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from the said Service Contracts with Stanfilco. The owners-members get
their income from the service surplus generated by the quality and amount of
services they rendered, which is determined by the Board of Directors of the
respondent cooperative.
In order to enjoy the benefits under the Social Security Law of 1997, the
owners-members of the respondent cooperative, who were assigned to
Stanfilco requested the services of the latter to register them with petitioner
SSS as self-employed and to remit their contributions as such. Also, to
comply with Section 19-A of Republic Act No. 1161, as amended by Republic
Act No. 8282, the SSS contributions of the said owners-members were equal
to the share of both the employer and the employee.
On 26 September 2002, however, petitioner SSS through its Vice-President
for Mindanao Division, Atty. Eddie A. Jara, sent a letter11 to the respondent
cooperative, addressed to its Chief Executive Officer (CEO) and General
Manager Leo G. Parma, informing the latter that based on the Service
Contracts it executed with Stanfilco, respondent cooperative is actually a
manpower contractor supplying employees to Stanfilco and for that reason, it
is an employer of its owners-members working with Stanfilco. Thus,
respondent cooperative should register itself with petitioner SSS as an
employer and make the corresponding report and remittance of premium
contributions in accordance with the Social Security Law of 1997. On 9
October 2002,12 respondent cooperative, through its counsel, sent a reply to
petitioner SSSs letter asserting that it is not an employer because its
owners-members are the cooperative itself; hence, it cannot be its own
employer. Again, on 21 October 2002,13 petitioner SSS sent a letter to
respondent cooperative ordering the latter to register as an employer and
report its owners-members as employees for compulsory coverage with the
petitioner SSS. Respondent cooperative continuously ignored the demand of
petitioner SSS.
Accordingly, petitioner SSS, on 12 June 2003, filed a Petition 14 before
petitioner SSC against the respondent cooperative and Stanfilco praying that
the respondent cooperative or, in the alternative, Stanfilco be directed to
register as an employer and to report respondent cooperatives ownersmembers as covered employees under the compulsory coverage of SSS and
to remit the necessary contributions in accordance with the Social Security
Law of 1997. The same was docketed as SSC Case No. 6-15507-03.
Respondent cooperative filed its Answer with Motion to Dismiss alleging that
no employer-employee relationship exists between it and its ownersmembers, thus, petitioner SSC has no jurisdiction over the respondent
cooperative. Stanfilco, on the other hand, filed an Answer with Cross-claim
against the respondent cooperative.
On 17 February 2004, petitioner SSC issued an Order denying the Motion to
the force of law between them. However, the agreed terms and conditions
must not be contrary to law, morals, customs, public policy or public order.36
The Service Contract provision in question must be struck down for being
contrary to law and public policy since it is apparently being used by the
respondent cooperative merely to circumvent the compulsory coverage of its
employees, who are also its owners-members, by the Social Security Law.
of Directors, which directs and supervises its business; meaning, its Board of
Directors is the one in charge in the conduct and management of its affairs. 39
With that, a cooperative can be likened to a corporation with a personality
separate and distinct from its owners-members. Consequently, an ownermember of a cooperative can be an employee of the latter and an employeremployee relationship can exist between them.
In the present case, it is not disputed that the respondent cooperative had
registered itself with the Cooperative Development Authority, as evidenced
by its Certificate of Registration No. 0-623-2460.40 In its by-laws,41 its Board
of Directors directs, controls, and supervises the business and manages the
property of the respondent cooperative. Clearly then, the management of the
affairs of the respondent cooperative is vested in its Board of Directors and
not in its owners-members as a whole. Therefore, it is completely logical that
the respondent cooperative, as a juridical person represented by its Board of
Directors, can enter into an employment with its owners-members.
Thus, this petition for certiorari with prayer for the issuance of a writ of
preliminary prohibitory injunction and temporary restraining order based on
the following grounds:
GANCAYCO, J.:p
The issue presented by this petition is whether or not the med-arbiter or the
Secretary of Labor and Employment has the authority to determine the
existence of an employer-employee relationship between the parties in a
petition for certification election.
On May 12, 1989, private respondent Philippine Transport and General
Workers Organization (Union for short) file a petition for certification election
as a bargaining agent for a group of employees of petitioner M.Y. San
Biscuits, Inc. before the med-arbiter of the Department of Labor and
Employment (DOLE).
After the parties submitted their position papers, on August 25, 1989, the
med-arbiter issued an order dismissing the petition for lack of merit as there
is no employer-employee relationship between petitioner and the delivery
drivers/helpers represented by respondent Union. 1
Meanwhile, respondent Union and several others filed before the NLRC
Branch of Region No. IV a complaint for underpayment of wages; nonpayment of 13th month pay; service incentive pay and COLA; damages and
attorney's fees.
On February 9, 1990, the labor arbiter rendered a decision dismissing the
said complaint on the ground that there is no employer-employee relationship
between the parties. 2 On February 26, 1990 private respondent appealed to
the National Labor Relations Commission (NLRC).
In the certification election case, private respondent appealed to the
Secretary of DOLE. On December 15, 1989, then DOLE Secretary Franklin
Drilon promulgated a resolution reversing the decision of the med-arbiter,
thus finding that there exists an employer-employee relationship between
petitioner and private respondent. 3
Petitioner filed a motion for reconsideration of this resolution on January 22,
1990 and a manifestation on February 12, 1990 asking that action be held in
abeyance pending consideration of the other case where the labor arbiter
rendered a decision declaring the absence of an employer-employee
relationship between the parties. 4 On April 16, 1990, public respondent
issued an order denying the relief sought in the manifestation of petitioner. 5
Petitioner filed a motion for reconsideration therefrom 6 but it was denied on
June 18, 1990. 7
From the foregoing, the BLR has the original and exclusive jurisdiction to
inter alia, decide all disputes, grievances or problems arising from or
affecting labor-management relations in all workplaces whether agricultural
or non-agricultural. Necessarily, in the exercise of this jurisdiction over labormanagement relations, the med-arbiter has the authority, original and
exclusive, to determine the existence of an employer-employee relationship
between the parties.
