laid down by the National Assembly in said Act, to wit, "to
promote safe transit upon, and avoid obstructions on, roads and
FIRST DIVISION
[G.R. No. 47800. December 2, 1940.]
MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS,
ET AL., Respondents.
Maximo Calalang in his own behalf.
Solicitor General Ozaeta and Assistant Solicitor General
Amparo for respondents Williams, Fragante and Bayan
City Fiscal Mabanag for the other respondents.
SYLLABUS
1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF
COMMONWEALTH ACT No. 648; DELEGATION OF
LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF
PUBLIC WORKS AND SECRETARY OF PUBLIC WORKS
AND COMMUNICATIONS TO PROMULGATE RULES
AND REGULATIONS. — The provisions of section 1 of
Commonwealth Act No. 648 do not confer legislative power
upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred
upon them and under which they promulgated the rules and
regulations now complained of is not to determine what public
policy demands but merely to carry out the legislative policy
streets designated as national roads by acts of the National
Assembly or by executive orders of the President of the
Philippines" and to close them temporarily to any or all classes
of traffic "whenever the condition of the road or the traffic
thereon makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all,
therefore, is not the determination of what the law shall be, but
merely the ascertainment of the facts and circumstances upon
which the application of said law is to be predicated. To
promulgate rules and regulations on the use of national roads
and to determine when and how long a national road should be
closed to traffic, in view of the condition of the road or the
traffic thereon and the requirements of public convenience and
interest, is an administrative function which cannot be directly
discharged by the National Assembly. It must depend on the
discretion of some other government official to whom is
confided the duty of determining whether the proper occasion
exists for executing the law. But it cannot be said that the
exercise of such discretion is the making of the law.
2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY;
GOVERNMENTAL AUTHORITY. — Commonwealth Act
No. 548 was passed by the National Assembly in the exercise
of the paramount police power of the state. Said Act, by virtue
of which the rules and regulations complained of were
promulgated, aims to promote safe transit upon and avoid
obstructions on national roads, in the interest and convenience
of the public. In enacting said law, therefore, the National
Assembly was prompted by considerations of public
convenience and welfare. It was inspired by a desire to relieve
congestion of traffic, which is, to say the least, a menace to
 public safety. Public welfare, then, lies at the bottom of the
enactment of said law, and the state in order to promote the
general welfare may interfere with personal liberty, with
property, and with business and occupations. Persons and
property may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort, health, and
prosperity of the state (U.S. v. Gomer Jesus, 31 Phil., 218). To
this fundamental aim of our Government the rights of the
individual are subordinated. Liberty is a blessing without which
life is a misery, but liberty should not be made to prevail over
authority because then society will fall into anarchy. Neither
should authority be made to prevail over liberty because then
the individual will fall into slavery. The citizen should achieve
the required balance of liberty and authority in his mind
through education and, personal discipline, so that there may be
established the resultant equilibrium, which means peace and
order and happiness for all. The moment greater authority is
conferred upon the government, logically so much is
withdrawn from the residuum of liberty which resides in the
people. The paradox lies in the fact that the apparent
curtailment of liberty is precisely the very means of insuring its
preservation.
3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither
communism, nor despotism, nor atomism, nor anarchy," but the
humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated.
Social justice means the promotion of the welfare of all the
people, the adoption by the Government of measures calculated
to insure economic stability of all the competent elements of
society, through the maintenance of a proper economic and
social equilibrium in the interrelations of the members of the
community, constitutionally, through the adoption of measures
legally justifiable, or extra-constitutionally, through the
exercise of powers underlying the existence of all governments
on the time-honored principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of
the necessity of interdependence among divers and diverse
units of a society and of the protection that should be equally
and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and
paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."
DECISION
LAUREL, J.:
Maximo Calalang, in his capacity as a private citizen and as a
taxpayer of Manila, brought before this court this petition for a
writ of prohibition against the respondents, A. D. Williams, as
Chairman of the National Traffic Commission; Vicente
Fragante, as Director of Public Works; Sergio Bayan, as Acting
Secretary of Public Works and Communications; Eulogio
Rodriguez, as Mayor of the City of Manila; and Juan
Dominguez, as Acting Chief of Police of Manila.
It is alleged in the petition that the National Traffic
Commission, in its resolution of July 17, 1940, resolved to
recommend to the Director of Public Works and to the
Secretary of Public Works and Communications that animal-
drawn vehicles be prohibited from passing along Rosario Street
extending from Plaza Calderon de la Barca to Dasmariñas
Street, from 7:30 a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30
p.m.; and along Rizal Avenue extending from the railroad
crossing at Antipolo Street to Echague Street, from 7 a.m. to 11
p.m., from a period of one year from the date of the opening of
the Colgante Bridge to traffic; that the Chairman of the
National Traffic Commission, on July 18, 1940 recommended
to the Director of Public Works the adoption of the measure
proposed in the resolution aforementioned, in pursuance of the
provisions of Commonwealth Act No. 548 which authorizes
said Director of Public Works, with the approval of the
Secretary of Public Works and Communications, to promulgate
rules and regulations to regulate and control the use of and
traffic on national roads; that on August 2, 1940, the Director
of Public Works, in his first indorsement to the Secretary of
Public Works and Communications, recommended to the latter
the approval of the recommendation made by the Chairman of
the National Traffic Commission as aforesaid, with the
modification that the closing of Rizal Avenue to traffic to
animal-drawn vehicles be limited to the portion thereof
extending from the railroad crossing at Antipolo Street to
Azcarraga Street; that on August 10, 1940, the Secretary of
Public Works and Communications, in his second indorsement
addressed to the Director of Public Works, approved the
recommendation of the latter that Rosario Street and Rizal
Avenue be closed to traffic of animal-drawn vehicles, between
the points and during the hours as above indicated, for a period
of one year from the date of the opening of the Colgante Bridge
to traffic; that the Mayor of Manila and the Acting Chief of
Police of Manila have enforced and caused to be enforced the
rules and regulations thus adopted; that as a consequence of
such enforcement, all animal-drawn vehicles are not allowed to
pass and pick up passengers in the places above-mentioned to
the detriment not only of their owners but of the riding public
as well.
It is contended by the petitioner that Commonwealth Act No.
548 by which the Director of Public Works, with the approval
of the Secretary of Public Works and Communications, is
authorized to promulgate rules and regulations for the
regulation and control of the use of and traffic on national
roads and streets is unconstitutional because it constitutes an
undue delegation of legislative power. This contention is
untenable. As was observed by this court in Rubi v. Provincial
Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere
been better stated than in the early Ohio case decided by Judge
Ranney, and since followed in a multitude of cases, namely:
’The true distinction therefore is between the delegation of
power to make the law, which necessarily involves a discretion
as to what it shall be, and conferring an authority or discretion
as to its execution, to be exercised under and in pursuance of
the law. The first cannot be done; to the latter no valid
