G.R. No.

130866 September 16, 1998

ST. MARTIN FUNERAL HOME, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and BIENVENIDO ARICAYOS, respondents.

REGALADO, J.:

The present petition for certiorari stemmed from a complaint for illegal dismissal filed by herein
private respondent before the National Labor Relations Commission (NLRC), Regional Arbitration
Branch No. III, in San Fernando, Pampanga. Private respondent alleges that he started working as
Operations Manager of petitioner St. Martin Funeral Home on February 6, 1995. However, there was
no contract of employment executed between him and petitioner nor was his name included in the
semi-monthly payroll. On January 22, 1996, he was dismissed from his employment for allegedly
misappropriating P38,000.00 which was intended for payment by petitioner of its value added tax
(VAT) to the Bureau of Internal Revenue (BIR).  1

Petitioner on the other hand claims that private respondent was not its employee but only the uncle
of Amelita Malabed, the owner of petitioner St. Martin's Funeral Home. Sometime in 1995, private
respondent, who was formerly working as an overseas contract worker, asked for financial
assistance from the mother of Amelita. Since then, as an indication of gratitude, private respondent
voluntarily helped the mother of Amelita in overseeing the business.

In January 1996, the mother of Amelita passed away, so the latter then took over the management of
the business. She then discovered that there were arrears in the payment of taxes and other
government fees, although the records purported to show that the same were already paid. Amelita
then made some changes in the business operation and private respondent and his wife were no
longer allowed to participate in the management thereof. As a consequence, the latter filed a
complaint charging that petitioner had illegally terminated his employment. 2

Based on the position papers of the parties, the labor arbiter rendered a decision in favor of
petitioner on October 25, 1996 declaring that no employer-employee relationship existed between
the parties and, therefore, his office had no jurisdiction over the case. 
3

Not satisfied with the said decision, private respondent appealed to the NLRC contending that the
labor arbiter erred (1) in not giving credence to the evidence submitted by him; (2) in holding that he
worked as a "volunteer" and not as an employee of St. Martin Funeral Home from February 6, 1995
to January 23, 1996, or a period of about one year; and (3) in ruling that there was no employer-
employee relationship between him and petitioner. 4

On June 13, 1997, the NLRC rendered a resolution setting aside the questioned decision and
remanding the case to the labor arbiter for immediate appropriate proceedings.  Petitioner then filed
5

a motion for reconsideration which was denied by the NLRC in its resolution dated August 18, 1997
for lack of merit,  hence the present petition alleging that the NLRC committed grave abuse of
6

discretion.
7

Before proceeding further into the merits of the case at bar, the Court feels that it is now exigent and
opportune to reexamine the functional validity and systemic practicability of the mode of judicial
review it has long adopted and still follows with respect to decisions of the NLRC. The increasing
number of labor disputes that find their way to this Court and the legislative changes introduced over
the years into the provisions of Presidential Decree (P.D.) No. 442 (The Labor Code of the
Philippines and Batas Pambansa Blg. (B.P. No.) 129 (The Judiciary Reorganization Act of 1980) now
stridently call for and warrant a reassessment of that procedural aspect.

We prefatorily delve into the legal history of the NLRC. It was first established in the Department of
Labor by P.D. No. 21 on October 14, 1972, and its decisions were expressly declared to be
appealable to the Secretary of Labor and, ultimately, to the President of the Philippines.

On May 1, 1974, P.D. No. 442 enacted the Labor Code of the Philippines, the same to take effect six
months after its promulgation.   Created and regulated therein is the present NLRC which was
8
attached to the Department of Labor and Employment for program and policy coordination
only.  Initially, Article 302 (now, Article 223) thereof also granted an aggrieved party the remedy of
9

appeal from the decision of the NLRC to the Secretary of Labor, but P.D. No. 1391 subsequently
amended said provision and abolished such appeals. No appellate review has since then been
provided for.

Thus, to repeat, under the present state of the law, there is no provision for appeals from the
decision of the NLRC.   The present Section 223, as last amended by Section 12 of R.A. No. 6715,
10

instead merely provides that the Commission shall decide all cases within twenty days from receipt
of the answer of the appellee, and that such decision shall be final and executory after ten calendar
days from receipt thereof by the parties.

When the issue was raised in an early case on the argument that this Court has no jurisdiction to
review the decisions of the NLRC, and formerly of the Secretary of Labor, since there is no legal
provision for appellate review thereof, the Court nevertheless rejected that thesis. It held that there is
an underlying power of the courts to scrutinize the acts of such agencies on questions of law and
jurisdiction even though no right of review is given by statute; that the purpose of judicial review is to
keep the administrative agency within its jurisdiction and protect the substantial rights of the parties;
and that it is that part of the checks and balances which restricts the separation of powers and
forestalls arbitrary and unjust adjudications. 
11

Pursuant to such ruling, and as sanctioned by subsequent decisions of this Court, the remedy of the
aggrieved party is to timely file a motion for reconsideration as a precondition for any further or
subsequent remedy,   and then seasonably avail of the special civil action of certiorari under Rule
12

65,   for which said Rule has now fixed the reglementary period of sixty days from notice of the
13

decision. Curiously, although the 10-day period for finality of the decision of the NLRC may already
have lapsed as contemplated in Section 223 of the Labor Code, it has been held that this Court may
still take cognizance of the petition for certiorari on jurisdictional and due process considerations if
filed within the reglementary period under Rule 65.  14

Turning now to the matter of judicial review of NLRC decisions, B.P. No. 129 originally provided as
follows:

Sec. 9. Jurisdiction. — The Intermediate Appellate Court shall exercise:

(1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas

corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of
its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional
Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders, or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards, or commissions, except those falling within the appellate
jurisdiction of the Supreme Court in accordance with the Constitution, the provisions
of this Act, and of subparagraph (1) of the third paragraph and subparagraph (4) of
the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Intermediate Appellate Court shall have the power to try cases and conduct
hearings, receive evidence and perform any and all acts necessary to resolve factual
issues raised in cases falling within its original and appellate jurisdiction, including the
power to grant and conduct new trials or further proceedings.

These provisions shall not apply to decisions and interlocutory orders issued under
the Labor Code of the Philippines and by the Central Board of Assessment
Appeals.  15

Subsequently, and as it presently reads, this provision was amended by R.A. No. 7902 effective
March 18, 1995, to wit:

Sec. 9. Jurisdiction. — The Court of Appeals shall exercise:

 (1) Original jurisdiction to issue writs of mandamus, prohibition, certiorari, habeas
corpus, and quo warranto, and auxiliary writs or processes, whether or not in aid of
its appellate jurisdiction;

(2) Exclusive original jurisdiction over actions for annulment of judgments of Regional
Trial Courts; and

(3) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Social Security Commission, the Employees Compensation
Commission and the Civil Service Commission, except those falling within the
appellate jurisdiction of the Supreme Court in accordance with the Constitution, the
Labor Code of the Philippines under Presidential Decree No. 442, as amended, the
provisions of this Act, and of subparagraph (1) of the third paragraph and
subparagraph (4) of the fourth paragraph of Section 17 of the Judiciary Act of 1948.

The Court of Appeals shall have the power to try cases and conduct hearings,
receive evidence and perform any and all acts necessary to resolve factual issues
raised in cases falling within its original and appellate jurisdiction, including the power
to grant and conduct new trials or further proceedings. Trials or hearings in the Court
of Appeals must be continuous and must be completed within, three (3) months,
unless extended by the Chief Justice.

It will readily be observed that, aside from the change in the name of the lower appellate court,   the
16

following amendments of the original provisions of Section 9 of B.P. No. 129 were effected by R.A.
No. 7902, viz.:

1. The last paragraph which excluded its application to the Labor Code of the Philippines and the
Central Board of Assessment Appeals was deleted and replaced by a new paragraph granting the
Court of Appeals limited powers to conduct trials and hearings in cases within its jurisdiction.

2. The reference to the Labor Code in that last paragraph was transposed to paragraph (3) of the
section, such that the original exclusionary clause therein now provides "except those falling within
the appellate jurisdiction of the Supreme Court in accordance with the Constitution, the Labor Code
of the Philippines under Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth paragraph of Section 17
of the Judiciary Act of 1948." (Emphasis supplied).

3. Contrarily, however, specifically added to and included among the quasi-judicial agencies over
which the Court of Appeals shall have exclusive appellate jurisdiction are the Securities and
Exchange Commission, the Social Security Commission, the Employees Compensation Commission
and the Civil Service Commission.

This, then, brings us to a somewhat perplexing impassè, both in point of purpose and terminology.
As earlier explained, our mode of judicial review over decisions of the NLRC has for some time now
been understood to be by a petition for certiorari under Rule 65 of the Rules of Court. This is, of
course, a special original action limited to the resolution of jurisdictional issues, that is, lack or excess
of jurisdiction and, in almost all cases that have been brought to us, grave abuse of discretion
amounting to lack of jurisdiction.

It will, however, be noted that paragraph (3), Section 9 of B.P. No. 129 now grants
exclusive appellate jurisdiction to the Court of Appeals over all final adjudications of the Regional
Trial Courts and the quasi-judicial agencies generally or specifically referred to therein except,
among others, "those falling within the appellate jurisdiction of the Supreme Court in accordance
with . . . the Labor Code of the Philippines under Presidential Decree No. 442, as amended, . . . ."
This would necessarily contradict what has been ruled and said all along that appeal does not lie
from decisions of the NLRC.   Yet, under such excepting clause literally construed, the appeal from
17

the NLRC cannot be brought to the Court of Appeals, but to this Court by necessary implication.

The same exceptive clause further confuses the situation by declaring that the Court of Appeals has
no appellate jurisdiction over decisions falling within the appellate jurisdiction of the Supreme Court
in accordance with the Constitution, the provisions of B.P. No. 129, and those specified cases in
Section 17 of the Judiciary Act of 1948. These cases can, of course, be properly excluded from the
exclusive appellate jurisdiction of the Court of Appeals. However, because of the aforementioned
amendment by transposition, also supposedly excluded are cases falling within the appellate
jurisdiction of the Supreme Court in accordance with the Labor Code. This is illogical and
impracticable, and Congress could not have intended that procedural gaffe, since there are no cases
in the Labor Code the decisions, resolutions, orders or awards wherein are within
the appellate jurisdiction of the Supreme Court or of any other court for that matter.

A review of the legislative records on the antecedents of R.A. No. 7902 persuades us that there may
have been an oversight in the course of the deliberations on the said Act or an imprecision in the
terminology used therein. In fine, Congress did intend to provide for judicial review of the
adjudications of the NLRC in labor cases by the Supreme Court, but there was an inaccuracy in the
term used for the intended mode of review. This conclusion which we have reluctantly but prudently
arrived at has been drawn from the considerations extant in the records of Congress, more
particularly on Senate Bill No. 1495 and the Reference Committee Report on S. No. 1495/H. No.
10452. 18

In sponsoring Senate Bill No. 1495, Senator Raul S. Roco delivered his sponsorship speech   from
19

which we reproduce the following excerpts:

The Judiciary Reorganization Act, Mr. President, Batas Pambansa Blg. 129,
reorganized the Court of Appeals and at the same time expanded its jurisdiction and
powers. Among others, its appellate jurisdiction was expanded to cover not only final
judgment of Regional Trial Courts, but also all final judgment(s), decisions,
resolutions, orders or awards of quasi-judicial agencies, instrumentalities, boards and
commissions, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the provisions of BP Blg. 129 and of
subparagraph 1 of the third paragraph and subparagraph 4 of Section 17 of the
Judiciary Act of 1948.

Mr. President, the purpose of the law is to ease the workload of the Supreme Court
by the transfer of some of its burden of review of factual issues to the Court of
Appeals. However, whatever benefits that can be derived from the expansion of the
appellate jurisdiction of the Court of Appeals was cut short by the last paragraph of
Section 9 of Batas Pambansa Blg. 129 which excludes from its coverage the
"decisions and interlocutory orders issued under the Labor Code of the Philippines
and by the Central Board of Assessment Appeals.

Among the highest number of cases that are brought up to the Supreme Court
are labor cases. Hence, Senate Bill No. 1495 seeks to eliminate the exceptions
enumerated in Section 9 and, additionally, extends the coverage of appellate review
of the Court of Appeals in the decision(s) of the Securities and Exchange
Commission, the Social Security Commission, and the Employees Compensation
Commission to reduce the number of cases elevated to the Supreme Court.
(Emphases and corrections ours)

x x x           x x x          x x x

Senate Bill No. 1495 authored by our distinguished Colleague from Laguna provides
the ideal situation of drastically reducing the workload of the Supreme Court without
depriving the litigants of the privilege of review by an appellate tribunal.

In closing, allow me to quote the observations of former Chief Justice Teehankee in

1986 in the Annual Report of the Supreme Court:

. . . Amendatory legislation is suggested so as to relieve the Supreme

Court of the burden of reviewing these cases which present no
important issues involved beyond the particular fact and the parties
involved, so that the Supreme Court may wholly devote its time to
cases of public interest in the discharge of its mandated task as the
guardian of the Constitution and the guarantor of the people's basic
rights and additional task expressly vested on it now "to determine
whether or not there has been a grave abuse of discretion amounting
 to lack of jurisdiction on the part of any branch or instrumentality of
the Government.