Apropos to the present case, once there is a determination as to the
existence of such a relationship, the med-arbiter can then decide the
certification election case. 9 As the authority to determine the employeremployee relationship is necessary and indispensable in the exercise of
jurisdiction by the med-arbiter, his finding thereon may only be reviewed and
reversed by the Secretary of Labor who exercises appellate jurisdiction under
Article 259 of the Labor Code, as amended, which provides
Art. 259. Appeal from certification election orders. Any
party to an election may appeal the order or results of the
election as determined by the Med-Arbiter directly to the
Secretary of Labor and Employment on the ground that the
rules and regulations or parts thereof established by the
Secretary of Labor and Employment for the conduct of the
election have been violated. Such appeal shall be decided
within fifteen (15) calendar days.
The Court reproduces with approval the findings and conclusions of the
Secretary in the said resolution dated December 15, 1989.
The sole issue to be resolved is whether or not there exists
an employer-employee relationship between members of
petitioning union and the company.
After a careful review of the records of the case, we find for
the appellant.
It has been well settled in jurisprudence that the factors to be
considered in determining the existence of employeremployee relationship are as follows: (a) selection and
engagement of the employees; (b) the payment of wages;
(e) the process [sic] of dismissal; and, (d) the employer's
power to control the employee with respect to the means
and methods [with] which the work is to be accomplished.
On the first factor, (selection and engagement of the
employer), [sic] it is very apparent from the records that the
personnel of M.Y. San Biscuits are the one responsible for
hiring of employees. Assuming, it is the salesman that
engages his own driver, it could be inferred however that
such authority emanates from the respondent.
Finally, on the fourth factor which is the control test, the fact
that the respondent gives daily instructions to the drivers on
how to go about their work is sufficient indication that it
exercises control over the movements of the drivers/helpers.
The drivers are instructed as to what time they are supposed
to report to the office and what time they are supposed to
return.
Petitioner seeks the reversal of the decision[1] dated January 10, 2000 of the
Court of Appeals in CA-G.R. SP No. 52780, dismissing its petition for
certiorari against the NLRC, as well as the resolution[2] dated February 24,
2000, denying its motion for reconsideration.
The antecedent facts of the case, as found by the Court of Appeals,[3] are as
follows:
On March 13, 1993,[4] Pea was allegedly caught urinating and defecating
on company premises not intended for the purpose. The farm manager of
petitioner issued a formal notice directing him to explain within 24 hours why
disciplinary action should not be taken against him for violating company
rules and regulations. Pea refused, however, to receive the formal notice.
He never bothered to explain, either verbally or in writing, according to
petitioner. Thus, on March 20, 1993, a notice of termination with payment of
his monetary benefits was sent to him. He duly acknowledged receipt of his
separation pay of P13,918.67.
From the start of his employment on July 8, 1989, until his termination on
March 20, 1993, Pea had worked for seven days a week, including
holidays, without overtime, holiday, rest day pay and service incentive leave.
At the time of his dismissal from employment, he was receiving P180 pesos
daily wage, or an average monthly salary of P5,402.
Co-respondent Marcial I. Abion[5] was a carpenter/mason and a
maintenance man whose employment by petitioner commenced on October
8, 1990. Allegedly, he caused the clogging of the fishpond drainage resulting
in damages worth several hundred thousand pesos when he improperly
disposed of the cut grass and other waste materials into the ponds drainage
system. Petitioner sent a written notice to Abion, requiring him to explain
what happened, otherwise, disciplinary action would be taken against him.
He refused to receive the notice and give an explanation, according to
petitioner. Consequently, the company terminated his services on October
27, 1992. He acknowledged receipt of a written notice of dismissal, with his
separation pay.
DECISION
QUISUMBING, J.:
Like Pea, Abion worked seven days a week, including holidays, without
holiday pay, rest day pay, service incentive leave pay and night shift
differential pay. When terminated on October 27, 1992, Abion was receiving
In a decision dated January 30, 1996, the labor arbiter dismissed the
complaint for lack of merit, finding that the case was one of illegal dismissal
and did not involve the interpretation or implementation of any CBA provision.
He stated that Article 217 (c) of the Labor Code[6] was inapplicable to the
case. Further, the labor arbiter found that although both complainants did not
substantiate their claims of illegal dismissal, there was proof that private
respondents voluntarily accepted their separation pay and petitioners
financial assistance.
I.
DENYING THE PETITION FOR CERTIORARI AND IN EFFECT
AFFIRMING THE RULINGS OF THE PUBLIC RESPONDENT NLRC THAT
THE PRIVATE RESPONDENTS WERE ILLEGALLY DISMISSED;
Thus, private respondents brought the case to the NLRC, which reversed the
labor arbiters decision. Dissatisfied with the NLRC ruling, petitioner went to
the Court of Appeals by way of a petition for review on certiorari under Rule
65, seeking reinstatement of the labor arbiters decision. The appellate court
denied the petition and affirmed the NLRC resolution with some
modifications, thus:
Petitioner contends that the dismissal of private respondents was for a just
and valid cause, pursuant to the provisions of the companys rules and
regulations. It also alleges lack of jurisdiction on the part of the labor arbiter,
claiming that the cases should have been resolved through the grievance
machinery, and eventually referred to voluntary arbitration, as prescribed in
the CBA.
