G.R. No.

166863               July 20, 2011

GOVERNMENT SERVICE INSURANCE SYSTEM, Petitioner,

vs.
JUM ANGEL, Respondent.

DECISION

PEREZ, J.:

On appeal by certiorari1 from the Decision2 of the First Division of the Court of Appeals in CA-
G.R. SP No. 61304 dated 31 May 2004, granting the Petition of Jum Angel (respondent) to
REVERSE and SET ASIDE the Decision3 and Order of the Employees’ Compensation
Commission (ECC) denying payment of death benefits due to private respondent as widow of
Sergeant Benjamin Angel (Sgt. Angel) under Presidential Decree No. 626 otherwise known as
"Employees' Compensation and State Insurance Fund."

The relevant factual antecedents of the case, as gathered by the court, are the following:

The late Sgt. Angel started his military training on 1 July 1974. On 7 October 1977, he was
admitted into active service. He was later promoted to the rank of Corporal in December 1982
and to the rank of Sergeant in July 1986. He was in active service until his death on 3 March
1998.

On 3 March 1998, Sgt. Angel was "fetched/invited" from his post by a certain Capt. Fabie M.
Lamerez (Capt. Lamerez) of the Intelligence Service Group of the Philippine Army to shed light
on his alleged involvement in a "pilferage/gunrunning" case being investigated by the Philippine
Army.4

On or about 2 p.m. of the same day, he was placed inside a detention cell to await further
investigation.

The following day, the lifeless body of Sgt. Angel was found hanging inside his cell with an
electric cord tied around his neck. According to the Autopsy Report conducted by the Crime
Laboratory of the Philippine National Police (PNP), the cause of death was asphyxia by
strangulation.

Respondent, the wife of the late Sgt. Angel, filed a complaint before the PNP Criminal
Investigation Command, alleging that her husband was murdered and named the "elements of
Intelligence Service Group" led by Capt. Lamerez as suspects.

On 8 April 1998, upon investigation, the Office of the Provost Marshal reported that Sgt. Angel
died under suspicious circumstance while in line of duty. The Provost Marshal found it incredible
that Sgt. Angel would take his life, in view of his impending retirement and being a father to four
(4) children. The Provost Marshal concluded that foul play may have been committed against
Sgt. Angel and recommended that the case be tried by a court martial.
On 25 April 1998, the Inspector General, upon referral of the case, held that there is no
evidence suggesting foul play in the death of Sgt. Angel and maintained that the detention of
Sgt. Angel could have triggered a mental block that caused him to hang himself.

The case was referred to a Judge Advocate General, to determine whether or not Sgt. Angel
died while in line of duty. On 3 December 1999, Judge Advocate General Honorio Capulong in
his report recommended that Sgt. Angel be declared to have died in line of duty.

On 15 March 2000, the Philippine Army through Chief of Staff Brig. General Pedro V. Atienza,
Jr., issued General Order No. 270 declaring the line of duty status in favor of Sgt. Angel. Section
1 of the Order states:

I. Declaration of in Line of Duty Status – the death of the late Sgt. Benjamin R. Angel 633863,
Philippine Army formerly assigned with SBTM, ASCOM who died on March 3, 1998 at ISG, Fort
Bonifacio, Makati is declared IN LINE OF DUTY STATUS.5 (Emphasis ours)

By reason thereof, respondent, as widow of Sgt. Angel, filed a claim for death benefits with the
Government Service Insurance System (GSIS) under Presidential Decree No. 626, as
amended.

On 29 September 1999, the GSIS denied the respondent’s claim on the ground that Sgt.
Angel’s death did not arise out of and in the course of employment. A motion for reconsideration
was filed but the same was denied by the GSIS.

On appeal before the ECC, the ECC in its Decision6 dated 13 April 2000 likewise denied the
claim for want of merit. The relevant portion of the decision states that:

After careful deliberation of the facts attendant to this case, this Commission believes that the
death benefits prayed for under P.D. 626, as amended, cannot be granted. It has been stressed
time and again that the thrust of Employees’ Compensation Law is to secure adequate and
prompt benefits to the employee and his dependents in the event of a work-related disability or
death. In this connection, Rule III, Section 1(a) of the Implementing Rules of PD 626, as
amended, defines when an injury or death is considered compensable, to wit: "For the injury
and the resulting disability or death to be compensable, the injury must be the result of accident
arising out of and in the course of employment." The circumstances surrounding this case do
not meet the aforementioned conditions. Clearly, the deceased was not performing his official
duties at the time of the incident. On the contrary, he was being investigated regarding his
alleged involvement on a pilferage/gunrunning case when he was found dead in his cell, an
activity which is foreign and unrelated to his employment as a soldier. Thus, the protective
mantle of the law cannot be extended to him as the documents appear bereft of any showing to
justify a casual connection between his death and his employment.

WHEREFORE, premises considered, the decision of the respondent System appealed from is
hereby AFFIRMED, and this case DISMISSED for want of merit.7

Respondent appealed the case before the Court of Appeals under Rule 43 of the 1997 Rules of
Civil Procedure. Before the appellate court, she raised the issue that the ECC erred:
 1. In declaring that the death benefits prayed for under P.D. 626, as amended, cannot be
granted, as the deceased was not performing his official duties at the time of the
incident.

2. In declaring that the subject matter of the investigation, during which he was found
dead in his cell, is foreign and unrelated to his employment as a soldier.

3. In declaring that the mantle of the law cannot be extended to the deceased as the
documents appear bereft of any showing to justify a causal connection between his
death and his employment.8

On 31 May 2004, the Court of Appeals reversed the ECC ruling. The dispositive portion of the
decision reads:

WHEREFORE, the instant petition is GRANTED. Accordingly, the assailed decision dated April
13, 2000 of respondent ECC is hereby REVERSED and SET ASIDE and the GSIS [is]
ORDERED to pay the death benefits due the petitioner as widow of Sgt. Angel under
Presidential Decree No. 626, as amended.9

The appellate court in its decision pointed out that Sgt. Angel was manning his post at the Army
Support Command when "invited" by Capt. Lamerez of the Intelligence Service Group to
undergo an investigation concerning a gunrunning/pilferage case in the Philippine Army. Sgt.
Angel was never arrested; he went with Capt. Lamerez to shed light on the investigation.10 It
was never shown that Sgt. Angel’s subsequent detention was a punishment for any wrong
doing.11 Furthermore, the appellate court recognized the peculiar nature of a soldier’s job as
decided by the Supreme Court. To quote:

x x x a soldier on active duty status is really on a 24 hours a day official duty status and is
subject to military discipline and military law 24 hours a day. He is subject to call and to the
orders of his superior officers at all times, seven (7) days a week, except, of course, when he is
on vacation leave status. Thus, a soldier should be presumed to be on official duty unless he is
shown to have clearly and unequivocally put aside that status or condition temporarily by going
on an approved vacation leave.12

Hence, this Petition for Review on Certiorari.

Petitioner GSIS raises the issue whether or not the Court of Appeals disregarded the law and
jurisprudence when it set aside the ECC Decision dated 13 April 2000 that for the injury and the
resulting disability or death to be compensable, the injury must be the result of accident arising
out of and in the course of employment.

Court’s Ruling

GSIS contends that the death of Sgt. Angel did not arise out of in the course of employment as
provided by Section 1, Rule III of the Implementing Rules of Presidential Decree No. 626,
otherwise known as the "Employees’ Compensation and State Insurance Fund." The widow, on
the other hand, counters that her husband died in line of duty so that such death is
compensable under the Fund.
The contentions bring out the issue whether or not the declaration by the Philippine Army that
the death of Sgt. Angel was "in line of duty status" confers compensability under the provisions
of Presidential Decree No. 626 otherwise known as "Employees’ Compensation and State
Insurance Fund."

We rule in favor of petitioner GSIS.

For the injury and the resulting death to be compensable, the law provides:

Implementing Rules of P.D. 626,13 RULE III – COMPENSABILITY, Section 1. Grounds.

(a) For the injury and the resulting disability or death to be compensable, the injury must be
the result of accident arising out of and in the course of the employment. (Underscoring
supplied)

Pertinent jurisprudence outline that the injury must be the result of an employment accident
satisfying all of the following: 1) the employee must have been injured at the place where his
work requires him to be; 2) the employee must have been performing his official functions; and
3) if the injury is sustained elsewhere, the employee must have been executing an order for the
employer.14

It is important to note, however, that the requirement that the injury must arise out of and in the
course of employment proceeds from the limiting premise that the injury must be the result of an
accident.

The term accident has been defined in an insurance case.15 We find the definition applicable to
the present case. Thus:

The words "accident" and "accidental" have never acquired any technical signification in law,
and when used in an insurance contract are to be construed and considered according to the
ordinary understanding and common usage and speech of people generally. In substance, the
courts are practically agreed that the words "accident" and "accidental" mean that which
happens by chance or fortuitously, without intention or design, and which is unexpected,
unusual, and unforeseen. The definition that has usually been adopted by the courts is that an
accident is an event that takes place without one’s foresight or expectation – an event that
proceeds from an unknown cause, or is an unusual effect of a known case, and therefore not
expected.

An accident is an event which happens without any human agency or, if happening through
human agency, an event which, under the circumstances, is unusual to and not expected by the
person to whom it happens. It has also been defined as an injury which happens by reason of
some violence or casualty to the insured without his design, consent, or voluntary cooperation.

Significantly, an accident excludes that which happens with intention or design, with one’s
foresight or expectation or that which under the circumstances is expected by the person to
whom it happens.

The exclusion of an intentional or designed act which exclusion refines the definition of accident
that we find applicable to the provisions of the implementing rules of the law is specifically
provided for in Article 172 of the law, Presidential Decree No. 626. Thus:
Art. 172. Limitation of liability – The State Insurance Fund shall be liable for compensation to the
employee or his dependents, except when the disability or death was occasioned by the
employee’s intoxication, willful intention to injure or kill himself or another, notorious negligence
or otherwise provided under this title. (Underscoring supplied)

The factual foundation of respondent’s claim is that on the day following Sgt. Angel’s detention
for investigation of his alleged involvement in a pilferage/gunrunning case, his lifeless body was
found hanging inside his cell with an electric cord tied around his neck. The autopsy report
stated that the cause of death as asphyxia by strangulation.

With the law upon the facts, we conclude that the death of Sgt. Angel did not result from an
accident which is compensable under Presidential Decree No. 626. It was on the contrary
occasioned by an intentional or designed act which removes the resulting death from the
coverage of the State Insurance Fund. It is unexpected that the discussion below by the GSIS,
the ECC and the Court of Appeals, veered away from the indispensible antecedent that the
death must be caused by accident and, instead, focused on the requirement that the death must
arise out of or in the course of employment. Such that, the ECC denied compensability
because:

Clearly the deceased was not performing his official duties at the time of the incident. On the
contrary, he was being investigated regarding his alleged involvement on a pilferage/gunrunning
case when he was found dead in his cell, an activity which is foreign and unrelated to his
employment as a soldier. Thus, the protective mantle of the law cannot be extended to him as
the documents appear bereft of any showing to justify causal connection between his death and
his employment.16

Led into a confined debate, the Court of Appeals merely met the ECC’s reasons and said that
even during the investigation, Sgt. Angel was still in the performance of his duties. The Court of
Appeals alluded to the ruling that a soldier is on active duty status 24-hours a day and
concluded that the ECC should not have ignored the official findings of the military that the
deceased sergeant died while in the performance of his duties.

We should undo the reversal by the Court of Appeals of the ECC ruling.

1. The finding of the military authorities that Sgt. Angel died while in the line of duty is not
binding on the ECC. This is not a new ECC doctrine. Apropos is the case of Government
Service Insurance System v. Court of Appeals,17 even if the case concerns the PNP and
not the AFP. Thus:

x x x the proceedings before the PNP Board and the ECC are separate and distinct,
treating of two (2) totally different subjects; moreover, the PNP Board’s conclusions here
may not be used as basis to find that private respondent is entitled to compensation
under P.D. No. 626, as amended. The presumption afforded by the Order relied upon by
the PNP Board concerns itself merely with the query as to whether one died in the line of
duty, while P.D. No. 626 addressed the issue of whether a causal relation existed
between a claimant’s ailment and his working conditions. Plainly, these are different
issues calling for differing forms of proof or evidence, thus accounting for the existence
of a favorable presumption in favor of a claimant under the Defense Department Order,
but not under P.D. No. 626 when the disease is not listed under Annex ‘A’ of the
Amended Rules on Employees’ Compensation.
Paraphrasing the above ruling, we find that the proceedings before the Philippine Army
which finally resulted in the issuance by the Chief of Staff of General Order No. 270 that
the death of Sgt. Angel was "in line of duty status" may not be used as basis for the
finding that the widow of Sgt. Angel is entitled to compensation under Presidential
Decree No. 626, as amended. Death in line of duty is not equivalent to a finding that the
death resulted from an accident and was not occasioned by the sergeant’s willful
intention to kill himself. It is not enough, as erroneously pointed out by the Court of
Appeals, that there is evidence to support the conclusion that the sergeant died while in
the performance of his duties since he was not arrested but was merely invited to shed
light on the investigation which was "part of xxx official duties to cooperate with the
inquiry being conducted by the Philippine Army." There must be evidence that the
sergeant did not take his own life considering the fact that he was "found hanging inside
his cell with an electric cord tied around his neck."

2. The scene and setting of apparent suicide was contested by herein respondent, wife
of the sergeant through a complaint before the PNP Criminal Investigation Command
alleging that her husband was murdered and named the elements of Intelligence Service
Group led by Capt. Lamerez as suspects. The alleged murder vis-à-vis the apparent
suicide is precisely the determinant of compensability, with death "in line of duty" as a
given factor. The sergeant was fetched from his post for investigation and he died in a
detention cell while awaiting further investigation. The findings regarding his death
provided by the Provost Marshall and the Inspector General are conflicting. The former
found it incredible that the deceased would take his life in view of his impending
retirement and being a father to four children and concluded that foul play may have
been committed. The latter held that there was no evidence suggesting foul play
maintaining that the detention of Sgt. Angel could have triggered a mental block that
caused him to hang himself. The conflict was not resolved by subsequent official actions.
The Judge Advocate General recommended that Sgt. Angel be declared to have died
while in line of duty which declaration was done by the Chief of Staff of the Philippine
Army. Noticeably, the declaration went no further than state that Sgt. Angel "died on
March 3, 1998 at ISG, Fort Bonifacio, Makati." There was no mention about the cause of
death. There was nothing in the declaration that would resolve the contradiction between
the conclusion of foul play reached by the Provost Marshall and the finding of the
Inspector General that there is no evidence suggesting foul play. The senior officers
merely declared the fact that death occurred inside Fort Bonifacio.

