Almira vs. BF Goodrich - G.R. No. L-34974 (July 25, 1974) after April 26, 1971, . . .

ter April 26, 1971, . . ." 5 Then came this portion: "It would seem that the determination of the legality or illegality of the strike, was abandoned.
the picketing by respondents has continued up [to] the present, under the In the case of Ferrer v. CIR, Et. Al. the belief of the strikers that the
What is readily apparent in this appeal from a decision of respondent Court same pattern of coercive activities narrated in our Order Of July 1, 1971. management was committing unfair labor practice was properly considered
of Industrial Relations, declaring a strike illegal because of the means Physical injuries were inflicted on complainant’s personnel manager. Mass in declaring an otherwise premature strike, not unlawful, and in affirming
employed, and dismissing petitioners, was the high pitch of bitterness that picketing with the employment of intimidatory statements have again the order of the Labor Court for the reinstatement without back wages of
marked the relationship between labor and management in the started on January 3, 1972. The roof of the complainant’s Makati Recap said employees." 18 This 1968 decision of this Court, if present in the
establishment of private respondent, B. F. Goodrich Philippines, Inc. Even a Plant was set on fire on January 13, 1972. . ." 6 consciousness of respondent Judge Salvador, certainly could have caused,
cursory reading of the records will make evident that on both sides, there at the very least, a hesitancy on his part to declare the strike illegal. This is
was the feeling that the other party was guilty of conduct the most Based on the above facts, it was held in the appealed order of Judge not to deny that the labor union ought not to have declared a strike under
reprehensible resulting in the flagrant disregard of its rights. With such a Salvador: "On the basis, therefore, of the motivation as well as the conduct such circumstances, but at least, while premature, it could have been
background, there was a greater need for objectivity in the application of of the strike, the respondents are declared to have committed an illegal plausibly viewed as inspired by good faith, although perhaps not guided by
the authoritative legal norms to the facts as found. It cannot be said that strike, which is likewise an unfair labor practice." 7 As a consequence, in sound legal advice.
respondent Court, more precisely respondent Joaquin Salvador, then the the dispositive portion, petitioners were "declared to have lost their status
Judge whose order is now on appeal, was fully cognizant that such should of employees of the complainant corporation as of April 19, 1971," 8 The 2. What was set forth in the facts as found by respondent Judge Salvador
be the case. 1 It is hard not to lend credence to the contention of appealed order was handed down on February 4, 1972. Had a greater would indicate that it was during the picketing, certainly not peaceful, that
petitioners that there was undue receptivity to the claim of private awareness been displayed to the approach followed by this Court in a 1968 the imputed acts of violence did occur. It cannot be ignored, however, that
respondent, no doubt induced by the skill, competence, and decision, Cebu Portland Cement Co. v. Cement Workers Union, 9 as well as there were injuries on both sides because management did not,
resourcefulness of its counsel, Atty. Manuel Chan. It was unfortunate that to Shell Oil Workers’ Union v. Shell Co. of the Philippines, Ltd., 10 there understandably, play a passive role confronted as it was with the unruly
in some of the crucial stages of the controversy, petitioners did not have would have been less certitude displayed in the opinion of Judge Salvador disruptive tactics of labor. This is not, by any means, to condone activities
the same advantage. 2 Nonetheless, as will be shown, the strike could as to the correctness of its decision. Moreover, as stated at the outset, if of such character, irrespective of the parties responsible. It is merely to
have been viewed with a little less disapproval and even if declared illegal, there be deference to what of late has been so evident, even on the explain what cannot be justified. Nonetheless, did the acts in question call
need not have been attended with such a drastic consequence as assumption of the illegality of the strike, there need not be the automatic for an automatic finding of illegality? Again, the order issued on February
termination of employment relationship. This last point is even more termination of the employment relationship, especially so in view of the 4, 1972 appeared to be oblivious of a 1971 decision of this Court, Shell Oil
compelling considering the security of tenure which is one of the notable command of the present Constitution as to the security of tenure. Workers’ Union v. Shell Company of the Philippines, Ltd. 19 There it was
features in the present Constitution. 3 clearly held: "A strike otherwise valid, if violent in character, may be placed
1. It is understandable why respondent Judge Salvador was unsympathetic beyond the pale. Care is to be taken, however, especially where an unfair
The facts according to the appealed order follow: "As to the conduct of the to a strike in which petitioners participated, considering the pendency of a labor practice is involved, to avoid stamping it with illegality just because it
strike and the picketing, this Court’s Order of July 1, 1971 has fully certification election, just because management would not consider their is tainted by such acts. To avoid rendering illusory the recognition of the
described the same. In the course of the mass picketing, illegal and union as the exclusive collective bargaining representative. At the very right to strike, responsibility in such a case should be individual and not
unlawful acts were committed by the respondents such as physically least, it was premature. Nonetheless, there was this commendable collective. A different conclusion would be called for, of course, if the
blocking and preventing the entry of complainant’s customers, supplies and admission in the appealed order of Judge Salvador: "Lest we be existence of force while the strike lasts is pervasive and widespread,
other employees who were not on strike, both in complainant’s premises in misconstrued, the illegality of a strike for recognition as a general consistently and deliberately resorted to as a matter of policy. It could be
Makati and Marikina, Rizal. Injuries likewise were inflicted on certain proposition is not absolute. We declare such strike illegal on the basis of reasonably concluded then that even if justified as to ends, it becomes
employees of complainant. Such acts of violence and intimidation appear to the attendant circumstances in this case." 11 It mentioned the attendant illegal because of the means employed." 20 It must be pointed out likewise
be of such a widespread nature so as to create an impression that there is circumstances, but as was apparent in an earlier portion of such order, that the facts as there found would seem to indicate a greater degree of
a common pattern of action set into motion by the respondents. The what respondent Judge apparently could not resist was the compelling violence. Thus: "Respondent Court must have been unduly impressed by
actuations of respondents are likewise illegal. In the premises of force of what by now should be an outmoded view of a strike being "by its the evidence submitted by the Shell Company to the effect that the strike
complainant at Makati, Rizal, the respondents who picketed the same on very nature . . . coercive . . ." 12 To display such a predisposition is to was marred by acts of force, intimidation and violence on the evening of
April 20, 1971 were identified . . . Similarly, some of the respondents who ignore the leading case of Cebu Portland Cement Co. v. Cement Workers June 14 and twice in the mornings of June 15 and 16, 1967 in Manila.
picketed the Marikina premises of complainants were identified . . . 4 Union. 13 For, as was therein pointed out, the ruling in National Labor Attention was likewise called to the fact that even on the following day,
Further: ‘The complainant caused the publication of notices in both the Union, Inc. v. Philippine Match Factory 14 to the effect that a strike "is an with police officials stationed at the strike-bound area, molotov bombs did
Manila Times and Daily Mirror, newspapers of general and wide circulation . economic weapon at war with the policy of the Constitution and the law," explode and the streets were obstructed with wooden planks containing
. . for all employees not participating in the illegal strike to report for work resort to which "is not, in plain terms, outlawed," 15 although certainly protruding nails. Moreover, in the branches of the Shell Company in Iloilo
on or before April 23, 1971, otherwise such failure will be considered as discouraged, is obsolete, for as was so clearly pointed out by Justice J. B. City as well as in Bacolod, on dates unspecified, physical injuries appeared
participation therein. Such notices were accompanied by instructions to L. Reyes in Cebu Portland Cement Co. v. Cement Workers Union: 16 "For a to have been inflicted on management personnel. Respondent Court in the
personnel at all levels on how reporting for work will be accomplished, time, decisions on the issue under consideration were characterized by appealed decision did penalize with loss of employment the ten individuals
considering the precarious situation in relation to the safety of employees strict adherence to the ruling in the Philippine Match Factory Case." 17 responsible for such acts. Nor is it to be lost sight of that before the
brought about by the strike of respondents. With respect to this particular Further, it was stated by him: "The actual break-away from the doctrine certification on June 27, 1967, one month had elapsed during which the
aspect, certain of the respondents who were not seen in the picket line on laid down in the Philippine Match Factory case came in Dinglasan v. Union was on strike. Except on those few days specified then, the Shell
or before April 23, 1971 were identified as having failed to report for work . National Labor Union, when the discretionary power of the Court of Company could not allege that the strike was conducted in a manner other
. . It would appear, however, that these listed respondents who failed to Industrial Relations to grant affirmative relief was recognized. . . . than peaceful. Under the circumstances, it would be going too far to
report for work likewise were seen picketing the premises of complainant Thereafter, the doctrine enunciated in Interwood Employees Association, . . consider that it thereby became illegal." 21 Then, mention was made of a
. that good faith of the strikers in the staging of the strike is immaterial in decision "in Insular Life Assurance Co., Ltd. Employees’ Association v.
1
Insular Life Assurance Co., Ltd. [where] there is the recognition by this were filed by one group against the other. The reply brief of private 4. This is all that needs to be said except to remind petitioners that the
Court, speaking through Justice Castro, of picketing as such being respondent, submitted on March 8, 1973, included a memorandum from a basic doctrine underlying the provisions of the Constitution so solicitous of
`inherently explosive.’ It is thus clear that not every form of violence certain Attorney Rolando A. Velasco, speaking of the status of the criminal labor as well as the applicable statutory norms is that both the working
suffices to affix the seal of illegality on a strike or to cause the loss of cases filed by the group of petitioners against management men, 28 and of force and management are necessary components of the economy. The
employment by the guilty party." 22 thirteen criminal cases as well as complaints against at least thirty rights of labor have been expanded. Concern is evident for its welfare. The
individuals identified with private Respondent. 29 In some of them the advantages thus conferred, however, call for attendant responsibilities. The
There was in that case a concurring opinion by Justice Barredo which complainants did not press charges, and the cases were dismissed. With ways of the law are not to be ignored. Those who seek comfort from the
elicited the approval of the present Chief Justice. Thus: "All these, the submission of such data, its objection to the admission of information shelter that it affords should be the last to engage in activities which
however, do not mean, on the other hand, that petitioner’s strike should similar in character as to the status of the criminal cases against negate the very concept of a legal order as antithetical to force and
necessarily be held to be illegal. It is always a wholesome attitude in cases petitioners loses weight. What is more, it does not appear as of this date as coercion. What is equally important is that in the steps to be taken by it in
of this nature to give but secondary importance to strict technicalities, to who of the petitioners were found guilty of what was referred to it in the the pursuit of what it believes to be its rights, the advice of those
whether of substantive or remedial law, and to constantly bear in mind the Shell opinion as committing serious acts of violence. As a matter of fact, conversant with the requirements of legal norms should be sought and
human values involved which are beyond pecuniary estimation." 23 the appealed order merely referred to the instances of picketing conducted should not be ignored. It is even more important that reason and not
illegally without specifically pin-pointing the culprits to whom such kind of violence should be its milieu.
It would seem, therefore, to reiterate a point, that on the date of the conduct could be ascribed. It would seem therefore, that the wholesale
appealed order of February 4, 1972, a less condemnatory attitude to the dismissal of petitioners is far from warranted. It is to be admitted though WHEREFORE, the appealed order of February 4, 1972 as affirmed in a
appearance of violence as such was part of the law of the land. It is to be that on a showing of having engaged in non-peaceful activities of a serious resolution of March 14, 1972 is reversed and set aside. Petitioners against
admitted that this is one of those close cases. What is merely emphasized character, the right to readmission is defeated. whom no criminal charges filed in relation to their acts referred to in this
is that the imputation of illegality on the ground of the means employed is decision are still pending are ordered reinstated to their employment, with
not automatically called for. This conclusion is further fortified by the stress on the security of tenure the right to backpay corresponding to eighteen (18) months, at the
that is a notable feature of the present Constitution. As pointed out in a respective rates of compensation they were being paid on February 4,
3. This is not to say that the appealed order is totally bereft of support in decision rendered only last month, Philippine Airlines, Inc. v. Philippine Air 1972, without any deduction corresponding to any possible income earned
law. It is merely to point out that the facts as found did not point Lines Employees Association: 30 "The futility of this appeal becomes even elsewhere since their dismissal to the present. Those petitioners against
automatically and unerringly to so severe a result, namely the dismissal of more apparent considering the express provision in the Constitution whom criminal complaints have been filed shall be reinstated, with the
petitioners. From a perspective more attuned to the trend indicated in already noted, requiring the State to assure workers ‘security of tenure.’ It right to backpay as herein indicated, only upon the final dismissal of said
current decisions of this Court, the three cited cases being representative, was not that specific in the 1935 Charter. The mandate was limited to the cases or their acquittal therein. Respondent Court is hereby ordered to
the conclusion reached could have been cast in a different mold. In labor State affording ‘protection to labor, especially to working women and implement this decision as expeditiously as possible. No costs.
law, as in constitutional law, it is no doubt true that the issues submitted, minors, . . .’ . . . That is to conform to the ideal of the New Society, the
in the language of Justice Malcolm, may be "determined by the court’s establishment of which was to felicitously referred to by the First Lady as
approach to them." 24 It is submitted that the direction indicated in the the Compassionate Society." 31 To the possible objection that in this
express language of both the 1935 and the present Constitution, is that Philippine Air Lines case, there was an order of reinstatement, it suffices by
which leads to protection to labor.25cralaw:red way of an answer that while the facts could be distinguished, the basic
principle in accordance with a constitutional mandate, in the language of
As previously noted, both petitioners and private respondent were guilty of Justice Cardozo, speaks with "a reverberating clang that drowns all weaker
practices far from peaceful in character. The original blame must of course sounds."cralaw virtua1aw library
be assumed by petitioners, for they ought to have known that the picketing
that comes within the protection of the free speech guarantee is one that is It would imply at the very least that where a penalty less punitive would
peaceful. It involves people marching to and fro with placards to acquaint suffice, whatever missteps may be committed by labor ought not to be
the public with the facts of a labor dispute. So it has been ruled from visited with a consequence so severe. It is not only because of the law’s
Mortera v. Court of Industrial Relations, 26 a 1947 decision, to Chan Bros., concern for the workingman. There is, in addition, his family to consider.
Inc. v. Federacion Obrera de la Industria Tabaquera y Otros Trabajadores Unemployment brings untold hardships and sorrows on those dependent
de Filipinas, 27 decided in January of this year. When they obstructed on the wage-earner. The misery and pain attendant on the loss of jobs
entrance into the premises of private respondent, they ought to have then could be avoided if there he acceptance of the view that under all the
known that they were inviting reprisal. It has been observed of course that circumstances of this case, petitioners should not be deprived of their
in labor controversies the unstructured incoherencies of vehement protest means of livelihood. Nor is this to condone what had been done by them.
for grievances, sincerely even if erroneously felt, may easily flare up into For all this while, since private respondent considered them separated from
rowdy conduct. So it did come about. The appealed order took note of the the service, they had not been paid. From the strictly juridical standpoint,
resulting melee. From the standpoint of settling a dispute, it would not it cannot he too strongly stressed, to follow Davis in his masterly work,
suffice just to visit recriminations on either or both parties. The more Discretionary Justice, 32 that where a decision may be made to rest an
crucial question is what to do next. informed judgment rather than rigid rules, all the equities of the case must
be accorded their due weight. Finally, labor law determinations, to quote
We start with the circumstances that ought to be considered. To repeat, from Bultmann, should be not only secundum rationem but also secundum
the breach of the peace, though started by petitioners, was not solely their caritatem.
responsibility as it turned out. For criminal charge, and countercharges

2
 do not in any way approve of complainants (private respondent) violation of company policy but was allowed separation pay for his 2
malfeasance, for which she is to suffer the penalty of dismissal, it is years of service. In Metro Drug Corporation v. NLRC, 9 the employee
for reasons of equity and compassion that we resolve to uphold the was validly removed for loss of confidence because of her failure to
award of financial assistance in her favor." 5 account for certain funds but she was awarded separation pay
equivalent to one-half month’s salary for every year of her service of
The position of the petitioner is simply stated: It is conceded that an 15 years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of
employee illegally dismissed is entitled to reinstatement and the employee was justified because he had instigated labor unrest
backwages as required by the labor laws. However, an employee among the workers and had serious differences with them, among
dismissed for cause is entitled to neither reinstatement nor backwages other grounds, but he was still granted three months separation pay
PLDT vs. NLRC - G.R. No. 80609 (August 23, 1988)
and is not allowed any relief at all because his dismissal is in corresponding to his 3-year service. In New Frontier Mines Inc. v.
accordance with law. In the case of the private respondent, she has NLRC, 11 the employee’s 3-year service was held validly terminated
The only issue presented in the case at bar is the legality of the award
been awarded financial assistance equivalent to ten months pay for lack of confidence and abandonment of work but he was
of financial assistance to an employee who had been dismissed for
corresponding to her 10-year service in the company despite her nonetheless granted three months separation pay. And in San Miguel
cause as found by the public Respondent.chanrobles virtual lawlibrary
removal for cause. She is, therefore, in effect rewarded rather than Corporation v. Deputy Minister of Labor and Employment, Et Al., 12
punished for her dishonesty, and without any legal authorization or full separation pay for 6, 10, and 16 years service, respectively, was
Marilyn Abucay, a traffic operator of the Philippine Long Distance
justification. The award is made on the ground of equity and also allowed three employees who had been dismissed after they were
Telephone Company, was accused by two complainants of having
compassion, which cannot be a substitute for law. Moreover, such found guilty of misappropriating company
demanded and received from them the total amount of P3,800.00 in
award puts a premium on dishonesty and encourages instead of funds.chanroblesvirtualawlibrary
consideration of her promise to facilitate approval of their applications
deterring corruption.chanrobles virtual lawlibrary
for telephone installation. 1 Investigated and heard, she was found
The rule embodied in the Labor Code is that a person dismissed for
guilty as charged and accordingly separated from the service. 2 She
For its part, the public respondent claims that the employee is cause as defined therein is not entitled to separation pay. 13 The
went to the Ministry of Labor and Employment claiming she had been
sufficiently punished with her dismissal. The grant of financial cases above cited constitute the exception, based upon considerations
illegally removed. After consideration of the evidence and arguments
assistance is not intended as a reward for her offense but merely to of equity. Equity has been defined as justice outside law, 14 being
of the parties, the company was sustained and the complaint was
help her for the loss of her employment after working faithfully with ethical rather than jural and belonging to the sphere of morals than of
dismissed for lack of merit. Nevertheless, the dispositive portion of
the company for ten years. In support of this position, the Solicitor law. 15 It is grounded on the precepts of conscience and not on any
labor arbiter’s decision declared:jgc:chanrobles.com.ph
General cites the cases of Firestone Tire and Rubber Company of the sanction of positive law. 16 Hence, it cannot prevail against the
Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of Davao, expressed provision of the labor laws allowing dismissal of employees
"WHEREFORE, the instant complaint is dismissed for lack of merit.
7 where the employees were dismissed for cause but were for cause and without any provision for separation pay.
nevertheless allowed separation pay on grounds of social and
"Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez
compassionate justice. As the Court put it in the Firestone Strictly speaking, however, it is not correct to say that there is no
are not totally blameless in the light of the fact that the deal
case:jgc:chanrobles.com.ph express justification for the grant of separation pay to lawfully
happened outside the premises of respondent company and that their
dismissed employees other than the abstract consideration of equity.
act of giving P3,800.00 without any receipt is tantamount to
"In view of the foregoing, We rule that Firestone had valid grounds to The reason is that our Constitution is replete with positive commands
corruption of public officers, complainant must be given one month
dispense with the services of Lariosa and that the NLRC acted with for the promotion of social justice, and particularly the protection of
pay for every year of service as financial assistance." 3
grave abuse of discretion in ordering his reinstatement. However, the rights of the workers. The enhancement of their welfare is one of
considering that Lariosa had worked with the company for eleven the primary concerns of the present charter. In fact, instead of
Both the petitioner and the private respondent appealed to the
years with no known previous bad record, the ends of social and confining itself to the general commitment to the cause of labor in
National Labor Relations Board, which upheld the said decision in toto
compassionate justice would be served if he is paid full separation pay Article II on the Declaration of Principles of State Policies, the new
and dismissed the appeals. 4 The private respondent took no further
but not reinstatement without backwages by the NLRC."cralaw Constitution contains a separate article devoted to the promotion of
action, thereby impliedly accepting the validity of her dismissal. The
virtua1aw library social justice and human rights with a separate sub-topic for labor.
petitioner, however, is now before us to question the affirmance of
Article XIII expressly recognizes the vital role of labor, hand in hand
the above-quoted award as having been made with grave abuse of
In the said case, the employee was validly dismissed for theft but the with management, in the advancement of the national economy and
discretion.chanroblesvirtualawlibrary
NLRC nevertheless awarded him full separation pay for his 11 years of the welfare of the people in general. The categorical mandates in the
service with the company. In Soco, the employee was also legally Constitution for the improvement of the lot of the workers are more
In its challenged resolution of September 22, 1987, the NLRC
separated for unauthorized use of a company vehicle and refusal to than sufficient basis to justify the award of separation pay in proper
said:jgc:chanrobles.com.ph
attend the grievance proceedings but he was just the same granted cases even if the dismissal be for cause.
one-half month separation pay for every year of his 18-year service.
". . . Anent the award of separation pay as financial assistance in
The Court notes, however, that where the exception has been applied,
complainant’s favor, We find the same to be equitable, taking into
Similar action was taken in Filipino, Inc. v. NLRC, 8 where the the decisions have not been consistent as to the justification for the
consideration her long years of service to the company whereby she
employee was validly dismissed for preferring certain dealers in grant of separation pay and the amount or rate of such award. Thus,
had undoubtedly contributed to the success of Respondent. While we
3
the employees dismissed for theft in the Firestone case and for conduct, while inept, is not depraved. But if he was in fact not really strengthened instead of betraying during all of her 10 years of service
animosities with fellow workers in the Engineering Equipment case sleeping but sleeping with a prostitute during his tour of duty and in with the company. If regarded as a justification for moderating the
were both awarded separation pay notwithstanding that the first the company premises, the situation is changed completely. This is penalty of dismissal, it will actually become a prize for disloyalty,
cause was certainly more serious than the second. No less curiously, not only inefficiency but immorality and the grant of separation pay perverting the meaning of social justice and undermining the efforts
the employee in the Soco case was allowed only one-half month pay would be entirely unjustified. of labor to cleanse its ranks of all undesirables.
for every year of his 18 years of service, but in Filipino the award was
two months separation pay for 2 years service. In Firestone, the We hold that henceforth separation pay shall be allowed as a measure The Court also rules that the separation pay, if found due under the
employee was allowed full separation pay corresponding to his 11 of social justice only in those instances where the employee is validly circumstances of each case, should be computed at the rate of one
years of service, but in Metro, the employee was granted only one- dismissed for causes other than serious misconduct or those reflecting month salary for every year of service, assuming the length of such
half month separation pay for every year of her 15-year service. It on his moral character. Where the reason for the valid dismissal is, for service is deemed material. This is without prejudice to the application
would seem then that length of service is not necessarily a criterion example, habitual intoxication or an offense involving moral turpitude, of special agreements between the employer and the employee
for the grant of separation pay and neither apparently is the reason like theft or illicit sexual relations with a fellow worker, the employer stipulating a higher rate of computation and providing for more
for the dismissal.chanrobles law library : red may not be required to give the dismissed employee separation pay, benefits to the discharged employee. 17
or financial assistance, or whatever other name it-is called, on the
The Court feels that distinctions are in order. We note that heretofore ground of social justice. WHEREFORE, the petition is GRANTED. The challenged resolution of
the separation pay, when it was considered warranted, was required September 22, 1987, is AFFIRMED in toto except for the grant of
regardless of the nature or degree of the ground proved, be it mere A contrary rule would, as the petitioner correctly argues, have the separation pay in the form of financial assistance, which is hereby
inefficiency or something graver like immorality or dishonesty. The effect, of rewarding rather than punishing the erring employee for his DISALLOWED. The temporary restraining order dated March 23, 1988,
benediction of compassion was made to cover a multitude of sins, as offense. And we do not agree that the punishment is his dismissal is LIFTED. It is so ordered.
it were, and to justify the helping hand to the validly dismissed only and that the separation pay has nothing to do with the wrong he
employee whatever the reason for his dismissal. This policy should be has committed. Of course it has. Indeed, if the employee who steals
re-examined. It is time we rationalized the exception, to make it fair from the company is granted separation pay even as he is validly
to both labor and management, especially to labor. dismissed, it is not unlikely that he will commit a similar offense in his
next employment because he thinks he can expect a like leniency if he
There should be no question that where it comes to such valid but not is again found out. This kind of misplaced compassion is not going to
iniquitous causes as failure to comply with work standards, the grant do labor in general any good as it will encourage the infiltration of its
of separation pay to the dismissed employee may be both just and ranks by those who do not deserve the protection and concern of the
compassionate, particularly if he has worked for some time with the Constitution.chanrobles virtual lawlibrary
company. For example, a subordinate who has irreconcilable policy or
personal differences with his employer may be validly dismissed for The policy of social justice is not intended to countenance wrongdoing
demonstrated loss of confidence, which is an allowable ground. A simply because it is committed by the underprivileged. At best it may
working mother who has to be frequently absent because she has also mitigate the penalty but it certainly will not condone the offense.
to take care of her child may also be removed because of her poor Compassion for the poor is an imperative of every humane society but
attendance, this being another authorized ground. It is not the only when the recipient is not a rascal claiming an undeserved
employee’s fault if he does not have the necessary aptitude for his privilege. Social justice cannot be permitted to be refuge of scoundrels
work but on the other hand the company cannot be required to any more than can equity be an impediment to the punishment of the
maintain him just the same at the expense of the efficiency of its guilty. Those who invoke social justice may do so only if their hands
operations. He too may be validly replaced. Under these and similar are clean and their motives blameless and not simply because they
circumstances, however, the award to the employee of separation pay happen to be poor. This great policy of our Constitution is not meant
would be sustainable under the social justice policy even if the for the protection of those who have proved they are not worthy of it,
separation is for cause. like the workers who have tainted the cause of labor with the
blemishes of their own character.
But where the cause of the separation is more serious than mere
inefficiency, the generosity of the law must be more discerning. There Applying the above considerations, we hold that the grant of
is no doubt it is compassionate to give separation pay to a salesman if separation pay in the case at bar is unjustified. The private
he is dismissed for his inability to fill his quota but surely he does not respondent has been dismissed for dishonesty, as found by the labor
deserve such generosity if his offense is misappropriation of the arbiter and affirmed by the NLRC and as she herself has impliedly
receipts of his sales. This is no longer mere incompetence but clear admitted. The fact that she has worked with the PLDT for more than a
dishonesty. A security guard found sleeping on the job is doubtless decade, if it is to be considered at all, should be taken against her as
subject to dismissal but may be allowed separation pay since his it reflects a regrettable lack of loyalty that she should have

4
 rendered his Decision 12 in favor of Daabay. He ruled that Daabay was Accordingly, the assailed 18 April 2008 Decision of the Executive Labor
illegally dismissed because his participation in the alleged conspiracy was Arbiter is hereby REVERSED and SET ASIDE, and a new judgment is
not proved by substantial evidence. In lieu of reinstatement and entered DISMISSING the present complaint for want of evidence.
considering the already strained relations between the parties, ELA
Magbanua ordered the payment to Daabay of backwages and separation
Let, however, this case be REMANDED to the Executive Labor Arbiter or the
pay or retirement benefits, as may be applicable. The dispositive portion of
Regional Arbitration Branch of origin for the computation of complainant’s
ELA Magbanua’s Decision reads:
retirement benefits in accordance with the latest Collective Bargaining
Agreement prior to his termination.
WHEREFORE, premises considered, judgment is hereby rendered declaring
the dismissal of complainant Jerome Daabay as illegal, and ordering
SO ORDERED.18
respondents to pay complainant his backwages in the amount of
3. Daabay vs. Coca-Cola - G.R. No. 199890 (August 19, 2013) [P]750,996.00.
Coca-Cola’s partial motion for reconsideration to assail the award of
retirement benefits was denied by the NLRC in a Resolution 19 dated
This resolves petitioner Jerome M. Daabay’s (Daabay) Verified Petition for Additionally, respondents are hereby ordered to pay complainant his
October 30, 2009. The NLRC explained that there was a need "to humanize
Review1 , which assails the Decision 2 dated June 24, 2011 and separation pay at one (1) month for every year of service, or his
the severe effects of dismissal" 20 and "tilt the scales of justice in favor of
Resolution3 dated December 9, 2011 of the Court of Appeals (CA) in CA- retirement benefits based on the latest Collective Bargaining Agreement
labor as a measure of equity and compassionate social justice." 21 Daabay
G.R. SP No. 03369-MIN. prior to his suspension/termination.
also moved to reconsider, but his motion remained unresolved by the
NLRC.22 Undaunted, Coca-Cola appealed to the CA.
The case stems from a complaint for illegal dismissal, illegal suspension, Other claims are hereby ordered dismissed for failure to substantiate.
unfair labor practice and monetary claims filed by Daabay against
The CA agreed with Coca-Cola that the award of retirement benefits lacked
respondent Coca-Cola Bottlers Phils., Inc. (Coca-Cola) and three officers of
SO ORDERED.13 basis considering that Daabay was dismissed for just cause. It explained:
the company.4 The records indicate that the employment of Daabay with
Coca-Cola as Sales Logistics Checker was terminated by the company in
June 2005,5 following receipt of information from one Cesar Sorin (Sorin) Dissatisfied, Coca-Cola, Huang, Salvador and Garcia, appealed from ELA We are not oblivious of the instances where the Court awarded financial
that Daabay was part of a conspiracy that allowed the pilferage of company Magbanua’s Decision to the National Labor Relations Commission (NLRC). assistance to dismissed employees, even though they were terminated for
property.6 Daabay filed a separate appeal to ask for his reinstatement without loss of just causes. Equity and social justice was the vague justification. Quickly
seniority rights, the payment of backwages instead of separation pay or realizing the unjustness of these [s]o-called equitable awards, the Supreme
retirement benefits, and an award of litigation expenses, moral and Court took the opportunity to curb and rationalize the grant of financial
The allegations of Sorin were embodied in an affidavit which he executed
exemplary damages and attorney’s fees. assistance to legally dismissed employees. Thus, in Philippine Long
on April 16, 2005.7 The losses to the company were also confirmed by an
Distance Telephone Company v. National Labor Relations Commission, the
inventory and audit conducted by Coca-Cola’s Territory Finance Head,
Supreme Court recognized the harsh realities faced by employees that
Silvia Ang. Such losses comprised of cases of assorted softdrinks, empty The NLRC reversed the finding of illegal dismissal. In a Resolution 14 dated
forced them, despite their good intentions, to violate company policies, for
bottles, missing shells and missing pallets valued at ₱20,860,913.00. 8 August 27, 2009, the NLRC held that there was "reasonable and well-
which the employer can rightfully terminate their employment. For these
founded basis to dismiss [Daabay], not only for serious misconduct, but
instances, the award of financial assistance was allowed. But, in clear and
also for breach of trust or loss of confidence arising from such company
Coca-Cola then served upon Daabay a Notice to Explain with Preventive unmistakable language, the Supreme Court also held that the award of
losses."15 Daabay’s participation in the conspiracy was sufficiently
Suspension, which required him to explain in writing his participation in the financial assistance should not be given to validly terminated employees,
established. Several documents such as checkers receipts and sales
scheme that was reported to involve logistics checkers and gate guards. In whose offenses are iniquitous or reflective of some depravity in their moral
invoices that made the fraudulent scheme possible were signed by
compliance therewith, Daabay submitted an Explanation dated April 19, character. x x x.23 (Citation omitted)
Daabay.16 The NLRC also found fault in Daabay for his failure to detect the
2005 wherein he denied any participation in the reported pilferage. 9
pilferage, considering that the "timely recording and monitoring as security
control for the outgoing [sic] of company products are necessarily Thus, the dispositive portion of its Decision dated June 24, 2011 reads:
A formal investigation on the matter ensued. Eventually, Coca-Cola served connected with the functions, duties and responsibilities reposed in him as
upon Daabay a Notice of Termination that cited pilferage, serious Sales Logistics Checker."17 Notwithstanding its ruling on the legality of the
FOR THESE REASONS, the writ of certiorari is GRANTED; the portion of the
misconduct and loss of trust and confidence as grounds. At the time of his dismissal, the NLRC awarded retirement benefits in favor of Daabay. The
Resolution promulgated on 27 August 2009 remanding of the case to the
dismissal, Daabay had been a regular employee of Coca-Cola for eight dispositive portion of its Resolution reads:
Executive Labor Arbiter or the Regional Arbitration Branch of origin for
years, and was receiving a monthly pay of ₱20,861.00, exclusive of other
computation of retirement benefits is DELETED.
benefits.10
WHEREFORE, premises considered, the appeal of complainant is DENIED
for lack of merit, while that of respondent Coca-Cola Bottlers Philippines,
SO ORDERED.24
Daabay then filed the subject labor complaint against Coca-Cola and Inc. is GRANTED.
Roberto Huang (Huang), Raymund Salvador (Salvador) and Alvin Garcia
(Garcia), who were the President and Plant Logistics Managers, Daabay’s motion for reconsideration was denied in a Resolution 25 dated
respectively, of Coca-Cola at the time of the dispute.11 On April 18, 2008, December 9, 2011; hence, this petition.
Executive Labor Arbiter Noel Augusto S. Magbanua (ELA Magbanua)

5
It bears stressing that although the assailed CA decision and resolution are Even as we limit our present review to the lone issue that was involved in a fellow worker, the employer may not be required to give the dismissed
confined to the issue of Daabay’s entitlement to retirement benefits, the assailed CA decision and resolution, the Court finds no cogent reason employee separation pay, or financial assistance, or whatever other name
Daabay attempts to revive through the present petition the issue of to reverse the ruling of the CA. it is called, on the ground of social justice.
whether or not his dismissal had factual and legal bases. Thus, instead of
confining itself to the issue of whether or not Daabay should be entitled to
Daabay was declared by the NLRC to have been lawfully dismissed by A contrary rule would, as the petitioner correctly argues, have the effect, of
the retirement benefits that were awarded by the NLRC, the petition
Coca-Cola on the grounds of serious misconduct, breach of trust and loss rewarding rather than punishing the erring employee for his offense. And
includes a plea upon the Court to affirm ELA Magbanua’s Decision, with the
of confidence. Our pronouncement in Philippine Airlines, Inc. v. NLRC 31 on we do not agree that the punishment is his dismissal only and that the
modification to include: (a) his allowances and other benefits or their
the issue of whether an employee who is dismissed for just cause may still separation pay has nothing to do with the wrong he has committed. Of
monetary equivalent in the computation of his backwages; (b) his actual
claim retirement benefits equally applies to this case. We held: course it has. Indeed, if the employee who steals from the company is
reinstatement; and (c) damages, attorney’s fees and litigation expenses.
granted separation pay even as he is validly dismissed, it is not unlikely
that he will commit a similar offense in his next employment because he
At the risk of stating the obvious, private respondent was not separated
We deny the petition. thinks he can expect a like leniency if he is again found out. This kind of
from petitioner’s employ due to mandatory or optional retirement but,
misplaced compassion is not going to do labor in general any good as it will
rather, by termination of employment for a just cause. Thus, any
encourage the infiltration of its ranks by those who do not deserve the
We emphasize that the appeal to the CA was brought not by Daabay but by retirement pay provided by PAL’s "Special Retirement & Separation
protection and concern of the Constitution.36 (Emphasis ours)
Coca-Cola, and was limited to the issue of whether or not the award of Program" dated February 15, 1988 or, in the absence or legal inadequacy
retirement benefits in favor of Daabay was proper. Insofar as CA-G.R. SP thereof, by Article 287 of the Labor Code does not operate nor can be
No. 03369-MIN was concerned, the correctness of the NLRC’s made to operate for the benefit of private respondent. Even private Clearly, considering that Daabay was dismissed on the grounds of serious
pronouncement on the legality of Daabay’s dismissal was no longer an respondent’s assertion that, at the time of her lawful dismissal, she was misconduct, breach of trust and loss of confidence, the award based on
issue, even beyond the appellate court’s authority to modify. In Andaya v. already qualified for retirement does not aid her case because the fact equity was unwarranted.1âwphi1
NLRC,26 the Court emphasized that a party who has not appealed from a remains that private respondent was already terminated for cause thereby
decision may not obtain any affirmative relief from the appellate court rendering nugatory any entitlement to mandatory or optional retirement
Even the NLRC’s reliance on the alleged admission by Coca-Cola in its
other than what he had obtained from the lower court, if any, whose pay that she might have previously possessed.32 (Citation omitted and
motion to reduce bond that Daabay is entitled to retirement benefits is
decision is brought up on appeal.27 Further, we explained in Yano v. emphasis ours)
misplaced. Apparently, the supposed admission by Coca-Cola was based on
Sanchez,28 that the entrenched procedural rule in this jurisdiction is that a
the following:
party who did not appeal cannot assign such errors as are designed to
In ruling against the grant of the retirement benefits, we also take note of
have the judgment modified. All that he can do is to make a counter-
the NLRC’s lone justification for the award, to wit:
assignment of errors or to argue on issues raised below only for the In support of its motion to reduce bond, Coca-cola seeks leniency for its
purpose of sustaining the judgment in his favor.29 Due process prevents the failure to include in the posting of the bond the monetary award for
grant of additional awards to parties who did not appeal. 30 Considering that Where from the facts obtaining, as in this case, there is a need to [Daabay’s] retirement benefits which, as directed by the Executive Labor
Daabay had not yet appealed from the NLRC’s Resolution to the CA, his humanize the severe effects of dismissal and where complainant’s Arbiter, should be computed in accordance with the latest Collective
plea for the modification of the NLRC’s findings was then misplaced. For entitlement to retirement benefits are even admitted in [Coca-Cola’s] Bargaining Agreement prior to his termination. Coca-Cola explains that the
the Court to review all matters that are raised in the petition would be motion to reduce bond, [w]e can do no less but tilt the scales of justice in amount of the retirement benefits has not been determined and there is a
tolerant of what Daabay was barred to do before the appellate court. favor of labor as a measure of equity and compassionate social justice, need to compute the same on appeal. x x x.37
taking into consideration the circumstances obtaining in this
case.33 (Emphasis ours)
Before the CA and this Court, Daabay attempts to justify his plea for relief It is patent that the statements made by Coca-Cola were in light of ELA
by stressing that he had filed his own motion for reconsideration of the Magbanua’s ruling that Daabay was illegally dismissed. Furthermore, any
NLRC’s Resolution dated August 27, 2009 but the same remained unacted Being intended as a mere measure of equity and social justice, the NLRC’s admission was only for the purpose of explaining the non-inclusion of the
upon by the NLRC. Such bare allegation, however, is insufficient to allow award was then akin to a financial assistance or separation pay that is amount of retirement benefits in the computation of the appeal bond
the issue to be disturbed through this petition. We take note of Daabay’s granted to a dismissed employee notwithstanding the legality of his posted with the NLRC. Coca-Cola’s statements should be taken in such
failure to attach to his petition a copy of the motion which he allegedly filed dismissal. Jurisprudence on such financial assistance and separation pay context, and could not be deemed to bind the company even after the
with the NLRC. It is also quite baffling why Daabay does not appear to then equally apply to this case. The Court has ruled, time and again, that NLRC had reversed the finding of illegal dismissal. And although retirement
have undertaken steps to seek the NLRC’s resolution on the motion, even financial assistance, or whatever name it is called, as a measure of social benefits, where not mandated by law, may still be granted by agreement of
after it remained unresolved for more than two years from its supposed justice is allowed only in instances where the employee is validly dismissed the employees and their employer or as a voluntary act of the
filing. for causes other than serious misconduct or those reflecting on his moral employer,38 there is no proof that any of these incidents attends the instant
character.34 We explained in Philippine Long Distance Telephone Company case.
v. NLRC35:
Granting that such motion to reconsider was filed with the NLRC, the labor
tribunal shall first be given the opportunity to review its findings and WHEREFORE, the petition is DENIED. The Decision dated June 24, 2011
rulings on the issue of the legality of Daabay’s dismissal, and then correct [S]eparation pay shall be allowed as a measure of social justice only in and Resolution dated December 9, 2011 of the Court of Appeals in CA-G.R.
them should it find that it erred in its disposition. The Court cannot, by this those instances where the employee is validly dismissed for causes other SP No. 03369-MIN are AFFIRMED.
petition, pre-empt the action which the NLRC, and the CA in case of an than serious misconduct or those reflecting on his moral character. Where
appeal, may take on the matter. the reason for the valid dismissal is, for example, habitual intoxication or
SO ORDERED.
an offense involving moral turpitude, like theft or illicit sexual relations with

6
 guidelines issued to all officers and staff in President/CEO D.N. Corporation to provide each complainant a financial assistance of one
Vistan’s Memorandum of 14 July 2000. You will receive your month’s salary.
separation pay only upon release of your clearance, but not later than
the effectivity date of your termination from the Bank. Metrobank’s motion to dismiss the claim against it for want of
jurisdiction is DENIED for lack of merit.
We wish you success in your future endeavors.4
Complainants’ motion to admit annexes dated March 12, 2001,
On July 31, 2000, petitioner sent to the Department of Labor and together with their motions to amend affidavits/complaints dated
Employment a letter5 dated July 28, 2000, informing said office of the January 22, 2001 are hereby GRANTED for being meritorious.
termination of its employees, the pertinent portions of which read:
Solidbank’s counterclaim is dismissed for lack of merit.
In compliance with the provisions of Article 283 of the Labor Code, we
would like to inform the Department of Labor and Employment that SO ORDERED.9
Solidbank Corporation will cease operations and surrender its banking
license to the Bangko Sentral ng Pilipinas effective 31 August 2000.
4. Solidbank vs. NLRC - G.R. No. 165951 (March 30, 2010) Both parties appealed the LA’s Decision to the National Labor
Relations Commission (NLRC).
Due to the cessation of the Bank’s operations, the employment of all
Before this Court is a Petition for Review on certiorari,1 under Rule 45
officers and staff of Solidbank will be terminated effective the close of
of the Rules of Court, seeking to set aside the May 28, 2004 On October 29, 2002, the NLRC rendered a Decision 10 affirming the
business hours on 31 August 2000. As a result, the Bank will
Decision2 and October 28, 2004 Resolution 3 of the Court of Appeals findings of the LA that respondents were validly terminated. The NLRC
implement a separation program in accordance with the attached
(CA), in CA-G.R. SP No. 76879. The CA awarded financial assistance ruled that the closure of a business is an authorized cause sanctioned
guidelines. The separation package offered to Solidbankers is more
to respondents Rodolfo Bombita et al. out of "compassionate justice" under Article 283 of the Labor Code and one that is ultimately a
than what is required by law.6
despite the fact that petitioner Solidbank Corporation had already paid management prerogative. The NLRC, however, modified the LA’s
the respondents their separation pay in accordance with Article 283 of Decision by increasing the amount of financial assistance to two
the Labor Code. Petitioner granted to its employees separation pay equivalent to month’s salary out of compassionate justice. The dispositive portion of
150% of gross monthly pay per year of service, and cash equivalent the Decision reads:
of earned and accrued vacation and sick leaves as a result of their
The facts of the case are as follows:
dismissal. Upon receipt of their separation pay, the employees of
petitioner, including respondents, individually signed a "Release, WHEREFORE, premises considered, the Decision appealed from is
Sometime in May 2000, petitioner decided to cease its commercial Waiver, and Quitclaim."7 affirmed with modification as to the award of the financial assistance.
banking operations and forthwith surrendered to the Bangko Central
ng Pilipinas its expanded banking license. As a result of petitioner’s SO ORDERED.11
On September 27, 2000, respondents filed with the Labor Arbiter (LA)
decision to cease its operations, 1,867 of its employees would be
complaints for illegal dismissal, underpayment of separation pay, plus
terminated.
damages and attorney’s fees, and these were docketed as NLRC NCR Aggrieved by the NLRC Decision, petitioner then appealed to the CA,
Case Nos. 30-09-03843-00, 30-1004350-00, 30-10-03928-00, 30-10- specifically questioning the grant of financial assistance to
On July 25, 2000, petitioner sent individual letters to its employees, 04200-00, and 30-10-04036-00. respondents.
including respondents, advising them of its decision to cease
operations and informing them that their employment would be
On July 22, 2002, the LA rendered a Decision 8 ruling that respondents On May 28, 2004, the CA rendered a Decision reversing the Decision
terminated. The pertinent portions of said letter are hereunder
were validly terminated from employment as a result of petitioner’s of the NLRC. The CA shared the view of the LA that respondents
reproduced, to wit:
decision to cease its banking operations. The LA, however, inspired by should only be awarded one month’s salary as financial assistance and
compassionate justice, awarded financial assistance of one month’s not two month’s salary as previously decreed by the NLRC. The
With the cessation of the banking operations of Solidbank Corporation salary to respondents. The dispositive portion of the Decision reads: dispositive portion of the Decision reads:
and the surrender of its banking license to the Bangko Sentral ng
Pilipinas (BSP), the employment of all Solidbankers will have to be
WHEREFORE, the Complaints for illegal dismissal filed by the WHEREFORE, premises considered, the assailed Decision is hereby
terminated.
complainants under the above-stated case numbers are hereby REVERSED, and the 22 July 2002 Decision of the Labor Arbiter is
dismissed for lack of merit. However, inspired by compassionate hereby REINSTATED.
We regret that your services as an employee of Solidbank are hereby justice, this Office hereby orders the respondent Solidbank
terminated, effective the close of business hours on 31 August 2000.
SO ORDERED.12
Your separation package will be in accordance with the implementing
7
Petitioner then filed a motion for reconsideration, which was, long as they are supported by substantial evidence. A heavy burden In the case at bar, petitioner paid respondents the following: (a)
however, denied by the CA in a Resolution dated October 28, 2004. rests upon respondents to convince the Court that it should take separation pay computed at 150% of their gross monthly pay per year
exception from such a settled rule.19 of service; and (b) cash equivalent of earned and accrued vacation
Hence, herein petition, with petitioner raising the following and sick leaves. Clearly, petitioner had gone over and above the
assignment of errors, to wit: Moreover, what is damning to the cause of the respondents is the fact requirements of the law. Despite this, however, petitioner has been
that the issue of the validity of their dismissal is now already final. As ordered to pay respondents an additional amount, equivalent to one
correctly manifested by petitioner, respondents had earlier filed with month’s salary, as a form of financial assistance.
THERE IS NO LEGAL BASIS FOR THE COURT OF APPEALS’ AWARD OF
FINANCIAL ASSISTANCE EQUIVALENT TO ONE-MONTH’S SALARY TO this Court a petition for review 20 dated December 28, 2004, docketed
THE RESPONDENTS AFTER ITS FINDING THAT SOLIDBANK HAS MORE as G.R. No. 165985, entitled Rodolfo Bombita, et al. v. Solidbank The LA awarded the financial assistance out of "compassionate
THAN COMPLIED WITH THE MANDATE OF THE LAW ON PAYMENT OF Corporation, et al., which questioned the validity of their termination. justice." The CA affirmed such grant also out of "compassionate
SEPARATION PAY.13 A perusal of said petition shows that the issues raised therein are the justice" and as a form of "equitable relief" for the employees who
very same issues respondents now raise in their Comment. On were suddenly dismissed due to exigencies of business.24
February 21, 2005, this Court’s Second Division issued a
THE AWARD OF FINANCIAL ASSISTANCE CANNOT BE JUSTIFIED ON Resolution21 denying respondents’ petition for review. On September
THE BASIS OF "COMPASSIONATE JUSTICE" AND AS A FORM OF After a thorough consideration of the circumstances at bar, this Court
20, 2005, an Entry of Judgment 22 was rendered. Based on the finds that the award of financial assistance is bereft of legal basis and
"EQUITABLE RELIEF."14 foregoing, the validity of the termination of respondents is an issue serves to penalize petitioner who has complied with the requirements
that this Court must no longer look into as a necessary consequence of the law.
TO SUSTAIN THE COURT OF APPEALS’ AWARD OF FINANCIAL of the denial of their petition for review before this Court.
ASSISTANCE TO THE 140 VALIDLY-DISMISSED RESPONDENTS
WOULD RESULT IN A HIGHLY ANOMALOUS SITUATION WHERE THE It behooves this Court as to why the CA affirmed the grant of financial
Now, going to the issues raised by petitioner, this Court finds the assistance notwithstanding its pronouncement that it would be
SAID RESPONDENTS WOULD BE ACCORDED BETTER BENEFITS THAN same to be impressed with merit.
OTHER FORMER SOLIDBANK EMPLOYEES WHO WERE SIMILARLY inequitable to allow respondents to receive benefits than those
SITUATED.15 prescribed by law and jurisprudence, to wit:
Article 283 of the Labor Code provides:

The petition is meritorious. The errors being interrelated, this Court In the instant case, both the Labor Arbiter and the NLRC upheld the
shall discuss the same seriatim. ARTICLE 283. Closure of establishment and reduction of validity of the dismissal of the employees and of the quitclaim
personnel. - The employer may also terminate the employment of agreements between the affected employees and employer Solidbank.
any employee due to the installation of labor-saving devices, However, it was a strange occurrence when the NLRC granted an
Before anything else, this Court shall first address the allegations redundancy, retrenchment to prevent losses or the closing or additional award of separation pay in an amount equivalent to two
raised by respondents in their Comment,16 which deal with the issue cessation of operation of the establishment or undertaking unless the months salary to each employee. This means that Solidbank now has
of the validity of their termination. Respondents, in the main, claim closing is for the purpose of circumventing the provisions of this Title, the obligation to pay the employees not only their wages, benefits and
that their termination was unlawful as petitioner did not really cease by serving a written notice on the workers and the Ministry of Labor other privileges under the law, and separation pay in an amount
its operations.17 Thus, notwithstanding their admission that the LA, and Employment at least one (1) month before the intended date equivalent to 150% of their one month’s pay, but also financial
the NLRC, and the CA all ruled in unison that their termination was in thereof. In case of termination due to the installation of labor-saving assistance equivalent to two months pay to each employee. Such a
accordance with law, respondents seek this Court’s discretion to devices or redundancy, the worker affected thereby shall be entitled situation cannot be upheld by this Court. As discussed above, all that
reverse such findings. to a separation pay equivalent to at least his one (1) month pay or to the law requires in cases of dismissal due to an authorized cause is
at least one (1) month pay for every year of service, whichever is that the employer must pay financial assistance or separation pay in
On this note, it is well settled that this Court is not a trier of facts. To higher. In case of retrenchment to prevent losses and in cases of an amount equivalent to "one month’s pay or one-half month’s for
begin with, the question of whether respondents were dismissed for closures or cessation of operations of establishment or undertaking every year of service, whichever is higher." Solidbank has complied
authorized cause is a question of fact which is beyond the province of not due to serious business losses or financial reverses, the separation with the mandate of the law. Hence, it would be unjust and
a petition for review on certiorari. It is fundamental that the scope of pay shall be equivalent to one (1) month pay or at least one-half inequitable to allow the employees to receive higher benefits than
the Supreme Court’s judicial review under Rule 45 of the Rules of (1/2) month pay for every year of service, whichever is higher. A those prescribed by the Labor Code and jurisprudence.25
Court is confined only to errors of law. It does not extend to questions fraction of at least six (6) months shall be considered one (1) whole
of fact; more so, in labor cases where the doctrine applies with year. 23 Moreover, a review of jurisprudence relating to the application of
greater force.18 "compassionate and social justice" in granting financial assistance in
Based on Article 283, in case of cessation of operations, the employer labor cases shows that the same has been generally used in instances
The LA and the NLRC have already determined the factual issues, and is only required to pay his employees a separation pay of one month when an employee has been dismissed for a just cause under Article
these were affirmed by the CA. Thus, they are accorded not only great pay or at least one-half month pay for every year of service, 282 of the Labor Code and not when an employee has been dismissed
respect but also finality, and are deemed binding upon this Court so whichever is higher. That is all that the law requires. for an authorized cause under Article 283.

8
As a general rule, an employee who has been dismissed for any of the required to pay separation pay, the amount of which is also statutorily
just causes enumerated under Article 282 26 of the Labor Code is not prescribed.
entitled to separation pay. 27 Although by way of exception, the grant
of separation pay or some other financial assistance may be allowed While the CA should not be faulted for sympathizing with the plight of
to an employee dismissed for just causes on the basis of equity. 28 respondents as they suddenly lost their means of livelihood, this Court
holds that it is precisely because of the sudden loss of employment −
The reason that the law does not statutorily grant separation pay or one that is beyond the control of labor − that the law statutorily
financial assistance in instances of termination due to a just cause is grants separation pay and dictates how the same should be
precisely because the cause for termination is due to the acts of the computed. Thus, any business establishment that decides to cease its
employee. In such instances, however, this Court, inspired by operations has the burden of complying with the law. This Court
compassionate and social justice, has in the past awarded financial should refrain from adding more than what the law requires, as the
assistance to dismissed employees when circumstances warranted same is within the realm of the legislature.
such an award.1avvphi1
It bears to stress, however, that petitioner may, as it has done, grant
In Central Philippines Bandag Retreaders, Inc. v. Diasnes, 29 this Court on a voluntary and ex gratia basis, any amount more than what is
discussed the parameters of awarding separation pay to dismissed required by the law, but to insist that more financial assistance be
employees as a measure of financial assistance, viz: given is certainly something that this Court cannot countenance, as
the same serves to penalize petitioner, which has already given more
To reiterate our ruling in Toyota,  labor adjudicatory officials and the than what the law requires. Moreover, any award of additional
CA must demur the award of separation pay based on social justice financial assistance to respondents would put them at an advantage
when an employee’s dismissal is based on serious misconduct or and in a better position than the rest of their co-employees who 5. Civil Service Commission vs. Veloso - G.R. No. 196201 (June
willful disobedience; gross and habitual neglect of duty; fraud or similarly lost their employment because of petitioner’s decision to 19, 2012)
willful breach of trust; or commission of a crime against the person of cease its operations.
the employer or his immediate family - grounds under Art. 282 of the We review the petition filed under Rule 45 of the Rules of Court by
Labor Code that sanction dismissals of employees. They must be most Withal, the law, in protecting the rights of the laborers, authorizes petitioner Francisco T. Duque III, in his capacity as Chairman of the
judicious and circumspect in awarding separation pay or financial neither oppression nor self-destruction of the employer. While the Civil Service Commission (CSC), assailing the decision 1 and the
assistance as the constitutional policy to provide full protection to Constitution is committed to the policy of social justice and the resolution2 issued by the Court of Appeals (CA) 3 in CA-G.R. SP No.
labor is not meant to be an instrument to oppress the employers. The protection of the working class, it should not be supposed that every 01682-MIN. The CA modified CSC Resolution No. 061714, 4 finding
commitment of the Court to the cause of labor should not embarrass labor dispute will be automatically decided in favor of labor. The Florentino Veloso (respondent) guilty of dishonesty, by reducing the
us from sustaining the employers when they are right, as here. In management also has its own rights, as such, are entitled to respect penalty imposed by the CSC from dismissal from the service to
fine, we should be more cautious in awarding financial assistance to and enforcement in the interest of simple fair play. Out of its concern suspension from office for one year without pay.
the undeserving and those who are unworthy of the liberality of the for those with less privileges in life, the Supreme Court has inclined
law.30 more often than not toward the worker and upheld his cause in his The Facts
conflicts with the employer. Such favoritism, however, has not blinded
Thus, in Philippine Commercial International Bank v. Abad, 31 this the Court to the rule that justice is in every case for the deserving, to
The records show that the respondent, then District Supervisor of
Court, having considered the circumstances present therein and as a be dispensed in the light of the established facts and applicable law
Quedan and Rural Credit Guarantee Corporation (Quedancor),
measure of social justice, awarded separation pay to a dismissed and doctrine.34
Cagayan de Oro City, was administratively charged with three (3)
employee for a just cause under Article 282. The same concession counts of dishonesty in connection with his unauthorized withdrawals
was given by this Court in Aparente, Sr. v. National Labor Relations WHEREFORE, premises considered, the petition is GRANTED. The of money deposited by Juanito Quino (complainant), a client of
Commission32  and Tanala v. National Labor Relations Commission.33 May 28, 2004 Decision and October 28, 2004 Resolution of the Court Quedancor. The complainant applied for a restructuring of his loan
of Appeals, in CA-G.R SP No. 76879, are REVERSED and SET ASIDE. with Quedancor and deposited the amount of ₱50,000.00 to
Looking now at Article 283, this Court holds that the same was Quedancor’s cashier for his Manila account. In three (3) separate
drafted by the legislature, taking the best interest of laborers in mind. SO ORDERED. occasions, the respondent, without notice and authority from the
It is clear that the causes of the termination of an employee under complainant and with the assistance of Quedancor’s cashier, managed
Article 283 are due to circumstances beyond their control, such as to withdraw the ₱50,000.00 deposit. Upon the discovery of the
when management decides to reduce personnel based on valid withdrawals, the complainant demanded the return of the money and
grounds, or when the employer decides to cease operations. Thus, the called the attention of the manager of Quedancor in Cagayan de Oro
bias towards labor is very apparent, as the employer is statutorily City, who issued to the respondent a memorandum requiring him to
explain the withdrawals and to return the money.
9
In compliance with the memorandum, the respondent returned the (4) Section 52(A)(1), Rule IV of the Uniform Rules imposes A significant aspect which the CA failed to consider under the
money. The respondent admitted having received the ₱50,000.00 dismissal from the service for dishonesty, even for the first circumstances is the inapplicability to the present case of the Court’s
from Quedancor’s cashier knowing that it was intended for the offense. ruling in Vicente A. Miel v. Jesus A. Malindog, 9 which in turn cited
complainant’s loan repayment. Apuyan, Jr. v. Sta. Isabel10 and Civil Service Commission v.
In compliance with our Minute Resolution dated May 31, 2011, the Belagan.11 The rulings in these three (3) cases were rendered under
From the established facts, the respondent was charged by Quedancor respondent filed his comment to the petition. The respondent begs the different factual circumstances involving dishonest acts, i.e.,
with dishonesty, and was subsequently found guilty of the charges Court to apply jurisprudence where the Court, for humanitarian submission of false entries in the Personal Data Sheet, the solicitation
and dismissed from the service. The CSC affirmed the findings and reasons, refrained from meting out the actual penalties imposed by of money, or the non-compliance with the prescribed court procedure,
conclusions of Quedancor on appeal. law, in the presence of mitigating circumstances. In this case, the among others. In terms of seriousness and gravity, these dishonest
respondent calls attention to the following circumstances: (1) that he acts differ from the dishonest acts committed by the respondent who
is the sole breadwinner of his family; (2) his length of service with used public funds under his responsibility for his own personal benefit.
Dissatisfied with the adverse rulings of Quedancor and the CSC, the Unlike the cases cited by the CA, we also take into account the nature
respondent elevated his case to the CA which adjudged him guilty of Quedancor; and (3) other than this case, no other administrative case
had been filed against him for his past 21 years of government of Quedancor’s business – it is a credit and guarantee institution
dishonesty, but modified the penalty of dismissal to one (1) year where the public perception of the official’s credibility and reputation
suspension from office without pay. The CA cited the case of Miel v. service.6
is material.
Malindog5 as supporting basis and relied on Section 53, Rule IV of the
Uniform Rules on Administrative Cases (Uniform Rules) which allows The Issue
the appreciation of mitigating circumstances in the determination of In the clearest of terms, the CA upheld that factual findings of the
the proper imposable penalty. The CA took into account the following CSC. Thus, it is on the basis of these findings that we must now make
The issue in this case is the determination of the proper our own independent appreciation of the circumstances cited by the
mitigating circumstances: (1) the respondent’s length of service of 18 administrative penalty to be imposed on the respondent.
years; (2) the prompt admission of culpability; (3) the return of the respondent and appreciated by the CA as mitigating circumstances.
money; and (4) the respondent’s status as a first time offender. After a careful review of the records and jurisprudence, we disagree
The Court’s Ruling with the CA’s conclusion that mitigating circumstances warrant the
mitigation of the prescribed penalty imposed against the respondent.
The Present Petition
We grant the petition.
First, we have repeatedly held that length of service can either be a
The CSC argues that the CA disregarded the applicable law and mitigating or an aggravating circumstance depending on the facts of
jurisprudence which penalize the offense of dishonesty with dismissal Dismissal from the service is the prescribed penalty imposed by
each case.12 While in most cases, length of service is considered in
from the service. The CSC also argues that there are no mitigating Section 52(A)(1), Rule IV of the Uniform Rules for the commission of
dishonesty even as a first offense. The aforesaid rule underscores the favor of the respondent, it is not considered where the offense
circumstances to warrant a reduction of the penalty, for the following committed is found to be serious or grave; 13 or when the length of
reasons: constitutional principle that public office is a public trust and only
those who can live up to such exacting standard deserve the honor of service helped the offender commit the infraction. 14 The factors
against mitigation are present in this case.
continuing in public service.7 It is true that Section 53, Rule IV of the
(1) The respondent’s length of service aggravated his Uniform Rules provides the application of mitigating, aggravating or
dishonesty since the respondent took advantage of his alternative circumstances in the imposition of administrative Under the circumstances, the administrative offense of dishonesty
authority over a subordinate and disregarded his oath that a penalties. Section 53, Rule IV applies only when clear proof is shown, committed by the respondent was serious on account of the
public office is a public trust. The respondent’s length of using the specific standards set by law and jurisprudence, that the supervisory position he held at Quedancor and the nature of
service cannot also be considered mitigating given the facts in a given case justify the mitigation of the prescribed penalty. Quedancor’s business. Quedancor deals with the administration,
number of times the dishonest acts were committed and the management and disposition of public funds which the respondent
supervisory position held by the respondent. was entrusted to handle.
In appreciating the presence of mitigating, aggravating or alternative
circumstances to a given case, two constitutional principles come into
(2) The admission of guilt and the restitution by the play which the Court is tasked to balance. The first is public The respondent’s dishonest acts carried grave consequences because
respondent were made in 2003, while the misappropriation accountability which requires the Court to consider the improvement Quedancor is a credit and guarantee institution, and the public’s
took place in 2001. The respondent admitted his culpability of public service, and the preservation of the public’s faith and perception of its credibility is critical. In this case, the sanction of
and effected payment not because of his desire to right a confidence in the government by ensuring that only individuals who dismissal imposed on the respondent as a dishonest employee assures
wrong but because he feared possible administrative possess good moral character, integrity and competence are the public that: first, public funds belonging to Quedancor are used for
liabilities. employed in the government service. 8 The second relates to social their intended purpose; second, public funds are released to their
justice which gives the Court the discretionary leeway to lessen the proper recipients only after strict compliance with the standard
(3) The respondent was charged with, and admitted having harsh effects of the wrongdoing committed by an offender for operating procedure of Quedancor is followed; and lastly, only
committed, dishonesty in three separate occasions. equitable and humanitarian considerations. employees who are competent, honest and trustworthy may manage,
administer and handle public funds in Quedancor.

10
Like a bank, Quedancor as a credit and guarantee institution is him.18 Under the circumstances, the restitution was half-hearted and Commission, affirming the decision dated August 11, 2004 of the
expected to observe the highest degree of competence and diligence was certainly neither purely voluntary nor made because of the Quedan and Rural Credit Guarantee Corporation, imposing upon
as it is a business imbued with public interest. 15 To promote trust and exercise of good conscience; it was triggered, more than anything respondent Florentino Veloso the penalty of dismissal from the
confidence, employees in Quedancor are expected to possess the else, by his fear of possible administrative penalties. 19 The admission service, with the accessory penalties of cancellation of eligibility,
highest standards of integrity and moral uprightness. The of guilt and the restitution effected were clearly mere afterthoughts forfeiture of retirement benefits, and perpetual disqualification for
respondent’s dismissal from the service is a measure of self-protection made two (2) years after the commission of the offense and after the reemployment in the government service, for dishonesty, are hereby
and self-preservation by Quedancor of its reputation before its clients administrative complaint against him was filed. With these REINSTATED.
and the public. circumstances in mind, we do not find it justified to relieve the
respondent of the full consequences of his dishonest actions. SO ORDERED.
We additionally note that length of service should also be taken
against the respondent; the infraction he committed and the number All told, in reversing the CA’s decision, we emphasize that the
of times he committed the violations demonstrate the highest degree principle of social justice cannot be properly applied in the
of ingratitude and ungratefulness to an institution that has been the respondent’s case to shield him from the full consequences of his
source of his livelihood for 18 years. His actions constitute no less dishonesty. The Court, in Philippine Long Distance Telephone Co. v.
than disloyalty and betrayal of the trust and confidence the institution NLRC,20 clearly recognized the limitations in invoking social justice:
reposed in him. They constitute ingratitude for the opportunities given
to him over the years for career advancement. Had it not been for the The policy of social justice is not intended to countenance wrongdoing
respondent’s length of service, he could not have taken the subject simply because it is committed by the underprivileged. At best it may
funds for his own use as he could not have held a supervisory mitigate the penalty but it certainly will not condone the offense.
position. In addition, the respondent’s length of service allowed him to Compassion for the poor is an imperative of every humane society but
take advantage of his familiarity with Quedancor operations and only when the recipient is not a rascal claiming an undeserved
employees – a factor that made the misappropriation possible. privilege. Social justice cannot be permitted to be [the] refuge
of scoundrels any more than can equity be an impediment to
Second, the circumstance that this is the respondent’s first the punishment of the guilty. Those who invoke social justice
administrative offense should not benefit him. By the express terms of may do so only if their hands are clean and their motives
Section 52, Rule IV of the Uniform Rules, the commission of an blameless and not simply because they happen to be poor. This
administrative offense classified as a serious offense (like dishonesty) great policy of our Constitution is not meant for the protection of
is punishable by dismissal from the service even for the first time. In those who have proved they are not worthy of it, like the workers who
other words, the clear language of Section 52, Rule IV does not have tainted the cause of labor with the blemishes of their own
consider a first-time offender as a mitigating circumstance. Likewise, character.21 [Emphases supplied.]
under statutory construction principles, a special provision prevails
over a general provision.16 Section 53, Rule IV of the Uniform Rules, a Prejudice to the service is not only through wrongful disbursement of
general provision relating to the appreciation of mitigating, public funds or loss of public property. 22 Greater damage comes with
aggravating or alternative circumstances, must thus yield to the the public’s perception of corruption and incompetence in the
provision of Section 52, Rule IV of the Uniform Rules which expressly government.23
provides for the penalty of dismissal even for the first commission of
the offense.
Thus, the Constitution stresses that a public office is a public trust and
public officers must at all times be accountable to the people, serve
While we are not unmindful of the existing jurisprudence 17 cited by the them with utmost responsibility, integrity, loyalty, and efficiency, act
respondent where the penalty of dismissal from the service was not with patriotism and justice, and lead modest lives. 24 These
imposed despite the clear language of Section 52, Rule IV of the constitutionally-enshrined principles, oft-repeated in our case law, are
Uniform Rules, the respondent failed to clearly show exceptional and not mere rhetorical flourishes or idealistic sentiments. They should be
compelling reasons to justify a deviation from the general rule. taken as working standards by all in the public service.25

Finally, we reject as mitigating circumstances the respondent’s WHEREFORE, premises considered, we GRANT the petition, and
admission of his culpability and the restitution of the REVERSE and SET ASIDE the decision dated August 20, 2010 and the
amount.1âwphi1 As pointed out by the CSC, the respondent made use resolution dated March 8, 2011 issued by the Court of Appeals in CA-
of the complainant’s money in 2001 while the restitution was made G.R. SP No. 01682-MIN. The resolutions of the Civil Service
only in 2003, during the pendency of the administrative case against

11
 The original findings were contained in a one-page order 3 reciting 1978. As such, he could validly claim the security of tenure
simply that "complainant was employed on a probationary period of guaranteed to him by the Constitution and the Labor Code.
employment for six (6) months. After said period, he underwent
medical examination for qualification as regular employee but the The applicable rule on the ground for dismissal invoked against him is
results showed that he is suffering from PTB minimal. Consequently, Section 8, Rule I, Book VI, of the Rules and Regulations Implementing
he was informed of the termination of his employment the Labor Code reading as follows:chanrobles.com : virtual law library
by Respondent." The order then concluded that the termination was
"justified." That was all.chanrobles law library : red "Sec. 8. Disease as a ground for dismissal.— Where the employee
suffers from a disease and his continued employment is prohibited by
As there is no mention of the basis of the above order, we may law or prejudicial to his health or to the health of his co-employees,
assume it was the temporary payroll authority 4 submitted by the the employer shall not terminate his employment unless there is a
petitioner showing that the private respondent was employed on certification by a competent public health authority that the disease is
probation on February 16, 1978. Even supposing that it is not self- of such nature or at such a stage that it cannot be cured within a
serving, we find nevertheless that it is self-defeating. The six-month period of six (6) months even with proper medical treatment. If the
period of probation started from the said date of appointment and so disease or ailment can be cured within the period, the employer shall
ended on August 17, 1978, but it is not shown that the private not terminate the employee but shall ask the employee to take a
respondent’s employment also ended then; on the contrary, he leave. The employer shall reinstate such employee to his former
continued working as usual. Under Article 282 of the Labor Code, "an position immediately upon the restoration of his normal health."cralaw
employee who is allowed to work after a probationary period shall be virtua1aw library
6. Cebu Royal Plant vs. Deputy Minister - G.R. No. 58639 considered a regular employee." Hence, Pilones was already on
(August 12, 1987) permanent status when he was dismissed on August 21, 1978, or four The record does not contain the certification required by the above
days after he ceased to be a probationer. rule. The medical certificate offered by the petitioner came from its
own physician, who was not a "competent public health authority,"
The private respondent was removed by the petitioner and
The petitioner claims it could not have dismissed the private and merely stated the employee’s disease, without more. We may
complained to the Ministry of Labor. His complaint was dismissed by
respondent earlier because the x-ray examination was made only on surmise that if the required certification was not presented, it was
the regional director, who was, however, reversed by the
August 17, 1978, and the results were not immediately available. That because the disease was not of such a nature or seriousness that it
public Respondent. Required to reinstate the separated employee and
excuse is untenable. We note that when the petitioner had all of six could not be cured within a period of six months even with proper
pay him back wages, the petitioner has come to us, faulting the
months during which to conduct such examination, it chose to wait medical treatment. If so, dismissal was unquestionably a severe and
Deputy Minister with grave abuse of discretion. We have issued in the
until exactly the last day of the probation period. In the light of such unlawful sanction.
meantime a temporary restraining order. 1
delay, its protestations now that reinstatement of Pilones would
prejudice public health cannot but sound hollow and hypocritical. By It is also worth noting that the petitioner’s application for clearance to
The public respondent held that Ramon Pilones, the private
its own implied admission, the petitioner had exposed its customers to terminate the employment of the private respondent was filed with
respondent, was already a permanent employee at the time of his
the employee’s disease because of its failure to examine him before the Ministry of Labor only on August 28, 1978, or seven days after his
dismissal and so was entitled to security of tenure. The alleged
entrusting him with the functions of a "syrup man." Its belated dismissal. 6 As the NLRC has repeatedly and correctly said, the prior
ground for his removal, to wit, "pulmonary tuberculosis minimal," was
concern for the consuming public is hardly persuasive, if not clearly clearance rule (which was in force at that time) was not a "trivial
not certified as incurable within six months as to justify his
insincere and self-righteous. technicality." It required "not just the mere filing of a petition or the
separation. 2 Additionally, the private respondent insists that the
mere attempt to procure a clearance" but that "the said clearance be
petitioner should have first obtained a clearance, as required by the
There is proof in fact that the private respondent was first hired not obtained prior to the operative act of termination." 7
regulations then in force, for the termination of his employment.
on February 16, 1978, but earlier in 1977. This is the 1977
withholding tax statement 5 issued for him by the petitioner itself We agree that there was here an attempt to circumvent the law by
The petitioner for its part claims that the private respondent was still
which it does not and cannot deny. The petitioner stresses that this is separating the employee after five months’ service to prevent him
on probation at the time of his dismissal and so had no security of
the only evidence of the private respondent’s earlier service and notes from becoming a regular employee, and then rehiring him on
tenure. His dismissal was not only in conformity with company policy
that he has not presented any co-worker to substantiate his claim. probation, again without security of tenure. We cannot permit this
but also necessary for the protection of the public health, as he was
This is perfectly understandable. Given the natural reluctance of many subterfuge if we are to be true to the spirit and mandate of social
handling ingredients in the processing of soft drinks which were being
workers to antagonize their employers, we need not wonder why none justice. On the other hand, we have also the health of the public and
sold to the public. It is also argued that the findings of the regional
of them testified against the petitioner. of the dismissed employee himself to consider. Hence, although we
director, who had direct access to the facts, should not have been
must rule in favor of his reinstatement, this must be conditioned on
disturbed on appeal. For these same reasons, it contends, the
We are satisfied that whether his employment began on February 16, his fitness to resume his work, as certified by competent authority.
employee’s reinstatement as ordered by the public respondent should
1978, or even earlier as he claims, the private respondent was
not be allowed.
already a regular employee when he was dismissed on August 21, We take this opportunity to reaffirm our concern for the lowly worker

12
who, often at the mercy of his employers, must look up to the law for the Hotel’s alleged "refusal x x x to bargain" and for alleged acts of Court of Appeals, pursuant to the principle embodied in National
his protection. Fittingly, that law regards him with tenderness and unfair labor practice. The NCMB summoned both parties and held a Federation of Labor v. Laguesma.5
even favor and always with faith and hope in his capacity to help in series of dialogues, the first of which was on October 6, 1997.
shaping the nation’s future. It is error to take him for granted. He On October 19, 1999, the Court of Appeals rendered a Decision
deserves our abiding respect. How society treats him will determine On November 29, 1997, however, the Union staged a strike against dismissing the Union’s petition and affirming the Secretary of Labor’s
whether the knife in his hands shall be a caring tool for beauty and the Hotel. Numerous confrontations between the two parties followed, Order for payroll reinstatement. The Court of Appeals held that the
progress or an angry weapon of defiance and revenge. The choice is creating an obvious strain between them. The Hotel claims that the challenged order is merely an error of judgment and not a grave
obvious, of course. If we cherish him as we should, we must resolve strike was illegal and it had to dismiss some employees for their abuse of discretion and that payroll reinstatement is not prohibited by
to lighten "the weight of centuries" of exploitation and disdain that participation in the allegedly illegal concerted activity. The Union, on law, but may be "called for" under certain circumstances. 6
bends his back but does not bow his head. the other hand, accused the Hotel of illegally dismissing the workers.
What is pertinent to this case, however, is the Order issued by the Hence, the Union now stands before this Court maintaining that:
WHEREFORE, the petition is DISMISSED and the temporary then Secretary of Labor and Employment Cresenciano B. Trajano
restraining order of November 18, 1981, is LIFTED. The Order of the assuming jurisdiction over the labor dispute. A Petition for Assumption
public respondent dated July 14, 1981, is AFFIRMED, but with the of Jurisdiction was filed by the Union on April 2, 1998. Thereafter, the THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED
modification that the backwages shall be limited to three years only Secretary of Labor and Employment issued an Order dated April 15, IN RULING THAT THE SECRETARY OF LABOR’S
and the private respondent shall be reinstated only upon certification 1998, the dispositive portion of which states: UNAUTHORIZED ORDER OF MERE "PAYROLL
by a competent public health authority that he is fit to return to work. REINSTATEMENT" IS NOT GRAVE ABUSE OF DISCRETION7
Costs against the petitioner.
WHEREFORE, premises considered[,] this Office CERTIFIES
the labor dispute at the Manila Diamond Hotel to the The petition has merit.
SO ORDERED.
National Labor Relations Commission, for compulsory
arbitration, pursuant to Article 263 (g) of the Labor Code, as The Court of Appeals based its decision on this Court’s ruling
Manila Diamond vs. CA - G.R. No. 140518 (December 16, 2004)
amended. in University of Santo Tomas (UST) v. NLRC. 8 There, the Secretary
assumed jurisdiction over the labor dispute between striking teachers
This petition for review of a decision of the Court of Appeals arose out and the university. He ordered the striking teachers to return to work
Accordingly, the striking officers and members of the Manila
of a dispute between the Philippine Diamond Hotel and Resort, Inc. and the university to accept them under the same terms and
Diamond Hotel Employees Union --- NUWHRAIN are hereby
("Hotel"), owner of the Manila Diamond Hotel, and the Manila conditions. However, in a subsequent order, the NLRC provided
directed to return to work within twenty-four (24) hours
Diamond Hotel Employees’ Union ("Union"). The facts are as follows: payroll reinstatement for the striking teachers as an alternative
upon receipt of this Order and the Hotel to accept them back
under the same terms and conditions prevailing prior to the remedy to actual reinstatement. True, this Court held therein that the
On November 11, 1996, the Union filed a petition for a certification strike. The parties are enjoined from committing any act NLRC did not commit grave abuse of discretion in providing for the
election so that it may be declared the exclusive bargaining that may exacerbate the situation. alternative remedy of payroll reinstatement. This Court found that it
representative of the Hotel’s employees for the purpose of collective was merely an error of judgment, which is not correctible by a special
bargaining. The petition was dismissed by the Department of Labor civil action for certiorari. The NLRC was only trying its best to work
The Union received the aforesaid Order on April 16, 1998 and its out a satisfactory ad hoc solution to a festering and serious problem.
and Employment (DOLE) on January 15, 1997. After a few months,
members reported for work the next day, April 17, 1998. The Hotel,
however, on August 25, 1997, the Union sent a letter to the Hotel
however, refused to accept the returning workers and instead filed a
informing it of its desire to negotiate for a collective bargaining However, this Court notes that the UST  ruling was made in the light
Motion for Reconsideration of the Secretary’s Order.
agreement.1 In a letter dated September 11, 1997, the Hotel’s Human of one very important fact: the teachers could not be given back their
Resources Department Manager, Mary Anne Mangalindan, wrote to academic assignments since the order of the Secretary for them to
the Union stating that the Hotel cannot recognize it as the employees’ On April 30, 1998, then Acting Secretary of Labor Jose M. Español, return to work was given in the middle of the first semester of the
bargaining agent since its petition for certification election had been issued the disputed Order, which modified the earlier one issued by academic year. The NLRC was, therefore, faced with a situation where
earlier dismissed by the DOLE.2 On that same day, the Hotel received Secretary Trajano. Instead of an actual return to work, Acting the striking teachers were entitled to a return to work order, but the
a letter from the Union stating that they were not giving the Hotel a Secretary Español directed that the strikers be reinstated only in the university could not immediately reinstate them since it would be
notice to bargain, but that they were merely asking for the Hotel to payroll.4 The Union moved for the reconsideration of this Order, but its impracticable and detrimental to the students to change teachers at
engage in collective bargaining negotiations with the Union for its motion was denied on June 25, 1998. Hence, it filed before this Court that point in time.
members only and not for all the rank and file employees of the on August 26, 1998, a petition for certiorari under Rule 65 of the
Hotel.3 Rules of Court alleging grave abuse of discretion on the part of the
Secretary of Labor for modifying its earlier order and requiring instead In the present case, there is no showing that the facts called for
the reinstatement of the employees in the payroll. However, in a payroll reinstatement as an alternative remedy. A strained
On September 18, 1997, the Union announced that it was taking a relationship between the striking employees and management is no
resolution dated July 12, 1999, this Court referred the case to the
strike vote. A Notice of Strike was thereafter filed on September 29, reason for payroll reinstatement in lieu of actual reinstatement.
1997, with the National Conciliation and Mediation Board (NCMB) for Petitioner correctly points out that labor disputes naturally involve

13
strained relations between labor and management, and that in most point out that the law uses the precise phrase of "under the same
strikes, the relations between the strikers and the non-strikers will terms and conditions," revealing that it contemplates only actual
similarly be tense.9 Bitter labor disputes always leave an aftermath of reinstatement. This is in keeping with the rationale that any work
strong emotions and unpleasant situations. Nevertheless, the stoppage or slowdown in that particular industry can be inimical to the
government must still perform its function and apply the law, national economy. It is clear that Article 263(g) was not written to
especially if, as in this case, national interest is involved. protect labor from the excesses of management, nor was it written to
ease management from expenses, which it normally incurs during a
After making the distinction between UST  and the present case, this work stoppage or slowdown. It was an error on the part of the Court
Court now addresses the issue of whether the Court of Appeals erred of Appeals to view the assumption order of the Secretary as a
in ruling that the Secretary did not commit any grave abuse of measure to protect the striking workers from any retaliatory action
discretion in ordering payroll reinstatement in lieu of actual from the Hotel. This Court reiterates that this law was written as a
reinstatement. This question is answered by the nature of Article means to be used by the State to protect itself from an emergency or
263(g). As a general rule, the State encourages an environment crisis. It is not for labor, nor is it for management.
wherein employers and employees themselves must deal with their
problems in a manner that mutually suits them best. This is the basic It is, therefore, evident from the foregoing that the Secretary’s
policy embodied in Article XIII, Section 3 of the Constitution, 10 which subsequent order for mere payroll reinstatement constitutes grave
was further echoed in Article 211 of the Labor Code. 11 Hence, a abuse of discretion amounting to lack or excess of jurisdiction.
voluntary, instead of compulsory, mode of dispute settlement is the Indeed, this Court has always recognized the "great breadth of
general rule. discretion" by the Secretary once he assumes jurisdiction over a labor
dispute. However, payroll reinstatement in lieu of actual
However, Article 263, paragraph (g) of the Labor Code, which allows reinstatement is a departure from the rule in these cases and there
the Secretary of Labor to assume jurisdiction over a labor dispute must be showing of special circumstances rendering actual
involving an industry indispensable to the national interest, provides reinstatement impracticable, as in the UST case aforementioned, or
an exception: otherwise not conducive to attaining the purpose of the law in
providing for assumption of jurisdiction by the Secretary of Labor and
Employment in a labor dispute that affects the national interest. None
(g) When, in his opinion, there exists a labor dispute causing Arco Metal vs. Samahan - G.R. No. 170734 (May 14, 2008)
appears to have been established in this case. Even in the exercise of
or likely to cause a strike or lockout in an industry his discretion under Article 236(g), the Secretary must always keep in
indispensable to the national interest, the Secretary of Labor mind the purpose of the law. Time and again, this Court has held that
and Employment may assume jurisdiction over the dispute when an official by-passes the law on the asserted ground of attaining This treats of the Petition for Review 1 of the Resolution2 and
and decide it or certify the same to the Commission for a laudable objective, the same will not be maintained if the Decision3 of the Court of Appeals dated 9 December 2005 and
compulsory arbitration. Such assumption or certification intendment or purpose of the law would be defeated.13 29 September 2005, respectively in CA-G.R. SP No. 85089
shall have the effect of automatically enjoining the intended entitled
or impending strike or lockout as specified in the assumption
or certification order. If one has already taken place at the WHEREFORE, the petition is GRANTED and the assailed Decision of
the Court of Appeals dated October 19, 1999 is REVERSED and SET Samahan ng mga Manggagawa sa Arco Metal-NAFLU
time of assumption or certification, all striking or locked out
ASIDE. The Order dated April 30, 1998 issued by the Secretary of (SAMARM-NAFLU) v. Arco Metal Products Co., Inc. and/or Mr.
employees shall immediately return to work and the
Labor and Employment modifying the earlier Order dated April 15, Salvador Uy/Accredited Voluntary Arbitrator Apron M.
employer shall immediately resume operations and readmit
1998, is likewise SET ASIDE. No pronouncement as to costs. Mangabat,4 which ruled that the 13th month pay, vacation
all workers under the same terms and conditions prevailing
leave and sick leave conversion to cash shall be paid in full to
before the strike or lockout. x x x
the employees of petitioner regardless of the actual service
SO ORDERED.
they rendered within a year.
This provision is viewed as an exercise of the police power of the
State. A prolonged strike or lockout can be inimical to the national
Petitioner is a company engaged in the manufacture of metal
economy and, therefore, the situation is imbued with public necessity
products, whereas respondent is the labor union of petitioner’s
and involves the right of the State and the public to self-protection. 12
rank and file employees. Sometime in December 2003,
petitioner paid the 13th month pay, bonus, and leave
Under Article 263(g), all workers must immediately return to work encashment of three union members in amounts proportional
and all employers must readmit all of them under the same terms and to the service they actually rendered in a year, which is less
conditions prevailing before the strike or lockout. This Court must

14
than a full twelve (12) months. The employees were: alleged error. The dispositive portion of the court’s decision However, if the 1st Saturday of December falls in
reads: December 1, November 30 (Friday) being a holiday,
the management will give the cash conversion of
WHEREFORE, premises considered, the instant leaves in November 29.
1. Rante Lamadrid Sickness 27 August 2003 to 27 February 2004
petition is hereby GRANTED and the Decision of
Accredited Voluntary Arbiter Apron M. Mangabat in Section 2. In case of resignation or retirement of an
2. Alberto Gamban Suspension 10 June 2003 to 1 July 2003 NCMB-NCR Case No. PM-12-345-03, dated June 18, employee, his vacation leave shall be paid
2004 is hereby AFFIRMED WITH proportionately to his days of service rendered
MODIFICATION in that the 13th month pay, bonus, during the year.
3. Rodelio Collantes Sickness August 2003 to February 2004
vacation leave and sick leave conversions to cash
shall be paid to the employees in full, irrespective of ARTICLE XV-SICK LEAVE
Respondent protested the prorated scheme, claiming that on the actual service rendered within a year.7
several occasions petitioner did not prorate the payment of the
same benefits to seven (7) employees who had not served for Section 1. Employees/workers covered by this
Petitioner moved for the reconsideration of the decision but its agreement who have rendered at least one (1) year
the full 12 months. The payments were made in 1992, 1993,
motion was denied, hence this petition. of service shall be entitled to sixteen (16) days of
1994, 1996, 1999, 2003, and 2004. According to respondent,
the prorated payment violates the rule against diminution of sick leave with pay for each year of service. Unused
benefits under Article 100 of the Labor Code. Thus, they filed a Petitioner submits that the Court of Appeals erred when it sick leave shall not be cumulative but shall be
complaint before the National Conciliation and Mediation Board ruled that the grant of 13 th month pay, bonus, and leave converted into its cash equivalent and shall become
(NCMB). The parties submitted the case for voluntary encashment in full regardless of actual service rendered due and payable every 1st Saturday of December of
arbitration. constitutes voluntary employer practice and, consequently, the each year.
prorated payment of the said benefits does not constitute
diminution of benefits under Article 100 of the Labor Code. 8 Section 2. Sick Leave will only be granted to actual
The voluntary arbitrator, Apron M. Mangabat, ruled in favor of
petitioner and found that the giving of the contested benefits sickness duly certified by the Company physician or
in full, irrespective of the actual service rendered within one The petition ultimately fails. by a licensed physician.
year has not ripened into a practice. He noted the affidavit of
Joselito Baingan, manufacturing group head of petitioner, First, we determine whether the intent of the CBA provisions is Section 3. All commutable earned leaves will be paid
which states that the giving in full of the benefit was a mere to grant full benefits regardless of service actually rendered by proportionately upon retirement or separation.
error. He also interpreted the phrase "for each year of service" an employee to the company. According to petitioner, there is
found in the pertinent CBA provisions to mean that an a one-year cutoff in the entitlement to the benefits provided in ARTICLE XVI – EMERGENCY LEAVE, ETC.
employee must have rendered one year of service in order to the CBA which is evident from the wording of its pertinent
be entitled to the full benefits provided in the CBA. 5 provisions as well as of the existing law.
Section 1. The Company shall grant six (6) days
emergency leave to employees covered by this
Unsatisfied, respondent filed a Petition for Review 6 under Rule We agree with petitioner on the first issue. The applicable CBA agreement and if unused shall be converted into cash
43 before the Court of Appeals, imputing serious error to provisions read: and become due and payable on the 1st Saturday of
Mangabat’s conclusion. The Court of Appeals ruled that the
December each year.
CBA did not intend to foreclose the application of prorated
ARTICLE XIV-VACATION LEAVE
payments of leave benefits to covered employees. The
appellate court found that petitioner, however, had an existing Section 2. Employees/workers covered by this
voluntary practice of paying the aforesaid benefits in full to its Section 1. Employees/workers covered by this agreement who have rendered at least one (1) year
employees, thereby rejecting the claim that petitioner erred in agreement who have rendered at least one (1) year of service shall be entitled to seven (7) days of
paying full benefits to its seven employees. The appellate of service shall be entitled to sixteen (16) days Paternity Leave with pay in case the married
court noted that aside from the affidavit of petitioner’s officer, vacation leave with pay for each year of service. employee’s legitimate spouse gave birth. Said benefit
it has not presented any evidence in support of its position Unused leaves shall not be cumulative but shall be shall be non-cumulative and non-commutative and
that it has no voluntary practice of granting the contested converted into its cash equivalent and shall become shall be deemed in compliance with the law on the
benefits in full and without regard to the service actually due and payable every 1st Saturday of December of same.
rendered within the year. It also questioned why it took each year.
petitioner eleven (11) years before it was able to discover the Section 3. Maternity leaves for married female