For their part, private respondents contend that they were illegally dismissed
from employment because management discovered that they intended to
form another union, and because they were vocal in asserting their rights. In
any case, according to private respondents, the petition involves factual
issues that cannot be properly raised in a petition for review on certiorari
under Rule 45 of the Revised Rules of Court.[10]
The first issue primarily involves questions of fact, which can serve as basis
for the conclusion that private respondents were legally and validly
dismissed. The burden of proving that the dismissal of private respondents
was legal and valid falls upon petitioner. The NLRC found that petitioner
failed to substantiate its claim that both private respondents committed
certain acts that violated company rules and regulations,[11] hence we find
no factual basis to say that private respondents dismissal was in order. We
see no compelling reason to deviate from the NLRC ruling that their
dismissal was illegal, absent a showing that it reached its conclusion
arbitrarily.[12] Moreover, factual findings of agencies exercising quasi-judicial
functions are accorded not only respect but even finality, aside from the
consideration here that this Court is not a trier of facts. [13]
Anent the second issue, Article 217 of the Labor Code provides that labor
arbiters have original and exclusive jurisdiction over termination disputes. A
possible exception is provided in Article 261 of the Labor Code, which
provides thatThe Voluntary Arbitrator or panel of voluntary arbitrators shall have original
and exclusive jurisdiction to hear and decide all unresolved grievances
arising from the interpretation or implementation of the Collective Bargaining
Agreement and those arising from the interpretation or enforcement of
company personnel policies referred to in the immediately preceding article.
Accordingly, violations of a Collective Bargaining Agreement, except those
which are gross in character, shall no longer be treated as unfair labor
practice and shall be resolved as grievances under the Collective Bargaining
Agreement. For purposes of this article, gross violations of Collective
Bargaining Agreement shall mean flagrant and or malicious refusal to comply
with the economic provisions of such agreement.
The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately
dispose and refer the same to the grievance Machinery or Arbitration
provided in the Collective Bargaining Agreement.
But as held in Vivero vs. CA,[14] petitioner cannot arrogate into the powers
of Voluntary Arbitrators the original and exclusive jurisdiction of Labor
Arbiters over unfair labor practices, termination disputes, and claims for
only in finding that their cause of action was ripe for arbitration.
In the case of Maneja vs. NLRC,[19] we held that the dismissal case does
not fall within the phrase grievances arising from the interpretation or
implementation of the collective bargaining agreement and those arising from
the interpretation or enforcement of company personnel policies. In Maneja,
the hotel employee was dismissed without hearing. We ruled that her
dismissal was unjustified, and her right to due process was violated, absent
the twin requirements of notice and hearing. We also held that the labor
arbiter had original and exclusive jurisdiction over the termination case, and
that it was error to give the voluntary arbitrator jurisdiction over the illegal
dismissal case.
In Vivero vs. CA,[20] private respondents attempted to justify the jurisdiction
of the voluntary arbitrator over a termination dispute alleging that the issue
involved the interpretation and implementation of the grievance procedure in
the CBA. There, we held that since what was challenged was the legality of
the employees dismissal for lack of cause and lack of due process, the case
was primarily a termination dispute. The issue of whether there was proper
interpretation and implementation of the CBA provisions came into play only
because the grievance procedure in the CBA was not observed, after he
sought his unions assistance. Since the real issue then was whether there
was a valid termination, there was no reason to invoke the need to interpret
nor question an implementation of any CBA provision.
One significant fact in the present petition also needs stressing. Pursuant to
Article 260[21] of the Labor Code, the parties to a CBA shall name or
designate their respective representatives to the grievance machinery and if
the grievance is unsettled in that level, it shall automatically be referred to the
voluntary arbitrators designated in advance by the parties to a CBA.
Consequently only disputes involving the union and the company shall be
referred to the grievance machinery or voluntary arbitrators. In these
termination cases of private respondents, the union had no participation, it
having failed to object to the dismissal of the employees concerned by the
petitioner. It is obvious that arbitration without the unions active participation
on behalf of the dismissed employees would be pointless, or even prejudicial
to their cause.
Coming to the merits of the petition, the NLRC found that petitioner did not
comply with the requirements of a valid dismissal. For a dismissal to be valid,
the employer must show that: (1) the employee was accorded due process,
and (2) the dismissal must be for any of the valid causes provided for by law.
[22] No evidence was shown that private respondents refused, as alleged, to
receive the notices requiring them to show cause why no disciplinary action
should be taken against them. Without proof of notice, private respondents
who were subsequently dismissed without hearing were also deprived of a
chance to air their side at the level of the grievance machinery. Given the
fact of dismissal, it can be said that the cases were effectively removed from
the jurisdiction of the voluntary arbitrator, thus placing them within the
jurisdiction of the labor arbiter. Where the dispute is just in the interpretation,
implementation or enforcement stage, it may be referred to the grievance
machinery set up in the CBA, or brought to voluntary arbitration. But, where
there was already actual termination, with alleged violation of the employees
rights, it is already cognizable by the labor arbiter.[23]
In sum, we conclude that the labor arbiter and then the NLRC had jurisdiction
over the cases involving private respondents dismissal, and no error was
committed by the appellate court in upholding their assumption of jurisdiction.