From what is extant in the records, though, we rule in favor of the positive finding that
there is no evidence of foul play over the inference that foul play may have been
committed. The circumstances of Sgt. Angel’s death – his lifeless body was found
hanging inside his cell with an electric cord tied around his neck − taken together with
the unrebutted finding that there is no evidence of foul play – negate respondent’s claim
of murder of her husband and of compensability of such death. It was not accidental
death that is covered by Presidential Decree No. 626.

3. We are not unmindful of the fact that liberality of the law in favor of the working man
and woman prevails in light of the Constitution and social justice.18 But, as stated in
Government Service Insurance System v. Court of Appeals, it is now the trust fund and
not the employer which suffers if benefits are paid to claimants who are not entitled
under the law. There is now an intention to restore a sensible equilibrium between the
 employer’s obligation to pay workmen’s compensation and the employee’s right to
receive separation for work connected death or disability.19

There is a competing, yet equally vital interest to heed in passing upon undeserving claims for
compensation.1avvphi1 It is well to remember that if diseases or death not intended by the law
to be compensated are inadvertently or recklessly included, the integrity of the State Insurance
Fund is endangered. Compassion for the victims of diseases not covered by the law ignores the
need to show a greater concern for the trust fund to which the tens of millions of workers and
their families look to for compensation whenever covered accidents, diseases and deaths
occur.20

This Court sympathizes with the sad predicament of respondent, the widow of Sgt. Angel. Such,
however has already been considered in fixing the equilibrium between obligation and right in
employees’ compensation cases. It can no longer tilt the balance in respondent’s favor.

WHEREFORE, the instant appeal is GRANTED. Accordingly, the Decision of the Court of

Appeals is hereby REVERSED. The Decision dated 13 April 2000 of the Employees’
Compensation Commission is REINSTATED.

No costs.

SO ORDERED.

G.R. No. 212774

WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner
vs.
GUILLERMO T. MAGLAYA, SR., Respondent

DECISION

PERALTA, J.:

For this Court's resolution is a petition for review on certiorari filed by petitioner Wesleyan
University-Philippines (WUP) assailing the Resolution1 dated January 20, 2014 of the Court of
Appeals (CA) which denied its petition for certiorari.

The facts are as follows:

WUP is a non-stock, non-profit, non-sectarian educational corporation duly organized and

existing under the Philippine laws on April 28, 1948.2

Respondent Atty. Guillermo T. Maglaya, Sr. (Maglaya) was appointed as a corporate member
on January 1, 2004, and was elected as a member of the Board of Trustees (Board) on January
9, 2004 - both for a period of five (5) years. On May 25, 2005, he was elected as President of
the University for a five-year term. He was re-elected as a trustee on May 25, 2007. 3

In a Memorandum dated November 28, 2008, the incumbent Bishops of the United Methodist
Church (Bishops) apprised all the corporate members of the expiration of their tenns on
December 31, 2008, unless renewed by the former. 4 The said members, including Maglaya,
sought the renewal of their membership in the WUP's Board, and signified their willingness to
serve the corporation. 5

On January 10, 2009, Dr. Dominador Cabasal, Chairman of the Board, informed the Bishops of
the cessation of corporate terms of some of the members and/or trustees since the by-laws
provided that the vacancy shall only be filled by the Bishops upon the recommendation of the
Board. 6

On March 25, 2009, Maglaya learned that the Bishops created an Ad Hoc Committee to plan
the efficient and orderly turnover of the administration of the WUP in view of the alleged
"gentleman's agreement" reached in December 2008, and that the Bishops have appointed the
incoming corporate members and trustees. 7 He clarified that there was no agreement and any
discussion of the turnover because the corporate members still have valid and existing
corporate terms.8

On April 24, 2009, the Bishops, through a formal notice to all the officers, deans, staff, and
employees of WUP, introduced the new corporate members, trustees, and officers. In the said
notice, it was indicated that the new Board met, organized, and elected the new set of officers
on April 20, 2009.9 Manuel Palomo (Palomo), the new Chairman of the Board, informed
Maglaya of the termination of his services and authority as the President of the University on
April 27, 2009. 10

Thereafter, Maglaya and other fonner members of the Board (Plaintiffs) filed a Complaint for
Injunction and Damages before the Regional Trial Court (RTC) of Cabanatuan City, Branch
28. 11 In a Resolution12 dated August 19, 2009, the RTC dismissed the case declaring the same
as a nuisance or harassment suit prohibited under Section l(b), 13 Rule 1 of the Interim Rules for
Intra-Corporate Controversies. 14 The RTC observed that it is clear from the by-laws of WUP
that insofar as membership in the corporation is concerned, which can only be given by the
College of Bishops of the United Methodist Church, it is a precondition to a seat in the WUP
Board. 15 Consequently, the expiration of the terms of the plaintiffs, including Maglaya, as
corporate members carried with it their termination as members of the Board. 16 Moreover, their
continued stay in their office beyond their terms was only in hold-over capacities, which ceased
when the Bishops appointed new members of the corporation and the Board. 17

The CA, in a Decision18 dated .March 15, 2011, affirmed the decision of the RTC, and dismissed
the petition for certiorari filed by the plaintiffs for being the improper remedy. The CA held that
their status as corporate members of WUP which expired on December 31, 2008 was
undisputed. The CA agreed with the RTC that the plaintiffs had no legal standing to question the
Bishops' alleged irregular appointment of the new members in their Complaint on May 18, 2009
as the termination of their membership in the corporation necessarily resulted in the conclusion
of their positions as members of the Board pursuant to the WUP by-laws. 19

Thereafter, Maglaya filed on March 22, 2011 the present illegal dismissal case against WUP,
Palomo, Bishop Lito C. Tangonan (Tangonan), and Bishop Leo A. Soriano (Soriano ).20 Maglaya
claimed that he was unceremoniously dismissed in a wanton, reckless, oppressive and
malevolent manner on the eve of April 27, 2009.21 Tangonan and Soriano acted in evident bad
faith when they disregarded his five-year term of office and delegated their protege Palomo as
the new university president.22 Maglaya alleged that he faithfully discharged his necessary and
desirable functions as President, and received ₱75,000.00 as basic salary, Pl0,000.00 as cost
of living allowance, and ₱10,000.00 as representation allowance. He was also entitled to other
benefits such as: the use of university vehicles; the use of a post paid mobile cellular phone in
his official transactions; the residence in the University Executive House located at Inday Street,
Magsaysay Sur, Cabanatuan City, with free water, electricity, and services of a household
helper; and receipt of 13th month pay, vacation leave pay, retirement pay, and shares in related
learning experience.23 On May 31, 2006, his basic salary was increased to P95,000.00 due to
his additional duty in overseeing the operations of the WUP Cardiovascular and Medical Center.

Maglaya presented the following pieces of evidence: copies of his appointment as President, his
Identification Card, the WUP Administration and Personnel Policy Manual which specified the
retirement of the university president, and the check disbursement in his favor evidencing his
salary, to substantiate his claim that he was a mere employee.24

WUP, on the other hand, asseverated that the dismissal or removal of Maglaya, being a
corporate officer and not a regular employee, is a corporate act or intra-corporate controversy
under the jurisdiction of the RTC. 25 WUP also maintained that since Maglaya's appointment
was not renewed, he ceased to be a member of the corporation and of the Board; thus, his term
for presidency has also been tenninated. 26

Meanwhile, this Court, in a Resolution dated June 13, 2011, denied the petition for review
on certiorari filed by Maglaya and the other former members of the Board for failure to show any
reversible error in the decision of the CA. The same became final and executory on August 24,
2011.27

In a Decision28 dated September 20, 2011, the Labor Arbiter (LA) ruled in favor of WUP. The LA
held that the action between employers and employees where the employer-employee
relationship is merely incidental is within the exclusive and original jurisdiction of the regular
courts.29 Since he was appointed as President of the University by the Board, Maglaya was a
corporate officer and not a mere employee. The instant case involves intra-corporate dispute
which was definitely beyond the jurisdiction of the labor tribunal.30 The dispositive portion of the
decision reads:

WHEREFORE, premises considered, the instant complaint is hereby dismissed for lack of
jurisdiction.

SO ORDERED.31

In a Decision32 dated April 25, 2012, the National Labor Relations Commission (NLRC) in·
NLRC-LAC No. 01-000470-12, reversed and set aside the Decision of the LA ruling that the
illegal dismissal case falls within the jurisdiction of the labor tribunals. Since the reasons for his
termination cited by WUP were not among the just causes provided under Article 28233 (now
Article 297) of the Labor Code, Maglaya was illegally dismissed. The NLRC observed that the
Board did not elect Maglaya, but merely appointed him. Maglaya was appointed for a fixed
period of five (5) years from May 7, 2005 to May 6, 2010, while the period of his appointment as
member of the corporation was five (5) years from January 2004.34 The decretal portion of the
decision reads:

WHEREFORE, premises considered, the appealed decision is hereby REVERSED and SET
ASIDE, declaring:

(a) jurisdiction over this case by virtue of the employer-employee relation of the parties

(b) the illegality of the dismissal of [respondent] by [petitioner] [Petitioner] therefore [is] hereby
ordered to pay [respondent]:

1. separation pay - ₱375,000.00

2. full backwages - 1,252,462.50

3. retirement pay - 500,000.00

4. moral damages - 100,000.00

5. exemplary damages - 50,000.00

10% of the above as attorney's

6. - 227,746.25
fees

  TOTAL AWARDS - [₱]2,505,208.75

Based on the attached computation of this Commission’s Computation Unit.

SO ORDERED.35

Ruling in favor of Maglaya, the NLRC explicated that although the position of the President of
the University is a corporate office, the manner of Maglaya' s appointment, and his duties,
salaries, and allowances point to his being an employee and subordinate. 36 The control test is
the most important indicator of the presence of employer-employee relationship. Such was
present in the instant case as Maglaya had the duty to report to the Board, and it was the Board
which terminated or dismissed him even before his term ends.37

Thereafter, the NLRC denied the motion for reconsideration filed by WUP in a
Resolution38 dated February 11, 2013.

In a Resolution, the CA dismissed the petition for certiorari filed by WUP. The CA noted that the
decision and resolution of the NLRC became final and executory on March 16, 2013.39 WUP's
attempt to resurrect its lost remedy through filing the petition would not prosper since final and
executory judgment becomes unalterable and may no longer be modified in any respect.40 Thus:

WHEREFORE, the petition is DENIED for lack of merit.

SO ORDERED.41
Upon denial of his Motion for Reconsideration, WUP elevated the case before this Court raising
the issue:

The Court of Appeals committed an error of law when it summarily dismissed the special civil
action for certiorari raising lack of jurisdiction of the NLRC filed by [WUP] where it was very clear
that the NLRC had no jurisdiction over the case involving a corporate officer and where the
nature of the controversy is an intra-corporate dispute.

We find the instant petition impressed with merit.

WUP alleges that while the NLRC decision became final and executory on March 16, 2013, it
did not mean that the said decision had become immutable and unalterable as the CA ruled.
WUP maintains that the remedy of the aggrieved party against a final and executory decision of
the NLRC is the filing of the petition for certiorari under Rule 65 of the Rules of Court. As such, it
was able to meet the conditions set forth in filing the said remedy before the CA.

Settled is the rule that while the decision of the NLRC becomes final and executory after the
lapse of ten calendar days from receipt thereof by the parties under Article 22342 (now Article
229) of the Labor Code, the adverse party is not precluded from assailing it via Petition
for Certiorari under Rule 65 before the CA and then to this Court via a Petition for Review under
Rule 45.43

This Court has explained and clarified the power of the CA to review NLRC decisions, viz. :

The power of the Court of Appeals to review NLRC decisions via Rule 65 or Petition
for Certiorari has been settled as early as in our decision in St. Martin Funeral Home v. National
Labor Relations Commission. This Court held that the proper vehicle for such review was a
Special Civil Action for Certiorari under Rule 65 of the Rules of Court, and that this action should
be filed in the Court of Appeals in strict observance of the doctrine of the hierarchy of courts.
Moreover, it is already settled that under Section 9 of Batas Pambansa Blg. 129, as amended
by Republic Act No. 7902[10] (An Act Expanding the Jurisdiction of the Court of Appeals,
amending for the purpose of Section Nine of Batas Pambansa Blg. 129 as amended, known as
the Judiciary Reorganization Act of 1980), the Court of Appeals - pursuant to the exercise of its
original jurisdiction over Petitions for Certiorari – is specifically given the power to pass upon the
evidence, if and hwen necessary, to resolve factual issues.44

Consequently, 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 65, for a period of sixty (60)
days from notice of the decision.45

Records reveal that WUP received the decision of the NLRC on May 12, 2012, and filed its
motion for reconsideration on May 24, 2012.46 WUP received the Resolution dated February 11,
2013 denying its motion on March 12, 2013.47 Thereafter, it filed its petition for certiorari before
the CA on March 26, 2013.48

We find that the application of the doctrine of immutability of judgment in the case at bar is
misplaced.1âwphi1 To reiterate, although the 10-day period for finality of the decision of the
NLRC may already have lapsed as contemplated in the Labor Code, 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 65.49 From the abovementioned, WUP was able to
discharge the necessary conditions in availing its remedy against the final and executory
decision of the NLRC.

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.50 Furthermore, the
purpose of judicial review is to keep the administrative agency within its jurisdiction and protect
the substantial rights of the parties.51

Now on the issue of whether or not the NLRC has jurisdiction over the illegal dismissal case
filed by Maglaya.