We used to have 500,000 cases pending all over the land, Mr. President. It has been
cut down to 300,000 cases some five years ago. I understand we are now back to
400,000 cases. Unless we distribute the work of the appellate courts, we shall
continue to mount and add to the number of cases pending.

In view of the foregoing, Mr. President, and by virtue of all the reasons we have
submitted, the Committee on Justice and Human Rights requests the support and
collegial approval of our Chamber.

x x x           x x x          x x x

Surprisingly, however, in a subsequent session, the following Committee Amendment was

introduced by the said sponsor and the following proceedings transpired:  20

Senator Roco. On page 2, line 5, after the line "Supreme Court in accordance with
the Constitution," add the phrase "THE LABOR CODE OF THE PHILIPPINES
UNDER P.D. 442, AS AMENDED." So that it becomes clear, Mr. President, that
issues arising from the Labor Code will still be appealable to the Supreme Court.

The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.

Senator Roco. On the same page, we move that lines 25 to 30 be deleted. This was
also discussed with our Colleagues in the House of Representatives and as we
understand it, as approved in the House, this was also deleted, Mr. President.

The President. Is there any objection? (Silence) Hearing none, the amendment is
approved.

Senator Roco. There are no further Committee amendments, Mr. President.

Senator Romulo. Mr. President, I move that we close the period of Committee
amendments.

The President. Is there any objection? (Silence) Hearing none, the amendment is
approved. (Emphasis supplied).

x x x           x x x          x x x

Thereafter, since there were no individual amendments, Senate Bill No. 1495 was passed on second
reading and being a certified bill, its unanimous approval on third reading followed.   The Conference
21

Committee Report on Senate Bill No. 1495 and House Bill No. 10452, having theretofore been
approved by the House of Representatives, the same was likewise approved by the Senate on
February 20, 1995,   inclusive of the dubious formulation on appeals to the Supreme Court earlier
22

discussed.

The Court is, therefore, of the considered opinion that ever since appeals from the NLRC to the
Supreme Court were eliminated, the legislative intendment was that the special civil action
of certiorari was and still is the proper vehicle for judicial review of decisions of the NLRC. The use
of the word "appeal" in relation thereto and in the instances we have noted could have been
a lapsus plumae because appeals by certiorari and the original action for certiorari are both modes
of judicial review addressed to the appellate courts. The important distinction between them,
however, and with which the Court is particularly concerned here is that the special civil action
of certiorari is within the concurrent original jurisdiction of this Court and the Court of
Appeals;   whereas to indulge in the assumption that appeals by certiorari to the Supreme Court are
23

allowed would not subserve, but would subvert, the intention of Congress as expressed in the
sponsorship speech on Senate Bill No. 1495.

Incidentally, it was noted by the sponsor therein that some quarters were of the opinion that recourse
from the NLRC to the Court of Appeals as an initial step in the process of judicial review would be
circuitous and would prolong the proceedings. On the contrary, as he commendably and realistically
emphasized, that procedure would be advantageous to the aggrieved party on this reasoning:

On the other hand, Mr. President, to allow these cases to be appealed to the Court of
Appeals would give litigants the advantage to have all the evidence on record be
reexamined and reweighed after which the findings of facts and conclusions of said
bodies are correspondingly affirmed, modified or reversed.

Under such guarantee, the Supreme Court can then apply strictly the axiom that
factual findings of the Court of Appeals are final and may not be reversed on appeal
to the Supreme Court. A perusal of the records will reveal appeals which are factual
in nature and may, therefore, be dismissed outright by minute resolutions.  24

While we do not wish to intrude into the Congressional sphere on the matter of the wisdom of a law,
on this score we add the further observations that there is a growing number of labor cases being
elevated to this Court which, not being a trier of fact, has at times been constrained to remand the
case to the NLRC for resolution of unclear or ambiguous factual findings; that the Court of Appeals is
procedurally equipped for that purpose, aside from the increased number of its component divisions;
and that there is undeniably an imperative need for expeditious action on labor cases as a major
aspect of constitutional protection to labor.

Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the
NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions
for certiorari under Rule 65. Consequently, all such petitions should hence forth be initially filed in the
Court of Appeals in strict observance of the doctrine on the hierarchy of courts as the appropriate
forum for the relief desired.

Apropos to this directive that resort to the higher courts should be made in accordance with their
hierarchical order, this pronouncement in Santiago vs. Vasquez, et al.   should be taken into
25

account:

One final observation. We discern in the proceedings in this case a propensity on the
part of petitioner, and, for that matter, the same may be said of a number of litigants
who initiate recourses before us, to disregard the hierarchy of courts in our judicial
system by seeking relief directly from this Court despite the fact that the same is
available in the lower courts in the exercise of their original or concurrent jurisdiction,
or is even mandated by law to be sought therein. This practice must be stopped, not
only because of the imposition upon the precious time of this Court but also because
of the inevitable and resultant delay, intended or otherwise, in the adjudication of the
case which often has to be remanded or referred to the lower court as the proper
forum under the rules of procedure, or as better equipped to resolve the issues since
this Court is not a trier of facts. We, therefore, reiterate the judicial policy that this
Court will not entertain direct resort to it unless the redress desired cannot be
obtained in the appropriate courts or where exceptional and compelling
circumstances justify availment of a remedy within and calling for the exercise of our
primary jurisdiction.

WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby
REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court of Appeals
for appropriate action and disposition consistent with the views and ruling herein set forth, without
pronouncement as to costs.

SO ORDERED.
.R. No. 120319 October 6, 1995

LUZON DEVELOPMENT BANK, petitioner,

vs.
ASSOCIATION OF LUZON DEVELOPMENT BANK EMPLOYEES and ATTY. ESTER S. GARCIA
in her capacity as VOLUNTARY ARBITRATOR, respondents.

ROMERO, J.:

From a submission agreement of the Luzon Development Bank (LDB) and the Association of Luzon
Development Bank Employees (ALDBE) arose an arbitration case to resolve the following issue:

Whether or not the company has violated the Collective Bargaining Agreement
provision and the Memorandum of Agreement dated April 1994, on promotion.

At a conference, the parties agreed on the submission of their respective Position Papers on
December 1-15, 1994. Atty. Ester S. Garcia, in her capacity as Voluntary Arbitrator, received
ALDBE's Position Paper on January 18, 1995. LDB, on the other hand, failed to submit its Position
Paper despite a letter from the Voluntary Arbitrator reminding them to do so. As of May 23, 1995 no
Position Paper had been filed by LDB.

On May 24, 1995, without LDB's Position Paper, the Voluntary Arbitrator rendered a decision
disposing as follows:

WHEREFORE, finding is hereby made that the Bank has not adhered to the
Collective Bargaining Agreement provision nor the Memorandum of Agreement on
promotion.

Hence, this petition for certiorari and prohibition seeking to set aside the decision of the Voluntary
Arbitrator and to prohibit her from enforcing the same.

In labor law context, arbitration is the reference of a labor dispute to an impartial third person for
determination on the basis of evidence and arguments presented by such parties who have bound
themselves to accept the decision of the arbitrator as final and binding.

Arbitration may be classified, on the basis of the obligation on which it is based, as either compulsory
or voluntary.

Compulsory arbitration is a system whereby the parties to a dispute are compelled by the
government to forego their right to strike and are compelled to accept the resolution of their dispute
through arbitration by a third party.  The essence of arbitration remains since a resolution of a
1

dispute is arrived at by resort to a disinterested third party whose decision is final and binding on the
parties, but in compulsory arbitration, such a third party is normally appointed by the government.

Under voluntary arbitration, on the other hand, referral of a dispute by the parties is made, pursuant
to a voluntary arbitration clause in their collective agreement, to an impartial third person for a final
and binding resolution.  Ideally, arbitration awards are supposed to be complied with by both parties
2

without delay, such that once an award has been rendered by an arbitrator, nothing is left to be done
by both parties but to comply with the same. After all, they are presumed to have freely chosen
arbitration as the mode of settlement for that particular dispute. Pursuant thereto, they have chosen
a mutually acceptable arbitrator who shall hear and decide their case. Above all, they have mutually
agreed to de bound by said arbitrator's decision.

In the Philippine context, the parties to a Collective Bargaining Agreement (CBA) are required to
include therein provisions for a machinery for the resolution of grievances arising from the
interpretation or implementation of the CBA or company personnel policies.  For this purpose, parties
3

to a CBA shall name and designate therein a voluntary arbitrator or a panel of arbitrators, or include
a procedure for their selection, preferably from those accredited by the National Conciliation and
Mediation Board (NCMB). Article 261 of the Labor Code accordingly provides for exclusive original
jurisdiction of such voluntary arbitrator or panel of arbitrators over (1) the interpretation or
implementation of the CBA and (2) the interpretation or enforcement of company personnel policies.
Article 262 authorizes them, but only upon agreement of the parties, to exercise jurisdiction over
other labor disputes.

On the other hand, a labor arbiter under Article 217 of the Labor Code has jurisdiction over the
following enumerated cases:

. . . (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 wages, 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;

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 domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with
a claim for reinstatement.

xxx xxx xxx

It will thus be noted that the jurisdiction conferred by law on a voluntary arbitrator or a panel of such
arbitrators is quite limited compared to the original jurisdiction of the labor arbiter and the appellate
jurisdiction of the National Labor Relations Commission (NLRC) for that matter.  The state of our
4

present law relating to voluntary arbitration provides that "(t)he award or decision of the Voluntary
Arbitrator . . . shall be final and executory after ten (10) calendar days from receipt of the copy of the
award or decision by the parties,"  while the "(d)ecision, awards, or orders of the Labor Arbiter are
5

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."  Hence, while there is an express
6

mode of appeal from the decision of a labor arbiter, Republic Act No. 6715 is silent with respect to an
appeal from the decision of a voluntary arbitrator.

Yet, past practice shows that a decision or award of a voluntary arbitrator is, more often than not,
elevated to the Supreme Court itself on a petition for certiorari,  in effect equating the voluntary
7

arbitrator with the NLRC or the Court of Appeals. In the view of the Court, this is illogical and
imposes an unnecessary burden upon it.

In Volkschel Labor Union, et al. v. NLRC, et al.,  on the settled premise that the judgments of courts
8

and awards of quasi-judicial agencies must become final at some definite time, this Court ruled that
the awards of voluntary arbitrators determine the rights of parties; hence, their decisions have the
same legal effect as judgments of a court. In Oceanic Bic Division (FFW), et al. v. Romero, et
al.,  this Court ruled that "a voluntary arbitrator by the nature of her functions acts in a quasi-judicial
9

capacity." Under these rulings, it follows that the voluntary arbitrator, whether acting solely or in a
panel, enjoys in law the status of a quasi-judicial agency but independent of, and apart from, the
NLRC since his decisions are not appealable to the latter. 10
Section 9 of B.P. Blg. 129, as amended by Republic Act No. 7902, provides that the Court of
Appeals shall exercise:

xxx xxx xxx

(B) Exclusive appellate jurisdiction over all final judgments, decisions, resolutions,
orders or awards of Regional Trial Courts and quasi-judicial agencies,
instrumentalities, boards or commissions, including the Securities and Exchange
Commission, the Employees Compensation Commission and the Civil Service
Commission, except those falling within the appellate jurisdiction of the Supreme
Court in accordance with the Constitution, the Labor Code of the Philippines under
Presidential Decree No. 442, as amended, the provisions of this Act, and of
subparagraph (1) of the third paragraph and subparagraph (4) of the fourth
paragraph of Section 17 of the Judiciary Act of 1948.

xxx xxx xxx

Assuming arguendo that the voluntary arbitrator or the panel of voluntary arbitrators may not strictly
be considered as a quasi-judicial agency, board or commission, still both he and the panel are
comprehended within the concept of a "quasi-judicial instrumentality." It may even be stated that it
was to meet the very situation presented by the quasi-judicial functions of the voluntary arbitrators
here, as well as the subsequent arbitrator/arbitral tribunal operating under the Construction Industry
Arbitration Commission,  that the broader term "instrumentalities" was purposely included in the
11

above-quoted provision.

An "instrumentality" is anything used as a means or agency.  Thus, the terms governmental

12

"agency" or "instrumentality" are synonymous in the sense that either of them is a means by which a
government acts, or by which a certain government act or function is performed.  The word
13

"instrumentality," with respect to a state, contemplates an authority to which the state delegates
governmental power for the performance of a state function.  An individual person, like an
14

administrator or executor, is a judicial instrumentality in the settling of an estate,  in the same
15

manner that a sub-agent appointed by a bankruptcy court is an instrumentality of the court,  and a
16

trustee in bankruptcy of a defunct corporation is an instrumentality of the state.17

The voluntary arbitrator no less performs a state function pursuant to a governmental power
delegated to him under the provisions therefor in the Labor Code and he falls, therefore, within the
contemplation of the term "instrumentality" in the aforequoted Sec. 9 of B.P. 129. The fact that his
functions and powers are provided for in the Labor Code does not place him within the exceptions to
said Sec. 9 since he is a quasi-judicial instrumentality as contemplated therein. It will be noted that,
although the Employees Compensation Commission is also provided for in the Labor Code, Circular
No. 1-91, which is the forerunner of the present Revised Administrative Circular No. 1-95, laid down
the procedure for the appealability of its decisions to the Court of Appeals under the foregoing
rationalization, and this was later adopted by Republic Act No. 7902 in amending Sec. 9 of B.P. 129.