However, we find that a modification of the monetary awards is in order. As a
consequence of their illegal dismissal, private respondents are entitled to
reinstatement to their former positions. But since reinstatement is no longer
feasible because petitioner had already closed its shop, separation pay in
lieu of reinstatement shall be awarded.[24] A terminated employees receipt
of his separation pay and other monetary benefits does not preclude
reinstatement or full benefits under the law, should reinstatement be no
longer possible.[25] As held in Cario vs. ACCFA:[26]
Acceptance of those benefits would not amount to estoppel. The reason is
plain. Employer and employee, obviously, do not stand on the same footing.
The employer drove the employee to the wall. The latter must have to get
hold of the money. Because out of 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. One thing sure, however, is that
petitioners did not relent their claim. They pressed it. They are deemed not
to have waived their rights. Renuntiato non praesumitur.
Conformably, private respondents are entitled to separation pay equivalent to
one months salary for every year of service, in lieu of reinstatement.[27] As
regards the award of damages, in order not to further delay the disposition of
this case, we find it necessary to expressly set forth the extent of the
backwages as awarded by the appellate court. Pursuant to R.A. 6715, as
amended, private respondents shall be entitled to full backwages computed
from the time of their illegal dismissal up to the date of promulgation of this
decision without qualification, considering that reinstatement is no longer
practicable under the circumstances.[28]
Having found private respondents dismissal to be illegal, and the labor
arbiter and the NLRC duly vested with jurisdiction to hear and decide their
cases, we agree with the appellate court that petitioner should pay the costs
of suit.
WHEREFORE, the petition is DENIED for lack of merit. The decision of the
Court of Appeals in CA-G.R. SP No. 52780 is AFFIRMED with the
MODIFICATION that petitioner is ordered to pay private respondents (a)
separation pay, in lieu of their reinstatement, equivalent to one months salary
for every year of service, (b) full backwages from the date of their dismissal
up to the date of the promulgation of this decision, together with (c) the costs
of suit.
SO ORDERED.
October 8, 2001
Petitioner PHCCI contends that private respondents are its members and are
working for it as volunteers. Not being regular employees, they cannot sue
petitioner.
On the same date, the Labor Arbiter denied petitioner's motion to dismiss,
The above elements are present here. Petitioner PHCCI, through Mr.
Edilberto Lantaca, Jr., its Manager, hired private respondents to work for it.
They worked regularly on regular working hours, were assigned specific
duties, were paid regular wages and made to accomplish daily time records
just like any other regular employee. They worked under the supervision of
the cooperative manager. But unfortunately, they were dismissed.
That an employer-employee exists between the parties is shown by the
averments of private respondents in their respective affidavits, carefully
considered by respondent NLRC in affirming the Labor Arbiter's decision,
thus:
Benedicto Faburada Regular part-time Computer programmer/
operator. Worked with the Cooperative since June 1, 1988 up to
December 29, 1989. Work schedule: Tuesdays and Thursdays, from
1:00 p.m. to 5:30 p.m. and every Saturday from 8:00 to 11:30 a.m.
and 1:00 to 4:00 p.m. and for at least three (3) hours during
Sundays. Monthly salary: P1,000.00 from June to December
1988; P1,350.00 - from January to June 1989; and P1,500.00 from
July to December 1989. Duties: Among others, Enter data into the
computer; compute interests on savings deposits, effect mortuary
deductions and dividends on fixed deposits; maintain the masterlist
of the cooperative members; perform various forms for
mimeographing; and perform such other duties as may be assigned
from time to time.
Sisinita Vilar Clerk. Worked with the Cooperative since December
1, 1987 up to December 29, 1989. Work schedule: Regular working
hours. Monthly salary: P500.00 from December 1, 1987 to
December 31, 1988; P1,000.00 from January 1, 1989 to June 30,
1989; and P1,150.00 from July 1, 1989 to December 31, 1989.
Duties: Among others, Prepare summary of salary advances, journal
vouchers, daily summary of disbursements to respective
classifications; schedule loans; prepare checks and cash vouchers
for regular and emergency loans; reconcile bank statements to the
daily summary of disbursements; post the monthly balance of fixed
and savings deposits in preparation for the computation of interests,
dividends, mortuary and patronage funds; disburse checks during
regular and emergency loans; and perform such other bookkeeping
and accounting duties as may be assigned to her from time to time.
Imelda C. Tamayo Clerk. Worked with the Cooperative since
October 19, 1987 up to December 29, 1989. Work schedule: Monday
to Friday - 8:00 to 11:30 a.m and 2:00 to 5:30 p.m.; every Saturday
8:00 to 11:30 a.m and 1:00 to 4:00 p.m; and for one Sunday each
month - for at least three (3) hours. Monthly salary: P60.00 from
the ladder and got promoted several times. In January, 1968, petitioner
became the Assistant Publishing Director in the West Visayan Mission of the
SDA. In July, 1972, he was elevated to the position of Pastor in the West
Visayan Mission covering the island of Panay, and the provinces of Romblon
and Guimaras. Petitioner held the same position up to 1988. Finally, in 1989,
petitioner was promoted as District Pastor of the Negros Mission of the SDA
and was assigned at Sagay, Balintawak and Toboso, Negros Occidental, with
twelve (12) churches under his jurisdiction. In January, 1991, petitioner was
transferred to Bacolod City. He held the position of district pastor until his
services were terminated on 31 October 1991.
On various occasions from August up to October, 1991, petitioner received
several communications3 from Mr. Eufronio Ibesate, the treasurer of the
Negros Mission asking him to admit accountability and responsibility for the
church tithes and offerings collected by his wife, Mrs. Thelma Austria, in his
district which amounted to P15,078.10, and to remit the same to the Negros
Mission.