15
 employees shall be in accordance with the SSS Law as the factual conclusions of the Court of Appeals differ from CBA has not been modified to incorporate the giving of full
plus a cash grant of P1,500.00 per month. that of the voluntary arbitrator. benefits regardless of the length of service, proof that the
grant has not ripened into company practice.
xxx Petitioner granted, in several instances, full benefits to
employees who have not served a full year, thus: We disagree.
ARTICLE XVIII- 13  MONTH PAY & BONUS
TH

Any benefit and supplement being enjoyed by employees

Section 1. The Company shall grant 13  Month Pay
th cannot be reduced, diminished, discontinued or eliminated by
Name Reason Duration
to all employees covered by this agreement. The the employer.14 The principle of non-diminution of benefits is
basis of computing such pay shall be the basic salary founded on the Constitutional mandate to "protect the rights
per day of the employee multiplied by 30 and shall 1. Percival Bernas Sickness July 1992 to Novemberof1992
workers and promote their welfare," 15 and "to afford labor
become due and payable every 1 st Saturday of full protection."16 Said mandate in turn is the basis of Article 4
December. of the Labor Code which states that "all doubts in the
2. Cezar Montero Sickness 21 Dec. 1992 to February 1993
implementation and interpretation of this Code, including its
implementing rules and regulations shall be rendered in favor
Section 2. The Company shall grant a bonus to all
3. Wilson Sayod Sickness May 1994 to July 1994of labor." Jurisprudence is replete with cases which recognize
employees as practiced which shall be distributed on the right of employees to benefits which were voluntarily given
the 2nd Saturday of December. by the employer and which ripened into company practice.
4. Nomer Becina Suspension 1 Sept. 1996 to 5 Oct.Thus
1996in Davao Fruits Corporation v. Associated Labor Unions,
Section 3. That the Company further grants the et al.17 where an employer had freely and continuously
amount of Two Thousand Five Hundred Pesos included in the computation of the 13th month pay those items
5. Ronnie Licuan Sickness 8 Nov. 1999 to 9 Dec. 1999
(P2,500.00) as signing bonus plus a free CBA that were expressly excluded by the law, we held that the act
Booklet.9 (Underscoring ours) which was favorable to the employees though not conforming
6. Guilbert Villaruel Sickness 23 Aug. 2002 to 4 Feb.to2003
law had thus ripened into a practice and could not be
There is no doubt that in order to be entitled to the full withdrawn, reduced, diminished, discontinued or eliminated.
In Sevilla Trading Company v. Semana,18 we ruled that the
monetization of sixteen (16) days of vacation and sick leave, 7. Melandro Moque Sickness 29 Aug. 2003 to 30 Sept. 2003
one must have rendered at least one year of service. The clear employer’s act of including non-basic benefits in the
computation of the 13 th month pay was a voluntary act and
wording of the provisions does not allow any other
Petitioner claims that its full payment of benefits regardless of had ripened into a company practice which cannot be
interpretation. Anent the 13th month pay and bonus, we agree
the length of service to the company does not constitute peremptorily withdrawn. Meanwhile in Davao Integrated Port
with the findings of Mangabat that the CBA provisions did not
voluntary employer practice. It points out that the payments Stevedoring Services v. Abarquez,19 the Court ordered the
give any meaning different from that given by the law, thus it
had been erroneously made and they occurred in isolated payment of the cash equivalent of the unenjoyed sick leave
should be computed at 1/12 of the total compensation which
cases in the years 1992, 1993, 1994, 1999, 2002 and 2003. benefits to its intermittent workers after finding that said
an employee receives for the whole calendar year. The bonus
According to petitioner, it was only in 2003 that the accounting workers had received these benefits for almost four years until
is also equivalent to the amount of the 13 th month pay given,
department discovered the error "when there were already the grant was stopped due to a different interpretation of the
or in proportion to the actual service rendered by an employee
three (3) employees involved with prolonged absences and the CBA provisions. We held that the employer cannot unilaterally
within the year.
error was corrected by implementing the pro-rata payment of withdraw the existing privilege of commutation or conversion
benefits pursuant to law and their existing CBA." 12 It adds that to cash given to said workers, and as also noted that the
On the second issue, however, petitioner founders. the seven earlier cases of full payment of benefits went employer had in fact granted and paid said cash equivalent of
unnoticed considering the proportion of one employee the unenjoyed portion of the sick leave benefits to some
As a general rule, in petitions for review under Rule 45, the concerned (per year) vis à vis the 170 employees of the intermittent workers.
Court, not being a trier of facts, does not normally embark on company. Petitioner describes the situation as a "clear
a re-examination of the evidence presented by the contending oversight" which should not be taken against it. 13 To further
In the years 1992, 1993, 1994, 1999, 2002 and 2003,
parties during the trial of the case considering that the findings bolster its case, petitioner argues that for a grant of a benefit
petitioner had adopted a policy of freely, voluntarily and
of facts of the Court of Appeals are conclusive and binding on to be considered a practice, it should have been practiced over
consistently granting full benefits to its employees regardless
the Court.10 The rule, however, admits of several exceptions, a long period of time and must be shown to be consistent,
of the length of service rendered. True, there were only a total
one of which is when the findings of the Court of Appeals are deliberate and intentional, which is not what happened in this
of seven employees who benefited from such a practice, but it
contrary to that of the lower tribunals. Such is the case here, case. Petitioner tries to make a case out of the fact that the
was an established practice nonetheless. Jurisprudence has

16
 8K Stope, 850 level committing Highgrading activities
not laid down any rule specifying a minimum number of years are hereby AFFIRMED. therein;
within which a company practice must be exercised in order to
constitute voluntary company practice.20 Thus, it can be six (6) SO ORDERED. Consequently, all miners assigned to work therein including
years,21 three (3) years,22 or even as short as two (2) their supervisor and SG Ceasarion Damoslog, an element
years.23 Petitioner cannot shirk away from its responsibility by of the Mine Security Patrol posted therein as stationary
merely claiming that it was a mistake or an error, supported guard were called to this office for interrogation regarding
only by an affidavit of its manufacturing group head portions this effect;
of which read: Lepanto vs. Dumapis - G.R. No. 163210 (August 13, 2008)

In the course of the investigation, we eventually learned that

Before the Court is a Petition for Review on Certiorari under Rule 45 of
5. 13th month pay, bonus, and cash conversion of the highgrading event really transpired somewhere at the
the Rules of Court assailing the November 7, 2003 Decision 1 and April
unused/earned vacation leave, sick leave and roadway of 8K Stope, 850 level at about 2:00 o’clock PM of
15, 2004 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No.
emergency leave are computed and paid in full to September 15, 2000. That the involved participants were all
75860.
employees who rendered services to the company for miners assigned to work at 7K Stope, 8K Stope, 240 E,
the entire year and proportionately to those Cross Cut South level drive, all located at 850 mine level.
employees who rendered service to the company for The antecedents of the case are as follows: Likewise, the detailed stationary guard assigned thereat and
a period less than one (1) year or twelve (12) some mine supervisors were also directly involved in this
months in accordance with the CBA provision relative Lepanto Consolidated Mining Corporation (petitioner), a domestic activity;
thereto. juridical entity engaged in mining, employed Moreno Dumapis and
Elmo Tundagui as lead miners; and Francis Liagao, as load, haul and Security Guard Ceasarion Damoslog honestly confessed his
6. It was never the intention much less the policy of dump (LHD) machine operator (respondents). 3 All three were direct participation then claimed that he was allegedly
the management to grant the aforesaid benefits to assigned at the 850 level, underground, Victoria Area in Lepanto, convinced by Mr. Joel Gumatin, one of the miners assigned
the employees in full regardless of whether or not Mankayan, Benguet. This is a known "highgrade" area where most of at Panel No.1-est-North, 8K Stope, 850 level to cooperate
the employee has rendered services to the company the ores mined are considered of high grade content.4 with them to commit Highgrading. He revealed his
for the entire year, otherwise, it would be unjust and companions to be all the miners assigned at 8K stope,
inequitable not only to the company but to other In the afternoon of September 15, 2000, at 2:00 p.m., Dwayne namely, Joel Gumatin, Brent Suyam, Maximo Madao, Elmo
employees as well.24 Chambers (Chambers), one of its foreign consultants who was then Tundagui and Daniel Fegsar. He also included those who
acting as Assistant Resident Manager of the Mine, went underground were assigned to work at 240 E, XCS, namely: Thomas
In cases involving money claims of employees, the employer at the 850 level to conduct a routinary inspection of the workers and Garcia (immediate supervisor), John Kitoyan, Moreno
has the burden of proving that the employees did receive the the working conditions therein. When he went to the various stopes of Dumapis, and Marolito Cativo. He enumerated also messrs.
wages and benefits and that the same were paid in accordance the said level, he was surprised to see that nobody was there. Benedict Arocod, Samson Damian, and Dionisio Bandoc, 7K
with law.25 However, when he went to the 8k stope, he noticed a group of Stope, 850 level assigned miners and shiftboss,
workers sitting, sorting, and washing ores believed to be "highgrade." respectively;
Realizing that "highgrading" 5 was being committed, Chambers
Indeed, if petitioner wants to prove that it merely erred in
shouted. Upon hearing his angry voice, the workers scampered in Mr. Pablo Daguio, the shiftboss of 240 E, XCS, 850 level also
giving full benefits, it could have easily presented other proofs,
different directions of the stope.6 Chambers then reported the incident positively confirmed the Highgrading activity. He added that
such as the names of other employees who did not fully serve
to the security investigation office.7 actually he came upon the group and even dispersed them
for one year and thus were given prorated benefits.
Experientially, a perfect attendance in the workplace is always when he went therein prior to the arrival of Mr. Chambers;
the goal but it is seldom achieved. There must have been After investigating, Security Investigators Paul Pespes, Jr. and
other employees who had reported for work less than a full Felimon Ringor (Security Investigators) executed a Joint Affidavit, Furthermore, we also learned from the confession of Mr.
year and who, as a consequence received only prorated which reads as follows: Maximo Madao that its was messrs. Joel Gumatin and Brent
benefits. This could have easily bolstered petitioner’s theory of Suyam who took their issued rock drilling machine then
mistake/error, but sadly, no evidence to that effect was xxxx drilled holes and blasted the same at the 8K Stope roadway
presented. with the assistance of Thomas Garcia, John Kitoyan,
Benedict Arocod, Samsom Damian, Daniel Fegsar and
At about 3:40 PM of September 15, 2000, while we were at
IN VIEW HEREOF, the petition is DENIED. The Decision of Francisco Liagao. That SG Ceasarion Damoslog was present
the Lepanto Security Investigation office, we received a
the Court of Appeals in CA-G.R. SP No. 85089 dated 29 on the area standing and watching the group during the
report that the LMD Asst. Resident Manager, Mr. Dwayne
September 2005 is and its Resolution dated 9 December 2005 incident;
Chambers saw and surprised several unidentified miners at

17
 That we are executing this joint affidavit to establish the resolution of the NLRC. The CA affirmed the decision of the evidence prevailing in courts of law or equity shall not
foregoing facts and to support any complaint that may be NLRC13 and denied petitioner’s Motion for Reconsideration. be controlling and it is the spirit and intention of the Code
filed against respondents; that the Commission and its members and the Labor Arbiters
Hence, herein petition on the following grounds: shall use every and all reasonable means to ascertain the
IN WITNESS WHEREOF, we have hereunto set our hands facts in each case speedily and objectively and without
and affix our signature this 28th day of September 2000, at regard to the technicalities of law or procedure, all in
THE HONORABLE COURT OF APPEALS COMMITTED the interest of due process. x x x (Emphasis supplied)
Lepanto, Mankayan, Benguet.8 GRAVE AND REVERSIBLE ERROR IN AFFIRMING THE
NATIONAL LABOR RELATIONS COMMISSION’S
(Emphasis supplied) DECISION DATED AUGUST 30, 2002 WHICH DECLARED We agree with the petitioner.
AS ILLEGAL THE DISMISSAL FROM SERVICE OF
On October 24, 2000, petitioner issued a resolution finding HEREIN RESPONDENTS.14 Administrative bodies like the NLRC are not bound by the technical
respondents and their co-accused guilty of the offense of highgrading niceties of law and procedure and the rules obtaining in courts of law.
and dismissing them from their employment.9 A. The Court of Appeal’s strict application of the Indeed, the Revised Rules of Court and prevailing jurisprudence may
hearsay rule under Section 36, Rule 130 of the Rules be given only stringent application, i.e.,  by analogy or in a suppletory
of Court to the present case is uncalled for. character and effect.17
On November 14, 2000, respondents together with the nine other
miners, filed a Complaint for illegal dismissal with the Labor Arbiter
(LA), docketed as NLRC Case No. 11-0607-00 against petitioner. 10 On B. In cases of dismissal for breach of trust and In a number of cases, 18 this Court has construed Article 221 of the
August 21, 2001, the LA dismissed the complaint for lack of merit. confidence, proof beyond doubt is not required, it Labor Code as permitting the NLRC or the LA to decide a case on the
being sufficient that the employer has reasonable basis of position papers and other documents submitted without
ground to believe that the employees are responsible necessarily resorting to technical rules of evidence as observed in the
On September 22, 2001, the miners appealed the decision of the LA regular courts of justice. Rules of evidence are not strictly observed in
to the National Labor Relations Commission (NLRC). On August 30, for the misconduct which renders them unworthy of
the trust and confidence demanded by their position. 15 proceedings before administrative bodies like the NLRC.19
2002, the NLRC rendered a Decision, declaring the dismissal of herein
respondents as illegal, but affirming the dismissal of the nine other
complainant miners. The dispositive portion of the NLRC Decision The petition is devoid of merit. In Bantolino v. Coca-Coca Bottlers Phils., Inc.20 the Court ruled that
insofar as respondents are concerned, reads: although the affiants had not been presented to affirm the contents of
their affidavits and be cross-examined, their affidavits may be given
In finding the dismissal of respondents illegal, the CA upheld the NLRC evidentiary value; the argument that such affidavits were hearsay was
WHEREFORE, premises considered, the DECISION dated in considering the Joint Affidavit of the Security Investigators (Joint not persuasive. Likewise, in Rase v. National Labor Relations
August 21, 2001 is hereby MODIFIED declaring the dismissal Affidavit) as hearsay and therefore inadmissible, to wit: Commission,21 this Court ruled that it was not necessary for the
of complainants [herein respondents] Moreno Dumapis, affiants to appear and testify and be cross-examined by counsel for
Elmo Tundagui and Francis Liagao illegal and ordering We subscribed to the conclusion of the NLRC that the Joint the adverse party. To require otherwise would be to negate the
respondent to pay them backwages in the total amount of Affidavit of Security Investigators Paul D. Pespes, Jr. and rationale and purpose of the summary nature of the proceedings
four hundred eighty thousand one hundred eighty two pesos Felimon Ringor is hearsay and thus, inadmissible. Their mandated by the Rules and to make mandatory the application of the
and 63/100 (P480, 182.63) and separation pay in the total narration of factual events was not based on their personal technical rules of evidence.
amount of four hundred seventeen thousand two hundred knowledge but on disclosures made by Chambers and
thirty pesos and 32/100 (P417,230.32) as computed in the Daguio. Section 36, Rule 130 of the Rules of Court defined
body of the decision. Thus, the CA and the NLRC erred in ruling that the Joint Affidavit is
the nature of hearsay: inadmissible for being hearsay. The Joint Affidavit of the Security
Investigators is admissible for what it is, an investigation report.
xxxx Witness can testify only to those facts which he knows of his
personal knowledge, that is, which are derived from his own However, the admissibility of evidence should not be confused with its
SO ORDERED.11 perception, except as otherwise provided in these rules.16 probative value. Admissibility refers to the question of whether certain
pieces of evidence are to be considered at all, while probative value
Petitioner filed a motion for reconsideration which was denied for lack Arguing for the admissibility of the Joint Affidavit, petitioner cites refers to the question of whether the admitted evidence proves an
of merit by the NLRC in its Resolution dated on November 22, 2002.12 Article 221 of the Labor Code, as amended, which provides: issue.22 Thus, a particular item of evidence may be admissible, but its
evidentiary weight depends on judicial evaluation within the guidelines
Petitioner then filed a petition for certiorari under Rule 65 of the Rules Article 221. Technical rules not binding and prior resort to provided by the rules of evidence. 23 The distinction is clearly laid out
in Skippers United Pacific, Inc. v. National Labor Relations
of Court with the CA assailing the aforementioned decision and amicable settlement. In any proceeding before the
Commission or any Labor Arbiters, the rules of Commission.24 In finding that the Report of the Chief Engineer did not

18
constitute substantial evidence to warrant the dismissal of Rosaroso, decision must be based on evidence that must, at the very least, be Ans - I did not asked him honestly but he only insisted that
this Court ruled: substantial.29 he needed an amount of money badly as I earlier said.

According to petitioner, the foregoing Report established Pursuant to the aforementioned doctrines, we now look into the 10. Ques - So just after telling his purpose did he started
that respondent was dismissed for just cause. The CA, the probative weight of the Joint Affidavit. [sic] the highgrading activity?
NLRC and the Labor Arbiter, however, refused to give
credence to the Report. They are one in ruling that the An examination of the Joint Affidavit reveals that the facts alleged Ans - No, the highgrading scheme started at past 1300 Hrs.
Report cannot be given any probative value as it is therein by the Security Investigators are not of their own personal
uncorroborated by other evidence and that it is merely knowledge. They simply referred to the facts allegedly relayed to
hearsay, having come from a source, the Chief Engineer, 11. Ques - How did it started [sic]?
them by Chambers, Damoslog, Daguio, and Madao. Thus, there is a
who did not have any personal knowledge of the events need to individually scrutinize the statements and testimonies of the
reported therein. four sources of the Joint Affidavit in order to determine the latter’s Ans - They started after they all finished their respective
probative weight. drilling assignment. That while I was near the panel 2-West
xxxx located at the inner portion of 8K Stope, I observed the LHD
unit coming from the roadway near the 8K Eating station
The Joint Affidavit states that, "Mr. Dwayne Chambers saw and which was previously parked thereat proceeded to the
The CA upheld these findings, succinctly stating as follows: surprised several unidentified miners x x x." 30 Chambers simply roadway of panel 1-West then started cleaning and scraping
narrated to the Security Investigators what he saw but did not said roadway. That after cleaning he parked it at the inner
Verily, the report of Chief Engineer Retardo is utterly bereft indicate herein respondents. portion of the roadway. Then afterwhich one among the
of probative value. It is not verified by an oath and, miner who was not assigned therein and I failed to identify
therefore, lacks any guarantee of trusthworthiness. It is Also stated in the Joint Affidavit is the alleged confession of Damoslog his name shove two shovels on the roadway recently
furthermore, and this is crucial, not sourced from the wherein he named respondents Tundagui and Dumapis as his cleaned by the LHD then handed it to us with another man
personal knowledge of Chief Engineer Retardo. It is rather companions in the act of highgrading .31 whom I don’t know his name but could recognize and
based on the perception of "ATTENDING SUPT. ENGINEERS identify him if I will meet him again then we washed the
CONSTANTLY OBSERVING ALL PERSONNELS ABILITY AND Records show that Damoslog submitted two sworn statements. In his same in the inner area of panel 2-West which is adjacent.
ATTITUDE WITH REGARDS TO OUR TECHNICAL CAPABILITY first statement,32 Damoslog claimed that he was unaware of the act of That after washing and sorting the same, we placed it atop
AND BEHAVIOURS WITH EMPHASY [sic] ON DISCIPLINE" highrading, and denied any involvement therein. However, in his of an spread cartoon [sic] sheet. That while we were busy
who " NOTICED 3/E ROSAROSO AS BEING SLACK AND NOT second statement,33 Damoslog claimed to have personally witnessed washing and sorting, Mr. Gumatin also was fixing and
CARING OF HIS JOB AND DUTIES x x x." Accordingly, the the act of highgrading and named the miners involved to wit: spreading the airhose for rockdrilling machine. That few
report is plain hearsay. It is not backed up by the affidavit of moments thereafter, I heard the running engine of the
any of the "Supt." Engineers who purportedly had first-hand drilling machine but I can not identify the operator as my
knowledge of private respondents supposed "lack of 07. Ques - Could you narrate briefly how it transpired then? line of view was obstructed by the curbed angle of the panel
discipline," "irresponsibility" and "lack of diligence" which where we are washing the ores. That afterwhich I heard
caused him to lose his job. x x x Ans - On the first hour of this specific dated and shift at somebody that they are now going to blast the drilled holes
about 0800hrs, while we were at the 8K stope, 850 but we remained in our place continuing washing the stones.
The Courts finds no reason to reverse the foregoing level, Mr. Joel Gumatin approached me that he could not That after the blast Mr. Garcia and one other companion
findings.25 (Emphasis supplied) procure some needed amount of money and if possible we whom I failed to identify due to foggy condition caused by
will commit highgrading for that effect to settle his problem. the explosive blasting then handed us the additional newly
That because I pity him, I just answered that if they could unearth ores for washing. That while were still busy
While it is true that administrative or quasi-judicial bodies like the manage to do it then they could do it. washing, Gumatin approached us then told us that he will
NLRC are not bound by the technical rules of procedure in the collect what was already washed and sorted and start to
adjudication of cases, this procedural rule should not be construed as process the same. That Gumatin took the items then started
a license to disregard certain fundamental evidentiary rules. The 08. Ques - Who was the companion of Mr. Gumatin when he
approached you? to pound the ores atop of an LHD unit parked near the
evidence presented must at least have a modicum of admissibility for entrance of panel 2-East which was not used during the
it to have probative value.26 Not only must there be some evidence to shift. That after that, I stood up then subsequently
support a finding or conclusion, but the evidence must be substantial. Ans - He was alone. proceeded to panel 2-West then observed messrs. Maximo
Substantial evidence is more than a mere scintilla. 27 It means such Madao, Benedict Arocod, Brent Suyam, Daniel Fegsar,
relevant evidence as a reasonable mind might accept as adequate to 09. Ques - Did Gumatin specifically informed [sic] you his Thomas Garcia, Mariolito Cativo, John Kitoyna and
support a conclusion.28 Thus, even though technical rules of evidence Samson Damian who acted as the look out at the junction
problem?
are not strictly complied with before the LA and the NLRC, their of 240 E, XCS and 8K Stope. The enumerated miners except

19
 Damian were in squatting position in scattered adjacent Ans - Yes, that is true I saw Suyam and Gumatin transferred involved in the act of highgrading. In addition, Damoslog’s first and
places busy sorting ores. Moments later Shift boss Dionisio [sic] their assigned drilling machine at the said roadway and second sworn statements did not implicate respondents, and Madao
Bandoc arrived then went to the place of Gumatin then told drilled the area with the company of Garcia, Kitoyan, recanted his statement implicating respondent Liagao. As earlier
us that he will get a portion of the already proceeded ores Arocod, Damian, Fegsar and Liagao.39 (Emphasis supplied) discussed, the sworn statements and joint affidavits of the sources do
for the operator to handcarry so that he will not need to not corroborate but actually cast doubt as to the veracity of the
come to 8K Stope, 850 level then after taking some of the Nonetheless, the second sworn statement of Madao is not sufficient to statements in the Joint Affidavit.
loot he proceeded out simultaneously uttering that he will find Liagao guilty of highgrading. In a Joint Affidavit 40 which he
check the look out at the outer area of the mainline posted executed with respondent Tundagui, Madao made the following The second ground is not plausible.
away from the 7K Stope.34 (Emphasis supplied) declarations:
While the Court agrees that the job of the respondents, as miners,
Evidently, Damoslog does not name respondents Dumapis and When I, MAXIMO MADAO reported for work on September although generally described as menial, is nevertheless of such nature
Tundagui as among the miners involved in the act of highgrading; 16, 2000, I am being required to appear at the security as to require a substantial amount of trust and confidence on the part
neither does he mention respondent Liagao. investigation office. After quitting time I went to the security of petitioner,43 the rule that proof beyond reasonable doubt is not
office and was surprised to learn that my name is among required to terminate an employee on the charge of loss of
The Joint Affidavit also states that Daguio positively confirmed the act those listed persons who were seen by Mr. Chambers confidence, and that it is sufficient that there be some basis for such
of highgrading. However, in his sworn statement, 35 Daguio claims that committing acts of highgrading on September 15, 2000. loss of confidence, is not absolute.44
he did not recognize nor did he identify any of the miners, to wit: However, when I quit work on September 20, 2000 I was
again called through telephone to appear at the security The right of an employer to dismiss an employee on the ground that it
11. Ques - In your own honest observation, what could be office. Investigator Felimon Ringor told me that I will give has lost its trust and confidence in him must not be exercised
the estimate [sic] number of this group of miners doing another statement and convinced to tell me all the names of arbitrarily and without just cause.45 In order that loss of trust and
highgrading activities? the persons assigned thereat with the promise that I will confidence may be considered as a valid ground for an employee’s
report for work. With my limited education having not dismissal, it must be substantial and not arbitrary, and must be
finished grade 1, I was made to give my statement on founded on clearly established facts sufficient to warrant the
Ans - I don’t know but obviously they were several as questions and answers which are self-incriminating and
manifested by their number of cap lamplights. I also employee’s separation from work.46
knowingly mentioned names of persons who are innocent.
speculated that some of them were hidden at the curved Worst, when I got my copy and the contents were fully
inner access of the roadway enroute to the inner area. explained to me by our legal counsel I was surprised that it In the present case, the Court reiterates that the evidence is not
was duly notarized when in fact and in truth after I gave my substantial to hold respondents guilty of highgrading so as to
12. Ques - Did you recognize nor [sic] identify any of statement I did not appear before Atty. Nina Fe Lazaga- warrant the dismissal of respondents.
them? Raffols for swearing. With this circumstances, I hereby
RETRACT my statement dated September 20, 2000 for being Moreover, it is a well-settled doctrine that if doubts exist between the
Ans - Honestly, no.36 (Emphasis supplied) self incriminatory unassisted by my counsel or union evidence presented by the employer and the employee, the scales of
representative and hereby ADAPTS [sic] and RETAINS my justice must be tilted in favor of the latter. It is a time-honored rule
sworn statement dated September 16, 2000. 41 (Emphasis that in controversies between a laborer and his master, doubts
Lastly, the Joint Affidavit also points to the confession of Madao supplied) reasonably arising from the evidence, or in the interpretation of
wherein he particularly named respondent Liagao as one of the miners agreements and writing, should be resolved in the former’s favor. The
involved in the act of highgrading. policy is to extend the doctrine to a greater number of employees who
In labor cases, in which technical rules of procedure are not to be
strictly applied if the result would be detrimental to the workingman, can avail themselves of the benefits under the law, which is in
Madao submitted two sworn statements. In his first sworn an affidavit of desistance gains added importance in the absence of consonance with the avowed policy of the State to give maximum aid
statement37 dated September 16, 2000, Madao claimed his innocence. any evidence on record explicitly showing that the dismissed and protection to labor.47
He did not incriminate any of the respondents. However, in his second employee committed the act which caused the
sworn statement38 dated September 20, 2000, Madao claimed to have dismissal.42 Accordingly, the Court cannot turn a blind eye and Lastly, respondents’ prayer in their Comment 48 and
knowledge of the act of highgrading and specifically named disregard Madao’s recantation, as it serves to cast doubt as to the Memorandum,49 that the CA Decision be modified by ordering their
respondent Liagao as one of the miners involved, to wit: guilt of respondent Liagao. reinstatement to their former positions without loss of seniority rights
and with payment of full backwages from their alleged dismissal up to
09. Ques - Do I understand that Mr. Suyam has companions Based on the foregoing, the Court is convinced that the Joint Affidavit, date of reinstatement, deserves scant consideration. Respondents are
and had drilled first the flooring of that roadway before being sourced from Chambers, Damoslog, Daguio and Madao, has no estopped from claiming their right to reinstatement. Records show
blasting it? probative value to support evidence to warrant the dismissal of the that respondents along with their co-accused, filed an appeal with the
respondents. Chambers and Daguio did not identify the miners CA docketed as CA-G.R. SP No. 75457 questioning the decision of the

20
NLRC. The said appeal was denied by the CA. The case was then Manila.
elevated to this Court through a petition for review, entitled Thomas
Garcia v. Court of Appeals, docketed as G.R. No. 162554. However, In the Philippines, petitioner filed with the Philippine Overseas
the same was denied with finality for having been filed out of Employment Administration (POEA for short), a complaint against
time.50 In effect, it serves to estop the respondents from praying for private respondent for payment of salary differential, overtime pay,
their reinstatement in the present case. Under the doctrine of unpaid salary for November, 1985 and refund of his return airfare and
conclusiveness of judgment, which is also known as "reclusion of cash bond allegedly in the amount of P20,000.00 contending therein
issues" or "collateral estoppel," issues actually and directly resolved in that private respondent unilaterally altered the employment contract
a former suit cannot again be raised in any future case between the by reducing his salary of US$800.00 per month to US$560.00,
same parties involving a different cause of action. 51 Applied to the causing him to request for his repatriation to the Philippines. Although
present case, the "former suit" refers to CA-G.R. SP No. 75457 repatriated, he claims that he failed to receive payment for the
wherein the CA ordered separation pay instead of reinstatement and following:chanrobles.com : virtual law library
G.R. No. 162554 wherein this Court denied the petition for review
filed by respondents together with other dismissed workers. The "1. Salary for November which is equivalent to US$800.00;
"future case" is the present case in which the petitioner is Lepanto
Consolidated Mining Company assailing the validity of the CA Decision "2. Leave pay equivalent to his salary for 16.5 days in the sum of
declaring the dismissal of respondents to be illegal. Reinstatement US$440.00;
was not an issue raised by herein petitioner. Respondents cannot now
be allowed to raise the same in the petition filed by petitioner, for that "3. Salary differentials which is equivalent to US$240.00 a month for
would circumvent the finality of judgment as to separation pay insofar four (4) months and one (1) week in the total sum of US$1,020.00;
as respondents are concerned.
"4. Fixed overtime pay equivalent to US$240.00 a month for four (4)
3. Soriano vs. Offshore Shipping - G.R. No. 78409 (September
WHEREFORE, the petition is DENIED. The Decision of the Court of months and one (1) week in the sum of US$1,020.00;
14, 1989)
Appeals dated November 7, 2003 and its Resolution dated April 15,
2004 in CA-G.R. SP No. 75860 are AFFIRMED. "5. Overtime pay for 14 Sundays equivalent to US$484.99;
This is a petition for certiorari seeking to annul and set aside the
decision of public respondent National Labor Relations Commission
"6. Repatriation cost of US$945.45;
Double costs against petitioner. affirming the decision of the Philippine Overseas Employment
Administration in POEA Case No. (M)85-12-0953 entitled "Norberto
"7. Petitioner’s cash bond of P20,000.00." 1
Soriano v. Offshore Shipping and Manning Corporation and Knut
SO ORDERED.
Knutsen O.A.S.", which denied petitioner’s claim for salary differential
In resolving aforesaid case, the Officer-in-Charge of the Philippine
and overtime pay and limited the reimbursement of his cash bond to
Overseas Employment Administration or POEA found that petitioner-
P15,000.00 instead of P20,000.00.
complainant’s total monthly emolument is US$800.00 inclusive of
fixed overtime as shown and proved in the Wage Scale submitted to
In search for better opportunities and higher income, petitioner
the Accreditation Department of its Office which would therefore not
Norberto Soriano, a licensed Second Marine Engineer, sought
entitle petitioner to any salary differential; that the version of
employment and was hired by private respondent Knut Knutsen
complainant that there was in effect contract substitution has no grain
O.A.S. through its authorized shipping agent in the Philippines,
of truth because although the Employment Contract seems to have
Offshore Shipping and Manning Corporation. As evidenced by the
corrections on it, said corrections or alterations are in conformity with
Crew Agreement, petitioner was hired to work as Third Marine
the Wage Scale duly approved by the POEA; that the withholding of a
Engineer on board "Knut Provider" with a salary of US$800.00 a
certain amount due petitioner was justified to answer for his
month on a conduction basis for a period of fifteen (15) days. He
repatriation expenses which repatriation was found to have been
admitted that the term of the contract was extended to six (6)
requested by petitioner himself as shown in the entry in his Seaman’s
months by mutual agreement on the promise of the employer to the
Book; and that petitioner deposited a total amount of P15,000.00 only
petitioner that he will be promoted to Second Engineer. Thus, while it
instead of P20,000.00 cash bond. 2
appears that petitioner joined the aforesaid vessel on July 23, 1985
he signed off on November 27, 1985 due to the alleged failure of
Accordingly, respondent POEA ruled as follows:jgc:chanrobles.com.ph
private respondent-employer to fulfill its promise to promote
petitioner to the position of Second Engineer and for the unilateral
"VIEWED IN THE LIGHT OF THE FOREGOING, respondents are hereby
decision to reduce petitioner’s basic salary from US$800.00 to
ordered to pay complainant, jointly and severally within ten (10) days
US$560.00. Petitioner was made to shoulder his return airfare to
21
from receipt hereof the amount of P15,000.00 representing the only to specify the salary and the overtime pay to which petitioner is
reimbursement of the cash bond deposited by complainant less entitled under the contract. It was a mere breakdown of the total Specifically, the law provides:jgc:chanrobles.com.ph
US$285.83 (to be converted to its peso equivalent at the time of amount into US$560.00 as basic wage and US$240.00 as overtime
actual payment). pay. Otherwise stated, with or without the amendments the total "Article 34 paragraph (i) of the Labor Code
emolument that petitioner would receive under the agreement as reads:jgc:chanrobles.com.ph
"Further, attorney’s fees equivalent to 10% of the aforesaid award is approved by the POEA is US$800.00 monthly with wage differentials
assessed against respondents. or overtime pay included. 10 "Prohibited Practices — It shall be unlawful for any individual, entity,
licensee, or holder of authority:chanrob1es virtual 1aw library
"All other claims are hereby dismissed for lack of merit. Moreover, the presence of petitioner’s signature after said items
renders improbable the possibility that petitioner could have
"SO ORDERED." 3 misunderstood the amount of compensation he will be receiving under
the contract. Nor has petitioner advanced any explanation for x              x              x
Dissatisfied, both parties appealed the aforementioned decision of the statements contrary or inconsistent with what appears in the records.
POEA to the National Labor Relations Commission. Complainant- Thus, he claimed: [a] that private respondent extended the duration
petitioner’s appeal was dismissed for lack of merit while respondents’ of the employment contract indefinitely, 11 but admitted in his Reply
appeal was dismissed for having been filed out of time. that his employment contract was extended for another six (6) "(i) To substitute or alter employment contracts approved and verified
months by agreement between private respondent and himself: 12 by the Department of Labor from the time of actual signing thereof by
Petitioner’s motion for reconsideration was likewise denied. Hence this [b] that when petitioner demanded for his overtime pay, respondents the parties up to and including the period of expiration of the same
recourse. repatriated him 13 which again was discarded in his reply stating that without the approval of the Department of Labor."cralaw virtua1aw
he himself requested for his voluntary repatriation because of the bad library
Petitioner submits that public respondent committed grave abuse of faith and insincerity of private respondent; 14 [c] that he was
discretion and/or acted without or in excess of jurisdiction by required to post a cash bond in the amount of P20,000.00 but it was In the case at bar, both the Labor Arbiter and the National Labor
disregarding the alteration of the employment contract made by found that he deposited only the total amount of P15,000.00; [d] that Relations Commission correctly analyzed the questioned annotations
private Respondent. Petitioner claims that the alteration by private his salary for November 1985 was not paid when in truth and in fact it as not constituting an alteration of the original employment contract
respondent of his salary and overtime rate which is evidenced by the was petitioner who owes private respondent US$285.83 for cash but only a clarification thereof which by no stretch of the imagination
Crew Agreement 4 and the exit pass 5 constitutes a violation of Article advances 15 and on November 27, 1985 the final pay slip was can be considered a violation of the above-quoted law. Under similar
34 of the Labor Code of the Philippines. 6 executed and signed; 16 and [e] that he finished his contract when on circumstances, this Court ruled that as a general proposition,
the contrary, despite proddings that he continue working until the exceptions from the coverage of a statute are strictly construed. But
On the other hand, public respondent through the Solicitor General, renewed contract has expired, he adamantly insisted on his such construction nevertheless must be at all times reasonable,
contends that, as explained by the POEA: "Although the employment termination. sensible and fair. Hence, to rule out from the exemption amendments
contract seems to have corrections, it is in conformity with the Wage set forth, although they did not materially change the terms and
Scale submitted to said office." 7 Verily, it is quite apparent that the whole conflict centers on the conditions of the original letter of credit, was held to be unreasonable
failure of respondent company to give the petitioner the desired and unjust, and not in accord with the declared purpose of the Margin
Apparently, petitioner emphasizes the materiality of the alleged promotion which appears to be improbable at the moment because Law. 19
unilateral alteration of the employment contract as this is proscribed the M/V Knut Provider continues to be laid off at Limassol for lack of
by the Labor Code while public respondent finds the same to be charterers. 17 The purpose of Article 34, paragraph 1 of the Labor Code is clearly the
merely innocuous. We take a closer look at the effects of these protection of both parties. In the instant case, the alleged amendment
alterations upon petitioner’s right to demand for salary differential, It is axiomatic that laws should be given a reasonable interpretation, served to clarify what was agreed upon by the parties and approved
overtime pay and refund of his return airfare to Manila.chanrobles not one which defeats the very purpose for which they were passed. by the Department of Labor. To rule otherwise would go beyond the
virtual lawlibrary This Court has in many cases involving the construction of statutes bounds of reason and justice.
always cautioned against narrowly interpreting a statute as to defeat
A careful examination of the records shows that there is in fact no the purpose of the legislator and stressed that it is of the essence of As recently laid down by this Court, the rule that there should be
alteration made in the Crew Agreement 8 or in the Exit Pass. 9 As the judicial duty to construe statutes so as to avoid such a deplorable concern, sympathy and solicitude for the rights and welfare of the
original data appear, the figures US$800.00 fall under the column result (of injustice or absurdity) and that therefore "a literal working class, is meet and proper. That in controversies between a
salary, while the word "inclusive" is indicated under the column interpretation is to be rejected if it would be unjust or lead to absurd laborer and his master, doubts reasonably arising from the evidence
overtime rate. With the supposed alterations, the figures US$560.00 results." 18 or in the interpretation of agreements and writings should be resolved
were handwritten above the figures US$800.00 while the figures in the former’s favor, is not an unreasonable or unfair rule. 20 But to
US$240.00 were also written above the word "inclusive." There is no dispute that an alteration of the employment contract disregard the employer’s own rights and interests solely on the basis
without the approval of the Department of Labor is a serious violation of that concern and solicitude for labor is unjust and
As clearly explained by respondent NLRC, the correction was made of law. unacceptable.chanrobles.com:cralaw:red

22
 recordings for title music, background music, musical numbers, finale
Finally, it is well-settled that factual findings of quasi-judicial agencies music and other incidental music, without which a motion picture is
like the National Labor Relations Commission which have acquired incomplete; that ninety-five (95%) percent of all the musicians
expertise because their jurisdiction is confined to specific matters are playing for the musical recordings of said companies are members of
generally accorded not only respect but at times even finality if such the Guild; and that the same has no knowledge of the existence of
findings are supported by substantial evidence. 21 any other legitimate labor organization representing musicians in said
companies. Premised upon these allegations, the Guild prayed that it
In fact since Madrigal v. Rafferty 22 great weight has been accorded be certified as the sole and exclusive bargaining agency for all
to the interpretation or construction of a statute by the government musicians working in the aforementioned companies. In their
agency called upon to implement the same. 23 respective answers, the latter denied that they have any musicians as
employees, and alleged that the musical numbers in the filing of the
WHEREFORE, the instant petition is DENIED. The assailed decision of companies are furnished by independent contractors. The lower court,
the National Labor Relations Commission is AFFIRMED in toto. however, rejected this pretense and sustained the theory of the Guild,
with the result already adverted to. A reconsideration of the order
SO ORDERED. complained of having been denied by the Court en banc, LVN Pictures,
inc., and Sampaguita Pictures, Inc., filed these petitions for review
for certiorari.

Apart from impugning the conclusion of the lower court on the status
of the Guild members as alleged employees of the film companies, the
LVN Pictures, Inc., maintains that a petition for certification cannot be
entertained when the existence of employer-employee relationship
between the parties is contested. However, this claim is neither borne
out by any legal provision nor supported by any authority. So long as,
after due hearing, the parties are found to bear said relationship, as in
the case at bar, it is proper to pass upon the merits of the petition for
C. Employer-Employee Relationship
certification.

1. LVN vs. Philippine Musician's Guild - G.R. Nos. L-12582 and

L-12598 (January 28, 1961) It is next urged that a certification is improper in the present case,
because, "(a) the petition does not allege and no evidence was
presented that the alleged musicians-employees of the respondents
Petitioners herein, LVN Pictures, Inc. and Sampaguita Pictures, Inc.
constitute a proper bargaining unit, and (b) said alleged musicians-
seek a review by certiorari of an order of the Court of Industrial
employees represent a majority of the other numerous employees of
Relations in Case No. 306-MC thereof, certifying the Philippine
the film companies constituting a proper bargaining unit under section
Musicians Guild (FFW), petitioner therein and respondent herein, as
12 (a) of Republic Act No. 875."
the sole and exclusive bargaining agency of all musicians working with
said companies, as well as with the Premiere Productions, Inc., which
has not appealed. The appeal of LVN Pictures, Inc., has been docketed The absence of an express allegation that the members of the Guild
as G.R. No. L-12582, whereas G.R. No. L-12598 is the appeal of constitute a proper bargaining unit is fatal proceeding, for the same is
Sampaguita Pictures, Inc. Involving as they do the same order, the not a "litigation" in the sense in which this term is commonly
two cases have been jointly heard in this Court, and will similarly be understood, but a mere investigation of a non-adversary, fact finding
disposed of. character, in which the investigating agency plays the part of a
disinterested investigator seeking merely to ascertain the desires of
employees as to the matter of their representation. In connection
In its petition in the lower court, the Philippine Musicians Guild (FFW),
therewith, the court enjoys a wide discretion in determining the
hereafter referred to as the Guild, averred that it is a duly registered
procedure necessary to insure the fair and free choice of bargaining
legitimate labor organization; that LVN Pictures, Inc., Sampaguita
representatives by employees.1 Moreover, it is alleged in the petition
Pictures, Inc., and Premiere Productions, Inc. are corporations, duly
that the Guild it a duly registered legitimate labor organization and
organized under the Philippine laws, engaged in the making of motion
that ninety-five (95%) percent of the musicians playing for all the
pictures and in the processing and distribution thereof; that said
musical recordings of the film companies involved in these cases are
companies employ musicians for the purpose of making music

23
members of the Guild. Although, in its answer, the LVN Pictures, Inc. During the recording sessions, the motion picture director, The mischief at which the Act is aimed and the remedies it
denied both allegations, it appears that, at the hearing in the lower who is an employee of the company, supervises the offers are not confined exclusively to 'employees' within the
court it was merely the status of the musicians as its employees that recording of the musicians and tells what to do in every traditional legal distinctions, separating them from
the film companies really contested. Besides, the substantial detail. He solely directs the performance of the musicians 'independent contractor'. Myriad forms of service
difference between the work performed by said musicians and that of before the camera as director, he supervises the relationship, with infinite and subtle variations in the term of
other persons who participate in the production of a film, and the performance of all the action, including the musicians who employment, blanket the nation's economy. Some are within
peculiar circumstances under which the services of that former are appear in the scenes so that in the actual performance to be this Act, others beyond its coverage. Large numbers will fall
engaged and rendered, suffice to show that they constitute a proper shown on the screen, the musical director's intervention has clearly on one side or on the other, by whatever test may be
bargaining unit. At this juncture, it should be noted that the action of stopped. applied. Inequality of bargaining power in controversies of
the lower court in deciding upon an appropriate unit for collective their wages, hours and working conditions may characterize
bargaining purposes is discretionary (N.L.R.B. v. May Dept. Store Co., And even in the recording sessions and during the actual the status of one group as of the other. The former, when
66 Sup. Ct. 468. 90 L. ed. 145) and that its judgment in this respect shooting of a scene, the technicians, soundmen and other acting alone may be as helpless in dealing with the employer
is entitled to almost complete finality, unless its action is arbitrary or employees of the company assist in the operation. Hence, as dependent on his daily wage and as unable to resist
capricious (Marshall Field & Co. v. N.L.R.B. [C.C.A. 19431, 135 F. 2d. the work of the musicians is an integral part of the entire arbitrary and unfair treatment as the latter.'
891), which is far from being so in the cases at bar. motion picture since they not only furnish the music but are
also called upon to appear in the finished picture. To eliminate the causes of labor dispute and industrial strike,
Again, the Guild seeks to be, and was, certified as the sole and Congress thought it necessary to create a balance of forces
exclusive bargaining agency for the musicians working in the The question to be determined next is what legal in certain types of economic relationship. Congress
aforesaid film companies. It does not intend to represent the other relationship exits between the musicians and the company in recognized those economic relationships cannot be fitted
employees therein. Hence, it was not necessary for the Guild to allege the light of the foregoing facts. neatly into the containers designated as 'employee' and
that its members constitute a majority of all the employees of said 'employer'. Employers and employees not in proximate
film companies, including those who are not musicians. The real issue relationship may be drawn into common controversies by
in these cases, is whether or not the musicians in question are We are thus called upon to apply R.A. Act 875. which is economic forces and that the very dispute sought to be
employees of the film companies. In this connection the lower court substantially the same as and patterned after the Wagner avoided might involve 'employees' who are at times brought
had the following to say: Act substantially the same as a Act and the Taft-Hartley Law into an economic relationship with 'employers', who are not
of the United States. Hence, reference to decisions of their 'employers'. In this light, the language of the Act's
American Courts on these laws on the point-at-issue is called definition of 'employee' or 'employer' should be determined
As a normal and usual course of procedure employed by the for.
companies when a picture is to be made, the producer broadly in doubtful situations, by underlying economic facts
invariably chooses, from the musical directors, one who will rather than technically and exclusively established legal
furnish the musical background for a film. A price is agreed Statutes are to be construed in the light of purposes classifications. (NLRB vs. Blount, 131 F [2d] 585.)
upon verbally between the producer and musical director for achieved and the evils sought to be remedied. (U.S. vs.
the cost of furnishing such musical background. Thus, the American Tracking Association, 310 U.S. 534, 84 L. ed. In other words, the scope of the term 'employee' must be
musical director may compose his own music specially 1345.) . understood with reference to the purposes of the Act and the
written for or adapted to the picture. He engages his own facts involved in the economic relationship. Where all the
men and pays the corresponding compensation of the In the case of National Labor Relations Board vs. Hearts conditions of relation require protection, protection ought to
musicians under him. Publication, 322 U.S. 111, the United States Supreme Court be given .
said the Wagner Act was designed to avert the 'substantial
When the music is ready for recording, the musicians are obstruction to the free flow of commerce which results from By declaring a worker an employee of the person for whom
summoned through 'call slips' in the name of the film strikes and other forms of industrial unrest by eliminating he works and by recognizing and protecting his rights as
company (Exh 'D'), which show the name of the musician, the causes of the unrest. Strikes and industrial unrest result such, we eliminate the cause of industrial unrest and
his musical instrument, and the date, time and place where from the refusal of employers' to bargain collectively and the consequently we promote industrial peace, because we
he will be picked up by the truck of the film company. The inability of workers to bargain successfully for improvement enable him to negotiate an agreement which will settle
film company provides the studio for the use of the in their working conditions. Hence, the purposes of the Act disputes regarding conditions of employment, through the
musicians for that particular recording. The musicians are are to encourage collective bargaining and to remedy the process of collective bargaining.
also provided transportation to and from the studio by the workers' inability to bargaining power, by protecting the
company. Similarly, the company furnishes them meals at exercise of full freedom of association and designation of
representatives of their own choosing, for the purpose of The statutory definition of the word 'employee' is of wide
dinner time. scope. As used in the Act, the term embraces 'any
negotiating the terms and conditions of their employment.'
employee' that is all employees in the conventional as well in

24
the legal sense expect those excluded by express provision. 'Notwithstanding that the employees are called independent Rilloraza, L-9569 (September 30, 1957), with the particularity that
(Connor Lumber Co., 11 NLRB 776.). contractors', the Board will hold them to be employees the Caro case involved the  enforcement of the liability of an employer
under the Act where the extent of the employer's control under the Workmen's Compensation Act, whereas the cases before us
It is the purpose of the policy of Republic Act 875; (a) To over them indicates that the relationship is in reality one of are merely concerned with the right of the Guild to represent the
eliminate the causes of industrial unrest by protecting the employment. (John Hancock Insurance Co., 2375-D, 1940, musicians as a collective bargaining unit. Hence, there is less reason
exercise of their right to self-organization for the purpose of Teller, Labor Dispute Collective Bargaining, Vol.). to be legalistic and technical in these cases, than in the Caro case.
collective bargaining. (b) To promote sound stable industrial
peace and the advancement of the general welfare, and the The right of control of the film company over the musicians Herein, petitioners-appellants cite, in support of their appeal, the
best interests of employers and employees by the is shown (1) by calling the musicians through 'call slips' in cases of Sunripe Coconut Product Co., Inc vs. CIR (46 Off. Gaz.,
settlement of issues respecting terms and conditions of 'the name of the company; (2) by arranging schedules in its 5506, 5509), Philippine Manufacturing Co. vs. Santos Vda. de
employment through the process of collective bargaining studio for recording sessions; (3) by furnishing Geronimo, L-6968 (November 29, 1954), Viana vs. Al-Lagadan, L-
between employers and representatives of their employees. transportation and meals to musicians; and (4) by 8967 (May 31, 1956), and  Josefa Vda. de Cruz vs. The Manila Hotel
supervising and directing in detail, through the motion Co. (53 Off. Gaz., 8540). Instead of favoring the theory of said
The primary consideration is whether the declared policy and picture director, the performance of the musicians before the petitioners-appellants, the case of the Sunripe Coconut Product Co.,
purpose of the Act can be effectuated by securing for the camera, in order to suit the music they are playing to the Inc. is authority for herein respondents-appellees. It was held that,
individual worker the rights and protection guaranteed by picture which is being flashed on the screen. although engaged as piece-workers, under the "pakiao" system, the
the Act. The matter is not conclusively determined by a "parers" and "shellers" in the case were, not independent contractor,
contract which purports to establish the status of the Thus, in the application of Philippine statutes and pertinent but employees of said company, because "the requirement imposed
worker, not as an employee. decisions of the United States Courts on the matter to the on the 'parers' to the effect that 'the nuts are pared whole or that
facts established in this case, we cannot but conclude that to there is not much meat wasted,' in effect  limits or controls the means
effectuate the policies of the Act and by virtue of the 'right or details by which said workers are to accomplish their services" —
The work of the musical director and musicians is a as in the cases before us.
functional and integral part of the enterprise performed at of control' test, the members of the Philippine Musicians
the same studio substantially under the direction and control Guild are employees of the three film companies and,
of the company. therefore, entitled to right of collective bargaining under The nature of the relation between the parties was not settled in
Republic Act No. 875. the Viana case, the same having been remanded to the Workmen's
Compensation Commission for further evidence.
In other words, to determine whether a person who
performs work for another is the latter's employee or an In view of the fact that the three (3) film companies did not
independent contractor, the National Labor Relations relies question the union's majority, the Philippine Musicians Guild The case of the  Philippine Manufacturing Co. involved a contract
on 'the right to control' test. Under this test an employer- is hereby declared as the sole collective bargaining between said company and Eliano Garcia, who undertook to paint a
employee relationship exist where the person for whom the representative for all the musicians employed by the film tank of the former. Garcia, in turn engaged the services of Arcadio
services are performed reserves the right to control not only companies." Geronimo, a laborer, who fell while painting the tank and died in
the end to be achieved, but also the manner and means to consequence of the injuries thus sustained by him. Inasmuch as the
be used in reaching the end. (United Insurance Company, We are fully in agreement with the foregoing conclusion and the company was engaged in the manufacture of soap, vegetable lard,
108, NLRB No. 115.). reasons given in support thereof. Both are substantially in line with cooking oil and margarine, it was held that the connection between its
the spirit of our decision in Maligaya Ship Watchmen Agency vs. business and the painting aforementioned was purely casual; that
Associated Watchmen and Security Union, L-12214-17 (May 28, Eliano Garcia was an independent contractor; that Geronimo was not
Thus, in said similar case of Connor Lumber Company, the an employee of the company; and that the latter was not bound,
Supreme Court said:. 1958). In fact, the contention of the employers in the Maligaya cases,
to the effect that they had dealt with independent contractors, was therefore, to pay the compensation provided in the Workmen's
stronger than that of the film companies in these cases. The third Compensation Act. Unlike the Philippine Manufacturing case, the
'We find that the independent contractors and parties with whom the management and the workers contracted in relation between the business of herein petitioners-appellants and the
persons working under them are employees' within the Maligaya cases were agencies registered with the Bureau of work of the musicians is not casual. As held in the order appealed
the meaning of Section 2 (3) of its Act. However, Commerce and duly licensed by the City of Manila to engage in the from which, in this respect, is not contested by herein petitioners-
we are of the opinion that the independent business of supplying watchmen to steamship companies, with appellants — "the work of the musicians is an integral part  of the
contractors have sufficient authority over the permits  to engage in said business issued by the City Mayor and entire motion picture." Indeed, one can hardly find modern films
persons working under their immediate supervision the Collector of Customs.  In the cases at bar, the musical directors without music therein. Hence, in the Caro case (supra), the owner and
to warrant their exclusion from the unit.  We shall with whom the film companies claim to have dealt with operator of buildings for rent was held bound to pay the indemnity
include in the unit the employees working under had nothing comparable to the business standing of said watchmen prescribed in the Workmen's Compensation Act for the injury suffered
the supervision of the independent contractors, but agencies. In this respect, the status of said musical directors is by a carpenter while working as such in one of said buildings even
exclude the contractors.' analogous to that of the alleged independent contractor in Caro vs. though his services had been allegedly engaged by a third party who

25
had directly contracted with said owner. In other words, the repair wants more drums and the drummer plays more" or "if he wants more On motion by defendant and after hearing the parties, the Hon.
work had not merely a casual connection with the business of said violin or he does not like that.". Francisco E. Jose, Judge, issued an order dismissing the complaint on
owner. It was a necessary incident thereof, just as music is in the the ground that plaintiffs had no cause of action against defendant
production of motion pictures. It is well settled that "an employer-employee relationship exists . . since they were not its employees. Hence this appeal directly to this
.where the person for whom the services are performed reserves a Court, involving only questions of law. In the meantime Tirso Cruz the
The case of Josefa Vda. de Cruz vs. The Manila Hotel Co., L-9110 right to control not only the end  to be achieved  but also the means  to band leader died; he is now substituted by his legal heirs. However for
(April 30, 1957) differs materially from the present cases. It involved be used in reaching such end . . . ." (Alabama Highway Express Co., convenience we shall refer to him as if he were still a party to the
the interpretation of Republic Act No. 660, which amends the law Express Co., v. Local 612, 108S. 2d. 350.) The decisive nature of said proceedings.
creating and establishing the Government Service Insurance System. control over the "means to be used", is illustrated in the case of
No labor law was sought to be construed in that case. In act, the Gilchrist Timber Co., et al., Local No. 2530 (73 NLRB No. 210, pp. The complaint alleged that plaintiffs "were members of the orchestra
same was originally heard in the Court of First Instance of Manila, the 1197, 1199-1201), in which, by reason of said control, the employer- which had been employed by the defendant to furnish music in the
decision of which was, on appeal, affirmed by the Supreme Court. The employee relationship was held to exist between the management Manila Hotel"; that they were employees of the Hotel, and that
meaning or scope if the term "employee," as used in the Industrial and the workers, notwithstanding the intervention of an alleged contrary to the announcement (Annex A) promising gratuities to its
Peace Act (Republic Act No. 875), was not touched therein. Moreover, independent contractor, who had, and exercise, the power to hire and "employees" the Hotel Management had refused to pay plaintiffs. The
the subject matter of said case was a contract between the fire said workers. The aforementioned control over the means to be complaint attached a Copy of the announcement which partly reads as
management of the Manila Hotel, on the one hand, and Tirso Cruz, on used" in reading the desired end is possessed and exercised by the follows:
the other, whereby the latter greed to furnish the former the services film companies over the musicians in the cases before us.
of his orchestra, consisting of 15 musicians, including Tirso Cruz, . . . . It is for this reason that the necessary authority has
"from 7:30 p.m. to closing time daily." In the language of this court in WHEREFORE, the order appealed from is hereby affirmed, with costs already been secured for the payment of separation gratuity
that case, "what pieces the orchestra shall play, and how the music against petitioners herein. It is so ordered. to the employees to be laid off as a result of the lease and
shall be arranged or directed, the intervals and other details — such who are not yet entitled to either the optional or compulsory
are left to the leader's discretion." retirement insurance provided under Republic Act No. 660,
as amended, . . . .
This is not situation obtaining in the case at bar. The musical directors
above referred to have no such control over the musicians involved in The defendant filed a motion to dismiss alleging that plaintiffs were
the present case. Said musical directors control neither the music to not its employees, under the terms of the contract whereby they had
be played, nor the musicians playing it. The film companies summon rendered services to the hotel, copy of which was attached as Exhibit
the musicians to work, through the musical directors. The film 1. It also alleged plaintiffs did not fall within the terms of Annex A
companies, through the musical directors, fix the date, the time and because they were not, and never had been members of the
the place of work. The film companies, not the musical directors, Government Service Insurance System. Plaintiffs replied to the
provide the transportation to and from the studio. The film companies motion, did not deny the terms of Exhibit 1, nor the allegations of
furnish meal at dinner time. non-membership in the Government Service Insurance System; but
insisted they were employees of the Hotel.
2. Vda de Cruz vs. Manila Hotel - G.R. No. L-9110 (April 30,
What is more — in the language of the order appealed from — "during
1957)
the recording sessions, the motion picture director who is The controversy could therefore be decided and it was decide in the
an  employee of the company" — not the musical director — light of the terms of Exhibit 1 and Annex A, plus the factual
"supervises the recording of the musicians and tells them what to do On May 22, 1954 and for several years before, Tirso Cruz with his
orchestra furnished music to the Manila Hotel under the arrangement allegations expressly or impliedly admitted by the contending parties.
in every detail". The motion picture director — not the musical
director — "solely directs and performance of the musicians before hereafter to be set forth. On that date the corporation owning the
the camera". The motion picture director "supervises the performance Hotel gave written notice to its employees that beginning July 1, 1954 At the outset the following consideration presents itself: plaintiffs'
of all the actors,  including the musicians  who appear in the scenes, so the Hotel would be leased to the Bay View Hotel, and that those right is not predicated on some statutory provision, but upon the offer
that in the actual performance to be shown in the screen,  the musical employees to be laid off would be granted a separation gratuity or promise contained in Annex A. Such offer or promise having been
director's intervention has stopped." Or, as testified to in the lower computed according to specified terms and conditions. written by the defendant, it is logical to regard said defendant to in
court, "the movie director tells the musical director what to do; tells the best position to state who were the employees contemplated in
the music to be cut or tells additional music in this part or he Cruz and his musicians claimed the gratuity; but the Manila Hotel the aforesaid Annex A. The defendant asserts these musicians were
eliminates the entire music he does not (want) or he may want more management denied their claim saying they were not its employees. not included; therefore such assertion should be persuasive, if not
drums or move violin or piano, as the case may be". The movie Wherefore they instituted this action in the Manila court of first conclusive. Let it be emphasized that Annex A is not a contract, but a
director "directly controls the activities of the musicians." He "says he instance in December 1954. mere offer of gratuity, the beneficiaries of which normally depended
upon the free selection of the offeror.

26
Independently however of the Hotel's interpretation of its own An independent contractor is one who in rendering services,
announcement, and analyzing the terms of Annex A, we notice that it exercises an independent employment or occupation and In their answer petitioners herein denied the charges and by way of affirmative
defenses, alleged that complainant is an independent contractor whose services
extends to those employees of the Hotel who were "not yet entitled to represents the will of his employer only as to the results of
were restrained by petitioners to submit reports of radio monitoring work
either the optional or compulsory retirement insurance provided under his work and not as to the means whereby it is
performed outside of their (petitioner’s) office; that petitioners no longer
Republic Act No. 660". And then we read that retirement insurance accomplished; one who exercising an independent required complainant’s services and therefore, it gave her notice of termination,
under Republic Act No. 660 is given only to those insured with the employment, contracts to do a piece of work according to his as it did in fact terminate her services, as an independent contractor; that
Government Service Insurance System or the G.S.I.S.; and that the own methods, without being subject to the control of his petitioners terminated the services of complainant-respondent for good and
herein plaintiffs were never members of (insured with) such Insurance employer except as to the result of his work; and who justifiable reasons and in accordance with business requirements; that the
System. Wherefore the inevitable conclusion flows that even if these engages to perform a certain service for another, according complaint states no cause of action and that petitioners did not and are not
engaged in unfair labor practice acts against the complainant within the meaning
plaintiffs were "employees" of the Hotel in general, they cannot claim to his own manner and methods, without being subject to
of Sec 4(a), subsection 5 of the Industrial Peace Act.
to be beneficiaries under Annex A, because they could not qualify as the control of his employer except as to the result of his
employees "who were not yet entitled to retirement insurance under work; and who engages to perform a certain service for Judge Tabigne of the Court of Industrial Relations in a decision dated October 8,
the G.S.I.S." The quoted portion of the announcement implied another, according to his own manner and method, free 1960 held that the complainant is not an employee of the respondent firm but
reference to employees insured by the Government Insurance from the control and direction of his employer in all matters only an independent contractor and that respondent firm was justified in
System. connected with the performance of the service, except as to dismissing the complainant due to economic reasons.

the result of the work. (56 C. J. S. pp. 41-43.)

Complainant filed a motion to reconsider that decision, raising the question as to
Still going further, are these plaintiffs "employees" of the Hotel? None whether she is an employee or an independent contractor. The lower court
of them except Tirzo Cruz and Ric Cruz, is mentioned in the contract Among the factors to be considered are whether the reversed the decision of Judge Tabigne, ruling that complainant was an
Exhibit 1. None has submitted any contract or appointment except contractor is carrying on an independent business; whether employee and not an independent contractor, and ordered her reinstatement
with back wages. The lower Court further ruled that respondent firm was guilty
said Exhibit 1. Obviously their connection with the Hotel was only thru the work is part of the employer's general business; the
of unfair labor practice. In arriving at this ruling it considered the following
Tirso Cruz who was the leader of the orchestra; and they couldn't be nature and extent of the work; the skill required; the term circumstances:" (1) Complainant was given an identification card stating that
in a better class than Tirso Cruz who dealt with the Hotel. Was Tirso and duration of the relationship; the right to assign the "Bearer Loreta C. Sol is a bonafide employee of this Company;" (2) when she
Cruz an employee? Or was he an independent contractor, as held by performance of the work to another; the power to terminate applied for purchase of a lot from the PHHC, she was given a certificate to show
the trial court? the relationship; the existence of a contract for the that she was indeed an employee of the respondent company for the last five
performance of a specified piece of work; the control and years or six years; and (3) as such employee, she enjoyed the privilege of
borrowing money from the Employees Loan Association of the firm.
It will be observed that by Annex 1 the Manila Hotel contracted or supervision of the work; the employer's powers and duties
engaged the "services of your orchestra" (of Tirso Cruz) composed of with respect to the hiring, firing, and payment of the
The court further found that the company’s control over respondent’s work is
fifteen musicians including yourself plus Ric Cruz as vocalist" at P250 contractor's servants; the control of the premises; the duty shown by the fact that she can not listen to broadcasts other than those that
per day, said orchestra to "play from 7:30 p.m. to closing time daily". to supply the premises, tools, appliances, material and were contained in the schedule given to her by the company. Supervision and
What pieces the orchestra shall play, and how the music shall be labor; and the mode, manner, and terms of payment. (56 C. control of her work could be done by checking or verifying the contents of her
J. S. p. 46.) (Emphasis ours.) reports on said broadcasts, said the court.
arranged or directed, the intervals and other details — such are left to
the leader's discretion. The music instruments, the music papers and Further discussing the question the court states:jgc:chanrobles.com.ph
other paraphernalia are not furnished by the Hotel, they belong to the Not being employees of the Manila Hotel, the plaintiff's have no cause
orchestra, which in turn belongs to Tirso Cruz — not to the Hotel. The of action against the latter under Annex A. The order of dismissal is "In the case at bar, the company not only hired and fired Mrs. Sol, without third
individual musicians, and the instruments they have not been selected therefore affirmed, with costs against them. So ordered. party intervention, but also reserved to itself, possessed and exercised its right
by the Hotel. It reserved no power to discharge any musician. How to control `the end to be achieved and the means’ to be used in reaching such
end, namely, the schedule and other instructions by which the monitor shall be
much salary is given to the individual members is left entirely to "the 3. Sterling vs. Sol - G.R. No. L-19187 (February 28, 1963) guided, and the reports with specifications by which the company observes and
orchestra" or the leader. Payment of such salary is not made by the verifies the performance of her work."cralaw virtua1aw library
Hotel to the individual musicians, but only a lump-sum compensation
This is a petition to review on certiorari the resolution of the Court of Industrial
is given weekly to Tirso Cruz. Relations, dated June 23, 1961 in Case No. 2292- ULP, ordering the herein In consequence the court held that the respondent was an employee. It also
petitioners to reinstate complainant- respondent Loreta C. Sol, with back wages found that the petitioners herein are guilty of unfair labor practice, so it ordered
from the date of her dismissal until her reinstatement. petitioners to reinstate respondent Loreta C. Sol, with back wages from the date
Considering the above features of the relationship, in connection with of her dismissal until her reinstatement. Two judges dissented to this decision.
the tests indicated by numerous authorities, it is our opinion that Tirso
Loreta C. Sol charged the herein petitioners Sterling Products International and
Cruz was not an employee of the Manila Hotel, but one engaged to its Radio Director V. San Pedro with having committed an unfair labor practice In the petition now brought to Us by certiorari it is urged that respondent Sol
furnish music to said hotel for the price of P250.00 daily, in other act. In her complaint she alleged among others that she has been a regular was an independent contractor because in the performance of her work, the
words, an independent contractor1 within the meaning of the law of Radio Monitor of respondents- petitioners; that on January 8, 1960, she filed a elements of control and direction are lacking, hence no relationship of employer
complaint against the said firm for underpayment, money equivalent of her and employee must have existed, citing in support of this contention Section 3,
master and servant.
vacation leave from 1952 to 1959, and Christmas bonus for 1959, equivalent to 35 Am. Jur. 445-446; and that since respondent was employed to work
one month salary. The complaint resulted in her dismissal, without just cause, on according to her own methods and without being subject to control except as to
December 16, 1960. its final result, she may not be considered as an employee. (Ibid.) We cannot

27
accept this argument. Respondent Sol was directed to listen to certain unless the closing is for the purpose of defeating the intention of this law."cralaw dates of dismissal until fully reinstated without loss
broadcasts, directing her, in the instructions given her, when to listen and what virtua1aw library to their right of seniority and of such other rights
to listen, petitioners herein naming the stations to be listened to, the hours of
already acquired by them and/or allowed by law. 1
broadcasts, and the days when listening was to be done. Respondent Sol had to The contract between the petitioners and the respondent Sol providing that the
follow these directions. The mere fact that while performing the duties assigned respondent Sol can be dismissed upon fifteen days’ notice is therefore null and
to her she was not under the supervision of the petitioners does not render her a void. Inasmuch as respondent Sol was employed since the year 1952 and was in Now, Dy Keh Beng assigns the following errors 2 as having been
contractor, because what she has to do, the hours that she has to work and the the employment of the petitioners from that time up to 1959, or a period of committed by the Court of Industrial Relations:
report that she has to submit — all these are according to instructions given by seven years, she is entitled to three and one-half months pay in accordance with
the employer. It is not correct to say, therefore, that she was an independent the above quoted section 1 of the Act.
contractor, for an independent contractor is one who does not receive I
instructions as to what to do, how to do, without specific instructions. WHEREFORE, that portion of the decision finding the petitioners herein guilty of
unfair labor practice and sentencing petitioners to reinstate respondent Sol in her
Finally, the very act of respondent Sol in demanding vacation leave, Christmas former work is hereby set aside, and the petitioners are sentenced to pay, as RESPONDENT COURT ERRED IN FINDING THAT
bonus and additional wages shows that she considered herself an employee. A separation pay, three and one-half months’ pay to respondent Sol. In all other RESPONDENTS SOLANO AND TUDLA WERE
contractor is not entitled to a vacation leave or to a bonus nor to a minimum respects the decision is affirmed. No costs. EMPLOYEES OF PETITIONERS.
wage. This act of hers in demanding these privileges are inconsistent with the
claim that she was an independent contractor.
II
The next point at issue is whether or not the petitioners herein are guilty of
unfair labor practice. Petitioners claim that under the decision rendered by Us in
RESPONDENT COURT ERRED IN FINDING THAT
the case of Royal Interocean Lines, Et. Al. v. Court of Industrial Relations, Et. Al.
RESPONDENTS SOLANO AND TUDLA WERE
G.R. No. L-11745, Oct. 31, 1960, as respondent Sol was merely an employee
and was not connected with any labor union, the company cannot be considered DISMISSED FROM THEIR EMPLOYMENT BY
as having committed acts constituting unfair labor practice as defined in the PETITIONER.
Industrial Peace Act, Rep. Act 875. We find this contention to be well-founded.
The term unfair labor practice has been defined as any of those acts listed in
III
Sec. 4 of the Act. The respondent Sol has never been found to commit any of the
acts mentioned in paragraph (a) of Sec. 4. Respondent Sol was not connected
with any labor organization, nor has she ever attempted to join a labor RESPONDENT COURT ERRED IN FINDING THAT
organization, or to assist, or contribute to a labor organization. The company,
THE TESTIMONIES ADDUCED BY COMPLAINANT
cannot therefore, be considered as having committed an unfair labor practice.
ARE CONVINCING AND DISCLOSES (SIC) A
The court below found that there is an employment contract (Exhibit "3") PATTERN OF DISCRIMINATION BY THE
between petitioners and respondent Sol in which it was expressly agreed that Sol PETITIONER HEREIN.
could be dismissed upon fifteen days’ advance notice, if petitioners herein desire.
Respondent Sol was dismissed on January 13, 1959 and therefore the dismissal
IV
should be governed by the provisions of Republic Act 1787, which took effect on
June 21, 1957. Section 1 of this Act provides:jgc:chanrobles.com.ph
RESPONDENT COURT ERRED IN DECLARING
"SECTION 1. In cases of employment, without a definite period, in a commercial,
PETITIONER GUILTY OF UNFAIR LABOR PRACTICE
industrial, or agricultural establishment or enterprise, the employer or the
employee may terminate at any time the employment with just cause; or
ACTS AS ALLEGED AND DESCRIBED IN THE
without just cause in the case of an employee by serving written notice on the COMPLAINT.
employer at least one month in advance, or in the case of an employer, by
serving such notice to the employee at least one month in advance or one-half 4. Dy Keh Beng vs. International Labor - G.R. No. L-32245
V
for every year of service of the employee, whichever is longer, a fraction of at (May 25, 1979)
least six months being considered as one whole year.
Petitioner Dy Keh Beng seeks a review by certiorari of the decision of RESPONDENT COURT ERRED IN PETITIONER TO
"The employer, upon whom no such notice was served in case of termination of REINSTATE RESPONDENTS TO THEIR FORMER
the Court of Industrial Relations dated March 23, 1970 in Case No.
employment without just cause may hold the employee liable for damages.
3019-ULP and the Court's Resolution en banc of June 10, 1970 JOBS WITH BACKWAGES FROM THEIR RESPECTIVE
affirming said decision. The Court of Industrial Relations in that case DATES OF DISMISSALS UNTIL FINALLY
"The following are just causes for terminating an employment without a definite found Dy Keh Beng guilty of the unfair labor practice acts alleged and REINSTATED WITHOUT LOSS TO THEIR RIGHT OF
period:jgc:chanrobles.com.ph order him to SENIORITY AND OF SUCH OTHER RIGHTS
ALREADY ACQUIRED BY THEM AND/OR ALLOWED
"1. By the employer — BY LAW.
reinstate Carlos Solano and Ricardo Tudla to their
"a. The closing or cessation of operation of the establishment or enterprise, former jobs with backwages from their respective

28
The facts as found by the Hearing Examiner are as follows: (4) When there were no orders needing his Petitioner contends that the private respondents "did not meet the
services there was nothing for him to do; control test in the fight of the ... definition of the terms employer and
A charge of unfair labor practice was filed against Dy Keh Beng, employee, because there was no evidence to show that petitioner had
proprietor of a basket factory, for discriminatory acts within the (5) When orders came to the shop that his regular the right to direct the manner and method of respondent's
meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act No. workers could not fill it was then that Dy went to work. 10 Moreover, it is argued that petitioner's evidence showed that
875, 3 by dismissing on September 28 and 29, 1960, respectively, his address in Caloocan and fetched him for these "Solano worked on a pakiaw  basis" and that he stayed in the
Carlos N. Solano and Ricardo Tudla for their union activities. After orders; and establishment only when there was work.
preliminary investigation was conducted, a case was filed in the Court
of Industrial Relations for in behalf of the International Labor and (6) Solano's work with Dy's establishment was not While this Court upholds the control test 11 under which an employer-
Marine Union of the Philippines and two of its members, Solano and continuous. , 7 employee relationship exists "where the person for whom the services
Tudla In his answer, Dy Keh Beng contended that he did not know are performed reserves a right to control not only the end to be
Tudla and that Solano was not his employee because the latter came achieved but also the means to be used in reaching such end, " it
to the establishment only when there was work which he did According to petitioner, these facts show that respondents Solano and finds no merit with petitioner's arguments as stated above. It should
on pakiaw  basis, each piece of work being done under a separate Tudla are only piece workers, not employees under Republic Act 875, be borne in mind that the control test calls merely for the existence of
contract. Moreover, Dy Keh Beng countered with a special defense of where an employee 8 is referred to as the right to control the manner of doing the work, not the actual
simple extortion committed by the head of the labor union, exercise of the right. 12 Considering the finding by the Hearing
Bienvenido Onayan. shall include any employee and shag not be limited Examiner that the establishment of Dy Keh Beng is "engaged in the
to the employee of a particular employer unless manufacture of baskets known as kaing, 13 it is natural to expect that
After trial, the Hearing Examiner prepared a report which was the Act explicitly states otherwise and shall include those working under Dy would have to observe, among others, Dy's
subsequently adopted in toto  by the Court of Industrial Relations. An any individual whose work has ceased as a requirements of size and quality of the kaing. Some control would
employee-employer relationship was found to have existed between consequence of, or in connection with any current necessarily be exercised by Dy as the making of the kaing would be
Dy Keh Beng and complainants Tudla and Solano, although Solano labor dispute or because of any unfair labor subject to Dy's specifications. Parenthetically, since the work on the
was admitted to have worked on piece basis. 4 The issue therefore practice and who has not obtained any other baskets is done at Dy's establishments, it can be inferred that the
centered on whether there existed an employee employer relation substantially equivalent and regular employment. proprietor Dy could easily exercise control on the men he employed.
between petitioner Dy Keh Beng and the respondents Solano and
Tudla . while an employer 9 As to the contention that Solano was not an employee because he
worked on piece basis, this Court agrees with the Hearing Examiner
According to the Hearing Examiner, the evidence for the complainant includes any person acting in the interest of an that
Union tended to show that Solano and Tudla became employees of Dy employer, directly or indirectly but shall not include
Keh Beng from May 2, 1953 and July 15, 1955, 5 respectively, and any labor organization (otherwise than when acting circumstances must be construed to determine
that except in the event of illness, their work with the establishment as an employer) or anyone acting in the capacity of indeed if payment by the piece is just a method of
was continuous although their services were compensated on piece officer or agent of such labor organization. compensation and does not define the essence of
basis. Evidence likewise showed that at times the establishment had the relation. Units of time ... and units of work are
eight (8) workers and never less than five (5); including the in establishments like respondent (sic) just
Petitioner really anchors his contention of the non-existence of
complainants, and that complainants used to receive ?5.00 a day. employee-employer relationship on the control test. He points to the yardsticks whereby to determine rate of
sometimes less. 6 compensation, to be applied whenever agreed
case of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et al.,
L-13130, October 31, 1959, where the Court ruled that: upon. We cannot construe payment by the piece
According to Dy Keh Beng, however, Solano was not his employee for where work is done in such an establishment so as
the following reasons: to put the worker completely at liberty to turn him
The test ... of the existence of employee and out and take in another at pleasure.
employer relationship is whether there is an
(1) Solano never stayed long enought at Dy's understanding between the parties that one is to
establishment; render personal services to or for the benefit of the At this juncture, it is worthy to note that Justice Perfecto, concurring
with Chief Justice Ricardo Paras who penned the decision in "Sunrise
other and recognition by them of the right of one
to order and control the other in the performance Coconut Products Co. v. Court of Industrial Relations" (83 Phil..518,
(2) Solano had to leave as soon as he was through 523), opined that
with the of the work and to direct the manner and method
of its performance.
judicial notice of the fact that the so-called
(3) order given him by Dy; "pakyaw" system mentioned in this case as

29
 generally practiced in our country, is, in fact, a in Cases Nos. AB-4-11054-81 and AB-8-12354-81 entitled Antonio
labor contract -between employers and employees, Boticario, Et. Al. v. RJL Fishing Corporation and/or Peninsula Fishing
between capitalists and laborers. Corporation, dated November 26, 1982, as well as the Order, dated
February 14, 1983, denying petitioners’ Manifestation and Omnibus
Insofar as the other assignments of errors are concerned, there is no Motion to dismiss private respondents’ appeal. The dispositive portion
showing that the Court of Industrial Relations abused its discretion of the challenged resolution reads:jgc:chanrobles.com.ph
when it concluded that the findings of fact made by the Hearing
Examiner were supported by evidence on the record. Section 6, "WHEREFORE, in view of the foregoing considerations, the Decision
Republic Act 875 provides that in unfair labor practice cases, the appealed from is hereby set aside and another one entered, directing
factual findings of the Court of Industrial Relations are conclusive on respondents-appellees: (1) to reinstate complainants-appellants to
the Supreme Court, if supported by substantial evidence. This their former work, without loss of seniority rights and other privileges
provision has been put into effect in a long line of decisions where the appertaining thereto; (2) to pay complainants-appellants full
Supreme Court did not reverse the findings of fact of the Court of backwages computed from the date they were dismissed up to the
Industrial Relations when they were supported by substantial date they are actually reinstated; (3) to pay complainants-appellants
evidence. 14 legal holiday pay, emergency living allowance and 13th month pay in
accordance with law; and (4) to pay complainants-appellants who are
entitled to incentive leave pay, as herein above determined, according
Nevertheless, considering that about eighteen (18) years have already to law.
elapsed from the time the complainants were dismissed, 15 and that
the decision being appealed ordered the payment of backwages to the The claims for overtime pay and premium pay for holiday and rest day
employees from their respective dates of dismissal until finally are dismissed.
reinstated, it is fitting to apply in this connection the formula for
backwages worked out by Justice Claudio Teehankee in "cases not SO ORDERED." 1
terminated sooner." 16 The formula cans for fixing the award of
backwages without qualification and deduction to three years, This case was originally assigned to the Second Division but because
"subject to deduction where there are mitigating circumstances in of the pendency of a lower-numbered case, G.R. No. 63474, entitled
favor of the employer but subject to increase by way of exemplary RJL Martinez Fishing Corporation v. National Labor Relations
damages where there are aggravating circumstances. 17 Considering Commission, et als. before the First Division, involving the same
there are no such circumstances in this case, there is no reason why petitioners and their workers (albeit a different group and not exactly
the Court should not apply the abovementioned formula in this identical issues), this case was transferred to the latter Division for
instance. proper action and determination. G.R. No. 63474 was dismissed by
the First Division on August 17, 1983 for lack of merit.chanrobles law
WHEREFORE; the award of backwages granted by the Court of library : red
Industrial Relations is herein modified to an award of backwages for
three years without qualification and deduction at the respective rates Petitioner corporations are principally engaged in the deep-sea fishing
of compensation the employees concerned were receiving at the time business. Since 1978, private respondents were employed by them as
of dismissal. The execution of this award is entrusted to the National stevedores at Navotas Fish Port for the unloading of tuna fish catch
Labor Relations Commission. Costs against petitioner. from petitioners’ vessels and then loading them on refrigerated vans
for shipment abroad.
SO ORDERED.
On March 27, 1981, private respondents Antonio Boticario, and thirty
(30) others, upon the premise that they are petitioners’ regular
employees, filed a complaint against petitioners for non-payment of
overtime pay, premium pay, legal holiday pay, emergency allowance
under P.D. Nos. 525, 1123, 1614, 1634, 1678, 1713, 1751, 13th
5. RJL Martinez vs. NLRC - G.R. No. L-63550-51 (January 31, month pay (P.D. 851), service incentive leave pay and night shift
1984) differential. 2

Petition for Certiorari, Prohibition and Mandamus assailing the Claiming that they were dismissed from employment on March 29,
Decision of respondent National Labor Relations Commission (NLRC) 1981 as a retaliatory measure for their having filed the said

30
complaint, private respondents filed on April 21, 1981 another "I. Whether or not the appeal from the decision of Labor Arbiter filed employer. 8 We are thus in accord with the findings of respondent
complaint against petitioners for Illegal Dismissal and for Violation of by private respondents is within the 10-day reglementary period; NLRC in this regard.
Article 118 of the Labor Code, as amended. 3 Upon petitioners’
motion, these two cases were consolidated and tried "II. Whether or not respondent NLRC erred in reversing the decision Although it may be that private respondents alternated their
jointly.chanrobles lawlibrary : rednad of the Labor Arbiter despite the failure to furnish petitioners with a employment on different vessels when they were not assigned to
copy of the appeal; petitioners’ boats, that did not affect their employee status. The
In disputing any employer-employee relationship between them, evidence also establishes that petitioners had a fleet of fishing vessels
petitioners contend that private respondents are contract laborers "III. Whether or not there is an employer-employee relationship with about 65 ship captains, and as private respondents contended,
whose work terminated upon completion of each unloading, and that between the parties; when they finished with one vessel, they were instructed to wait for
in the absence of any boat arrivals, private respondents did not work the next. As respondent NLRC had found:chanrob1es virtual 1aw
for petitioners but were free to work or seek employment with other "IV. Whether or not private respondents are entitled to legal holiday library
fishing boat operators. pay, emergency living allowance, thirteenth month pay and incentive
leave pay."cralaw virtua1aw library We further find that the employer-employee relationship between the
On February 26, 1982, the Labor Arbiter upheld petitioners’ position parties herein is not co-terminous with each loading and unloading
ruling that the latter are extra workers, who were hired to perform 1. Petitioners, joined by the Solicitor General, contend that the appeal job. As earlier shown, respondents are engaged in the business of
specific tasks on contractual basis; that their work is intermittent filed by private respondents from the Decision of the Labor Arbiter fishing. For this purpose, they have a fleet of fishing vessels. Under
depending on the arrival of fishing vessels; that if there are no fish to was filed out of time considering that they received copy of the same this situation, respondents’ activity of catching fish is a continuous
unload and load, they work for some other fishing boat operators; on April 1, 1982 but that they filed their appeal only on April 19, process and could hardly be considered as seasonal in nature. So that
that private respondent Antonio Boticario had executed an 1982, or 18 days later. If we were to reckon the 10-day reglementary the activities performed by herein complainants, i.e. unloading the
employment contract under which he agreed to act as a labor period to appeal as calendar days, as held in the case of Vir-Jen catch of tuna fish from respondents’ vessels and then loading the
contractor and that the other private respondents are his men; that Shipping and Marine Services, Inc. v. NLRC, Et. Al. 5 , private same to refrigerated vans, are necessary or desirable in the business
even assuming that private respondents are employees of petitioners, respondents’ appeal was, indeed, out of time. However, it was clear of respondents. This circumstance makes the employment of
their employer-employee relation is co-terminous with each unloading from Vir-jen that the calendar day basis of computation would apply complainants a regular one, in the sense that it does not depend on
and loading job; that in the same manner, petitioners are not under only "henceforth" or to future cases. That ruling was not affected by any specific project or seasonal activity. 9
any obligation to hire petitioners exclusively, hence, when they were this Court’s Resolution of November 18, 1983 reconsidering its
not given any job on March 29, 1981, no dismissal was effected but Decision of July 20, 1982. When the appeal herein was filed on April The employment contract signed by Antonio Boticario, 10 which
that they were merely not rehired. 4 19, 1982, the governing proviso was found in Section 7, Rule XIII of described him as "labor contractor", is not really so inasmuch as
the Rules and Regulations Implementing the Labor Code along with wages continued to be paid by petitioners and he and the other
On April 1, 1982, private respondents received the Decision of the NLRC Resolution No. 1, Series of 1977, which based the computation workers were uniformly paid. He was merely asked by petitioners to
Labor Arbiter dismissing their complaints. On April 19, 1982, they filed on "working days." The very face of the Notice of Decision itself 6 recruit other workers. Besides, labor-contracting is prohibited under
an appeal before respondent NLRC, which took cognizance thereof. indicated that the aggrieved party could appeal within 10 "working Sec. 9(b), Rule VIII, Book III — Rules and Regulations Implementing
days" from receipt of copy of the resolution appealed from. From April the Labor Code as amended. 11 Directly in point and controlling is the
In its Decision of November 26, 1982, the NLRC reversed the findings 1 to April 19, 1982 is exactly ten (10) working days considering the ruling in an analogous case, Philippine Fishing Boat Officers and
of the Labor Arbiter, and resolved, as previously stated, to uphold the Holy Week and the two Saturdays and Sundays that supervened in Engineers Union v. CIR, 12 reading:jgc:chanrobles.com.ph
existence of employer-employee relationship between the parties. between that period. In other words, private respondents’ appeal,
having been filed during the time that the prevailing period of appeal "The Court holds, therefore, that the employer-employee relationship
Petitioners resorted to a "Manifestation and Omnibus Motion to was ten (10) working days and prior to the Vir-Jen case promulgated existed between the parties notwithstanding evidence to the fact that
Dismiss Appeal and to Vacate and/or to Declare Null and Void the on July 20, 1982, it must be held to have been timely filed.chanrobles petitioners Visayas and Bergado, even during the time that they
Decision of this Honorable Commission Promulgated on November 25 law library : red worked with respondent company alternated their employment on
(should be 26), 1982" but the same was denied, hence, the instant different vessels when they were not assigned on the company’s
recourse. 2. Anent the failure of private respondents to furnish petitioners with vessels. For, as was stressed in the above-quoted case of Industrial-
a copy of their memorandum on appeal, suffice it to state that the Commercial-Agricultural Workers Organization v. CIR, (16 SCRA 562
As prayed for, a Temporary Restraining Order to enjoin the same is not fatal to the appeal. 7 [1966], ‘that during the temporary layoff the laborers are considered
enforcement of the questioned decision of respondent NLRC was free to seek other employment is natural, since the laborers are not
issued on April 20, 1983, and on August 15, 1983, the Petition was 3. The issue of the existence of an employer-employee relationship being paid, yet must find means of support’ and such temporary
given due course by the Second Division. between the parties is actually a question of fact, and the finding of cessation of operations ‘should not mean starvation for employees
the NLRC on this point is binding upon us, the exceptions to the and their families’."cralaw virtua1aw library
Petitioners submit the following issues for general rule being absent in this case. Besides, the continuity of
resolution:jgc:chanrobles.com.ph employment is not the determining factor, but rather whether the 4. Indeed, considering the length of time that private respondents
work of the laborer is part of the regular business or occupation of the have worked for petitioner — since 1978 — there is justification to

31
conclude that they were engaged to perform activities usually Kimberly Clark vs. Drilon - G.R. Nos. 77629 & 78791 (May 9, adversely affect national interest, then Minister Augusto S. Sanchez issued
necessary or desirable in the usual business or trade of petitioners 1990) an assumption order, the dispositive portion whereof
and are, therefore, regular employees. 13 As such, they are entitled reads:jgc:chanrobles.com.ph
to the benefits awarded them by respondent NLRC. Before us are two consolidated petitions for certiorari filed by the
"Wherefore, premises considered, immediately upon receipt of this order,
above-named petitioner union (hereinafter referred to as KILUSAN-OLALIA,
the striking union and its members are hereby enjoined to lift the picket
WHEREFORE, the instant Petition for Certiorari, Prohibition and for conciseness) and individual complainants therein, to wit: (a) G.R.
and remove all obstacles to the free ingress to and egress from the
Mandamus is hereby dismissed and the Temporary Restraining Order 77629, which seeks to reverse and set aside the decision, dated November
company premises and to return to work, including the 28 contractual
heretofore issued is hereby dissolved. 13, 1986, 1 and the resolution, dated January 9, 1987, 2 respectively
workers who were dismissed; likewise, the company is directed to resume
handed down by the two former Ministers of Labor, both rendered in BLR
its operations immediately thereafter and to accept all the employees back
Costs against petitioners. Case No. NS-5-164-86; and (b) G.R. No. 78791, which prays for the
under the same terms and conditions of employment prevailing prior to the
reversal of the resolutions of the National Labor Relations Commission,
industrial action. Further, all issues in the notice of strike, as amended, are
dated May 25, 1987 3 and June 19, 1987, 4 issued in Injunction Case No.
SO ORDERED. hereby assumed in this assumption order, except for the representation
1442 thereof.
issue pending in Region IV in which the Med-Arbiter is also enjoined to
decide the same the soonest possible time." 8
Kimberly-Clark Philippines, Inc. (KIMBERLY, for brevity) executed a three-
year collective bargaining agreement (CBA) with United Kimberly-Clark
In obedience to said assumption order, KILUSAN-OLALIA terminated its
Employees Union-Philippine Transport and General Workers’ Organization
strike and picketing activities effective June 1, 1986 after a compliance
(UKCEUPTGWO) which expired on June 30, 1986.chanrobles law library
agreement was entered into by it with KIMBERLY. 9

Within the 60-day freedom period prior to the expiration of and during the
On June 2, 1986, Med-Arbiter Bonifacio I. Marasigan, who was handling the
negotiations for the renewal of the aforementioned CBA, some members of
certification election case (R04-OD-M-4-15-86), issued an order 10
the bargaining unit formed another union called "Kimberly Independent
declaring the following as eligible to vote in the certification election,
Labor Union for Solidarity, Activism and Nationalism-Organized Labor
thus:chanrob1es virtual 1aw library
Association in Line Industries and Agriculture (KILUSAN-OLALIA)."cralaw
virtua1aw library
1. The regular rank-and-file laborers/employees of the respondent
company consisting of 537 as of May 14, 1986 should be considered
On April 21, 1986, KILUSAN-OLALIA filed a petition for certification election
qualified to vote;
in Regional Office No. IV, Ministry of Labor and Employment (MOLE),
docketed as Case No. RO4-OD-M-4-15-86. 5 KIMBERLY and UKCEU-
2. Those casuals who have worked at least six (6) months as appearing in
PTGWO did not object to the holding of a certification election but objected
the payroll months prior to the filing of the instant petition on April 21,
to the inclusion of the so-called contractual workers whose employment
1986; and
with KIMBERLY was coursed through an independent contractor, Rank
Manpower Company (RANK, for short), as among the qualified voters.
3. Those Contractual employees who are allegedly in the employ of an
independent contractor and who have also worked for at least six (6)
Pending resolution of the petition for certification election by the med-
months as appearing in the payroll month prior to the filing of the instant
arbiter, KILUSAN-OLALIA filed a notice of strike on May 7, 1986 with the
petition on April 21, 1986.
Bureau of Labor Relations, docketed as BLR Case No. NS-5-164-86, 6
charging KIMBERLY with unfair labor practices based on the following
During the pre-election conference, 64 casual workers were challenged by
alleged acts: (1) dismissal of union members (KILUSAN-OLALIA); (2) non-
KIMBERLY and UKCEU-PTGWO on the ground that they are not employees
regularization of casuals/contractuals with over six months service; (3)
of KIMBERLY but of RANK. It was agreed by all the parties that the 64
non-implementation of appreciation bonus for 1982 and 1983; (4) non-
voters shall be allowed to cast their votes but that their ballots shall be
payment of minimum wages (5) coercion of employees; and (6) engaging
segregated and subject to challenge proceedings. The certification election
in CBA negotiations despite the pendency of a petition for certification
was conducted on July 1, 1986, with the following results: 11
election. This was later amended to withdraw the charge of coercion but to
add, as new charges, the dismissal of Roque Jimenez and the non-payment
1. KILUSAN-OLALIA = 246 votes
of backwages of the reinstated Emerito Fuentes. 7

2. UKCEU-PTGWO = 266 votes

Conciliation proceedings conducted by the bureau proved futile, and
KILUSAN-OLALIA declared a strike at KIMBERLY’s premises in San Pedro,
3. NO UNION = 1 vote
Laguna on May 23, 1986.

