Professional Documents
Culture Documents
Contents
1 Insular life vs basiao ......................................................................................................................... 2
2 Tongko vs manufacturers .............................................................................................................. 8
3 Indophil vs adviento ........................................................................................................................ 24
4 Phil journalist vs journal employees ......................................................................................... 33
5 Julies bakeshop vs arnaiz ............................................................................................................ 43
6 GJT Builders vs ambos ................................................................................................................... 55
7 Mirant Phils. Vs Caro ....................................................................................................................... 65
8 Benigno vs ABSCBN ........................................................................................................................ 86
9 Universidad vs Sambajon.............................................................................................................. 96
10 Abbot vs Alcaraz........................................................................................................................... 116
11 Colegio vs Rojo ............................................................................................................................. 122
12 AMA computer vs Austria ......................................................................................................... 132
13 Tirol vs NLRC ................................................................................................................................. 145
14 Goma vs Pamplona ..................................................................................................................... 159
G.R. No. 160905 ................................................................................................................................. 159
15 Gadia vs Sykes ............................................................................................................................. 172
16 Hacienda vs Lorenzo ................................................................................................................... 178
17 Tunay na pakakaisa vs Asia..................................................................................................... 186
18 Fuji vs Espiritu .............................................................................................................................. 196
19 Goya Inc. vs Goya Employees ................................................................................................ 232
20 Alviado vs Procter and Gamble .............................................................................................. 242
Enojas, Defensor & Teodosio Cabado Law Offices for private respondent.
NARVASA, J.:
On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called
the Company) and Melecio T. Basiao entered into a contract 1 by which:
3. the "rules in ... (the Company's) Rate Book and its Agent's
Manual, as well as all its circulars ... and those which may from
time to time be promulgated by it, ..." were made part of said
contract.
Some four years later, in April 1972, the parties entered into another
contract an Agency Manager's Contract and to implement his end of it
Basiao organized an agency or office to which he gave the name M. Basiao
and Associates, while concurrently fulfilling his commitments under the first
contract with the Company. 2
Basiao thereafter filed with the then Ministry of Labor a complaint 4 against
the Company and its president. Without contesting the termination of the
first contract, the complaint sought to recover commissions allegedly unpaid
thereunder, plus attorney's fees. The respondents disputed the Ministry's
jurisdiction over Basiao's claim, asserting that he was not the Company's
employee, but an independent contractor and that the Company had no
obligation to him for unpaid commissions under the terms and conditions of
his contract. 5
The Labor Arbiter to whom the case was assigned found for Basiao. He ruled
that the underwriting agreement had established an employer-employee
relationship between him and the Company, and this conferred jurisdiction
on the Ministry of Labor to adjudicate his claim. Said official's decision
directed payment of his unpaid commissions "... equivalent to the balance of
the first year's premium remaining unpaid, at the time of his termination, of
all the insurance policies solicited by ... (him) in favor of the respondent
company ..." plus 10% attorney's fees. 6
Without denying that the above were indeed the expressed implicit
conditions of Basiao's contract with the Company, the respondents contend
that they do not constitute the decisive determinant of the nature of his
engagement, invoking precedents to the effect that the critical feature
distinguishing the status of an employee from that of an independent
contractor is control, that is, whether or not the party who engages the
services of another has the power to control the latter's conduct in rendering
such services. Pursuing the argument, the respondents draw attention to the
provisions of Basiao's contract obliging him to "... observe and conform to all
rules and regulations which the Company may from time to time prescribe
...," as well as to the fact that the Company prescribed the qualifications of
applicants for insurance, processed their applications and determined the
amounts of insurance cover to be issued as indicative of the control, which
made Basiao, in legal contemplation, an employee of the Company. 9
has been followed and applied in later cases, some fairly recent. 11 Indeed, it
is without question a valid test of the character of a contract or agreement
to render service. It should, however, be obvious that not every form of
control that the hiring party reserves to himself over the conduct of the
party hired in relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the legal
or technical sense of the term. A line must be drawn somewhere, if the
recognized distinction between an employee and an individual contractor is
not to vanish altogether. Realistically, it would be a rare contract of service
that gives untrammelled freedom to the party hired and eschews any
intervention whatsoever in his performance of the engagement.
Logically, the line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those
that control or fix the methodology and bind or restrict the party hired to the
use of such means. The first, which aim only to promote the result, create
no employer-employee relationship unlike the second, which address both
the result and the means used to achieve it. The distinction acquires
particular relevance in the case of an enterprise affected with public interest,
as is the business of insurance, and is on that account subject to regulation
by the State with respect, not only to the relations between insurer and
insured but also to the internal affairs of the insurance company. 12 Rules
and regulations governing the conduct of the business are provided for in
the Insurance Code and enforced by the Insurance Commissioner. It is,
therefore, usual and expected for an insurance company to promulgate a set
of rules to guide its commission agents in selling its policies that they may
not run afoul of the law and what it requires or prohibits. Of such a character
are the rules which prescribe the qualifications of persons who may be
insured, subject insurance applications to processing and approval by the
Company, and also reserve to the Company the determination of the
premiums to be paid and the schedules of payment. None of these really
invades the agent's contractual prerogative to adopt his own selling methods
or to sell insurance at his own time and convenience, hence cannot
justifiably be said to establish an employer-employee relationship between
him and the company.
More recently, in Sara vs. NLRC, 15 it was held that one who had been
engaged by a rice miller to buy and sell rice and palay without compensation
except a certain percentage of what he was able to buy or sell, did work at
his own pleasure without any supervision or control on the part of his
principal and relied on his own resources in the performance of his work,
was a plain commission agent, an independent contractor and not an
employee.
The respondents limit themselves to pointing out that Basiao's contract with
the Company bound him to observe and conform to such rules and
regulations as the latter might from time to time prescribe. No showing has
been made that any such rules or regulations were in fact promulgated,
much less that any rules existed or were issued which effectively controlled
or restricted his choice of methods or the methods themselves of
selling insurance. Absent such showing, the Court will not speculate that any
exceptions or qualifications were imposed on the express provision of the
contract leaving Basiao "... free to exercise his own judgment as to the time,
place and means of soliciting insurance."
The Court, therefore, rules that under the contract invoked by him, Basiao
was not an employee of the petitioner, but a commission agent, an
independent contractor whose claim for unpaid commissions should have
been litigated in an ordinary civil action. The Labor Arbiter erred in taking
cognizance of, and adjudicating, said claim, being without jurisdiction to do
so, as did the respondent NLRC in affirming the Arbiter's decision. This
conclusion renders it unnecessary and premature to consider Basiao's claim
for commissions on its merits.
SO ORDERED.
2 Tongko vs manufacturers
GREGORIO V. TONGKO, G.R. No. 167622
Petitioner,
Present:
CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
x------------------------------------------------------------------------------
-----------x
RESOLUTION
BRION, J.:
Control over the performance of the task of one providing service both
with respect to the means and manner, and the results of the service is the
primary element in determining whether an employment relationship
exists. We resolve the petitioners Motion against his favor since he failed to
show that the control Manulife exercised over him was the control required
to exist in an employer-employee relationship; Manulifes control fell short of
this norm and carried only the characteristic of the relationship between an
insurance company and its agents, as defined by the Insurance Code and by
the law of agency under the Civil Code.
The petitioner asserts in his Motion that Manulifes labor law control
over him was demonstrated (1) when it set the objectives and sales targets
regarding production, recruitment and training programs; and (2) when it
prescribed the Code of Conduct for Agents and the Manulife Financial Code
of Conduct to govern his activities.[5] We find no merit in these contentions.
In our June 29, 2010 Resolution, we noted that there are built-in
elements of control specific to an insurance agency, which do not amount to
the elements of control that characterize an employment relationship
governed by the Labor Code.The Insurance Code provides definite
parameters in the way an agent negotiates for the sale of the companys
insurance products, his collection activities and his delivery of the insurance
contract or policy.[6] In addition, the Civil Code defines an agent as a person
who binds himself to do something in behalf of another, with the consent or
authority of the latter.[7]Article 1887 of the Civil Code also provides that in
the execution of the agency, the agent shall act in accordance with the
instructions of the principal.
The duties[10] that the petitioner enumerated in his Motion are not supported
by evidence and, therefore, deserve scant consideration. Even assuming
their existence, however, they mostly pertain to the duties of an insurance
agent such as remitting insurance fees to Manulife, delivering policies to the
insured, and after-sale services. For agents leading other agents, these
include the task of overseeing other insurance agents, the recruitment of
other insurance agents engaged by Manulife as principal, and ensuring that
these other agents comply with the paperwork necessary in selling
insurance. That Manulife exercises the power to assign and remove agents
under the petitioners supervision is in keeping with its role as a principal in
an agency relationship; they are Manulife agents in the same manner that
the petitioner had all along been a Manulife agent.
who could use other agents in selling insurance and share in the earnings of
these other agents.
B. No Resulting Inequity
We also do not agree that our assailed Resolution has the effect of
fostering an inequitable or unjust situation. The records show that the
petitioner was very amply paid for his services as an insurance agent, who
also shared in the commissions of the other agents under his guidance. In
1997, his income was P2,822,620; in 1998, P4,805,166.34; in
1999, P6,797,814.05; in 2001, P6,214,737.11; and in
2002, P8,003,180.38. All these he earned as an insurance agent, as he
failed to ever prove that he earned these sums as an employee. In technical
terms, he could not have earned all these as an employee because he failed
to provide the substantial evidence required in administrative cases to
support the finding that he was a Manulife employee. No inequity results
under this legal situation; what would be unjust is an award of backwages
and separation pay amounts that are not due him because he was never an
employee.
The Dissents discussion on this aspect of the case begins with the wide
disparity in the status of the parties that Manulife is a big Canadian
insurance company while Tongko is but a single agent of Manulife. The
Dissent then went on to say that [i]f is but just, it is but right, that the Court
interprets the relationship between Tongko and Manulife as one of
employment under labor laws and to uphold his constitutionally protected
right, as an employee, to security of tenure and entitlement to monetary
This Court (and all adjudicators for that matter) cannot and should not
fill in the evidentiary gaps in a partys case that the party failed to
support; we cannot and should not take the cudgels for any
party. Tongko failed to support his cause and we should simply view him
and his case as they are; our duty is to sit as a judge in the case that he and
the respondent presented.
That his earnings were agents commissions arising from his work as
an insurance agent is a matter that the petitioner cannot deny, as these are
the declarations and representations he stated in his income tax returns
through the years. It would be doubly unjust, particularly to the
government, if he would be allowed at this late point to turn around and
successfully claim that he was merely an employee after he declared
himself, through the years, as an independent self-employed insurance
agent with the privilege of deducting business expenses. This aspect of the
case alone considered together with the probative value of income tax
declarations and returns filed prior to the present controversy should be
enough to clinch the present case against the petitioners favor.
Decisions of the Supreme Court, as the Civil Code provides, form part
of the law of the land. When the Court states that the determination of the
existence of an employment relationship should be on a case-to-case basis,
this does not mean that there will be as many laws on the issue as there are
cases. In the context of this case, the four-fold test is the established
standard for determining employer-employee relationship and the existence
of these elements, most notably control, is the basis upon which a
conclusion on the absence of employment relationship was anchored. This
simply means that a conclusion on whether employment relationship exists
in a particular case largely depends on the facts and, in no small measure,
on the parties evidence vis--vis the clearly defined jurisprudential
standards. Given that the parties control what and how the facts will be
established in a particular case and/or how a particular suit is to be litigated,
deciding the issues on a case-to-case basis becomes an imperative.
Another legal reality, a more important one, is that the duty of a court
is to say what the law is.[17] This is the same duty of the Supreme Court
that underlies the stare decisis principle. This is how the public, in general
and the insurance industry in particular, views the role of this Court and
courts in general in deciding cases. The lower courts and the bar, most
specially, look up to the rulings of this Court for guidance. Unless extremely
unavoidable, the Court must, as a matter of sound judicial policy, resist the
temptation of branding its ruling pro hac vice.
The Dissent cites the cases of Great Pacific Life Assurance Corporation
v. National Labor Relations Commission[18] and Insular Life Assurance Co.,
Ltd. v. National Labor Relations Commission[19] to support the allegation that
Manulife exercised control over the petitioner as an employer.
xxxx
xxxx
The dissent also erroneously cites eight other cases Social Security System
v. Court of Appeals,[23] Cosmopolitan Funeral Homes, Inc. v.
Maalat, [24] Algon Engineering Construction Corporation v. National Labor
Relations Commission,[25]Equitable Banking Corporation v. National Labor
Relations Commission,[26] Lazaro v. Social Security Commission,[27]Dealco
Farms, Inc. v. National Labor Relations Commission,[28] South Davao
Development Company, Inc. v. Gamo,[29]and Abante, Jr. v. Lamadrid
Bearing & Parts Corporation.[30] The dissent cited these cases to support its
allegation that labor laws and jurisprudence should be applied in cases, to
the exclusion of other laws such as the Civil Code or the Insurance Code,
even when the latter are also applicable.
In Algon, the issue was whether the lease contract should dictate the
legal relationship between the parties, when there was proof of an employer-
employee relationship. In the cited case, the lease provisions on termination
were thus considered irrelevant because of a substantial evidence of an
employment relationship. The cited case lacks the complexity of the present
case; Civil Code provisions on lease do not prescribe that lessees exercise
control over their lessors in the way that the Insurance Code and the Civil
provide that insurance companies and principals exercised control over their
agents.
On the other hand, we find it strange that the dissent cites Abante as a
precedent, since the Court, in this case, held that an employee-employer
relationship is notably absent in this case as the complainant was a sales
agent. This case better supports the majoritys position that a sales agent,
who fails to show control in the concept of labor law, cannot be considered
an employee, even if the company exercised control in the concept of a sales
agent.[33]
It bears stressing that our ruling in this case is not about which law
has primacy over the other, but that we should be able to reconcile these
laws. We are merely saying that where the law makes it mandatory for a
company to exercise control over its agents, the complainant in an illegal
dismissal case cannot rely on these legally prescribed control devices as
indicators of an employer-employee relationship. As shown in our discussion,
our consideration of the Insurance Code and Civil Code provisions does not
negate the application of labor laws and jurisprudence; ultimately, we
dismissed the petition because of its failure to comply with the control test.
SO ORDERED.
3 Indophil vs adviento
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Revised Rules of Court which seeks to review, reverse and set-aside the
Decision1 of the Court of Appeals (CA), dated May 30, 2005, and its
Resolution2dated January 10, 2006 in the case entitled Jndophil Textile Mills,
Inc. v. Hon. Rolando R. Velasco and Engr. Salvador Adviento, docketed as
CA-G.R. SP No. 83099.
Respondent averred that, being the only breadwinner in the family, he made
several attempts to apply for a new job, but to his dismay and frustration,
employers who knew ofhis present health condition discriminated against
him and turned down his application.19 By reason thereof, respondent
suffered intense moral suffering, mental anguish, serious anxiety and
wounded feelings, praying for the recovery of the following: (1) Five Million
Pesos (P5,000,000.00) asmoral damages; (2) Two Million Pesos
(P2,000,000.00) as exemplary damages; and (3) Seven Million Three
Thousand and Eight Pesos (P7,003,008.00) as compensatory
In reply, petitioner filed a Motion to Dismiss22 on the ground that: (1) the
RTC has no jurisdiction over the subject matter of the complaint because the
same falls under the original and exclusive jurisdiction of the Labor Arbiter
(LA) under Article 217(a)(4) of the Labor Code; and (2) there is another
action pending with the Regional Arbitration Branch III of the NLRC in San
Fernando City, Pampanga, involving the same parties for the same cause.
On December 29, 2003, the RTC issued a Resolution23 denying the aforesaid
Motion and sustaining its jurisdiction over the instant case. It held that
petitioners alleged failure to provide its employees with a safe, healthy and
workable environment is an act of negligence, a case of quasi-delict. As
such, it is not within the jurisdiction of the LA under Article 217 of the Labor
Code. On the matter of dismissal based on lis pendencia, the RTC ruled that
the complaint before the NLRC has a different cause of action which is for
illegal dismissal and prayer for backwages, actual damages, attorneys fees
and separation pay due to illegal dismissal while in the present case, the
cause of action is for quasi-delict.24 The falloof the Resolution is quoted
below:
SO ORDERED.25
The delineation between the jurisdiction of regular courts and labor courts
over cases involving workers and their employers has always been a matter
of dispute.31 It is up to the Courts to lay the line after careful scrutiny of the
factual milieu of each case. Here, we find that jurisdiction rests on the
regular courts.
In its attempt to overturn the assailed Decision and Resolution of the CA,
petitioner argues that respondentsclaim for damages is anchored on the
alleged gross negligence of petitioner as an employer to provide its
employees, including herein respondent, with a safe, healthy and workable
environment; hence, it arose from an employer-employee relationship.32 The
fact of respondents employment withpetitioner as a civil engineer is a
necessary element of his cause ofaction because without the same,
respondent cannot claim to have a rightto a safe, healthy and workable
environment.33 Thus, exclusive jurisdiction over the same should be vested
in the Labor Arbiter and the NLRC pursuant to Article 217(a)(4) of the Labor
Code of the Philippines (Labor Code), as amended.34
The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor
Code, as amended by Section 9 of Republic Act (R.A.) No. 6715, to wit:
ART. 217. Jurisdiction of Labor Arbiters and the Commission-- (a) Except as
otherwise provided under this Code the Labor Arbiter shall have original and
exclusive jurisdiction to hear and decide, within thirty (30) calendar days
after the submission of the case by the parties for decision without
extension, even in the absence of stenographic notes, the following cases
involving all workers, whether agricultural or nonagricultural:
2. Termination disputes;
5. Cases arising from any violation of Article 264 of this Code including
questions involving the legality of strikes and lockouts; and
x x x.35
The pivotal question to Our mind iswhether or not the Labor Code has any
relevance to the reliefs sought by the plaintiffs. For if the Labor Code has no
It is obvious from the complaint that the plaintiffs have not alleged any
unfair labor practice. Theirs is a simple action for damages for tortious acts
allegedly committed by the defendants. Such being the case, the governing
statute is the Civil Code and not the Labor Code. It results that the orders
under revieware based on a wrong premise.40
Similarly, we ruled in the recent case of Portillo v. Rudolf Lietz, Inc.41 that
not all disputes between an employer and his employees fall within the
jurisdiction of the labor tribunals suchthat when the claim for damages is
grounded on the "wanton failure and refusal" without just cause of an
employee to report for duty despite repeated notices served upon him of the
disapproval of his application for leave ofabsence, the same falls within the
purview of Civil Law, to wit:
Upon the facts and issues involved, jurisdiction over the present controversy
must be held to belong to the civil Courts. While seemingly petitioner's claim
for damages arises from employer-employee relations, and the latest
amendment to Article 217 of the Labor Code under PD No. 1691 and BP Blg.
130 provides that all other claimsarising from employer-employee
relationship are cognizable by Labor Arbiters [citation omitted], in essence,
petitioner's claim for damages is grounded on the "wanton failure and
refusal"without just cause of private respondent Cruz to report for duty
despite repeated notices served upon him of the disapproval of his
application for leave of absence without pay. This, coupled with the further
averment that Cruz "maliciously and with bad faith" violated the terms and
conditions of the conversion training course agreement to the damage of
petitioner removes the present controversy from the coverage of the Labor
Code and brings it within the purview of Civil Law.
Clearly, the complaint was anchored not on the abandonment per seby
private respondent Cruz of his jobas the latter was not required in the
Complaint to report back to workbut on the manner and consequent
effects of such abandonmentof work translated in terms of the damages
which petitioner had to suffer. x x x.42
Indeed, jurisprudence has evolved the rule that claims for damages under
Article 217(a)(4) of the Labor Code, to be cognizable by the LA, must have a
reasonable causal connection withany of the claims provided for in that
article.43 Only if there is such a connection with the other claims can a claim
for damages be considered as arising from employer-employee relations.44
1. Petitioners textile mills have excessive flying textile dust and waste
in its operations and no effort was exerted by petitioner to minimize or
totally eradicate it;
6. The chemical and color room are not equipped with proper safety
chemical nose mask; and
7. The power and boiler plant emit too much smoke with solid particles
blown to the air from the smoke stack of the power plant emitting a
brown rust color which engulfs the entire compound.46
The pertinent provision of Article 2176 of the Civil Code which governs
quasi-delictprovides that: Whoever by act or omissioncauses damageto
another, there being fault or negligence, is obliged to pay for the
damagedone. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called quasi-delict.50
In the case at bar, respondent alleges that due to the continued and
prolonged exposure to textile dust seriously inimical to his health, he
suffered work-contracted disease which is now irreversible and incurable,
and deprived him of job opportunities.52 Clearly, injury and damages were
allegedly suffered by respondent, an element of quasi-delict. Secondly, the
previous contract of employment between petitioner and respondent cannot
be used to counter the element of "no pre-existing contractual relation"
since petitioners alleged gross negligence in maintaining a hazardous work
environment cannot be considered a mere breach of such contract of
employment, but falls squarely within the elements of quasi-delictunder
Article 2176 of the Civil Code since the negligence is direct, substantive and
independent.53 Hence, we ruled in Yusen Air and Sea Services Phils., Inc. v.
Villamor54that:
It also bears stressing that respondent is not praying for any relief under the
Labor Code of the Philippines. He neither claims for reinstatement nor
backwages or separation pay resulting from an illegal termination. The cause
of action herein pertains to the consequence of petitioners omission which
led to a work-related disease suffered by respondent, causing harm or
damage to his person. Such cause of action is within the realm of Civil Law,
and jurisdiction over the controversy belongs to the regular courts.56
Further, it cannot be gainsaid that the claim for damages occurred afterthe
employer-employee relationship of petitioner and respondent has ceased.
Given that respondent no longer demands for any relief under the Labor
Code as well as the rules and regulations pertinent thereto, Article 217(a)(4)
of the Labor Code is inapplicable to the instant case, as emphatically held in
Portillo, to wit:
It is clear, therefore, that while Portillos claim for unpaid salaries is a money
claim that arises out ofor in connection with an employeremployee
relationship, Lietz Inc.s claim against Portillo for violation of the goodwill
clause is a money claim based on an act done after the cessation of the
employment relationship. And, while the jurisdiction over Portillos claim is
vested in the labor arbiter, the jurisdiction over Lietz Inc.s claim rests on
the regular courts. Thus:
As it is, petitioner does not ask for any relief under the Labor Code. It
merely seeks to recover damages based on the parties' contract of
employment as redress for respondent's breach thereof. Such cause of
action is within the realm of Civil Law, and jurisdiction over the controversy
belongs to the regular courts. More so must this be in the present case, what
with the reality that the stipulation refers to the post-employment relations
of the parties.58
SO ORDERED.