In his written explanation dated 11 October 1991, 4 petitioner reasoned out
that he should not be made accountable for the unremitted collections since
it was private respondents Pastor Gideon Buhat and Mr. Eufronio Ibesate
who authorized his wife to collect the tithes and offerings since he was very
sick to do the collecting at that time.
Thereafter, on 16 October 1991, at around 7:30 a.m., petitioner went to the
office of Pastor Buhat, the president of the Negros Mission. During said call,
petitioner tried to persuade Pastor Buhat to convene the Executive
Committee for the purpose of settling the dispute between him and the
private respondent, Pastor David Rodrigo. The dispute between Pastor
Rodrigo and petitioner arose from an incident in which petitioner assisted his
friend, Danny Diamada, to collect from Pastor Rodrigo the unpaid balance for
the repair of the latter's motor vehicle which he failed to pay to Diamada. 5
Due to the assistance of petitioner in collecting Pastor Rodrigo's debt, the
latter harbored ill-feelings against petitioner. When news reached petitioner
that Pastor Rodrigo was about to file a complaint against him with the Negros
Mission, he immediately proceeded to the office of Pastor Buhat on the date
abovementioned and asked the latter to convene the Executive Committee.
Pastor Buhat denied the request of petitioner since some committee
members were out of town and there was no quorum. Thereafter, the two
exchanged heated arguments. Petitioner then left the office of Pastor Buhat.
While on his way out, petitioner overheard Pastor Buhat saying, "Pastor daw
inisog na ina iya (Pador you are talking tough)." 6 Irked by such remark,
petitioner returned to the office of Pastor Buhat, and tried to overturn the
latter's table, though unsuccessfully, since it was heavy. Thereafter, petitioner
banged the attach case of Pastor Buhat on the table, scattered the books in
his office, and threw the phone.7 Fortunately, private respondents Pastors
Yonilo Leopoldo and Claudio Montao were around and they pacified both
Pastor Buhat and petitioner.
On 17 October 1991, petitioner received a letter 8 inviting him and his wife to
attend the Executive Committee meeting at the Negros Mission Conference
Room on 21 October 1991, at nine in the morning. To be discussed in the
meeting were the non-remittance of church collection and the events that
transpired on 16 October 1991. A fact-finding committee was created to
investigate petitioner. For two (2) days, from October 21 and 22, the factfinding committee conducted an investigation of petitioner. Sensing that the
result of the investigation might be one-sided, petitioner immediately wrote
Pastor Rueben Moralde, president of the SDA and chairman of the factfinding committee, requesting that certain members of the fact-finding
committee be excluded in the investigation and resolution of the case. 9 Out of
the six (6) members requested to inhibit themselves from the investigation
and decision-making, only two (2) were actually excluded, namely: Pastor
Buhat and Pastor Rodrigo. Subsequently, on 29 October 1991, petitioner
received a letter of dismissal10 citing misappropriation of denominational
funds, willful breach of trust, serious misconduct, gross and habitual neglect
of duties, and commission of an offense against the person of employer's
duly authorized representative, as grounds for the termination of his services.
Reacting against the adverse decision of the SDA, petitioner filed a
complaint11 on 14 November 1991, before the Labor Arbiter for illegal
dismissal against the SDA and its officers and prayed for reinstatement with
backwages and benefits, moral and exemplary damages and other labor law
benefits.
On 15 February 1993, Labor Arbiter Cesar D. Sideo rendered a decision in
favor of petitioner, the dispositive portion of which reads thus:
WHEREFORE, PREMISES CONSIDERED, respondents CENTRAL
PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTHDAY ADVENTISTS (CPUMCSDA) and its officers, respondents
herein, are hereby ordered to immediately reinstate complainant
Pastor Dionisio Austria to his former position as Pastor of Brgy.
Taculing, Progreso and Banago, Bacolod City, without loss of
seniority and other rights and backwages in the amount of ONE
HUNDRED FIFTEEN THOUSAND EIGHT HUNDRED THIRTY
PESOS (P115,830.00) without deductions and qualificatioons.
Respondent CPUMCSDA is further ordered to pay complainant the
following:
A. 13th month pay P 21,060.00
B. Allowance P 4,770.83
C. Service Incentive
Leave Pay P 3,461.85
D. Moral Damages P 50,000.00
E. Exemplary
Damages P 25,000.00
F. Attorney's Fee P 22,012.27
SO ORDERED.12
The SDA, through its officers, appealed the decision of the Labor Arbiter to
the National Labor Labor Relations Commission, Fourth Division, Cebu City.
In a decision, dated 26 August 1994, the NLRC vacated the findings of the
Labor Arbiter. The decretal portion of the NLRC decision states:
WHEREFORE, the Decision appealed from is hereby VACATED and
a new one ENTERED dismissing this case for want of merit.
SO ORDERED.13
Petitioner filed a motion for reconsideration of the above-named decision. On
18 July 1995, the NLRC issued a Resolution reversing its original decision.
The dispositive portion of the resolution reads:
WHEREFORE, premises considered, Our decision dated August 26,
1994 is VACATED and the decision of the Labor Arbiter dated
February 15, 1993 is REINSTATED.
SO ORDERED.14
In view of the reversal of the original decision of the NLRC, the SDA filed a
motion for reconsideration of the above resolution. Notable in the motion for
reconsideration filed by private respondents is their invocation, for the first
time on appeal, that the Labor Arbiter has no jurisdiction over the complaint
filed by petitioner due to the constitutional provision on the separation of
church and state since the case allegedly involved an ecclesiastical affair to
which the State cannot interfere.
