and employees were and still are represented for purposes of
maintaining mutual and beneficial cooperation between IRRI and
its employees." The existence of this Union factually and tellingly
belies the argument that Pres. Decree No. 1620, which grants to
IRRI the status, privileges and immunities of an international
organization, deprives its employees of the right to self-
organization.
MELENCIO-HERRERA, J.:
Consolidated on 11 December 1989, these two cases involve the
validity of the claim of immunity by the International Catholic
Migration Commission (ICMC) and the International Rice Research
Institute, Inc. (IRRI) from the application of Philippine labor laws.
I the Privileges and Immunities of Specialized Agencies, adopted by
Facts and Issues
A. G.R. No. 85750 — the International Catholic Migration
Commission (ICMC) Case.
As an aftermath of the Vietnam War, the plight of Vietnamese
refugees fleeing from South Vietnam's communist rule confronted
the international community.
In response to this crisis, on 23 February 1981, an Agreement was
forged between the Philippine Government and the United Nations
High Commissioner for Refugees whereby an operating center for
processing Indo-Chinese refugees for eventual resettlement to
other countries was to be established in Bataan (Annex "A", Rollo,
pp. 22-32).
ICMC was one of those accredited by the Philippine Government to
operate the refugee processing center in Morong, Bataan. It was
incorporated in New York, USA, at the request of the Holy See, as
a non-profit agency involved in international humanitarian and
voluntary work. It is duly registered with the United Nations
Economic and Social Council (ECOSOC) and enjoys Consultative
Status, Category II. As an international organization rendering
voluntary and humanitarian services in the Philippines, its activities
are parallel to those of the International Committee for Migration
(ICM) and the International Committee of the Red Cross (ICRC)
[DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol.
1].
On 14 July 1986, Trade Unions of the Philippines and Allied
Services (TUPAS) filed with the then Ministry of Labor and
Employment a Petition for Certification Election among the rank
and file members employed by ICMC The latter opposed the
petition on the ground that it is an international organization
registered with the United Nations and, hence, enjoys diplomatic
immunity.
On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained
ICMC and dismissed the petition for lack of jurisdiction.
On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor
Relations (BLR), reversed the Med-Arbiter's Decision and ordered
the immediate conduct of a certification election. At that time,
ICMC's request for recognition as a specialized agency was still
pending with the Department of Foreign Affairs (DEFORAF).
Subsequently, however, on 15 July 1988, the Philippine
Government, through the DEFORAF, granted ICMC the status of a
specialized agency with corresponding diplomatic privileges and
immunities, as evidenced by a Memorandum of Agreement
between the Government and ICMC (Annex "E", Petition, Rollo, pp.
41-43), infra.
15
ICMC then sought the immediate dismissal of the TUPAS Petition
for Certification Election invoking the immunity expressly granted
but the same was denied by respondent BLR Director who, again,
ordered the immediate conduct of a pre-election conference.
ICMC's two Motions for Reconsideration were denied despite an
opinion rendered by DEFORAF on 17 October 1988 that said BLR
Order violated ICMC's diplomatic immunity.
Thus, on 24 November 1988, ICMC filed the present Petition for
Certiorari with Preliminary Injunction assailing the BLR Order.
On 28 November 1988, the Court issued a Temporary Restraining
Order enjoining the holding of the certification election.
On 10 January 1989, the DEFORAF, through its Legal Adviser,
retired Justice Jorge C. Coquia of the Court of Appeals, filed a
Motion for Intervention alleging that, as the highest executive
department with the competence and authority to act on matters
involving diplomatic immunity and privileges, and tasked with the
conduct of Philippine diplomatic and consular relations with foreign
governments and UN organizations, it has a legal interest in the
outcome of this case.
Over the opposition of the Solicitor General, the Court allowed
DEFORAF intervention.
On 12 July 1989, the Second Division gave due course to the
ICMC Petition and required the submittal of memoranda by the
parties, which has been complied with.
As initially stated, the issue is whether or not the grant of diplomatic
privileges and immunites to ICMC extends to immunity from the
application of Philippine labor laws.
ICMC sustains the affirmative of the proposition citing (1) its
Memorandum of Agreement with the Philippine Government giving
it the status of a specialized agency, (infra); (2) the Convention on
the UN General Assembly on 21 November 1947 and concurred in
by the Philippine Senate through Resolution No. 91 on 17 May
1949 (the Philippine Instrument of Ratification was signed by the
President on 30 August 1949 and deposited with the UN on 20
March 1950) infra; and (3) Article II, Section 2 of the 1987
Constitution, which declares that the Philippines adopts the
generally accepted principles of international law as part of the law
of the land.
Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity
and seeks an affirmance of the DEFORAF determination that the
BLR Order for a certification election among the ICMC employees
is violative of the diplomatic immunity of said organization.
Respondent BLR Director, on the other hand, with whom the
Solicitor General agrees, cites State policy and Philippine labor
laws to justify its assailed Order, particularly, Article II, Section 18
and Article III, Section 8 of the 1987 Constitution, infra; and Articles
243 and 246 of the Labor Code, as amended, ibid. In addition, she
contends that a certification election is not a litigation but a mere
investigation of a non-adversary, fact-finding character. It is not a
suit against ICMC its property, funds or assets, but is the sole
concern of the workers themselves.
B. G.R. No. 89331 — (The International Rice Research Institute
[IRRI] Case).
Before a Decision could be rendered in the ICMC Case, the Third
Division, on 11 December 1989, resolved to consolidate G.R. No.
89331 pending before it with G.R. No. 85750, the lower-numbered
case pending with the Second Division, upon manifestation by the
Solicitor General that both cases involve similar issues.
The facts disclose that on 9 December 1959, the Philippine
Government and the Ford and Rockefeller Foundations signed a
Memorandum of Understanding establishing the International Rice
Research Institute (IRRI) at Los Baños, Laguna. It was intended to
be an autonomous, philanthropic, tax-free, non-profit, non-stock
organization designed to carry out the principal objective of
conducting "basic research on the rice plant, on all phases of rice
production, management, distribution and utilization with a view to
attaining nutritive and economic advantage or benefit for the people
of Asia and other major rice-growing areas through improvement in
quality and quantity of rice."
Initially, IRRI was organized and registered with the Securities and
Exchange Commission as a private corporation subject to all laws
and regulations. However, by virtue of Pres. Decree No. 1620,
promulgated on 19 April 1979, IRRI was granted the status,
prerogatives, privileges and immunities of an international
organization.
The Organized Labor Association in Line Industries and Agriculture
(OLALIA), is a legitimate labor organization with an existing local
union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan,
for short) in respondent IRRI.
On 20 April 1987, the Kapisanan filed a Petition for Direct
Certification Election with Region IV, Regional Office of the
Department of Labor and Employment (DOLE).
IRRI opposed the petition invoking Pres. Decree No. 1620
conferring upon it the status of an international organization and
granting it immunity from all civil, criminal and administrative
proceedings under Philippine laws.
On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the
opposition on the basis of Pres. Decree No. 1620 and dismissed
the Petition for Direct Certification.
On appeal, the BLR Director, who is the public respondent in the
ICMC Case, set aside the Med-Arbiter's Order and authorized the
calling of a certification election among the rank-and-file employees
of IRRI. Said Director relied on Article 243 of the Labor Code, as
amended, infra and Article XIII, Section 3 of the 1987 Constitution, 1
and held that "the immunities and privileges granted to IRRI do not
include exemption from coverage of our Labor Laws."
Reconsideration sought by IRRI was denied.
On appeal, the Secretary of Labor, in a Resolution of 5 July 1989,
set aside the BLR Director's Order, dismissed the Petition for
Certification Election, and held that the grant of specialized agency
status by the Philippine Government to the IRRI bars DOLE from
assuming and exercising jurisdiction over IRRI Said Resolution
reads in part as follows:
Presidential Decree No. 1620 which grants to the IRRI the status,
prerogatives, privileges and immunities of an international
organization is clear and explicit. It provides in categorical terms
that:
Art. 3 — The Institute shall enjoy immunity from any penal, civil and
administrative proceedings, except insofar as immunity has been
expressly waived by the Director-General of the Institution or his
authorized representative.
Verily, unless and until the Institute expressly waives its immunity,
no summons, subpoena, orders, decisions or proceedings ordered
by any court or administrative or quasi-judicial agency are
enforceable as against the Institute. In the case at bar there was no
such waiver made by the Director-General of the Institute. Indeed,
the Institute, at the very first opportunity already vehemently
questioned the jurisdiction of this Department by filing an ex-parte
motion to dismiss the case.
Hence, the present Petition for Certiorari filed by Kapisanan
alleging grave abuse of discretion by respondent Secretary of
Labor in upholding IRRI's diplomatic immunity.
The Third Division, to which the case was originally assigned,
required the respondents to comment on the petition. In a
Manifestation filed on 4 August 1990, the Secretary of Labor
declared that it was "not adopting as his own" the decision of the
BLR Director in the ICMC Case as well as the Comment of the
Solicitor General sustaining said Director. The last pleading was
filed by IRRI on 14 August 1990.
Instead of a Comment, the Solicitor General filed a Manifestation
and Motion praying that he be excused from filing a comment "it
appearing that in the earlier case of International Catholic Migration
Commission v. Hon. Pura Calleja, G.R. No. 85750. the Office of the
Solicitor General had sustained the stand of Director Calleja on the
very same issue now before it, which position has been
superseded by respondent Secretary of Labor in G.R. No. 89331,"
the present case. The Court acceded to the Solicitor General's
prayer.
The Court is now asked to rule upon whether or not the Secretary
of Labor committed grave abuse of discretion in dismissing the
Petition for Certification Election filed by Kapisanan.
Kapisanan contends that Article 3 of Pres. Decree No. 1620
granting IRRI the status, privileges, prerogatives and immunities of
an international organization, invoked by the Secretary of Labor, is
unconstitutional in so far as it deprives the Filipino workers of their
fundamental and constitutional right to form trade unions for the
purpose of collective bargaining as enshrined in the 1987
Constitution.
16
A procedural issue is also raised. Kapisanan faults respondent
Secretary of Labor for entertaining IRRI'S appeal from the Order of
the Director of the Bureau of Labor Relations directing the holding
of a certification election. Kapisanan contends that pursuant to
Sections 7, 8, 9 and 10 of Rule V 2 of the Omnibus Rules
Implementing the Labor Code, the Order of the BLR Director had
become final and unappeable and that, therefore, the Secretary of
Labor had no more jurisdiction over the said appeal.
On the other hand, in entertaining the appeal, the Secretary of
Labor relied on Section 25 of Rep. Act. No. 6715, which took effect
on 21 March 1989, providing for the direct filing of appeal from the
Med-Arbiter to the Office of the Secretary of Labor and
Employment instead of to the Director of the Bureau of Labor
Relations in cases involving certification election orders.
III
Findings in Both Cases.
There can be no question that diplomatic immunity has, in fact,
been granted ICMC and IRRI.
Article II of the Memorandum of Agreement between the Philippine
Government and ICMC provides that ICMC shall have a status
"similar to that of a specialized agency." Article III, Sections 4 and 5
of the Convention on the Privileges and Immunities of Specialized
Agencies, adopted by the UN General Assembly on 21 November
1947 and concurred in by the Philippine Senate through Resolution
No. 19 on 17 May 1949, explicitly provides:
Art. III, Section 4. The specialized agencies, their property and
assets, wherever located and by whomsoever held, shall enjoy
immunity from every form of legal process except insofar as in any
particular case they have expressly waived their immunity. It is,
however, understood that no waiver of immunity shall extend to any
measure of execution.
Sec. 5. — The premises of the specialized agencies shall be
inviolable. The property and assets of the specialized agencies,
wherever located and by whomsoever held shall be immune from
search, requisition, confiscation, expropriation and any other form
of interference, whether by executive, administrative, judicial or
legislative action. (Emphasis supplied).
IRRI is similarly situated, Pres. Decree No. 1620, Article 3, is
explicit in its grant of immunity, thus:
Art. 3. Immunity from Legal Process. — The Institute shall enjoy
immunity from any penal, civil and administrative proceedings,
except insofar as that immunity has been expressly waived by the
Director-General of the Institute or his authorized representatives.
Thus it is that the DEFORAF, through its Legal Adviser, sustained
ICMC'S invocation of immunity when in a Memorandum, dated 17
October 1988, it expressed the view that "the Order of the Director
of the Bureau of Labor Relations dated 21 September 1988 for the
conduct of Certification Election within ICMC violates the diplomatic
immunity of the organization." Similarly, in respect of IRRI, the
DEFORAF speaking through The Acting Secretary of Foreign
Affairs, Jose D. Ingles, in a letter, dated 17 June 1987, to the
Secretary of Labor, maintained that "IRRI enjoys immunity from the
jurisdiction of DOLE in this particular instance."
The foregoing opinions constitute a categorical recognition by the
Executive Branch of the Government that ICMC and IRRI enjoy
immunities accorded to international organizations, which
determination has been held to be a political question conclusive
upon the Courts in order not to embarrass a political department of
Government.
It is a recognized principle of international law and under our
system of separation of powers that diplomatic immunity is
essentially a political question and courts should refuse to look
beyond a determination by the executive branch of the
government, and where the plea of diplomatic immunity is
recognized and affirmed by the executive branch of the government
as in the case at bar, it is then the duty of the courts to accept the
claim of immunity upon appropriate suggestion by the principal law
officer of the government . . . or other officer acting under his
direction. Hence, in adherence to the settled principle that courts
may not so exercise their jurisdiction . . . as to embarrass the
executive arm of the government in conducting foreign relations, it
is accepted doctrine that in such cases the judicial department of
(this) government follows the action of the political branch and will
not embarrass the latter by assuming an antagonistic jurisdiction. 3
A brief look into the nature of international organizations and
specialized agencies is in order. The term "international
organization" is generally used to describe an organization set up
by agreement between two or more states. 4 Under contemporary
international law, such organizations are endowed with some
degree of international legal personality 5 such that they are
capable of exercising specific rights, duties and powers. 6 They are
organized mainly as a means for conducting general international
business in which the member states have an interest. 7 The United
Nations, for instance, is an international organization dedicated to
the propagation of world peace.
"Specialized agencies" are international organizations having
functions in particular fields. The term appears in Articles 57 8 and
63 9 of the Charter of the United Nations:
The Charter, while it invests the United Nations with the general
task of promoting progress and international cooperation in
economic, social, health, cultural, educational and related matters,
contemplates that these tasks will be mainly fulfilled not by organs
of the United Nations itself but by autonomous international
organizations established by inter-governmental agreements
outside the United Nations. There are now many such international
agencies having functions in many different fields, e.g. in posts,
telecommunications, railways, canals, rivers, sea transport, civil
aviation, meteorology, atomic energy, finance, trade, education and
culture, health and refugees. Some are virtually world-wide in their
membership, some are regional or otherwise limited in their
membership. The Charter provides that those agencies which have
"wide international responsibilities" are to be brought into
relationship with the United Nations by agreements entered into
between them and the Economic and Social Council, are then to be
known as "specialized agencies." 10
The rapid growth of international organizations under contemporary
international law has paved the way for the development of the
concept of international immunities.
It is now usual for the constitutions of international organizations to
contain provisions conferring certain immunities on the
organizations themselves, representatives of their member states
and persons acting on behalf of the organizations. A series of
conventions, agreements and protocols defining the immunities of
various international organizations in relation to their members
generally are now widely in force; . . . 11
There are basically three propositions underlying the grant of
international immunities to international organizations. These
principles, contained in the ILO Memorandum are stated thus: 1)
international institutions should have a status which protects them
against control or interference by any one government in the
performance of functions for the effective discharge of which they
are responsible to democratically constituted international bodies in
which all the nations concerned are represented; 2) no country
should derive any national financial advantage by levying fiscal
charges on common international funds; and 3) the international
organization should, as a collectivity of States members, be
accorded the facilities for the conduct of its official business
customarily extended to each other by its individual member
States. 12 The theory behind all three propositions is said to be
essentially institutional in character. "It is not concerned with the
status, dignity or privileges of individuals, but with the elements of
functional independence necessary to free international institutions
from national control and to enable them to discharge their
responsibilities impartially on behalf of all their members. 13 The
raison d'etre for these immunities is the assurance of unimpeded
performance of their functions by the agencies concerned.
The grant of immunity from local jurisdiction to ICMC and IRRI is
clearly necessitated by their international character and respective
purposes. The objective is to avoid the danger of partiality and
interference by the host country in their internal workings. The
exercise of jurisdiction by the Department of Labor in these
instances would defeat the very purpose of immunity, which is to
shield the affairs of international organizations, in accordance with
international practice, from political pressure or control by the host
country to the prejudice of member States of the organization, and
to ensure the unhampered performance of their functions.
ICMC's and IRRI's immunity from local jurisdiction by no means
deprives labor of its basic rights, which are guaranteed by Article II,
Section 18, 14 Article III, Section 8, 15 and Article XIII, Section 3
17
(supra), of the 1987 Constitution; and implemented by Articles 243
and 246 of the Labor Code, 16 relied on by the BLR Director and by
Kapisanan.
For, ICMC employees are not without recourse whenever there are
disputes to be settled. Section 31 of the Convention on the
Privileges and Immunities of the Specialized Agencies of the United
Nations 17 provides that "each specialized agency shall make
provision for appropriate modes of settlement of: (a) disputes
arising out of contracts or other disputes of private character to
which the specialized agency is a party." Moreover, pursuant to
Article IV of the Memorandum of Agreement between ICMC the the
Philippine Government, whenever there is any abuse of privilege
by ICMC, the Government is free to withdraw the privileges and
immunities accorded. Thus:
Art. IV. Cooperation with Government Authorities. — 1. The
Commission shall cooperate at all times with the appropriate
authorities of the Government to ensure the observance of
Philippine laws, rules and regulations, facilitate the proper
administration of justice and prevent the occurrences of any abuse
of the privileges and immunities granted its officials and alien
employees in Article III of this Agreement to the Commission.
2. In the event that the Government determines that there has been
an abuse of the privileges and immunities granted under this
Agreement, consultations shall be held between the Government
and the Commission to determine whether any such abuse has
occurred and, if so, the Government shall withdraw the privileges
and immunities granted the Commission and its officials.
Neither are the employees of IRRI without remedy in case of
dispute with management as, in fact, there had been organized a
forum for better management-employee relationship as evidenced
by the formation of the Council of IRRI Employees and
Management (CIEM) wherein "both management and employees
were and still are represented for purposes of maintaining mutual
and beneficial cooperation between IRRI and its employees." The
existence of this Union factually and tellingly belies the argument
that Pres. Decree No. 1620, which grants to IRRI the status,
privileges and immunities of an international organization, deprives
its employees of the right to self-organization.
The immunity granted being "from every form of legal process
except in so far as in any particular case they have expressly
waived their immunity," it is inaccurate to state that a certification
election is beyond the scope of that immunity for the reason that it
is not a suit against ICMC. A certification election cannot be viewed
as an independent or isolated process. It could tugger off a series
of events in the collective bargaining process together with related
incidents and/or concerted activities, which could inevitably involve
ICMC in the "legal process," which includes "any penal, civil and
administrative proceedings." The eventuality of Court litigation is
neither remote and from which international organizations are
precisely shielded to safeguard them from the disruption of their
functions. Clauses on jurisdictional immunity are said to be
standard provisions in the constitutions of international
Organizations. "The immunity covers the organization concerned,
its property and its assets. It is equally applicable to proceedings in
personam and proceedings in rem." 18
We take note of a Manifestation, dated 28 September 1989, in the
ICMC Case (p. 161, Rollo), wherein TUPAS calls attention to the
case entitled "International Catholic Migration Commission v.
NLRC, et als., (G.R. No. 72222, 30 January 1989, 169 SCRA 606),
and claims that, having taken cognizance of that dispute (on the
issue of payment of salary for the unexpired portion of a six-month
probationary employment), the Court is now estopped from passing
upon the question of DOLE jurisdiction petition over ICMC.
We find no merit to said submission. Not only did the facts of said
controversy occur between 1983-1985, or before the grant to ICMC
on 15 July 1988 of the status of a specialized agency with
corresponding immunities, but also because ICMC in that case did
not invoke its immunity and, therefore, may be deemed to have
waived it, assuming that during that period (1983-1985) it was
tacitly recognized as enjoying such immunity.
Anent the procedural issue raised in the IRRI Case, suffice it to
state that the Decision of the BLR Director, dated 15 February
1989, had not become final because of a Motion for
Reconsideration filed by IRRI Said Motion was acted upon only on
30 March 1989 when Rep. Act No. 6715, which provides for direct
appeals from the Orders of the Med-Arbiter to the Secretary of
Labor in certification election cases either from the order or the
results of the election itself, was already in effect, specifically since
21 March 1989. Hence, no grave abuse of discretion may be
imputed to respondent Secretary of Labor in his assumption of
appellate jurisdiction, contrary to Kapisanan's allegations. The
pertinent portion of that law provides:
Art. 259. — Any party to an election may appeal the order or results
of the election as determined by the Med-Arbiter directly to the
Secretary of Labor and Employment on the ground that the rules
and regulations or parts thereof established by the Secretary of
Labor and Employment for the conduct of the election have been
violated. Such appeal shall be decided within 15 calendar days
(Emphasis supplied).
En passant, the Court is gratified to note that the heretofore
antagonistic positions assumed by two departments of the
executive branch of government have been rectified and the
resultant embarrassment to the Philippine Government in the eyes
of the international community now, hopefully, effaced.
WHEREFORE, in G.R. No. 85750 (the ICMC Case), the Petition is
GRANTED, the Order of the Bureau of Labor Relations for
certification election is SET ASIDE, and the Temporary Restraining
Order earlier issued is made PERMANENT.
In G.R. No. 89331 (the IRRI Case), the Petition is Dismissed, no
grave abuse of discretion having been committed by the Secretary
of Labor and Employment in dismissing the Petition for Certification
Election.
No pronouncement as to costs.
SO ORDERED.