A fortiori, the decision or award of the voluntary arbitrator or panel of arbitrators should likewise be
appealable to the Court of Appeals, in line with the procedure outlined in Revised Administrative
Circular No. 1-95, just like those of the quasi-judicial agencies, boards and commissions enumerated
therein.

This would be in furtherance of, and consistent with, the original purpose of Circular No. 1-91 to
provide a uniform procedure for the appellate review of adjudications of all quasi-judicial entities  not
18

expressly excepted from the coverage of Sec. 9 of B.P. 129 by either the Constitution or another
statute. Nor will it run counter to the legislative intendment that decisions of the NLRC be reviewable
directly by the Supreme Court since, precisely, the cases within the adjudicative competence of the
voluntary arbitrator are excluded from the jurisdiction of the NLRC or the labor arbiter.

In the same vein, it is worth mentioning that under Section 22 of Republic Act No. 876, also known
as the Arbitration Law, arbitration is deemed a special proceeding of which the court specified in the
contract or submission, or if none be specified, the Regional Trial Court for the province or city in
which one of the parties resides or is doing business, or in which the arbitration is held, shall have
jurisdiction. A party to the controversy may, at any time within one (1) month after an award is made,
apply to the court having jurisdiction for an order confirming the award and the court must grant such
order unless the award is vacated, modified or corrected. 19
In effect, this equates the award or decision of the voluntary arbitrator with that of the regional trial
court. Consequently, in a petition for certiorari from that award or decision, the Court of Appeals must
be deemed to have concurrent jurisdiction with the Supreme Court. As a matter of policy, this Court
shall henceforth remand to the Court of Appeals petitions of this nature for proper disposition.

ACCORDINGLY, the Court resolved to REFER this case to the Court of Appeals.

SO ORDERED.
G.R. No. 123426 March 10, 1999

NATIONAL FEDERATION OF LABOR (NFL), petitioner,

vs.
HON. BIENVENIDO E. LAGUESMA, UNDERSECRETARY OF THE DEPARTMENT OF LABOR
AND EMPLOYMENT, AND ALLIANCE OF NATIONALIST GENUINE LABOR ORGANIZATION-
KILUSANG MAYO UNO (ANGLO-KMU), respondents.

KAPUNAN, J.:

Before us is a petition for certiorari under Rule 65 assailing the Resolution in OS-A-7-142-93

(RO700-9412-RU-037) dated August 8, 1995 of Undersecretary Bienvenido E. Laguesma, by
authority of the Secretary of Labor and Employment, setting aside the Resolution of the Med-Arbiter
dated March 13, 1995.

The antecedents are summarized in the assailed Resolution of Undersecretary Laguesma as

follows:

Records show that on 27 December 1994, a petition for certification election among
the rank and file employees of Cebu Shipyard and Engineering Work, Inc. was filed
by the Alliance of Nationalist and Genuine Labor Organization (ANGLO-KMU),
alleging among others, that it is a legitimate labor organization; that respondent Cebu
Shipyard and Engineering Work, Inc. is a company engaged in the business of
shipbuilding and repair with more or less, four hundred (400) rank and file
employees; that the Nagkahiusang Mamumuo sa Baradero — National Federation of
Labor is the incumbent bargaining agent of the rank and file employees of the
respondent company; that the petition is supported by more than twenty-five percent
(25%) of all the employees in the bargaining unit; that the petition is filed within the
sixty (60) day period prior to the expiry date of the collective bargaining agreement
(CBA) entered into by and between the Nagkahiusang Mamumuo sa Baradero-NFL
and Cebu Shipyard Engineering Work, Inc. which is due to expire on 31 December
1994; and, that there is no bar to its bid to be certified as the sole and exclusive
bargaining agent of all the rank and file employees of the respondent company.

On 2 January 1995, the Med-Arbiter issued an Order, the pertinent portion of which reads as follows:

The petitioner is given five days from receipt of this Order to present proofs that it has
created a local in the appropriate bargaining unit where it seeks to operate as the
bargaining agent and that, relative thereto, it has submitted to the Bureau of Labor
Relations or the Industrial Relations Division of this Office the following: 1) A charter
certificate; 2) the constitution and by-laws, a statement on the set of officers, and the
books of accounts all of which are certified under oath by the Secretary or Treasurer,
as the case may be, of such local or chapter and attested to by its President,
OTHERWISE, this case will be dismissed.

SO ORDERED.

On 9 January 1995, forced-intervenor National Federation of Labor (NFL) moved for

the dismissal of the petition on grounds that petitioner has no legal personality to file
the present petition for certification election and that it failed to comply with the
twenty-five percent (25%) consent requirement. It averred among others, that settled
is the rule that when a petition for certification election is filed by the federation which
is merely an agent, the petition is deemed to be filed by the local/chapter, the
principal, which must be a legitimate labor organization; that for a local to be vested
with the status a legitimate labor organization, it must submit to the Bureau of Labor
 Relations (BLR) or the Industrial Relations Division of the Regional Office of the
Department of Labor and Employment the following: a) charter certificate, indicating
the creation or establishment of a local or chapter; b) constitution and by-laws; c) set
of officers, and d) books of accounts; that petitioner failed to submit the aforesaid
requirements necessary for its acquisition of legal personality; that compliance with
the aforesaid requirements must be made at the time of the filing of the petition within
the freedom period; that the submission of the aforesaid requirements beyond the
freedom period will not operate to allow the defective petition to prosper; that contrary
to the allegation of the petitioner, the number of workers in the subject bargaining unit
is 486, twenty-five percent (25%) of which is 122; that the consent signatures
submitted by the petitioner is 120 which is below the required 25% consent
requirement; that of the 120 employees who allegedly supported the petition, one (1)
executed a certification stating that the signature, Margarito Cabalhug, does not
belong to him, 15 retracted, 9 of which were made before the filing of the petition
while 6 were made after the filing of the petition; and, that the remaining 104
signatures are way below the 25% consent requirement.

On 16 January 1995, forced-intervenor filed an Addendum/Supplement to its Motion

to Dismiss, together with the certification issued by the Regional Office No. VII, this
Department, attesting to the fact that the mandatory requirements necessary for the
petitioner to acquire the requisite legal personality were submitted only on 6 January
1995 and the certification issued by the BLR, this Department, stating that as of 11
January 1995, the ANGLO-Cebu Shipyard and Engineering Work has not been
reported as one of the affiliates of the Alliance of Nationalist and Genuine Labor
Organization (ANGLO). Forced intervenor alleged that it is clear from the said
certification that when the present petition was filed on 27 December 1994, petitioner
and its alleged local/chapter have no legal personality to file the same. It claimed that
the fatal defect in the instant petition cannot be cured with the submission of the
requirements in question as the local/chapter may be accorded the status of a
legitimate labor organization only on 6 January 1995 which is after the freedom
period expired on 31 December 1994. Forced intervenor further claimed that the
documents submitted by the petitioner were procured thru misrepresentation, and
fraud, as there was no meeting on 13 November 1994 for the purpose of ratifying a
constitution and by-laws and there was no election of officers that actually took place.

On 15 February 1995, petitioner filed its opposition to the respondent's motion to

dismiss. It averred among others, that in compliance with the order of the Med-
Arbiter, it submitted to the Regional Office No. VII, this Department, the following
documents; charter certificate, constitution and by-laws; statement on the set of
officers and treasurer's affidavit in lieu of the books of accounts; that the submission
of the aforesaid document, as ordered, has cured whatever defect the petition may
have at the time of the filing of the petition, that at the time of the filing of petition, the
total number of rank and file employees in the respondent company was about 400
and that the petition was supported by 120 signatures which are more than the 25%
required by law; that granting without admitting that it was not able to secure the
signatures of at least 25% of the rank and file employees in the bargaining unit, the
Med-Arbiter is still empowered to order for the conduct of a certification election
precisely for the purpose of ascertaining which of the contending unions shall be the
exclusive bargaining agent pursuant to the ruling of the Supreme Court in the case
of California Manufacturing Corporation vs. Hon. Undersecretary of Labor, et al.,
G.R. No. 97020, June 8, 1992.

On 20 February 1995, forced-intervenor filed its reply, reiterating all its arguments
and allegations contained in its previous pleadings. It stressed that petitioner is not a
legitimate labor organization at the time of the filing of the petition and that the
petitioner's submission of the mandatory requirements after the freedom period
would not cure the defect of the petition.

On 13 March 1995, the Med-Arbiter issued the assailed Resolution dismissing the
petition, after finding that the submission of the required documents evidencing the
due creation of a local was made after the lapse of the freedom period.  1

The Alliance of Nationalist Genuine Labor Organization-Kilusang Mayo Uno (ANGLO-KMU) filed an
appeal from the March 13, 1995 Med-Arbiter's resolution insisting that it is a legitimate labor
organization at the time of the filing of the petition for certification election, and claiming that
whatever defect the petition may have had was cured by the subsequent submission of the
mandatory requirements.

In a Resolution dated August 8, 1995, respondent Undersecretary Bienvenido E. Laguesma, by

authority of the Secretary of Labor and Employment, set aside the Med-Arbiter's resolution and
entered in lieu thereof a new order "finding petitioner [ANGLO-KMU] as having complied with the
requirements of registration at the time of filing of the petition and remanding the records of this case
to the Regional Office of origin . . . ." 
2

The National Federation of Labor thus filed this special civil action for certiorari under Rule 65 of the
Rules of Court raising the following grounds:

A. RESOLUTION OF PUBLIC RESPONDENT HON.

BIENVENIDO E. LAGUESMA DATED 8 AUGUST
1995 AND HIS ORDER DATED 14 SEPTEMBER
1995 WERE ISSUED IN DISREGARD OF EXISTING
LAWS AND JURISPRUDENCE; AND

B. GRAVELY ABUSED HIS DISCRETION IN

APPLYING THE RULING IN THE CASE OF FUR V.
LAGUESMA, G.R. NO. 109251, MAY 26, 1993, IN
THE PRESENT CASE.

We will not rule on the merits of the petition. Instead, we will take this opportunity to lay the rules on
the procedure for review of decisions or rulings of the Secretary of Labor and Employment under the
Labor Code and its Implementing Rules. (P.D. No. 442 as amended)

In St. Martin Funeral Homes v. National Labor Relations Commission and Bienvenido Aricayos, G.R.
No. 130866, September 16, 1998, the Court re-examined the mode of judicial review with respect to
decisions of the National Labor Relations Commission.

The course taken by decisions of the NLRC and those of the Secretary of Labor and Employment
are tangent, but all are within the umbra of the Labor Code of the Philippines and its implementing
rules. On this premise, we find that the very same rationale in St. Martin Funeral Homes
v. NLRC finds application here, leading ultimately to the same disposition as in that leading case.

We have always emphatically asserted our power to pass upon the decisions and discretionary acts
of the NLRC well as the Secretary of Labor in the face of the contention that no judicial review is
provided by the Labor Code. We stated in San Miguel Corporation v. Secretary of Labor   thus: 3

. . . It is generally understood that as to a administrative agencies exercising quasi-

judicial or legislative power there is an underlying power in the courts to scrutinize the
acts of such agencies on questions of law and jurisdiction even though no right of
review is given by statute (73 C.J.S. 506, note 56).

The purpose of judicial review is to keep the administrative agency within its
jurisdiction and protect substantial rights of parties affected by its decision (73 C.J.S.
507, Sec. 165). It is part of the system of checks and balances which restricts the
separation of powers and forestalls arbitrary and unjust adjudications.

Considering the above dictum and as affirmed by decisions of this Court, St. Martin Funeral Homes
v. NLRC succinctly pointed out, the remedy of an aggrieved party is to timely file a motion for
reconsideration as a precondition for any further or subsequent remedy, and then seasonably file a
special civil action for certiorari under Rule 65 of the 1997 Rules of Civil Procedure.

The propriety of Rule 65 as a remedy was highlighted in St. Martin Funeral Homes v. NLRC, where
the legislative history of the pertinent statutes on judicial review of cases decided under the Labor
Code was traced, leading to and supporting the thesis that "since appeals from the NLRC to the
Supreme Court were eliminated, the legislative intendment was that the special civil action
of certiorari was and still is the proper vehicle for judicial review of decision of the NLRC"   and
4

consequently "all references in the amended Section 9 of B.P. No. 129 to supposed appeals from the
NLRC to the Supreme Court are interpreted and hereby declared to mean and refer to petitions
for certiorari under Rule 65."5

Proceeding therefrom and particularly considering that the special civil action of certiorari under Rule
65 is within the concurrent original jurisdiction of the Supreme Court and the Court of
Appeals, St. Martin Funeral Homes v. NLRC concluded and directed that all such petitions should
be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of courts.

In the original rendering of the Labor Code, Art. 222 thereof provided that the decisions of the NLRC
are appealable to the Secretary of Labor on specified grounds.   The decisions of the Secretary of
6

Labor may be appealed to the President of the Philippines subject to such conditions or limitations as
the President may direct.