The NLRC, without ruling on the merits of the case, reversed itself once
again, sustained the argument posed by private respondents and,
accordingly, dismissed the complaint of petitioner. The dispositive portion of
the NLRC resolution dated 23 January 1996, subject of the present petition,
is as follows:
WHEREFORE, in view of all the foregoing, the instant motion for
reconsideration is hereby granted. Accordingly, this case is hereby
DISMISSED for lack of jurisdiction.
SO ORDERED.15
Hence, the recourse to this Court by petitioner.
After the filing of the petition, the Court ordered the Office of the Solicitor
General (the "OSG") to file its comment on behalf of public respondent
NLRC. Interestingly, the OSG filed a manifestation and motion in lieu of
comment16 setting forth its stand that it cannot sustain the resolution of the
NLRC. In its manifestation, the OSG submits that the termination of petitioner
from his employment may be questioned before the NLRC as the same is
secular in nature, not ecclesiastical. After the submission of memoranda of all
the parties, the case was submitted for decision.
The issues to be resolved in this petition are:
1) Whether or not the Labor Arbiter/NLRC has jurisdiction to try and
decide the complaint filed by petitioner against the SDA;
2) Whether or not the termination of the services of petitioner is an
ecclesiastical affair, and, as such, involves the separation of church
and state; and
3) Whether or not such termination is valid.
The first two issues shall be resolved jointly, since they are related.
Private respondents contend that by virtue of the doctrine of separation of
church and state, the Labor Arbiter and the NLRC have no jurisdiction to
entertain the complaint filed by petitioner. Since the matter at bar allegedly
involves the discipline of a religious minister, it is to be considered a purely
ecclesiastical affair to which the State has no right to interfere.
The contention of private respondents deserves scant consideration. The
principle of separation of church and state finds no application in this case.
proceedings before the Labor Arbiter and the NLRC mooted the question on
jurisdiction.
The jurisdictional question now settled, we shall now proceed to determine
whether the dismissal of petitioner was valid.
At the outset, we note that as a general rule, findings of fact of administrative
bodies like the NLRC are binding upon this Court. A review of such findings is
justified, however, in instances when the findings of the NLRC differ from
those of the labor arbiter, as in this case.26 When the findings of NLRC do not
agree with those of the Labor Arbiter, this Court must of necessity review the
records to determine which findings should be preferred as more comfortable
to the evidentiary facts.27
We turn now to the crux of the matter. In termination cases, the settled rule is
that the burden of proving that the termination was for a valid or authorized
cause rests on the employer.28 Thus, private respondents must not merely
rely on the weaknesses of petitioner's evidence but must stand on the merits
of their own defense.
The issue being the legality of petitioner's dismissal, the same must be
measured against the requisites for a valid dismissal, namely: (a) the
employee must be afforded due process, i.e., he must be given an
opportunity to be heard and to defend himself, and; (b) the dismissal must be
for a valid cause as provided in Article 282 of the Labor Code. 29 Without the
concurrence of this twin requirements, the termination would, in the eyes of
the law, be illegal.30
Before the services of an employee can be validly terminated, Article 277 (b)
of the Labor Code and Section 2, Rule XXIII, Book V of the Rules
Implementing the Labor Code further require the employer to furnish the
employee with two (2) written notices, to wit: (a) a written notice served on
the employee specifying the ground or grounds for termination, and giving to
said employee reasonable opportunity within which to explain his side; and,
(b) a written notice of termination served on the employee indicating that
upon due consideration of all the circumstances, grounds have been
established to justify his termination.
The first notice, which may be considered as the proper charge, serves to
apprise the employee of the particular acts or omissions for which his
dismissal is sought.31 The second notice on the other hand seeks to inform
the employee of the employer's decision to dismiss him. 32 This decision,
however, must come only after the employee is given a reasonable period
from receipt of the first notice within which to answer the charge and ample
opportunity to be heard and defend himself with the assistance of a
of the voluminous records of the case reveals that there is simply no basis for
the alleged loss of confidence and breach of trust. Settled is the rule that
under Article 282 (c) of the Labor Code, the breach of trust must be willful. A
breach is willful if it is done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done carelessly,
thoughtlessly, heedlessly or inadvertently.38 It must rest on substantial
grounds and not on the employer's arbitrariness, whims, caprices or
suspicion; otherwise the employee would eternally remain at the mercy of the
employer.39 It should be genuine and not simulated.40 This ground has never
been intended to afford an occasion for abuse, because of its subjective
nature. The records show that there were only six (6) instances when
petitioner personally collected and received from the church treasurers the
tithes, collections, and donations for the church. 41 The stenographic notes on
the testimony of Naomi Geniebla, the Negros Mission Church Auditor and a
witness for private respondents, show that Pastor Austria was able to remit
all his collections to the treasurer of the Negros Mission. 42
Though private respondents were able to establish that petitioner collected
and received tithes and donations several times, they were notable to
establish that petitioner failed to remit the same to the Negros Mission, and
that he pocketed the amount and used it for his personal purpose. In fact, as
admitted by their own witness, Naomi Geniebla, petitioner remitted the
amounts which he collected to the Negros Mission for which corresponding
receipts were issued to him. Thus, the allegations of private respondents that
petitioner breached their trust have no leg to stand on.
In a vain attempt to support their claim of breach of trust, private respondents
try to pin on petitioner the alleged non-remittance of the tithes collected by
his wife. This argument deserves little consideration. First of all, as proven by
convincing and substantial evidence consisting of the testimonies of the
witnesses for private respondents who are church treasurers, it was Mrs.