18
G.R. No. 70615 October 28, 1986
VIRGILIO CALLANTA, petitioner,
vs.
CARNATION PHILIPPINES, INC., and NATIONAL LABOR
RELATIONS COMMISSION [NLRC], respondents.
Labor Law; Ilegal Dismissal; Dismissal with out just cause of an
employee from his employment, a violation of the Labor Code, but
which does not amount to an offense under said Code; “Offense,”
concept of.—Verily, the dismissal without just cause of an
employee from his employment constitutes a violation of the Labor
Code and its implementing rules and regulations. Such violation,
however, does Hot amount to an “offense” as understood under
Article 291 of the Labor Coda In its broad sense, an offense is an
illegal act which does not amount to a crime as defined in the penal
law, but which by statute carries with it a penalty similar to those
imposed by law for the punishment of a crime. It is in this sense
that a general penalty clause is provided under Article 289 of the
Labor Code which provides that “x x x any violation of the
provisions of this Code declared to be unlawful or penal in nature
shall be punished with a fine of not iess than One Thousand Pesos
[1,000.00] nor more than Ten Thousand Pesos [10,000.00], or
imprisonment of not less than three [3] months nor more than three
[3] years, or both such fine and imprisonment at the discretion of
the court.”
Same; Same; Same; Termination of an employment with out just
cause, not an unlawful practice; Reason.—The confusion arises
over the use of the term “illegal dismissal” which creates the
impression that termination of an employment without just cause
constitutes an offense. It must be noted, however that unlike in
cases of commission of any of the prohibited activities during
strikes or lockouts under Article 265, unfair labor practices under
Articles 248, 249 and 250 and illegal recruitment activities under
Article 38, among others, which the Code itself deelares to be
unlawfai, termination of an employment without just or valid cause
is not categorized as an unlawful practice.
FERNAN, J.:
The issue raised in this petition for certiorari is whether or not an
action for illegal dismissal prescribes in three [3] years pursuant to
Articles 291 and 292 of the Labor Code which provide:
Art. 291. Offenses.— Offenses penalized under this Code and the
rules and regulations issued pursuant thereto shall prescribe in
three [3] years.
xxx xxx xxx
Art. 292. Money Claims. — All money claims arising from
employer-employee relations accruing during the effectivity of this
Code shall be filed within three [3] years from the time the cause of
action accrued; otherwise, they shall be forever barred.
xxx xxx xxx
Petitioner Virgilio Callanta was employed by private respondent
Carnation Philippines, Inc. [Carnation, for brevity] in January 1974
as a salesman in the Agusan del Sur area. Five [51 years later or
on June 1, 1979, respondent Carnation filed with the Regional
Office No. X of the Ministry of Labor and Employment [MOLE], an
application for clearance to terminate the employment of Virgilio
Callanta on the alleged grounds of serious misconduct and
misappropriation of company funds amounting to P12,000.00, more
or less.
Upon approval on June 26, 1979 by MOLE Regional Director
Felizardo G. Baterbonia, of said clearance application, petitioner
Virgilio Callanta's employment with Carnation was terminated
effective June 1, 1979.
On July 5, 1982, Virgilio Callanta filed with the MOLE, Regional
Office No. X, a complaint for illegal dismissal with claims for
reinstatement, backwages, and damages against respondent
Carnation.
In its position paper dated October 5, 1982, respondent Carnation
put in issue the timeliness of petitioner's complaint alleging that the
same is barred by prescription for having been filed more than
three [3] years after the date of Callanta's dismissal.
On March 24, 1983, Labor Arbiter Pedro C. Ramos rendered a
decision finding the termination of Callanta's employment to be
without valid cause. Respondent Carnation was therefore ordered
to reinstate Virgilio Callanta to his former position with backwages
19
of one [1] year without qualification including all fringe benefits
provided for by law and company policy, within ten [10] days from
receipt of the decision. It was likewise provided that failure on the
part of respondent to comply with the decision shall entitle
complainant to full backwages and all fringe benefits without loss of
seniority rights.
On April 18, 1983, respondent Carnation appealed to respondent
National Labor Relations Commission [NLRC] which in a decision
dated February 25, 1985, 1 set aside the decision of the Labor
Arbiter. It declared the complaint for illegal dismissal filed by Virgilio
Callanta to have already prescribed. Thus:
Records show that Virgilio Callanta was dismissed from his
employment with respondent company effective June 1, 1979; and
that on 5 July 1982, he filed the instant complaint against
respondent for: Unlawful Dismissal with Backwages, etc.
The provisions of the Labor Code applicable are:
Art. 291. Offenses. — Offenses penalized under this Code and the
rules and regulations issued pursuant thereto shall prescribe in
three [3] years.
Art. 292. Money claims. — All money claims arising from employer-
employee relations accruing during the effectivity of this Code shall
be filed within three [3] years from the time the cause of action
accrued; otherwise, they shall be forever barred.
Obviously, therefore, the causes of action, i.e., "Unlawful Dismissal"
and "Backwages, etc." have already prescribed, the complaint
therefore having been filed beyond the three-year period from
accrual date.
With this finding, there is no need to discuss the other issues raised
in the appeal.
WHEREFORE, in view of the foregoing, the Decision appealed
from is hereby SET ASIDE and another one entered, dismissing the
complaint.
SO ORDERED.
Hence, this petition, which We gave due course in the resolution
dated September 18, 1985.2
Petitioner contends that since the Labor Code is silent as to the
prescriptive period of an action for illegal dismissal with claims for
reinstatement, backwages and damages, the applicable law, by
way of supplement, is Article 1146 of the New Civil Code which
provides a four [4]-year prescriptive period for an action predicated
upon "an injury to the rights of the plaintiff" considering that an
action for illegal dismissal is neither a "penal offense" nor a mere
"money claim," as contemplated under Articles 291 and 292,
respectively, of the Labor Code. Petitioner further claims that an
action for illegal dismissal is a more serious violation of the rights of
an employee as it deprives him of his means of livelihood; thus, it
should correspondingly have a prescriptive period longer than the
three 13] years provided for in "money claims."
Public respondent, on the other hand, counters with the arguments
that a case for illegal dismissal falls under the general category of
"offenses penalized under this Code and the rules and regulations
pursuant thereto" provided under Article 291 or a money claim
under Article 292, so that petitioner's complaint for illegal dismissal
filed on July 5, 1982, or three [3] years, one [1] month and five [5]
days after his alleged dismissal on June 1, 1979, was filed beyond
the three-year prescriptive period as provided under Articles 291
and 292 of the Labor Code, hence, barred by prescription; that
while it is admittedly a more serious offense as it involves an
employee's means of livelihood, there is no logic in assuming that it
has a longer prescriptive period, as naturally, one who is truly
aggrieved would immediately seek the redress of his grievance;
that assuming arguendo that the law does not provide for a
prescriptive period for the enforcement of petitioner's right, it is
nevertheless beyond dispute that the said right has already lapsed
into a stale demand; and that considering the seriousness of the
act committed by petitioner, private respondent was justified in
terminating the employment.
We find for petitioner.
Verily, the dismissal without just cause of an employee from his
employment constitutes a violation of the Labor Code and its
implementing rules and regulations. Such violation, however, does
not amount to an "offense" as understood under Article 291 of the
Labor Code. In its broad sense, an offense is an illegal act which
does not amount to a crime as defined in the penal law, but which
by statute carries with it a penalty similar to those imposed by law
for the punishment of a crime. 3 It is in this sense that a general
penalty clause is provided under Article 289 of the Labor Code
which provides that "... any violation of the provisions of this code
declared to be unlawful or penal in nature shall be punished with a
fine of not less than One Thousand Pesos [P1,000.00] nor more
than Ten Thousand Pesos [10,000.00], or imprisonment of not less
than three [3] months nor more than three [3] years, or both such
fine and imprisonment at the discretion of the court." [Emphasis
supplied.]
The confusion arises over the use of the term "illegal dismissal"
which creates the impression that termination of an employment
without just cause constitutes an offense. It must be noted,
however that unlike in cases of commission of any of the probihited
activities during strikes or lockouts under Article 265, unfair labor
practices under Article 248, 249 and 250 and illegal recruitment
activities under Article 38, among others, which the Code itself
declares to be unlawful, termination of an employment without just
or valid cause is not categorized as an unlawful practice.
Besides, the reliefs principally sought by an employee who was
illegally dismissed from his employment are reinstatement to his
former position without loss of seniority rights and privileges, if any,
backwages and damages, in case there is bad faith in his
dismissal. As an affirmative relief, reinstatement may be ordered,
with or without backwages. While ordinarily, reinstatement is a
concomitant of backwages, the two are not necessarily
complements, nor is the award of one a condition precedent to an
award of the other. 4 And, in proper cases, backwages may be
awarded without ordering reinstatement . In either case, no penalty
of fine nor improsonment is imposed on the employer upon a
finding of illegality in the dismissal. By the very nature of the reliefs
sought, therefore, an action for illegal dismissal cannot be generally
categorized as an "offense" as used under Article 291 of the Labor
Code, which according to public respondent, must be brought
within the period of three[3] years from the time the cause of action
accrued, otherwise, the same is forever barred.
It is true that the "backwwages" sought by an illegally dismissed
employee may be considered, by reason of its practical effect, as a
"money claim." However, it is not the principal cause of action in an
illegal dismissal case but the unlawful deprivation of the one's
employment committed by the employer in violation of the right of
an employee. Backwages is merely one of the reliefs which an
illegally dismissed employee prays the labor arbiter and the NLRC
to render in his favor as a consequence of the unlawful act
committed by the employer. The award thereof is not private
compensation or damages 5 but is in furtherance and effectuation
of the public objectives of the Labor Code. 6 even though the
practical effect is the enrichment of the individual, the award of
backwages is not inredness of a private right, but, rather, is in the
nature of a command upon the employer to make public reparation
for his violation of the Labor Code. 7
The case of Valencia vs. Cebu Portland Cement, et al., 106 Phil.
732, a 1959 case cited by petitioner, is applicable in the instant
case insofar as it concerns the issue of prescription of actions. In
said case, this Court had occasion to hold that an action for
damages involving a plaintiff seperated from his employment for
alleged unjustifiable causes is one for " injury to the rights of the
plaintiff, and must be brought within four [4] years. 8
In Santos vs. Court of Appeals, 96 SCRA 448 [1980], this Court,
thru then Chief Justice Enrique M. Fernando, sustained the sand of
the Solicitor General that the period of prescription mentioned
under Article 281, now Article 292, of the Labor Code, refers to and
"is limited to money claims, an other cases of injury to rights of a
workingman being governed by the Civil Code." Accordingly, this
Court ruled that petitioner Marciana Santos, who sought
reinstatement, had four [4] years within which to file her complaint
for the injury to her rights as provided under Article 1146 of the Civil
Code.
Indeed there is, merit in the contention of petitioner that the four [4]-
year prescriptive period under Article 1146 of the New Civil Code,
applies by way of supplement, in the instant case, to wit:
Art. 1146. The following actions must be instituted within four years.
[1] Upon an injury to the lights of the plaintiff.
xxx xxx xxx
[Emphasis supplied]
20
As this Court stated in Bondoc us. People's Bank and Trust Co.,9
when a person has no property, his job may possibly be his only
possession or means of livelihood, hence, he should be protected
against any arbitrary and unjust deprivation of his job.
Unemployment, said the Court in Almira vs. B.F. Goodrich
Philippines, 10 brings "untold hardships and sorrows on those
dependent on the wage earners. The misery and pain attendant on
the loss of jobs thus could be avoided if there be acceptance of the
view that under all the circumstances of this case, petitioners
should not be deprived of their means of livelihood."
It is a principle in American jurisprudence which, undoubtedly, is
well-recognized in this jurisdiction that one's employment,
profession, trade or calling is a "property right," and the wrongful
interference therewith is an actionable wrong. 11 The right is
considered to be property within the protection of a constitutional
guaranty of due process of law. 12 Clearly then, when one is
arbitrarily and unjustly deprived of his job or means of livelihood,
the action instituted to contest the legality of one's dismissal from
employment constitutes, in essence, an action predicated "upon an
injury to the rights of the plaintiff," as contemplated under Art. 1146
of the New Civil Code, which must be brought within four [4] years.
In the instant case, the action for illegal dismissal was filed by
petitioners on July 5, 1982, or three [3] years, one [1] month and
five [5] days after the alleged effectivity date of his dismissal on
June 1, 1979 which is well within the four [4]-year prescriptive
period under Article 1146 of the New Civil Code.
Even on the assumption that an action for illegal dismissal falls
under the category of "offenses" or "money claims" under Articles
291 and 292, Labor Code, which provide for a three-year
prescriptive period, still, a strict application of said provisions will
not destroy the enforcement of fundamental rights of the
employees. As a statutory provision on limitations of actions,
Articles 291 and 292 go to matters of remedy and not to the
destruction of fundamental rights.13 As a general rule, a statute of
limitation extinguishes the remedy only. Although the remedy to
enforce a right may be barred, that right may be enforced by some
other available remedy which is not barred. 14
More so, in the instant case, where the delay in filing the case was
with justifiable cause. The threat to petitioner that he would be
charged with estafa if he filed a complaint for illegal dismissal,
which private respondent did after all on June 22, 1981, justifies,
the delayed filing of the action for illegal dismissal with the Regional
Office No. X, MOLE on July 5, 1982. Laches will not in that sense
strengthen the cause of public respondent. Besides, it is deemed
waived as it was never alleged before the Labor Arbiter nor the
NLRC.
Public respondent dismissed the action for illegal dismissal on the
sole issue of prescription of actions. It did not resolve the case of
illegal dismissal on the merits. Nonetheless, to resolve once and for
all the issue of the legality of the dismissal, We find that petitioner,
who has continuously served respondent Carnation for five [5]
years was, under the attendant circumstances, arbitrarily dismissed
from his employment. The alleged shortage in his accountabilities
should have been impartially investigated with all due regard for
due process in view of the admitted enmity between petitioner and
E.L. Corsino, respondent's auditor. 15 Absent such an impartial
investigation, the alleged shortage should not have been attended
with such a drastic consequence as termination of the employment
relationship. Outright dismissal was too severe a penalty for a first
offense, considering that the alleged shortage was explained to
respondent's Auditor, E.L. Corsino, in accordance with
respondent's accounting and auditing policies.
The indecent haste of his dismissal from employment was, in fact,
aggravated by the filing of the estafa charge against petitioner with
the City Fiscal of Butuan City on June 22, 1981, or two [2] years
after his questioned dismissal. After the case had remained
pending for five [5] years, the Regional Trial Court of Agusan del
Norte and Butuan City, Branch V finally dismissed the same
provisionally in an order dated February 21, 1986 for failure of the
prosecution's principal witness to appear in court. Admittedly, loss
of trust and confidence arising from the same alleged misconduct is
sufficient ground for dismissing an employee from his employment
despite the dismissal of the criminal case. 16 However, it must not
be indiscriminately used as a shield to dismiss an employee
arbitrarily. 17 For, who can stop the employer from filing all the
charges in the books for the simple exercise of it, and then hide
behind the pretext of loss of confidence which can be proved by
mere preponderance of evidence.
We grant the petition and the decision of the NLRC is hereby
reversed and set aside. Although We are strongly inclined to affirm
that part of the decision of the Labor Arbiter ordering the
reinstatement of petitioner to his former position without loss of
seniority rights and privileges, a supervening event, which
petitioner mentioned in his motion for early decision dated January
6, 1986 18 that is, FILIPRO, Inc.'s taking over the business of
Carnation, has legally rendered the order of reinstatement difficult
to enforce, unless there is an express agreement on assumption of
liabilities 19 by the purchasing corporation, FILIPRO, Inc. Besides,
there is no law requiring that the purchasing corporation should
absorb the employees of the selling corporation. 20 In any case, the
very concept of social justice dictates that petitioner shall be
entitled to backwages of three [3] years. 21
WHEREFORE, respondent Carnation Philippines, Inc. is hereby
ordered to pay petitioner Virgilio Callanta backwages for three [3]
years without qualification and deduction. This decision is
immediately executory. No costs.
SO ORDERED.

21
G.R. No. 177705 September 18, 2009
KIMBERLY-CLARK PHILIPPINES, INC. Petitioner,
vs.
NORA DIMAYUGA, ROSEMARIE C. GLORIA, and MARICAR C.
DE GUIA, Respondents.
DECISION
CARPIO MORALES, J.:
Respondents were employees of Kimberly-Clark Philippines, Inc.
(petitioner). Nora Dimayuga (Nora) was Cost Accounting
Supervisor, Rosemarie Gloria (Rosemarie) was Business Analyst,
and Maricar de Guia (Maricar) was General Accounting Manager.
On September 19, 2002, Nora tendered her resignation effective
October 21, 2002.1
On October 7, 2002, Rosemarie tendered her resignation, also
effective October 21, 2002.2
As petitioner had been experiencing a downward trend in its sales,
it created a tax-free early retirement package for its employees as
a cost-cutting and streamlining measure. Twenty-four of its
employees availed of the offer that was made available from
November 10-30, 2002.3
Despite their resignation before the early retirement package was
offered, Nora and Rosemarie pleaded with petitioner that they be
retroactively extended the benefits thereunder, to which petitioner
acceded.4 Hence, Nora received a total of ₱1,025,113.73 while
Rosemarie received a total of ₱1,006,493.94, in consideration of
which they executed release and quitclaim deeds dated January
17, 20035 and January 16, 2003,6 respectively.
On November 4, 2002, Maricar tendered her resignation effective
December 1, 2002,7 citing career advancement as the reason
therefor. As at the time of her resignation the early retirement
package was still effective, she received a total of ₱523,540.13 for
which she signed a release and quitclaim.8
On November 28, 2002, petitioner announced that in lieu of the
merit increase which it did not give that year, it would provide
economic assistance, to be released the following day, to all
monthly-paid employees on regular status as of November 16,
2002.
Still later or on January 16, 2003, petitioner announced that it
would the grant a lump sum retirement pay in the amount of
₱200,000, in addition to the early retirement package benefit, to
those who signed up for early retirement and who would sign up
until January 22, 2003.9
On May 23, 2003, respondents filed a Complaint,10 docketed as
NLRC Case No. RAB-IV 5-17522-03-L, before the National Labor
Relations Commission (NLRC) Regional Arbitration Branch No. IV
against petitioner and its Finance Manager Fernando B. Gomez
(Gomez) whom respondents alleged to be "responsible for the
withholding of [their] additional retirement benefits,"11 claiming
entitlement to the ₱200,000 lump sum retirement pay. Respondents
Nora and Rosemarie additionally claimed entitlement to the
economic assistance.
By Decision of August 31, 2004, Labor Arbiter Generoso V. Santos
dismissed the claims of Nora and Rosemarie, holding that they
were not entitled to the ₱200,000 lump sum retirement pay, they
having ceased to be employees of petitioner at the time it was
offered or made effective on January 16, 2003. He, however,
granted Maricar’s claim for the same pay, holding that she was
entitled to it because at the time she resigned from the company
effective December 1, 2002, such pay was already offered.
Besides, the Labor Arbiter ruled, Maricar had a vested right to it as
she was given a formal notice of her entitlement to it by petitioner,
through its Human Resources Director.
On appeal by both parties,12 the NLRC, by Decision13 of November
22, 2005, modified the Labor Arbiters Decision by ordering
petitioner to pay Nora ₱200,000 additional bonus and ₱2,880
economic assistance, and to pay Rosemarie ₱200,000 additional
bonus and ₱2,656 economic assistance. It affirmed Maricar’s
entitlement to the lump sum retirement pay.
Applying the ruling in Businessday Information Systems and
Services, Inc. v. NLRC (Businessday),14 the NLRC ratiocinated that
petitioner’s refusal to give Nora and Rosemarie the lump sum
retirement pay was an act of discrimination, more so because a
certain Oscar Diokno, another employee who presumably resigned
also prior to January 16, 2003, was given said benefit.
22
As to the award of economic assistance, the NLRC held that Nora
and Rosemarie were also entitled to it as the same was given in
lieu of the annual performance-based salary increase that was not
given in 2002 and, therefore, already earned by them when they
resigned. Petitioner’s Motion for Reconsideration15 having been
denied,16 it filed a Petition for Certiorari17 before the Court of
Appeals.
By Decision18 of January 19, 2007, the appellate court affirmed the
NLRC Decision. It held that, contrary to petitioner’s assertion that
the early retirement package was extended to respondents out of
generosity, the offer/grant thereof, as well as their inclusion in the
termination report submitted to the Department of Labor and
Employment, made them "full retirees," hence, they must be given
the other benefits extended to petitioner’s other employees,
following the ruling in Businessday.
The appellate court added that since respondents resigned from
their respective positions barely a month before the effectivity of the
early retirement package, the general principles of fair play and
justice dictate that petitioner extend to them the same benefits in
consideration of their long years of service.
The appellant court, noting that Nora and Rosemarie received
commendable ratings, upheld their entitlement to the economic
assistance as their resignation before the grant of such benefit took
effect did not detract from the fact that it was in substitution of the
traditional merit increase extended by petitioner to its employees
with commendable or outstanding ratings which it failed to give in
2002.
Petitioner’s Motion for Reconsideration19 having been denied,20 it
filed the present petition, insisting that Nora and Rosemarie are no
longer entitled to the economic assistance and lump sum pay
considering that they were already retired and have in fact
executed quitclaims and waivers.
And petitioner questions the application to the present case by the
appellate court of the doctrine laid down in Businessday.
The petition is impressed with merit.
It is settled that entitlement of employees to retirement benefits
must specifically be granted under existing laws, a collective
bargaining agreement or employment contract, or an established
employer policy.21 No law or collective bargaining agreement or
other applicable contract, or an established company policy was
existing during respondents’ employment entitling them to the
₱200,000 lump-sum retirement pay. Petitioner was not thus obliged
to grant them such pay.
Respondents nevertheless argue that since other employees who
resigned before the announcement of the grant of the lump sum
retirement pay received the same, they (respondents) should also
receive it,22 citing the pronouncement in Businessday that:
x x x The law requires an employer to extend equal treatment to its
employees. It may not, in the guise of exercising management
prerogatives, grant greater benefits to some and less to others.
Management prerogatives are not absolute prerogatives but are
subject to legal limits, collective bargaining agreements, or general
principles of fair play and justice.23 (Underscoring supplied)
Respondents’ reliance on Businessday is misplaced. The factual
milieu in Businessday is markedly different from that of the present
case. That case involved the retrenched employees’ separation pay
to which they are entitled under Article 283 of the Labor Code. In
the present case, Nora and Rosemarie resigned prior to petitioner’s
offer of the lump sum retirement pay as an incentive to those
employees who would voluntarily avail of its early retirement
scheme as a cost-cutting and streamlining measure. That
respondents resigned, and not retrenched, is clear from their
respective letters to petitioner. And nowhere in the letters is there
any allegation that they resigned in view of the company’s
downward trend in sales which necessitated downsizing or
streamlining.
The appellate court’s finding that petitioner’s inclusion of Nora and
Rosemarie in the termination report submitted to the DOLE and its
grant to them of the early retirement benefits made them "full
retirees" to thus entitle them to the same benefits offered to those
who would voluntarily resign after November 16, 2003 does not lie.
Petitioner’s claim that it allowed Nora and Rosemarie to avail of the
early retirement package despite their previous separation from the
company out of pure generosity is well-taken in light of Nora’s letter
of September 15, 2002 asking if she could avail of the early
retirement package as "it would certainly be of great assistance to with petitioner, she resigned from employment, citing career
us financially." It is thus absurd to fault petitioner for acceding to advancement as the reason therefor. Indubitably, the incentive was
such a request out of compassion by directing it to pay additional addressed to those employees who, without prior plans of
benefits to resigned employees who are not entitled thereto. resigning, opted to terminate their employment in light of the
1avvphi1 downsizing being undertaken by petitioner. In other words, Maricar
Petitioner’s decision to extend the benefit to some former resigned from petitioner in order to find gainful employment
employees who had already resigned before the offer of the lump elsewhere – a reason which has no bearing on the financial viability
sum pay incentive was thus an act of generosity which it is not of petitioner.
obliged to extend to respondents. Apropos is this Court’s ruling in WHEREFORE, the petition is GRANTED. The Decision and
Businessday: Resolution of the Court of Appeals dated January 19, 2007 and
With regard to the private respondents’ claim for the mid-year April 30, 2007, respectively, are REVERSED and SET ASIDE.
bonus, it is settled doctrine that the grant of a bonus is a NLRC Case No. RAB-IV-17522-03-L is DISMISSED.
prerogative, not an obligation, of the employer. The matter of giving SO ORDERED.
a bonus over and above the worker’s lawful salaries and
allowances is entirely dependent on the financial capability of the
employer to give it. The fact that the company’s business was no
longer profitable (it was in fact moribund) plus the fact that the
private respondents did not work up to the middle of the year (they
were discharged in May 1998) were valid reasons for not granting
them a mid-year bonus. Requiring the company to pay a mid-year
bonus to them also would in effect penalize the company for its
generosity to those workers who remained with the company "till
the end" of its days.24 (Citations omitted) (Emphasis and
underscoring supplied)
Neither are Nora and Rosemarie entitled to the economic
assistance which petitioner awarded to "all monthly employees who
are under regular status as of November 16, 2002," they having
resigned earlier or on October 21, 2002.
Again, contrary to the appellate court’s ruling that Nora and
Rosemarie already earned the economic assistance, the same
having been given in lieu of the performance-based annual salary
increase, the Court finds that the economic assistance was a
bonus over and above the employees’ salaries and allowances. A
perusal of the memorandum regarding the grant of economic
assistance shows that it was granted in lieu of salary increase (the
grant of which depends on petitioner’s financial capability) and that
it was not intended to be a counterpart of the Collective Bargaining
Agreement grant to members of the K-CPI union. The grant of
economic assistance to all monthly employees under regular status
as of November 16, 2002 was thus well within petitioner’s
prerogatives.1avvphi1
Moreover, petitioner’s decision to give economic assistance was
arrived at more than a month after respondents’ resignation and,
therefore, it was a benefit not yet existing at the time of their
separation.
In any event, assuming that Nora and Rosemarie are entitled to the
economic assistance, they had signed release and quitclaim deeds
upon their resignation25 in which they waived x x x any or manner
of action or actions, course or courses of action, suits, debts, dues,
sums of money, accounts, reckonings, promises, damages
(whether actual, moral, nominal, temperate, liquidated or
exemplary), claims and liabilities whatsoever, in law or equity,
arising out or and in connection with, but not limited to claims for
salary, termination pay, vacation leave, overtime, night work,
compensation for injuries or illness directly caused by my
employment or either aggravated by or the results of the nature of
my employment and claims for which I may or shall make, or may
have for or by any reason of any matter, cause or thing whatsoever,
including but not limited to my employment and to matters arising
from my employment by KIMBERLY-CLARK PHILIPPINES, INC.
over any period or periods in the past.26
While quitclaims executed by employees are commonly frowned
upon as being contrary to public policy and are ineffective to bar
claims for the full measure of their legal rights, where the person
making the waiver has done so voluntarily, with a full understanding
thereof, and the consideration for the quitclaim is credible and
reasonable, the transaction must be recognized as being a valid
and binding undertaking.27 In the case at bar, Nora and Rosemarie
are Accounting graduates. They have not alleged having been
compelled to sign the quitclaims, nor that the considerations
thereof (₱1,024,113.73 for Nora and ₱682,721.24 for Rosemarie)
are unconscionable.
As for Maricar’s claim to the lump sum retirement pay, the Court
finds that, like Nora and Rosemarie, she is not entitled to it.
Although the incentive was offered when she was still connected