DECISION
BERSAMIN, J.:
The decision of the Court of Appeals (CA) under review summarizes the
factual and procedural antecedents, as follows:
Complainant added that in her thirteen (13) years with the company and
after so many changes in its management and executives, she had never
done anything that will cause them to issue a memorandum against her or
her work attitude, more so, reasons to terminate her services; that she got
dismissed because she was the Union President who was very active in
defending and pursuing the rights of her union members, and in fighting
against the abuses of respondent Corporate Officers; and that she got the
ire of respondents when the employees filed a complaint against the
Corporate Officers before Malacaang and which was later indorsed to the
Office of the Ombudsman.
In both instances, respondents maintained that they did not commit any act
of unfair labor practices; that they did not commit acts tantamount to
interfering, restraining, or coercing employees in the exercise of their right
to self-organization.
With respect to the alleged non-adjustment of longevity pay and burial aid,
respondent PJI pointed out that it complies with the provisions of the CBA
and that both complainants have not claimed for the burial aid.
Respondents asserted that the respondents Arturo Dela Cruz, Bobby Capco,
Arnold Banares, Ruby Ruiz-Bruno and Fundador Soriano should not be held
liable on account of complainants dismissal as they merely acted as agents
of respondent PJI.1
The charge of illegal dismissal by Michael Alfante is hereby dismissed for lack
of merit.
SO ORDERED.2
In the meantime, on May 10, 2006, petitioner and Judith Pulido (Pulido), the
other complainant, jointly manifested to the NLRC that the decision of March
29, 2006 had been fully satisfied as to Pulido under the following terms,
namely: (a) she would be reinstated to her former position as editorial
staffmember, or an equivalent position, without loss of seniority rights,
effective May 15, 2006; (b) she would go on maternity leave, and report to
On January 31, 2007, the NLRC rendered its decision dismissing the partial
appeal for lack of merit.
JEU and Alfante moved for the reconsideration of the decision, but the NLRC
denied their motion on April 24, 2007.
Thereafter, JEU and Alfante assailed the decision of the NLRC before the CA
on certiorari (C.A.-G.R. SP No. 99407).
The twin Resolutions dated January 31, 2007 and April 24, 2007,
respectively, of the Third Division of the National Labor Relations
Commission (NLRC), in NLRC NCR CA No. 048785-06 (NLRC NCR Case No.
00-10-11413-04), are MODIFIED insofar as the funeral or bereavement aid
is concerned, which is hereby GRANTED, but only after submission of
conclusive proofs that the deceased is a parent, either father or mother, of
the employees concerned, as well as the death certificate to establish the
fact of death of the deceased legal dependent.
The rest of the findings of fact and law in the assailed Resolutions are hereby
AFFIRMED.
SO ORDERED.
Both parties moved for reconsideration, but the CA denied their respective
motions for reconsideration on June 2, 2010.8
JEU and Alfante appealed to the Court (G.R. No. 192478) to challenge the
CAs dispositions regarding the legality of: (a) Alfantes dismissal; (b) the
non-compliance with Minimum Wage Order No. 9; and (c) the non-payment
of the rest day.9
On August 18, 2010, the Court denied due course to the petition in G.R. No.
192478 for failure of petitioners to sufficiently show that the CA had
The Court denied with finality JEU and Alfantes ensuing motion for
reconsideration through the resolution of December 8, 2010.11 The entry of
judgment in G.R. No. 192478 issued in due course on February 1, 2011.12
On its part, petitioner likewise appealed (G.R. No. 192601), seeking the
review of the CAs disposition in the decision of February 5, 2010 on the
granting of the funeral and bereavement aid stipulated in the CBA.
In its petition for review, petitioner maintained that under Section 4, Article
XIII of the CBA, funeral and bereavement aid should be granted upon the
death of a legal dependent of a regular employee; that consistent with the
definition provided by the Social Security System (SSS), the term legal
dependent referred to the spouse and children of a married regular
employee, and to the parents and siblings, 18 years old and below, of a
single regular employee;13 that the CBA considered the term dependents to
have the same meaning as beneficiaries, as provided in Section 5, Article
XIII of the CBA on the payment of death benefits;14 that its earlier granting
of claims for funeral and bereavement aid without regard to the foregoing
definition of the legal dependents of married or single regular employees did
not ripen into a company policy whose unilateral withdrawal would constitute
a violation of Article 100 of the Labor Code,15 the law disallowing the non-
diminution of benefits;16 that it had approved only four claims from 1999 to
2003 based on its mistaken interpretation of the term legal dependents, but
later corrected the same in 2000;17 that the grant of funeral and
bereavement aid for the death of an employees legal dependent, regardless
of the employees civil status, did not occur over a long period of time, was
not consistent and deliberate, and was partly due to its mistake in
appreciating a doubtful question of law; and that its denial of subsequent
claims did not amount to a violation of the law against the non-diminution of
benefits.18
In their comment,19 JEU and Alfante countered that the CBA was a bilateral
contractual agreement that could not be unilaterally changed by any party
during its lifetime; and that the grant of burial benefits had already become
a company practice favorable to the employees, and could not anymore be
reduced, diminished, discontinued or eliminated by petitioner.
Issue
In view of the entry of judgment issued in G.R. No. 192478, JEU and
Alfantes submissions on the illegality of his dismissal, the non-payment of
his rest days, and the violation of Minimum Wage Order No. 9 shall no
longer be considered and passed upon.
Ruling
The nature and force of a CBA are delineated in Honda Phils., Inc. v.
Samahan ng Malayang Manggagawa sa Honda,20 thuswise:
Here, a conflict has arisen regarding the interpretation of the term legal
dependent in connection with the grant of funeral and bereavement aid to a
regular employee under Section 4, Article XIII of the CBA,23 which stipulates
as follows:
Petitioner insists that notwithstanding the silence of the CBA, the term legal
dependent should follow the definition of it under Republic Act (R.A.) No.
8282 (Social Security Law),24 so that in the case of a married regular
employee, his or her legal dependents include only his or her spouse and
children, and in the case of a single regular employee, his or her legal
dependents include only his or her parents and siblings, 18 years old and
below; and that the term dependents has the same meaning as beneficiaries
as used in Section 5, Article XIII of the CBA.
It is clear from these statutory definitions of dependent that the civil status
of the employee as either married or single is not the controlling
Further, Aguas pointed out that a wife who left her family until her husband
died and lived with other men, was not dependent upon her husband for
support, financial or otherwise, during the entire period.
In a parallel case involving a claim for benefits under the GSIS law, the
Court defined a dependent as "one who derives his or her main support from
another. Meaning, relying on, or subject to, someone else for support; not
able to exist or sustain oneself, or to perform anything without the will,
power, or aid of someone else." It should be noted that the GSIS law
likewise defines a dependent spouse as "the legitimate spouse dependent for
support upon the member or pensioner." In that case, the Court found it
obvious that a wife who abandoned the family for more than 17 years until
her husband died, and lived with other men, was not dependent on her
husband for support, financial or otherwise, during that entire period. Hence,
the Court denied her claim for death benefits.
The obvious conclusion then is that a wife who is already separated de facto
from her husband cannot be said to be "dependent for support" upon the
husband, absent any showing to the contrary. Conversely, if it is proved that
the husband and wife were still living together at the time of his death, it
would be safe to presume that she was dependent on the husband for
support, unless it is shown that she is capable of providing for herself.
Considering that existing laws always form part of any contract, and are
deemed incorporated in each and every contract,28 the definition of legal
dependents under the aforecited social legislations applies herein in the
absence of a contrary or different definition mutually intended and adopted
by the parties in the CBA. Accordingly, the concurrence of a legitimate
spouse does not disqualify a child or a parent of the employee from being a
Pursuant to Article 100 of the Labor Code, petitioner as the employer could
not reduce, diminish, discontinue or eliminate any benefit and supplement
being enjoyed by or granted to its employees. This prohibition against the
diminution of benefits is founded on the constitutional mandate to protect
the rights of workers and to promote their welfare and to afford labor full
protection.29 The application of the prohibition against the diminution of
benefits presupposes that a company practice, policy or tradition favorable
to the employees has been clearly established; and that the payments made
by the employer pursuant to the practice, policy, or tradition have ripened
into benefits enjoyed by them.30 To be considered as a practice, policy or
tradition, however, the giving of the benefits should have been done over a
long period of time, and must be shown to have been consistent and
deliberate.31 It is relevant to mention that we have not yet settled on the
specific minimum number of years as the length of time sufficient to ripen
the practice, policy or tradition into a benefit that the employer cannot
unilaterally withdraw.32
The argument of petitioner that the grant of the funeral and bereavement
benefit was not voluntary but resulted from its mistaken interpretation as to
who was considered a legal dependent of a regular employee deserves scant
consideration. To be sure, no doubtful or difficult question of law was
involved inasmuch as the several cogent statutes existing at the time the
CBA was entered into already defined who were qualified as the legal
dependents of another. Moreover, the voluntariness of the grant of the
benefit became even manifest from petitioners admission that, despite the
memorandum it issued in 200033 in order to "correct" the interpretation of
the term legal dependent, it still approved in 2003 the claims for funeral and
bereavement aid of two employees, namely: (a) Cecille Bulacan, for the
death of her father; and (b) Charito Cartel, for the death of her mother,
based on its supposedly mistaken interpretation.34
It is further worthy to note that petitioner granted claims for funeral and
bereavement aid as early as 1999, then issued a memorandum in 2000 to
correct its erroneous interpretation of legal dependent under Section 4,
Article XIII of the CBA. This notwithstanding, the 2001-2004 CBA35 still
contained the same provision granting funeral or bereavement aid in case of
the death of a legal dependent of a regular employee without differentiating
the legal dependents according to the employee's civil status as married or
single. The continuity in the grant of the funeral and bereavement aid to
regular employees for the death of their legal dependents has undoubtedly
ripened into a company policy. With that, the denial of Alfante's qualified
claim for such benefit pursuant to Section 4, Article XIII of the CBA violated
the law prohibiting the diminution of benefits.
SO ORDERED.
DECISION
Management has a wide latitude to conduct its own affairs in accordance with the
necessities of its business. This so-called management prerogative, however,
should be exercised in accordance with justice and fair play.
Factual Antecedents
Reyes hired respondents as chief bakers in his three franchise branches of Julies
Bakeshop in Sibalom and San Jose, Antique. On January 26, 2000, respondents
filed separate complaints against petitioners for underpayment of wages, payment
of premium pay for holiday and rest day, service incentive leave pay, 13th month
pay, cost of living allowance (COLA) and attorneys fees. These complaints were
later on consolidated.
Realizing the futility of further resetting the case to give way to a possible
settlement, the Labor Arbiter ordered the parties to file their respective position
papers.
Despite his earlier withdrawal as counsel, Atty. Pefianco filed a Joint Position
Paper[5] on behalf of respondents alleging that they were dismissed from
employment on February 21, 2000 without valid cause. As for petitioners, they
stated in their position paper[6]that respondents were never dismissed but that
they abandoned their jobs after filing their complaints. Petitioners denied that
Reyes is the employer of Arnaiz and Napal but admitted such fact insofar as
Tolores is concerned.
In his Decision[7] dated August 25, 2000, the Labor Arbiter expressed dismay over
respondents lack of good faith in negotiating a settlement. The Labor Arbiter
denounced the way respondents dealt with Atty. Delicana during their discussions
for a possible settlement since respondents themselves later on informed the said
tribunal that at the time of the said discussions, they no longer considered Atty.
Delicana as their counsel. Despite this, the Labor Arbiter still required the parties
to submit their respective position papers. And as respondents position paper was
filed late and no evidence was attached to prove the allegations therein, the Labor
Arbiter resolved to dismiss the complaints, thus:
SO ORDERED.[8]
Respondents filed a joint appeal[9] with the NLRC. In a Decision[10] dated January
17, 2002, the NLRC overruled the Decision of the Labor Arbiter and held that the
burden of proof lies on herein petitioners as Reyes admitted being the employer of
Tolores.Hence, petitioners not Tolores, had the duty to advance proof. With
respect to Arnaiz and Napal, the NLRC noted that since their alleged employer
was not impleaded, said respondents cases should be remanded to the Labor
Arbiter, and tried as new and separate cases. The dispositive portion of the NLRCs
Decision reads:
SO ORDERED.[11]
SO ORDERED.[14]
such reassignment does not amount to constructive dismissal. Reyes claimed that
it would be likely for respondents, after filing complaints against him, to do
something prejudicial to the business as chief bakers, like mixing harmful
ingredients into the bread that they bake. This could be inimical to the health of
the consuming public. Petitioners averred that respondents reassignment as
utility/security personnel is a preventive measure designed to protect the business
and its customers. They likewise added that the transfer was meant to be only
temporary and besides, same does not involve any diminution in pay, rights and
privileges of the respondents. Petitioners also alleged that respondents wage
of P115.00 per day is in consonance with and is even higher than the mandated
minimum wage of P105.00 under Wage Order No. RB6-09 for retail and service
establishments employing not more than 10 workers as in his business.
The CA, in its Decision[20] dated September 23, 2005, found merit in the
petition, ruling that respondents were constructively dismissed since their
designation from chief bakers to utility/security personnel is undoubtedly a
demotion in rank which involved a drastic change in the nature of work resulting
to a demeaning and humiliating work condition. It also held that petitioners fear
that respondents might introduce harmful foreign substances in baking bread is
more imaginary than real. Further, respondents could not be held guilty of
abandonment of work as this was negated by their immediate filing of complaints
to specifically ask for reinstatement. Nevertheless, the CA denied the claim for
salary differentials by totally agreeing with the NLRCs finding on the matter. Said
court then resolved to award respondents the rest of their monetary claims for
failure of petitioners to present proof of payment and 10% attorneys fees as
respondents dismissal was attended with bad faith which forced them to
litigate, viz:
Petitioners filed a Motion for Reconsideration[22] but the same was denied by
the CA in a Resolution[23] dated May 25, 2006.
Issues
Hence, this present petition raising the following issues for the Courts
consideration:
Petitioners maintain that the NLRC, in its Resolution dated December 18,
2003, merely upheld the findings of the Labor Arbiter that there was no
constructive dismissal because of the absence of any evidence to prove such
allegation. As such, Reyes supposition is that the CA erred in coming up with a
contrary finding.
Our Ruling
Petitioners claim that the CA should have accorded respect and finality to the
factual findings rendered by the NLRC in its December 18, 2003 Resolution as the
same merely affirmed the findings of the Labor Arbiter. Citing several
jurisprudence on the matter, petitioners add that factual findings of labor officials
who acquired expertise on matters within their jurisdiction have conclusive effect.
respondents were constructively dismissed. But later on, it again reversed itself in
its third and final resolution of the case and ruled in petitioners favor. Therefore,
contrary to Reyess claim, the NLRC did not, on any occasion, affirm any factual
findings of the Labor Arbiter. The CA is thus correct in reviewing the entire records
of the case to determine which findings of the NLRC is sound and in accordance
with law. Besides, the CA, at any rate, may still resolve factual issues by express
mandate of the law despite the respect given to administrative findings of fact.[27]
DECISION
LEONEN, J.:
G.J.T. Rebuilders rented space in the Far East Asia (FEA) Building in Shaw
Boulevard, Mandaluyong City, which served as the site of its machine shop.
On September 8, 1996, a fire partially destroyed the FEA Building.6
Due to the damage sustained by the building, its owner notified its tenants
to vacate their rented units by the end of September 1996 "to avoid any
unforeseen accidents which may arise due to the damage."7
Despite the building owners notice to vacate, G.J.T. Rebuilders continued its
business in the condemned building. When the building owner finally refused
to accommodate it, G.J.T. Rebuilders left its rented space and closed the
machine shop on December 15, 1997.8 It then filed an Affidavit of Closure
before the Department of Labor and Employment on February 16, 1998 and
a sworn application to retire its business operations before the Mandaluyong
City Treasurers Office on February 25, 1998.9
In their defense, G.J.T. Rebuilders and the Trillana spouses argued that
G.J.T. Rebuilders suffered serious business losses and financial reverses,
forcing it to close its machine shop. Therefore, Ricardo, Russell, and
Benjamin were not entitled to separation pay.11
Labor Arbiter Facundo L. Leda (Labor Arbiter Leda) decided the Complaint,
finding no convincing proof of G.J.T. Rebuilders alleged serious business
losses. Labor Arbiter Leda, in the Decision12 dated December 28, 1999,
found that Ricardo, Russell, and Benjamin were entitled to separation pay
under Article 283 of the Labor Code.13In addition, they were awarded
attorneys fees, having been constrained to litigate their claims.14
Even assuming that G.J.T. Rebuilders closure was due to serious business
losses, Labor Arbiter Leda held that the employees affected were still
entitled to separation pay "based on social justice and equity."15
G.J.T. Rebuilders and the Trillana spouses appealed Labor Arbiter Ledas
Decision before the National Labor Relations Commission.16
In contrast with the Labor Arbiters finding, the National Labor Relations
Commission found G.J.T. Rebuilders to have suffered serious business
losses. Because of the fire that destroyed the building where G.J.T.
Rebuilders was renting space, the demand for its services allegedly declined
as "no same customer would dare to entrust machine works to be done for
them in a machine shop lying in a ruined and condemned building." 17 The
National Labor Relations Commission then concluded that the fire
"proximately caused"18 G.J.T. Rebuilders serious business losses, with its
financial statement for the fiscal year 1997 showing a net loss of
316,210.00.19
In the Decision20 dated January 25, 2001, the National Labor Relations
Commission vacated and set aside Labor Arbiter Ledas Decision and
dismissed the Complaint for lack of merit. Since the Commission found that
G.J.T. Rebuilders ceased operations due to serious business losses, it held
that G.J.T. Rebuilders and the Trillana spouses need not pay Ricardo,
Russell, and Benjamin separation pay.
Ricardo, Russell, and Benjamin filed a Motion for Reconsideration, which the
National Labor Relations Commission denied in the Resolution21 dated March
5, 2001.
did not suffer from serious business losses but closed the machine shop to
prevent losses.23
In the Decision25 dated January 17, 2006, the Court of Appeals granted the
Petition for Certiorari, vacating and setting aside the National Labor
Relations Commissions Decision. It reinstated Labor Arbiter Ledas Decision
dated December 28, 1999.
G.J.T. Rebuilders and the Trillana spouses filed a Motion for Reconsideration,
which the Court of Appeals denied in the Resolution26 dated August 11,
2006.
Petitioners G.J.T. Rebuilders and the Trillana spouses filed before this court a
Petition for Review on Certiorari.27Respondents Ricardo, Russell, and
Benjamin commented28 on the Petition, after which petitioners filed a
Reply.29
As for respondents, they contend that G.J.T. Rebuilders failed to prove its
alleged serious business losses. They argue that the financial statement
showing a net loss for the year 1997 was not credible, having been belatedly
subscribed under oath by the Certified Public Accountant who prepared it.33
The issue for our resolution is whether petitioners sufficiently proved that
G.J.T. Rebuilders suffered from serious business losses.
It would indeed be stretching the intent and spirit of the law if [courts] were
to unjustly interfere with the managements prerogative to close or cease its
business operations just because [the] business operation or undertaking is
not suffering from any loss or simply to provide the workers continued
employment.39
The only time employers are not compelled to pay separation pay is when
they closed their establishments or undertaking due to serious business
losses or financial reverses.42
The burden of proving serious business losses is with the employer.45 The
employer must show losses on the basis of financial statements covering a
sufficient period of time. The period covered must be sufficient for the
National Labor Relations Commission and this court to appreciate the nature
and vagaries of the business.
Aside from the obligation to pay separation pay, employers must comply
with the notice requirement under Article 283 of the Labor Code. Employers
must serve a written notice on the affected employees and on the
Department of Labor and Employment at least one month before the
intended date of closure. Failure to comply with this requirement renders the
employer liable for nominal damages.55
Considering that G.J.T. Rebuilders failed to prove its alleged serious business
losses, it must pay respondents their separation pay equivalent to one-
month pay or at least one-half-month pay for every year of service,
whichever is higher. In computing the period of service, a fraction of at least
six months is considered a year.59
Ricardo had a daily salary of 230.00 and worked 13 days a month.62 His
one-month pay, therefore, is equal to 2,990.00. On the other hand, his one-
half-month pay for every year of service is equal to 29,250.00. The latter
amount being higher, Ricardo must receive 29,250.00 as separation pay.
Russell had a daily salary of 225.00 and worked 13 days a month.65 His one-
month pay, therefore, is equal to 2,925.00. On the other hand, his one-half-
month pay for every year of service is equal to 7,312.50. The latter amount
being higher, Russell must receive 7,312.50 as separation pay.
Benjamin had a daily salary of 225.00 and worked 13 days a month.68 His
one-month pay, therefore, is equal to 2,925.00. On the other hand, his one-
half-month pay for every year of service is equal to 5,850.00. The latter
amount being higher, Benjamin must receive 5,850.00 as separation pay.
II
The requirement "is not a mere technicality or formality which the employer
may dispense with."71 Should employers fail to properly notify their
employees, they shall be liable for nominal damages even if they validly
closed their businesses.72
Generally, employers that validly closed their businesses but failed to comply
with the notice requirement are liable in the amount of 50,000.00. 73 This
amount of nominal damages, however, may be reduced depending on "the
sound discretion of the court."74 In Sangwoo Philippines, Inc. v. Sangwoo
Philippines, Inc. Employees Union-OLALIA,75 we said that:
G.J.T. Rebuilders allegedly "conferred with all [of its employees] of [its]
intention to cease business operations"77one month before closing its
business. It allegedly submitted an Affidavit of Closure to the Department of
Labor and Employment on February 16, 1998.78
"Conferring with employees" is not the notice required under Article 283 of
the Labor Code.1wphi1 The law requires a written notice of closure served
on the affected employees. As to when the written notice should be served
on the Department of Labor and Employment, the law requires that it be
served at least one month before the intended date of closure. G.J.T.
Rebuilders served the written notice on the Department of Labor and
Employment on February 16, 1998, two months after it had closed its
business on December 15, 1997.