4. SPOILED BALLOTS = 4 votes

On May 26, 1986, KIMBERLY petitioned MOLE to assume jurisdiction over
the labor dispute. On May 30, 1986, finding that the labor dispute would
5. CHALLENGED BALLOTS = 64votes

32
 agreement (CBA), no restraining order or injunctive writ having been 6. The company has reinstated Roque Jimenez as of January 11, 1987.
TOTAL 581 votes issued, and on December 18, 1986, a new CBA was concluded and ratified
by 440 out of 517 members of the bargaining unit. 17 In G.R. No. 78791, the records 21 disclose that on May 4, 1987, KILUSAN-
On July 2, 1986, KILUSAN-OLALIA filed with the med-arbiter a "Protest and OLALIA filed another notice of strike with the Bureau of Labor Relations
Motion to Open and Count Challenged Votes" 12 on the ground that the 64 In an order dated January 9, 1987, former Labor Minister Franklin Drilon charging respondent company with unfair labor practices. On May 8, 1987,
workers are employees of KIMBERLY within the meaning of Article 212(e) denied both motions for reconsideration filed by KIMBERLY and KILUSAN- the bureau dismissed and considered the said notice as not filed by reason
of the Labor Code. On July 7, 1986, KIMBERLY filed an opposition to the OLALIA. 18 On March 10, 1987, the new CBA executed between KIMBERLY of the pendency of the representation issue before this Court in G.R. No.
protest and motion, asserting that there is no employer-employee and UKCEU-PTGWO was signed. 77629. KILUSAN-OLALIA moved to reconsider said order, but before the
relationship between the casual workers and the company, and that the bureau could act on said motion, KILUSAN-OLALIA declared a strike and
med-arbiter has no jurisdiction to rule on the issue of the status of the On March 16, 1987, KILUSAN-OLALIA filed a petition for certiorari in this established a picket on respondent company’s premises in San Pedro,
challenged workers which is one of the issues covered by the assumption Court, docketed as G.R. No. 77629, seeking to set aside the aforesaid Laguna on May 17, 1987.chanrobles virtual lawlibrary
order. The med-arbiter opted not to rule on the protest until the issue of decision, dated November 13, 1986, and the order, dated January 9, 1987,
regularization has been resolved by MOLE. 13 rendered by the aforesaid labor ministers. On May 18, 1987, KIMBERLY filed a petition for injunction with the National
Labor Relations Commission (NLRC), docketed as Injunction Case No.
On November 13, 1986, then Minister Sanchez rendered a decision in BLR On March 25, 1987, this Court issued in G.R. No. 77629 a temporary 1442. A supplement to said petition was filed on May 19, 1987. On May 26,
Case No. NS-5-164-86, 14 the disposition wherein is summarized as restraining order, enjoining respondents from enforcing and/or carrying out 1987, the commissioner en banc issued a temporary restraining order
follows:cralawnad the decision and order above stated, particularly that portion (1) (TRO) on the basis of the ocular inspection report submitted by the
recognizing respondent UKCEU-PTGWO as the exclusive bargaining commission’s agent, the testimonies of KIMBERLY’s witnesses, and pictures
1. The service contract for janitorial and yard maintenance services representative of all regular rank-and-file employees in the establishment of the barricade. KILUSAN-OLALIA moved to dissolve the TRO on the
between KIMBERLY and RANK was declared legal; of respondent company, (2) enforcing and/or implementing the alleged ground of lack of jurisdiction.
CBA which is detrimental to the interests of the members of the petitioner
2. The other casual employees not performing janitorial and yard union, and (3) stopping respondent company from deducting monthly dues Immediately after the expiration of the first TRO on June 9, 1987, the
maintenance services were deemed labor-only contractuals and since and other union assessments from the wages of all regular rank-and-file striking employees returned to their picketlines and reestablished their
labor-only contracting is prohibited, such employees were held to have employees of respondent company and from remitting the said collection to barricades at the gate. On June 19, 1987, the commission en banc issued a
attained the status of regular employees, the regularization being effective respondent UKCEU-PTGWO, issued in BLR Case No. NS-5-164-86, entitled, second TRO.
as of the date of the decision; "In Re: Labor Dispute at Kimberly-Clark Philippines, Inc.," of the
Department of Labor and Employment, Manila, 19 On June 25, 1987, KILUSAN-OLALIA filed another petition for certiorari and
3. UKCEU-PTGWO, having garnered more votes than KILUSAN-OLALIA, prohibition with this Court, docketed as G.R. No. 78791, questioning the
was certified as the exclusive bargaining representative of KlMBERLY’s In its comment, 20 respondent company pointed out certain events which validity of the temporary restraining orders issued by the NLRC on May 26,
employees; took place prior to the filing of the petition in G.R. No. 77629, to 1987 and June 19, 1987. On June 29, 1987, KILUSAN-OLALIA filed in said
wit:chanrob1es virtual 1aw library case an urgent motion for a TRO to restrain NLRC from implementing the
4. The reinstatement of 28 dismissed KILUSAN-OLALIA members was questioned orders. An opposition, as well as a reply thereto, were filed by
ordered; 1. The company and UKCEU-PTGWO have concluded a new collective the parties.
bargaining agreement which had been ratified by 440 out of 517 members
5. Roque Jimenez was ordered reinstated without backwages, the period of the bargaining unit; Meanwhile, on July 3, 1987, KIMBERLY filed in the NLRC an urgent motion
when he was out of work being considered as penalty for his misdemeanor; for the issuance of a writ of preliminary injunction when the strikers
2. The company has already granted the new benefits under the new CBA returned to the strike area after the second TRO expired. After due
6. The decision of the voluntary arbitrator ordering the reinstatement of to all its regular employees, including members of petitioner union who, hearing, the commission issued a writ of preliminary injunction on July 14,
Ermilo Fuentes with backwages was declared as already final and while refusing to ratify the CBA nevertheless readily accepted the benefits 1987, after requiring KIMBERLY to post a bond in the amount of
unappealable; and arising therefrom; P20,000.00.

7. KIMBERLY was ordered to pay appreciation bonus for 1982 and 1983. 3. The company has been complying with the check-off provision of the Consequently, on July 17, 1987, KILUSAN-OLALIA filed in G.R. No. 78791 a
CBA and has been remitting the union dues to UKCEU-PTGWO; second urgent motion for the issuance of a TRO by reason of the issuance
On November 25, 1986, KIMBERLY filed a motion for reconsideration with of said writ of preliminary injunction, which motion was opposed by
respect to the regularization of contractual workers, the appreciation bonus 4. The company has already implemented the decision of November 13, KIMBERLY.
and the reinstatement of Roque Jimenez. 15 In a letter dated November 1986 insofar as the regularization of contractual employees who have
24, 1986, counsel for KILUSAN-OLALIA demanded from KIMBERLY the rendered more than one (1) year of service as of the filing of the Notice of Thereafter, in its memorandum 22 filed on December 28, 1989 and in its
implementation of the November 13, 1986 decision but only with respect Strike on May 7, 1986 and are not engaged in janitorial and yard motion for early resolution 23 filed on February 28, 1990, both in G.R. No.
to the regularization of the casual workers. 16 maintenance work, are concerned; 78791, KILUSAN-OLALIA alleged that it had terminated its strike and
picketing activities and that the striking employees had unconditionally
On December 11, 1986, KILUSAN-OLALIA filed a motion for reconsideration 5. Rank Manpower Company bad already pulled out, reassigned, or offered to return to work, although they were refused admission by
questioning the authority of the Minister of Labor to assume jurisdiction replaced the contractual employees engaged in jaritorial and yard KIMBERLY. By reason of this supervening development, the petition in G.R.
over the representation issue. In the meantime, KIMBERLY and UKCEU- maintenance work, as well as those with less than one year service; and No. 78791, questioning the propriety of the issuance of the two temporary
PTGWO continued with the negotiations on the new collective bargaining restraining orders and the writ of injunction therein, has been rendered

33
moot and academic. The law thus provides for two kinds of regular employees, namely: (1)
However, the matter of the controverted pronouncement by former those who are engaged to perform activities which are usually necessary or
In G.R. No. 77629, the petition of KILUSAN-OLALIA avers that the Minister Sanchez, as reaffirmed by respondent secretary, regarding the desirable in the usual business or trade of the employer; and (2) those who
respondent Secretary of Labor and/or the former Minister of Labor have winner in the certification election presents a different situation. have rendered at least one year of service, whether continuous or broken,
acted with grave abuse of discretion and/or without jurisdiction in (1) with respect to the activity in which they are employed. The individual
ruling on the issue of bargaining representation and declaring respondent It will be recalled that in the certification election, UKCEU-PTGWO came out petitioners herein who have been adjudged to be regular employees fall
UKCEU-PTGWO as the collective bargaining representative of all regular as the winner, by garnering a majority of the votes cast therein with the under the second category. These are the mechanics, electricians,
rank-and-file employees of the respondent company; (2) holding that exception of 64 ballots which were subject to challenge. In the protest filed machinists, machine shop helpers, warehouse helpers, painters,
petitioners are not entitled to vote in the certification election; (3) for the opening and counting of the challenged ballots, KILUSAN-OLALIA carpenters, pipefitters and masons. It is not disputed that these workers
considering the regularization of petitioners (who are not janitors and raised the main and sole question of regularization of the 64 casual have been in the employ of KIMBERLY for more than one year at the time
maintenance employees) to be effective only on the date of the disputed workers. The med-arbiter refused to act on the protest on the ground that of the filing of the petition for certification election by KILUSAN-OLALIA.
decision; (4) declaring petitioners who are assigned janitorial and yard the issue involved is within the jurisdiction of the then Minister of Labor.
maintenance work to be employees of respondent RANK and not entitled to KILUSAN-OLALIA then sought an interim order for an early resolution on Owing to their length of service with the company, these workers became
be regularized; (5) not awarding to petitioners differential pay arising out the employment status of the casual workers, which was one of the issues regular employees, by operation of law, one year after they were employed
of such illegal work scheme; and (6) ordering the mere reinstatement of included in the notice of strike filed by KILUSAN-OLALIA in BLR Case No. by KIMBERLY through RANK. While the actual regularization of these
petitioner Jimenez. NS-5-164-86. Consequently, Minister Sanchez rendered the questioned employees entails the mechanical act of issuing regular appointment
decision finding that the workers not engaged in janitorial and yard papers and compliance with such other operating procedures as may be
The issue of jurisdiction actually involves a question of whether or not maintenance service are regular employees but that they became regular adopted by the employer, it is more in keeping with the intent and spirit of
former Minister Sanchez committed a grave abuse of discretion amounting only on the date of his decision, that is, on November 13, 1986, and, the law to rule that the status of regular employment attaches to the
to lack of jurisdiction in declaring respondent UKCEU-PTGWO as the therefore, they were not entitled to vote in the certification election. On the casual worker on the day immediately after the end of his first year of
certified bargaining representative of the regular employees of KIMBERLY, basis of the results obtained in the certification election, Minister Sanchez service. To rule otherwise, and to instead make their regularization
after ruling that the 64 casual workers, whose votes are being challenged, declared UKCEU-PTGWO as the winner. dependent on the happening of some contingency or the fulfillment of
were not entitled to vote in the certification election. certain requirements, is to impose a burden on the employee which is not
The pivotal issue, therefore, is when said workers, not performing janitorial sanctioned by law.chanrobles virtual lawlibrary
KILUSAN-OLALIA contends that after finding that the 64 workers are or yard maintenance service, became regular employees of KIMBERLY.
regular employees of KIMBERLY, Minister Sanchez should have remanded That the first stated position is the situation contemplated and sanctioned
the representation case to the med-arbiter, instead of declaring UKCEU- We find and so hold that the former labor minister gravely abused his by law is further enhanced by the absence of a statutory limitation before
PTGWO as the winner in the certification election and setting aside the discretion in holding that those workers not engaged in janitorial or yard regular status can be acquired by a casual employee. The law is explicit. As
med-arbiter’s order which allowed the 64 casual workers to cast their maintenance service attained the status of regular employees only on long as the employee has rendered at least one year of service, he
votes. November 13, 1986, which thus deprived them of their constitutionally becomes a regular employee with respect to the activity in which he is
protected right to vote in the certification election and choose their rightful employed. The law does not provide the qualification that the employee
Respondents argue that since the issues of regularization and bargaining representative. must first be issued a regular appointment or must first be formally
representation are closely interrelated and that a resolution of the former declared as such before he can acquire a regular status. Obviously, where
inevitable affects the latter, it was necessary for the former labor minister The Labor Code defines who are regular employees, as the law does not distinguish, no distinction should be drawn.
to take cognizance of the representation issue; that no timely motion for follows:jgc:chanrobles.com.ph
reconsideration or appeal was made from his decision of November 13, The submission that the decision of November 13, 1986 has become final
1986 which had become final and executory; and that the aforesaid "ART. 280. Regular and Casual Employment. — The provisions of written and executory, on the grounds that no timely appeal has been made
decision was impliedly accepted by KILUSAN-OLALIA when it demanded agreements to the contrary notwithstanding and regardless of the oral therefrom and that KILUSAN-OLALIA has impliedly acceded thereto, is
from KIMBERLY the issuance of regular appointments to its affected agreements of the parties, an employment shall be deemed to be regular untenable.
members in compliance with said decision, hence petitioner employees are where the employee has been engaged to perform activities which are
now estopped from questioning the legality thereof.chanrobles usually necessary or desirable in the usual business or trade of the Rule 65 of the Rules of Court allows original petitions for certiorari from
virtualawlibrary chanrobles.com:chanrobles.com.ph employer, except where the employment has been fixed for a specific decisions or orders of public respondents provided they are filed within a
project or undertaking the completion or termination of which has been reasonable time. We believe that the period from January 9, 1987, when
We uphold the authority of former Minister Sanchez to assume jurisdiction determined at the time of the engagement of the employee or where the the motions for reconsideration separately filed by KILUSAN-OLALIA and
over the issue of the regularization of the 64 casual workers, which fact is work or services to be performed is seasonal in nature and the KIMBERLY were denied, to March 16, 1987, when the petition in G.R. No.
not even disputed by KILUSAN-OLALIA as may be gleaned from its request employment is for the duration of the season. 77629 was filed, constitutes a reasonable time for availing of such
for an interim order in the notice of strike case (BLR-NS-5-164-86), asking recourse.
that the regularization issue be immediately resolved. Furthermore, even "An employment shall be deemed to be casual if it is not covered by the
the med-arbiter who ordered the holding of the certification election preceding paragraph: Provided, That any employee who has rendered at We likewise do not subscribe to the claim of respondents that KILUSAN-
refused to resolve the protest on the ground that the issue raised therein least one year of service, whether such service is continuous or broken, OLALIA has impliedly accepted the questioned decision by demanding
correctly pertains to the jurisdiction of the then labor minister. No shall be considered a regular employee with respect to the activity in which compliance therewith. In the letter of KILUSAN-OLALIA dated November
opposition was offered by KILUSAN-OLALIA. We hold that the issue of he is employed and his employment shall continue while such activity 24, 1986, 24 addressed to the legal counsel of KIMBERLY, it is there
regularization was properly addressed to the discretion of said former exists."cralaw virtua1aw library expressly and specifically pointed out that KILUSAN-OLALIA intends to file
minister. a motion for reconsideration of the questioned decision but that, in the

34
meantime, it was demanding the issuance of regular appointments to the virtualawlibrary chanrobles.com:chanrobles.com.ph
casual workers who had been declared to be regular employees. The filing
of said motion for reconsideration of the questioned decision by KILUSAN- The petition filed in G.R. No. 78791 is hereby DISMISSED.
OLALIA, which was later denied, sustains our position on this issue and
denies the theory of estoppel postulated by respondents. SO ORDERED.

On the basis of the foregoing circumstances, and as a consequence of their

status as regular employees, those workers not perforce janitorial and yard
maintenance service were performance entitled to the payment of salary
differential, cost of living allowance, 13th month pay, and such other
benefits extended to regular employees under the CBA, from the day
immediately following their first year of service in the company. These 7. Tabas vs. California Manufacturing - G.R. No. 80680
regular employees are likewise entitled to vote in the certification election (January 26, 1989)
held in July 1, 1986. Consequently, the votes cast by those employees not
performing janitorial and yard maintenance service, which form part of the
On July 21, 1986, July 23, 1986, and July 28, 1986, the petitioners
64 challenged votes, should be opened, counted and considered for the
purpose of determining the certified bargaining representative. petitioned the National Labor Relations Commission for reinstatement
and payment of various benefits, including minimum wage, overtime
We do not find it necessary to disturb the finding of then Minister Sanchez pay, holiday pay, thirteen-month pay, and emergency cost of living
holding as legal the service contract executed between KIMBERLY and allowance pay, against the respondent, the California Manufacturing
RANK, with respect to the workers performing janitorial and yard Company. 1
maintenance service, which is supported by substantial and convincing
evidence. Besides, we take judicial notice of the general practice adopted On October 7, 1986, after the cases had been consolidated, the
in several government and private institutions and industries of hiring a California Manufacturing Company (California) filed a motion to
janitorial service on an independent contractor basis. Furthermore, the dismiss as well as a position paper denying the existence of an
occasional directives and suggestions of KIMBERLY are insufficient to erode employer-employee relation between the petitioners and the company
primary and continuous control over the employees of the independent
and, consequently, any liability for payment of money claims. 2 On
contractor. 25 Lastly, the duties performed by these workers are not
motion of the petitioners, Livi Manpower Services, Inc. was impleaded
independent and integral steps in or aspects of the essential operations of
as a party-respondent.
KIMBERLY which is engaged in the manufacture of consumer paper
products and cigarette paper, hence said workers cannot be considered
regular employees. It appears that the petitioners were, prior to their stint with California,
employees of Livi Manpower Services, Inc. (Livi), which subsequently
The reinstatement of Roque Jimenez without backwages involves a assigned them to work as "promotional merchandisers" 3 for the
question of fact best addressed to the discretion of respondent secretary former firm pursuant to a manpower supply agreement. Among other
whose finding thereon is binding and conclusive upon this Court, absent a things, the agreement provided that California "has no control or
showing that he committed a grave abuse in the exercise thereof. supervisions whatsoever over [Livi’s] workers with respect to how
they accomplish their work or perform [California’s] obligation" ; 4 the
WHEREFORE, judgment is hereby rendered in G.R. No. 77629:chanrob1es Livi "is an independent contractor and nothing herein contained shall
virtual 1aw library be construed as creating between [California] and [Livi] . . . the
relationship of principal[-]agent or employer[-] employee" ; 5 that "it
1. Ordering the med-arbiter in Case No. R04-OD-M-4-15-86 to open and
is hereby agreed that it is the sole responsibility of [Livi] to comply
count the 64 challenged votes, and that the union with the highest number
with all existing as well as future laws, rules and regulations pertinent
of votes be thereafter declared as the duly elected certified bargaining
to employment of labor" ; 6 and that" [California] is free and harmless
representative of the regular employees of KIMBERLY;
from any liability arising from such laws or from any accident that
2. Ordering KIMBERLY to pay the workers who have been regularized their may befall workers and employees of [Livi] while in the performance
differential pay with respect to minimum wage, cost of living allowance, of their duties for [California]." 7
13th month pay, and benefits provided for under the applicable collective
bargaining agreement from the time they became regular employees. It was further expressly stipulated that the assignment of workers to
California shall be on a "seasonal and contractual basis" ; that" [c]ost
All other aspects of the decision appealed from, which are not so modified of living allowance and the 10 legal holidays will be charged directly to
or affected thereby, are hereby AFFIRMED. The temporary restraining [California] at cost’; and that" [p]ayroll for the preceeding [sic] week
order issued in G.R. No. 77629 is hereby made permanent.chanrobles [shall] be delivered by [Livi] at [California’s] premises." 8
35
 standards: (1) the manner of selection and engagement of the shouldered by either one or shared by both. 18
The petitioners were then made to sign employment contracts with putative employee; (2) the mode of payment of wages; (3) the
durations of six months, upon the expiration of which they signed new presence or absence of a power of dismissal; and (4) the presence or There is no doubt that in the case at bar, Livi performs "manpower
agreements with the same period, and so on. Unlike regular California absence of a power to control the putative employee’s conduct. 14 Of services," 19 meaning to say, it contracts out labor in favor of clients.
employees, who received not less than P2,823.00 a month in addition the four, the right-of-control test has been held to be the decisive We hold that it is one notwithstanding its vehement claims to the
to a host of fringe benefits and bonuses, they received P38.56 plus factor. 15 contrary, and notwithstanding the provision of the contract that it is
P15.00 in allowance daily.chanrobles virtual lawlibrary "an independent contractor." 20 The nature of one’s business is not
On the other hand, we have likewise held, based on Article 106 of the determined by self-serving appellations one attaches thereto but by
The petitioners now allege that they had become regular California Labor Code, hereinbelow reproduced:chanrob1es virtual 1aw library the tests provided by statute and prevailing case law. 21 The bare fact
employees and demand, as a consequence whereof, similar benefits. that Livi maintains a separate line of business does not extinguish the
They likewise claim that pending further proceedings below, they were ART. 106. Contractor or subcontractor. — Whenever an employee equal fact that it has provided California with workers to pursue the
notified by California that they would not be rehired. As a result, they enters into a contract with another person for the performance of the latter’s own business. In this connection, we do not agree that the
filed an amended complaint charging California with illegal dismissal. former’s work, the employees of the contractor and of the latter’s petitioners had been made to perform activities "which are not
subcontractor, if any, shall be paid in accordance with the provisions directly related to the general business of manufacturing," 22
California admits having refused to accept the petitioners back to of this Code. California’s purported "principal operation activity." 23 The petitioner’s
work but deny liability therefor for the reason that it is not, to begin had been charged with "merchandizing [sic] promotion or sale of the
with, the petitioners’ employer and that the "retrenchment" had been In the event that the contractor or subcontractor fails to pay wages of products of [California] in the different sales outlets in Metro Manila
forced by business losses as well as expiration of contracts. 9 It his employees in accordance with this Code, the employer shall be including task and occational [sic] price tagging," 24 an activity that is
appears that thereafter, Livi reabsorbed them into its labor pool on a jointly and severally liable with his contractor or subcontractor to such doubtless, an integral part of the manufacturing business. It is not,
"wait-in or standby" status. 10 employees to the extent of the work performed under the contract, in then, as if Livi had served as its (California’s) promotions or sales arm
the same manner and extent that he is liable to employees directly or agent, or otherwise, rendered a piece of work it (California) could
Amid these factual antecedents, the Court finds the single most employed by him. not have itself done; Livi, as a placement agency, had simply supplied
important issue to be: Whether the petitioners are California’s or Livi’s it with the manpower necessary to carry out its (California’s)
employees. The Secretary of Labor may, by appropriate regulations, restrict or merchandising activities, using its (California’s) premises and
prohibit the contracting out of labor to protect the rights of workers equipment.25cralaw:red
The labor arbiter’s decision, 11 a decision affirmed on appeal, 12 ruled established under this Code. In so prohibiting or restricting, he may
against the existence of any employer-employee relation between the make appropriate distinctions between labor-only contracting and job Neither Livi nor California can therefore escape liability, that is,
petitioners and California ostensibly in the light of the manpower contracting as well as differentiations within these types of contracting assuming one exists.
supply contract, supra, and consequently, against the latter’s liability and determine who among the parties involved shall be considered
as and for the money claims demanded. In the same breath, the employer for purposes of this Code, to prevent any violation or The fact that the petitioners have allegedly admitted being Livi’s
however, the labor arbiter absolved Livi from any obligation because circumvention of any provisions of this Code.chanrobles law library : "direct employees" 26 in their complaints is nothing conclusive. For
the "retrenchment" in question was allegedly "beyond its control." 13 red one thing, the fact that the petitioners were (are), will not absolve
He assessed against the firm, nevertheless, separation pay and California since liability has been imposed by legal operation. For
attorney’s fees. There is "labor-only" contracting where the person supplying workers another, and as we indicated, the relations of parties must be judged
to an employer does not have substantial capital or investment in the from case to case and the decree of law, and not by declarations of
We reverse. form of tools, equipment, machineries, work premises, among others, parties.
and the workers recruited and placed by such person are performing
The existence of an employer-employees relation is a question of law activities which are directly related to the principal business of such The fact that the petitioners have been hired on a "temporary or
and being such, it cannot be made the subject of agreement. Hence, employer. In such cases, the person or intermediary shall be seasonal" basis merely is no argument either. As we held in Philippine
the fact that the manpower supply agreement between Livi and considered merely as an agent of the employer who shall be Bank of Communications v. NLRC, 27 a temporary or casual
California had specifically designated the former as the petitioners’ responsible to the workers in the same manner and extent as if the employee, under Article 218 of the Labor Code, becomes regular after
employer and had absolved the latter from any liability as an latter were directly employed by him. service of one year, unless he has been contracted for a specific
employer, will not erase either party’s obligations as an employer, if project. And we cannot say that merchandising is a specific project for
an employer-employee relation otherwise exists between the workers that notwithstanding the absence of a direct employer-employee the obvious reason that it is an activity related to the day-to-day
and either firm. At any rate, since the agreement was between Livi relationship between the employer in whose favor work had been operations of California.
and California, they alone are bound by it, and the petitioners cannot contracted out by a "labor-only" contractor, and the employees, the
be made to suffer from its adverse consequences. former has the responsibility, together with the "labor-only" It would have been different, we believe, had Livi been discretely a
contractor, for any valid labor claims, 16 by operation of law. The promotions firm, and that California had hired it to perform the
This Court has consistently ruled that the determination of whether or reason, so we held, is that the "labor-only" contractor is considered latter’s merchandising activities. For then, Livi would have been truly
not there is an employer-employee relation depends upon four "merely an agent of the employer," 17 and liability must be the employer of its employees, and California, its client. The client, in

36
that case, would have been a mere patron, and not an employer. The supply agreement, we have, hence, considered it illegal. Under the 281, of the Labor Code, but not to exceed three (3) years, and (b) all
employees would not in that event be unlike waiters, who, although at Labor Code, genuine job contracts are permissible, provided they are such other and further benefits as may be provided by existing
the service of customers, are not the latter’s employees, but of the genuine job contracts. But, as we held in Philippine Bank of collective bargaining agreement(s) or other relations, or by law,
restaurant. As we pointed out in the Philippine Bank of Communications, supra, when such arrangements are resorted to "in beginning such time; and (4) ORDERING the private respondents to
Communications case:chanrob1es virtual 1aw library anticipation of, and for the very purpose of making possible, the PAY unto the petitioners attorney’s fees equivalent to ten (10%)
secondment 30 of the employees from the true employer, the Court percent of all money claims hereby awarded, in addition to those
will be justified in expressing its concern. For then that would money claims.
compromise the rights of the workers, especially their right to security
x              x              x of tenure. The private respondents are likewise ORDERED to PAY the costs of
this suit.
This brings us to the question: What is the liability of either Livi or
California? IT IS SO ORDERED.
. . . The undertaking given by CESI in favor of the bank was not the
performance of a specific job — for instance, the carriage and delivery The records show that the petitioners had been given an initial six-
of documents and parcels to the addresses thereof. There appear to month contract, renewed for another six months. Accordingly, under
be many companies today which perform this discrete service, Article 281 of the Code, they had become regular employees — of 8. Fonterra Brands vs. Largado - G.R. No. 205300 (March 18,
companies with their own personnel who pick up documents and California — and had acquired a secure tenure. Hence, they cannot be 2015)
packages from the offices of a client or customer, and who deliver separated without due process of law.
such materials utilizing their own delivery vans or motorcycles to the
Petitioner Fonterra Brands Phils., Inc. (Fonterra) contracted the
addressees. In the present case, the undertaking of CESI was to California resists reinstatement on the ground, first, and as we said,
services of Zytron Marketing and Promotions Corp. (Zytron) for the
provide its client the bank with a certain number of persons able to that the petitioners are not its employees, and second, by reason of
marketing and promotion of its milk and dairy products. Pursuant to
carry out the work of messengers. Such undertaking of CESI was financial distress brought about by "unfavorable political and
the contract, Zytron provided Fonterra with trade merchandising
complied with when the requisite number of persons were assigned or economic atmosphere," 31 "coupled by the February Revolution." 32
representatives (TMRs), including respondents Leonardo Largado
seconded to the petitioner bank. Orpiada utilized the premises and As to the first objection, we reiterate that the petitioners are its
(Largado) and Teotimo Estrellado (Estrellado). The engagement of
office equipment of the bank and not those of CESI. Messengerial employees and who, by virtue of the required one-year length-of-
their services began on September 15, 2003 and May 27, 2002,
work — the delivery of documents to designated persons whether service, have acquired a regular status. As to the second, we are not
respectively, and ended on June 6, 2006.
within or without the bank premises — is of course directly related to convinced that California has shown enough evidence, other than its
the day-to-day operations of the bank. Section 9(2) quoted above bare say-so, that it had in fact suffered serious business reverses as a
On May 3, 2006, Fonterra sent Zytron a letter terminating its
does not require for its applicability that the petitioner must be result alone of the prevailing political and economic climate. We
promotions contract, effective June 5, 2006. Fonterra then entered
engaged in the delivery of items as a distinct and separate line of further find the attribution to the February Revolution as a cause for
into an agreement for manpower supply with A.C. Sicat Marketing and
business. its alleged losses to be gratuitous and without basis in fact.
Promotional Services (A.C. Sicat). Desirous of continuing their work as
TMRs, respondents submitted their job applications with A.C. Sicat,
Succinctly put, CESI is not a parcel delivery company: as its name California should be warned that retrenchment of workers, unless
which hired them for a term of five (5) months, beginning June 7,
indicates, it is a recruitment and placement corporation placing clearly warranted, has serious consequences not only on the State’s
2006 up to November 6, 2006.
bodies, as it were, in different client companies for longer or shorter initiatives to maintain a stable employment record for the country, but
periods of time, . . . 28 more so, on the workingman himself, amid an environment that is
desperately scarce in jobs. And, the National Labor Relations
In the case at bar, Livi is admittedly an "independent contractor Commission should have known better than to fall for such
providing temporary services of manpower to its client." 29 When it When respondents’ 5-month contracts with A.C. Sicat were about to
unwarranted excuses and nebulous claims.
thus provided California with manpower, it supplied California with expire, they allegedly sought renewal thereof, but wereallegedly
personnel, as if such personnel had been directly hired by California. refused. This prompted respondents to file complaints for illegal
WHEREFORE, the petition is GRANTED. Judgment is hereby
Hence, Article 106 of the Code applies.chanrobles virtualawlibrary dismissal, regularization, non-payment of service incentive leave and
RENDERED: (1) SETTING ASIDE the decision, dated March 20, 1987,
chanrobles.com:chanrobles.com.ph 13th month pay, and actual and moral damages, against petitioner,
and the resolution, dated August 19, 1987; (2) ORDERING the
Zytron, and A.C. Sicat.
respondent, the California Manufacturing Company, to REINSTATE the
The Court need not therefore consider whether it is Livi or California petitioners with full status and rights of regular employees; and (3)
which exercises control over the petitioner vis-a-vis the four The Labor Arbiter dismissed the complaint and ruled that: (1)
ORDERING the respondent, the California Manufacturing Company,
barometers referred to earlier, since by fiction of law, either or both respondents were not illegally dismissed. As a matter of fact, they
and the respondents, Livi Manpower Service, Inc. and/or Lily-Victoria
shoulder responsibility. were the ones who refused to renew their contract and that they
A. Azarcon, to PAY, jointly and severally, unto the petitioners: (a)
voluntarily complied with the requirements for them to claim their
backwages and differential pays effective as and from the time they
It is not that by dismissing the terms and conditions of the manpower corresponding monetary benefits in relation thereto; and (2) they
had acquired a regular status under the second paragraph, of Section
were consecutively employed by Zytron and A.C. Sicat, not by
37
Fonterra. The dispositive portion of the respondents without loss of seniority rights, with full backwages, and b. As shown in its Articles of Incorporation,
Decision2 reads:chanRoblesvirtualLawlibrary other benefits from the time of their illegal dismissal up to the time of Zytron  had been in business since 1990,
their actual reinstatement. The fallo of the Decision or more than a decade before it signed a
reads:chanRoblesvirtualLawlibrary merchandising agreement with petitioner
Fonterra;chanrobleslaw
WHEREFORE, in view of the foregoing, judgment is hereby rendered
DISMISSING the instant case for utter lack of merit.
c. Very importantly, petitioner Fonterra
WHEREFORE, premises considered, the petition is hereby GRANTED.
never exercised the right to control
SO ORDERED.cralawred The assailed Decision dated 20 November 2009 and Resolution dated
respondents and other employees of
5 March 2010 of the National Labor Relations Commission (NLRC),
Zytron. Indeed, respondents neither
The NLRC affirmed the Labor Arbiter, finding that respondents’ Seventh Division, are hereby ANULLED and SET ASIDE. Private
alleged that petitioner exercised control
separation from Zytron was brought about by the execution of the respondent Fonterra Brand, Inc. is hereby ordered to REINSTATE
over them nor presented proof in support
contract between Fonterra and A.C. Sicat where the parties agreed to [respondents] without loss of seniority rights. Private respondents
thereof in any of their previous pleadings.
absorb Zytron’s personnel, including respondents. Too, respondents Fonterra Brand, Inc. and Zytron Marketing and Promotional Corp. are
failed to present any evidence that they protested this set-up. hereby further ORDERED to jointly and severally pay petitioners their
Furthermore, respondents failed to refute the allegation that they full backwages and other benefits from the time of their illegal
voluntarily refused to renew their contract with A.C. Sicat. Also, dismissal up to the time of their actual reinstatement; and attorney’s
respondents did not assert any claim against Zytron and A.C. Sicat. fees. II. Respondents never claimed nor adduced evidence
The NLRC disposed of the case in this that they were dismissed from employment by
wise:chanRoblesvirtualLawlibrary SO ORDERED. Zytron. In fact, Zytron denies terminating them
from work. The CA, thus, erred in finding that
Zytron and Fonterra moved for reconsideration, but to no avail. respondents were “illegally dismissed.”
Hence, this petition.
WHEREFORE, premises considered, the appeals are hereby
Succinctly, the issues in the case at bar are: (1) whether or not
ordered DISMISSED and the Decision of the Labor Arbiter is
AFFIRMED [in]toto. Zytron and A.C. Sicat are labor-only contractors, making Fonterra the
employer of herein respondents; and (2) whether or not respondents
SO ORDERED.3 The Issues were illegally dismissed.

The NLRC decision was assailed in a petition under Rule 65 before the
CA. Petitioner presents the following issues for Our
resolution:chanRoblesvirtualLawlibrary Our Ruling
Ruling on the petition, the CA, in the questioned Decision, 4 found that
A.C. Sicat satisfies the requirements of legitimate job contracting, but
Zytron does not. According to the CA: (1) Zytron’s paid-in capital of We find merit in the petition.
P250,000 cannot be considered as substantial capital; (2) its I. The CA erred in ruling that Zytron was a mere
Certificate of Registration was issued by the DOLE months after labor-only contractor to petitioner Fonterra, in
that:chanRoblesvirtualLawlibrary As regards the CA’s conclusion that Zytron is not a legitimate job
respondents’ supposed employment ended; and (3) its claim that it contractor, We are of the view that such is immaterial to the
has the necessary tools and equipment for its business is resolution of the illegal dismissal issue for one reason: We find that
unsubstantiated. Therefore, according to the CA, respondents were a. As held by the Court, there is no absolute
respondents voluntarily terminated their employment with Zytron,
Fonterra’s employees. figure that constitutes “substantial”
contrary to their allegation that their employment with Zytron was
capital for an independent contractor, and
illegally terminated.
Additionally, the CA held that respondents were illegally dismissed the same should instead be measured
since Fonterra itself failed to prove that their dismissal is lawful. against the type of work it is obligated to
We do not agree with the CA that respondents’ employment with
However, the illegal dismissal should be reckoned from the do for the principal. It is most respectfully
Zytron was illegally terminated.
termination of their supposed employment with Zytron on June 6, submitted that, here, the merchandising
2006. Furthermore, respondents’ transfer to A.C. Sicat is tantamount work undertaken by Zytron’s paid-in
As correctly held by the Labor Arbiter and the NLRC, the termination
to a completely new engagement by another employer. Lastly, the capital of P250,000 was as of 1990, the
of respondents’ employment with Zytron was brought about by the
termination of their contract with A.C. Sicat arose from the expiration year it was incorporated;chanrobleslaw
cessation of their contracts with the latter. We give credence to the
of their respective contracts with the latter. The CA, thus, ruled that Labor Arbiter’s conclusion that respondents were the ones who
Fonterra is liable to respondents and ordered the reinstatement of
38
refused to renew their contracts with Zytron, and the NLRC’s finding 2. Certificate of Registration with the Bureau of Internal
that they themselves acquiesced to their transfer to A.C. Sicat. A person is considered engaged in legitimate job contracting or Revenue;chanrobleslaw
subcontracting if the following conditions
By refusing to renew their contracts with Zytron, respondents concur:chanRoblesvirtualLawlibrary 3. Mayor’s Permit;chanrobleslaw
effectively resigned from the latter. Resignation is the voluntary act of
employees who are compelled by personal reasons to dissociate 4. Certificate of Membership with the Social Security
themselves from their employment, done with the intention of System;chanrobleslaw
relinquishing an office, accompanied by the act of 1. The contractor or subcontractor carries on a distinct and
abandonment.5chanroblesvirtuallawlibrary independent business and undertakes to perform the job,
work or service on its own account and under its own 5. Certificate of Registration with the Department of Labor and
responsibility according to its own manner and method, and Employment;chanrobleslaw
Here, it is obvious that respondents were no longer interested in
continuing their employment with Zytron. Their voluntary refusal to free from the control and direction of the principal in all
matters connected with the performance of the work except 6. Company Profile; and
renew their contracts was brought about by their desire to continue
their assignment in Fonterra which could not happen in view of the as to the results thereof;chanrobleslaw
conclusion of Zytron’s contract with Fonterra. Hence, to be able to 7. Certifications issued by its clients.10
continue with their assignment, they applied for work with A.C. Sicat 2. The contractor or subcontractor has substantial capital or
with the hope that they will be able to continue rendering services as investment; and Furthermore, A.C. Sicat has substantial capital, having assets totaling
TMRs at Fonterra since A.C. Sicat is Fonterra’s new manpower P5,926,155.76 as of December 31, 2006. Too, its Agreement with
supplier. This fact is even acknowledged by the CA in the assailed 3. The agreement between the principal and contractor or Fonterra clearly sets forth that A.C. Sicat shall be liable for the wages
Decision where it recognized the reason why respondents applied for subcontractor assures the contractual employees entitlement and salaries of its employees or workers, including benefits,
work at A.C. Sicat. The CA stated that “[t]o continuously work as to all labor and occupational safety and health standards, premiums, and protection due them, as well as remittance to the
merchandisers of Fonterra products, [respondents] submitted their free exercise of the right to self-organization, security of proper government entities of all withholding taxes, Social Security
job applications to A.C. Sicat xxx.” 6 This is further bolstered by the tenure, and social and welfare benefits.8 Service, and Medicare premiums, in accordance with relevant laws.
fact that respondents voluntarily complied with the requirements for
them to claim their corresponding monetary benefits in relation to the On the other hand, contracting is prohibited when the contractor or The appellate court further correctly held that Fonterra’s issuance of
cessation of their employment contract with Zytron. subcontractor merely recruits, supplies or places workers to perform a Merchandising Guidelines, stock monitoring and inventory forms, and
job, work or service for a principal and if any of the following promo mechanics, for compliance and use of A.C. Sicat’s employees
In short, respondents voluntarily terminated their employment with elements are present, thus:chanRoblesvirtualLawlibrary assigned to them, does not establish that Fonterra exercises control
Zytron by refusing to renew their employment contracts with the over A.C. Sicat. We agree with the CA’s conclusion that these were
latter, applying with A.C. Sicat, and working as the latter’s employees, imposed only to ensure the effectiveness of the promotion services to
thereby abandoning their previous employment with Zytron. Too, it is be rendered by the merchandisers as it would be risky, if not
well to mention that for obvious reasons, resignation is inconsistent 1. The contractor or subcontractor does not have substantial imprudent, for any company to completely entrust the performance of
with illegal dismissal. This being the case, Zytron cannot be said to capital or investment which relates to the job, work or the operations it has contracted out.
have illegally dismissed respondents, contrary to the findings of the service to be performed and the employees recruited,
CA. supplied or placed by such contractor or subcontractor are These sufficiently show that A.C. Sicat carries out its merchandising
performing activities which are directly related to the main and promotions business, independent of Fonterra’s business. Thus,
As regards respondents’ employment with A.C. Sicat and its business of the principal; or having settled that A.C. Sicat is a legitimate job contractor, We now
termination via non-renewal of their contracts, considering that in determine whether the termination of respondents’ employment with
labor-only contracting, the law creates an employer-employee 2. The contractor does not exercise the right to control over the the former is valid.
relationship between the principal and the labor-only contractor’s performance of the work of the contractual employee.9
employee as if such employees are directly employed by the principal We agree with the findings of the CA that the termination of
employer, and considers the contractor as merely the agent of the respondents’ employment with the latter was simply brought about by
The CA correctly found that A.C. Sicat is engaged in legitimate job
principal,7 it is proper to dispose of the issue on A.C. Sicat’s status as the expiration of their employment contracts.
contracting. It duly noted that A.C. Sicat was able to prove its status
a job contractor first before resolving the issue on the legality of the
as a legitimate job contractor for having presented the following
cessation of respondents’ employment. Foremost, respondents were fixed-term employees. As previously held
evidence, to wit:chanRoblesvirtualLawlibrary
by this Court, fixed-term employment contracts are not limited, as
In this regard, We defer to the findings of the CA anent A.C. Sicat’s they are under the present Labor Code, to those by nature seasonal
status as a legitimate job contractor, seeing that it is consistent with or for specific projects with predetermined dates of completion; they
the rules on job contracting and is sufficiently supported by the 1. Certificate of Business Registration;chanrobleslaw also include those to which the parties by free choice have assigned a
evidence on record. specific date of termination. 11 The determining factor of such contracts

39
is not the duty of the employee but the day certain agreed upon by averred, effected his dismissal in bad faith and in an oppressive
the parties for the commencement and termination of the manner.
employment relationship.12chanroblesvirtuallawlibrary
Alcantara prayed to be reinstated tohis former position without loss of
In the case at bar, it is clear that respondents were employed by A.C. seniority rights and other privileges, as well as to be paid backwages,
Sicat as project employees. In their employment contract with the moral and exemplary damages, and attorney’s fees. He further sought
latter, it is clearly stated that “[A.C. Sicat is] temporarily employing that the ownership of the Mitsubishi Adventure with Plate No. WHD-
[respondents] as TMR[s] effective June 6[, 2006] under the following 945 be transferred to his name.
terms and conditions: The need for your service being only for a
specific project, your temporary employment will be for the duration
only of said project of our client, namely to promote FONTERRA Royale Homes, on the other hand, vehemently denied that Alcantara
BRANDS products xxx which is expected to be finished on or before is its employee. It argued that the appointment paper of Alcantara
Nov. 06, 2006.”13chanroblesvirtuallawlibrary isclear that it engaged his services as an independent sales
contractorfor a fixed term of one year only. He never received any
Respondents, by accepting the conditions of the contract with A.C. salary, 13th month pay, overtime pay or holiday pay from Royale
Sicat, were well aware of and even acceded to the condition that their Homes as hewas paid purely on commission basis. In addition, Royale
employment thereat will end on said pre-determined date of Homes had no control on how Alcantara would accomplish his tasks
termination. They cannot now argue that they were illegally dismissed and responsibilities as he was free to solicit sales at any time and by
by the latter when it refused to renew their contracts after its any manner which he may deem appropriateand necessary. He is
expiration. This is so since the non-renewal of their contracts by A.C. even free to recruit his own sales personnel to assist him in pursuance
Sicat is a management prerogative, and failure of respondents to of his sales target.
prove that such was done in bad faith militates against their
9. Royale Homes vs. Alcantara - G.R. No. 195190 (July 28,
contention that they were illegally dismissed. The expiration of their According to Royale Homes, Alcantara decided to leave the company
2014)
contract with A.C. Sicat simply caused the natural cessation of their after his wife, who was once connectedwith it as a sales agent, had
fixed-term employment there at. We, thus, see no reason to disturb formed a brokerage company that directly competed with its business,
In 1994, Royale Homes, a corporation engaged in marketing real
the ruling of the CA in this respect. and even recruited some of its sales agents. Although this was against
estates, appointed Alcantara asits Marketing Director for a fixed
the exclusivity clause of the contract, Royale Homes still offered to
period of one year. His work consisted mainly of marketing Royale
With these, We need not belabor the other assigned errors. accept Alcantara’s wife back so she could continue to engage in real
Homes’ realestate inventories on an exclusive basis. Royale Homes
estate brokerage, albeit exclusively for Royale Homes. In a special
reappointed him for several consecutive years, the last of which
IN VIEW OF THE FOREGOING, the instant Petition for Review management committee meeting on October 8,2003, however,
covered the period January 1 to December 31, 2003 where he held
is GRANTED. The assailed Decision of the Court of Appeals dated Alcantara announced publicly and openly that he would leave the
the position of Division 5 Vice-President-Sales. 8
September 6, 2012 and its January 11, 2013 Resolution denying company by the end of October 2003 and that he would no longer
reconsideration thereof, in CA-G.R. SP No. 114227, are finish the unexpired term of his contract. He has decided to join his
hereby REVERSED and SET ASIDE. The Decision of the National Proceedings before the Labor Arbiter wifeand pursue their own brokerage business. Royale Homes accepted
Labor Relations Commission dated November 20, 2009 and its Alcantara’s decision. It then threw a despedidaparty in his honor and,
Resolution dated March 5, 2010 in NLRC Case No. RAB IV 12-23927- On December 17, 2003, Alcantara filed a Complaint for Illegal subsequently, appointed a new independent contractor. Two months
06-Q are hereby REINSTATED. Dismissal9 against Royale Homes and its President Matilde Robles, after herelinquished his post, however, Alcantara appeared in Royale
Executive Vice-President for Administration and Finance Ma. Melinda Homes and submitted a letter claiming that he was illegally dismissed.
SO ORDERED. Bernardino, and Executive Vice- President for Sales Carmina Sotto.
Alcantara alleged that he is a regular employee of Royale Homes since Ruling of the Labor Arbiter
he is performing tasks that are necessary and desirable to its
business; that in 2003 the company gave him ₱1.2 million for the
On September 7, 2005,the Labor Arbiter rendered a Decision 11 holding
services he rendered to it; that in the first week of November 2003,
that Alcantara is an employee of Royale Homes with a fixed-term
however, the executive officers of Royale Homes told him that they
employment period from January 1 to December 31, 2003 and that
were wondering why he still had the gall to come to office and sit at
the pre-termination of his contract was against the law.Hence,
his table;10 and that the actsof the executive officers of Royale Homes
Alcantara is entitled to an amount which he may have earned on the
amounted to his dismissal from work without any valid or just cause
average for the unexpired portion of the contract. With regard to the
and in gross disregard of the proper procedure for dismissing
impleaded corporate officers, the Labor Arbiter absolved them from
employees. Thus, he alsoimpleaded the corporate officers who, he
any liability.

40
The dispositive portion of the Labor Arbiter’s Decision reads: SO ORDERED.14 SO ORDERED.19

WHEREFORE, premises considered, judgment is hereby rendered Alcantara moved for reconsideration.15 In a Resolution16 dated May 29, Royale Homes filed a Motion for Reconsideration 20 and a Supplemental
ordering the respondent Royale Homes Marketing Corp. to pay the 2009, however, the NLRC denied his motion. Motion for Reconsideration.21 In a Resolution22 dated January 18,
complainant the total amount of TWO HUNDRED SEVENTY SEVEN 2011, however, the CA denied said motions.
THOUSAND PESOS (₱277,000.00) representing his Alcantara thus filed a Petition for Certiorari 17 with the CA imputing
compensation/commission for the unexpired term of his contract. grave abuse of discretion on the partof the NLRC in ruling that he is Issues
not an employee of Royale Homes and that it is the regular courts
All other claims are dismissed for lack of merit. which have jurisdiction over the issue of whether the pre-termination Hence, this Petition where Royale Homes submits before this Court
of the contract is valid. the following issues for resolution:
SO ORDERED.12
Ruling of the Court of Appeals A.
Both parties appealed the Labor Arbiter’s Decision to the NLRC.
Royale Homes claimed that the Labor Arbiter grievously erred inruling On June 23, 2010, the CA promulgated its Decision 18 granting WHETHER THE COURT OF APPEALS HAS DECIDED THE
that there exists an employer-employee relationship between the Alcantara’s Petition and reversing the NLRC’s Decision. Applying the INSTANT CASE NOT IN ACCORD WITH LAW AND
parties. It insisted that the contract between them expressly four-fold and economic reality tests, it held thatAlcantara is an APPLICABLE DECISIONS OF THE SUPREME COURT WHEN IT
statesthat Alcantara is an independent contractor and not an ordinary employee of Royale Homes. Royale Homes exercised some degree of REVERSED THE RULING OF THE NLRC DISMISSING THE
employee. Ithad no control over the means and methods by which he control over Alcantara since his job, as observed by the CA, is subject COMPLAINT OF RESPONDENT FOR LACK OF JURISDICTION
performed his work. RoyaleHomes likewise assailed the award of to company rules, regulations, and periodic evaluations. He was also AND CONSEQUENTLY, IN FINDING THAT RESPONDENT WAS
₱277,000.00 for lack of basis as it did not pre-terminate the contract. bound by the company code of ethics. Moreover, the exclusivity ILLEGALLY DISMISSED[.]
It was Alcantara who chose not to finish the contract. clause of the contract has made Alcantara economically dependent on
Royale Homes, supporting the theory that he is anemployee of said
company. B.
Alcantara, for his part, argued that the Labor Arbiter erred in ruling
that his employment was for a fixed-term and that he is not entitled
to backwages, reinstatement, unpaid commissions, and damages. The CA further held that Alcantara’s termination from employment WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS
was without any valid or just cause, and it was carried out in violation ERROR OF LAW IN DISREGARDING THE EN BANCRULING OF
of his right to procedural due process. Thus, the CA ruled that he THIS HONORABLE COURT IN THE CASEOF TONGKO VS.
Ruling of the National LaborRelations Commission MANULIFE, AND IN BRUSHING ASIDE THE APPLICABLE
isentitled to backwages and separation pay, in lieu of reinstatement.
Considering,however, that the CA was not satisfied with the RULINGS OF SONZA VS. ABS CBN AND CONSULTA V. CA[.]
On February 23, 2009, the NLRC rendered its Decision, 13 ruling that proofadduced to establish the amount of Alcantara’s annual salary, it
Alcantara is not an employee but a mere independent contractor of remanded the caseto the Labor Arbiter to determine the same and the C.
Royale Homes. It based its ruling mainly on the contract which does monetary award he is entitled to. With regard to the corporate
not require Alcantara to observe regular working hours. He was also officers, the CA absolved them from any liability for want of clear
free to adopt the selling methods he deemed most effective and can WHETHER THE COURT OF APPEALS COMMITTED A SERIOUS
proof that they assented to the patently unlawful acts or that they are
even recruit sales agents to assist him in marketing the inventories of ERROR OF LAW IN DENYING THE MOTION FOR
guilty of bad faith orgross negligence. Thus: RECONSIDERATION OF PETITIONER AND IN REFUSING TO
Royale Homes. The NLRC also considered the fact that Alcantara was
not receiving monthly salary, but was being paid on commission basis CORRECT ITSELF[.]23
as stipulated in the contract. Being an independent contractor, the WHEREFORE, in view of the foregoing, the instant PETITION is
NLRC concluded that Alcantara’s Complaint iscognizable by the regular GRANTED. The assailed decision of the National Labor Relations Royale Homes contends that its contract with Alcantara is clear and
courts. Commission in NLRC NCR CASE NO. 00-12-14311-03 NLRC CA NO.
unambiguous −it engaged his services as an independent contractor.
046104-05 dated February 23, 2009 as well as the Resolution dated This can be readily seen from the contract stating that no employer-
May 29, 2009 are hereby SET ASIDE and a new one is entered
The falloof the NLRC Decision reads: employee relationship exists between the parties; that Alcantara was
ordering the respondent company to pay petitioner backwages which free to solicit sales at any time and by any manner he may deem
shall be computed from the time of his illegal termination in October
appropriate; that he may recruit sales personnel to assist him in
WHEREFORE, premises considered, the Decision of Labor Arbiter 2003 up to the finality of this decision, plus separation pay equivalent marketing Royale Homes’ inventories; and, thathis remunerations are
Dolores Peralta-Beley dated September 5, 2005 is REVERSED and SET to one month salary for every year of service. This case is REMANDED
dependent on his sales performance.
ASIDE and a NEW ONE rendered dismissing the complaint for lack of to the Labor Arbiter for the proper determination and computation of
jurisdiction. back wages, separation pay and other monetary benefits that
petitioner is entitled to.

41
Royale Homes likewise argues that the CA grievously erred in ruling time, though, the characterization the parties gave to their 1. Commission override of 0.5% for all option sales
that it exercised control over Alcantara based on a shallow ground relationship in the Agreement cannot simply be brushed aside beginning January 1, 2003 booked by your sales
that his performance is subject to company rules and regulations, because it embodiestheir intent at the time they entered the agents.
code of ethics, periodic evaluation, and exclusivity clause of contract. Agreement, and they were governed by this understanding
RoyaleHomes maintains that it is expected to exercise some degree of throughout their relationship. At the very least, the provision on the 2. Budget allocation depending on your division’s
control over its independent contractors,but that does not absence of employer- employee relationship between the parties can sale performance as per our budget guidelines.
automatically result in the existence ofemployer-employee be an aid in considering the Agreement and its implementation, and in
relationship. For control to be consideredas a proof tending to appreciating the other evidence on record.26
establish employer-employee relationship, the same mustpertain to 3. Sales incentive and other forms of company
the means and method of performing the work; not on the support which may be granted from time to time.
In this case, the contract,  duly signed and not disputed by the
27
It is understood, however, that no employer-
relationship of the independent contractors among themselves or their parties, conspicuously provides that "no employer-employee
persons or their source of living. employee relationship exists between us, that of
relationship exists between" Royale Homes and Alcantara, as well as your sales personnel/agents, and that you shall
his sales agents. It is clear that they did not want to be bound by hold our company x x x, its officers and directors,
Royale Homes further asserts that it neither hired nor wielded the employer-employee relationship atthe time ofthe signing of the free and harmless from any and all claims of
power to dismiss Alcantara. It was Alcantara who openly and publicly contract. Thus: liability and damages arising from and/or incident
declared that he was pre-terminating his fixed-term contract. to the marketing of our real estate inventories.
January 24, 2003
The pivotal issue to be resolved in this case is whether Alcantara was We reserve, however, our right to terminate this agreement in case of
an independent contractor or anemployee of Royale Homes. MR. FIDEL P. ALCANTARA violation of any company rules and regulations, policies and code of
ethics upon notice for justifiable reason.
Our Ruling 13 Rancho I,Marikina City
Your performance shall be subject toperiodic evaluation based on
The Petition is impressed with merit. Dear Mr. Alcantara, factors which shall be determined by the management.

This will confirm yourappointment as Division 5

The determination of whether a party who renders services to another If you are amenable to the foregoing terms and conditions, please
VICE[-]PRESIDENTSALES of ROYALE HOMES MARKETING
is an employee or an independent contractor involves an evaluation of indicate your conformity by signing on the space provided below and
CORPORATION effective January 1, 2003 to December 31, 2003.
factual matters which, ordinarily, is not within the province of this return [to] us a duplicate copy of this letter, duly accomplished, to
Court. In view of the conflicting findings of the tribunals below, constitute as our agreement on the matter.(Emphasis ours)
however, this Court is constrained to go over the factual matters Your appointment entails marketing our real estate inventories on an
involved in this case.24 EXCLUSIVE BASIS under such price, terms and condition to be
Since "the terms of the contract are clear and leave no doubt upon
provided to you from time to time.
the intention of the contracting parties, the literal meaning of
The juridical relationship of the parties based on their written contract itsstipulations should control."28 No construction is even needed
As such, you can solicit sales at any time and by any manner which asthey already expressly state their intention. Also, this Court adopts
you deem appropriate and necessary to market our real estate the observation of the NLRC that it is rather strange on the part of
The primary evidence of the nature of the parties’ relationship in this
inventories subject to rules, regulations and code of ethics Alcantara, an educated man and a veteran sales broker who claimed
case is the written contract that they signed and executed in
promulgated by the company. Further, you are free to recruit sales to be receiving ₱1.2 million as his annual salary, not to have
pursuanceof their mutual agreement. While the existence of
personnel/agents to assist you in marketing of our inventories contested the portion of the contract expressly indicating that he is
employer-employee relationship is a matter of law, the
provided that your personnel/agents shall first attend the required not an employee of Royale Homes if their true intention were
characterization made by the parties in their contract as to the nature
seminars and briefing to be conducted by us from time to time for the otherwise.
of their juridical relationship cannot be simply ignored, particularly in
purpose of familiarizing them of terms and conditionsof sale, the
this case where the parties’ written contractunequivocally states their
natureof property sold, etc., attendance of which shall be a condition
intention at the time they entered into it. In Tongko v. The The juridical relationship of the parties based on Control Test
precedent for their accreditation by us.
Manufacturers LifeInsurance Co. (Phils.), Inc.,25 it was held that:
In determining the existence of an employer-employee relationship,
That as such Division 5 VICE[-]PRESIDENT-SALES you shall be
To be sure, the Agreement’s legal characterization of the nature of the this Court has generally relied on the four-fold test, to wit: (1) the
entitled to:
relationship cannot be conclusive and binding on the courts; x x x the selection and engagement of the employee; (2) the payment of
characterization of the juridical relationship the Agreement embodied wages; (3) the power of dismissal; and (4) the employer’s power to
is a matter of law that is for the courts to determine. At the same control the employee with respect to the means and methods by

42
which the work is to be accomplished.29 Among the four, the most same, grant commission or allowance based on predetermined account free from the control and direction of Royale Homes in all
determinative factor in ascertaining the existence of criteria, and regularly monitor the result of their marketing and sales matters connected therewith, except as to the results thereof. 40
employeremployee relationship is the "right of control test". 30 "It is efforts. But tothe mind of this Court, these do not pertain to the
deemed to be such an important factor that the other requisites may means and methods of how Alcantara was to perform and accomplish Neither does the repeated hiring of Alcantara prove the existence of
even be disregarded."31 This holds true where the issues to be his task of soliciting sales. They do not dictate upon him the details of employer-employee relationship.41 As discussed above, the absence of
resolved iswhether a person who performs work for another is the how he would solicit sales or the manner as to how he would transact control over the means and methodsdisproves employer-employee
latter’s employee or is an independent contractor, 32 as in this case. business with prospective clients. In Tongko, this Court held that relationship. The continuous rehiring of Alcantara simply signifies the
For where the person for whom the services are performed reserves guidelines or rules and regulations that do notpertain to the means or renewal of his contract with Royale Homes, and highlights his
the right to control not only the end to beachieved, but also the methodsto be employed in attaining the result are not indicative of satisfactory services warranting the renewal of such contract. Nor
means by which such end is reached, employer-employee relationship control as understood inlabor law. Thus: does the exclusivity clause of contract establish the existence of the
is deemed to exist.33 labor law concept of control. In Consulta v. Court of Appeals, 42 it was
From jurisprudence, an important lesson that the first Insular Lifecase held that exclusivity of contract does not necessarily result in
In concluding that Alcantara is an employee of RoyaleHomes, the CA teaches us is that a commitment to abide by the rules and regulations employer-employee relationship, viz:
ratiocinated that since the performance of his tasks is subject to of an insurance company does not ipso factomake the insurance agent
company rules, regulations, code of ethics, and periodic evaluation, an employee. Neither do guidelines somehow restrictive of the x x x However, the fact that the appointment required Consulta to
the element of control is present. insurance agent’s conduct necessarily indicate "control" as this term is solicit business exclusively for Pamana did not mean that Pamana
defined in jurisprudence. Guidelines indicative of labor law "control," exercised control over the means and methods of Consulta’s work as
The Court disagrees. as the first Insular Lifecase tells us, should not merely relate to the the term control is understood in labor jurisprudence. Neither did it
mutually desirable result intended by the contractual relationship; make Consulta an employee of Pamana. Pamana did not prohibit
they must have the nature of dictating the means or methods to Consulta from engaging in any other business, or from being
Not every form of control is indicative of employer-employee beemployed in attaining the result, or of fixing the methodology and
relationship.1âwphi1 A person who performs work for another and is connected with any other company, for aslong as the business [of
of binding or restricting the party hired to the use of these means.In the] company did not compete with Pamana’s business. 43
subjected to its rules, regulations, and code of ethics does not fact, results-wise, the principal can impose production quotas and can
necessarily become an employee.34 As long as the level of control determine how many agents, with specific territories, ought to be
does not interfere with the means and methods of accomplishing the employed to achieve the company’s objectives. These are The same scenario obtains in this case. Alcantara was not prohibited
assigned tasks, the rules imposed by the hiring party on the hired management policy decisions that the labor law element of control from engaging in any other business as long as he does not sell
party do not amount to the labor law concept of control that is cannot reach. Our ruling in these respects in the first Insular Lifecase projects of Royale Homes’ competitors. He can engage in selling
indicative of employer-employee relationship. In Insular Life was practically reiterated in Carungcong. Thus, as will be shown more various other products or engage in unrelated businesses.
Assurance Co., Ltd. v. National Labor Relations Commission 35 it was fully below, Manulife’s codes of conduct, all of which do not intrude
pronounced that: into the insurance agents’ means and manner of conducting their Payment of Wages
sales and only control them as to the desired results and Insurance
Logically, the line should be drawn between rules that merely serve as Code norms, cannot be used as basis for a finding that the labor law
The element of payment of wages is also absent in thiscase. As
guidelines towards the achievement of the mutually desired result concept of control existed between Manulife and Tongko. 37 (Emphases provided in the contract, Alcantara’s remunerations consist only of
without dictating the means or methods to be employed in attaining in the original)
commission override of 0.5%, budget allocation, sales incentive and
it, and those that control or fix the methodology and bind or restrict other forms of company support. There is no proof that he received
the party hired to the use of such means. The first, which aim only to As the party claiming the existence of employer-employee fixed monthly salary. No payslip or payroll was ever presented and
promote the result, create no employeremployee relationship unlike relationship, it behoved upon Alcantara to prove the elements thereof, there is no proof that Royale Homes deducted from his supposed
the second, which address both the result and the means used to particularly Royale Homes’ power of control over the means and salary withholding tax or that it registered him with the Social
achieve it. x x x36 methods of accomplishing the work. 38 He, however, failed to cite Security System, Philippine Health Insurance Corporation, or Pag-Ibig
specificrules, regulations or codes of ethics that supposedly imposed Fund. In fact, his Complaint merely states a ballpark figure of his
In this case, the Court agrees with Royale Homes that the rules, control on his means and methods of soliciting sales and dealing with alleged salary of ₱100,000.00, more or less. All of these indicate an
regulations, code of ethics, and periodic evaluation alluded to prospective clients. On the other hand, this case is replete with independent contractual relationship.44 Besides, if Alcantara indeed
byAlcantara do not involve control over the means and methods by instances that negate the element of control and the existence of consideredhimself an employee of Royale Homes, then he, an
which he was to performhis job. Understandably, Royale Homes has employer-employee relationship. Notably, Alcantara was not required experienced and professional broker, would have complained that he
to fix the price, impose requirements on prospective buyers, and lay to observe definite working hours.39 Except for soliciting sales, was being denied statutorily mandated benefits. But for nine
down the terms and conditionsof the sale, including the mode of RoyaleHomes did not assign other tasks to him. He had full control consecutive years, he kept mum about it, signifying that he has
payment, which the independent contractors must follow. It is also over the means and methods of accomplishing his tasks as he can agreed, consented, and accepted the fact that he is not entitled
necessary for Royale Homes to allocateits inventories among its "solicit sales at any time and by any manner which [he may] deem tothose employee benefits because he is an independent contractor.
independent contractors, determine who has priority in selling the appropriate and necessary." He performed his tasks on his own

43
This Court is, therefore,convinced that Alcantara is not an employee The contractual relationship between Tongko and Manulife had two Tongko’s gross earnings consisted of commissions, persistency
of Royale Homes, but a mere independent contractor. The NLRC is, basic phases. The first or initial phase began on July 1, 1977, under a income, and management overrides. Since the beginning, Tongko
therefore, correct in concluding that the Labor Arbiter has no Career Agent’s Agreement (Agreement) that provided: consistently declared himself self-employed in his income tax returns.
jurisdiction over the case and that the same is cognizable by the Thus, under oath, he declared his gross business income and
regular courts. It is understood and agreed that the Agent is an independent deducted his business expenses to arrive at his taxable business
contractor and nothing contained herein shall be construed or income. Manulife withheld the corresponding 10% tax on Tongko’s
WHEREFORE, the instant Petition is hereby GRANTED. The June 23, interpreted as creating an employer-employee relationship between earnings.5
2010 Decision of the Court of Appeals in CA-G.R. SP No. 109998 is the Company and the Agent.
REVERSED and SET ASIDE. The February 23, 2009 Decision of the In 2001, Manulife instituted manpower development programs at the
National Labor Relations Commission is REINSTATED and AFFIRMED. xxxx regional sales management level. Respondent Renato Vergel de Dios
SO ORDERED. wrote Tongko a letter dated November 6, 2001 on concerns that were
brought up during the October 18, 2001 Metro North Sales Managers
a) The Agent shall canvass for applications for Life Insurance, Meeting. De Dios wrote:
Annuities, Group policies and other products offered by the Company,
and collect, in exchange for provisional receipts issued by the Agent,
money due to or become due to the Company in respect of The first step to transforming Manulife into a big league player has
applications or policies obtained by or through the Agent or from been very clear – to increase the number of agents to at least 1,000
policyholders allotted by the Company to the Agent for servicing, strong for a start. This may seem diametrically opposed to the way
subject to subsequent confirmation of receipt of payment by the Manulife was run when you first joined the organization. Since then,
Company as evidenced by an Official Receipt issued by the Company however, substantial changes have taken place in the organization, as
directly to the policyholder. these have been influenced by developments both from within and
without the company.

xxxx
xxxx

The Company may terminate this Agreement for any breach or

violation of any of the provisions hereof by the Agent by giving written The issues around agent recruiting are central to the intended
notice to the Agent within fifteen (15) days from the time of the objectives hence the need for a Senior Managers’ meeting earlier last
discovery of the breach. No waiver, extinguishment, abandonment, month when Kevin O’Connor, SVP-Agency, took to the floor to
withdrawal or cancellation of the right to terminate this Agreement by determine from our senior agency leaders what more could be done to
the Company shall be construed for any previous failure to exercise its bolster manpower development. At earlier meetings, Kevin had
right under any provision of this Agreement. presented information where evidently, your Region was the lowest
performer (on a per Manager basis) in terms of recruiting in 2000
and, as of today, continues to remain one of the laggards in this area.
Either of the parties hereto may likewise terminate his Agreement at
any time without cause, by giving to the other party fifteen (15) days
notice in writing.2 While discussions, in general, were positive other than for certain
comments from your end which were perceived to be uncalled for, it
10. Tongko vs. Manufacturers Life - G.R. No. 167622 (June 29,
became clear that a one-on-one meeting with you was necessary to
2010) Tongko additionally agreed (1) to comply with all regulations and ensure that you and management, were on the same plane. As
requirements of Manulife, and (2) to maintain a standard of gleaned from some of your previous comments in prior meetings
This resolves the Motion for Reconsideration 1 dated December 3, 2008 knowledge and competency in the sale of Manulife’s products, (both in group and one-on-one), it was not clear that we were
filed by respondent The Manufacturers Life Insurance Co. (Phils.), Inc. satisfactory to Manulife and sufficient to meet the volume of the new proceeding in the same direction.
(Manulife) to set aside our Decision of November 7, 2008. In the business, required by his Production Club membership.3
assailed decision, we found that an employer-employee relationship
existed between Manulife and petitioner Gregorio Tongko and ordered Kevin held subsequent series of meetings with you as a result, one of
The second phase started in 1983 when Tongko was named Unit which I joined briefly. In those subsequent meetings you reiterated
Manulife to pay Tongko backwages and separation pay for illegal
Manager in Manulife’s Sales Agency Organization. In 1990, he became certain views, the validity of which we challenged and subsequently
dismissal.
a Branch Manager. Six years later (or in 1996), Tongko became a found as having no basis.
Regional Sales Manager.4
The following facts have been stated in our Decision of November 7,
2008, now under reconsideration, but are repeated, simply for With such views coming from you, I was a bit concerned that the rest
purposes of clarity. of the Metro North Managers may be a bit confused as to the

44
directions the company was taking. For this reason, I sought a heard you proactively push for greater agency recruiting. You have helping you align your directions with Management’s avowed agency
meeting with everyone in your management team, including you, to not been proactive all these years when it comes to agency growth. growth policy.
clear the air, so to speak.
xxxx xxxx
This note is intended to confirm the items that were discussed at the
said Metro North Region’s Sales Managers meeting held at the 7/F I cannot afford to see a major region fail to deliver on its On account thereof, Management is exercising its prerogative under
Conference room last 18 October. developmental goals next year and so, we are making the following Section 14 of your Agents Contract as we are now issuing this notice
changes in the interim: of termination of your Agency Agreement with us effective fifteen
xxxx days from the date of this letter.7
1. You will hire at your expense a competent assistant who can unload
Issue # 2: "Some Managers are unhappy with their earnings and you of much of the routine tasks which can be easily delegated. This Tongko responded by filing an illegal dismissal complaint with the
would want to revert to the position of agents." assistant should be so chosen as to complement your skills and help National Labor Relations Commission (NLRC) Arbitration Branch. He
you in the areas where you feel "may not be your cup of tea." essentially alleged – despite the clear terms of the letter terminating
This is an often repeated issue you have raised with me and with his Agency Agreement – that he was Manulife’s employee before he
Kevin. For this reason, I placed the issue on the table before the rest You have stated, if not implied, that your work as Regional Manager was illegally dismissed.8
of your Region’s Sales Managers to verify its validity. As you must may be too taxing for you and for your health. The above could solve
have noted, no Sales Manager came forward on their own to confirm this problem. Thus, the threshold issue is the existence of an employment
your statement and it took you to name Malou Samson as a source of relationship. A finding that none exists renders the question of illegal
the same, an allegation that Malou herself denied at our meeting and xxxx dismissal moot; a finding that an employment relationship exists, on
in your very presence. the other hand, necessarily leads to the need to determine the validity
of the termination of the relationship.
2. Effective immediately, Kevin and the rest of the Agency Operations
This only confirms, Greg, that those prior comments have no solid will deal with the North Star Branch (NSB) in autonomous fashion. x x
basis at all. I now believe what I had thought all along, that these x A. Tongko’s Case for Employment Relationship
allegations were simply meant to muddle the issues surrounding the
inability of your Region to meet its agency development objectives! Tongko asserted that as Unit Manager, he was paid an annual over-
I have decided to make this change so as to reduce your span of
control and allow you to concentrate more fully on overseeing the rider not exceeding ₱50,000.00, regardless of production levels
Issue # 3: "Sales Managers are doing what the company asks them to remaining groups under Metro North, your Central Unit and the rest of attained and exclusive of commissions and bonuses. He also claimed
do but, in the process, they earn less." the Sales Managers in Metro North. I will hold you solely responsible that as Regional Sales Manager, he was given a travel and
for meeting the objectives of these remaining groups. entertainment allowance of ₱36,000.00 per year in addition to his
xxxx overriding commissions; he was tasked with numerous administrative
functions and supervisory authority over Manulife’s employees, aside
xxxx from merely selling policies and recruiting agents for Manulife; and he
All the above notwithstanding, we had your own records checked and recommended and recruited insurance agents subject to vetting and
we found that you made a lot more money in the Year 2000 versus The above changes can end at this point and they need not go any approval by Manulife. He further alleges that he was assigned a
1999. In addition, you also volunteered the information to Kevin when further. This, however, is entirely dependent upon you. But you have definite place in the Manulife offices when he was not in the field – at
you said that you probably will make more money in the Year 2001 to understand that meeting corporate objectives by everyone is the 3rd Floor, Manulife Center, 108 Tordesillas corner Gallardo Sts.,
compared to Year 2000. Obviously, your above statement about primary and will not be compromised. We are meeting tough Salcedo Village, Makati City – for which he never paid any rental.
making "less money" did not refer to you but the way you argued this challenges next year, and I would want everybody on board. Any Manulife provided the office equipment he used, including tables,
point had us almost believing that you were spouting the gospel of resistance or holding back by anyone will be dealt with accordingly.6 chairs, computers and printers (and even office stationery), and paid
truth when you were not. x x x for the electricity, water and telephone bills. As Regional Sales
Manager, Tongko additionally asserts that he was required to follow at
Subsequently, de Dios wrote Tongko another letter, dated December
xxxx 18, 2001, terminating Tongko’s services: least three codes of conduct.9

All of a sudden, Greg, I have become much more worried about your B. Manulife’s Case – Agency Relationship with Tongko
It would appear, however, that despite the series of meetings and
ability to lead this group towards the new direction that we have been communications, both one-on-one meetings between yourself and
discussing these past few weeks, i.e., Manulife’s goal to become a SVP Kevin O’Connor, some of them with me, as well as group Manulife argues that Tongko had no fixed wage or salary. Under the
major agency-led distribution company in the Philippines. While as meetings with your Sales Managers, all these efforts have failed in Agreement, Tongko was paid commissions of varying amounts,
you claim, you have not stopped anyone from recruiting, I have never

45
computed based on the premium paid in full and actually received by 2.1 Tongko undertook to comply with Manulife’s "control test," by selecting, without basis, a few items of
Manulife on policies obtained through an agent. As sales manager, rules, regulations and other requirements, i.e., the evidence to the exclusion of more material evidence to
Tongko was paid overriding sales commission derived from sales different codes of conduct such as the Agent Code support its conclusion that there is "control."
made by agents under his unit/structure/branch/region. Manulife also of Conduct, the Manulife Financial Code of Conduct,
points out that it deducted and withheld a 10% tax from all and the Financial Code of Conduct Agreement; 4. The November 7[, 2008] Decision is judicial legislation,
commissions Tongko received; Tongko even declared himself to be beyond the scope authorized by Articles 8 and 9 of the Civil
self-employed and consistently paid taxes as such—i.e., he availed of 2.2 The various affidavits of Manulife’s insurance Code, beyond the powers granted to this Court under Article
tax deductions such as ordinary and necessary trade, business and agents and managers, who occupied similar VIII, Section 1 of the Constitution and contravenes through
professional expenses to which a business is entitled. positions as Tongko, showed that they performed judicial legislation, the constitutional prohibition against
administrative duties that established employment impairment of contracts under Article III, Section 10 of the
Manulife asserts that the labor tribunals have no jurisdiction over with Manulife;12 and Constitution.
Tongko’s claim as he was not its employee as characterized in the
four-fold test and our ruling in Carungcong v. National Labor Relations 2.3 Tongko was tasked to recruit some agents in 5. For all the above reasons, the November 7[, 2008]
Commission.10 addition to his other administrative functions. De Decision made unsustainable and reversible errors, which
Dios’ letter harped on the direction Manulife should be corrected, in concluding that Respondent Manulife
The Conflicting Rulings of the Lower Tribunals intended to take, viz., greater agency recruitment and Petitioner had an employer-employee relationship, that
as the primary means to sell more policies; Respondent Manulife illegally dismissed Petitioner, and for
The labor arbiter decreed that no employer-employee relationship Tongko’s alleged failure to follow this directive led consequently ordering Respondent Manulife to pay Petitioner
existed between the parties. However, the NLRC reversed the labor to the termination of his employment with backwages, separation pay, nominal damages and attorney’s
arbiter’s decision on appeal; it found the existence of an employer- Manulife. fees.13
employee relationship and concluded that Tongko had been illegally
dismissed. In the petition for certiorari with the Court of Appeals (CA), The Motion for Reconsideration THE COURT’S RULING
the appellate court found that the NLRC gravely abused its discretion
in its ruling and reverted to the labor arbiter’s decision that no Manulife disagreed with our Decision and filed the present motion for A. The Insurance and the Civil Codes;
employer-employee relationship existed between Tongko and reconsideration on the following GROUNDS: the Parties’ Intent and Established
Manulife. Industry Practices
1. The November 7[, 2008] Decision violates Manulife’s right
Our Decision of November 7, 2008 to due process by: (a) confining the review only to the issue We cannot consider the present case purely from a labor law
of "control" and utterly disregarding all the other issues that perspective, oblivious that the factual antecedents were set in the
In our Decision of November 7, 2008, we reversed the CA ruling and had been joined in this case; (b) mischaracterizing the insurance industry so that the Insurance Code primarily governs.
found that an employment relationship existed between Tongko and divergence of conclusions between the CA and the NLRC Chapter IV, Title 1 of this Code is wholly devoted to "Insurance Agents
Manulife. We concluded that Tongko is Manulife’s employee for the decisions as confined only to that on "control"; (c) grossly and Brokers" and specifically defines the agents and brokers
following reasons: failing to consider the findings and conclusions of the CA on relationship with the insurance company and how they are governed
the majority of the material evidence, especially [Tongko’s] by the Code and regulated by the Insurance Commission.
1. Our ruling in the first Insular 11 case did not foreclose the declaration in his income tax returns that he was a "business
possibility of an insurance agent becoming an employee of person" or "self-employed"; and (d) allowing [Tongko] to The Insurance Code, of course, does not wholly regulate the "agency"
an insurance company; if evidence exists showing that the repudiate his sworn statement in a public document. that it speaks of, as agency is a civil law matter governed by the Civil
company promulgated rules or regulations that effectively Code. Thus, at the very least, three sets of laws – namely, the
controlled or restricted an insurance agent’s choice of 2. The November 7[, 2008] Decision contravenes settled Insurance Code, the Labor Code and the Civil Code – have to be
methods or the methods themselves in selling insurance, an rules in contract law and agency, distorts not only the legal considered in looking at the present case. Not to be forgotten, too, is
employer-employee relationship would be present. The relationships of agencies to sell but also distributorship and the Agreement (partly reproduced on page 2 of this Dissent and which
determination of the existence of an employer-employee franchising, and ignores the constitutional and policy context no one disputes) that the parties adopted to govern their relationship
relationship is thus on a case-to-case basis depending on the of contract law vis-à-vis labor law. for purposes of selling the insurance the company offers. To forget
evidence on record. these other laws is to take a myopic view of the present case and to
3. The November 7[, 2008] Decision ignores the findings of add to the uncertainties that now exist in considering the legal
2. Manulife had the power of control over Tongko, sufficient the CA on the three elements of the four-fold test other than relationship between the insurance company and its "agents."
to characterize him as an employee, as shown by the the "control" test, reverses well-settled doctrines of law on
following indicators: employer-employee relationships, and grossly misapplies the