Thus under the state of the law then, this Court had ruled that original actions for certiorari and
prohibition filed with this Court against the decision of the Secretary of Labor passing upon the
decision of the NLRC were unavailing for mere error of judgment as there was a plain, speedy and
adequate remedy in the ordinary course of law, which was an appeal to the President. We said in the
1975 case, Scott v. Inciong,  quoting Nation Multi Service Labor Union v. Acgoaili:  "It is also a
7 8

matter of significance that there was an appeal to the President. So it is explicitly provided by the
Decree. That was a remedy both adequate and appropriate. It was in line with the executive
determination, after the proclamation of martial law, to leave the solution of labor disputes as much
as possible to administrative agencies and correspondingly to limit judicial participation." 9

Significantly, we also asserted in Scott v. Inciong that while appeal did not lie, the corrective power
of this Court by a writ of certiorari was available whenever a jurisdictional issue was raised or one of
grave abuse of discretion amounting to a lack or excess thereof, citing San Miguel Corporation v.
Secretary of Labor. 10

P.D. No. 1367   amending certain provisions of the Labor Code eliminated appeals to the President,
11

but gave the President the power to assume jurisdiction over any cases which he considered
national interest cases. The subsequent P.D. No. 1391,   enacted "to insure speedy labor justice and
12

further stabilize industrial peace", further eliminated appeals from the NLRC to the Secretary of
Labor but the President still continued to exercise his power to assume jurisdiction over any cases
which he considered national interest
cases. 13

Though appeals from the NLRC to the Secretary of Labor were eliminated, presently there are
several instances in the Labor Code and its implementing and related rules where an appeal can be
filed with the Office of the Secretary of Labor or the Secretary of Labor issues a ruling, to wit:

(1) Under the Rules and Regulations Governing Recruitment and Placement
Agencies for Local Employment   dated June 5, 1997 superseding certain provisions
14

of Book I (Pre-Employment) of the implementing rules, the decision of the Regional

Director on complaints against agencies is appealable to the Secretary of Labor
within ten (10) working days from receipt of a copy of the order, on specified grounds,
whose decision shall be final and inappealable.

(2) Art. 128 of the Labor Code provides that an order issued by the duly authorized
representative of the Secretary of Labor in labor standards cases pursuant to his
visitorial and enforcement power under said article may be appealed to the Secretary
of Labor.

Sec. 2 in relation to Section 3 (a), Rule X, Book III (Conditions of Employment) of the
implementing rules gives the Regional Director the power to order and administer
compliance with the labor standards provisions of the Code and other labor
legislation. Section 4 gives the Secretary the power to review the order of the
Regional Director, and the Secretary's decision shall be final and executory.

Sec. 1, Rule IV (Appeals) of the Rules on the Disposition of Labor Standards Cases
in the Regional Offices dated September 16, 1987   provides that the order of the
15

Regional Director in labor standards cases shall be final and executory unless
appealed to the Secretary of Labor.
Sec. 5, Rule V (Execution) provides that the decisions, orders or resolutions of the
Secretary of Labor and Employment shall become final and executory after ten (10)
calendar days from receipt of the case records. The filing of a petition
for certiorari before the Supreme Court shall not stay the execution of the order or
decision unless the aggrieved party secures a temporary restraining order from the
Court within fifteen (15) calendar days from the date of finality of the order or decision
or posts a supersedeas bond.

Sec. 6 of Rule VI (Health and Safety Cases) provides that the Secretary of Labor at
his own initiative or upon the request of the employer and/or employee may review
the order of the Regional Director in occupational health and safety cases. The
Secretary's order shall be final and executory.

(2) Art. 236 provides that the decision of the Labor Relations Division in the regional
office denying an applicant labor organization, association or group of unions or
workers' application for registration may be appealed by the applicant union to the
Bureau of Labor Relations within ten (10) days from receipt of notice thereof.

Sec. 4, Rule V, Book V (Labor Relations), as amended by Department Order No. 9

dated May 1, 1997   provides that the decision of the Regional Office denying the
16

application for registration of a workers association whose place of operation is

confined to one regional jurisdiction, or the Bureau of Labor Relations denying the
registration of a federation, national or industry union or trade union center may be
appealed to the Bureau or the Secretary as the case may be who shall decide the
appeal within twenty (20) calendar days from receipt of the records of the case.

(3) Art. 238 provides that the certificate of registration of any legitimate organization
shall be canceled by the Bureau of Labor Relations if it has reason to believe, after
due hearing, that the said labor organization no longer meets one or more of the
requirements prescribed by law.

Sec. 4, Rule VIII, Book V provides that the decision of the Regional Office or the
Director of the Bureau of Labor Relations may be appealed within ten (10) days from
receipt thereof by the aggrieved party to the Director of the Bureau or the Secretary
of Labor, as the case may be, whose decision shall be final and executory.

(4) Art. 259 provides that any party to a certification election may appeal the order or
results of the election as determined by the Med-Arbiter directly to the Secretary of
Labor who shall decide the same within fifteen (15) calendar days.

Sec. 12, Rule XI, Book V provides that the decision of the Med-Arbiter on the petition
for certification election may be appealed to the Secretary.

Sec. 15, Rule XI, Book V provides that the decision of the Secretary of Labor on an
appeal from the Med-Arbiter's decision on a petition for certification election shall be
final and executory. The implementation of the decision of the Secretary affirming the
decision to conduct a certification election shall not be stayed unless restrained by
the appropriate court.

Sec. 15, Rule XII, Book V provides that the decision of the Med-Arbiter on the results
of the certification election may be appealed to the Secretary within ten (10) days
from receipt by the parties of a copy thereof, whose decision shall be final and
executory.

Sec. 7, Rule XVIII (Administration of Trade Union Funds and Actions Arising
Therefrom), Book V provides that the decision of the Bureau in complaints filed
directly with said office pertaining to administration of trade union funds may be
appealed to the Secretary of Labor within ten (10) days from receipt of the parties of
a copy thereof.

Sec. 1, Rule XXIV (Execution of Decisions, Awards, or Orders), Book V provides that
the decision of the Secretary of Labor shall be final and executory after ten (10)
 calendar days from receipt thereof by the parties unless otherwise specifically
provided for in Book V.

(5) Art. 263 provides that the Secretary of Labor shall decide or resolve the labor
dispute over which he assumed jurisdiction within thirty (30) days from the date of the
assumption of jurisdiction. His decision shall be final and executory ten (10) calendar
days after receipt thereof by the parties.

From the foregoing we see that the Labor Code and its implementing and related rules generally do
not provide for any mode for reviewing the decision of the Secretary of Labor. It is further generally
provided that the decision of the Secretary of Labor shall be final and executory after ten (10) days
from notice. Yet, like decisions of the NLRC which under Art. 223 of the Labor Code become final
after ten (10) days,   decisions of the Secretary of Labor come to this Court by way of a petition
17

for certiorari even beyond the ten-day period provided in the Labor Code and the implementing rules
but within the reglementary period set for Rule 65 petitions under the 1997 Rules of Civil Procedure.
For example, in M. Ramirez Industries v. Secretary of Labor,   assailed was respondent's order
18

affirming the Regional Director's having taken cognizance of a case filed pursuant to his visitorial
powers under Art. 128 (a) of the Labor Code; in Samahang Manggagawa sa Permex v. Secretary of
Labor,   assailed was respondent's order setting aside the Med-Arbiter's dismissal a petition for
19

certification election; Samahan ng Manggagawa sa Pacific Plastic v. Laguesma,   assailed was

20

respondent's order affirming the Med-Arbiter's decision on the results of a certification election;
in Philtread Workers Union v. Confessor,   assailed was respondent's order issued under Art. 263
21

certifying a labor dispute to the NLRC for compulsory arbitration.

In two instances, however, there is specific mention of a remedy from the decision of the Secretary
of Labor, thus:

(1) Section 15, Rule XI, Book V of the amended implementing rules provides that the decision of the
Secretary of Labor on appeal from the Med-Arbiter's decision on a petition for certification election
shall be final and executory, but that the implementation of the Secretary's decision affirming the
Med-Arbiter's decision to conduct a certification election "shall not be stayed unless restrained by the
appropriate court."

(2) Section 5, Rule V (Execution) of the Rules on the Disposition of Labor Standards Cases in
Regional Offices provides that "the filing of a petition for certiorari before the Supreme Court shall
not stay the execution of the [appealed] order or decision unless the aggrieved party secures a
temporary restraining order from the Court."

We perceive no conflict with our pronouncements on the proper remedy which is Rule 65 and which
should be initially filed in the Court of Appeals in strict observance of the doctrine on the hierarchy of
courts. Accordingly, we read "the appropriate court" in Section 15, Rule XI, Book V of the
Implementing Rules to refer to the Court of Appeals.

Sec. 5, Rule V of the Rules on the Disposition of Labor Standards Cases in Regional Offices
specifying the Supreme Court as the forum for filing the petition for certiorari is not infirm in like
manner or similarly as is the statute involved in Fabian v. Desierto.  And Section 5 cannot be read to
22

mean that the petition for certiorari can only be filed exclusively and solely with this Court, as the
provision must invariably be read in relation to the pertinent laws on the concurrent original
jurisdiction of this Court and the Court of Appeals in Rule 65 petitions.

In fine, we find that it is procedurally feasible as well as practicable that petitions for certiorari under
Rule 65 against the decision of the Secretary of Labor rendered under the Labor Code and its
implementing and related rules be filed initially in the Court of Appeals. Paramount consideration is
strict observance of the doctrine on the hierarchy of the courts, emphasized in St. Martin Funeral
Homes v. NLRC, on "the judicial policy that this Court will not entertain direct resort to it unless the
redress desired cannot be obtained in the appropriate courts or where exceptional and compelling
circumstances justify availment of a remedy within and calling for the exercise of our preliminary
jurisdiction." 
23

WHEREFORE, in view of the foregoing, certiorari, together with all pertinent records REFERRED to
the Court of Appeals for disposition.

SO ORDERED.
G.R. No. 131750 November 16, 1998

FRANCISCO GUICO, JR., doing business under the name and style of COPYLANDIA
SERVICES & TRADING, petitioner,
vs.
THE HON. SECRETARY OF LABOR & EMPLOYMENT LEONARDO A. QUISUMBING, THE
OFFICE OF REGIONAL DIRECTOR OF REGION I, DEP'T. OF LABOR & EMPLOYMENT,
ROSALINA CARRERA, ET. AL., respondents.

PUNO, J.:

This is a petition for certiorari seeking a review of two (2) Orders   issued by the respondent
1

Secretary of Labor and Employment dismissing petitioner's appeal.

The case started when the Office of the Regional Director, Department of Labor and
Employment (DOLE), Region I, San Fernando, La Union, received a letter-complaint dated
April 25, 1995, requesting for an investigation of petitioner's establishment, Copylandia
Services & Trading, for violation of labor standards laws. Pursuant to the visitorial and
enforcement powers of the Secretary of Labor and Employment or his duly authorized
representative under Article 128 of the Labor Code, as amended, inspections were conducted
at Copylandia's outlets on April 27 and May 2, 1995. The inspections yielded the following
violations involving twenty-one (21) employees who are copier operators: (1) underpayment
of wages; (2) underpayment of 13th month pay; and (3) no service incentive leave with pay. 2

The first hearing of the case was held on June 14, 1995, where petitioner was represented by
Joseph Botea, Officer-in-Charge of the Dagupan City outlets, while the 21 employees were
represented by Leilani Barrozo, Gemma Gales, Majestina Raymundo and Laureta Clauna. It
was established that a copier operator was receiving a daily salary ranging from P35.00 to
P60.00 plus commission of P20.00 per P500.00 worth of photocopying. There was also
incentive pay of P20.00 per P250.00 worth of photocopying in excess of the first P500.00. 3

On July 13, 1995, petitioner's representative submitted a Joint Affidavit signed and executed
by the 21 employees expressing their disinterest in prosecuting the case and their waiver and
release of petitioner from his liabilities arising from non-payment and underpayment of their
salaries and other benefits. Individually signed documents dated December 21, 1994,
purporting to be the employees' Receipt, Waiver and Quitclaim were also submitted. 4

In the investigation conducted by Hearing Officer Adonis Peralta on July 21, 1995, the 21
employees claimed that they signed the Joint Affidavit for fear of losing their jobs. They
added that their daily salary was increased to P92.00 effective July 1, 1995, but the incentive
and commission schemes were discontinued. They alleged that they did not waive the unpaid
benefits due to them. 5

On October 30, 1995, Regional Director Guerrero N. Cirilo issued an Order  favorable to the 21
6

employees. First, he ruled that the purported Receipt, Waiver and Quitclaim dated December
21 and 22, 1994, could not cause the dismissal of the labor standards case against the
petitioner since the same were executed before the filing of the said case. Moreover, the
employees repudiated said waiver and quitclaim. Second, he held that despite the salary
increase granted by the petitioner, the daily salary of the employees was still below the
minimum daily wage rate of P119.00 under Wage Order No. RB-I-03. Thirdly, he held that the
removal of the commission and incentive schemes during the pendency of the case violated
the prohibition against elimination or diminution of benefits under Article 100 of the Labor
Code, as amended. The dispositive portion of the Order states:

WHEREFORE, premises considered and pursuant to the Rules on the

Disposition of Labor Standards Cases in the Regional Offices issued by the
 Secretary of Labor and Employment on 16 September 1987, respondent
Copylandia Services and Trading thru its owner/manager Mr. Francisco Guico,
is hereby ORDERED to pay the employees the amount of ONE MILLION
EIGHTY ONE THOUSAND SEVEN HUNDRED FIFTY SIX PESOS AND SEVENTY
CENTAVOS (P1,081,756.70) representing their backwages, distributed as
follows:

1. Rosalina Carrera — P 68,010.91

2. Joanna Ventura — 28,568.10

3. Mercelita Paredes — 68,010.91

4. Aida Licuanan — 68,010.91

5. Gemma Gales — 68,010.91

6. Clotilda Zarata — 27,808.33

7. Consolacion Miguel — 65,708.28

8. Gemma Macalalay — 68,010.91

9. Wandy Aquino — 19,559.58

10. Laureta Clauna — 68,010.91

11. Josephine Valdez — 27,808.33

12. Leilani Berrozo — 27,808.33

13. Majestina Raymundo — 68,010.91

14. Theresa Rosario — 68,010.91

15. Edelyn Maramba — 68,010.91

16. Yolly Dimabayao — 40,380.60

17. Vilma Calaguin — 68,010.91

18. Maila Balolong — 40,380.60

19. Clarissa Villena — 27,808.33

20. Maryann Galinato — 68,010.91

21. Desiree Cabansag — 27,808.33

——————

Total P1,081,756.70.

and to submit proof of payment to this Office within seven (7) day is from
receipt hereof. Otherwise, a Writ of Execution will be issued to enforce this
Order.