23
G.R. No. 129076 November 25, 1998
ORLANDO FARMS GROWERS ASSOCIATION/GLICERIO
AÑOVER, petitioner,
vs.
T H E H O N O R A B L E N AT I O N A L L A B O R R E L AT I O N S
COMMISSION (FIFTH DIVISION), ANTONIO PAQUIT, ESTHER
BONGGOT, FRANCISCO BAUG, LEOCADIO ORDONO,
REBECCA MOREN, MARCELINA HONTIVEROS, MARTIN
ORDONO, TITO ORDONO, FE ORDONO, ERNIE COLON,
EUSTIQUIO GELDO, DANNY SAM, JOEL PIAMONTE,
FEDERICO PASTOLERO, VIRGINIA BUSANO, EDILMIRO
ALDION, EUGENIO BETICAN, JR. and BERNARDO OPERIO,
respondents.
ROMERO, J.:
It is a settled doctrine that an employer-employee relationship can
be deduced from the existence of the following elements: (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 principal issue to be resolved in the instant petition is whether
or not an unregistered association may be an employer
independent of the respective members it represents.
The evidence reveals the ensuing facts:
Petitioner Orlando Farms Growers Association, with co-petitioner
Glicerio Añover as its President, is an association of landowners
engaged in the production of export quality bananas located in
Kinamayan, Sto. Tomas, Davao del Norte, established for the sole
purpose of dealing collectively with Stanfilco on matters concerning
technical services, canal maintenance, irrigation and pest control,
among others. Respondents, on the other hand, were hired as farm
workers by several member-landowners but; nonetheless, were
made to perform functions as packers and harvesters in the
plantation of petitioner association.
After respondents were dismissed on various dates from January
8, 1993 to July 30, 1994, several complaints were filed against
petitioner for illegal dismissal and monetary benefits. Based on
similar grounds, the same were consolidated in the office of Labor
Arbiter Newton R. Sancho who, in a decision dated September 6,
1995, ordered their reinstatement, viz:
WHEREFORE, judgment is hereby rendered declaring the
dismissal of the 20 above-named complainants ILLEGAL, and
ordering respondents Orlando Farms Growers Association/Glicerio
Anover to REINSTATE them immediately to their former or
equivalent positions, and to PAY individual complainants their
respective backwages and other benefits (wage differentials, 13th
month pay and holiday pay) appearing opposite their names above
set forth, including moral damages and attorney's fees, in the total
amount of P1,047,720.92 only.
All other claims are dismissed for lack of merit.
As becoming a collective association, respondents liabilities to
complainants are joint and solidary, with its responsible officers.
The case of Loran Paquit and Lovilla Dorlones1 is dropped for
having been amicably settled.
In case of appeal, backwages and other benefits shall accrue but in
no case exceeding 3 years, without any qualification or deduction.
SO ORDERED. 2
On appeal, the National Labor Relations Commission (NLRC)
affirmed the same in toto in a decision dated December 26, 1996.
Its motion for reconsideration having been denied on February 25,
1997, petitioner filed the instant petition for certiorari.
Petitioner alleged that the NLRC erred in finding that respondents
were its employees and not of the individual landowners which fact
can easily be deduced from the payments made by the latter of
respondent's Social Security System (SSS) contributions.
Moreover, it could have never exercised the power of control over
them with regard to the manner and method by which the work was
to be accomplished, which authority remain vested with the
landowners despite becoming members thereof.
The arguments adduced before us do not warrant the nullification
of the findings made by the Labor Arbiter and the NLRC as the
determination of the existence of an employer-employee
relationship between the party-litigants, being a question of fact, is
amply supported by substantial evidence, as can be gathered from
a perfunctory reading, not only of the pleadings submitted, but from
24
the assailed decision, as well. Thus, the authority of this Court to
review the findings of the NLRC is limited to allegations of lack of
jurisdiction or grave abuse of discretion.
The contention that petitioner, being an unregistered association
and having been formed solely to serve as an effective medium for
dealing collectively with Stanfilco, does not exist in law and,
therefore, cannot be considered an employer, is misleading. This
assertion can easily be dismissed by reference to Article 212 (e) of
the Labor Code, as amended, which defines an employer as any
person acting in the interest of an employer, directly or indirectly.
Following a careful scrutiny of the said provision, the Court
concludes that the law does not require an employer to be
registered before he may come within the purview of the Labor
Code, consistent with the established rule in statutory construction
that when the law does not distinguish, we should not distinguish.
To do otherwise would bring about a situation whereby employees
are denied, not only redress of their grievances, but, more
importantly, the protection and benefits accorded to them by law if
their employer happens to be an unregistered association.
To reiterate, as held in the case of Filipinas Broadcasting Network,
Inc. v. NLRC, 3 the following are generally considered in the
determination of the existence of an employer-employee
relationship; (1) the manner of selection and engagement; (2) the
payment of wages; (3) the presence or absence of the power of
dismissal; and (4) the presence or absence of the power of control;
of these four, the last one being the most important.
In the instant case, the following circumstances which support the
existence of employer-employee relations cannot be denied.
During the subsistence of the association, several circulars and
memoranda were issued concerning, among other things,
absences without formal request, loitering in the work area and
disciplinary measures with which every worker is enjoined to
comply. Furthermore, the employees were issued identification
cards which the Court, in the case of Domasig v. NLRC,4
construed, not only as a security measure but mainly to
identify the holder as a bonafide employee of the firm.
However, what makes the relationship explicit is the power of
the petitioner to enter into compromise agreements involving
money claims filed by three of its employees, namely: Lorna
Paquit, Lovella Dorlones and Jasmine Espanola. If petitioner's
disclaimer were to be believed, what benefit would accrue to it
in settling an employer-employee dispute to which it allegedly
lay no claim?
In spite of the overwhelming evidence sufficient to justify a
conclusion that respondents were indeed employees of
petitioner, the latter, nevertheless, maintain the preposterous
claim that the ID card, circulars and memoranda were issued
merely to facilitate the efficient use of common resources, as
well as to promote uniform rules in the work establishment.
On this score, we defer to the observations made by the NLRC
when it ruled that, while the original purpose of the formation
of the association was merely to provide the landowners a
unified voice in dealing with Stanfilco, petitioner however
exceeded its avowed intentions when its subsequent actions
reenforced only too clearly its admitted role of employer. As
reiterated all too often, factual findings of the NLRC,
particularly when they coincide with those of the Labor
Arbiter, are accorded respect, even finality, and will not be
disturbed for as long as such findings are supported by
substantial evidence. 5
Prescinding from the foregoing, we now address the issue of
whether or not petitioner had a valid ground to dismiss
respondents from their respective employment.
It is settled that in termination disputes, the employer bears
the burden of proving that the dismissal is for just cause,
failing which it would mean that the dismissal is not justified
and the employer is entitled to reinstatement.6 The dismissal
of employees must be made within the parameters of the law
and pursuant to the basic tenets of equity, justice and fair play.
7 In Brahm Industries, Inc. v. NLRC,8 the Court explained that
there are two (2) facets of valid termination of employment; (a)
the legality of the act of dismissal, i.e., the dismissal must be
under any of the just causes provided under Art. 2829 of the
Labor Code; and (b) the legality of the manner of dismissal,
which means that there must be observance of the
requirements of due process, otherwise known as the two-
notice rule. Thus, "the employer is required to furnish the
employee with a written notice containing a statement of the
cause for termination and to afford said employee ample
opportunity to be heard and to defend himself with the
assistance of his representative, if he so desires. The
employer is also required to notify the worker in writing of the
decision to dismiss him, stating clearly the reasons therefore."
10

In the instant case, petitioner severed employment relations

when it whimsically dismissed the respondents in utter
disregard of the safeguards underscored in the Constitution,
as well as in the Labor Code. Petitioner failed to controvert the
allegation that it was responsible for the dismissal of the
employees. Instead of denying the same or otherwise imputing
liability on its member-landowner by naming the employees
allegedly in his employ, petitioner was silent on the issue and
harped on the non-existence of employer-employee
relationship between the parties, which contention we find to
be tangential. However related the issue might seem, it would
have been more relevant for the petitioner to have presented
ample evidence before the NLRC and this Court to justify its
exoneration from liability. Having failed in this respect, we
deem it fatal to its defense.
For having been dismissed without a valid cause and for non-
observance of the due process requirement, respondents,
consistent with recent jurisprudence laid down in the case of
Bustamante v. NLRC, 11 are entitled to receive full backwages
from the date of their dismissal up to the time of their
reinstatement. The order, therefore, of the labor arbiter limiting
backwages to a period of three (3) years in the event of an
appeal, is erroneous.
WHEREFORE, in view of the foregoing, the petition is hereby
DISMISSED and the decision of the National Labor Relations
Commission dated September 6, 1995 is AFFIRMED subject to
the deletion of the award of moral damages and attorney's
fees. The Court, however, is remanding this case to Labor
Arbiter Newton R. Sancho to specify in the dispositive portion
of his decision the names of the respondents and the amount
that each is entitled to.
SO ORDERED.

25
G.R. No. 138051 June 10, 2004
JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on certiorari1 assailing the
26 March 1999 Decision2 of the Court of Appeals in CA-G.R. SP
No. 49190 dismissing the petition filed by Jose Y. Sonza
("SONZA"). The Court of Appeals affirmed the findings of the
National Labor Relations Commission ("NLRC"), which affirmed the
Labor Arbiter’s dismissal of the case for lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation
("ABS-CBN") signed an Agreement ("Agreement") with the Mel and
Jay Management and Development Corporation ("MJMDC"). ABS-
CBN was represented by its corporate officers while MJMDC was
represented by SONZA, as President and General Manager, and
Carmela Tiangco ("TIANGCO"), as EVP and Treasurer. Referred to
in the Agreement as "AGENT," MJMDC agreed to provide SONZA’s
services exclusively to ABS-CBN as talent for radio and television.
The Agreement listed the services SONZA would render to ABS-
CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m.,
Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m.,
Sundays.3
ABS-CBN agreed to pay for SONZA’s services a monthly talent fee
of ₱310,000 for the first year and ₱317,000 for the second and
third year of the Agreement. ABS-CBN would pay the talent fees on
the 10th and 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBN’s President,
Eugenio Lopez III, which reads:
Dear Mr. Lopez,
We would like to call your attention to the Agreement dated May
1994 entered into by your goodself on behalf of ABS-CBN with our
company relative to our talent JOSE Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of
recent events concerning his programs and career. We consider
these acts of the station violative of the Agreement and the station
as in breach thereof. In this connection, we hereby serve notice of
rescission of said Agreement at our instance effective as of date.
Mr. Sonza informed us that he is waiving and renouncing recovery
of the remaining amount stipulated in paragraph 7 of the
Agreement but reserves the right to seek recovery of the other
benefits under said Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.)
JOSE Y. SONZA
President and Gen. Manager4
On 30 April 1996, SONZA filed a complaint against ABS-CBN
before the Department of Labor and Employment, National Capital
Region in Quezon City. SONZA complained that ABS-CBN did not
pay his salaries, separation pay, service incentive leave pay, 13th
month pay, signing bonus, travel allowance and amounts due under
the Employees Stock Option Plan ("ESOP").
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground
that no employer-employee relationship existed between the
parties. SONZA filed an Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZA’s monthly talent
fees through his account at PCIBank, Quezon Avenue Branch,
Quezon City. In July 1996, ABS-CBN opened a new account with
the same bank where ABS-CBN deposited SONZA’s talent fees
and other payments due him under the Agreement.
In his Order dated 2 December 1996, the Labor Arbiter5 denied the
motion to dismiss and directed the parties to file their respective
position papers. The Labor Arbiter ruled:
In this instant case, complainant for having invoked a claim that he
was an employee of respondent company until April 15, 1996 and
that he was not paid certain claims, it is sufficient enough as to
confer jurisdiction over the instant case in this Office. And as to
whether or not such claim would entitle complainant to recover
upon the causes of action asserted is a matter to be resolved only
26
after and as a result of a hearing. Thus, the respondent’s plea of
lack of employer-employee relationship may be pleaded only as a
matter of defense. It behooves upon it the duty to prove that there
really is no employer-employee relationship between it and the
complainant.
The Labor Arbiter then considered the case submitted for
resolution. The parties submitted their position papers on 24
February 1997.
On 11 March 1997, SONZA filed a Reply to Respondent’s Position
Paper with Motion to Expunge Respondent’s Annex 4 and Annex 5
from the Records. Annexes 4 and 5 are affidavits of ABS-CBN’s
witnesses Soccoro Vidanes and Rolando V. Cruz. These witnesses
stated in their affidavits that the prevailing practice in the television
and broadcast industry is to treat talents like SONZA as
independent contractors.
The Labor Arbiter rendered his Decision dated 8 July 1997
dismissing the complaint for lack of jurisdiction.6 The pertinent parts
of the decision read as follows:
xxx
While Philippine jurisprudence has not yet, with certainty, touched
on the "true nature of the contract of a talent," it stands to reason
that a "talent" as above-described cannot be considered as an
employee by reason of the peculiar circumstances surrounding the
engagement of his services.
It must be noted that complainant was engaged by respondent
by reason of his peculiar skills and talent as a TV host and a
radio broadcaster. Unlike an ordinary employee, he was free to
perform the services he undertook to render in accordance
with his own style. The benefits conferred to complainant under
the May 1994 Agreement are certainly very much higher than those
generally given to employees. For one, complainant Sonza’s
monthly talent fees amount to a staggering ₱317,000. Moreover,
his engagement as a talent was covered by a specific contract.
Likewise, he was not bound to render eight (8) hours of work per
day as he worked only for such number of hours as may be
necessary.
The fact that per the May 1994 Agreement complainant was
accorded some benefits normally given to an employee is
inconsequential. Whatever benefits complainant enjoyed arose
from specific agreement by the parties and not by reason of
employer-employee relationship. As correctly put by the
respondent, "All these benefits are merely talent fees and other
contractual benefits and should not be deemed as ‘salaries, wages
and/or other remuneration’ accorded to an employee,
notwithstanding the nomenclature appended to these benefits.
Apropos to this is the rule that the term or nomenclature given to a
stipulated benefit is not controlling, but the intent of the parties to
the Agreement conferring such benefit."
The fact that complainant was made subject to respondent’s
Rules and Regulations, likewise, does not detract from the
absence of employer-employee relationship. As held by the
Supreme Court, "The line should be drawn between rules that
merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to
be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such
means. The first, which aim only to promote the result, create no
employer-employee relationship unlike the second, which address
both the result and the means to achieve it." (Insular Life
Assurance Co., Ltd. vs. NLRC, et al., G.R. No. 84484, November
15, 1989).
x x x (Emphasis supplied)7
SONZA appealed to the NLRC. On 24 February 1998, the NLRC
rendered a Decision affirming the Labor Arbiter’s decision. SONZA
filed a motion for reconsideration, which the NLRC denied in its
Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari
before the Court of Appeals assailing the decision and resolution of
the NLRC. On 26 March 1999, the Court of Appeals rendered a
Decision dismissing the case.8
Hence, this petition.
The Rulings of the NLRC and Court of Appeals
The Court of Appeals affirmed the NLRC’s finding that no
employer-employee relationship existed between SONZA and ABS-
CBN. Adopting the NLRC’s decision, the appellate court quoted the
following findings of the NLRC:
x x x the May 1994 Agreement will readily reveal that MJMDC
entered into the contract merely as an agent of complainant Sonza,
the principal. By all indication and as the law puts it, the act of the
agent is the act of the principal itself. This fact is made particularly
true in this case, as admittedly MJMDC ‘is a management company
devoted exclusively to managing the careers of Mr. Sonza and his
broadcast partner, Mrs. Carmela C. Tiangco.’ (Opposition to Motion
to Dismiss)
Clearly, the relations of principal and agent only accrues between
complainant Sonza and MJMDC, and not between ABS-CBN and
MJMDC. This is clear from the provisions of the May 1994
Agreement which specifically referred to MJMDC as the ‘AGENT’.
As a matter of fact, when complainant herein unilaterally rescinded
said May 1994 Agreement, it was MJMDC which issued the notice
of rescission in behalf of Mr. Sonza, who himself signed the same
in his capacity as President.
Moreover, previous contracts between Mr. Sonza and ABS-CBN
reveal the fact that historically, the parties to the said agreements
are ABS-CBN and Mr. Sonza. And it is only in the May 1994
Agreement, which is the latest Agreement executed between ABS-
CBN and Mr. Sonza, that MJMDC figured in the said Agreement as
the agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is a mere ‘labor-only’
contractor of ABS-CBN such that there exist[s] employer-employee
relationship between the latter and Mr. Sonza. On the contrary, We
find it indubitable, that MJMDC is an agent, not of ABS-CBN, but of
the talent/contractor Mr. Sonza, as expressly admitted by the latter
and MJMDC in the May 1994 Agreement.
It may not be amiss to state that jurisdiction over the instant
controversy indeed belongs to the regular courts, the same being in
the nature of an action for alleged breach of contractual obligation
on the part of respondent-appellee. As squarely apparent from
complainant-appellant’s Position Paper, his claims for
compensation for services, ‘13th month pay’, signing bonus and
travel allowance against respondent-appellee are not based on the
Labor Code but rather on the provisions of the May 1994
Agreement, while his claims for proceeds under Stock Purchase
Agreement are based on the latter. A portion of the Position Paper
of complainant-appellant bears perusal:
‘Under [the May 1994 Agreement] with respondent ABS-CBN, the
latter contractually bound itself to pay complainant a signing bonus
consisting of shares of stocks…with FIVE HUNDRED THOUSAND
PESOS (₱500,000.00).
Similarly, complainant is also entitled to be paid 13th month pay
based on an amount not lower than the amount he was receiving
prior to effectivity of (the) Agreement’.
Under paragraph 9 of (the May 1994 Agreement), complainant is
entitled to a commutable travel benefit amounting to at least One
Hundred Fifty Thousand Pesos (₱150,000.00) per year.’
Thus, it is precisely because of complainant-appellant’s own
recognition of the fact that his contractual relations with ABS-CBN
are founded on the New Civil Code, rather than the Labor Code,
that instead of merely resigning from ABS-CBN, complainant-
appellant served upon the latter a ‘notice of rescission’ of
Agreement with the station, per his letter dated April 1, 1996, which
asserted that instead of referring to unpaid employee benefits, ‘he
is waiving and renouncing recovery of the remaining amount
stipulated in paragraph 7 of the Agreement but reserves the right to
such recovery of the other benefits under said Agreement.’ (Annex
3 of the respondent ABS-CBN’s Motion to Dismiss dated July 10,
1996).
Evidently, it is precisely by reason of the alleged violation of the
May 1994 Agreement and/or the Stock Purchase Agreement by
respondent-appellee that complainant-appellant filed his complaint.
Complainant-appellant’s claims being anchored on the alleged
breach of contract on the part of respondent-appellee, the same
can be resolved by reference to civil law and not to labor law.
Consequently, they are within the realm of civil law and, thus, lie
with the regular courts. As held in the case of Dai-Chi Electronics
Manufacturing vs. Villarama, 238 SCRA 267, 21 November 1994,
an action for breach of contractual obligation is intrinsically a
civil dispute.9 (Emphasis supplied)
27
The Court of Appeals ruled that the existence of an employer-
employee relationship between SONZA and ABS-CBN is a factual
question that is within the jurisdiction of the NLRC to resolve.10 A
special civil action for certiorari extends only to issues of want or
excess of jurisdiction of the NLRC.11 Such action cannot cover an
inquiry into the correctness of the evaluation of the evidence which
served as basis of the NLRC’s conclusion.12 The Court of Appeals
added that it could not re-examine the parties’ evidence and
substitute the factual findings of the NLRC with its own.13
The Issue
In assailing the decision of the Court of Appeals, SONZA contends
that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING
THE NLRC’S DECISION AND REFUSING TO FIND THAT AN
EMPLOYER-EMPLOYEE RELATIONSHIP EXISTED BETWEEN
SONZA AND ABS-CBN, DESPITE THE WEIGHT OF
CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO
SUPPORT SUCH A FINDING.14
The Court’s Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the decision of
the Court of Appeals affirming the NLRC ruling which upheld the
Labor Arbiter’s dismissal of the case for lack of jurisdiction.
The present controversy is one of first impression. Although
Philippine labor laws and jurisprudence define clearly the elements
of an employer-employee relationship, this is the first time that the
Court will resolve the nature of the relationship between a
television and radio station and one of its "talents." There is no
case law stating that a radio and television program host is an
employee of the broadcast station.
The instant case involves big names in the broadcast industry,
namely Jose "Jay" Sonza, a known television and radio personality,
and ABS-CBN, one of the biggest television and radio networks in
the country.
SONZA contends that the Labor Arbiter has jurisdiction over the
case because he was an employee of ABS-CBN. On the other
hand, ABS-CBN insists that the Labor Arbiter has no jurisdiction
because SONZA was an independent contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship is a question
of fact. Appellate courts accord the factual findings of the Labor
Arbiter and the NLRC not only respect but also finality when
supported by substantial evidence.15 Substantial evidence means
such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.16 A party cannot prove the
absence of substantial evidence by simply pointing out that there is
contrary evidence on record, direct or circumstantial. The Court
does not substitute its own judgment for that of the tribunal in
determining where the weight of evidence lies or what evidence is
credible.17
SONZA maintains that all essential elements of an employer-
employee relationship are present in this case. Case law has
consistently held that the elements of an employer-employee
relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal;
and (d) the employer’s power to control the employee on the
means and methods by which the work is accomplished.18 The last
element, the so-called "control test", is the most important
element.19
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its television and
radio programs because of SONZA’s peculiar skills, talent and
celebrity status. SONZA contends that the "discretion used by
respondent in specifically selecting and hiring complainant over
other broadcasters of possibly similar experience and qualification
as complainant belies respondent’s claim of independent
contractorship."
Independent contractors often present themselves to possess
unique skills, expertise or talent to distinguish them from ordinary
employees. The specific selection and hiring of SONZA, because
of his unique skills, talent and celebrity status not possessed
by ordinary employees, is a circumstance indicative, but not
conclusive, of an independent contractual relationship. If SONZA
did not possess such unique skills, talent and celebrity status, ABS-
CBN would not have entered into the Agreement with SONZA but
would have hired him through its personnel department just like
any other employee.
In any event, the method of selecting and engaging SONZA does
not conclusively determine his status. We must consider all the
circumstances of the relationship, with the control test being the
most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part
of his fees going to MJMDC. SONZA asserts that this mode of fee
payment shows that he was an employee of ABS-CBN. SONZA
also points out that ABS-CBN granted him benefits and privileges
"which he would not have enjoyed if he were truly the subject of a
valid job contract."
All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBN’s
employee, there would be no need for the parties to stipulate on
benefits such as "SSS, Medicare, x x x and 13th month pay"20
which the law automatically incorporates into every employer-
employee contract.21 Whatever benefits SONZA enjoyed arose
from contract and not because of an employer-employee
relationship.22
SONZA’s talent fees, amounting to ₱317,000 monthly in the second
and third year, are so huge and out of the ordinary that they
indicate more an independent contractual relationship rather than
an employer-employee relationship. ABS-CBN agreed to pay
SONZA such huge talent fees precisely because of SONZA’s
unique skills, talent and celebrity status not possessed by ordinary
employees. Obviously, SONZA acting alone possessed enough
bargaining power to demand and receive such huge talent fees for
his services. The power to bargain talent fees way above the salary
scales of ordinary employees is a circumstance indicative, but not
conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC
does not negate the status of SONZA as an independent
contractor. The parties expressly agreed on such mode of payment.
Under the Agreement, MJMDC is the AGENT of SONZA, to whom
MJMDC would have to turn over any talent fee accruing under the
Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may
terminate their relationship. SONZA failed to show that ABS-CBN
could terminate his services on grounds other than breach of
contract, such as retrenchment to prevent losses as provided under
labor laws.23
During the life of the Agreement, ABS-CBN agreed to pay SONZA’s
talent fees as long as "AGENT and Jay Sonza shall faithfully and
completely perform each condition of this Agreement."24 Even if it
suffered severe business losses, ABS-CBN could not retrench
SONZA because ABS-CBN remained obligated to pay SONZA’s
talent fees during the life of the Agreement. This circumstance
indicates an independent contractual relationship between SONZA
and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his
programs, ABS-CBN still paid him his talent fees. Plainly, ABS-CBN
adhered to its undertaking in the Agreement to continue paying
SONZA’s talent fees during the remaining life of the Agreement
even if ABS-CBN cancelled SONZA’s programs through no fault of
SONZA.25
SONZA assails the Labor Arbiter’s interpretation of his rescission of
the Agreement as an admission that he is not an employee of ABS-
CBN. The Labor Arbiter stated that "if it were true that complainant
was really an employee, he would merely resign, instead." SONZA
did actually resign from ABS-CBN but he also, as president of
MJMDC, rescinded the Agreement. SONZA’s letter clearly bears
this out.26 However, the manner by which SONZA terminated his
relationship with ABS-CBN is immaterial. Whether SONZA
rescinded the Agreement or resigned from work does not
determine his status as employee or independent contractor.
D. Power of Control
Since there is no local precedent on whether a radio and television
program host is an employee or an independent contractor, we
refer to foreign case law in analyzing the present case. The United
States Court of Appeals, First Circuit, recently held in Alberty-
Vélez v. Corporación De Puerto Rico Para La Difusión Pública
28
("WIPR")27 that a television program host is an independent
contractor. We quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an independent
contractor. First, a television actress is a skilled position
requiring talent and training not available on-the-job. x x x In
this regard, Alberty possesses a master’s degree in public
communications and journalism; is trained in dance, singing, and
modeling; taught with the drama department at the University of
Puerto Rico; and acted in several theater and television
productions prior to her affiliation with "Desde Mi Pueblo." Second,
Alberty provided the "tools and instrumentalities" necessary
for her to perform. Specifically, she provided, or obtained
sponsors to provide, the costumes, jewelry, and other image-
related supplies and services necessary for her appearance.
Alberty disputes that this factor favors independent contractor
status because WIPR provided the "equipment necessary to tape
the show." Alberty’s argument is misplaced. The equipment
necessary for Alberty to conduct her job as host of "Desde Mi
Pueblo" related to her appearance on the show. Others provided
equipment for filming and producing the show, but these were not
the primary tools that Alberty used to perform her particular
function. If we accepted this argument, independent contractors
could never work on collaborative projects because other
individuals often provide the equipment required for different
aspects of the collaboration. x x x
Third, WIPR could not assign Alberty work in addition to
filming "Desde Mi Pueblo." Alberty’s contracts with WIPR
specifically provided that WIPR hired her "professional services as
Hostess for the Program Desde Mi Pueblo." There is no evidence
that WIPR assigned Alberty tasks in addition to work related to
these tapings. x x x28 (Emphasis supplied)
Applying the control test to the present case, we find that SONZA
is not an employee but an independent contractor. The control test
is the most important test our courts apply in distinguishing an
employee from an independent contractor.29 This test is based on
the extent of control the hirer exercises over a worker. The greater
the supervision and control the hirer exercises, the more likely the
worker is deemed an employee. The converse holds true as well –
the less control the hirer exercises, the more likely the worker is
considered an independent contractor.30
First, SONZA contends that ABS-CBN exercised control over the
means and methods of his work.
SONZA’s argument is misplaced. ABS-CBN engaged SONZA’s
services specifically to co-host the "Mel & Jay" programs. ABS-
CBN did not assign any other work to SONZA. To perform his work,
SONZA only needed his skills and talent. How SONZA delivered
his lines, appeared on television, and sounded on radio were
outside ABS-CBN’s control. SONZA did not have to render eight
hours of work per day. The Agreement required SONZA to attend
only rehearsals and tapings of the shows, as well as pre- and post-
production staff meetings.31 ABS-CBN could not dictate the
contents of SONZA’s script. However, the Agreement prohibited
SONZA from criticizing in his shows ABS-CBN or its interests.32
The clear implication is that SONZA had a free hand on what to say
or discuss in his shows provided he did not attack ABS-CBN or its
interests.
We find that ABS-CBN was not involved in the actual performance
that produced the finished product of SONZA’s work.33 ABS-CBN
did not instruct SONZA how to perform his job. ABS-CBN merely
reserved the right to modify the program format and airtime
schedule "for more effective programming."34 ABS-CBN’s sole
concern was the quality of the shows and their standing in the
ratings. Clearly, ABS-CBN did not exercise control over the means
and methods of performance of SONZA’s work.
SONZA claims that ABS-CBN’s power not to broadcast his shows
proves ABS-CBN’s power over the means and methods of the
performance of his work. Although ABS-CBN did have the option
not to broadcast SONZA’s show, ABS-CBN was still obligated to
pay SONZA’s talent fees... Thus, even if ABS-CBN was completely
dissatisfied with the means and methods of SONZA’s performance
of his work, or even with the quality or product of his work, ABS-
CBN could not dismiss or even discipline SONZA. All that ABS-
CBN could do is not to broadcast SONZA’s show but ABS-CBN
must still pay his talent fees in full.35
Clearly, ABS-CBN’s right not to broadcast SONZA’s show,
burdened as it was by the obligation to continue paying in full
SONZA’s talent fees, did not amount to control over the means and
methods of the performance of SONZA’s work. ABS-CBN could not
terminate or discipline SONZA even if the means and methods of
performance of his work - how he delivered his lines and appeared
on television - did not meet ABS-CBN’s approval. This proves that
ABS-CBN’s control was limited only to the result of SONZA’s work,
whether to broadcast the final product or not. In either case, ABS-
CBN must still pay SONZA’s talent fees in full until the expiry of the
Agreement.
In Vaughan, et al. v. Warner, et al.,36 the United States Circuit
Court of Appeals ruled that vaudeville performers were
independent contractors although the management reserved the
right to delete objectionable features in their shows. Since the
management did not have control over the manner of performance
of the skills of the artists, it could only control the result of the work
by deleting objectionable features.37
SONZA further contends that ABS-CBN exercised control over his
work by supplying all equipment and crew. No doubt, ABS-CBN
supplied the equipment, crew and airtime needed to broadcast the
"Mel & Jay" programs. However, the equipment, crew and airtime
are not the "tools and instrumentalities" SONZA needed to perform
his job. What SONZA principally needed were his talent or skills
and the costumes necessary for his appearance.38 Even though
ABS-CBN provided SONZA with the place of work and the
necessary equipment, SONZA was still an independent contractor
since ABS-CBN did not supervise and control his work. ABS-CBN’s
sole concern was for SONZA to display his talent during the airing
of the programs.39
A radio broadcast specialist who works under minimal supervision
is an independent contractor.40 SONZA’s work as television and
radio program host required special skills and talent, which SONZA
admittedly possesses. The records do not show that ABS-CBN
exercised any supervision and control over how SONZA utilized his
skills and talent in his shows.
Second, SONZA urges us to rule that he was ABS-CBN’s employee
because ABS-CBN subjected him to its rules and standards of
performance. SONZA claims that this indicates ABS-CBN’s control
"not only [over] his manner of work but also the quality of his work."
The Agreement stipulates that SONZA shall abide with the rules
and standards of performance "covering talents"41 of ABS-CBN.
The Agreement does not require SONZA to comply with the rules
and standards of performance prescribed for employees of ABS-
CBN. The code of conduct imposed on SONZA under the
Agreement refers to the "Television and Radio Code of the
Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been
adopted by the COMPANY (ABS-CBN) as its Code of Ethics."42
The KBP code applies to broadcasters, not to employees of radio
and television stations. Broadcasters are not necessarily
employees of radio and television stations. Clearly, the rules and
standards of performance referred to in the Agreement are those
applicable to talents and not to employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired
party indicate that the latter is an employee of the former.43 In this
case, SONZA failed to show that these rules controlled his
performance. We find that these general rules are merely
guidelines towards the achievement of the mutually desired result,
which are top-rating television and radio programs that comply with
standards of the industry. We have ruled that:
Further, not every form of control that a party reserves to himself
over the conduct of the other party in relation to the services being
rendered may be accorded the effect of establishing an employer-
employee relationship. The facts of this case fall squarely with the
case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case, we
held that:
Logically, the line should be drawn between rules that merely serve
as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which
aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and
the means used to achieve it.44
29
The Vaughan case also held that one could still be an independent
contractor although the hirer reserved certain supervision to insure
the attainment of the desired result. The hirer, however, must not
deprive the one hired from performing his services according to his
own initiative.45
Lastly, SONZA insists that the "exclusivity clause" in the Agreement
is the most extreme form of control which ABS-CBN exercised over
him.
This argument is futile. Being an exclusive talent does not by itself
mean that SONZA is an employee of ABS-CBN. Even an
independent contractor can validly provide his services exclusively
to the hiring party. In the broadcast industry, exclusivity is not
necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted
practice in the entertainment industry.46 This practice is not
designed to control the means and methods of work of the talent,
but simply to protect the investment of the broadcast station. The
broadcast station normally spends substantial amounts of money,
time and effort "in building up its talents as well as the programs
they appear in and thus expects that said talents remain exclusive
with the station for a commensurate period of time."47 Normally, a
much higher fee is paid to talents who agree to work exclusively for
a particular radio or television station. In short, the huge talent fees
partially compensates for exclusivity, as in the present case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiter’s finding that he is a talent of
MJMDC, which contracted out his services to ABS-CBN. The Labor
Arbiter ruled that as a talent of MJMDC, SONZA is not an
employee of ABS-CBN. SONZA insists that MJMDC is a "labor-
only" contractor and ABS-CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the
"labor-only" contractor; (2) the employee who is ostensibly under
the employ of the "labor-only" contractor; and (3) the principal who
is deemed the real employer. Under this scheme, the "labor-only"
contractor is the agent of the principal. The law makes the
principal responsible to the employees of the "labor-only contractor"
as if the principal itself directly hired or employed the employees.48
These circumstances are not present in this case.
There are essentially only two parties involved under the
Agreement, namely, SONZA and ABS-CBN. MJMDC merely acted
as SONZA’s agent. The Agreement expressly states that MJMDC
acted as the "AGENT" of SONZA. The records do not show that
MJMDC acted as ABS-CBN’s agent. MJMDC, which stands for Mel
and Jay Management and Development Corporation, is a
corporation organized and owned by SONZA and TIANGCO. The
President and General Manager of MJMDC is SONZA himself. It is
absurd to hold that MJMDC, which is owned, controlled, headed
and managed by SONZA, acted as agent of ABS-CBN in entering
into the Agreement with SONZA, who himself is represented by
MJMDC. That would make MJMDC the agent of both ABS-CBN
and SONZA.
As SONZA admits, MJMDC is a management company devoted
exclusively to managing the careers of SONZA and his broadcast
partner, TIANGCO. MJMDC is not engaged in any other business,
not even job contracting. MJMDC does not have any other function
apart from acting as agent of SONZA or TIANGCO to promote their
careers in the broadcast and television industry.49
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued by then
Minister of Labor Blas Ople on 8 January 1979 finally settled the
status of workers in the broadcast industry. Under this policy, the
types of employees in the broadcast industry are the station and
program employees.
Policy Instruction No. 40 is a mere executive issuance which does
not have the force and effect of law. There is no legal presumption
that Policy Instruction No. 40 determines SONZA’s status. A mere
executive issuance cannot exclude independent contractors from
the class of service providers to the broadcast industry. The
classification of workers in the broadcast industry into only two
groups under Policy Instruction No. 40 is not binding on this Court,
especially when the classification has no basis either in law or in
fact.
Affidavits of ABS-CBN’s Witnesses
SONZA also faults the Labor Arbiter for admitting the affidavits of
Socorro Vidanes and Rolando Cruz without giving his counsel the
opportunity to cross-examine these witnesses. SONZA brands SONZA seeks the recovery of allegedly unpaid talent fees, 13th
these witnesses as incompetent to attest on the prevailing practice month pay, separation pay, service incentive leave, signing bonus,
in the radio and television industry. SONZA views the affidavits of travel allowance, and amounts due under the Employee Stock
these witnesses as misleading and irrelevant. Option Plan. We agree with the findings of the Labor Arbiter and
While SONZA failed to cross-examine ABS-CBN’s witnesses, he the Court of Appeals that SONZA’s claims are all based on the
was never prevented from denying or refuting the allegations in the May 1994 Agreement and stock option plan, and not on the
affidavits. The Labor Arbiter has the discretion whether to conduct a Labor Code. Clearly, the present case does not call for an
formal (trial-type) hearing after the submission of the position application of the Labor Code provisions but an interpretation and
papers of the parties, thus: implementation of the May 1994 Agreement. In effect, SONZA’s
Section 3. Submission of Position Papers/Memorandum cause of action is for breach of contract which is intrinsically a civil
xxx dispute cognizable by the regular courts.58
These verified position papers shall cover only those claims and WHEREFORE, we DENY the petition. The assailed Decision of the
causes of action raised in the complaint excluding those that may Court of Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is
have been amicably settled, and shall be accompanied by all AFFIRMED. Costs against petitioner.
supporting documents including the affidavits of their respective SO ORDERED.
witnesses which shall take the place of the latter’s direct testimony.
xxx
Section 4. Determination of Necessity of Hearing. – Immediately
after the submission of the parties of their position papers/
memorandum, the Labor Arbiter shall motu propio determine
whether there is need for a formal trial or hearing. At this stage, he
may, at his discretion and for the purpose of making such
determination, ask clarificatory questions to further elicit facts or
information, including but not limited to the subpoena of relevant
documentary evidence, if any from any party or witness.50
The Labor Arbiter can decide a case based solely on the position
papers and the supporting documents without a formal trial.51 The
holding of a formal hearing or trial is something that the parties
cannot demand as a matter of right.52 If the Labor Arbiter is
confident that he can rely on the documents before him, he cannot
be faulted for not conducting a formal trial, unless under the
particular circumstances of the case, the documents alone are
insufficient. The proceedings before a Labor Arbiter are non-
litigious in nature. Subject to the requirements of due process, the
technicalities of law and the rules obtaining in the courts of law do
not strictly apply in proceedings before a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the
broadcast and entertainment industries to treat talents like SONZA
as independent contractors. SONZA argues that if such practice
exists, it is void for violating the right of labor to security of tenure.
The right of labor to security of tenure as guaranteed in the
Constitution53 arises only if there is an employer-employee
relationship under labor laws. Not every performance of services
for a fee creates an employer-employee relationship. To hold that
every person who renders services to another for a fee is an
employee - to give meaning to the security of tenure clause - will
lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom
to offer their services as independent contractors. The right to life
and livelihood guarantees this freedom to contract as independent
contractors. The right of labor to security of tenure cannot operate
to deprive an individual, possessed with special skills, expertise
and talent, of his right to contract as an independent contractor. An
individual like an artist or talent has a right to render his services
without any one controlling the means and methods by which he
performs his art or craft. This Court will not interpret the right of
labor to security of tenure to compel artists and talents to render
their services only as employees. If radio and television program
hosts can render their services only as employees, the station
owners and managers can dictate to the radio and television hosts
what they say in their shows. This is not conducive to freedom of
the press.
Different Tax Treatment of Talents and Broadcasters
The National Internal Revenue Code ("NIRC")54 in relation to
Republic Act No. 7716,55 as amended by Republic Act No. 8241,56
treats talents, television and radio broadcasters differently. Under
the NIRC, these professionals are subject to the 10% value-added
tax ("VAT") on services they render. Exempted from the VAT are
those under an employer-employee relationship.57 This different tax
treatment accorded to talents and broadcasters bolters our
conclusion that they are independent contractors, provided all the
basic elements of a contractual relationship are present as in this
case.
Nature of SONZA’s Claims