With G.J.T. Rebuilders failing to comply with the notice requirement under
Article 283 of the Labor Code, we find that it deprived respondents of due
process. However, considering that G.J.T. Rebuilders attempted to comply
with the notice requirement, we find the nominal damages of 10,000.00 for
each of the respondents sufficient.79
III
All told, G.J.T. Rebuilders failed to prove that it closed its machine shop due
to serious business losses. Moreover, it failed to comply with Article 283 of
the Labor Code on the notice requirement. Therefore, petitioners must pay
respondents Ricardo Ambos, Russell Ambos, and Benjamin Putian separation
pay and nominal damages.
SO ORDERED.
DECISION
Respondent filed a complaint10 for illegal dismissal and money claims for
13th and 14th month pay, bonuses and other benefits, as well as the
payment of moral and exemplary damages and attorneys fees. Respondent
posits the following allegations in his Position Paper:11
for random drug testing to be conducted on the same day that they received
the correspondence. Respondent was duly notified that he was scheduled to
be tested after lunch on that day. His receipt of the notice was evidenced by
his signature on the correspondence.
Respondent avers that at around 11:30 a.m. of the same day, he received a
phone call from his wifes colleague who informed him that a bombing
incident occurred near his wifes work station in Tel Aviv, Israel where his
wife was then working as a caregiver. Respondent attached to his Position
Paper a Press Release13 of the Department of Foreign Affairs (DFA) in Manila
to prove the occurrence of the bombing incident and a letter 14 from the
colleague of his wife who allegedly gave him a phone call from Tel Aviv.
Respondent claims that after the said phone call, he proceeded to the Israeli
Embassy to confirm the news on the alleged bombing incident. Respondent
further claims that before he left the office on the day of the random drug
test, he first informed the secretary of his Department, Irene Torres
(Torres), at around 12:30 p.m. that he will give preferential attention to the
emergency phone call that he just received. He also told Torres that he
would be back at the office as soon as he has resolved his predicament.
Respondent recounts that he tried to contact his wife by phone but he could
not reach her. He then had to go to the Israeli Embassy to confirm the
bombing incident. However, he was told by Eveth Salvador (Salvador), a
lobby attendant at the Israeli Embassy, that he could not be allowed entry
due to security reasons.
3. He agreed to take the drug test the following day at his own
expense, which he says was clearly not an indication of evasion from
the drug test.
failure to undergo the drug test out of the category of "unjustified refusal."
Petitioner corporation argues that respondents omission amounted to
"unjustified refusal" to submit to the random drug test as he could not
proffer a satisfactory explanation why he failed to submit to the drug test:
2. Respondent could not even tell if he received the call via the
landline telephone service at petitioner corporations office or at his
mobile phone.
To the mind of petitioners, they are not liable for illegal dismissal because all
of these circumstances prove that respondent really eluded the random drug
test and was therefore validly terminated for cause after being properly
accorded with due process. Petitioners further argue that they have already
fully settled the claim of respondent as evidenced by a Quitclaim which he
duly executed. Lastly, petitioners maintain that they are not guilty of unfair
labor practice as respondents dismissal was not intended to curtail his right
to self-organization; that respondent is not entitled to the payment of his
13th and 14th month bonuses and other incentives as he failed to show that
he is entitled to these amounts according to company policy; that
respondent is not entitled to reinstatement, payment of full back wages,
moral and exemplary damages and attorneys fees due to his termination for
cause.
SO ORDERED.30
The Labor Arbiter stated that while petitioner corporation observed the
proper procedure in the termination of an employee for a purported
authorized cause, such just cause did not exist in the case at bar. The
decision did not agree with the conclusions reached by petitioner
corporations own Investigating Panel that while respondent did not refuse to
submit to the questioned drug test and merely "avoided" it on the
designated day, "avoidance" and "refusal" are one and the same. It also held
that the terms "avoidance" and "refusal" are separate and distinct and that
"the two words are not even synonymous with each other."31 The Labor
Arbiter considered as more tenable the stance of respondent that his
omission merely resulted to a "failure" to submit to the said drug test and
not an "unjustified refusal." Even if respondents omission is to be
considered as refusal, the Labor Arbiter opined that it was not tantamount to
"unjustified refusal" which constitutes as just cause for his termination.
Finally, the Labor Arbiter found that respondent was entitled to moral and
exemplary damages and attorneys fees.
On appeal to the NLRC, petitioners alleged that the decision of the Labor
Arbiter was rendered with grave abuse of discretion for being contrary to
law, rules and established jurisprudence, and contained serious errors in the
findings of facts which, if not corrected, would cause grave and irreparable
damage or injury to petitioners. The NLRC, giving weight and emphasis to
the inconsistencies in respondents explanations, considered his omission as
"unjustified refusal" in violation of petitioner corporations drug policy. Thus,
in a decision dated May 31, 2006, the NLRC ruled, viz.:
"I was scheduled for drug test after lunch that day of November 3, 2004 as
confirmed with Tina Cecilia. I was having my lunch when a colleague of my
wife abroad called up informing me that there was something wrong [that]
happened in their neighborhood, where a bomb exploded near her
workstation. Immediately, I [left] the office to confirm said information but
at around 12:30 P.M. that day, I informed MS. IRENE TORRES, our
Department Secretary[,] that I would be attending to this emergency call.
Did even [inform] her that Ill try to be back as soon as possible but
unfortunately, I was able to return at 6:15 P.M. I didnt know that Tina was
the one calling me on my cell that day. Did only receive her message after I
charged my cell at the office that night. I was able to call back Tina Cecilia
later [that] night if its possible to have it (drug test) the next day.
In his explanation, the [respondent] stated that the reason why he had to
leave the office on 3 November 2004 was to verify an information at the
Israel Embassy of the alleged bombing incident on the same day. However,
[petitioners] in their position paper alleged that Ms. Torres of [petitioner]
company received a text message from him at around 12:47 p.m. informing
her that he will try to be back since he had a lot of things to do and asking
her if there was a signatory on that day. [Respondent] did not deny sending
said text messages to Ms. Torres in his reply and rejoinder x x x. He actually
confirmed that he was involved in the CIIS registration with all companies
that was involved with [petitioner] company and worked on the registration
of [petitioner] companys vehicles with TRO.
It is also herein noted that [respondent] had initially reported to Ms. Torres
that it was his mother in law who informed him about the problem
concerning his wife. However, in his written explanation x x x, the
[respondent] stated that it was a friend of his wife, whom he could not even
identify, who informed him of the alleged bombing incident in Tel Aviv,
Israel. [Respondent] also did not deny receiving a cellphone call from Ms.
Cecilia that day. He merely stated that he did not know that it was Ms.
Cecilia calling him up in a cellphone and it was only after he charged his
cellphone at the office that night that he received her message. In effect,
[respondent] asserted that his cellphone battery was running low or drained.
[Petitioners] were able to refute [these] averments of [respondent] when
they presented [respondents] Smart Billing Statement
Given the foregoing facts, the NLRC stated that the offer of respondent to
submit to another drug test the following day, even at his expense, cannot
operate to free him from liability. The NLRC opined that taking the drug test
on the day following the scheduled random drug test would affect both the
integrity and the accuracy of the specimen which was supposed to be taken
from a randomly selected employee who was notified of his/her selection on
the same day that the drug test was to be administered. The NLRC further
asserted that a drug test, conducted many hours or a day after the
employee was notified, would compromise its results because the employee
may have possibly taken remedial measures to metabolize or eradicate
whatever drugs s/he may have ingested prior to the drug test.
The NLRC further stated that these circumstances have clearly established
the falsity of respondents claims and found no justifiable reason for
respondent to refuse to submit to the petitioner corporations random drug
test. While the NLRC acknowledged that it was petitioner corporations own
Investigating Panel that considered respondents failure to take the required
drug test as mere "avoidance" and not "unjustified refusal," it concluded that
such finding was merely recommendatory to guide top management on what
action to take.
We are not convinced that there was indeed that call which you claim to
have received noon of November 3, 2004. On the contrary, our belief is
based on the fact that you could not tell who called you up or how the call
got to you. If you forgot to ask the name of the person who called you up,
surely you would have known how the call came to you. You said you were
having lunch at the third floor of the CTC building when you received the
call. There were only two means of communication available to you then:
the land line telephone service in your office and your mobile phone. If your
claim were (sic) not fabricated, you would be able to tell which of these two
was used.
Granting that you indeed received that alleged call, from your own account,
there was no compelling reason for you to act on it at the expense of your
scheduled drug testing. The call, as it were, merely stated that something
wrong happened (sic) in their neighborhood, where a bomb exploded near
her workstation. Nothing was said if your wife was affected. There is no
point in confirming it with extraordinary haste and forego the drug test
which would have taken only a few minutes to accomplish. If at all, you
should have undergone the drug testing first before proceeding to confirm
the news so as to leave your mind free from this obligation.
Additionally, if it was indeed necessary that you skip the scheduled drug
testing to verify that call, why did you not ask permission from the Drug
Watch [C]ommittee that you were leaving? The place where the activity was
being conducted was very close to your workstation. It was absolutely within
your reach to inform any of its members that you were attending to an
emergency call. Why did you not do so?
All this undisputedly proves that you merely eluded the drug testing. Your
claim that you did not refuse to be screened carries no value. Your act was a
negation of your words."33
The NLRC found that respondent was not only validly dismissed for cause
he was also properly accorded his constitutional right to due process as
shown by the following succession of events:
The NLRC, notwithstanding its finding that respondent was dismissed for
cause and with due process, granted financial assistance to respondent on
equitable grounds. It invoked the past decisions of this Court which allowed
the award of financial assistance due to factors such as long years of service
or the Courts concern and compassion towards labor where the infraction
was not so serious. Thus, considering respondents 10 years of service with
petitioner corporation without any record of violation of company policies,
the NLRC ordered petitioner corporation to pay respondent financial
assistance equivalent to one-half (1/2) month pay for every year of service
in the amount of One Hundred Ninety-Nine Thousand Seventy-Five Pesos
(P199,075.00). The NLRC decision states thus:
SO ORDERED.36
In a petition for certiorari before the CA, respondent raised the following
issues: whether the NLRC acted without or in excess of its jurisdiction, or
with grave abuse of discretion amounting to lack or excess of its jurisdiction
when it construed that the terms "failure," "avoidance," "refusal" and
"unjustified refusal" have similar meanings; reversed the factual findings of
the Labor Arbiter; and held that respondent deliberately breached
petitioners Anti-Drugs Policy.40 Respondent further argued before the
appellate court that his failure to submit himself to the random drug test
was justified because he merely responded to an emergency call regarding
his wifes safety in Tel Aviv, and that such failure cannot be considered
synonymous with "avoidance" or "refusal" so as to mean "unjustified refusal"
in order to be meted the penalty of termination.41
The CA disagreed with the NLRC and ruled that it was immaterial whether
respondent failed, refused, or avoided being tested. To the appellate court,
the singular fact material to this case was that respondent did not get
himself tested in clear disobedience of company instructions and policy.
"VII. Recommendation
The Panel also took into consideration that Mr. Joselito A. Caro has served
the company for ten (10) years without any record of violation of the
company policies.
xxxx
The Panel also recommends that Management review the Mirant Drug Policy
specifically Unjustified [R]efusal to submit to random drug testing. The
Panel believes that the term refusal casts certain ambiguities and should be
clearly defined."42
SO ORDERED.43
We shall first rule on the issue raised by petitioners that the petition for
certiorari filed by respondent with the CA should have been summarily
dismissed as it lacked the requisite verification and certification against
forum shopping under Sections 4 and 5, Rule 7 of the Rules, viz.:
A pleading is verified by an affidavit that the affiant has read the pleading
and that the allegations therein are true and correct of his knowledge and
belief.
This jurisdiction has adopted in the field of labor protection a liberal stance
towards the construction of the rules of procedure in order to serve the ends
of substantial justice. This liberal construction in labor law emanates from
the mandate that the workingmans welfare should be the primordial and
paramount consideration.45 Thus, if the rules of procedure will stunt courts
from fulfilling this mandate, the rules of procedure shall be relaxed if the
circumstances of a case warrant the exercise of such liberality. If we sustain
the argument of petitioners in the case at bar that the petition for certiorari
should have been dismissed outright by the CA, the NLRC decision would
have reached finality and respondent would have lost his remedy and denied
his right to be protected against illegal dismissal under the Labor Code, as
amended.
We agree with the disposition of the appellate court that there was illegal
dismissal in the case at bar.
Petitioner corporations subject Anti-Drugs Policy fell short of being fair and
reasonable.
First. The policy was not clear on what constitutes "unjustified refusal" when
the subject drug policy prescribed that an employees "unjustified refusal" to
submit to a random drug test shall be punishable by the penalty of
termination for the first offense. To be sure, the term "unjustified refusal"
could not possibly cover all forms of "refusal" as the employees resistance,
to be punishable by termination, must be "unjustified." To the mind of the
Court, it is on this area where petitioner corporation had fallen short of
making it clear to its employees as well as to management as to what
types of acts would fall under the purview of "unjustified refusal." Even
petitioner corporations own Investigating Panel recognized this ambiguity,
viz.:
The Panel also recommends that Management review the Mirant Drug Policy
specifically "Unjustified [R]efusal to submit to random drug testing." The
Panel believes that the term "refusal" casts certain ambiguities and should
be clearly defined.48
The fact that petitioner corporations own Investigating Panel and its Vice
President for Operations, Sliman, differed in their recommendations
regarding respondents case are first-hand proof that there, indeed, is
ambiguity in the interpretation and application of the subject drug policy.
The fact that petitioner corporations own personnel had to dissect the
intended meaning of "unjustified refusal" is further proof that it is not clear
on what context the term "unjustified refusal" applies to. It is therefore not a
surprise that the Labor Arbiter, the NLRC and the CA have perceived the
term "unjustified refusal" on different prisms due to the lack of parameters
as to what comes under its purview. To be sure, the fact that the courts and
entities involved in this case had to engage in semantics and come up with
different constructions is yet another glaring proof that the subject policy
is not clear creating doubt that respondents dismissal was a result of
petitioner corporations valid exercise of its management prerogative.
Thus, We find that the recommended four (4) working weeks suspension
without pay as the reasonable penalty to be imposed on [respondent] for his
disobedience. x x x51 (Additional emphasis supplied.)
We believe that this issue was extensively discussed by both the Labor
Arbiter and the CA and we find no reversible error on the disposition of this
issue, viz.:
A review of the records show that the alluded quitclaim, which was undated
and not even notarized although signed by the petitioner, was for the
amount of P59,630.05. The said quitclaim was attached as Annex 26 in the
[petitioners] Position Paper filed before the Labor Arbiter. As fully explained
by [respondent] in his Reply filed with the Labor Arbiter, the amount stated
therein was his last pay due to him when he was terminated, not the amount
representing his legitimate claims in this labor suit x x x. To bolster his
defense, [respondent] submitted the pay form issued to him by the
[petitioner corporation], showing his net pay at P59,630.05 exactly the
amount stated in the quitclaim x x x. Then, too, as stated on the quitclaim
itself, the intention of the waiver executed by the [respondent] was to
release [petitioner corporation] from any liability only on the said amount
representing [respondents] "full and final payment of [his] last
salary/separation pay" x x x. It did not in any way waive [respondents]
right to pursue his legitimate claims regarding his dismissal in a labor suit.
Thus, We gave no credence to [petitioners] private defense that alleged
quitclaim rendered the instant petition moot.55
Finally, the petition avers that petitioner Bautista should not be held
personally liable for respondents dismissal as he acted in good faith and
within the scope of his official functions as then president of petitioner
corporation. We agree with petitioners.1wphi1 Both decisions of the Labor
Arbiter and the CA did not discuss the basis of the personal liability of
petitioner Bautista, and yet the dispositive portion of the decision of the
Labor Arbiter - which was affirmed by the appellate court - held him jointly
and severally liable with petitioner corporation, viz.:
A corporation has a personality separate and distinct from its officers and
board of directors who may only be held personally liable for damages if it is
proven that they acted with malice or bad faith in the dismissal of an
employee.57 Absent any evidence on record that petitioner Bautista acted
maliciously or in bad faith in effecting the termination of respondent, plus
the apparent lack of allegation in the pleadings of respondent that petitioner
Bautista acted in such manner, the doctrine of corporate fiction dictates that
only petitioner corporation should be held liable for the illegal dismissal of
respondent.
No pronouncement as to costs.
SO ORDERED.
8 Benigno vs ABSCBN
DECISION
PEREZ, J.:
The Facts
Having been terminated during the pendency of the case, Petitioners filed on
10 July 2007 a second complaint against respondents, for regularization,
payment of labor standard benefits, illegal dismissal and unfair labor
practice, which was docketed as Sub-RAB 05-08-00107-07. Upon
respondents motion, this complaint was dismissed for violation of the rules
against forum shopping in view of the fact that the determination of the
issues in the second case hinged on the resolution of those raised in the
first.10 On 19 December 2007, however, Labor Arbiter Jesus Orlando
Quiones (Labor Arbiter Quiones) resolved Sub-RAB 05-04-00041-07 in
favor of petitioners who, having rendered services necessary and related to
ABS-CBNs business for more than a year, were determined to be its regular
employees. With said conclusion found to be buttressed by, among others,
the exclusivity clause and prohibitions under petitioners Talent Contracts
and/or Project Assignment Forms which evinced respondents control over
them,11 Labor Arbiter Quiones disposed of the case in the following wise:
Other than the above, all other claims and charges are ordered DISMISSED
for lack of merit.12
The Issues
Petitioners seek the reversal of the CAs assailed Decision and Resolution on
the affirmative of the following issues:
gainsaid, however, that labor contracts are subject to the police power of the
state and are placed on a higher plane than ordinary contracts. The
recognized supremacy of the law over the nomenclature of the contract and
the stipulations contained therein is aimed at bringing life to the policy
enshrined in the Constitution to afford protection to labor.25 Insofar as the
nature of ones employment is concerned, Article 280 of the Labor Code of
the Philippines also provides as follows:
It has been ruled that the foregoing provision contemplates four kinds of
employees, namely: (a) regular employees or those who have been engaged
to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; (b) project employees or those whose
employment has been fixed for a specific project or undertaking, the
completion or termination of which has been determined at the time of the
engagement of the employee; (c) seasonal employees or those who work or
perform services which are seasonal in nature, and the employment is for
the duration of the season; and (d) casual employees or those who are not
regular, project, or seasonal employees.26 To the foregoing classification of
employee, jurisprudence has added that of contractual or fixed term
employee which, if not for the fixed term, would fall under the category of
regular employment in view of the nature of the employees engagement,
which is to perform activity usually necessary or desirable in the employers
business.27
again, it has been ruled that the test to determine whether employment is
regular or not is the reasonable connection between the activity performed
by the employee in relation to the business or trade of the employer. 28 As
cameramen/editors and reporters, petitioners were undoubtedly performing
functions necessary and essential to ABS-CBNs business of broadcasting
television and radio content. It matters little that petitioners services were
engaged for specified periods for TV Patrol Bicol and that they were paid
according to the budget allocated therefor. Aside from the fact that said
program is a regular weekday fare of the ABS-CBNs Regional Network
Group in Naga City, the record shows that, from their initial engagement in
the aforesaid capacities, petitioners were continuously re-hired by
respondents over the years. To the mind of the Court, respondents repeated
hiring of petitioners for its long-running news program positively indicates
that the latter were ABS-CBNs regular employees.
If the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems the
repeated or continuing performance as sufficient evidence of the necessity, if
not indispensability of that activity in the business.29 Indeed, an employment
stops being co-terminous with specific projects where the employee is
continuously re-hired due to the demands of the employers business.30When
circumstances show, moreover, that contractually stipulated periods of
employment have been imposed to preclude the acquisition of tenurial
security by the employee, this Court has not hesitated in striking down such
arrangements as contrary to public policy, morals, good customs or public
order.31 The nature of the employment depends, after all, on the nature of
the activities to be performed by the employee, considering the nature of the
employers business, the duration and scope to be done, and, in some cases,
even the length of time of the performance and its continued existence.32 In
the same manner that the practice of having fixed-term contracts in the
industry does not automatically make all talent contracts valid and compliant
with labor law, it has, consequently, been ruled that the assertion that a
talent contract exists does not necessarily prevent a regular employment
status.33
In finding that petitioners were regular employees, the NLRC further ruled
that the exclusivity clause and prohibitions in their Talent Contracts and/or
Project Assignment Forms were likewise indicative of respondents control
over them. Brushing aside said finding, however, the CA applied the ruling in
Sonza v. ABS-CBN Broadcasting Corporation35 where similar restrictions
were considered not necessarily determinative of the existence of an
employer-employee relationship. Recognizing that independent contractors
can validly provide his exclusive services to the hiring party, said case
enunciated that guidelines for the achievement of mutually desired results
are not tantamount to control. As correctly pointed out by petitioners,
however, parallels cannot be expediently drawn between this case and that
of Sonza case which involved a well-known television and radio personality
who was legitimately considered a talent and amply compensated as such.
While possessed of skills for which they were modestly recompensed by
respondents, petitioners lay no claim to fame and/or unique talents for
which talents like actors and personalities are hired and generally
compensated in the broadcast industry.
Third. Petitioner could always discharge respondents should it find their work
unsatisfactory, and respondents are highly dependent on the petitioner for
continued work.
The presumption is that when the work done is an integral part of the
regular business of the employer and when the worker, relative to the
employer, does not furnish an independent business or professional service,
such work is a regular employment of such employee and not an
independent contractor. The Court will peruse beyond any such agreement
to examine the facts that typify the parties actual relationship.38 (Emphasis
omitted)
SO ORDERED.
9 Universidad vs Sambajon
DECISION
The Facts
xxxx
Please be informed that teachers in the Universidad are not re-ranked during
their probationary period. The Faculty Manual as revised for school year
2002-2003 provides (page 38) "Re-ranking is done every two years, hence
the personnel hold their present rank for two years. Those undergoing
probationary period and those on part-time basis of employment are not
covered by this provision." This provision is found also in the 2000-2001
Operations Manual.