The said issue revolves around the question on whether Maglaya is a corporate officer or a
mere employee. For purposes of identifying an intracorporate controversy, We have defined
corporate officers, thus:

"Corporate officers" in the context of Presidential Decree No. 902- A are those officers of the
corporation who are given that character by the Corporation Code or by the corporation's
by-laws. There are three specific officers whom a corporation must have under Section 25 of
the Corporation Code. These are the president, secretary and the treasurer. The number of
officers is not limited to these three. A corporation may have such other officers as may be
provided for by its by-laws like, but not limited to, the vice-president, cashier, auditor or general
manager. The number of corporate officers is thus limited by law and by the corporation's by-
laws.52

The president, vice-president, secretary and treasurer are commonly regarded as the principal
or executive officers of a corporation, and they are usually designated as the officers of the
corporation. However, other officers are sometimes created by the charter or by-laws of a
corporation, or the board of directors may be empowered under the by-laws of a corporation to
create additional offices as may be necessary. This Court expounded that an "office" is created
by the charter of the corporation and the officer is elected by the directors or stockholders, while
an "employee" usually occupies no office and generally is employed not by action of the
directors or stockholders but by the managing officer of the corporation who also determines the
compensation to be paid to such employee. 53

From the foregoing, that the creation of the position is under the corporation's charter or by-
laws, and that the election of the officer is by the directors or stockholders must concur in order
for an individual to be considered a corporate officer, as against an ordinary employee or officer.
It is only when the officer claiming to have been illegally dismissed is classified as such
corporate officer that the issue is deemed an intracorporate dispute which falls within the
jurisdiction of the trial courts. 54 In its position paper before the LA, WUP presented its amended
ByLaws55 dated November 28, 1988 submitted to the SEC to prove that Maglaya, as the
University President, was a corporate officer whose rights do not fall within the jurisdiction of the
labor tribunal. It also presented the Resolution dated. August 19, 2009 of the RTC, and the
Decision dated March 15, 2011 of the CA to show that the earlier case was filed by Maglaya
and others, as members of the Board, questioning the Bishops' appointment of the new
members without their recommendation.

The relevant portions of the amended By-Laws provide:

 ARTICLE VI. BOARD OF TRUSTEES

xxxx

Section 2. Membership - (a) The Board of Trustees shall be composed of Ten (10) members of
the corporation from among themselves provided, that six (6) shall come from the Ministry and
Laity of the United Methodist [C]hurch in the Philippines, tlu·ee (3) shall be non-Methodist,
friends and sympathizers of the Wesleyan UniversityPhilippines and of the United Methodist
Church, and one (1) representative of the Wesleyan Alumni Association, as provided in section
1 (c), Aiiicle IV hereof, and (b) provided further that the incumbent area bishop and the
President of the Wesleyan University-Philippines shall be honorary members of the Board.

x x x x56

ARTICLE VIII. OFFICERS

Section 1. Officers -The officers of the Board of Trustees shall be:

(a) Chairman

(b) Vice-Chairman

(c) Secretary

(d) Treasurer

xxxx

Section 6. The President of Wesleyan University-Philippines -The President of the University,

who must be an active member of the United Methodist Church in the Philippines at the time of
his election shall be incharge of and be responsible for the administration of the University and
other institutions of learning that [ m]ay hereafter be established by the corporation, and

(a) May, with the Board of Trustees;

(1) Organize and/or reorganize the administrative set up of the Wesleyan University-Philippines
to effect efficiency and upgrade institutional administration and supervision;

(2) Employ, suspend, dismiss, transfer or replace personnel and prescribe and enforce rules
and regulations for their proper conduct in the discharge of their duties;

(3) Shall make reports during the different ammal conference of the United Methodist Church
and to such agencies as may be deemed necessary on the operations of the university and
related matters;

(4) Shall prescribe and enforce rules and regulations for the promotion and maintenance of
discipline in the proper conduct and discharge of the functions and duties of subordinate
administrative officers, professors, teachers, employees and students and other personnel.
(b) Shall make reports and recommendations to the Board of Trustees or to the Chairman of the
Board of Trustees on matters pertaining to the institution as he may find necessary;

(c) Shall countersign all checks drawn by the Treasurer from the depository of the University,
and

(d) Shall exercise, perform and discharge all such other powers, functions and duties as are
interest in the office of the President.

x x x57

It is apparent from the By-laws of WUP that the president was one of the officers of the
corporation, and was an honorary member of the Board. He was appointed by the Board and
not by a managing officer of the corporation. We held that one who is included in the by-laws of
a corporation in its roster of corporate officers is an officer of said corporation and not a mere
employee58

The alleged "appointment" of Maglaya instead of "election" as provided by the by-laws neither
convert the president of university as a mere employee, nor amend its nature as a corporate
officer. With the office specifically mentioned in the by-laws, the NLRC erred in taking
cognizance of the case, and in concluding that Maglaya was a mere employee and subordinate
official because of the manner of his appointment, his duties and responsibilities, salaries and
allowances, and considering the Identification Card, the Administration and Personnel Policy
Manual which specified the retirement of the university president, and the check disbursement
as pieces of evidence supporting such finding.

A corporate officer's dismissal is always a corporate act, or an intracorporate controversy which

arises between a stockholder and a corporation, and the nature is not altered by the reason or
wisdom with which the Board of Directors may have in taking such action.59 The issue of the
alleged termination involving a corporate officer, not a mere employee, is not a simple labor
problem but a matter that comes within the area of corporate affairs and management and is a
corporate controversy in contemplation of the Corporation Code.60

The long-established rule is that the jurisdiction over a subject matter is conferred by
law.61 Perforce, Section 5 (c) of PD 902-A, as amended by Subsection 5.2, Section 5 of
Republic Act No. 8799, which provides that the regional trial courts exercise exclusive
jurisdiction over all controversies in the election or appointment of directors, trustees, officers or
managers of corporations, partnerships or associations, applies in the case at bar.62

To emphasize, the determination of the rights of a corporate officer dismissed from his
employment, as well as the corresponding liability of a corporation, if any, is an intra-corporate
dispute subject to the jurisdiction of the regular courts.63

As held in Leonor v. Court of Appeals,64 a void judgment for want of jurisdiction is no judgment
at all. It cannot be the source of any right nor the creator of any obligation. All acts perfonned
pursuant to it and all claims emanating from it have no legal effect. Hence, it can never become
final and any writ of execution based on it is void. 65

Since this Court is now reversing the challenged decision of the CA and affirming the decision of
the LA in dismissing the case for want of jurisdiction, Maglaya is not entitled to collect the
amount of ₱2,505,208.75 awarded from the time the NLRC decision became final and
executory up to the time the CA dismissed WUP's petition for certiorari.

In sum, this Court finds that the NLRC eITed in assuming jurisdiction over, and thereafter in
failing to dismiss, Maglaya's complaint for illegal dismissal against WUP, since the subject
matter of the instant case is an intra-corporate controversy which the NLRC has no jurisdiction.

WHEREFORE, the petition for review on certiorari filed by petitioner Wesleyan University-

Philippines is hereby GRANTED. The assailed Resolution dated January 20, 2014 of the Court
of Appeals in CAG.R. SP No. 129196 is hereby REVERSED and SET ASIDE. Respondent Atty.
Guillermo T. Maglaya, Sr. is hereby ORDERED to REIMBURSE the petitioner the amount of
₱2,505,208.75 awarded by the National Labor Relations Commission.

SO ORDERED

G.R. No. 195457

READ-RITE PHILIPPINES, INC., Petitioner,

vs.
GINA G. FRANCISCO, MAXIMINO H. REYES, LUCIA E. MACHADO, IRENE G. ABANILLA,
EDNA L. GUAVES, ARLENE FRANCISCO, JOSEPHINE V. TRINIDAD, MARILYN E.
AMPARO, SOLITA F. SANTOS, ELLEN T. CASTILLO, ROSALIE V ALDEABELLA, MARITA
E. RIVERA, JULITA M. MAGNO, MARCIA P. DELA TORRE, ELENA ANGCAHAN, ESTER H.
REYES, CORAZON ARMADILLA, IRMA A. PEREGRINO, DELFIN D. DUBAN, AMANCIA
PRADO, CECILIA D. NABUA, DANNY A. CABUCOY, ELIZABETH R. REVELLAME, ELVIRA
R. MAGNO, GIERL YN R. VILLANEVA, JEANETTE GAA LEGASPI, GREGORIA I.
MARASIGAN, JOHN JOSEPH R. MAGNO, LODELYN P. CASTILLO, JUSTINA TORTOSA,
LENY M. ZARENO, LOIDA E. ESTOMATA, MA. BASILIA DE LA ROSA, MA. GRACIA DE
GUZMAN, MA. NENITA G. CASTILLO, MERCEDARIO A. MARTINEZ, NORA M. PAVELON,
PRECILLA D. MAGBITANG, RAQUEL CABUCOY, REGAL M. ALFARO, RIZA UMANDAP,
ROSALITA R. MANLUNAS, ROSEMARIE C. LEYVA, ROSSANA M. YUMOL, SENETA
SERENO, VILMA R. MANALO, YOLANDA Y. MANGAOANG, GLORIA BARSOLASCO and
NENA M. REYES, Respondents.

DECISION

LEONARDO-DE CASTRO, J.:

In this petition for review on certiorari, 1 petitioner Read-Rite Philippines, Inc. (Read-Rite) seeks
to annul and set aside the Decision2 dated June 17, 2010 and the Resolution3 dated February 2,
2011 of the Court of Appeals in CA-G.R. SP No. 104622.

The Facts

During the time material to this case, Read-Rite was a duly registered domestic corporation
engaged in the business of manufacturing magnetic heads for use in computer hard disks.4
In the Compensation and Benefits Manual5 of Read-Rite's predecessor company, among the
benefits that an employee is entitled to are the following:

Voluntary Separation Benefit. Upon separation from employment after rendering at least

twenty (20) continuous years of service, an employee shall be entitled to a lump sum benefit
equal to his full retirement benefit with salary and service calculated as of the date of voluntary
separation.

Year of Service Percentage

Less than 10 0%

10 50%

11 55%

12 60%

13 65%

14 70%

15 75%

16 80%

17 85%

18 90%

19 95%

20 100%

Involuntary Separation Benefit. An employee terminated involuntarily for reasons beyond his
control (except for just cause), including but not limited to retrenchment or redundancy, shall be
entitled to receive the applicable minimum benefit prescribed by law.6

Similarly, in the Retirement Plan7 subsequently adopted by Read-Rite, Sections 3 and 4 of

Article VII (Retirement Benefits) thereof state:

Section 3 - Voluntary Separation Benefit

Upon separation from employment after having rendered ten (10) years of Continuous Service,
a Member will receive a lump sum benefit equal his full accrued Normal Retirement Benefit
multiplied by the appropriate factor as shown below:

Year of Service Factor

Less than 10 0%

10 50%

11 55%

12 60%

13 65%

14 70%

15 75%

16 80%

17 85%

18 90%

19 95%

20 and up 100%

Section 4 - Involuntary Separation Benefit

A Member terminated involuntarily for reasons beyond his control (except for just cause),
including but not limited to retrenchment or redundancy, shall be entitled to receive the
applicable minimum benefit prescribed by law on involuntary separation or the benefit computed
in accordance with Article VII Section 3 of this Plan, whichever is greater.

Such benefit will be in lieu of and is in full satisfaction of all termination and retirement benefits
which the Employee may be entitled to under the labor laws of the Republic of the Philippines
and benefits under this Plan.8

In April 1999, Read-Rite began implementing a retrenchment program due to serious business
losses. About 200 employees were terminated and they were each given involuntary
separation benefits equivalent to one month pay per year of service. From this first batch of
retrenched employees, however, there were eight employees - who had rendered at least ten
years of service - that apparently received additional voluntary separation benefits.9

Eventually, Read-Rite embarked on another round of retrenchment beginning the last quarter of
1999. Most of the 49 respondents in this case were part of this second batch of retrenched
employees.

All of the respondents received involuntary separation benefits equivalent to one month pay per
year of service. Accordingly, they each executed a Release, Waiver and Quitclaim10 (quitclaim),
which stated, among others, that they had each received from Read-Rite the full payment of all
compensation, benefits, and privileges due them and they will not undertake any action against
the company to demand further compensation.

In July 2003, Read-Rite sent notices to various government agencies, such as the Securities
and Exchange Commission (SEC), the Bureau of Internal Revenue (BIR), and the Department
of Labor and Employment (DOLE) Region IV, that the company had ceased its manufacturing
operations effective June 18, 2003.11

Meanwhile in February 2002 and February 2003, respondents filed complaints against Read-
Rite docketed as NLRC Case No. RAB-IV-02- 15180-02-L12 and NLRC Case No. RAB-IV-02-
17002-03-L,13 which were consolidated. Respondents sought the payment of
additional voluntary separation benefits, legal interest thereon, and attorney's fees. They
argued that Read-Rite discriminated against them by not granting the aforesaid benefits, the
award of which had since become a company policy.

The Labor Arbiter Ruling

In a Decision14 dated July 1, 2005, the Labor Arbiter dismissed the respondents' complaints,

ruling that voluntary separation benefits are separate and distinct from involuntary separation
benefits. That additional voluntary separation benefits were given once to a few retrenched
employees in April 1999 did not convert such grant into a company practice. The isolated
payment was no longer given to · involuntarily separated employees in subsequent rounds of
retrenchment as Read-Rite explained that the same was only paid by mistake.

The Labor Arbiter also declared that the respondents' quitclaims were valid and voluntarily
executed. Respondents occupied positions that required a certain degree of intelligence and
competence such that they must have fully understood the consequences of their signing of the
quitclaims. Besides, respondents did not allege that their execution of the quitclaims was
vitiated by duress, force, or intimidation. Thus, respondents may no longer pursue any claim of
action against Read-Rite.

The NLRC Ruling

On appeal, the National Labor Relations Commission (NLRC) affirmed the above judgment in a
Resolution15 dated December 21, 2007 in NLRC CA No. 046085. The NLRC ruled that
respondents were not entitled to additional voluntary separation benefits as the same pertained
to employees who have rendered at least ten years of service and who resigned voluntarily.
Moreover, involuntarily separated employees cannot avail themselves of both involuntary
separation benefits and voluntary separation benefits, unless the same was so expressly
provided by Read-Rite's Compensation and Benefits Manual. The NLRC further upheld the
Labor Arbiter's position that an isolated payment of additional separation benefits to eight
retrenched employees in April 1999 did not ripen into a company policy. The NLRC also bound
respondents to their quitclaims absent any proof that the same were executed with vitiated
consent.

Respondents sought a reconsideration16 of the NLRC Resolution, manifesting that in similar

labor cases involving other employees of Read Rite, the Court of Appeals and the Supreme
Court allegedly upheld said employees' entitlement to additional voluntary separation benefits.