objection can be made.’ (Cincinnati, W. & Z. R. Co. v.
Comm’rs. Clinton County, 1 Ohio St., 88.) Discretion, as held
by Chief Justice Marshall in Wayman v. Southard (10 Wheat.,
1) may be committed by the Legislature to an executive
department or official. The Legislature may make decisions of
executive departments or subordinate officials thereof, to
whom it has committed the execution of certain acts, final on
questions of fact. (U.S. v. Kinkead, 248 Fed., 141.) The
growing tendency in the decisions is to give prominence to the
’necessity’ of the case."cralaw virtua1aw library
Section 1 of Commonwealth Act No. 548 reads as
follows:jgc:chanrobles.com.ph
"SECTION 1. To promote safe transit upon, and avoid
obstructions on, roads and streets designated as national roads
by acts of the National Assembly or by executive orders of the
President of the Philippines, the Director of Public Works, with
the approval of the Secretary of Public Works and
Communications, shall promulgate the necessary rules and
regulations to regulate and control the use of and traffic on
such roads and streets. Such rules and regulations, with the
approval of the President, may contain provisions controlling
or regulating the construction of buildings or other structures
within a reasonable distance from along the national roads.
Such roads may be temporarily closed to any or all classes of
traffic by the Director of Public Works and his duly authorized
representatives whenever the condition of the road or the traffic
thereon makes such action necessary or advisable in the public
convenience and interest, or for a specified period, with the
approval of the Secretary of Public Works and
Communications."cralaw virtua1aw library
The above provisions of law do not confer legislative power
upon the Director of Public Works and the Secretary of Public
Works and Communications. The authority therein conferred
upon them and under which they promulgated the rules and
regulations now complained of is not to determine what public
policy demands but merely to carry out the legislative policy
laid down by the National Assembly in said Act, to wit, "to
promote safe transit upon and avoid obstructions on, roads and
streets designated as national roads by acts of the National
Assembly or by executive orders of the President of the
Philippines" and to close them temporarily to any or all classes
of traffic "whenever the condition of the road or the traffic
makes such action necessary or advisable in the public
convenience and interest." The delegated power, if at all,
therefore, is not the determination of what the law shall be, but
merely the ascertainment of the facts and circumstances upon
which the application of said law is to be predicated. To
promulgate rules and regulations on the use of national roads
and to determine when and how long a national road should be
closed to traffic, in view of the condition of the road or the
traffic thereon and the requirements of public convenience and
interest, is an administrative function which cannot be directly
discharged by the National Assembly. It must depend on the
discretion of some other government official to whom is
confided the duty of determining whether the proper occasion
exists for executing the law. But it cannot be said that the
exercise of such discretion is the making of the law. As was
said in Locke’s Appeal (72 Pa. 491): "To assert that a law is
less than a law, because it is made to depend on a future event
or act, is to rob the Legislature of the power to act wisely for
the public welfare whenever a law is passed relating to a state
of affairs not yet developed, or to things future and impossible
to fully know." The proper distinction the court said was this:
"The Legislature cannot delegate its power to make the law;
but it can make a law to delegate a power to determine some
fact or state of things upon which the law makes, or intends to
make, its own action depend. To deny this would be to stop the
wheels of government. There are many things upon which wise
and useful legislation must depend which cannot be known to
the law-making power, and, must, therefore, be a subject of
inquiry and determination outside of the halls of legislation."
(Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)
In the case of People v. Rosenthal and Osmeña, G.R. Nos.
46076 and 46077, promulgated June 12, 1939, and in
Pangasinan Transportation v. The Public Service Commission,
G.R. No. 47065, promulgated June 26, 1940, this Court had
occasion to observe that the principle of separation of powers
has been made to adapt itself to the complexities of modern
governments, giving rise to the adoption, within certain limits,
of the principle of "subordinate legislation," not only in the
United States and England but in practically all modern
governments. Accordingly, with the growing complexity of
modern life, the multiplication of the subjects of governmental
regulations, and the increased difficulty of administering the
laws, the rigidity of the theory of separation of governmental
powers has, to a large extent, been relaxed by permitting the
delegation of greater powers by the legislative and vesting a
larger amount of discretion in administrative and executive
officials, not only in the execution of the laws, but also in the
promulgation of certain rules and regulations calculated to
promote public interest.
The petitioner further contends that the rules and regulations
promulgated by the respondents pursuant to the provisions of
Commonwealth Act No. 548 constitute an unlawful
interference with legitimate business or trade and abridge the
right to personal liberty and freedom of locomotion.
Commonwealth Act No. 548 was passed by the National
Assembly in the exercise of the paramount police power of the
state.
Said Act, by virtue of which the rules and regulations
complained of were promulgated, aims to promote safe transit
upon and avoid obstructions on national roads, in the interest
and convenience of the public. In enacting said law, therefore,
the National Assembly was prompted by considerations of
public convenience and welfare. It was inspired by a desire to
relieve congestion of traffic. which is, to say the least, a
menace to public safety. Public welfare, then, lies at the bottom
of the enactment of said law, and the state in order to promote
the general welfare may interfere with personal liberty, with
property, and with business and occupations. Persons and
property may be subjected to all kinds of restraints and
burdens, in order to secure the general comfort, health, and
prosperity of the state (U.S. v. Gomez Jesus, 31 Phil., 218). To
this fundamental aim of our Government the rights of the
individual are subordinated. Liberty is a blessing without which
life is a misery, but liberty should not be made to prevail over
authority because then society will fall into anarchy. Neither
should authority be made to prevail over liberty because then
the individual will fall into slavery. The citizen should achieve
the required balance of liberty and authority in his mind
through education and personal discipline, so that there may be
established the resultant equilibrium, which means peace and
order and happiness for all. The moment greater authority is
conferred upon the government, logically so much is
withdrawn from the residuum of liberty which resides in the
people. The paradox lies in the fact that the apparent
curtailment of liberty is precisely the very means of insuring its
preservation.
The scope of police power keeps expanding as civilization
advances. As was said in the case of Dobbins v. Los Angeles
(195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the
police power is a continuing one, and a business lawful today
may in the future, because of the changed situation, the growth
of population or other causes, become a menace to the public
health and welfare, and be required to yield to the public
good." And in People v. Pomar (46 Phil., 440), it was observed
that "advancing civilization is bringing within the police power
of the state today things which were not thought of as being
within such power yesterday. The development of civilization,
the rapidly increasing population, the growth of public opinion,
with an increasing desire on the part of the masses and of the
government to look after and care for the interests of the
individuals of the state, have brought within the police power
many questions for regulation which formerly were not so
considered."cralaw virtua1aw library
paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about "the
greatest good to the greatest number."cralaw virtua1aw library
In view of the foregoing, the writ of prohibition prayed for is
hereby denied, with costs against the petitioner. So ordered.