Your personnel file shows that you were hired as a probationary teacher in
the second semester of school year 2002-2003. By October 2004, you will
be completing four (4) semesters (two school years) of service. Even
permanent teachers are re-ranked only every two years, and you are not
even a permanent teacher. I am informed that you have been told several
times and made to read the Provision in the Faculty Manual by the personnel
office that you cannot be re-ranked because you are still a probationary
teacher.
x x x x8
xxx
Special Order you submitted showing that you had obtained the degree of
Master of Arts in Education. Instead of being grateful for the adjustment,
you insist that the adjustment be made retroactive to June 2003. Simply
stated, you want your salary adjusted after one semester of probationary
service. We do not think a probationary teacher has better rights than a
permanent teacher in the matter of re-ranking or "evaluation."9
However, respondent found the above explanation insufficient and not clear
enough. In his letter dated January 12, 2005, he pointed out the case of
another faculty member -- whom he did not name -- also on probationary
status whose salary was supposedly adjusted by petitioner at the start of
school year (June) after he/she had completed his/her masters degree in
March. Respondent thus pleaded for the release of his salary differential, or
at the very least, that petitioner give him categorical answers to his
questions.10
We regret to inform your good self that your full time probationary
appointment will not be renewed when it expires at the end of this coming
March 31, 2005.
Thank you so much for the services that you have rendered to USI and to
her clientele the past several semesters. We strongly and sincerely
encourage you to pursue your desire to complete your Post Graduate studies
in the University of your choice as soon as you are able.
Godspeed!13
On April 14, 2005, respondent filed a complaint for illegal dismissal against
the petitioner.
In his Decision dated August 22, 2006, Labor Arbiter Jesus Orlando M.
Quinones ruled that there was no just or authorized cause in the termination
of respondents probationary employment. Consequently, petitioner was
found liable for illegal dismissal, thus:
Accordingly, and consistent with Article 279 of the Labor Code, respondent
school is hereby directed to pay complainant full backwages covering the
period/duration of the 1st semester of academic year 2005-2006.
Reinstatement being rendered moot by the expiration of the probationary
period, respondent school is directed to pay complainant separation pay in
lieu of reinstatement computed at one (1) months pay for every year of
service. An award of 10% attorneys fees in favor of complainant is also held
in order.
All other claims and charges are DISMISSED for lack of legal and factual
basis.
SO ORDERED.14
Petitioner appealed to the NLRC raising the issue of the correct interpretation
of Section 92 of the Manual of Regulations for Private Schools and DOLE-
DECS-CHED-TESDA Order No. 01, series of 1996, and alleging grave abuse
of discretion committed by the Labor Arbiter in ruling on a cause of
action/issue not raised by the complainant (respondent) in his position
paper.
On August 1, 2008, the NLRC rendered its Decision affirming the Labor
Arbiter and holding that respondent had acquired a permanent status
pursuant to Sections 91, 92 and 93 of the 1992 Manual of Regulations for
Private Schools, in relation to Article 281 of the Labor Code, as amended.
Thus:
In the instant case, the first contract (records, pp. 36; 92) executed by the
parties provides that he was hired on a probationary status effective
November 1, 2002 to March 30, 2003. While his employment continued
beyond the above-mentioned period and lasted for a total of five (5)
consecutive semesters, it appears that the only other contract he signed is
the one (records, p. 103) for the second semester of SY 2003-2004. A
portion of this contract reads:
"I am pleased to inform you that you are designated and commissioned to
be an Apostle of Love and Service, Unity and Peace as you dedicate and
commit yourself in the exercise of your duties and responsibilities as a:
There is no showing that the complainant signed a contract for the first and
second semesters of SY 2004-2005.
SO ORDERED.15
Both parties filed separate appeals before the CA. On motion by respondent,
the two cases were consolidated (CA-G.R. SP Nos. 108103 and 108168).16
By Decision dated March 25, 2011, the CA sustained the conclusion of the
NLRC that respondent had already acquired permanent status when he was
allowed to continue teaching after the expiration of his first appointment-
contract on March 30, 2003. However, the CA found it necessary to modify
the decision of the NLRC to include the award of back wages to respondent.
The dispositive portion of the said decision reads:
As regards CA-G.R. SP No. 108168, the petition is DENIED for lack of merit.
SO ORDERED.17
The Petition/Issues
Before this Court, petitioner ascribes grave error on the part of the CA in
sustaining the NLRC which ruled that respondent was dismissed without just
or authorized cause at the time he had already acquired permanent or
regular status since petitioner allowed him to continue teaching despite the
expiration of the first contract of probationary employment for the second
In fine, petitioner asks this Court to rule on the following issues: (1) whether
the NLRC correctly resolved an issue not raised in petitioners appeal
memorandum; and (2) whether respondents probationary employment was
validly terminated by petitioner.
Our Ruling
Section 4(d), Rule VI of the 2005 Revised Rules of Procedure of the NLRC,
which was in force at the time petitioner appealed the Labor Arbiters
decision, expressly provided that, on appeal, the NLRC shall limit itself only
to the specific issues that were elevated for review, to wit:
xxxx
(d) Subject to the provisions of Article 218 of the Labor Code, once the
appeal is perfected in accordance with these Rules, the Commission shall
limit itself to reviewing and deciding only the specific issues that were
elevated on appeal.
We have clarified that the clear import of the aforementioned procedural rule
is that the NLRC shall, in cases of perfected appeals, limit itself to reviewing
those issues which are raised on appeal. As a consequence thereof, any
other issues which were not included in the appeal shall become final and
executory.18
In this case, petitioner sets forth the following issues in its appeal
memorandum:
5.01
5.02
5.03
There is no merit to this contention. The records show that the petitioners
elevated the issues regarding the correctness of the award of damages,
reinstatement with backpay, retirement benefits and the cost-saving bonus
to the respondent Commission in their appeal. This opened the said issues
for review and any action taken thereon by the Commission was well within
the parameters of its jurisdiction. (Emphasis supplied.)
It is well settled that the employer has the right or is at liberty to choose
who will be hired and who will be denied employment. In that sense, it is
within the exercise of the right to select his employees that the employer
may set or fix a probationary period within which the latter may test and
observe the conduct of the former before hiring him permanently.22 The law,
however, regulates the exercise of this prerogative to fix the period of
probationary employment. While there is no statutory cap on the minimum
term of probation, the law sets a maximum "trial period" during which the
employer may test the fitness and efficiency of the employee.23
Thus, it is the Manual of Regulations for Private Schools, and not the Labor
Code, that determines whether or not a faculty member in an educational
institution has attained regular or permanent status.25 Section 9326 of the
1992 Manual of Regulations for Private Schools provides that full-time
teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent.
In this case, the CA sustained the NLRCs ruling that respondent was illegally
dismissed considering that he had become a regular employee when
petitioner allowed him to work beyond the date specified in his first
probationary appointment contract which expired on March 30, 2003.
According to the CA:
Only the first and third contracts were signed by the respondent. However,
such lack of signature in the second contract appears not to be the crucial
element considered by the CA but the fact that the third contract dated
February 26, 2004, unlike the previous contracts, does not indicate the
nature of the appointment as probationary employment. According to the
CA, this implies, as concluded by the NLRC, that respondent was already a
regular employee.
We disagree.
Congratulations and keep your work full in the spirit of the Lord for the
Charity of Christ urges us to live life to the fullest.
God bless
In Christ,
Witness:
Since it was explicitly provided in the above contract that unless renewed in
writing respondents appointment automatically expires at the end of the
stipulated period of employment, the CA erred in concluding that simply
because the word "probationary" no longer appears below the designation
(Full-Time Faculty Member), respondent had already become a permanent
employee. Noteworthy is respondents admission of being still under
probationary period in his January 12, 2005 letter to Sr. Evidente reiterating
his demand for salary differential, which letter was sent almost one year
after he signed the February 26, 2004 appointment contract, to wit:
The problem is that your good office has never categorically resolved
whether or not probationary teachers can also be evaluated for salary
adjustment. Nevertheless, inferring from your statement that evaluation
precedes re-ranking and in fact is the basis for re-ranking, may I
categorically ask: does it really mean that since, it precedes re-ranking,
evaluation should not take place among probationary teachers for they can
not yet be re-ranked? If so, then how pitiful are we, probationary teachers
for our credentials are never evaluated since we cannot yet be re-ranked. Oh
my goodness! Can your good office not give me a clearer and more
convincing argument shedding light on this matter?30
There can be no dispute that the period of probation may be reduced if the
employer, convinced of the fitness and efficiency of a probationary
employee, voluntarily extends a permanent appointment even before the
three-year period ends. Conversely, if the purpose sought by the employer is
neither attained nor attainable within the said period, the law does not
preclude the employer from terminating the probationary employment on
justifiable ground; or, a shorter probationary period may be incorporated in
a collective bargaining agreement. But absent any circumstances which
unmistakably show that an abbreviated probationary period has been agreed
upon, the three-year probationary term governs.32
3.3 Whose regular working day of not more than eight (8) hours
a day is devoted to the school;
The common practice is for the employer and the teacher to enter into a
contract, effective for one school year. At the end of the school year, the
employer has the option not to renew the contract, particularly considering
the teachers performance. If the contract is not renewed, the employment
relationship terminates. If the contract is renewed, usually for another
school year, the probationary employment continues. Again, at the end of
that period, the parties may opt to renew or not to renew the contract. If
renewed, this second renewal of the contract for another school year would
then be the last year since it would be the third school year of
probationary employment. At the end of this third year, the employer may
now decide whether to extend a permanent appointment to the employee,
primarily on the basis of the employee having met the reasonable standards
of competence and efficiency set by the employer. For the entire duration of
this three-year period, the teacher remains under probation. Upon the
expiration of his contract of employment, being simply on probation, he
cannot automatically claim security of tenure and compel the employer to
renew his employment contract. It is when the yearly contract is renewed for
the third time that Section 93 of the Manual becomes operative, and the
teacher then is entitled to regular or permanent employment
status.38 (Emphasis supplied.)
two (2) years and three (3) months of service. This case, however, brings to
the fore the essential question of which, between the two factors affecting
employment, should prevail given AMACCs position that the teachers
contracts expired and it had the right not to renew them. In other words,
should the teachers probationary status be disregarded simply because the
contracts were fixed-term?
Labor, for its part, is given the protection during the probationary period of
knowing the company standards the new hires have to meet during the
probationary period, and to be judged on the basis of these standards, aside
from the usual standards applicable to employees after they achieve
permanent status. Under the terms of the Labor Code, these standards
should be made known to the teachers on probationary status at the start of
their probationary period, or at the very least under the circumstances of the
present case, at the start of the semester or the trimester during which the
probationary standards are to be applied. Of critical importance in invoking a
failure to meet the probationary standards, is that the school should show
as a matter of due process how these standards have been applied. This is
effectively the second notice in a dismissal situation that the law requires as
a due process guarantee supporting the security of tenure provision, and is
in furtherance, too, of the basic rule in employee dismissal that the employer
carries the burden of justifying a dismissal. These rules ensure compliance
with the limited security of tenure guarantee the law extends to probationary
employees.
Under the given facts where the school year is divided into trimesters, the
school apparently utilizes its fixed-term contracts as a convenient
arrangement dictated by the trimestral system and not because the
workplace parties really intended to limit the period of their relationship to
any fixed term and to finish this relationship at the end of that term. If we
pierce the veil, so to speak, of the parties so-called fixed-term employment
contracts, what undeniably comes out at the core is a fixed-term contract
conveniently used by the school to define and regulate its relations with its
teachers during their probationary period.
Given the clear constitutional and statutory intents, we cannot but conclude
that in a situation where the probationary status overlaps with a fixed-term
contract not specifically used for the fixed term it offers, Article 281 should
assume primacy and the fixed-period character of the contract must give
way. This conclusion is immeasurably strengthened by the petitioners and
the AMACCs hardly concealed expectation that the employment on
probation could lead to permanent status, and that the contracts are
renewable unless the petitioners fail to pass the schools
standards. (Additional emphasis supplied.)
40
Illegal Dismissal
No pronouncement as to costs.
SO ORDERED.
10 Abbot vs Alcaraz
RESOLUTION
PERLAS-BERNABE, J.:
A. Manner of review.
Alcaraz contends that the Court should not have conducted a re-weighing of
evidence since a petition for review on certiorari under Rule 45 of the Rules
of Court (Rules) is limited to the review of questions of law. She submits
that since what was under review was a ruling of the Court of Appeals (CA)
rendered via a petition for certiorari under Rule 65 of the Rules, the Court
should only determine whether or not the CA properly determined that the
National Labor Relations Commission (NLRC) committed a grave abuse of
discretion.
The assertion does not justify the reconsideration of the assailed Decision.
A careful perusal of the questioned Decision will reveal that the Court
actually resolved the controversy under the above-stated framework of
analysis. Essentially, the Court found the CA to have committed an error in
holding that no grave abuse of discretion can be ascribed to the NLRC since
the latter arbitrarily disregarded the legal implication of the attendant
circumstances in this case which should have simply resulted in the finding
that Alcaraz was apprised of the performance standards for her
regularization and hence, was properly a probationary employee. As the
Court observed, an employees failure to perform the duties and
responsibilities which have been clearly made known to him constitutes a
justifiable basis for a probationary employees non-regularization. As
detailed in the Decision, Alcaraz was well-apprised of her duties and
responsibilities as well as the probationary status of her employment:
Considering the foregoing incidents which were readily observable from the
records, the Court reached the conclusion that the NLRC committed grave
abuse of discretion, viz.:
[I]n holding that Alcaraz was illegally dismissed due to her status as a
regular and not a probationary employee, the Court finds that the NLRC
committed a grave abuse of discretion.
To elucidate, records show that the NLRC based its decision on the premise
that Alcarazs receipt of her job description and Abbotts Code of Conduct
and Performance Modules was not equivalent to being actually informed of
the performance standards upon which she should have been evaluated on.
It, however, overlooked the legal implication of the other attendant
circumstances as detailed herein which should have warranted a contrary
finding that Alcaraz was indeed a probationary and not a regular employee
more particularly the fact that she was well-aware of her duties and
responsibilities and that her failure to adequately perform the same would
lead to her non-regularization and eventually, her termination.3
Consequently, since the CA found that the NLRC did not commit grave abuse
of discretion and denied the certiorari petition before it, the reversal of its
ruling was thus in order.
At this juncture, it bears exposition that while NLRC decisions are, by their
nature, final and executory4 and, hence, not subject to appellate
review,5 the Court is not precluded from considering other questions of law
aside from the CAs finding on the NLRCs grave abuse of discretion. While
the focal point of analysis revolves on this issue, the Court may deal with
ancillary issues such as, in this case, the question of how a probationary
employee is deemed to have been informed of the standards of his
regularization if only to determine if the concepts and principles of labor
law were correctly applied or misapplied by the NLRC in its decision. In other
words, the Courts analysis of the NLRCs interpretation of the environmental
Finally, if only to put to rest Alcarazs misgivings on the manner in which this
case was reviewed, it bears pointing out that no "factual appellate review"
was conducted by the Court in the Decision. Rather, the Court proceeded to
interpret the relevant rules on probationary employment as applied to
settled factual findings. Besides, even on the assumption that a scrutiny of
facts was undertaken, the Court is not altogether barred from conducting the
same. This was explained in the case of Career Philippines Shipmanagement,
Inc. v. Serna6 wherein the Court held as follows:
Nevertheless, there are exceptional cases where we, in the exercise of our
discretionary appellate jurisdiction may be urged to look into factual issues
raised in a Rule 45 petition. For instance, when the petitioner persuasively
alleges that there is insufficient or insubstantial evidence on record to
support the factual findings of the tribunal or court a quo, as Section 5, Rule
133 of the Rules of Court states in express terms that in cases filed before
administrative or quasi-judicial bodies, a fact may be deemed established
only if supported by substantial evidence.7 (Emphasis supplied)
Alcaraz posits that, contrary to the Courts Decision, ones job description
cannot by and of itself be treated as a standard for regularization as a
standard denotes a measure of quantity or quality. By way of example,
Alcaraz cites the case of a probationary salesperson and asks how does such
employee achieve regular status if he does not know how much he needs to
sell to reach the same.
First off, the Court must correct Alcarazs mistaken notion: it is not the
probationary employees job description but the adequate performance of his
duties and responsibilities which constitutes the inherent and implied
records, her termination was justified. Bear in mind that the quantum of
proof which the employer must discharge is only substantial evidence which,
as defined in case law, means that amount of relevant evidence as a
reasonable mind might accept as adequate to support a conclusion, even if
other minds, equally reasonable, might conceivably opine otherwise.14 To
the Court's mind, this threshold of evidence Abbott amply overcame in this
case.
All told, the Court hereby denies the instant motion for reconsideration and
thereby upholds the Decision in the main case.
WHEREFORE, the motion for reconsideration dated August 23, 2013 of the
Court's Decision dated July 23, 2013 in this case is hereby DENIED.
SO ORDERED.
11 Colegio vs Rojo
DECISION
This Petition for Review on Certiorari1 assails the August 31, 2005
Decision2 and the November 10, 2005 Resolution3 of the Court of Appeals
(CA) in CA-G.R. SP No. 85188, which affirmed the July 31, 2003 Decision 4 of
the National Labor Relations Commission (NLRC). Said NLRC Decision
affirmed with modification the October 7, 2002 Decision5 of the Labor Arbiter
(LA) which, in turn, granted respondent Emmanuel Rojos (respondent)
Complaint6 for illegal dismissal.
Factual Antecedents
Thus, on July 13, 1995, respondent filed a Complaint10 for illegal dismissal.
He alleged that since he had served three consecutive school years which is
the maximum number of terms allowed for probationary employment, he
should be extended permanent employment. Citing paragraph 75 of the
1970 Manual of Regulations for Private Schools (1970 Manual), respondent
asserted that "full- time teachers who have rendered three (3) consecutive
years of satisfactory services shall be considered permanent."11
On the other hand, petitioners argued that respondent knew that his
Teachers Contract for school year 1994-1995 with CSR would expire on
March 31, 1995.12 Accordingly, respondent was not dismissed but his
probationary contract merely expired and was not renewed.13 Petitioners
also claimed that the "three years" mentioned in paragraph 75 of the 1970
Manual refer to "36 months," not three school years.14 And since respondent
served for only three school years of 10 months each or 30 months, then he
had not yet served the "three years" or 36 months mentioned in paragraph
75 of the 1970 Manual.15
The LA ruled that "three school years" means three years of 10 months, not
12 months.16 Considering that respondent had already served for three
consecutive school years, then he has already attained regular employment
status. Thus, the non-renewal of his contract for school year 1995-1996
constitutes illegal dismissal.17
The LA also found petitioners guilty of bad faith when they treated
respondents termination merely as the expiration of the third employment
contract and when they insisted that the school board actually deliberated on
the non-renewal of respondents employment without submitting admissible
proof of his alleged regular performance evaluation.18
SO ORDERED.20
On appeal, the NLRC affirmed the LAs Decision with modification. It held
that after serving three school years, respondent had attained the status of
regular employment21 especially because CSR did not make known to
respondent the reasonable standards he should meet.22 The NLRC also
agreed with the LA that respondents termination was done in bad faith. It
held that respondent is entitled to reinstatement, if viable; or separation
pay, if reinstatement was no longer feasible, and backwages, viz:
SO ORDERED.23
Petitioners moved for reconsideration which the NLRC denied in its April 28,
2004 Resolution24 for lack of merit.
Petitioners filed a Petition for Certiorari25 before the CA alleging grave abuse
of discretion on the part of the NLRC in finding that respondent had attained
In a Decision26 dated August 31, 2005, the CA denied the Petition for lack of
merit. Citing Cagayan Capitol College v. National Labor Relations
Commission,27 it held that respondent has satisfied all the requirements
necessary to acquire permanent employment and security of tenure viz:
Issue
COURT IN COLEGIO SAN AGUSTIN V. NLRC, 201 SCRA 398 1991 THAT A
PROBATIONARY TEACHER ACQUIRES PERMANENT STATUS "ONLY WHEN HE
IS ALLOWED TO WORK AFTER THE PROBATIONARY PERIOD" AND [B] DOLE-
DECS-CHED-TESDA ORDER NO. 01, S. 1996 WHICH PROVIDE THAT
TEACHERS WHO HAVE SERVED THE PROBATIONARY PERIOD "SHALL BE
MADE REGULAR OR PERMANENT IF ALLOWED TO WORK AFTER SUCH
PROBATIONARY PERIOD."31
Our Ruling
Such employment for fixed terms during the teachers probationary period is
an accepted practice in the teaching profession. In Magis Young Achievers
Learning Center v. Manalo,34 we noted that:
The common practice is for the employer and the teacher to enter into a
contract, effective for one school year. At the end of the school year, the
employer has the option not to renew the contract, particularly considering
the teachers performance. If the contract is not renewed, the employment
relationship terminates. If the contract is renewed, usually for another
school year, the probationary employment continues. Again, at the end of
that period, the parties may opt to renew or not to renew the contract. If
renewed, this second renewal of the contract for another school year would
then be the last year since it would be the third school year of
probationary employment. At the end of this third year, the employer may
now decide whether to extend a permanent appointment to the employee,
primarily on the basis of the employee having met the reasonable standards
of competence and efficiency set by the employer. For the entire duration of
this three-year period, the teacher remains under probation. Upon the
expiration of his contract of employment, being simply on probation, he
cannot automatically claim security of tenure and compel the employer to
renew his employment contract. It is when the yearly contract is renewed for
the third time that Section 93 of the Manual becomes operative, and the
teacher then is entitled to regular or permanent employment status.
(Emphases supplied)
Sec. 93. Regular or Permanent Status. - Those who have served the
probationary period shall be made regular or permanent. Full-time teachers
who have satisfactorily completed their probationary period shall be
considered regular or permanent. (Emphasis supplied)
The above provision clearly provides that full-time teachers become regular
or permanent employees once they have satisfactorily completed the
probationary period of three school years.37 The use of the term
satisfactorily necessarily connotes the requirement for schools to set
reasonable standards to be followed by teachers on probationary
employment. For how else can one determine if probationary teachers have
satisfactorily completed the probationary period if standards therefor are not
provided?