Respondents alleged that in a Decision17 dated October 7, 2005 in CA-G.R. SP No. 73795,

entitled Read-Rite (Phils.), Inc. v. National Labor Relations Commission and Teresa Ayore, the
Court of Appeals affirmed the judgment of the NLRC that ruled in favor of another batch of
Read-Rite employees in their pursuit of the same additional voluntary separation benefits
sought by herein respondents. Read-Rite did not appeal the appellate court's decision, thus
making the same final and executory.

In like manner, respondents argued that the Court of Appeals rendered a Decision dated
January 26, 2006 in CA-G.R. SP No. 82463, entitled Zamora v. Read-Rite Philippines, Inc. and
National Labor Relations Commission, which affirmed the NLRC ruling that awarded additional
voluntary separation benefits to yet another set of retrenched Read-Rite employees. Read-Rite
elevated the said decision to the Court, but the petition was denied outright in a minute
Resolution18 dated November 12, 2007 in G.R. No. 179022. The resolution became final and
executory on March 28, 2008.19

Respondents also argued that they had been discriminated upon by Read-Rite in their
enjoyment of the additional voluntary separation benefits. Their quitclaims should not be used
against them as the same were standard requirements imposed on resigning or separated
employees. That they filed their complaints is proof that they did not voluntarily execute their
quitclaims.

The NLRC denied the motion in a Resolution20 dated May 30, 2008.

The Court of Appeals Ruling

Respondents filed a petition for certiorari21 before the Court of Appeals to impugn the judgment
of the NLRC. In its assailed Decision dated June 17, 2010, the Court of Appeals granted the
petition ..

The Court of Appeals noted that the case involved the same facts and the same
employer, i.e., Read-Rite, as that of the Ayore and Zamora cases. The complainant employees
therein sought additional voluntary separation benefits previously granted by Read-Rite to the
above-mentioned eight employees who were retrenched in April 1999, arguing that the denial of
the benefits constituted undue discrimination. The arguments put forward by the parties
in Ayore and Zamora were found to be the same as the contentions of the herein respondents.
Given the said similarities, the Court of Appeals held that the rulings in Ayore and Zamora must
be applied in a similar manner.

The Court of Appeals agreed with Read-Rite that the grant of voluntary separation benefits to
eight employees in April 1999 did not turn it into a company practice as it was given only once.
Still, the failure of Read-Rite to grant the same to respondents constituted discrimination. The
appellate court further rejected Read-Rite's claim that the grant of voluntary separation benefits
to the eight retrenched employees in April 1999 was merely made by mistake. As for the
quitclaims, the same cannot bar respondents from demanding benefits to which they are legally
entitled to.

The appellate court further added that "while the position of [ReadRite] may be correct under
the circumstances,"22 it was not inclined to revisit its rulings in Ayore and Zamora especially
when the ruling in Zamora was affirmed by this Court.

The Court of Appeals, thus, decreed:

WHEREFORE, premises considered, the Petition is hereby GRANTED. The assailed

Resolutions of the NLRC are NULLIFIED and SET ASIDE. [Read-Rite] is ordered to pay each
[respondent] the following:

(1) Lump sum benefit equal to his/her full retirement benefit as of the date of
retrenchment in accordance with Sec. III, Art. VII of the Retirement Plan; and

(2) Legal interest of six percent (6%) per annum computed from the date of the
employee's retrenchment.

Let this case be remanded to the Labor Arbiter for · proper computation of the awards.23

Read-Rite moved for reconsideration24 on the above decision, but the same was denied in the
assailed Resolution dated February 2, 2011.

Hence, Read-Rite filed this petition.

The Arguments of Read-Rite

Read-Rite puts forth the following issue:

May an employer, forced to undergo retrenchment due to serious business losses, be required
to still pay Voluntary Separation Benefit after it had already paid Involuntary Separation Benefit
(retrenchment pay) to the retrenched employees, simply because it had earlier paid, albeit
mistakenly, eight (8) retrenched employees additional Voluntary Separation Benefit?25

Read-Rite avers that respondents were separated from service on the ground of retrenchment,
which separation was involuntary in nature. Accordingly, they received involuntary separation
benefit equivalent to one month pay for every year of service. As such, nothing more is due
them. Read-Rite faults the Court of Appeals for awarding to respondents additional voluntary
separation benefits in accordance with the rulings in Ayore and Zamora. This was done despite
the fact that the appellate court conceded that Read-Rite’s position may be correct.

According to Read-Rite, it cannot be adjudged guilty of undue discrimination as the same must
proceed from a deliberate and ill motivated act.1âwphi1 There was no intent to favor the eight
employees who were retrenched in April 1999, who were mistakenly paid additional voluntary
separation benefits, over the other retrenched employees. The company insists that the
retrenched employees were only entitled to receive involuntary separation benefits under its
Retirement Plan.

As to the individual quitclaims executed by the respondents, Read-Rite contends that they have
categorically stated therein that they have discharged the company from any and all liabilities in
connection with their former employment. The consideration therefore cannot be considered
inadequate or unreasonable as the amount thereof was actually more than the amount required
by law in cases of retrenchment.

The Arguments of the Respondents

Respondents pray for the outright dismissal of the petition, given that the same raises a factual
issue and that Read-Rite is bound by the final rulings in Ayore and Zamora on the entitlement to
additional voluntary separation pay of retrenched Read-Rite employees who have worked in the
company for at least ten years. They argue that Read-Rite should no longer be allowed to re-
litigate the same issue.

Respondents further maintain that they were arbitrarily discriminated upon when they were not
awarded additional voluntary separation benefits despite being in Read-Rite's employ for at
least ten years. They believe that the grant thereof is already an established company practice.
They refuse to concede that the payment of additional voluntary separation benefits to the eight
retrenched employees in April 1999 was made by mistake.

The Court's Ruling

The petition is meritorious.

At the outset, the Court finds that the instant petition does pose factual issues. In Century Iron
Works, Inc. v. Banas,26 we explained that:

A question of law arises when there is doubt as to what the law is on a certain state of facts,
while there is a question of fact when the doubt arises as to the truth or falsity of the alleged
facts. For a question to be one of law, the question must not involve an examination of the
probative value of the evidence presented by the litigants or any of them. The resolution of the
issue must rest solely on what the law provides on the given set of circumstances. Once it is
clear that the issue invites a review of the evidence presented, the question posed is one of fact.

Thus, the test of whether a question is one of law or of fact is not the appellation given to such
question by the party raising the same; rather, it is whether the appellate court can determine
the issue raised without reviewing or evaluating the evidence, in which case, it is a question of
law; otherwise it is a question of fact. (Citations omitted.)

In the case before us, there is a need to examine the evidence presented by the parties relative
to the entitlement of respondents to the additional voluntary separation benefits they seek.
Ordinarily, questions of fact cannot be raised in a petition for review on certiorari under Rule 45
of the Rules of Court. However, by way of exception, the Court will scrutinize the facts if only to
rectify the prejudice and injustice resulting from an incorrect assessment of the evidence
presented.27
Respondents are only entitled to
involuntary separation benefits

The Court rules that respondents are only entitled to involuntary separation pay given that they
were retrenched employees.

Retrenchment to prevent losses is one of the authorized causes for an employee's separation
from employment. As explained in Waterfront Cebu City Hotel v. Jimenez28 :

Retrenchment is the termination of employment initiated by the employer through no fault of and
without prejudice to the employees. It is resorted to during periods of business recession,
industrial depression, or seasonal fluctuations or during lulls occasioned by lack of orders,
shortage of materials, conversion of the plant for a new production program or the introduction
of new methods or more efficient machinery or of automation. It is an act of the employer of
dismissing employees because of losses in the operation of a business, lack of work, and
considerable reduction on the volume of his business. (Citations omitted.)

Article 283 (now Article 298) of the Labor Code, as amended, recognizes retrenchment as a
right of the management to meet clear and continuing economic threats or during periods of
economic recession to prevent losses.29 Said article reads:

ART. 283. Closure of establishment and reduction of personnel. - The employer may also
terminate the employment of any employee due to the installation of labor-saving devices,
redundancy, retrenchment to prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of termination due
to the installation of labor-saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1)
month pay for every year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be equivalent
to one (1) month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one (1)
whole year. (Emphasis supplied.)

Respondents never disputed the fact that they were retrenched employees of Read-Rite and
they were accordingly paid involuntary separation benefits of one month pay per year of
service. They, however, claim similar entitlement to voluntary separation benefits under
Read-Rite's Compensation and Benefits Manual.

To our mind, the Labor Arbiter and the NLRC were correct in ruling that voluntary and
involuntary separation benefits are distinct from one another. The same are embodied in
separate provisions of both the Compensation and Benefits Manual, upon which the
respondents base their claim, and the Read-Rite Retirement Plan, which the Court of Appeals
cited in its ruling. Respondents’ right to voluntary and involuntary separation benefits are
governed by the aforementioned instruments.30

As to involuntary separation benefits, the Compensation and Benefits Manual explicitly and

specifically states that "an employee terminated involuntarily for reasons beyond his control
(except for just cause), including but not limited to retrenchment or redundancy, shall be entitled
to receive the applicable minimum benefit prescribed by law."

On the other hand, Section 4, Article VII of the Retirement Plan more emphatically states that a
member thereof who is "terminated involuntarily for reasons beyond his control (except for just
cause), including but not limited to retrenchment or redundancy, shall be entitled to receive the
applicable minimum benefit prescribed by law on involuntary separation or the benefit computed
in accordance with Article VII, Section 3 of this Plan, whichever is greater." Section 3, Article VII
of the Retirement Plan pertains to voluntary separation benefits.

As to voluntary separation benefits, the Compensation and Benefits Manual and Retirement

Plan are ostensibly silent as to the conditions for an employee's entitlement thereto, save for the
length of the required continuous service. However, by its nomenclature alone, one ·could easily
discern that the award of voluntary separation benefits involves a situation that is opposite of
that contemplated in involuntary separation benefits - that is, the employee's separation from
employment is by his own choice and/or for reasons within his control. Indeed, the term
voluntary is defined as "proceeding from the will or from one's own choice or consent";
"unconstrained by interference"; or "done by design or intention."31

Given the diametrical nature of an involuntary and a voluntary separation from service, one
necessarily excludes the other. For sure, an employee's termination from service cannot be
voluntary and involuntary at the same time. As respondents' termination was involuntary in
nature, i.e., by virtue of a retrenchment program undertaken by Read-Rite, they are only entitled
to receive involuntary separation benefits under the express provisions of the company's
Compensation and Benefits Manual and the Retirement Plan.

In view of the foregoing discussion, the Court is more inclined to believe that the payment of
additional voluntary separation benefits, on top of involuntary separation benefits, to eight
retrenched employees of ReadRite in April 1999 was indeed a mistake since the same was not
in accordance with the company's Compensation and Benefits Manual and its Retirement Plan.
In any event, whether said payment was a mistake or otherwise, respondents cannot use the
same to bolster their own claim of entitlement to additional voluntary separation benefits.

First, the labor tribunals and the Court of Appeals were one in declaring that the single, isolated
payment of additional voluntary separation benefits to the eight retrenched employees of Read-
Rite in April 1999 did not convert the same into a voluntary company practice that cannot be
unilaterally withdrawn by the company. The Court had since declared in National Sugar
Refineries Corporation v. National Labor Relations Commission32 that to be considered as a
company practice, the grant of benefits should have been practiced over a long period of
time, .and must be shown to have been consistent and deliberate.

Second, respondents are wrong to insist that they had been discriminated upon by Read-Rite in
view of the similarity of their case to that obtaining in Businessday Information Systems and
Services, Inc. v. National Labor Relations Commission.33

In said case, Businessday Information Systems and Services, Inc. (BSSI) terminated the
services of some of its employees as a retrenchment measure brought about by financial
reverses. The retrenched employees were given separation pay equivalent to one-half (1/2)
month pay for every year of service. In an attempt to rehabilitate its business as a trading
company, BSSI retained some of its employees. Nonetheless, after only two and a half months,
BSSI also terminated their services as it decided to cease all of its business operations. The
second and third batches of retrenched employees were then given separation pay equivalent
to one full month pay for every year of service and a mid-year bonus.

In granting the claim of the first batch of retrenched BSSI employees, the Court found that
"there was impermissible discrimination against [them] in the payment of their separation
benefits. The law requires an· employer to extend equal treatment to its employees. It may not,
in the guise of exercising management prerogatives, grant greater benefits to some and less to
others."34 However, in so ruling, the Court took into account the following findings of the NLRC:

The respondent argued that the giving of more separation benefit to the second and third
batches of employees separated was their expression of gratitude and benevolence to
the remaining employees who have tried to save and make the company viable in the
remaining days of operations. This justification is not plausible. There are workers in the first
batch who have rendered more years of service and could even be said to be more efficient
than those separated subsequently, yet they did not receive the same recognition.
Understandably, their being retained longer in their job and be not included in the batch that was
first terminated, was a concession enough and may already be considered as favor granted by
the respondents to the prejudice of the complainants. As it happened, there are workers in the
first batch who have rendered more years in service but received lesser separation pay,
because of that arrangement made by the respondents in paying their termination benefits[.] x x
x.35 (Emphasis supplied, citation omitted.)

Clearly, BSSI admitted that it purposely favored the second and third batches of retrenched
employees by giving them a higher separation pay and a mid-year bonus as a reward for their
efforts during the last days of the company. In contrast to the instant case, however, Read-Rite
made no such admission. Quite the opposite, Read-Rite has consistently claimed that the
payment of additional voluntary separation benefits to the eight retrenched employees in April
1999 was made by mistake and was no longer repeated in the next batches of retrenchment.

Third, respondents cannot invoke the final rulings in Ayore and Zamora in order to fetter this
Court into dismissing the instant petition.

The final ruling in Ayore is a Decision dated October 7, 2005 of the Court of Appeals in CA-G.R.
SP No. 73795. As such, it does not establish a doctrine and can only have a persuasive juridical
value.36 Moreover, a close reading of the Ayore decision reveals that the same involved an
issue that is not present in the instant case, i.e., which appropriate severance package should
be applied in computing the retrenched employees.' separation benefits.37 In this case, no such
issue was invoked by the parties and none was resolved by the lower courts.