The petitioner finally avers that the rules and regulations

complained of infringe upon the constitutional precept
regarding the promotion of social justice to insure the well-
being and economic security of all the people. The promotion
of social justice, however, is to be achieved not through a
mistaken sympathy towards any given group. Social justice is
"neither communism, nor despotism, nor atomism, nor
anarchy," but the humanization of laws and the equalization of
social and economic forces by the State so that justice in its
rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the
welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the
competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of
the members of the community, constitutionally, through the
adoption of measures legally justifiable, or extra-
constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of
salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of

the necessity of interdependence among divers and diverse
units of a society and of the protection that should be equally
and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and
 FIRST DIVISION x --------------------------------------------------------------------------------
-------- x

ANGELINA FRANCISCO, G.R. No. 170087 DECISION

Petitioner,
Present:
YNARES-SANTIAGO, J.:
Panganiban, C.J.
(Chairperson),
- versus - Ynares- This petition for review on certiorari under Rule 45 of the
Santiago,
Rules of Court seeks to annul and set aside the Decision and
Austria-
Martinez, Resolution of the Court of Appeals dated October 29, 20041[1] and
Callejo, Sr., and
October 7, 2005,2[2] respectively, in CA-G.R. SP No. 78515
Chico-Nazario,
JJ. dismissing the complaint for constructive dismissal filed by herein
NATIONAL LABOR RELATIONS
petitioner Angelina Francisco. The appellate court reversed and set
COMMISSION, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO aside the Decision of the National Labor Relations Commission
ACEDO, DELFIN LIZA, IRENE
(NLRC) dated April 15, 2003,3[3] in NLRC NCR CA No. 032766-
BALLESTEROS, TRINIDAD LIZA Promulgated:
and RAMON ESCUETA, 02 which affirmed with modification the decision of the Labor Arbiter
Respondents.
dated July 31, 2002,4[4] in NLRC-NCR Case No. 30-10-0-489-01,
August 31, 2006
finding that private respondents were liable for constructive
dismissal.
In 1995, petitioner was hired by Kasei Corporation during its
incorporation stage. She was designated as Accountant and Corporate
Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of
Makati to secure business permits, construction permits and other
licenses for the initial operation of the company.5[5]
Although she was designated as Corporate Secretary, she was
not entrusted with the corporate documents; neither did she attend any
board meeting nor required to do so. She never prepared any legal
document and never represented the company as its Corporate
Secretary. However, on some occasions, she was prevailed upon to
sign documentation for the company.6[6]
In 1996, petitioner was designated Acting Manager. The
corporation also hired Gerry Nino as accountant in lieu of petitioner.
As Acting Manager, petitioner was assigned to handle recruitment of
all employees and perform management administration functions;
represent the company in all dealings with government agencies,
especially with the Bureau of Internal Revenue (BIR), Social Security
System (SSS) and in the city government of Makati; and to administer
all other matters pertaining to the operation of Kasei Restaurant which
is owned and operated by Kasei Corporation.7[7]
For five years, petitioner performed the duties of Acting
Manager. As of December 31, 2000 her salary was P27,500.00 plus
P3,000.00 housing allowance and a 10% share in the profit of Kasei
Corporation.8[8]
 In January 2001, petitioner was replaced by Liza R. Fuentes
as Manager. Petitioner alleged that she was required to sign a prepared
resolution for her replacement but she was assured that she would still
be connected with Kasei Corporation. Timoteo Acedo, the designated
Treasurer, convened a meeting of all employees of Kasei Corporation
and announced that nothing had changed and that petitioner was still
connected with Kasei Corporation as Technical Assistant to Seiji
Kamura and in charge of all BIR matters.9[9]
Thereafter, Kasei Corporation reduced her salary by
P2,500.00 a month beginning January up to September 2001 for a
total reduction of P22,500.00 as of September 2001. Petitioner was
not paid her mid-year bonus allegedly because the company was not
earning well. On October 2001, petitioner did not receive her salary
from the company. She made repeated follow-ups with the company
cashier but she was advised that the company was not earning
well.10[10]
On October 15, 2001, petitioner asked for her salary from
Acedo and the rest of the officers but she was informed that she is no
longer connected with the company.11[11]
Since she was no longer paid her salary, petitioner did not
report for work and filed an action for constructive dismissal before
the labor arbiter.
Private respondents averred that petitioner is not an employee
of Kasei Corporation. They alleged that petitioner was hired in 1995
as one of its technical consultants on accounting matters and act
concurrently as Corporate Secretary. As technical consultant,
petitioner performed her work at her own discretion without control
and supervision of Kasei Corporation. Petitioner had no daily time
record and she came to the office any time she wanted. The company
never interfered with her work except that from time to time, the
management would ask her opinion on matters relating to her
profession. Petitioner did not go through the usual procedure of
selection of employees, but her services were engaged through a
Board Resolution designating her as technical consultant. The money
received by petitioner from the corporation was her professional fee
subject to the 10% expanded withholding tax on professionals, and
that she was not one of those reported to the BIR or SSS as one of the
companys employees.12[12]
payees subject to expanded withholding tax which included
petitioner. SSS records were also submitted showing that petitioners
latest employer was Seiji Corporation.13[13]
The Labor Arbiter found that petitioner was illegally
dismissed, thus:
WHEREFORE, premises considered,
judgment is hereby rendered as follows:

1. finding complainant an employee of

Petitioners designation as technical consultant depended
respondent corporation;
solely upon the will of management. As such, her consultancy may be 2. declaring complainants dismissal as
illegal;
terminated any time considering that her services were only
3. ordering respondents to reinstate
temporary in nature and dependent on the needs of the corporation. complainant to her former position without loss of
seniority rights and jointly and severally pay
complainant her money claims in accordance with the
To prove that petitioner was not an employee of the following computation:
corporation, private respondents submitted a list of employees for the
a. Backwages 10/2001 07/2002
years 1999 and 2000 duly received by the BIR showing that petitioner 275,000.00
(27,500 x 10 mos.)
was not among the employees reported to the BIR, as well as a list of
b. Salary Differentials (01/2001 09/2001)
22,500.00
 c. Housing Allowance (01/2001 07/2002) PREMISES CONSIDERED, the Decision of
57,000.00 July 31, 2002 is hereby MODIFIED as follows:
d. Midyear Bonus 2001
27,500.00 1) Respondents are directed to pay
e. 13th Month Pay complainant separation pay computed at one month
27,500.00 per year of service in addition to full backwages from
f. 10% share in the profits of Kasei October 2001 to July 31, 2002;
Corp. from 1996-2001
361,175.00 2) The awards representing moral and
g. Moral and exemplary damages exemplary damages and 10% share in profit in the
100,000.00 respective accounts of P100,000.00 and P361,175.00
h. 10% Attorneys fees are deleted;
87,076.50
P957,742.50 3) The award of 10% attorneys fees shall
be based on salary differential award only;
If reinstatement is no longer feasible,
respondents are ordered to pay complainant separation 4) The awards representing salary
pay with additional backwages that would accrue up differentials, housing allowance, mid year bonus and
to actual payment of separation pay. 13th month pay are AFFIRMED.