Thelma Austria who actually collected the tithes and donations from them,
and, who failed to remit the same to the treasurer of the Negros Mission. The
testimony of these church treasurers were corroborated and confirmed by
Ms. Geniebla and Mr. Ibesate, officers of the SDA. Hence, in the absence of
conspiracy and collusion, which private respondents failed to demonstrate,
between petitioner and his wife, petitioner cannot be made accountable for
the alleged infraction committed by his wife. After all, they still have separate
and distinct personalities. For this reason, the Labor Arbiter found it difficult to
see the basis for the alleged loss of confidence and breach of trust. The
Court does not find any cogent reason, therefore, to digress from the findings
of the Labor Arbiter which is fully supported by the evidence on record.
With respect to the grounds of serious misconduct and commission of an
offense against the person of the employer's duly authorized representative,
we find the same unmeritorious and, as such, do not warrant petitioner's
up to actual reinstatement.46
WHEREFORE, the petition for certiorari is GRANTED. The challenged
Resolution of public respondent National Labor Relations Commission,
rendered on 23 January 1996, is NULLIFIED and SET ASIDE. The Decision
of the Labor Arbiter, dated 15 February 1993, is REINSTATED and hereby
AFFIRMED.
SO ORDERED.
"3. And to pay complainants other benefits and without loss of seniority
rights and other privileges and benefits due a regular employee of Asian
Development Bank from the time he was terminated on December 31, 1992;
(penultimate paragraph, Art. 213, Labor Code), he does not have the
competence to investigate or review any decision of a Labor Arbiter.
However, on the purely administrative aspect of the decision-making
process, he may cause that an investigation be made of any misconduct,
malfeasance or misfeasance, upon complaint properly made.
"If the Department of Foreign Affairs feels that the action of Labor Arbiter
Nieves de Castro constitutes misconduct, malfeasance or misfeasance, it is
suggested that an appropriate complaint be lodged with the Office of the
Ombudsman.
"Thank you for your kind attention."[2]
Dissatisfied, the DFA lodged the instant petition for certiorari. In this Court's
resolution of 31 January 1994, respondents were required to comment.
Petitioner was later constrained to make an application for a restraining order
and/or writ of preliminary injunction following the issuance, on 16 March
1994, by the Labor Arbiter of a writ of execution. In a resolution, dated 07
April 1994, the Court issued the temporary restraining order prayed for.
The Office of the Solicitor General (OSG), in its comment of 26 May 1994,
initially assailed the claim of immunity by the ADB. Subsequently, however, it
submitted a Manifestation (dated 20 June 1994) stating, among other things,
that "after a thorough review of the case and the records," it became
convinced that ADB, indeed, was correct in invoking its immunity from suit
under the Charter and the Headquarters Agreement.
The Court is of the same view.
Article 50(1) of the Charter provides:
The Bank shall enjoy immunity from every form of legal process, except in
cases arising out of or in connection with the exercise of its powers to borrow
money, to guarantee obligations, or to buy and sell or underwrite the sale of
securities.[3]
Under Article 55 thereof All Governors, Directors, alternates, officers and employees of the Bank,
including experts performing missions for the Bank:
(1)
shall be immune from legal process with respect of acts performed
by them in their official capacity, except when the Bank waives the
immunity.[4]
Like provisions are found in the Headquarters Agreement. Thus, its Section
5 reads:
"The Bank shall enjoy immunity from every form of legal process, except in
cases arising out of, or in connection with, the exercise of its powers to
borrow money, to guarantee obligations, or to buy and sell or underwrite the
sale of securities.[5]
And, with respect to certain officials of the bank, Section 44 of the agreement
states:
Governors, other representatives of Members, Directors, the President,
Vice-President and executive officers as may be agreed upon between the
Government and the Bank shall enjoy, during their stay in the Republic of the
Philippines in connection with their official duties with the Bank:
x x x
xxx
xxx
(b)
Immunity from legal process of every kind in respect of words
spoken or written and all acts done by them in their official capacity.[6]
The above stipulations of both the Charter and Headquarters Agreement
should be able, nay well enough, to establish that, except in the specified
cases of borrowing and guarantee operations, as well as the purchase, sale
and underwriting of securities, the ADB enjoys immunity from legal process
of every form. The Banks officers, on their part, enjoy immunity in respect of
all acts performed by them in their official capacity. The Charter and the
Headquarters Agreement granting these immunities and privileges are treaty
covenants and commitments voluntarily assumed by the Philippine
government which must be respected.
In World Health Organization vs. Aquino,[7] we have declared:
It is a recognized principle of international law and under our system of
separation of powers that diplomatic immunity is essentially a political
question and courts should refuse to look beyond a determination by the
executive branch of the government, and where the plea of diplomatic
immunity is recognized and affirmed by the executive branch of the
government x x x it is then the duty of the courts to accept the claim of
immunity upon appropriate suggestion by the principal law officer of the
government, x x x or other officer acting under his direction. Hence, in
adherence to the settled principle that courts may not so exercise their
jurisdiction x x x as to embarrass the executive arm of the government in
conducting foreign relations, it is accepted doctrine that `in such cases the
judicial department of government follows the action of the political branch
"In view of the fact that the Asian Development Bank (ADB) invokes its
immunity which is sustained by the Department of Foreign Affairs, a
continuous hearing of this case erodes the credibility of the Philippine
government before the international community, let alone the negative
implication of such a suit on the official relationship of the Philippine
government with the ADB.