Respondents based their claim of additional voluntary separation benefits on the Compensation
and Benefits Manual of Read-Rite's predecessor company, while Read-Rite disputed the claim
not only on the basis of the said Manual but also on the company's Retirement Plan. The Court
notes that in respondents' reply to Read-Rite's position paper before the Labor Arbiter, they
denounced the Retirement Plan cited by Read-Rite as spurious.38 However, respondents no
longer brought up this issue in their memorandum before this Court. Thus, the same is deemed
waived. In the Court's resolution that required the parties to submit their respective memoranda,
it is explicitly stated that "[ n ]o new issues may be raised by a party in his/its memorandum, and
the issues raised in his/its pleadings but not included in the memorandum shall be deemed
waived or abandoned."39
As to the final ruling in Zamora, the same is a minute resolution of the Court dated November
12, 2007 in G.R. No. 179022 that affirmed the judgment of the Court of Appeals. In Alonso v.
Cebu Country Club, Inc. ,40 we declared that a minute resolution may amount to a final action on
a case, but the same cannot bind non-parties to the action. Further, in Philippine Health Care
Providers, Inc. v. Commissioner of Internal Revenue,41 we expounded on the consequence of
issuing a minute resolution in this wise:

It is true that, although contained in a minute resolution, our dismissal of the petition was a
disposition of the merits of the case. When we dismissed the petition, we effectively affirmed the
CA ruling being questioned. As a result, our ruling in that case has already become final. When
a minute resolution denies or dismisses a petition for failure to comply with formal and
substantive requirements, the challenged decision, together with its findings of fact and legal
conclusions, are deemed sustained. But what is its effect on other cases?

With respect to the same subject matter and the same issues concerning the same parties, it
constitutes res judicata. However, if other ties or another subject matter (even with the
same parties and issues) is involved, the minute resolution is not binding precedent. x x
x. (Emphasis supplied; citations omitted.)

As respondents were not parties in the Zamora case in G.R. No. 179022, they cannot rely on
the minute resolution therein to obtain a dismissal of the instant petition.

All told, the Court of Appeals erred in denying Read-Rite's petition on the basis of the final
rulings in the Ayore and Zamora cases and in awarding additional voluntary separation benefits
to respondents on top of the involuntary separation benefits they already received.

The Court agrees with Read-Rite that the award of involuntary separation benefits in favor of
respondents should be in accordance with the provisions of not only the Compensation Benefits
Manual but also the Read-Rite Retirement Plan. The latter provides for involuntary separation
benefit that is equivalent to the applicable minimum benefit prescribed by law on involuntary
separation or the benefit computed in accordance with Section 3, Article VII of the Retirement
Plan, whichever is greater. Therefore, the amount of involuntary separation benefits that were
awarded to respondents must be in accordance with the above-mentioned provision.

To reiterate, each of the respondents already received involuntary separation benefits of one
month pay per year of service. This award is clearly more than that prescribed in Article 283
(now Article 298) of the Labor Code, as amended, which only grants separation pay equivalent
to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher, in cases of retrenchment.

On the other hand, Read-Rite's Retirement Plan provides that an employee's normal retirement
benefit shall be equal to twenty-six (26) multiplied by his final basic daily salary (or
approximately his one month salary) multiplied by his years of credited service.42 An employee
receives the full amount (or 100%) of the normal retirement benefit if he has at least twenty (20)
years of service but only a fraction thereof (ranging from 50%- 95%) if he has at least ten (10)
but less than twenty (20) years of service. In the case at bar, respondents received their full one
month's salary multiplied by their number of years of service, even those who were employed by
Read-Rite for less than twenty (20) years.
Verily, respondents were paid involuntary separation benefits which exceeded what they were
entitled to under the law or the Compensation Benefits Manual and the Retirement Plan.

Finally, we uphold the ruling of the Labor Arbiter and the NLRC that the respondents' individual
quitclaims are valid and binding upon them. Jurisprudence teaches that:

Not all quitclaims are per se invalid or against policy, except: (1) where there is clear proof that
the waiver was wangled from an unsuspecting or gullible person; or (2) where the terms of
settlement are unconscionable on their face; in these cases, the law will step in to annul the
questionable transaction. Indeed, there are legitimate waivers that represent a voluntary and
reasonable settlement of laborers' claims which should be respected by the Court as the law
between the parties. Where the person making the waiver has done so voluntarily, with a full
understanding thereof, and the consideration for the quitclaim is credible and reasonable, the
transaction must be recognized as being a valid and binding undertaking, and may not later be
disowned simply because of a change of mind.43 (Citations omitted.)

In this case, there is want of proof that respondents were coerced or deceived into signing their
individual quitclaims. As consideration therefor, respondents each received involuntary
separation benefits of one month pay per year of service. This consideration is reasonable and
not unconscionable under the circumstances given that respondents are only entitled thereto, as
previously explained. In any event, respondents no longer argued against the validity of their
quitclaims before this Court.

WHEREFORE, the petition is GRANTED. The Decision dated June 17, 2010 and the
Resolution dated February 2, 2011 of the Court of Appeals in CA-G.R. SP No. 104622 are
hereby REVERSED and SET ASIDE. The Decision dated July 1, 2005 of the Labor Arbiter in
NLRC Case No. RAB-IV-02-15180-02-L and NLRC Case No. RAB-IV-02-17002- 03-L
is REINSTATED. No costs.

SO ORDERED.

G.R. No. 172295             December 23, 2008

LILIA P. LABADAN, petitioner,
vs.
FOREST HILLS ACADEMY/NAOMI CABALUNA and PRESIDING COMISSIONER SALIC B.
DUMARPA, COMMISSIONER PROCULO T. SARMEN, COMMISSIONER NOVITO C.
CAGAYAN, respondents.

DECISION

CARPIO MORALES, J.:
Lilian L. Labadan (petitioner) was hired by private respondent Forest Hills Mission Academy
(Forest Hills) in July 1989 as an elementary school teacher. From 1990 up to 2002, petitioner
was registrar and secondary school teacher.

On August 18, 2003, petitioner filed a complaint1 against respondent Forest Hills and its
administrator respondent Naomi Cabaluna for illegal dismissal, non-payment of overtime pay,
holiday pay, allowances, 13th month pay, service incentive leave, illegal deductions, and
damages.

In her Position Paper,2 petitioner alleged that she was allowed to go on leave from Forest Hills,
and albeit she had exceeded her approved leave period, its extension was impliedly approved
by the school principal because she received no warning or reprimand and was in fact retained
in the payroll up to 2002.3

Petitioner further alleged that since 1990, tithes to the Seventh Day Adventist church have been
illegally deducted from her salary; and she was not paid overtime pay for overtime service,
13th month pay, five days service incentive leave pay, and holiday pay; and that her SSS
contributions have not been remitted.

Claiming that strained relations between her and Forest Hill have rendered reinstatement not
feasible, petitioner prayed for separation pay in lieu of reinstatement.

In its Position Paper,4 Forest Hills claimed as follows: In July 2001, petitioner was permitted to
go on leave for two weeks but did not return for work after the expiration of the period. Despite
petitioner’s undertaking to report "soon," she never did even until the end of School Year 2001-
2002. It thus hired a temporary employee to accomplish the needed reports. When she finally
returned for work, classes for the School Year 2002-2003 were already on-going.

To belie petitioner’s claim that she was dismissed, Forest Hills submitted a list of faculty
members and staff from School Year 1998-1999 up to School Year 2001 to 2002 which included
her name.5

With regard to the charge for illegal deduction, Forest Hills claimed that the Seventh Day
Adventist Church requires its members to pay tithes equivalent to 10% of their salaries, and
petitioner was hired on account of her being a member thereof, and petitioner never questioned
the deduction of the tithe from her salary.

With regard to the charge for non-payment of overtime pay, holiday pay, and allowances, Forest
Hills noted that petitioner proffered no evidence to support the same.

The Labor Arbiter decided in favor of petitioner, disposing as follows:

WHEREFORE, judgment is hereby rendered:

1. Finding respondents Forest Hills Academy and/or Naomi Cabaluna guilty of illegally
dismissing the complainant;

2. Directing respondent to pay complainant Lilia P. Labadan the total amount of

P152,501.02 representing her monetary award x x x.
 Complainant’s other claim[s] are hereby dismissed for lack of merit and/or failure to
substantiate.

SO ORDERED.6

The National Labor Relations Commission (NLRC), finding the Labor Arbiter to have
misappreciated the facts of the case, reversed and set aside his decision and dismissed
petitioner’s complaint by Resolution of June 30, 2005.7

On petitioner’s Petition for Certiorari,8 the Court of Appeals, by Resolution9 of December 15,

2005, dismissed the petition for deficient amount of appellate docket fee, non-attachment of
Affidavit of Service, absence of written explanation why the petition was filed through registered
mail instead of through personal service, and non-attachment of copies of the Complaint and
the Answer filed before the Labor Arbiter. Petitioner’s Motion for Reconsideration having been
denied,10 she filed the present Petition for Review on Certiorari,11 faulting the Court of Appeals

x x x IN DISMISSING THE PETITION ON THE GROUND OF TECHNICALITIES[;]

x x x IN NOT DECIDING ON THE MERITS WHETHER OR NOT HONORABLE

COMMISSIONERS OF THE 5TH DIVISION HAVE COMMITTED AN ACT OF GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION:

A. IN REVERSING THE FINDINGS OF THE EXECUTIVE LABOR ARBITER

THAT HEREIN PETITIONER-COMPLAINANT WAS NOT DISMISSED FROM
HER WORK AS A TEACHER and AT THE SAME TIME THE REGISTRAR;

B. IN FINDING THAT BY A PROLONGED ABSENCE OF ONE YEAR MORE

OR LESS, PETITIONER WAIVED HER 13TH MONTH PAY AND SERVICE
INCENTIVE LEAVES AS SHE FAILED TO STATE SUCH CLAIMS IN HER
AFFIDAVIT THAT WAS ATTACHED [TO] HER POSITION PAPER, and;

C. THAT THE DECISION/RESOLUTION RENDERED BY THE HONORABLE

COMMISSIONERS OF THE 5TH DIVISION WAS TAINTED WITH GRAVE
ABUSE OF DISCRETION AS IT WAS INCOMPLETE AND
UNLAWFUL[.]12 (Italics and emphasis in the original)

Non-payment of docket fee at the time of the filing of a petition does not automatically call for its
dismissal as long as the fee is paid within the applicable prescriptive or reglementary
period.13 While petitioner paid the P30 deficient amount of the docket fee on February 7,
2006,14 it was beyond the 60-day period for filing the petition for certiorari. Nevertheless, the
Court, in the interest of substantial justice, brushes aside this and the other technicalities cited
by the Court of Appeals in its Resolution of December 15, 200515 and, instead of remanding the
case to the appellate court, now hereby decides the case on the merits.

While in cases of illegal dismissal, the employer bears the burden of proving that the dismissal
is for a valid or authorized cause, the employee must first establish by substantial evidence the
fact of dismissal.16

The records do not show that petitioner was dismissed from the service. They in fact show that
despite petitioner’s absence from July 2001 to March 2002 which, by her own admission,
exceeded her approved leave,17 she was still considered a member of the Forest Hills
faculty18 which retained her in its payroll.19

Petitioner argues, however, that she was constructively dismissed when Forest Hills merged her
class with another "so much that when she reported back to work, she has no more claims to
hold and no more work to do."20

Petitioner, however, failed to refute Forest Hills’ claim that when she expressed her intention to
resume teaching, classes were already ongoing for School Year 2002-2003. It bears noting that
petitioner simultaneously held the positions of secondary school teacher and registrar and, as
the NLRC noted, she could have resumed her work as registrar had she really wanted to
continue working with Forest Hills.21

Petitioner’s affidavit and those of her former colleagues,22 which she attached to her Position
Paper, merely attested that she was dismissed from her job without valid cause, but gave no
particulars on when and how she was dismissed.

There being no substantial proof that petitioner was dismissed, she is not entitled to separation
pay or backwages.

Respecting petitioner’s claim for holiday pay, Forest Hills contends that petitioner failed to prove
that she actually worked during specific holidays. Article 94 of the Labor Code provides,
however, that

(a) Every worker shall be paid his regular daily wage during regular holidays, except in
retail and service establishments regularly employing less than ten (10) workers;

(b) The employer may require an employee to work on any holiday but such employee
shall be paid a compensation equivalent to twice his regular rate[.]

The provision that a worker is entitled to twice his regular rate if he is required to work on a
holiday implies that the provision entitling a worker to his regular rate on holidays applies even if
he does not work.

The petitioner is likewise entitled to service incentive leave under Article 95 of the Labor Code
which provides that

(a) Every employee who has rendered at least one year of service shall be entitled to a
yearly service incentive leave of five days with pay.

(b) This provision shall not apply to those who are already enjoying the benefit herein
provided, those enjoying vacation leave with pay of at least five days and those
employed in establishments regularly employing less than ten employees or in
establishment exempted from granting this benefit by the Secretary of Labor after
considering the viability or financial condition of such establishment.

x x x x,

and to 13th month pay under Presidential Decree No. 851.23

As for petitioner’s claims for overtime pay, it must be denied, for other than the uncorroborated
affidavits of her colleagues, there is no concrete proof that she is entitled thereto.24 And so must
her claim for allowances, no proof to her entitlement thereto having been presented

On the deduction of 10% tithe, Article 113 of the Labor Code instructs:

ART. 113. No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to check-
off has been recognized by the employer or authorized in writing by the individual
worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor,

as does Rule VIII, Section 10 of the Rules Implementing Book III of the Labor Code reading:

SEC. 10. Deductions from the wages of the employees may be made by the employer in
any of the following cases:

(a) When the deductions are authorized by law, including deductions for the
insurance premiums advanced by the employer in behalf of the employee as well
as union dues where the right to check-off has been recognized by the employer
or authorized in writing by the individual employee himself;

(b) When the deductions are with the written authorization of the employees for
payment to a third person and the employer agrees to do so, provided that the
latter does not receive any pecuniary benefit, directly or indirectly, from the
transaction. (Emphasis and underscoring supplied)

In the absence then of petitioner’s written conformity to the deduction of the 10% tithe from her
salary, the deduction made by Forest Hills was illegal.