SO ORDERED.14[14] SO ORDERED.15[15]

On April 15, 2003, the NLRC affirmed with modification the On appeal, the Court of Appeals reversed the NLRC decision,
Decision of the Labor Arbiter, the dispositive portion of which reads: thus:
 WHEREFORE, the instant petition is hereby
GRANTED. The decision of the National Labor
Relations Commissions dated April 15, 2003 is hereby
REVERSED and SET ASIDE and a new one is hereby
rendered dismissing the complaint filed by private
respondent against Kasei Corporation, et al. for
constructive dismissal.
SO ORDERED.16[16]
The appellate court denied petitioners motion for
reconsideration, hence, the present recourse.
The core issues to be resolved in this case are (1) whether there
was an employer-employee relationship between petitioner and
private respondent Kasei Corporation; and if in the affirmative, (2)
whether petitioner was illegally dismissed.
Considering the conflicting findings by the Labor Arbiter and
the National Labor Relations Commission on one hand, and the Court
of Appeals on the other, there is a need to reexamine the records to
determine which of the propositions espoused by the contending
parties is supported by substantial evidence.17[17]
We held in Sevilla v. Court of Appeals18[18] that in this
jurisdiction, there has been no uniform test to determine the existence
of an employer-employee relation. Generally, courts have relied on
the so-called right of control test where the person for whom the
services are performed reserves a right to control not only the end to
be achieved but also the means to be used in reaching such end. In
addition to the standard of right-of-control, the existing economic
conditions prevailing between the parties, like the inclusion of the
employee in the payrolls, can help in determining the existence of an
employer-employee relationship.
However, in certain cases the control test is not sufficient to
give a complete picture of the relationship between the parties, owing
to the complexity of such a relationship where several positions have
been held by the worker. There are instances when, aside from the
employers power to control the employee with respect to the means
and methods by which the work is to be accomplished, economic
realities of the employment relations help provide a comprehensive
analysis of the true classification of the individual, whether as
employee, independent contractor, corporate officer or some other
capacity.
The better approach would therefore be to adopt a two-tiered
test involving: (1) the putative employers power to control the
employee with respect to the means and methods by which the work
is to be accomplished; and (2) the underlying economic realities of
the activity or relationship.
This two-tiered test would provide us with a framework of
analysis, which would take into consideration the totality of
circumstances surrounding the true nature of the relationship between
the parties. This is especially appropriate in this case where there is
no written agreement or terms of reference to base the relationship on;
and due to the complexity of the relationship based on the various
positions and responsibilities given to the worker over the period of
the latters employment.
The control test initially found application in the case of Viaa
v. Al-Lagadan and Piga,19[19] and lately in Leonardo v. Court of
Appeals,20[20] where we held that there is an employer-employee
relationship when the person for whom the services are performed
reserves the right to control not only the end achieved but also the
manner and means used to achieve that end.
In Sevilla v. Court of Appeals,21[21] we observed the need to
consider the existing economic conditions prevailing between the
parties, in addition to the standard of right-of-control like the
inclusion of the employee in the payrolls, to give a clearer picture in
determining the existence of an employer-employee relationship
based on an analysis of the totality of economic circumstances of the
worker.
Thus, the determination of the relationship between employer
and employee depends upon the circumstances of the whole economic
activity,22[22] such as: (1) the extent to which the services performed
are an integral part of the employers business; (2) the extent of the
workers investment in equipment and facilities; (3) the nature and
degree of control exercised by the employer; (4) the workers
opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed
independent enterprise; (6) the permanency and duration of the
relationship between the worker and the employer; and (7) the degree
of dependency of the worker upon the employer for his continued
employment in that line of business.23[23]
The proper standard of economic dependence is whether the
worker is dependent on the alleged employer for his continued
employment in that line of business.24[24] In the United States, the
touchstone of economic reality in analyzing possible employment
relationships for purposes of the Federal Labor Standards Act is
dependency.25[25] By analogy, the benchmark of economic reality
in analyzing possible employment relationships for purposes of the
Labor Code ought to be the economic dependence of the worker on
his employer.
By applying the control test, there is no doubt that petitioner
is an employee of Kasei Corporation because she was under the direct
control and supervision of Seiji Kamura, the corporations Technical
Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant,
Acting Manager and Corporate Secretary, with substantially the same
job functions, that is, rendering accounting and tax services to the
company and performing functions necessary and desirable for the
proper operation of the corporation such as securing business permits
and other licenses over an indefinite period of engagement.
Under the broader economic reality test, the petitioner can
likewise be said to be an employee of respondent corporation because
she had served the company for six years before her dismissal,
receiving check vouchers indicating her salaries/wages, benefits, 13th
month pay, bonuses and allowances, as well as deductions and Social
Security contributions from August 1, 1999 to December 18,
2000.26[26] When petitioner was designated General Manager,
respondent corporation made a report to the SSS signed by Irene
Ballesteros. Petitioners membership in the SSS as manifested by a
copy of the SSS specimen signature card which was signed by the
President of Kasei Corporation and the inclusion of her name in the
on-line inquiry system of the SSS evinces the existence of an
employer-employee relationship between petitioner and respondent
corporation.27[27]
It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment
in the latters line of business.
In Domasig v. National Labor Relations Commission,28[28]
we held that in a business establishment, an identification card is
provided not only as a security measure but mainly to identify the
holder thereof as a bona fide employee of the firm that issues it.
Together with the cash vouchers covering petitioners salaries for the
months stated therein, these matters constitute substantial evidence
adequate to support a conclusion that petitioner was an employee of
private respondent.