30
G.R. No. 196426 August 15, 2011
MARTICIO SEMBLANTE and DUBRICK PILAR, Petitioners,
vs.
COURT OF APPEALS, 19th DIVISION, now SPECIAL FORMER
19th DIVISION, GALLERA DE MANDAUE / SPOUSES VICENTE
and MARIA LUISA LOOT, Respondents.
DECISION
VELASCO, JR., J.:
Before Us is a Petition for Review on Certiorari under Rule 45,
assailing and seeking to set aside the Decision1 and Resolution2
dated May 29, 2009 and February 23, 2010, respectively, of the
Court of Appeals (CA) in CA-G.R. SP No. 03328. The CA affirmed
the October 18, 2006 Resolution3 of the National Labor Relations
Commission (NLRC), Fourth Division (now Seventh Division), in
NLRC Case No. V-000673-2004.
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar
(Pilar) assert that they were hired by respondents-spouses Vicente
and Maria Luisa Loot, the owners of Gallera de Mandaue (the
cockpit), as the official masiador and sentenciador, respectively, of
the cockpit sometime in 1993.
As the masiador, Semblante calls and takes the bets from the
gamecock owners and other bettors and orders the start of the
cockfight. He also distributes the winnings after deducting the
arriba, or the commission for the cockpit. Meanwhile, as the
sentenciador, Pilar oversees the proper gaffing of fighting cocks,
determines the fighting cocks’ physical condition and capabilities to
continue the cockfight, and eventually declares the result of the
cockfight.4
For their services as masiador and sentenciador, Semblante
receives PhP 2,000 per week or a total of PhP 8,000 per month,
while Pilar gets PhP 3,500 a week or PhP 14,000 per month. They
work every Tuesday, Wednesday, Saturday, and Sunday every
week, excluding monthly derbies and cockfights held on special
holidays. Their working days start at 1:00 p.m. and last until 12:00
midnight, or until the early hours of the morning depending on the
needs of the cockpit. Petitioners had both been issued employees’
identification cards5 that they wear every time they report for duty.
They alleged never having incurred any infraction and/or violation
of the cockpit rules and regulations.
On November 14, 2003, however, petitioners were denied entry
into the cockpit upon the instructions of respondents, and were
informed of the termination of their services effective that date. This
prompted petitioners to file a complaint for illegal dismissal against
respondents.
In answer, respondents denied that petitioners were their
employees and alleged that they were associates of respondents’
independent contractor, Tomas Vega. Respondents claimed that
petitioners have no regular working time or day and they are free to
decide for themselves whether to report for work or not on any
cockfighting day. In times when there are few cockfights in Gallera
de Mandaue, petitioners go to other cockpits in the vicinity. Lastly,
petitioners, so respondents assert, were only issued identification
cards to indicate that they were free from the normal entrance fee
and to differentiate them from the general public.6
In a Decision dated June 16, 2004, Labor Arbiter Julie C.
Rendoque found petitioners to be regular employees of
respondents as they performed work that was necessary and
indispensable to the usual trade or business of respondents for a
number of years. The Labor Arbiter also ruled that petitioners were
illegally dismissed, and so ordered respondents to pay petitioners
their backwages and separation pay.7
Respondents’ counsel received the Labor Arbiter’s Decision on
September 14, 2004. And within the 10-day appeal period, he filed
the respondents’ appeal with the NLRC on September 24, 2004,
but without posting a cash or surety bond equivalent to the
monetary award granted by the Labor Arbiter.8
It was only on October 11, 2004 that respondents filed an appeal
bond dated October 6, 2004. Hence, in a Resolution9 dated August
25, 2005, the NLRC denied the appeal for its non-perfection.
Subsequently, however, the NLRC, acting on respondents’ Motion
for Reconsideration, reversed its Resolution on the postulate that
their appeal was meritorious and the filing of an appeal bond, albeit
belated, is a substantial compliance with the rules. The NLRC held
in its Resolution of October 18, 2006 that there was no employer-
employee relationship between petitioners and respondents,
31
respondents having no part in the selection and engagement of
petitioners, and that no separate individual contract with
respondents was ever executed by petitioners.10
Following the denial by the NLRC of their Motion for
Reconsideration, per Resolution dated January 12, 2007,
petitioners went to the CA on a petition for certiorari. In support of
their petition, petitioners argued that the NLRC gravely abused its
discretion in entertaining an appeal that was not perfected in the
first place. On the other hand, respondents argued that the NLRC
did not commit grave abuse of discretion, since they eventually
posted their appeal bond and that their appeal was so meritorious
warranting the relaxation of the rules in the interest of justice.11
In its Decision dated May 29, 2009, the appellate court found for
respondents, noting that referees and bet-takers in a cockfight
need to have the kind of expertise that is characteristic of the game
to interpret messages conveyed by mere gestures. Hence,
petitioners are akin to independent contractors who possess
unique skills, expertise, and talent to distinguish them from ordinary
employees. Further, respondents did not supply petitioners with the
tools and instrumentalities they needed to perform work. Petitioners
only needed their unique skills and talents to perform their job as
masiador and sentenciador.12 The CA held:
In some circumstances, the NLRC is allowed to be liberal in the
interpretation of the rules in deciding labor cases. In this case, the
appeal bond was filed, although late. Moreover, an exceptional
circumstance obtains in the case at bench which warrants a
relaxation of the bond requirement as a condition for perfecting the
appeal. This case is highly meritorious that propels this Court not to
strictly apply the rules and thus prevent a grave injustice from being
done.
As elucidated by the NLRC, the circumstances obtaining in this
case wherein no actual employer-employee exists between the
petitioners and the private respondents [constrain] the relaxation of
the rules. In this regard, we find no grave abuse attributable to the
administrative body.
xxxx
Petitioners are duly licensed "masiador" and "sentenciador" in the
cockpit owned by Lucia Loot. Cockfighting, which is a part of our
cultural heritage, has a peculiar set of rules. It is a game based on
the fighting ability of the game cocks in the cockpit. The referees
and bet-takers need to have that kind of expertise that is
characteristic of the cockfight gambling who can interpret the
message conveyed even by mere gestures. They ought to have the
talent and skill to get the bets from numerous cockfighting
aficionados and decide which cockerel to put in the arena. They are
placed in that elite spot where they can control the game and the
crowd. They are not given salaries by cockpit owners as their
compensation is based on the "arriba". In fact, they can offer their
services everywhere because they are duly licensed by the GAB.
They are free to choose which cockpit arena to enter and offer their
expertise. Private respondents cannot even control over the means
and methods of the manner by which they perform their work. In
this light, they are akin to independent contractors who possess
unique skills, expertise and talent to distinguish them from ordinary
employees.
Furthermore, private respondents did not supply petitioners with
the tools and instrumentalities they needed to perform their work.
Petitioners only needed their talent and skills to be a "masiador"
and "sentenciador". As such, they had all the tools they needed to
perform their work. (Emphasis supplied.)
The CA refused to reconsider its Decision. Hence, petitioners came
to this Court, arguing in the main that the CA committed a
reversible error in entertaining an appeal, which was not perfected
in the first place.
Indeed, the posting of a bond is indispensable to the perfection of
an appeal in cases involving monetary awards from the Decision of
the Labor Arbiter.13 Article 223 of the Labor Code provides:
Article 223. Appeal. — Decisions, awards, or orders of the Labor
Arbiter are final and executory unless appealed to the Commission
by any or both parties within ten (10) calendar days from receipt of
such decisions, awards, or orders. Such appeal may be entertained
only on any of the following grounds:
xxxx
In case of a judgment involving a monetary award, an appeal by
the employer may be perfected only upon the posting of a cash or
surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the
monetary award in the judgment appealed from. (Emphasis
supplied.)
Time and again, however, this Court, considering the substantial
merits of the case, has relaxed this rule on, and excused the late
posting of, the appeal bond when there are strong and compelling
reasons for the liberality,14 such as the prevention of miscarriage of
justice extant in the case15 or the special circumstances in the case
combined with its legal merits or the amount and the issue
involved.16 After all, technical rules cannot prevent courts from
exercising their duties to determine and settle, equitably and
completely, the rights and obligations of the parties.17 This is one
case where the exception to the general rule lies.
While respondents had failed to post their bond within the 10-day
period provided above, it is evident, on the other hand, that
petitioners are NOT employees of respondents, since their
relationship fails to pass muster the four-fold test of employment
We have repeatedly mentioned in countless decisions: (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, which is the most important element.18
1avvphi1
As found by both the NLRC and the CA, respondents had no part
in petitioners’ selection and management; 19 petitioners’
compensation was paid out of the arriba (which is a percentage
deducted from the total bets), not by petitioners;20 and petitioners
performed their functions as masiador and sentenciador free from
the direction and control of respondents.21 In the conduct of their
work, petitioners relied mainly on their "expertise that is
characteristic of the cockfight gambling,"22 and were never given by
respondents any tool needed for the performance of their work.23
Respondents, not being petitioners’ employers, could never have
dismissed, legally or illegally, petitioners, since respondents were
without power or prerogative to do so in the first place. The rule on
the posting of an appeal bond cannot defeat the substantive rights
of respondents to be free from an unwarranted burden of
answering for an illegal dismissal for which they were never
responsible.1avvphi1
Strict implementation of the rules on appeals must give way to the
factual and legal reality that is evident from the records of this case.
24 After all, the primary objective of our laws is to dispense justice

and equity, not the contrary.

WHEREFORE, We DENY this petition and AFFIRM the May 29,
2009 Decision and February 23, 2010 Resolution of the CA, and
the October 18, 2006 Resolution of the NLRC.
SO ORDERED.