Finally, on petitioner’s claim that Forest Hills did not remit her SSS contributions, Villar v.
National Labor Relations Commission25 enlightens:

x x x [T]he burden of proving payment of monetary claims rests on the employer. x x x

xxxx

The reason for the rule is that the pertinent personnel files, payrolls, records, remittances
and other similar documents – which will show that overtime, differentials, service
incentive leave and other claims of workers have been paid – are not in the possession
 of the worker but in the custody and absolute control of the employer.26 (Underscoring
supplied)

Forest Hills having glossed over this claim, the same must be granted.

Finally, insofar as petitioner was compelled to litigate her money claims, an award of attorney’s
fees equivalent to 10% of the final judgment award is in order.27

WHEREFORE, the Court of Appeals Resolution of December 15, 2005 is SET ASIDE. The
petition is GRANTED insofar as petitioner’s claims for illegal deductions, holiday pay, service
incentive leave pay, 13th month pay, and non-remittance of SSS contributions are concerned.
Respondents are accordingly ORDERED to refund to petitioner the amount of the illegal
deductions from her salary; to pay her holiday pay, service incentive leave pay, and 13th month
pay; to remit her contributions to the SSS; and to pay her attorney’s fees equivalent to 10% of
the final judgment award. The case is accordingly REMANDED to the Labor Arbiter for
computation of the amount of such money claims.

SO ORDERED.

[ G.R. No. 223018, August 27, 2020 ]

LEONARDA JAMAGO SALABE, PETITIONER, VS. SOCIAL SECURITY COMMISSION AND

MARINO TALICTIC, IN HIS CAPACITY AS OFFICER-IN-CHARGE AND BRANCH HEAD,
SSS-TAGBILARAN CITY BRANCH, RESPONDENTS.

DECISION

LAZARO-JAVIER, J.:

The Case

This petition for review on certiorari1 seeks to reverse the following dispositions of the Court of
Appeals in CA-G.R. S.P. No. 07954 entitled Leonarda Jamago Salabe v. Social Security
System and Marino Talictic, in his capacity as Officer-in-Charge and Branch Head, SSS-
Tagbilaran City Branch:

1. Decision2 dated December 1, 2014, affirming the rulings of respondent Social

Security Commission which upheld the invalidation of petitioner's SSS membership and
the cancellation of her pension benefits; and

2. Resolution3 dated January 28, 2016 denying reconsideration.

Antecedents
The Petition

Petitioner Leonarda Jamago Salabe sought relief from the Social Security Commission4 via her
Petition dated March 31, 2008. She essentially alleged:

From August 1978 to February 1979, she worked as a helper5 in the carinderia of one Ana
Macas at the Jagna Public Market, Jagna, Bohol. By virtue of this employment, Ana registered
her for social security purposes. Thus, she became a bona fide member of the Social Security
System (SSS)6 with Social Security Number 06-0618084-5.7

After her employment with Ana, she continued her membership with SSS as a voluntary paying
member and diligently paid her monthly premiums for a total of one hundred thirty-seven (137)
contributions.8

In 1993, when she reached the age of sixty (60), she filed an application for retirement benefits
with the SSS which got approved. That same year, she started receiving a monthly pension of
P1,362.75.9

Sometime in 2001, however, the SSS suddenly and unilaterally terminated her monthly pension
so she inquired with the local SSS branch regarding its cause.10

By Letter11 dated March 24, 2008, through respondent Marino B. Talictic, Officer-in-Charge and
Branch Head, SSS-Tagbilaran City Branch, informed her that her membership was cancelled for
there was purportedly no employer-employee relationship between her and Ana, viz.:

Dear Sir/Madam:

This has reference to your retirement pension, which was cancelled in 7/2001. Our review of the
records showed the following:

1. You were employed by ER Ana Macas ID# 06-1663518-6 whose membership with the

system was cancelled due to "No EE-ER Relationship".

2. As a result of the cancellation of the membership of the employer, all contributions

remitted in favor of any of its alleged employees cannot be considered in the
computation of benefit. Since it has no basis, the same is therefore subject to refund.

3. Your voluntary membership after separation from employment with cancelled

employer were also invalid.

In this connection, you may opt to file a petition to the Social Security Commission (SSC) should
you decide to pursue the resumption of your monthly pension. For further clarification on the
matter, please feel free to visit our SSS Tagbilaran Office.

Thank you.

Very sincerely yours,

(sgd.)
MARINO B. TALICTIC
OIC, Branch Head

(Emphasis and underscoring in the original)

She thus asked to be declared a bona fide employee of Ana and a bona fide member of the
SSS, and that her retirement pension be restored. She likewise asked for other just and
equitable remedies under the premises.12

The Answer

By Answer13 dated August 28, 2008, the SSS riposted, in the main:

Records showed that Leonarda became a covered employee in 1978 and became a retiree-
pensioner effective November 6, 1993 with a monthly pension of P1,584.83. Her last one was
given on July 2001.14

Under Memorandum Report15 dated April 14, 1989, then SSS Provincial Officer Lamberto C.
Miel, Jr. recommended the cancellation of Leonarda's SSS membership for failure of her
alleged employer Ana Macas to prove that she actually had employees in her carinderia, viz.:

This has reference to the letter-complaint allegedly signed by business firms whose SSS
membership were withdrawn and cancelled due to lack of Employer-Employee Relationship.

xxxx

... the letter complaint had given us some leads or information regarding violations of SSS
coverage of employees and self-employed persons. The investigation conducted on the basis of
this report disclosed the following:

xxxx

6. Ana Macas - SSS No. 06-1663578-6 - The investigation showed that subject firm could not
present any proof of employment of its reported employees despite repeated demands. All the
reported were already separated and had applied for voluntary membership. In view of the
absence of employer-employee relationship, it is recommended that withdrawal of SSS
membership of subject firm and its employees be effected. (emphases added)

In the absence of an employer-employee relationship between Ana and Leonarda, Leonarda's

membership with SSS had no factual and legal basis. Consequently, her payment of monthly
premiums during her alleged employment with Ana, as well as her subsequent voluntary
payments, were just as ineffective.16

It was incumbent upon Leonarda to prove the fact of her employment with Ana Macas by clear
and convincing evidence. As it was, however, she only offered self-serving affidavits
uncorroborated by documentary proof. Thus, the cancellation of Leonarda's retirement pension
was in order.17
Leonarda's Position Paper

In her Position Paper,18 Leonarda further averred:

The so called SSS Memorandum Report dated April 14, 1989 sought to establish material facts
that occurred in 1978 or eleven (11) years ago. SSS conveniently declared there was no
employer-employee relationship based solely on ground that the subject firm could not present
any proof of employment of its reported employees. As a humble carinderia, the SSS could not
have reasonably expected it to have kept employment records of all its employees throughout
its existence. At any rate, she should not be faulted for the alleged infraction of her employer.19

More, as much as she would like to implead Ana Macas in her petition, the latter had already
passed away. Ana's son Cefemio Macas, nonetheless, executed a sworn declaration attesting
to her employment. She also attached sworn declarations of disinterested witnesses Sabas
Ranin and Ricardo Vinalon to corroborate her claim.20

Finally, she relied on Social Security System v. Court of Appeals,21 where the Court
decreed the testimonial evidence of the claimant and her witnesses constitute positive and
credible evidence of the existence of an employer-employee relationship.

The SSS' Position Paper

By Manifestation dated August 28, 2009, the SSS adopted its Answer in lieu of filing its Position
Paper.

Administrative Hearing before the SSC

During the clarificatory hearing, Leonarda Salabe testified: In August 1978, Ana personally

recruited and hired her as a helper (dishwasher) in her restaurant at the Jagna Public Market;
her salary was P30.00 per day, paid on a weekly or monthly basis; she worked from Mondays
through Saturdays from 7 o'clock in the morning to 5 o'clock in the afternoon, and even on
Sundays when there were plenty of customers; the restaurant had a four (4) to five (5)-table
capacity; Ana had six (6) employees, including her; Ana herself supervised them; her
employment lasted for five (5) months; she and her co-workers regularly remitted their SSS
contributions.22

Ceferino Macas corroborated Leonarda's testimony. He further testified that he executed an

Affidavit dated April 21, 2008; his parents Ana and Vicente operated a small restaurant
(carinderia) which had a six (6)-table capacity and was frequented by a lot of patrons (suki); his
mother regularly remitted SSS contributions; many people from their place also registered under
the system to avail of the coverage; he personally knew Leonarda because they were neighbors
and his mother hired her as a helper in their carinderia; his mother's employees worked for short
periods only, the longest employment lasted about two (2) years; in any given month, the
number of his mother's employees did not reach ten (10).23

Ricardo O. Viñalon affirmed the contents of his Affidavit dated January 21, 2008. He testified
further that he used to sell and deliver meat to Ana's carinderia; there, he met Leonarda who
worked as a helper; the carinderia only had about three (3) to five (5) employees at a time,
considering the small size; he was covered by the system himself, being a self-employed
member.24
The Social Security Commission's Ruling

By Resolution25 dated June 6, 2012, the Social Security Commission dismissed the

petition, viz.:

WHEREFORE, the petition is hereby DISMISSED for lack of merit.

The SSS is ordered to demand within thirty (30) days from receipt hereof, the refund of the
monthly pensions paid to petitioner Salabe on account of her "retirement" on November 6, 1993,
minus all contributions paid by her, including those she paid as a voluntary member.

SO ORDERED.26

At the outset, it noted the inconsistency in its records where Ana reported Leonarda as
"Leonardo A. Jamago, widow (assigned SS. No. 06-0618084-5) for SS coverage effective
August 1978", while Leonarda represented herself in the proceedings as "Leonarda Jamago
Salabe" with a "married" civil status. She failed to explain or reconcile the inconsistency before
the Commission, making her identity questionable.27

At any rate, Leonarda failed to prove her employment with Ana Macas.28

Leonarda allegedly worked at Ana's carinderia which had five (5) to six (6) tables maximum and
listed twelve (12) employees for 1978. At the end of 1978, however, Ana remitted contributions
for a total of twenty (20) employees, more than the eleven (11) employees she had paid for in
the previous quarter (ending September 1978).29

Among Ana's twelve (12) employees, only three (3) were long-time employees. This conformed
with Ricardo's testimony that the carinderia had about three (3) to five (5) employees only. Thus,
most of Ana's supposed employees, Leonarda included, were not legitimate employees at all;
their so called employments were mere accommodations for purposes of qualifying them as
members of the SSS.30

In the absence of an employer-employee relationship, Leonarda could not be deemed a bona

fide member of the SSS. Consequently, she could not have paid contributions either as a
covered employee or as a voluntary member. For to be considered a voluntary member, one
should have earlier been separated from employment but was nevertheless allowed to continue
paying contributions to maintain the right to full benefits. Leonarda, therefore, had no right to
remit voluntary contributions and receive a monthly pension from the SSS.31

By Order32 dated June 10, 2013, the SSC denied Leonarda's motion for reconsideration.33

Proceedings before the Court of Appeals

Aggrieved, Leonarda assailed the SSC Resolutions34 dated June 6, 2012 and June 10, 2013
before the Court of Appeals. She argued:

First. Her right to due process was violated by the unilateral investigation initiated by a certain
by SSs Provincial Officer Miel. In fact, she was not even furnished with copy of Miel's
memorandum report. She only got hold of it when the SSS attached a copy thereof to its answer
before the SSC.35 Among the cardinal administrative due process rights postulated in Ang
Tibay v. CIR,36 "the decision must be rendered on the evidence presented at the hearing, or at
least contained in the record and disclosed to the parties affected"; and that the decision must
be rendered "in such a manner that the parties to the proceedings can know the various issues
involved, and the reasons for the decisions rendered." None of these requirements were
complied with by the SSS when it invalidated her membership.37

Second. The SSC erred when invalidated her SSS membership and cancelled her retirement
pension despite the presence of sufficient evidence showing that she was really an employee at
Ana's carinderia. The SSC merely relied on the presumption of regularity accorded to its
investigation. On the other hand, she presented witnesses Ceferino and Ricardo to corroborate
her claim.

Too, the SSC merely hinged its finding on the number of Ana's employees vis-a-vis the size of
her carinderia, viz.:

The rest of the reported employees were "new" and had no previous employers. As there were
more "employees" than the number of tables that the small restaurant had, the Commission
concluded that a majority of these 20 reported individuals were not really legitimate employees
of Macas. Even the petitioner's testimony supports such findings, as she declared that at the
time of her employment, there were then only 5 employees, already including
herself. (Resolution of the SSC dated June 6, 2012; Italics and underscoring supplied by
petitioner)

Notably though, the SSC did not even apply the four-fold test in determining the existence of an
employer-employee relationship.38

Third. Under the principle of estoppel, the SSC was already barred from questioning her status
as an SSS member. After the SSS approved her membership, it received her total one hundred
thirty-seven (137) contributions. Though SSS Provincial Officer Miel formally recommended the
cancellation of her membership as early as April 14, 1989, this was not immediately acted upon.
Meanwhile, she turned sixty (60) on November 6, 1993 and applied with SSS for pension
benefits. Her application got approved and she had been receiving pension benefits until it got
cancelled in 2001. But it was only on March 24, 2008 when she was formally informed of the
cancellation.

Surely, when she applied for retirement benefits, the SSS would have inevitably come across
Miel's Memorandum Report dated April 14, 1989 recommending the cancelation of her
membership. Yet the SSS still approved her claim for pension. It cannot, a decade later rule that
she was after all ineligible not only to receive retirement benefits, but also to become a voluntary
member of the SSS.

Had the SSS wanted to validly assail her membership, it should have done so at the earliest
opportunity. To demand a refund from her now in twilight of her years would be against the
principles of justice, equity, and good conscience.39

Finally. The SSS should not be unjustly enriched, and Leonarda prejudiced, by its own inaction
or negligence as regards the Memorandum Report dated April 14, 1989.

The Court of Appeals' Ruling

Through its Decision40 dated December 1, 2014, the Court of Appeals affirmed.