46
The main issue of whether an agency or an employment relationship The application for an insurance agent’s license requires a written agency is for compensation,19 a matter the Civil Code Rules on Agency
exists depends on the incidents of the relationship. The Labor Code examination, and the applicant must be of good moral character and presumes in the absence of proof to the contrary. 20 Other than the
concept of "control" has to be compared and distinguished with the must not have been convicted of a crime involving moral compensation, the principal is bound to advance to, or to reimburse,
"control" that must necessarily exist in a principal-agent relationship. turpitude.14 The insurance agent who collects premiums from an the agent the agreed sums necessary for the execution of the
The principal cannot but also have his or her say in directing the insured person for remittance to the insurance company does so in a agency.21 By implication at least under Article 1994 of the Civil Code,
course of the principal-agent relationship, especially in cases where fiduciary capacity, and an insurance company which delivers an the principal can appoint two or more agents to carry out the same
the company-representative relationship in the insurance industry is insurance policy or contract to an authorized agent is deemed to have assigned tasks,22 based necessarily on the specific instructions and
an agency. authorized the agent to receive payment on the company’s directives given to them.
behalf.15 Section 361 further prohibits the offer, negotiation, or
a. The laws on insurance and agency collection of any amount other than that specified in the policy and With particular relevance to the present case is the provision that "In
this covers any rebate from the premium or any special favor or the execution of the agency, the agent shall act in accordance with
advantage in the dividends or benefit accruing from the policy. the instructions of the principal."23 This provision is pertinent for
The business of insurance is a highly regulated commercial activity in
the country, in terms particularly of who can be in the insurance purposes of the necessary control that the principal exercises over the
business, who can act for and in behalf of an insurer, and how these Thus, under the Insurance Code, the agent must, as a matter of agent in undertaking the assigned task, and is an area where the
parties shall conduct themselves in the insurance business. Section qualification, be licensed and must also act within the parameters of instructions can intrude into the labor law concept of control so that
186 of the Insurance Code provides that "No person, partnership, or the authority granted under the license and under the contract with minute consideration of the facts is necessary. A related article is
association of persons shall transact any insurance business in the the principal. Other than the need for a license, the agent is limited in Article 1891 of the Civil Code which binds the agent to render an
Philippines except as agent of a person or corporation authorized to the way he offers and negotiates for the sale of the company’s account of his transactions to the principal.
do the business of insurance in the Philippines." Sections 299 and 300 insurance products, in his collection activities, and in the delivery of
of the Insurance Code on Insurance Agents and Brokers, among other the insurance contract or policy. Rules regarding the desired results B. The Cited Case
provisions, provide: (e.g., the required volume to continue to qualify as a company agent,
rules to check on the parameters on the authority given to the agent,
and rules to ensure that industry, legal and ethical rules are followed) The Decision of November 7, 2008 refers to the first Insular and
Section 299. No insurance company doing business in the Philippines, are built-in elements of control specific to an insurance agency and Grepalife cases to establish that the company rules and regulations
nor any agent thereof, shall pay any commission or other should not and cannot be read as elements of control that attend an that an agent has to comply with are indicative of an employer-
compensation to any person for services in obtaining insurance, employment relationship governed by the Labor Code. employee relationship.24 The Dissenting Opinions of Justice Presbitero
unless such person shall have first procured from the Commissioner a Velasco, Jr. and Justice Conchita Carpio Morales also cite Insular Life
license to act as an insurance agent of such company or as an Assurance Co. v. National Labor Relations Commission (second Insular
insurance broker as hereinafter provided. On the other hand, the Civil Code defines an agent as a "person [who] case)25 to support the view that Tongko is Manulife’s employee. On
binds himself to render some service or to do something in the other hand, Manulife cites the Carungcong case and AFP Mutual
representation or on behalf of another, with the consent or authority Benefit Association, Inc. v. National Labor Relations Commission
No person shall act as an insurance agent or as an insurance broker in of the latter."16 While this is a very broad definition that on its face
the solicitation or procurement of applications for insurance, or (AFPMBAI case)26 to support its allegation that Tongko was not its
may even encompass an employment relationship, the distinctions employee.
receive for services in obtaining insurance, any commission or other between agency and employment are sufficiently established by law
compensation from any insurance company doing business in the and jurisprudence.
Philippines or any agent thereof, without first procuring a license so to A caveat has been given above with respect to the use of the rulings
act from the Commissioner x x x The Commissioner shall satisfy in the cited cases because none of them is on all fours with the
himself as to the competence and trustworthiness of the applicant and Generally, the determinative element is the control exercised over the present case; the uniqueness of the factual situation of the present
shall have the right to refuse to issue or renew and to suspend or one rendering service. The employer controls the employee both in case prevents it from being directly and readily cast in the mold of the
revoke any such license in his discretion.1avvphi1.net the results and in the means and manner of achieving this result. The cited cases. These cited cases are themselves different from one
principal in an agency relationship, on the other hand, also has the another; this difference underscores the need to read and quote them
prerogative to exercise control over the agent in undertaking the in the context of their own factual situations.
Section 300. Any person who for compensation solicits or obtains assigned task based on the parameters outlined in the pertinent laws.
insurance on behalf of any insurance company or transmits for a
person other than himself an application for a policy or contract of The present case at first glance appears aligned with the facts in the
insurance to or from such company or offers or assumes to act in the Under the general law on agency as applied to insurance, an agency Carungcong, the Grepalife, and the second Insular Life cases. A
negotiating of such insurance shall be an insurance agent within the must be express in light of the need for a license and for the critical difference, however, exists as these cited cases dealt with the
intent of this section and shall thereby become liable to all the duties, designation by the insurance company. In the present case, the proper legal characterization of a subsequent management contract
requirements, liabilities and penalties to which an insurance agent is Agreement fully serves as grant of authority to Tongko as Manulife’s that superseded the original agency contract between the insurance
subject. insurance agent.17 This agreement is supplemented by the company’s company and its agent. Carungcong dealt with a subsequent
agency practices and usages, duly accepted by the agent in carrying Agreement making Carungcong a New Business Manager that clearly
out the agency. 18 By authority of the Insurance Code, an insurance

47
superseded the Agreement designating Carungcong as an agent conclusive and binding on the courts; as the dissent clearly stated, the course of his lead agency, a prerogative he enjoyed pursuant to
empowered to solicit applications for insurance. The Grepalife case, on the characterization of the juridical relationship the Agreement Article 1912 of the Civil Code. Thus, Tongko received greater
the other hand, dealt with the proper legal characterization of the embodied is a matter of law that is for the courts to determine. At the reimbursements for his expenses and was even allowed to use
appointment of the Ruiz brothers to positions higher than their same time, though, the characterization the parties gave to their Manulife facilities in his interactions with the agents, all of whom
original position as insurance agents. Thus, after analyzing the duties relationship in the Agreement cannot simply be brushed aside were, in the strict sense, Manulife agents approved and certified as
and functions of the Ruiz brothers, as these were enumerated in their because it embodies their intent at the time they entered the such by Manulife with the Insurance Commission.
contracts, we concluded that the company practically dictated the Agreement, and they were governed by this understanding
manner by which the Ruiz brothers were to carry out their jobs. throughout their relationship. At the very least, the provision on the That Tongko assumed a leadership role but nevertheless wholly
Finally, the second Insular Life case dealt with the implications of de absence of employer-employee relationship between the parties can remained an agent is the inevitable conclusion that results from the
los Reyes’ appointment as acting unit manager which, like the be an aid in considering the Agreement and its implementation, and in reading of the Agreement (the only agreement on record in this case)
subsequent contracts in the Carungcong and the Grepalife cases, was appreciating the other evidence on record. and his continuing role thereunder as sales agent, from the
clearly defined under a subsequent contract. In all these cited cases, a perspective of the Insurance and the Civil Codes and in light of what
determination of the presence of the Labor Code element of control The parties’ legal characterization of their intent, although not Tongko himself attested to as his role as Regional Sales Manager. To
was made on the basis of the stipulations of the subsequent contracts. conclusive, is critical in this case because this intent is not illegal or be sure, this interpretation could have been contradicted if other
outside the contemplation of law, particularly of the Insurance and the agreements had been submitted as evidence of the relationship
In stark contrast with the Carungcong, the Grepalife, and the second Civil Codes. From this perspective, the provisions of the Insurance between Manulife and Tongko on the latter’s expanded undertakings.
Insular Life cases, the only contract or document extant and Code cannot be disregarded as this Code (as heretofore already In the absence of any such evidence, however, this reading – based
submitted as evidence in the present case is the Agreement – a pure noted) expressly envisions a principal-agent relationship between the on the available evidence and the applicable insurance and civil law
agency agreement in the Civil Code context similar to the original insurance company and the insurance agent in the sale of insurance provisions – must stand, subject only to objective and evidentiary
contract in the first Insular Life case and the contract in the AFPMBAI to the public.1awph!1 For this reason, we can take judicial notice that Labor Code tests on the existence of an employer-employee
case. And while Tongko was later on designated unit manager in as a matter of Insurance Code-based business practice, an agency relationship.
1983, Branch Manager in 1990, and Regional Sales Manager in 1996, relationship prevails in the insurance industry for the purpose of
no formal contract regarding these undertakings appears in the selling insurance. The Agreement, by its express terms, is in In applying such Labor Code tests, however, the enforcement of the
records of the case. Any such contract or agreement, had there been accordance with the Insurance Code model when it provided for a Agreement during the course of the parties’ relationship should be
any, could have at the very least provided the bases for properly principal-agent relationship, and thus cannot lightly be set aside nor noted. From 1977 until the termination of the Agreement, Tongko’s
ascertaining the juridical relationship established between the parties. simply be considered as an agreement that does not reflect the occupation was to sell Manulife’s insurance policies and products. Both
parties’ true intent. This intent, incidentally, is reinforced by the parties acquiesced with the terms and conditions of the Agreement.
These critical differences, particularly between the present case and system of compensation the Agreement provides, which likewise is in Tongko, for his part, accepted all the benefits flowing from the
the Grepalife and the second Insular Life cases, should therefore accordance with the production-based sales commissions the Agreement, particularly the generous commissions.
immediately drive us to be more prudent and cautious in applying the Insurance Code provides.
rulings in these cases. Evidence indicates that Tongko consistently clung to the view that he
Significantly, evidence shows that Tongko’s role as an insurance agent was an independent agent selling Manulife insurance products since
C. Analysis of the Evidence never changed during his relationship with Manulife. If changes he invariably declared himself a business or self-employed person in
occurred at all, the changes did not appear to be in the nature of their his income tax returns. This consistency with, and action made
core relationship. Tongko essentially remained an agent, but moved pursuant to the Agreement were pieces of evidence that were
c.1. The Agreement up in this role through Manulife’s recognition that he could use other never mentioned nor considered in our Decision of November
agents approved by Manulife, but operating under his guidance and in 7, 2008. Had they been considered, they could, at the very least,
The primary evidence in the present case is the July 1, 1977 whose commissions he had a share. For want of a better term, serve as Tongko’s admissions against his interest. Strictly speaking,
Agreement that governed and defined the parties’ relations until the Tongko perhaps could be labeled as a "lead agent" who guided under Tongko’s tax returns cannot but be legally significant because he
Agreement’s termination in 2001. This Agreement stood for more than his wing other Manulife agents similarly tasked with the selling of certified under oath the amount he earned as gross business income,
two decades and, based on the records of the case, was never Manulife insurance. claimed business deductions, leading to his net taxable income. This
modified or novated. It assumes primacy because it directly dealt with should be evidence of the first order that cannot be brushed aside by
the nature of the parties’ relationship up to the very end; moreover, Like Tongko, the evidence suggests that these other agents operated a mere denial. Even on a layman’s view that is devoid of legal
both parties never disputed its authenticity or the accuracy of its under their own agency agreements. Thus, if Tongko’s compensation considerations, the extent of his annual income alone renders his
terms. scheme changed at all during his relationship with Manulife, the claimed employment status doubtful.27
change was solely for purposes of crediting him with his share in the
By the Agreement’s express terms, Tongko served as an "insurance commissions the agents under his wing generated. As an agent who Hand in hand with the concept of admission against interest in
agent" for Manulife, not as an employee. To be sure, the Agreement’s was recruiting and guiding other insurance agents, Tongko likewise considering the tax returns, the concept of estoppel – a legal and
legal characterization of the nature of the relationship cannot be moved up in terms of the reimbursement of expenses he incurred in equitable concept28 – necessarily must come into play. Tongko’s

48
previous admissions in several years of tax returns as an independent is, prior to de Dios’ letter, Manulife had practically left Tongko alone wise, the principal can impose production quotas and can determine
agent, as against his belated claim that he was all along an employee, not only in doing the business of selling insurance, but also in guiding how many agents, with specific territories, ought to be employed to
are too diametrically opposed to be simply dismissed or ignored. the agents under his wing. As discussed below, the alleged directives achieve the company’s objectives. These are management policy
Interestingly, Justice Velasco’s dissenting opinion states that Tongko covered by de Dios’ letter, heretofore quoted in full, were policy decisions that the labor law element of control cannot reach. Our
was forced to declare himself a business or self-employed person by directions and targeted results that the company wanted Tongko and ruling in these respects in the first Insular Life case was practically
Manulife’s persistent refusal to recognize him as its the other sales groups to realign with in their own selling activities. reiterated in Carungcong. Thus, as will be shown more fully below,
employee.29 Regrettably, the dissent has shown no basis for this This is the reality that the parties’ presented evidence consistently Manulife’s codes of conduct,30 all of which do not intrude into the
conclusion, an understandable omission since no evidence in tells us. insurance agents’ means and manner of conducting their sales and
fact exists on this point in the records of the case. In fact, what only control them as to the desired results and Insurance Code
the evidence shows is Tongko’s full conformity with, and action as, an What, to Tongko, serve as evidence of labor law control are the codes norms, cannot be used as basis for a finding that the labor law
independent agent until his relationship with Manulife took a bad turn. of conduct that Manulife imposes on its agents in the sale of concept of control existed between Manulife and Tongko.
insurance. The mere presentation of codes or of rules and regulations,
Another interesting point the dissent raised with respect to the however, is not per se indicative of labor law control as the law and The dissent considers the imposition of administrative and managerial
Agreement is its conclusion that the Agreement negated any jurisprudence teach us. functions on Tongko as indicative of labor law control; thus, Tongko
employment relationship between Tongko and Manulife so that the as manager, but not as insurance agent, became Manulife’s employee.
commissions he earned as a sales agent should not be considered in As already recited above, the Insurance Code imposes obligations on It drew this conclusion from what the other Manulife managers
the determination of the backwages and separation pay that should both the insurance company and its agents in the performance of disclosed in their affidavits (i.e., their enumerated administrative and
be given to him. This part of the dissent is correct although it went on their respective obligations under the Code, particularly on licenses managerial functions) and after comparing these statements with the
to twist this conclusion by asserting that Tongko had dual roles in his and their renewals, on the representations to be made to potential managers in Grepalife. The dissent compared the control exercised by
relationship with Manulife; he was an agent, not an employee, in so customers, the collection of premiums, on the delivery of insurance Manulife over its managers in the present case with the control the
far as he sold insurance for Manulife, but was an employee in his policies, on the matter of compensation, and on measures to ensure managers in the Grepalife case exercised over their employees by
capacity as a manager. Thus, the dissent concluded that Tongko’s ethical business practice in the industry. presenting the following matrix:31
backwages should only be with respect to his role as Manulife’s
manager. Aside from these affidavits however, no other evidence exists
The general law on agency, on the other hand, expressly allows the
principal an element of control over the agent in a manner consistent regarding the effects of Tongko’s additional roles in Manulife’s sales
The conclusion with respect to Tongko’s employment as a manager is, with an agency relationship. In this sense, these control measures operations on the contractual relationship between them.
of course, unacceptable for the legal, factual and practical reasons cannot be read as indicative of labor law control. Foremost among
discussed in this Resolution. In brief, the factual reason is grounded these are the directives that the principal may impose on the agent to To the dissent, Tongko’s administrative functions as recruiter, trainer,
on the lack of evidentiary support of the conclusion that Manulife achieve the assigned tasks, to the extent that they do not involve the or supervisor of other sales agents constituted a substantive
exercised control over Tongko in the sense understood in the Labor means and manner of undertaking these tasks. The law likewise alteration of Manulife’s authority over Tongko and the performance of
Code. The legal reason, partly based on the lack of factual basis, is obligates the agent to render an account; in this sense, the principal his end of the relationship with Manulife. We could not deny though
the erroneous legal conclusion that Manulife controlled Tongko and may impose on the agent specific instructions on how an account shall that Tongko remained, first and foremost, an insurance agent, and
was thus its employee. The practical reason, on the other hand, is be made, particularly on the matter of expenses and reimbursements. that his additional role as Branch Manager did not lessen his main and
the havoc that the dissent’s unwarranted conclusion would cause the To these extents, control can be imposed through rules and dominant role as insurance agent; this role continued to dominate the
insurance industry that, by the law’s own design, operated along the regulations without intruding into the labor law concept of control for relations between Tongko and Manulife even after Tongko assumed
lines of principal-agent relationship in the sale of insurance. purposes of employment. his leadership role among agents. This conclusion cannot be denied
because it proceeds from the undisputed fact that Tongko and
c.2. Other Evidence of Alleged Control From jurisprudence, an important lesson that the first Insular Life Manulife never altered their July 1, 1977 Agreement, a distinction the
case teaches us is that a commitment to abide by the rules and present case has with the contractual changes made in the second
A glaring evidentiary gap for Tongko in this case is the lack of regulations of an insurance company does not ipso facto make the Insular Life case. Tongko’s results-based commissions, too, attest to
evidence on record showing that Manulife ever exercised means-and- insurance agent an employee. Neither do guidelines somehow the primacy he gave to his role as insurance sales agent.
manner control, even to a limited extent, over Tongko during his restrictive of the insurance agent’s conduct necessarily indicate
ascent in Manulife’s sales ladder. In 1983, Tongko was appointed unit "control" as this term is defined in jurisprudence. Guidelines The dissent apparently did not also properly analyze and appreciate
manager. Inexplicably, Tongko never bothered to present any indicative of labor law "control," as the first Insular Life case the great qualitative difference that exists between:
evidence at all on what this designation meant. This also holds true tells us, should not merely relate to the mutually desirable
for Tongko’s appointment as branch manager in 1990, and as result intended by the contractual relationship; they must have  the Manulife managers’ role is to coordinate activities of the
Regional Sales Manager in 1996. The best evidence of control – the the nature of dictating the means or methods to be employed in agents under the managers’ Unit in the agents’ daily,
agreement or directive relating to Tongko’s duties and responsibilities attaining the result, or of fixing the methodology and of binding or
– was never introduced as part of the records of the case. The reality restricting the party hired to the use of these means. In fact, results-

49
 weekly, and monthly selling activities, making sure that their 1.b. I have no fixed working hours and employ my own for want of a more appropriate term, since the title of Branch Manager
respective sales targets are met. method in soliticing insurance at a time and place I see fit; used by the parties is really a misnomer given that what is involved is
not a specific regular branch of the company but a corps of non-
 the District Manager’s duty in Grepalife is to properly 1.c. I have my own assistant and messenger who handle my employed agents, defined in terms of covered territory, through which
account, record, and document the company's funds, spot- daily work load; the company sells insurance. Still another point to consider is that
check and audit the work of the zone supervisors, conserve Tongko was not even setting policies in the way a regular company
the company's business in the district through manager does; company aims and objectives were simply relayed to
1.d. I use my own facilities, tools, materials and supplies in him with suggestions on how these objectives can be reached through
"reinstatements," follow up the submission of weekly
carrying out my business of selling insurance; the expansion of a non-employee sales force.
remittance reports of the debit agents and zone supervisors,
preserve company property in good condition, train
understudies for the position of district managers, and xxxx Interestingly, a large part of de Dios’ letter focused on income, which
maintain his quota of sales (the failure of which is a ground Manulife demonstrated, in Tongko’s case, to be unaffected by the new
for termination). 6. I have my own staff that handles the day to day goal and direction the company had set. Income in insurance agency,
operations of my office; of course, is dependent on results, not on the means and manner of
 the  Zone Supervisor’s (also in Grepalife)  has the duty selling – a matter for Tongko and his agents to determine and an area
to direct and supervise the sales activities of the debit into which Manulife had not waded. Undeniably, de Dios’ letter
7. My staff are my own employees and received salaries
agents under him, conserve company property through contained a directive to secure a competent assistant at Tongko’s own
from me;
"reinstatements," undertake and discharge the functions of expense. While couched in terms of a directive, it cannot strictly be
absentee debit agents, spot-check the records of debit understood as an intrusion into Tongko’s method of operating and
agents, and insure proper documentation of sales and xxxx supervising the group of agents within his delineated territory. More
collections by the debit agents. than anything else, the "directive" was a signal to Tongko that his
9. My commission and incentives are all reported to the results were unsatisfactory, and was a suggestion on how Tongko’s
These job contents are worlds apart in terms of "control." In Bureau of Internal Revenue (BIR) as income by a self- perceived weakness in delivering results could be remedied. It was a
Grepalife, the details of how to do the job are specified and pre- employed individual or professional with a ten (10) percent solution, with an eye on results, for a consistently underperforming
determined; in the present case, the operative words are the "sales creditable withholding tax. I also remit monthly for group; its obvious intent was to save Tongko from the result that he
target," the methodology being left undefined except to the extent of professionals. then failed to grasp – that he could lose even his own status as an
being "coordinative." To be sure, a "coordinative" standard for a agent, as he in fact eventually did.
manager cannot be indicative of control; the standard only essentially These statements, read with the above comparative analysis of the
describes what a Branch Manager is – the person in the lead who Manulife and the Grepalife cases, would have readily yielded the The present case must be distinguished from the second Insular Life
orchestrates activities within the group. To "coordinate," and thereby conclusion that no employer-employee relationship existed between case that showed the hallmarks of an employer-employee relationship
to lead and to orchestrate, is not so much a matter of control by Manulife and Tongko. in the management system established. These were: exclusivity of
Manulife; it is simply a statement of a branch manager’s role in service, control of assignments and removal of agents under the
relation with his agents from the point of view of Manulife whose private respondent’s unit, and furnishing of company facilities and
Even de Dios’ letter is not determinative of control as it indicates the
business Tongko’s sales group carries. materials as well as capital described as Unit Development Fund. All
least amount of intrusion into Tongko’s exercise of his role as
these are obviously absent in the present case. If there is a
manager in guiding the sales agents. Strictly viewed, de Dios’
A disturbing note, with respect to the presented affidavits and commonality in these cases, it is in the collection of premiums which
directives are merely operational guidelines on how Tongko could
Tongko’s alleged administrative functions, is the selective citation of is a basic authority that can be delegated to agents under the
align his operations with Manulife’s re-directed goal of being a "big
the portions supportive of an employment relationship and the Insurance Code.
league player." The method is to expand coverage through the use of
consequent omission of portions leading to the contrary conclusion. more agents. This requirement for the recruitment of more agents is
For example, the following portions of the affidavit of Regional Sales not a means-and-method control as it relates, more than anything As previously discussed, what simply happened in Tongko’s case was
Manager John Chua, with counterparts in the other affidavits, were else, and is directly relevant, to Manulife’s objective of expanded the grant of an expanded sales agency role that recognized him as
not brought out in the Decision of November 7, 2008, while the other business operations through the use of a bigger sales force whose leader amongst agents in an area that Manulife defined. Whether
portions suggesting labor law control were highlighted. Specifically, members are all on a principal-agent relationship. An important point this consequently resulted in the establishment of an
the following portions of the affidavits were not brought out:32 to note here is that Tongko was not supervising regular full-time employment relationship can be answered by concrete
employees of Manulife engaged in the running of the insurance evidence that corresponds to the following questions:
1.a. I have no fixed wages or salary since my services are business; Tongko was effectively guiding his corps of sales agents,
compensated by way of commissions based on the who are bound to Manulife through the same Agreement that he had  as lead agent, what were Tongko’s specific functions and the
computed premiums paid in full on the policies obtained with Manulife, all the while sharing in these agents’ commissions terms of his additional engagement;
thereat; through his overrides. This is the lead agent concept mentioned above

50
  was he paid additional compensation as a so-called Area i.e., the cases’ factual situations, the issues they decided and the substantiate his claim of employment relationship by the quantum of
Sales Manager, apart from the commissions he received totality of the rulings in these cases – and cannot yield the evidence the Labor Code requires.
from the insurance sales he generated; conclusions that the dissenting opinions drew.
On the dissent’s last point regarding the lack of jurisprudential value
 what can be Manulife’s basis to terminate his status as lead The Grepalife case dealt with the sole issue of whether the Ruiz of our November 7, 2008 Decision, suffice it to state that, as
agent; brothers’ appointment as zone supervisor and district manager made discussed above, the Decision was not supported by the evidence
them employees of Grepalife. Indeed, because of the presence of the adduced and was not in accordance with controlling jurisprudence. It
 can Manulife terminate his role as lead agent separately element of control in their contract of engagements, they were should, therefore, be reconsidered and abandoned, but not in the
from his agency contract; and considered Grepalife’s employees. This did not mean, however, that manner the dissent suggests as the dissenting opinions are as
they were simultaneously considered agents as well as employees factually and as legally erroneous as the Decision under
 to what extent does Manulife control the means and of Grepalife; the Court’s ruling never implied that this situation reconsideration.
methods of Tongko’s role as lead agent? existed insofar as the Ruiz brothers were concerned. The Court’s
statement – the Insurance Code may govern the licensing In light of these conclusions, the sufficiency of Tongko’s failure to
requirements and other particular duties of insurance agents, but it comply with the guidelines of de Dios’ letter, as a ground for
The answers to these questions may, to some extent, be deduced
does not bar the application of the Labor Code with regard to labor termination of Tongko’s agency, is a matter that the labor tribunals
from the evidence at hand, as partly discussed above. But strictly
standards and labor relations – simply means that when an insurance cannot rule upon in the absence of an employer-employee
speaking, the questions cannot definitively and concretely be
company has exercised control over its agents so as to make them relationship. Jurisdiction over the matter belongs to the courts
answered through the evidence on record. The concrete evidence
their employees, the relationship between the parties, which was applying the laws of insurance, agency and contracts.
required to settle these questions is simply not there, since only the
otherwise one for agency governed by the Civil Code and the
Agreement and the anecdotal affidavits have been marked and
Insurance Code, will now be governed by the Labor Code. The reason
submitted as evidence. WHEREFORE, considering the foregoing discussion, we REVERSE our
for this is simple – the contract of agency has been transformed into
an employer-employee relationship. Decision of November 7, 2008, GRANT Manulife’s motion for
Given this anemic state of the evidence, particularly on the requisite reconsideration and, accordingly, DISMISS Tongko’s petition. No
confluence of the factors determinative of the existence of employer- costs.
The second Insular Life case, on the other hand, involved the issue of
employee relationship, the Court cannot conclusively find that the
whether the labor bodies have jurisdiction over an illegal termination
relationship exists in the present case, even if such relationship only SO ORDERED.
dispute involving parties who had two contracts – first, an original
refers to Tongko’s additional functions. While a rough deduction can
contract (agency contract), which was undoubtedly one for agency,
be made, the answer will not be fully supported by the substantial
and another subsequent contract that in turn designated the agent
evidence needed.
acting unit manager (a management contract). Both the Insular Life
and the labor arbiter were one in the position that both were agency
Under this legal situation, the only conclusion that can be made is that contracts. The Court disagreed with this conclusion and held that
the absence of evidence showing Manulife’s control over Tongko’s insofar as the management contract is concerned, the labor arbiter
contractual duties points to the absence of any employer-employee has jurisdiction. It is in this light that we remanded the case to the
relationship between Tongko and Manulife. In the context of the labor arbiter for further proceedings. We never said in this case
established evidence, Tongko remained an agent all along; although though that the insurance agent had effectively assumed dual
his subsequent duties made him a lead agent with leadership role, he personalities for the simple reason that the agency contract has been
was nevertheless only an agent whose basic contract yields no effectively superseded by the management contract. The
evidence of means-and-manner control. management contract provided that if the appointment was
terminated for any reason other than for cause, the acting unit
This conclusion renders unnecessary any further discussion of the manager would be reverted to agent status and assigned to any unit.
question of whether an agent may simultaneously assume conflicting
dual personalities. But to set the record straight, the concept of a The dissent pointed out, as an argument to support its employment
single person having the dual role of agent and employee while doing relationship conclusion, that any doubt in the existence of an
the same task is a novel one in our jurisprudence, which must be employer-employee relationship should be resolved in favor of the
viewed with caution especially when it is devoid of any jurisprudential existence of the relationship.34 This observation, apparently drawn
support or precedent. The quoted portions in Justice Carpio-Morales’ from Article 4 of the Labor Code, is misplaced, as Article 4 applies 11. Manila Golf Club vs. NLRC - G.R. No. 64948 (September 27,
dissent,33 borrowed from both the Grepalife and the second Insular only when a doubt exists in the "implementation and application" of 1994)
Life cases, to support the duality approach of the Decision of the Labor Code and its implementing rules; it does not apply where no
November 7, 2008, are regrettably far removed from their context – doubt exists as in a situation where the claimant clearly failed to

51
The question before the Court here is whether or not persons was no employer-employee relationship between assertion that the caddies are never their
rendering caddying services for members of golf clubs and their the petitioning caddies and the respondent Club. 2 employees in the absence of two elements,
guests in said clubs' courses or premises are the employees of such namely, (1) payment of wages and (2) control or
clubs and therefore within the compulsory coverage of the Social In the case before the SSC, the respondent Club filed answer praying supervision over them. In this connection, our
Security System (SSS). for the dismissal of the petition, alleging in substance that the Supreme Court ruled that in the determination of
petitioners, caddies by occupation, were allowed into the Club the existence of an employer-employee
That question appears to have been involved, either directly or premises to render services as such to the individual members and relationship, the "control test" shall be considered
peripherally, in three separate proceedings, all initiated by or on guests playing the Club's golf course and who themselves paid for decisive (Philippine Manufacturing Co. vs.
behalf of herein private respondent and his fellow caddies. That which such services; that as such caddies, the petitioners were not subject Geronimo and Garcia, 96 Phil. 276; Mansal vs. P.P.
gave rise to the present petition for review was originally filed with to the direction and control of the Club as regards the manner in Coheco Lumber Co., 96 Phil. 941; Viana vs.
the Social Security Commission (SSC) via petition of seventeen (17) which they performed their work; and hence, they were not the Club's Al-lagadan, et al., 99 Phil. 408; Vda, de Ang, et al.
persons who styled themselves "Caddies of Manila Golf and Country employees. vs. The Manila Hotel Co., 101 Phil. 358, LVN
Club-PTCCEA" for coverage and availment of benefits under the Social Pictures Inc. vs. Phil. Musicians Guild, et al.,
Security Act as amended, "PTCCEA" being L-12582, January 28, 1961, 1 SCRA 132. . . .
Subsequently, all but two of the seventeen petitioners of their own (reference being made also to Investment Planning
the acronym of a labor organization, the "Philippine Technical, accord withdrew their claim for social security coverage, avowedly
Clerical, Commercial Employees Association," with which the Corporation Phil. vs. SSS 21 SCRA 925).
coming to realize that indeed there was no employment relationship
petitioners claimed to be affiliated. The petition, docketed as SSC between them and the Club. The case continued, and was eventually
Case No. 5443, alleged in essence that although the petitioners were adjudicated by the SSC after protracted proceedings only as regards Records show the respondent club had reported for
employees of the Manila Golf and Country Club, a domestic the two holdouts, Fermin Llamar and Raymundo Jomok. The SS coverage Graciano Awit and Daniel Quijano, as
corporation, the latter had not registered them as such with the SSS. Commission dismissed the petition for lack of merit, 3 ruling: bat unloader and helper, respectively, including
their ground men, house and administrative
At about the same time, two other proceedings bearing on the same personnel, a situation indicative of the latter's
. . . that the caddy's fees were paid by the golf concern with the rights and welfare of its
question were filed or were pending; these were: players themselves and not by respondent club. employees under the SS law, as amended. The
For instance, petitioner Raymundo Jomok averred unrebutted testimony of Col. Generoso A. Alejo
(1) a certification election case filed with the Labor that for their services as caddies a caddy's Claim (Ret.) that the ID cards issued to the caddies
Relations Division of the Ministry of Labor by the Stub (Exh. "1-A") is issued by a player who will in merely intended to identify the holders as
PTCCEA on behalf of the same caddies of the turn hand over to management the other portion of accredited caddies of the club and privilege(d) to
Manila Golf and Country Club, the case being titled the stub known as Caddy Ticket (Exh. "1") so that ply their trade or occupation within its premises
"Philippine Technical, Clerical, Commercial by this arrangement management will know how which could be withdrawn anytime for loss of
Association vs. Manila Golf and Country Club" and much a caddy will be paid (TSN, p. 80, July 23, confidence. This gives us a reasonable ground to
docketed as Case No. R4-LRDX-M-10-504-78; it 1980). Likewise, petitioner Fermin Llamar admitted state that the defense posture of respondent that
appears to have been resolved in favor of the that caddy works on his own in accordance with petitioners were never its employees is well taken. 4
petitioners therein by Med-Arbiter Orlando S. Rojo the rules and regulations (TSN, p. 24, February 26,
who was thereafter upheld by Director Carmelo S. 1980) but petitioner Jomok could not state any
Noriel, denying the Club's motion for policy of respondent that directs the manner of From this Resolution appeal was taken to the Intermediate appellate
reconsideration; 1 caddying (TSN, pp. 76-77, July 23, 1980). While Court by the union representing Llamar and Jomok. After the appeal
respondent club promulgates rules and regulations was docketed 5 and some months before decision thereon was
on the assignment, deportment and conduct of reached and promulgated, Raymundo Jomok's appeal was dismissed
(2) a compulsory arbitration case initiated before at his instance, leaving Fermin Llamar the lone appellant. 6
the Arbitration Branch of the Ministry of Labor by caddies (Exh. "C") the same are designed to
the same labor organization, titled "Philippine impose personal discipline among the caddies but
Technical, Clerical, Commercial Employees not to direct or conduct their actual work. In fact, a The appeal ascribed two errors to the SSC:
Association (PTCCEA), Fermin Lamar and golf player is at liberty to choose a caddy of his
Raymundo Jomok vs. Manila Golf and Country preference regardless of the respondent club's (1) refusing to suspend the proceedings to await
Club, Inc., Miguel Celdran, Henry Lim and group rotation system and has the discretion on judgment by the Labor Relations Division of
Geronimo Alejo;" it was dismissed for lack of merit whether or not to pay a caddy. As testified to by National Capital Regional Office in the certification
by Labor Arbiter Cornelio T. Linsangan, a decision petitioner Llamar that their income depends on the election case (R-4-LRD-M-10-504-78) supra, on
later affirmed on appeal by the National Labor number of players engaging their services and the precise issue of the existence of employer-
Relations Commission on the ground that there liberality of the latter (TSN, pp. 10-11, Feb. 26, employee relationship between the respondent club
1980). This lends credence to respondent's and the appellants, it being contended that said

52
 issue was "a function of the proper labor office"; instance, the caddies were still employees of the club." This, no dispute between the parties as to the existence, or non-existence, of
and matter that the case which produced this ruling had a slightly different employer-employee relationship between them.
factual cast, apparently having involved a claim for workmen's
(2) adjudicating that self same issue a manner compensation made by a caddy who, about to leave the premises of It is well settled that for res adjudicata, or the principle of bar by prior
contrary to the ruling of the Director of the Bureau the club where he worked, was hit and injured by an automobile then judgment, to apply, the following essential requisites must concur: (1)
of Labor Relations, which "has not only become negotiating the club's private driveway. there must be a final judgment or order; (2) said judgment or order
final but (has been) executed or (become) res must be on the merits; (3) the court rendering the same must have
adjudicata." 7 That same issue of res adjudicata, ignored by the IAC beyond bare jurisdiction over the subject matter and the parties; and (4) there
mention thereof, as already pointed out, is now among the mainways must be between the two cases identity of parties, identity of subject
The Intermediate Appellate Court gave short shirt to the first assigned of the private respondent's defenses to the petition for review. matter and identity of cause of action. 13
error, dismissing it as of the least importance. Nor, it would appear, Considered in the perspective of the incidents just recounted, it
did it find any greater merit in the second alleged error. Although said illustrates as well as anything can, why the practice of forum- Clearly implicit in these requisites is that the action or proceedings in
Court reserved the appealed SSC decision and declared Fermin Llamar shopping justly merits censure and punitive sanction. Because the which is issued the "prior Judgment" that would operate in bar of a
an employee of the Manila Gold and Country Club, ordering that he be same question of employer-employee relationship has been dragged subsequent action between the same parties for the same cause,
reported as such for social security coverage and paid any into three different fora, willy-nilly and in quick succession, it has be adversarial, or contentious, "one having opposing parties; (is)
corresponding benefits, 8 it conspicuously ignored the issue of res birthed controversy as to which of the resulting adjudications must contested, as distinguished from an ex parte hearing or
adjudicata  raised in said second assignment. Instead, it drew basis for now be recognized as decisive. On the one hand, there is the proceeding. . . . of which the party seeking relief has given legal
the reversal from this Court's ruling in Investment Planning certification case [R4-LRDX-M-10-504-78), where the decision of the notice to the other party and afforded the latter an opportunity to
Corporation of the Philippines vs.  Social Security System, supra  9 and Med-Arbiter found for the existence of employer-employee contest it" 14 and a certification case is not such a proceeding, as this
declared that upon the evidence, the questioned employer-employee relationship between the parties, was affirmed by Director Carmelo S. Court already ruled:
relationship between the Club and Fermin Llamar passed the so-called Noriel, who ordered a certification election held, a disposition never
"control test," establishment in the case — i.e., "whether the thereafter appealed according to the private respondent; on the other,
the compulsory arbitration case (NCR Case No. AB-4-1771-79), A certification proceedings is not a "litigation" in
employer controls or has reserved the right to control the employee the sense in which the term is commonly
not only as to the result of the work to be done but also as to the instituted by or for the same respondent at about the same time,
which was dismissed for lack of merit by the Labor Arbiter, which was understood, but mere investigation of a non-
means and methods by which the same is to be accomplished," — the adversary, fact-finding character, in which the
Club's control over the caddies encompassing: afterwards affirmed by the NLRC itself on the ground that there
existed no such relationship between the Club and the private investigating agency plays the part of a
respondent. And, as if matters were not already complicated enough, disinterested investigator seeking merely to
(a) the promulgation of no less than twenty-four the same respondent, with the support and assistance of the PTCCEA, ascertain the desires of the employees as to the
(24) rules and regulations just about every aspect saw fit, also contemporaneously, to initiate still a third proceeding for matter of their representation. The court enjoys a
of the conduct that the caddy must observe, or compulsory social security coverage with the Social Security wide discretion in determining the procedure
avoid, when serving as such, any violation of any Commission (SSC Case No. 5443), with the result already mentioned. necessary to insure the fair and free choice of
which could subject him to disciplinary action, bargaining representatives by the employees.15
which may include suspending or cutting off his
access to the club premises; Before this Court, the petitioner Club now contends that the decision
of the Med-Arbiter in the certification case had never become final, Indeed, if any ruling or judgment can be said to operate as res
being in fact the subject of three pending and unresolved motions for adjudicata  on the contested issue of employer-employee relationship
(b) the devising and enforcement of a group reconsideration, as well as of a later motion for early between present petitioner and the private respondent, it would
rotation system whereby a caddy is assigned a resolution. 11 Unfortunately, none of these motions is incorporated or logically be that rendered in the compulsory arbitration case (NCR
number which designates his turn to serve a reproduced in the record before the Court. And, for his part, the Case No. AB-4-771-79, supra), petitioner having asserted, without
player; private respondent contends, not only that said decision had been dispute from the private respondent, that said issue was there
appealed to and been affirmed by the Director of the BLR, but that a squarely raised and litigated, resulting in a ruling of the Arbitration
(c) the club's "suggesting" the rate of fees payable certification election had in fact been held, which resulted in the Branch (of the same Ministry of Labor) that such relationship did not
to the caddies. PTCCEA being recognized as the sole bargaining agent of the caddies exist, and which ruling was thereafter affirmed by the National Labor
of the Manila Golf and Country Club with respect to wages, hours of Relations Commission in an appeal taken by said respondent. 16
work, terms of employment, etc. 12 Whatever the truth about these
Deemed of title or no moment by the Appellate Court was the fact
that the caddies were paid by the players, not by the Club, that they opposing contentions, which the record before the Court does not In any case, this Court is not inclined to allow private respondent the
adequately disclose, the more controlling consideration would seem to benefit of any doubt as to which of the conflicting ruling just adverted
observed no definite working hours and earned no fixed income. It
quoted with approval from an American decision 10 to the effect that: be that, however, final it may become, the decision in a certification to should be accorded primacy, given the fact that it was he who
case, by the actively sought them simultaneously, as it were, from separate fora,
"whether the club paid the caddies and afterward collected in the first
very nature of that proceedings, is not such as to foreclose all further
53
and even if the graver sanctions more lately imposed by the Court for By and large, there appears nothing in the record to refute the 12. Villamaria vs. CA - G.R. No. 165881 (April 19, 2006) D.
forum-shopping may not be applied to him retroactively. petitioner's claim that: Burden of Proof / Determination

Accordingly, the IAC is not to be faulted for ignoring private (Petitioner) has no means of compelling the Before us is a Petition for Review on Certiorari under Rule 65 of the
respondent's invocation of res adjudicata; on contrary, it acted presence of a caddy. A caddy is not required to Revised Rules of Court assailing the Decision 1 and Resolution2 of the
correctly in doing so. exercise his occupation in the premises of Court of Appeals (CA) in CA-G.R. SP No. 78720 which set aside the
petitioner. He may work with any other golf club or Resolution3 of the National Labor Relations Commission (NLRC) in
he may seek employment a caddy or otherwise NCR-30-08-03247-00, which in turn affirmed the Decision 4 of the
Said Court’s holding that upon the facts, there exists (or existed) a
with any entity or individual without restriction by Labor Arbiter dismissing the complaint filed by respondent Jerry V.
relationship of employer and employee between petitioner and private
petitioner. . . . Bustamante.
respondent is, however, another matter. The Court does not agree
that said facts necessarily or logically point to such a relationship, and
to the exclusion of any form of arrangements, other than of . . . In the final analysis, petitioner has no was of Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a
employment, that would make the respondent's services available to compelling the presence of the caddies as they are sole proprietorship engaged in assembling passenger jeepneys with a
the members and guest of the petitioner. not required to render a definite number of hours public utility franchise to operate along the Baclaran-Sucat route. By
of work on a single day. Even the group rotation of 1995, Villamaria stopped assembling jeepneys and retained only nine,
caddies is not absolute because a player is at four of which he operated by employing drivers on a "boundary
As long as it is, the list made in the appealed decision detailing the
liberty to choose a caddy of his preference basis." One of those drivers was respondent Bustamante who drove
various matters of conduct, dress, language, etc. covered by the
regardless of the caddy's order in the rotation. the jeepney with Plate No. PVU-660. Bustamante remitted P450.00 a
petitioner's regulations, does not, in the mind of the Court, so
day to Villamaria as boundary and kept the residue of his daily
circumscribe the actions or judgment of the caddies concerned as to
earnings as compensation for driving the vehicle. In August 1997,
leave them little or no freedom of choice whatsoever in the manner of It can happen that a caddy who has rendered
Villamaria verbally agreed to sell the jeepney to Bustamante under
carrying out their services. In the very nature of things, caddies must services to a player on one day may still find
the "boundary-hulog scheme," where Bustamante would remit to
submit to some supervision of their conduct while enjoying the sufficient time to work elsewhere. Under such
Villarama P550.00 a day for a period of four years; Bustamante would
privilege of pursuing their occupation within the premises and grounds circumstances, he may then leave the premises of
then become the owner of the vehicle and continue to drive the same
of whatever club they do their work in. For all that is made to appear, petitioner and go to such other place of work that
under Villamaria’s franchise. It was also agreed that Bustamante
they work for the club to which they attach themselves on sufference he wishes (sic). Or a caddy who is on call for a
would make a downpayment of P10,000.00.
but, on the other hand, also without having to observe any working particular day may deliberately absent himself if he
hours, free to leave anytime they please, to stay away for as long has more profitable caddying, or another,
they like. It is not pretended that if found remiss in the observance of engagement in some other place. These are things On August 7, 1997, Villamaria executed a contract entitled
said rules, any discipline may be meted them beyond barring them beyond petitioner's control and for which it "Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng Boundary-
from the premises which, it may be supposed, the Club may do in any imposes no direct sanctions on the caddies. . . . 18 Hulog"5 over the passenger jeepney with Plate No. PVU-660, Chassis
case even absent any breach of the rules, and without violating any No. EVER95-38168-C and Motor No. SL-26647. The parties agreed
right to work on their part. All these considerations clash frontally with that if Bustamante failed to pay the boundary-hulog for three days,
WHEREFORE, the Decision of the Intermediate Appellant Court, review
the concept of employment. Villamaria Motors would hold on to the vehicle until Bustamante paid
of which is sought, is reversed and set aside, it being hereby declared
his arrears, including a penalty of P50.00 a day; in case Bustamante
that the private respondent, Fermin Llamar, is not an employee of
failed to remit the daily boundary-hulog for a period of one week, the
The IAC would point to the fact that the Club suggests the rate of fees petitioner Manila Golf and Country Club and that petitioner is under no
Kasunduan would cease to have legal effect and Bustamante would
payable by the players to the caddies as still another indication of the obligation to report him for compulsory coverage to the Social
have to return the vehicle to Villamaria Motors.
latter's status as employees. It seems to the Court, however, that the Security System. No pronouncement as to costs.
intendment of such fact is to the contrary, showing that the Club has
not the measure of control over the incidents of the caddies' work and Under the Kasunduan, Bustamante was prohibited from driving the
SO ORDERED.
compensation that an employer would possess. vehicle without prior authority from Villamaria Motors. Thus,
Bustamante was authorized to operate the vehicle to transport
passengers only and not for other purposes. He was also required to
The Court agrees with petitioner that the group rotation system so-
display an identification card in front of the windshield of the vehicle;
called, is less a measure of employer control than an assurance that
in case of failure to do so, any fine that may be imposed by
the work is fairly distributed, a caddy who is absent when his turn
government authorities would be charged against his account.
number is called simply losing his turn to serve and being assigned
Bustamante further obliged himself to pay for the cost of replacing
instead the last number for the day. 17
any parts of the vehicle that would be lost or damaged due to his
negligence. In case the vehicle sustained serious damage,
Bustamante was obliged to notify Villamaria Motors before

54
commencing repairs. Bustamante was not allowed to wear slippers, Bustamante prayed that judgment be rendered in his favor, thus: tires were worn, the alternator was gone, and the battery was no
short pants or undershirts while driving. He was required to be polite longer working.
and respectful towards the passengers. He was also obliged to notify WHEREFORE, in the light of the foregoing, it is most respectfully
Villamaria Motors in case the vehicle was leased for two or more days prayed that judgment be rendered ordering the respondents, jointly Citing the cases of Cathedral School of Technology v. NLRC 11 and
and was required to attend any meetings which may be called from and severally, the following: Canlubang Security Agency Corporation v. NLRC, 12 the spouses
time to time. Aside from the boundary-hulog, Bustamante was also Villamaria argued that Bustamante was not illegally dismissed since
obliged to pay for the annual registration fees of the vehicle and the the Kasunduan executed on August 7, 1997 transformed the
premium for the vehicle’s comprehensive insurance. Bustamante 1. Reinstate complainant to his former position without loss
of seniority rights and execute a Deed of Sale in favor of the employer-employee relationship into that of vendor-vendee. Hence,
promised to strictly comply with the rules and regulations imposed by the spouses concluded, there was no legal basis to hold them liable
Villamaria for the upkeep and maintenance of the jeepney. complainant relative to the PUJ with Plate No. PVU-660;
for illegal dismissal. They prayed that the case be dismissed for lack
of jurisdiction and patent lack of merit.
Bustamante continued driving the jeepney under the supervision and 2. Ordering the respondents to pay backwages in the
control of Villamaria. As agreed upon, he made daily remittances of amount of P400.00 a day and other benefits computed from
July 24, 2000 up to the time of his actual reinstatement; In his Reply,13 Bustamante claimed that Villamaria exercised control
P550.00 in payment of the purchase price of the vehicle. Bustamante and supervision over the conduct of his employment. He maintained
failed to pay for the annual registration fees of the vehicle, but that the rulings of the Court in National Labor Union v.
Villamaria allowed him to continue driving the jeepney. 3. Ordering respondents to return the amount of P10,000.00 Dinglasan,14 Magboo v. Bernardo,15 and Citizen's League of Free
and P180,000.00 for the expenses incurred by the Workers v. Abbas16 are germane to the issue as they define the nature
In 1999, Bustamante and other drivers who also had the same complainant in the repair and maintenance of the subject of the owner/operator-driver relationship under the boundary system.
arrangement with Villamaria Motors failed to pay their respective jeep; He further reiterated that it was the Villamaria spouses who presented
boundary-hulog. This prompted Villamaria to serve a the Kasunduan to him and that he conformed thereto only upon their
"Paalala,"6 reminding them that under the Kasunduan, failure to pay 4. Ordering the respondents to refund the amount of One representation that he would own the vehicle after four years.
the daily boundary-hulog for one week, would mean their respective Hundred (P100.00) Pesos per day counted from August 7, Moreover, it appeared that the Paalala was duly received by him, as
jeepneys would be returned to him without any complaints. He 1997 up to June 2000 or a total of P91,200.00; he, together with other drivers, was made to affix his signature on a
warned the drivers that the Kasunduan would henceforth be strictly blank piece of paper purporting to be an "attendance sheet."
enforced and urged them to comply with their obligation to avoid
5. To pay moral and exemplary damages of not less than
litigation. P200,000.00; On March 15, 2002, the Labor Arbiter rendered judgment 17 in favor of
the spouses Villamaria and ordered the complaint dismissed on the
On July 24, 2000, Villamaria took back the jeepney driven by following ratiocination:
6. Attorney’s fee[s] of not less than 10% of the monetary
Bustamante and barred the latter from driving the vehicle. award.
Respondents presented the contract of Boundary-Hulog, as well as the
On August 15, 2000, Bustamante filed a Complaint 7 for Illegal PAALALA, to prove their claim that complainant violated the terms of
Other just and equitable reliefs under the premises are also being
Dismissal against Villamaria and his wife Teresita. In his Position prayed for.9 their contract and afterwards abandoned the vehicle assigned to him.
Paper,8 Bustamante alleged that he was employed by Villamaria in As against the foregoing, [the] complaint’s (sic) mere allegations to
July 1996 under the boundary system, where he was required to the contrary cannot prevail.
remit P450.00 a day. After one year of continuously working for them, In their Position Paper,10 the spouses Villamaria admitted the
the spouses Villamaria presented the Kasunduan for his signature, existence of the Kasunduan, but alleged that Bustamante failed to pay
Not having been illegally dismissed, complainant is not entitled to
with the assurance that he (Bustamante) would own the jeepney by the P10,000.00 downpayment and the vehicle’s annual registration
fees. They further alleged that Bustamante eventually failed to remit damages and attorney's fees.18
March 2001 after paying P550.00 in daily installments and that he
would thereafter continue driving the vehicle along the same route the requisite boundary-hulog of P550.00 a day, which prompted them
under the same franchise. He further narrated that in July 2000, he to issue the Paalaala. Instead of complying with his obligations, Bustamante appealed the decision to the NLRC, 19 insisting that the
informed the Villamaria spouses that the surplus engine of the Bustamante stopped making his remittances despite his daily trips Kasunduan did not extinguish the employer-employee relationship
jeepney needed to be replaced, and was assured that it would be and even brought the jeepney to the province without permission. between him and Villamaria. While he did not receive fixed wages, he
done. However, he was later arrested and his driver’s license was Worse, the jeepney figured in an accident and its license plate was kept only the excess of the boundary-hulog which he was required to
confiscated because apparently, the replacement engine that was confiscated; Bustamante even abandoned the vehicle in a gasoline remit daily to Villamaria under the agreement. Bustamante
installed was taken from a stolen vehicle. Due to negotiations with the station in Sucat, Parañaque City for two weeks. When the security maintained that he remained an employee because he was engaged
apprehending authorities, the jeepney was not impounded. The guard at the gasoline station requested that the vehicle be retrieved to perform activities which were necessary or desirable to Villamaria’s
Villamaria spouses took the jeepney from him on July 24, 2000, and and Teresita Villamaria asked Bustamante for the keys, Bustamante trade or business.
he was no longer allowed to drive the vehicle since then unless he told her: "Di kunin ninyo." When the vehicle was finally retrieved, the
paid them P70,000.00.

55
The NLRC rendered judgment20 dismissing the appeal for lack of merit, relationship. Noting that he was engaged in the manufacture and sale inconsistent with the former’s claim that he was not engaged in the
thus: of jeepneys and not in the business of transporting passengers for transportation business. There was no evidence that petitioner was
consideration, Villamaria contended that the daily fees which allowed to let some other person drive the jeepney.
WHEREFORE, premises considered, complainant's appeal is hereby Bustmante paid were actually periodic installments for the the vehicle
DISMISSED for reasons not stated in the Labor Arbiter's decision but and were not the same fees as understood in the boundary system. The CA further held that, while the power to dismiss was not
mainly on a jurisdictional issue, there being none over the subject He added that the boundary-hulog plan was basically a scheme to mentioned in the Kasunduan, it did not mean that Villamaria could not
matter of the controversy.21 help the driver-buyer earn money and eventually pay for the unit in exercise it. It explained that the existence of an employment
full, and for the owner to profit not from the daily earnings of the relationship did not depend on how the worker was paid but on the
driver-buyer but from the purchase price of the unit sold. Villamaria presence or absence of control over the means and method of the
The NLRC ruled that under the Kasunduan, the juridical relationship further asserted that the apparently restrictive conditions in the
between Bustamante and Villamaria was that of vendor and vendee, employee’s work. In this case, Villamaria’s directives (to drive
Kasunduan did not mean that the means and method of driver- carefully, wear an identification card, don decent attire, park the
hence, the Labor Arbiter had no jurisdiction over the complaint. buyer’s conduct was controlled, but were mere ways to preserve the
Bustamante filed a Motion for Reconsideration, which the NLRC vehicle in his garage, and to inform him about provincial trips, etc.)
vehicle for the benefit of both parties: Villamaria would be able to was a means to control the way in which Bustamante was to go about
resolved to deny on May 30, 2003.22 collect the agreed purchase price, while Bustamante would be assured his work. In view of Villamaria’s supervision and control as employer,
that the vehicle would still be in good running condition even after the fact that the "boundary" represented installment payments of the
Bustamante elevated the matter to the CA via Petition for Certiorari, four years. Moreover, the right of vendor to impose certain conditions purchase price on the jeepney did not remove the parties’ employer-
alleging that the NLRC erred on the buyer should be respected until full ownership of the property employee relationship.
is vested on the latter. Villamaria insisted that the parallel
circumstances obtaining in Singer Sewing Machine Company v.
I While the appellate court recognized that a week’s default in paying
Drilon24 has analogous application to the instant issue.
the boundary-hulog constituted an additional cause for terminating
IN DISMISSING PETITIONER’S APPEAL "FOR REASON NOT STATED IN Bustamante’s employment, it held that the latter was illegally
In its Decision25 dated August 30, 2004, the CA reversed and set aside dismissed. According to the CA, assuming that Bustamante failed to
THE LABOR ARBITER’S DECISION, BUT MAINLY ON JURISDICTIONAL
ISSUE;" the NLRC decision. The fallo of the decision reads: make the required payments as claimed by Villamaria, the latter
nevertheless failed to take steps to recover the unit and waited for
UPON THE VIEW WE TAKE IN THIS CASE, THUS, the impugned Bustamante to abandon it. It also pointed out that Villamaria neither
II
resolutions of the NLRC must be, as they are hereby are, REVERSED submitted any police report to support his claim that the vehicle
AND SET ASIDE, and judgment entered in favor of petitioner: figured in a mishap nor presented the affidavit of the gas station
IN DISREGARDING THE LAW AND PREVAILING JURISPRUDENCE guard to substantiate the claim that Bustamante abandoned the unit.
WHEN IT DECLARED THAT THE RELATIONSHIP WHICH WAS
ESTABLISHED BETWEEN PETITIONER AND THE PRIVATE 1. Sentencing private respondent Oscar Villamaria, Jr. to pay
petitioner Jerry Bustamante separation pay computed from Villamaria received a copy of the decision on September 8, 2004, and
RESPONDENT WAS DEFINITELY A MATTER WHICH IS BEYOND THE
PROTECTIVE MANTLE OF OUR LABOR LAWS.23 the time of his employment up to the time of termination filed, on September 17, 2004, a motion for reconsideration thereof.
based on the prevailing minimum wage at the time of The CA denied the motion in a Resolution 27 dated November 2, 2004,
termination; and, and Villamaria received a copy thereof on November 8, 2004.
Bustamante insisted that despite the Kasunduan, the relationship
between him and Villamaria continued to be that of employer-
2. Condemning private respondent Oscar Villamaria, Jr. to Villamaria, now petitioner, seeks relief from this Court via petition for
employee and as such, the Labor Arbiter had jurisdiction over his
complaint. He further alleged that it is common knowledge that pay petitioner Jerry Bustamante back wages computed from review on certiorari under Rule 65 of the Rules of Court, alleging that
the time of his dismissal up to March 2001 based on the the CA committed grave abuse of its discretion amounting to excess
operators of passenger jeepneys (including taxis) pay their drivers not
on a regular monthly basis but on commission or boundary basis, or prevailing minimum wage at the time of his dismissal. or lack of jurisdiction in reversing the decision of the Labor Arbiter and
the NLRC. He claims that the CA erred in ruling that the juridical
even the boundary-hulog system. Bustamante asserted that he was
dismissed from employment without any lawful or just cause and Without Costs. relationship between him and respondent under the Kasunduan was a
combination of employer-employee and vendor-vendee relationships.
without due notice.
The terms and conditions of the Kasunduan clearly state that he and
SO ORDERED.26 respondent Bustamante had entered into a conditional deed of sale
For his part, Villamaria averred that Bustamante failed to adduce over the jeepney; as such, their employer-employee relationship had
proof of their employer-employee relationship. He further pointed out The appellate court ruled that the Labor Arbiter had jurisdiction over been transformed into that of vendor-vendee. Petitioner insists that
that the Dinglasan case pertains to the boundary system and not the Bustamante’s complaint. Under the Kasunduan, the relationship he had the right to reserve his title on the jeepney until after the
boundary-hulog system, hence inapplicable in the instant case. He between him and Villamaria was dual: that of vendor-vendee and purchase price thereof had been paid in full.
argued that upon the execution of the Kasunduan, the juridical tie employer-employee. The CA ratiocinated that Villamaria’s exercise of
between him and Bustamante was transformed into a vendor-vendee control over Bustamante’s conduct in operating the jeepney is

56
In his Comment on the petition, respondent avers that the notice of the decision of the CA or its resolution denying the motion parties but also the nature of the action that is the subject of their
appropriate remedy of petitioner was an appeal via a petition for for reconsideration of the same. This is based on the premise that in controversy.35
review on certiorari under Rule 45 of the Rules of Court and not a issuing the assailed decision and resolution, the CA acted with grave
special civil action of certiorari under Rule 65. He argues that abuse of discretion, amounting to excess or lack of jurisdiction and Article 217 of the Labor Code, as amended, vests on the Labor Arbiter
petitioner failed to establish that the CA committed grave abuse of its there is no plain, speedy and adequate remedy in the ordinary course exclusive original jurisdiction only over the following:
discretion amounting to excess or lack of jurisdiction in its decision, as of law. A remedy is considered plain, speedy and adequate if it will
the said ruling is in accord with law and the evidence on record. promptly relieve the petitioner from the injurious effect of the
judgment and the acts of the lower court. x x x (a) Except as otherwise provided under this Code, the Labor
Arbiters shall have original and exclusive jurisdiction to hear and
Respondent further asserts that the Kasunduan presented to him by decide, within thirty (30) calendar days after the submission of the
petitioner which provides for a boundary-hulog scheme was a devious The aggrieved party is proscribed from filing a petition for certiorari if case by the parties for decision without extension, even in the
circumvention of the Labor Code of the Philippines. Respondent insists appeal is available, for the remedies of appeal and certiorari are absence of stenographic notes, the following cases involving all
that his juridical relationship with petitioner is that of employer- mutually exclusive and not alternative or successive. The aggrieved workers, whether agricultural or non-agricultural:
employee because he was engaged to perform activities which were party is, likewise, barred from filing a petition for certiorari if the
necessary or desirable in the usual business of petitioner, his remedy of appeal is lost through his negligence. A petition for
employer. certiorari is an original action and does not interrupt the course of the 1. Unfair labor practice cases;
principal case unless a temporary restraining order or a writ of
In his Reply, petitioner avers that the Rules of Procedure should be preliminary injunction has been issued against the public respondent 2. Termination disputes;
liberally construed in his favor; hence, it behooves the Court to from further proceeding. A petition for certiorari must be based on
resolve the merits of his petition. jurisdictional grounds because, as long as the respondent court acted 3. If accompanied with a claim for reinstatement, those
within its jurisdiction, any error committed by it will amount to
cases that workers may file involving wage, rates of pay,
nothing more than an error of judgment which may be corrected or hours of work, and other terms and conditions of
We agree with respondent’s contention that the remedy of petitioner reviewed only by appeal.31
from the CA decision was to file a petition for review on certiorari employment;
under Rule 45 of the Rules of Court and not the independent action of
certiorari under Rule 65. Petitioner had 15 days from receipt of the CA However, we have also ruled that a petition for certiorari under Rule 4. Claims for actual, moral, exemplary and other forms of
resolution denying his motion for the reconsideration within which to 65 may be considered as filed under Rule 45, conformably with the
damages arising from the employer-employee relations;
file the petition under Rule 45. 28 But instead of doing so, he filed a principle that rules of procedure are to be construed liberally,
petition for certiorari under Rule 65 on November 22, 2004, which did provided that the petition is filed within the reglementary period under
Section 2, Rule 45 of the Rules of Court, and where valid and 5. Cases arising from violation of Article 264 of this Code,
not, however, suspend the running of the 15-day reglementary
compelling circumstances warrant that the petition be resolved on its including questions involving the legality of strikes and
period; consequently, the CA decision became final and executory lockouts; and
upon the lapse of the reglementary period for appeal. Thus, on this merits.32 In this case, the petition was filed within the reglementary
procedural lapse, the instant petition stands to be dismissed. 29 period and petitioner has raised an issue of substance: whether the
existence of a boundary-hulog agreement negates the employer- 6. Except claims for Employees Compensation, Social
employee relationship between the vendor and vendee, and, as a Security, Medicare and maternity benefits, all other claims,
It must be stressed that the recourse to a special civil action under corollary, whether the Labor Arbiter has jurisdiction over a complaint arising from employer-employee relationship, including
Rule 65 of the Rules of Court is proscribed by the remedy of appeal for illegal dismissal in such case. those of persons in domestic or household service, involving
under Rule 45. As the Court elaborated in Tomas Claudio Memorial
an amount exceeding five thousand pesos (P5,000.00)
College, Inc. v. Court of Appeals:30 regardless of whether accompanied with a claim for
We resolve these issues in the affirmative.
reinstatement.
We agree that the remedy of the aggrieved party from a decision or
final resolution of the CA is to file a petition for review on certiorari The rule is that, the nature of an action and the subject matter
thereof, as well as, which court or agency of the government has (b) The Commission shall have exclusive appellate
under Rule 45 of the Rules of Court, as amended, on questions of
jurisdiction over the same, are determined by the material allegations jurisdiction over all cases decided by Labor
facts or issues of law within fifteen days from notice of the said Arbiters.
resolution. Otherwise, the decision of the CA shall become final and of the complaint in relation to the law involved and the character of
executory. The remedy under Rule 45 of the Rules of Court is a mode the reliefs prayed for, whether or not the complainant/plaintiff is
of appeal to this Court from the decision of the CA. It is a continuation entitled to any or all of such reliefs. 33 A prayer or demand for relief is (c) Cases arising from the interpretation or
of the appellate process over the original case. A review is not a not part of the petition of the cause of action; nor does it enlarge the implementation of collective bargaining
matter of right but is a matter of judicial discretion. The aggrieved cause of action stated or change the legal effect of what is agreements, and those arising from the
party may, however, assail the decision of the CA via a petition for alleged.34 In determining which body has jurisdiction over a case, the interpretation or enforcement of company
certiorari under Rule 65 of the Rules of Court within sixty days from better policy is to consider not only the status or relationship of the personnel policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance

57
 machinery and voluntary arbitration as may be of the "boundary" given to the owner/operator is not sufficient to pampasada o pangangalakal sa malinis at maayos na
provided in said agreements. change the relationship between them. Indubitably, the driver pamamaraan.
performs activities which are usually necessary or desirable in the
In the foregoing cases, an employer-employee relationship is an usual business or trade of the owner/operator.46 3. Na ang sasakyan nabanggit ay hindi gagamitin ng
indispensable jurisdictional requisite.36 The jurisdiction of Labor TAUHAN NG IKALAWANG PANIG sa mga bagay na
Arbiters and the NLRC under Article 217 of the Labor Code is limited Under the Kasunduan, respondent was required to remit P550.00 makapagdudulot ng kahihiyan, kasiraan o pananagutan sa
to disputes arising from an employer-employee relationship which can daily to petitioner, an amount which represented the boundary of TAUHAN NG UNANG PANIG.
only be resolved by reference to the Labor Code, other labor statutes petitioner as well as respondent’s partial payment (hulog) of the
or their collective bargaining agreement.37 Not every dispute between purchase price of the jeepney. 4. Na hindi ito mamanehohin ng hindi awtorisado ng opisina
an employer and employee involves matters that only the Labor ng UNANG PANIG.
Arbiter and the NLRC can resolve in the exercise of their adjudicatory Respondent was entitled to keep the excess of his daily earnings as
or quasi-judicial powers. Actions between employers and employees his daily wage. Thus, the daily remittances also had a dual purpose:
where the employer-employee relationship is merely incidental is 5. Na ang TAUHAN NG IKALAWANG PANIG ay
that of petitioner’s boundary and respondent’s partial payment kinakailangang maglagay ng ID Card sa harap ng windshield
within the exclusive original jurisdiction of the regular courts. 38 When (hulog) for the vehicle. This dual purpose was expressly stated in the
the principal relief is to be granted under labor legislation or a upang sa pamamagitan nito ay madaliang malaman kung
Kasunduan. The well-settled rule is that an obligation is not novated ang nagmamaneho ay awtorisado ng VILLAMARIA MOTORS
collective bargaining agreement, the case falls within the exclusive by an instrument that expressly recognizes the old one, changes only
jurisdiction of the Labor Arbiter and the NLRC even though a claim for o hindi.
the terms of payment, and adds other obligations not incompatible
damages might be asserted as an incident to such claim. 39 with the old provisions or where the new contract merely supplements
the previous one. 47 The two obligations of the respondent to remit to 6. Na sasagutin ng TAUHAN NG IKALAWANG PANIG ang
We agree with the ruling of the CA that, under the boundary-hulog petitioner the boundary-hulog can stand together. [halaga ng] multa kung sakaling mahuli ang sasakyang ito
scheme incorporated in the Kasunduan, a dual juridical relationship na hindi nakakabit ang ID card sa wastong lugar o anuman
was created between petitioner and respondent: that of employer- kasalanan o kapabayaan.
In resolving an issue based on contract, this Court must first examine
employee and vendor-vendee. The Kasunduan did not extinguish the the contract itself, keeping in mind that when the terms of the
employer-employee relationship of the parties extant before the agreement are clear and leave no doubt as to the intention of the 7. Na sasagutin din ng TAUHAN NG IKALAWANG PANIG ang
execution of said deed. contracting parties, the literal meaning of its stipulations shall materyales o piyesa na papalitan ng nasira o nawala ito
prevail.48 The intention of the contracting parties should be dahil sa kanyang kapabayaan.
As early as 1956, the Court ruled in National Labor Union v. ascertained by looking at the words used to project their intention,
Dinglasan40 that the jeepney owner/operator-driver relationship under that is, all the words, not just a particular word or two or more words 8. Kailangan sa VILLAMARIA MOTORS pa rin ang garahe
the boundary system is that of employer-employee and not lessor- standing alone. The various stipulations of a contract shall be habang hinuhulugan pa rin ng TAUHAN NG IKALAWANG
lessee. This doctrine was affirmed, under similar factual settings, in interpreted together, attributing to the doubtful ones that sense which PANIG ang nasabing sasakyan.
Magboo v. Bernardo41 and Lantaco, Sr. v. Llamas,42 and was may result from all of them taken jointly. 49 The parts and clauses
analogously applied to govern the relationships between auto-calesa must be interpreted in relation to one another to give effect to the
9. Na kung magkaroon ng mabigat na kasiraan ang
owner/operator and driver,43 bus owner/operator and conductor,44 and whole. The legal effect of a contract is to be determined from the sasakyang ipinagkaloob ng TAUHAN NG UNANG PANIG, ang
taxi owner/operator and driver.45 whole read together.50
TAUHAN NG IKALAWANG PANIG ay obligadong itawag ito
muna sa VILLAMARIA MOTORS bago ipagawa sa alin mang
The boundary system is a scheme by an owner/operator engaged in Under the Kasunduan, petitioner retained supervision and control over Motor Shop na awtorisado ng VILLAMARIA MOTORS.
transporting passengers as a common carrier to primarily govern the the conduct of the respondent as driver of the jeepney, thus:
compensation of the driver, that is, the latter’s daily earnings are 10. Na hindi pahihintulutan ng TAUHAN NG IKALAWANG
remitted to the owner/operator less the excess of the boundary which Ang mga patakaran, kaugnay ng bilihang ito sa pamamagitan ng PANIG sa panahon ng pamamasada na ang nagmamaneho
represents the driver’s compensation. Under this system, the boundary hulog ay ang mga sumusunod: ay naka-tsinelas, naka short pants at nakasando lamang.
owner/operator exercises control and supervision over the driver. It is
Dapat ang nagmamaneho ay laging nasa maayos ang
unlike in lease of chattels where the lessor loses complete control over kasuotan upang igalang ng mga pasahero.
the chattel leased but the lessee is still ultimately responsible for the 1. Pangangalagaan at pag-iingatan ng TAUHAN NG
consequences of its use. The management of the business is still in IKALAWANG PANIG ang sasakyan ipinagkatiwala sa kanya
the hands of the owner/operator, who, being the holder of the ng TAUHAN NG UNANG PANIG. 11. Na ang TAUHAN NG IKALAWANG PANIG o ang
certificate of public convenience, must see to it that the driver follows awtorisado niyang driver ay magpapakita ng magandang
the route prescribed by the franchising and regulatory authority, and 2. Na ang sasakyan nabanggit ay gagamitin lamang ng asal sa mga pasaheros at hindi dapat magsasalita ng
the rules promulgated with regard to the business operations. The TAUHAN NG IKALAWANG PANIG sa paghahanapbuhay bilang masama kung sakali man may pasaherong pilosopo upang
fact that the driver does not receive fixed wages but only the excess

58
maiwasan ang anumang kaguluhan na maaaring 19. Na kung sakaling ang nasabing sasakyan ay maaarkila respondent as its driver. In case respondent failed to make his
kasangkutan. at aabutin ng dalawa o higit pang araw sa lalawigan ay P550.00 daily installment payment for a week, the agreement would
dapat lamang na ipagbigay alam muna ito sa VILLAMARIA be of no force and effect and respondent would have to return the
12. Na kung sakaling hindi makapagbigay ng BOUNDARY MOTORS upang maiwasan ang mga anumang suliranin. jeepney to petitioner; the employer-employee relationship would
HULOG ang TAUHAN NG IKALAWANG PANIG sa loob ng likewise be terminated unless petitioner would allow respondent to
tatlong (3) araw ay ang opisina ng VILLAMARIA MOTORS 20. Na ang TAUHAN NG IKALAWANG PANIG ay iiwasan ang continue driving the jeepney on a boundary basis of P550.00 daily
ang may karapatang mangasiwa ng nasabing sasakyan pakikipag-unahan sa kaninumang sasakyan upang maiwasan despite the termination of their vendor-vendee relationship.
hanggang matugunan ang lahat ng responsibilidad. Ang ang aksidente.
halagang dapat bayaran sa opisina ay may karagdagang The juridical relationship of employer-employee between petitioner
multa ng P50.00 sa araw-araw na ito ay nasa pangangasiwa 21. Na kung ang TAUHAN NG IKALAWANG PANIG ay and respondent was not negated by the foregoing stipulation in the
ng VILLAMARIA MOTORS. mayroon sasabihin sa VILLAMARIA MOTORS mabuti man or Kasunduan, considering that petitioner retained control of
masama ay iparating agad ito sa kinauukulan at iwasan na respondent’s conduct as driver of the vehicle. As correctly ruled by the
13. Na kung ang TAUHAN NG IKALAWANG PANIG ay hindi iparating ito kung [kani-kanino] lamang upang maiwasan CA:
makapagbigay ng BOUNDARY HULOG sa loob ng isang ang anumang usapin. Magsadya agad sa opisina ng
linggo ay nangangahulugan na ang kasunduang ito ay wala VILLAMARIA MOTORS. The exercise of control by private respondent over petitioner’s
ng bisa at kusang ibabalik ng TAUHAN NG IKALAWANG conduct in operating the jeepney he was driving is inconsistent with
PANIG ang nasabing sasakyan sa TAUHAN NG UNANG 22. Ang mga nasasaad sa KASUNDUAN ito ay buong galang private respondent’s claim that he is, or was, not engaged in the
PANIG. at puso kong sinasang-ayunan at buong sikap na transportation business; that, even if petitioner was allowed to let
pangangalagaan ng TAUHAN NG IKALAWANG PANIG ang some other person drive the unit, it was not shown that he did so;
14. Sasagutin ng TAUHAN NG IKALAWANG PANIG ang bayad nasabing sasakyan at gagamitin lamang ito sa that the existence of an employment relation is not dependent on how
sa rehistro, comprehensive insurance taon-taon at kahit paghahanapbuhay at wala nang iba pa.51 the worker is paid but on the presence or absence of control over the
anong uri ng aksidente habang ito ay hinuhulugan pa sa means and method of the work; that the amount earned in excess of
TAUHAN NG UNANG PANIG. the "boundary hulog" is equivalent to wages; and that the fact that
The parties expressly agreed that petitioner, as vendor, and the power of dismissal was not mentioned in the Kasunduan did not
respondent, as vendee, entered into a contract to sell the jeepney on mean that private respondent never exercised such power, or could
15. Na ang TAUHAN NG IKALAWANG PANIG ay obligadong a daily installment basis of P550.00 payable in four years and that not exercise such power.
dumalo sa pangkalahatang pagpupulong ng VILLAMARIA petitioner would thereafter become its owner. A contract is one of
MOTORS sa tuwing tatawag ang mga tagapangasiwa nito conditional sale, oftentimes referred to as contract to sell, if the
upang maipaabot ang anumang mungkahi sa ikasusulong ng ownership or title over the Moreover, requiring petitioner to drive the unit for commercial use, or
samahan. to wear an identification card, or to don a decent attire, or to park the
vehicle in Villamaria Motors garage, or to inform Villamaria Motors
property sold is retained by the vendor, and is not passed to the about the fact that the unit would be going out to the province for two
16. Na ang TAUHAN NG IKALAWANG PANIG ay makikiisa sa vendee unless and until there is full payment of the purchase price days of more, or to drive the unit carefully, etc. necessarily related to
lahat ng mga patakaran na magkakaroon ng pagbabago o and/or upon faithful compliance with the other terms and conditions control over the means by which the petitioner was to go about his
karagdagan sa mga darating na panahon at hindi magiging that may lawfully be stipulated.52 Such payment or satisfaction of work; that the ruling applicable here is not Singer Sewing Machine but
hadlang sa lahat ng mga balakin ng VILLAMARIA MOTORS sa other preconditions, as the case may be, is a positive suspensive National Labor Union since the latter case involved jeepney
lalo pang ipagtatagumpay at ikakatibay ng Samahan. condition, the failure of which is not a breach of contract, casual or owners/operators and jeepney drivers, and that the fact that the
serious, but simply an event that would prevent the obligation of the "boundary" here represented installment payment of the purchase
17. Na ang TAUHAN NG IKALAWANG PANIG ay hindi vendor to convey title from acquiring binding force.53 Stated price on the jeepney did not withdraw the relationship from that of
magiging buwaya sa pasahero upang hindi kainisan ng differently, the efficacy or obligatory force of the vendor's obligation employer-employee, in view of the overt presence of supervision and
kapwa driver at maiwasan ang pagkakasangkot sa anumang to transfer title is subordinated to the happening of a future and control by the employer.56
gulo. uncertain event so that if the suspensive condition does not take
place, the parties would stand as if the conditional obligation had
never existed.54 The vendor may extrajudicially terminate the Neither is such juridical relationship negated by petitioner’s claim that
18. Ang nasabing sasakyan ay hindi kalilimutang siyasatin operation of the contract, refuse conveyance, and retain the sums or the terms and conditions in the Kasunduan relative to respondent’s
ang kalagayan lalo na sa umaga bago pumasada, at sa installments already received, where such rights are expressly behavior and deportment as driver was for his and respondent’s
hapon o gabi naman ay sisikapin mapanatili ang kalinisan provided for.55 benefit: to insure that respondent would be able to pay the requisite
nito. daily installment of P550.00, and that the vehicle would still be in
good condition despite the lapse of four years. What is primordial is
Under the boundary-hulog scheme, petitioner retained ownership of that petitioner retained control over the conduct of the respondent as
the jeepney although its material possession was vested in driver of the jeepney.

59
Indeed, petitioner, as the owner of the vehicle and the holder of the gasoline station after figuring in an accident. But private respondent On another point, private respondent did not submit any police report
franchise, is entitled to exercise supervision and control over the failed to substantiate these allegations with solid, sufficient proof. to support his claim that petitioner really figured in a vehicular
respondent, by seeing to it that the route provided in his franchise, Notably, private respondent’s allegation viz, that he retrieved the mishap. Neither did he present the affidavit of the guard from the gas
and the rules and regulations of the Land Transportation Regulatory vehicle from the gas station, where petitioner abandoned it, station to substantiate his claim that petitioner abandoned the unit
Board are duly complied with. Moreover, in a business establishment, contradicted his statement in the Paalala that he would enforce the there.58
an identification card is usually provided not just as a security provision (in the Kasunduan) to the effect that default in the
measure but to mainly identify the holder thereof as a bona fide remittance of the boundary hulog for one week would result in the Petitioner’s claim that he opted not to terminate the employment of
employee of the firm who issues it.57 forfeiture of the unit. The Paalala reads as follows: respondent because of magnanimity is negated by his (petitioner’s)
own evidence that he took the jeepney from the respondent only on
As respondent’s employer, it was the burden of petitioner to prove "Sa lahat ng mga kumukuha ng sasakyan July 24, 2000.
that respondent’s termination from employment was for a lawful or
just cause, or, at the very least, that respondent failed to make his "Sa pamamagitan ng ‘BOUNDARY HULOG’ IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The
daily remittances of P550.00 as boundary. However, petitioner failed decision of the Court of Appeals in CA-G.R. SP No. 78720 is
to do so. As correctly ruled by the appellate court: AFFIRMED. Costs against petitioner.
"Nais ko pong ipaalala sa inyo ang Kasunduan na inyong pinirmahan
particular na ang paragrapo 13 na nagsasaad na kung hindi kayo
It is basic of course that termination of employment must be effected makapagbigay ng Boundary Hulog sa loob ng isang linggo ay kusa SO ORDERED.
in accordance with law. The just and authorized causes for ninyong ibabalik and nasabing sasakyan na inyong hinuhulugan ng
termination of employment are enumerated under Articles 282, 283 wala ng paghahabol pa.
and 284 of the Labor Code.

"Mula po sa araw ng inyong pagkatanggap ng Paalala na ito ay akin Javier vs. Fly Ace Corp
Parenthetically, given the peculiarity of the situation of the parties na pong ipatutupad ang nasabing Kasunduan kaya’t aking pinaaalala
here, the default in the remittance of the boundary hulog for one sa inyong lahat na tuparin natin ang nakalagay sa kasunduan upang Antecedent Facts
week or longer may be considered an additional cause for termination maiwasan natin ito.
of employment. The reason is because the Kasunduan would be of no
force and effect in the event that the purchaser failed to remit the On May 23, 2008, Javier filed a complaint before the NLRC for
boundary hulog for one week. The Kasunduan in this case pertinently "Hinihiling ko na sumunod kayo sa hinihingi ng paalalang ito upang underpayment of salaries and other labor standard benefits. He
stipulates: hindi na tayo makaabot pa sa korte kung sakaling hindi ninyo isasauli alleged that he was an employee of Fly Ace since September
ang inyong sasakyan na hinuhulugan na ang mga magagastos ay 2007, performing various tasks at the respondent’s warehouse
kayo pa ang magbabayad sapagkat ang hindi ninyo pagtupad sa such as cleaning and arranging the canned items before their
13. Na kung ang TAUHAN NG IKALAWANG PANIG ay hindi kasunduan ang naging dahilan ng pagsampa ng kaso. delivery to certain locations, except in instances when he would
makapagbigay ng BOUNDARY HULOG sa loob ng isang linggo ay
be ordered to accompany the company’s delivery vehicles,
NANGANGAHULUGAN na ang kasunduang ito ay wala ng bisa at
"Sumasainyo as pahinante; that he reported for work from Monday to Saturday
kusang ibabalik ng TAUHAN NG IKALAWANG PANIG ang nasabing
from 7:00 o’clock in the morning to 5:00 o’clock in the afternoon;
sasakyan sa TAUHAN NG UNANG PANIG na wala ng paghahabol pa.
that during his employment, he was not issued an identification
"Attendance: 8/27/99
card and payslips by the company; that on May 6, 2008, he
Moreover, well-settled is the rule that, the employer has the burden of reported for work but he was no longer allowed to enter the
proving that the dismissal of an employee is for a just cause. The "(The Signatures appearing herein company premises by the security guard upon the instruction of
failure of the employer to discharge this burden means that the Ruben Ong (Mr. Ong), his superior;5 that after several minutes of
dismissal is not justified and that the employee is entitled to begging to the guard to allow him to enter, he saw Ong whom he
include (sic) that of petitioner’s) (Sgd.)
reinstatement and back wages. approached and asked why he was being barred from entering
the premises; that Ong replied by saying, "Tanungin mo anak
OSCAR VILLAMARIA, JR."
In the case at bench, private respondent in his position paper before mo;" 6 that he then went home and discussed the matter with his
the Labor Arbiter, alleged that petitioner failed to pay the family; that he discovered that Ong had been courting his
miscellaneous fee of P10,000.00 and the yearly registration of the If it were true that petitioner did not remit the boundary hulog for one daughter Annalyn after the two met at a fiesta celebration in
unit; that petitioner also stopped remitting the "boundary hulog," week or more, why did private respondent not forthwith take steps to Malabon City; that Annalyn tried to talk to Ong and convince him
prompting him (private respondent) to issue a "Paalala," which recover the unit, and why did he have to wait for petitioner to to spare her father from trouble but he refused to accede; that
petitioner however ignored; that petitioner even brought the unit to abandon it?1avvphil.net thereafter, Javier was terminated from his employment without
his (petitioner’s) province without informing him (private respondent) notice; and that he was neither given the opportunity to refute
about it; and that petitioner eventually abandoned the vehicle at a the cause/s of his dismissal from work.