32
G.R. No. 119268 February 23, 2000
ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS,
ROSENDO MARCOS, LUIS DE LOS ANGELES, JOEL
ORDENIZA and AMADO CENTENO, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) and
GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.)
respondents.
QUISUMBING, J.:
This special civil action for certiorari seeks to annul the decision1 of
public respondent promulgated on October 28, 1994, in NLRC
NCR CA No. 003883-92, and its resolution2 dated December 13,
1994 which denied petitioners motion for reconsideration.
Petitioners were drivers of private respondent, Philjama
International Inc., a domestic corporation engaged in the operation
of "Goodman Taxi." Petitioners used to drive private respondent's
taxicabs every other day on a 24-hour work schedule under the
boundary system. Under this arrangement, the petitioners earned
an average of P400.00 daily. Nevertheless, private respondent
admittedly regularly deducts from petitioners, daily earnings the
amount of P30.00 supposedly for the washing of the taxi units.
Believing that the deduction is illegal, petitioners decided to form a
labor union to protect their rights and interests.
Upon learning about the plan of petitioners, private respondent
refused to let petitioners drive their taxicabs when they reported for
work on August 6, 1991, and on succeeding days. Petitioners
suspected that they were singled out because they were the
leaders and active members of the proposed union. Aggrieved,
petitioners filed with the labor arbiter a complaint against private
respondent for unfair labor practice, illegal dismissal and illegal
deduction of washing fees. In a decision3 dated August 31, 1992,
the labor arbiter dismissed said complaint for lack of merit.
On appeal, the NLRC (public respondent herein), in a decision
dated April 28, 1994, reversed and set aside the judgment of the
labor arbiter. The labor tribunal declared that petitioners are
employees of private respondent, and, as such, their dismissal
must be for just cause and after due process. It disposed of the
case as follows:
WHEREFORE, in view of all the foregoing considerations, the
decision of the Labor Arbiter appealed from is hereby SET ASIDE
and another one entered:
1. Declaring the respondent company guilty of illegal dismissal and
accordingly it is directed to reinstate the complainants, namely,
Alberto A. Gonzales, Joel T. Morato, Gavino Panahon, Demetrio L.
Calagos, Sonny M. Lustado, Romeo Q. Clariza, Luis de los
Angeles, Amado Centino, Angel Jardin, Rosendo Marcos, Urbano
Marcos, Jr., and Joel Ordeniza, to their former positions without
loss of seniority and other privileges appertaining thereto; to pay
the complainants full backwages and other benefits, less earnings
elsewhere, and to reimburse the drivers the amount paid as
washing charges; and
2. Dismissing the charge of unfair [labor] practice for insufficiency
of evidence.
SO ORDERED.4
Private respondent's first motion for reconsideration was denied.
Remaining hopeful, private respondent filed another motion for
reconsideration. This time, public respondent, in its decision5 dated
October 28, 1994, granted aforesaid second motion for
reconsideration. It ruled that it lacks jurisdiction over the case as
petitioners and private respondent have no employer-employee
relationship. It held that the relationship of the parties is leasehold
which is covered by the Civil Code rather than the Labor Code, and
disposed of the case as follows:
VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion
under reconsideration is hereby given due course.
Accordingly, the Resolution of August 10, 1994, and the Decision of
April 28, 1994 are hereby SET ASIDE. The Decision of the Labor
Arbiter subject of the appeal is likewise SET ASIDE and a NEW
ONE ENTERED dismissing the complaint for lack of jurisdiction.
No costs.
SO ORDERED.6
Expectedly, petitioners sought reconsideration of the labor
tribunal's latest decision which was denied. Hence, the instant
petition.
33
In this recourse, petitioners allege that public respondent acted
without or in excess of jurisdiction, or with grave abuse of discretion
in rendering the assailed decision, arguing that:
I
THE NLRC HAS NO JURISDICTION TO ENTERTAIN
RESPONDENT'S SECOND MOTION FOR RECONSIDERATION
WHICH IS ADMITTEDLY A PLEADING PROHIBITED UNDER THE
NLRC RULES, AND TO GRANT THE SAME ON GROUNDS NOT
EVEN INVOKED THEREIN.
II
THE EXISTENCE OF AN EMPLOYER-EMPLOYEE
RELATIONSHIP BETWEEN THE PARTIES IS ALREADY A
SETTLED ISSUE CONSTITUTING RES JUDICATA, WHICH THE
NLRC HAS NO MORE JURISDICTION TO REVERSE, ALTER OR
MODIFY.
III
IN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER
SUPPORTS THE VIEW THAT PETITIONERS-TAXI DRIVERS ARE
EMPLOYEES OF RESPONDENT TAXI COMPANY.7
The petition is impressed with merit.
The phrase "grave abuse of discretion amounting to lack or excess
of jurisdiction" has settled meaning in the jurisprudence of
procedure. It means such capricious and whimsical exercise of
judgment by the tribunal exercising judicial or quasi-judicial power
as to amount to lack of power.8 In labor cases, this Court has
declared in several instances that disregarding rules it is bound to
observe constitutes grave abuse of discretion on the part of labor
tribunal.
In Garcia vs. NLRC,9 private respondent therein, after receiving a
copy of the labor arbiter's decision, wrote the labor arbiter who
rendered the decision and expressed dismay over the judgment.
Neither notice of appeal was filed nor cash or surety bond was
posted by private respondent. Nevertheless, the labor tribunal took
cognizance of the letter from private respondent and treated said
letter as private respondent's appeal. In a certiorari action before
this Court, we ruled that the labor tribunal acted with grave abuse
of discretion in treating a mere letter from private respondent as
private respondent's appeal in clear violation of the rules on appeal
prescribed under Section 3(a), Rule VI of the New Rules of
Procedure of NLRC.
In Philippine Airlines Inc. vs. NLRC,10 we held that the labor arbiter
committed grave abuse of discretion when he failed to resolve
immediately by written order a motion to dismiss on the ground of
lack of jurisdiction and the supplemental motion to dismiss as
mandated by Section 15 of Rule V of the New Rules of Procedure
of the NLRC.
In Unicane Workers Union-CLUP vs. NLRC,11 we held that the
NLRC gravely abused its discretion by allowing and deciding an
appeal without an appeal bond having been filed as required under
Article 223 of the Labor Code.
In Mañebo vs. NLRC,12 we declared that the labor arbiter gravely
abused its discretion in disregarding the rule governing position
papers. In this case, the parties have already filed their position
papers and even agreed to consider the case submitted for
decision, yet the labor arbiter still admitted a supplemental position
paper and memorandum, and by taking into consideration, as basis
for his decision, the alleged facts adduced therein and the
documents attached thereto.
In Gesulgon vs. NLRC,13 we held that public respondent gravely
abused its discretion in treating the motion to set aside judgment
and writ of execution as a petition for relief of judgment. In doing
so, public respondent had, without sufficient basis, extended the
reglementary period for filing petition for relief from judgment
contrary to prevailing rule and case law.
In this case before us, private respondent exhausted administrative
remedy available to it by seeking reconsideration of public
respondent's decision dated April 28, 1994, which public
respondent denied. With this motion for reconsideration, the labor
tribunal had ample opportunity to rectify errors or mistakes it may
have committed before resort to courts of justice can be had.14
Thus, when private respondent filed a second motion for
reconsideration, public respondent should have forthwith denied it
in accordance with Rule 7, Section 14 of its New Rules of
Procedure which allows only one motion for reconsideration from
the same party, thus:
Sec. 14. Motions for Reconsideration. — Motions for
reconsideration of any order, resolution or decision of the
Commission shall not be entertained except when based on
palpable or patent errors, provided that the motion is under oath
and filed within ten (10) calendar days from receipt of the order,
resolution or decision with proof of service that a copy of the same
has been furnished within the reglementary period the adverse
party and provided further, that only one such motion from the
same party shall be entertained. [Emphasis supplied]
The rationale for allowing only one motion for reconsideration from
the same party is to assist the parties in obtaining an expeditious
and inexpensive settlement of labor cases. For obvious reasons,
delays cannot be countenanced in the resolution of labor disputes.
The dispute may involve no less than the livelihood of an employee
and that of his loved ones who are dependent upon him for food,
shelter, clothing, medicine, and education. It may as well involve
the survival of a business or an industry.15
As correctly pointed out by petitioner, the second motion for
reconsideration filed by private respondent is indubitably a
prohibited pleading16 which should have not been entertained at all.
Public respondent cannot just disregard its own rules on the pretext
of "satisfying the ends of justice",17 especially when its disposition
of a legal controversy ran afoul with a clear and long standing
jurisprudence in this jurisdiction as elucidated in the subsequent
discussion. Clearly, disregarding a settled legal doctrine enunciated
by this Court is not a way of rectifying an error or mistake. In our
view, public respondent gravely abused its discretion in taking
cognizance and granting private respondent's second motion for
reconsideration as it wrecks the orderly procedure in seeking reliefs
in labor cases.
But, there is another compelling reason why we cannot leave
untouched the flip-flopping decisions of the public respondent. As
mentioned earlier, its October 28, 1994 judgment is not in accord
with the applicable decisions of this Court. The labor tribunal
reasoned out as follows:
On the issue of whether or not employer-employee relationship
exists, admitted is the fact that complainants are taxi drivers purely
on the "boundary system". Under this system the driver takes out
his unit and pays the owner/operator a fee commonly called
"boundary" for the use of the unit. Now, in the determination the
existence of employer-employee relationship, the Supreme Court in
the case of Sara, et al., vs. Agarrado, et al. (G.R. No. 73199, 26
October 1988) has applied the following four-fold test: "(1) the
selection and engagement of the employee; (2) the payment of
wages; (3) the power of dismissal; and (4) the power of control the
employees conduct."
"Among the four (4) requisites", the Supreme Court stresses that
"control is deemed the most important that the other requisites may
even be disregarded". Under the control test, an employer-
employee relationship exists if the "employer" has reserved the
right to control the "employee" not only as to the result of the work
done but also as to the means and methods by which the same is
to be accomplished. Otherwise, no such relationship exists. (Ibid.)
Applying the foregoing parameters to the case herein obtaining, it
is clear that the respondent does not pay the drivers, the
complainants herein, their wages. Instead, the drivers pay a certain
fee for the use of the vehicle. On the matter of control, the drivers,
once they are out plying their trade, are free to choose whatever
manner they conduct their trade and are beyond the physical
control of the owner/operator; they themselves determine the
amount of revenue they would want to earn in a day's driving; and,
more significantly aside from the fact that they pay for the gasoline
they consume, they likewise shoulder the cost of repairs on
damages sustained by the vehicles they are driving.
Verily, all the foregoing attributes signify that the relationship of the
parties is more of a leasehold or one that is covered by a charter
agreement under the Civil Code rather than the Labor Code.18
The foregoing ratiocination goes against prevailing jurisprudence.
In a number of cases decided by this Court,19 we ruled that the
relationship between jeepney owners/operators on one hand and
jeepney drivers on the other under the boundary system is that of
employer-employee and not of lessor-lessee. We explained that in
the lease of chattels, the lessor loses complete control over the
chattel leased although the lessee cannot be reckless in the use
thereof, otherwise he would be responsible for the damages to the
34
lessor. In the case of jeepney owners/operators and jeepney
drivers, the former exercise supervision and control over the latter.
The management of the business is in the owner's hands. The
owner as holder of the certificate of public convenience must see to
it that the driver follows the route prescribed by the franchising
authority and the rules promulgated as regards its operation. Now,
the fact that the drivers do not receive fixed wages but get only that
in excess of the so-called "boundary" they pay to the owner/
operator is not sufficient to withdraw the relationship between them
from that of employer and employee. We have applied by analogy
the abovestated doctrine to the relationships between bus owner/
operator and bus conductor,20 auto-calesa owner/operator and
driver,21 and recently between taxi owners/operators and taxi
drivers.22 Hence, petitioners are undoubtedly employees of private
respondent because as taxi drivers they perform activities which
are usually necessary or desirable in the usual business or trade of
their employer.
As consistently held by this Court, termination of employment must
be effected in accordance with law. The just and authorized causes
for termination of employment are enumerated under Articles 282,
283 and 284 of the Labor Code. The requirement of notice and
hearing is set-out in Article 277 (b) of the said Code. Hence,
petitioners, being employees of private respondent, can be
dismissed only for just and authorized cause, and after affording
them notice and hearing prior to termination. In the instant case,
private respondent had no valid cause to terminate the employment
of petitioners. Neither were there two (2) written notices sent by
private respondent informing each of the petitioners that they had
been dismissed from work. These lack of valid cause and failure on
the part of private respondent to comply with the twin-notice
requirement underscored the illegality surrounding petitioners'
dismissal.
Under the law, an employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances,
and to his other benefits or their monetary equivalent computed
from the time his compensation was withheld from him up to the
time of his actual reinstatement.23 It must be emphasized, though,
that recent judicial pronouncements 24 distinguish between
employees illegally dismissed prior to the effectivity of Republic Act
No. 6715 on March 21, 1989, and those whose illegal dismissals
were effected after such date. Thus, employees illegally dismissed
prior to March 21, 1989, are entitled to backwages up to three (3)
years without deduction or qualification, while those illegally
dismissed after that date are granted full backwages inclusive of
allowances and other benefits or their monetary equivalent from the
time their actual compensation was withheld from them up to the
time of their actual reinstatement. The legislative policy behind
Republic Act No. 6715 points to "full backwages" as meaning
exactly that, i.e., without deducting from backwages the earnings
derived elsewhere by the concerned employee during the period of
his illegal dismissal. Considering that petitioners were terminated
from work on August 1, 1991, they are entitled to full backwages on
the basis of their last daily earnings.
With regard to the amount deducted daily by private respondent
from petitioners for washing of the taxi units, we view the same as
not illegal in the context of the law. We note that after a tour of duty,
it is incumbent upon the driver to restore the unit he has driven to
the same clean condition when he took it out. Car washing after a
tour of duty is indeed a practice in the taxi industry and is in fact
dictated by fair play.25 Hence, the drivers are not entitled to
reimbursement of washing charges.1âwphi1.nêt
WHEREFORE, the instant petition is GRANTED. The assailed
DECISION of public respondent dated October 28, 1994, is hereby
SET ASIDE. The DECISION of public respondent dated April 28,
1994, and its RESOLUTION dated December 13, 1994, are hereby
REINSTATED subject to MODIFICATION. Private respondent is
directed to reinstate petitioners to their positions held at the time of
the complained dismissal. Private respondent is likewise ordered to
pay petitioners their full backwages, to be computed from the date
of dismissal until their actual reinstatement. However, the order of
public respondent that petitioners be reimbursed the amount paid
as washing charges is deleted. Costs against private respondents.
SO ORDERED.
G.R. No. 169704 November 17, 2010
ALBERT TENG, doing business under the firm name ALBERT
TENG FISH TRADING, and EMILIA TENG-CHUA, Petitioners,
vs.
ALFREDO S. PAHAGAC, EDDIE D. NIPA, ORLANDO P.
LAYESE, HERNAN Y. BADILLES and ROGER S. PAHAGAC,
Respondents.
DECISION
BRION, J.:
Before this Court is a Petition for Review on Certiorari1 filed by
petitioners Albert Teng Fish Trading, its owner Albert Teng, and its
manager Emilia Teng-Chua, to reverse and set aside the
September 21, 2004 decision2 and the September 1, 2005
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 78783.
The CA reversed the decision of the Voluntary Arbitrator (VA),
National Conciliation and Mediation Board (NCMB), Region IX,
Zamboanga City, and declared that there exists an employer-
employee relationship between Teng and respondents Hernan
Badilles, Orlando Layese, Eddie Nipa, Alfredo Pahagac, and Roger
Pahagac (collectively, respondent workers). It also found that Teng
illegally dismissed the respondent workers from their employment.
BACKGROUND FACTS
Albert Teng Fish Trading is engaged in deep sea fishing and, for
this purpose, owns boats (basnig), equipment, and other fishing
paraphernalia. As owner of the business, Teng claims that he
customarily enters into joint venture agreements with master
fishermen (maestros) who are skilled and are experts in deep sea
fishing; they take charge of the management of each fishing
venture, including the hiring of the members of its complement. He
avers that the maestros hired the respondent workers as checkers
to determine the volume of the fish caught in every fishing voyage.4
On February 20, 2003, the respondent workers filed a complaint for
illegal dismissal against Albert Teng Fish Trading, Teng, and Chua
before the NCMB, Region Branch No. IX, Zamboanga City.
The respondent workers alleged that Teng hired them, without any
written employment contract, to serve as his "eyes and ears"
aboard the fishing boats; to classify the fish caught by bañera; to
report to Teng via radio communication the classes and volume of
each catch; to receive instructions from him as to where and when
to unload the catch; to prepare the list of the provisions requested
by the maestro and the mechanic for his approval; and, to procure
the items as approved by him.5 They also claimed that they
received regular monthly salaries, 13th month pay, Christmas
bonus, and incentives in the form of shares in the total volume of
fish caught.
They asserted that sometime in September 2002, Teng expressed
his doubts on the correct volume of fish caught in every fishing
voyage.6 In December 2002, Teng informed them that their services
had been terminated.7
In his defense, Teng maintained that he did not have any hand in
hiring the respondent workers; the maestros, rather than he, invited
them to join the venture. According to him, his role was clearly
limited to the provision of the necessary capital, tools and
equipment, consisting of basnig, gears, fuel, food, and other
supplies.8
The VA rendered a decision9 in Teng’s favor and declared that no
employer-employee relationship existed between Teng and the
respondent workers. The dispositive portion of the VA’s May 30,
2003 decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
dismissing the instant complaint for lack of merit.
It follows also, that all other claims are likewise dismissed for lack
of merit.10
The respondent workers received the VA’s decision on June 12,
2003.11 They filed a motion for reconsideration, which was denied
in an order dated June 27, 2003 and which they received on July 8,
2003.12 The VA reasoned out that Section 6, Rule VII of the 1989
Procedural Guidelines in the Conduct of Voluntary Arbitration
Proceedings (1989 Procedural Guidelines) does not provide the
remedy of a motion for reconsideration to the party adversely
affected by the VA’s order or decision.13 The order states:
Under Executive Order No. 126, as amended by Executive Order
No. 251, and in order to implement Article 260-262 (b) of the Labor
Code, as amended by R.A. No. 6715, otherwise known as the
35
Procedural Guidelines in the Conduct of Voluntary Arbitration
Proceedings, inter alia:
An award or the Decision of the Voluntary Arbitrators becomes final
and executory after ten (10) calendar days from receipt of copies of
the award or decision by the parties (Sec. 6, Rule VII).
Moreover, the above-mentioned guidelines do not provide the
remedy of a motion for reconsideration to the party adversely
affected by the order or decision of voluntary arbitrators.14
On July 21, 2003, the respondent-workers elevated the case to the
CA. In its decision of September 21, 2004, the CA reversed the
VA’s decision after finding sufficient evidence showing the
existence of employer-employee relationship:
WHEREFORE, premises considered, the petition is granted. The
questioned decision of the Voluntary Arbitrator dated May 30, 2003
is hereby REVERSED and SET ASIDE by ordering private
respondent to pay separation pay with backwages and other
monetary benefits. For this purpose, the case is REMANDED to the
Voluntary Arbitrator for the computation of petitioner’s backwages
and other monetary benefits. No pronouncement as to costs.
SO ORDERED.15
Teng moved to reconsider the CA’s decision, but the CA denied the
motion in its resolution of September 1, 2005.16 He, thereafter, filed
the present Petition for Review on Certiorari under Rule 45 of the
Rules of Court, claiming that:
a. the VA’s decision is not subject to a motion for reconsideration;
and
b. no employer-employee relationship existed between Teng and
the respondent workers.
Teng contends that the VA’s decision is not subject to a motion for
reconsideration in the absence of any specific provision allowing
this recourse under Article 262-A of the Labor Code.17 He cites the
1989 Procedural Guidelines, which, as the VA declared, does not
provide the remedy of a motion for reconsideration.18 He claims
that after the lapse of 10 days from its receipt, the VA’s decision
becomes final and executory unless an appeal is taken.19 He
argues that when the respondent workers received the VA’s
decision on June 12, 2003,20 they had 10 days, or until June 22,
2003, to file an appeal. As the respondent workers opted instead to
move for reconsideration, the 10-day period to appeal continued to
run; thus, the VA’s decision had already become final and
executory by the time they assailed it before the CA on July 21,
2003.21
Teng further insists that the VA was correct in ruling that there was
no employer-employee relationship between him and the
respondent workers. What he entered into was a joint venture
agreement with the maestros, where Teng’s role was only to
provide basnig, gears, nets, and other tools and equipment for
every fishing voyage.22
THE COURT’S RULING
We resolve to deny the petition for lack of merit.
Article 262-A of the Labor Code does not prohibit the filing of a
motion for reconsideration.
On March 21, 1989, Republic Act No. 671523 took effect, amending,
among others, Article 263 of the Labor Code which was originally
worded as:
Art. 263 x x x Voluntary arbitration awards or decisions shall be
final, unappealable, and executory.
As amended, Article 263 is now Article 262-A, which states:
Art. 262-A. x x x [T]he award or decision x x x shall contain the
facts and the law on which it is based. It shall be final and
executory after ten (10) calendar days from receipt of the copy of
the award or decision by the parties.
Notably, Article 262-A deleted the word "unappealable" from Article
263. The deliberate selection of the language in the amendatory act
differing from that of the original act indicates that the legislature
intended a change in the law, and the court should endeavor to
give effect to such intent.24 We recognized the intent of the change
of phraseology in Imperial Textile Mills, Inc. v. Sampang,25 where
we ruled that:
It is true that the present rule [Art. 262-A] makes the voluntary
arbitration award final and executory after ten calendar days from
receipt of the copy of the award or decision by the parties.
Presumably, the decision may still be reconsidered by the Voluntary
Arbitrator on the basis of a motion for reconsideration duly filed
during that period.26
In Coca-Cola Bottlers Phil., Inc., Sales Force Union-PTGWO-Balais
v. Coca-Cola Bottlers Philippines, Inc.,27 we likewise ruled that the
VA’s decision may still be reconsidered on the basis of a motion for
reconsideration seasonably filed within 10 days from receipt
thereof.28 The seasonable filing of a motion for reconsideration is a
mandatory requirement to forestall the finality of such decision.29
We further cited the 1989 Procedural Guidelines which
implemented Article 262-A, viz:30
[U]nder Section 6, Rule VII of the same guidelines implementing
Article 262-A of the Labor Code, this Decision, as a matter of
course, would become final and executory after ten (10) calendar
days from receipt of copies of the decision by the parties x x x
unless, in the meantime, a motion for reconsideration or a petition
for review to the Court of Appeals under Rule 43 of the Rules of
Court is filed within the same 10-day period. 31
These rulings fully establish that the absence of a categorical
language in Article 262-A does not preclude the filing of a motion
for reconsideration of the VA’s decision within the 10-day period.
Teng’s allegation that the VA’s decision had become final and
executory by the time the respondent workers filed an appeal with
the CA thus fails. We consequently rule that the respondent
workers seasonably filed a motion for reconsideration of the VA’s
judgment, and the VA erred in denying the motion because no
motion for reconsideration is allowed.
The Court notes that despite our interpretation that Article 262-A
does not preclude the filing of a motion for reconsideration of the
VA’s decision, a contrary provision can be found in Section 7, Rule
XIX of the Department of Labor’s Department Order (DO) No. 40,
series of 2003:32
Rule XIX
Section 7. Finality of Award/Decision. – The decision, order,
resolution or award of the voluntary arbitrator or panel of voluntary
arbitrators shall be final and executory after ten (10) calendar days
from receipt of the copy of the award or decision by the parties and
it shall not be subject of a motion for reconsideration.
Presumably on the basis of DO 40-03, the 1989 Procedural
Guidelines was revised in 2005 (2005 Procedural Guidelines),33
whose pertinent provisions provide that:
Rule VII – DECISIONS
Section 6. Finality of Decisions. – The decision of the Voluntary
Arbitrator shall be final and executory after ten (10) calendar days
from receipt of the copy of the decision by the parties.
Section 7. Motions for Reconsideration. – The decision of the
Voluntary Arbitrator is not subject of a Motion for Reconsideration.
We are surprised that neither the VA nor Teng cited DO 40-03 and
the 2005 Procedural Guidelines as authorities for their cause,
considering that these were the governing rules while the case was
pending and these directly and fully supported their theory. Had
they done so, their reliance on the provisions would have
nevertheless been unavailing for reasons we shall now discuss.
In the exercise of its power to promulgate implementing rules and
regulations, an implementing agency, such as the Department of
Labor,34 is restricted from going beyond the terms of the law it
seeks to implement; it should neither modify nor improve the law.
The agency formulating the rules and guidelines cannot exceed the
statutory authority granted to it by the legislature.35
By allowing a 10-day period, the obvious intent of Congress in
amending Article 263 to Article 262-A is to provide an opportunity
for the party adversely affected by the VA’s decision to seek
recourse via a motion for reconsideration or a petition for review
under Rule 43 of the Rules of Court filed with the CA. Indeed, a
motion for reconsideration is the more appropriate remedy in line
with the doctrine of exhaustion of administrative remedies. For this
reason, an appeal from administrative agencies to the CA via Rule
43 of the Rules of Court requires exhaustion of available
remedies36 as a condition precedent to a petition under that Rule.
The requirement that administrative remedies be exhausted is
based on the doctrine that in providing for a remedy before an
administrative agency, every opportunity must be given to the
agency to resolve the matter and to exhaust all opportunities for a
resolution under the given remedy before bringing an action in, or
resorting to, the courts of justice.37 Where Congress has not clearly
required exhaustion, sound judicial discretion governs,38 guided by
congressional intent.39
36
By disallowing reconsideration of the VA’s decision, Section 7, Rule
XIX of DO 40-03 and Section 7 of the 2005 Procedural Guidelines
went directly against the legislative intent behind Article 262-A of
the Labor Code. These rules deny the VA the chance to correct
himself40 and compel the courts of justice to prematurely intervene
with the action of an administrative agency entrusted with the
adjudication of controversies coming under its special knowledge,
training and specific field of expertise. In this era of clogged court
dockets, the need for specialized administrative agencies with the
special knowledge, experience and capability to hear and
determine promptly disputes on technical matters or intricate
questions of facts, subject to judicial review, is indispensable.41 In
Industrial Enterprises, Inc. v. Court of Appeals,42 we ruled that relief
must first be obtained in an administrative proceeding before a
remedy will be supplied by the courts even though the matter is
within the proper jurisdiction of a court.43
There exists an employer-employee relationship between Teng and
the respondent workers.
We agree with the CA’s finding that sufficient evidence exists
indicating the existence of an employer-employee relationship
between Teng and the respondent workers.
While Teng alleged that it was the maestros who hired the
respondent workers, it was his company that issued to the
respondent workers identification cards (IDs) bearing their names
as employees and Teng’s signature as the employer. Generally, in
a business establishment, IDs are issued to identify the holder as a
bona fide employee of the issuing entity.
For the 13 years that the respondent workers worked for Teng, they
received wages on a regular basis, in addition to their shares in the
fish caught.44 The worksheet showed that the respondent workers
received uniform amounts within a given year, which amounts
annually increased until the termination of their employment in
2002.45 Teng’s claim that the amounts received by the respondent
workers are mere commissions is incredulous, as it would mean
that the fish caught throughout the year is uniform and increases in
number each year.
More importantly, the element of control – which we have ruled in a
number of cases to be a strong indicator of the existence of an
employer-employee relationship – is present in this case. Teng not
only owned the tools and equipment, he directed how the
respondent workers were to perform their job as checkers; they, in
fact, acted as Teng’s eyes and ears in every fishing expedition.
Teng cannot hide behind his argument that the respondent workers
were hired by the maestros. To consider the respondent workers as
employees of the maestros would mean that Teng committed
impermissible labor-only contracting. As a policy, the Labor Code
prohibits labor-only contracting:
ART. 106. Contractor or Subcontractor – x x x The Secretary of
Labor and Employment may, by appropriate regulations, restrict or
prohibit the contracting-out of labor.
xxxx
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 persons 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.
Section 5 of the DO No. 18-02,46 which implements Article 106 of
the Labor Code, provides:
Section 5. Prohibition against labor-only contracting. – Labor-only
contracting is hereby declared prohibited. For this purpose,
labor-only contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places
workers to perform a job, work or service for a principal, and any of
the following elements are present:
(i) The contractor or subcontractor does not have substantial capital
or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are
directly related to the main business of the principal; or
(ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee.
In the present case, the maestros did not have any substantial
capital or investment.1avvphi1 Teng admitted that he solely
provided the capital and equipment, while the maestros supplied
the workers. The power of control over the respondent workers was
lodged not with the maestros but with Teng. As checkers, the
respondent workers’ main tasks were to count and classify the fish
caught and report them to Teng. They performed tasks that were
necessary and desirable in Teng’s fishing business. Taken together,
these incidents confirm the existence of a labor-only contracting
which is prohibited in our jurisdiction, as it is considered to be the
employer’s attempt to evade obligations afforded by law to
employees.
Accordingly, we hold that employer-employee ties exist between
Teng and the respondent workers. A finding that the maestros are
labor-only contractors is equivalent to a finding that an employer-
employee relationship exists between Teng and the respondent
workers. As regular employees, the respondent workers are
entitled to all the benefits and rights appurtenant to regular
employment.
The dismissal of an employee, which the employer must validate,
has a twofold requirement: one is substantive, the other is
procedural.47 Not only must the dismissal be for a just or an
authorized cause, as provided by law; the rudimentary
requirements of due process – the opportunity to be heard and to
defend oneself – must be observed as well.48 The employer has
the burden of proving that the dismissal was for a just cause; failure
to show this, as in the present case, would necessarily mean that
the dismissal was unjustified and, therefore, illegal.49
The respondent worker’s allegation that Teng summarily dismissed
them on suspicion that they were not reporting to him the correct
volume of the fish caught in each fishing voyage was never denied
by Teng. Unsubstantiated suspicion is not a just cause to terminate
one’s employment under Article 28250 of the Labor Code. To allow
an employer to dismiss an employee based on mere allegations
and generalities would place the employee at the mercy of his
employer, and would emasculate the right to security of tenure.51
For his failure to comply with the Labor Code’s substantive
requirement on termination of employment, we declare that Teng
illegally dismissed the respondent workers.
WHEREFORE, we DENY the petition and AFFIRM the September
21, 2004 decision and the September 1, 2005 resolution of the
Court of Appeals in CA-G.R. SP No. 78783. Costs against the
petitioners.
SO ORDERED.