SO ORDERED. 7

Petitioner received a copy of the Order on November 10, 1995. On November 15, 1995,
petitioner filed a Notice of Appeal.  The next day, he filed a Memorandum of Appeal
8
accompanied by a Motion to Reduce Amount of Appeal Bond and a Manifestation of an
Appeal Bond.

In his appeal memorandum,  petitioner questioned the jurisdiction of the Regional Director
9

citing Article 123 of the Labor Code, as amended,   and Section 1, Rule IX of the Implementing
10

Rules of Republic Act No. 6715.   He argued that the Regional Director has no jurisdiction
11

over the complaint of the 21 employees since their individual monetary claims exceed the
P5,000.00 limit. He alleged that the Regional Director should have indorsed the case to the
Labor Arbiter for proper adjudication and for a more formal proceeding where there is ample
opportunity for him to present evidence to contest the claims of the employees. He further
alleged that the Regional Director erred in computing the monetary award since it was done
without regard to the actual number of days and time worked by the employees. He also
faulted the Regional Director for not giving credence to the Receipt, Waiver and Quitclaim of
the employees.

In the Motion to Reduce Amount of Appeal Bond,   petitioner claimed he was having difficulty
12

in raising the monetary award which he denounced as exorbitant. Pending resolution of the
motion, he posted an appeal bond in the amount of P105,000.00 insisting that the jurisdiction
of the Regional Director is limited to claims of P5,000.00 per employee and there were 21
employees involved in the case.

On November 22, 1995, petitioner also filed a request to hold in abeyance any action relative
to the case for a possible amicable settlement with the employees. 13

On January 10, 1996, District Labor Officer Adonis Peralta forwarded a Report showing that
the petitioner and most of the 21 employees had reached a compromise agreement. The
Release, Waiver and Quitclaim was signed by the following employees and show the
following amounts they received, viz:

1. Aida Licuanan — P 3,000.00

2. Clarissa Villena — 3,000.00

3. Gemma Gales — 3,000.00

4. Desiree Cabansag — 3,000.00

5. Clotilda Zarata — 3,000.00

6. Consolacion Miguel — 5,000.00

7. Josephine Valdez — 3,000.00

8. Maryann Galinato — 5,000.00

9. Theresa Rosario — 3,000.00

10. Yolly Dimabayao — 3,000.00

11. Vilma Calaguin — 3,000.00

12. Gemma Macalalay — 3,000.00

13. Edelyn Maramba — 5,000.00

14. Charito Gonzales — 3,000.00

15. Joanna Ventura — 3,000.00

Four (4) employees did not sign in the compromise agreement. They insisted that they
be paid what is due to them according to the Order of the Regional Director in the total
 amount of P231,841.06. They were Laureta Clauna, Majestina Raymundo, Leilani
Barrozo and Rosalina Carrera.  14

In a letter   dated February 23, 1996, the Regional Director informed petitioner that he could
15

not give due course to his appeal since the appeal bond of P105,000.00 fell short of the
amount due to the 4 employees who did not participate in the settlement of the case. In the
same letter, he directed petitioner to post, within ten (10) days from receipt of the letter, the
amount of P126,841.06 or the difference between the monetary award due to the 4 employees
and the appeal bond previously posted.

On March 13, 1996, petitioner filed a Motion for Reconsideration to Reduce Amount of Appeal
Bond.   He manifested that he has closed down his business operations due to severe
16

financial losses and implored the Regional Director to accept the appeal bond already filed
for reasons of justice and equity.

In an Order dated December 3, 1936, the respondent Secretary denied the foregoing Motion
for Reconsideration on the ground that the directive from the Regional Director to post an
additional surety bond is contained in a "mere letter" which cannot be the proper subject of a
Motion for Reconsideration and/or Appeal before his office. He added that for failure of the
petitioner to post the correct amount of surety or cash bond, his appeal was not perfected
following Article 128 (b) of the Labor Code, as amended. Despite the non-perfection of the
appeal, respondent Secretary looked into the Receipt, Waiver and Quitclaim signed by the
employees and rejected it on the ground that the consideration was unconscionably
inadequate. He ruled, nonetheless, that the amount received by the said employees should be
deducted from the judgment award and the difference should be paid by the petitioner.

On December 26, 1996, petitioner filed a Motion for Reconsideration. On February 13, 1997, he
filed a Motion to Admit Additional Bond and posted the amount of P126,841.06 in compliance
with the order of the Regional Director in his letter dated February 13, 1996. 17

On October 24, 1997, the respondent Secretary denied the Motion for Reconsideration. He
ruled that the Regional Director has jurisdiction over the case citing Article 128 (b) of the
Labor Code, as amended. He pointed out that Republic Act No. 7730 repealed the
jurisdictional limitations imposed by Article 129 on the visitorial and enforcement powers of
the Secretary of Labor and Employment or his duly authorized representatives. In addition, he
held that petitioner is now estopped from questioning the computation made by the Regional
Director as a result of the compromise agreement he entered into with the employees. Lastly,
he reiterated his ruling that the Receipt, Waiver and Quitclaim signed by the employees was
not valid.

Petitioner is now before this Court raising the following issues:

Whether or not Public Respondent acted with grave abuse of discretion

amounting to lack or in excess of jurisdiction when he set aside the Release
and Quitclaim executed by the seventeen (sic) complainants before the Office
of the Regional Director when Public Respondent himself ruled that the Appeal
of the Petitioner was not perfected and, therefore, Public Respondent did not
acquire jurisdiction over the case.

II

Whether or not Public Respondent acted with grave abuse of discretion

amounting to lack or in excess of jurisdiction when in complete disregard of
Article 227 of the Labor Code, Public Respondent set aside and nullified the
Release and Quitclaim executed by the seventeen (sic) complainants.

III

Whether or not Public Respondent acted with grave abuse of discretion

amounting to lack or in excess of jurisdiction when he affirmed the Order of the
Regional Director who, in complete disregard of the due process requirements
 of law, computed the monetary award given to the private respondents without
notice to petitioner and without benefit of hearing.

IV

Whether or not petitioner is deemed estopped from appealing the decision of

the Regional Director when it (sic) entered into a compromise settlement with
complainants/private respondents.

The threshold issues that need to be settled in this case are: (1) whether or not the Regional
Director has jurisdiction over the instant labor standards case, and (2) whether or not
petitioner perfected his appeal.

With regard to the issue of jurisdiction, petitioner alleged that the Regional Director has no
jurisdiction over the instant case since the individual monetary claims of the 21 employees
exceed P5,000.00. He further argued that following Article 129 of the Labor Code, as
amended, and Section 1, Rule IX of the Implementing Rules of Republic Act No. 6715, the
jurisdiction over this case belongs to the Labor Arbiter, and the Regional Director should
have indorsed it to the appropriate regional branch of the National Labor Relations
Commission (NLRC). On the other hand, the respondent Secretary held that the jurisdictional
limitation imposed by Article 129 on his visitorial and enforcement power under Article 128
(b) of the Labor Code, as amended, has been repealed by Republic Act No. 7730.   He pointed
18

out that the amendment "[n]otwithstanding the provisions of Article 129 and 217 of the Labor
Code to the contrary" erased all doubts as to the amendatory nature of the new law, and in
effect, overturned this Court's ruling in the case of Servando's Inc. v. Secretary of Labor and
Employment.  19

We sustain the jurisdiction of the respondent Secretary. As the respondent correctly pointed
out, this Court's ruling in Servando — that the visitorial power of the Secretary of Labor to
order and enforce compliance with labor standard laws cannot be exercised where the
individual claim exceeds P5,000.00, can no longer be applied in view of the enactment of R.A.
No. 7730 amending Article 128(b) of the Labor Code, viz:

Art. 128 (b) — Notwithstanding the provisions of Articles 129 and 217 of this
Code to the contrary, and in cases where the relationship of employer-
employee still exists, the Secretary of Labor and Employment or his duly
authorized representatives shall have the power to issue compliance orders to
give effect to the labor standards provisions of the Code and other labor
legislation based on the findings of the labor employment and enforcement
officers or industrial safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue writs of execution
to the appropriate authority for the enforcement of their orders, except in cases
where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs which
were not considered in the course of inspection.

An order issued by the duly authorized representative of the Secretary of Labor

and Employment under this article may be appealed to the latter. In case said
order involves 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 Secretary of Labor and Employment in the
amount equivalent to the monetary award in the order appealed from.
(Emphasis supplied.)

The records of the House of Representatives   show that Congressmen Alberto S.

20

Veloso and Eriberto V. Loreto sponsored the law. In his sponsorship speech,
Congressman Veloso categorically declared that "this bill seeks to do away with the
jurisdictional limitations imposed through said ruling (referring to Servando) and to
finally settle any lingering doubts on the visitorial and enforcement powers of the
Secretary of Labor and Employment."   Petitioner's reliance on Servando is thus
21

untenable.

The next issue is whether petitioner was able to perfect his appeal to the Secretary of Labor
and Employment. Article 128(b) of the Labor Code clearly provides that the appeal bond must
be "in the amount equivalent to the monetary award in the order appealed from." The records
show that petitioner failed to post the required amount of the appeal bond. His appeal was
therefore not perfected.

IN VIEW WHEREOF, the petition for certiorari is dismissed. No pronouncement as to costs.

Melo and Mendoza, JJ., concur.

THIRD DIVISION

G.R. No. 188493, December 13, 2017

VIVIAN B. TORREON AND FELOMINA F. ABELLANA, Petitioners, v. GENEROSO

APARRA, JR., FELIX CABALLES, AND CARMELO SIMOLDE, Respondents.

DECISION

LEONEN, J.:

Lack of documentary evidence is not fatal to a claim for the deceased's lost earning
capacity. Testimony from a competent witness familiar with his salary is a sufficient
basis to determine the deceased's income before his death.

This is a Petition for Review on Certiorari1 under Rule 45 of the 1997 Rules of Court,
praying that the April 3, 2008 Decision2 and the May 28, 2009 Resolution3 of the Court
of Appeals in CA-G.R. CV No. 71090 be partially modified. Petitioner Vivian B. Torreon
(Vivian) prays that: (1) an award of actual or compensatory damages for loss of earning
capacity worth P2,079,675.00 be granted; (2) the award of moral damages be
increased to P1,000,000.00; (3) the award of exemplary damages be increased to
P1,000,000.00; and (4) the awarded attorney's fees and litigation expenses be
increased to P100,000.00 and P50,000.00, respectively.4

On November 1, 1989, Vivian's husband, Rodolfo Torreon (Rodolfo), and daughters,

Monalisa Torreon (Monalisa) and Johanna Ava Torreon (Johanna), arrived with Felomina
Abellana (Abellana) at the municipal wharf of Jetafe, Bohol. They came from Cebu City
aboard M/B Island Traders, a motor boat owned and operated by Carmelo Simolde
(Simolde).5

After they disembarked from the motor boat, they looked for a vehicle that would
transport them from the wharf to the poblacion of Jetafe. A cargo truck entered the
wharf and their fellow passengers boarded it. Abellana, Rodolfo, and his daughters
chose not to board the already-overcrowded truck. Instead, they waited for a different
vehicle to bring them to the poblacion. However, they were informed that only the
cargo truck, which was also owned and operated by Simolde, would enter the wharf.6

Approximately 10 minutes later, the same cargo truck returned to the wharf. Again,
fellow passengers from M/B Island Traders started embarking it. This time, Rodolfo,
Monalisa, Johanna, and Abellana also boarded it. Abellana was seated in front, while
Rodolfo and his daughters were with the rest of the passengers at the back of the truck.
Because there were no proper seats at the back of the truck, the 30 or more
passengers were either standing or sitting on their bags.7