First, it gave weight and credence to the factual findings of the SSC, being the agency with
expertise on the matter. Such findings of administrative agencies with primary jurisdiction are
generally accorded not only respect, but even finality if supported by substantial evidence.41

Second, the absence of an employer-employee relationship between Ana and Leonarda was

sufficiently established. This was based on Miel's investigation as well as the testimonies given
before the SSC. Too, Leonarda's failure to present documentary evidence such as a
timesheets, pay slips, pay roll, or cash vouchers was fatal to her cause.42

Third, there was no violation of due process. Among the duties of the SSC is to protect workers
by requiring reports and conducting investigations to ensure that the proper benefits are
received by the rightful members.43

Fourth. The SSC did its investigation and resolved the issue at the earliest possible time. It was
impossible for SSC to investigate first before accepting a prospective member. The fact that it
accepted contributions from a person claiming to be a member does not mean it is already
accepting as valid the payor's membership. A person's membership with the SSS is always
subject validation and investigation.44

Finally. The SSS was not unjustly enriched since the SSC ordered the refund of Leonarda's
contributions.45

Through its Resolution46 dated January 28, 2016, the Court of Appeals denied
reconsideration.47

The Present Appeal

Leonarda now seeks affirmative relief from the Court and prays for the dispositions of the Court
of Appeals to be reversed.48 She faults the Court of Appeals for affirming the SSC Resolutions
which discontinued her monthly pension and cancelled her SSS membership.

For one, no particular form of evidence is required to prove the existence of an employer-
employee relationship.49

The present case involves a peculiar situation where it was neither she nor Ana Macas who
questioned the employment, but a third party, anchored on the theory of an "accommodation"
employment. Hence, the burden was unduly shifted to Ana to prove the existence of an
employer-employee relationship between her and Leonarda. Unfortunately, Ana had already
died so Leonarda had to rely on the affidavits of Ana's son and disinterested third persons which
the SSC nonetheless rejected.50

Leonarda's failure to present documentary evidence to prove her employment does not mean
there was no employer-employee relationship at all between her and Ana Macas. To determine
its existence, the four-fold test, which does not require a particular form of evidence, should
have been applied. Thus, any competent and relevant evidence may be admitted.51 SSS v.
Court of Appeals52 decrees:
Petitioners further argue that 'complainant miserably failed to present any documentary
evidence to prove his employment. There was no timesheet, pay slip and/or payroll/cash
voucher to speak of. Absence of these material documents are necessarily fatal to
complainant's cause.'

We do not agree. No particular form of evidence is required to prove the existence of an

employer-employee relationship. Any competent and relevant evidence to prove the relationship
may be admitted. For, if only documentary evidence would be required to show that relationship,
no scheming employer would ever be brought before the bar of justice, as no employer would
wish to come out with any trace of the illegality he has authored considering that it should take
much weightier proof to invalidate a written instrument. Thus, as in this case where the
employer-employee relationship between petitioners and Esita was sufficiently proved by
testimonial evidence, the absence of time sheet, time record or payroll has become
inconsequential. (Underscoring in the original)

Ana's positive act of registering Leonardo under the system was an admission or
acknowledgment of the employer-employee relationship between them. This should have been
considered as reliable and substantial proof of her employment, as corroborated by the
affidavits and testimonies of Ceferino, Sabas, and Ricardo.53

More, Section 8(d), Republic Act 828254 itself defines an employee, thus:

Any person who performs services for an employer in which either or both mental or physical
efforts are used and who receives compensation for such services, where there is an employer-
employee relationship: Provided, That a self-employed person shall be both employee and
employer at the same time.

As a dishwasher who performed services at Ana's carinderia and received compensation

therefor, she was indubitably Ana's employee.55

For another, the cancellation of her retirement pension and membership was too harsh a
penalty considering she is a beneficiary of a law enacted for social legislation, under which
compassionate justice should prevail.56 Our jurisdiction commands a liberal construction of
social legislation in favor of laborers, especially to retirees who need sustenance when she is no
longer capable to earn a livelihood.57

In its Comment,58 the SSC agrees that as a general rule, the existence of an employer-

employee relationship may be proved by any evidence other than documentary, which is
precisely why it called for clarificatory hearings and allowed Leonarda to present testimonial
evidence. Despite this opportunity given to Leonarda, she nevertheless failed to establish her
employer-employee relation with Ana. On the contrary, the SSC found Ana to have employed
an illegal scheme for her so called workers to get registered under the system and avail of its
benefits.59 It was highly suspicious for Ana to have hired twenty (20) employees to operate her
small carinderia of five (5) to six (6) tables, leading to the obvious conclusion that this mass
reporting of "employees" was done essentially for accommodation.60

In her Reply,61 Leonarda maintains that the SCC failed to meet quantum of evidence required
in administrative proceedings. More, the lengthy period of ten (10) years between the
termination of her employment and Miel's investigation makes the SSCs findings all the more
questionable. As for the other issues, she reiterates the arguments she had exhaustively
discussed in her earlier pleadings.62

In its Memorandum,63 the SSC echoes: factual findings in the performance of duty by

administrative agencies with expertise should be accorded not just respect, but finality; its
findings here are supported by substantial evidence based on its investigation; with the
cancellation of Ana's registration, the very foundation of Leonarda's membership crumbles. Her
membership, too, must be cancelled. Finally, social welfare legislations are only construed
liberally in favor of those intended to be benefited when there is doubt or ambiguity in the law
which does not obtain here.64

In her Memorandum,65 Leonarda maintains: she had acquired a vested right to receive her

monthly pension under the law which the SSC took away without due process; the SSC's
factual findings were not supported by substantial evidence, but a lazy conclusion; the twenty
(20) employees could have worked part time and in shifts and would nonetheless still be
employees; the cancellation of Ana's employer's registration should not affect the fact that there
was an employer-employee relationship that validly existed between them; she registered under
the system in good faith; assuming arguendo that Ana merely accommodated her, it was not
proscribed by the law or its implementing rules and regulations; if at all, Ana should have only
been fined; finally, the cancellation of Ana's employer's registration leading to the invalidation of
her membership does not have legal basis.

Issue

Is Leonarda entitled to retirement benefits from the SSS?

Ruling

We grant the petition.

The Governing Law

Leonarda prays for the dispositions of the Court of Appeals to be reversed and set aside to
effectively restore her membership with the SSS and the payment of her retirement benefits.

To recall, Leonarda was registered as a member of SSS in August 1978. The applicable law at
that time was RA 1161 or the Social Security Act of 1954, viz.:

SECTION 9. (a) Compulsory Coverage. — Upon determination by the Commission pursuant to

paragraphs (a) and (b) of section four hereof, coverage in the System shall be compulsory
upon all employees between the ages of eighteen and sixty years, inclusive, if they have been
for at least six months in the service of an employer who is a member of the System: Provided,
That the Commission may not compel any employer to become a member of the System unless
he shall have been in operation for at least three years and has, at the time of admission, two
hundred employees: Provided, further, That any employer otherwise qualified to be a member
may be exempted by the Commission from the provisions of this Act (a) if said employer can
satisfactorily show that he did not make any profit in any one year for the last three consecutive
years, or (b) if he is maintaining for his employee's compulsory contributions are not higher, and
employer's contribution not lower, than those required in this Act: Provided, further, That any
such employer, with the consent of the majority of his employees participating in the plan, may
liquidate such plan and become a member of the System: Provided, finally, That any amount
accruing to an employee as a result of such liquidation shall not be paid to him but shall be
remitted to the System to be credited to his account therein.

An employer exempt from the provision of this Act for the reason that he has an equivalent plan
shall, nevertheless, be a member of the System with respect to all his other employees who are
not included in such plan, or who may refuse to join or continue under said plan.

(b) Voluntary Coverage. — Under such rules and regulations as the Commission may prescribe,
any employer not required to be a member of the System may become a member thereof and
have his employees come under the provisions of this Act if the majority of his employees do
not object; and any individual in the employ of the Government, or of any of its political
subdivisions, branches, or instrumentalities, including corporations owned or controlled by the
Government, as well as any individual employed by a private entity not subject to compulsory
membership under this Act may join the System by paying twice the employee's contribution
prescribed in section nineteen. Any other individual may likewise join the System, subject to
such rules and regulations as may be prescribed by the Commission.

Section 8 of the law defines "employees" as follows:

(d) Employee. — Any person who performs services for an "employer" in which either or both
mental and physical efforts are used and who receives compensation for such services.

Verily, RA 1161 did not expressly cover self-employed individuals. Section 11, however, allows
a person previously employed to continue paying contributions in order to retain his or her
benefits as a member, viz.:

SECTION 11. Effect of Separation from Employment. — When an employee under compulsory

coverage is separated from employment, his employer's contribution on his account shall cease
at the end of the month of separation, but said employee may continue his membership in the
System and receive the benefits of this Act, in accordance with such rules and regulations as
may be promulgated by the Commission.

Thus, when Leonarda's employment with Ana ended in February, 1979, she continued paying
contributions to SSS under Section 11.

Subsequently, on January 1, 1980, Presidential Decree (PD) 1636 took effect, amending RA
1161 and enlarging the scope of the SSS' compulsory coverage to include the self-
employed, viz.:

SECTION 8. Terms Defined. - x x x

xxxx

(c) Employer Any person, natural or juridical, domestic or foreign, who carries on in the
Philippines any trade, business, industry, undertaking or activity or any kind and uses the
services of another person who is under his orders as regards the employment except the
Government and any of its political subdivision, branches or instrumentalities, including
corporations owned or controlled by the Government: Provided, that a self-employed
professional shall be both employee and employer at the same time. (d) Employee Any person
who performs services for an employer in which either or both mental and physical efforts are
used and who receives compensation for such services, where there is an employer-employee
relationship; Provided, That a self-employed professional shall be both employee and employer
at the same time.

xxxx

Sec. 9-A. Compulsory coverage of the self-employed. Coverage in the SSS shall also be

compulsory upon all self-employed persons earning f 1,800.00 or more per annum; x x x

RA 1161, as amended by PD 1636 was still in effect when Leonarda applied for retirement
benefits in 1993. The eligibility requirements for retirement benefits are set forth under Section
12-B of the law, as amended, thus:

SECTION 12-B. Retirement benefits. - (a) A covered employee who had paid at least one
hundred twenty monthly contributions prior to the semester of retirement; and who (1) has
reached the age of sixty years and is not receiving monthly compensation of at least three
hundred pesos, or (2) has reached the age of sixty-five years, shall be entitled for as long as he
lives to the monthly pension: Provided, That his dependents born before his retirement of a
marriage subsisting when he was fifty-seven years old shall be entitled to the dependents'
pension.

xxxx

Hence, to be eligible for retirement benefits, Leonarda must establish that (a) she is a covered
employee, (b) paid at least 120 contributions prior to the semester of her retirement, (c) has
reached the age of 60, and (d) is not receiving monthly compensation of at least P300.00.

The sole issue here is the presence of the first requirement.

Leonarda was Ana's Employee

Indeed, there is no dispute that Leonarda had made 137 contributions to SSS during her
lifetime. Too, she turned 60 in 1993. The records also made no mention whatsoever about
Leonarda's sources of compensation.

What appears on record, however, is that the Court of Appeals affirmed the SSC's cancelation
of Leonarda's membership on ground that she was not a legitimate employee of Ana. She could
not have therefore been a covered employee under Section 9 of RA 1161 prior to its
amendment, nor could she have continued making payments under Section 11 of the same law.
Consequently, she was not a valid member of the SSS and, thus, not entitled to retirement
pensions; her payments under the system must be returned.

We disagree with the findings of the Court of Appeals.

a. Factual findings generally not subject to review; Exceptions

As stated, whether Leonarda is a bona fide member of the SSS hinges on whether there was a
valid employer-employee relationship between Ana and her. While the existence of an
employer-employee relationship is a factual matter generally beyond the purview of a Rule 45
petition, the Court finds that three (3) of the recognized exceptions to the rule obtain in this
case, viz.:

(1) When the conclusion is a finding grounded entirely on speculation, surmises or conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a
grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5)
When the findings of fact are conflicting; (6) When the Court of Appeals, in making its findings,
went beyond the issues of the case and the same is contrary to the admissions of both
appellant and appellee; (7) The findings of the Court of Appeals are contrary to those of the trial
court; (8) When the findings of fact are conclusions without citation of specific evidence on
which they are based; (9) When the facts set forth in the petition as well as in the petitioner's
main and reply briefs are not disputed by the respondents; and (10) The finding of fact of the
Court of Appeals is premised on the supposed absence of evidence and is contradicted by the
evidence on records. (Emphasis supplied)66

Here, the factual finding that Leonarda was not Ana's employee was based on a mere
conjecture, speculation, or an estimate, as will be discussed below. Too, such conclusion was
based on an investigation which was not supported by any sort of evidence. Contrary to the
findings of the Court of Appeals, Leonarda sufficiently established that she was employed by
Ana.

b. Leonarda was deprived due process of law

Preliminarily, the Court observes that Leonarda was deprived of due process when the SSS
canceled her membership and retirement pension before according her an opportunity to be
heard on her eligibility.

In GSIS v. Montesclaros,67 the Court pronounced:

x x x [W]here the employee retires and meets the eligibility requirements, he acquires a vested
right to benefits that is protected by the due process clause. Retirees enjoy a protected property
interest whenever they acquire a right to immediate payment under pre-existing law. x x x No
law can deprive such person of his pension rights without due process of law, that is, without
notice and opportunity to be heard. (citations omitted; emphasis and underscoring supplied)

Here, Leonarda had been receiving pension benefits of P1,362.75 since 1993 until it was
unilaterally cancelled by the SSS in 2001. She never knew the cause of the cancellation
until 2008 when respondent Talictic informed her in writing that the cancellation of her
membership was due to the cancelation of Ana's membership in the system.

As it turned out, Leonarda's case was a derivative of the earlier investigation against Ana who
allegedly failed to prove that she actually had employees in her carinderia. Thus, SSS
Investigator Miel recommended the cancellation of Ana's membership in the system, which
recommendation was approved in 2001.

It bears stress, however, that Leonarda was never a party to the investigation against Ana.
Thus, Leonarda could not have possibly been bound by the results thereof. Indeed, a decision
rendered in a proceeding does not bind or prejudice a person not impleaded therein, for no
person shall be adversely affected by the outcome of a proceeding in which he or she is not a
party.68 The exception to this rule - successors in interest,69 is inapplicable here since Ana's
interest as the purported employer is surely different from the interest of her purported
employee Leonarda.

Perhaps aware of this due process violation, respondent Talictic, in the same letter in 2008,
advised Leonarda to file a petition with the SSC should she decide to pursue the restoration of
her monthly pension. This, however, is paradoxical.