37
G.R. No. 160506 June 6, 2011
JOEB M. ALIVIADO, Petitioners,
vs.
PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC.,
Respondents.
DECISION
DEL CASTILLO, J.:
Labor laws expressly prohibit "labor-only" contracting. To prevent
its circumvention, the Labor Code establishes an employer-
employee relationship between the employer and the employees of
the ‘labor-only’ contractor.
The instant petition for review assails the March 21, 2003 Decision1
of the Court of Appeals (CA) in CA-G.R. SP No. 52082 and its
October 20, 2003 Resolution 2 denying the motions for
reconsideration separately filed by petitioners and respondent
Procter & Gamble Phils. Inc. (P&G). The appellate court affirmed
the July 27, 1998 Decision of the National Labor Relations
Commission (NLRC), which in turn affirmed the November 29,
1996 Decision3 of the Labor Arbiter. All these decisions found
Promm-Gem, Inc. (Promm-Gem) and Sales and Promotions
Services (SAPS) to be legitimate independent contractors and the
employers of the petitioners.
Factual Antecedents
Petitioners worked as merchandisers of P&G from various dates,
allegedly starting as early as 1982 or as late as June 1991, to
either May 5, 1992 or March 11, 1993, more specifically as follows:
They all individually signed employment contracts with either
Promm-Gem or SAPS for periods of more or less five months at a
time.5 They were assigned at different outlets, supermarkets and
stores where they handled all the products of P&G. They received
their wages from Promm-Gem or SAPS.6
SAPS and Promm-Gem imposed disciplinary measures on erring
merchandisers for reasons such as habitual absenteeism,
dishonesty or changing day-off without prior notice.7
P&G is principally engaged in the manufacture and production of
different consumer and health products, which it sells on a
wholesale basis to various supermarkets and distributors.8 To
enhance consumer awareness and acceptance of the products,
P&G entered into contracts with Promm-Gem and SAPS for the
promotion and merchandising of its products.9
In December 1991, petitioners filed a complaint10 against P&G for
regularization, service incentive leave pay and other benefits with
damages. The complaint was later amended11 to include the matter
of their subsequent dismissal.
Ruling of the Labor Arbiter
On November 29, 1996, the Labor Arbiter dismissed the complaint
for lack of merit and ruled that there was no employer-employee
relationship between petitioners and P&G. He found that the
selection and engagement of the petitioners, the payment of their
wages, the power of dismissal and control with respect to the
means and methods by which their work was accomplished, were
all done and exercised by Promm-Gem/SAPS. He further found
that Promm-Gem and SAPS were legitimate independent job
contractors. The dispositive portion of his Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered
Dismissing the above-entitled cases against respondent Procter &
Gamble (Phils.), Inc. for lack of merit.
SO ORDERED.12
Ruling of the NLRC
Appealing to the NLRC, petitioners disputed the Labor Arbiter’s
findings. On July 27, 1998, the NLRC rendered a Decision13
disposing as follows:
WHEREFORE, premises considered, the appeal of complainants is
hereby DISMISSED and the decision appealed from AFFIRMED.
SO ORDERED.14
Petitioners filed a motion for reconsideration but the motion was
denied in the November 19, 1998 Resolution.15
Ruling of the Court of Appeals
Petitioners then filed a petition for certiorari with the CA, alleging
grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the Labor Arbiter and the NLRC.
However, said petition was also denied by the CA which disposed
as follows:
38
WHEREFORE, the decision of the National Labor Relations
Commission dated July 27, 1998 is AFFIRMED with the
MODIFICATION that respondent Procter & Gamble Phils., Inc. is
ordered to pay service incentive leave pay to petitioners.
SO ORDERED.16
Petitioners filed a motion for reconsideration but the motion was
also denied. Hence, this petition.
Issues
Petitioners now come before us raising the following issues:
I.
WHETHER X X X THE HONORABLE COURT OF APPEALS HAS
COMMITTED [A] REVERSIBLE ERROR WHEN IT DID NOT FIND
THE PUBLIC RESPONDENTS TO HAVE ACTED WITH GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OF OR IN
EXCESS OF JURISDICTION IN RENDERING THE QUESTIONED
JUDGMENT WHEN, OBVIOUSLY, THE PETITIONERS WERE
ABLE TO PROVE AND ESTABLISH THAT RESPONDENT
PROCTER & GAMBLE PHILS., INC. IS THEIR EMPLOYER AND
THAT THEY WERE ILLEGALLY DISMISSED BY THE FORMER.
II.
WHETHER X X X THE HONORABLE COURT OF APPEALS HAS
COMMITTED [A] REVERSIBLE ERROR WHEN IT DID NOT
DECLARE THAT THE PUBLIC RESPONDENTS HAD ACTED
WITH GRAVE ABUSE OF DISCRETION WHEN THE LATTER DID
NOT FIND THE PRIVATE RESPONDENTS LIABLE TO THE
PETITIONERS FOR PAYMENT OF ACTUAL, MORAL AND
EXEMPLARY DAMAGES AS WELL AS LITIGATION COSTS AND
ATTORNEY’S FEES.17
Simply stated, the issues are: (1) whether P&G is the employer of
petitioners; (2) whether petitioners were illegally dismissed; and (3)
whether petitioners are entitled for payment of actual, moral and
exemplary damages as well as litigation costs and attorney’s fees.
Petitioners’ Arguments
Petitioners insist that they are employees of P&G. They claim that
they were recruited by the salesmen of P&G and were engaged to
undertake merchandising chores for P&G long before the existence
of Promm-Gem and/or SAPS. They further claim that when the
latter had its so-called re-alignment program, petitioners were
instructed to fill up application forms and report to the agencies
which P&G created.18
Petitioners further claim that P&G instigated their dismissal from
work as can be gleaned from its letter19 to SAPS dated February
24, 1993, informing the latter that their Merchandising Services
Contract will no longer be renewed.
Petitioners further assert that Promm-Gem and SAPS are labor-
only contractors providing services of manpower to their client.
They claim that the contractors have neither substantial capital nor
tools and equipment to undertake independent labor contracting.
Petitioners insist that since they had been engaged to perform
activities which are necessary or desirable in the usual business or
trade of P&G, then they are its regular employees.20
Respondents’ Arguments
On the other hand, P&G points out that the instant petition raises
only questions of fact and should thus be thrown out as the Court is
not a trier of facts. It argues that findings of facts of the NLRC,
particularly where the NLRC and the Labor Arbiter are in
agreement, are deemed binding and conclusive on the Supreme
Court.
P&G further argues that there is no employment relationship
between it and petitioners. It was Promm-Gem or SAPS that (1)
selected petitioners and engaged their services; (2) paid their
salaries; (3) wielded the power of dismissal; and (4) had the power
of control over their conduct of work.
P&G also contends that the Labor Code neither defines nor limits
which services or activities may be validly outsourced. Thus, an
employer can farm out any of its activities to an independent
contractor, regardless of whether such activity is peripheral or core
in nature. It insists that the determination of whether to engage the
services of a job contractor or to engage in direct hiring is within the
ambit of management prerogative.
At this juncture, it is worth mentioning that on January 29, 2007, we
deemed as waived the filing of the Comment of Promm-Gem on
the petition.21 Also, although SAPS was impleaded as a party in the
proceedings before the Labor Arbiter and the NLRC, it was no
longer impleaded as a party in the proceedings before the CA.22
Hence, our pronouncements with regard to SAPS are only for the
purpose of determining the obligations of P&G, if any.
Our Ruling
The petition has merit.
As a rule, the Court refrains from reviewing factual assessments of
lower courts and agencies exercising adjudicative functions, such
as the NLRC. Occasionally, however, the Court is constrained to
wade into factual matters when there is insufficient or insubstantial
evidence on record to support those factual findings; or when too
much is concluded, inferred or deduced from the bare or
incomplete facts appearing on record.23 In the present case, we
find the need to review the records to ascertain the facts.
Labor-only contracting and job contracting
In order to resolve the issue of whether P&G is the employer of
petitioners, it is necessary to first determine whether Promm-Gem
and SAPS are labor-only contractors or legitimate job contractors.
The pertinent Labor Code provision on the matter states:
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.
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that
he is liable to employees directly employed by him.
The Secretary of Labor 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.
(Emphasis and underscoring supplied.)
Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor
Code, as amended by Department Order No. 18-02,24 distinguishes
between legitimate and labor-only contracting:
xxxx
Section 3. Trilateral Relationship in Contracting Arrangements. In
legitimate contracting, there exists a trilateral relationship under
which there is a contract for a specific job, work or service between
the principal and the contractor or subcontractor, and a contract of
employment between the contractor or subcontractor and its
workers. Hence, there are three parties involved in these
arrangements, the principal which decides to farm out a job or
service to a contractor or subcontractor, the contractor or
subcontractor which has the capacity to independently undertake
the performance of the job, work or service, and the contractual
workers engaged by the contractor or subcontractor to accomplish
the job[,] work or service.
xxxx
Section 5. Prohibition against labor-only contracting. Labor-only
contracting is hereby declared prohibited. For this purpose, labor-
only contracting shall refer to an arrangement where the contractor
or subcontractor merely recruits, supplies or places workers to
perform a job, work or service for a principal, and any of the
following elements are present:
i) The contractor or subcontractor does not have substantial capital
or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are
directly related to the main business of the principal; or
39
ii) [T]he contractor does not exercise the right to control over the
performance of the work of the contractual employee.
The foregoing provisions shall be without prejudice to the
application of Article 248 (c) of the Labor Code, as amended.
"Substantial capital or investment" refers to capital stocks and
subscribed capitalization in the case of corporations, tools,
equipment, implements, machineries and work premises, actually
and directly used by the contractor or subcontractor in the
performance or completion of the job, work or service contracted
out.
The "right to control" shall refer to the right reserved to the person
for whom the services of the contractual workers are performed, to
determine not only the end to be achieved, but also the manner
and means to be used in reaching that end.
x x x x (Underscoring supplied.)
Clearly, the law and its implementing rules allow contracting
arrangements for the performance of specific jobs, works or
services. Indeed, it is management prerogative to farm out any of
its activities, regardless of whether such activity is peripheral or
core in nature. However, in order for such outsourcing to be valid, it
must be made to an independent contractor because the current
labor rules expressly prohibit labor-only contracting.
To emphasize, there is labor-only contracting when the contractor
or sub-contractor merely recruits, supplies or places workers to
perform a job, work or service for a principal25 and any of the
following elements are present:
i) The contractor or subcontractor does not have substantial capital
or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are
directly related to the main business of the principal; or
ii) The contractor does not exercise the right to control over the
performance of the work of the contractual employee.
(Underscoring supplied)
In the instant case, the financial statements26 of Promm-Gem show
that it
has authorized capital stock of ₱1 million and a paid-in capital, or
capital available for operations, of ₱500,000.00 as of 1990.27 It also
has long term assets worth ₱432,895.28 and current assets of
₱719,042.32. Promm-Gem has also proven that it maintained its
own warehouse and office space with a floor area of 870 square
meters.28 It also had under its name three registered vehicles which
were used for its promotional/merchandising business.29 Promm-
Gem also has other clients30 aside from P&G.31 Under the
circumstances, we find that Promm-Gem has substantial
investment which relates to the work to be performed. These
factors negate the existence of the element specified in Section 5(i)
of DOLE Department Order No. 18-02.
The records also show that Promm-Gem supplied its complainant-
workers with the relevant materials, such as markers, tapes, liners
and cutters, necessary for them to perform their work. Promm-Gem
also issued uniforms to them. It is also relevant to mention that
Promm-Gem already considered the complainants working under it
as its regular, not merely contractual or project, employees.32 This
circumstance negates the existence of element (ii) as stated in
Section 5 of DOLE Department Order No. 18-02, which speaks of
contractual employees. This, furthermore, negates – on the part of
Promm-Gem – bad faith and intent to circumvent labor laws which
factors have often been tipping points that lead the Court to strike
down the employment practice or agreement concerned as
contrary to public policy, morals, good customs or public order.33
Under the circumstances, Promm-Gem cannot be considered as a
labor-only contractor. We find that it is a legitimate independent
contractor.
On the other hand, the Articles of Incorporation of SAPS shows that
it has a paid-in capital of only ₱31,250.00. There is no other
evidence presented to show how much its working capital and
assets are. Furthermore, there is no showing of substantial
investment in tools, equipment or other assets.
In Vinoya v. National Labor Relations Commission,34 the Court held
that "[w]ith the current economic atmosphere in the country, the
paid-in capitalization of PMCI amounting to ₱75,000.00 cannot be
considered as substantial capital and, as such, PMCI cannot
qualify as an independent contractor."35 Applying the same
rationale to the present case, it is clear that SAPS – having a paid-
in capital of only ₱31,250 - has no substantial capital. SAPS’ lack of
substantial capital is underlined by the records36 which show that
its payroll for its merchandisers alone for one month would already
total ₱44,561.00. It had 6-month contracts with P&G.37 Yet SAPS
failed to show that it could complete the 6-month contracts using its
own capital and investment. Its capital is not even sufficient for one
month’s payroll. SAPS failed to show that its paid-in capital of
₱31,250.00 is sufficient for the period required for it to generate its
needed revenue to sustain its operations independently.
Substantial capital refers to capitalization used in the performance
or completion of the job, work or service contracted out. In the
present case, SAPS has failed to show substantial capital.
Furthermore, the petitioners have been charged with the
merchandising and promotion of the products of P&G, an activity
that has already been considered by the Court as doubtlessly
directly related to the manufacturing business,38 which is the
principal business of P&G. Considering that SAPS has no
substantial capital or investment and the workers it recruited are
performing activities which are directly related to the principal
business of P&G, we find that the former is engaged in "labor-only
contracting".
"Where ‘labor-only’ contracting exists, the Labor Code itself
establishes an employer-employee relationship between the
employer and the employees of the ‘labor-only’ contractor."39 The
statute establishes this relationship for a comprehensive purpose:
to prevent a circumvention of labor laws. The contractor is
considered merely an agent of the principal employer and the latter
is responsible to the employees of the labor-only contractor as if
such employees had been directly employed by the principal
employer.40
Consequently, the following petitioners, having been recruited and
supplied
by SAPS41 -- which engaged in labor-only contracting -- are
considered as the employees of P&G: Arthur Corpuz, Eric Aliviado,
Monchito Ampeloquio, Abraham Basmayor, Jr., Jonathan Mateo,
Lorenzo Platon, Estanislao Buenaventura, Lope Salonga, Franz
David, Nestor Ignacio, Jr., Rolando Romasanta, Roehl Agoo,
Bonifacio Ortega, Arsenio Soriano, Jr., Arnel Endaya, Roberto
Enriquez, Edgardo Quiambao, Santos Bacalso, Samson Basco,
Alstando Montos, Rainer N. Salvador, Pedro G. Roy, Leonardo F.
Talledo, Enrique F. Talledo, Joel Billones, Allan Baltazar, Noli
Gabuyo, Gerry Gatpo, German Guevara, Gilbert V. Miranda,
Rodolfo C. Toledo, Jr., Arnold D. Laspoña, Philip M. Loza, Mario N.
Coldayon, Orlando P. Jimenez, Fred P. Jimenez, Restituto C.
Pamintuan, Jr., Rolando J. De Andres, Artuz Bustenera, Jr.,
Roberto B. Cruz, Rosedy O. Yordan, Orlando S. Balangue, Emil
Tawat, Cresente J. Garcia, Melencio Casapao, Romeo Vasquez,
Renato dela Cruz, Romeo Viernes, Jr., Elias Basco and Dennis
Dacasin.
The following petitioners, having worked under, and been
dismissed by Promm-Gem, are considered the employees of
Promm-Gem, not of P&G: Wilfredo Torres, John Sumergido, Edwin
Garcia, Mario P. Liongson, Jr., Ferdinand Salvo, Alejandrino
Abaton, Emmanuel A. Laban, Ernesto Soyosa, Aladino Gregore,
Jr., Ramil Reyes, Ruben Vasquez, Jr., Maximino Pascual, Willie
Ortiz, Armando Villar, Jose Fernando Gutierrez, Ramiro Pita,
Fernando Macabenta, Nestor Esquila, Julio Rey, Albert Leynes,
Ernesto Calanao, Roberto Rosales, Antonio Dacuma, Tadeo
Durano, Raul Dulay, Marino Maranion, Joseph Banico, Melchor
Cardano, Reynaldo Jacaban, and Joeb Aliviado.42
Termination of services
We now discuss the issue of whether petitioners were illegally
dismissed. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just43 or
authorized44 cause.
In the instant case, the termination letters given by Promm-Gem to
its employees uniformly specified the cause of dismissal as grave
misconduct and breach of trust, as follows:
xxxx
This informs you that effective May 5, 1992, your employment with
our company, Promm-Gem, Inc. has been terminated. We find your
expressed admission, that you considered yourself as an employee
of Procter & Gamble Phils., Inc…. and assailing the integrity of the
Company as legitimate and independent promotion firm, is deemed
as an act of disloyalty prejudicial to the interests of our Company:
40
serious misconduct and breach of trust reposed upon you as
employee of our Company which [co]nstitute just cause for the
termination of your employment.
x x x x45
Misconduct has been defined as improper or wrong conduct; the
transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, unlawful in character implying
wrongful intent and not mere error of judgment. The misconduct to
be serious must be of such grave and aggravated character and
not merely trivial and unimportant.46 To be a just cause for
dismissal, such misconduct (a) must be serious; (b) must relate to
the performance of the employee’s duties; and (c) must show that
the employee has become unfit to continue working for the
employer.47
In other words, in order to constitute serious misconduct which will
warrant the dismissal of an employee under paragraph (a) of Article
282 of the Labor Code, it is not sufficient that the act or conduct
complained of has violated some established rules or policies. It is
equally important and required that the act or conduct must have
been performed with wrongful intent.48 In the instant case,
petitioners-employees of Promm-Gem may have committed an
error of judgment in claiming to be employees of P&G, but it cannot
be said that they were motivated by any wrongful intent in doing so.
As such, we find them guilty of only simple misconduct for assailing
the integrity of Promm-Gem as a legitimate and independent
promotion firm. A misconduct which is not serious or grave, as that
existing in the instant case, cannot be a valid basis for dismissing
an employee.
Meanwhile, loss of trust and confidence, as a ground for dismissal,
must be based on the willful breach of the trust reposed in the
employee by his employer. Ordinary breach will not suffice. A
breach of trust is willful if it is done intentionally, knowingly and
purposely, without justifiable excuse, as distinguished from an act
done carelessly, thoughtlessly, heedlessly or inadvertently.49
Loss of trust and confidence, as a cause for termination of
employment, is premised on the fact that the employee concerned
holds a position of responsibility or of trust and confidence. As
such, he must be invested with confidence on delicate matters,
such as custody, handling or care and protection of the property
and assets of the employer. And, in order to constitute a just cause
for dismissal, the act complained of must be work-related and must
show that the employee is unfit to continue to work for the
employer.50 In the instant case, the petitioners-employees of
Promm-Gem have not been shown to be occupying positions of
responsibility or of trust and confidence. Neither is there any
evidence to show that they are unfit to continue to work as
merchandisers for Promm-Gem.
All told, we find no valid cause for the dismissal of petitioners-
employees of Promm-Gem.
While Promm-Gem had complied with the procedural aspect of due
process in terminating the employment of petitioners-employees,
i.e., giving two notices and in between such notices, an opportunity
for the employees to answer and rebut the charges against them, it
failed to comply with the substantive aspect of due process as the
acts complained of neither constitute serious misconduct nor
breach of trust. Hence, the dismissal is illegal.
With regard to the petitioners placed with P&G by SAPS, they were
given no written notice of dismissal. The records show that upon
receipt by SAPS of P&G’s letter terminating their "Merchandising
Services Contact" effective March 11, 1993, they in turn verbally
informed the concerned petitioners not to report for work anymore.
The concerned petitioners related their dismissal as follows:
xxxx
5. On March 11, 1993, we were called to a meeting at SAPS office.
We were told by Mr. Saturnino A. Ponce that we should already
stop working immediately because that was the order of Procter
and Gamble. According to him he could not do otherwise because
Procter and Gamble was the one paying us. To prove that Procter
and Gamble was the one responsible in our dismissal, he showed
to us the letter51 dated February 24, 1993, x x x
February 24, 1993
Sales and Promotions Services
Armon’s Bldg., 142 Kamias Road,
Quezon City
Attention: Mr. Saturnino A. Ponce
President & General Manager WHEREFORE, the petition is GRANTED. The Decision dated
Gentlemen: March 21, 2003 of the Court of Appeals in CA-G.R. SP No. 52082
Based on our discussions last 5 and 19 February 1993, this and the Resolution dated October 20, 2003 are REVERSED and
formally informs you that we will not be renewing our SET ASIDE. Procter & Gamble Phils., Inc. and Promm-Gem, Inc.
Merchandising Services Contract with your agency. are ORDERED to reinstate their respective employees immediately
Please immediately undertake efforts to ensure that your services without loss of seniority rights and with full backwages and other
to the Company will terminate effective close of business hours of benefits from the time of their illegal dismissal up to the time of their
11 March 1993. actual reinstatement. Procter & Gamble Phils., Inc. is further
This is without prejudice to whatever obligations you may have to ORDERED to pay each of those petitioners considered as its
the company under the abovementioned contract. employees, namely Arthur Corpuz, Eric Aliviado, Monchito
Very truly yours, Ampeloquio, Abraham Basmayor, Jr., Jonathan Mateo, Lorenzo
(Sgd.) Platon, Estanislao Buenaventura, Lope Salonga, Franz David,
EMMANUEL M. NON Nestor Ignacio, Rolando Romasanta, Roehl Agoo, Bonifacio
Sales Merchandising III Ortega, Arsenio Soriano, Jr., Arnel Endaya, Roberto Enriquez,
6. On March 12, 1993, we reported to our respective outlet Edgardo Quiambao, Santos Bacalso, Samson Basco, Alstando
assignments. But, we were no longer allowed to work and we were Montos, Rainer N. Salvador, Pedro G. Roy, Leonardo F. Talledo,
refused entrance by the security guards posted. According to the Enrique F. Talledo, Joel Billones, Allan Baltazar, Noli Gabuyo, Gerry
security guards, all merchandisers of Procter and Gamble under Gatpo, German Guevara, Gilbert Y. Miranda, Rodolfo C. Toledo, Jr.,
S[APS] who filed a case in the Dept. of Labor are already Arnold D. Laspoña, Philip M. Loza, Mario N. Coldayon, Orlando P.
dismissed as per letter of Procter and Gamble dated February 25, Jimenez, Fred P. Jimenez, Restituto C. Pamintuan, Jr., Rolando J.
1993. x x x52 De Andres, Artuz Bustenera, Jr., Roberto B. Cruz, Rosedy O.
Neither SAPS nor P&G dispute the existence of these Yordan, Orlando S. Balangue, Emil Tawat, Cresente J. Garcia,
circumstances. Parenthetically, unlike Promm-Gem which Melencio Casapao, Romeo Vasquez, Renato dela Cruz, Romeo
dismissed its employees for grave misconduct and breach of trust Viernes, Jr., Elias Basco and Dennis Dacasin, ₱25,000.00 as moral
due to disloyalty, SAPS dismissed its employees upon the initiation damages plus ten percent of the total sum as and for attorney’s
of P&G. It is evident that SAPS does not carry on its own business fees.
because the termination of its contract with P&G automatically Let this case be REMANDED to the Labor Arbiter for the
meant for it also the termination of its employees’ services. It is computation, within 30 days from receipt of this Decision, of
obvious from its act that SAPS had no other clients and had no petitioners’ backwages and other benefits; and ten percent of the
intention of seeking other clients in order to further its total sum as and for attorney’s fees as stated above; and for
merchandising business. From all indications SAPS, existed to immediate execution.
cater solely to the need of P&G for the supply of employees in the SO ORDERED.
latter’s merchandising concerns only. Under the circumstances
prevailing in the instant case, we cannot consider SAPS as an
independent contractor.
Going back to the matter of dismissal, it must be emphasized that
the onus probandi to prove the lawfulness of the dismissal rests
with the employer.53 In termination cases, the burden of proof rests
upon the employer to show that the dismissal is for just and valid
cause.54 In the instant case, P&G failed to discharge the burden of
proving the legality and validity of the dismissals of those
petitioners who are considered its employees. Hence, the
dismissals necessarily were not justified and are therefore illegal.
Damages
We now go to the issue of whether petitioners are entitled to
damages. Moral
and exemplary damages are recoverable where the dismissal of an
employee was attended by bad faith or fraud or constituted an act
oppressive to labor or was done in a manner contrary to morals,
good customs or public policy.55
With regard to the employees of Promm-Gem, there being no
evidence of bad faith, fraud or any oppressive act on the part of the
latter, we find no support for the award of damages.
As for P&G, the records show that it dismissed its employees
through SAPS in a manner oppressive to labor. The sudden and
peremptory barring of the concerned petitioners from work, and
from admission to the work place, after just a one-day verbal
notice, and for no valid cause bellows oppression and utter
disregard of the right to due process of the concerned petitioners.
Hence, an award of moral damages is called for.
Attorney’s fees may likewise be awarded to the concerned
petitioners who were illegally dismissed in bad faith and were
compelled to litigate or incur expenses to protect their rights by
reason of the oppressive acts56 of P&G.
Lastly, under Article 279 of the Labor Code, an employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges, inclusive of
allowances, and other benefits or their monetary equivalent from
the time the compensation was withheld up to the time of actual
reinstatement.57 Hence, all the petitioners, having been illegally
dismissed are entitled to reinstatement without loss of seniority
rights and with full back wages and other benefits from the time of
their illegal dismissal up to the time of their actual reinstatement.
1avvphi1