60
To support his allegations, Javier presented an affidavit of one Hence, as complainant received the rightful salary as shown by 2. Separation pay, in lieu of reinstatement - 8,450.00
Bengie Valenzuela who alleged that Javier was a stevedore the above described payrolls, Respondents are not liable for
or pahinante of Fly Ace from September 2007 to January 2008. salary differentials. 9 3. Unpaid 13th month pay (proportionate) - 5,633.33
The said affidavit was subscribed before the Labor Arbiter (LA).7
Ruling of the NLRC TOTAL -₱ 59,854.16
For its part, Fly Ace averred that it was engaged in the business
of importation and sales of groceries. Sometime in December On appeal with the NLRC, Javier was favored. It ruled that the LA
2007, Javier was contracted by its employee, Mr. Ong, as extra All other claims are dismissed for lack of merit.
skirted the argument of Javier and immediately concluded that
helper on a pakyaw basis at an agreed rate of ₱ 300.00 per trip, he was not a regular employee simply because he failed to
which was later increased to ₱ 325.00 in January 2008. Mr. Ong present proof. It was of the view that a pakyaw-basis SO ORDERED.11
contracted Javier roughly 5 to 6 times only in a month whenever arrangement did not preclude the existence of employer-
the vehicle of its contracted hauler, Milmar Hauling Services, was employee relationship. "Payment by result x x x is a method of Ruling of the Court of Appeals
not available. On April 30, 2008, Fly Ace no longer needed the compensation and does not define the essence of the relation. It
services of Javier. Denying that he was their employee, Fly Ace is a mere method of computing compensation, not a basis for
insisted that there was no illegal dismissal. 8 Fly Ace submitted a On March 18, 2010, the CA annulled the NLRC findings that
determining the existence or absence of an employer-employee
copy of its agreement with Milmar Hauling Services and copies of Javier was indeed a former employee of Fly Ace and reinstated
relationship.10 " The NLRC further averred that it did not follow the dismissal of Javier’s complaint as ordered by the LA. The CA
acknowledgment receipts evidencing payment to Javier for his that a worker was a job contractor and not an employee, just
contracted services bearing the words, "daily exercised its authority to make its own factual determination
because the work he was doing was not directly related to the anent the issue of the existence of an employer-employee
manpower (pakyaw/piece rate pay)" and the latter’s employer’s trade or business or the work may be considered as
signatures/initials. relationship between the parties. According to the CA:
"extra" helper as in this case; and that the relationship of an
employer and an employee was determined by law and the same
Ruling of the Labor Arbiter would prevail whatever the parties may call it. In this case, the xxx
NLRC held that substantial evidence was sufficient basis for
On November 28, 2008, the LA dismissed the complaint for lack judgment on the existence of the employer-employee In an illegal dismissal case the onus probandi  rests on the
of merit on the ground that Javier failed to present proof that he relationship. Javier was a regular employee of Fly Ace because employer to prove that its dismissal was for a valid cause.
was a regular employee of Fly Ace. He wrote: there was reasonable connection between the particular activity However, before a case for illegal dismissal can prosper, an
performed by the employee (as a "pahinante") in relation to the employer-employee relationship must first be established. x x x it
usual business or trade of the employer (importation, sales and is incumbent upon private respondent to prove the employee-
Complainant has no employee ID showing his employment with delivery of groceries). He may not be considered as an employer relationship by substantial evidence.
the Respondent nor any document showing that he received the independent contractor because he could not exercise any
benefits accorded to regular employees of the Respondents. His judgment in the delivery of company products. He was only
contention that Respondent failed to give him said ID and xxx
engaged as a "helper."
payslips implies that indeed he was not a regular employee of Fly
Ace considering that complainant was a helper and that It is incumbent upon private respondent to prove, by substantial
Respondent company has contracted a regular trucking for the Finding Javier to be a regular employee, the NLRC ruled that he
evidence, that he is an employee of petitioners, but he failed to
delivery of its products. was entitled to a security of tenure. For failing to present proof of
discharge his burden. The non-issuance of a company-issued
a valid cause for his termination, Fly Ace was found to be liable
identification card to private respondent supports petitioners’
for illegal dismissal of Javier who was likewise entitled to
Respondent Fly Ace is not engaged in trucking business but in the contention that private respondent was not its employee.12
backwages and separation pay in lieu of reinstatement. The NLRC
importation and sales of groceries. Since there is a regular hauler thus ordered:
to deliver its products, we give credence to Respondents’ claim The CA likewise added that Javier’s failure to present salary
that complainant was contracted on "pakiao" basis. vouchers, payslips, or other pieces of evidence to bolster his
WHEREFORE, premises considered, complainant’s appeal is
contention, pointed to the inescapable conclusion that he was not
partially GRANTED. The assailed Decision of the labor arbiter is
As to the claim for underpayment of salaries, the payroll an employee of Fly Ace. Further, it found that Javier’s work was
VACATED and a new one is hereby entered holding respondent
presented by the Respondents showing salaries of workers on not necessary and desirable to the business or trade of the
FLY ACE CORPORATION guilty of illegal dismissal and non-
"pakiao" basis has evidentiary weight because although the company, as it was only when there were scheduled deliveries,
payment of 13th month pay. Consequently, it is hereby ordered
signature of the complainant appearing thereon are not uniform, which a regular hauling service could not deliver, that Fly Ace
to pay complainant DANILO "Bitoy" JAVIER the following:
they appeared to be his true signature. would contract the services of Javier as an extra helper. Lastly,
the CA declared that the facts alleged by Javier did not pass the
1. Backwages -₱ 45,770.83 "control test."
xxxx

61
He contracted work outside the company premises; he was not delivery schedule and output, and his other duties in the In an illegal dismissal case, the onus probandi rests on the
required to observe definite hours of work; he was not required warehouse.16 employer to prove that its dismissal of an employee was for a
to report daily; and he was free to accept other work elsewhere valid cause. However, before a case for illegal dismissal can
as there was no exclusivity of his contracted service to the The petitioner chiefly relied on Chavez v. NLRC,17 where the Court prosper, an employer-employee relationship must first be
company, the same being co-terminous with the trip only. 13 Since ruled that payment to a worker on a per trip basis is not established.
no substantial evidence was presented to establish an employer- significant because "this is merely a method of computing
employee relationship, the case for illegal dismissal could not compensation and not a basis for determining the existence of Fly Ace points out that Javier merely offers factual assertions that
prosper. employer-employee relationship." Javier likewise invokes the rule he was an employee of Fly Ace, "which are unfortunately not
that, "in controversies between a laborer and his master, x x x supported by proof, documentary or otherwise." 23 Javier simply
The petitioners moved for reconsideration, but to no avail. doubts reasonably arising from the evidence should be resolved assumed that he was an employee of Fly Ace, absent any
in the former’s favour. The policy is reflected is no less than the competent or relevant evidence to support it. "He performed his
Hence, this appeal anchored on the following grounds: Constitution, Labor Code and Civil Code."18 contracted work outside the premises of the respondent; he was
not even required to report to work at regular hours; he was not
Claiming to be an employee of Fly Ace, petitioner asserts that he made to register his time in and time out every time he was
I. contracted to work; he was not subjected to any disciplinary
was illegally dismissed by the latter’s failure to observe
substantive and procedural due process. Since his dismissal was sanction imposed to other employees for company violations; he
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN not based on any of the causes recognized by law, and was was not issued a company I.D.; he was not accorded the same
HOLDING THAT THE PETITIONER WAS NOT A REGULAR implemented without notice, Javier is entitled to separation pay benefits given to other employees; he was not registered with
EMPLOYEE OF FLY ACE. and backwages. the Social Security System (SSS) as petitioner’s employee; and,
he was free to leave, accept and engage in other means of
II. livelihood as there is no exclusivity of his contracted services with
In its Comment,19 Fly Ace insists that there was no substantial the petitioner, his services being co-terminus with the trip only.
evidence to prove employer-employee relationship. Having a All these lead to the conclusion that petitioner is not an employee
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN service contract with Milmar Hauling Services for the purpose of of the respondents."24
HOLDING THAT THE PETITIONER IS NOT ENTITLED TO HIS transporting and delivering company products to customers, Fly
MONETARY CLAIMS.14 Ace contracted Javier as an extra helper or pahinante on a mere
"per trip basis." Javier, who was actually a loiterer in the area, Moreover, Fly Ace claims that it had "no right to control the
only accompanied and assisted the company driver when Milmar result, means, manner and methods by which Javier would
The petitioner contends that other than its bare allegations and perform his work or by which the same is to be
could not deliver or when the exigency of extra deliveries arises
self-serving affidavits of the other employees, Fly Ace has accomplished."25 In other words, Javier and the company driver
nothing to substantiate its claim that Javier was engaged on for roughly five to six times a month. Before making a delivery,
Fly Ace would turn over to the driver and Javier the delivery were given a free hand as to how they would perform their
a pakyaw basis. Assuming that Javier was indeed hired on contracted services and neither were they subjected to definite
a pakyaw basis, it does not preclude his regular employment with vehicle with its loaded company products. With the vehicle and
products in their custody, the driver and Javier "would leave the hours or condition of work.
the company. Even the acknowledgment receipts bearing his
signature and the confirming receipt of his salaries will not show company premises using their own means, method, best
judgment and discretion on how to deliver, time to deliver, where Fly Ace likewise claims that Javier’s function as a pahinante was
the true nature of his employment as they do not reflect the
necessary details of the commissioned task. Besides, Javier’s and [when] to start, and manner of delivering the products."20 not directly related or necessary to its principal business of
importation and sales of groceries. Even without Javier, the
tasks as pahinante are related, necessary and desirable to the
line of business by Fly Ace which is engaged in the importation Fly Ace dismisses Javier’s claims of employment as baseless business could operate its usual course as it did not involve the
assertions. Aside from his bare allegations, he presented nothing business of inland transportation. Lastly, the acknowledgment
and sale of grocery items. "On days when there were no
scheduled deliveries, he worked in petitioners’ warehouse, to substantiate his status as an employee. "It is a basic rule of receipts bearing Javier’s signature and words "pakiao rate,"
evidence that each party must prove his affirmative allegation. If referring to his earned salaries on a per trip basis, have
arranging and cleaning the stored cans for delivery to
clients."15 More importantly, Javier was subject to the control and he claims a right granted by law, he must prove his claim by evidentiary weight that the LA correctly considered in arriving at
competent evidence, relying on the strength of his own evidence the conclusion that Javier was not an employee of the company.
supervision of the company, as he was made to report to the
office from Monday to Saturday, from 7:00 o’clock in the morning and not upon the weakness of his opponent." 21 Invoking the case
until 5:00 o’clock in the afternoon. The list of deliverable goods, of Lopez v. Bodega City, 22 Fly Ace insists that in an illegal The Court affirms the assailed CA decision.
together with the corresponding clients and their respective dismissal case, the burden of proof is upon the complainant who
purchases and addresses, would necessarily have been prepared claims to be an employee. It is essential that an employer- It must be noted that the issue of Javier’s alleged illegal dismissal
by Fly Ace. Clearly, he was subjected to compliance with employee relationship be proved by substantial evidence. Thus, it is anchored on the existence of an employer-employee
company rules and regulations as regards working hours, cites: relationship between him and Fly Ace. This is essentially a

62
question of fact. Generally, the Court does not review errors that In sum, the rule of thumb remains: the onus probandi falls on Fly Ace could dictate what his conduct should be while at work.
raise factual questions. However, when there is conflict among petitioner to establish or substantiate such claim by the requisite In other words, Javier’s allegations did not establish that his
the factual findings of the antecedent deciding bodies like the LA, quantum of evidence.32 "Whoever claims entitlement to the relationship with Fly Ace had the attributes of an employer-
the NLRC and the CA, "it is proper, in the exercise of Our equity benefits provided by law should establish his or her right thereto employee relationship on the basis of the above-mentioned four-
jurisdiction, to review and re-evaluate the factual issues and to x x x."33 Sadly, Javier failed to adduce substantial evidence as fold test. Worse, Javier was not able to refute Fly Ace’s assertion
look into the records of the case and re-examine the questioned basis for the grant of relief. that it had an agreement with a hauling company to undertake
findings."26 In dealing with factual issues in labor cases, the delivery of its goods. It was also baffling to realize that Javier
"substantial evidence – that amount of relevant evidence which a In this case, the LA and the CA both concluded that Javier failed did not dispute Fly Ace’s denial of his services’ exclusivity to the
reasonable mind might accept as adequate to justify a conclusion to establish his employment with Fly Ace. By way of evidence on company. In short, all that Javier laid down were bare allegations
– is sufficient."27 this point, all that Javier presented were his self-serving without corroborative proof.
statements purportedly showing his activities as an employee of
As the records bear out, the LA and the CA found Javier’s claim of Fly Ace. Clearly, Javier failed to pass the substantiality Fly Ace does not dispute having contracted Javier and paid him
employment with Fly Ace as wanting and deficient. The Court is requirement to support his claim. Hence, the Court sees no on a "per trip" rate as a stevedore, albeit on a pakyaw basis. The
constrained to agree. Although Section 10, Rule VII of the New reason to depart from the findings of the CA. Court cannot fail to note that Fly Ace presented documentary
Rules of Procedure of the NLRC 28 allows a relaxation of the rules proof that Javier was indeed paid on a pakyaw basis per the
of procedure and evidence in labor cases, this rule of liberality While Javier remains firm in his position that as an employed acknowledgment receipts admitted as competent evidence by the
does not mean a complete dispensation of proof. Labor officials stevedore of Fly Ace, he was made to work in the company LA. Unfortunately for Javier, his mere denial of the signatures
are enjoined to use reasonable means to ascertain the facts premises during weekdays arranging and cleaning grocery items affixed therein cannot automatically sway us to ignore the
speedily and objectively with little regard to technicalities or for delivery to clients, no other proof was submitted to fortify his documents because "forgery cannot be presumed and must be
formalities but nowhere in the rules are they provided a license claim. The lone affidavit executed by one Bengie Valenzuela was proved by clear, positive and convincing evidence and the burden
to completely discount evidence, or the lack of it. The quantum of unsuccessful in strengthening Javier’s cause. In said document, of proof lies on the party alleging forgery."36
proof required, however, must still be satisfied. Hence, "when all Valenzuela attested to was that he would frequently see Javier
confronted with conflicting versions on factual matters, it is for at the workplace where the latter was also hired as Considering the above findings, the Court does not see the
them in the exercise of discretion to determine which party stevedore.34 Certainly, in gauging the evidence presented by necessity to resolve the second issue presented.
deserves credence on the basis of evidence received, subject only Javier, the Court cannot ignore the inescapable conclusion that
to the requirement that their decision must be supported by his mere presence at the workplace falls short in proving
substantial evidence."29 Accordingly, the petitioner needs to show One final note. The Court’s decision does not contradict the
employment therein. The supporting affidavit could have, to an settled rule that "payment by the piece is just a method of
by substantial evidence that he was indeed an employee of the extent, bolstered Javier’s claim of being tasked to clean grocery
company against which he claims illegal dismissal. compensation and does not define the essence of the
items when there were no scheduled delivery trips, but no relation."37 Payment on a piece-rate basis does not negate regular
information was offered in this subject simply because the employment. "The term ‘wage’ is broadly defined in Article 97 of
Expectedly, opposing parties would stand poles apart and proffer witness had no personal knowledge of Javier’s employment the Labor Code as remuneration or earnings, capable of being
allegations as different as chalk and cheese. It is, therefore, status in the company. Verily, the Court cannot accept Javier’s expressed in terms of money whether fixed or ascertained on a
incumbent upon the Court to determine whether the party on statements, hook, line and sinker. time, task, piece or commission basis. Payment by the piece is
whom the burden to prove lies was able to hurdle the same. "No just a method of compensation and does not define the essence
particular form of evidence is required to prove the existence of The Court is of the considerable view that on Javier lies the of the relations. Nor does the fact that the petitioner is not
such employer-employee relationship. Any competent and burden to pass the well-settled tests to determine the existence covered by the SSS affect the employer-employee relationship.
relevant evidence to prove the relationship may be of an employer-employee relationship, viz: (1) the selection and However, in determining whether the relationship is that of
admitted.http://www.lawphil.net/judjuris/juri2009/may2009/gr_ engagement of the employee; (2) the payment of wages; (3) the employer and employee or one of an independent contractor,
179652_2009.html - fnt31 Hence, while no particular form of power of dismissal; and (4) the power to control the employee’s each case must be determined on its own facts and all the
evidence is required, a finding that such relationship exists must conduct. Of these elements, the most important criterion is features of the relationship are to be considered." 38 Unfortunately
still rest on some substantial evidence. Moreover, the whether the employer controls or has reserved the right to for Javier, the attendant facts and circumstances of the instant
substantiality of the evidence depends on its quantitative as well control the employee not only as to the result of the work but case do not provide the Court with sufficient reason to uphold his
as its qualitative aspects."30 Although substantial evidence is not also as to the means and methods by which the result is to be claimed status as employee of Fly Ace.
a function of quantity but rather of quality, the x x x accomplished.35
circumstances of the instant case demand that something more
should have been proffered. Had there been other proofs of While the Constitution is committed to the policy of social justice
employment, such as x x x inclusion in petitioner’s payroll, or a In this case, Javier was not able to persuade the Court that the and the protection of the working class, it should not be
clear exercise of control, the Court would have affirmed the above elements exist in his case.1avvphi1 He could not submit supposed that every labor dispute will be automatically decided
finding of employer-employee relationship."31 competent proof that Fly Ace engaged his services as a regular in favor of labor. Management also has its rights which are
employee; that Fly Ace paid his wages as an employee, or that entitled to respect and enforcement in the interest of simple fair

63
play. Out of its concern for the less privileged in life, the Court or that he was able to drive one of the company’s units at any
has inclined, more often than not, toward the worker and upheld point in time.11
A. y
his cause in his conflicts with the employer. Such favoritism, 7 7
Tenazas System
however, has not blinded the Court to the rule that justice is in The respondents further alleged that Tenazas was never
every case for the deserving, to be dispensed in the light of the terminated by the company. They claimed that on July 3, 2007,
established facts and the applicable law and doctrine.39 Jaime Tenazas went to the company garage to get his taxi unit but was
Boundar
M. 04/10/0 06/04/0 informed that it is due for overhaul because of some mechanical
y
WHEREFORE, the petition is DENIED. The March 18, 2010 Francisc 4 7 defects reported by the other driver who takes turns with him in
System
Decision of the Court of Appeals and its June 7, 2010 Resolution, o using the same. He was thus advised to wait for further notice
in CA-G.R. SP No. 109975, are hereby AFFIRMED. from the company if his unit has already been fixed. On July 8,
2007, however, upon being informed that his unit is ready for
Isidro Boundar release, Tenazas failed to report back to work for no apparent
SO ORDERED. 04/200 03/06/0
G. y
0 6 reason.12
Endraca System7

As regards Endraca, the respondents alleged that they hired him

Relaying the circumstances of his dismissal, Tenazas alleged that as a spare driver in February 2001. They allow him to drive a taxi
on July 1, 2007, the taxi unit assigned to him was sideswiped by unit whenever their regular driver will not be able to report for
another vehicle, causing a dent on the left fender near the driver work. In July 2003, however, Endraca stopped reporting for work
seat. The cost of repair for the damage was estimated at without informing the company of his reason. Subsequently, the
₱500.00. Upon reporting the incident to the company, he was respondents learned that a complaint for illegal dismissal was
scolded by respondents Romualdo and Andy and was told to filed by Endraca against them. They strongly maintained,
leave the garage for he is already fired. He was even threatened however, that they could never have terminated Endraca in
with physical harm should he ever be seen in the company’s March 2006 since he already stopped reporting for work as early
premises again. Despite the warning, Tenazas reported for work as July 2003. Even then, they expressed willingness to
on the following day but was told that he can no longer drive any accommodate Endraca should he wish to work as a spare driver
Tenazas vs. R Villegas Taxi of the company’s units as he is already fired.8 for the company again since he was never really dismissed from
employment anyway.13
The Antecedent Facts Francisco, on the other hand, averred that his dismissal was
brought about by the company’s unfounded suspicion that he was On May 29, 2008, the petitioners, by registered mail, filed a
On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M. organizing a labor union. He was instantaneously terminated, Motion to Admit Additional Evidence.14 They alleged that after
Francisco (Francisco) filed a complaint for illegal dismissal against without the benefit of procedural due process, on June 4, 2007.9 diligent efforts, they were able to discover new pieces of
R. Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) evidence that will substantiate the allegations in their position
and Andy Villegas (Andy) (respondents). At that time, a similar Endraca, for his part, alleged that his dismissal was instigated by paper. Attached with the motion are the following: (a) Joint
case had already been filed by Isidro G. Endraca (Endraca) an occasion when he fell short of the required boundary for his Affidavit of the petitioners;15 (2) Affidavit of Good Faith of Aloney
against the same respondents. The two (2) cases were taxi unit. He related that before he was dismissed, he brought his Rivera, a co-driver;16 (3) pictures of the petitioners wearing
subsequently consolidated.5 taxi unit to an auto shop for an urgent repair. He was charged company shirts;17 and (4) Tenazas’ Certification/Record of Social
the amount of ₱700.00 for the repair services and the Security System (SSS) contributions.18
In their position paper,6 Tenazas, Francisco and Endraca replacement parts. As a result, he was not able to meet his
(petitioners) alleged that they were hired and dismissed by the boundary for the day. Upon returning to the company garage and The Ruling of the Labor Arbiter
respondents on the following dates: informing the management of the incident, his driver’s license
was confiscated and was told to settle the deficiency in his
boundary first before his license will be returned to him. He was On May 30, 2008, the Labor Arbiter (LA) rendered a
no longer allowed to drive a taxi unit despite his persistent Decision,19 which pertinently states, thus:

Date of pleas.10
Date of In the case of complainant Jaime Francisco, respondents
Name Dismiss Salary
Hiring categorically denied the existence of an employer-employee
al For their part, the respondents admitted that Tenazas and
Endraca were employees of the company, the former being a relationship. In this situation, the burden of proof shifts to the
regular driver and the latter a spare driver. The respondents, complainant to prove the existence of a regular employment.
Bernard 10/199 07/03/0 Boundar Complainant Francisco failed to present evidence of regular
however, denied that Francisco was an employee of the company

64
employment available to all regular employees, such as an "We must bear in mind that the complaint herein is one of actual On July 24, 2009, the respondents filed a motion for
employment contract, company ID, SSS, withholding tax dismissal. But there were no formal investigations, no show reconsideration but the NLRC denied the same in its
certificates, SSS membership and the like. cause memos, suspension memos or termination memos were Resolution23 dated September 23, 2009.
never issued. Otherwise stated, there is no proof of overt act of
In the case of complainant Isidro Endraca, respondents claim dismissal committed by herein respondents. The Ruling of the CA
that he was only an extra driver who stopped reporting to queue
for available taxi units which he could drive. In fact, respondents We are therefore constrained to rule that there was no illegal Unperturbed, the respondents filed a petition for certiorari with
offered him in their Position Paper on record, immediate dismissal in the case at bar." the CA. On March 11, 2010, the CA rendered a
reinstatement as extra taxi driver which offer he refused. Decision,24 affirming with modification the Decision dated June
Issue: [W]hether or not the complainants were illegally dismissed 23, 2009 of the NLRC. The CA agreed with the NLRC’s finding
In case of Bernard Tenazas, he was told to wait while his taxi was from employment. that Tenazas and Endraca were employees of the company, but
under repair but he did not report for work after the taxi was ruled otherwise in the case of Francisco for failing to establish his
repaired. Respondents[,] in their Position Paper, on record It is possible that the complainants’ Motion to Admit Additional relationship with the company. It also deleted the award of
likewise, offered him immediate reinstatement, which offer he Evidence did not reach the Labor Arbiter’s attention because he separation pay and ordered for reinstatement of Tenazas and
refused. had drafted the challenged decision even before they submitted Endraca. The pertinent portions of the decision read as follows:
it, and thereafter, his staff attended only to clerical matters, and
We must bear in mind that the complaint herein is one of actual failed to bring the motion in question to his attention. It is now At the outset, We declare that respondent Francisco failed to
dismissal. But there was no formal investigations, no show cause up to this Commission to consider the complainants’ additional prove that an employer-employee relationship exists between
memos, suspension memos or termination memos were never evidence. Anyway, if this Commission must consider evidence him and R. Transport. If there is no employer-employee
issued. Otherwise stated, there is no proof of overt act of submitted for the first time on appeal (Andaya vs. NLRC, G.R. relationship in the first place, the duty of R. Transport to adhere
dismissal committed by herein respondents. No. 157371, July 15, 2005), much more so must it consider to the labor standards provisions of the Labor Code with respect
evidence that was simply overlooked by the Labor Arbiter. to Francisco is questionable.
We are therefore constrained to rule that there was no illegal
dismissal in the case at bar. Among the additional pieces of evidence submitted by the xxxx
complainants are the following: (1) joint affidavit (records, p. 51-
The situations contemplated by law for entitlement to separation 52) of the three (3) complainants; (2) affidavit (records, p. 53) Although substantial evidence is not a function of quantity but
pay does [sic] not apply. of Aloney Rivera y Aldo; and (3) three (3) pictures (records, p. rather of quality, the peculiar environmental circumstances of the
54) referred to by the complainant in their joint affidavit showing instant case demand that something more should have been
them wearing t-shirts bearing the name and logo of the proffered. Had there been other proofs of employment, such as
WHEREFORE, premises considered, instant consolidated respondent’s company.
complaints are hereby dismissed for lack of merit. Francisco’s inclusion in R.R.

xxxx Transport’s payroll, this Court would have affirmed the finding of
SO ORDERED.20
employer-employee relationship.1âwphi1 The NLRC, therefore,
WHEREFORE, the decision appealed from is hereby REVERSED. committed grievous error in ordering R. Transport to answer for
The Ruling of the NLRC Respondent Rom[u]aldo Villegas doing business under the name Francisco’s claims.
and style Villegas Taxi Transport is hereby ordered to pay the
Unyielding, the petitioners appealed the decision of the LA to the complainants the following (1) full backwages from the date of We now tackle R. Transport’s petition with respect to Tenazas
NLRC. Subsequently, on June 23, 2009, the NLRC rendered a their dismissal (July 3, 2007 for Tena[z]as, June 4, 2004 for and Endraca, who are both admitted to be R. Transport’s
Decision,21 reversing the appealed decision of the LA, holding that Francisco, and March 6, 2006 for Endraca[)] up to the date of the employees. In its petition, R. Transport puts forth the theory that
the additional pieces of evidence belatedly submitted by the finality of this decision[;] (2) separation pay equivalent to one it did not terminate the services of respondents but that the
petitioners sufficed to establish the existence of employer- month for every year of service; and (3) attorney’s fees latter deliberately abandoned their work. We cannot subscribe to
employee relationship and their illegal dismissal. It held, thus: equivalent to ten percent (10%) of the total judgment awards. this theory.

In the challenged decision, the Labor Arbiter found that it cannot SO ORDERED.22 xxxx
be said that the complainants were illegally dismissed, there
being no showing, in the first place, that the respondent [sic]
terminated their services. A portion thereof reads: Considering that the complaints for illegal dismissal were filed
soon after the alleged dates of dismissal, it cannot be inferred

65
that respondents Tenazas and Endraca intended to abandon their Pivotal to the resolution of the instant case is the determination "Well-settled is the rule that the jurisdiction of this Court in a
employment. The complainants for dismissal are, in themselves, of the existence of employer-employee relationship and whether petition for review on certiorari under Rule 45 of the Revised
pleas for the continuance of employment. They are incompatible there was an illegal dismissal. Remarkably, the LA, NLRC and the Rules of Court is limited to reviewing only errors of law, not of
with the allegation of abandonment. x x x. CA had varying assessment on the matters at hand. The LA fact, unless the factual findings complained of are completely
believed that, with the admission of the respondents, there is no devoid of support from the evidence on record, or the assailed
For R. Transport’s failure to discharge the burden of proving that longer any question regarding the status of both Tenazas and judgment is based on a gross misapprehension of facts." 29 The
the dismissal of respondents Tenazas and Endraca was for a just Endraca being employees of the company. However, he ruled Court finds that none of the mentioned circumstances is present
cause, We are constrained to uphold the NLRC’s conclusion that that the same conclusion does not hold with respect to Francisco in this case.
their dismissal was not justified and that they are entitled to back whom the respondents denied to have ever employed or known.
wages. Because they were illegally dismissed, private With the respondents’ denial, the burden of proof shifts to In reviewing the decision of the NLRC, the CA found that no
respondents Tenazas and Endraca are entitled to reinstatement Francisco to establish his regular employment. Unfortunately, the substantial evidence was presented to support the conclusion
and back wages x x x. LA found that Francisco failed to present sufficient evidence to that Francisco was an employee of the respondents and
prove regular employment such as company ID, SSS accordingly modified the NLRC decision. It stressed that with the
membership, withholding tax certificates or similar articles. Thus, respondents’ denial of employer-employee relationship, it
xxxx he was not considered an employee of the company. Even then, behooved Francisco to present substantial evidence to prove that
the LA held that Tenazas and Endraca could not have been he is an employee before any question on the legality of his
However, R. Transport is correct in its contention that separation illegally dismissed since there was no overt act of dismissal supposed dismissal becomes appropriate for discussion.
pay should not be awarded because reinstatement is still possible committed by the respondents.27 Francisco, however, did not offer evidence to substantiate his
and has been offered. It is well[-]settled that separation pay is claim of employment with the respondents. Short of the required
granted only in instances where reinstatement is no longer On appeal, the NLRC reversed the ruling of the LA and ruled that quantum of proof, the CA correctly ruled that the NLRC’s finding
feasible or appropriate, which is not the case here. the petitioners were all employees of the company. The NLRC of illegal dismissal and the monetary awards which necessarily
premised its conclusion on the additional pieces of evidence follow such ruling lacked factual and legal basis and must
xxxx belatedly submitted by the petitioners, which it supposed, have therefore be deleted.
been overlooked by the LA owing to the time when it was
WHEREFORE, the Decision of the National Labor Relations received by the said office. It opined that the said pieces of The action of the CA finds support in Anonas Construction and
evidence are sufficient to establish the circumstances of their Industrial Supply Corp., et al. v. NLRC, et al., 30 where the Court
Commission dated 23 June 2009, in NLRC LAC Case No. 07-
002648-08, and its Resolution dated 23 September 2009 denying illegal termination. In particular, it noted that in the affidavit of reiterated:
the petitioners, there were allegations about the company’s
reconsideration thereof are AFFIRMED with MODIFICATION in
that the award of Jaime Francisco’s claims is DELETED. The practice of not issuing employment records and this was not
rebutted by the respondents. It underscored that in a situation [J]udicial review of decisions of the NLRC via petition for
separation pay granted in favor of Bernard Tenazas and Isidro certiorari under Rule 65, as a general rule, is confined only to
Endraca is, likewise, DELETED and their reinstatement is ordered where doubt exists between evidence presented by the employer
and the employee, the scales of justice must be tilted in favor of issues of lack or excess of jurisdiction and grave abuse of
instead. discretion on the part of the NLRC. The CA does not assess and
the employee. It awarded the petitioners with: (1) full backwages
from the date of their dismissal up to the finality of the decision; weigh the sufficiency of evidence upon which the LA and the
SO ORDERED.25 (Citations omitted) (2) separation pay equivalent to one month of salary for every NLRC based their conclusions. The issue is limited to the
year of service; and (3) attorney’s fees. determination of whether or not the NLRC acted without or in
excess of its jurisdiction, or with grave abuse of discretion in
On March 19, 2010, the petitioners filed a motion for
reconsideration but the same was denied by the CA in its rendering the resolution, except if the findings of the NLRC are
On petition for certiorari, the CA affirmed with modification the not supported by substantial evidence.31 (Citation omitted and
Resolution26 dated June 28, 2010. decision of the NLRC, holding that there was indeed an illegal emphasis ours)
dismissal on the part of Tenazas and Endraca but not with
Undeterred, the petitioners filed the instant petition for review on respect to Francisco who failed to present substantial evidence,
proving that he was an employee of the respondents. The CA It is an oft-repeated rule that in labor cases, as in other
certiorari before this Court on July 15, 2010.
likewise dismissed the respondents’ claim that Tenazas and administrative and quasi-judicial proceedings, "the quantum of
Endraca abandoned their work, asseverating that immediate proof necessary is substantial evidence, or such amount of
The Ruling of this Court relevant evidence which a reasonable mind might accept as
filing of a complaint for illegal dismissal and persistent pleas for
continuance of employment are incompatible with abandonment. adequate to justify a conclusion."32 "[T]he burden of proof rests
The petition lacks merit. It also deleted the NLRC’s award of separation pay and instead upon the party who asserts the affirmative of an
ordered that Tenazas and Endraca be reinstated.28 issue."33 Corollarily, as Francisco was claiming to be an employee
of the respondents, it is incumbent upon him to proffer evidence
to prove the existence of said relationship.

66
"[I]n determining the presence or absence of an employer- should take much weightier proof to invalidate a written antagonism would be generated as to adversely affect the
employee relationship, the Court has consistently looked for the instrument.38 efficiency and productivity of the employee concerned." 44
following incidents, to wit: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of Here, Francisco simply relied on his allegation that he was an Moreover, the existence of strained relations, it must be
dismissal; and (d) the employer’s power to control the employee employee of the company without any other evidence supporting emphasized, is a question of fact. In Golden Ace Builders v.
on the means and methods by which the work is accomplished. his claim. Unfortunately for him, a mere allegation in the position Talde,45 the Court underscored:
The last element, the so-called control test, is the most important paper is not tantamount to evidence. 39 Bereft of any evidence,
element."34 the CA correctly ruled that Francisco could not be considered an Strained relations must be demonstrated as a fact, however, to
employee of the respondents. be adequately supported by evidence—substantial evidence to
There is no hard and fast rule designed to establish the aforesaid show that the relationship between the employer and the
elements. Any competent and relevant evidence to prove the The CA’s order of reinstatement of Tenazas and Endraca, instead employee is indeed strained as a necessary consequence of the
relationship may be admitted. Identification cards, cash of the payment of separation pay, is also well in accordance with judicial controversy.46 (Citations omitted and emphasis ours)
vouchers, social security registration, appointment letters or prevailing jurisprudence. In Macasero v. Southern Industrial
employment contracts, payrolls, organization charts, and Gases Philippines,40 the Court reiterated, thus:
personnel lists, serve as evidence of employee status. 35 After a perusal of the NLRC decision, this Court failed to find the
factual basis of the award of separation pay to the petitioners.
[A]n illegally dismissed employee is entitled to two reliefs: The NLRC decision did not state the facts which demonstrate that
In this case, however, Francisco failed to present any proof backwages and reinstatement.1âwphi1 The two reliefs provided reinstatement is no longer a feasible option that could have
substantial enough to establish his relationship with the are separate and distinct. In instances where reinstatement is no justified the alternative relief of granting separation pay instead.
respondents. He failed to present documentary evidence like longer feasible because of strained relations between the
attendance logbook, payroll, SSS record or any personnel file employee and the employer, separation pay is granted. In effect,
that could somehow depict his status as an employee. Anent his The petitioners themselves likewise overlooked to allege
an illegally dismissed employee is entitled to either circumstances which may have rendered their reinstatement
claim that he was not issued with employment records, he could reinstatement, if viable, or separation pay if reinstatement is no
have, at least, produced his social security records which state unlikely or unwise and even prayed for reinstatement alongside
longer viable, and backwages. the payment of separation pay in their position paper. 47 A bare
his contributions, name and address of his employer, as his co-
petitioner Tenazas did. He could have also presented testimonial claim of strained relations by reason of termination is insufficient
evidence showing the respondents’ exercise of control over the The normal consequences of respondents’ illegal dismissal, then, to warrant the granting of separation pay. Likewise, the filing of
means and methods by which he undertakes his work. This is are reinstatement without loss of seniority rights, and payment of the complaint by the petitioners does not necessarily translate to
imperative in light of the respondents’ denial of his employment backwages computed from the time compensation was withheld strained relations between the parties. As a rule, no strained
and the claim of another taxi operator, Emmanuel Villegas up to the date of actual reinstatement. Where reinstatement is relations should arise from a valid and legal act asserting one’s
(Emmanuel), that he was his employer. Specifically, in his no longer viable as an option, separation pay equivalent to one right.48 Although litigation may also engender a certain degree of
Affidavit,36 Emmanuel alleged that Francisco was employed as a (1) month salary for every year of service should be awarded as hostility, the understandable strain in the parties’ relation would
spare driver in his taxi garage from January 2006 to December an alternative. The payment of separation pay is in addition to not necessarily rule out reinstatement which would, otherwise,
2006, a fact that the latter failed to deny or question in any of payment of backwages.41 (Emphasis supplied) become the rule rather the exception in illegal dismissal
the pleadings attached to the records of this case. The utter lack cases.49 Thus, it was a prudent call for the CA to delete the award
of evidence is fatal to Francisco’s case especially in cases like his Clearly, it is only when reinstatement is no longer feasible that of separation pay and order for reinstatement instead, in
present predicament when the law has been very lenient in not the payment of separation pay is ordered in lieu thereof. For accordance with the general rule stated in Article 279 50 of the
requiring any particular form of evidence or manner of proving instance, if reinstatement would only exacerbate the tension and Labor Code.
the presence of employer-employee relationship. strained relations between the parties, or where the relationship
between the employer and the employee has been unduly Finally, the Court finds the computation of the petitioners'
In Opulencia Ice Plant and Storage v. NLRC, 37 this Court strained by reason of their irreconcilable differences, it would be backwages at the rate of ₱800.00 daily reasonable and just under
emphasized, thus: more prudent to order payment of separation pay instead of the circumstances. The said rate is consistent with the ruling of
reinstatement.42 this Court in Hyatt Taxi Services, Inc. v. Catinoy, 51 which dealt
with the same matter.
No particular form of evidence is required to prove the existence
of an employer-employee relationship. Any competent and This doctrine of strained relations, however, should not be used
relevant evidence to prove the relationship may be admitted. For, recklessly or applied loosely 43 nor be based on impression alone. WHEREFORE, in view of the foregoing disquisition, the petition for
if only documentary evidence would be required to show that "It bears to stress that reinstatement is the rule and, for the review on certiorari is DENIED. The Decision dated March 11,
relationship, no scheming employer would ever be brought before exception of strained relations to apply, it should be proved that 2010 and Resolution dated June 28, 2010 of the Court of Appeals
the bar of justice, as no employer would wish to come out with it is likely that if reinstated, an atmosphere of antipathy and in CA-G.R. SP No. 111150 are AFFIRMED.
any trace of the illegality he has authored considering that it

67
 SO ORDERED. Private respondent Jandeleon Juezan filed a complaint against existence of an employer-employee relationship.6 In its Comment,7 the
petitioner with the Department of Labor and Employment (DOLE) DOLE sought clarification as well, as to the extent of its visitorial and
Regional Office No. VII, Cebu City, for illegal deduction, nonpayment enforcement power under the Labor Code, as amended.
of service incentive leave, 13th month pay, premium pay for holiday
and rest day and illegal diminution of benefits, delayed payment of The Court treated the Motion for Clarification as a second motion for
wages and noncoverage of SSS, PAG-IBIG and Philhealth.1 After the reconsideration, granting said motion and reinstating the petition. 8 It
conduct of summary investigations, and after the parties submitted is apparent that there is a need to delineate the jurisdiction of the
their position papers, the DOLE Regional Director found that private DOLE Secretary vis-à-vis that of the NLRC.
respondent was an employee of petitioner, and was entitled to his
money claims.2 Petitioner sought reconsideration of the Director’s
Order, but failed. The Acting DOLE Secretary dismissed petitioner’s Under Art. 129 of the Labor Code, the power of the DOLE and its duly
appeal on the ground that petitioner submitted a Deed of Assignment authorized hearing officers to hear and decide any matter involving
of Bank Deposit instead of posting a cash or surety bond. When the the recovery of wages and other monetary claims and benefits was
matter was brought before the CA, where petitioner claimed that it qualified by the proviso that the complaint not include a claim for
had been denied due process, it was held that petitioner was accorded reinstatement, or that the aggregate money claims not exceed PhP
due process as it had been given the opportunity to be heard, and 5,000. RA 7730, or an Act Further Strengthening the Visitorial and
that the DOLE Secretary had jurisdiction over the matter, as the Enforcement Powers of the Secretary of Labor, did away with the PhP
jurisdictional limitation imposed by Article 129 of the Labor Code on 5,000 limitation, allowing the DOLE Secretary to exercise its visitorial
the power of the DOLE Secretary under Art. 128(b) of the Code had and enforcement power for claims beyond PhP 5,000. The only
been repealed by Republic Act No. (RA) 7730.3 qualification to this expanded power of the DOLE was only that there
still be an existing employer-employee relationship.

In the Decision of this Court, the CA Decision was reversed and set
aside, and the complaint against petitioner was dismissed. The It is conceded that if there is no employer-employee relationship,
dispositive portion of the Decision reads as follows: whether it has been terminated or it has not existed from the start,
the DOLE has no jurisdiction. Under Art. 128(b) of the Labor Code, as
amended by RA 7730, the first sentence reads, "Notwithstanding the
WHEREFORE, the petition is GRANTED. The Decision dated 26 provisions of Articles 129 and 217 of this Code to the contrary, and in
October 2006 and the Resolution dated 26 June 2007 of the Court of cases where the relationship of employer-employee still exists, the
Appeals in C.A. G.R. CEB-SP No. 00855 are REVERSED and SET Secretary of Labor and Employment or his duly authorized
ASIDE. The Order of the then Acting Secretary of the Department of representatives shall have the power to issue compliance orders to
Labor and Employment dated 27 January 2005 denying petitioner’s give effect to the labor standards provisions of this Code and other
appeal, and the Orders of the Director, DOLE Regional Office No. VII, labor legislation based on the findings of labor employment and
dated 24 May 2004 and 27 February 2004, respectively, enforcement officers or industrial safety engineers made in the course
are ANNULLED. The complaint against petitioner is DISMISSED.4 of inspection." It is clear and beyond debate that an employer-
employee relationship must exist for the exercise of the visitorial and
The Court found that there was no employer-employee relationship enforcement power of the DOLE. The question now arises, may the
between petitioner and private respondent. It was held that while the DOLE make a determination of whether or not an employer-employee
DOLE may make a determination of the existence of an employer- relationship exists, and if so, to what extent?
employee relationship, this function could not be co-extensive with
the visitorial and enforcement power provided in Art. 128(b) of the The first portion of the question must be answered in the affirmative.
Labor Code, as amended by RA 7730. The National Labor Relations
People's Broadcasting vs. Secretary Commission (NLRC) was held to be the primary agency in determining
the existence of an employer-employee relationship. This was the The prior decision of this Court in the present case accepts such
interpretation of the Court of the clause "in cases where the answer, but places a limitation upon the power of the DOLE, that is,
In a Petition for Certiorari under Rule 65, petitioner People’s
relationship of employer-employee still exists" in Art. 128(b). 5 the determination of the existence of an employer-employee
Broadcasting Service, Inc. (Bombo Radyo Phils., Inc.) questioned the
relationship cannot be co-extensive with the visitorial and
Decision and Resolution of the Court of Appeals (CA) dated October
enforcement power of the DOLE. But even in conceding the power of
26, 2006 and June 26, 2007, respectively, in C.A. G.R. CEB-SP No. From this Decision, the Public Attorney’s Office (PAO) filed a Motion the DOLE to determine the existence of an employer-employee
00855. for Clarification of Decision (with Leave of Court). The PAO sought to relationship, the Court held that the determination of the existence of
clarify as to when the visitorial and enforcement power of the DOLE
be not considered as co-extensive with the power to determine the

68
an employer-employee relationship is still primarily within the power The Court, in limiting the power of the DOLE, gave the rationale that labor legislation, and there is a finding by the DOLE that there is an
of the NLRC, that any finding by the DOLE is merely preliminary. such limitation would eliminate the prospect of competing conclusions existing employer-employee relationship, the DOLE exercises
between the DOLE and the NLRC. The prospect of competing jurisdiction to the exclusion of the NLRC. If the DOLE finds that there
This conclusion must be revisited. conclusions could just as well have been eliminated by according is no employer-employee relationship, the jurisdiction is properly with
respect to the DOLE findings, to the exclusion of the NLRC, and this the NLRC. If a complaint is filed with the DOLE, and it is accompanied
We believe is the more prudent course of action to take. by a claim for reinstatement, the jurisdiction is properly with the
No limitation in the law was placed upon the power of the DOLE to Labor Arbiter, under Art. 217(3) of the Labor Code, which provides
determine the existence of an employer-employee relationship. No that the Labor Arbiter has original and exclusive jurisdiction over
procedure was laid down where the DOLE would only make a This is not to say that the determination by the DOLE is beyond
question or review.1avvphi1 Suffice it to say, there are judicial those cases involving wages, rates of pay, hours of work, and other
preliminary finding, that the power was primarily held by the NLRC. terms and conditions of employment, if accompanied by a claim for
The law did not say that the DOLE would first seek the NLRC’s remedies such as a petition for certiorari under Rule 65 that may be
availed of, should a party wish to dispute the findings of the DOLE. reinstatement. If a complaint is filed with the NLRC, and there is still
determination of the existence of an employer-employee relationship, an existing employer-employee relationship, the jurisdiction is
or that should the existence of the employer-employee relationship be properly with the DOLE. The findings of the DOLE, however, may still
disputed, the DOLE would refer the matter to the NLRC. The DOLE It must also be remembered that the power of the DOLE to determine be questioned through a petition for certiorari under Rule 65 of the
must have the power to determine whether or not an employer- the existence of an employer-employee relationship need not Rules of Court.
employee relationship exists, and from there to decide whether or not necessarily result in an affirmative finding. The DOLE may well make
to issue compliance orders in accordance with Art. 128(b) of the Labor the determination that no employer-employee relationship exists, thus
Code, as amended by RA 7730. divesting itself of jurisdiction over the case. It must not be precluded In the present case, the finding of the DOLE Regional Director that
from being able to reach its own conclusions, not by the parties, and there was an employer-employee relationship has been subjected to
certainly not by this Court. review by this Court, with the finding being that there was no
The DOLE, in determining the existence of an employer-employee employer-employee relationship between petitioner and private
relationship, has a ready set of guidelines to follow, the same guide respondent, based on the evidence presented. Private respondent
the courts themselves use. The elements to determine the existence Under Art. 128(b) of the Labor Code, as amended by RA 7730, the presented self-serving allegations as well as self-defeating
of an employment relationship are: (1) the selection and engagement DOLE is fully empowered to make a determination as to the existence evidence.10 The findings of the Regional Director were not based on
of the employee; (2) the payment of wages; (3) the power of of an employer-employee relationship in the exercise of its visitorial substantial evidence, and private respondent failed to prove the
dismissal; (4) the employer’s power to control the employee’s and enforcement power, subject to judicial review, not review by the existence of an employer-employee relationship. The DOLE had no
conduct.9 The use of this test is not solely limited to the NLRC. The NLRC. jurisdiction over the case, as there was no employer-employee
DOLE Secretary, or his or her representatives, can utilize the same relationship present. Thus, the dismissal of the complaint against
test, even in the course of inspection, making use of the same There is a view that despite Art. 128(b) of the Labor Code, as petitioner is proper.
evidence that would have been presented before the NLRC. amended by RA 7730, there is still a threshold amount set by Arts.
129 and 217 of the Labor Code when money claims are involved, i.e., WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby
The determination of the existence of an employer-employee that if it is for PhP 5,000 and below, the jurisdiction is with the AFFIRMED, with the MODIFICATION that in the exercise of the DOLE’s
relationship by the DOLE must be respected. The expanded visitorial regional director of the DOLE, under Art. 129, and if the amount visitorial and enforcement power, the Labor Secretary or the latter’s
and enforcement power of the DOLE granted by RA 7730 would be involved exceeds PhP 5,000, the jurisdiction is with the labor arbiter, authorized representative shall have the power to determine the
rendered nugatory if the alleged employer could, by the simple under Art. 217. The view states that despite the wording of Art. existence of an employer-employee relationship, to the exclusion of
expedient of disputing the employer-employee relationship, force the 128(b), this would only apply in the course of regular inspections the NLRC.
referral of the matter to the NLRC. The Court issued the declaration undertaken by the DOLE, as differentiated from cases under Arts. 129
that at least a prima facie showing of the absence of an employer- and 217, which originate from complaints. There are several cases,
employee relationship be made to oust the DOLE of jurisdiction. But it however, where the Court has ruled that Art. 128(b) has been SO ORDERED.
is precisely the DOLE that will be faced with that evidence, and it is amended to expand the powers of the DOLE Secretary and his duly
the DOLE that will weigh it, to see if the same does successfully refute authorized representatives by RA 7730. In these cases, the Court
the existence of an employer-employee relationship. resolved that the DOLE had the jurisdiction, despite the amount of the
money claims involved. Furthermore, in these cases, the inspection
If the DOLE makes a finding that there is an existing employer- held by the DOLE regional director was prompted specifically by a
employee relationship, it takes cognizance of the matter, to the complaint. Therefore, the initiation of a case through a complaint does
exclusion of the NLRC. The DOLE would have no jurisdiction only if the not divest the DOLE Secretary or his duly authorized representative of
employer-employee relationship has already been terminated, or it jurisdiction under Art. 128(b).
appears, upon review, that no employer-employee relationship
existed in the first place. To recapitulate, if a complaint is brought before the DOLE to give 1. Camporedondo vs. NLRC
effect to the labor standards provisions of the Labor Code or other

69
At issue in this case is whether the Philippine National Red
Cross (PNRC for short) is a government owned and On May 28, 1996, petitioner filed with the National Labor Resolving the issue set out in the opening paragraph of this
controlled corporation, or it has been "impliedly converted to Relations Commission, Sub-Regional Arbitration Branch X, opinion, we rule that the Philippine National Red Cross
a private organization" subject to the jurisdiction of labor Butuan City, a complaint for illegal dismissal, damages and (PNRC) is a government owned and controlled corporation,
tribunals in a complaint filed by petitioner, a former PNRC underpayment of wages against the Philippine National Red with an original charter under Republic Act No. 95, as
chapter administrator in Surigao del Norte, for illegal Cross and its key officials. 6 amended. The test to determine whether a corporation is
dismissal and damages, as he was forced to "retire" after he government owned or controlled, or private in nature is
was required to restitute shortages and unremitted On June 14, 1996, respondent Philippine National Red Cross simple. Is it created by its own charter for the exercise of a
collections in the total sum of P135,927.78. filed with the Surigao del Norte provincial office, Department public function, or by incorporation under the general
of Labor and Employment, a motion to dismiss the complaint corporation law? Those with special charters are government
Having obviously no merit, we dismiss the petition. for lack of jurisdiction over the subject matter of the case corporations subject to its provisions, and its employees are
because the PNRC is a government corporation whose under the jurisdiction of the Civil Service Commission, and
All suitors must come to court with clean hands. This is employees are members of the Government Service are compulsory members of the Government Service
especially true of paid staff of the Philippine National Red Insurance System (GSIS), and embraced within the Civil Insurance System. The PNRC was not "impliedly converted
Cross. Like its unpaid volunteers, they must be men of Service Law and regulations. 7 to a private corporation" simply because its charter was
unquestioned honesty and integrity, serving in selfless amended to vest in it the authority to secure loans, be
manner to aid the sick and wounded of armed forces in time On July 25, 1996, petitioner filed an opposition to motion to exempted from payment of all duties, taxes, fees and other
of war, acting in voluntary relief in time of peace and war, dismiss arguing that there was between the PNRC and its charges of all kinds on all importations and purchases for its
maintaining a system of national and international relief in duly appointed paid staff, an employer-employee exclusive use, on donations for its disaster relief work and
meeting emergency relief needs caused by typhoons, floods, relationship, governed by the Labor Code of the Philippines. other services and in its benefits and fund raising drives, and
fires, earthquakes, and other natural disasters, and 8 be allotted one lottery draw a year by the Philippine Charity
promoting such service in time of peace and war to improve Sweepstakes Office for the support of its disaster relief
the health, safety and welfare of the Filipino people. 1 Paid On October 11, 1996, the Labor Arbiter issued an order operation in addition to its existing lottery draws for blood
staff of the PNRC are government employees who are dismissing the complaint for lack of jurisdiction, finding that program.
members of the Government Service Insurance System and the Philippine National Red Cross is a government
covered by the Civil Service Law. Unlike government service corporation with an original charter, having been created by Having served in the Philippine National Red Cross for a
in other agencies, Red Cross service demands of its paid Republic Act No. 95. 9 number of years since his initial employment, he must know
staff uberrima fides, the utmost good faith and dedication to that it is a government corporation with its own charter and
work.chanroblesvirtuallawlibrary:red On November 12, 1996, the Labor Arbiter denied petitioner’s that he was covered by compulsory membership in the
motion for reconsideration filed on October 14, 1996. 10 Government Service Insurance System, which is why he
Since 1980, petitioner was employed with the PNRC, and could apply, as he did, for "early" retirement from the
until his early "retirement" on December 15, 1995, he was On November 20, 1996, petitioner filed a notice of appeal service under Presidential Decree No. 1146 or Republic Act
administrator of the Surigao del Norte Chapter, Philippine and appeal memorandum with the National Labor Relations No. 1616. 16
National Red Cross. 2 Commission. 11
WHEREFORE, the Court hereby DISMISSES the petition, and
In July, 1995, a field auditor of the PNRC conducted an audit On March 21, 1997, the National Labor Relations AFFIRMS the ruling of the National Labor Relations
of the books of account of the Surigao del Norte Chapter, Commission, Fifth Division, issued a resolution dismissing Commission.
headed by petitioner and found him short in the total sum of the appeal and confirming the decision of the Labor Arbiter
P109,000.00. 3 that dismissed petitioner’s complaint for lack of jurisdiction. Double costs taxed against petitioner.chanrobles virtual
12 lawlibrary
On November 21, 1995, Dr. Celso Samson, Secretary
General of the PNRC wrote petitioner requiring him to Hence, this recourse. SO ORDERED.
restitute within seventy two (72) hours from notice, the total
sum of P135,927.78, representing cash shortage, technical On July 7, 1997, we resolved to require respondents to
shortage and unremitted collections. 4 comment on the petition within ten (10) days from notice.
13
On December 15, 1995, petitioner applied for early
retirement from the service, and later wrote Dr. Samson On August 7, 1997, respondent Philippine National Red
requesting for a re-audit by an independent auditor of his Cross filed its comment. 14 On November 7, 1997, the
accounts. However, Dr. Samson denied the request. 5 Solicitor General filed its comment. 15

70
 terminal leave pay, was not included in the award of retirement with law and applicable jurisprudence and based on
benefits. the evidence on record for having failed to apply
Postigo vs. Philippine Tuberculosis the jurisprudential precepts that:
Aggrieved, respondent PTSI appealed to the NLRC. Instead of posting
This petition assails the Decision[1] dated June 13, 2002 of the the required cash or surety bond equivalent to the amount of the a. errors in the computation of
Court of Appeals in CA-G.R. SP No. 59597, which set aside award, the respondent filed a Motion to Reduce Bond on the ground the monetary award are
the Resolution[2]dated January 31, 2000 of the National Labor that the amount awarded by the Labor Arbiter was erroneous. properly a subject of appeal and
Relations Commission (NLRC) in NLRC NCR CN 00-02-02148-99. The On January 31, 2000, the NLRC dismissed the appeal for failure to should be ventilated at the
NLRC had dismissed the respondent's appeal from the Decision of the post the required cash or surety bond. appropriate time, not in a mere
Labor Arbiter, who ordered the payment of retirement benefits under motion to reduce bond; and
Republic Act No. 7641 to petitioners. This petition likewise assails Undaunted, the respondent elevated the matter to the Court of
the Resolution[3]dated September 3, 2002 of the Court of Appeals. On June 13, 2002, the CA reversed the NLRC's decision in b. the posting of a bond is an
Appeals denying petitioners' motion for reconsideration. this wise: indispensable requirement to
perfect an employer's appeal.
The antecedent facts, as summarized by the Court of Appeals and Indeed, in several occasions, the Supreme Court
borne by the records, are as follows: has cautioned the NLRC to give Article 223 of the III.               Whether or not Petitioners are
Labor Code, as amended, particularly the entitled to thebenefits of the Retirement Pay Law.
Petitioners Dr. Perla A. Postigo, et al., were regular employees of the provisions on requiring a bond on appeals involving
respondent Philippine Tuberculosis Society, Inc. (PTSI). They retired monetary awards, a liberal interpretation in line IV.              Whether or not Petitioners are entitled
on various dates from 1996 to 1998. Upon retirement from service, with the desired objective of resolving to interest on their retirement benefits for the
some of the petitioners who were compulsory members of the controversies on the merits. unjustified withholding thereof.
Government Service Insurance System (GSIS) obtained retirement
benefits from the GSIS. Hence, considering the timeliness of the filing of V.                 Whether or not Petitioner Dr.
the motion to reduce the appeal bond and the Tanshould be made similarly entitled to her
At the time the petitioners retired, Article 287 of the Labor Code had meritorious ground upon which it relies, We believe retirement pay, which was inadvertently excluded
been amended by Republic Act No. 7641.[4] Rep. Act No. 7641 and so hold that the legal requirement of posting by the Labor Arbiter, pursuant to the timely motion
granted retirement pay to qualified employees in the private sector, in an appeal bond has been substantially satisfied. to render judgmentnunc pro tunc she filed before
the absence of any retirement plan or agreement with the company. Public respondent acted with grave abuse of the Labor Arbiterand which was consistently raised
As the respondent did not have a retirement plan for its employees, discretion in dismissing the appeal without passing all the way up tothis Honorable Court, in order to
aside from its contribution to the GSIS, petitioners claimed from the upon the motion to reduce the appeal bond. effect a complete disposition of the instant case.
respondent their retirement benefits under Rep. Act No. 7641. The [10]
respondent denied their claims on the ground that the accommodation WHEREFORE, the petition is hereby GRANTED.
extended by the GSIS to the petitioners removed them from the Resolutions dated 31 January 2000 and 24 May In short, petitioners raise for our resolution these issues: (1) Did the
coverage of the law. 2000 in NLRC-NCR CN 00-02-02148-99 of public Court of Appeals err in granting the petition and directing the NLRC to
respondent National Labor Relations Commission act on the Motion to Reduce Bond and to give due course to the
The petitioners then sought the opinion of the Bureau of Working are hereby SET ASIDE. The NLRC is directed to act appeal? and (2) Are the petitioners entitled to benefits under Rep. Act
Conditions (BWC) of the Department of Labor and Employment on the Motion to Reduce Bond and to give due No. 7641?
regarding their entitlement to the retirement benefits provided in Rep. course to the Appeal.
Act No. 7641.[5] The BWC confirmed their entitlement.[6] The same On the first issue, petitioners contend that (1) errors in the
opinion was rendered and submitted by the respondent's legal SO ORDERED.[9] computation of the monetary award are properly a subject of appeal
counsel, Atty. Rene V. Sarmiento, to its Board of Directors. and should be ventilated at the appropriate time, not in a mere
[7] Despite this, respondent PTSI refused to pay the petitioners their The petitioners now submit the following issues for our consideration: motion to reduce bond; and (2) the posting of a bond is an
retirement benefits. indispensable requirement to perfect an employer's appeal.
I.                    Whether or not the remand of the
The petitioners then filed a complaint before the Labor Arbiter. case to the NLRC would only further delay the Respondent counters that in case the monetary award is being
resolution of this case. disputed, an appeal may still be filed without the appeal bond,
In a Decision[8] dated June 30, 1999, the Labor Arbiter declared provided that a motion to reduce bond is filed within the reglementary
petitioners entitled to retirement benefits under Rep. Act No. 7641. II.                 Whether or not the Honorable Court period.
However, one petitioner, Dr. Finaflor C. Tan who was awarded her of Appealsdecided the instant case in accordance

71
We think that the Court of Appeals did not err in granting the petition receipt of a copy of the decision by the aggrieved party; and if the kind and uses the services of another person who
and holding that there was substantial compliance in the posting of a decision involves a monetary award, an appeal by the aggrieved party is under his orders as regards the employment.
cash or surety bond. We likewise find Nationwide Security and Allied may be perfected only upon the posting of a cash or surety bond
Services, Inc. v. NLRC[11] and Rosewood Processing, Inc. v. issued by a reputable bonding company duly accredited by the NLRC (b) An employer shall belong to
NLRC[12] inapplicable to this case. in the amount equivalent to the monetary award. In addition, Section either:
6, Rule VI of the New Rules of Procedure of the NLRC provides that
In Nationwide Security, the petitioners therein filed a motion to the Commission may, in justifiable cases and upon motion of the (1) The public sector covered by
reduce bond instead of an appeal or surety bond. The NLRC denied aggrieved party, reduce the amount of the bond. Further, the filing of the GSIS, comprising the
the motion on the grounds that petitioners' alleged inability to post the motion to reduce bond does not stop the running of the period to National Government, including
the bond was without basis, and to grant the motion on the grounds perfect appeal. government-owned or
stated therein would be tantamount to ruling on the merits. 'In controlled corporations, the
affirming the decision of the NLRC, the Court noted that petitioners Time and again, this Court has ruled that while the above-mentioned Philippine Tuberculosis Society,
had funds from its other businesses to post the required bond. rule treats the filing of a cash or surety bond in the amount equivalent the Philippine National Red
Further, the errors raised in the motion dealt with matters that would to the monetary award in the judgment appealed from, as a Cross, and the Philippine
go into the merits of the case and were thus more appropriate in an jurisdictional requirement to perfect an appeal, the bond requirement Veterans Bank; or
appeal. on appeals involving awards is sometimes given a liberal
interpretation in line with the desired objective of resolving (2) The private sector covered
In this case, respondent deferred the posting of the surety bond in controversies on the merits.[18] by the SSS, comprising all
view of the alleged erroneous computation by the Labor Arbiter of the employers other than those
monetary award. While the Labor Arbiter The special circumstances in this case, upon which the motion to defined in the immediately
awarded P5,480,484.25[13] as retirement benefits, reduce the bond was predicated, justify the relaxation of the appeal preceding paragraph.
only P5,072,277.73,[14] according to the respondent's computation bond requirement. However, considering that the claim for retirement
was due and owing to the petitioners. Since the motion raised a pure benefits was made sometime in 1999 to support the petitioners during Respondent's reliance on the afore-quoted rules is unfounded. The
mathematical error, the same may be resolved without going into the the twilight years of their lives, there is no doubt that a remand of the definition of a public sector employer as quoted above is relevant only
merits of the case. case to the NLRC will only unduly delay the determination of their for purposes of coverage under the Employees' Compensation and
entitlement to such benefits. Moreover, since the case calls for the State Insurance Fund. Instead, it is the implementing rules of Title II,
In Rosewood, the petitioner therein filed a motion to reduce the bond resolution of a question of law, we consider it more appropriate to Book VI of the Labor Code, which provides for the coverage and
with the appeal bond, albeit not in the amount equivalent to the resolve the appeal at this juncture, rather than remand the case to exemptions of retirement benefits. Thus:
monetary award in the judgment appealed from. The Court held that the NLRC.
the NLRC gravely abused its discretion in dismissing the appeal since SECTION 1. General Statement on
a consideration of the merits appearing in the appeal as well as the We come now to the second issue. The petitioners contend that Coverage. This Rule shall apply to all employees
filing of the appeal bond show that there was substantial compliance despite their compulsory membership in the GSIS, they are still in the private sector, regardless of their position,
with the rules governing appeal. covered by Rep. Act No. 7641 for the following reasons: (1) the designation or status and irrespective of the
respondent is registered with the Securities and Exchange method by which their wages are paid, except to
Here, aside from the fact that the filing of the motion was justified, Commission as a non-stock and non-profit corporation; hence, it is a those specifically exempted under Section 2
the respondent immediately submitted a supersedeas bond[15] with private entity and its employees are employees in the private sector; hereof. As used herein, the term 'Act shall refer to
its motion for reconsideration of the NLRC resolution dismissing its and (2) the petitioners are not included in the exemptions from Republic Act No. 7641 which took effect on January
appeal. In Ong v. Court of Appeals,[16] we ruled that the aggrieved coverage of Rep. Act No. 7641. 7, 1993.
party may file the appeal bond within the ten-day reglementary period
following the receipt of the resolution of the NLRC to forestall the Respondent PTSI counters that as an employer in the public sector, it SEC. 2. Exemption. ' This Rule shall not apply to
finality of such resolution.[17] Hence, while the appeal of a decision is not covered by Rep. Act No. 7641 which applies only to employees the following employees:
involving a monetary award in labor cases may be perfected only in the private sector. It relies on Section 3, Rule I of the Amended
upon the posting of a cash or surety bond and the posting of the bond Rules Implementing Title II, Book IV of the Labor Code, to wit:
2.1 Employees of the
is an indispensable requirement to perfect such an appeal, a
National Government and its
relaxation of the appeal bond requirement could be justified by SEC. 3. Employer(a) The term shall mean any political subdivisions,
substantial compliance with the rule. person natural or juridical, domestic or foreign, including Government-
who carries on in the Philippines any trade, owned and/or 'controlled
Article 223 of the Labor Code provides that an appeal from a decision business, industry, undertaking or activity of any corporations, if they are
of the Labor Arbiter must be made within ten calendar days from

72
 covered by the Civil Service still entitled to the benefits of Rep. Act No. 7641 since they are not ...
Law and its regulations. covered by the Civil Service Law and its regulations. This much is
certain upon reading the implementing rules of Title II, Book VI of the In Juco v. NLRC,[22] we clarified that employees of government-
... Labor Code as afore-cited as well as the Labor Advisory on Retirement owned and controlled corporations with special charters are covered
Pay Law.[21] Under the said advisory, the coverage of, as well as the under the Civil Service. On the other hand, employees of government-
Having determined the applicable implementing rules, we now exclusion from, Rep. Act No. 7641 has been delineated as follows: owned and controlled corporations under the Corporation Code are
proceed to resolve whether the respondent is a private corporation or governed by the provisions of the Labor Code.
a public corporation; and consequently, whether the petitioners are RA 7641 or the Retirement Pay Law shall apply to
employees in the private sector or in the public sector. all employees in the private sector, regardless of The Philippine Tuberculosis Society, Inc. (PTSI) belongs to the latter
their position, designation or status and category and, therefore, covered by Rep. Act No. 7641 which is an
On this score, the case of Feliciano v. Commission on Audit,[19] finds irrespective of the method by which their wages amendment to the Labor Code. The accommodation under Rep. Act
strong relevance. Although with different factual circumstances, the are paid. They shall include part-time employees, No. 1820 extending GSIS coverage to PTSI employees did not take
Court discussed therein the two classes of corporations recognized by employees of service and other job contractors and away from petitioners the beneficial coverage afforded by Rep. Act
the 1987 Constitution. The first refers to private corporations created domestic helpers or persons in the personal service No. 7641. Hence, the retirement pay payable under Article 287 of the
under a general law; the second refers to government-owned or of another. Labor Code as amended by Rep. Act No. 7641 should be considered
controlled corporations created by special charters. We also reiterated apart from the retirement benefit claimable by the petitioners under
that under Section 14 of the Corporation Code, '[a]ll corporations The law does not cover employees of retail, service the social security law or, as in this case, the GSIS law.
organized under this Code shall file with the Securities and Exchange and agricultural establishments or operations
Commission articles of incorporation employing not more than (10) employees or As to the alleged prolonged refusal by the respondent to pay the
workers and employees of the National petitioners their retirement benefits, we do not think that the
The respondent was incorporated on March 11, 1960 as a non-profit, Government and its political subdivisions, including respondent's stance was entirely in bad faith. The respondent
benevolent and non-stock corporation under the Corporation Code. Government-owned and/or controlled corporations, harbored the honest belief that their compulsory coverage in the GSIS
[20] Having been created under the general corporation law instead if they are covered by the Civil Service Law and its converted it into a public corporation excluded from the coverage of
of a special charter, we hold that the respondent is a private and not regulations. (Underscoring ours.) Rep. Act No. 7641. As noted by this Court, the respondent even filed
a governmental corporation. More so, Section 2(1), Article IX(B) of a supersedeas bond, albeit belatedly, with its motion for
the 1987 Constitution provides: Neither do we find merit in the respondent's argument that the reconsideration of the NLRC resolution dismissing its appeal. Such act
rationale behind the enactment of Rep. Act No. 7641 justifies the only demonstrates that the respondent filed the appeal in good faith.
SECTION 2. (1) The civil service embraces all exclusion of employees in the public sector, who are already enjoying We could not speculate and say that respondent did not intend to pay
branches, subdivisions, instrumentalities, and retirement benefits under the GSIS law, from the New Retirement the petitioners their retirement benefits in case the appeal is
agencies of the Government, including Law. dismissed.
government-owned or controlled corporations with
original charters. We direct the respondent's attention to Section 2 of Rep. Act No. On the matter of petitioner Dr. Finaflor C. Tan, records show she has
7641, to wit: two causes of action: (1) non-payment of terminal leave pay; and (2)
Extant on the records is the respondent's admission that although its non-payment of retirement benefits.[23] While the Labor Arbiter
employees are compulsory members of the GSIS, said employees are SEC. 2. Nothing in this Act shall deprive any ruled that she is entitled to the commutation into cash of her unused
not governed by the Civil Service Law. If the respondent is truly a employee of benefits to which he may be entitled leave credits which is the equivalent of her terminal leave pay, the
government-owned or controlled corporation, and petitioners are under existing laws or company policies or former did not include her in the award of retirement benefits. This
employees in the public sector, then, they should have been covered practices. was properly raised in the Motion to Render Judgment Nunc Pro
by said law. The truth, however, is that, the respondent is a non- Tunc[24] filed by the petitioners on October 29, 1999 before the
profit but private corporation organized under the Corporation Code, In addition, Rule II of the Rules Implementing Book VI of the Labor NLRC. We see no cogent reason why she should be excluded from the
and the petitioners are covered by the Labor Code and not by the Civil Code provides as follows: over-all award of retirement benefits considering that she has
Service Law. participated in the proceedings before the Labor Arbiter.

SEC. 8. Relation to agreements and

From the foregoing, it is clear to us that the petitioners are employees regulations. Nothing in this Rule shall justify an WHEREFORE, this petition is PARTIALLY GRANTED. The Decision
in the private sector, hence entitled to the benefits of Rep. Act No. employer from withdrawing or reducing any dated June 13, 2002 of the Court of Appeals in CA-G.R. SP No. 59597,
7641. benefits, supplements or payments as provided in directing the NLRC to act on the Motion to Reduce Bond and to give
existing laws, individual or collective agreements or due course to the Appeal, as well as its Resolution denying the
employment practices or policies. petitioners' motion for reconsideration, are MODIFIED.
Even assuming that by virtue of their compulsory inclusion in the
GSIS, the petitioners became employees in the public sector, they are

73
Consequently, it is DECLARED that the petitioners are entitled to No. RAB-VII-0170-83) was filed against petitioner Corporation SO ORDERED.
retirement benefits under Rep. Act No. 7641. In addition to retirement with Regional Arbitration Branch No. VII (Cebu City) of the
benefits, petitioner Dr. Finaflor C. Tan is entitled to the commutation then.", Ministry of Labor and Employment. Frivate respondent In the present Petition for certiorari filed on 4 December 1987,
into cash of her unused leave credits which is the equivalent of her Vega alleged there that his proposal "[had] been accepted by the petitioner Corporation, invoking Article 217 of the Labor Code,
terminal leave pay. Likewise, the petitioners are entitled to attorney's methods analyst and implemented by the Corporation [in] seeks to annul the Decision of public respondent Commission in
fees, equivalent to 10% of the total monetary award. October 1980," and that the same "ultimately and finally solved Case No. RAB-VII-01 70-83 upon the ground that the Labor
the problem of the Corporation in the production of Beer Arbiter and the Commission have no jurisdiction over the subject
Let this case be remanded to the Labor Arbiter for the computation of Grande." Private respondent thus claimed entitlement to a cash matter of the case.
the retirement benefits and terminal leave pay above-mentioned. No prize of P60,000.00 (the maximum award per proposal offered
pronouncement as to costs. under the Innovation Program) and attorney's fees.
The jurisdiction of Labor Arbiters and the National Labor Relations
Commission is outlined in Article 217 of the Labor Code, as last
SO ORDERED. In an Answer With Counterclaim and Position Paper,   petitioner
3
amended by Batas Pambansa Blg. 227 which took effect on 1
Corporation alleged that private respondent had no cause of June 1982:
action. It denied ever having approved or adopted Mr. Vega's
proposal as part of the Corporation's brewing procedure in the
production of San Miguel Beer Grande. Among other things, ART. 217. Jurisdiction of Labor Arbiters and the commission. (a)
San Miguel vs. NLRC
petitioner stated that Mr. Vega's proposal was tumed down by The Labor Arbiters shall have the original and exclusive
the company "for lack of originality" and that the same, "even if jurisdiction to hear and decide within thirty (30) working days
Title of Proposal after submission of the case by the parties for decision, the
implemented [could not] achieve the desired result." Petitioner
further alleged that the Labor Arbiter had no jurisdiction, Mr. following cases involving are workers, whether agricultural or
Modified Grande Pasteurization Process Vega having improperly bypassed the grievance machinery non-agricultural:
procedure prescribed under a then existing collective bargaining
Present Condition or Procedure agreement between management and employees, and available 1. Unfair labor practice cases;
administrative remedies provided under the rules of the
Innovation Program. A counterclaim for moral and exemplary 2. Those that workers may file involving wages, hours of work
At the early stage of beer grande production, several cases of
damages, attorney's fees, and litigation expenses closed out
beer grande full goods were received by MB as returned beer fulls and other terms and conditions of employment;
petitioner's pleading.
(RBF). The RBF's were found to have sediments and their
contents were hazy. These effects are usually caused by 3. All money claims of workers, including those based on non-
underpasteurization time and the pasteurzation units for beer In an Order 4 dated 30 April 1986, the Labor Arbiter, noting that
payment or underpayment of wages, overtime compensation,
grande were almost similar to those of the steinie. the money claim of complainant Vega in this case is "not a separation pay and other benefits provided by law or appropriate
necessary incident of his employment" and that said claim is not
agreement, except claims for employees' compensation, social
among those mentioned in Article 217 of the Labor Code, security, medicare and maternity benefits;
Proposed lnnovation  (Attach necessary information)
dismissed the complaint for lack of jurisdiction. However, in a
gesture of "compassion and to show the government's concern
In order to minimize if not elienate underpasteurization of beer for the workingman," the Labor Arbiter also directed petitioner to 4. Cases involving household services; and
grande, reduce the speed of the beer grande pasteurizer thereby, pay Mr. Vega the sum of P2,000.00 as "financial assistance."
increasing the pasteurization time and the pasteurization acts for 5. Cases arising from any violation of Article 265 of this; Code,
grande beer. In this way, the self-life (sic) of beer grande will including questions involving the legality of strikes and lockouts.
The Labor Arbiter's order was subsequently appealed by both
also be increased. 1
parties, private respondent Vega assailing the dismissal of his
complaint for lack of jurisdiction and petitioner Corporation (b) The Commission shall have exclusive appellate jurisdiction
Mr. Vega at that time had been in the employ of petitioner questioning the propriety of the award of "financial assistance" to over all cases decided by Labor Arbiters. (Emphasis supplied)
Corporation for thirteen (1 3) years and was then holding the Mr. Vega. Acting on the appeals, the public respondent National
position of "mechanic in the Bottling Department of the SMC Labor Relations Commission, on 4 September 1987, rendered a
While paragraph 3 above refers to "all money claims of workers,"
Plant Brewery situated in Tipolo, Mandaue City. Decision, 5 the dispositive portion of which reads:
it is not necessary to suppose that the entire universe of money
claims that might be asserted by workers against their employers
Petitioner Corporation, however, did not find the aforequoted WHEREFORE, the appealed Order is hereby set aside and another has been absorbed into the original and exclusive jurisdiction of
proposal acceptable and consequently refused Mr. Vega's udgment entered, order the respondent to pay the complainant Labor Arbiters. In the first place, paragraph 3 should be read not
subsequent demands for a cash award under the Innovation the amount of P60,000.00 as explained above. in isolation from but rather within the context formed by
Program. On 22 February 1983., a Complaint 2 (docketed as Case paragraph 1 related to unfair labor practices), paragraph 2

74
(relating to claims concerning terms and conditions of Corporation, is enough to bring such money claim within the Stated differently,  petitioner seeks protection under the civil laws
employment), paragraph 4 (claims relating to household original and exclusive jurisdiction of Labor Arbiters. and claims no benefits under the Labor Code. The primary relief
services, a particular species of employer-employee relations), sought is for liquidated damages for breach of a contractual
and paragraph 5 (relating to certain activities prohibited to In Molave Motor Sales, Inc. v. Laron, 7 the petitioner was a obligation. The other items demanded are not labor benefits
employees or to employers).<äre||anº•1àw>  It is evident that corporation engaged in the sale and repair of motor vehicles, demanded by workers generally taken cognizance of in labor
there is a unifying element which runs through paragraphs 1 to 5 while private respondent was the sales Manager of petitioner. disputes, such as payment of wages, overtime compensation or
and that is, that they all refer to cases or disputes arising out of Petitioner had sued private respondent for non-payment of separation pay. The items claimed are the natural consequences
or in connection with an employer-employee relationship. This is, accounts which had arisen from private respondent's own flowing from breach of an obligation, intrinsically a civil dispute.
in other words, a situation where the rule of noscitur a sociis may purchases of vehicles and parts, repair jobs on cars personally
be usefully invoked in clarifying the scope of paragraph 3, and owned by him, and cash advances from the corporation. At the In the case below, PLAINTIFF had sued for monies loaned to
any other paragraph of Article 217 of the Labor Code, as pre-trial in the lower court, private respondent raised the DEFENDANT, the cost of repair jobs made on his personal cars,
amended. We reach the above conclusion from an examination of question of lack of jurisdiction of the court, stating that because and for the purchase price of vehicles and parts sold to
the terms themselves of Article 217, as last amended by B.P. Blg. petitioner's complaint arose out of the employer-employee him.  Those accounts have no relevance to the Labor Code. The
227, and even though earlier versions of Article 217 of the Labor relationship, it fell outside the jurisdiction of the court and cause of action was one under the civil laws, and it does not
Code expressly brought within the jurisdiction of the Labor consequently should be dismissed. Respondent Judge did dismiss breach any provision of the Labor Code or the contract of
Arbiters and the NLRC "cases arising from employer employee the case, holding that the sum of money and damages sued for employment of DEFENDANT. Hence the civil courts, not the Labor
relations," 6 which clause was not expressly carried over, in by the employer arose from the employer-employee relationship Arbiters and the NLRC should have jurisdiction. 8
printer's ink, in Article 217 as it exists today. For it cannot be and, hence, fell within the jurisdiction of the Labor Arbiter and
presumed that money claims of workers which do not arise out of the NLRC. In reversing the order of dismissal and requiring
or in connection with their employer-employee relationship, and It seems worth noting that Medina v. Castro-Bartolome, referred
respondent Judge to take cognizance of the case below, this to in the above excerpt, involved a claim for damages by two (2)
which would therefore fall within the general jurisdiction of the Court, speaking through Mme. Justice Melencio-Herrera, said:
regular courts of justice, were intended by the legislative employees against the employer company and the General
authority to be taken away from the jurisdiction of the courts and Manager thereof, arising from the use of slanderous language on
lodged with Labor Arbiters on an exclusive basis. The Court, Before the enactment of BP Blg. 227 on June 1, 1982, Labor the occasion when the General Manager fired the two (2)
therefore, believes and so holds that the money claims of Arbiters, under paragraph 5 of Article 217 of the Labor Code had employees (the Plant General Manager and the Plant
workers" referred to in paragraph 3 of Article 217 embraces jurisdiction over" all other cases arising from employer-employee Comptroller). The Court treated the claim for damages as "a
money claims which arise out of or in connection with the relation, unless, expressly excluded by this Code." Even then, the simple action for damages for tortious acts" allegedly committed
employer-employee relationship, or some aspect or incident of principle followed by this Court was that, although a controversy by private respondents, clearly if impliedly suggesting that the
such relationship. Put a little differently, that money claims of is between an employer and an employee, the Labor Arbiters claim for damages did not necessarily arise out of or in
workers which now fall within the original and exclusive have no jurisdiction if the Labor Code is not involved. In Medina connection with the employer-employee relationship. Singapore
jurisdiction of Labor Arbiters are those money claims which have vs. Castro-Bartolome, 11 SCRA 597, 604, in negating jurisdiction Airlines Limited v. Paño, also cited in Molave, involved a claim for
some reasonable causal connection with the employer-employee of the Labor Arbiter, although the parties were an employer and liquidated damages not by a worker but by the employer
relationship. two employees, Mr. Justice Abad Santos stated: company, unlike Medina. The important principle that runs
through these three (3) cases is that where the claim to the
The pivotal question to Our mind is whether or not the Labor principal relief sought 9 is to be resolved not by reference to the
Applying the foregoing reading to the present case, we note that Labor Code or other labor relations statute or a collective
petitioner's Innovation Program is an employee incentive scheme Code has any relevance to the reliefs sought by the plaintiffs. For
if the Labor Code has no relevance, any discussion concerning bargaining agreement but by the general civil law, the
offered and open only to employees of petitioner Corporation, jurisdiction over the dispute belongs to the regular courts of
more specifically to employees below the rank of manager. the statutes amending it and whether or not they have
retroactive effect is unnecessary. justice and not to the Labor Arbiter and the NLRC. In such
Without the existing employer-employee relationship between situations, resolution of the dispute requires expertise, not in
the parties here, there would have been no occasion to consider labor management relations nor in wage structures and other
the petitioner's Innovation Program or the submission by Mr. It is obvious from the complaint that the plaintiffs have not terms and conditions of employment, but rather in the application
Vega of his proposal concerning beer grande; without that alleged any unfair labor practice.  Theirs is a simple action for of the general civil law. Clearly, such claims fall outside the area
relationship, private respondent Vega's suit against petitioner damages for tortious acts allegedly committed by the of competence or expertise ordinarily ascribed to Labor Arbiters
Corporation would never have arisen. The money claim of private defendants. Such being the case, the governing statute is the and the NLRC and the rationale for granting jurisdiction over such
respondent Vega in this case, therefore, arose out of or in Civil Code and not the Labor Code. It results that the orders claims to these agencies disappears.
connection with his employment relationship with petitioner. under review are based on a wrong premise.