While passengers were getting on the truck, Simolde called Felix Caballes (Caballes),
the official truck driver. Caballes approached Simolde but left the engine running. While
Simolde and Caballes were talking, Generoso Aparra, Jr. (Aparra), Simolde's chief diesel
mechanic, started driving the truck. Upon seeing the truck move, Caballes rushed to the
truck and sat beside Aparra. However, instead of taking control of the vehicle, Caballes
allowed Aparra to drive.8
Shortly thereafter, Aparra maneuvered the truck to the right side of the road to avoid
hitting a parked bicycle. But as he turned, Aparra had to swerve to the left to avoid
hitting Marcelo Subiano, who was allegedly standing on the side of the road. Because
the road was only four (4) meters and 24 inches wide, rough, and full of potholes,
Aparra lost control of the truck and they fell off the wharf.9

Consequently, Rodolfo and Monalisa died while Johanna and Abellana were injured.10

On April 3, 1990, Vivian and Abellana filed a criminal complaint for Reckless
Imprudence resulting to Double Homicide, Multiple Serious Physical Injuries and
Damage to Property against Aparra and Caballes,11 docketed as Criminal Case No. 6555
before the Regional Trial Court, Tagbilaran City, Bohol.12

On January 4, 1991, Vivian and Abellana filed a separate complaint for damages against
Simolde, Caballes, and Aparra13 docketed as Civil Case No. 3593 before Branch 3,
Regional Trial Court, Butuan City.14

Simolde, Caballes, and Aparra filed a Motion to Dismiss and to Suspend Proceedings
(Motion to Dismiss) in Civil Case No. 3593. They argued that when Abellana instituted
Criminal Case No. 6555 before the Regional Trial Court of Bohol, she failed to make a
reservation to file an independent civil action for damages. Thus, Abellana was barred
from instituting the civil action.15

On January 22, 1992, the Regional Trial Court of Butuan City denied the Motion to
Dismiss. However, upon reconsideration, the Regional Trial Court dismissed the case,
ruling that the civil action was impliedly instituted with Criminal Case No. 6555.16

Abellana and Vivian filed a Petition for Certiorari before the Court of Appeals, assailing
the dismissal of the case. On June 18, 1993, the Court of Appeals reinstated Civil Case
No. 3593 but only with respect to Vivian.17

During the trial for the civil case, SPO2 Federico T. Torniado (SPO2 Torniado) testified
that he was the "acting traffic investigator of the PNP" assigned to the case.18 According
to SPO2 Torniado, he had previously seen the pick-up truck transport passengers from
the wharf to the poblacion.19 The road, which was four (4) meters wide, could only
accommodate one (1) vehicle. Other than the truck, there were no other vehicles that
came in and out of the wharf.20 He further testified that on the day of the accident, he
asked to see Aparra's license but Aparra only presented a student driver's permit.21

Abellana testified that Rodolfo was the General Manager of her businesses in Butuan
City. As manager, Rodolfo was in charge of three (3) drugstores, an apartment, and rice
fields. He was earning a basic salary of P1 0,000.00 and received a 20% commission on
the profit of the businesses, thus, earning more or less P15,000.00. Abellana claimed
that she could not present her accounting books to the court because she had already
disposed of them.22

On November 17, 2000, the Regional Trial Court ruled that Caballes and Aparra
committed acts constituting a quasi-delict.23 Since these acts were the proximate cause
of the deaths of Rodolfo and Monalisa and the injuries sustained by Abellana and
Johanna, Simolde, Caballes, and Aparra were held liable for damages. The dispositive
portion of the trial court Decision stated:

Wherefore, on the basis therefore of the foregoing evidence, both [testimonial and
documentary [,] [t]his Court does hereby render judgment in favor of the plaintiffs and
against defendants and hereby ordering the defendants as follows:

1. To pay jointly and severally to plaintiffs the amount of P300,000.00 as

actual damages;
 2. To pay jointly and severally to plaintiffs the sum of P50,000.00 as moral
damages; and to pay in solidum to plaintiffs by way of litigation expenses
in the sum of P10,000.00;

3. To pay in solidum into plaintiffs [Vivian] Torreon and Felomina Abellana

the sum of P25,000.00 and P10,000.00 by way of Attorney's fees; and

4. To pay in solidum into plaintiffs the sum of P10,000.00 as exemplary

damages.

SO ORDERED.24

Simolde, Caballes, and Aparra filed a Notice of Appeal on November 27, 2000.25

On April 3, 2008, the Court of Appeals promulgated a Decision26 holding Simolde

solidarity liable with Caballes and Aparra. According to the Court of Appeals, Caballes
and Aparra were clearly negligent in transporting the passengers. Given that the road
was narrow and fall of pot holes, it was apparent that an experienced driver was needed
to safely navigate the vehicle out of the wharf. In allowing Aparra to drive the truck
despite having only a student driver's permit, Caballes risked the lives of the
passengers on board the truck. The Court of Appeals also held Simolde solidarity liable
with his employees for failing to exercise due diligence in supervising them.27 However,
the Court of Appeals deleted the award of actual damages for Rodolfo's loss of earning
capacity. According to the Court of Appeals, documentary evidence should be presented
to substantiate a claim for loss of earning capacity. The dispositive portion of the Court
of Appeals Decision read:

WHEREFORE, in view of the foregoing, the decision of the Court a quo in Civil Case No.
3593 is SET ASIDE and another one is RENDERED ordering appellants Carmelo T.
Simolde, Felix Caballes and Generoso Aparra, Jr., to pay, solidarity, appellee Vivian
Torreon the amount of Fifty Thousand (P50,000.00) Pesos as civil indemnity for the
death of Rod[o]lfo Torreon; another Fifty Thousand (P50,000.00) Pesos as civil
indemnity for the death of Monalisa Torreon; Twenty-five Thousand (P25,000.00) Pesos
as temperate or moderate damages for pecuniary loss sustained due to the death of
Rod[o]lfo Torreon and another Twenty-five Thousand (P25,000.00) Pesos as temperate
or moderate damages for pecuniary loss sustained due to the death of Monalisa
Torreon; Fifty Thousand (P50,000.00) Pesos as moral damages; Ten Thousand
(P10,000.00) Pesos as exemplary damages; Ten Thousand . . . (P10,000.00) Pesos as
attorney's fees and Twenty[-]Five Thousand (P25,000.00) Pesos as litigation expenses,
with legal interest at the rate of SIX PERCENT(6%) per annum starting from the date of
the promulgation of the court a quo's Decision or from 17 November 2000. A TWELVE
PERCENT (12%) interest, in lieu of SIX PERCENT (6%), shall be imposed on such
amount upon finality of this decision until actual payment thereof.

SO ORDERED.28

Vivian and Abellana filed a Motion for Partial Reconsideration,29 asking the Court of
Appeals to modify its April 3, 2008 Decision by increasing the award of the damages to
the following amounts:

(a) Php2,079,675.00, as compensatory damages for loss or impairment of earning capacity

(lucro cesant); instead of Php25,000.00.
   
(b) Php300,000.00 as actual damages for funeral and burial expenses; or in the alternative, a
reasonable or just amount as temperate damages.
   
(c) Php1,000,000.00 as moral damages; instead of Php50,000.00.
   
(d) Php1,000,000.00 as exemplary damages; instead of Php10,000.00.
   
(e) Php100,000.00 and Php50,000.00 as attorney's fees and litigation expenses; instead of
Php10,000.00 and Php25,000.00, respectively[.]30

In its May 28, 2009 Resolution,31 the Court of Appeals denied the motion.

Hence, this Petition was filed before this Court.

Petitioner Vivian argues that the Court of Appeals gravely erred in deleting the
compensatory damages awarded for Rodolfo's loss of earning capacity.32 She posits that
Abellana's testimony is enough to prove Rodolfo's income. As Rodolfo's employer,
Abellana had direct and personal knowledge of the compensation that he was receiving
prior to his death; thus, she is qualified to testify on his income.33 Petitioner Vivian
cites Philippine Airlines, Inc. v. Court of Appeals34 to point out that the Court of Appeals
gravely erred in concluding that Abellana's testimony, without any documentary
evidence, did not suffice to claim damages for lack of earning capacity.35 Based on
Abellana's testimony, Rodolfo had an estimated gross monthly income of P15,000.00 or
an annual gross income of P195,000.00.36 Using the formula37 laid down in  Negros
Navigation Co., Inc. v. Court of Appeals,38 Rodolfo's lost earnings would amount to
P2,079,675.00.39

Petitioner Vivian cites four (4) reasons why the damages awarded to her should be
increased. First, she points to the gravity of the loss she suffered. The difficulties she
has gone through, following the death of her husband and her young daughter, are
immeasurable and deserve a higher compensation. Second, the degree of the
negligence committed by respondents, as affirmed by the Court of Appeals, is gross and
inexcusable, thereby warranting harsher penalties.40 Third, Simolde has an undisputable
substantial financial capacity to pay more. Allegedly, Simolde has a "virtual monopoly of
the business at Jetafe wharf."41 He has the capacity to pay the increased amounts
petitioner Vivian is praying for. Lastly, the length of the litigation, which spanned almost
two (2) decades at the time this petition was filed to this Court, has whittled down the
real value of the monetary award.42

On the other hand, respondents argue that the Court of Appeals committed no
reversible error in the assailed Decision. They claim that there is no sufficient proof to
sustain the award of damages.43 Respondents also contend that the inclusion of
Abellana as a petitioner is baseless. The Court of Appeals in CA-G.R. SP No. 28859
already ruled that the present case is reinstated only with respect to Vivian.44

In its February 17, 2010 Resolution, this Court required petitioners to file a Reply to
respondents' Comment.45

On April 28, 2010, petitioners filed their Reply and claimed that Abellana's inclusion as a
petitioner is "a non-issue."46 Abellana was only joined as a petitioner because she was
already a co-petitioner in the lower courts. However, as seen "in the prayer of the
Petition for Review, Felomina Abellana is not mentioned as being entitled [to] payment
for damages from respondents."47

The issues for this Court's resolution are as follows:

First, whether or not actual damages for loss of earning capacity should be awarded to
petitioner Vivian B. Torreon; and

Second, whether or not the value of the other awarded damages should be increased.
Before proceeding with the discussion regarding civil damages, this Court will briefly
discuss Abellana's standing in this case. Notably, the Court of Appeals already ruled on
this matter. However, since respondents raised it in their Comment,48 it is best to
address this concern.

On April 3, 1990, petitioners instituted a criminal case against respondents. However,

petitioner Abellana did not reserve her right to file a separate civil action for damages
arising from the crime.49 Rule 111, Section 1(a) of the Rules of Court provides:

Section 1. Institution of criminal and civil actions. — (a) When a criminal action is
instituted, the civil action for the recovery of civil liability arising from the offense
charged shall be deemed instituted with the criminal action unless the offended party
waives the civil action, reserves the right to institute it separately or institutes the civil
action prior to the criminal action.

The reservation of the right to institute separately the civil action shall be made before
the prosecution starts presenting its evidence and under circumstances affording the
offended party a reasonable opportunity to make such reservation.

When the offended party seeks to enforce civil liability against the accused by way of
moral, nominal, temperate, or exemplary damages without specifying the amount
thereof in the complaint or information, the filing fees therefor shall constitute a first
lien on the judgment awarding such damages.

Where the amount of damages, other than actual, is specified in the complaint or
information, the corresponding filing fees shall be paid by the offended party upon the
filing thereof in court.

Except as otherwise provided in these Rules, no filing fees shall be required for actual
damages.

No counterclaim, cross-claim or third-party complaint may be filed by the accused in

the criminal case, but any cause of action which could have been the subject thereof
may be litigated in a separate civil action.

The Court of Appeals in CA-G.R. SP No. 28859 correctly reinstated the present case
only with regard to Vivian. When Abellana did not reserve her right to institute a
separate civil action, her cause of action for damages was deemed impliedly instituted
with the criminal case. Rule 111, Section 3 of the Rules of Court prohibits offended
parties from recovering damages twice for the act being prosecuted in the criminal
action.50 Thus, Abellana is now barred from instituting this case.

This Court now moves to the discussion regarding damages.

II

Article 2176 of the Civil Code provides that those who commit acts constituting a quasi-
delict are liable to pay damages:

Article 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there
is no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.

Vergara v. Court of Appeals51 enumerated the elements necessary to establish a quasi-

delict case:
These requisites are: (1) damages to the plaintiff; (2) negligence, by act or omission, of
which defendant, or some person for whose-acts he must respond, was guilty; and (3)
the connection of cause and effect between such negligence and the damages.52

This Court affirms the finding of the Court of Appeals that Caballes and Aparra were
grossly negligent in transporting the passengers. The Court of Appeals ruled:

Records bore that after appellant Aparra took over the control of the wheel of the cargo
truck and drove the same, appellant Caballes merely rushed to get on the truck and
only sat beside appellant Aparra. Appellant Caballes, despite the fact that appellant
Aparra possessed only a student driver's permit, allowed him to continue driving the
truck. Moreover, We cannot glean from the records that appellant Caballes cautioned
appellant Aparra while the latter was driving the truck. It must be pointed out that the
cargo truck had more than thirty (30) passengers on board at its back, who were either
just standing or sitting on their bags, with nothing to hold on for support, while the
truck was moving. Furthermore, the road was only four (4) meters wide, rough and
with many pot holes. Obviously, these circumstances warrant that the driver be
somebody of competence and experience in maneuvering a vehicle under such a
precarious condition. Therefore, the acts of appellant Aparra in taking the wheel and of
appellant Caballes in allowing the former to take the wheel are plain manifestations of
negligence.53

Caballes was grossly negligent in allowing Aparra to drive the truck despite being an
inexperienced driver. Aparra's inexperience caused the accident that led to the deaths
of Rodolfo and Monalisa. It is undisputed that the deaths of Vivian's husband and
daughter caused damage to her. Clearly, the requisites for a quasi-delict are present in
this case.