As such, "no vested right to a permanent appointment shall accrue until the
employee has completed the prerequisite three-year period necessary for
the acquisition of a permanent status. [However, it must be emphasized
that] mere rendition of service for three consecutive years does not
automatically ripen into a permanent appointment. It is also necessary that
the employee be a full-time teacher, and that the services he rendered are
satisfactory."38
Labor, for its part, is given the protection during the probationary period of
knowing the company standards the new hires have to meet during the
probationary period, and to be judged on the basis of these standards, aside
from the usual standards applicable to employees after they achieve
permanent status. Under the terms of the Labor Code, these standards
should be made known to the teachers on probationary status at the start of
their probationary period, or at the very least under the circumstances of the
present case, at the start of the semester or the trimester during which the
probationary standards are to be applied. Of critical importance in invoking a
failure to meet the probationary standards, is that the school should show
as a matter of due process how these standards have been applied. This is
effectively the second notice in a dismissal situation that the law requires as
a due process guarantee supporting the security of tenure provision, and is
in furtherance, too, of the basic rule in employee dismissal that the employer
carries the burden of justifying a dismissal. These rules ensure compliance
with the limited security of tenure guarantee the law extends to probationary
employees.
In the same case, this Court has definitively pronounced that "in a situation
where the probationary status overlaps with a fixed-term contract not
specifically used for the fixed term it offers, Article 281 should assume
primacy and the fixed-period character of the contract must give way."40
In this case, glaringly absent from petitioners evidence are the reasonable
standards that respondent was expected to meet that could have served as
proper guidelines for purposes of evaluating his performance. Nowhere in
the Teachers Contract44 could such standards be found.45 Neither was it
mentioned that the same were ever conveyed to respondent. Even assuming
that respondent failed to meet the standards set forth by CSR and made
known to the former at the time he was engaged as a teacher on
probationary status, still, the termination was flawed for failure to give the
required notice to respondent.46 This is because Book VI, Rule I, Section 2 of
the IRR of the Labor Code provides:
xxxx
xxxx
WHEREFORE, the Petition is hereby DENIED. The August 31, 2005 Decision
and the November 10, 2005 Resolution of the Court of Appeals in CA-G.R.
SP No. 85188 are AFFIRMED. The status quo order of this Court is LIFTED.
SO ORDERED.
ROLANDO A. AUSTRIA,
Respondent.
Promulgated:
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
---x
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the
Rules of Civil Procedure seeking the reversal of the Court of Appeals (CA)
Decision[2] dated March 29, 2004 which affirmed with modification the
Decision[3]of the National Labor Relations Commission (NLRC), dated March
31, 2003.
The Facts
In the event that Mr. Austria gives up the Dean position or fails
to meet the standards of the (sic) based on the evaluation of his
immediate superior, he shall be considered for a faculty position
and the appointee agrees that he shall lose the transportation
allowance he enjoys as Dean and be entitled to his faculty rate.
You are barred from entering the company premises unless with
clearance from the HRD.[10]
In his Decision[12] dated December 6, 2000, the Labor Arbiter held that
petitioners accorded respondent due process. The Labor Arbiter however,
also held that respondent substantially refuted the charges of gross
inefficiency, incompetence, and leaking of test questions filed against him.
But since respondent can no longer be reinstated beyond September 17,
2000 as his designation as college dean was only until such date, respondent
should instead be paid his compensation and transportation allowance for
the period from September 8, 2000 to September 17, 2000, or the salary
and benefits withheld prior thereto. Thus:
SO ORDERED.
On March 31, 2003, the NLRC, in its Decision,[14] found merit in respondent's
appeal. The NLRC opined that the petitioners did not
contravene respondent's allegation that he had attained regular status after
SO ORDERED.[16]
Thus, petitioners went to the CA via Petition for Certiorari[21] under Rule 65
of the 1997 Rules of Civil Procedure.
On March 29, 2004, the CA held that based on the Handbook and on
respondent's appointment, it can be inferred that respondent was a regular
employee, and as such, his employment can only be terminated for any of
the causes provided under Article 282[22] of the Labor Code and after
observance of the requirements of due process. Furthermore, the CA upheld
the Labor Arbiters and the NLRCs similar findings that respondent sufficiently
rebutted the charges against him and that petitioners failed to prove the
grounds for respondent's dismissal. The dispositive portion of the said
Decision reads:
SO ORDERED.
Hence, this Petition based on the sole ground that the CA committed serious
error of law in affirming and then further modifying the erroneous decision of
the NLRC declaring that herein respondent was illegally dismissed by
AMA.[25]
On the other hand, respondent counters that both the NLRC and the CA
found that respondent was a regular employee and that he was illegally
dismissed; that the instant Petition raises questions of fact - such as
whether or not respondent is a regular employee and whether or not
circumstances existed warranting his dismissal - which can no longer
be inquired into by
this Court;[29] that petitioners assailed the regular status of the respondent
for the first time only before the CA; that they never raised as issue
respondent's regular status before the Labor Arbiter and the NLRC because
they merely concentrated on their stand that respondent was lawfully
The instant case falls squarely within the aforesaid exception. The Labor
Arbiter held that, while petitioners did not prove the existence of just causes
in order to warrant respondent's dismissal, the latter's employment as dean
ceased to exist upon expiration of respondent's term of employment
on September 17, 2000. In sum, the Labor Arbiter held that the nature of
respondent's employment is one for a fixed term. On the other hand, the
NLRC and the CA both held that respondent is a regular employee because
respondent had fully served the three (3)-month probationary period
required in the Handbook, which the petitioners failed to deny or contravene
in the proceedings before the Labor Arbiter.
Prior to his dismissal, respondent held the position of college dean. The
letter of appointment states that he was officially confirmed as Dean of AMA
College, Paraaque, effective from April 17, 2000 to September 17, 2000.
Petitioners submit that the nature of respondent's employment as dean is
one with a fixed term.
We agree.
We held that Article 280 of the Labor Code does not proscribe or prohibit an
employment contract with a fixed period. Even if the duties of the employee
consist of activities necessary or desirable in the usual
business of the employer, the parties are free to agree on a fixed period
of time for the performance of such activities. There is nothing essentially
The instant case involves respondent's position as dean, and comes within
the purview of the Brent School doctrine.
Second. The fact that respondent did not sign the letter of appointment is of
no moment. We held in Brent School, to wit:
The fact that respondent voluntarily accepted the employment, assumed the
position, and performed the functions of dean is clear indication that he
knowingly and voluntarily consented to the terms and conditions of the
appointment, including the fixed period of his deanship. Other than the
handwritten notes made in the letter of appointment, no evidence was ever
presented to show that respondents consent was vitiated, or that respondent
objected to the said appointment or to any of its conditions. Furthermore, in
his status as dean, there can be no valid inference that he was shackled by
any form of moral dominance exercised by AMA and the rest of the
petitioners.
Alternatively, petitioners also claim that respondent did not attain regular
status, relying on Section 92 of the Manual in connection with Section 4(m)
4(c) thereof which provides for a three (3)-year probationary period for
Academic Personnel. Petitioners submit that the position of dean is included
in the provision school officials responsible for academic matters, and may
include other school officials. As such, petitioners aver that the three (3)-
month probationary period for officers set forth in the Handbook is not
applicable to the case of respondent.
The Handbook merely provides for two classes of employees for purposes of
permanency, i.e., Faculty and Non-Academic. However, the same does not
specifically classify the position of dean as part of the Faculty or of the Non-
Academic personnel. At this juncture, we find solace in the Manual of
Regulations for Private Schools Annotated,[38] which provides that the college
dean is the senior officer responsible for the operation of an academic
program, the enforcement of rules and regulations, and the supervision of
faculty and student services. We already had occasion to state that the
position of dean is primarily academic[39] and, as such, he is considered a
managerial employee.[40] Yet, a perusal of the Handbook yields the
interpretation that the provision on the permanency of Faculty members
applies to teachers only. But the Handbook or school manual must yield to
the decree of the Manual, the latter having the character of law.[41] The
specified probationary periods in Section 92 of the Manual are the maximum
periods; under certain conditions, regular status may be achieved by the
employee in less time.[42] However, under the given circumstances and the
fact that the position of dean in this case is for a fixed term, the issue
whether the respondent attained a regular status is not in point. By the
same token, the application of the provision in the Manual as to the required
probationary period is misplaced. It can be well said that a tenured status of
employment co-exists and is co-terminous only with the definite term fixed
in the contract of employment.
Thus, the unanimous finding of the Labor Arbiter, the NLRC and the CA that
respondent adequately refuted all the charges against him assumes
relevance only insofar as respondents dismissal from the service was
effected by petitioners before expiration of the fixed period of employment.
True, petitioners erred in dismissing the respondent, acting on the mistaken
belief that respondent was liable for the charges leveled against him. But
respondent also cannot claim entitlement to any benefit flowing from such
employment after September 17, 2000, because the employment, which is
the source of the benefits, had, by then, already ceased to exist.
Finally, while this Court adheres to the principle of social justice and
protection to labor, the constitutional policy to provide such protection to
labor is not meant to be an instrument to oppress employers. The
commitment under the fundamental law is that the cause of labor does not
prevent us from sustaining the employer when the law is clearly on its
side.[45]
WHEREFORE, the instant Petition is GRANTED and the CA Decision in CA-
G.R. SP No. 78455 is REVERSED and SET ASIDE. The Decision of the Labor
Arbiter, dated December 6, 2000, is hereby REINSTATED. No costs.
SO ORDERED.
13 Tirol vs NLRC
WILFREDO ARO, RONILO TIROL, JOSE PACALDO, G.R. No. 174792
PRIMITIVO CASQUEJO and MARCIAL ABGO,
Petitioners,
Present:
ABAD,
MENDOZA, and
NATIONAL LABOR RELATIONS COMMISSION,
FOURTH DIVISION and BENTHEL DEVELOPMENT PERLAS-BERNABE, JJ.
CORPORATION,
Respondents. Promulgated:
March 7, 2012
x-----------------------------------------------------------------------------------------x
DECISION
PERALTA, J.:
For resolution of this Court is the Petition for Review on Certiorari under Rule
45 of the Rules of Court, dated October 7, 2006, of petitioners Wilfredo Aro,
Ronilo Tirol, Jose Pacaldo, Primitivo Casquejo and Marcial Abgo, seeking to
reverse and set aside the Decision[1] dated March 7, 2006, and
Resolution[2] dated July 27, 2006, of the Court of Appeals (CA) in CA-G.R.
CEB-SP No. 01012 which reversed the Decision and Resolution dated June
25, 2004 and June 30, 2005, respectively, of the National Labor Relations
Commission (NLRC).
The employees, including the petitioners herein, appealed from the said
decision. The NLRC, in NLRC Case No. V-000399-98, affirmed the decision of
Labor Arbiter Carreon in its Decision dated January 12, 1999, with the
modification that private respondent pay backwages computed from the
respective dates of dismissal until finality of the decision.
Aggrieved, private respondent filed a Petition for Certiorari with the CA,
docketed as CA-G.R. SP No. UDK 3092 assailing the January 12, 1999
decision of the NLRC and the denial of its motion for reconsideration which
was dismissed for non-payment of docket fees and insufficiency of form. It
filed a motion for reconsideration, but the latter was also denied.
Thus, private respondent filed with this Court, docketed as G.R. No. 144433
a Petition for Review on Certiorari. In a Resolution dated September 20,
2000, this Court denied the petition for having been filed out of time and for
non-payment of docket and other lawful fees.
The employees, including the petitioners, upon the finality of this Court's
resolution, filed a Motion for Execution before the Labor Arbiter of the
January 12, 1999 decision. Thereafter, the Labor Arbiter ordered for the
issuance of a writ of execution directing the computation of the awards.
Afterwards, private respondent filed an appeal from the said Order with an
urgent prayer for the issuance of a temporary restraining order and/or
preliminary injunction with public respondent NLRC. The said appeal was
denied. The NLRC held that the appeal was premature, there having been no
computation yet made by the Labor Arbiter as to the exact amount to be
paid to the employees. Public respondent remanded the case to the
arbitration branch for appropriate action.
Labor Arbiter Carreon inhibited himself from further proceedings in the case
upon motion of private respondent. In the meantime, fifteen (15) employees
have executed Affidavits of Full Settlement after having settled amicably
with the private respondent. Labor Arbiter Violeta Ortiz-Bantug issued an
Order dated July 31, 2003 for the issuance of a writ of execution only for the
payment of the claims of the twenty-one (21) remaining employees in the
As a recourse, private respondent filed a petition for certiorari with the CA,
alleging that public respondent committed grave abuse of discretion in
promulgating its assailed decision and denying its motion for
reconsideration. The CA granted the petition, therefore, annulling and
setting aside the decision and resolution of the NLRC as to the award for
backwages and remanded the case to the same public respondent for the
proper computation of the backwages due to each of the petitioners
herein. The dispositive portion of the decision reads:
SO ORDERED.[3]
GROUND/ASSIGNMENT OF ERRORS
In its Comment[5] dated January 24, 2007, private respondent stated the
following counter-arguments:
First of all, this Court has to address the nature of the petition filed by
petitioners. As pointed out by private respondent, and not disputed by
petitioners, the present petition was filed out of time. Petitioners received,
on August 4, 2006, a copy of the CA Resolution dated July 27, 2006. The
period within which to file a petition for review under Rule 45 is within
fifteen (15) days from notice of the judgment or final order or resolution
appealed from, or from the denial of the petitioners' motion for new trial or
reconsideration filed in due time after notice of the judgment, or in this
case, not later than August 19, 2006. Under Rule 65, a petition
for certiorari may be filed not later than sixty (60) days from notice of the
judgment, order or resolution, or in this case, not later than October 3,
2006. However, the present petition is dated October 7, 2006 and as it
appears on the records, this Court received the said petition on October 17,
2006. Thus, on its face and in reality, the present petition was filed out of
time, whether it be under Rule 45 or Rule 65 of the Rules of
Court.Nevertheless, this Court did not dismiss the present petition and
required private respondent to file its Comment.Consequently, a Reply from
petitioners and eventually, both parties' respective memorandum were
filed. In view of that premise and in the interest of justice, this Court shall
forego the technicalities and is constrained to resolve the present petition as
a petition for certiorari under Rule 65, since the main issue raised by
petitioners is whether or not the CA committed grave abuse of discretion
which amounted to lack or excess of its jurisdiction.
On the other hand, private respondent insists that the inequitable, nay
illegal, in a decision cannot lapse into finality, referring to the computation
of the backwages which is not commensurate to the factual findings of the
Labor Arbiter and the NLRC. Basically, according to private respondent, the
CA merely sought to correct the NLRC's and the Labor Arbiter's one-sided
and blind adherence to and/or misguided application of strict technical rules,
and their overzealous partiality in favor of labor. Private respondent further
claims that the issues presented in their earlier petitions with the CA and
this Court (CA-G.R. SP No. UDK 3092 and SC G.R. No. 144433, respectively)
are not the same issues raised in the petition for certiorari later filed with
the CA and the decision of which is now the subject of herein
petition. Private respondent clarifies that there is no final and executory
ruling that petitioners were regular and not just project employees, hence,
there was a need to file a petition with the CA.
In Hanjin Heavy Industries and Construction Co. Ltd. v. Ibaez,[10] this Court
extensively discussed the above distinction, thus:
Applying the above disquisition, this Court agrees with the findings of the CA
that petitioners were project employees. It is not disputed that petitioners
were hired for the construction of the Cordova Reef Village Resort in
Cordova, Cebu. By the nature of the contract alone, it is clear that
petitioners' employment was to carry out a specific project. Hence, the CA
did not commit grave abuse of discretion when it affirmed the findings of the
Labor Arbiter. The CA correctly ruled:
A review of the facts and the evidence in this case readily shows
that a finding had been made by Labor Arbiter Ernesto Carreon,
in his decision dated May 28, 1998, that complainants, including
private respondents, are project employees. They were hired for
the construction of the Cordova Reef Village Resort in Cordova,
Cebu. We note that no appeal had been made by the
complainants, including herein private respondents, from the
xxxx
xxxx
SO ORDERED.
14 Goma vs Pamplona
BIENVENIDO D. GOMA, G.R. No. 160905
Petitioner,
Present:
YNARES-
SANTIAGO, J.,
Chairperson,
- versus -
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
July 4, 2008
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
For review is the Decision[1] of the Court of Appeals (CA) dated August
27, 2003 granting respondent Pamplona Plantation, Inc.s petition
for certiorari and its Resolution[2] dated November 11, 2003 denying
petitioner Bienvenido Gomas motion for reconsideration, in CA-G.R. SP No.
74892.
SO ORDERED.[10]
SO ORDERED.[16]
Petitioner now comes before this Court raising the sole issue:
ASIDE THE NLRC (Fourth Division, Cebu City) RULING THAT THE
PETITIONER WAS NOT ILLEGALLY DISMISSED AS HE WAS NOT
AN EMPLOYEE OF RESPONDENT, IS CONTRARY TO LAW AND
JURISPRUDENCE ON WHICH IT WAS BASED, AND NOT IN
CONSONANCE WITH THE EVIDENCE ON RECORD.[20]
Both the Labor Arbiter and the CA concluded that there was no
employer-employee relationship between the petitioner and
respondent. They based their conclusion on the alleged admission of the
petitioner that he was previously hired by the former owner of the
hacienda. Thus, they rationalized that since the respondent was not obliged
to absorb all the employees of the former owner, petitioners claim of
employment could not be sustained. The NLRC, on the other hand, upheld
petitioners claim of regular employment because of the respondents failure
to present its employment records.
with those of the NLRC, the Court is constrained to probe into the attendant
circumstances as appearing on record.[21]
xxxx
Thus, departing from its initial stand that it never hired petitioner, the
respondent eventually admitted the existence of employer-employee
relationship before the CA. It, however, qualified such admission by claiming
that it was PPLC that hired the petitioner and that the nature of his
employment therein was that of a project and not regular employee.
As can be gleaned from this provision, there are two kinds of regular
employees, namely: (1) those who are engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which they are
employed.[27] Simply stated, regular employees are classified into: regular
employees by nature of work; and regular employees by years of
service. The former refers to those employees who perform a particular
activity which is necessary or desirable in the usual business or trade of the
employer, regardless of their length of service; while the latter refers to
those employees who have been performing the job, regardless of the
nature thereof, for at least a year.[28] If the employee has been performing
the job for at least one year, even if the performance is not continuous or
merely intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability, of
that activity to the business.[29]
duration or scope of which was specified at the time the employees were
engaged for that project.[31] In this case, apart from respondents bare
allegation that petitioner was a project employee, it had not shown that
petitioner was informed that he would be assigned to a specific project or
undertaking. Neither was it established that he was informed of the duration
and scope of such project or undertaking at the time of his engagement.
Most important of all, based on the records, respondent did not report the
termination of petitioners supposed project employment to the Department
of Labor and Employment (DOLE). Department Order No. 19 (as well as the
old Policy Instructions No. 20) requires employers to submit a report of an
employees termination to the nearest public employment
office every time the employment is terminated due to a completion of a
project. Respondents failure to file termination reports, particularly on the
cessation of petitioners employment, was an indication that the petitioner
was not a project but a regular employee.[32]
We stress herein that the law overrides such conditions which are prejudicial
to the interest of the worker whose weak bargaining position necessitates
the succor of the State. What determines whether a certain employment is
regular or otherwise is not the will or word of the employer, to which the
worker oftentimes acquiesces. Neither is it the procedure ofhiring the
employee nor the manner of paying the salary or the actual time spent at
work. It is the character of the activities performed by the employer in
relation to the particular trade or business of the employer, taking into
account all the circumstances, including the length of time of its
performance and its continued existence. Given the attendant circumstances
in the case at bar, it is obvious that one year after he was employed by the
respondent, petitioner became a regular employee by operation of law.[33]
that this case has been pending. Moreover, the protracted litigation may
have seriously abraded the relationship of the parties so as to render
reinstatement impractical. Accordingly, petitioner may be awarded
separation pay in lieu of reinstatement.[41]
the NLRC decision dated October 24, 2000 in NLRC Case No. V-000882-99;
2) Separation Pay; 3) Backwages; and 4) Attorneys fees equivalent to ten
percent (10%) of the monetary awards. Upon finality of this judgment, let
the records of the case be remanded to the NLRC for the computation of the
exact amounts due the petitioner.
SO ORDERED.
15 Gadia vs Sykes
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated April
29, 2013 and the Resolution3 dated October 3, 2013 of the Court of Appeals
(CA) in CA-G.R. SP No. 120433, which annulled and set aside the
Decision4 dated November 15, 2010 and the Resolution5 dated May 10, 2011
of the National Labor Relations Commission (NLRC), in NLRC LAC No. 07-
001583-10, and reinstated the Decision6 dated June 23, 2010 of the Labor
Arbiter (LA), holding that herein petitioners Ma. Charito C. Gadia7 (Gadia),
Ernesto M. Peas,8 Gemmabelle B. Remo (Remo), Lorena S. Quesea
(Quesea), Marie Joy Francisco, Beverly A. Cabingas, Ivee U.
The Facts
Services for the said project went on smoothly until Alltel sent two (2)
letters to Sykes Asia dated August 7, 200914and September 9,
200915 informing the latter that it was terminating all support services
provided by Sykes Asia related to the Alltel Project. In view of this
development, Sykes Asia sent each of the petitioners end-of-life
notices,16 informing them of their dismissal from employment due to the
termination of the Alltel Project. Aggrieved, petitioners filed separate
complaints17 for illegal dismissal against respondents Sykes Asia, Chuck
Sykes, the President and Chief Operating Officer of Sykes Enterprise, Inc.,
and Mike Hinds and Michael Henderson, the President and Operations
Director, respectively, of Sykes Asia (respondents), praying for
reinstatement, backwages, 13th month pay, service incentive leave pay,
night shift differential, moral and exemplary damages, and attorneys fees.
In their complaints, petitioners alleged that their dismissal from service was
unjust as the same was effected without substantive and procedural due
process.18
The LA Ruling
Contrary to the LAs finding, the NLRC found that petitioners could not be
properly characterized as project-based employees, ratiocinating that while
it was made known to petitioners that their employment would be co-
terminus to the Alltel Project, it was neither determined nor made known to
petitioners, at the time of hiring, when the said project would end, be
terminated, or be completed.32 In this relation, the NLRC concluded that
inasmuch as petitioners had been engaged to perform activities which are
necessary or desirable in respondents usual business or trade of BPO,
petitioners should be deemed regular employees of Sykes Asia.33 This
notwithstanding, and in view of the cessation of the Alltel Project, the NLRC
found petitioners employment with Sykes Asia to be redundant; hence,
declared that they were legally dismissed from service and were only
entitled to receive their respective separation pay.34
The CA Ruling
In a Decision39 dated April 29, 2013, the CA annulled and set aside the
ruling of the NLRC, and accordingly, reinstated that of the LA.40 It held that
a perusal of petitioners respective employment contracts readily shows that
they were hired exclusively for the Alltel Project and that it was specifically
stated therein that their employment would be project-based.41 The CA
further held that petitioners employment contracts need not state an actual
date as to when their employment would end, opining that it is enough that
such date is determinable.42
The primordial issue for the Courts resolution is whether or not the CA
correctly granted respondents petition for certiorari, thereby setting aside
the NLRCs decision holding that petitioners were regular employees and
reinstating the LA ruling that petitioners were merely project-based
employees, and thus, validly dismissed from service.