Applying the foregoing to the instant case, the Court notes that
The next issue that must logically be confronted is whether the And in Singapore Airlines Limited v. Paño, 122 SCRA 671, 677, the SMC Innovation Program was essentially an invitation from
fact that the money claim of private respondent Vega arose out the following was said: petitioner Corporation to its employees to submit innovation
of or in connection with his employment relation" with petitioner
75
proposals, and that petitioner Corporation undertook to grant On 13 November 1984, a complaint3
cash awards to employees who accept such invitation and whose
innovation suggestions, in the judgment of the Corporation's (docketed as NLRC Case No. 16-84J) for illegal transfer was filed with
officials, satisfied the standards and requirements of the the then Ministry of Labor and Employment, Sub-Regional Arbitration
Innovation Program 10 and which, therefore, could be translated Branch IV, San Pablo City, Laguna. Private respondents there sought
into some substantial benefit to the Corporation. Such to enjoin implementation of Special Orders Nos. 80, 81, 83, 84 and
undertaking, though unilateral in origin, could nonetheless ripen 85, alleging, among other things, that said orders were "indubitable
into an enforceable contractual (facio ut des) 11 obligation on the and irrefutable action[s] prejudicial not only to [them] but to [their]
part of petitioner Corporation under certain circumstances. Thus, families and [would] seriously affect [their] economic stability and
whether or not an enforceable contract, albeit implied arid solvency considering the present cost of living."
innominate, had arisen between petitioner Corporation and
private respondent Vega in the circumstances of this case, and if
so, whether or not it had been breached, are preeminently legal On 21 November 1984 (or the day immediately following the date of
questions, questions not to be resolved by referring to labor scheduled transfer), the BSP Camp Manager in Makiling issued a
legislation and having nothing to do with wages or other terms Memorandum requiring the five (5) private respondents to explain
and conditions of employment, but rather having recourse to our why they should not be charged administratively for insubordination.
Boy Scouts of the Philippines vs. NLRC
law on contracts. The Memorandum was a direct result of the refusal by private
respondents, two (2) days earlier, to accept from petitioner BSP their
This Petition for Certiorari is directed at (1) the Decision, 1 dated 27
respective boat tickets to Davao del Norte and their relocation
WEREFORE, the Petition for certiorari is GRANTED. The decision February 1987, and (2) the Resolution 2 dated 16 October 1987, both
allowances.
dated 4 September 1987 of public respondent National Labor issued by the National Labor Relations Commission ("NLRC") in Case
Relations Commission is SET ASIDE and the complaint in Case No. 1637-84.
No. RAB-VII-0170-83 is hereby DISMISSED, without prejudice to Meanwhile, in a letter of the same date, the BSP National President
the right of private respondent Vega to file a suit before the informed private respondents that their refusal to comply with the
Private respondents Fortunato C. Esquerra, Roberto O. Malaborbor,
proper court, if he so desires. No pronouncement as to costs. Special Orders was not sufficiently justified and constituted rank
Estanislao M. Misa, Vicente N. Evangelista and Marcelino P. Garcia,
disobedience. Memoranda subsequently issued by the BSP Secretary-
had all been rank-and-file employees of petitioner Boy Scouts of the
General stressed that such refusal as well as the explanations
SO ORDERED. Philippines ("BSP"). At the time of termination of their services in
proffered therefor, were unacceptable and could altogether result in
February 1985, private respondents were stationed at the BSP Camp
termination of employment with petitioner BSP. These warnings
in Makiling, Los Baños, Laguna.
notwithstanding, private respondents continued pertinaciously to
disobey the disputed transfer orders.
The events which led to such termination of services are as follows:

Petitioner BSP consequently imposed a five-day suspension on the

On 19 October 1984, the Secretary-General of petitioner BSP issued five (5) private respondents, in the latter part of January 1985.
Special Orders Nos. 80, 81, 83, 84 and 85 addressed separately to Subsequently, by Special Order dated 12 February 1985 issued by the
the five (5) private respondents, informing them that on 20 November BSP Secretary-General, private respondents' services were ordered
1984, they were to be transferred from the BSP Camp in Makiling to terminated effective 15 February 1985.
the BSP Land Grant in Asuncion, Davao del Norte. These Orders were
opposed by private respondents who, on 4 November 1984, appealed
On 22 February 1985, private respondents amended their original
the matter to the BSP National President.
complaint to include charges of illegal dismissal and unfair labor
practice against petitioner BSP.4
On 6 November 1984, petitioner BSP conducted a pre-transfer briefing
at its National Headquarters in Manila. Private respondents were in
The Labor Arbiter thereafter proceeded to hear the complaint.
attendance during the briefing and they were there assured that their
transfer to Davao del Norte would not involve any diminution in
salary, and that each of them would receive a relocation allowance In a decision5 dated 31 July 1985, the Labor Arbiter ordered the
equivalent to one (1) month's basic pay. This assurance, however, dismissal of private respondents' complaint for lack of merit.
failed to persuade private respondents to abandon their opposition to
the transfer orders issued by the BSP Secretary-General. On 27 February 1987, however, the ruling of the Labor Arbiter was
reversed by public respondent, NLRC, which held that private

76
respondents had been illegally dismissed by petitioner BSP. The The answer to the central issue will determine whether or not private provisions of the Act and promote the purposes of said
dispositive portion of the NLRC decision read: respondent NLRC had jurisdiction to render the Decision and corporation.
Resolution which are here sought to be nullified.
WHEREFORE, premises considered the Decision appealed Private respondents also point out that the BSP is registered as a
from is hereby SET ASIDE and a new one entered ordering The responses of the parties, on the one hand, and of the Office of the private employer with the Social Security System and that all its staff
the respondent-appellee [petitioner BSP] to reinstate the Solicitor General and the Office of the Government Corporate Counsel, members and employees are covered by the Social Security Act,
complainants-appellants [private respondents] to their upon the other hand, in compliance with the Resolution of this Court indicating that the BSP had lost its personality or standing as a public
former positions without loss of seniority rights and other of 9 August 1989, present a noteworthy uniformity. Petitioner BSP corporation. It is further alleged that the BSP's assets and liabilities,
benefits appurtenant thereto and with full backwages from and private respondents submit substantially the same view "that the official transactions and financial statements have never been
the time they were illegally dismissed from the service up to BSP is a purely private organization". In contrast, the Solicitor General subjected to audit by the government auditing office, i.e., the
the date of their actual reinstatement. and the Government Corporate Counsel take much the same position, Commission on Audit, being audited rather by the private auditing
that is, that the BSP is a "public corporation' or a "quasi-public firm of Sycip Gorres Velayo and Co. Private respondents finally state
SO ORDERED. corporation" and, as well, a "government controlled corporation." that the appointments of BSP officers and staff were not approved or
Petitioner BSP's compliance with our Resolution invokes the following confirmed by the Civil Service Commission.
provisions of its Constitution and By-laws:
The Court notes at the outset that in the Position Paper 6 filed by
petitioner BSP with the Labor Arbiter, it was alleged in the second The views of the Office of the Solicitor General and the Office of the
paragraph thereof, that petitioner is a "civic service, non-stock and The Boy Scouts of the Philippines declares that it is an Government Corporate Counsel on the above issue appeared to be
non-profit organization, relying mostly [on] government and public independent, voluntary, non-political, non-sectarian and generally similar. The Solicitor General's Office, although it had
support, existing under and by virtue of Commonwealth Act No. 111, non-governmental organization, with obligations towards appeared for the NLRC and filed a Comment on the latter's behalf on
as amended, by Presidential Decree No. 460 . . . " A similar allegation nation building and with international orientation. the merits of the Petition for Certiorari, submitted that the BSP is a
was contained in the Brief for Appellee7 and in the Petition8 and government-owned or controlled corporation, having been created by
Memorandum9 filed by petitioner BSP with public respondent NLRC The BSP, petitioner stresses, does not receive any monetary or virtue of Commonwealth Act No. 111 entitled "An Act to Create a
and this Court, respectively. The same allegation, moreover, appeared financial subsidy from the Government whether on the national or Public Corporation to be known as the Boy Scouts of the Philippines
in the Comment10 (also treated as the Memorandum) submitted to local level.13 Petitioner declares that it is a "purely private and to Define its Powers and Purposes." The Solicitor General stressed
this Court by the Solicitor General on behalf of public respondent organization" directed and controlled by its National Executive Board that the BSP was created in order to "promote, through organization,
NLRC; for their part, private respondents stated in their Appeal the members of which are, it is said, all "voluntary scouters," and cooperation with other agencies the ability of boys to do things
Memorandum11 with the NLRC that petitioner BSP is "by mandate of including seven (7) Cabinet Secretaries.14 for themselves and others, to train them in scoutcraft, and to teach
law a Public Corporation," a statement reiterated by them in their them patriotism, courage, self-reliance, and kindred virtues, using the
Memorandum12 before this Court. methods which are now in common use by boy scouts." 5 He further
Private respondents submitted a supplementary memorandum noted that the BSP's objectives and purposes are "solely of a
arguing that while petitioner BSP was created as a public corporation, benevolent character and not for pecuniary profit by its
In a Resolution dated 9 August 1989, this Court required the parties it had lost that status when Section 2 of Commonwealth Act No. 111 members.16 The Solicitor General also underscored the extent of
and the Office of the Government Corporate Counsel to file a as amended by P.D. No. 460 conferred upon it the powers which government participation in the BSP under its charter as reflected in
comment on the question of whether or not petitioner BSP is in fact a ordinary private corporations organized under the Corporation Code the composition of its governing body:
government-owned or controlled corporation. have:

The governing body of the said corporation shall consist of a

Petitioner, private respondents, the Office of the Solicitor General and Sec. 2. The said corporation shall have perpetual succession National Executive Board composed of (a) the President of
the Office of the Government Corporate Counsel filed their respective with power to sue and be sued; to hold such real and the Philippines or his representative; (b) the charter and life
comments. personal estate as shall be necessary for corporate members of the Boy Scouts of the Philippines; (c) the
purposes, and to receive real and personal property by gift, Chairman of the Board of Trustees of the Philippine Scouting
The central issue is whether or not the BSP is embraced within the devise, or bequest; to adopt a seal, and to alter or destroy Foundation; (d) the Regional Chairman of the Scout Regions
Civil Service as that term is defined in Article IX (B) (2) (1) of the the same at pleasure; to have offices and conduct its of the Philippines; (e) the Secretary of Education and
1987 Constitution which reads as follows: business and affairs in the City of Manila and in the several Culture, the Secretary of Social Welfare, the Secretary of
provinces; to make and adopt by-laws, rules and regulations National Defense, the Secretary of Labor, the Secretary of
not inconsistent with the laws of the Philippines, and Finance, the Secretary of Youth and Sports, and the
The Civil Service embraces all branches, subdivisions, generally to do all such acts and things (including the Secretary of local Government and Community
instrumentality mentalities and agencies of the Government, establishment of regulations for the election of associates
including government-owned or controlled corporations with Development; (f) an equal number of individuals from the
and successors: as may be necessary to carry into effect the private sector; (g) the National President of the Girl Scouts
original charters.
of the Philippines; (h) one Scout of Senior age from each

77
 Scout Region to represent the boy membership; and (i) At the same time, BSP's sanctions do not relate to the governance of considering that such funds have not been audited by the
three representatives of the cultural minorities. Except for any part of territory of the Philippines; BSP is not a public corporation Commission.
the Regional Chairman who shall be elected by the Regional in the same sense that municipal corporations or local governments
Scout Councils during their annual meetings, and the Scouts are public corporations. BSP's functions can not also be described as While the BSP may be seen to be a mixed type of entity, combining
of their respective regions, all members of the National proprietary functions in the same sense that the functions or activities aspects of both public and private entities, we believe that considering
Executive Board shall be either by appointment or cooption, of government-owned or controlled corporations like the National the character of its purposes and its functions, the statutory
subject to ratification and confirmation by the Chief Scout, Development Company or the National Steel Corporation can be designation of the BSP as "a public corporation" and the substantial
who shall be the Head of State. . . .17 (Emphasis supplied) described as proprietary or "business-like" in character. Nevertheless, participation of the Government in the selection of members of the
the public character of BSP's functions and activities must be National Executive Board of the BSP, the BSP, as presently constituted
The Government Corporate Counsel, like the Solicitor General, conceded, for they pertain to the educational, civic and social under its charter, is a government-controlled corporation within the
describes the BSP as a "public corporation" but, unlike the Solicitor development of the youth which constitutes a very substantial and meaning of Article IX. (B) (2) (1) of the Constitution.
General, suggests that the BSP is more of a "quasi corporation" than a important part of the nation.
"public corporation." The BSP, unlike most public corporations which We are fortified in this conclusion when we note that the
are created for a political purpose, is not vested with political or The second aspect that the Court must take into account relates to Administrative Code of 1987 designates the BSP as one of the
governmental powers to be exercised for the public good or public the governance of the BSP. The composition of the National Executive attached agencies of the Department of Education, Culture and Sports
welfare in connection with the administration of civil government. The Board of the BSP includes, as noted from Section 5 of its charter ("DECS").20 An "agency of the Government" is defined as referring to
Government Corporate Counsel submits, more specifically, that the quoted earlier, includes seven (7) Secretaries of Executive any of the various units of the Government including a department,
BSP falls within the ambit of the term "government-owned or Departments. The seven (7) Secretaries (now six [6] in view of the bureau, office, instrumentality, government-owned or-controlled
controlled corporation" as defined in Section 2 of P.D. No. 2029 abolition of the Department of Youth and Sports and merger thereof corporation, or local government or distinct unit
(approved on 4 February 1986) which reads as follows: into the Department of Education, Culture and Sports) by themselves therein.21 "Government instrumentality" is in turn defined in the 1987
do not constitute a majority of the members of the National Executive Administrative Code in the following manner:
A government-owned or controlled corporation is a stock Board. We must note at the same time that the appointments of
or a non-stock corporation, whether performing members of the National Executive Board, except only the
appointments of the Regional Chairman and Scouts of Senior age Instrumentality –– refers to any agency of the National
governmental or proprietary functions, which is directly Government, not integrated within the department
chartered by special law or if organized under the general from the various Scout Regions, are subject to ratification and
confirmation by the Chief Scout, who is the President of the framework, vested with special functions or jurisdiction by
corporation law is owned or controlled by the government law, endowed with some if not all corporate powers,
directly, or indirectly through a parent corporation or Philippines. Vacancies to the Board are filled by a majority vote of the
remaining members thereof, but again subject to ratification and administering special funds, and enjoying operational
subsidiary corporation, to the extent of at least a majority of autonomy usually through a charter. This term
its outstanding capital stock or its outstanding voting capital confirmation by the Chief Scout. 18 We must assume that such
confirmation or ratification involves the exercise of choice or includes regulatory  agencies, chartered institutions and
stock. government-owned or controlled corporations.22 (Emphasis
discretion on the part of ratifying or confirming power. It does
appears therefore that there is substantial governmental (i.e., supplied)
Examining the relevant statutory provisions and the arguments Presidential) participation or intervention in the choice of the majority
outlined above, the Court considers that the following need to be of the members of the National Executive Board of the BSP. The same Code describes a "chartered institution" in the following
considered in arriving at the appropriate legal characterization of the terms:
BSP for purposes of determining whether its officials and staff
members are embraced in the Civil Service. Firstly, BSP's functions as The third aspect relates to the character of the assets and funds of
set out in its statutory charter do have a public aspect. BSP's the BSP. The original assets of the BSP were acquired by purchase or Chartered institution –– refers to any agency organized or
functions do relate to the fostering of the public virtues of citizenship gift or other equitable arrangement with the Boy Scouts of America, of operating under a special charter, and vested by law with
and patriotism and the general improvement of the moral spirit and which the BSP was part before the establishment of the functions relating to specific constitutional policies or
fiber of our youth. The social value of activities like those to which the Commonwealth of the Philippines. The BSP charter, however, does not objectives. This term includes the state universities and
BSP dedicates itself by statutory mandate have in fact, been accorded indicate that such assets were public or statal in character or had colleges, and the monetary authority of the
constitutional recognition. Article II of the 1987 Constitution includes originated from the Government or the State. According to petitioner State.23 (Emphasis supplied)
in the "Declaration of Principles and State Policies," the following: BSP, its operating funds used for carrying out its purposes and
programs, are derived principally from membership dues paid by the We believe that the BSP is appropriately regarded as "a government
Boy Scouts themselves and from property rentals. In this respect, the
Sec. 13. The State recognizes the vital role of the youth in instrumentality" under the 1987 Administrative Code.
BSP appears similar to private non-stock, non-profit corporations,
nation-building and shall promote and protect their physical, although its charter expressly envisages donations and contributions
moral, spiritual, intellectual, and social well-being. It shall to it from the Government and any of its agencies and It thus appears that the BSP may be regarded as both a "government
inculcate in the youth patriotism and nationalism, and instrumentalities.19 We note only that BSP funds have not apparently controlled corporation with an original charter" and as an
encourage their involvement in public and civic affairs. heretofore been regarded as public funds by the Commission on Audit, "instrumentality" of the Government within the meaning of Article IX

78
(B) (2) (1) of the Constitution. It follows that the employees of In view of the foregoing, we hold that both the Labor Arbiter and For the purpose of enhancing its powers in promoting animal welfare
petitioner BSP are embraced within the Civil Service and are public respondent NLRC had no jurisdiction over the complaint filed by and enforcing laws for the protection of animals, the petitioner was
accordingly governed by the Civil Service Law and Regulations. private respondents in NLRC Case No. 1637-84; neither labor agency initially imbued under its charter with the power to apprehend
had before it any matter which could validly have been passed upon violators of animal welfare laws. In addition, the petitioner was to
It remains only to note that even before the effectivity of the 1987 by it in the exercise of original or appellate jurisdiction. The appealed share one-half (1/2) of the fines imposed and collected through its
Constitution employees of the BSP already fell within the scope of the Decision and Resolution in this case, having been rendered without efforts for violations of the laws related thereto. As originally worded,
Civil Service. In National Housing Corporation v. Juco,24 decided in jurisdiction, vested no rights and imposed no liabilities upon any of Sections 4 and 5 of Act No. 1285 provide:
1985, the Court, speaking through Mr. Justice Gutierrez, held: the parties here involved. That neither party had expressly raised the
issue of jurisdiction in the pleadings poses no obstacle to this ruling of SEC. 4. The said society is authorized to appoint not to exceed five
the Court, which may motu proprio take cognizance of the issue of agents in the City of Manila, and not to exceed two in each of the
There should no longer be any question at this time existence or absence of jurisdiction and pass upon the same.27
that employees of government-owned or controlled provinces of the Philippine Islands who shall have all the power and
corporations are governed by the civil service law and civil authority of a police officer to make arrests for violation of the
service rules and regulations. ACCORDINGLY, the Decision of the Labor Arbiter dated 31 July 1985, laws enacted for the prevention of cruelty to animals and the
and the Decision dated 27 February 1987 and Resolution dated 16 protection of animals, and to serve any process in connection with the
October 1987, issued by public respondent NLRC, in NLRC Case No. execution of such laws; and in addition thereto, all the police force of
Section 1, Article XII-B of the [19731 Constitution 1637-84, are hereby SET ASIDE. All other orders and resolutions the Philippine Islands, wherever organized, shall, as occasion
specifically provides: rendered in this case by the Labor Arbiter and the NLRC are likewise requires, assist said society, its members or agents, in the
SET ASIDE. No pronouncement as to costs. enforcement of all such laws.
The Civil Service embraces every branch, agency,
subdivision and instrumentality of the Government, including Philippine Society for the Prevention of Cruelty to Animals vs. SEC. 5. One-half of all the fines imposed and collected through the
every government-owned or controlled corporation. . . . COA efforts of said society, its members or its agents, for violations of the
laws enacted for the prevention of cruelty to animals and for their
The 1935 Constitution had a similar provision in its Section Before the Court is a special civil action for Certiorari  and  Prohibition protection, shall belong to said society and shall be used to promote
1, Article XII which stated: under Rule 65 of the Rules of Court, in relation to Section 2 of Rule its objects.
64, filed by the petitioner assailing Office Order No. 2005-021 1 dated
A Civil Service embracing all branches and subdivisions of September 14, 2005 issued by the respondents which constituted the (emphasis supplied)
the Government shall be provided by law.1âwphi1 audit team, as well as its September 23, 2005 Letter 2 informing the
petitioner that respondents’ audit team shall conduct an audit survey
Subsequently, however, the power to make arrests as well as the
on the petitioner for a detailed audit of its accounts, operations, and
The inclusion of "government-owned or controlled privilege to retain a portion of the fines collected for violation of
financial transactions. No temporary restraining order was issued.
corporations" within the embrace of the civil service shows a animal-related laws were recalled by virtue of Commonwealth Act
deliberate effort of the framers to plug an earlier loophole (C.A.) No. 148,4 which reads, in its entirety, thus:
which allowed government-owned or controlled corporations The petitioner was incorporated as a juridical entity over one hundred
to avoid the full consequences of the all encompassing years ago by virtue of Act No. 1285, enacted on January 19, 1905, by
Be it enacted by the National Assembly of the Philippines:
coverage of the civil service system. The same explicit intent the Philippine Commission. The petitioner, at the time it was created,
is shown by the addition of "agency" and "instrumentality" to was composed of animal aficionados and animal propagandists. The
branches and subdivisions of the Government. All offices and objects of the petitioner, as stated in Section 2 of its charter, shall be Section 1. Section four of Act Numbered Twelve hundred and eighty-
firms of the government are covered. The amendments to enforce laws relating to cruelty inflicted upon animals or the five as amended by Act Numbered Thirty five hundred and forty-eight,
introduced in 1973 are not idle exercises or meaningless protection of animals in the Philippine Islands, and generally, to do is hereby further amended so as to read as follows:
gestures. They carry the strong message that civil service and perform all things which may tend in any way to alleviate the
coverage is broad and all-embracing insofar as employment suffering of animals and promote their welfare.3 Sec. 4. The said society is authorized to appoint not to exceed ten
in the government in any of its governmental or corporate agents in the City of Manila, and not to exceed one in each
arms is concerned.25 At the time of the enactment of Act No. 1285, the original Corporation municipality of the Philippines who shall have the authority to
Law, Act No. 1459, was not yet in existence. Act No. 1285 antedated denounce to regular peace officers any violation of the laws enacted
The complaint in NLRC Case No. 1637-84 having been filed on 13 both the Corporation Law and the constitution of the Securities and for the prevention of cruelty to animals and the protection of animals
November 1984, when the 1973 Constitution was still in force, our Exchange Commission. Important to note is that the nature of the and to cooperate with said peace officers in the prosecution of
ruling in Juco applies in the case at bar.26 petitioner as a corporate entity is distinguished from the sociedad transgressors of such laws.
anonimas under the Spanish Code of Commerce.

79
Sec. 2. The full amount of the fines collected for violation of the laws or uses of funds and property, owned or held in trust by, or pertaining Petitioner thereafter filed with the respondent COA a Request for Re-
against cruelty to animals and for the protection of animals, shall to the Government, or any of its subdivisions, agencies, or evaluation dated May 19, 2004, 8 insisting that it was a private
accrue to the general fund of the Municipality where the offense was instrumentalities, including government-owned and controlled domestic corporation.
committed. corporations with original charters, and on a post-audit basis: (a)
constitutional bodies, commissions and officers that have been Acting on the said request, the General Counsel of respondent COA, in
Sec. 3. This Act shall take effect upon its approval. granted fiscal autonomy under the Constitution; (b) autonomous state a Memorandum dated July 13, 2004,9 affirmed her earlier opinion that
colleges and universities; (c) other government-owned or controlled the petitioner was a government entity that was subject to the audit
corporations and their subsidiaries; and (d) such non-governmental jurisdiction of respondent COA. In a letter dated September 14, 2004,
Approved, November 8, 1936. (Emphasis supplied) entities receiving subsidy or equity, directly or indirectly, from or the respondent COA informed the petitioner of the result of the re-
through the government, which are required by law or the granting evaluation, maintaining its position that the petitioner was subject to
Immediately thereafter, then President Manuel L. Quezon issued institution to submit to such audit as a condition of subsidy or equity . its audit jurisdiction, and requested an initial conference with the
Executive Order (E.O.) No. 63 dated November 12, 1936, portions of However, where the internal control system of the audited agencies is respondents.
which provide: inadequate, the Commission may adopt such measures, including
temporary or special pre-audit, as are necessary and appropriate to
correct the deficiencies. It shall keep the general accounts of the In a Memorandum dated September 16, 2004, Director Delfin Aguilar
Whereas, during the first regular session of the National Assembly, reported to COA Assistant Commissioner Juanito Espino, Corporate
Commonwealth Act Numbered One Hundred Forty Eight was enacted Government, and for such period as may be provided by law, preserve
the vouchers and other supporting papers pertaining thereto. Government Sector, that the audit survey was not conducted due to
depriving the agents of the Society for the Prevention of Cruelty to the refusal of the petitioner because the latter maintained that it was
Animals of their power to arrest persons who have violated the laws (Emphasis supplied)
a private corporation.
prohibiting cruelty to animals thereby correcting a serious defect in
one of the laws existing in our statute books.
Petitioner received on September 27, 2005 the subject COA Office
Order 2005-021 dated September 14, 2005 and the COA Letter dated
xxxx September 23, 2005.

Whereas, the cruel treatment of animals is an offense against the Petitioner explained thus: Hence, herein Petition on the following grounds:
State, penalized under our statutes, which the Government is duty
bound to enforce; a. Although the petitioner was created by special legislation, A.
this necessarily came about because in January 1905 there
Now, therefore, I, Manuel L. Quezon, President of the Philippines, was as yet neither a Corporation Law or any other general
pursuant to the authority conferred upon me by the Constitution, law under which it may be organized and incorporated, nor a RESPONDENT COMMISSION ON AUDIT COMMITTED GRAVE
hereby decree, order, and direct the Commissioner of Public Safety, Securities and Exchange Commission which would have ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS
the Provost Marshal General as head of the Constabulary Division of passed upon its organization and incorporation. OF JURISDICTION WHEN IT RULED THAT PETITIONER IS
the Philippine Army, every Mayor of a chartered city, and every SUBJECT TO ITS AUDIT AUTHORITY.
municipal president to detail and organize special members of the b. That Executive Order No. 63, issued during the
police force, local, national, and the Constabulary to watch, capture, Commonwealth period, effectively deprived the petitioner of B.
and prosecute offenders against the laws enacted to prevent cruelty its power to make arrests, and that the petitioner lost its
to animals. (Emphasis supplied) operational funding, underscore the fact that it exercises no PETITIONER IS ENTITLED TO THE RELIEF SOUGHT, THERE
governmental function. In fine, the government itself, by its BEING NO APPEAL, NOR ANY PLAIN, SPEEDY AND
On December 1, 2003, an audit team from respondent Commission on overt acts, confirmed petitioner’s status as a private juridical ADEQUATE REMEDY IN THE ORDINARY COURSE OF LAW
Audit (COA) visited the office of the petitioner to conduct an audit entity. AVAILABLE TO IT.10
survey pursuant to COA Office Order No. 2003-051 dated November
18, 20035 addressed to the petitioner. The petitioner demurred on the The COA General Counsel issued a Memorandum 6 dated May 6, 2004, The essential question before this Court is whether the petitioner
ground that it was a private entity not under the jurisdiction of COA, asserting that the petitioner was subject to its audit authority. In a qualifies as a government agency that may be subject to audit by
citing Section 2(1) of Article IX of the Constitution which specifies the letter dated May 17, 2004,7 respondent COA informed the petitioner of respondent COA.
general jurisdiction of the COA, viz: the result of the evaluation, furnishing it with a copy of said
Memorandum dated May 6, 2004 of the General Counsel.
Petitioner argues: first, even though it was created by special
Section 1. General Jurisdiction. The Commission on Audit shall have legislation in 1905 as there was no general law then existing under
the power, authority, and duty to examine, audit, and settle all which it may be organized or incorporated, it exercises no
accounts pertaining to the revenue and receipts of, and expenditures governmental functions because these have been revoked by C.A. No.

80
148 and E.O. No. 63; second, nowhere in its charter is it indicated petitioner to render a report to the Civil Governor, whose functions The petition is impressed with merit.
that it is a public corporation, unlike, for instance, C.A. No. 111 which have been inherited by the Office of the President, clearly reflects the
created the Boy Scouts of the Philippines, defined its powers and nature of the petitioner as a government instrumentality; fifth, The arguments of the parties, interlaced as they are, can be disposed
purposes, and specifically stated that it was "An Act to Create a Public despite the passage of the Corporation Code, the law creating the of in five points.
Corporation" in which, even as amended by Presidential Decree No. petitioner had not been abolished, nor had it been re-incorporated
460, the law still adverted to the Boy Scouts of the Philippines as a under any general corporation law; and finally, sixth, Republic Act No.
"public corporation," all of which are not obtaining in the charter of 8485, otherwise known as the "Animal Welfare Act of 1998," First, the Court agrees with the petitioner that the "charter test"
the petitioner; third, if it were a government body, there would have designates the petitioner as a member of its Committee on Animal cannot be applied.
been no need for the State to grant it tax exemptions under Republic Welfare which is attached to the Department of Agriculture.
Act No. 1178, and the fact that it was so exempted strengthens its Essentially, the "charter test" as it stands today provides:
position that it is a private institution; fourth, the employees of the In view of the phrase "One-half of all the fines imposed and collected
petitioner are registered and covered by the Social Security System at through the efforts of said society," the Court, in a Resolution dated [T]he test to determine whether a corporation is government owned
the latter’s initiative and not through the Government Service January 30, 2007, required the Office of the Solicitor General (OSG) or controlled, or private in nature is simple.  Is it created by its own
Insurance System, which should have been the case had the and the parties to comment on: a) petitioner's authority to impose charter for the exercise of a public function, or by incorporation under
employees been considered government employees; fifth, the fines and the validity of the provisions of Act No. 1285 and the general corporation law? Those with special charters are
petitioner does not receive any form of financial assistance from the Commonwealth Act No. 148 considering that there are no standard government corporations subject to its provisions, and its employees
government, since C.A. No. 148, amending Section 5 of Act No. 1285, measures provided for in the aforecited laws as to the manner of are under the jurisdiction of the Civil Service Commission, and are
states that the "full amount of the fines, collected for violation of the implementation, the specific violations of the law, the person/s compulsory members of the Government Service Insurance System.
laws against cruelty to animals and for the protection of animals, shall authorized to impose fine and in what amount; and, b) the effect of xxx (Emphasis supplied)13
accrue to the general fund of the Municipality where the offense was the 1935 and 1987 Constitutions on whether petitioner continues to
committed"; sixth, C.A. No. 148 effectively deprived the petitioner of exist or should organize as a private corporation under the
its powers to make arrests and serve processes as these functions The petitioner is correct in stating that the charter test is predicated,
Corporation Code, B.P. Blg.  68 as amended.
were placed in the hands of the police force; seventh, no government at best, on the legal regime established by the 1935 Constitution,
appointee or representative sits on the board of trustees of the Section 7, Article XIII, which states:
petitioner; eighth, a reading of the provisions of its charter (Act No. Petitioner and the OSG filed their respective Comments. Respondents
1285) fails to show that any act or decision of the petitioner is subject filed a Manifestation stating that since they were being represented by
Sec. 7. The National Assembly shall not, except by general law,
to the approval of or control by any government agency, except to the the OSG which filed its Comment, they opted to dispense with the provide for the formation, organization, or regulation of private
extent that it is governed by the law on private corporations in filing of a separate one and adopt for the purpose that of the OSG.
corporations, unless such corporations are owned or controlled by the
general; and finally, ninth, the Committee on Animal Welfare, under Government or any subdivision or instrumentality thereof. 14
the Animal Welfare Act of 1998, includes members from both the The petitioner avers that it does not have the authority to impose
private and the public sectors. fines for violation of animal welfare laws; it only enjoyed the privilege
The foregoing proscription has been carried over to the 1973 and the
of sharing in the fines imposed and collected from its efforts in the 1987 Constitutions. Section 16 of Article XII of the present
The respondents contend that since the petitioner is a "body politic" enforcement of animal welfare laws; such privilege, however, was
Constitution provides:
created by virtue of a special legislation and endowed with a subsequently abolished by C.A. No. 148; that it continues to exist as a
governmental purpose, then, indubitably, the COA may audit the private corporation since it was created by the Philippine Commission
before the effectivity of the Corporation law, Act No. 1459; and the Sec. 16. The Congress shall not, except by general law, provide for
financial activities of the latter. Respondents in effect divide their
1935 and 1987 Constitutions. the formation, organization, or regulation of private corporations.
contentions into six strains: first, the test to determine whether an
Government-owned or controlled corporations may be created or
entity is a government corporation lies in the manner of its creation,
established by special charters in the interest of the common good
and, since the petitioner was created by virtue of a special charter, it The OSG submits that Act No. 1285 and its amendatory laws did not and subject to the test of economic viability.
is thus a government corporation subject to respondents’ auditing give petitioner the authority to impose fines for violation of
power; second, the petitioner exercises "sovereign powers," that is, it laws12 relating to the prevention of cruelty to animals and the
is tasked to enforce the laws for the protection and welfare of animals protection of animals; that even prior to the amendment of Act No. Section 16 is essentially a re-enactment of Section 7 of Article XVI of
which "ultimately redound to the public good and welfare," and, 1285, petitioner was only entitled to share in the fines imposed; C.A. the 1935 Constitution and Section 4 of Article XIV of the 1973
therefore, it is deemed to be a government "instrumentality" as No. 148 abolished that privilege to share in the fines collected; that Constitution.
defined under the Administrative Code of 1987, the purpose of which petitioner is a public corporation and has continued to exist since Act
is connected with the administration of government, as purportedly No. 1285; petitioner was not repealed by the 1935 and 1987 During the formulation of the 1935 Constitution, the Committee on
affirmed by American jurisprudence; third, by virtue of Section Constitutions which contain transitory provisions maintaining all laws Franchises recommended the foregoing proscription to prevent the
23,11 Title II, Book III of the same Code, the Office of the President issued not inconsistent therewith until amended, modified or repealed. pressure of special interests upon the lawmaking body in the creation
exercises supervision or control over the petitioner; fourth, under the of corporations or in the regulation of the same. To permit the
same Code, the requirement under its special charter for the lawmaking body by special law to provide for the organization,

81
formation, or regulation of private corporations would be in effect to In a legal regime where the charter test doctrine cannot be applied, sued, to use a common seal, and so forth. It may adopt by-laws for
offer to it the temptation in many cases to favor certain groups, to the the mere fact that a corporation has been created by virtue of a its internal operations: the petitioner shall be managed or operated by
prejudice of others or to the prejudice of the interests of the special law does not necessarily qualify it as a public corporation. its officers "in accordance with its by-laws in force." The pertinent
country.15 provisions of the charter provide:
What then is the nature of the petitioner as a corporate entity? What
And since the underpinnings of the charter test had been introduced legal regime governs its rights, powers, and duties? Section 1. Anna L. Ide, Kate S. Wright, John L. Chamberlain, William
by the 1935 Constitution and not earlier, it follows that the test F. Tucker, Mary S. Fergusson, Amasa S. Crossfield, Spencer Cosby,
cannot apply to the petitioner, which was incorporated by virtue of Act As stated, at the time the petitioner was formed, the applicable law Sealy B. Rossiter, Richard P. Strong, Jose Robles Lahesa, Josefina R.
No. 1285, enacted on January 19, 1905. Settled is the rule that laws was the Philippine Bill of 1902, and, emphatically, as also stated de Luzuriaga, and such other persons as may be associated with them
in general have no retroactive effect, unless the contrary is above, no proscription similar to the charter test can be found therein. in conformity with this act, and their successors, are hereby
provided.16 All statutes are to be construed as having only a constituted and created a body politic and corporate at law, under the
prospective operation, unless the purpose and intention of the name and style of "The Philippines Society for the Prevention of
legislature to give them a retrospective effect is expressly declared or The textual foundation of the charter test, which placed a limitation on Cruelty to Animals."
is necessarily implied from the language used. In case of doubt, the the power of the legislature, first appeared in the 1935 Constitution.
doubt must be resolved against the retrospective effect.17 However, the petitioner was incorporated in 1905 by virtue of Act No.
1258, a law antedating the Corporation Law (Act No. 1459) by a year, As incorporated by this Act, said society shall have the power to add
and the 1935 Constitution, by thirty years. There being neither a to its organization such and as many members as it desires, to
There are a few exceptions. Statutes can be given retroactive effect in general law on the formation and organization of private corporations provide for and choose such officers as it may deem advisable, and in
the following cases: (1) when the law itself so expressly provides; (2) nor a restriction on the legislature to create private corporations by such manner as it may wish, and to remove members as it shall
in case of remedial statutes; (3) in case of curative statutes; (4) in direct legislation, the Philippine Commission at that moment in history provide.
case of laws interpreting others; and (5) in case of laws creating new was well within its powers in 1905 to constitute the petitioner as a
rights.18 None of the exceptions is present in the instant case. private juridical entity.1âwphi1 It shall have the right to sue and be sued, to use a common seal, to
receive legacies and donations, to conduct social enterprises for the
The general principle of prospectivity of the law likewise applies to Act Time and again the Court must caution even the most brilliant purpose of obtaining funds, to levy dues upon its members and
No. 1459, otherwise known as the Corporation Law, which had been scholars of the law and all constitutional historians on the danger of provide for their collection to hold real and personal estate such as
enacted by virtue of the plenary powers of the Philippine Commission imposing legal concepts of a later date on facts of an earlier date.20 may be necessary for the accomplishment of the purposes of the
on March 1, 1906, a little over a year after January 19, 1905, the time society, and to adopt such by-laws for its government as may not be
the petitioner emerged as a juridical entity. Even the Corporation Law inconsistent with law or this charter.
respects the rights and powers of juridical entities organized The amendments introduced by C.A. No. 148 made it clear that the
beforehand, viz: petitioner was a private corporation and not an agency of the
government. This was evident in Executive Order No. 63, issued by xxxx
then President of the Philippines Manuel L. Quezon, declaring that the
SEC. 75. Any corporation or sociedad anonima formed, organized, and revocation of the powers of the petitioner to appoint agents with Sec. 3. The said society shall be operated under the direction of its
existing under the laws of the Philippine Islands and lawfully powers of arrest "corrected a serious defect" in one of the laws officers, in accordance with its by-laws in force, and this charter.
transacting business in the Philippine Islands on the date of the existing in the statute books.
passage of this Act, shall be subject to the provisions hereof so far as
such provisions may be applicable and shall be entitled  at its xxxx
option  either to continue business as such corporation or to reform As a curative statute, and based on the doctrines so far discussed,
and organize under and by virtue of the provisions of this Act, C.A. No. 148 has to be given retroactive effect, thereby freeing all Sec. 6. The principal office of the society shall be kept in the city of
transferring all corporate interests to the new corporation which, if a doubt as to which class of corporations the petitioner belongs, that is, Manila, and the society shall have full power to locate and establish
stock corporation, is authorized to issue its shares of stock at par to it is a quasi-public corporation, a kind of private domestic corporation, branch offices of the society wherever it may deem advisable in the
the stockholders or members of the old corporation according to their which the Court will further elaborate on under the fourth point. Philippine Islands, such branch offices to be under the supervision and
interests. (Emphasis supplied). control of the principal office.
Second, a reading of petitioner’s charter shows that it is not subject to
As pointed out by the OSG, both the 1935 and 1987 Constitutions control or supervision by any agency of the State, unlike government- Third. The employees of the petitioner are registered and covered by
contain transitory provisions maintaining all laws issued not owned and -controlled corporations. No government representative the Social Security System at the latter’s initiative, and not through
inconsistent therewith until amended, modified or repealed.19 sits on the board of trustees of the petitioner. Like all private the Government Service Insurance System, which should be the case
corporations, the successors of its members are determined if the employees are considered government employees. This is
voluntarily and solely by the petitioner in accordance with its by-laws, another indication of petitioner’s nature as a private entity. Section 1
and may exercise those powers generally accorded to private of Republic Act No. 1161, as amended by Republic Act No. 8282,
corporations, such as the powers to hold property, to sue and be

82
otherwise known as the Social Security Act of 1997, defines the governmental functions, then that corporation is considered public; immunity statute, it does not follow that a corporation vested with
employer: otherwise, it is private. Applying the above test, provinces, chartered special privileges and franchises may refuse to show its hand when
cities, and barangays can best exemplify public corporations. They are charged with an abuse of such privileges. (Wilson v. United States, 55
Employer – Any person, natural or juridical, domestic or foreign, who created by the State as its own device and agency for the Law Ed., 771, 780.)27
carries on in the Philippines any trade, business, industry, undertaking accomplishment of parts of its own public works.25
or activity of any kind and uses the services of another person who is WHEREFORE, the petition is GRANTED. Petitioner is DECLARED a
under his orders as regards the employment, except the Government It is clear that the amendments introduced by C.A. No. 148 revoked private domestic corporation subject to the jurisdiction of the
and any of its political subdivisions, branches or instrumentalities, the powers of the petitioner to arrest offenders of animal welfare laws Securities and Exchange Commission. The respondents
including corporations owned or controlled by the Government: and the power to serve processes in connection therewith. are ENJOINED from investigating, examining and auditing the
Provided, That a self-employed person shall be both employee and petitioner's fiscal and financial affairs.
employer at the same time. (Emphasis supplied) Fifth. The respondents argue that since the charter of the petitioner
requires the latter to render periodic reports to the Civil Governor, SO ORDERED.
Fourth. The respondents contend that the petitioner is a "body politic" whose functions have been inherited by the President, the petitioner
because its primary purpose is to secure the protection and welfare of is, therefore, a government instrumentality.
animals which, in turn, redounds to the public good.
This contention is inconclusive. By virtue of the fiction that all
This argument, is, at best, specious. The fact that a certain juridical corporations owe their very existence and powers to the State, the
entity is impressed with public interest does not, by that circumstance reportorial requirement is applicable to all corporations of whatever
alone, make the entity a public corporation, inasmuch as a nature, whether they are public, quasi-public, or private corporations
corporation may be private although its charter contains provisions of —as creatures of the State, there is a reserved right in the legislature
a public character, incorporated solely for the public good. This class to investigate the activities of a corporation to determine whether it
of corporations may be considered quasi-public corporations, which acted within its powers. In other words, the reportorial requirement is
are private corporations that render public service, supply public the principal means by which the State may see to it that its creature
wants,21 or pursue other eleemosynary objectives. While purposely acted according to the powers and functions conferred upon it. These
organized for the gain or benefit of its members, they are required by principles were extensively discussed in Bataan Shipyard &
law to discharge functions for the public benefit. Examples of these Engineering Co., Inc. v. Presidential Commission on Good
corporations are utility,22 railroad, warehouse, telegraph, telephone, Government.26 Here, the Court, in holding that the subject corporation
water supply corporations and transportation companies.23 It must be could not invoke the right against self-incrimination whenever the
stressed that a quasi-public corporation is a species of private State demanded the production of its corporate books and papers,
corporations, but the qualifying factor is the type of service the extensively discussed the purpose of reportorial requirements, viz:
former renders to the public: if it performs a public service, then it
becomes a quasi-public corporation.241âwphi1 x x x The corporation is a creature of the state. It is presumed to be
Liban vs. Gordon
incorporated for the benefit of the public. It received certain special
Authorities are of the view that the purpose alone of the corporation privileges and franchises, and holds them subject to the laws of the
This resolves the Motion for Clarification and/or for
cannot be taken as a safe guide, for the fact is that almost all state and the limitations of its charter. Its powers are limited by law.
Reconsideration1 filed on August 10, 2009 by respondent Richard J.
corporations are nowadays created to promote the interest, good, or It can make no contract not authorized by its charter. Its rights to act
Gordon (respondent) of the Decision promulgated by this Court on
convenience of the public. A bank, for example, is a private as a corporation are only preserved to it so long as it obeys the laws
July 15, 2009 (the Decision), the Motion for Partial
corporation; yet, it is created for a public benefit. Private schools and of its creation. There is a reserve[d] right in the legislature to
Reconsideration2 filed on August 27, 2009 by movant-intervenor
universities are likewise private corporations; and yet, they are investigate its contracts and find out whether it has exceeded its
Philippine National Red Cross (PNRC), and the latter’s Manifestation
rendering public service. Private hospitals and wards are charged with powers. It would be a strange anomaly to hold that a state, having
and Motion to Admit Attached Position Paper 3 filed on December 23,
heavy social responsibilities. More so with all common carriers. On the chartered a corporation to make use of certain franchises, could not,
2009.
other hand, there may exist a public corporation even if it is endowed in the exercise of sovereignty, inquire how these franchises had been
with gifts or donations from private individuals. employed, and whether they had been abused, and demand the
production of the corporate books and papers for that purpose. The In the Decision,4 the Court held that respondent did not forfeit his
defense amounts to this, that an officer of the corporation which is seat in the Senate when he accepted the chairmanship of the PNRC
The true criterion, therefore, to determine whether a corporation is
charged with a criminal violation of the statute may plead the Board of Governors, as "the office of the PNRC Chairman is not a
public or private is found in the totality of the relation of the
criminality of such corporation as a refusal to produce its books. To government office or an office in a government-owned or controlled
corporation to the State. If the corporation is created by the State as
state this proposition is to answer it. While an individual may lawfully corporation for purposes of the prohibition in Section 13, Article VI of
the latter’s own agency or instrumentality to help it in carrying out its
refuse to answer incriminating questions unless protected by an the 1987 Constitution."5 The Decision, however, further declared void

83
the PNRC Charter "insofar as it creates the PNRC as a private B. THE CURRENT CHARTER OF PNRC IS PRESIDENTIAL DECREE NO. Court could have based its judgment. Furthermore, the PNRC, the
corporation" and consequently ruled that "the PNRC should 1264 AND NOT REPUBLIC ACT NO. 95. PRESIDENTIAL DECREE NO. entity most adversely affected by this declaration of
incorporate under the Corporation Code and register with the 1264 WAS NOT A CREATION OF CONGRESS. unconstitutionality, which was not even originally a party to this case,
Securities and Exchange Commission if it wants to be a private was being compelled, as a consequence of the Decision, to suddenly
corporation."6 The dispositive portion of the Decision reads as follows: C. PNRC’S STRUCTURE IS SUI GENERIS; IT IS A CLASS OF ITS OWN. reorganize and incorporate under the Corporation Code, after more
WHILE IT IS PERFORMING HUMANITARIAN FUNCTIONS AS AN than sixty (60) years of existence in this country.
WHEREFORE, we declare that the office of the Chairman of the AUXILIARY TO GOVERNMENT, IT IS A NEUTRAL ENTITY SEPARATE
Philippine National Red Cross is not a government office or an office in AND INDEPENDENT OF GOVERNMENT CONTROL, YET IT DOES NOT Its existence as a chartered corporation remained unchallenged on
a government-owned or controlled corporation for purposes of the QUALIFY AS STRICTLY PRIVATE IN CHARACTER. ground of unconstitutionality notwithstanding that R.A. No. 95 was
prohibition in Section 13, Article VI of the 1987 Constitution. We also enacted on March 22, 1947 during the effectivity of the 1935
declare that Sections 1, 2, 3, 4(a), 5, 6, 7, 8, 9, 10, 11, 12, and 13 of In his Comment and Manifestation10 filed on November 9, 2009, Constitution, which provided for a proscription against the creation of
the Charter of the Philippine National Red Cross, or Republic Act No. respondent manifests: (1) that he agrees with the position taken by private corporations by special law, to wit:
95, as amended by Presidential Decree Nos. 1264 and 1643, are VOID the PNRC in its Motion for Partial Reconsideration dated August 27,
because they create the PNRC as a private corporation or grant it 2009; and (2) as of the writing of said Comment and Manifestation, SEC. 7. The Congress shall not, except by general law, provide for the
corporate powers.7 there was pending before the Congress of the Philippines a proposed formation, organization, or regulation of private corporations, unless
bill entitled "An Act Recognizing the PNRC as an Independent, such corporations are owned and controlled by the Government or
In his Motion for Clarification and/or for Reconsideration, respondent Autonomous, Non-Governmental Organization Auxiliary to the any subdivision or instrumentality thereof. (Art. XIV, 1935
raises the following grounds: (1) as the issue of constitutionality of Authorities of the Republic of the Philippines in the Humanitarian Constitution.)
Republic Act (R.A.) No. 95 was not raised by the parties, the Court Field, to be Known as The Philippine Red Cross."11
went beyond the case in deciding such issue; and (2) as the Court Similar provisions are found in Article XIV, Section 4 of the 1973
decided that Petitioners did not have standing to file the instant After a thorough study of the arguments and points raised by the Constitution and Article XII, Section 16 of the 1987 Constitution. The
Petition, the pronouncement of the Court on the validity of R.A. No. respondent as well as those of movant-intervenor in their respective latter reads:
95 should be considered obiter.8 motions, we have reconsidered our pronouncements in our Decision
dated July 15, 2009 with regard to the nature of the PNRC and the SECTION 16. The Congress shall not, except by general law, provide
Respondent argues that the validity of R.A. No. 95 was a non-issue; constitutionality of some provisions of the PNRC Charter, R.A. No. 95, for the formation, organization, or regulation of private corporations.
therefore, it was unnecessary for the Court to decide on that question. as amended. Government-owned or controlled corporations may be created or
Respondent cites Laurel v. Garcia, 9 wherein the Court said that it "will established by special charters in the interest of the common good
not pass upon a constitutional question although properly presented As correctly pointed out in respondent’s Motion, the issue of and subject to the test of economic viability.
by the record if the case can be disposed of on some other ground" constitutionality of R.A. No. 95 was not raised by the parties, and was
and goes on to claim that since this Court, in the Decision, disposed of not among the issues defined in the body of the Decision; thus, it was
the petition on some other ground, i.e., lack of standing of petitioners, Since its enactment, the PNRC Charter was amended several times,
not the very lis mota of the case. We have reiterated the rule as to particularly on June 11, 1953, August 16, 1971, December 15, 1977,
there was no need for it to delve into the validity of R.A. No. 95, and when the Court will consider the issue of constitutionality in Alvarez v.
the rest of the judgment should be deemed obiter. and October 1, 1979, by virtue of R.A. No. 855, R.A. No. 6373, P.D.
PICOP Resources, Inc.,12 thus: No. 1264, and P.D. No. 1643, respectively. The passage of several
laws relating to the PNRC’s corporate existence notwithstanding the
In its Motion for Partial Reconsideration, PNRC prays that the Court This Court will not touch the issue of unconstitutionality unless it is effectivity of the constitutional proscription on the creation of private
sustain the constitutionality of its Charter on the following grounds: the very lis mota. It is a well-established rule that a court should not corporations by law, is a recognition that the PNRC is not strictly in
pass upon a constitutional question and decide a law to be the nature of a private corporation contemplated by the aforesaid
A. THE ASSAILED DECISION DECLARING UNCONSTITUTIONAL unconstitutional or invalid, unless such question is raised by the constitutional ban.
REPUBLIC ACT NO. 95 AS AMENDED DEPRIVED INTERVENOR PNRC parties and that when it is raised, if the record also presents some
OF ITS CONSTITUTIONAL RIGHT TO DUE PROCESS. other ground upon which the court may [rest] its judgment, that A closer look at the nature of the PNRC would show that there is none
course will be adopted and the constitutional question will be left for like it not just in terms of structure, but also in terms of history,
1. INTERVENOR PNRC WAS NEVER A PARTY TO consideration until such question will be unavoidable.13 public service and official status accorded to it by the State and the
THE INSTANT CONTROVERSY. international community. There is merit in PNRC’s contention that its
Under the rule quoted above, therefore, this Court should not have structure is sui generis.
2. THE CONSTITUTIONALITY OF REPUBLIC ACT declared void certain sections of R.A. No. 95, as amended by
NO. 95, AS AMENDED WAS NEVER AN ISSUE IN Presidential Decree (P.D.) Nos. 1264 and 1643, the PNRC Charter. The PNRC succeeded the chapter of the American Red Cross which
THIS CASE. Instead, the Court should have exercised judicial restraint on this was in existence in the Philippines since 1917. It was created by an
matter, especially since there was some other ground upon which the Act of Congress after the Republic of the Philippines became an

84
independent nation on July 6, 1946 and proclaimed on February 14, NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the (e) To devise and promote such other services in time of
1947 its adherence to the Convention of Geneva of July 29, 1929 for Philippines, by virtue of the powers vested in me by the Constitution peace and in time of war as may be found desirable in
the Amelioration of the Condition of the Wounded and Sick of Armies as Commander-in-Chief of all the Armed Forces of the Philippines and improving the health, safety and welfare of the Filipino
in the Field (the "Geneva Red Cross Convention"). By that action the pursuant to Proclamation No. 1081 dated September 21, 1972, and people;
Philippines indicated its desire to participate with the nations of the General Order No. 1 dated September 22, 1972, do hereby decree
world in mitigating the suffering caused by war and to establish in the and order that Republic Act No. 95, Charter of the Philippine National (f) To devise such means as to make every citizen and/or
Philippines a voluntary organization for that purpose and like other Red Cross (PNRC) as amended by Republic Acts No. 855 and 6373, be resident of the Philippines a member of the Red Cross.
volunteer organizations established in other countries which have further amended as follows:
ratified the Geneva Conventions, to promote the health and welfare of
the people in peace and in war.14 The PNRC is one of the National Red Cross and Red Crescent
Section 1. There is hereby created in the Republic of the Philippines a Societies, which, together with the International Committee of the
body corporate and politic to be the voluntary organization officially Red Cross (ICRC) and the IFRC and RCS, make up the International
The provisions of R.A. No. 95, as amended by R.A. Nos. 855 and designated to assist the Republic of the Philippines in discharging the Red Cross and Red Crescent Movement (the Movement). They
6373, and further amended by P.D. Nos. 1264 and 1643, show the obligations set forth in the Geneva Conventions and to perform such constitute a worldwide humanitarian movement, whose mission is:
historical background and legal basis of the creation of the PNRC by other duties as are inherent upon a national Red Cross Society. The
legislative fiat, as a voluntary organization impressed with public national headquarters of this Corporation shall be located in
interest. Pertinently R.A. No. 95, as amended by P.D. 1264, provides: Metropolitan Manila. (Emphasis supplied.) [T]o prevent and alleviate human suffering wherever it may be found,
to protect life and health and ensure respect for the human being, in
particular in times of armed conflict and other emergencies, to work
WHEREAS, during the meeting in Geneva, Switzerland, on 22 August The significant public service rendered by the PNRC can be gleaned for the prevention of disease and for the promotion of health and
1894, the nations of the world unanimously agreed to diminish within from Section 3 of its Charter, which provides: social welfare, to encourage voluntary service and a constant
their power the evils inherent in war; readiness to give help by the members of the Movement, and a
Section 3. That the purposes of this Corporation shall be as follows: universal sense of solidarity towards all those in need of its protection
WHEREAS, more than one hundred forty nations of the world have and assistance.15
ratified or adhered to the Geneva Conventions of August 12, 1949 for (a) To provide volunteer aid to the sick and wounded of
the Amelioration of the Condition of the Wounded and Sick of Armed armed forces in time of war, in accordance with the spirit of The PNRC works closely with the ICRC and has been involved in
Forces in the Field and at Sea, The Prisoners of War, and The Civilian and under the conditions prescribed by the Geneva humanitarian activities in the Philippines since 1982. Among others,
Population in Time of War referred to in this Charter as the Geneva Conventions to which the Republic of the Philippines these activities in the country include:
Conventions; proclaimed its adherence;
1. Giving protection and assistance to civilians displaced or
WHEREAS, the Republic of the Philippines became an independent (b) For the purposes mentioned in the preceding sub- otherwise affected by armed clashes between the
nation on July 4, 1946, and proclaimed on February 14, 1947 its section, to perform all duties devolving upon the Corporation government and armed opposition groups, primarily in
adherence to the Geneva Conventions of 1929, and by the action, as a result of the adherence of the Republic of the Mindanao;
indicated its desire to participate with the nations of the world in Philippines to the said Convention;
mitigating the suffering caused by war and to establish in the
Philippines a voluntary organization for that purpose as contemplated 2. Working to minimize the effects of armed hostilities and
by the Geneva Conventions; (c) To act in matters of voluntary relief and in accordance violence on the population;
with the authorities of the armed forces as a medium of
communication between people of the Republic of the 3. Visiting detainees; and
WHEREAS, there existed in the Philippines since 1917 a chapter of the Philippines and their Armed Forces, in time of peace and in
American National Red Cross which was terminated in view of the time of war, and to act in such matters between similar
independence of the Philippines; and national societies of other governments and the 4. Promoting awareness of international humanitarian law in
Governments and people and the Armed Forces of the the public and private sectors.16
WHEREAS, the volunteer organizations established in other countries Republic of the Philippines;
which have ratified or adhered to the Geneva Conventions assist in National Societies such as the PNRC act as auxiliaries to the public
promoting the health and welfare of their people in peace and in war, (d) To establish and maintain a system of national and authorities of their own countries in the humanitarian field and
and through their mutual assistance and cooperation directly and international relief in time of peace and in time of war and provide a range of services including disaster relief and health and
through their international organizations promote better apply the same in meeting and emergency needs caused by social programmes.
understanding and sympathy among the people of the world; typhoons, flood, fires, earthquakes, and other natural
disasters and to devise and carry on measures for The International Federation of Red Cross (IFRC) and Red Crescent
minimizing the suffering caused by such disasters; Societies (RCS) Position Paper,17 submitted by the PNRC, is instructive

85
with regard to the elements of the specific nature of the National resources than the Societies, working towards comparable ends in a The Republic of the Philippines, adhering to the Geneva Conventions,
Societies such as the PNRC, to wit: given sector. established the PNRC as a voluntary organization for the purpose
contemplated in the Geneva Convention of 27 July 1929. x x
National Societies, such as the Philippine National Red Cross and its x x x No other organization has a duty to be its government’s x.20 (Citations omitted.)
sister Red Cross and Red Crescent Societies, have certain specificities humanitarian partner while remaining independent. 18 (Emphases
deriving from the 1949 Geneva Convention and the Statutes of the ours.) So must this Court recognize too the country’s adherence to
International Red Cross and Red Crescent Movement (the Movement). the Geneva Convention and respect the unique status of the
They are also guided by the seven Fundamental Principles of the Red It is in recognition of this sui generis character of the PNRC that R.A. PNRC in consonance with its treaty obligations. The Geneva
Cross and Red Crescent Movement: Humanity, Impartiality, No. 95 has remained valid and effective from the time of its Convention has the force and effect of law. 21 Under the Constitution,
Neutrality, Independence, Voluntary Service, Unity and Universality. enactment in March 22, 1947 under the 1935 Constitution and during the Philippines adopts the generally accepted principles of
the effectivity of the 1973 Constitution and the 1987 Constitution. international law as part of the law of the land. 22 This constitutional
A National Society partakes of a sui generis character. It is a provision must be reconciled and harmonized with Article XII, Section
protected component of the Red Cross movement under Articles 24 16 of the Constitution, instead of using the latter to negate the
The PNRC Charter and its amendatory laws have not been questioned former.
and 26 of the First Geneva Convention, especially in times of armed or challenged on constitutional grounds, not even in this case before
conflict. These provisions require that the staff of a National Society the Court now.
shall be respected and protected in all circumstances. Such protection By requiring the PNRC to organize under the Corporation Code just
is not ordinarily afforded by an international treaty to ordinary private like any other private corporation, the Decision of July 15, 2009 lost
entities or even non-governmental organisations (NGOs). This sui In the Decision, the Court, citing Feliciano v. Commission on sight of the PNRC’s special status under international humanitarian
generis character is also emphasized by the Fourth Geneva Audit,19 explained that the purpose of the constitutional provision law and as an auxiliary of the State, designated to assist it in
Convention which holds that an Occupying Power cannot require any prohibiting Congress from creating private corporations was to discharging its obligations under the Geneva Conventions. Although
change in the personnel or structure of a National Society. National prevent the granting of special privileges to certain individuals, the PNRC is called to be independent under its Fundamental
societies are therefore organizations that are directly families, or groups, which were denied to other groups. Based on the Principles, it interprets such independence as inclusive of its duty to
regulated by international humanitarian law, in contrast to above discussion, it can be seen that the PNRC Charter does not come be the government’s humanitarian partner. To be recognized in the
other ordinary private entities, including NGOs. within the spirit of this constitutional provision, as it does not grant International Committee, the PNRC must have an autonomous status,
special privileges to a particular individual, family, or group, but and carry out its humanitarian mission in a neutral and impartial
creates an entity that strives to serve the common good. manner.
xxxx

Furthermore, a strict and mechanical interpretation of Article XII, However, in accordance with the Fundamental Principle of Voluntary
In addition, National Societies are not only officially recognized by Section 16 of the 1987 Constitution will hinder the State in adopting
their public authorities as voluntary aid societies, auxiliary to the Service of National Societies of the Movement, the PNRC must be
measures that will serve the public good or national interest. It should distinguished from private and profit-making entities. It is the main
public authorities in the humanitarian field, but also benefit from be noted that a special law, R.A. No. 9520, the Philippine Cooperative
recognition at the International level. This is considered to be an characteristic of National Societies that they "are not inspired by the
Code of 2008, and not the general corporation code, vests corporate desire for financial gain but by individual commitment and devotion to
element distinguishing National Societies from other organisations power and capacities upon cooperatives which are private
(mainly NGOs) and other forms of humanitarian response. a humanitarian purpose freely chosen or accepted as part of the
corporations, in order to implement the State’s avowed policy. service that National Societies through its volunteers and/or members
render to the Community."23
x x x. No other organisation belongs to a world-wide Movement in In the Decision of July 15, 2009, the Court recognized the public
which all Societies have equal status and share equal responsibilities service rendered by the PNRC as the government’s partner in the
and duties in helping each other. This is considered to be the essence The PNRC, as a National Society of the International Red Cross and
observance of its international commitments, to wit: Red Crescent Movement, can neither "be classified as an
of the Fundamental Principle of Universality.
instrumentality of the State, so as not to lose its character of
The PNRC is a non-profit, donor-funded, voluntary, humanitarian neutrality" as well as its independence, nor strictly as a private
Furthermore, the National Societies are considered to be auxiliaries to organization, whose mission is to bring timely, effective, and corporation since it is regulated by international humanitarian law and
the public authorities in the humanitarian field. x x x. compassionate humanitarian assistance for the most vulnerable is treated as an auxiliary of the State.24
without consideration of nationality, race, religion, gender, social
The auxiliary status of [a] Red Cross Society means that it is at one status, or political affiliation. The PNRC provides six major services: Based on the above, the sui generis status of the PNRC is now
and the same time a private institution and a public service Blood Services, Disaster Management, Safety Services, Community sufficiently established.1âwphi1 Although it is neither a subdivision,
organization because the very nature of its work implies Health and Nursing, Social Services and Voluntary Service. agency, or instrumentality of the government, nor a government-
cooperation with the authorities, a link with the State. In owned or -controlled corporation or a subsidiary thereof, as succinctly
carrying out their major functions, Red Cross Societies give their explained in the Decision of July 15, 2009, so much so that
humanitarian support to official bodies, in general having larger

86
respondent, under the Decision, was correctly allowed to hold his The case stems from a complaint 4 for constructive dismissal, 1. A confidential memo was received from the VP for Sales
position as Chairman thereof concurrently while he served as a illegal suspension and monetary claims filed with the National informing me that you had directed, or at the very least tried to
Senator, such a conclusion does not ipso facto imply that the PNRC is Capital Region Arbitration Branch of the National Labor Relations persuade, a customer to purchase a camera from another
a "private corporation" within the contemplation of the provision of Commission (NLRC) by Cosare against the respondents. supplier. Clearly, this action is a gross and willful violation of the
the Constitution, that must be organized under the Corporation Code. trust and confidence this company has given to you being its AVP
As correctly mentioned by Justice Roberto A. Abad, the sui generis Cosare claimed that sometime in April 1993, he was employed as for Sales and is an attempt to deprive the company of income
character of PNRC requires us to approach controversies involving the a salesman by Arevalo, who was then in the business of selling from which you, along with the other employees of this company,
PNRC on a case-to-case basis. broadcast equipment needed by television networks and derive your salaries and other benefits. x x x.
production houses. In December 2000, Arevalo set up the
In sum, the PNRC enjoys a special status as an important ally and company Broadcom, still to continue the business of trading 2. A company vehicle assigned to you with plate no. UNV 402
auxiliary of the government in the humanitarian field in accordance communication and broadcast equipment. Cosare was named an was found abandoned in another place outside of the office
with its commitments under international law. This Court cannot all of incorporator of Broadcom, having been assigned 100 shares of without proper turnover from you to this office which had
a sudden refuse to recognize its existence, especially since the issue stock with par value of ₱1.00 per share. 5 In October 2001, assigned said vehicle to you. The vehicle was found to be
of the constitutionality of the PNRC Charter was never raised by the Cosare was promoted to the position of Assistant Vice President inoperable and in very bad condition, which required that the
parties. It bears emphasizing that the PNRC has responded to almost for Sales (AVP for Sales) and Head of the Technical Coordination, vehicle be towed to a nearby auto repair shop for extensive
all national disasters since 1947, and is widely known to provide a having a monthly basic net salary and average commissions of repairs.
substantial portion of the country’s blood requirements. Its ₱18,000.00 and ₱37,000.00, respectively.6
humanitarian work is unparalleled. The Court should not shake its 3. You have repeatedly failed to submit regular sales reports
existence to the core in an untimely and drastic manner that would Sometime in 2003, Alex F. Abiog (Abiog) was appointed as informing the company of your activities within and outside of
not only have negative consequences to those who depend on it in Broadcom’s Vice President for Sales and thus, became Cosare’s company premises despite repeated reminders. However, it has
times of disaster and armed hostilities but also have adverse effects immediate superior. On March 23, 2009, Cosare sent a been observed that you have been both frequently absent and/or
on the image of the Philippines in the international community. The confidential memo7 to Arevalo to inform him of the following tardy without proper information to this office or your direct
sections of the PNRC Charter that were declared void must therefore anomalies which were allegedly being committed by Abiog supervisor, the VP for Sales Mr. Alex Abiog, of your whereabouts.
stay. against the company: (a) he failed to report to work on time, and
would immediately leave the office on the pretext of client visits; 4. You have been remiss in the performance of your duties as a
WHEREFORE, premises considered, respondent Richard J. Gordon’s (b) he advised the clients of Broadcom to purchase camera units Sales officer as evidenced by the fact that you have not recorded
Motion for Clarification and/or for Reconsideration and movant- from its competitors, and received commissions therefor; (c) he any sales for the past immediate twelve (12) months. This was
intervenor PNRC’s Motion for Partial Reconsideration of the Decision in shared in the "under the-table dealings" or "confidential inspite of the fact that my office decided to relieve you of your
G.R. No. 175352 dated July 15, 2009 are GRANTED. The commissions" which Broadcom extended to its clients’ personnel duties as technical coordinator between Engineering and Sales
constitutionality of R.A. No. 95, as amended, the charter of the and engineers; and (d) he expressed his complaints and disgust since June last year so that you could focus and concentrate [on]
Philippine National Red Cross, was not raised by the parties as an over Broadcom’s uncompetitive salaries and wages and delay in your activities in sales.11
issue and should not have been passed upon by this Court. The the payment of other benefits, even in the presence of office
structure of the PNRC is sui generis¸ being neither strictly private nor staff. Cosare ended his memo by clarifying that he was not
public in nature. R.A. No. 95 remains valid and constitutional in its interested in Abiog’s position, but only wanted Arevalo to know of Cosare was given forty-eight (48) hours from the date of the
entirety. The dispositive portion of the Decision should therefore be the irregularities for the corporation’s sake. memo within which to present his explanation on the charges. He
MODIFIED by deleting the second sentence, to now read as follows: was also "suspended from having access to any and all company
files/records and use of company assets effective
Apparently, Arevalo failed to act on Cosare’s accusations. Cosare immediately."12 Thus, Cosare claimed that he was precluded from
WHEREFORE, we declare that the office of the Chairman of the claimed that he was instead called for a meeting by Arevalo on reporting for work on March 31, 2009, and was instead instructed
Philippine National Red Cross is not a government office or an office in March 25, 2009, wherein he was asked to tender his resignation to wait at the office’s receiving section. Upon the specific
a government-owned or controlled corporation for purposes of the in exchange for "financial assistance" in the amount of instructions of Arevalo, he was also prevented by Villareal from
prohibition in Section 13, Article VI of the 1987 Constitution. ₱300,000.00.8 Cosare refused to comply with the directive, as retrieving even his personal belongings from the office.
signified in a letter9 dated March 26, 2009 which he sent to
SO ORDERED. Arevalo.
On April 1, 2009, Cosare was totally barred from entering the
company premises, and was told to merely wait outside the office
Cosare vs. Broadcom Asia On March 30, 2009, Cosare received from Roselyn Villareal building for further instructions. When no such instructions were
(Villareal), Broadcom’s Manager for Finance and Administration, a given by 8:00 p.m., Cosare was impelled to seek the assistance
memo10 signed by Arevalo, charging him of serious misconduct of the officials of Barangay San Antonio, Pasig City, and had the
The Antecedents
and willful breach of trust, and providing in part: incident reported in the barangay blotter.13

87
On April 2, 2009, Cosare attempted to furnish the company with Unyielding, Cosare appealed the LA decision to the NLRC. jurisdiction of the RTC, instead of the LA. 25 They argued that the
a Memo14 by which he addressed and denied the accusations case involved a complaint against a corporation filed by a
cited in Arevalo’s memo dated March 30, 2009. The respondents The Ruling of the NLRC stockholder, who, at the same time, was a corporate officer.
refused to receive the memo on the ground of late filing,
prompting Cosare to serve a copy thereof by registered mail. The The Ruling of the CA
following day, April 3, 2009, Cosare filed the subject labor On August 24, 2010, the NLRC rendered its Decision21 reversing
complaint, claiming that he was constructively dismissed from the Decision of LA Menese. The dispositive portion of the NLRC
employment by the respondents. He further argued that he was Decision reads: On November 24, 2011, the CA rendered the assailed
illegally suspended, as he placed no serious and imminent threat Decision26 granting the respondents’ petition. It agreed with the
to the life or property of his employer and co-employees.15 WHEREFORE, premises considered, the DECISION is REVERSED respondents’ contention that the case involved an intra-corporate
and the Respondents are found guilty of Illegal Constructive controversy which, pursuant to Presidential Decree No. 902-A, as
Dismissal. Respondents BROADCOM ASIA, INC. and Dante amended, was within the exclusive jurisdiction of the RTC. It
In refuting Cosare’s complaint, the respondents argued that reasoned:
Cosare was neither illegally suspended nor dismissed from Arevalo are ordered to pay [Cosare’s] backwages, and separation
employment. They also contended that Cosare committed the pay, as well as damages, in the total amount of ₱1,915,458.33,
following acts inimical to the interests of Broadcom: (a) he failed per attached Computation. Record shows that [Cosare] was indeed a stockholder of
to sell any broadcast equipment since the year 2007; (b) he [Broadcom], and that he was listed as one of its directors.
attempted to sell a Panasonic HMC 150 Camera which was to be SO ORDERED.22 Moreover, he held the position of [AVP] for Sales which is listed
sourced from a competitor; and (c) he made an unauthorized as a corporate office. Generally, the president, vice-president,
request in Broadcom’s name for its principal, Panasonic USA, to secretary or treasurer are commonly regarded as the principal or
In ruling in favor of Cosare, the NLRC explained that "due weight executive officers of a corporation, and modern corporation
issue an invitation for Cosare’s friend, one Alex Paredes, to
and credence is accorded to [Cosare’s] contention that he was statutes usually designate them as the officers of the corporation.
attend the National Association of Broadcasters’ Conference in constructively dismissed by Respondent Arevalo when he was
Las Vegas, USA. 16 Furthermore, they contended that Cosare However, it bears mentioning that under Section 25 of the
asked to resign from his employment." 23 The fact that Cosare was Corporation Code, the Board of Directors of [Broadcom] is
abandoned his job17 by continually failing to report for work suspended from using the assets of Broadcom was also
beginning April 1, 2009, prompting them to issue on April 14, allowed to appoint such other officers as it may deem necessary.
inconsistent with the respondents’ claim that Cosare opted to Indeed, [Broadcom’s] By-Laws provides:
2009 a memorandum18 accusing Cosare of absence without leave abandon his employment.
beginning April 1, 2009.
Article IV
Exemplary damages in the amount of ₱100,000.00 was awarded, Officer
The Ruling of the LA given the NLRC’s finding that the termination of Cosare’s
employment was effected by the respondents in bad faith and in
On January 6, 2010, LA Napoleon M. Menese (LA Menese) a wanton, oppressive and malevolent manner. The claim for Section 1. Election / Appointment – Immediately after
rendered his Decision19 dismissing the complaint on the ground of unpaid commissions was denied on the ground of the failure to their election, the Board of Directors shall formally
Cosare’s failure to establish that he was dismissed, constructively include it in the prayer of pleadings filed with the LA and in the organize by electing the President, the Vice-President,
or otherwise, from his employment. For the LA, what transpired appeal. the Treasurer, and the Secretary at said meeting.
on March 30, 2009 was merely the respondents’ issuance to
Cosare of a show-cause memo, giving him a chance to present The respondents’ motion for reconsideration was The Board, may, from time to time, appoint such other
his side on the charges against him. He explained: officers as it may determine to be necessary or proper.
denied.24 Dissatisfied, they filed a petition for certiorari with the
CA founded on the following arguments: (1) the respondents did xxx
It is obvious that [Cosare] DID NOT wait for respondents’ action not have to prove just cause for terminating the employment of
regarding the charges leveled against him in the show-cause Cosare because the latter’s complaint was based on an alleged We hold that [the respondents] were able to present substantial
memo. What he did was to pre-empt that action by filing this constructive dismissal; (2) Cosare resigned and was thus not evidence that [Cosare] indeed held a corporate office, as
complaint just a day after he submitted his written explanation. dismissed from employment; (3) the respondents should not be evidenced by the General Information Sheet which was submitted
Moreover, by specifically seeking payment of "Separation Pay" declared liable for the payment of Cosare’s monetary claims; and to the Securities and Exchange Commission (SEC) on October 22,
instead of reinstatement, [Cosare’s] motive for filing this case (4) Arevalo should not be held solidarily liable for the judgment 2009.27 (Citations omitted and emphasis supplied)
becomes more evident.20 award.
Thus, the CA reversed the NLRC decision and resolution, and
It was also held that Cosare failed to substantiate by In a manifestation filed by the respondents during the pendency then entered a new one dismissing the labor complaint on the
documentary evidence his allegations of illegal suspension and of the CA appeal, they raised a new argument, i.e., the case ground of lack of jurisdiction, finding it unnecessary to resolve
non-payment of allowances and commissions. involved an intra-corporate controversy which was within the the main issues that were raised in the petition. Cosare filed a

88
motion for reconsideration, but this was denied by the CA via the whether a complaint for illegal dismissal is cognizable by the LA To support their argument that Cosare was a corporate officer,
Resolution28 dated March 26, 2012. Hence, this petition. or by the RTC. "In case of the regular employee, the LA has the respondents referred to Section 1, Article IV of Broadcom’s
jurisdiction; otherwise, the RTC exercises the legal authority to by-laws, which reads:
The Present Petition adjudicate.31
ARTICLE IV
The pivotal issues for the petition’s full resolution are as follows: Applying the foregoing to the present case, the LA had the OFFICER
(1) whether or not the case instituted by Cosare was an intra- original jurisdiction over the complaint for illegal dismissal
corporate dispute that was within the original jurisdiction of the because Cosare, although an officer of Broadcom for being its Section 1. Election / Appointment – Immediately after
RTC, and not of the LAs; and (2) whether or not Cosare was AVP for Sales, was not a "corporate officer" as the term is defined their election, the Board of Directors shall formally
constructively and illegally dismissed from employment by the by law. We emphasized in Real v. Sangu Philippines, Inc. 32 the organize by electing the President, the Vice-President,
respondents. definition of corporate officers for the purpose of identifying an the Treasurer, and the Secretary at said meeting.
intra-corporate controversy. Citing Garcia v. Eastern
Telecommunications Philippines, Inc.,33 we held:
The Court’s Ruling The Board may, from time to time, appoint such other officers as
it may determine to be necessary or proper. Any two (2) or more
" ‘Corporate officers’ in the context of Presidential Decree No. compatible positions may be held concurrently by the same
The petition is impressed with merit. 902-A are those officers of the corporation who are given that person, except that no one shall act as President and Treasurer
character by the Corporation Code or by the corporation’s by- or Secretary at the same time.37 (Emphasis ours)
Jurisdiction over the controversy 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 This was also the CA’s main basis in ruling that the matter was
As regards the issue of jurisdiction, the Court has determined an intra-corporate dispute that was within the trial courts’
not limited to these three. A corporation may have such other
that contrary to the ruling of the CA, it is the LA, and not the jurisdiction.
regular courts, which has the original jurisdiction over the subject officers as may be provided for by its by-laws like, but not limited
to, the vice-president, cashier, auditor or general manager. The
controversy. An intra-corporate controversy, which falls within
the jurisdiction of regular courts, has been regarded in its broad number of corporate officers is thus limited by law and by the The Court disagrees with the respondents and the CA. As may be
corporation’s by-laws."34 (Emphasis ours) gleaned from the aforequoted provision, the only officers who are
sense to pertain to disputes that involve any of the following
relationships: (1) between the corporation, partnership or specifically listed, and thus with offices that are created under
association and the public; (2) between the corporation, In Tabang v. NLRC,35 the Court also made the following Broadcom’s by-laws are the following: the President, Vice-
partnership or association and the state in so far as its franchise, pronouncement on the nature of corporate offices: President, Treasurer and Secretary. Although a blanket authority
permit or license to operate is concerned; (3) between the provides for the Board’s appointment of such other officers as it
corporation, partnership or association and its stockholders, may deem necessary and proper, the respondents failed to
It has been held that an "office" is created by the charter of the sufficiently establish that the position of AVP for Sales was
partners, members or officers; and (4) among the stockholders, corporation and the officer is elected by the directors and
partners or associates, themselves.29 Settled jurisprudence, created by virtue of an act of Broadcom’s board, and that Cosare
stockholders. On the other hand, an "employee" usually occupies was specifically elected or appointed to such position by the
however, qualifies that when the dispute involves a charge of no office and generally is employed not by action of the directors
illegal dismissal, the action may fall under the jurisdiction of the directors. No board resolutions to establish such facts form part
or stockholders but by the managing officer of the corporation of the case records. Further, it was held in Marc II Marketing,
LAs upon whose jurisdiction, as a rule, falls termination disputes who also determines the compensation to be paid to such
and claims for damages arising from employer-employee Inc. v. Joson38 that an enabling clause in a corporation’s by-laws
employee.36 (Citations omitted) empowering its board of directors to create additional officers,
relations as provided in Article 217 of the Labor Code. Consistent
with this jurisprudence, the mere fact that Cosare was a even with the subsequent passage of a board resolution to that
stockholder and an officer of Broadcom at the time the subject As may be deduced from the foregoing, there are two effect, cannot make such position a corporate office. The board of
controversy developed failed to necessarily make the case an circumstances which must concur in order for an individual to be directors has no power to create other corporate offices without
intra-corporate dispute. considered a corporate officer, as against an ordinary employee first amending the corporate by-laws so as to include therein the
or officer, namely: (1) the creation of the position is under the newly created corporate office.39 "To allow the creation of a
corporation’s charter or by-laws; and (2) the election of the corporate officer position by a simple inclusion in the corporate
In Matling Industrial and Commercial Corporation v. Coros, 30 the officer is by the directors or stockholders. It is only when the by-laws of an enabling clause empowering the board of directors
Court distinguished between a "regular employee" and a officer claiming to have been illegally dismissed is classified as to do so can result in the circumvention of that constitutionally
"corporate officer" for purposes of establishing the true nature of such corporate officer that the issue is deemed an intra-corporate well-protected right [of every employee to security of tenure]." 40
a dispute or complaint for illegal dismissal and determining which dispute which falls within the jurisdiction of the trial courts.
body has jurisdiction over it. Succinctly, it was explained that
"[t]he determination of whether the dismissed officer was a The CA’s heavy reliance on the contents of the General
regular employee or corporate officer unravels the conundrum" of Information Sheets41, which were submitted by the respondents

89
during the appeal proceedings and which plainly provided that unsupported by the case records, as even the General summoned to Arevalo’s office and was asked to tender his
Cosare was an "officer" of Broadcom, was clearly misplaced. The Information Sheet of 2009 referred to in the CA decision to immediate resignation from the company, in exchange for a
said documents could neither govern nor establish the nature of support such finding failed to provide such detail. financial assistance of ₱300,000.00.49 The directive was said to
the office held by Cosare and his appointment thereto. be founded on Arevalo’s choice to retain Abiog’s employment
Furthermore, although Cosare could indeed be classified as an All told, it is then evident that the CA erred in reversing the with the company.50 The respondents failed to refute these
officer as provided in the General Information Sheets, his position NLRC’s ruling that favored Cosare solely on the ground that the claims.
could only be deemed a regular office, and not a corporate office dispute was an intra-corporate controversy within the jurisdiction
as it is defined under the Corporation Code. Incidentally, the of the regular courts. Given the circumstances, the Court agrees with Cosare’s claim of
Court noticed that although the Corporate Secretary of constructive and illegal dismissal. "[C]onstructive dismissal
Broadcom, Atty. Efren L. Cordero, declared under oath the truth occurs when there is cessation of work because continued
of the matters set forth in the General Information Sheets, the The charge of constructive dismissal
employment is rendered impossible, unreasonable, or unlikely as
respondents failed to explain why the General Information Sheet when there is a demotion in rank or diminution in pay or when a
officially filed with the Securities and Exchange Commission in Towards a full resolution of the instant case, the Court finds it clear discrimination, insensibility, or disdain by an employer
2011 and submitted to the CA by the respondents still indicated appropriate to rule on the correctness of the NLRC’s ruling finding becomes unbearable to the employee leaving the latter with no
Cosare as an AVP for Sales, when among their defenses in the Cosare to have been illegally dismissed from employment. other option but to quit." 51 In Dimagan v. Dacworks United,
charge of illegal dismissal, they asserted that Cosare had severed Incorporated,52 it was explained:
his relationship with the corporation since the year 2009.
In filing his labor complaint, Cosare maintained that he was
constructively dismissed, citing among other circumstances the The test of constructive dismissal is whether a reasonable person
Finally, the mere fact that Cosare was a stockholder of Broadcom charges that were hurled and the suspension that was imposed in the employee’s position would have felt compelled to give up
at the time of the case’s filing did not necessarily make the action against him via Arevalo’s memo dated March 30, 2009. Even his position under the circumstances. It is an act amounting to
an intra- corporate controversy. "Not all conflicts between the prior to such charge, he claimed to have been subjected to dismissal but is made to appear as if it were not. Constructive
stockholders and the corporation are classified as intra-corporate. mental torture, having been locked out of his files and records dismissal is therefore a dismissal in disguise. The law recognizes
There are other facts to consider in determining whether the and disallowed use of his office computer and access to personal and resolves this situation in favor of employees in order to
dispute involves corporate matters as to consider them as intra- belongings.47 While Cosare attempted to furnish the respondents protect their rights and interests from the coercive acts of the
corporate controversies."42 Time and again, the Court has ruled with his reply to the charges, the latter refused to accept the employer.53 (Citation omitted)
that in determining the existence of an intra-corporate dispute, same on the ground that it was filed beyond the 48-hour period
the status or relationship of the parties and the nature of the which they provided in the memo.
question that is the subject of the controversy must be taken into It is clear from the cited circumstances that the respondents
account.43 Considering that the pending dispute particularly already rejected Cosare’s continued involvement with the
Cosare further referred to the circumstances that allegedly company. Even their refusal to accept the explanation which
relates to Cosare’s rights and obligations as a regular officer of
transpired subsequent to the service of the memo, particularly Cosare tried to tender on April 2, 2009 further evidenced the
Broadcom, instead of as a stockholder of the corporation, the the continued refusal of the respondents to allow Cosare’s entry
controversy cannot be deemed intra-corporate. This is consistent resolve to deny Cosare of the opportunity to be heard prior to
into the company’s premises. These incidents were cited in the any decision on the termination of his employment. The
with the "controversy test" explained by the Court in Reyes v. CA decision as follows:
Hon. RTC, Br. 142,44 to wit: respondents allegedly refused acceptance of the explanation as it
was filed beyond the mere 48-hour period which they granted to
On March 31, 2009, [Cosare] reported back to work again. He Cosare under the memo dated March 30, 2009. However, even
Under the nature of the controversy test, the incidents of that asked Villareal if he could retrieve his personal belongings, but this limitation was a flaw in the memo or notice to explain which
relationship must also be considered for the purpose of only further signified the respondents’ discrimination, disdain and
the latter said that x x x Arevalo directed her to deny his request,
ascertaining whether the controversy itself is intra-corporate. The so [Cosare] again waited at the receiving section of the office. On insensibility towards Cosare, apparently resorted to by the
controversy must not only be rooted in the existence of an intra- respondents in order to deny their employee of the opportunity
April 1, 2009, [Cosare] was not allowed to enter the office
corporate relationship, but must as well pertain to the premises. He was asked to just wait outside of the Tektite (PSE) to fully explain his defenses and ultimately, retain his
enforcement of the parties’ correlative rights and obligations employment. The Court emphasized in King of Kings Transport,
Towers, where [Broadcom] had its offices, for further instructions
under the Corporation Code and the internal and intra-corporate on how and when he could get his personal belongings. [Cosare] Inc. v. Mamac54 the standards to be observed by employers in
regulatory rules of the corporation. If the relationship and its complying with the service of notices prior to termination:
waited until 8 p.m. for instructions but none were given. Thus,
incidents are merely incidental to the controversy or if there will [Cosare] sought the assistance of the officials of Barangay San
still be conflict even if the relationship does not exist, then no
Antonio, Pasig who advised him to file a labor or replevin case to [T]he first written notice to be served on the employees should
intra-corporate controversy exists.45 (Citation omitted) recover his personal belongings. x x x.48 (Citation omitted) contain the specific causes or grounds for termination against
them, and a directive that the employees are given the
It bears mentioning that even the CA’s finding 46 that Cosare was opportunity to submit their written explanation within a
It is also worth mentioning that a few days before the issuance of
a director of Broadcom when the dispute commenced was the memo dated March 30, 2009, Cosare was allegedly reasonable period. "Reasonable opportunity" under the Omnibus

90
Rules means every kind of assistance that management must employee relationship manifested by some overt act.’" 57 Cosare’s 1. Rodolfo vs. People
accord to the employees to enable them to prepare adequately failure to report to work beginning April 1, 2009 was neither
for their defense. This should be construed as a period of at least voluntary nor indicative of an intention to sever his employment Petitioner was charged before the Regional Trial Court (RTC) of Makati
five (5) calendar days from receipt of the notice to give the with Broadcom. It was illogical to be requiring him to report for for illegal recruitment alleged to have been committed as follows:
employees an opportunity to study the accusation against them, work, and imputing fault when he failed to do so after he was
consult a union official or lawyer, gather data and evidence, and specifically denied access to all of the company’s assets. As
That in or about and during the period from August to September
decide on the defenses they will raise against the complaint. correctly observed by the NLRC:
1984, in Makati, Metro Manila, Philippines, and within the jurisdiction
Moreover, in order to enable the employees to intelligently
of this Honorable Court, the said accused representing herself to have
prepare their explanation and defenses, the notice should contain [T]he Respondent[s] had charged [Cosare] of abandoning his the capacity to contract, enlist and transport Filipino workers for
a detailed narration of the facts and circumstances that will serve employment beginning on April 1, 2009. However[,] the show- employment abroad, did then and there willfully and unlawfully, for a
as basis for the charge against the employees. A general cause letter dated March 3[0], 2009 (Annex "F", ibid) suspended fee, recruit and promise employment/job placement abroad to
description of the charge will not suffice. Lastly, the notice should [Cosare] from using not only the equipment but the "assets" of VILLAMOR ALCANTARA, NARCISO CORPUZ, 1 NECITAS R. FERRE,
specifically mention which company rules, if any, are violated Respondent [Broadcom]. This insults rational thinking because GERARDO H. TAPAWAN and JOVITO L. CAMA, without first securing
and/or which among the grounds under Art. 282 is being charged the Respondents tried to mislead us and make [it appear] that the required license or authority from the Ministry of Labor and
against the employees.55 (Citation omitted, underscoring ours, [Cosare] failed to report for work when they had in fact had [sic] Employment. 2
and emphasis supplied) placed him on suspension. x x x.58

After trial on the merits, Branch 61 of the Makati RTC rendered its
In sum, the respondents were already resolute on a severance of Following a finding of constructive dismissal, the Court finds no Judgment on the case, 3 the decretal portion of which reads:
their working relationship with Cosare, notwithstanding the facts cogent reason to modify the NLRC's monetary awards in Cosare's
which could have been established by his explanations and the favor. In Robinsons Galleria/Robinsons Supermarket Corporation
respondents’ full investigation on the matter. In addition to this, WHEREFORE, PREMISES ABOVE CONSIDERED, the Court finds the
v. Ranchez,59 the Court reiterated that an illegally or
the fact that no further investigation and final disposition accused ROSA C. RODOLFO as GUILTY of the offense of ILLEGAL
constructively dismissed employee is entitled to: (1) either
appeared to have been made by the respondents on Cosare’s RECRUITMENT and hereby sentences her [to] a penalty of
reinstatement, if viable, or separation pay, if reinstatement is no
case only negated the claim that they actually intended to first imprisonment of EIGHT YEARS  and to pay the costs. 4 (Underscoring
longer viable; and (2) backwages. 60 The award of exemplary
look into the matter before making a final determination as to the supplied)
damages was also justified given the NLRC's finding that the
guilt or innocence of their employee. This also manifested from respondents acted in bad faith and in a wanton, oppressive and
the fact that even before Cosare was required to present his side malevolent manner when they dismissed Cosare. It is also by In so imposing the penalty, the trial court took note of the fact that
on the charges of serious misconduct and willful breach of trust, reason of such bad faith that Arevalo was correctly declared while the information reflected the commission of illegal recruitment
he was summoned to Arevalo’s office and was asked to tender solidarily liable for the monetary awards. in large scale, only the complaint of the two of the five complainants
his immediate resignation in exchange for financial assistance. was proven.