In addition to Caballes and Aparra, the law also holds their employer, Simolde, liable.
Article 2180 of the Civil Code provides that an employer is vicariously liable with his
employees for any damage they cause while performing their duties.

Article 2180. The obligation imposed by Article 2176 is demandable not only for one's
own acts or omissions, but also for those of persons for whom one is responsible.
....

Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though
the former are not engaged in any business or industry.
....

The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage. (Emphasis supplied)

Delsan Transport Lines, Inc. v. C & A Construction, Inc.54 explained that when an

employee's negligence causes injury to another, a presumption against the employer
arises. To avoid liability, the employer must prove he exercised due diligence in
selecting as well as supervising his employees.

Whenever an employee's negligence causes damage or injury to another, there

instantly arises a presumption juris tantum that the employer failed to
exercise  diligentissimi patris familias in the selection (culpa in eligiendo) or supervision
(culpa in vigilando) of its employees. To avoid liability or a quasi-delict committed by
his employee, an employer must overcome the presumption by presenting convincing
proof that he exercised the care and diligence of a good father of a family in the
selection and supervision of his employee.

There is no question that petitioner, who is the owner/operator of M/V Delsan Express,
is also the employer of Capt. Jusep who at the time of the incident acted within the
scope of his duty. The defense raised by petitioner was that it exercised due diligence in
the selection of Capt. Jusep because the latter is a licensed and competent Master
Mariner. It should be stressed, however, that the required diligence of a good
father of a family pertains not only to the selection, but also to the supervision
of employees. It is not enough that the employees chosen be competent and qualified,
inasmuch as the employer is still required to exercise due diligence in supervising its
employees.

In Fabre, Jr. v. Court of Appeals, it was held that due diligence in supervision

requires the formulation of rules and regulations for the guidance of
employees and the issuance of proper instructions as well as actual
implementation and monitoring of consistent compliance with the rules.
Corollarily, in Ramos v. Court of Appeals, the Court stressed that once negligence on
the part of the employees is shown, the burden of proving that he observed
the diligence in the selection and supervision of its employees shifts to the
employer.55 (Emphasis supplied, citations omitted)

In an effort to decry liability, Simolde insists that the passengers boarded the truck
without his knowledge and despite his objections. He testified as follows:

Q: You mentioned that this truck was being used by different passengers to load their cargoes
to different destinations, and of course when the passengers would load their cargoes, they
would join in the truck?
   
A: It depends on the condition at their own risk.
   
Q: Regardless whether at their own risk, you would admit that there was also passengers
boarding the truck at the same time that the cargoes are being loaded and transported to
their respective destinations?
   
A: No, only cargoes, that is strictly given and instructed to the driver.
   
Q: Now, Mr. Simolde, you said it was at their own risk when the passengers boarded the
cargo truck when this truck transported the cargoes to their destinations, do you mean to
say that no passengers were on board that particular vehicle?
   
A: You know, you cannot, although you try to impose this, but you know in the provinces
like that, especially there are only few jeepney for transportation, even cargo trucks are
being boarded by the passengers in spite of the fact that the driver says no passengers, no
passengers, you know, those things are pakikisama, but my strict implementation is that
the truck is only good for services for the cargoes and the cargo that is being loaded there
is already included on the freight-on-board the vessel, so that truck is used for servicing
cargo.
   
Q: Based on your observations, you mentioned that this cargo truck picture of which has been
identified as Exh. "6", was used to transport cargo, now, in one occasion, how many
passengers would ride without your notice, can you make an estimate?
   
A: I cannot tell you any facts about that, because for me, I have not received any information
that the truck has been boarded with passengers, because by the nature of the looks of the
truck, how could the passenger board the vehicle, and where can they sit down on the side,
 there is no bench.
   
Q: Let us clarify this, Mr. Simolde, you earlier admitted that there were occasions, because of
the absence of cargo trucks and passenger vehicles in the area, the passengers would board
the cargo truck even without your knowledge or your consent?
   
A: Yes, sir.
   
Q: In other words, there were occasions, of course you acquired knowledge of this, when the
truck was transporting cargoes, passengers would join in the truck?
   
A: No, only cargoes. I don't know if when the truck is already out of sight, it depends on the
driver.56

Instead of helping his defense, Simolde's testimony proves his failure to supervise his
employees. Simolde should have been more diligent in ensuring that his employees
acted within the parameters of their jobs. He should have taken steps to ensure that his
instructions were followed. His failure to control the behavior of his employees makes
him liable for the consequences of their actions. Thus, Simolde is solidarity liable with
Caballes and Aparra for the payment of the damages granted by law.

The Civil Code holds Simolde liable for the damages that his actions have
caused.57 Article 2206 specifically applies when a death occurs as a result of a crime or
a quasi-delict:

Article 2206. The amount of damages for death caused by a crime or quasi-delict

shall be at least Three thousand pesos, even though there may have been mitigating
circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and
the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be
assessed and awarded by the court, unless the deceased on account of permanent physical
disability not caused by the defendant, had no earning capacity at the time of his death;
   
(2) If the deceased was obliged to give support according to the provisions of Article 291,
the recipient who is not an heir called to the decedent's inheritance by the law of testate or
intestate succession, may demand support from the person causing the death, for a period
not exceeding five years, the exact duration to be fixed by the court;
   
(3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may
demand moral damages for mental anguish by reason of the death of the deceased.
(Emphasis supplied)

The same rules on damages are applicable whether or not the death occurred as a
result of a crime or a quasi-delict. To summarize, the heirs are entitled to recover:

1. As indemnity for the death of the victim of the offense — P12,000.00, without
the need of any evidence or proof of damages, and even though there may have been
mitigating circumstances attending the commission of the offense [now P50,000.00].
2. As indemnity for loss of earning capacity of the deceased — an amount to be
fixed by the court according to the circumstances of the deceased related to his actual
income at the time of death and his probable life expectancy, the said indemnity to be
assessed and awarded by the court as a matter of duty, unless the deceased had no
earning capacity at said time on account of permanent disability not caused by the
accused. If the deceased was obliged to give support, under Art. 291, Civil Code, the
recipient who is not an heir, may demand support from the accused for not more than
five years, the exact duration to be fixed by the court.

3. As moral damages for mental anguish, — an amount to be fixed by the court. This

may be recovered even by the illegitimate descendants and ascendants of the
deceased.

4. As exemplary damages, when the crime is attended by one or more aggravating

circumstances, — an amount to be fixed in the discretion of the court, the same to be
considered separate from fines.

5. As attorney's fees and expenses of litigation, — the actual amount thereof, (but
only when a separate civil action to recover civil liability has been filed or when
exemplary damages are awarded)

6. Interests in the proper cases.

7. It must be emphasized that the indemnities for loss of earning capacity of
the deceased and for moral damages are recoverable separately from and in
addition to the fixed sum of P12,000.00 corresponding to the indemnity for the
sole fact of death, and that these damages may, however, be respectively increased
or lessened according to the mitigating or aggravating circumstances, except items 1
and 4 above, for obvious reasons.58 (Emphasis supplied)

Civil or death indemnity is mandatory and granted to the heirs of the victim without
need of proof other than the commission of the crime.59 Initially fixed by the Civil Code
at P3,000.00, the amount of the indemnity is currently fixed at P50,000.00.60

Thus, respondents are liable to pay Rodolfo's heirs P50,000.00. They are liable to pay
another P50,000.00 to answer for the death of Monalisa.

In Pestaño v. Spouses Sumayang,61 this Court applied Article 2206 of the Civil Code and
awarded compensation for the deceased's lost earning capacity in addition to the award
of civil indemnity. The indemnity for the deceased's lost earning capacity is meant to
compensate the heirs for the income they would have received had the deceased
continued to live.62

Pleyto v. Lomboy63 provided the formula to compute a deceased's earning capacity:

It is well-settled in jurisprudence that the factors that should be taken into account in
determining the compensable amount of lost earnings are: (1) the number of years for
which the victim would otherwise have lived; and (2) the rate of loss sustained by the
heirs of the deceased. Jurisprudence provides that the first factor, i.e., life expectancy,
is computed by applying the formula (2/3 x [80 - age at death]) adopted in the
American Expectancy Table of Mortality or the Actuarial Combined Experience Table of
Mortality. As to the second factor, it is computed by multiplying the life expectancy by
the net earnings of the deceased, i.e., the total earnings less expenses necessary in the
creation of such earnings or income and less living and other incidental expenses. The
net earning is ordinarily computed at fifty percent (50%) of the gross earnings. Thus,
the formula used by this Court in computing loss of earning capacity is: Net Earning
Capacity = [2/3 x (80 - age at time of death) x (gross annual income -
reasonable and necessary living expenses)].64 (Emphasis supplied, citations
omitted)
The reason behind the formula for loss of earning capacity was discussed in Villa Rey
Transit, Inc. v. Court of Appeals:65

[The award of damages for loss of earning capacity is] concerned with the
determination of the losses or damages sustained by the Private respondents, as
dependents and intestate heirs of the deceased, and that said damages consist, not of
the full amount of his earnings, but of the support they received or would have received
from him had he not died in consequence of the negligence of petitioner's agent. In
fixing the amount of that support, We must reckon with the "necessary expenses of his
own living", which should be deducted from his earnings. Thus, it has been consistently
held that earning capacity, as an element of damages to one's estate for his death by
wrongful act is necessarily his net earning capacity or his capacity to acquire money,
"less the necessary expense for his own living." Stated otherwise, the amount
recoverable is not loss of the entire earning, but rather the loss of that portion of the
earnings which the beneficiary would have received. In other words, only net earnings,
not gross earning, are to be considered that is, the total of the earnings less expenses
necessary in creation of such earnings or income and less living and other incidental
expenses.66 (Citations omitted)

The formula provided in these cases is presumptive, i.e., it should be applied in the
absence of proof in terms of statistics and actuarial presented by the plaintiff.

The Court of Appeals deleted the award of actual damages granted to petitioner for
Rodolfo's lost earnings. According to the Court of Appeals, documentary evidence
should be presented to substantiate a claim for the deceased's lost income.67

This Court disagrees.

In civil cases, Vivian is only required to establish her claim by a preponderance of

evidence. Allowing testimonial evidence to prove loss of earning capacity is consistent
with the nature of civil actions.68 Rule 133, Section 1 of the Rules of Court provides:

Section 1. Preponderance of evidence, how determined. — In civil cases, the party

having the burden of proof must establish his case by a preponderance of evidence. In
determining where the preponderance or superior weight of evidence on the issues
involved lies, the court may consider all the facts and circumstances of the case, the
witnesses' manner of testifying, their intelligence, their means and opportunity of
knowing the facts to which they are testifying, the nature of the facts to which they
testify, the probability or improbability of their testimony, their interest or want of
interest, and also their personal credibility so far as the same may legitimately appear
upon the trial. The court may also consider the number of witnesses, though the
preponderance is not necessarily with the greater number.

In determining if this quantum of proof is met, this Court is not required to exclusively
consider documentary evidence:

Nothing in the Rules of Court requires that only documentary evidence is allowed in civil
cases. All that is required is the satisfaction of the quantum of evidence, that is,
preponderance of evidence. In addition, the Civil Code does not prohibit a claim for loss
of earning capacity on the basis that it is not proven by documentary evidence.

Testimonial evidence, if not questioned for credibility, bears the same weight as
documentary evidence. Testimonies given by the deceased's spouse, parent, or child
should be given weight because these individuals are presumed to know the income of
their spouse, child, or parent.

If the amount of income testified to seemed incredible or unrealistic, the defense could
always raise their objections and discredit the witness or, better yet, present evidence
that would outweigh the evidence of the prosecution.69
This Court has previously accepted a competent witness' testimony to determine the
deceased's income. In Pleyto v. Lomboy,70 this Court used the testimony of the
deceased's widow as basis to estimate his earning capacity:

Petitioners' claim that no substantial proof was presented to prove Ricardo Lomboy's
gross income lacks merit. Failure to present documentary evidence to support a claim
for loss of earning capacity of the deceased need not be fatal to its cause. Testimonial
evidence suffices to establish a basis for which the court can make a fair and reasonable
estimate of the loss of earning capacity. Hence, the testimony of respondent Maria
Lomboy, Ricardo's widow, that her husband was earning a monthly income of P8,000 is
sufficient to establish a basis for an estimate of damages for loss of earning
capacity.71 (Citation omitted)

In a torts case, this Court also accepted testimony from co-workers of the deceased to
establish his income before his death.