We likewise ruled in Flores v. Nuestro29[29] that a
corporation who registers its workers with the SSS is proof that the
latter were the formers employees. The coverage of Social Security
Law is predicated on the existence of an employer-employee
relationship.
Furthermore, the affidavit of Seiji Kamura dated December 5,
2001 has clearly established that petitioner never acted as Corporate
Secretary and that her designation as such was only for convenience.
The actual nature of petitioners job was as Kamuras direct assistant
with the duty of acting as Liaison Officer in representing the company
to secure construction permits, license to operate and other
requirements imposed by government agencies. Petitioner was never
entrusted with corporate documents of the company, nor required to
attend the meeting of the corporation. She was never privy to the
preparation of any document for the corporation, although once in a
while she was required to sign prepared documentation for the
company.30[30]
The second affidavit of Kamura dated March 7, 2002 which
repudiated the December 5, 2001 affidavit has been allegedly
withdrawn by Kamura himself from the records of the case.31[31]
Regardless of this fact, we are convinced that the allegations in the
first affidavit are sufficient to establish that petitioner is an employee
of Kasei Corporation.
Granting arguendo, that the second affidavit validly
repudiated the first one, courts do not generally look with favor on
any retraction or recanted testimony, for it could have been secured
by considerations other than to tell the truth and would make solemn
trials a mockery and place the investigation of the truth at the mercy
of unscrupulous witnesses.32[32] A recantation does not necessarily
cancel an earlier declaration, but like any other testimony the same is
subject to the test of credibility and should be received with
caution.33[33]
Based on the foregoing, there can be no other conclusion that
petitioner is an employee of respondent Kasei Corporation. She was
selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued
employment in that line of business. Her main job function involved
accounting and tax services rendered to respondent corporation on a
regular basis over an indefinite period of engagement. Respondent
corporation hired and engaged petitioner for compensation, with the
power to dismiss her for cause. More importantly, respondent
corporation had the power to control petitioner with the means and
methods by which the work is to be accomplished.
The corporation constructively dismissed petitioner when it
reduced her salary by P2,500 a month from January to September
2001. This amounts to an illegal termination of employment, where
the petitioner is entitled to full backwages. Since the position of
petitioner as accountant is one of trust and confidence, and under the
principle of strained relations, petitioner is further entitled to
separation pay, in lieu of reinstatement.34[34]
A diminution of pay is prejudicial to the employee and
amounts to constructive dismissal. Constructive dismissal is an
involuntary resignation resulting in cessation of work resorted to
when continued employment becomes impossible, unreasonable or
unlikely; when there is a demotion in rank or a diminution in pay; or
when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to an employee.35[35] In Globe Telecom, Inc. v.
Florendo-Flores,36[36] we ruled that where an employee ceases to
work due to a demotion of rank or a diminution of pay, an
unreasonable situation arises which creates an adverse working
environment rendering it impossible for such employee to continue
working for her employer. Hence, her severance from the company
was not of her own making and therefore amounted to an illegal
termination of employment.
In affording full protection to labor, this Court must ensure
equal work opportunities regardless of sex, race or creed. Even as we,
in every case, attempt to carefully balance the fragile relationship
between employees and employers, we are mindful of the fact that the
policy of the law is to apply the Labor Code to a greater number of
employees. This would enable employees to avail of the benefits
accorded to them by law, in line with the constitutional mandate
giving maximum aid and protection to labor, promoting their welfare
and reaffirming it as a primary social economic force in furtherance
of social justice and national development.
WHEREFORE, the petition is GRANTED. The Decision
and Resolution of the Court of Appeals dated October 29, 2004 and
October 7, 2005, respectively, in CA-G.R. SP No. 78515 are
ANNULLED and SET ASIDE. The Decision of the National Labor
Relations Commission dated April 15, 2003 in NLRC NCR CA No.
032766-02, is REINSTATED. The case is REMANDED to the
Labor Arbiter for the recomputation of petitioner Angelina Franciscos
full backwages from the time she was illegally terminated until the
date of finality of this decision, and separation pay representing one-
half month pay for every year of service, where a fraction of at least
six months shall be considered as one whole year.
SO ORDERED.
 SECOND DIVISION

G.R. No. 202047, June 08, 2016

LIGHT RAIL TRANSIT AUTHORITY, Petitioner, v. NOEL B.

PILI, MEDEL I. LIRIO, RODERICK B. JAMON,
VICTORINO A. MACHICA, RONNIE C. VALORIA,
VIRGILIO M. FLORES, RENATO C. PALMA, ANGELITO V.
GUINTO, RAMIRO M. FELICIANO, ENRIQUE L. CIUBAL,
ELMER P. TABIGAN, VENANCIO T. MADRIA, MAXIMO
M. VITANGCOL, RODOLFO L. PAGUIO, ARNEL F.
MAGSALIN, JULIANA N. DOLOR, NOEL C. CRUZ, SANDY
 C. JARILLA, BERTITO I. SERVIDAD, ALAN R. CORPUZ,
ROBERT D. PABLO, ROBERT H. MONTEREY, HENRY L.
LIAO, ROLANDO C. CEBANICO, VELIENTE S.
FANTASTICO, MA. EMILIAN S. CRUZ, EDGARDO G.
GAMBAYAN, GERARDO M. RUMBAWA, DANTE D.
PALOMARA, MA. TERESA B. DE LOS REYES, JOSE
ALLAN S. PACIFICO, RESTITUTO R. MALAPO, EARL G.
PONGCO, LUCILO C. DEL MONTE, RUEL F.
MAGBALANA, MARLYN V. VILLANUEVA, JUDITH C.
BANEZ, GERMAN N. DE LUNA, FREDERICK B. DEL
CORRO, CLODUALDO B. PASIOLAN, ROLANDO I.
NAVARRO, AND PACIANO J. VILLANUEVA,* Respondents.
DECISION
CARPIO, ACTING C.J.:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules
of Court. Petitioner Light Rail Transit Authority (LRTA) challenges
the 1 June 2011 Decision1 and 23 May 2012 Resolution2 of the
Court of Appeals (CA) in CA-G.R. SP No. 107593 which set aside
the 24 June 2008 Resolution3 of the National Labor Relations
Commission (NLRC) and reinstated the 27 October 2005 Decision4
of the Labor Arbiter.
The Facts
LRTA is a government-owned and controlled corporation created
under Executive Order (EO) No. 6035 for the "construction,
operation, maintenance, and/or lease of light rail transit systems in
the Philippines."6 It entered into a ten-year operations and
management agreement (Agreement) with Meralco Transit
Organization, Inc. (MTOI) from 8 June 1984 to 8 June 1994. MTOI,
a corporation organized under the Corporation Code, hired its own
employees and thereafter entered into collective bargaining
agreements (CBAs) with the unions of its employees. However, on 7
April 1989, the Commission on Audit declared the Agreement
between LRTA and MTOI void. As a result, on 9 June 1989, LRTA
purchased all the shares of stock of MTOI and renamed MTOI to
Metro Transit Organization, Inc. (Metro) and formally declared
Metro as its wholly-owned subsidiary.
The Agreement between LRTA and Metro expired on 8 June 1994,
and was thereafter extended on a month-to-month basis. On 25 July
2000, the union of rank-and-file employees of Metro staged a strike
over a bargaining deadlock which resulted in the paralysis in the
operations of Metro. On 31 July 2000, the Agreement expired when
LRTA decided no longer to renew. On 30 September 2000, Metro
ceased its operations.
Respondents7 were employees of Metro who have been terminated
upon the expiration of the Agreement. While the rest of the
respondents filed cases involving purely monetary claims in the
form of separation pays, balances of separation pays, and other
unpaid claims, respondent Noel B. Pili (Pili), in addition to his
monetary claims, alleged that he was illegally dismissed.
Pili was employed by Metro on 29 November 1984, and was
holding the position of Liaison Assistant when he was dismissed on
30 September 2000, when Metro stopped its operations. He received
the first fifty percent (50%) of his separation pay in accordance with
the CBA with Metro. On 29 May 2003, he received the amount of
P63,l 17.65 as financial assistance for which he was compelled to
execute a Release, Waiver and Quitclaim. Based on the foregoing,
Pili argues that his dismissal was illegal and violative of his security
of tenure. He alleges that the mere fact of the expiration of the
Agreement was not sufficient to justify his dismissal. He also claims
that the Release, Waiver and Quitclaim he executed does not bar
him from demanding the benefits to which he is legally entitled to or
from contesting the legality of his dismissal.
On the other hand, the rest of the respondents filed cases for purely
monetary claims. They assert that under Article 4.05 of the
Agreement, LRTA contractually bound itself to shoulder and
provide all "Operating Expenses" of Metro. Operating Expenses is
defined in the Agreement as:
chanRoblesvirtualLawlibrary
x x x all salaries, wages and fringe benefits (both direct and indirect)
up to the rank of Manager, and a lump sum amount to be determined
annually as top Management compensation (above the rank of
Manager up to the President).8 ChanRob lesVirtualawlibrary
The respondents, except Pili, further allege that LRTA sanctioned
and approved all the CBAs Metro entered with its employees; that
LRTA and Metro jointly declared the continued implementation of
the Agreement; and that there would be no interruption in the
employment of the employees of the former MTOI (now Metro). On
17 November 1997, LRTA approved the severance pay of the
employees of Metro amounting to one and a half months salary per
year of service. They claim that this shows that the LRTA bound
itself solidarity liable with Metro.
On 28 July 2000, the Board of Directors of LRTA issued Resolution
No. 00-44 where LRTA officially assumed the obligation to ensure
that the Metro Inc. Employees Retirement Fund is updated and that
it fully covers all retirement benefits payable to the employees of
Metro. Based on the foregoing, the respondents - except Pili - argue
that the LRTA is liable for their monetary claims.
LRTA, on the other hand, argues that NLRC cannot exercise
jurisdiction over it as it is a government-owned and controlled
corporation, and that only the Civil Service Commission (CSC) can
take cognizance of the matter. Further, LRTA maintains that it has a
separate legal personality from Metro, and thus there can be no
illegal dismissal and no basis for the monetary claims of the
employees of Metro.
The Ruling of the Labor Arbiter
On 27 October 2005, Labor Arbiter Catalino R. Laderas rendered his
Decision in favor of Pili and the rest of the respondents. The Labor
Arbiter found that Pili was illegally dismissed and that LRTA was
solidarity liable with Metro for the monetary claims. The dispositive
portion of the Decision states:
chanRoblesvirtualLawlibrary
WHEREFORE, premises considered, judgment is hereby rendered
as follows:
1. Ordering the respondents Metro Transit Organization and LRTA
to pay complainant Noel Pili jointly and severally the amount of
P379,710 representing backwages for eight (8) months and balance
of his separation pay plus ten [sic] (10%) of the monetary award as
attorney's fee.
a. unpaid wages/salaries for August and September 2000 of:
chanRoblesvirtualLawlibrary
P31,848.00 to Arnel F. Magsalin
P31,548.00 to Angelito V. Guinto
 P30,928.00 to Enrique L. Ciubal P28,015.96 to Vena[n]cio T. Madria