Tested against these considerations, the Court finds that the CA correctly
granted respondents certiorari petition before it, since the NLRC gravely
abused its discretion in ruling that petitioners were regular employees of
Sykes Asia when the latter had established by substantial evidence that they
were merely project-based.
In Omni Hauling Services, Inc. v. Bon,49 the Court extensively discussed how
to determine whether an employee may be properly deemed project-based
or regular, to wit:
In this case, records reveal that Sykes Asia adequately informed petitioners
of their employment status at the time of their engagement, as evidenced by
the latters employment contracts which similarly provide that they were
hired in connection with the Alltel Project, and that their positions were
"project-based and as such is co-terminus to the project." In this light, the
CA correctly ruled that petitioners were indeed project-based employees,
considering that: (a) they were hired to carry out a specific undertaking, i.e.,
the Alltel Project; and (b) the duration and scope of such project were made
known to them at the time of their engagement, i.e., "co-terminus with the
project."
As regards the second requisite, the CA correctly stressed that "[t]he law
and jurisprudence dictate that the duration of the undertaking begins and
ends at determined or determinable times" while clarifying that "[t]he
phrase determinable times simply means capable of being determined or
fixed."51 In this case, Sykes Asia substantially complied with this requisite
when it expressly indicated in petitioners employment contracts that their
positions were "co-terminus with the project." To the mind of the Court, this
caveat sufficiently apprised petitioners that their security of tenure with
Sykes Asia would only last as long as the Alltel Project was subsisting. In
other words, when the Alltel Project was terminated, petitioners no longer
had any project to work on, and hence, Sykes Asia may validly terminate
them from employment. Further, the Court likewise notes the fact that
Sykes Asia duly submitted an Establishment Employment Report52 and an
SO ORDERED.
16 Hacienda vs Lorenzo
DECISION
PERALTA, J.:
Before this Court is a petition for review on certiorari dated September 28,
2007 of petitioner Hacienda Cataywa, Manuel Villanueva, et al.,
(petitioners) seeking to reverse and set aside the Resolutions, dated October
17, 20061 and August 10, 2007,2 respectively, of the Court of Appeals (CA)
and the Resolution and Order, dated October 12, 2005 and March 8, 2006,
respectively, of the Social Security Commission, ordering petitioners to pay
jointly and severally all delinquent contributions, 3% penalty per month of
delayed payment and damages to respondent Rosario Lorezo.
informing her that she cannot avail of their retirement benefits since per
their record she has only paid 16 months. Such is 104 months short of the
minimum requirement of 120 months payment to be entitle to the
benefit. She was also informed that their investigation of her alleged
employment under employer Hda. Cataywa could not be confirmed because
Manuel Villanueva was permanently residing in Manila and Joemarie
Villanueva denied having managed the farm. She was also advised of her
options: continue paying contributions as voluntary member; request for
refund; leave her contributions in-trust with the System, or file a petition
before the Social Security Commission (SSC) so that liabilities, if any, of her
employer may be determined.3cralawred
Aggrieved, respondent then filed her Amended Petition dated September 30,
2003, before the SSC. She alleged that she was employed as laborer in Hda.
Cataywa managed by Jose Marie Villanueva in 1970 but was reported to the
SSS only in 1978. She alleged that SSS contributions were deducted from
her wages from 1970 to 1995, but not all were remitted to the SSS which,
subsequently, caused the rejection of her claim. She also impleaded Talisay
Farms, Inc. by virtue of its Investment Agreement with Mancy and Sons
Enterprises. She also prayed that the veil of corporate fiction be pierced
since she alleged that Mancy and Sons Enterprises and Manuel and Jose
Marie Villanueva are one and the same.4cralawred
Petitioners Manuel and Jose Villanueva refuted in their answer, the allegation
that not all contributions of respondent were remitted. Petitioners alleged
that all farm workers of Hda. Cataywa were reported a^id their contributions
were duly paid and remitted to SSS. It was the late Domingo Lizares, Jr.
who managed and administered the hacienda.5 While, Talisay Farms, Inc.
filed a motion to dismiss on the ground of lack of cause of action in the
absence of an allegation that there was an employer-employee relationship
between Talisay Farms and respondent.6cralawred
Consequently, the SSC rendered its Resolution dated October 12, 2005,
thus:chanRoblesvirtualLawlibrary
The SSS, on the other hand, is ordered to pay (subject to existing rules and
regulations) petitioner Rosario M. Lorezo her retirement benefit, upon the
filing of the claim therefor, and to inform this Commission of its compliance
herewith.
SO ORDERED.7cralawred
cralawlawlibrary
The SSC denied petitioners' Motion for Reconsideration. The petitioner, then,
elevated the case before the CA where the case was dismissed outrightly
due to technicalities, thus:chanRoblesvirtualLawlibrary
The Court Resolved to DISMISS the instant petition on the basis of the
following observations:
Petitioners argues that the CA has been too rigid in the application of the
rules of procedure in dismissing the appeal without evaluation of the merits.
This Court has emphasized that procedural rules should be treated with
utmost respect and due regard, since they are designed to facilitate the
adjudication of cases to remedy the worsening problem of delay in the
resolution of rival claims and in the administration of justice. However, this
Court has recognized exceptions to the Rules, but only for the most
compelling reasons where stubborn obedience to the Rules would defeat
rather than serve the ends of justice.10cralawred
As in the case of Obut v. Court of Appeals,11 this Court held that "judicial
orders are issued to be obeyed, nonetheless a non-compliance is to be dealt
with as the circumstances attending the case may warrant. What should
guide judicial action is the principle that a party-litigant is to be given the
fullest opportunity to establish the merits of his complaint of defense rather
than for him to lose life, liberty, honor or property on
technicalities."12cralawred
When the CA dismisses a petition outright and the petitioner files a motion
for the reconsideration of such dismissal, appending thereto the requisite
pleadings, documents or order/resolution, this would constitute substantial
compliance with the Revised Rules of Court.13 Thus, in the present case,
there was substantial compliance when in their Motion for Reconsideration,
At the outset, it is settled that this Court is not a trier of facts and will not
weigh evidence all over again.15 However, considering the issues raised
which can be resolved on the basis of the pleadings and documents filed,
and the fact that respondent herself has asked this Court for early
resolution, this Court deems it more practical and in the greater interest of
justice not to remand the case to the CA but, instead, to resolve the
controversy once and for all.
Petitioners are of the opinion that the SSC committed reversible error in
making conclusions founded on speculations and surmises that respondent
worked from 1970 to February 25, 1990. Petitioners argue that the SSC did
not give credence nor weight at all to the existing SSS Form R-1A and farm
bookkeeper Wilfredo Ibalobor. Petitioners insist that after thirty long years,
all the records of the farm were already destroyed by termites and elements,
thus, they relied on the SSS Form R-1A as the only remaining source of
information available. Petitioners also alleged that respondent was a very
casual worker.
The records are bereft of any showing that Demetria Denaga and Susano
Jugue harbored any ill will against the petitioners prompting them to execute
false affidavit. There lies no reason for this Court not to afford full faith and
credit to their testimonies. Denaga, in her Joint Affidavit with Jugue, stated
that she and respondent started working in Hda. Cataywa in 1970 and like
her, she was reported to the SSS on December 19, 1978.18 It was also
revealed in the records that the SSC found that Denaga was employed by
Manuel Villanueva at Hda. Cataywa from 1970 to December
1987.19cralawred
The nature of the services performed and not the duration thereof, is
determinative of coverage under the law.25 To be exempted on the basis of
casual employment, the services must not merely be irregular, temporary or
intermittent, but the same must not also be in connection with the business
or occupation of the employer.26 Thus, it is erroneous for the petitioners to
conclude that the respondent was a very casual worker simply because the
SSS form revealed that she had 16 months of contributions. It does not, in
any way, prove that the respondent performed a job which is not in
connection with the business or occupation of the employer to be considered
as casual employee.
A reading of the records would reveal that petitioners failed to dispute the
allegation that the respondent performed hacienda work, such as planting
sugarcane point, fertilizing, weeding, replanting dead sugarcane fields and
routine miscellaneous hacienda work.29 They merely alleged that respondent
was a very casual worker because she only rendered work for 16
months.30 Thus, respondent is considered a regular seasonal worker and not
a casual worker as the petitioners alleged.
Petitioners also assert that the sugarcane cultivation covers only a period of
six months, thus, disproving the allegation of the respondent that she
worked for 11 months a year for 25 years. This Court has classified farm
workers as regular seasonal employees who are called to work from time to
time and the nature of their relationship with the employer is such that
during the off season, they are temporarily laid off; but reemployed during
the summer season or when their services may be needed.31 Respondent,
therefore, as a farm worker is only a seasonal employee. Since petitioners
provided that the cultivation of sugarcane is only for six] months,
respondent cannot be considered as regular employee during the months
when there is no cultivation.
Based on the foregoing facts and evidence on record, petitioners are liable
for delinquent contributions. It being proven by sufficient evidence that
respondent started working for the hacienda in 1970, it follows that
petitioners are liable for deficiency in the SSS contributions.
The imposition upon and payment by the delinquent employer of the three
percent (3%) penalty for the late remittance of premium contributions is
mandatory and cannot be waived by the System. The law merely gives to
the Commission the power to prescribe the manner of paying the premiums.
Thus, the power to remit or condone the penalty for late remittance of
premium contributions is not embraced therein.32 Petitioners erred in
alleging that the imposition of penalty is not proper.
The law provides that should the employer misrepresent the true date of the
employment of the employee member, such employer shall pay to the SSS
damages equivalent to the difference between the amount of benefit to
which the employee member or his beneficiary is entitled had the proper
contributions been remitted to the SSS and the amount payable on the basis
of the contributions actually remitted. However, should the employee
member or his beneficiary is entitled to pension benefits, the damages shall
be equivalent to the accumulated pension due as of the date of settlement of
the claim or to the five years' pension, whichever is higher, including the
dependent's pension.33cralawred
Lastly, petitioners aver that there is no legal basis to pierce the veil of
corporation entity.
While a corporation may exist for any lawful purpose, the law will regard it
as an association of persons or, in case of two corporations, merge them
into one, when its corporate legal entity is used as a cloak for fraud or
illegality. This is the doctrine of piercing the veil of corporate fiction. The
doctrine applies only when such corporate fiction is used to defeat public
convenience, justify wrong, protect fraud, or defend crime, or when it is
made as a shield to confuse the legitimate issues, or where a corporation is
the mere alter ego or business conduit of a person, or where the corporation
is so organized and controlled and its affairs are so conducted as to make it
merely an instrumentality, agency, conduit or adjunct of another
corporation. To disregard the separate juridical personality of a corporation,
the wrongdoing must be established clearly and convincingly. It cannot be
presumed.35cralawlawlibrary
This Court has cautioned against the inordinate application of this doctrine,
reiterating the basic rule that "the corporate veil may be pierced only if it
becomes a shield for fraud, illegality or inequity committed against a third
person.36cralawred
The Court has expressed the language of piercing doctrine when applied to
alter ego cases, as follows: Where the stock of a corporation is owned by
one person whereby the corporation functions only for the benefit of such
individual owner, the corporation and the individual should be deemed the
same.37cralawred
This Court agrees with the petitioners that there is no need to pierce the
corporate veil. Respondent failed to substantiate her claim that Mancy and
Sons Enterprises, Inc. and Manuel and Jose Marie Villanueva are one and the
same. She based her claim on the SSS form wherein Manuel Villanueva
appeared as employer. However, this does not prove, in any way, that the
corporation is used to defeat public convenience, justify wrong, protect
SO ORDERED.cralawlawlibrary
DECISION
Article I of the CBA defined the scope of the bargaining unit, as follows:
1. Managers
2. Assistant Managers
3. Section Heads
4. Supervisors
5. Superintendents
6. Confidential and Executive Secretaries
7. Personnel, Accounting and Marketing Staff
8. Communications Personnel
9. Probationary Employees
10. Security and Fire Brigade Personnel
11. Monthly Employees
NO COSTS.
SO ORDERED.[10]
(1)
(2)
(3)
Although Article 245 of the Labor Code limits the ineligibility to join, form
and assist any labor organization to managerial employees, jurisprudence
has extended this prohibition to confidential employees or those who by
reason of their positions or nature of work are required to assist or act in a
fiduciary manner to managerial employees and hence, are likewise privy to
sensitive and highly confidential records.[14] Confidential employees are thus
excluded from the rank-and-file bargaining unit. The rationale for their
separate category and disqualification to join any labor organization is
similar to the inhibition for managerial employees because if allowed to be
affiliated with a Union, the latter might not be assured of their loyalty in
view of evident conflict of interests and the Union can also become
company-denominated with the presence of managerial employees in the
Union membership.[15] Having access to confidential information,
confidential employees may also become the source of undue
advantage. Said employees may act as a spy or spies of either party to a
collective bargaining agreement.[16]
Also considered having access to vital labor information are the executive
secretaries of the General Manager and the executive secretaries of the
In the present case, the CBA expressly excluded Confidential and Executive
Secretaries from the rank-and-file bargaining unit, for which reason ABI
seeks their disaffiliation from petitioner. Petitioner, however, maintains that
except for Daisy Laloon, Evelyn Mabilangan and Lennie Saguan who had
been promoted to monthly paid positions, the following secretaries/clerks
are deemed included among the rank-and-file employees of ABI:[22]
NAME DEPARTMENT IMMEDIATE SUPERIOR
C1 ADMIN DIVISION
xxxx
C2 BREWERY DIVISION
Production
3. Menil, Emmanuel S. Bottling Mr. Julius Palmares
Production
4. Nevalga, Marcelo G. Bottling Mr. Julius Palmares
Production
xxxx
C3 PACKAGING
DIVISION
As can be gleaned from the above listing, it is rather curious that there
would be several secretaries/clerks for just one (1) department/division
performing tasks which are mostly routine and clerical. Respondent insisted
they fall under the Confidential and Executive Secretaries expressly excluded
by the CBA from the rank-and-file bargaining unit. However, perusal of the
job descriptions of these secretaries/clerks reveals that their assigned duties
and responsibilities involve routine activities of recording and monitoring,
and other paper works for their respective departments while secretarial
tasks such as receiving telephone calls and filing of office correspondence
appear to have been commonly imposed as additional duties.[23] Respondent
failed to indicate who among these numerous secretaries/clerks have access
to confidential data relating to management policies that could give rise to
potential conflict of interest with their Union membership. Clearly, the
rationale under our previous rulings for the exclusion of executive
secretaries or division secretaries would have little or no significance
considering the lack of or very limited access to confidential information of
these secretaries/clerks. It is not even farfetched that the job category may
exist only on paper since they are all daily-paid workers. Quite
understandably, petitioner had earlier expressed the view that the positions
were just being reclassified as these employees actually discharged routine
functions.
We thus hold that the secretaries/clerks, numbering about forty (40), are
rank-and-file employees and not confidential employees.
company, respondent claimed, this is not per se ground for their exclusion in
the bargaining unit of the daily-paid rank-and-file employees.[27]
Unfair labor practice refers to acts that violate the workers right to organize.
The prohibited acts are related to the workers right to self organization and
to the observance of a CBA. For a charge of unfair labor practice to prosper,
it must be shown that ABI was motivated by ill will, bad faith, or fraud, or
was oppressive to labor, or done in a manner contrary to morals, good
customs, or public policy, and, of course, that social humiliation, wounded
feelings or grave anxiety resulted x x x[28]from ABIs act in discontinuing the
union dues deduction from those employees it believed were excluded by the
CBA.Considering that the herein dispute arose from a simple disagreement
in the interpretation of the CBA provision on excluded employees from the
bargaining unit, respondent cannot be said to have committed unfair labor
practice that restrained its employees in the exercise of their right to self-
organization, nor have thereby demonstrated an anti-union stance.
No costs.
SO ORDERED.
18 Fuji vs Espiritu
DECISION
LEONEN, J.:
After several verbal and written communications,11 Arlene and Fuji signed a
non-renewal contract on May 5, 2009 where it was stipulated that her
contract would no longer be renewed after its expiration on May 31, 2009.
The contract also provided that the parties release each other from liabilities
and responsibilities under the employment contract.12
On May 6, 2009, the day after Arlene signed the non-renewal contract, she
filed a complaint for illegal dismissal and attorneys fees with the National
Capital Region Arbitration Branch of the National Labor Relations
Commission. She alleged that she was forced to sign the nonrenewal
contract when Fuji came to know of her illness and that Fuji withheld her
salaries and other benefits for March and April 2009 when she refused to
sign.15
Arlene claimed that she was left with no other recourse but to sign the non-
renewal contract, and it was only upon signing that she was given her
salaries and bonuses, in addition to separation pay equivalent to four (4)
years.16
SO ORDERED.24
Arlene and Fuji filed separat emotions for reconsideration.25 Both motions
were denied by the National Labor Relations Commission for lack of merit in
the resolution dated April 26, 2010.26 From the decision of the National
WHEREFORE, for lack of merit, the petition of Fuji Television Network, Inc.
and Yoshiki Aoki is DENIED and the petition of Arlene S. Espiritu is
GRANTED. Accordingly, the Decision dated March 5, 2010 of the National
Labor Relations Commission, 6th Division in NLRC NCR Case No. 05-06811-
09 and its subsequent Resolution dated April 26, 2010 are hereby AFFIRMED
with MODIFICATIONS, as follows:
2. 13th Month Pay at the rate of $1,900.00 per annum from the date
of dismissal, until reinstated;
5. Sick leave of 30 days with pay or $1,900.00 per year from the date
of dismissal, until reinstated; and
10. Legal interest of twelve percent (12%) per annum of the total
monetary awards computed from May 5, 2009, until their full
satisfaction.
SO ORDERED.30
In arriving at the decision, the Court of Appeals held that Arlene was a
regular employee because she was engaged to perform work that was
necessary or desirable in the business of Fuji,31 and the successive renewals
of her fixed-term contract resulted in regular employment.32
The Court of Appeals also held that Arlene was illegally dismissed because
Fuji failed to comply with the requirements of substantive and procedural
due process necessary for her dismissal since she was a regular employee.35
The Court of Appeals found that Arlene did not sign the non-renewal contract
voluntarily and that the contract was a mere subterfuge by Fuji to secure its
position that it was her choice not to renew her contract. She was left with
no choice since Fuji was decided on severing her employment.36
Aggrieved, Fuji filed this petition for review and argued that the Court of
Appeals erred in affirming with modification the National Labor Relations
Commissions decision, holding that Arlene was a regular employee and that
she was illegally dismissed. Fuji also questioned the award of monetary
claims, benefits, and damages.39
Fuji points out that Arlene was hired as a stringer, and it informed her that
she would remain one.40 She was hired as an independent contractor as
defined in Sonza.41 Fuji had no control over her work.42 The employment
contracts were executed and renewed annually upon Arlenes insistence to
which Fuji relented because she had skills that distinguished her from
ordinary employees.43 Arlene and Fuji dealt on equal terms when they
negotiated and entered into the employment contracts.44 There was no
illegal dismissal because she freely agreed not to renew her fixed-term
contract as evidenced by her e-mail correspondences with Yoshiki Aoki.45 In
fact, the signing of the non-renewal contract was not necessary to terminate
her employment since "such employment terminated upon expiration of her
contract."46 Finally, Fuji had dealt with Arlene in good faith, thus, she should
not have been awarded damages.47
Fuji alleges that it did not need a permanent reporter since the news
reported by Arlene could easily be secured from other entities or from the
internet.48 Fuji "never controlled the manner by which she performed her
functions."49 It was Arlene who insisted that Fuji execute yearly fixed-term
contracts so that she could negotiate for annual increases in her pay.50
Fuji points out that Arlene reported for work for only five (5) days in
February 2009, three (3) days in March 2009, and one (1) day in April
2009.51 Despite the provision in her employment contract that sick leaves in
excess of 30 days shall not be paid, Fuji paid Arlene her entire salary for the
months of March, April, and May; four(4) months of separation pay; and a
bonus for two and a half months for a total of US$18,050.00.52 Despite
having received the amount of US$18,050.00, Arlene still filed a case for
illegal dismissal.53
Fuji further argues that the circumstances would show that Arlene was not
illegally dismissed. The decision tonot renew her contract was mutually
agreed upon by the parties as indicated in Arlenes e-mail54 dated March 11,
2009 where she consented to the non-renewal of her contract but refused to
sign anything.55 Aoki informed Arlene in an e-mail56 dated March 12, 2009
that she did not need to sign a resignation letter and that Fuji would pay
Arlenes salary and bonus until May 2009 as well as separation pay.57
Arlene sent an e-mail dated March 18, 2009 with her version of the non-
renewal agreement that she agreed to sign this time.58 This attached version
contained a provision that Fuji shall re-hire her if she was still interested to
work for Fuji.59 For Fuji, Arlenes e-mail showed that she had the power to
bargain.60
Fuji then posits that the Court of Appeals erred when it held that the
elements of an employer-employee relationship are present, particularly that
of control;61 that Arlenes separation from employment upon the expiration
of her contract constitutes illegal dismissal;62 that Arlene is entitled to
reinstatement;63 and that Fuji is liable to Arlene for damages and attorneys
fees.64
This petition for review on certiorari under Rule 45 was filed on February 8,
2013.65 On February 27, 2013, Arlene filed a manifestation66 stating that this
court may not take jurisdiction over the case since Fuji failed to authorize
Corazon E. Acerden to sign the verification.67 Fuji filed a comment on the
manifestation68 on March 9, 2013.