WHEREFORE, the petition is GRANTED. The Decision dated

The clear intent of the respondents to find fault in Cosare was November 24, 2011 and Resolution dated March 26, 2012 of the On appeal, the Court of Appeals correctly synthesized the evidence
also manifested by their persistent accusation that Cosare Court of Appeals in CA-G.R. SP. No. 117356 are SET ASIDE. The presented by the parties as follows:
abandoned his post, allegedly signified by his failure to report to Decision dated August 24, 2010 of the National Labor Relations
work or file a leave of absence beginning April 1, 2009. This was Commission in favor of petitioner Raul C. Cosare is AFFIRMED. [The evidence for the prosecution] shows that sometime in August
even the subject of a memo 56 issued by Arevalo to Cosare on
and September 1984, accused-appellant approached private
April 14, 2009, asking him to explain his absence within 48 hours
SO ORDERED. complainants Necitas Ferre and Narciso Corpus individually
from the date of the memo. As the records clearly indicated,
and invited them to apply for overseas employment  in Dubai. The
however, Arevalo placed Cosare under suspension beginning
accused-appellant being their neighbor, private complainants agreed
March 30, 2009. The suspension covered access to any and all
and went to the former’s office. This office which bore the business
company files/records and the use of the assets of the company,
name "Bayside Manpower Export Specialist" was in a building situated
with warning that his failure to comply with the memo would be
at Bautista St. Buendia, Makati, Metro Manila. In that office, private
dealt with drastic management action. The charge of
complainants gave certain amounts to appellant for processing and
abandonment was inconsistent with this imposed suspension.
other fees. Ferre gave P1,000.00 as processing fee (Exhibit A) and
"Abandonment is the deliberate and unjustified refusal of an
another P4,000.00 (Exhibit B). Likewise, Corpus gave
employee to resume his employment. To constitute abandonment
appellant P7,000.00 (Exhibit D). Appellant then told private
of work, two elements must concur: ‘(1) the employee must have A. Recruitment and Placement of Workers RA 8042, as
complainants that they were scheduled to leave for Dubai on
failed to report for work or must have been absent without valid amended by RA 10022
September 8, 1984. However, private complainants and all the other
or justifiable reason; and (2) there must have been a clear
applicants were not able to depart on the said date as their employer
intention on the part of the employee to sever the employer-
91
allegedly did not arrive. Thus, their departure was rescheduled to Petitioner’s Motion for Reconsideration having been denied, 8 the than P100,000 or both such imprisonment and fine, at the discretion
September 23, but the result was the same. Suspecting that they present petition was filed, faulting the appellate court of the court;
were being hoodwinked, private complainants demanded of appellant
to return their money. Except for the refund of P1,000.00 to Ferre, I x x x x (Underscoring supplied)
appellant was not able to return private complainants’ money. Tired of
excuses, private complainants filed the present case for illegal
recruitment against the accused-appellant. x x x IN GIVING CREDENCE TO THE TESTIMONIES OF THE The elements of the offense of illegal recruitment, which must concur,
COMPLAINING WITNESSES, [AND] are: (1) that the offender has no valid license or authority required by
law to lawfully engage in recruitment and placement of workers; and
To prove that accused-appellant had no authority to recruit workers (2) that the offender undertakes any activity within the meaning of
for overseas employment, the prosecution presented Jose Valeriano, a II
recruitment and placement under Article 13(b), or any prohibited
Senior Overseas Employment Officer of the Philippine Overseas practices enumerated under Article 34 of the Labor Code. 13 If another
Employment Agency (POEA), who testified that accused-appellant was x x x IN FINDING THE PETITIONER-ACCUSED GUILTY WHEN THE element is present  that the accused commits the act against three
neither licensed nor authorized by the then Ministry of Labor and PROSECUTION FAILED TO PROVE HER GUILT BEYOND REASONABLE or more persons, individually or as a group, it becomes an illegal
Employment to recruit workers for overseas employment. DOUBT. 9 (Underscoring supplied) recruitment in a large scale. 14

For her defense, appellant denied ever approaching private Petitioner bewails the failure of the trial court and the Court of Article 13 (b) of the Labor Code defines "recruitment and placement"
complainants to recruit them for employment in Dubai. On the Appeals to credit the testimonies of her witnesses, her companion as "[a]ny act of canvassing, enlisting, contracting, transporting,
contrary, it was the private complainants who asked her help in Milagros Cuadra, and Eriberto C. Tabing who is an accountant-cashier utilizing, hiring or procuring workers, and includes referrals, contract
securing jobs abroad. As a good neighbor and friend, she brought the of the agency. services, promising or advertising for employment, locally or
private complainants to the Bayside Manpower Export Specialist abroad, whether for profit or not." (Underscoring supplied)
agency because she knew Florante Hinahon, 5 the owner of the said
Further, petitioner assails the trial court’s and the appellate court’s
agency. While accused-appellant admitted that she received money failure to consider that the provisional receipts she issued indicated
from the private complainants, she was quick to point out that she That the first element is present in the case at bar, there is no doubt.
that the amounts she collected from the private complainants were Jose Valeriano, Senior Overseas Employment Officer of the Philippine
received the same only in trust for delivery to the agency. She denied turned over to the agency through Minda Marcos and Florante
being part of the agency either as an owner or employee thereof. To Overseas Employment Administration, testified that the records of the
Hinahon. At any rate, she draws attention to People v. POEA do not show that petitioner is authorized to recruit workers for
corroborate appellant’s testimony, Milagros Cuadra, who was also an Señoron 10 wherein this Court held that the issuance or signing of
applicant and a companion of private complainants, testified that overseas employment. 15 A Certification to that effect was in fact
receipts for placement fees does not make a case for illegal issued by Hermogenes C. Mateo, Chief of the Licensing Division of
appellant did not recruit them. On the contrary, they were the ones recruitment. 11
who asked help from appellant. To further bolster the defense, POEA. 16
Eriberto C. Tabing, the accountant and cashier of the agency, testified
that appellant is not connected with the agency and that he saw The petition fails. Petitioner’s disclaimer of having engaged in recruitment activities from
appellant received money from the applicants but she turned them the very start does not persuade in light of the evidence for the
over to the agency through either Florantino Hinahon or Luzviminda Articles 38 and 39 of the Labor Code, the legal provisions applicable prosecution. In People v. Alvarez, this Court held:
Marcos. 6 (Emphasis and underscoring supplied) when the offense charged was committed, 12 provided:
Appellant denies that she engaged in acts of recruitment and
In light thereof, the appellate court affirmed the judgment of the trial ART. 38. Illegal Recruitment. – (a) Any recruitment activities, placement without first complying with the guidelines issued by the
court but modified the penalty imposed due to the trial court’s failure including the prohibited practices enumerated under Article 34 of this Department of Labor and Employment. She contends that she did not
to apply the Indeterminate Sentence Law. Code, to be undertaken by non-licensees or non-holders of authority possess any license for recruitment, because she never engaged in
shall be deemed illegal and punishable under Article 39 of this Code. x such activity.
The appellate court thus disposed: xx
We are not persuaded. In weighing contradictory declarations and
WHEREFORE, finding no merit in the appeal, this Court DISMISSES it Article 39. Penalties. – x x x x statements, greater weight must be given to the positive testimonies
and AFFIRMS the appealed Decision EXCEPT the penalty x x x which is of the prosecution witnesses than to the denial of the defendant.
hereby changed to five (5) years as minimum to seven (7) years as (c) Any person who is neither a licensee nor a holder of Article 38 (a) clearly shows that illegal recruitment is an offense that
maximum with perpetual disqualification from engaging in the is essentially committed by a non-licensee or non-holder of authority.
authority under this Title found violating any provision thereof or its
business of recruitment and placement of workers. 7 (Underscoring implementing rules and regulations shall, upon conviction thereof, A non-licensee means any person, corporation or entity to which the
supplied) labor secretary has not issued a valid license or authority to engage in
suffer the penalty of imprisonment of not less than four years nor
more than eight years or a fine of not less than  P20,000 nor more recruitment and placement; or whose license or authority has been
suspended, revoked or cancelled by the POEA or the labor secretary.

92
A license authorizes a person or an entity to operate a private A word on the penalty. Indeed, the trial court failed to apply the 2. People vs. Spouses Reichl
employment agency, while authority is given to those engaged in Indeterminate Sentence Law which also applies to offenses punished
recruitment and placement activities. by special laws. This is an appeal from the Joint Decision of the Regional Trial Court,
Batangas City in Criminal Case Nos. 6428, 6429, 6430, 6431, 6432,
xxxx Thus, Section 1 of Act No. 4103 (An Act to Provide for an 6433, 6434, 6435, 6436, 6437, 6438, 6439, 6528, 6529, 6530 and
Indeterminate Sentence and Parole for All Persons Convicted of 6531 finding accused-appellants, Spouses Karl Reichl and Yolanda
Certain Crimes by the Courts of the Philippine Islands; To Create A Gutierrez de Reichl guilty of five (5) counts of estafa and one (1)
That appellant in this case had been neither licensed nor authorized  to
Board of Indeterminate Sentence and to Provide Funds Therefor; and count of syndicated and large scale illegal recruitment.1
recruit workers for overseas employment was certified by Veneranda
C. Guerrero, officer-in-charge of the Licensing and Regulation Office; for Other Purposes) provides:
and Ma. Salome S. Mendoza, manager of the Licensing Branch – both In April 1993, eight (8) informations for syndicated and large scale
of the Philippine Overseas Employment Administration. Yet, as SECTION 1. Hereafter, in imposing a prison sentence for an offense illegal recruitment and eight (8) informations for estafa were filed
complainants convincingly proved, she recruited them for jobs in punished by the Revised Penal Code, or its amendments, the court against accused-appellants, spouses Karl and Yolanda Reichl, together
Taiwan. 17 (Italics in the original; underscoring supplied) shall sentence the accused to an indeterminate sentence the with Francisco Hernandez. Only the Reichl spouses were tried and
maximum term of which shall be that which, in view of the attending convicted by the trial court as Francisco Hernandez remained at large.

The second element is doubtless also present. The act of referral, circumstances, could be properly imposed under the rules of the said
which is included in recruitment, 18 is "the act of passing along or Code, and the minimum which shall be within the range of the penalty The evidence for the prosecution consisted of the testimonies of
forwarding of an applicant  for employment after an initial interview of next lower to that prescribed by the Code for the offense; and if the private complainants; a certification from the Philippine Overseas
a selected applicant for employment to a selected employer, offense is punished by any other law, the court shall sentence the Employment Administration (POEA) that Francisco Hernandez, Karl
placement officer or bureau." 19 Petitioner’s admission that she accused to an indeterminate sentence, the maximum term of which Reichl and Yolanda Gutierrez Reichl in their personal capacities were
brought private complainants to the agency whose owner she knows shall not exceed the maximum fixed by said law and the minimum neither licensed nor authorized by the POEA to recruit workers for
and her acceptance of fees including those for processing betrays her shall not be less than the minimum term prescribed by the same. (As overseas employment;2 the receipts for the payment made by private
guilt. amended by Act No. 4225) (Underscoring supplied) complainants; and two documents signed by the Reichl spouses where
they admitted that they promised to secure Austrian tourist visas for
While the penalty of imprisonment imposed by the appellate court is private complainants and that they would return all the expenses
That petitioner issued provisional receipts indicating that the amounts
within the prescribed penalty for the offense, its addition of "perpetual incurred by them if they are not able to leave by March 24,
she received from the private complainants were turned over to
disqualification from engaging in the business of recruitment and 1993,3 and where Karl Reichl pledged to refund to private
Luzviminda Marcos and Florante Hinahon does not free her from
placement of workers" is not part thereof. Such additional penalty complainants the total sum of P1,388,924.00 representing the
liability. For the act of recruitment may be "for profit or not." It is
must thus be stricken off. amounts they paid for the processing of their papers.4
sufficient that the accused "promises or offers for a fee employment"
to warrant conviction for illegal recruitment. 20 As the appellate court
stated: WHEREFORE, the petition is DENIED. The assailed Decision and Private complainant Narcisa Hernandez, a teacher, was first to testify
Resolution of the Court of Appeals are AFFIRMED with for the prosecution. She stated that Francisco Hernandez introduced
MODIFICATION in that the accessory penalty imposed by it her to the spouses Karl and Yolanda Reichl at the residence of a
x x x Sec. 13(b) of P.D. 442 [The Labor Code] does not require that
consisting of "perpetual disqualification from engaging in the business certain Hilarion Matira at Kumintang Ibaba, Batangas City. At the
the recruiter receives and keeps the placement money for himself or
of recruitment and placement of workers" is DELETED. time, she also saw the other applicants Melanie Bautista, Estela
herself. For as long as a person who has no license to engage in
Manalo, Edwin Coleng, Anicel Umahon, Analiza Perez and Maricel
recruitment of workers for overseas employment offers for a fee an
Matira. Karl and Yolanda Reichl told Narcisa that they could find her a
employment to two or more persons, then he or she is guilty of illegal Costs against petitioner.
job as domestic helper in Italy. They, however, required her to pay
recruitment. 21
the amount of P150,000.00 for the processing of her papers and
SO ORDERED. travel documents. She paid the fee in three installments. She paid the
Parenthetically, why petitioner accepted the payment of fees from the first installment of P50,000.00 on July 14, 1992, the second
private complainants when, in light of her claim that she merely installment of P25,000.00 on August 6, 1992 and the third in the
brought them to the agency, she could have advised them to directly amount of P75,000.00 on December 27, 1992. She gave the money to
pay the same to the agency, she proferred no explanation. Francisco Hernandez in the presence of the Reichl spouses at Matira's
residence. Francisco Hernandez issued a receipt for the first and
On petitioner’s reliance on Señoron, 22 true, this Court held that second installment5 but not for the third. Narcisa was scheduled to
issuance of receipts for placement fees does not make a case for leave on December 17, 1992 but was not able to do so. Karl Reichl
illegal recruitment. But it went on to state that it is "rather explained that she would get her transit visa to Italy in Austria, but
the undertaking of recruitment activities without the necessary license she could not yet leave for Austria because the hotels were fully
or authority" that makes a case for illegal recruitment. 23 booked at that time because of the Christmas season. Narcisa's

93
departure was again scheduled on January 5, 1993, but it still did not Private complainant Charito Balmes told a similar story when she were received by Francisco Hernandez who, in turn, remitted them to
push through. Narcisa stated that they went to Manila several times testified before the court. She said that Francisco Hernandez the Reichl spouses. Francisco Hernandez issued a receipt for the
supposedly to obtain a visa from the Austrian Embassy and Karl Reichl convinced her to apply for the job of domestic helper in Italy and payment. The Reichls promised to take care of Estela's papers and to
assured her that she would be able to leave once she gets her visa. required her to pay a fee of P150,000.00. He also asked her to secure a job for her abroad. The Reichls vowed to return the payment
The accused set the departure of Narcisa and that of the other prepare her passport and other papers to be used to secure a visa. On if they fail on their promise. As with the other applicants, Estela was
applicants several times but these proved to be empty promises. In November 25, 1992, she gave P25,000.00 to Francisco Hernandez. also not able to leave the country.15
March 1993, the applicants met with the three accused at the They proceeded to Kumintang Ibaba, Batangas City and Francisco
residence of private complainant Charito Balmes and asked them to Hernandez introduced her to his business partners, spouses Karl and The defense interposed denial and alibi.
refund the payment if they could not send them abroad. The meeting Yolanda Reichl. Francisco Hernandez turned over the payment to the
resulted in an agreement which was reduced into writing and signed spouses so that they could secure a visa for her. The Reichl spouses
by Karl Reichl. Mr. Reichl promised to ensure private complainants' promised her an overseas job. They said she and the other applicants Accused-appellant Karl Reichl, an Austrian citizen, claimed that he
departure by April, otherwise, they would return their payment.6 would leave on December 17, 1992. On December 11, 1992, Charito entered the Philippines on July 29, 1992. Prior to this date, he was in
paid the amount of P70,300.00 to Francisco Hernandez in the various places in Europe. He came to the country on July 29, 1992 to
presence of the Reichls. Francisco Hernandez again handed the money explore business opportunities in connection with the import and
Private complainant Leonora Perez also gave the following testimony: export of beer and sugar. He also planned to establish a tourist spot
In July 1992, her sister, Analiza Perez, introduced her to Francisco to the spouses. On February 16, 1993, Charito paid P20,000.00 to
Francisco Hernandez who delivered the same to the spouses. somewhere in Batangas. Upon his arrival, he and his wife, Yolanda
Hernandez at their residence in Dolor Subdivision, Batangas City. Reichl, stayed at the Manila Intercontinental Hotel. On August 3,
Francisco Hernandez convinced her to apply for a job in Italy. When Francisco Hernandez did not issue a receipt for the payment made by
Charito because he told her that he would not betray her trust. Like 1992, they moved to Manila Midtown Hotel. They stayed there until
she accepted the offer, Francisco Hernandez told her to August 26, 1992. After they left Manila Midtown Hotel, they went to
prepare P150,000.00 for the processing of her papers. In August the other applicants, Charito was not able to leave the country despite
the numerous promises made by the accused. They gave various another hotel in Quezon City. Karl Reichl returned to Vienna on
1992, Leonora, together with her sister and Francisco Hernandez, September 19, 1992.16
went to Ramada Hotel in Manila to meet with Karl and Yolanda Reichl. excuses for their failure to depart, until finally the Reichls told the
At said meeting, Leonora handed her payment of P50,000.00 to applicants that Karl Reichl had so many business transactions in the
Yolanda Reichl. Yolanda assured her that she would be able to work in Philippines that they would not be able to send them abroad and that Mr. Reichl stated that he first met Francisco Hernandez through a
Italy. Francisco Hernandez and the Reichl spouses told Leonora to they would refund their payment instead. Hence, they executed an certain Jimmy Pineda around August 1992 at Manila Midtown Hotel.
wait for about three weeks before she could leave. After three weeks, agreement which was signed by Karl Reichl and stating that they Francisco Hernandez was allegedly looking for a European equipment
Francisco Hernandez invited Leonora and the other applicants to the would return the amounts paid by the applicants. The accused, to be used for the quarrying operation of his friend. Before accepting
house of Hilarion Matira in Batangas City to discuss some matters. however, did not comply with their obligation. 9 the deal, he made some research on the background of the intended
Francisco Hernandez informed the applicants that their departure business. Realizing that said business would not be viable, Karl Reichl
would be postponed to December 17, 1992. December 17 came and Mrs. Elemenita Bautista, the mother of private complainant Melanie advised Francisco Hernandez to instead look for a second-hand
the applicants were still unable to leave as it was allegedly a holiday. Bautista, also took the witness stand. She stated that in May 1992, equipment from Taiwan or Japan. He never saw Francisco Hernandez
Yolanda and Karl Reichl nonetheless assured Leonora of employment Melanie applied for an overseas job through Francisco Hernandez. again until he left for Vienna in September 1992.17
as domestic helper in Italy with a monthly salary of $1,000.00. Francisco Hernandez told her to prepare P150,000.00 to be used for
Francisco Hernandez and the Reichl spouses promised the applicants the processing of her papers and plane ticket. On June 26, 1992, Karl Reichl returned to the Philippines on October 21, 1992. Francisco
that they would leave for Italy on January 5, 1993. Some time in Melanie made the initial payment of P50,000.00 to Francisco Hernandez allegedly approached him and sought his help in securing
January 1993, Francisco Hernandez went to the residence of Leonora Hernandez who was then accompanied by Karl and Yolanda Austrian visas purportedly for his relatives. Karl Reichl refused and
and collected the sum of P50,000.00 purportedly for the plane fare. Reichl.10 Upon receipt of the payment, Francisco Hernandez gave the told him that he was planning to stay permanently in the Philippines.
Francisco issued a receipt for the payment. When the applicants were money to Yolanda Reichl. Melanie made two other payments: one on On one occasion, Francisco Hernandez invited him to an excursion at
not able to leave on the designated date, Francisco Hernandez and August 6, 1992 in the amount of P25,000.00,11 and another on Sombrero Island. Francisco Hernandez told him that he would also
the spouses again made another promise. Tired of the recruiters' January 3, 1993 in the amount of P51,000.00.12 Three receipts were bring some of his relatives with him and he would introduce him to
unfulfilled promises, the applicants decided to withdraw their issued for the payments.13 them. There he met Narcisa Hernandez and Leonora Perez. Leonora
application. However, Karl Reichl constantly assured them that they Perez, together with Francisco Hernandez, later went to see Mr. Reichl
would land a job in Italy because he had connections in Vienna. The Rustico Manalo, the husband of private complainant Estela Abel de at the house of his in-laws at No. 4 Buenafe Road, Batangas City and
promised employment, however, never materialized. Thus, Karl Reichl Manalo, testified that his wife applied for the job of domestic helper asked him if he could help her obtain an Austrian visa. Karl Reichl,
signed a document stating that he would refund the payment made by abroad. In June 1992, Francisco Hernandez introduced them to Karl however, was firm on his refusal.18
the applicants plus interest and other expenses. The document was and Yolanda Reichl who were allegedly sending workers to Italy.
executed and signed at the house of one of the applicants, Charito Rustico and his wife prepared all the relevant documents, i.e., In his testimony before the trial court, Karl Reichl denied any
Balmes, at P. Zamora St., Batangas City.7 passport, police clearance and marriage contract, and paid a total knowledge about Francisco Hernandez's recruitment activities. He said
placement fee of P130,000.00.14 They paid P50,000.00 on June 5, that Francisco Hernandez merely told him that he wanted to help his
Janet Perez, Leonora's sister, corroborated the latter's testimony that 1992, P25,000.00 on August 8, 1992, and P55,000.00 on January 3, relatives go to Europe. He further denied that he promised private
she paid a total amount of P100,000.00 to the three accused.8 1993. The payments were made at the house of Hilarion Matira and
94
complainants that he would give them overseas employment. 19 As 2. In Criminal Case No. 6428, there being no mitigating or 3. The trial court erred in rendering as a matter of course an
regards the document where Mr. Reichl undertook to aggravating circumstance, to suffer the indeterminate sentence of Six automatic guilty verdict against accused-appellant for the crime of
pay P1,388,924.00 to private complainants, he claimed that he signed (6) Years of prision correctional, as minimum to Sixteen (16) Years of estafa after a guilty verdict in a separate crime for illegal recruitment.
said document under duress. Francisco Hernandez allegedly told him reclusion temporal, as maximum, and to indemnify the complainant It is submitted that conviction in the latter crime does not ipso facto
that private complainants would harm him and his family if he refused Narcisa Hernandez in the amount of P150,000.00; result in conviction in the former."22
to sign it. He signed the document as he felt he had no other option.20
3. In Criminal Case No. 6430, there being no mitigating or The appeal is bereft of merit.
Yolanda Gutierrez de Reichl corroborated the testimony of her aggravating circumstance, to suffer the indeterminate sentence of six
husband and denied the charges against her. She claimed that she (6) years of prision correctional as minimum to eleven (11) years of Article 38 of the Labor Code defines illegal recruitment as "any
was in Manila on the dates alleged in the various informations, thus, prision mayor, as maximum and to indemnify the complainant recruitment activities, including the prohibited practices enumerated
she could not have committed the acts charged therein. Yolanda Leonora Perez in the amount of P100,000.00; under Article 34 of (the Labor Code), to be undertaken by non-
Reichl further stated that she did not know of any reason why private licensees or non-holders of authority." The term "recruitment and
complainants filed these cases against her and her husband. She said 4. In Criminal Case No. 6432, there being no mitigating or placement" refers to any act of canvassing, enlisting, contracting,
that several persons were harassing her and pressuring her to pay aggravating circumstance, to suffer the indeterminate sentence of six transporting, utilizing, hiring or procuring workers, including referrals,
private complainants the sum of at least P50,000.00.21 (6) years of prision correctional as minimum to sixteen (16) years of contract services, promising or advertising for employment, locally or
reclusion temporal, as maximum and to indemnify the complainant abroad, whether for profit or not, provided that any person or entity
After assessing the evidence presented by the parties, the trial court Melanie Bautista in the amount of P150,000.00; which, in any manner, offers or promises for a fee employment to two
rendered a decision convicting accused-appellants of one (1) count of or more persons shall be deemed engaged in recruitment and
illegal recruitment in large scale and six (6) counts of estafa. The 5. In Criminal Case No. 6438, there being no mitigating or placement.23 The law imposes a higher penalty when the illegal
dispositive portion of the decision reads: aggravating circumstance, to suffer the indeterminate sentence of six recruitment is committed by a syndicate or in large scale as they are
(6) years of prision correctional as minimum to fourteen (14) years of considered an offense involving economic sabotage. Illegal
"WHEREFORE, judgment is hereby rendered finding the accused reclusion temporal as maximum and to indemnify the complainant recruitment is deemed committed by a syndicate if carried out by a
spouses KARL REICHL and YOLANDA GUTIERREZ REICHL - Estela Abel de Manalo in the amount of P130,000.00; group of three (3) or more persons conspiring and/or confederating
with one another in carrying out any unlawful or illegal transaction,
enterprise or scheme. It is deemed committed in large scale if
1. NOT GUILTY of the crime of syndicated and large-scale illegal 6. In Criminal Case No. 6530, there being no mitigating or committed against three (3) or more persons individually or as a
recruitment as charged in the above-mentioned Criminal Cases Nos. aggravating circumstance, to suffer the indeterminate sentence of six group.24
6435, 6437 and 6529; (6) years or prision correctional as minimum to thirteen (13) years of
reclusion temporal as maximum and to indemnify the complainant
Charito Balmes in the amount of P121,300.00; and In the case at bar, the prosecution was able to prove beyond
2. NOT GUILTY of the crime of estafa as charged in the above- reasonable doubt that accused-appellants engaged in activities that
mentioned Criminal Cases Nos. 6434, 6436 and 6528; fall within the definition of recruitment and placement under the Labor
7. To pay the costs. Code. The evidence on record shows that they promised overseas
3. GUILTY beyond reasonable doubt of the crime of syndicated and employment to private complainants and required them to prepare
large-scale illegal recruitment, as charged, in the above-mentioned SO ORDERED." the necessary documents and to pay the placement fee, although they
Criminal Cases Nos. 6429, 6431, 6433, 6439 and 6531; did not have any license to do so. There is illegal recruitment when
one who does not possess the necessary authority or license gives the
Accused-appellants appealed from the decision of the trial court. They
4. GUILTY beyond reasonable doubt of the crime of estafa, as raise the following errors: impression of having the ability to send a worker abroad.25
charged, in the above-mentioned Criminal Cases Nos. 6428, 6430,
6432, 6438 and 6530. Accused-appellants assert that they merely undertook to secure
"1. The trial court erred in finding accused-appellant Karl Reichl guilty
of the crimes of estafa and illegal recruitment committed by syndicate Austrian visas for private complainants, which act did not constitute
illegal recruitment. They cite the document marked at Exhibit "J"
The Court hereby imposes upon the accused-spouses KARL REICHL and in large scale based on the evidence presented by the prosecution
and YOLANDA GUTIERREZ REICHL the following sentences: which miserably failed to establish guilt beyond reasonable doubt. stating that they promised to obtain Austrian tourist visas for private
complainants. We are not convinced. Private complainants Narcisa
Hernandez, Leonora Perez and Charito Balmes categorically stated
1. For the 5 offenses, collectively, of syndicated and large-scale illegal 2. The trial court erred in convicting the accused-appellant of the that Karl and Yolanda Reichl told them that they would provide them
recruitment in Criminal Cases Nos. 6429, 6431, 6433, 6438 and 6531, crime of illegal recruitment on a large scale by cummulating five overseas employment and promised them that they would be able to
to suffer the penalty of life imprisonment, and to pay a fine of One separate cases of illegal recruitment each filed by a single private leave the country on a specified date. We do not see any reason to
Hundred Thousand Pesos (P100,000.00); complainant. doubt the truthfulness of their testimony. The defense has not shown
any ill motive for these witnesses to falsely testify against accused-

95
appellants if it were not true that they met with the Reichl spouses themselves gave assurances to private complainants that they would Philippine Currency, to said accused, which acts constitute a violation
and the latter represented themselves to have the capacity to secure seek employment for them in Italy. Francisco Hernandez remitted the of the said law.
gainful employment for them abroad. The minor lapses in the payments given by the applicants to the Reichl spouses and the latter
testimony of these witnesses pointed out by accused-appellants in undertook to process the applicants' papers. There being conspiracy, Contrary to Law."
their brief do not impair their credibility, especially since they each of the accused shall be equally liable for the acts of his co-
corroborate each other on the material points, i.e., that they met with accused even if he himself did not personally take part in its
the three accused several times, that the three accused promised to execution. Criminal Case No. 6433
give them overseas employment, and that they paid the
corresponding placement fee but were not able to leave the country. Accused-appellants argue that the trial court erred in convicting "That on or about June 26, 1992 and sometime prior and subsequent
It has been held that truth-telling witnesses are not always expected accused-appellants of illegal recruitment in large scale by thereto at Hilltop, Brgy. Kumintang Ibaba, Batangas City, Philippines
to give error-free testimonies considering the lapse of time and the cummulating the individual informations filed by private complainants. and within the jurisdiction of this Honorable Court, the above-named
treachery of human memory. 26 Moreover, it was shown that Karl The eight informations for illegal recruitment are worded as follows: accused, knowing fully well that they are non-licensees nor holders of
Reichl signed a document marked as Exhibit "C" where he promised to authority from the Department of Labor and Employment or any other
refund the payments given by private complainants for the processing authorized government entity, conspiring and confederating together,
of their papers. We are not inclined to believe Mr. Reichl's claim that Criminal Case No. 6429 did then and there, wilfully, unlawfully and feloniously engage in
he was forced by Francisco Hernandez to sign said document. There is syndicated and large scale recruitment and placement activities by
no showing, whether in his testimony or in that of his wife, that "That on or about July 14, 1992 and sometime prior and subsequent enlisting, contracting, procuring, offering and promising for a fee to
private complainants threatened to harm them if he did not sign the thereto at Hilltop, Brgy. Kumintang Ibaba, Batangas City, Philippines one Melanie Bautista y Dolor and to more than three other persons,
document. Mr. Reichl is an educated man and it cannot be said that and within the jurisdiction of this Honorable Court, the above-named job placement abroad, by reason of which said Melanie Bautista y
he did not understand the contents of the paper he was signing. When accused, knowing fully well that they are non-licensees nor holders of Dolor relying on these misrepresentations, paid and/or gave the
he affixed his signature thereon, he in effect acknowledged his authority from the Department of Labor and Employment or any other amount of ONE HUNDRED FIFTY THOUSAND (P150,000.00) PESOS,
obligation to ensure the departure of private complainants and to authorized government entity, conspiring and confederating together, Philippine Currency, to said accused, which acts constitute a violation
provide them gainful employment abroad. Such obligation arose from did then and there, wilfully, unlawfully and feloniously engage in of the said law.
the promise of overseas placement made by him and his co-accused syndicated and large scale recruitment and placement activities by
to private complainants. The admission made by accused-appellants enlisting, contracting, procuring, offering and promising for a fee to Contrary to Law."
in Exhibit "J" that they promised to obtain Austrian visas for private one Narcisa Autor de Hernandez and to more than three other
complainants does not negate the fact that they also promised to persons, job placement abroad, by reason of which said Narcisa Autor
procure for them overseas employment. In fact, in Exhibit "J", de Hernandez relying on these misrepresentations, paid and/or gave Criminal Case No. 6435
accused-appellants admitted that each of the private complainants the amount of ONE HUNDRED FIFTY THOUSAND (P150,000.00)
paid the amount of P50,000.00. However, in Exhibit "C", which was PESOS, Philippine Currency, to said accused, which acts constitute a "That on or about July 12, 1992 and sometime prior and subsequent
executed on a later date, accused-appellants promised to refund to violation of the said law. thereto at Hilltop, Brgy. Kumintang Ibaba, Batangas City, Philippines
each complainant an amount exceeding P150,000.00. This is an and within the jurisdiction of this Honorable Court, the above-named
acknowledgment that accused-appellants received payments from the accused, knowing fully well that they are non-licensees nor holders of
Contrary to Law."
complainants not only for securing visas but also for their placement authority from the Department of Labor and Employment or any other
abroad. authorized government entity, conspiring and confederating together,
Criminal Case No. 6431 did then and there, wilfully, unlawfully and feloniously engage in
Accused-appellants' defense of denial and alibi fail to impress us. The syndicated and large scale recruitment and placement activities by
acts of recruitment were committed from June 1992 until January "That on or about July 1992 and sometime prior and subsequent enlisting, contracting, procuring, offering and promising for a fee to
1993 in Batangas City. Karl Reichl was in Manila from July 29, 1992 thereto at Dolor Subdivision, Batangas City, Philippines and within the one Annaliza Perez y Atienza and to more than three other persons,
until September 19, 1992, and then he returned to the Philippines and jurisdiction of this Honorable Court, the above-named accused, job placement abroad, by reason of which said Annaliza Perez y
stayed in Batangas from October 21, 1992. Yolanda Reichl, on the knowing fully well that they are non-licensees nor holders of authority Atienza relying on these misrepresentations, paid and/or gave the
other hand, claimed that he was in Manila on the dates alleged in the from the Department of Labor and Employment or any other amount of ONE HUNDRED SIXTY THOUSAND (P160,000.00) PESOS,
various informations. It is of judicial notice that Batangas City is only authorized government entity, conspiring and confederating together, Philippine Currency, to said accused, which acts constitute a violation
a few hours' drive from Manila. Thus, even if the spouses were staying did then and there, wilfully, unlawfully and feloniously engage in of the said law.
in Manila, it does not prevent them from going to Batangas to engage syndicated and large scale recruitment and placement activities by
in their recruitment business. Furthermore, it appears that the three enlisting, contracting, procuring, offering and promising for a fee to Contrary to Law.
accused worked as a team and they conspired and cooperated with one Leonora Perez y Atienza and to more than three other persons,
each other in recruiting domestic helpers purportedly to be sent to job placement abroad, by reason of which said Leonora Perez y
Atienza relying on these misrepresentations, paid and/or gave the Criminal Case No. 6437
Italy. Francisco Hernandez introduced Karl and Yolanda Reichl to the
job applicants as his business partners. Karl and Yolanda Reichl amount of ONE HUNDRED THOUSAND (P100,000.00) PESOS,

96
"That on or about August 15, 1992 and sometime prior and enlisting, contracting, procuring, offering and promising for a fee to committed in large scale but also for illegal recruitment committed by
subsequent thereto at Hilltop, Brgy. Kumintang Ibaba, Batangas City, one Anicel Umahon y Delgado and to more than three other persons, a syndicate. Illegal recruitment is deemed committed by a syndicate if
Philippines and within the jurisdiction of this Honorable Court, the job placement abroad, by reason of which said Anicel Umahon y carried out by a group of three (3) or more persons conspiring and/or
above-named accused, knowing fully well that they are non-licensees Delgado relying on these misrepresentations, paid and/or gave the confederating with one another in carrying out any unlawful or illegal
nor holders of authority from the Department of Labor and amount of ONE HUNDRED THIRTY THOUSAND (P130,000.00) PESOS, transaction, enterprise or scheme defined under the first paragraph of
Employment or any other authorized government entity, conspiring Philippine Currency, to said accused, which acts constitute a violation Article 38 of the Labor Code. It has been shown that Karl Reichl,
and confederating together, did then and there, wilfully, unlawfully of the said law. Yolanda Reichl and Francisco Hernandez conspired with each other in
and feloniously engage in syndicated and large scale recruitment and convincing private complainants to apply for an overseas job and
placement activities by enlisting, contracting, procuring, offering and Contrary to Law." giving them the guaranty that they would be hired as domestic
promising for a fee to one Edwin Coling y Coling and to more than helpers in Italy although they were not licensed to do so. Thus, we
three other persons, job placement abroad, by reason of which said hold that accused-appellants should be held liable for illegal
Edwin Coling y Coling relying on these misrepresentations, paid Criminal Case No. 6531 recruitment committed by a syndicate which is also punishable by life
and/or gave the amount of ONE HUNDRED FIFTY THOUSAND imprisonment and a fine of one hundred thousand pesos
(P150,000.00) PESOS, Philippine Currency, to said accused, which "That on or about November 25, 1992 and sometime prior and (P100,000.00) under Article 39 of the Labor Code.
acts constitute a violation of the said law. subsequent thereto at No. 40 P. Zamora Street, Batangas City,
Philippines and within the jurisdiction of this Honorable Court, the Finally, we hold that the prosecution also proved the guilt of accused-
Contrary to Law." above-named accused, knowing fully well that they are non-licensees appellants for the crime of estafa. A person who is convicted of illegal
nor holders of authority from the Department of Labor and recruitment may, in addition, be convicted of estafa under Art. 315
Employment or any other authorized government entity, conspiring (2) of the Revised Penal Code provided the elements of estafa are
Criminal Case No. 6439 and confederating together, did then and there, wilfully, unlawfully present. Estafa under Article 315, paragraph 2 of the Revised Penal
and feloniously engage in syndicated and large scale recruitment and Code is committed by any person who defrauds another by using a
"That on or about June 5, 1992 and sometime prior and subsequent placement activities by enlisting, contracting, procuring, offering and fictitious name, or falsely pretends to possess power, influence,
thereto at Hilltop, Brgy. Kumintang Ibaba, Batangas City, Philippines promising for a fee to one Charito Balmes y Cantos and to more than qualifications, property, credit, agency, business or imaginary
and within the jurisdiction of this Honorable Court, the above-named three other persons, job placement abroad, by reason of which said transactions, or by means of similar deceits executed prior to or
accused, knowing fully well that they are non-licensees nor holders of Charito Balmes y Cantos relying on these misrepresentations, paid simultaneously with the commission of the fraud. The offended party
authority from the Department of Labor and Employment or any other and/or gave the amount of ONE HUNDRED TWENTY ONE THOUSAND must have relied on the false pretense, fraudulent act or fraudulent
authorized government entity, conspiring and confederating together, THREE HUNDRED PESOS (P121,300.00), Philippine Currency, to said means of the accused-appellant and as a result thereof, the offended
did then and there, wilfully, unlawfully and feloniously engage in accused, which acts constitute a violation of the said law. party suffered damages.29 It has been proved in this case that
syndicated and large scale recruitment and placement activities by accused-appellants represented themselves to private complainants to
enlisting, contracting, procuring, offering and promising for a fee to Contrary to Law." have the capacity to send domestic helpers to Italy, although they did
one Estela Abel de Manalo and to more than three other persons, job not have any authority or license. It is by this representation that they
placement abroad, by reason of which said Estela Abel de Manalo induced private complainants to pay a placement fee of P150,000.00.
relying on these misrepresentations, paid and/or gave the amount of We note that each information was filed by only one complainant. We
agree with accused-appellants that they could not be convicted for Such act clearly constitutes estafa under Article 315 (2) of the
ONE HUNDRED THIRTY THOUSAND (P130,000.00) PESOS, Philippine Revised Penal Code.
Currency, to said accused, which acts constitute a violation of the said illegal recruitment committed in large scale based on several
law. informations filed by only one complainant. The Court held in People
vs. Reyes:27 IN VIEW WHEREOF, the appeal is DISMISSED. The Decision
appealed from is hereby AFFIRMED.
Contrary to Law."
"x x x When the Labor Code speaks of illegal recruitment 'committed
against three (3) or more persons individually or as a group,' it must Cost against appellants.
Criminal Case No. 6529 be understood as referring to the number of complainants in each
case who are complainants therein, otherwise, prosecutions for single SO ORDERED.
"That on or about July 1992 and sometime prior and subsequent crimes of illegal recruitment can be cummulated to make out a case of
thereto at Brgy. Sta. Rita Karsada, Batangas City, Philippines and large scale illegal recruitment. In other words, a conviction for large
within the jurisdiction of this Honorable Court, the above-named scale illegal recruitment must be based on a finding in each case of
accused, knowing fully well that they are non-licensees nor holders of illegal recruitment of three or more persons whether individually or as
authority from the Department of Labor and Employment or any other a group."28
authorized government entity, conspiring and confederating together,
did then and there, wilfully, unlawfully and feloniously engage in This, however, does not serve to lower the penalty imposed upon
syndicated and large scale recruitment and placement activities by accused-appellants. The charge was not only for illegal recruitment

97
 Annex A-2 - Appendix 2 Annex A - Affidavit of Romas B. Saluria

Annex A-3 - Appendix 3-Crew Contract From the Answer, Rejoinder and Comment to Sur-Rejoinder filed by
respondent, the following were averred:
3. NFD vs. NLRC Annex B - Medical Certificate from the
First Aid Medical Office, Nagoya, Japan When complainant was treated in Japan, he was diagnosed to he
Before us is a petition for certiorari, seeking the nullification of the suffering from epilepsy and this finding was confirmed at St. Luke's
decision 1 of the National Labor Relations Commission (NLRC)  2 in a Annex B-1 - Doctor's Report and Account, Japan Hospital where he was sent by respondent for further treatment.
case involving a seaman's claim 3 for permanent total disability
benefits. The NLRC, in its assailed decision, ruled in favor of private Annex C - Demand letter dated May 18, 1988 Respondent argued that because he was declared fit to work on
respondent Romel Bearneza and granted him permanent total February 3, 1986 complainant was considered for possible deployment
disability benefits. The NLRC, in effect, reversed the Philippine Annex D - Reply of NFD Int'l dated May 24, 1988 but for reasons known only to him, complainant did not appear for
Overseas Employment Agency (POEA) which denied private interview.
respondent's said claim. 4 Annex D-1 - Letter to Atty. Lita Aglibut, August 20, 1986
He was found to be afflicted with "Schizophreniform Disorder" which
Although the POEA and the NLRC reached contrary conclusions, both Annex D-2 - Telex from AWAC, Inc. addressed to NFD International was allegedly diagnosed on September 25, 1986 at the Western
agree that the following facts are undisputed: Visayas Medical Center. Considering the length of time that
Annex D-3 - Letter to NFD Int'l to St. Luke's Hospital, November 14, complainant was declared fit to work on February 3, 1986 and his
The facts of the case as found by the POEA which we hereby adopt 1985 alleged consultation for "Schizophreniform Disorder" on September
are as follows: 25, 1986, respondent denied any responsibility for disability benefits.
Annex D-4 - Certification from Dr. Charles Harn of St. Luke's
"Complainant was hired by respondent as wiper on board M/S Wilnina, Hospital, November 21, 1985 which diagnosed Respondent further argued that the allegations in the complaint are
with a monthly salary of US$413.00 for a contract period of ten (10) complainant's case as Anxiety reaction with insomnia purely hearsay since they are merely based on the statements made
months commencing on February 15, 1985. On November 8, 1985, he and epilepsy, petit Mal, Mild by the father of complainant to counsel. The information stated
was mauled by four (4) unidentified persons on board the vessel and therein were not based on the personal knowledge of complainant's
was diagnosed to have contusion on the face and lumbar region with Annex D-5 - Certification from Dr. Harn, February 3, 1986 declaring father but were only relayed to him.
epilepsy. On November 12, 1985, he was again examined and complainant physically fit to resume work
diagnosed as having suspected epilepsy. Complainant was declared The following documents were submitted by respondent to bolster its
unfit for work and was repatriated. On February 3, 1986 complainant Annex E - Demand Letter dated January 9, 1989 stand:
was declared fit for work by his attending physician at St. Luke's
Hospital. However, for the period of September 25, 1986 to January Annex E-1 - Certification from Dr. Rene Seyan of Western Visayas
Annex 1 - Contract of Employment
1, 1987, he was confined for 98 days at the Western Visayas Medical Medical Center dated March 17, 1989
Center and was found to be suffering from "Schizophreniform
Disorder" which has become a total permanent disability. Pursuant Annex 2 - Certificate of Medical Examination
Annex P - Certification from Dr. Seyan of July 24, 1989 declaring
thereto, he is entitled to insurance benefits amounting to complainant's condition as permanent total disability
US$30,000.00 as provided in his contract. Annex 3 - Medical Certificate November 8, 1985 Nagoya, Japan
which found complainant with contusion on the face and
Sur-Rejoinder:
lumbar region and epilepsy but declared him fit to work
To support his complaint, the following documents were submitted by
with routine medications.
complainant in evidence: Annex A - Affidavit of Romeo Bearneza
Annex 4 - Doctor's Report and Account, November 8, 1985,
Complaint: Annex A-1 - Certification from Dr. Mauricio Madrona of Don Jose S. Yokohama, Japan
Nonfort Memorial Hospital March 27, 1990
Annex A - Employment Contract Annex 5 - Doctor's Report and Account, November 12, 1985,
Annex B - Certification from Dr. Seyan dated February 13, 1990 Yokohama, Japan, which declared complainant unfit and
Annex A-1 - Application and Agreement recommended for repatriation because epilepsy was
for monthly allotment Supplement to Sur-Rejoinder: suspected.

98
Annex 6 - Letter of NFD to St. Luke's Hospital, November 14, "Schizophreniform Disorder," on the other hand, is a kind of mental when complainant was discharged in Japan, he was confirmed to be
1985 disorder characterized by a "split mind." It has no one single cause suffering from epilepsy as a result of his mauling. This fact was
but it has been agreed by men knowledgeable in the filed ( sic) that it confirmed by Dr. Charles Harn of St. Luke's Hospital who treated
Annex 7 - Certification of Dr. Charles Harn of SLH dated is a product of the interplay of biology, psychology and culture, just as complainant upon his arrival in the Philippines. Although complainant
November 21, 1985 which was found complainant to be innormal (sic) personality. This disorder however runs in the family. was found to be fit to resume work on February 3, 1986 and
suffering from Anxiety reaction with Insomnia and Family members of a schizophrenic person are more likely to develop complainant was diagnosed to be afflicted with schizophreniform
epilepsy Petit Mal, Mild. this disorder. disorder on September 25, 1986, POEA has no factual basis when it
ruled that epilepsy does not cause Schizophreniform Disorder.
Annex 8 - Certification from Dr. Harn's, February 3, 1986 which From the foregoing, it is evident that the illness was acquired by
diagnosed complainant as suffering from anxiety complainant after the expiration of his contract and after he was We agree with the complainant that the finding of epilepsy does not
reactions with insomnia but declared him fit to resume declared fit to resume work by his attending physician. 6 obviate its development into schizophreniform disorder, which is a
work permanent total disability. We take into consideration the letter of Dr.
The POEA having ruled to dismiss his complaint for permanent total Rene Gigato Seyan, the psychiatrist who treated the complainant,
Annex 9 - Letter from Dr. Harn to respondent, May 26, 1988." 5 disability benefits, petitioner appealed to the NLRC. The NLRC, relying who presented a medical opinion on epilepsy and schizophreniform
on the same findings of fact established by the POEA, however, disorder and we quote some pertinent portions.
The POEA, addressing the sole issue of whether or not private reached a different conclusion. The NLRC, unlike the POEA, viewed the
respondent is entitled to permanent disability benefits, ruled in this medical declaration of private respondent's fitness for work in "According to the book Synopsis of Psychiatry 5th edition by Harold J.
wise: February, 1986 as an inconclusive and limited finding. First, that Kaplan, M.D. and Benjamin J. Saddock, M.D. pages 209-212 in its
finding was not a result of a mental examination. Secondly, petitioner topic about epilepsy clearly states that psychiatric problems are
The only issue submitted for our consideration is whether complainant does not deny that private respondent is indeed afflicted with common in patients with epilepsy and so constitute an important
is entitled to permanent total disability benefits in the amount of schizophrenia now and has been so afflicted since it was first mental health problem. . . .
US$30,000.00. diagnosed in September, 1986. Thirdly, no evidence was presented by
petitioner to show that epilepsy does not develop to schizophrenia. To You also asked whether epilepsy maybe produced by a variety of
the contrary, the NLRC cited medical opinions to the effect that pathologic states and introxications such as head trauma, brain
We rule in the negative. When complainant was discharged in Japan,
psychiatric problems are common in patients with epilepsy. The NLRC tumor, cerebrovascular accidents, intro cravial infections, uremia,
he was suspected to be suffering from epilepsy. This is evidenced by
explained its decision to grant disability benefits to private hypoglycernia, hypocalcemia and overhydration. If the patient suffers
the Medical Certificates issued by the attending physicians in Japan on
respondent, in this manner: head trauma secondary to mauling, then it could be the possible
November 8, 1985 and November 12, 1985. . . . . . This finding was
confirmed by Dr. Charles Harn of St. Luke's Hospital who treated cause of his epilepsy. . . ."
complainant. . . . . . . On February 4, 1986, complainant was found to It is undisputed that complainant was insured for U.S. $30,000.00 in
be fit to resume work. case of 100% disability during his contractual employment. Records Evidences on record will show therefore that complainant was mauled
also show that at the time of the filing of the complaint, complainant during his course of employment which resulted into epilepsy and
was suffering from Schizophreniform Disorder. Complainant is now later developed into Schizophreniform Disorder, which is considered
On September 25, 1986, complainant was diagnosed to be afflicted
unfit to work due to his illness and considered suffering from total total permanent disability. Under his contract of employment,
with "Schizophreniform Disorder." This conclusion was reached after 7
permanent disability. The Supreme Court in the case of Abaya complainant is entitled to receive the insurance benefits of U.S.
months, more or less, from the date complainant was declared fit to
Jr. v. ECC, 176 SCRA 507 ruled that permanent total disability means $30,000.00. In disability compensation, it is not the injury which is
work. This disability is entirely different and distinct from his previous
disablement of an employee to earn wages in the same kind of work, compensated, but rather it is the incapacity to work resulting in the
findings, i.e., epilepsy. Epilepsy certainly does not cause
or work of a similar nature that he was trained for or accustomed to impairment of one's earning capacity. (Orlino v. Employees
"Schizophreniform Disorder."
perform, or any other kind of work which a person of his mentality Commission et. al. G.R 85015, 29 March 90 En Banc Minute
and attainment could do. Likewise in the cave of Orlino v. ECC, G.R Resolutions, Martinez page 294) 7
It is a chronic brain disorder characterized by repeated conclusions or No. L85015, 29 March, 1990, the Supreme Court ruled that a person
seizures. The seizures are a result of underlying brain damage, as is considered permanently and totally disabled to work when he was
opposed to those caused by adverse drug reactions. . . . . incapacitated or disabled to perform any substantial amount of labor Aggrieved by the foregoing ruling of the NLRC, petitioner has come to
in the line of work he was formerly engaged or any other kind of work us seeking its nullification on the ground that the NLRC, in rendering
to which he could be assigned. the herein assailed decision, acted in grave abuse of discretion
Studies show that although epilepsy is not inherited, predisposition to
amounting to lack or excess of jurisdiction.
the disorder is a hereditary trait responsible for some of the idiopathic
cases (those in which no organic cause is found. . . . . Funk and Evidences prevented by complainant has proven that complainant was
Wagnalls New Encyclopedia, Volume 9, 1986 Edition, p. 320. not able to resume work since November 8, 1985 when he was The petition is utterly bereft of merit.
mauled by unidentified persons in the vessel of the respondent where
he was working in Yokohama, Japan. It is undisputed, however, that

99
Petitioner mainly contends that private respondent's ailment was Rantes doesn't agree with the amount sent to [her] Private
acquired after the expiration of his contract, that is, after he was respondent further claimed that since his wife did not "agree with" the
declared fit to resume work by his attending physician. Respondent's amount given to her as 'an allotment for the 3-month period (of April,
refutation of this argument is to the effect that the employment May and June 1984), he was entitled to recover the additional US$
contract did not expire; rather, the contract could no longer be 1,500.00 "as mandated under the Compromise Agreement which was
performed by private respondent because he was mauled within the the basis of the decision of the Dubai Civil Court. 3 As evidence of this
vessel, as a result of which he suffered contusion on the face and foreign award, private respondent submitted what purports to be an
lumbar region and became afflicted with epilepsy. Private "original copy (sic) of the decision" of the Dubai court written in Arabic
respondent's epilepsy worsened into schizophrenia, thereby script and language, With a copy of an English translation by an
permanently preventing private respondent from performing his job unidentified translator and a copy of a transmittal letter dated 23
and earning a livelihood for himself and his family. Petitioner makes a September 1984 signed by one Mohd Bin Saleh "Honorary Consul for
mountain out of the contention that private respondent was declared 4. Pacific vs. NLRC Philippines." The full texts of the purported English translation of the
fit to work after his repatriation. No mental examination of Dubai award and of the transmittal letter are set out in the margin. 4
respondent, however, was shown to have been conducted in the Sometime in March 1984, private respondent Teodoro Rances was
course of his physical examination in February, 1986. Thus, there is engaged by petitioner Pascor as Radio Operator of a vessel belonging
In its answer filed on 11 December 1985, petitioner Pascor made four
no medical finding as to private respondent's mental fitness to resume to Pascor's foreign principal, the Gulf-East Ship Management Limited.
principal arguments: that the copy of the Dubai decision relied upon
work. Furthermore, petitioner has not presented before the Labor Four (4) months later, and after having been transferred from one
by private respondent could not be considered as evidence, not
Arbiter and the NLRC sufficient medical evidence to the effect that vessel to another four times for misbehaviour and inability to get
having been properly authenticated; that Pascor was not a party to
schizophrenia has definitively identified causes and that epilepsy is along with officers and crew members of each of the vessels, the
the Dubai court proceedings; that the POEA had no jurisdiction over
and cannot be one of them. In other words, petitioner miserably failed foreign principal terminated the services of private respondent Rances
cases for the enforcement of foreign judgments; and that the claim
to negate the causal confluence of the mauling of private respondent citing the latter's poor and incorrigible work attitude and incitement of
had already been resolved in POEA Case No: M-84-09-848, having
during his employment with petitioner, the contusions he suffered, the others to insubordination. 1
been there dismissed as a counterclaim.
epilepsy caused by the mauling and the schizophrenia which
subsequently developed, as the principal factor in the permanent total Petitioner Pascor filed a complaint against private respondent with the
disability of private respondent. In a decision dated 14 April 1986, the POEA held petitioner Pascor
Philippine Overseas Employment Administration tion (POEA) for acts
liable to pay private respondent Rances the amount of US$ 1,500.00
unbecoming a marine officer and for, character assassination," which
"at the prevailing rate of exchange at the time of payment." This
Strict rules of evidence, it must be remembered, are not applicable in case was docketed as POEA Case No: M-84-09-848. Private
decision was served on petitioner's counsel on 18 April 1986, which
claims for compensation and disability benefits. 8 Private respondent respondent denied the charges set out in the complaint and by way of
counsel filed a 'Memorandum on Appeal and/or Motion for
having substantially established the causative circumstances leading counterclaim demanded an amount of US$ 1,500.00 which a court in
Reconsideration" on 29 April 1986.
to his permanent total disability to have transpired during his Dubai had, he contended, awarded in his favor against petitioner's
employment, we find the NLRC to have acted in the exercise of its foreign principal. In due course, on 4 September 1985, the POEA
sound discretion in awarding permanent total disability benefits to found private respondent liable for inciting another officer or seaman Private respondent moved the next day for dismissal of the appeal
private respondent. Probability and not the ultimate degree of to insubordination and challenging a superior officer to a fist fight and and for issuance of a writ of execution, upon the ground that
certainty is the test of proof in compensation proceedings. 9 imposed six (6) months suspension for each offense or a total of petitioner's appeal had been filed one (1) day beyond the
twelve (12) months suspension, with a warning that commission of reglementary period and that, consequently, the POEA decision had
the same or similar offense in the future would be met with a stiffer become final and executory.
WHEREFORE, the instant petition is DISMISSED.
disciplinary sanction. The POEA decision passed over sub silentio the
counterclaim of private respondent. 2 Petitioner opposed dismissal of its appeal and issuance of a writ of
execution, arguing that the one (1) day delay in filing its
On 10 October 1985, private respondent filed a complaint against Memorandum on Appeal had been occasioned by an excusable
petitioner, docketed as POEA Case No: M-85-10-0814 and entitled mistake.
"Teodoro Rances v. Pacific Asia Overseas Shipping Corporation." In
this complaint, he sought to carry out and enforce the same award On 20 May 1986, the POEA issued an order denying petitioner's
obtained by him in Dubai allegedly against Pascor's foreign principal appeal for having been filed out of time. Petitioner moved for
which he had pleaded as a counterclaim in POEA Case No: M-84-09- reconsideration, paid the docket fee and posted the required
848. Private respondent claimed that be had filed an action in the supercedes bond in connection with its appeal.
Dubai court for US$ 9,364.89, which claim was compromised by the
parties for US$ 5,500.00 plus "a return ticket to (private
On 29 May 1986, the POEA denied private respondent's Motion for a
respondent's) country," with the proviso that "the opponent" would
Writ of Execution and elevated the case to the NLRC.
pay "to the claimant" US$ 1,500.00 'in case the wife of the claimant
100
On 14 August 1986, public respondent NLRC denied petitioner's respondent NLRC stating that she had read to receive the We turn to the merits of the Petition. An examination of the complaint
appeal as flied out of time. Petitioner's Motion for Reconsideration was Memorandum on Appeal on or about 4:15 P.M., 28 April 1986, and of the Manifestation and Motion filed by respondent Rances in
similarly denied. because the Memorandum was supposed to be filed with the POEA POEA Case No: M-85-08-14, shows that the cause of action pleaded
office in Ortigas and not with the NLRC in Intramuros. by respondent Rances was enforcement of the decision rendered by c.
Dubai Court which purported to award him, among other things, an
In the present Petition for certiorari and mandamus with prayer for additional amount of US$ 1,500.00 under certain circumstances. In
Preliminary Injunction and Temporary Restraint ' 9 Order, Pascor The brevity of the delay in filing an appeal is not, of course, by itself a the complaint dated 23 October 1985, respondent Rances stated:
urges that public respondent NLRC acted with grave abuse of sufficient basis for giving due course to the appeal. In the present
discretion or in excess of its jurisdiction in denying its appeal and case, however, the factual circumstances combine with the legal Details of cause of action (Why are you complaining?) (To include
motion for reconsideration. merits of the case urged by the petitioner to move us to the place and date of occurrence of case of action and amount of claim, if
conviction that respondent NLRC should have recognized and heeded any) P 2,295 US$ salary for three (3) months stated in the
the requirements of orderly procedure and substantial justice which compromise of 1,500 TJS$ total of 2,795.50 US$ [as] per decision
We think petitioner's contention has merit. The record shows, not an
are at stake in the present case by allowing the appeal. In Siguenza from Civil Court of Dubai U.A.E. 7
intent to delay the proceedings but rather a genuine and substantial
effort on the part of petitioner Pascor to file, in a timely manner, its v. Court of appeals, 5 the Court stressed that the right to appeal
The Motion/Manifestation dated 3 December 1985 filed by respondent
Memorandum on Appeal which, in the circumstances of this case, should not be lightly disregarded by a stringent application of rules of
Rances may be quoted in extension
should not have been disregarded by respondent NLRC. The procedure especially where the appeal is on its face meritorious and
circumstances surrounding the one (1) day delay in the filing of the interests of substantial justice would be served by permitting the 1. Originally, complainant's claim was US$ 9,364.89 which he filed
petitioner's Memorandum on Appeal are summed up by petitioner in appeal: with the Dubai Court for adjudication.
the following terms:
xxx xxx xxx
In the case of Castro v. Court of Appeals (132
30.1. Mr. Ruben de la Cruz, who was newly hired SCRA 782), we stressed the importance and real 2. The US$ 9,364.89 claim was compromised by the court in a
as messenger in the law firm representing the purpose of the remedy of appeal and ruled: decision dated September 12, 1984. Xerox copy of the decision is
hereto attached as Annex "B" and the authentication as Annex "B-l'
petitioner was tasked with the delivery of the
and made an integral part thereof.
memorandum on appeal in the afternoon of April An appeal is an essential part of our judicial system. We have advised
28, 1986 (the last day for filing the same). the courts to proceed with caution so as not to deprive a party of the 3. Pertinent portion of the decision referred to above reads as follows:
right to appeal (National Waterworks and Sewerage Authority v.
Municipality of Libmanan, 97 SCRA 138) and instructed that every Both parties came to a decision that the opponent would pay to the
30.2. When Mr. de la Cruz read the caption of the
party-litigant should be afforded the amplest opportunity for the claimant the amount of Five Thousand & Five Hundred dollars for the
memorandum, he noted that the same is proper and just disposition of his cause, freed from the constraints of withdrawal of the claimant and providing him return ticket to his
addressed to the respondent NLRC and he technicalities (A. One Feeds, Inc. v. Court of Appeals, 100 SCRA country. The opponent declared that he would pay One Thousand &
erroneously concluded that it should be filed with 590).<äre||anº•1àw> Five Hundred Dollars to the opponent in case the wife of the claimant
the offices of the NLRC in Intramuros, Manila. doesn't agree with the amount sent to.
The rules of procedure are not to be applied in a very rigid and
technical sense. The rules of procedure are used only to help secure 4. During the hearing leading to the Compromise, I emphasized that
30.3. Wen Mr. de la Cruz presented petitioner's
not override substantial justice. (Gregorio v. Court of Appeals [72 the allotment I was giving my wife was US$ 765.00 per month and at
Appeal at the docket section of respondent NLRC,
SCRA 1201). Therefore, we ruled in Republic v. Court of Appeals (83 the time the case was filed the allotment was already 3 months in
he was advised that the same should be filed with SCRA 453) that a six-day delay in the perfection of the appeal does arrears which already amounted to US$ 2,295.00.
the offices of the POEA in Ortigas, San Juan, Metro not warrant its dismissal. And again in Ramos v. Bagasao, 96 SCRA
Manila. 396, this Court held that the delay in four (4) days in filing a notice of 5. The amount sent my wife which is only P 13,393.45 through
appeal and a notion for extension of time to file a record on appeal PASCOR and confirmed by a Certification of the Philippine National
30.4. Mr. de la Cruz upon being apprised of his can be excused on the basis of equity. Bank, Dagupan City Branch, hereto attached as Annex 'C' is definitely
error immediately proceeded to the offices of the very meager compared to the exchange value of US$ 2,295.00;
We should emphasize, however, that we have allowed the of an
POEA in order to have petitioner's (PASCOR's)
appeal in some cases where a sent application of the rules would have 6. My wife certainly did not agree and cannot agree or admit that only
appeal received but unfortunately, by the time he denied it only when to do so would serve the demands of substantial P 13,393.45 will be given her as an allotment for the 3-month period;
arrived thereat, the POEA office had already closed justice and in the exercise of our equity junction. hence, urder the Compromise Agreement, we are entitled to recover
for the day. Thus, the appeal was filed the the additional US$ 1,500.00;
following day. In the case at bar, the petitioner's delay in their record on
appeal should not be strictly construed as to deprive them of the right 7. The agreement insofar as the additional remittance to my wife of
to appeal especially since on its face the appeal appears to be US$1,500.00 is reasonable in that adding the same to the P13,393.45
To Support the above explanation, in addition to an affidavit executed
impressed appeal especially with merit. 6 my wife received would sum up to US$2,295.00 corresponding to the
by Mr. Ruben de la Cruz, petitioner submitted a certification dated 2
accumulated 3 month allotment due my wife.
May 1986 executed by Evelyn G. Sauza, receive . receiving clerk of

101
WHEREFORE, premises considered, it is respectfully prayed of this before the regular courts. The POEA is not a court; it is an translation is legally defective. Section 34 of Rule 132 of the Revised
Honorable Office to — administrative agency exercising, inter alia, adjudicatory or quasi- Rules of Court requires that documents written in a non-official
judicial functions. Neither the rules of procedure nor the rules of language hke Arabic) shall not be admitted as evidence unless
Cause or require respondent to remit and/or pay the undersigned or
evidence which are mandatorily applicable in proceedings before accompanied by a translation into English or Spanish or
his wife of the amount of US$ 1,500.00 as mandated under the
courts, are observed in proceedings before the POEA. 10 Filipino. 12 In Ahag v. Cabiling, 13 Mr. Justice Moreland elaborated on
Compromise Agreement which was the basis of the decision of the
the need for a translation of a document written in a language other
Dubai Civil Court. 8
Even assuming (arguendo, merely) that the POEA has jurisdiction to than an official language:
It should be noted that respondent Rances submitted to the POEA recognize and enforce a foreign judgment, still respondent Rances
only the Dubai Court decision; he did not submit any copy of the cannot rely upon the Dubai decision. The Dubai decision was not ... Moreover, when there is presented in evidence
'Compromise Agreement' (assuming that to have been reduced to properly proved before the POEA. The Dubai decision purports to be an exhibit written in any language other than
writing) which he presumably believed to have been absorbed and
the written act or record of an act of an official body or tribunal of a Spanish, if there is an appeal, that exhibit should
superseded by the Dubai decision.
foreign country, and therefore a public writing under Section 20 (a) of be translated into Spanish by the official
That the cause of action set out in respondent Rances' complaint was Rule 132 of the Revised Rules of Court. Sections 25 and 26 of Rules interpreter of the court, or a translation should be
enforcement of the Dubai decision is further, indicated in the decision 132 prescribe the manner of proving a public of official record of a agreed upon by the parties, and both original and
dated 14 April 1986 rendered by the POEA. This decision provided in foreign country in the following terms: translation sent to this court. In the case before us,
part as follows: there is an untranslated exhibit written in the
Sec. 25. Proof of public or official record. — An official record or an Visayan language. 14
Complainant alleged that his original claim of US$ 9,364.89 for unpaid
entry therein, when admissible for any purpose, may be evidenced by
salaries, termination pay and travel expenses was filed in Dubai. In a
an official publication thereof or by a copy attested by the officer In Teng Giok Yan v. Hon. Court of Appeals, et al., 15 the Court,
decision rendered by the Dubai Court, his claim was compromised in
having the legal custody of the record, or by his deputy, and speaking through Mr. Justice Montemayor, had occasion to stress the
the amount of US$ 5,500.00 plus return plane ticket. The amount of
accompanied. if the record is not kept in the Philippines, with a importance of having a translation made by the court interpreter who
US$ 1,500.00 will be paid to his wife if she does not agree with the
certificate that such officer has the custody. If the office in which the must, of course, be of recognized competence both in the language in
amount sent to her. The three (3) months unremitted allotments
record is kept is in a foreign country, the certificate maybe be
refers to the months of April, May and June 1984. As evidenced by which the document involved is written and in English. The Court said:
made by a secretary of embassy or litigation, consul general, consul,
the Allotment Shp, respondent approved the authority given by
vice consul, or consular agent or by any officer in the foreign service
complainant stating that the amount of US$ 765.00 be remitted to his
of the Philippines stationed in the foreign country in which the record [t]he trial court was certainly not bound by the
wife belong with the month of April 1984. The amount remitted to his
is kept, and authenticated by the seal of his office. translation given by the Chinese Embassy, specially
wife for allotment cover the three (3) month period was only P
in the absence of a delete assurance that said
13,393.45. The basis of complainant's claim is the reservation in the Sec. 26. What attestation of copy must state. — Whenever a copy of a translation was correct and that it was made by the
decision of the Dubai Court which states that in case the wife of the writing is attend for the purpose of evidence, the attestation must
claimant does not agree with the amount sent to her, the opponent Embassy Adviser himself. On the other hand, the
state, in substance, that the copy is a correct copy of the original, or a
shall pay US$ l,500.00. 9 translation made by the court interpreter is official
specific part thereof, as the case may be. The attestation must be
and reliable not only because of the recognized
under the official seal of the attesting officer, if there be any, or if he
Clearly, therefore, respondent Rances' action was for enforcement of ability of said interpreter to translate Chinese
be the clerk of a court having a seal, under the seal of such court.
the Dubai decision to the extent that such decision provided for characters into English, but also because said
(Emphasis supplied)
payment of an additional amount of US$1,500.00 and that respondent interpreter was under the direct supervision and
relied upon such decision. control of the court. .... 16
In the instant case, respondent Rances failed to submit any
attestation issued by the proper Dubai official having legal custody of
Petitioner argues vigorously that the POEA had no authority and the original of the decision of the Dubai Court that the copy presented In the instant case, there is no showing of who effected the English
jurisdiction to enforce the judgment of a foreign court. Under Section by said respondent is a faithful copy of the original decision, which translation of the Dubai decision which respondent Rances submitted
1, Rule 1, Book VI of the POEA Rules and Regulations, it will be seen attestation must furthermore be authenticated by a Philippine to the POEA. The English translation does not purport to have been
that the POEA has jurisdiction to decide all cases 'involving employer Consular Officer having jurisdiction in Dubai. The transmittal letter, made by an official court interpreter of the Philippine Government nor
employee relations arising out of or by virtue of any law or contract dated 23 September 1984, signed by Mohd Bin Saleh, Honorary of the Dubai Government. Neither the Identity of the translator nor
involving Filipino workers for overseas employment, including Consul for Philippines' does not comply with the requirements of his competence in both the Arabic and English languages has been
seamen." Respondent Rances, however, relied not upon the employer either the attestation under Section 26 nor the authentication shown. The English translation submitted by the respondent is not
- employee relationship between himself and petitioner corporation envisaged by Section 25. 11 sworn to as an accurate translation of the original decision in Arabic.
and the latter's foreign principal, but rather upon the judgment Neither has that translation been agreed upon by the parties as a true
obtained by him from the Dubai Court which had apparently already and faithful one.
There is another problem in respect of the admissibility in evidence of
been partially satisfied by payment to respondent Rances of US$ the Dubai decision. The Dubai decision is accompanied by a document
5,500.00. The POEA has no jurisdiction to hear and decide a claim for which purports to be an English translation of that decision., but that
enforcement of a foreign judgment. Such a claim must be brought
102
The foregoing does not exhaust the difficulties presented by reliance SO ORDERED.
upon the Dubai decision. The Dubai Court decision, even on the basis
of the English translation submitted by respondent Rances, does not
purport on its face to have been rendered against petitioner Pascor
nor against the foreign principal of petitioner. Respondent Rances
simply assumed that the decision was rendered against petitioner's
foreign principal.  The Dubai decision does not Identify the parties to
the litigation that was resolved by said decision. Accordingly, the
Dubai decision can scarcely be enforced against petitioner Pascor.
Further, even if the Dubai decision had on its face purported to be
rendered against petitioner Pascor, we must note that petitioner
Pascor has expressly denied that jurisdiction had ever been acquired
by the Dubai court over the person of Pascor in accordance with the
Rules of Procedure applicable before the Dubai Court. 17 Respondent
Rances has not proved the contents of the Dubai Rules of Procedure
governing acquisition of jurisdiction over the person of a non-resident 5. Chavez vs. Bonto-Perez
defendant.
One of the anguished cries in our society today is that while our laws
Finally, if it be assumed (arguendo, once more) that the Dubai Court appear to protect the poor, their interpretation is sometimes anti-
had indeed acquired jurisdiction over the person of Pascor's foreign poor. In the case at bench, petitioner, a poor, uncounselled
principal — Gulf East Ship Management Ltd. — it still would not follow entertainment dancer signed a contract with her Japanese employer
that Pascor would automatically be bound by the Dubai decision. The calling for a monthly salary of One Thousand Five Hundred U.S.
statutory agency (or suretyship) of Pascor is limited in its reach to the Dollars (US$1,500) but later had to sign an immoral side agreement
contracts of employment Pascor entered into on behalf of its principal reducing her salary below the minimum standard set by the POEA.
with persons like respondent Rances. 18 Such statutory inability does Petitioner invoked the law to collect her salary differentials, but
not extend to liability for judgments secured against Gulf East Ship incredibly found public respondent straining the seams of our law to
Management Ltd., in suits brought against Gulf East outside Philippine disfavor her. There is no greater disappointment to the poor like
territorial jurisdiction, even though such a suit may involve a contract petitioner than to discover the ugly reality behind the beautiful
of employment with a Filipino seaman. rhetoric of laws. We will not allow this travesty.

We conclude that the POEA acted without or in excess of jurisdiction This is a petition for certiorari  to review the Decision of the National
in rendering its Decision dated 14 April 1986 and its Order dated 20 Labor Relations Commission (NLRC), 1 dated December 29, 1992,
May 1986, and that public respondent NLRC similarly acted without or which affirmed the Decision of public respondent Philippine Overseas
in excess of jurisdiction in rendering its Orders dated 14 August 1986 Employment Agency (POEA) Administrator Jose N. Sarmiento, dated
and 19 November 1986 denying petitioner's appeal and Motion for February 17, 1992, dismissing petitioner's complaint for unpaid
Reconsideration. This, however, is without prejudice to the right of salaries amounting to Six Thousand Dollars (US$6,000.00).
respondent Rances to initiate another proceeding before the POEA
against petitioner Pascor, this time on the basis alone of the contract The facts are undisputed.
of employment which existed between said respondent and petitioner
or petitioner's foreign principal; there, respondent Rances may seek
On December 1, 1988, petitioner, an entertainment dancer, entered
to show that he is still entitled to the allotments which he claims were
into a standard employment contract for overseas Filipino artists and
not remitted by his employer to his wife.
entertainers with Planning Japan Co., Ltd., 2 through its Philippine
representative, private respondent Centrum Placement & Promotions
ACCORDINGLY, the Petition for certiorari is GRANTED and the Corporation. The contract had a duration of two (2) to six (6) months,
Resolutions of public respondent NLRC dated 14 August 1986 and 19 and petitioner was to be paid a monthly compensation of One
November 1986 are hereby NULLIFIED and SET ASIDE. The Thousand Five Hundred Dollars (US$1,5000.00). On December 5,
Temporary Restraining Order issued by this Court on 8 December 1888, the POEA approved the contract. Subsequently, petitioner
1986 is hereby made PERCENT. No pronouncement as to costs. executed the following side agreement with her Japanese employer
through her local manager, Jaz Talents Promotion:

103
Date: Dec. 10, 1988 thru her own act of consenting and agreeing to receive a salary not in policy. It cannot supersede the standard employment contract of
accordance with her contract of employment. Moreover, her self- December 1, 1988 approved by the POEA with the following
SUBJECT: Salary Deduction imposed silence for a long period of time worked to her own stipulation appended thereto:
MANAGERIAL COMMISSION disadvantage as she allowed laches to prevail which barred
respondent from doing something at the outset. Normally, if a It is understood that the terms and conditions stated in this
DATE OF DEPARTURE: _________________ person's right (is) violated, she/he would immediately react to protect Employment Contract are in conformance with the Standard
her/his rights which is not true in the case at bar. Employment Contract for Entertainers prescribed by the POEA under
ATTENTION: MR. IWATA Memorandum Circular No. 2, Series of 1986. Any alterations or
The term laches has been defined as one's negligence or failure to changes made in any part of this contract without prior approval by
I, ESALYN CHAVEZ, DANCER, do hereby with my own free will and
assert his right in due time or within reasonable time from the accrual the POEA shall be null and void; 6 (Emphasis supplied.)
voluntarily have the honor to authorize your good office to please
of his cause of action, thus, leading another party to believe that
deduct the amount of TWO HUNDRED FIFTY DOLLARS ($250) from The stipulation is in line with the provisions of Rule II, Book V and
there is nothing wrong with his own claim. This resulted in placing the
my contracted monthly salary of SEVEN HUNDRED FIFTY DOLLARS Section 2(f), Rule I, Book VI of the 1991 Rules and Regulations
negligent party in estoppel to assert or enforce his right. . . . Likewise,
($750) as monthly commission for my Manager, Mr. Jose A. Azucena, Governing Overseas Employment, thus:
the Supreme Court in one case held that not only is inaction within
Jr.
reasonable time to enforce a right the basic premise that underlies a
valid defense of laches but such inaction evinces implied consent or Book V, Rule II
That, my monthly salary (net) is FIVE HUNDRED DOLLARS ($500).
acquiescence to the violation of the right . . .
Sec. 1. Employment Standards. The Administration shall determine,
Under the prevailing circumstances of this case, it is outside the formulate and review employment standards in accordance with the
regulatory powers of the Administration to rule on the liability of market development and welfare objectives of the overseas
(sgd. by petitioner)3
respondent Jaz Talents Promotions, if any, (it) not being a licensed employment program and the prevailing market conditions.
On December 16, 1988, petitioner left for Osaka, Japan, where she private agency but a promotion which trains entertainers for abroad.
Sec. 2. Minimum Provisions for Contract. The following shall be
worked for six (6) months, until June 10, 1989. She came back to the
x x x           x x x          x x x considered the minimum requirements for contracts of employment:
Philippines on June 14, 1989.

(Citations omitted.) a. Guaranteed wages for regular working hours and overtime pay for
Petitioner instituted the case at bench for underpayment of wages
services rendered beyond regular working hours in accordance with
with the POEA on February 21, 1991. She prayed for the payment of
On appeal, the NLRC upheld the Decision, thus: the standards established by the Administration;
Six Thousand U.S. Dollars (US$6,000.00), representing the unpaid
portion of her basic salary for six months. Charged in the case were xxx xxx xxx
We fail to see any conspiracy that the complainant (petitioner herein)
private respondent Centrum Promotions and Placement Corporation,
imputes to the respondents. She has, to put it bluntly, not established
the Philippine representative of Planning Japan, Co., Inc., its insurer, Sec. 3. Standard Employment Contract. The administration shall
and/or laid the basis for Us to arrive at a conclusion that the
Times Surety and Insurance Co., Inc., and Jaz Talents Promotion. undertake development and/or periodic review of region, country and
respondents have been and should be held liable for her claims.
skills specific employment contracts for landbased workers and
The complaint was dismissed by public respondent POEA conduct regular review of standard employment contracts (SEC) for
The way We see it, the records do not at all indicate any connection
Administrator on February 17, 1992. He ratiocinated, inter alia: seafarers. These contracts shall provide for minimum employment
between respondents Centrum Promotion & Placement Corporation
and Jaz Talents Promotion. standards herein enumerated under Section 2, of this Rule and shall
. . . Apparently and from all indications, complainant (referring to
recognize the prevailing labor and social legislations at the site of
petitioner herein) was satisfied and did not have any complaint
There is, therefore, no merit in the appeal. Hence, We affirmed.4 employment and international conventions. The SEC shall set the
(about) anything regarding her employment in Japan until after
minimum terms and conditions of employment. All employers and
almost two (2) years (when) she filed the instant complaint on Dissatisfied with the NLRC's Decision, petitioner instituted the present principals shall adopt the SEC in connection with the hiring of workers
February 21, 1991. The records show that after signing the Standard petition, alleging that public respondents committed grave abuse of without prejudice to their adoption of other terms and conditions of
Employment Contract on December 1, 1988, she entered into a side discretion in finding: that she is guilty of laches; that she entered into employment over and above the minimum standards of the
agreement with the Japanese employer thru her local manager, Jaz a side contract on December 10, 1988 for the reduction of her basic Administration. (Emphasis supplied.)
Talents Promotion consenting to a monthly salary of US$750.00 which salary to Seven Hundred Fifty U.S. Dollars (US$750.00) which
she affirmed during the conference of May 21, 1991. Respondent superseded, nullified and invalidated the standard employment and
agency had no knowledge nor participation in the said agreement contract she entered into on December 1, 1988; and that Planning
such that it could not be faulted for violation of the Standard Japan Co., Ltd. and private respondents are not solidarily liable to her BOOK VI, RULE I
Employment Contract regarding the stipulated salary. We cannot take for Six Thousand US Dollars (US$6,000.00) in unpaid wages.5
cognizance of such violation when one of the principal party (sic) Sec. 2. Grounds for suspension/cancellation of license.
thereto opted to receive a salary different from what has been The petition is meritorious.
stipulated in their contract, especially so if the contracting party did xxx xxx xxx
not consent/participate in such arrangement. Complainant (petitioner) Firstly, we hold that the managerial commission agreement executed
cannot now demand from respondent agency to pay her the salary by petitioner to authorize her Japanese Employer to deduct Two f. Substituting or altering employment contracts and other documents
based (on) the processed Employment Contract for she is now Hundred Fifty U.S. Dollars (US$250.00) from her monthly basic salary approved and verified by the Administration from the time of actual
considered in bad faith and hence, estopped from claiming thereto is void because it is against our existing laws, morals and public
104
signing thereof by the parties up to and including the period of As for equity, which has been aptly described as a "justice outside treatment in foreign lands just to survive. Out of despondence, they
expiration of the same without the Administration's approval. legality," this applied only in the absence of, and never against, will work under sub-human conditions and accept salaries below the
statutory law or, as in this case, judicial rules of procedure. Aequetas minimum. The least we can do is to protect them with our laws in our
xxx xxx xxx nunguam contravenit legis. The pertinent positive rules being present land. Regretfully, respondent public officials who should sympathize
here, they should pre-empt and prevail over all abstract arguments with the working class appear to have a different orientation.
(Emphasis supplied.) based only on equity.
Clearly, the basic salary of One Thousand Five Hundred U.S. Dollars Thus, where the claim was filed within the three-year statutory IN VIEW WHEREOF, the petition is GRANTED. The Decisions of
(US$1,500.00) guaranteed to petitioner under the parties' standard period, recovery therefore cannot be barred by laches. Courts should respondent POEA Administrator and NLRC Commissioners in POEA
employment contract is in accordance with the minimum employment never apply the doctrine of laches earlier than the expiration of time Case No. Adj. 91-02-199 (ER), respectively dated February 17 and
standards with respect to wages set by the POEA, Thus, the side limited for the commencement of actions at law. December 29, 1992, and the Resolution of the NLRC, dated March 23,
agreement which reduced petitioner's basic wage to Seven Hundred
1993, are REVERSED and SET ASIDE. Private respondents are held
Fifty U.S. Dollars (US$750.00) is null and void for violating the POEA's Thirdly, private respondents Centrum and Times as well as Planning
minimum employment standards, and for not having been approved jointly and severally liable to petitioner for the payment of SIX
Japan Co., Ltd. — the agency's foreign principal — are solidarily liable
by the POEA. Indeed, this side agreement is a scheme all too THOUSAND US DOLLARS (US$6,000.00) in unpaid wages. Costs
to petitioner for her unpaid wages. This is in accordance with
frequently resorted to by unscrupulous employers against our helpless against private respondents.
stipulation 13.7 of the parties' standard employment contract which
overseas workers who are compelled to agree to satisfy their basic provides:
economic needs. SO ORDERED.
13.7. The Employer (in this case, Planning Japan Co., Ltd. ) and its
Secondly. The doctrine of laches or "stale demands"' cannot be locally (sic) agent/promoter/representative (private respondent
applied to petitioner. Laches has been defined as the failure or neglect Centrum Promotions & Placement Corporation) shall be jointly and 6. Sameer vs. Cabiles
for an unreasonable and unexplained length time to do that which, by severally responsible for the proper implementation of the terms and
exercising due diligence, could or should have been done conditions in this Contract. 13 (Emphasis supplied.) This case involves an overseas Filipino worker with shattered dreams.
earlier, 7 thus giving rise to a presumption that the party entitled to It is our duty, given the facts and the law, to approximate justice for
assert it either has abandoned or declined to assert it.8 It is not This solidary liability also arises from the provisions of Section 10(a) her.
concerned with mere lapse of time; the fact of delay, standing alone, (2), Rule V, Book I of the Omnibus Rules Implementing the Labor
is insufficient to constitute laches.9 Code, as amended, thus:
We are asked to decide a petition for review 1 on certiorari assailing
The doctrine of laches is based upon grounds of public policy which Sec. 10. Requirement before recruitment. — Before recruiting any the Court of Appeals’ decision 2 dated June 27, 2005. This decision
requires, for the peace of society, the discouragement of stale claims, worker, the private employment agency shall submit to the Bureau partially affirmed the National Labor Relations Commission’s
and is principally a question of the inequity or unfairness of permitting the following documents: resolution dated March 31, 2004,3 declaring respondent’s dismissal
a right or claim to be enforced or asserted. 10 There is no absolute illegal, directing petitioner to pay respondent’s three-month salary
rule as to what constitutes laches; each case is to be determined a) A formal appointment or agency contract executed by a foreign- equivalent to New Taiwan Dollar (NT$) 46,080.00, and ordering it to
according to its particular circumstances. The question of laches is based employer in favor of the license holder to recruit and hire reimburse the NT$3,000.00 withheld from respondent, and pay her
addressed to the sound discretion of the court, and since it is an personnel for the former . . . . Such formal appointment or NT$300.00 attorney’s fees.4cralawred
equitable doctrine, its application is controlled by equitable recruitment agreement shall contain the following provisions, among
considerations. It cannot be worked to defeat justice or to perpetrate others:
fraud and injustice.11
xxx xxx xxx
In the case at bench, petitioner filed her claim well within the three- Petitioner, Sameer Overseas Placement Agency, Inc., is a recruitment
year prescriptive period for the filing of money claims set forth in 2. Power of the agency to sue and be sued jointly and solidarily with and placement agency.5 Responding to an ad it published, respondent,
Article 291 of the Labor Code. 12 For this reason, we hold the doctrine the principal or foreign based employer for any of the violations of the Joy C. Cabiles, submitted her application for a quality control job in
of laches inapplicable to petitioner. As we ruled in Imperial Victory recruitment agreement and the contracts of employment. Taiwan.6cralawred
Shipping Agency v. NLRC, 200 SCRA 178 (1991):
xxx xxx xxx
Joy’s application was accepted. 7 Joy was later asked to sign a one-
. . . Laches is a doctrine in equity while prescription is based on law. year employment contract for a monthly salary of NT$15,360.00. 8 She
(Emphasis supplied.)
Our courts are basically courts of law not courts of equity. Thus,
alleged that Sameer Overseas Agency required her to pay a
laches cannot be invoked to resist the enforcement of an existing
Our overseas workers constitute an exploited class. Most of them placement fee of P70,000.00 when she signed the employment
legal right. We have ruled in Arsenal v. Intermediate Appellate Court .
come from the poorest sector of our society. They are thoroughly contract.9cralawred
. . that it is a long standing principle that equity follows the law.
Courts exercising equity jurisdiction are bound by rules of law and disadvantaged. Their profile shows they live in suffocating slums,
have no arbitrary discretion to disregard them. In Zabat, Jr. v. Court trapped in an environment of crime. Hardly literate and in ill health, Joy was deployed to work for Taiwan Wacoal, Co. Ltd. (Wacoal) on
of Appeals . . ., this Court was more emphatic upholding the rules of their only hope lies in jobs they can hardly find in our country. Their June 26, 1997.10 She alleged that in her employment contract, she
procedure. We said therein: unfortunate circumstance makes them easy prey to avaricious agreed to work as quality control for one year.11 In Taiwan, she was
employers. They will climb mountains, cross the seas, endure slave asked to work as a cutter.12cralawred