P31,538.00 to Ronnie C. Valoria P45,626.15 to Renato C. Palima

P31,046.00 to Maximo M. Vitangcol P31,948.09 to Victorino A. Machica

P31,046.00 to Ramiro M. Feliciano P15,381.08 to Roderick B. Jamon

P31,538.00 to Virgilio M. Flores c. unpaid hazard pays for August and September 2000 of:
chanRoblesvirtualLawlibrary

P31,046.00 to Vena[n]cio T. Madria P1,400.00 to Arnel F. Magsalin

P30,906.00 to Ruel F. Magbalana P1,400.00 to Angelito V. Guinto

P30,728.00 to Renato C. Palima P1,400.00 to Enrique L. Ciubal

P28,004.00 to Victorino A. Machica P1,400.00 to Ronnie C. Valoria

P27,804.00 to Rodolfo L. Paguio P1,400.00 to Maximo M. Vitangcol

P21,136.00 to Roderick B. Jamon P1,400.00 to Ramiro M. Feliciano

P18,170.00 to Elmer P. Tabigan P1,400.00 to Virgilio M. Flores

b. unpaid 13th month and earned leave benefits of:
chanRoblesvirtualLawlibrary
P1,400.00 to Vena[n]cio T. Madria

P42,097.68 to Angelito V. Guinto P1,400.00 to Ruel F. Magbalana

P25,749.91 to Enrique L. Ciubal P1,400.00 to Renato C. Palima

P36,138.16 to Ronnie C. Valoria P1,400.00 to Victorino A. Machica

P36,178.90 to Ramiro M. Feliciano P1,400.00 to Rodolfo L. Paguio

P39,400.82 to Virgilio M. Flores P1,400.00 to Roderick B. Jamon

 P1,400.00 to Elmer P. Tabigan pay of:
chanRoblesvirtualLawlibrary

d. amounts of unsupplied rice subsidiaries for August and P45,557.33 to Ma. Theresa B. Delos Reyes
September 2000 of:
chanRoblesvirtualLawlibrary

P 8,471.82 to Roberto H. Monterey

P2,000.00 to Arnel F. Magsalin
P 8,994.75 to Edgardo G. Gambayan
P2,000.00 to Angelito V. Guinto f. Fifty percent (50%) balance of separation pay of:
chanRoblesvirtualLawlibrary

P2,000.00 to Enrique L. Ciubal

P455,473.32 to Ma. Theresa B. Delos Reyes
P2,000.00 to Ronnie C. Valoria
P294,703.50 to Juliana N. Dolor
P2,000.00 to Maximo M. Vitangcol
P198,428.25 to Roberto H. Monterey
P2,000.00 to Ramiro M. Feliciano
P201,429.92 to Rolando C. Cebanico
P2,000.00 to Virgilio M. Flores
P193.301.85 to Edgardo G. Gambayan
P2,000.00 to Vena[n]cio T. Madria
P281,203.02 to Rolando I. Navarro
P2,000.00 to Ruel F. Magbalana
P189,300.00 to Jose Allan S. Pacifico
P2,000.00 to Renato C. Palima
P212,148.00 to Lucilo C. Del Monte
P2,000.00 to Victorino A. Machica
P184,884.00 to Earl G. Ponco
P2,000.00 to Rodolfo L. Paguio
P188,640.00 to Allan R. Corpuz
P2,000.00 to Roderick B. Jamon
P188,520.00 to Ma. Emilian S. Cruz
P2,000.00 to Elmer P. Tabigan
P236.748.00 to German N. De Luna
e. reimbursement for over deductions for settled accountabilities
and/or 10% retention from the first fifty percent (50%) separation P186,396.00 to Robert D. Pablo
 P236,808.00 to Frederick B. Del Corro P378,576.00 to Angelito V. Guinto