Based on the arguments of the parties, there are procedural and substantive
issues for resolution:
III. Whether the Court of Appeals properly modified the National Labor
Relations Commissions decision by awarding reinstatement, damages,
and attorneys fees.
because Mr. Shuji Yano was empowered under the secretarys certificate to
delegate his authority to sign the necessary pleadings, including the
verification and certification against forum shopping.69
On the other hand, Arlene points outthat the authority given to Mr. Shuji
Yano and Mr. Jin Eto in the secretarys certificate is only for the petition for
certiorari before the Court of Appeals.70 Fuji did not attach any board
resolution authorizing Corazon orany other person tofile a petition for review
on certiorari with this court.71 Shuji Yano and Jin Eto could not re-delegate
the power thatwas delegated to them.72 In addition, the special power of
attorney executed by Shuji Yano in favor of Corazon indicated that she was
empowered to sign on behalf of Shuji Yano, and not on behalf of Fuji.73
SEC. 4. Ver if ica tio n. Except when otherwise specifically required by law
or rule, pleadings need not be under oath, verified or accompanied by
affidavit.
A pleading is verified by an affidavit that the affiant has read the pleading
and that the allegations therein are true and correct of his knowledge and
belief.
the court wherein his aforesaid complaint or initiatory pleading has been
filed.
Section 4(e) of Rule 4574 requires that petitions for review should "contain a
sworn certification against forum shopping as provided in the last paragraph
of section 2, Rule 42." Section 5 of the same rule provides that failure to
comply with any requirement in Section 4 is sufficient ground to dismiss the
petition.
Effects of non-compliance
that the failure of the petitioner tosubmit the required documents that
should accompany the petition, including the certification against forum
shopping, shall be sufficient ground for the dismissal thereof. The same rule
applies to certifications against forum shopping signed by a person on behalf
of a corporation which are unaccompanied by proof that said signatory is
authorized to file a petition on behalf of the corporation.78 (Emphasis
supplied) Effects of substantial compliance with the requirement of
verification and certification against forum shopping
In LDP Marketing, Inc. v. Monter,82 Ma. Lourdes Dela Pea signed the
verification and certification against forum shopping but failed to attach the
board resolution indicating her authority to sign.83 In a motion for
reconsideration, LDP Marketing attached the secretarys certificate quoting
the board resolution that authorized Dela Pea.84 Citing Shipside, this court
deemed the belated submission as substantial compliance since LDP
Marketing complied with the requirement; what it failed to do was to attach
proof of Dela Peas authority to sign.85 Havtor Management Phils., Inc. v.
National Labor Relations Commission86 and General Milling Corporation v.
National Labor Relations Commission87 involved petitions that were
dismissed for failure to attach any document showing that the signatory on
the verification and certification against forum-shopping was authorized.88 In
both cases, the secretarys certificate was attached to the motion for
reconsideration.89 This court considered the subsequent submission of proof
indicating authority to sign as substantial compliance.90 Altres v.
Empleo91 summarized the rules on verification and certification against
forum shopping in this manner:
For the guidance of the bench and bar, the Court restates in capsule form
the jurisprudential pronouncements . . . respecting non-compliance with the
requirement on, or submission of defective, verification and certification
against forum shopping:
Being a corporation, Fuji exercises its power to sue and be sued through its
board of directors or duly authorized officers and agents. Thus, the physical
act of signing the verification and certification against forum shopping can
only be done by natural persons duly authorized either by the corporate by-
laws or a board resolution.93
In its petition for review on certiorari, Fuji attached Hideaki Otas secretarys
certificate,94 authorizing Shuji Yano and Jin Eto to represent and sign for and
on behalf of Fuji.95 The secretarys certificate was duly authenticated96by
Sulpicio Confiado, Consul-General of the Philippines in Japan. Likewise
attached to the petition is the special power of attorney executed by Shuji
Yano, authorizing Corazon to sign on his behalf.97 The verification and
certification against forum shopping was signed by Corazon.98
Arlene filed the manifestation dated February 27, 2013, arguing that the
petition for review should be dismissed because Corazon was not duly
authorized to sign the verification and certification against forum shopping.
Quoting the board resolution dated May 13, 2010, the secretary's certificate
states:
(a) The Corporation shall file a Petition for Certiorari with the Court of
Appeals, against Philippines National Labor Relations Commission
("NLRC") and Arlene S. Espiritu, pertaining to NLRC-NCR Case No. LAC
00-002697-09, RAB No. 05-06811-00 and entitled "Arlene S. Espiritu
v. Fuji Television Network, Inc./Yoshiki Aoki", and participate in any
other subsequent proceeding that may necessarily arise therefrom,
including but not limited to the filing of appeals in the appropriate
venue;
(b) Mr. Shuji Yano and Mr. Jin Etobe authorized, as they are hereby
authorized, to verify and execute the certification against nonforum
shopping which may be necessary or required to be attached to any
pleading to [sic] submitted to the Court of Appeals; and the authority
to so verify and certify for the Corporation in favor of the said persons
shall subsist and remain effective until the termination of the said
case;
....
(d) Mr. Shuji Yano and Mr. Jin Etobe authorized, as they are hereby
authorized, to represent and appear on behalf the [sic] Corporation in
all stages of the [sic] this case and in any other proceeding that may
necessarily arise thereform [sic], and to act in the Corporations name,
place and stead to determine, propose, agree, decide, do, and perform
any and all of the following:
Shuji Yano executed a special power of attorney appointing Ms. Ma. Corazon
E. Acerden and Mr. Moises A. Rollera as his attorneys-in-fact.100 The special
power of attorney states:
That I, SHUJI YANO, of legal age, Japanese national, with office address at
2-4-8 Daiba, Minato-Ku, Tokyo, 137-8088 Japan, and being the
representative of Fuji TV, INc., [sic] (evidenced by the attached Secretarys
Certificate) one of the respondents in NLRC-NCR Case No. 05-06811-00
entitled "Arlene S. Espiritu v. Fuji Television Network, Inc./Yoshiki Aoki", and
subsequently docketed before the Court of Appeals asC.A. G.R. S.P. No.
114867 (Consolidated with SP No. 114889) do hereby make, constitute and
appoint Ms. Ma. Corazon E. Acerden and Mr. Moises A. Rolleraas my true and
lawful attorneys-infact for me and my name, place and stead to act and
represent me in the above-mentioned case, with special power to make
admission/s and stipulations and/or to make and submit as well as to accept
and approve compromise proposals upon such terms and conditions and
under such covenants as my attorney-in-fact may deem fit, and to engage
the services of Villa Judan and Cruz Law Officesas the legal counsel to
represent the Company in the Supreme Court;
Considering that the subsequent proceeding that may arise from the petition
for certiorari with the Court of Appeals is the filing of a petition for review
with this court, Fuji substantially complied with the procedural requirement.
ART. 1892. The agent may appoint a substitute if the principal has not
prohibited him from doing so; but he shall be responsible for the acts of the
substitute:
(2) When he was given such power, but without designating the
person, and the person appointed was notoriously incompetent or
insolvent. All acts of the substitute appointed against the prohibition of
the principal shall be void.
The secretarys certificate does not state that Shuji Yano is prohibited from
appointing a substitute. In fact, heis empowered to do acts that will aid in
the resolution of this case.
This court has recognized that there are instances when officials or
employees of a corporation can sign the verification and certification against
Corazons affidavit111 states that she is the "office manager and resident
interpreter of the Manila Bureau of Fuji Television Network, Inc." 112 and that
she has "held the position for the last twenty-three years."113
Before resolving the substantive issues in this case, this court will discuss
the procedural parameters of a Rule 45 petition for review in labor cases.
II
Article 223 of the Labor Code115 does not provide any mode of appeal for
decisions of the National Labor Relations Commission. It merely states that
"[t]he decision of the Commission shall be final and executory after ten (10)
calendar days from receipt thereof by the parties." Being final, it is no longer
appealable. However, the finality of the National Labor Relations
Commissions decisions does not mean that there is no more recourse for
the parties.
A petition for certiorari under Rule 65 is an original action where the issue is
limited to grave abuse of discretion. As an original action, it cannot be
considered as a continuation of the proceedings of the labor tribunals.
This Court is not a trier of facts. Well-settled is the rule that the jurisdiction
of this Court ina petition for review on certiorari under Rule 45 of the
Revised Rules of Court is limited to reviewing only errors of law, not of fact,
unless the factual findings complained of are completely devoid of support
Justice Brions dissenting opinion also laid down the following guidelines:
If the NLRC ruling has basis in the evidence and the applicable law and
jurisprudence, then no grave abuse of discretion exists and the CA should so
declare and, accordingly, dismiss the petition. If grave abuse of discretion
exists, then the CA must grant the petition and nullify the NLRC ruling,
entering at the same time the ruling that isjustified under the evidence and
the governing law, rules and jurisprudence. In our Rule 45 review, this Court
must denythe petition if it finds that the CA correctly acted.133 (Emphasis in
the original)
III
This court has often used the four-fold test to determine the existence of an
employer-employee relationship. Under the four-fold test, the "control test"
is the most important.134 As to how the elements in the four-fold test are
proven, this court has discussed that:
[t]here is no hard and fast rule designed to establish the aforesaid elements.
Any competent and relevant evidence to prove the relationship may be
admitted. Identification cards, cash vouchers, social security registration,
appointment letters or employment contracts, payrolls, organization charts,
and personnel lists, serve as evidence of employee status.135
If the facts of this case vis--vis the four-fold test show that an employer-
employee relationship existed, we then determine the status of Arlenes
employment, i.e., whether she was a regular employee. Relative to this, we
shall analyze Arlenes fixed-term contract and determine whether it supports
her argument that she was a regular employee, or the argument of Fuji that
she was an independent contractor. We shall scrutinize whether the nature
of Arlenes work was necessary and desirable to Fujis business or whether
Fuji only needed the output of her work. If the circumstances show that
Arlenes work was necessary and desirable to Fuji, then she is presumed to
be a regular employee. The burden of proving that she was an independent
contractor lies with Fuji.
IV
Fuji alleges that Arlene was anindependent contractor, citing Sonza v. ABS-
CBN and relying on the following facts: (1) she was hired because of her
skills; (2) her salary was US$1,900.00, which is higher than the normal rate;
(3) she had the power to bargain with her employer; and (4) her contract
was for a fixed term. According to Fuji, the Court of Appeals erred when it
ruled that Arlene was forcedto sign the non-renewal agreement, considering
that she sent an email with another version of the non-renewal
agreement.140 Further, she is not entitled tomoral damages and attorneys
fees because she acted in bad faith when she filed a labor complaint against
Fuji after receiving US$18,050.00 representing her salary and other
benefits.141 Arlene argues that she was a regular employee because Fuji had
control and supervision over her work. The news events that she covered
were all based on the instructions of Fuji.142 She maintains that the
successive renewal of her employment contracts for four (4) years indicates
that her work was necessary and desirable.143 In addition, Fujis payment of
separation pay equivalent to one (1) months pay per year of service
indicates that she was a regular employee.144 To further support her
argument that she was not an independent contractor, she states that Fuji
owns the laptop computer and mini-camera that she used for work.145 Arlene
also argues that Sonza is not applicable because she was a plain reporter for
Fuji, unlike Jay Sonza who was a news anchor, talk show host, and who
enjoyed a celebrity status.146 On her illness, Arlene points outthat it was not
a ground for her dismissal because her attending physician certified that she
was fit to work.147
Arlene admits that she signed the non-renewal agreement with quitclaim,
not because she agreed to itsterms, but because she was not in a position to
reject the non-renewal agreement. Further, she badly needed the salary
withheld for her sustenance and medication.148 She posits that her
acceptance of separation pay does not bar filing of a complaint for illegal
dismissal.149
This court further discussed that there are employment contracts where "a
fixed term is an essential and natural appurtenance"152 such as overseas
employment contracts and officers in educational institutions.153
2) It satisfactorily appears that the employer and the employee dealt with
each other on more or less equal terms with no moral dominance exercised
by the former or the latter.
These indications, which must be read together, make the Brent doctrine
applicable only in a few special cases wherein the employer and employee
are on more or less in equal footing in entering into the contract. The reason
for this is evident: whena prospective employee, on account of special skills
or market forces, is in a position to make demands upon the prospective
employer, such prospective employee needs less protection than the
ordinary worker. Lesser limitations on the parties freedom of contract are
thus required for the protection of the employee.155 (Citations omitted)
For as long as the guidelines laid down in Brentare satisfied, this court will
recognize the validity of the fixed-term contract.
In Labayog v. M.Y. San Biscuits, Inc.,156 this court upheld the fixedterm
employment of petitioners because from the time they were hired, they were
informed that their engagement was for a specific period. This court stated
that:
....
Section 3. . . .
....
have the power of control over Orozco, and she worked at her own
pleasure.165
On the other hand, contracts of employment are different and have a higher
level of regulation because they are impressed with public interest. Article
XIII, Section 3 of the 1987 Constitution provides full protection to labor:
....
LABOR
Section 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.
The State shall regulate the relations between workers and employers,
recognizing the right of labor to its just share in the fruits of production and
the right of enterprises to reasonable returns on investments, and to
expansion and growth.
ART. 1700. The relations between capital and labor are not merely
contractual. They are so impressed with public interest that labor contracts
must yield to the common good. Therefore, such contracts are subject to the
special laws on labor unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of labor and similar subjects.
The power to control refers to the existence of the power and not necessarily
to the actual exercise thereof, nor is it essential for the employer to actually
supervise the performance of duties of the employee. It is enough that the
employer has the right to wield that power.183 (Citation omitted)
Logically, the line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result without
dictating the means or methods to be employed in attaining it, and those
that control or fix the methodology and bind or restrict the party hired to the
use of such means. The first, which aim only to promote the result, create
no employer-employee relationship unlike the second, which address both
the result and the means used to achieve it. . . .184 (Citation omitted)
Here, the Court of Appeals applied Sonza v. ABS-CBN and Dumpit Murillo v.
Court of Appeals187 in determining whether Arlene was an independent
contractor or a regular employee.
In deciding Sonza and Dumpit-Murillo, this court used the four-fold test.
Both cases involved newscasters and anchors. However, Sonza was held to
be an independent contractor, while Dumpit-Murillo was held to be a regular
employee.
Sonza was engaged by ABS-CBN in view of his "unique skills, talent and
celebrity status not possessed by ordinary employees."188 His work was for
radio and television programs.189 On the other hand, Dumpit-Murillo was
hired by ABC as a newscaster and co-anchor.190 Sonzas talent fee amounted
to P317,000.00 per month, which this court found to be a substantial
amount that indicatedhe was an independent contractor rather than a
regular employee.191 Meanwhile, Dumpit-Murillos monthly salary
was P28,000.00, a very low amount compared to what Sonza received.192
Sonza was unable to prove that ABS-CBN could terminate his services apart
from breach of contract. There was no indication that he could be terminated
based on just or authorized causes under the Labor Code. In addition, ABS-
CBN continued to pay his talent fee under their agreement, even though his
programs were no longer broadcasted.193 Dumpit-Murillo was found to have
beenillegally dismissed by her employer when they did not renew her
contract on her fourth year with ABC.194
In Sonza, this court ruled that ABS-CBN did not control how Sonza delivered
his lines, how he appeared on television, or how he sounded on radio. 195 All
that Sonza needed was his talent.196 Further, "ABS-CBN could not terminate
or discipline SONZA even if the means and methods of performance of his
work . . . did not meet ABS-CBNs approval."197 In Dumpit-Murillo, the duties
and responsibilities enumerated in her contract was a clear indication that
ABC had control over her work.198
The Court of Appeals did not err when it relied on the ruling in Dumpit-
Murillo and affirmed the ruling of the National Labor Relations Commission
finding that Arlene was a regular employee. Arlene was hired by Fuji as a
news producer, but there was no showing that she was hired because of
unique skills that would distinguish her from ordinary employees. Neither
was there any showing that she had a celebrity status. Her monthly salary
amounting to US$1,900.00 appears tobe a substantial sum, especially if
compared to her salary whenshe was still connected with GMA.199 Indeed,
wages may indicate whether oneis an independent contractor. Wages may
also indicate that an employee is able to bargain with the employer for
better pay. However, wages should not be the conclusive factor in
determining whether one is an employee or an independent contractor.
Fuji had the power to dismiss Arlene, as provided for in paragraph 5 of her
professional employment contract.200Her contract also indicated that Fuji had
control over her work because she was required to work for eight (8) hours
from Monday to Friday, although on flexible time.201 Sonza was not required
to work for eight (8) hours, while Dumpit-Murillo had to be in ABC to do both
on-air and off-air tasks.
On the power to control, Arlene alleged that Fuji gave her instructions on
what to report.202 Even the mode of transportation in carrying out her
functions was controlled by Fuji. Paragraph 6 of her contract states:
6. During the travel to carry out work, if there is change of place or change
of place of work, the train, bus, or public transport shall be used for the trip.
If the Employee uses the private car during the work and there is an
accident the Employer shall not be responsible for the damage, which may
be caused to the Employee.203
Thus, the Court of Appeals did not err when it upheld the findings of the
National Labor Relations Commission that Arlene was not an independent
contractor.
Note that the plant where private respondent was employed for only seven
months is engaged in the manufacture of glass, an integral component of
the packaging and manufacturing business of petitioner. The process of
manufacturing glass requires a furnace, which has a limited operating life.
Petitioner resorted to hiring project or fixed term employees in having said
furnaces repaired since said activity is not regularly performed. Said
....
Clearly, private respondent was hired for a specific project that was not
within the regular business of the corporation. For petitioner is not engaged
in the business of repairing furnaces. Although the activity was necessary to
enable petitioner to continue manufacturing glass, the necessity therefor
arose only when a particular furnace reached the end of its life or operating
cycle. Or, as in the second undertaking, when a particular furnace required
an emergency repair. In other words, the undertakings where private
respondent was hired primarily as helper/bricklayer have specified goals and
purposes which are fulfilled once the designated work was completed.
Moreover, such undertakings were also identifiably separate and distinct
from the usual, ordinary or regular business operations of petitioner, which
is glass manufacturing. These undertakings, the duration and scope of which
had been determined and made known to private respondent at the time of
his employment, clearly indicated the nature of his employment as a project
employee.208
Based on the record, Fujis Manila Bureau Office is a small unit213 and has a
few employees.214 As such, Arlene had to do all activities related to news
gathering. Although Fuji insists that Arlene was a stringer, it alleges that her
designation was "News Talent/Reporter/Producer."215
The Court of Appeals affirmed the finding of the National Labor Relations
Commission that the successive renewals of Arlenes contract indicated the
necessity and desirability of her work in the usual course of Fujis business.
Because of this, Arlene had become a regular employee with the right to
security of tenure.220 The Court of Appeals ruled that:
Here, Espiritu was engaged by Fuji as a stinger [sic] or news producer for its
Manila Bureau. She was hired for the primary purpose of news gathering and
reporting to the television networks headquarters. Espiritu was not
contracted on account of any peculiar ability or special talent and skill that
she may possess which the network desires to make use of. Parenthetically,
ifit were true that Espiritu is an independent contractor, as claimed by Fuji,
the factthat everything that she uses to perform her job is owned by the
company including the laptop computer and mini camera discounts the idea
of job contracting.221
With regard to Fujis argument that Arlenes contract was for a fixed term,
the Court of Appeals cited Philips Semiconductors, Inc. v. Fadriquela226 and
held that where an employees contract "had been continuously extended or
renewed to the same position, with the same duties and remained in the
employ without any interruption,"227 then such employee is a regular
employee. The continuous renewal is a scheme to prevent regularization. On
this basis, the Court of Appeals ruled in favor of Arlene.
The employment status of a person is defined and prescribed by law and not
by what the parties say it should be. Equally important to consider is that a
contract of employment is impressed with public interest such that labor
contracts must yield to the common good. Thus, provisions of applicable
statutes are deemed written into the contract, and the parties are not at
Arlenes contract indicating a fixed term did not automatically mean that she
could never be a regular employee. This is precisely what Article 280 seeks
to avoid. The ruling in Brent remains as the exception rather than the
general rule.
Fuji argues that the Court of Appeals erred when it held that Arlene was
illegally dismissed, in view of the non-renewal contract voluntarily executed
by the parties. Fuji also argues that Arlenes contract merely expired; hence,
she was not illegally dismissed.231
Arlene alleges that she had no choice but to sign the non-renewal contract
because Fuji withheldher salary and benefits.
....
LABOR
....
Article 279 of the Labor Code also provides for the right to security of tenure
and states the following:
The expiration of Arlenes contract does not negate the finding of illegal
dismissal by Fuji. The manner by which Fuji informed Arlene that her
contract would no longer be renewed is tantamount to constructive
dismissal. To make matters worse, Arlene was asked to sign a letter of
resignation prepared by Fuji.235 The existence of a fixed-term contract
should not mean that there can be no illegal dismissal. Due process must
still be observed in the pre-termination of fixed-term contracts of
employment.
Art. 284. Disease as ground for termination. An employer may terminate the
services of an employee who has been found to be suffering from any
disease and whose continued employment is prohibited by law or is
prejudicial to his health as well as to the health of his co-employees:
Provided, That he is paid separation pay equivalent to at least one (1) month
salary or to one-half (1/2) month salary for every year of service, whichever
is greater, a fraction of at least six (6) months being considered as one (1)
whole year.
Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor
Code provides:
Sec. 8. Disease as a ground for dismissal. Where the employee suffers from
a disease and his continued employment is prohibited by law or prejudicial
to his healthor to the health of his coemployees, the employer shall not
terminate his employment unless there is a certification by a competent
public health authority that the disease is of such nature or at such a stage
that it cannot be cured within a period of six (6) months even with proper
medical treatment. If the disease or ailment can be cured within the period,
the employer shall not terminate the employee but shall ask the employee to
take a leave. The employer shall reinstate such employee to his former
position immediately upon the restoration of his normal health.
There is no evidence showing that Arlene was accorded due process. After
informing her employer of her lung cancer, she was not given the chance to
present medical certificates. Fuji immediately concluded that Arlene could no
longer perform her duties because of chemotherapy. It did not ask her how
her condition would affect her work. Neither did it suggest for her to take a
leave, even though she was entitled to sick leaves. Worse, it did not present
any certificate from a competent public health authority. What Fuji did was
to inform her thather contract would no longer be renewed, and when she
did not agree, her salary was withheld. Thus, the Court of Appeals correctly
upheld the finding of the National Labor Relations Commission that for
failure of Fuji to comply with due process, Arlene was illegally dismissed.240
VI
The Court of Appeals reasoned that strained relations are a question of fact
that must be supported by evidence.246 No evidence was presented by Fuji
to prove that reinstatement was no longer feasible. Fuji did not allege that it
ceased operations or that Arlenes position was no longer available. Nothing
in the records shows that Arlenes reinstatement would cause an atmosphere
of antagonism in the workplace. Arlene filed her complaint in 2009. Five (5)
years are not yet a substantial period247 to bar reinstatement.