The witnesses Mate and Reyes, who were respectively the manager and auditor of Allied
Overseas Trading Company and Padilla Shipping Company, were competent to testify
on matters within their personal knowledge because of their positions, such as the
income and salary of the deceased, Nicanor A. Padilla (Sec. 30, Rule 130, Rules of
Court). As observed by the Court of Appeals, since they were cross-examined by
petitioner's counsel, any objections to their competence and the admissibility of their
testimonies, were deemed waived. The payrolls of the companies and the decedent's
income tax returns could, it is true, have constituted the best evidence of his salaries,
but there is no rule disqualifying competent officers of the corporation from
testifying on the compensation of the deceased as an officer of the
same corporation, and in any event, no timely objection was made to their
testimonies.72

If co-workers were deemed competent to testify on the compensation that the deceased
was receiving, all the more should an employer be allowed to testify on the amount she
was paying her deceased employee.

Abellana testified that at the time of his death, deceased Rodolfo was earning
P15,000.00 per month:

Q: Prior to the death of Rodolfo Torreon, do you know where he was working?
A: He was working under me.
Q: You said he was working under you?
A: Yes, later, he was the general manager in my business in Butuan City.
Q: What were these business [es]?
A: Three drug stores.
Q: Can you identify the drug stores at that time?
A: Yes[,] sir.
Q: What are the names?
A: All Farmacia Buena. Farmacia Bue[n]a located in G. Flores Ave., Farmacia Buena located
in A.D. Curato St., and the other one in Langihan.
Q: What happened to these drugstores?
A: At that time, I immediately sold my store in Curato St., a few months after the death of
Rod[o]lfo Torreon.
Q: Aside from the drug stores, what other business you have at that time in 1989?
A: I have an apartment.
Q: And Rod[o]lfo Torreon was?
A: He was the one supervising.
Q: Aside from this apartment, what else?
A: I have my rice fields in Los Angeles.
....
Q: Did you keep the payroll of Rod[o]lfo Torreon?
A: At this time, almost five years, I think I have thrown that away already, the records.
Q: From your estimate, how much income was he receiving?
A: His basic salary is P10,000.00 a month and he is receiving 20% commission on the net
profit.
Q: How about for the other businesses, did he also receive share?
A: Sometimes.
Q: How much do you think was Rod[o]lfo Torreon earning at that time?
A: More or less P15,000.00 and I think he was receiving commission from the salesmen.73

The simplified formula to compute loss of earning capacity was given in the ponencia
of People v. Wahiman:74

[2/3 x 80 - age] x [gross annual income - necessary expenses equivalent to 50% of the
gross annual income]75

The concurring opinion in Wahiman was instructive on how to properly apply this

formula:

This is a step-by-step guide to compute an award for loss of earning capacity.

(1) Subtract the age of the deceased from 80.
(2) Multiply the answer in (1) by 2, and divide it by 3 (these operations, are
interchangeable).
(3) Multiply 50% to the annual gross income of the deceased.
(4) Multiply the answer in (2) by the answer in (3). This is the loss of earning capacity
to be awarded.

When the evidence on record only shows monthly gross income, annual gross income is
derived from multiplying the monthly gross income by 12. When the daily wage is the
only information provided during trial, such amount may be multiplied by 260, or the
number of usual workdays in a year, to arrive at annual gross income.76

At the time of his death, Rodolfo was 48 years old and was earning P15,000.00
monthly.77 To determine his annual gross income, this Court multiplied his gross
monthly income by 12 to get the result of P180,000.00.

Computing for life expectancy, or steps 1 and 2, results:

Life Expectancy = 2/3 x (80 - 48)

Life Expectancy = 2/3 x (32)
Life Expectancy = 21.33 years

Applying his life expectancy and annual gross income to the general formula, or step 3:
Loss of Earning Capacity = Life Expectancy x 1/2 annual gross income
Loss of Earning Capacity = 21.33 x (P180,000.00/2)
Loss of Earning Capacity = 21.33 x P90,000.00
Loss of Earning Capacity = P1,919,700.00

Respondents are liable to pay P1,919,700.00 to compensate for the income Rodolfo's

heirs would have received had he lived.

On the other hand, Vivian failed to prove the actual damages she suffered for the death
of her daughter, Monalisa. Vivian merely testified as to the funeral and burial expenses
she incurred without producing any receipt or other evidence to support her
claim.78 Consequently, she cannot be entitled to an award of actual damages on account
of Monalisa's loss.

III

With regard to the award of moral damages, this Court affirms the Court of Appeals'
ruling to grant it. Article 2206 of the Civil Code expressly grants moral damages in
addition to the award of civil indemnity.79

In her petition, Vivian maintains that the amount of moral damages granted her should
be increased. This Court is not convinced. Although the Civil Code80 grants
compensation for the mental anguish suffered by the heirs for the loss of their loved
one, this award is not meant to enrich the petitioner at the expense of the
respondents.81

The Court of Appeals correctly granted P50,000.00 as moral damages to the heirs of
Rodolfo. An award of P50,000.00 is also awarded to the heirs of Monalisa.

In addition, this Court affirms the award for exemplary damages. Exemplary damages
are imposed by way of example or to correct a wrongful conduct.82 It is imposed as a
punishment for highly reprehensible conduct, meant to deter serious
wrongdoing.83 Specifically, in cases of quasi-delicts, it is granted if the respondent acted
with gross negligence.84

Kierulf v. Court of Appeals85 summarized the requirements for exemplary damages to be

awarded:

Exemplary damages are designed to permit the courts to mould behavior that has
socially deleterious consequences, and its imposition is required by public policy to
suppress the wanton acts of an offender. However, it cannot be recovered as a matter
of right. It is based entirely on the discretion of the court. Jurisprudence sets certain
requirements before exemplary damages may be awarded, to wit:

(1) (T)hey may be imposed by way of example or correction only in addition, among
others, to compensatory damages, and cannot be recovered as a matter of right, their
determination depending upon the amount of compensatory damages that may be
awarded to the claimant;
(2) the claimant must first establish his right to moral, temperate, liquidated or
compensatory damages; and
(3) the wrongful act must be accompanied by bad faith, and the award would be
allowed only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.86 (Citations omitted)

The Court of Appeals correctly imposed exemplary damages against respondents. Each
respondent clearly acted with gross negligence. Aparra drove without a license and
jeopardized the life of the cargo truck passengers. Caballes not only allowed Aparra to
drive on a perilous road but he also permitted passengers to board the cargo truck
despite knowing that the vehicle was not designed to transport people. Simolde was
also grossly negligent for tolerating his employees' negligent behaviors. Had Simolde
been more diligent in supervising his employees, his driver would not have allowed
passengers to board the truck and his mechanic would not have attempted to drive a
vehicle he was not equipped to handle.

Thus, to ensure that such behavior will not be repeated, respondents are directed to
pay P10,000.00 as exemplary damage to the heirs of Rodolfo and Monalisa.

With respect to the award of litigation expenses and attorney's fees, the Civil Code
allows attorney's fees to be awarded if, as in this case, exemplary damages are
imposed.

Considering the protracted litigation of this dispute, an award of P100,000.00 as

attorney fees and P50,000.00 for litigation expenses are awarded to Vivian.

Finally, there is a need to modify the interest imposed by the Court of Appeals.

In its Decision, the Court of Appeals imposed 6% interest on the award of damages and
a 12% interest on the judgment award:

In addition, We impose the legal interest at the rate of SIX PERCENT (6%) per annum
of the total amount of damages awarded by this Court in the amount of Two Hundred
Forty Five Thousand (P245,000.00) Pesos, starting from the date of the promulgation of
the court a quo's Decision or from 17 November 2000 and the rate of TWELVE PERCENT
(12%) interest per annum, in lieu of SIX PERCENT (6%), upon finality of the decision of
this Court. This is in line with the ruling of the Supreme Court in Eastern Shipping
Lines, Inc. versus Court of Appeals[.]87

The Court of Appeals used as a guide Eastern Shipping v. Court of Appeals,88 which

provided:

II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due shall itself earn legal interest
from the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 12% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil
Code.

2. When a[n] obligation, not constituting a loan or forbearance of money, is

breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages except when or until the
demand can be established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall begin to
run from the time the claim is made judicially or extrajudicially (Art. 1169,
Civil Code) but when such certainty cannot be so reasonably established at the
time the demand is made, the interest shall begin to run only from the date of
the judgment of the court is made (at which time the quantification of
damages may be deemed to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in any case, be on the amount
of finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit.89 (Emphasis supplied, citations omitted)
Interest by way of damages, also known as moratory interest, is allowed in actions for
breach of contract or tort.90 Since the obligation in this case stems from a quasi-delict
and not from a loan or forbearance of money, the interest awarded falls under the
second paragraph illustrated in Eastern Shipping. This is in line with Article 2211 of the
Civil Code which states that this Court may impose "interest as a part of the damages"
in quasi-delict cases.91 Awarding this interest is discretionary upon the courts.92

This is different from interest on interest imposed under Article 221293 of the Civil Code.
Interest on interest is mandatory and is imposed as penalty for the delay in the
payment of a sum of money.94

Guided by Eastern Shipping, the Court of Appeals imposed a 6% interest on the award
of damages starting from November 17, 2000, the date of the promulgation of the
Regional Trial Court Decision. However, this award is not proper.

Generally, the Civil Code does not allow interest upon unliquidated claims or damages
to be recovered unless they can be established with reasonable certainty.95 The
rationale for this is because it would be unfair to require the liable person to pay
interest on a sum that is yet to be determined. However, the courts, in the interest of
justice, may impose interest on unliquidated claims or damages upon judgment.

In this case, there is no need to impose a moratory interest. Actual damages to

compensate for the deceased's lost earnings are already granted. Payment for Rodolfo's
lost earning capacity should be enough to cover the actual damages suffered by his
heirs.

On the other hand, pursuant to Eastern Shipping, the Court of Appeals correctly
imposed an interest on the judgment award. However, the 12% interest should be
modified. Following Bangko Sentral ng Pilipinas- Monetary Board Circular No. 796 dated
May 16, 2013, the rate of legal interest is now 6%. Nacar v. Gallery Frames96 is
instructive:

Recently, however, the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its
Resolution No. 796 dated May 16, 2013, approved the amendment of Section 2 of
Circular No. 905, Series of 1982 and, accordingly, issued Circular No. 799, Series of
2013, effective July 1, 2013, the pertinent portion of which reads:

The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the
following revisions governing the rate of interest in the absence of stipulation in loan
contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:

Section 1. The rate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of an express contract as to
such rate of interest, shall be six percent (6%) per annum.

Section 2. In view of the above, Subsection X305.1 of the Manual of Regulations for
Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for
Non-Bank Financial Institutions are hereby amended accordingly.

This Circular shall take effect on 1 July 2013.

Thus, from the foregoing, in the absence of an express stipulation as to the rate of
interest that would govern the parties, the rate of legal interest for loans or forbearance
of any money, goods or credits and the rate allowed in judgments shall no longer be
twelve percent (12%) per annum — as reflected in the case of Eastern Shipping
Lines and Subsection X305.1 of the Manual of Regulations for Banks and Sections
4305Q.I, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial
Institutions, before its amendment by BSP-MB Circular No. 799 — but will now be six
percent (6%) per annum effective July 1, 2013. It should be noted, nonetheless, that
the new rate could only be applied prospectively and not retroactively. Consequently,
the twelve percent (12%) per annum legal interest shall apply only until June 30, 2013.
Come July 1, 2013 the new rate of six percent (6%) per annum shall be the prevailing
rate of interest when applicable.97 (Citations omitted)

Consequently, the guidelines laid down in  Eastern Shipping  have been amended as
follows:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,

delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The
provisions under Title XVIII on "Damages" of the Civil Code govern in determining the
measure of recoverable damages.

II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is imposed,
as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due shall itself earn legal interest
from the time it is judicially demanded. In the absence of stipulation, the rate of
interest shall be 6% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil
Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an

interest on the amount of damages awarded may be imposed at the discretion of the
court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall begin to run
only from the date the judgment of the court is made (at which time the quantification
of damages may be deemed to have been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality
until its satisfaction, this interim period being deemed to be by then an
equivalent to a forbearance of credit.98 (Emphasis supplied)

Since the judgment of this Court has not yet become final and executory, the interest
rate applicable to the judgment award is 6% and not 12% as imposed by the Court of
Appeals.

The interest on the judgment award discussed in Eastern Shipping is reckoned from
finality of the judgment until full payment. It is designed to penalize non-payment of
the judgment award. Thus, if the liable party immediately pays, no interest will be
imposed.

WHEREFORE, the April 3, 2008 Decision of the Court of Appeals in CA-G.R. CV No.
71090 is MODIFIED. Respondents Carmelo T. Simolde, Felix Caballes, and Generoso
Aparra, Jr., are ORDERED to pay solidarity petitioner Vivian B. Torreon the amounts of:

a. P50,000.00 as civil indemnity for the death of Rodolfo Torreon;

b. P50,000.00 as civil indemnity for the death of Monalisa Torreon;

c. P1,919,700.00 as actual damages for Rodolfo Torreon's lost earning capacity;

 d. P100,000.00 as moral damages composed of P50,000.00 for Rodolfo Torreon's
heirs and P50,000.00 for Monalisa Torreon's heirs;

e. P10,000.00 as exemplary damages;

f. P100,000.00 as attorney fees; and

g. P50,000.00 as litigation expenses.

An interest at the legal rate of six percent (6%) per annum shall also be imposed on the
total judgment award computed from the finality of this decision until its actual
payment.

SO ORDERED.