P186,648.00 to Medel I. Lirio P371.136.00 to Enrique L. Ciubal

P242,628.00 to Paciano J. Villavieja, Jr. P378,456.00 to Ronnie C. Valoria

P224,376.00 to Noel C. Cruz P372,552.00 to Maximo M. Vitangcol

P179.061.58 to V[e]liente S. Fantastico P359,978.37 to Ramiro M. Feliciano

P185/786.68 to Sandy C. Jarilla P365,683.11 to Virgilio M. Flores

P204,556.18 to Dante D. Palomara P358.581.30 to Vena[n]cio T. Madria

P177,686.46 to Henry L. Liao P356,964.30 to Ruel F. Magbalana

P107,383.32 to Bertito I. Servidad P345,690.00 to Renato C. Palima

P105,592.08 to Gerardo M. Rumbawa P213,600.51 to Victorino A. Machica

P 91,719.00 to Clodualdo B. Pasiolan P194,558.49 to Rodolfo L. Paguio

P 74,550.00 to Judith C. Banez P 79,260.00 to Roderick B. Jamon

P 53,866.71 to Marlyn V. Villanueva P 60,760.73 to Elmer P. Tabigan

P 51,035.63 to Restituto R. Malapo with legal interest thereon from October 1, 2000 until actually and
fully paid.
with legal interests thereon from June 1, 2001 until actually and
fully paid; and Respondents are further ordered to pay solidarity to complainants an
amount equivalent to ten percent (10%) of the total awards, as and
g. severance pays of:
chanRoblesvirtualLawlibrary
by way of attorney's fees.

P406,062.00 to Arnel F. Magsalin Other claims dismissed.