On the award of damages, Fuji argues that Arlene is notentitled to the award
of damages and attorneys fees because the non-renewal agreement
contained a quitclaim, which Arlene signed. Quitclaims in labor cases do not
bar illegally dismissed employees from filing labor complaints and money
claim. As explained by Arlene, she signed the non-renewal agreement out of
necessity. In Land and Housing Development Corporation v. Esquillo,248this
court explained: We have heretofore explained that the reason why
quitclaims are commonly frowned upon as contrary to public policy, and why
they are held to be ineffective to bar claims for the full measure of the
workers legal rights, is the fact that the employer and the employee
obviously do not stand on the same footing. The employer drove the
employee to the wall. The latter must have to get holdof money. Because,
out of a job, he had to face the harsh necessities of life. He thus found
himself in no position to resist money proffered. His, then, is a case of
adherence, not of choice.249
With regard to the Court of Appeals award of moral and exemplary damages
and attorneys fees, this court has recognized in several cases that moral
damages are awarded "when the dismissal is attended by bad faith or fraud
or constitutes an act oppressive to labor, or is done in a manner contrary to
good morals, good customs or public policy."250 On the other hand,
exemplary damages may be awarded when the dismissal was effected "in a
wanton, oppressive or malevolent manner."251
The Court of Appeals and National Labor Relations Commission found that
after Arlene had informed Fuji of her cancer, she was informed that there
would be problems in renewing her contract on account of her condition.
This information caused Arlene mental anguish, serious anxiety, and
wounded feelings that can be gleaned from the tenor of her email dated
March 11, 2009. A portion of her email reads:
Apart from Arlenes illegal dismissal, the manner of her dismissal was
effected in an oppressive approach withher salary and other benefits being
withheld until May 5, 2009, when she had no other choice but to sign the
non-renewal contract. Thus, there was legal basis for the Court of Appeals to
modify the National Labor Relations Commissions decision.
However, Arlene receivedher salary for May 2009.253 Considering that the
date of her illegal dismissal was May 5, 2009,254 this amount may be
subtracted from the total monetary award. With regard to the award of
attorneys fees, Article 111 of the Labor Code states that "[i]n cases of
unlawful withholding of wages, the culpable party may be assessed
attorneys fees equivalent to ten percent of the amount of wages recovered."
Likewise, this court has recognized that "in actions for recovery of wages or
where an employee was forced to litigate and, thus, incur expenses to
protect his rights and interest, the award of attorneys fees is legallyand
morally justifiable."255 Due to her illegal dismissal, Arlene was forced to
litigate.
In the dispositive portion of its decision, the Court of Appeals awarded legal
interest at the rate of 12% per annum.256 In view of this courts ruling in
Nacar v. Gallery Frames,257 the legal interest shall be reducd to a rate of 6%
per annum from July 1, 2013 until full satisfaction.
SO ORDERED.
DECISION
PERALTA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Civil
Procedure seeks to reverse and set aside the June 16, 2005 Decision 1 and
October 12, 2005 Resolution2 of the Court of Appeals in CA-G.R. SP No.
87335, which sustained the October 26, 2004 Decision3 of Voluntary
Arbitrator Bienvenido E. Laguesma, the dispositive portion of which reads:
The company is, however, directed to observe and comply with its
commitment as it pertains to the hiring of casual employees when
necessitated by business circumstances.4
During the hearing on July 1, 2004, the Company and the Union manifested
before Voluntary Arbitrator (VA) Bienvenido E. Laguesma that amicable
settlement was no longer possible; hence, they agreed to submit for
resolution the solitary issue of "[w]hether or not the Company is guilty of
unfair labor acts in engaging the services of PESO, a third party service
provider, under the existing CBA, laws, and jurisprudence."6 Both parties
thereafter filed their respective pleadings.
The Union asserted that the hiring of contractual employees from PESO is
not a management prerogative and in gross violation of the CBA tantamount
to unfair labor practice (ULP). It noted that the contractual workers engaged
have been assigned to work in positions previously handled by regular
workers and Union members, in effect violating Section 4, Article I of the
CBA, which provides for three categories of employees in the Company, to
wit:
It was averred that the categories of employees had been a part of the CBA
since the 1970s and that due to this provision, a pool of casual employees
had been maintained by the Company from which it hired workers who then
became regular workers when urgently necessary to employ them for more
than a year. Likewise, the Company sometimes hired probationary
employees who also later became regular workers after passing the
probationary period. With the hiring of contractual employees, the Union
contended that it would no longer have probationary and casual employees
from which it could obtain additional Union members; thus, rendering inutile
Section 1, Article III (Union Security) of the CBA, which states:
The Union moreover advanced that sustaining the Companys position would
easily weaken and ultimately destroy the former with the latters resort to
retrenchment and/or retirement of employees and not filling up the vacant
regular positions through the hiring of contractual workers from PESO, and
In countering the Unions allegations, the Company argued that: (a) the law
expressly allows contracting and subcontracting arrangements through
Department of Labor and Employment (DOLE) Order No. 18-02; (b) the
engagement of contractual employees did not, in any way, prejudice the
Union, since not a single employee was terminated and neither did it result
in a reduction of working hours nor a reduction or splitting of the bargaining
unit; and (c) Section 4, Article I of the CBA merely provides for the definition
of the categories of employees and does not put a limitation on the
Companys right to engage the services of job contractors or its
management prerogative to address temporary/occasional needs in its
operation.
On October 26, 2004, VA Laguesma dismissed the Unions charge of ULP for
being purely speculative and for lacking in factual basis, but the Company
was directed to observe and comply with its commitment under the CBA.
The VA opined:
While the Union moved for partial reconsideration of the VA Decision,8 the
Company immediately filed a petition for review9 before the Court of Appeals
(CA) under Rule 43 of the Revised Rules of Civil Procedure to set aside the
directive to observe and comply with the CBA commitment pertaining to the
hiring of casual employees when necessitated by business circumstances.
Professing that such order was not covered by the sole issue submitted for
voluntary arbitration, the Company assigned the following errors:
On June 16, 2005, the CA dismissed the petition. In dispensing with the
merits of the controversy, it held:
This Court does not find it arbitrary on the part of the Hon. Voluntary
Arbitrator in ruling that "the engagement of PESO is not in keeping with the
intent and spirit of the CBA." The said ruling is interrelated and intertwined
with the sole issue to be resolved that is, "Whether or not the Company is
guilty of unfair labor practice in engaging the services of PESO, a third party
service provider, under existing CBA, laws, and jurisprudence." Both issues
concern the engagement of PESO by the Company which is perceived as a
violation of the CBA and which constitutes as unfair labor practice on the
part of the Company. This is easily discernible in the decision of the Hon.
Voluntary Arbitrator when it held:
Anent the second assigned error, the Company contends that the Hon.
Voluntary Arbitrator erred in declaring that the engagement of PESO is not in
keeping with the intent and spirit of the CBA. The Company justified its
engagement of contractual employees through PESO as a management
prerogative, which is not prohibited by law. Also, it further alleged that no
provision under the CBA limits or prohibits its right to contract out certain
services in the exercise of management prerogatives.
Germane to the resolution of the above issue is the provision in their CBA
with respect to the categories of the employees:
xxxx
In justifying its act, the Company posits that its engagement of PESO was a
management prerogative. It bears stressing that a management prerogative
refers to the right of the employer to regulate all aspects of employment,
such as the freedom to prescribe work assignments, working methods,
processes to be followed, regulation regarding transfer of employees,
supervision of their work, lay-off and discipline, and dismissal and recall of
work, presupposing the existence of employer-employee relationship. On the
basis of the foregoing definition, the Companys engagement of PESO was
indeed a management prerogative. This is in consonance with the
pronouncement of the Supreme Court in the case of Manila Electric Company
vs. Quisumbing where it ruled that contracting out of services is an exercise
of business judgment or management prerogative.
Even if this Court would brush aside technicality by ignoring the supervening
event that renders this case moot and academic19 due to the permanent
cessation of the Companys business operation on June 30, 2009, the
arguments raised in this petition still fail to convince Us.
We confirm that the VA ruled on a matter that is covered by the sole issue
submitted for voluntary arbitration. Resultantly, the CA did not commit
serious error when it sustained the ruling that the hiring of contractual
employees from PESO was not in keeping with the intent and spirit of the
CBA. Indeed, the opinion of the VA is germane to, or, in the words of the CA,
"interrelated and intertwined with," the sole issue submitted for resolution
by the parties. This being said, the Companys invocation of Sections 4 and
5, Rule IV20 and Section 5, Rule VI21of the Revised Procedural Guidelines in
the Conduct of Voluntary Arbitration Proceedings dated October 15, 2004
issued by the NCMB is plainly out of order.
Likewise, the Company cannot find solace in its cited case of Ludo & Luym
Corporation v. Saornido.22 In Ludo, the company was engaged in the
manufacture of coconut oil, corn starch, glucose and related products. In the
course of its business operations, it engaged the arrastre services of CLAS
for the loading and unloading of its finished products at the wharf. The
arrastre workers deployed by CLAS to perform the services needed were
In one case, the Supreme Court stressed that "xxx the Voluntary Arbitrator
had plenary jurisdiction and authority to interpret the agreement to arbitrate
and to determine the scope of his own authority subject only, in a proper
case, to the certiorari jurisdiction of this Court. The Arbitrator, as already
indicated, viewed his authority as embracing not merely the determination of
the abstract question of whether or not a performance bonus was to be
granted but also, in the affirmative case, the amount thereof.
Lastly, the Company kept on harping that both the VA and the CA conceded
that its engagement of contractual workers from PESO was a valid exercise
of management prerogative. It is confused. To emphasize, declaring that a
particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise
thereof. What the VA and the CA correctly ruled was that the Companys act
of contracting out/outsourcing is within the purview of management
prerogative. Both did not say, however, that such act is a valid exercise
thereof. Obviously, this is due to the recognition that the CBA provisions
agreed upon by the Company and the Union delimit the free exercise of
management prerogative pertaining to the hiring of contractual employees.
Indeed, the VA opined that "the right of the management to outsource parts
of its operations is not totally eliminated but is merely limited by the CBA,"
It is familiar and fundamental doctrine in labor law that the CBA is the law
between the parties and they are obliged to comply with its provisions. We
said so in Honda Phils., Inc. v. Samahan ng Malayang Manggagawa sa
Honda:
WHEREFORE, the petition is DENIED. The assailed June 16, 2005 Decision,
as well as the October 12, 2005 Resolution of the Court of Appeals, which
sustained the October 26, 2004 Decision of the Voluntary Arbitrator, are
hereby AFFIRMED.
SO ORDERED.
- versus -
DECISION
The instant petition for review assails the March 21, 2003 Decision[1] of the Court
of Appeals (CA) in CA-G.R. SP No. 52082 and its October 20, 2003
Resolution[2] denying the motions for reconsideration separately filed by
petitioners and respondent Procter & Gamble Phils. Inc. (P&G). The appellate
court affirmed the July 27, 1998 Decision of the National Labor Relations
Commission (NLRC), which in turn affirmed the November 29, 1996 Decision[3] of
the Labor Arbiter. All these decisions found Promm-Gem, Inc. (Promm-Gem) and
Sales and Promotions Services (SAPS) to be legitimate independent contractors
and the employers of the petitioners.
Factual Antecedents
On November 29, 1996, the Labor Arbiter dismissed the complaint for lack
of merit and ruled that there was no employer-employee relationship between
petitioners and P&G. He found that the selection and engagement of the
petitioners, the payment of their wages, the power of dismissal and control with
respect to the means and methods by which their work was accomplished, were
all done and exercised by Promm-Gem/SAPS. He further found that Promm-Gem
and SAPS were legitimate independent job contractors. The dispositive portion of
his Decision reads:
SO ORDERED.[12]
Ruling of the NLRC
SO ORDERED.[14]
Petitioners filed a motion for reconsideration but the motion was denied in
the November 19, 1998 Resolution.[15]
Petitioners then filed a petition for certiorari with the CA, alleging grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of the
Labor Arbiter and the NLRC. However, said petition was also denied by the CA
which disposed as follows:
SO ORDERED.[16]
Petitioners filed a motion for reconsideration but the motion was also
denied. Hence, this petition.
Issues
II.
WHETHER X X X THE HONORABLE COURT OF APPEALS HAS
COMMITTED [A] REVERSIBLE ERROR WHEN IT DID NOT DECLARE
THAT THE PUBLIC RESPONDENTS HAD ACTED WITH GRAVE ABUSE
OF DISCRETION WHEN THE LATTER DID NOT FIND THE PRIVATE
RESPONDENTS LIABLE TO THE PETITIONERS FOR PAYMENT OF
ACTUAL, MORAL AND EXEMPLARY DAMAGES AS WELL AS
LITIGATION COSTS AND ATTORNEYS FEES.[17]
Simply stated, the issues are: (1) whether P&G is the employer of
petitioners; (2) whether petitioners were illegally dismissed; and (3) whether
petitioners are entitled for payment of actual, moral and exemplary damages as
well as litigation costs and attorneys fees.
Petitioners Arguments
Petitioners insist that they are employees of P&G. They claim that they
were recruited by the salesmen of P&G and were engaged to undertake
merchandising chores for P&G long before the existence of Promm-Gem and/or
SAPS. They further claim that when the latter had its so-called re-alignment
program, petitioners were instructed to fill up application forms and report to the
agencies which P&G created.[18]
Petitioners further claim that P&G instigated their dismissal from work as
can be gleaned from its letter[19] to SAPS dated February 24, 1993, informing the
latter that their Merchandising Services Contract will no longer be renewed.
Petitioners further assert that Promm-Gem and SAPS are labor-only
contractors providing services of manpower to their client. They claim that the
contractors have neither substantial capital nor tools and equipment to undertake
independent labor contracting. Petitioners insist that since they had been engaged
to perform activities which are necessary or desirable in the usual business or
trade of P&G, then they are its regular employees.[20]
Respondents Arguments
On the other hand, P&G points out that the instant petition raises only
questions of fact and should thus be thrown out as the Court is not a trier of
facts. It argues that findings of facts of the NLRC, particularly where the NLRC and
the Labor Arbiter are in agreement, are deemed binding and conclusive on the
Supreme Court.
P&G also contends that the Labor Code neither defines nor limits which
services or activities may be validly outsourced.Thus, an employer can farm out
any of its activities to an independent contractor, regardless of whether such
activity is peripheral or core in nature. It insists that the determination of whether
to engage the services of a job contractor or to engage in direct hiring is within
the ambit of management prerogative.
Our Ruling
Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code,
as amended by Department Order No. 18-02,[24] distinguishes between legitimate
and labor-only contracting:
xxxx
xxxx
ii) [T]he contractor does not exercise the right to control over
the performance of the work of the contractual employee.
The right to control shall refer to the right reserved to the person
for whom the services of the contractual workers are performed, to
determine not only the end to be achieved, but also the manner and
means to be used in reaching that end.
x x x x (Underscoring supplied.)
Clearly, the law and its implementing rules allow contracting arrangements
for the performance of specific jobs, works or services. Indeed, it is management
prerogative to farm out any of its activities, regardless of whether such activity is
peripheral or core in nature. However, in order for such outsourcing to be valid, it
must be made to an independent contractor because the current labor rules
expressly prohibit labor-only contracting.
ii) The contractor does not exercise the right to control over
the performance of the work of the contractual employee.
(Underscoring supplied)
has authorized capital stock of P1 million and a paid-in capital, or capital available
for operations, of P500,000.00 as of 1990.[27] It also has long term assets
worth P432,895.28 and current assets of P719,042.32. Promm-Gem has also
proven that it maintained its own warehouse and office space with a floor area of
870 square meters.[28] It also had under its name three registered vehicles which
were used for its promotional/merchandising business.[29] Promm-Gem also has
other clients[30] aside from P&G.[31]Under the circumstances, we find that Promm-
Gem has substantial investment which relates to the work to be performed. These
factors negate the existence of the element specified in Section 5(i) of DOLE
Department Order No. 18-02.
On the other hand, the Articles of Incorporation of SAPS shows that it has a
paid-in capital of only P31,250.00. There is no other evidence presented to show
how much its working capital and assets are. Furthermore, there is no showing of
substantial investment in tools, equipment or other assets.
same rationale to the present case, it is clear that SAPS having a paid-in capital of
only P31,250 - has no substantial capital. SAPS lack of substantial capital is
underlined by the records[36] which show that its payroll for its merchandisers
alone for one month would already total P44,561.00. It had 6-month contracts
with P&G.[37]Yet SAPS failed to show that it could complete the 6-month contracts
using its own capital and investment. Its capital is not even sufficient for one
months payroll. SAPS failed to show that its paid-in capital of P31,250.00 is
sufficient for the period required for it to generate its needed revenue to sustain
its operations independently. Substantial capital refers to capitalization used in
the performance or completion of the job, work or service contracted out. In the
present case, SAPS has failed to show substantial capital.
Termination of services
In the instant case, the termination letters given by Promm-Gem to its employees
uniformly specified the cause of dismissal as grave misconduct and breach of
trust, as follows:
xxxx
x x x x[45]
In other words, in order to constitute serious misconduct which will warrant the
dismissal of an employee under paragraph (a) of Article 282 of the Labor Code, it
is not sufficient that the act or conduct complained of has violated some
established rules or policies. It is equally important and required that the act or
conduct must have been performed with wrongful intent.[48] In the instant case,
petitioners-employees of Promm-Gem may have committed an error of judgment
in claiming to be employees of P&G, but it cannot be said that they were
motivated by any wrongful intent in doing so. As such, we find them guilty of only
simple misconduct for assailing the integrity of Promm-Gem as a legitimate and
independent promotion firm. A misconduct which is not serious or grave, as that
existing in the instant case, cannot be a valid basis for dismissing an employee.
Meanwhile, loss of trust and confidence, as a ground for dismissal, must be based
on the willful breach of the trust reposed in the employee by his
employer. Ordinary breach will not suffice. A breach of trust is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as distinguished
from an act done carelessly, thoughtlessly, heedlessly or inadvertently.[49]
While Promm-Gem had complied with the procedural aspect of due process
in terminating the employment of petitioners-employees, i.e., giving two notices
and in between such notices, an opportunity for the employees to answer and
rebut the charges against them, it failed to comply with the substantive aspect of
due process as the acts complained of neither constitute serious misconduct nor
breach of trust. Hence, the dismissal is illegal.
With regard to the petitioners placed with P&G by SAPS, they were given no
written notice of dismissal. The records show that upon receipt by SAPS of P&Gs
letter terminating their Merchandising Services Contact effective March 11, 1993,
they in turn verbally informed the concerned petitioners not to report for work
anymore. The concerned petitioners related their dismissal as follows:
xxxx
Gentlemen:
(Sgd.)
EMMANUEL M. NON
Sales Merchandising III
Going back to the matter of dismissal, it must be emphasized that the onus
probandi to prove the lawfulness of the dismissal rests with the employer.[53] In
termination cases, the burden of proof rests upon the employer to show that the
dismissal is for just and valid cause.[54] In the instant case, P&G failed to discharge
the burden of proving the legality and validity of the dismissals of those
petitioners who are considered its employees. Hence, the dismissals necessarily
were not justified and are therefore illegal.
Damages
As for P&G, the records show that it dismissed its employees through SAPS in a
manner oppressive to labor. The sudden and peremptory barring of the concerned
petitioners from work, and from admission to the work place, after just a one-day
verbal notice, and for no valid cause bellows oppression and utter disregard of the
right to due process of the concerned petitioners. Hence, an award of moral
damages is called for.
Lastly, under Article 279 of the Labor Code, an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges, inclusive of allowances, and other benefits or their
monetary equivalent from the time the compensation was withheld up to the time
of actual reinstatement.[57] Hence, all the petitioners, having been illegally
dismissed are entitled to reinstatement without loss of seniority rights and with
full back wages and other benefits from the time of their illegal dismissal up to the
time of their actual reinstatement.
WHEREFORE, the petition is GRANTED. The Decision dated March 21, 2003 of
the Court of Appeals in CA-G.R. SP No. 52082 and the Resolution dated October
20, 2003 are REVERSED and SET ASIDE. Procter & Gamble Phils., Inc. and
Promm-Gem, Inc. are ORDERED to reinstate their respective employees
immediately without loss of seniority rights and with full backwages and other
benefits from the time of their illegal dismissal up to the time of their actual
reinstatement. Procter & Gamble Phils., Inc. is further ORDERED to pay each of
those petitioners considered as its employees, namely Arthur Corpuz, Eric
Aliviado, Monchito Ampeloquio, Abraham Basmayor, Jr., Jonathan Mateo, Lorenzo
Platon, Estanislao Buenaventura, Lope Salonga, Franz David, Nestor Ignacio,
Rolando Romasanta, Roehl Agoo, Bonifacio Ortega, Arsenio Soriano, Jr., Arnel
Endaya, Roberto Enriquez, Edgardo Quiambao, Santos Bacalso, Samson Basco,
Alstando Montos, Rainer N. Salvador, Pedro G. Roy, Leonardo F. Talledo, Enrique
F. Talledo, Joel Billones, Allan Baltazar, Noli Gabuyo, Gerry Gatpo, German
Guevara, Gilbert Y. Miranda, Rodolfo C. Toledo, Jr., Arnold D. Laspoa, Philip M.
Loza, Mario N. Coldayon, Orlando P. Jimenez, Fred P. Jimenez, Restituto C.
Pamintuan, Jr., Rolando J. De Andres, Artuz Bustenera, Jr., Roberto B. Cruz,
Rosedy O. Yordan, Orlando S. Balangue, Emil Tawat, Cresente J. Garcia, Melencio
Casapao, Romeo Vasquez, Renato dela Cruz, Romeo Viernes, Jr., Elias Basco and
Dennis Dacasin, P25,000.00 as moral damages plus ten percent of the total sum
as and for attorneys fees.
Let this case be REMANDED to the Labor Arbiter for the computation, within 30
days from receipt of this Decision, of petitioners backwages and other benefits;
and ten percent of the total sum as and for attorneys fees as stated above; and
for immediate execution.
SO ORDERED.