41
G.R. No. 149793. April 15, 2005
WACK WACK GOLF & COUNTRY CLUB, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MARTINA G.
CAGASAN, CARMENCITA F. DOMINGUEZ, and BUSINESS
STAFFING AND MANAGEMENT, INC., Respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review of the Resolution1 of the Court of
Appeals (CA) in CA-G.R. SP No. 63658, dismissing the petition for
certiorari before it for being insufficient in form and the subsequent
resolution denying the motion for reconsideration thereof.
The undisputed antecedent facts are as follows:
On November 29, 1996, a fire destroyed a large portion of the main
clubhouse of the Wack Wack Golf and Country Club (Wack Wack),
including its kitchen. In view of the reconstruction of the whole
clubhouse complex, Wack Wack filed a notice with the Department
of Labor and Employment (DOLE) on April 14, 1997 that it was
going to suspend the operations of the Food and Beverage (F & B)
Department one (1) month thereafter. Notices to 54 employees (out
of a complement of 85 employees in the department) were also
sent out, informing them that they need not report for work
anymore after April 14, 1997 but that they would still be paid their
salaries up to May 14, 1997. They were further told that they would
be informed once full operations in Wack Wack resume.
The Wack Wack Golf Employees Union branded the suspension of
operations of the F & B Department as arbitrary, discriminatory and
constitutive of union-busting, so they filed a notice of strike with the
DOLE’s National Conciliation and Mediation Board (NCMB).
Several meetings between the officers of Wack Wack and the
Union, headed by its President, Crisanto Baluyot, Sr., and assisted
by its counsel, Atty. Pedro T. De Quiroz, were held until the parties
entered into an amicable settlement. An Agreement2 was forged
whereby a special separation benefit/retirement package for
interested Wack Wack employees, especially those in the F & B
Department was offered. The terms and conditions thereof reads
as follows:
1. The UNION and the affected employees of F & B who are
members of the UNION hereby agree to accept the special
separation benefit package agreed upon between the CLUB
management on the one hand, and the UNION officers and the
UNION lawyer on the other, in the amount equivalent to one-and-
one-half months salary for every year of service, regardless of the
number of years of service rendered. That, in addition, said
employees shall also receive the other benefits due them, namely,
the cash equivalent of unused vacation and sick leave credits,
proportionate 13th month pay; and other benefits, if any, computed
without premium;
2. That the affected F & B employees who have already signified
intention to be separated from the service under the special
separation benefit package shall receive their separation pay as
soon as possible;
3. That the same package shall, likewise, be made available to
other employees who are members of the bargaining unit and who
may or may not be affected by future similar suspensions of
operations. The UNION re-affirms and recognizes that it is the sole
prerogative of the management of the Club to suspend part or all of
its operations as may be necessitated by the exigencies of the
situation and the general welfare of its membership. The closure of
the West Course, which is scheduled for conversion to an All-
Weather Championship golf course, is cited as an example. It is,
however, agreed that if a sufficient number of employees, other
than F & B employees, would apply for availment of the package
within the next two months, the Club may no longer go through the
process of formally notifying the Department of Labor. The
processing and handling of benefits for these other employees
shall be done over a transition period within one year;
4. All qualified employees who may have been separated from the
service under the above package shall be considered under a
priority basis for employment by concessionaires and/or
contractors, and even by the Club upon full resumption of
operations, upon the recommendation of the UNION. The Club
may even persuade an employee-applicant for availment under the
package to remain on his/her job, or be assigned to another
position.3
42
Respondent Carmencita F. Dominguez, who was then working in
the Administrative Department of Wack Wack, was the first to avail
of the special separation package.4 Computed at 1½ months for
every year of service pursuant to the Agreement, her separation
pay amounted to ₱91,116.84, while economic benefits amounted to
₱6,327.53.5 On September 18, 1997, Dominguez signed a Release
and Quitclaim6 in favor of Wack Wack.
Respondent Martina B. Cagasan was Wack Wack’s Personnel
Officer who, likewise, volunteered to avail of the separation
package.7 On September 30, 1997, she received from Wack Wack
the amount of ₱469,495.66 as separation pay and other economic
benefits amounting to ₱17,010.50.8 A Release and Quitclaim9 was
signed on September 30, 1997.
The last one to avail of the separation package was Crisanto
Baluyot, Sr. who, in a Letter10 dated January 16, 1998 addressed to
Mr. Bienvenido Juan, Administrative Manager of Wack Wack,
signified his willingness to avail of the said early retirement
package. The total amount of ₱688,290.3011 was received and the
Release and Quitclaim12 signed on May 14, 1998.
On October 15, 1997, Wack Wack entered into a Management
Contract13 with Business Staffing and Management, Inc. (BSMI), a
corporation engaged in the business as Management Service
Consultant undertaking and managing for a fee projects which are
specialized and technical in character like marketing, promotions,
merchandising, financial management, operation management and
the like.14 BSMI was to provide management services for Wack
Wack in the following operational areas:
1. Golf operations management;
2. Management and maintenance of building facilities;
3 .Management of food and beverage operation;
4. Management of materials and procurement functions;
5. To provide and undertake administrative and support services for
the [said] projects.15
Pursuant to the Agreement, the retired employees of Wack Wack
by reason of their experience were given priority by BSMI in hiring.
On October 21, 1997, respondents Cagasan and Dominguez filed
their respective applications16 for employment with BSMI. They
were eventually hired by BSMI to their former positions in Wack
Wack as project employees and were issued probationary
contracts.17
Aside from BSMI, Wack Wack also engaged several contractors
which were assigned in various operating functions of the club, to
wit:
1. Skills and Talent Employment Promotion (STEP) whose 90
workers are designated as locker attendants, golf bag attendants,
nurses, messengers, technical support engineer, golf director,
agriculturist, utilities and gardeners;
2. Marvel Manpower Agency - whose 19 employees are designated
as sweepers, locker attendants, drive range attendant, telephone
operator, workers and secretaries;
3 City Service Corporation – contractor for janitorial services for the
whole club;
4. Microstar Business and Management Services, Inc. whose 15
employees are designated in the Finance and Accounting
departments.18
Due to these various management service contracts, BSMI
undertook an organizational analysis and manpower evaluation to
determine its efficacy, and to streamline its operations. In the
course of its assessment, BSMI saw that the positions of Cagasan
and Dominguez were redundant. In the case of respondent
Cagasan, her tasks as personnel officer were likewise being taken
cared of by the different management service contractors; on the
other hand, Dominguez’s work as telephone operator was taken
over by the personnel of the accounting department. Thus, in
separate Letters19 dated February 27, 1998, the services of
Dominguez and Cagasan were terminated. With respect to Baluyot,
he applied for the position of Chief Porter on May 12, 1998. The
position, however, was among those recommended to be abolished
by the BSMI, so he was offered the position of Caddie Master Aide
with a starting salary of ₱5,500.00 a month. Baluyot declined the
offer. Pending Wack Wack’s approval of the proposed abolition of
the position of Chief Porter, Baluyot was temporarily accepted to
the position with a monthly salary of ₱12,000.00. In July 1998,
Baluyot decided not to accept the position of Caddie Master Aide;
thus, BSMI continued with its plan to abolish the said position of
Chief Porter and Baluyot was dismissed from the service.
Thereafter, the three (3) employees filed their respective
complaints with the National Labor Relations Commission (NLRC)
for illegal dismissal and damages against Wack Wack and BSMI.
The complainants averred that they were dismissed without cause.
They accepted the separation package upon the assurance that
they would be given their former work and assignments once the
Food and Beverage Department of Wack Wack resumes its
operations. On the other hand, the respondents therein alleged that
the dismissal of the complainants were made pursuant to a study
and evaluation of the different jobs and positions and found them to
be redundant.
In a Decision20 dated January 25, 2000, the Labor Arbiter found that
the dismissal of Dominguez and Cagasan was for a valid and
authorized cause, and dismissed their complaints.
The position of personnel manager occupied by Martina Cagasan
was redundated as it is allegedly not necessary, because her
functions will be taken over [by] the field superintendent and the
company’s personnel and operations manager. The work of
Carmencita Dominguez on the other hand as telephone operator
will be taken over by the accounting department personnel. Such
move really are intended to streamline operations. While
admittedly, they are still necessary in the operations of Wack Wack,
their jobs can be assigned to some other personnel, who will be
performing dual functions and does save Wack Wack money. This
is feasible on account of the fact that they are functions pertaining
to administrative work.21
As to Baluyot, however, the Labor Arbiter found that while the
position of chief porter had been abolished, the caddie master aide
had been created. Their functions were one and the same. The
porters, upon instructions from the chief porter, are the ones who
bring down the golf bags of the players from the vehicle. The
caddie master receives them and counts the number of clubs
inside the golf set. After the game, the same procedure is repeated
before the golf sets are loaded once more into the vehicle.22 The
Labor Arbiter found that the dismissal of Baluyot as Chief Porter
was unjustified and can not be considered redundant in the case at
bar. It was a means resorted to in order to unduly sever Baluyot’s
relationship with BSMI without justifiable cause. The Labor Arbiter
therefore found Baluyot’s dismissal to be illegal. The dispositive
portion of the decision reads as follows:
CONFORMABLY WITH THE FOREGOING, judgment is hereby
rendered dismissing the complaints of Carmencita F. Dominguez
and Martina Cagasan for lack of merit. Finding Crisanto Baluyot’s
dismissal to be illegal. Consequently, he should immediately be
reinstated to his former position as Chief Porter or Caddie Master,
and paid his backwages which, as of December 31, 1999, has
accumulated in the sum of ₱180,000.00 by BSMI.
All other claims are dismissed for lack of merit.23
Since Baluyot no longer appealed the decision, complainants
Dominguez and Cagasan filed a Partial Appeal on the ground of
prima facie abuse of discretion on the part of the Labor Arbiter and
serious errors in his findings of facts and law. Their claims were
anchored on the Agreement between the Union and management,
that they were promised to be rehired upon the full resumption of
operations of Wack Wack. They asserted that Wack Wack and
BSMI should not avoid responsibility to their employment, by
conniving with each other to render useless and meaningless the
Agreement.
BSMI also appealed to the NLRC, alleging that the Labor Arbiter
committed grave abuse of discretion in finding Baluyot’s dismissal
to be illegal, when in fact his position as Chief Porter was abolished
pursuant to a bona fide reorganization of Wack Wack. It was not
motivated by factors other than the promotion of the interest and
welfare of the company.
On September 27, 2000, the NLRC rendered its Decision24 ordering
Wack Wack to reinstate Carmencita F. Dominguez and Martina
Cagasan to their positions in respondent Wack Wack Golf &
Country Club with full backwages and other benefits from the date
of their dismissal until actually reinstated. It anchored its ruling on
the Agreement dated June 16, 1997 reached between the Union
and Wack Wack, particularly Section 425 thereof. The NLRC
directed Wack Wack to reinstate the respondents and pay their
backwages since "Business Staffing and Management, Inc. (BSMI)
43
is a contractor who [merely] supplies workers to respondent Wack
Wack. It has nothing to do with the grievance of the complainants
with their employer, respondent Wack Wack."
Wack Wack and BSMI filed a motion for reconsideration which was
denied in the Resolution26 dated December 15, 2000.
Wack Wack, now the petitioner, consequently filed a petition for
certiorari with the Court of Appeals, docketed as CA-G.R. SP No.
63658 alleging the following:
A. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION AND DENIAL OF DUE PROCESS IN HOLDING
THAT RESPONDENTS CAGASAN AND DOMINGUEZ HAVE
REGAINED THEIR JOBS OR EMPLOYMENT PURSUANT TO
THE AGREEMENT BETWEEN PETITIONER AND WACK WACK
GOLF EMPLOYEES UNION.
B. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION AND DENIAL OF DUE PROCESS IN RULING
THAT RESPONDENT BSMI IS NOT AN INDEPENDENT
CONTRACTOR BUT A MERE SUPPLIER OF WORKERS TO THE
PETITIONER.
C. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OR EXCESS OF
JURISDICTION AND DENIAL OF DUE PROCESS IN HOLDING
PETITIONER LIABLE FOR THE REINSTATEMENT OF
RESPONDENTS CAGASAN AND DOMINGUEZ AND FOR THE
PAYMENT OF THEIR SUPPOSED BACKWAGES DESPITE THE
ABSENCE OF EMPLOYER-EMPLOYEE RELATION BETWEEN
THEM.27
Likewise, BSMI also assailed the resolutions of the NLRC and filed
its own petition for certiorari with the CA, docketed as CA-G.R. SP
No. 63553.28 A perusal of the petition which is attached to the
records reveal that BSMI ascribes grave abuse of discretion on the
part of the NLRC in ruling that: (a) the private respondents have
regained their employment pursuant to the Agreement between
Wack Wack and the Wack Wack Golf Employees Union; (b) the
dismissal of private respondents was made pursuant to the
petitioner’s exercise of its management prerogatives; and (c) the
petitioner (BSMI) is liable for the reinstatement of private
respondents and the payment of their backwages.29
On April 3, 2001, the CA (Twelfth Division) dismissed the petition
on the ground that the petitioner therein failed to attach an Affidavit
of Service as required in Section 11, Rule 13 of the 1997 Rules of
Civil Procedure. Moreover, the verification and certification against
forum shopping was insufficient for having been executed by the
general manager who claimed to be the duly-authorized
representative of the petitioner, but did not show any proof of
authority, i.e., a board resolution, to the effect.
A motion for reconsideration was, consequently, filed appending
thereto the requisite documents of proof of authority. It asserted
that in the interest of substantial justice, the CA should decide the
case on its merits.
BSMI filed a Comment30 to the Motion for Reconsideration of the
petitioner, also urging the CA to set aside technicalities and to
consider the legal issues involved: (a) whether or not there is a
guaranty of employment in favor of the complainants under the
Agreement between the petitioner and the Union; (b) whether or
not the termination of the employment of the complainants, based
on redundancy, is legal and valid; and (c) who are the parties liable
for the reinstatement of the complainants and the payment of
backwages. It further added that it shares the view of the petitioner,
that the assailed resolutions of the NLRC are tainted with legal
infirmities. For this reason, it was also constrained to file its own
petition for certiorari with the CA, docketed as CA-G.R. SP No.
63553 pending with the Special Fourth Division, just to stress that
there is no guaranty of perpetual employment in favor of the
complainants.
On August 31, 2001, the CA denied petitioner’s motion for
reconsideration.
The petitioner is now before the Court, assailing the twin
resolutions of the CA. It points out that BSMI has filed its petition
for certiorari before the CA one day late and yet, the Special Fourth
Division admitted the petition in the interest of substantial justice,
and directed the respondents to file a comment thereon;31 whereas,
in the instant case, the mere lack of proof of authority of Wack
Wack’s General Manager to sign the certificate of non-forum
shopping was considered fatal by the CA’s Twelfth Division. It
further asserts that its petition for certiorari is meritorious,
considering that the NLRC committed grave abuse of discretion in
ordering Wack Wack to reinstate the respondents Cagasan and
Dominguez, and to pay their backwages when indubitable evidence
shows that the said respondents were no longer employees of
Wack Wack when they filed their complaints with the Labor Arbiter.
There is merit in the petition.
In Novelty Philippines, Inc. v. Court of Appeals,32 the Court
recognized the authority of the general manager to sue on behalf of
the corporation and to sign the requisite verification and
certification of non-forum shopping. The general manager is also
one person who is in the best position to know the state of affairs of
the corporation. It was also error for the CA not to admit the
requisite proof of authority when in the Novelty case, the Court
ruled that the subsequent submission of the requisite documents
constituted substantial compliance with procedural rules. There is
ample jurisprudence holding that the subsequent and substantial
compliance of an appellant may call for the relaxation of the rules
of procedure in the interest of justice.33 While it is true that rules of
procedure are intended to promote rather than frustrate the ends of
justice, and while the swift unclogging of court dockets is a
laudable objective, it nevertheless must not be met at the expense
of substantial justice.34 It was, therefore, reversible error for the CA
to have dismissed the petition for certiorari before it. The ordinary
recourse for us to take is to remand the case to the CA for proper
disposition on the merits; however, considering that the records are
now before us, we deem it necessary to resolve the instant case in
order to ensure harmony in the rulings and expediency.
Indeed, the merits of the case constitute special or compelling
reasons for us to overlook the technical rules in this case. With the
dismissal of its petition for certiorari before the CA, the petitioner by
virtue of the NLRC decision is compelled to reinstate respondents
Cagasan and Dominguez and pay their full backwages from the
time of their dismissal until actual reinstatement when the attendant
circumstances, however, show that the respondents had no cause
of action against the petitioner for illegal dismissal and damages.
It must be recalled that said respondents availed of the special
separation package offered by the petitioner. This special
separation package was thought of and agreed by the two parties
(Wack Wack and the Union) after a series of discussions and
negotiations to avert any labor unrest due to the closure of Wack
Wack.35 Priority was given to the employees of the F & B
Department, but was, likewise, offered to the other employees who
may wish to avail of the separation package due to the
reconstruction of Wack Wack. Respondents do not belong to the F
& B Department and yet, on their own volition opted to avail of the
special separation package. The applications which were similarly
worded read as follows:
TO : WACK WACK GOLF & COUNTRY CLUB
BOARD OF DIRECTORS AND MANAGEMENT
Based on the information that the Club and the employees’ Union
have reached an agreement on a special separation benefit
package equivalent to one-and-one-half months salary for every
year of service, regardless of the number of years of service, for
employees who have been affected and may be affected by
ongoing as well as forthcoming Club renovation, construction and
related activities and reportedly even for those who may not be
affected but wish to avail of an early retirement under the above
package arrangement, I hereby register my desire to be separated
from the Club and receive the benefits under the above stated
package.36
Thereafter, the respondents signed their respective release and
quitclaims after receiving their money benefits.
It cannot be said that the respondents in the case at bar did not
fully comprehend and realize the consequences of their acts.
Herein respondents are not unlettered persons who need special
protection. They held responsible positions in the petitioner-
employer, so they presumably understood the contents of the
documents they signed. There is no showing that the execution
thereof was tainted with deceit or coercion. Further, the
respondents were paid hefty amounts of separation pay indicating
that their separation from the company was for a valuable
consideration. Where the person making the waiver has done so
44
voluntarily, with a full understanding thereof, and the consideration
for the quitclaim is credible and reasonable, the transaction must
be recognized as being a valid and binding undertaking.37 As in
contracts, these quitclaims amount to a valid and binding
compromise agreement between the parties which deserve to be
respected.38
We reiterate what was stated in the case of Periquet v. NLRC 39
that:
Not all waivers and quitclaims are invalid as against public policy. If
the agreement was voluntarily entered into and represents a
reasonable settlement, it is binding on the parties and may not later
be disowned simply because of a change of mind. It is only where
there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the
questionable transaction. But where it is shown that the person
making the waiver did so voluntarily, with full understanding of what
he was doing, and the consideration for the quitclaim is credible
and reasonable, the transaction must be recognized as a valid and
binding undertaking. …40
When the respondents voluntarily signed their quitclaims and
accepted the separation package offered by the petitioner, they,
thenceforth, already ceased to be employees of the petitioner.
Nowhere does it appear in the Agreement that the petitioner
assured the respondents of continuous employment in Wack Wack.
Qualified employees were given priority in being hired by its
concessionaires and/or contractors such as BSMI when it entered
into a management contract with the petitioner.
This brings us to the threshold issue on whether or not BSMI is an
independent contractor or a labor-only contractor. The NLRC posits
that BSMI is merely a supplier of workers or a labor-only contractor;
hence, the petitioner remains to be the principal employer of the
respondents and liable for their reinstatement and payment of
backwages.
The ruling of the NLRC is wrong. An independent contractor is one
who undertakes "job contracting," i.e., a person who: (a) carries on
an independent business and undertakes the contract work on his
own account under his own responsibility according to his own
manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance
of the work except as to the results thereof; and (b) has substantial
capital or investment in the form of tools, equipments, machineries,
work premises and other materials which are necessary in the
conduct of the business. Jurisprudential holdings are to the effect
that in determining the existence of an independent contractor
relationship, several factors may be considered, such as, but not
necessarily confined to, whether or not the contractor is carrying on
an independent business; the nature and extent of the work; the
skill required; the term and duration of the relationship; the right to
assign the performance of specified pieces of work; the control and
supervision of the work to another; the employer’s power with
respect to the hiring, firing, and payment of the contractor’s
workers; the control of the premises; the duty to supply premises,
tools, appliances, materials and labor; and the mode, manner and
terms of payment.41
There is indubitable evidence showing that BSMI is an independent
contractor, engaged in the management of projects, business
operations, functions, jobs and other kinds of business ventures,
and has sufficient capital and resources to undertake its principal
business. It had provided management services to various
industrial and commercial business establishments. Its Articles of
Incorporation proves its sufficient capitalization. In December 1993,
Labor Secretary Bienvenido Laguesma, in the case of In re Petition
for Certification Election Among the Regular Rank-and-File
Employees Workers of Byron-Jackson (BJ) Services International
Incorporated, Federation of Free Workers (FFW)-Byron Jackson
Services Employees Chapter, 42 recognized BSMI as an
independent contractor. As a legitimate job contractor, there can be
no doubt as to the existence of an employer-employee relationship
between the contractor and the workers.43
BSMI admitted that it employed the respondents, giving the said
retired employees some degree of priority merely because of their
work experience with the petitioner, and in order to have a smooth
transition of operations.44 In accordance with its own recruitment
policies, the respondents were made to sign applications for
employment, accepting the condition that they were hired by BSMI
as probationary employees only. Not being contrary to law, morals,
good custom, public policy and public order, these employment
contracts, which the parties are bound are considered valid.
Unfortunately, after a study and evaluation of its personnel
organization, BSMI was impelled to terminate the services of the
respondents on the ground of redundancy. This right to hire and fire
is another element of the employer-employee relationship45 which
actually existed between the respondents and BSMI, and not with
Wack Wack.
There being no employer-employee relationship between the
petitioner and respondents Cagasan and Dominguez, the latter
have no cause of action for illegal dismissal and damages against
the petitioner. Consequently, the petitioner cannot be validly
ordered to reinstate the respondents and pay them their claims for
backwages.
WHEREFORE, the petition is GRANTED. The Resolutions of the
Court of Appeals and the NLRC are SET ASIDE and REVERSED.
The complaints of respondents Cagasan and Dominguez are
DISMISSED. No costs.
SO ORDERED.