Section 5(d) of RA 8282, which amended RA 1161 and took effect in 1997, was already in force
when the SSS implemented its ruling that cancelled Ana's membership leading to the
cancellation of Leonarda's membership and monthly pension. It states:

(d) Execution of Decisions. - The Commission may, motu proprio or on motion of any interested
party, issue a writ of execution to enforce any of its decisions or awards, after it has become
final and executory, in the same manner as the decision of the Regional Trial Court by directing
the city or provincial sheriff or the sheriff whom it may appoint to enforce such final decision or
execute such writ; and any person who shall fail or refuse to comply with such decision, award
or writ, after being required to do so shall, upon application by the Commission, pursuant to
Rule 71 of the Rules of Court, be punished for contempt. (emphasis added)

Verily, the SSS could have only canceled Leonarda's pension if there was already a final ruling
against her to that effect. As earlier explained though, the ruling against Ana could not have
been such final ruling required under Section 5. It simply does not bind Leonarda. Hence, the
cancelation of Leonarda's SSS membership had no factual or legal basis.

At any rate, even assuming that the ruling against Ana was final and binding on Leonarda as
well, why would Talictic advise Leonarda to file a new petition to establish the fact of
employment?

The situation would have been different had the SSS rejected Leonarda's application for
retirement benefits in 1993. After all, the SSS was already informed as early as 1989 of Ana's
supposed fraudulent scheme. Thus, when the SSS approved her application despite knowledge
thereof, Leonarda obtained a vested right to her pension benefits. Consequently, though not
estopped, the SSS could not have deprived her of these benefit without due process.

In fine, the SSS violated Leonarda's constitutional right to due process of law first, when it
unilaterally canceled her membership and retirement pension without affording her an
opportunity to be heard, second, when it implemented the cancelation of her membership and
retirement pension despite the absence of a final ruling to that effect, and third, when it failed to
notify Leonarda of the cause of the cancelation until seven (7) years later. To make matters
worse, the advice to Leonarda to file a case only came when Ana had already passed away.
Worse still, the SSS asked Leonarda to prove that she was a dishwasher at a
humble carinderia thirty (30) years after her separation from employment. For these reasons
alone, the petition should already be granted.

c. There is substantial evidence to establish that Leonarda was Ana's employee

The deprivation of her right to due process notwithstanding, Leonarda was nevertheless able to
prove that she was an employee at Ana's carinderia. During the clarificatory hearings before the
SSC, Leonarda offered the following pieces evidence: her affidavit and testimony; affidavit of
Sabas Ranin; affidavit and testimony of Ceferino Macas as son of carinderia owner Ana Macas
who had since passed away; and affidavit and testimony of Ricardo Vinalon as disinterested
third person.

Sabas G. Ranin essentially stated under the pain of perjury: he was a firewood supplier to small
restaurants at the Jagna public market from 1975 to 1988; he personally knows Leonarda whom
he met at Ana's carinderia; Leonarda started working for Ana in August 1978.70

Ricardo O. Viñalon expressed in his affidavit that he personally knew Leonarda whom he met in
August 1978 when Leonarda started working for Ana at the latter's carinderia; he was
acquainted with her because he used to deliver meats to the carinderia on a daily basis.71 In
the October 5, 2009 SSC clarificatory hearing, he added that Ana's carinderia had about three
(3) to five (5) employees at a time, but never more than ten (10) since the place was not that big
to accommodate many workers.72

Ceferino Macas was also present at the clarificatory hearing and he testified that his parents
Ana and Vicente Macas owned and operated carinderia at the Jagna Public Market; it had six
(6) tables and attracted a lot of customers (suki); he personally knew Leonarda as their neighbor
and as one of the workers at the carinderia; specifically, she worked as a server or a
dishwasher every day from 7 o' clock in the morning until 5 o' clock in the afternoon; she worked
at his mother's carinderia for around five (5) to seven (7) months; after her separation therefrom,
Leonarda chose to be a self-employed SSS member; finally, the carinderia had four (4) to five
(5) workers at a time, but never more than a total often (10) in any given month.

We find the affidavits and testimonies of Leonarda's witnesses to be credible, candid, and
consistent on material points. They were all able to support Leonarda's claim that there was an
employer-employee relationship between her and Ana. Indeed, they positively identified her and
her role in the carinderia as helper.

At any rate, the Court does not only take these documents and testimonies at face value, but
also considers Leonarda's circumstances. For one, she offered possibly the best evidence
available to her, given that thirty (30) years had already elapsed since her separation from
employment with Ana. For another, the Court is not unmindful that a carinderia at a public
market is part of a small and rather informal economy that could not reasonably be expected to
maintain a comprehensive documentation, more so beyond its operating lifetime. Still another,
Ana had already passed away, making any record or papers in her possession even more
difficult, if not impossible, to procure. Thus, it would be contrary to the dictates of fair play and
justice to demand Leonarda to submit pay slips, time sheets, or any other paper documentation
of her employment.

Indeed, the Court has consistently ruled that there is no hard and fast rule designed to establish
the elements of an employer-employee relationship.73 Some forms evidence that have
accepted to establish the elements include, but are not limited to, identification cards, cash
vouchers, social security registration, appointment letters or employment contracts, payroll,
organization charts, and personnel lists, among others.74 Too, the Court has also accepted
witnesses' testimonial evidence to sufficiently establish employer-employee relationship, as
here.75

Even applying the more stringent standards of the four-fold test, Leonarda satisfied its requisites
in establishing her employment. To be sure, the elements are: 1) the selection and engagement
of the employees; 2) the payment of wages; 3) the power of dismissal; and 4) the power to
control the employee's conduct.76 Leonarda and her witnesses proved: first, Ana personally
hired Leonarda as helper; second, Ana paid Leonarda a daily wage of P30.00, albeit on a
weekly or monthly basis; third, corollary to the power to hire, Ana could have fired
Leonarda; fourth and most importantly, Ana as owner directly supervised Leonarda in her work
as helper or dishwasher.

d. The SSS failed to disprove the fact of Leonarda's employment

Even with the testimonies and affidavits offered by Leonarda, the SSC essentially found it
unbelievable that a carinderia with a maximum of six (6) tables employed twenty (20) workers to
operate. With these "doubtful" figures, it had the "obvious conclusion" that the hiring of majority,
if not all, of these purported employees was done for accommodation. More:

The investigation showed that subject firm could not present any proof of employment of its
reported employees despite repeated demands. All the reported were already separated and
had applied for voluntary membership. In view of the absence of employer-employee
relationship, it is recommended that withdrawal of SSS membership of subject firm and its
employees be effected. (Emphasis supplied)

We are not persuaded.

First, the SSC had no actual basis for its conclusion that Ana had fake employees, but a mere
assumption which came to fore just because Ana allegedly failed to respond to its demands to
prove that her employees, including Leonarda, were not merely accommodated for inclusion in
the social security system. To be sure, the factual findings of the SSC pertaining to its
cancellation of Ana's registration cannot be used against Leonarda. More, the belated
investigation that took thirty (30) years to commence, through no fault of Leonarda, should not
prejudice her.

Second, assuming arguendo that most of Ana's workers were indeed merely accommodated to
be registered under the system, the SSC did not establish with substantial evidence that
Leonarda was one of them. The SSC itself admitted that Ana had legitimate employees. In fact,
among the many faces and names who may be more imagined than real, the witnesses
here positively identified Leonarda as a legitimate employee, erasing any doubt on her
employment.

Finally, Ana's failure to comply with reportorial requirements merely called for the application of
Section 24 of RA 1161, viz.:

Section 24. Employment Records and Reports. — (a) Each employer shall immediately report to
the SSS the names, ages, civil status, occupations, salaries and dependents of all his
employees who are subject to compulsory coverage: Provided, That if an employee subject to
compulsory coverage should die or become sick or disabled or reach the age of sixty without
the SSS having previously received any report or written communication about him from his
employer or a contribution paid in his name by his employer, the said employer shall pay to the
SSS the damages equivalent to the benefits to which said employee would have been entitled
had his name been reported on time by the employer to the SSS, except that in case of pension
benefits, the employer shall be liable to pay the SSS damages equivalent to five year's monthly
pension; including dependents' pension: Provided, further, That if the contingency occurs within
thirty days from the date of employment, the employer shall be relieved of his liability for
damages. (As amended by Sec. 15, R.A. 1792; Sec. 9, R.A. 4857; Sec. 13, P.D. No. 24, S-
1972; Sec. 16, P.D. No. 735, S-1975; and Sec. 12, P.D. No. 1202, S-1977) (Emphases and
underscoring supplied)

The provision does not mandate the automatic cancellation of the membership of the covered
employee.

Weighed against SSC's bare assertion, we find Leonarda's position to be more tenable. The
SSC should not have made a sweeping cancellation of the membership of all of Ana's
employees in view of the SSC's own findings that at least some of them were legitimate. These
legitimate employees, including Leonarda, should not be prejudiced by the SSC's over-arching
allegation of fraud.

e. A case of social legislation and the liberality rule

Suffice it to state that in cases involving social legislation, doubts should be liberally construed
in favor of the intended beneficiary of the law.77

In Philippine National Bank v. Dalmacio, the Court emphasized:

Retirement laws, in particular, are liberally construed in favor of the retiree because their
objective is to provide for the retiree's sustenance and, hopefully, even comfort, when he no
longer has the capability to earn a livelihood. The liberal approach aims to achieve the
humanitarian purposes of the law in order that efficiency, security, and well-being of government
employees may be enhanced. Indeed, retirement laws are liberally construed and administered
in favor of the persons intended to be benefited, and all doubts are resolved in favor of the
retiree to achieve their humanitarian purpose.

To be sure, even if both parties have presented substantial evidence to support their
allegations, the equipoise rule dictates that the scales of justice must be titled in favor of labor,
as here.78

Leonarda may be considered a Self-Employed or or Voluntary Paying Member

Assuming further that Leonarda was not an employee of Ana, this does not automatically entail
the invalidation of her 137 contributions to SSS.Ꮮαwρhi ৷ For Leonadra may be placed under
the category "self-employed" pursuant to the liberality rule. In fact, she may even be considered
as a voluntary paying member.

The application of liberality in this kind of situation is not out of the ordinary. In Haveria v.
SSS,79 the Court found no employer-employee relationship between therein petitioner and the
SSSEA. The Court, nonetheless, considered Haveria's contributions remitted by the SSSEA as
voluntary contributions to allow him to receive his pension which was then suspended by the
SSC. Similarly, Haveria registered with the SSS in May 1966 or under RA 1161, as here, and
the SSSEA remitted his monthly contributions from May 1966 to December 1981. The Court
ruled:
Under R.A. No. 1161, there are two kinds of coverage: compulsory coverage and voluntary
coverage. The Act provides:

xxxx

(b) Voluntary Coverage. — x x x any employer not required to be a member of the System may
become a member thereof and have his employees come under the provisions of this Act if the
majority of his employees do not object; and any individual in the employ of the Government, or
of any of its political subdivisions, branches, or instrumentalities, including corporations owned
or controlled by the Government, as well as any individual employed by a private entity not
subject to compulsory membership under this Act may join the System by paying twice the
employee's contribution prescribed in section nineteen. Any other individual may likewise join
the System, subject to such rules and regulations as may be prescribed by the Commission.80

xxxx

Haveria was reported by the SSSEA as an employee, and he claims coverage as a compulsory
member of the SSS. As correctly held by the SSC and CA, the SSSEA, a labor
organization, cannot be considered an employer under the law. The Labor Code expressly
excludes labor organizations from the definition of an employer, except when they directly hire
employees to render services for the union or association. Aside from his bare allegation that he
was an employee of the SSSEA, Haveria did not present any other fact to substantiate his claim
of employment with the SSSEA. He did not state his day-to-day duties or responsibilities and
work hours; he did not even present proof of employment such as pay slips and contract of
employment. Thus, the SSSEA was not an employer and Haveria was not its employee, but
merely a member or officer thereof.

xxxx

x x x Consequently, his compulsory coverage while supposedly employed with the SSSEA was
erroneous.

xxxx

x x x in the interest of justice and equity, Haveria's contributions remitted by the SSSEA shall be
considered as voluntary contributions so that his contributions can reach the minimum 120
monthly contributions for qualification to a retirement pension. x x x (Emphases supplied)

Hence, even if the Court rules that Leonarda was never an employee of Ana, this would not
necessarily entail the invalidity of all her contributions. Rather, this would call for the application
of liberality wherein Leonarda could be considered as a self-employed or voluntary paying
member as of January 1, 1980 when PD 1636 took effect, expanding t the scope of RA 1161 to
include the self-employed.

Here, it is undisputed that Leonarda made a total of 137 contributions to the SSS. Meanwhile,
she could have only paid a maximum of seventeen (17) months of contribution from the time
she got registered under the system in August 1978 until PD 1636 took effect on January 1,
1980. Thus, even if we deduct these seventeen (17) contributions made prior to the effectivity of
PD 1636, Leonarda would still have made one hundred twenty (120) valid contributions before
she turned sixty (60) in 1993, the minimum required to qualify for retirement benefits.
Consequently, Leonarda has satisfied the qualifications to receive her pension.

Retirees look forward to a life of dignified simplicity and sustenance, if not comfort, after their
economically productive years. If we deny Leonarda's petition, then we deny her the very
humanitarian purpose of the law - which she has been deprived of for nineteen (19) long years
now. What should have been her comfortable twilight years, Leonarda was burdened with
worries and anxiety of the laborious process of pleading her case.

The SSS should have been more sympathetic with its stakeholders - careful, not brash;
supportive, not vindictive; or at the very least true to its mandate.

ACCORDINGLY, the petition is GRANTED. The Decision dated December 1, 2014 and
Resolution dated January 28, 2016 of the Court of Appeals in CA-G.R. S.P. No. 07954
are REVERSED and SET ASIDE.

Respondent Social Security System is hereby ordered to:

1) REINSTATE petitioner Leonarda Jamago Salabe's membership with the system;

2) VALIDATE petitioner's 137 paid contributions;

3) RESTORE petitioner's right to retirement benefits; and

4) PAY petitioner her accrued retirement benefits from August 2001. This amount shall
earn twelve percent81 (12%) interest computed from the time her pension was withheld
in August 2001 until June 30, 2013 and six percent82 (6%) from July 1, 2013 until fully
paid.

SO ORDERED.