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 In a resolution37 dated March 31, 2004, the National Labor Relations But we do find it necessary to remand the instant case to the public
Sameer Overseas Placement Agency claims that on July 14, 1997, a Commission declared that Joy was illegally dismissed.38 It reiterated respondent for further proceedings, for the purpose of addressing the
certain Mr. Huwang from Wacoal informed Joy, without prior notice, the doctrine that the burden of proof to show that the dismissal was validity or propriety of petitioner’s third-party complaint against the
that she was terminated and that “she should immediately report to based on a just or valid cause belongs to the employer. 39 It found that transferee agent or the Pacific Manpower & Management Services,
their office to get her salary and passport.” 13 She was asked to Sameer Overseas Placement Agency failed to prove that there were Inc. and Lea G. Manabat. We should emphasize that as far as the
“prepare for immediate repatriation.” 14cralawred just causes for termination.40 There was no sufficient proof to show decision of the NLRC on the claims of Joy Cabiles, is concerned, the
that respondent was inefficient in her work and that she failed to same is hereby affirmed with finality, and we hold petitioner liable
Joy claims that she was told that from June 26 to July 14, 1997, she comply with company requirements. 41 Furthermore, procedural due thereon, but without prejudice to further hearings on its third party
only earned a total of NT$9,000.15 According to her, Wacoal deducted process was not observed in terminating respondent. 42cralawred complaint against Pacific for reimbursement.
NT$3,000 to cover her plane ticket to Manila. 16cralawred
The National Labor Relations Commission did not rule on the issue of WHEREFORE, premises considered, the assailed Resolutions are
On October 15, 1997, Joy filed a complaint 17 with the National Labor reimbursement of placement fees for lack of jurisdiction. 43 It refused hereby partly AFFIRMED in accordance with the foregoing discussion,
Relations Commission against petitioner and Wacoal. She claimed that to entertain the issue of the alleged transfer of obligations to but subject to the caveat embodied in the last sentence. No costs.
she was illegally dismissed.18 She asked for the return of her Pacific.44 It did not acquire jurisdiction over that issue because
placement fee, the withheld amount for repatriation costs, payment of Sameer Overseas Placement Agency failed to appeal the Labor SO ORDERED.53
her salary for 23 months as well as moral and exemplary Arbiter’s decision not to rule on the matter. 45cralawred
damages.19 She identified Wacoal as Sameer Overseas Placement
Agency’s foreign principal.20cralawred The National Labor Relations Commission awarded respondent only Dissatisfied, Sameer Overseas Placement Agency filed this
three (3) months worth of salary in the amount of NT$46,080, the petition.54cralawred
Sameer Overseas Placement Agency alleged that respondent's reimbursement of the NT$3,000 withheld from her, and attorney’s
termination was due to her inefficiency, negligence in her duties, and fees of NT$300.46cralawred We are asked to determine whether the Court of Appeals erred when
her “failure to comply with the work requirements [of] her foreign it affirmed the ruling of the National Labor Relations Commission
[employer].”21 The agency also claimed that it did not ask for a The Commission denied the agency’s motion for finding respondent illegally dismissed and awarding her three months’
placement fee of ?70,000.00.22 As evidence, it showed Official Receipt reconsideration47 dated May 12, 2004 through a resolution 48 dated worth of salary, the reimbursement of the cost of her repatriation, and
No. 14860 dated June 10, 1997, bearing the amount of ? July 2, 2004. attorney’s fees despite the alleged existence of just causes of
20,360.00.23 Petitioner added that Wacoal's accreditation with termination.
petitioner had already been transferred to the Pacific Manpower & Aggrieved by the ruling, Sameer Overseas Placement Agency caused
Management Services, Inc. (Pacific) as of August 6, 1997. 24 Thus, the filing of a petition49 for certiorari with the Court of Appeals Petitioner reiterates that there was just cause for termination because
petitioner asserts that it was already substituted by Pacific assailing the National Labor Relations Commission’s resolutions dated there was a finding of Wacoal that respondent was inefficient in her
Manpower.25cralawred March 31, 2004 and July 2, 2004. work.55 Therefore, it claims that respondent’s dismissal was
valid.56cralawred
Pacific Manpower moved for the dismissal of petitioner’s claims The Court of Appeals50 affirmed the decision of the National Labor
against it.26 It alleged that there was no employer-employee Relations Commission with respect to the finding of illegal dismissal, Petitioner also reiterates that since Wacoal’s accreditation was validly
relationship between them.27 Therefore, the claims against it were Joy’s entitlement to the equivalent of three months worth of salary, transferred to Pacific at the time respondent filed her complaint, it
outside the jurisdiction of the Labor Arbiter. 28 Pacific Manpower reimbursement of withheld repatriation expense, and attorney’s should be Pacific that should now assume responsibility for Wacoal’s
argued that the employment contract should first be presented so that fees.51 The Court of Appeals remanded the case to the National Labor contractual obligations to the workers originally recruited by
the employer’s contractual obligations might be identified. 29 It further Relations Commission to address the validity of petitioner's allegations petitioner.57cralawred
denied that it assumed liability for petitioner’s illegal acts. 30cralawred against Pacific.52 The Court of Appeals held,
thus:chanRoblesvirtualLawlibrary Sameer Overseas Placement Agency’s petition is without merit. We
On July 29, 1998, the Labor Arbiter dismissed Joy’s find for respondent.
complaint.31 Acting Executive Labor Arbiter Pedro C. Ramos ruled that Although the public respondent found the dismissal of the
her complaint was based on mere allegations. 32 The Labor Arbiter complainant-respondent illegal, we should point out that the NLRC I
found that there was no excess payment of placement fees, based on merely awarded her three (3) months backwages or the amount of Sameer Overseas Placement Agency failed to show that there was just
the official receipt presented by petitioner. 33 The Labor Arbiter found NT$46,080.00, which was based upon its finding that she was cause for causing Joy’s dismissal. The employer, Wacoal, also failed to
unnecessary a discussion on petitioner’s transfer of obligations to dismissed without due process, a finding that we uphold, given accord her due process of law.
Pacific34 and considered the matter immaterial in view of the dismissal petitioner’s lack of worthwhile discussion upon the same in the
of respondent’s complaint.35cralawred proceedings below or before us. Likewise we sustain NLRC’s finding in Indeed, employers have the prerogative to impose productivity and
regard to the reimbursement of her fare, which is squarely based on quality standards at work.58 They may also impose reasonable rules to
Joy appealed36 to the National Labor Relations Commission. the law; as well as the award of attorney’s fees. ensure that the employees comply with these standards. 59 Failure to
comply may be a just cause for their dismissal. 60 Certainly, employers

106
cannot be compelled to retain the services of an employee who is collective bargaining and negotiations, and peaceful concerted
guilty of acts that are inimical to the interest of the employer. 61 While activities, including the right to strike in accordance with law. They
the law acknowledges the plight and vulnerability of workers, it does shall be entitled to security of tenure, humane conditions of work, and
not “authorize the oppression or self-destruction of the a living wage. They shall also participate in policy and decision-
employer.”62 Management prerogative is recognized in law and in our making processes affecting their rights and benefits as may be Art. 282. Termination by employer. An employer may terminate an
jurisprudence. provided by law. employment for any of the following causes:cralawlawlibrary

This prerogative, however, should not be abused. It is “tempered with This public policy should be borne in mind in this case because to (a) Serious misconduct or willful disobedience by the employee of the
the employee’s right to security of tenure.” 63 Workers are entitled to allow foreign employers to determine for and by themselves whether lawful orders of his employer or representative in connection with his
substantive and procedural due process before termination. They may an overseas contract worker may be dismissed on the ground of work;chanroblesvirtuallawlibrary
not be removed from employment without a valid or just cause as illness would encourage illegal or arbitrary pre-termination of
determined by law and without going through the proper procedure. employment contracts.66 (Emphasis supplied, citation omitted) (b) Gross and habitual neglect by the employee of his
duties;chanroblesvirtuallawlibrary
Security of tenure for labor is guaranteed by our
Constitution.64cralawred (c) Fraud or willful breach by the employee of the trust reposed in him
Even with respect to fundamental procedural rights, this court
by his employer or duly authorized
emphasized in PCL Shipping Philippines, Inc. v. NLRC,67 to
Employees are not stripped of their security of tenure when they representative;chanroblesvirtuallawlibrary
wit:chanRoblesvirtualLawlibrary
move to work in a different jurisdiction. With respect to the rights of
overseas Filipino workers, we follow the principle of lex loci (d) Commission of a crime or offense by the employee against the
contractus. person of his employer or any immediate member of his family or his
duly authorized representatives; andChanRoblesVirtualawlibrary
Thus, in Triple Eight Integrated Services, Inc. v. NLRC, 65 this court Petitioners admit that they did not inform private respondent in
noted:chanRoblesvirtualLawlibrary writing of the charges against him and that they failed to conduct a (e) Other causes analogous to the foregoing.
formal investigation to give him opportunity to air his side. However,
Petitioner likewise attempts to sidestep the medical certificate petitioners contend that the twin requirements of notice and hearing
requirement by contending that since Osdana was working in Saudi applies strictly only when the employment is within the Philippines Petitioner’s allegation that respondent was inefficient in her work and
Arabia, her employment was subject to the laws of the host country. and that these need not be strictly observed in cases of international negligent in her duties69 may, therefore, constitute a just cause for
Apparently, petitioner hopes to make it appear that the labor laws of maritime or overseas employment. termination under Article 282(b), but only if petitioner was able to
Saudi Arabia do not require any certification by a competent public prove it.
health authority in the dismissal of employees due to illness. The Court does not agree. The provisions of the Constitution as
well as the Labor Code which afford protection to labor apply The burden of proving that there is just cause for termination is on
Again, petitioner’s argument is without merit. to Filipino employees whether working within the Philippines the employer. “The employer must affirmatively show rationally
or abroad. Moreover, the principle of lex loci contractus (the adequate evidence that the dismissal was for a justifiable
First, established is the rule that lex loci contractus (the law of law of the place where the contract is made) governs in this cause.”70 Failure to show that there was valid or just cause for
the place where the contract is made) governs in this jurisdiction. In the present case, it is not disputed that the Contract termination would necessarily mean that the dismissal was
jurisdiction. There is no question that the contract of of Employment entered into by and between petitioners and private illegal.71cralawred
employment in this case was perfected here in the Philippines. respondent was executed here in the Philippines with the approval of
Therefore, the Labor Code, its implementing rules and the Philippine Overseas Employment Administration (POEA). Hence, To show that dismissal resulting from inefficiency in work is valid, it
regulations, and other laws affecting labor apply in this case. the Labor Code together with its implementing rules and regulations must be shown that: 1) the employer has set standards of conduct
Furthermore, settled is the rule that the courts of the forum will not and other laws affecting labor apply in this case.68 (Emphasis supplied, and workmanship against which the employee will be judged; 2) the
enforce any foreign claim obnoxious to the forum’s public policy. Here citations omitted) standards of conduct and workmanship must have been
in the Philippines, employment agreements are more than contractual communicated to the employee; and 3) the communication was made
in nature. The Constitution itself, in Article XIII, Section 3, guarantees at a reasonable time prior to the employee’s performance
the special protection of workers, to wit:chanRoblesvirtualLawlibrary By our laws, overseas Filipino workers (OFWs) may only be assessment.
terminated for a just or authorized cause and after compliance with
The State shall afford full protection to labor, local and overseas, procedural due process requirements. This is similar to the law and jurisprudence on probationary
organized and unorganized, and promote full employment and employees, which allow termination of the employee only when there
equality of employment opportunities for all. Article 282 of the Labor Code enumerates the just causes of is “just cause or when [the probationary employee] fails to qualify as
termination by the employer. Thus:chanRoblesvirtualLawlibrary a regular employee in accordance with reasonable standards made
It shall guarantee the rights of all workers to self-organization, known by the employer to the employee at the time of his [or her]

107
engagement.”72cralawred that there is just cause for termination. There is no proof that to hear and decide, within ninety (90) calendar days after filing of the
respondent was legally terminated. complaint, the claims arising out of an employer-employee
However, we do not see why the application of that ruling should be relationship or by virtue of any law or contract involving Filipino
limited to probationary employment. That rule is basic to the idea of Petitioner failed to comply with workers for overseas deployment including claims for actual, moral,
security of tenure and due process, which are guaranteed to all the due process requirements exemplary and other forms of damages.
employees, whether their employment is probationary or regular.
Respondent’s dismissal less than one year from hiring and her The liability of the principal/employer and the recruitment/placement
The pre-determined standards that the employer sets are the bases repatriation on the same day show not only failure on the part of agency for any and all claims under this section shall be joint and
for determining the probationary employee’s fitness, propriety, petitioner to comply with the requirement of the existence of just several. This provisions [sic] shall be incorporated in the contract for
efficiency, and qualifications as a regular employee. Due process cause for termination. They patently show that the employers did not overseas employment and shall be a condition precedent for its
requires that the probationary employee be informed of such comply with the due process requirement. approval. The performance bond to be filed by the
standards at the time of his or her engagement so he or she can recruitment/placement agency, as provided by law, shall be
adjust his or her character or workmanship accordingly. Proper A valid dismissal requires both a valid cause and adherence to the answerable for all money claims or damages that may be awarded to
adjustment to fit the standards upon which the employee’s valid procedure of dismissal.75 The employer is required to give the the workers. If the recruitment/placement agency is a juridical being,
qualifications will be evaluated will increase one’s chances of being charged employee at least two written notices before the corporate officers and directors and partners as the case may be,
positively assessed for regularization by his or her employer. termination.76 One of the written notices must inform the employee of shall themselves be jointly and solidarily liable with the corporation or
the particular acts that may cause his or her dismissal. 77 The other partnership for the aforesaid claims and damages.
Assessing an employee’s work performance does not stop after notice must “[inform] the employee of the employer’s
regularization. The employer, on a regular basis, determines if an decision.”78 Aside from the notice requirement, the employee must Such liabilities shall continue during the entire period or duration of
employee is still qualified and efficient, based on work standards. also be given “an opportunity to be heard.” 79cralawred the employment contract and shall not be affected by any
Based on that determination, and after complying with the due substitution, amendment or modification made locally or in a foreign
process requirements of notice and hearing, the employer may Petitioner failed to comply with the twin notices and hearing country of the said contract.
exercise its management prerogative of terminating the employee requirements. Respondent started working on June 26, 1997. She was
found unqualified. told that she was terminated on July 14, 1997 effective on the same Any compromise/amicable settlement or voluntary agreement on
day and barely a month from her first workday. She was also money claims inclusive of damages under this section shall be paid
The regular employee must constantly attempt to prove to his or her repatriated on the same day that she was informed of her within four (4) months from the approval of the settlement by the
employer that he or she meets all the standards for employment. This termination. The abruptness of the termination negated any finding appropriate authority.
time, however, the standards to be met are set for the purpose of that she was properly notified and given the opportunity to be heard.
retaining employment or promotion. The employee cannot be Her constitutional right to due process of law was violated. In case of termination of overseas employment without just, valid or
expected to meet any standard of character or workmanship if such authorized cause as defined by law or contract, the workers shall be
standards were not communicated to him or her. Courts should entitled to the full reimbursement of his placement fee with interest of
remain vigilant on allegations of the employer’s failure to twelve (12%) per annum, plus his salaries for the unexpired portion
communicate work standards that would govern one’s employment “if II Respondent Joy Cabiles, having been illegally dismissed, is entitled of his employment contract or for three (3) months for every year of
[these are] to discharge in good faith [their] duty to to her salary for the unexpired portion of the employment contract the unexpired term, whichever is less.
adjudicate.”73cralawred that was violated together with attorney’s fees and reimbursement of
amounts withheld from her salary. Section 15 of Republic Act No. 8042 states that “repatriation of the
In this case, petitioner merely alleged that respondent failed to worker and the transport of his [or her] personal belongings shall be
comply with her foreign employer’s work requirements and was Section 10 of Republic Act No. 8042, otherwise known as the Migrant the primary responsibility of the agency which recruited or deployed
inefficient in her work.74No evidence was shown to support such Workers and Overseas Filipinos Act of 1995, states that overseas the worker overseas.” The exception is when “termination of
allegations. Petitioner did not even bother to specify what workers who were terminated without just, valid, or authorized cause employment is due solely to the fault of the worker,” 80 which as we
requirements were not met, what efficiency standards were violated, “shall be entitled to the full reimbursement of his placement fee with have established, is not the case. It
or what particular acts of respondent constituted inefficiency. interest of twelve (12%) per annum, plus his salaries for the reads:chanRoblesvirtualLawlibrary
unexpired portion of his employment contract or for three (3) months
There was also no showing that respondent was sufficiently informed for every year of the unexpired term, whichever is less.” SEC. 15. REPATRIATION OF WORKERS; EMERGENCY REPATRIATION
of the standards against which her work efficiency and performance FUND. – The repatriation of the worker and the transport of his
were judged.  The parties’ conflict as to the position held by personal belongings shall be the primary responsibility of the agency
respondent showed that even the matter as basic as the job which recruited or deployed the worker overseas. All costs attendant
title was not clear. to repatriation shall be borne by or charged to the agency concerned
Sec. 10. MONEY CLAIMS. – Notwithstanding any provision of law to
and/or its principal. Likewise, the repatriation of remains and
the contrary, the Labor Arbiters of the National Labor Relations
The bare allegations of petitioner are not sufficient to support a claim transport of the personal belongings of a deceased worker and all
Commission (NLRC) shall have the original and exclusive jurisdiction

108
costs attendant thereto shall be borne by the principal and/or local relationship or by virtue of any law or contract involving Filipino therewith;chanroblesvirtuallawlibrary
agency. However, in cases where the termination of employment is workers for overseas deployment including claims for actual, moral,
due solely to the fault of the worker, the principal/employer or agency exemplary and other forms of damage. Consistent with this mandate, (b) Suspension for not more than ninety (90) days; or
shall not in any manner be responsible for the repatriation of the the NLRC shall endeavor to update and keep abreast with the
former and/or his belongings. developments in the global services industry. (c) Dismissal from the service with disqualification to hold any
appointive public office for five (5) years.
The liability of the principal/employer and the recruitment/placement
agency for any and all claims under this section shall be joint and Provided, however, That the penalties herein provided shall be
several. This provision shall be incorporated in the contract for without prejudice to any liability which any such official may have
The Labor Code  also entitles the employee to 10% of the amount of
81
overseas employment and shall be a condition precedent for its incured [sic] under other existing laws or rules and regulations as a
withheld wages as attorney’s fees when the withholding is unlawful. approval. The performance bond to de [sic] filed by the consequence of violating the provisions of this paragraph. (Emphasis
recruitment/placement agency, as provided by law, shall be supplied)
The Court of Appeals affirmed the National Labor Relations answerable for all money claims or damages that may be awarded to
Commission’s decision to award respondent NT$46,080.00 or the the workers. If the recruitment/placement agency is a juridical being,
three-month equivalent of her salary, attorney’s fees of NT$300.00, the corporate officers and directors and partners as the case may be, Republic Act No. 10022 was promulgated on March 8, 2010. This
and the reimbursement of the withheld NT$3,000.00 salary, which shall themselves be jointly and solidarily liable with the corporation or means that the reinstatement of the clause in Republic Act No. 8042
answered for her repatriation. partnership for the aforesaid claims and damages. was not yet in effect at the time of respondent’s termination from
work in 1997.86 Republic Act No. 8042 before it was amended by
We uphold the finding that respondent is entitled to all of these Such liabilities shall continue during the entire period or duration of Republic Act No. 10022 governs this case.
awards. The award of the three-month equivalent of the employment contract and shall not be affected by any
respondent’s salary should, however, be increased to the substitution, amendment or modification made locally or in a foreign When a law is passed, this court awaits an actual case that clearly
amount equivalent to the unexpired term of the employment country of the said contract. raises adversarial positions in their proper context before considering
contract.
a prayer to declare it as unconstitutional.
Any compromise/amicable settlement or voluntary agreement on
In Serrano v. Gallant Maritime Services, Inc. and Marlow Navigation money claims inclusive of damages under this section shall be paid However, we are confronted with a unique situation. The law passed
Co., Inc.,82 this court ruled that the clause “or for three (3) months for within thirty (30) days from approval of the settlement by the incorporates the exact clause already declared as unconstitutional,
every year of the unexpired term, whichever is less” 83 is appropriate authority. without any perceived substantial change in the circumstances.
unconstitutional for violating the equal protection clause and
substantive due process.84cralawred In case of termination of overseas employment without just, valid or This may cause confusion on the part of the National Labor Relations
authorized cause as defined by law or contract, or any unauthorized Commission and the Court of Appeals. At minimum, the existence of
A statute or provision which was declared unconstitutional is not a deductions from the migrant worker’s salary, the worker shall be Republic Act No. 10022 may delay the execution of the judgment in
law. It “confers no rights; it imposes no duties; it affords no entitled to the full reimbursement if [sic] his placement fee and the this case, further frustrating remedies to assuage the wrong done to
protection; it creates no office; it is inoperative as if it has not been deductions made with interest at twelve percent (12%) per annum, petitioner. Hence, there is a necessity to decide this constitutional
passed at all.”85cralawred plus his salaries for the unexpired portion of his employment issue.
contract or for three (3) months for every year of the unexpired term,
We are aware that the clause  “or for three (3) months for every year whichever is less. Moreover, this court is possessed with the constitutional duty to
of the unexpired term, whichever is less” was reinstated in Republic
“[p]romulgate rules concerning the protection and enforcement of
Act No. 8042 upon promulgation of Republic Act No. 10022 in 2010. In case of a final and executory judgement against a foreign constitutional rights.”87 When cases become moot and academic, we
Section 7 of Republic Act No. 10022 employer/principal, it shall be automatically disqualified, without do not hesitate to provide for guidance to bench and bar in situations
provides:chanRoblesvirtualLawlibrary further proceedings, from participating in the Philippine Overseas where the same violations are capable of repetition but will evade
Employment Program and from recruiting and hiring Filipino workers review. This is analogous to cases where there are millions of Filipinos
until and unless it fully satisfies the judgement award. working abroad who are bound to suffer from the lack of protection
Section 7. Section 10 of Republic Act No. 8042, as amended, is because of the restoration of an identical clause in a provision
Noncompliance with the mandatory periods for resolutions of case previously declared as unconstitutional.
hereby amended to read as follows:chanRoblesvirtualLawlibrary
provided under this section shall subject the responsible officials to
any or all of the following penalties:cralawlawlibrary In the hierarchy of laws, the Constitution is supreme. No branch or
SEC. 10. Money Claims. – Notwithstanding any provision of law to the
office of the government may exercise its powers in any manner
contrary, the Labor Arbiters of the National Labor Relations
(a) The salary of any such official who fails to render his decision or inconsistent with the Constitution, regardless of the existence of any
Commission (NLRC) shall have the original and exclusive jurisdiction
resolution within the prescribed period shall be, or caused to be, law that supports such exercise. The Constitution cannot be trumped
to hear and decide, within ninety (90) calendar days after the filing of
withheld until the said official complies by any other law. All laws must be read in light of the Constitution.
the complaint, the claims arising out of an employer-employee
109
Any law that is inconsistent with it is a nullity. protection and due process.96 Petitioner as well as the Solicitor interferes with the exercise of a fundamental right or operates to the
General have failed to show any compelling change in the peculiar disadvantage of a suspect class.” 109cralawred
Thus, when a law or a provision of law is null because it is inconsistent circumstances that would warrant us to revisit the precedent.
with the Constitution, the nullity cannot be cured by reincorporation Under the Constitution, labor is afforded special protection. 110 Thus,
or reenactment of the same or a similar law or provision. A law or We reiterate our finding in Serrano v. Gallant Maritime that this court in Serrano, “[i]mbued with the same sense of ‘obligation to
provision of law that was already declared unconstitutional remains as limiting wages that should be recovered by an illegally afford protection to labor,’ . . . employ[ed] the standard of strict
such unless circumstances have so changed as to warrant a reverse dismissed overseas worker to three months is both a violation judicial scrutiny, for it perceive[d] in the subject clause a suspect
conclusion. of due process and the equal protection clauses of the classification prejudicial to OFWs.”111cralawred
Constitution.
We are not convinced by the pleadings submitted by the parties that We also noted in Serrano that before the passage of Republic Act No.
the situation has so changed so as to cause us to reverse binding Equal protection of the law is a guarantee that persons under like 8042, the money claims of illegally terminated overseas and local
precedent. circumstances and falling within the same class are treated alike, in workers with fixed-term employment were computed in the same
terms of “privileges conferred and liabilities enforced.” 97 It is a manner.112 Their money claims were computed based on the
Likewise, there are special reasons of judicial efficiency and economy guarantee against “undue favor and individual or class privilege, as “unexpired portions of their contracts.” 113 The adoption of the
that attend to these cases. well as hostile discrimination or the oppression of reinstated clause in Republic Act No. 8042 subjected the money
inequality.”98cralawred claims of illegally dismissed overseas workers with an unexpired term
The new law puts our overseas workers in the same vulnerable of at least a year to a cap of three months worth of their
position as they were prior to Serrano. Failure to reiterate the very In creating laws, the legislature has the power “to make distinctions salary.114 There was no such limitation on the money claims of illegally
ratio decidendi of that case will result in the same untold economic and classifications.”99 In exercising such power, it has a wide terminated local workers with fixed-term employment. 115cralawred
hardships that our reading of the Constitution intended to avoid. discretion.100cralawred
Obviously, we cannot countenance added expenses for further We observed that illegally dismissed overseas workers whose
litigation that will reduce their hard-earned wages as well as add to The equal protection clause does not infringe on this legislative employment contracts had a term of less than one year were granted
the indignity of having been deprived of the protection of our laws power.101 A law is void on this basis, only if classifications are made the amount equivalent to the unexpired portion of their employment
simply because our precedents have not been followed. There is no arbitrarily.102 There is no violation of the equal protection clause if the contracts.116 Meanwhile, illegally dismissed overseas workers with
constitutional doctrine that causes injustice in the face of empty law applies equally to persons within the same class and if there are employment terms of at least a year were granted a cap equivalent to
procedural niceties. Constitutional interpretation is complex, but it is reasonable grounds for distinguishing between those falling within the three months of their salary for the unexpired portions of their
never unreasonable. class and those who do not fall within the class.103 A law that does not contracts.117cralawred
violate the equal protection clause prescribes a reasonable
Thus, in a resolution88 dated October 22, 2013, we ordered the parties classification.104cralawred Observing the terminologies used in the clause, we also found that
and the Office of the Solicitor General to comment on the “the subject clause creates a sub-layer of discrimination among OFWs
constitutionality of the reinstated clause in Republic Act No. 10022. A reasonable classification “(1) must rest on substantial distinctions; whose contract periods are for more than one year: those who are
(2) must be germane to the purposes of the law; (3) must not be illegally dismissed with less than one year left in their contracts shall
In its comment,89 petitioner argued that the clause was limited to existing conditions only; and (4) must apply equally to all be entitled to their salaries for the entire unexpired portion thereof,
constitutional.90 The legislators intended a balance between the members of the same class.” 105cralawred while those who are illegally dismissed with one year or more
employers’ and the employees’ rights by not unduly burdening the remaining in their contracts shall be covered by the reinstated clause,
local recruitment agency.91 Petitioner is also of the view that the The reinstated clause does not satisfy the requirement of reasonable and their monetary benefits limited to their salaries for three months
clause was already declared as constitutional in Serrano.92cralawred classification. only.”118cralawred

The Office of the Solicitor General also argued that the clause was In Serrano, we identified the classifications made by the reinstated We do not need strict scrutiny to conclude that these classifications do
valid and constitutional.93 However, since the parties never raised the clause. It distinguished between fixed-period overseas workers and not rest on any real or substantial distinctions that would justify
issue of the constitutionality of the clause as reinstated in Republic Act fixed-period local workers.106 It also distinguished between overseas different treatments in terms of the computation of money claims
No. 10022, its contention is that it is beyond judicial workers with employment contracts of less than one year and resulting from illegal termination.
review.94cralawred overseas workers with employment contracts of at least one
year.107 Within the class of overseas workers with at least one-year Overseas workers regardless of their classifications are entitled to
On the other hand, respondent argued that the clause was employment contracts, there was a distinction between those with at security of tenure, at least for the period agreed upon in their
unconstitutional because it infringed on workers’ right to least a year left in their contracts and those with less than a year left contracts. This means that they cannot be dismissed before the end of
contract.95cralawred in their contracts when they were illegally dismissed. 108cralawred their contract terms without due process. If they were illegally
dismissed, the workers’ right to security of tenure is violated.
We observe that the reinstated clause, this time as provided in The Congress’ classification may be subjected to judicial review. In
Republic Act. No. 10022, violates the constitutional rights to equal Serrano, there is a “legislative classification which impermissibly The rights violated when, say, a fixed-period local worker is illegally

110
terminated are neither greater than nor less than the rights violated Serrano:chanRoblesvirtualLawlibrary imposes the same burden on another sector, especially when the
when a fixed-period overseas worker is illegally terminated. It is state favored sector is composed of private businesses such as placement
policy to protect the rights of workers without qualification as to the agencies, while the disadvantaged sector is composed of OFWs whose
place of employment.119 In both cases, the workers are deprived of protection no less than the Constitution commands. The idea that
their expected salary, which they could have earned had they not private business interest can be elevated to the level of a compelling
been illegally dismissed. For both workers, this deprivation translates Section 10 of R.A. No. 8042 affects these well-laid rules and state interest is odious.”127cralawred
to economic insecurity and disparity. 120 The same is true for the measures, and in fact provides a hidden twist affecting the
distinctions between overseas workers with an employment contract principal/employer’s liability. While intended as an incentive accruing Along the same line, we held that the reinstated clause violates due
of less than one year and overseas workers with at least one year of to recruitment/manning agencies, the law, as worded, simply limits process rights. It is arbitrary as it deprives overseas workers of their
employment contract, and between overseas workers with at least a the OFWs’ recovery in wrongful dismissal situations. Thus, it redounds monetary claims without any discernable valid purpose. 128cralawred
year left in their contracts and overseas workers with less than a year to the benefit of whoever may be liable, including the
left in their contracts when they were illegally dismissed. principal/employer – the direct employer primarily liable for the Respondent Joy Cabiles is entitled to her salary for the unexpired
wrongful dismissal. In this sense, Section 10 – read as a grant of portion of her contract, in accordance with Section 10 of Republic Act
For this reason, we cannot subscribe to the argument that “[overseas incentives to recruitment/manning agencies – oversteps what it aims No. 8042. The award of the three-month equivalence of respondent’s
workers] are contractual employees who can never acquire regular to do by effectively limiting what is otherwise the full liability of the salary must be modified accordingly. Since she started working on
employment status, unlike local workers”121 because it already foreign principals/employers. Section 10, in short, really operates to June 26, 1997 and was terminated on July 14, 1997, respondent is
justifies differentiated treatment in terms of the computation of benefit the wrong party and allows that party, without justifiable entitled to her salary from July 15, 1997 to June 25, 1998. “To rule
money claims.122cralawred reason, to mitigate its liability for wrongful dismissals. Because of this otherwise would be iniquitous to petitioner and other OFWs, and
hidden twist, the limitation of liability under Section 10 cannot be an would, in effect, send a wrong signal that principals/employers and
Likewise, the jurisdictional and enforcement issues on overseas “appropriate” incentive, to borrow the term that R.A. No. 8042 itself recruitment/manning agencies may violate an OFW’s security of
workers’ money claims do not justify a differentiated treatment in the uses to describe the incentive it envisions under its purpose clause. tenure which an employment contract embodies and actually profit
computation of their money claims. 123 If anything, these issues justify from such violation based on an unconstitutional provision of
an equal, if not greater protection and assistance to overseas workers What worsens the situation is the chosen mode of granting the law.”129cralawred
who generally are more prone to exploitation given their physical incentive: instead of a grant that, to encourage greater efforts at
distance from our government. recruitment, is directly related to extra efforts undertaken, the law III On the interest rate, the Bangko Sentral ng Pilipinas Circular No.
simply limits their liability for the wrongful dismissals of already 799 of June 21, 2013, which revised the interest rate for loan or
We also find that the classifications are not relevant to the purpose of deployed OFWs. This is effectively a legally-imposed partial forbearance from 12% to 6% in the absence of stipulation, applies in
the law, which is to “establish a higher standard of protection and condonation of their liability to OFWs, justified solely by the law’s this case. The pertinent portions of Circular No. 799, Series of 2013,
promotion of the welfare of migrant workers, their families and intent to encourage greater deployment efforts. Thus, the incentive, read:chanRoblesvirtualLawlibrary
overseas Filipinos in distress, and for other purposes.” 124 Further, we from a more practical and realistic view, is really part of a scheme to
find specious the argument that reducing the liability of placement sell Filipino overseas labor at a bargain for purposes solely of
agencies “redounds to the benefit of the [overseas] attracting the market. . . .
workers.”125cralawred
The so-called incentive is rendered particularly odious by its effect on The Monetary Board, in its Resolution No. 796 dated 16 May 2013,
Putting a cap on the money claims of certain overseas workers does the OFWs — the benefits accruing to the recruitment/manning approved the following revisions governing the rate of interest in the
not increase the standard of protection afforded to them. On the other agencies and their principals are taken from the pockets of the absence of stipulation in loan contracts, thereby amending Section 2
hand, foreign employers are more incentivized by the reinstated OFWs to whom the full salaries for the unexpired portion of the of Circular No. 905, Series of 1982:cralawlawlibrary
clause to enter into contracts of at least a year because it gives them contract rightfully belong. Thus, the principals/employers and the
more flexibility to violate our overseas workers’ rights. Their liability recruitment/manning agencies even profit from their violation of the Section 1. The rate of interest for the loan or forbearance of any
for arbitrarily terminating overseas workers is decreased at the security of tenure that an employment contract embodies. money, goods or credits and the rate allowed in judgments, in the
expense of the workers whose rights they violated. Meanwhile, these Conversely, lesser protection is afforded the OFW, not only because of absence of an express contract as to such rate of interest, shall be six
overseas workers who are impressed with an expectation of a stable the lessened recovery afforded him or her by operation of law, but percent (6%) per annum.
job overseas for the longer contract period disregard other also because this same lessened recovery renders a wrongful
opportunities only to be terminated earlier. They are left with claims dismissal easier and less onerous to undertake; the lesser cost of Section 2. In view of the above, Subsection X305.1 of the Manual of
that are less than what others in the same situation would receive. dismissing a Filipino will always be a consideration a foreign employer Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of
The reinstated clause, therefore, creates a situation where the law will take into account in termination of employment decisions. . . . 126 the Manual of Regulations for Non-Bank Financial Institutions are
meant to protect them makes violation of rights easier and simply hereby amended accordingly.
benign to the violator.
Further, “[t]here can never be a justification for any form of This Circular shall take effect on 1 July 2013.
As Justice Brion said in his concurring opinion in government action that alleviates the burden of one sector, but

111
 judgment did not become final and executory before July 1, provides that the foreign employer and the local employment agency
Through the able ponencia of Justice Diosdado Peralta, we laid down 2013.132cralawred are jointly and severally liable for money claims including claims
the guidelines in computing legal interest in Nacar v. Gallery arising out of an employer-employee relationship and/or damages.
Frames:130cralawred We add that Circular No. 799 is not applicable when there is a law This section also provides that the performance bond filed by the local
that states otherwise. While the Bangko Sentral ng Pilipinas has the agency shall be answerable for such money claims or damages if they
power to set or limit interest rates, 133 these interest rates do not apply were awarded to the employee.
when the law provides that a different interest rate shall be applied.
“[A] Central Bank Circular cannot repeal a law. Only a law can repeal This provision is in line with the state’s policy of affording protection
II. With regard particularly to an award of interest in the concept of another law.”134cralawred to labor and alleviating workers’ plight.136cralawred
actual and compensatory damages, the rate of interest, as well as the
accrual thereof, is imposed, as follows:chanRoblesvirtualLawlibrary For example, Section 10 of Republic Act No. 8042 provides that In overseas employment, the filing of money claims against the
unlawfully terminated overseas workers are entitled to the foreign employer is attended by practical and legal complications. The
When the obligation is breached, and it consists in the payment of a reimbursement of his or her placement fee with an interest of 12% distance of the foreign employer alone makes it difficult for an
sum of money, i.e., a loan or forbearance of money, the interest due per annum. Since Bangko Sentral ng Pilipinas circulars cannot repeal overseas worker to reach it and make it liable for violations of the
should be that which may have been stipulated in writing. Republic Act No. 8042, the issuance of Circular No. 799 does not have Labor Code. There are also possible conflict of laws, jurisdictional
Furthermore, the interest due shall itself earn legal interest from the the effect of changing the interest on awards for reimbursement of issues, and procedural rules that may be raised to frustrate an
time it is judicially demanded. In the absence of stipulation, the rate
placement fees from 12% to 6%. This is despite Section 1 of Circular overseas worker’s attempt to advance his or her claims.
of interest shall be 6% per annum to be computed from default, i.e.,
No. 799, which provides that the 6% interest rate applies even to
from judicial or extrajudicial demand under and subject to the
judgments. It may be argued, for instance, that the foreign employer must be
provisions of Article 1169 of the Civil Code.
impleaded in the complaint as an indispensable party without which
When an obligation, not constituting a loan or forbearance of money, Moreover, laws are deemed incorporated in contracts. “The no final determination can be had of an action. 137cralawred
is breached, an interest on the amount of damages awarded may be contracting parties need not repeat them. They do not even have to
imposed at the discretion of the court at the rate of 6% per annum. be referred to. Every contract, thus, contains not only what has been The provision on joint and several liability in the Migrant Workers and
No interest, however, shall be adjudged on unliquidated claims or explicitly stipulated, but the statutory provisions that have any Overseas Filipinos Act of 1995 assures overseas workers that their
damages, except when or until the demand can be established with bearing on the matter.”135 There is, therefore, an implied stipulation in rights will not be frustrated with these complications.
reasonable certainty. Accordingly, where the demand is established contracts between the placement agency and the overseas worker
with reasonable certainty, the interest shall begin to run from the that in case the overseas worker is adjudged as entitled to The fundamental effect of joint and several liability is that “each of the
time the claim is made judicially or extrajudicially (Art. 1169, Civil reimbursement of his or her placement fees, the amount shall be debtors is liable for the entire obligation.” 138 A final determination
Code), but when such certainty cannot be so reasonably established
subject to a 12% interest per annum. This implied stipulation has the may, therefore, be achieved even if only one of the joint and several
at the time the demand is made, the interest shall begin to run only
effect of removing awards for reimbursement of placement fees from debtors are impleaded in an action. Hence, in the case of overseas
from the date the judgment of the court is made (at which time the
Circular No. 799’s coverage. employment, either the local agency or the foreign employer may be
quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest sued for all claims arising from the foreign employer’s labor law
shall, in any case, be on the amount finally adjudged. The same cannot be said for awards of salary for the unexpired violations. This way, the overseas workers are assured that someone
portion of the employment contract under Republic Act No. 8042. — the foreign employer’s local agent — may be made to answer for
When the judgment of the court awarding a sum of money becomes These awards are covered by Circular No. 799 because the law does violations that the foreign employer may have committed.
final and executory, the rate of legal interest, whether the case falls not provide for a specific interest rate that should apply.
under paragraph 1 or paragraph 2, above, shall be 6% per The Migrant Workers and Overseas Filipinos Act of 1995 ensures that
annum from such finality until its satisfaction, this interim period In sum, if judgment did not become final and executory before July 1, overseas workers have recourse in law despite the circumstances of
being deemed to be by then an equivalent to a forbearance of credit. 2013 and there was no stipulation in the contract providing for a their employment. By providing that the liability of the foreign
different interest rate, other money claims under Section 10 of employer may be “enforced to the full extent” 139 against the local
Republic Act No. 8042 shall be subject to the 6% interest per annum agent, the overseas worker is assured of immediate and sufficient
And, in addition to the above, judgments that have become final and in accordance with Circular No. 799. payment of what is due them.140cralawred
executory prior to July 1, 2013, shall not be disturbed and shall
continue to be implemented applying the rate of interest fixed This means that respondent is also entitled to an interest of 6% per Corollary to the assurance of immediate recourse in law, the provision
therein.131 annum on her money claims from the finality of this judgment. on joint and several liability in the Migrant Workers and Overseas
IV. Finally, we clarify the liabilities of Wacoal as principal and Filipinos Act of 1995 shifts the burden of going after the foreign
petitioner as the employment agency that facilitated respondent’s employer from the overseas worker to the local employment agency.
Circular No. 799 is applicable only in loans and forbearance of money, overseas employment. However, it must be emphasized that the local agency that is held to
goods, or credits, and in judgments when there is no stipulation on answer for the overseas worker’s money claims is not left without
the applicable interest rate. Further, it is only applicable if the Section 10 of the Migrant Workers and Overseas Filipinos Act of 1995 remedy. The law does not preclude it from going after the foreign

112
employer for reimbursement of whatever payment it has made to the know of the joy and sadness when they come home to see them all
employee to answer for the money claims against the foreign grown up and, being so, they remember what their work has cost
employer. them. Twitter accounts, Facetime, and many other gadgets and online
applications will never substitute for their lost physical presence.
A further implication of making local agencies jointly and severally
liable with the foreign employer is that an additional layer of Unknown to them, they keep our economy afloat through the ebb and
protection is afforded to overseas workers. Local agencies, which are flow of political and economic crises. They are our true diplomats,
businesses by nature, are inoculated with interest in being always on they who show the world the resilience, patience, and creativity of our
the lookout against foreign employers that tend to violate labor law. people. Indeed, we are a people who contribute much to the provision
Lest they risk their reputation or finances, local agencies must already of material creations of this world.
have mechanisms for guarding against unscrupulous foreign
employers even at the level prior to overseas employment This government loses its soul if we fail to ensure decent treatment
applications. for all Filipinos. We default by limiting the contractual wages that
should be paid to our workers when their contracts are breached by
With the present state of the pleadings, it is not possible to determine the foreign employers. While we sit, this court will ensure that our
whether there was indeed a transfer of obligations from petitioner to laws will reward our overseas workers with what they deserve: their
Pacific. This should not be an obstacle for the respondent overseas dignity.
worker to proceed with the enforcement of this judgment. Petitioner is
possessed with the resources to determine the proper legal remedies Inevitably, their dignity is ours as well.
to enforce its rights against Pacific, if any.
WHEREFORE, the petition is DENIED. The decision of the Court of
V. Many times, this court has spoken on what Filipinos may encounter Appeals is AFFIRMED with modification. Petitioner Sameer Overseas
as they travel into the farthest and most difficult reaches of our planet Placement Agency is ORDERED to pay respondent Joy C. Cabiles the
to provide for their families. In  Prieto v. NLRC:141cralawred amount equivalent to her salary for the unexpired portion of her
employment contract at an interest of 6% per annum from the finality
of this judgment. Petitioner is also ORDERED to reimburse
respondent the withheld NT$3,000.00 salary and pay respondent
attorney’s fees of NT$300.00 at an interest of 6% per annum from the
The Court is not unaware of the many abuses suffered by our finality of this judgment.
overseas workers in the foreign land where they have ventured,
usually with heavy hearts, in pursuit of a more fulfilling future. Breach The clause, “or for three (3) months for every year of the unexpired
of contract, maltreatment, rape, insufficient nourishment, sub-human term, whichever is less” in Section 7 of Republic Act No. 10022
lodgings, insults and other forms of debasement, are only a few of the amending Section 10 of Republic Act No. 8042 is declared
inhumane acts to which they are subjected by their foreign unconstitutional and, therefore, null and void.
employers, who probably feel they can do as they please in their own
country. While these workers may indeed have relatively little defense
against exploitation while they are abroad, that disadvantage must
not continue to burden them when they return to their own territory
to voice their muted complaint. There is no reason why, in their very
own land, the protection of our own laws cannot be extended to them
in full measure for the redress of their grievances. 142chanrobleslaw

But it seems that we have not said enough.

We face a diaspora of Filipinos. Their travails and their heroism can be

told a million times over; each of their stories as real as any other.
Overseas Filipino workers brave alien cultures and the heartbreak of
families left behind daily. They would count the minutes, hours, days,
months, and years yearning to see their sons and daughters. We all

113
7. Vir-jen Shipping vs. NLRC membership if not actually paid with ITF rate that their 'demand is BOARD THAT THE SEAMEN VIOLATED THEIR
only 50% increase based on present basic salary and that the CONTRACTS IS MORE CREDIBLE THAN THE
Before the Court en banc is a motion to reconsider the decision proposed wage increase is the 'best and only solution to solve ITF FINDING OF FACT OF THE NATIONAL LABOR
promulgated on July 20, 1982 which set aside the decision of problem' since the Company's salary rates 'especially in tankers (are) RELATIONS COMMISSION THAT THE SEAMEN DID
very far in comparison with other shipping agencies in Manila ... NOT VIOLATE THEIR CONTRACT.
respondent National Labor Relations Commission and reinstated the
decision of the National Seamen Board. In reply, the Company proposed a 25% increase in the basic pay of
the complainant crew members, although it claimed, that it would B. THIS HONORABLE COURT ERRED IN FINDING
To better understand the issues raised in the motion for "suffer and absorb considerable amount of losses." The proposal was THAT VIR-JEN'S HAVING AGREED TO A 25%
reconsideration, we reiterate the background facts of the case, Taken accepted by the Seamen with certain conditions which were accepted INCREASE OF THE SEAMEN'S BASIC WAGE WAS
from the decision of the National Labor Relations Commission: têñ. by the Company. Conformably with the agreement of the parties NOT VOLUNTARY BUT WAS DUE TO THREATS.
£îhqw⣠which was effected through the cables abovementioned, the Seamen
were paid their new salary rates.
C. THIS HONORABLE COURT ERRED WHEN IT
It appears that on different dates in December, 1978 and January, Subsequently, the Company sought authority from the NSB to cancel TOOK COGNIZANCE OF THE ADDENDUM
1979, the Seamen entered into separate contracts of employment the contracts of employment of the Seamen, claiming that its AGREEMENT; ASSUMING THAT THE ADDENDUM
with the Company, engaging them to work on board M/T' Jannu for a principals had terminated their manning agreement because of the AGREEMENT COULD BE TAKEN COGNIZANCE OF,
period of twelve (12) months. After verification and approval of their actuations of the Seamen. The request was granted by the NSB THIS HONORABLE COURT ERRED WHEN' IT FOUND
contracts by the NSB, the Seamen boarded their vessel in Japan. Executive Director in a letter dated 10 April 1979. Soon thereafter, THAT PRIVATE RESPONDENTS HAD VIOLATED THE
the Company cabled the Seamen informing them that their contracts SAME.
On 10 January 1919, the master of the vessel complainant Rogelio H. would be terminated upon the vessel's arrival in Japan. On 19 April
Bisula, received a cable from the Company advising him of the 1979 they Arere asked to disembark from the vessel, their contracts
possibility that the vessel might be directed to call at ITF-controlled were terminated, and they were repatriated to Manila. There is no D, THIS HONORABLE COURT ERRED WHEN IT DID
ports said at the same time informing him of the procedure to be showing that the Seamen were given the opportunity to at least NOT FIND PETITIONER VIRJEN LIABLE FOR
followed in the computation of the special or additional compensation comment on the Company's request for the cancellation of their HAVING TERMINATED BEFORE EXPIRY DATE THE
of crew members while in said ports. ITF is the acronym for the contracts, although they had served only three (3) out of the twelve EMPLOYMENT CONTRACTS OF PRIVATE
International Transport Workers Federation, a militant international (12) months' duration of their contracts. RESPONDENTS, THERE BEING NO LEGAL AND
labor organization with affiliates in different ports of the world, which JUSTIFIABLE GROUND FOR SUCH TERMINATION.
reputedly can tie down a vessel in a port by preventing its loading or The private respondents filed a complaint for illegal dismissal and
unloading, This is a sanction resorted to by ITF to enforce the
non-payment of earned wages with the National Seamen Board. The E. THIS HONORABLE COURT ERRED IN FINDING
payment of its wages rates for seafarers the so-called ITF rates, if the
Vir-jen Shipping and Marine Services Inc. in turn filed a complaint for THAT THE PREPARATION BY PETITIONER OF THE
wages of the crew members of a vessel who have affiliated with it are
breach of contract and recovery of excess salaries and overtime pay TWO PAYROLLS AND THE EXECUTION OF THE SIDE
below its prescribed rates.) In the same cable of the Company, the
expressed its regrets for hot clarifying earlier the procedure in against the private respondents. On July 2, 1980, the NSB rendered a CONTRACT WERE NOT MADE IN BAD FAITH.
computing the special compensation as it thought that the vessel decision declaring that the seamen breached their employment
would 'trade in Caribbean ports only. contracts when they demanded and received from Vir-jen Shipping
F. THIS HONORABLE COURT INADVERTENTLY
wages over and above their contracted rates. The dismissal of the
On 22 March 1979, the Company sent another cable to complainant DISCRIMINATED AGAINST PRIVATE
seamen was declared legal and the seamen were ordered suspended.
Bisula, this time informing him of the respective amounts each of the RESPONDENTS.
officers and crew members would receive as special compensation
The seamen appealed the decision to the NLRC which reversed the
when the vessel called at the port of Kwinana Australia, an ITF- At the outset, we are faced with the question whether or not the Court
controlled port. This was followed by another cable on 23 March 1979, decision of the NSB and required the petitioner to pay the wages and
en banc should give due course to the motion for reconsideration
informing him that the officers and crew members had been enrolled other monetary benefits corresponding to the unexpired portion of the
inspite of its having been denied twice by the Court's Second Division.
as members of the ITF in Sidney, Australia, and that the membership manning contract on the ground that the termination of the contract
The case was referred to and accepted by the Court en banc because
fee for the 28 personnel complement of the vessel had already been by the petitioner was without valid cause. Vir-jen Shipping filed the
of the movants' contention that the decision in this case by the
paid. present petition.
Second Division deviated from Wallem Phil. Shipping Inc. v. Minister
In answer to the Company's cable last mentioned, complainant Bisula, of Labor  (L-50734-37, February 20, 1981), a First Division case with
The private respondents submit the following issues in their motion the same facts and issues. We are constrained to answer the initial
in representation of the other officers and crew members, sent on 24
March 1979 a cable informing the Company that the officers and crew for reconsideration: têñ.£îhqw⣠question in the affirmative.
members were not agreeable to its 'suggestion'; that they were not
contented with their present salaries 'based on the volume of works, A. THIS HONORABLE COURT DID VIOLENCE TO A fundamental postulate of Philippine Constitutional Law is the fact,
type of ship with hazardous cargo and registered in a world wide LAW AND JURISPRUDENCE WHEN IT HELD THAT that there is only one Supreme Court from whose decisions all other
trade': that the 'officers and crew (were) not interested in ITF THE FINDING OF FACT OF THE NATIONAL SEAMEN courts are required to take their bearings. (Albert v. Court of First

114
Instance, 23 SCRA 948; Barrera v. Barrera, 34 SCRA 98; Tugade v. only to return the increased pay once the ship leaves that port, should established by law and jurisprudence as "rights" and before these
Court of Appeals, 85 SCRA 226). The majority of the Court's work is stifle not only their right to ask for improved terms of employment but were proved beneficial to management, labor, and the nation as a
now performed by its two Divisions, but the Court remains one court, their freedom of speech and expression, and should suffer instant whole beyond reasonable doubt.
single, unitary, complete, and supreme. Flowing from this nature of termination of employment at the slightest sign of dissatisfaction with
the Supreme Court is the fact that, while ' individual Justices may no protection from their Government and their courts. Otherwise, the The case before us does not represent any major advance in the
dissent or partially concur with one another, when the Court states petitioners contend that Filipinos would no longer be accepted as rights of labor and the workingmen. The private respondents merely
what the law is, it speaks with only one voice. And that voice being seamen, those employed would lose their jobs, and the still sought rights already established. No matter how much the petitioner-
authoritative should be a clear as possible. unemployed would be left hopeless. employer tries to present itself as speaking for the entire industry,
there is no evidence that it is typical of employers hiring Filipino
Any doctrine or principle of law laid down by the Court, whether en This is not the first time and it will not be the last where the threat of seamen or that it can speak for them.
banc or in Division, may be modified or reversed only by the Court en unemployment and loss of jobs would be used to argue against the
banc. (Section 2(3), Article X, Constitution.) In the rare instances interests of labor; where efforts by workingmen to better their terms The contention that manning industries in the Philippines would not
when one Division disagrees in its views with the other Division, or of employment would be characterized as prejudicing the interests of survive if the instant case is not decided in favor of the petitioner is
the necessary votes on an issue cannot be had in a Division, the case labor as a whole. not supported by evidence. The Wallem case was decided on February
is brought to the Court en banc to reconcile any seeming conflict, to 20, 1981. There have been no severe repercussions, no drying up of
reverse or modify an earlier decision, and to declare the Court's In 1867 or one hundred sixteen years ago. Chief Justice Beasley of employment opportunities for seamen, and none of the dire
doctrine. This is what has happened in this case. the Supreme Court of New Jersey was ponente of the court's opinion consequences repeatedly emphasized by the petitioner. Why should
declaring as a conspiracy the threat of workingmen to strike in Vir-jen be all exception?
The decision sought to be reconsidered appears to be a deviation from connection with their efforts to promote unionism, têñ.£îhqwâ£
the Court's decision, speaking through the First Division, in Wallem The wages of seamen engaged in international shipping are
Shipping, Inc. v. Hon. Minister of Labor  (102 SCRA 835). Faced with It is difficult to believe that a right exists in law shouldered by the foreign principal. The local manning office is an
two seemingly conflicting resolutions of basically the same issue by its which we can scarcely conceive can produce, in agent whose primary function is recruitment and who .usually gets a
two Divisions, the Court. therefore, resolved to transfer the case to any posture of affairs, other than injuriois results. lump sum from the shipowner to defray the salaries of the crew. The
the Court en banc. Parenthetically, the petitioner's comment on the It is simply the right of workmen, by concert of hiring of seamen and the determination of their compensation is
third motion for reconsideration states that the resolution of the action, and by taking advantage of their position, subject to the interplay of various market factors and one key factor is
motion might be the needed vehicle to make the ruling in the Wallem to control the business of another, I am unwilling how much in terms of profits the local manning office and the foreign
case clearer and more in time with the underlying principles of the to hold that a right which cannot, in any, event, be shipowner may realize after the costs of the voyage are met. And
Labor Code. We agree with the petitioner. advantageous to the employee, and which must costs include salaries of officers and crew members.
always be hurtful to the employer, exists in law. In
After an exhaustive, painstaking, and perspicacious consideration of my opinion this indictment sufficiently shows that Filipino seamen are admittedly as competent and reliable as seamen
the motions for reconsideration and the comments, replies, and other the force of the confederates was brought to bear from any other country in the world. Otherwise, there would not be so
pleadings related thereto, the Court en banc is constrained to grant upon their employer for the purpose of oppression many of them in the vessels sailing in every ocean and sea on this
the motions. To grant the motion is to keep faith with the and mischief and that this amounts to a globe. It is competence and reliability, not cheap labor that makes our
constitutional mandate to afford protection to labor and to assure the conspiracy, (State v. Donaldson, 32 NJL 151, 1867. seamen so greatly in demand. Filipino seamen have never demanded
rights of workers to self-organization and to just and humane Cited in Chamberlain, Sourcebook on Labor, p. 13. the same high salaries as seamen from the United States, the United
conditions of work. We sustain the decision of the respondent National Emphasis supplied) Kingdom, Japan and other developed nations. But certainly they are
labor Relations Commission. entitled to government protection when they ask for fair and decent
The same arguments have greeted every major advance in the rights treatment by their employer.-, and when they exercise the right to
There are various arguments raised by the petitioners but the of the workingman. And they have invariably been proved unfounded petition for improved terms of employment, especially when they feel
common thread running through all of them is the contention, if not and false. that these are sub-standard or are capable of improvement according
the dismal prophecy, that if the respondent seamen are sustained by to internationally accepted rules. In the domestic scene, there are
this Court, we would in effect "kill the en that lays the golden egg." In Unionism, employers' liability acts, minimum wages, workmen's marginal employers who prepare two sets of payrolls for their
other words, Filipino seamen, admittedly among the best in the world, compensation, social security and collective bargaining to name a few employees — one in keeping with minimum wages and the other
should remain satisfied with relatively lower if not the lowest, were all initially opposed by employers and even well meaning leaders recording the sub-standard wages that the employees really receive,
international rates of compensation, should not agitate for higher of government and society as "killing the hen or goose which lays the The reliable employers, however, not only meet the minimums
wages while their contracts of employment are subsisting, should golden eggs." The claims of workingmen were described as required by fair labor standards legislation but even go way above the
accept as sacred, iron clad, and immutable the side contracts which outrageously injurious not only to the employer but more so to the minimums while earning reasonable profits and prospering. The same
require them to falsely pretend to be members of international labor employees themselves before these claims or demands were is true of international employment. There is no reason why this Court
federations, pretend to receive higher salaries at certain foreign ports and the Ministry of Labor and. Employment or its agencies and

115
commissions should come out with pronouncements based on the not have been intended as a threat to comp el the Company to accede The facts show that Virjen Initiated the discussions which led to the
standards and practices of unscrupulous or inefficient shipowners, to their proposals. But even assuming, if only for the sake of demand for increased . The seamen made a proposal and the
who claim they cannot survive without resorting to tricky and argument, that the demand or — proposal for a wage increase was petitioner organized with a counter-proposal. The ship had not vet
deceptive schemes, instead of Government maintaining labor law and accompanied by a threat that they would report to ITF if the Company gone to Australia or any ITF controlled port. There was absolutely no
jurisprudence according to the practices of honorable, competent, and did not accede to the contract revision - although there really was no mention of any strike. much less a threat to strike. The seamen had
law-abiding employers, domestic or foreign. such threat as pointed out earlier — the Seamen should not be held at done in act which under Philippine law or any other civilized law would
fault for asking such a demand. In the same case cited above, the
be termed illegal, oppressive, or malicious. Whatever pressure
Supreme Court held: têñ.£îhqwâ£
If any minor advantages given to Filipino seamen may somehow cut existed, it was mild compared to accepted valid modes of labor
into the profits of local manning agencies and foreign shipowners, that Petitioner claims that the dismissal of private respondents was activity.
is not sufficient reason why the NSB or the ILRC should not stand by justified because the latter threatened the ship authorities in acceding
the former instead of listening to unsubstantiated fears that they to their demands, and this constitutes serious misconduct as We reiterate our ruling in Wallem. têñ.£îhqwâ£
would be killing the hen which lays the golden eggs. contemplated by the Labor Code. This contention is not well-
taken. But even if there had been such a threat, respondents'
behavior should not be censured because it is but natural for them to Petitioner claims that the dismissal of private respondents was
Prescinding from the above, we now hold that neither the National employ some means of pressing their demands for petitioner, the justified because the latter threatened the ship authorities in acceding
Seamen Board nor the National Labor Relations Commission should, refusal to abide with the terms of the Special Agreement, to honor to their demands, and this constitutes serious misconduct as
as a matter of official policy, legitimize and enforce cubious and respect the same, They were only acting in the exercise of their contemplated by the Labor Code. This contention is not well-taken.
arrangements where shipowners and seamen enter into fictitious rights, and to deprive them of their freedom of expression is contrary The records fail to establish clearly the commission of any threat, But
contracts similar to the addendum agreements or side contracts in to law and public policy. There is no serious misconduct to speak of in even if there had been such a threat, respondents' behavior should
the case at bar which would justify respondents' dismissal just not be censured because it is but natural for them to employ some
this case whose purpose is to deceive. The Republic of the Philippines
because of their firmness in their demand for the fulfillment by means of pressing their demands for petitioner, who refused to abide
and its ministries and agencies should present a more honorable and
petitioner of its obligation it entered into without any coercion, with the terms of the Special Agreement, to honor and respect the
proper posture in official acts to the whole world, notwithstanding our
specially on the part of private respondents. (Emphasis supplied). same, They were only acting in the exercise of their rights, and to
desire to have as many job openings both here and abroad for our
deprive them of their form of expression is contrary to law and public
workers. At the very least, such as sensitive matter involving no less policy. ...
than our dignity as a people and the welfare of our workingmen must The above citation is from Wallem.
proceed from the Batasang Pambansa in the form of policy legislation,
Our dismissing the petition is premised on the assumption that the
not from administrative rule making or adjudication The facts show that when the respondents boarded the M/T Jannu Ministry of Labor and Employment and all its agencies exist primarily
there was no intention to send their ship to Australia. On January 10, for the workinginan's interests and, of course, the nation as a whole.
Another issue raised by the movants is whether or not the seamen 1979, the petitioner sent a cable to respondent shipmaster Bisula The points raised by the Solicitor-General in his comments refer to the
violated their contracts of employment. informing him of the procedure to be followed in the computation of issue of allowing what the petitioner importunes under the argument
special compensation of crewmembers while in ITF controlled ports of "killing the hen which lays the golden eggs." This is one of policy
and expressed regrets for not having earlier clarified the procedure as which should perhaps be directed to the Batasang Pambansa and to
The form contracts approved by the National Seamen Board are
it thought that the vessel would trade in Carribean ports only. our country's other policy makers for more specific legislation on the
designed to protect Filipino seamen not foreign shipowners who can
take care of themselves. The standard forms embody' the basic matter, subject to the constitutional provisions protecting labor,
minimums which must be incorporated as parts of the employment On March 22, 1979, the petitioner sent another cable informing Bisula promoting social justice, and guaranteeing non-abridgement of the
contract. (Section 15, Rule V, Rules and Regulations Implementing of the special compensation when the ship would call at Kwinana freedom of speech, press, peaceable assembly and petition. We agree
the Labor Code.) They are not collective bargaining agreements or Australia. with the movants that there is no showing of any cause, which under
immutable contracts which the parties cannot improve upon or modify the Labor Code or any current applicable law, would warrant the
in the course of the agreed period of time. To state, therefore, that termination of the respondents' services before the expiration of their
The following day, shipmaster Bisula cabled Vir-jen stating that the
the affected seamen cannot petition their employer for higher salaries contracts. The Constitution guarantees State assurance of the rights
officers and crews were not interested in ITF membership if not paid
during the 12 months duration of the contract runs counter to of workers to security of tenure. (Sec. 9, Article II, Constitution).
ITF rates and that their only demand was a 50 percent increase based
established principles of labor legislation. The National Labor Relations Presumptions and provisions of law, the evidence on record, and
on their then salaries. Bisula also pointed out that Vir-jen rates were
Commission, as the appellate tribunal from decisions of the National fundamental State policy all dictate that the motions for
"very far in comparison with other shipping agencies in Manila."
Seamen Board, correctly ruled that the seamen did not violate their reconsideration should be granted.
contracts to warrant their dismissal.
In reply, Vir-jen counter proposed a 25 percent increase. Only after
WHEREFORE, the motions for reconsideration are hereby GRANTED.
Kyoei Tanker Co., Ltd., declined to increase the lumps sum amount
The respondent Commission ruled: têñ.£îhqw⣠The petition is DISMISSED for lack of merit. The decision of the
given monthly to Vir-jen was the decision to terminate the
National Labor Relations Commission is AFFIRMED. No costs.
respondents' employment formulated.
In the light of all the foregoing facts, we find that the cable of the
seamen proposing an increase in their wage rates was not and could

116
SO ORDERED contracts of employment (Exhs. "B" to "B-17", respondent Judge Alfredo Benipayo and which eventually led to G.R.
inclusive) with complainant (private respondent) to Nos. 57999 and 58143-53.
work aboard vessels owned/operated/manned by
the latter for a period of 12 calendar months and In G.R. Nos. 64781-99, the petitioners claimed before the NSB that
with different rating/position, salary, overtime pay contrary to the private respondent's allegations, they did not commit
and allowance, hereinbelow specified: ...; that any illegal act nor stage a strike while they were on board the vessel;
aforesaid employment contracts were verified and that the "Special Agreement" entered into in Vancouver to pay their
8. Suzara vs. Benipayo
approved by this Board; that on different dates in salary differentials is valid, having been executed after peaceful
April 1978 respondents (petitioners) joined the M/V negotiations. Petitioners further argued that the amounts they
These petitions ask for a re-examination of this Court's precedent — "GRACE RIVER"; that on or about October 30, 1978 received were in accordance with the provision of law, citing among
setting decision in Vir-Jen Shipping and Marine Services Inc. v. aforesaid vessel, with the respondents on board, others, Section 18, Rule VI, Book I of the Rules and Regulations
National Labor Relations Commission, et al.  (125 SCRA 577 [1983]). arrived at the port of Vancouver, Canada; that at Implementing the Labor Code which provides that "the basic minimum
On constitutional, statutory, and factual grounds, we find no reason to this port respondent received additional wages salary of seamen shall not be less than the prevailing minimum rates
disturb the doctrine in Vir-Jen Shipping  and to turn back the clock of under rates prescribed by the Intemational established by the International Labor Organization (ILO) or those
progress for sea-based overseas workers. The experience gained in Transport Worker's Federation (ITF) in the total prevailing in the country whose flag the employing vessel carries,
the past few years shows that, following said doctrine, we should amount of US$98,261.70; that the respondents whichever is higher ..."; and that the "Agreement" executed in
neither deny nor diminish the enjoyment by Filipino seamen of the received the amounts appearing opposite their Nagoya, Japan had been forced upon them and that intercalations
same rights and freedoms taken for granted by other working-men names, to wit: ...; that aforesaid amounts were were made to make it appear that they were merely trustees of the
here and abroad. over and above the rates of pay of respondents as amounts they received in Vancouver.
appearing in their employment contracts approved
The cases at bar involve a group of Filipino seamen who were by this Board; that on November 10, 1978,
aforesaid vessel, with respondent on board, left On the other hand, the private respondent alleged that the petitioners
declared by the defunct National Seamen Board (NSB) guilty of
Vancouver, Canada for Yokohama, Japan; that on breached their employment contracts when they, acting in concert
breaching their employment contracts with the private respondent
December 14, 1978, while aforesaid vessel, was at and with the active participations of the ITF while the vessel was in
because they demanded, upon the intervention and assistance of a
Yura, Japan, they were made to disembark. (pp. Vancouver, staged an illegal strike and by means of threats, coercion
third party, the International Transport Worker's Federation (ITF), the
64-66, Rollo) and intimidation compelled the owners of the vessel to pay to them
payment of wages over and above their contracted rates without the
various sums totalling US$104,244.35; that the respondent entered
approval of the NSB. The petitioners were ordered to reimburse the
into the "Special Agreement" to pay the petitioners' wage differentials
total amount of US$91,348.44 or its equivalent in Philippine Currency Furthermore, according to the petitioners, while the vessel was because it was under duress as the vessel would not be allowed to
representing the said over-payments and to be suspended from the docked at Nagoya, Japan, a certain Atty. Oscar Torres of the NSB leave Vancouver unless the said agreement was signed, and to
NSB registry for a period of three years. The National Labor Relations Legal Department boarded the vessel and called a meeting of the prevent the shipowner from incurring further delay in the shipment of
Commission (NLRC) affirmed the decision of the NSB. seamen including the petitioners, telling them that for their own good goods; and that in view of petitioners' breach of contract, the latter's
and safety they should sign an agreement prepared by him on board names must be removed from the NSB's Registry and that they
In a corollary development, the private respondent, for failure of the the vessel and that if they do, the cases filed against them with NSB should be ordered to return the amounts they received over and
petitioners to return the overpayments made to them upon demand on November 17, 1978 would be dismissed. Thus, the petitioners above their contracted rates.
by the former, filed estafa charges against some of the petitioners. signed the. "Agreement" dated December 5, 1978. (Annex C of
The criminal cases were eventually consolidated in the sala of then Petition) However, when they were later furnished xerox copies of
what they had signed, they noticed that the line "which amount(s) The respondent NSB ruled that the petitioners were guilty of breach of
respondent Judge Alfredo Benipayo. Hence, these consolidated
was/were received and held by CREWMEMBERS in trust for contract because despite subsisting and valid NSB-approved
petitions, G.R. No. 64781-99 and G.R. Nos. 57999 and 58143-53,
SHIPOWNERS" was inserted therein, thereby making it appear that employment contracts, the petitioners sought the assistance of a third
which respectively pray for the nullification of the decisions of the
the amounts given to the petitioners representing the increase in their party (ITF) to demand from the private respondent wages in
NLRC and the NSB, and the dismissal of the criminal cases against the
wages based on ITF rates were only received by them in trust for the accordance with the ITF rates, which rates are over and above their
petitioners.
private respondent. rates of pay as appearing in their NSB-approved contracts. As bases
for this conclusion, the NSB stated:
The facts are found in the questioned decision of the NSB in G.R. No.
64781-99. When the vessel reached Manila, the private respondent demanded
from the petitioners the "overpayments" made to them in Canada. As 1) The fact that respondents sought the aid of a
the petitioners refused to give back the said amounts, charges were third party (ITF) and demanded for wages and
From the records of this case it appears that the overtime pay based on ITF rates is shown in the
filed against some of them with the NSB and the Professional
facts established and/or admitted by the parties entries of their respective Pay-Off Clearance Slips
Regulations Commission. Estafa charges were also filed before
are the following: that on different dates in 1977 which were marked as their Exhs. "1" to "18", and
different branches of the then Court of First Instance of Manila which,
and 1978 respondents entered into separate we quote "DEMANDED ITF WAGES, OVERTIME,
as earlier stated, were subsequently consolidated in the sala of the
117
 DIFFERENTIALS APRIL TO OCTOBER 1978". scale. The Board condemns the act of a party who themselves; (c), the petitioners' admission that ITF acted in their
Respondent Suzara admitted that the entries in his enters into a contract and with the use of force/or behalf; and (d) the fact that the private respondent was compelled to
Pay-Off Clearance Slip (Exh. "1") are correct (TSN., intimidation causes the other party to modify said sign the special agreement at Vancouver, Canada.
p. 16, Dec. 6, 1979).lâwphî1.ñèt  Moreover, it is contract. If the respondents believe that they have
the policy (reiterated very often) by the ITF that it a valid ground to demand from the complainant a There is nothing in the public and private respondents' pleadings, to
does not interfere in the affairs of the revision of the terms of their contracts, the same support the allegations that the petitioners used force and violence to
crewmembers and masters and/or owners of a should have been done in accordance with law and secure the special agreement signed in Vancouver. British Columbia.
vessel unless its assistance is sought by the not thru illegal means. (at p. 72, Rollo). There was no need for any form of intimidation coming from the
crewmembers themselves. Under this pronounced Filipino seamen because the Canadian Brotherhood of Railways and
policy of the ITF, it is reasonable to assume that Although the respondent NSB found that the petitioners were entitled Transport Workers (CBRT), a strong Canadian labor union, backed by
the representatives of the ITF in Vancouver, to the payment of earned wages and overtime pay/allowance from an international labor federation was actually doing all the influencing
Canada assisted and intervened by reason of the November 1, 1978 to December 14, 1978, it nevertheless ruled that not only on the ship-owners and employers but also against third
assistance sought by the latter. the computation should be based on the rates of pay as appearing in world seamen themselves who, by receiving lower wages and cheaper
the petitioners' NSB-approved contracts. It ordered that the amounts accommodations, were threatening the employment and livelihood of
2) The fact that the ITF assisted and intervened for to which the petitioners are entitled under the said computation seamen from developed nations.
and in behalf of the respondents in the latter's should be deducted from the amounts that the petitioners must return
demand for higher wages could be gleaned from to the private respondent. The bases used by the respondent NSB to support its decision do not
the answer of the respondents when they admitted prove that the petitioners initiated a conspiracy with the ITF or
that the ITF acted in their behalf in the On appeal, the NLRC affirmed the NSB's findings. Hence, the petition deliberately sought its assistance in order to receive higher wages.
negotiations for increase of wages. Moreover, in G.R. Nos. 64781-99. They only prove that when ITF acted in petitioners' behalf for an
respondent Cesar Dimaandal admitted that the ITF increase in wages, the latter manifested their support. This would be a
differential pay was computed by the ITF logical and natural reaction for any worker in whose benefit the ITF or
representative (TSN, p. 7, Dec. 12, 1979) Meanwhile, the petitioners in G.R. Nos. 57999 and 58143-53 moved
to quash the criminal cases of estafa filed against them on the ground any other labor group had intervened. The petitioners admit that
that the alleged crimes were committed, if at all, in Vancouver, while they expressed their conformity to and their sentiments for
3) The fact that complainant and the Canada and, therefore, Philippine courts have no jurisdiction. The higher wages by means of placards, they, nevertheless, continued
owner/operator of the vessel were compelled to respondent judge denied the motion. Hence, the second petition. working and going about their usual chores. In other words, all they
sign the Special Agreement (Exh. "20") and to pay did was to exercise their freedom of speech in a most peaceful way.
ITF differentials to respondents in order not to The ITF people, in turn, did not employ any violent means to force the
delay the departure of the vessel and to prevent The principal issue in these consolidated petitions is whether or not private respondent to accede to their demands. Instead, they simply
further losses is shown in the "Agreement" (Exhs. the petitioners are entitled to the amounts they received from the applied effective pressure when they intimated the possibility of
"R-21") ... (pp. 69-70, Rollo) private respondent representing additional wages as determined in interdiction should the shipowner fail to heed the call for an upward
the special agreement. If they are, then the decision of the NLRC and adjustment of the rates of the Filipino seamen. Interdiction is nothing
NSB must be reversed. Similarly, the criminal cases of estafa must be more than a refusal of ITF members to render service for the ship,
The NSB further said: dismissed because it follows as a consequence that the amounts such as to load or unload its cargo, to provision it or to perform such
received by the petitioners belong to them and not to the private other chores ordinarily incident to the docking of the ship at a certain
While the Board recognizes the rights of the respondent. port. It was the fear of ITF interdiction, not any action taken by the
respondents to demand for higher wages, provided seamen on board the vessel which led the shipowners to yield.
the means are peaceful and legal, it could not, In arriving at the questioned decision, the NSB ruled that the
however, sanction the same if the means employed petitioners are not entitled to the wage differentials as determined by
are violent and illegal. In the case at bar, the The NSB's contusion that it is ITF's policy not to intervene with the
the ITF because the means employed by them in obtaining the same plight of crewmembers of a vessel unless its intervention was sought
means employed are violent and illegal for in were violent and illegal and because in demanding higher wages the
demanding higher wages the respondents sought is without basis. This Court is cognizant of the fact that during the
petitioners sought the aid of a third party, which, in turn, intervened period covered by the labor controversies in Wallem Philippines
the aid of a third party and in turn the latter in their behalf and prohibited the vessel from sailing unless the owner
intervened in their behalf and prohibited the vessel Shipping, Inc. v. Minister of Labor  (102 SCRA 835 [1981]; Vir-Jen
and/or operator of the vessel acceded to respondents' demand for Shipping and Marine Services, Inc. v. NLRC  (supra) and these
from sailing unless the owner and/or operator of higher wages. And as proof of this conclusion, the NSB cited the
the vessel acceded to respondents' demand for consolidated petitions, the ITF was militant worldwide especially in
following: (a) the entries in the petitioners Pay-Off Clearance Slip Canada, Australia, Scandinavia, and various European countries,
higher wages. To avoid suffering further which contained the phrase "DEMANDED ITF WAGES ..."; (b) the
incalculable losses, the owner and/or operator of interdicting foreign vessels and demanding wage increases for third
alleged policy of the ITF in not interfering with crewmembers of a world seamen. There was no need for Filipino or other seamen to seek
the vessel had no altemative but to pay vessel unless its intervention is sought by the crewmembers
respondents' wages in accordance with the ITF ITF intervention. The ITF was waiting on its own volition in all

118
Canadian ports, not particularly for the petitioners' vessel but for all to honor and respect the same. They were only unrealistic to expect the petitioners while in Canada to exhibit the will
ships similarly situated. As earlier stated, the ITF was not really acting acting in the exercise of their rights, and to deprive and strength to oppose the ITF's demand for an increase
for the petitioners out of pure altruism. The ITF was merely protecting them of their freedom of expression is contrary to in their  wages, assuming they were so minded.
the interests of its own members. The petitioners happened to be law and public policy. ... (at page 843)
pawns in a higher and broader struggle between the ITF on one hand An examination of Annex C of the petition, the agreement signed in
and shipowners and third world seamen, on the other. To subject our We likewise, find the public respondents' conclusions that the acts of Japan by the crewmembers of the M/V Grace River and a certain M.
seamen to criminal prosecution and punishment for having been the petitioners in demanding and receiving wages over and above the Tabei, representative of the Japanese shipowner lends credence to the
caught in such a struggle is out of the question. rates appearing in their NSB-approved contracts is in effect an petitioners' claim that the clause "which amount(s) was received and
alteration of their valid and subsisting contracts because the same held by CREWMEMBERS in trust for SHIPOWNER" was an intercalation
were not obtained through. mutual consent and without the prior added after the execution of the agreement. The clause appears too
approval of the NSB to be without basis, not only because the private closely typed below the names of the 19 crewmen and their wages
As stated in Vir-Jen Shipping  (supra): respondent's consent to pay additional wages was not vitiated by any with no similar intervening space as that which appears between all
violence or intimidation on the part of the petitioners but because the the paragraphs and the triple space which appears between the list of
said NSB-approved form contracts are not unalterable contracts that crewmembers and their wages on one hand and the paragraph above
The seamen had done no act which under can have no room for improvement during their effectivity or which which introduces the list, on the other. The verb "were" was also
Philippine law or any other civilized law would be ban any amendments during their term. inserted above the verb "was" to make the clause grammatically
termed illegal, oppressive, or malicious. Whatever correct but the insertion of "were" is already on the same line as
pressure existed, it was mild compared to accepted "Antonio Miranda and 5,221.06" where it clearly does not belong.
and valid modes of labor activity. (at page 591) For one thing, the employer can always improve the working
conditions without violating any law or stipulation. There is no other space where the word "were" could be intercalated.
(See Rollo, page 80).
Given these factual situations, therefore, we cannot affirm the NSB
and NLRC's finding that there was violence, physical or otherwise We stated in the Vir-Jen case (supra) that:
At any rate, the proposition that the petitioners should have
employed by the petitioners in demanding for additional wages. The pretended to accept the increased wages while in Vancouver but
fact that the petitioners placed placards on the gangway of their ship The form contracts approved by the National returned them to the shipowner when they reached its country,
to show support for ITF's demands for wage differentials for their own Seamen Board are designed to protect Filipino Japan, has already been answered earlier by the Court:
benefit and the resulting ITF's threatened interdiction do not seamen not foreign shipowners who can take care
constitute violence. The petitioners were exercising their freedom of of themselves. The standard forms embody the
speech and expressing sentiments in their hearts when they placed basic minimums which must be incorporated as Filipino seamen are admittedly as competent and
the placard We Want ITF Rates." Under the facts and circumstances of parts of the employment contract. (Section 15, reliable as seamen from any other country in the
these petitions, we see no reason to deprive the seamen of their right Rule V, Rules and Regulations Implementing the world. Otherwise, there would not be so many of
to freedom of expression guaranteed by the Philippine Constitution Labor Code).lâwphî1.ñèt  They are not collective them in the vessels sailing in every ocean and sea
and the fundamental law of Canada where they happened to exercise bargaining agreements or immutable contracts on this globe. It is competence and reliability, not
it. which the parties cannot improve upon or modify cheap labor that makes our seamen so greatly in
in the course of the agreed period of time. To demand. Filipino seamen have never demanded
state, therefore, that the affected seamen cannot the same high salaries as seamen from the United
As we have ruled in Wallem Phil. Shipping Inc. v. Minister of Labor, et States, the United Kingdom, Japan and other
al. supra: petition their employer for higher salaries during
the 12 months duration of the contract runs developed nations. But certainly they are entitled
counter to estabhshed principles of labor to government protection when they ask for fair
Petitioner claims that the dismissal of private legislation. The National Labor Relations and decent treatment by their employer and when
respondents was justified because the latter Commission, as the appellate tribunal from the they exercise the right to petition for improved
threatened the ship authorities in acceding to their decisions of the National Seamen Board, correctly terms of employment, especially when they feel
demands, and this constitutes serious misconduct ruled that the seamen did not violate their that these are sub-standard or are capable of
as contemplated by the Labor Code. This contracts to warrant their dismissal. (at page 589) improvement according to internationally accepted
contention is now well-taken. The records fail to rules. In the domestic scene, there are marginal
establish clearly the commission of any threat. But employers who prepare two sets of payrolls for
even if there had been such a threat, respondents' It is impractical for the NSB to require the petitioners, caught in the their employees — one in keeping with minimum
behavior should not be censured because it is but middle of a labor struggle between the ITF and owners of ocean going wages and the other recording the sub-standard
natural for them to employ some means of vessels halfway around the world in Vancouver, British Columbia to wages that the employees really receive. The
pressing their demands for petitioner, who refused first secure the approval of the NSB in Manila before signing an reliable employers, however, not only meet the
to abide with the terms of the Special Agreement, agreement which the employer was willing to sign. It is also totally minimums required by fair labor standards

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 legislation but even go away above the minimums contract be allowed where the same provides for goose which lays the golden eggs" argument. We reiterate the ruling
while earning reasonable profits and prospering. benefits less than those enumerated in the model of the Court in Vir-Jen Shipping  (supra)
The same is true of international employment. employment contract, or in any way conflicts with
There is no reason why this court and the Ministry any other provisions embodied in the model There are various arguments raised by the
of Labor and Employment or its agencies and contract. petitioners but the common thread running
commissions should come out with through all of them is the contention, if not the
pronouncements based on the standards and Section 18 of Rule VI of the same Rules and Regulations provides: dismal prophecy, that if the respondent seamen
practices of unscrupulous or inefficient shipowners, are sustained by this Court, we would in effect "kill
who claim they cannot survive without resorting to the hen that lays the golden egg." In other words,
tricky and deceptive schemes, instead of Sec. 18. Basic minimum salary of able-seamen. —
The basic minimum salary of seamen shall be not Filipino seamen, admittedly among the best in the
Government maintaining labor law and world, should remain satisfied with relatively lower
jurisprudence according to the practices of less than the prevailing minimxun rates established
by the International Labor Organization or those if not the lowest, international rates of
honorable, competent, and law-abiding employers, compensation, should not agitate for higher wages
domestic or foreign. (Vir-Jen Shipping, supra, pp. prevailing in the country whose flag the employing
vessel carries, whichever is higher. However, this while their contracts of employment are subsisting,
587-588) should accept as sacred, iron clad, and immutable
provision shall not apply if any shipping company
pays its crew members salaries above the the side contracts which require: them to falsely
It is noteworthy to emphasize that while the Intemational Labor minimum herein provided. pretend to be members of international labor
Organization (ILO) set the minimum basic wage of able seamen at federations, pretend to receive higher salaries at
US$187.00 as early as October 1976, it was only in 1979 that the certain foreign ports only to return the increased
respondent NSB issued Memo Circular No. 45, enjoining all shipping Section 8, Rule X, Book I of the Omnibus Rules provides: pay once the ship leaves that port, should stifle not
companies to adopt the said minimum basic wage. It was correct for only their right to ask for improved terms of
the respondent NSB to state in its decision that when the petitioners Section 8. Use of standard format of service employment but their freedom of speech and
entered into separate contracts between 1977-1978, the monthly agreement. — The Board shall adopt a standard expression, and should suffer instant termination
minimum basic wage for able seamen ordered by NSB was still fixed format of service agreement in accordance with of employment at the slightest sign of
at US$130.00. However, it is not the fault of the petitioners that the pertinent labor and social legislation and prevailing dissatisfaction with no protection from their
NSB not only violated the Labor Code which created it and the Rules standards set by applicable International Labor Government and their courts. Otherwise, the
and Regulations Implementing the Labor Code but also seeks to Organization Conventions. The standard format petitioners contend that Filipinos would no longer
punish the seamen for a shortcoming of NSB itself. shall set the minimum standard of the terms and be accepted as seamen, those employed would
conditions to govern the employment of Filipino lose their jobs, and the still unemployed would be
Article 21(c) of the Labor Code, when it created the NSB, mandated seafarers but in no case shall a shipboard left hopeless.
the Board to "(O)btain the best possible terms and conditions of employment contract (sic), or in any way conflict
employment for seamen." with any other provision embodied in the standard This is not the first time and it will not be the last where the threat of
format. unemployment and loss of jobs would be used to argue against the
Section 15, Rule V of Book I of the Rules and Regulations interests of labor; where efforts by workingmen to better their terms
Implementing the Labor Code provides: It took three years for the NSB to implement requirements which, of employment would be characterized as prejudicing the interests of
under the law, they were obliged to follow and execute immediately. labor as a whole.
During those three years, the incident in Vancouver happened. The
Sec. 15. Model contract of employment. — The terms and conditions agreed upon in Vancouver were well within ILO
NSB shall devise a model contract of employment xxx xxx xxx
rates even if they were above NSB standards at the time.
which shall embody all the requirements of
pertinent labor and social legislations and the Unionism, employers' liability acts, minimum
prevailing standards set by applicable International The sanctions applied by NSB and affirmed by NLRC are moreover not wages, workmen's compensation, social security
Labor Organization Conventions. The model in keeping with the basic premise that this Court stressed in the Vir- and collective bargaining to name a few were all
contract shall set the minimum standards of the Jen Shipping case  (supra) that the Ministry now the Department of initially opposed by employers and even well
terms and conditions to govern the employment of Labor and Employment and all its agencies exist primarily for the meaning leaders of government and society as
Filipinos on board vessels engaged in overseas workingman's interest and the nation's as a whole. "killing the hen or goose which lays the golden
trade. All employers of Filipinos shall adopt the eggs." The claims of workingmen were described
model contract in connection with the hiring and Implicit in these petitions and the only reason for the NSB to take the as outrageously injurious not only to the employer
engagement of the services of Filipino seafarers, side of foreign shipowners against Filipino seamen is the "killing the but more so to the employees themselves before
and in no case shall a shipboard employment these claims or demands were established by law

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 and jurisprudence as "rights" and before these increase from the 1988 aggregate. (Business World, News SO ORDERED.
were proved beneficial to management, labor, and Briefs,  January 11, 1989 at page 2) According to the POEA, seabased
the national as a whole beyond reasonable doubt. workers numbering 95,913 in 1988 exceeded by a wide margin of
28.15 percent the year end total in 1987. The report shows that sea-
The case before us does not represent any major based workers posted bigger monthly increments compared to those
advance in the rights of labor and the workingmen. of landbased workers. (The Business Star,  Indicators, January 11,
The private respondents merely sought rights 1988 at page 2)
already established. No matter how much the
petitioner-employer tries to present itself as Augmenting this optimistic report of POEA Administrator Tomas
speaking for the entire industry, there is no Achacoso is the statement of Secretary of Labor Franklin M. Drilon
evidence that it is typical of employers hiring that the Philippines has a big jump over other crewing nations
Filipino seamen or that it can speak for them. because of the Filipinos' abilities compared with any European or
westem crewing country. Drilon added that cruise shipping is also a
The contention that manning industries in the growing market for Filipino seafarers because of their flexibility in
Philippines would not survive if the instant case is handling odd jobs and their expertise in handling almost all types of
not decided in favor of the petitioner is not ships, including luxury liners. (Manila Bulletin, More Filipino
supported by evidence. The Wallem case was Seamen Expected Development, December 27, 1988 at page
decided on February 20, 1981. There have been no 29).lâwphî1.ñèt  Parenthetically, the minimum monthly salary of able
severe repercussions, no drying up of employment bodied seamen set by the ILO and adhered to by the Philippines is
opportunities for seamen, and none of the dire now $276.00 (id.) more than double the $130.00 sought to be
consequences repeatedly emphasized by the enforced by the public respondents in these petitions.
petitioner. Why should Vir-Jen be an exception?
The experience from 1981 to the present vindicates the finding in Vir-
The wages of seamen engaged in international Jen Shipping  that a decision in favor of the seamen would not
shipping are shouldered by the foreign principal. necessarily mean severe repercussions, drying up of employment
The local manning office is an agent whose primary opportunities for seamen, and other dire consequences predicted by
function is recruitment and who usually gets a manning agencies and recruiters in the Philippines.
lump sum from the shipowner to defray the
salaries of the crew. The hiring of seamen and the From the foregoing, we find that the NSB and NLRC committed grave
determination of their compensation is subject to abuse of discretion in finding the petitioners guilty of using
the interplay of various market factors and one key intimidation and illegal means in breaching their contracts of
factor is how much in terms of profits the local employment and punishing them for these alleged offenses.
manning office and the foreign shipowner may Consequently, the criminal prosecutions for estafa in G.R. Nos. 57999
realize after the costs of the voyage are met. And and 58143-53 should be dismissed.
costs include salaries of officers and crew
members. (at pp. 585-586) WHEREFORE, the petitions are hereby GRANTED. The decisions of the
National Seamen Board and National Labor Relations Commission in
The Wallem Shipping  case, was decided in 1981. Vir-Jen G. R. Nos. 64781-99 are REVERSED and SET ASIDE and a new one is
Shipping  was decided in 1983. It is now 1989. There has'been no entered holding the petitioners not guilty of the offenses for which
drying up of employment opportunities for Filipino seamen. Not only they were charged. The petitioners' suspension from the National
have their wages improved thus leading ITF to be placid and quiet all Seamen Board's Registry for three (3) years is LIFTED. The private
these years insofar as Filipinos are concerned but the hiring of respondent is ordered to pay the petitioners their earned but unpaid
Philippine seamen is at its highest level ever. wages and overtime pay/allowance from November 1, 1978 to
December 14, 1978 according to the rates in the Special Agreement
Reporting its activities for the year 1988, the Philippine Overseas that the parties entered into in Vancouver, Canada.
Employment Administration (POEA) stated that there will be an
increase in demand for seamen based overseas in 1989 boosting the The criminal cases for estafa, subject matter of G. R. Nos. 57999 and
number to as high as 105,000. This will represent a 9.5 percent 58143-53, are ordered DISMISSED.

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