45
G.R. No. 180045 November 17, 2010
GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC),
DIONISIO BANLASAN, ALFREDO T. TAFALLA, TELESFORO D.
RUBIA, ROGELIO A. ALVAREZ, DOMINADOR A. ESCOBAL,
and ROSAURO PANIS, Respondents.
DECISION
NACHURA, J.:
This is a petition for review on certiorari under Rule 45 of the Rules
of Court, seeking to reverse and set aside the Decision1 and the
Resolution2 of the Court of Appeals (CA) dated September 7, 2006
and September 27, 2007, respectively, in CA-G.R. SP No. 50450.
The facts of the case are as follows:
Respondents Dionisio Banlasan, Alfredo T. Tafalla, Telesforo D.
Rubia, Rogelio A. Alvarez, Dominador A. Escobal, and Rosauro
Panis were employed as security guards by DNL Security Agency
(DNL Security). By virtue of the service contract entered into by
DNL Security and petitioner Government Service Insurance System
on May 1, 1978, respondents were assigned to petitioner’s
Tacloban City office, each receiving a monthly income of
₱1,400.00. Sometime in July 1989, petitioner voluntarily increased
respondents’ monthly salary to ₱3,000.00.3
In February 1993, DNL Security informed respondents that its
service contract with petitioner was terminated. This
notwithstanding, DNL Security instructed respondents to continue
reporting for work to petitioner. Respondents worked as instructed
until April 20, 1993, but without receiving their wages; after which,
they were terminated from employment.4
On June 15, 1995, respondents filed with the National Labor
Relations Commission (NLRC), Regional Arbitration Branch No.
VIII, Tacloban City, a complaint against DNL Security and petitioner
for illegal dismissal, separation pay, salary differential, 13th month
pay, and payment of unpaid salary.
On September 30, 1997, Labor Arbiter (LA) Benjamin S. Guimoc
rendered a decision5 against DNL Security and petitioner, the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in this manner[,] to
wit:
1. Finding no illegal dismissal of complainants;
2. Ordering respondent DNL Security Agency only to pay
complainants the amount of ₱176,130.00 representing separation
pay; the amount of ₱42,666.40 representing wages of
complainants from February 1993 to April 20, 1993;
3. Ordering as joint and solidary liability by the respondents DNL
Security Agency and GSIS the amount of ₱48,385.87 representing
salary differential[;] the amount of ₱55,564.92 as 13th month pay;
all in the aggregate sum of THREE HUNDRED TWENTY-TWO
THOUSAND SEVEN HUNDRED FORTY-SEVEN & 19/100
(₱322,747.19) to be paid by both or either of the said respondent
within ten (10) days from receipt of this decision and to be
deposited with the cashier of this office for proper disposition.
SO ORDERED.6
The LA found that respondents were not illegally terminated from
employment because the employment of security guards is
dependent on the service contract between the security agency
and its client. However, considering that respondents had been out
of work for a long period, and consonant with the principle of social
justice, the LA awarded respondents with separation pay equivalent
to one (1) month salary for every year of service, to be paid by DNL
Security. Because DNL Security instructed respondents to continue
working for petitioner from February 1993 to April 20, 1993, DNL
Security was also made to pay respondents’ wages for the period.
The LA further granted respondents’ claim of salary differential, as
they were paid wages below the minimum wage, as well as 13th
month pay. For these monetary awards, petitioner was made
solidarily liable with DNL Security, as the indirect employer of
respondents.7
DNL Security filed a motion for reconsideration, while petitioner
appealed to the NLRC.8
In a resolution9 dated December 9, 1997, the NLRC treated DNL
Security’s motion for reconsideration as an appeal, but dismissed
the same, as it was not legally perfected. It likewise dismissed
petitioner’s appeal, having been filed beyond the reglementary
period.
46
Undaunted, petitioner filed a petition for certiorari under Rule 65 of
the Rules of Court before the CA. On September 7, 2006, the CA
rendered the assailed Decision10 affirming the NLRC ruling.
Petitioner’s motion for reconsideration was denied by the CA on
September 27, 2007.
Hence, the present petition raising the following errors:
The Court of Appeals committed a reversible error in finding that
the public respondent NLRC did not commit grave abuse of
discretion amounting to lack or excess of jurisdiction in dismissing
the appeal of the petitioner GSIS, considering that:
1. The Court of Appeals disregarded the facts and circumstances
evidencing the timeliness of the petitioner GSIS’ appeal before the
NLRC and sacrificed substantial justice in the altar of dubious
technicalities; and
2. The Court of Appeals misapplied the law and mistakenly affirmed
the public respondent NLRC’s decision that the petitioner GSIS is
jointly and severally liable with DNL Security Agency for payment of
the unsubstantiated amounts of Salary Differentials and the 13th
Month Pay to the private respondent security guards.11
Petitioner insists that its appeal before the NLRC was filed on time,
having been filed through registered mail on October 27, 1997, as
evidenced by Registry Receipt No. 34581 countersigned by the
postmaster. It adds that, even assuming that the appeal was
indeed filed one day late, the NLRC should not have strictly applied
the Rules in order to effect substantial justice. Petitioner also claims
that although the body of the LA decision made DNL Security solely
liable for respondents’ wages from February 1993 to April 20, 1993,
and for their separation pay, the dispositive portion thereof made
petitioner solidarily liable for said awards. Petitioner further
questions the award of monetary benefits for lack of evidence to
substantiate said claims. Lastly, petitioner argues that the
enforcement of the decision is impossible, considering that
petitioner’s charter unequivocally exempts it from execution.12
We partly grant the petition.
The resolution of the petition before us involves the appreciation
and determination of factual matters, mainly on the issue of
whether petitioner’s appeal was seasonably filed before the NLRC.
Timeliness of an appeal is a factual issue. It requires a review or
evaluation of the evidence which would show when the appeal was
actually mailed to and received by the NLRC.13 In this case, to
prove that it mailed the notice of appeal and appeal memorandum
on October 27, 1997, instead of October 28, 1997, as shown by the
stamped date on the envelope, petitioner presented Registry
Receipt No. 34581 bearing the earlier date.
Under Section 3, Rule 13 of the Rules of Court, where the filing of
pleadings, appearances, motions, notices, orders, judgments, and
all other papers with the court/tribunal is made by registered mail,
the date of mailing, as shown by the post office stamp on the
envelope or the registry receipt, shall be considered as the date of
filing.14
Thus, the date of filing is determinable from two sources: from the
post office stamp on the envelope or from the registry receipt,
either of which may suffice to prove the timeliness of the filing of
the pleadings. If the date stamped on one is earlier than the other,
the former may be accepted as the date of filing. This presupposes,
however, that the envelope or registry receipt and the dates
appearing thereon are duly authenticated before the tribunal where
they are presented.15
In any case, even if the appeal was filed one day late, the same
should have been entertained by the NLRC. Indeed, the appeal
must be perfected within the statutory or reglementary period. This
is not only mandatory, but also jurisdictional. Failure to perfect the
appeal on time renders the assailed decision final and executory
and deprives the appellate court or body of the legal authority to
alter the final judgment, much less entertain the appeal. However,
this Court has, time and again, ruled that, in exceptional cases, a
belated appeal may be given due course if greater injustice will be
visited upon the party should the appeal be denied. The Court has
allowed this extraordinary measure even at the expense of
sacrificing order and efficiency if only to serve the greater principles
of substantial justice and equity.16
Technicality should not be allowed to stand in the way of equitably
and completely resolving the rights and obligations of the parties.
We have consistently held that technical rules are not binding in
labor cases and are not to be applied strictly if the result would be
detrimental to the working man.17
The Court notes, however, that while the CA affirmed the dismissal
by the NLRC of petitioner’s appeal for being filed out of time, it
nonetheless delved into the merits of the case. This
notwithstanding, we do not entirely agree with the appellate court’s
conclusion affirming in toto the LA decision.
In this case, the LA’s discussion of the issues appears to be in
conflict with his final conclusion. This would have required a
measure of clarification. But instead of looking into the errors
allegedly committed by the LA, the NLRC dismissed the appeal on
a mere technicality. The CA likewise failed to correct the apparent
mistake in the LA decision. Thus, we are constrained to review the
merits of the case.
We need not discuss DNL Security’s responsibility as respondents’
direct employer because DNL Security’s failure to interpose an
appeal from the LA decision has resulted in the finality of the LA
decision. The only issue that we should resolve is the matter of
petitioner’s liability as indirect employer.
The fact that there is no actual and direct employer-employee
relationship between petitioner and respondents does not absolve
the former from liability for the latter’s monetary claims. When
petitioner contracted DNL Security’s services, petitioner became an
indirect employer of respondents, pursuant to Article 107 of the
Labor Code, which reads:
ART. 107. Indirect employer. – The provisions of the immediately
preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer, contracts
with an independent contractor for the performance of any work,
task, job or project.
After DNL Security failed to pay respondents the correct wages and
other monetary benefits, petitioner, as principal, became jointly and
severally liable, as provided in Articles 106 and 109 of the Labor
Code, which state:
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.
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that
he is liable to employees directly employed by him. x x x.
xxxx
ART. 109. Solidary liability. – The provisions of existing laws to the
contrary notwithstanding, every employer or indirect employer shall
be held responsible with his contractor or subcontractor for any
violation of any provision of this Code. For purposes of determining
the extent of their civil liability under this Chapter, they shall be
considered as direct employers.
This statutory scheme is designed to give the workers ample
protection, consonant with labor and social justice provisions of the
1987 Constitution.18
This Court’s pronouncement in Rosewood Processing, Inc. v.
NLRC19 is noteworthy:
The joint and several liability of the employer or principal was
enacted to ensure compliance with the provisions of the Code,
principally those on statutory minimum wage. The contractor or
subcontractor is made liable by virtue of his or her status as a
direct employer, and the principal as the indirect employer of the
contractor’s employees. This liability facilitates, if not guarantees,
payment of the workers’ compensation, thus, giving the workers
ample protection as mandated by the 1987 Constitution. This is not
unduly burdensome to the employer. Should the indirect employer
be constrained to pay the workers, it can recover whatever amount
it had paid in accordance with the terms of the service contract
between itself and the contractor.20
Petitioner’s liability covers the payment of respondents’ salary
differential and 13th month pay during the time they worked for
petitioner. In addition, petitioner is solidarily liable with DNL Security
for respondents’ unpaid wages from February 1993 until April 20,
1993. While it is true that respondents continued working for
petitioner after the expiration of their contract, based on the
47
instruction of DNL Security, petitioner did not object to such
assignment and allowed respondents to render service. Thus,
petitioner impliedly approved the extension of respondents’
services. Accordingly, petitioner is bound by the provisions of the
Labor Code on indirect employment. Petitioner cannot be allowed
to deny its obligation to respondents after it had benefited from
their services. So long as the work, task, job, or project has been
performed for petitioner’s benefit or on its behalf, the liability
accrues for such services.21 The principal is made liable to its
indirect employees because, after all, it can protect itself from
irresponsible contractors by withholding payment of such sums that
are due the employees and by paying the employees directly, or by
requiring a bond from the contractor or subcontractor for this
purpose.22
Petitioner’s liability, however, cannot extend to the payment of
separation pay. An order to pay separation pay is invested with a
punitive character, such that an indirect employer should not be
made liable without a finding that it had conspired in the illegal
dismissal of the employees.23
It should be understood, though, that the solidary liability of
petitioner does not preclude the application of Article 1217 of the
Civil Code on the right of reimbursement from its co-debtor, viz.:24
Art. 1217. Payment made by one of the solidary debtors
extinguishes the obligation. If two or more solidary debtors offer to
pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the
share which corresponds to each, with the interest for the payment
already made. If the payment is made before the debt is due, no
interest for the intervening period may be demanded.
When one of the solidary debtors cannot, because of his
insolvency, reimburse his share to the debtor paying the obligation,
such share shall be borne by all his co-debtors, in proportion to the
debt of each.1avvphi1
Lastly, we do not agree with petitioner that the enforcement of the
decision is impossible because its charter unequivocally exempts it
from execution. As held in Government Service Insurance System
v. Regional Trial Court of Pasig City, Branch 71,25 citing Rubia v.
GSIS: 26
The processual exemption of the GSIS funds and properties under
Section 39 of the GSIS Charter, in our view, should be read
consistently with its avowed principal purpose: to maintain actuarial
solvency of the GSIS in the protection of assets which are to be
used to finance the retirement, disability and life insurance benefits
of its members. Clearly, the exemption should be limited to the
purposes and objects covered. Any interpretation that would give it
an expansive construction to exempt all GSIS assets from legal
processes absolutely would be unwarranted.
Furthermore, the declared policy of the State in Section 39 of the
GSIS Charter granting GSIS an exemption from tax, lien,
attachment, levy, execution, and other legal processes should be
read together with the grant of power to the GSIS to invest its
"excess funds" under Section 36 of the same Act. Under Section
36, the GSIS is granted the ancillary power to invest in business
and other ventures for the benefit of the employees, by using its
excess funds for investment purposes. In the exercise of such
function and power, the GSIS is allowed to assume a character
similar to a private corporation. Thus, it may sue and be sued, as
also, explicitly granted by its charter x x x.27
To be sure, petitioner’s charter should not be used to evade its
liabilities to its employees, even to its indirect employees, as
mandated by the Labor Code.
WHEREFORE, premises considered, the Court of Appeals
Decision and Resolution dated September 7, 2006 and September
27, 2007, respectively, in CA-G.R. SP No. 50450, are AFFIRMED
with MODIFICATION. Petitioner Government Service Insurance
System is declared solidarily liable with DNL Security to PAY
respondents their wage differentials, thirteenth month pay, and
unpaid wages from February 1993 to April 20, 1993, but is
EXONERATED from the payment of respondents’ separation pay.
SO ORDERED.

G.R. No. 144134 November 11, 2003
MARIVELES SHIPYARD CORP., Petitioner,
vs.
HON. COURT OF APPEALS, LUIS REGONDOLA, MANUELIT
GATALAN, ORESCA AGAPITO, NOEL ALBADBAD, ROGELIO
PINTUAN, DANILO CRISOSTOMO, ROMULO MACALINAO,
NESTOR FERER, RICKY CUESTA, ROLLY ANDRADA, LARRY
ROGOLA, FRANCISCO LENOGON, AUGUSTO QUINTO, ARFE
BERAMO, BONIFACIO TRINIDAD, ALFREDO ASCARRAGA,
ERNESTO MAGNO, HONORARIO HORTECIO, NELBERT
PINEDA, GLEN ESTIPULAR, FRANCISCO COMPUESTO,
ISABELITO CORTEZ, MATURAN ROSAURO, SAMSON CANAS,
FEBIEN ISIP, JESUS RIPARIP, ALFREDO SIENES, ADOLAR
ALBERT, HONESTO CABANILLAS, AMPING CASTILLO and
ELWIN REVILLA, Respondents.
DECISION
QUISUMBING, J.:
For review on certiorari is the Resolution,1 dated December 29,
1999, of the Court of Appeals in CA-G.R. SP No. 55416, which
dismissed outright the petition for certiorari of Mariveles Shipyard
Corp., due to a defective certificate of non-forum shopping and
non-submission of the required documents to accompany said
petition. Mariveles Shipyard Corp., had filed a special civil action
for certiorari with the Court of Appeals to nullify the resolution2 of
the National Labor Relations Commission (NLRC), dated April 22,
1999, in NLRC NCR Case No. 00-09-005440-96-A, which affirmed
the Labor Arbiter’s decision,3 dated May 22, 1998, holding
petitioner jointly and severally liable with Longest Force
Investigation and Security Agency, Inc., for the underpayment of
wages and overtime pay due to the private respondents. Likewise
challenged in the instant petition is the resolution4 of the Court of
Appeals, dated July 12, 2000, denying petitioner’s motion for
reconsideration.
The facts, as culled from records, are as follows:
Sometime on October 1993, petitioner Mariveles Shipyard
Corporation engaged the services of Longest Force Investigation
and Security Agency, Inc. (hereinafter, "Longest Force") to render
security services at its premises. Pursuant to their agreement,
Longest Force deployed its security guards, the private
respondents herein, at the petitioner’s shipyard in Mariveles,
Bataan.
According to petitioner, it religiously complied with the terms of the
security contract with Longest Force, promptly paying its bills and
the contract rates of the latter. However, it found the services being
rendered by the assigned guards unsatisfactory and inadequate,
causing it to terminate its contract with Longest Force on April
1995.5 Longest Force, in turn, terminated the employment of the
security guards it had deployed at petitioner’s shipyard.
On September 2, 1996, private respondents filed a case for illegal
dismissal, underpayment of wages pursuant to the PNPSOSIA-
PADPAO rates, non-payment of overtime pay, premium pay for
holiday and rest day, service incentive leave pay, 13th month pay
and attorney’s fees, against both Longest Force and petitioner,
before the Labor Arbiter. Docketed as NLRC NCR Case No.
00-09-005440-96-A, the case sought the guards’ reinstatement with
full backwages and without loss of seniority rights.
For its part, Longest Force filed a cross-claim6 against the
petitioner. Longest Force admitted that it employed private
respondents and assigned them as security guards at the premises
of petitioner from October 16, 1993 to April 30, 1995, rendering a
12 hours duty per shift for the said period. It likewise admitted its
liability as to the non-payment of the alleged wage differential in the
total amount of ₱2,618,025 but passed on the liability to petitioner
alleging that the service fee paid by the latter to it was way below
the PNPSOSIA and PADPAO rate, thus, "contrary to the mandatory
and prohibitive laws because the right to proper compensation and
benefits provided under the existing labor laws cannot be waived
nor compromised."
The petitioner denied any liability on account of the alleged illegal
dismissal, stressing that no employer-employee relationship
existed between it and the security guards. It further pointed out
that it would be the height of injustice to make it liable again for
monetary claims which it had already paid. Anent the cross-claim
filed by Longest Force against it, petitioner prayed that it be
48
dismissed for lack of merit. Petitioner averred that Longest Force
had benefited from the contract, it was now estopped from
questioning said agreement on the ground that it had made a bad
deal.
On May 22, 1998, the Labor Arbiter decided NLRC NCR Case No.
00-09-005440-96-A, to wit:
WHEREFORE, conformably with the foregoing, judgment is hereby
rendered ordering the respondents as follows:
1. DECLARING respondents Longest Force Investigation &
Security Agency, Inc.1âwphi1 and Mariveles Shipyard Corporation
jointly and severally liable to pay the money claims of complainants
representing underpayment of wages and overtime pay in the total
amount of ₱2,700,623.40 based on the PADPAO rates of pay
covering the period from October 16, 1993 up to April 29, 1995
broken down as follows:
UNDERPAYMENT OF WAGES:
OVERTIME:
Sub-Total of Underpayments and Overtime………………
₱87,116.90
1awp++i1
2. DECLARING both respondents liable to pay complainants
attorney’s fees equivalent to ten (10%) percent of the total award
recovered or the sum of ₱270,062.34.
3. ORDERING respondent Longest Force Investigation & Security
Agency, Inc. to reinstate all the herein complainants to their former
or equivalent positions without loss of seniority rights and privileges
with full backwages which as computed as of the date of this
decision are as follows:
(table)
4. ORDERING said Longest Force Investigation & Security Agency,
Inc. to pay attorney’s fees equivalent to ten (10%) percent of the
total award recovered representing backwages in the amount of
₱392,721.64.10
5. DISMISSING all other claims for lack of legal basis.
SO ORDERED.11
Petitioner appealed the foregoing to the NLRC in NLRC NCR Case
No. 00-09-005440-96-A. The labor tribunal, however, affirmed in
toto the decision of the Labor Arbiter. Petitioner moved for
reconsideration, but this was denied by the NLRC.
The petitioner then filed a special civil action for certiorari assailing
the NLRC judgment for having been rendered with grave abuse of
discretion with the Court of Appeals, docketed as CA-G.R. SP No.
55416. The Court of Appeals, however, denied due course to the
petition and dismissed it outright for the following reasons:
1. The verification and certification on non-forum shopping is
signed not by duly authorized officer of petitioner corporation, but
by counsel (Section 1, Rule 65, 1997 Rules of Civil Procedure).
2. The petition is unaccompanied by copies of relevant and
pertinent documents, particularly the motion for reconsideration
filed before the NLRC (Section 1, Rule 65, 1997 Rules of Civil
Procedure).12
The petitioner then moved for reconsideration of the order of
dismissal. The appellate court denied the motion, pointing out that
under prevailing case law subsequent compliance with formal
requirements for filing a petition as prescribed by the Rules, does
not ipso facto warrant a reconsideration. In any event, it found no
grave abuse of discretion on the part of the NLRC to grant the writ
of certiorari.
Hence, this present petition before us. Petitioner submits that THE
COURT OF APPEALS GRAVELY ERRED:
1. ….IN DISMISSING THE PETITION AND DENYING THE
MOTION FOR RECONSIDERATION DESPITE THE FACT THAT
PETITIONER SUBSTANTIALLY COMPLIED WITH THE
REQUIREMENTS OF SECTION 1, RULE 65, 1997 RULES OF
CIVIL PROCEDURE.
2. ….IN RULING THAT PETITIONER WAS NOT DENIED DUE
PROCESS OF LAW.
3. ….IN AFFIRMING THE DECISION OF THE NATIONAL LABOR
RELATIONS COMMISSION THAT "LONGEST FORCE" AND
PETITIONER ARE JOINTLY AND SEVERALLY LIABLE FOR
PAYMENT OF WAGES AND OVERTIME PAY DESPITE THE
CLEAR SHOWING THAT PETITIONER HAVE ALREADY PAID
THE SECURITY SERVICES THAT WAS RENDERED BY PRIVATE
RESPONDENTS.
4. …WHEN IT FAILED TO RULE THAT ONLY "LONGEST FORCE"
SHOULD BE SOLELY AND ULTIMATELY LIABLE IN THE
INSTANT CASE.13
We find the issues for our resolution to be: (1) Was it error for the
Court of Appeals to sustain its order of dismissal of petitioner’s
special civil action for certiorari, notwithstanding subsequent
compliance with the requirements under the Rules of Court by the
petitioner? (2) Did the appellate court err in not holding that
petitioner was denied due process of law by the NLRC? and (3) Did
the appellate court grievously err in finding petitioner jointly and
severally liable with Longest Force for the payment of wage
differentials and overtime pay owing to the private respondents?
On the first issue, the Court of Appeals in dismissing CA-G.R. SP
No. 55416 observed that: (1) the verification and certification of
non-forum shopping was not signed by any duly authorized officer
of petitioner but merely by petitioner’s counsel; and (2) the petition
was not accompanied by a copy of motion for reconsideration filed
before the NLRC, thus violating Section 1,14 Rule 65 of the Rules of
Court. Hence, a dismissal was proper under Section 3,15 Rule 46 of
the Rules.
In assailing the appellate court’s ruling, the petitioner appeals to our
sense of compassion and kind consideration. It submits that the
certification signed by its counsel and attached to its petition filed
with the Court of Appeals is substantial compliance with the
requirement. Moreover, petitioner calls our attention to the fact that
when it filed its motion for reconsideration before the Court of
Appeals, a joint verification and certification of non-forum shopping
duly signed by its Personnel Manager16 and a copy of the Motion
for Reconsideration17 filed before the NLRC were attached therein.
Thus, petitioner prays that we take a liberal stance to promote the
ends of justice.
Petitioner’s plea for liberality, however, cannot be granted by the
Court for reasons herein elucidated.
It is settled that the requirement in the Rules that the certification of
non-forum shopping should be executed and signed by the plaintiff
or the principal means that counsel cannot sign said certification
unless clothed with special authority to do so.18 The reason for this
is that the plaintiff or principal knows better than anyone else
whether a petition has previously been filed involving the same
case or substantially the same issues. Hence, a certification signed
by counsel alone is defective and constitutes a valid cause for
dismissal of the petition.19 In the case of natural persons, the Rule
requires the parties themselves to sign the certificate of non-forum
shopping. However, in the case of the corporations, the physical
act of signing may be performed, on behalf of the corporate entity,
only by specifically authorized individuals for the simple reason that
corporations, as artificial persons, cannot personally do the task
themselves.20 In this case, not only was the originally appended
certification signed by counsel, but in its motion for reconsideration,
still petitioner utterly failed to show that Ms. Rosanna Ignacio, its
Personnel Manager who signed the verification and certification of
non-forum shopping attached thereto, was duly authorized for this
purpose. It cannot be gainsaid that obedience to the requirements
of procedural rule is needed if we are to expect fair results
therefrom. Utter disregard of the rules cannot justly be rationalized
by harking on the policy of liberal construction.21
Thus, on this point, no error could be validly attributed to
respondent Court of Appeals. It did not err in dismissing the petition
for non-compliance with the requirements governing the
certification of non-forum shopping.
Anent the second issue, petitioner avers that there was denial of
due process of law when the Labor Arbiter failed to have the case
tried on the merits. Petitioner adds that the Arbiter did not observe
the mandatory language of the then Sec. 5(b) Rule V (now Section
11, per amendment in Resolution No. 01-02, Series of 2002) of the
NLRC New Rules of Procedure which provided that:
If the Labor Arbiter finds no necessity of further hearing after the
parties have submitted their position papers and supporting
documents, he shall issue an Order to that effect and shall inform
the parties, stating the reasons therefor. …22
Petitioner’s contention, in our view, lacks sufficient basis. Well
settled is the rule that the essence of due process is simply an
opportunity to be heard, or, as applied to administrative
49
proceedings, an opportunity to explain one’s side or an opportunity
to seek a reconsideration of the action or ruling complained of.23
Not all cases require a trial-type hearing. The requirement of due
process in labor cases before a Labor Arbiter is satisfied when the
parties are given the opportunity to submit their position papers to
which they are supposed to attach all the supporting documents or
documentary evidence that would prove their respective claims, in
the event the Labor Arbiter determines that no formal hearing
would be conducted or that such hearing was not necessary.24 In
any event, as found by the NLRC, petitioner was given ample
opportunity to present its side in several hearings conducted before
the Labor Arbiter and in the position papers and other supporting
documents that it had submitted. We find that such opportunity
more than satisfies the requirement of due process in labor cases.
On the third issue, petitioner argues that it should not be held jointly
and severally liable with Longest Force for underpayment of wages
and overtime pay because it had been religiously and promptly
paying the bills for the security services sent by Longest Force and
that these are in accordance with the statutory minimum wage.
Also, petitioner contends that it should not be held liable for
overtime pay as private respondents failed to present proof that
overtime work was actually performed. Lastly, petitioner claims that
the Court of Appeals failed to render a decision that finally disposed
of the case because it did not specifically rule on the immediate
recourse of private respondents, that is, the matter of
reimbursement between petitioner and Longest Force in
accordance with Eagle Security Agency Inc. v. NLRC,25 and
Philippine Fisheries Development Authority v. NLRC.26
Petitioner’s liability is joint and several with that of Longest Force,
pursuant to Articles 106, 107 and 109 of the Labor Code which
provide as follows:
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.
In the event that the contractor or subcontractor fails to pay the
wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that
he is liable to employees directly employed by him.
xxx
ART. 107. INDIRECT EMPLOYER. – The provisions of the
immediately preceding Article shall likewise apply to any person,
partnership, association or corporation which, not being an
employer, contracts with an independent contractor for the
performance of any work, task, job or project.
ART. 109. SOLIDARY LIABILITY. – The provisions of existing laws
to the contrary notwithstanding, every employer or indirect
employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this Code. For
purposes of determining the extent of their civil liability under this
Chapter, they shall be considered as direct employers.
In this case, when petitioner contracted for security services with
Longest Force as the security agency that hired private
respondents to work as guards for the shipyard corporation,
petitioner became an indirect employer of private respondents
pursuant to Article 107 abovecited. Following Article 106, when the
agency as contractor failed to pay the guards, the corporation as
principal becomes jointly and severally liable for the guards’ wages.
This is mandated by the Labor Code to ensure compliance with its
provisions, including payment of statutory minimum wage. The
security agency is held liable by virtue of its status as direct
employer, while the corporation is deemed the indirect employer of
the guards for the purpose of paying their wages in the event of
failure of the agency to pay them. This statutory scheme gives the
workers the ample protection consonant with labor and social
justice provisions of the 1987 Constitution.27
Petitioner cannot evade its liability by claiming that it had religiously
paid the compensation of guards as stipulated under the contract
with the security agency. Labor standards are enacted by the
legislature to alleviate the plight of workers whose wages barely
meet the spiraling costs of their basic needs. Labor laws are
considered written in every contract. Stipulations in violation thereof
are considered null. Similarly, legislated wage increases are
deemed amendments to the contract. Thus, employers cannot hide
behind their contracts in order to evade their (or their contractors’ or
subcontractors’) liability for noncompliance with the statutory
minimum wage.28
However, we must emphasize that the solidary liability of petitioner
with that of Longest Force does not preclude the application of the
Civil Code provision on the right of reimbursement from his co-
debtor by the one who paid.29 As held in Del Rosario & Sons
Logging Enterprises, Inc. v. NLRC,30 the joint and several liability
imposed on petitioner is without prejudice to a claim for
reimbursement by petitioner against the security agency for such
amounts as petitioner may have to pay to complainants, the private
respondents herein. The security agency may not seek exculpation
by claiming that the principal’s payments to it were inadequate for
the guards’ lawful compensation. As an employer, the security
agency is charged with knowledge of labor laws; and the adequacy
of the compensation that it demands for contractual services is its
principal concern and not any other’s.31
On the issue of the propriety of the award of overtime pay despite
the alleged lack of proof thereof, suffice it to state that such
involves a determination and evaluation of facts which cannot be
done in a petition for review. Well established is the rule that in an
appeal via certiorari, only questions of law may be reviewed.32
One final point. Upon review of the award of backwages and
attorney’s fees, we discovered certain errors that happened in the
addition of the amount of individual backwages that resulted in the
erroneous total amount of backwages and attorney’s fees. These
errors ought to be properly rectified now. Thus, the correct sum of
individual backwages should be ₱126,648.40 instead of
₱126,684.40, while the correct sum of total backwages awarded
and attorney’s fees should be ₱3,926,100.40 and ₱392,610.04,
instead of ₱3,927,216.40 and ₱392,721.64, respectively.
WHEREFORE, the Resolution of the Court of Appeals in CA-G.R.
SP No. 55416 is AFFIRMED with MODIFICATION. Petitioner and
Longest Force are held liable jointly and severally for
underpayment of wages and overtime pay of the security guards,
without prejudice to petitioner’s right of reimbursement from
Longest Force Investigation and Security Agency, Inc. The amounts
payable to complaining security guards, herein private
respondents, by way of total backwages and attorney’s fees are
hereby set at ₱3,926,100.40 and ₱392,610.04, respectively. Costs
against petitioner.
SO ORDERED.

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