9
SO ORDERED. ChanRoblesV irtualawlibrary
On 5 December 2005, LRTA appealed to the NLRC. LRTA averred
that the Labor Arbiter acted with grave abuse of discretion in (1)
taking cognizance of the case against LRTA despite the fact that it is
a government-owned and controlled corporation with an original
charter; (2) holding LRTA guilty of illegal dismissal despite the lack
of employer-employee relationship between LRTA and Pili; and (3)
awarding separation pay and other benefits to the respondents
despite the utter lack of factual and legal basis.10
The Ruling of the NLRC
On 24 June 2008, the NLRC found that there was no illegal
dismissal as Pili's dismissal was valid on account of the termination
of the Agreement between Metro and LRTA.11 The NLRC issued a
Resolution modifying in part the Decision of the Labor Arbiter, to
wit:
chanRoblesvirtualLawlibrary
WHEREFORE, premises considered the separate appeals are partly
GRANTED and the Decision dated 27 October 2005 is MODIFIED
deleting the finding of illegal dismissal and award of backwages to
complainant-appellee Pili, ordering respondents-appellants METRO
and LRTA to pay complainant-appellee Pili the balance of his
separation pay in the amount of P165,398.35 plus ten percent (10%)
of the award as attorney's fees and affirming the monetary awards in
the appealed Decision in its entirety including the 10% attorney's
fees to complainants-appellees Lirio, et al.
SO ORDERED.12 ChanRoblesVirtualawlibrary
The Motion for Partial Reconsideration13 filed by LRTA was denied
by the NLRC. Thereafter, LRTA filed a petition for certiorari under
Rule 65 before the CA on 10 November 2008.14
The Ruling of the CA
In a Decision dated 1 June 2011, the CA set aside the Resolution of
the NLRC and reinstated the 27 October 2005 Decision of the Labor
Arbiter in toto.15 The CA found that Pili was illegally dismissed as
the expiration of the Agreement between LRTA and Metro was not
a valid ground to terminate Pili's employment. The CA held:
chanRoblesvirtualLawlibrary
Indeed, and as stated above, Article 283 allows an employer to
terminate the services of his employees in case of closure of
business as a result of grave financial losses. But the employer must
comply with the clearance or report required under the Labor Code
and its implementing rules before the employment of the employees.
Nevertheless, employers who contemplate terminating the services
of their workers cannot be so arbitrary and ruthless as to find flimsy
excuses for their decisions. Thus must be so, considering that the
dismissal of an employee from work involves not only the loss of
his position but more important, his means of livelihood.
xxxx
In the case at bar, private respondent Pili's employment was
terminated on account of the expiration of the management contract
between petitioner LRTA and Metro. Such cause for termination of
employment is not within the contemplation of Article 283. Further,
there is no indication that Metro was closing shop after the
termination of its management contract with petitioner LRTA. Much
less, it was not proved that Metro was closing its business due to
financial losses or business reverses. Thus, the termination of Pili's
employment by Metro cannot be justified and, therefore, illegal.16
ChanRoblesVirtualawlibrary
In a Resolution dated 23 May 2012, the CA denied the Motion for
Reconsideration17 filed by LRTA. Hence, this petition.
 The Issues
In this petition, the LRTA seeks a reversal of the decision of the CA,
and raises the following arguments:
chanRoblesvirtualLawlibrary
A. THE HONORABLE COURT OF APPEALS DECIDED A
QUESTION OF LAW NOT IN ACCORD WITH THE
APPLICABLE DECISION OF THIS HONORABLE COURT ON
THE LACK OF JURISDICTION OF THE LABOR ARBITER
AND THE NATIONAL LABOR RELATIONS COMMISSION
OVER PETITIONER AND THE LABOR COMPLAINTS
AGAINST PETITIONER; and
B. ASSUMING ARGUENDO THAT THE LABOR ARBITER
AND THE NLRC HAVE SUCH JURISDICTION, THE
HONORABLE COURT OF APPEALS DECIDED A QUESTION
OF SUBSTANCE NOT IN ACCORD WITH THE APPLICABLE
LAW AND DECISIONS OF THIS HONORABLE COURT ON
ARTICLE[S] 106 AND 107 OF THE LABOR CODE
GOVERNING THE EXTENT OF LIABILITIES OF INDIRECT
EMPLOYERS.18 ChanRoblesVirtualawlibrary
The Ruling of the Court
The petition has no merit.
Jurisdiction of the NLRC over LRTA - Monetary Claims
We find error with the NLRC taking cognizance of the cases against
Metro and LRTA as far as the monetary claims are concerned. This
is despite the fact that LRTA is a government-owned and controlled
corporation with an original charter.
All of the respondents allege that they were employed by Metro.
Thus, there is no real issue as far as the employer-employee
relationship is concerned - the respondents themselves do not claim
to be employed by LRTA. While Pili claims that LRTA should also
be considered his true employer based on the doctrine of piercing
the corporate veil, this argument, as discussed below is baseless and
erroneous. The employees were employed solely by Metro as Metro
and LRTA each maintained their separate juridical personalities. We
have already consistently recognized, in clear and categorical terms,
that LRTA, even after it purchased all the shares of stock of Metro,
maintained and continued to have its separate and juridical
personality.19 Nonetheless, the argument of LRTA that only the CSC
may exercise jurisdiction over it - even for monetary claims, must
necessarily fail.
The NLRC acquired jurisdiction over LRTA not because of the
employer-employee relationship of the respondents and LRTA
(because there is none) but rather because LRTA expressly assumed
the monetary obligations of Metro to its employees. In the
Agreement, LRTA was obligated to reimburse Metro for the latter's
Operating Expenses which included the salaries, wages and fringe
benefits of certain employees of Metro. Moreover, the Board of
Directors of LRTA issued Resolution No. 00-44 where again, LRTA
assumed the monetary obligations of Metro more particularly to
update the Metro Inc. Employees Retirement Fund and to ensure
that it fully covers all the retirement benefits payable to the
employees of Metro.
It is clear from the foregoing, and it is also not denied by LRTA,
that it has assumed the monetary obligations of Metro to its
employees. As such, the NLRC may exercise jurisdiction over
LRTA on the issue of the monetary obligations. To repeat, NLRC
can exercise jurisdiction over LRTA not because of the existence of
any employer-employee relationship between LRTA and the
respondents, but rather because LRTA clearly assumed voluntarily
the monetary obligations of Metro to its employees. We therefore
find no error on the part of NLRC when it exercised jurisdiction
over LRTA which solidarity obligated itself to pay the monetary
obligations of Metro.
Jurisdiction of the NLRC over LRTA - Illegal Dismissal
However, as far as the claim of illegal dismissal is concerned, we
find that NLRC cannot exercise jurisdiction over LRTA. The NLRC
and Labor Arbiter erred when it took cognizance of such matter.
In Hugo v. LRTA,20 we have already addressed the issue of
jurisdiction in relation to illegal dismissal complaints. In the said
case, the employees of Metro filed an illegal dismissal and unfair
labor practice complaint against Metro and LRTA. We held that the
Labor Arbiter and NLRC did not have jurisdiction over LRTA, to
wit:
chanRoblesvirtualLawlibrary
The Labor Arbiter and the NLRC do not have jurisdiction over
LRTA. Petitioners themselves admitted in their complaint that
LRTA "is a government agency organized and existing pursuant to
an original charter (Executive Order No. 603)" and that they are
employees of METRO.21 (Emphasis and underscoring in the
original)
Pili admits that he was employed by Metro. However, in the same
breath, he argues that the doctrine of piercing the corporate veil
should be applied and LRTA should also be considered his
employer. We find this argument untenable. Pili cannot claim to be
employed by LRTA merely on the bare allegation that the corporate
veil must be pierced based on LRTA's ownership of the shares of
stock of Metro. This Court has already rejected such proposition -
there is no sufficient evidence to support the application of the
doctrine of piercing the corporate veil and LRTA, even after it
purchased all the shares of stock of Metro, maintained and continued
to have its separate juridical personality.22
Worse, if LRTA was his true employer, as he claims, it is CSC
which would have jurisdiction to hear his complaint against LRTA.
LRTA is a government-owned and controlled corporation - any
allegation of illegal dismissal against it by its employees should
have been brought to the CSC. However, the fact remains that Pili
was an employee of Metro alone - the Labor Arbiter and NLRC
could not have acquired jurisdiction over LRTA insofar as the illegal
dismissal complaint is concerned.
Monetary Claims of the Former Employees of Metro
The respondents, except Pili, all have purely monetary claims
against LRTA. They all anchor their claims on the Agreement, more
particularly the definition of Operating Expenses in relation to
Article 4.05.1 thereof, which states that LRTA shall reimburse
Metro for the latter's Operating Expenses. Moreover, LRTA's
Resolution No. 00-44 provides that LRTA assumes the obligation to
ensure full payment of the retirement/separation pay of the
employees of Metro. LRTA had already paid the first fifty percent
(50%) of the separation pay to some of the employees of Metro.
Therefore, the respondents, except Pili, are merely claiming their
unpaid balance, or the unpaid separation pay, unpaid wages and
other benefits which have accrued during their employment with
Metro.
This Court has already resolved this very issue on the monetary
claims of the employees of Metro as against LRTA. In LRTA v.
Mendoza,23 we found that LRTA is liable for the monetary claims of
the employees of Metro. The respondents in the said case were
employees of Metro who, similar to the respondents in this case,
have been separated due to the expiration of the Agreement between
LRTA and Metro. We held:
chanRoblesvirtualLawlibrary
First. LRTA obligated itself to fund METRO'S retirement fund to
answer for the retirement or severance/resignation of METRO
employees as part of METRO'S "operating expenses." Under Article
4.05.1 of the O & M agreement between LRTA and Metro, "The
Authority shall reimburse METRO for x x x OPERATING
EXPENSES x x x." In the letter to LRTA dated July 12, 2001, the
Acting Chairman of the METRO Board of Directors at the time,
Wilfredo Trinidad, reminded LRTA that funding provisions for the
retirement fund have always been considered operating expenses of
Metro. The coverage of operating expenses to include provisions for
the retirement fund has never been denied by LRTA.
xxxx
The clear language of Resolution No. 00-44, to our mind,
established the LRTA's obligation for the 50% unpaid balance of the
respondents' separation pay. Without doubt, it bound itself to
provide the necessary funding to METRO'S Employee Retirement
Fund to fully compensate the employees who had been involuntary
retired by the cessation of operations of METRO. This is not at all
surprising considering that METRO was a wholly owned subsidiary
of the LRTA.
Second. Even on the assumption that the LRTA did not obligate
itself to fully cover the separation benefits of the respondents and
others similarly situated, it still cannot avoid liability for the
respondents' claim. It is solidarity [sic] liable as an indirect employer
under the law for the respondents' separation pay. This liability
arises from the O & M agreement it had with METRO, which
created a principal-job contractor relationship between them, an
arrangement it admitted when it argued before the CA that METRO
was an independent job contractor who, it insinuated, should be
solely responsible for the respondents' claim.24 ChanRoblesV irtualawlibrary
Thus, based on (1) the Agreement where LRTA bound itself to be
liable for the Operating Expenses of Metro; (2) Resolution No. 00-
44 which contained LRTA's declaration to bind itself for the
payment of the separation pay of Metro's employees; and (3) the
solidary liability of an indirect employer under Articles 10725 and
10926 of the Labor Code and Department Order No. 18-02, s. 2002
(which implements Articles 106-109 of the Labor Code),27 we found
LRTA liable for the monetary claims of the respondents therein.
Accordingly, we find that the application of the doctrine of stare
decisis is in order. The doctrine of stare decisis et non quieta movere
means "to adhere to precedents, and not to unsettle things which are
established."28 Under this doctrine, when this Court has once laid
down a principle of law as applicable to a certain state of facts, it
will adhere to that principle, and apply it to all future cases, where
facts are substantially the same; regardless of whether the parties
and property are the same.29
The basic facts in this petition are the same as those in the case of
LRTA v. Mendoza.30 Thus, we find that LRTA is solidarity liable for
the monetary claims of respondents, in light of this Court's findings
in said case. It is the duty of the Court to apply the previous ruling in
LRTA v. Mendoza31 in accordance with the doctrine of stare decisis.
Once a case has been decided one way, any other case involving
exactly the same point at issue, as in the present case, should be
decided in the same manner.32
We find no reversible error in the CA ruling, insofar as the monetary
claims are concerned. chanrobleslaw

WHEREFORE, we DENY the petition.

SO ORDERED. cralawlawlibrary