"Last March 8, the Labor Arbiter charged with the case, Ms. Nieves V. de
Castro, addressed a Notice of Resolution/Order to the Bank which brought it
to the attention of the Department of Foreign Affairs on the ground that the
service of such notice was in violation of the RP-ADB Headquarters
Agreement which provided, inter-alia, for the immunity of the Bank, its
President and officers from every form of legal process, except only, in cases
of borrowings, guarantees or the sale of securities.
In its communication of 27 May 1993, the DFA, through the Office of Legal
Affairs, has advised the NLRC:
"Despite this, the labor arbiter in question persisted to send summons, the
latest dated May 4, herewith attached, regarding the Magnayi case.
"The Supreme Court has long settled the matter of diplomatic immunities. In
WHO vs. Aquino, SCRA 48, it ruled that courts should respect diplomatic
immunities of foreign officials recognized by the Philippine government.
Such decision by the Supreme Court forms part of the law of the land.
"Perhaps you should point out to Labor Arbiter Nieves V. de Castro that
ignorance of the law is a ground for dismissal.
"Very truly yours,
(Sgd.)
JOSE B. ALEJANDRINO
Chairman, PCC-ADB"[15]
Private respondent argues that, by entering into service contracts with
different private companies, ADB has descended to the level of an ordinary
party to a commercial transaction giving rise to a waiver of its immunity from
suit. In the case of Holy See vs. Hon. Rosario, Jr.,[16] the Court has held:
There are two conflicting concepts of sovereign immunity, each widely held
and firmly established. According to the classical or absolute theory, a
sovereign cannot, without its consent, be made a respondent in the Courts of
another sovereign. According to the newer or restrictive theory, the immunity
of the sovereign is recognized only with regard to public acts or acts jure
imperii of a state, but not with regard to private act or acts jure gestionis.
x x x
xxx
xxx
Certainly, the mere entering into a contract by a foreign state with a private
party cannot be the ultimate test. Such an act can only be the start of the
inquiry. The logical question is whether the foreign state is engaged in the
activity in the regular course of business. If the foreign state is not engaged
regularly in a business or trade, the particular act or transaction must then be
tested by its nature. If the act is in pursuit of a sovereign activity, or an
incident thereof, then it is an act jure imperii, especially when it is not
undertaken for gain or profit.[17]
seriously impair the conduct of the country's foreign relations. The DFA must
be allowed to plead its case whenever necessary or advisable to enable it to
help keep the credibility of the Philippine government before the international
community. When international agreements are concluded, the parties
thereto are deemed to have likewise accepted the responsibility of seeing to
it that their agreements are duly regarded. In our country, this task falls
principally on the DFA as being the highest executive department with the
competence and authority to so act in this aspect of the international arena.
[18] In Holy See vs. Hon. Rosario, Jr.,[19] this Court has explained the matter
in good detail; viz:
"In Public International Law, when a state or international agency wishes to
plead sovereign or diplomatic immunity in a foreign court, it requests the
Foreign Office of the state where it is sued to convey to the court that said
defendant is entitled to immunity.
"In the United States, the procedure followed is the process of 'suggestion,'
where the foreign state or the international organization sued in an American
court requests the Secretary of State to make a determination as to whether
it is entitled to immunity. If the Secretary of State finds that the defendant is
immune from suit, he, in turn, asks the Attorney General to submit to the
court a 'suggestion' that the defendant is entitled to immunity. In England, a
similar procedure is followed, only the Foreign Office issues a certification to
that effect instead of submitting a 'suggestion' (O'Connell, I International Law
130 [1965]; Note: Immunity from Suit of Foreign Sovereign Instrumentalities
and Obligations, 50 Yale Law Journal 1088 [1941]).
With regard to the issue of whether or not the DFA has the legal standing to
file the present petition, and whether or not petitioner has regarded the basic
rule that certiorari can be availed of only when there is no appeal nor plain,
speedy and adequate remedy in the ordinary course of law, we hold both in
the affirmative.
"In the Philippines, the practice is for the foreign government or the
international organization to first secure an executive endorsement of its
claim of sovereign or diplomatic immunity. But how the Philippine Foreign
Office conveys its endorsement to the courts varies. In International Catholic
Migration Commission vs. Calleja, 190 SCRA 130 (1990), the Secretary of
Foreign Affairs just sent a letter directly to the Secretary of Labor and
Employment, informing the latter that the respondent-employer could not be
sued because it enjoyed diplomatic immunity. In World Health Organization
vs. Aquino, 48 SCRA 242 (1972), the Secretary of Foreign Affairs sent the
trial court a telegram to that effect. In Baer vs. Tizon, 57 SCRA 1 (1974), the
U.S. Embassy asked the Secretary of Foreign Affairs to request the Solicitor
General to make, in behalf of the Commander of the United States Naval
Base at Olongapo City, Zambales, a 'suggestion' to respondent Judge. The
Solicitor General embodied the 'suggestion' in a manifestation and
memorandum as amicus curiae.
The DFA's function includes, among its other mandates, the determination of
persons and institutions covered by diplomatic immunities, a determination
which, when challenged, entitles it to seek relief from the court so as not to
"In the case at bench, the Department of Foreign Affairs, through the Office
of Legal Affairs moved with this Court to be allowed to intervene on the side
of petitioner. The Court allowed the said Department to file its memorandum
after the submission of the case by the parties for decision without extension,
even in the absence of stenographic notes, the following cases involving all
workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those
cases that workers may file involving wages, rates of pay,
hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of
damages arising from the employer-employee relations;
5. Cases arising from any violation of Article 264 of this
Code, including questions involving the legality of strikes and
lockouts; and
6. Except claims for Employees Compensation, Social
Security, Medicare and maternity benefits, all other claims
arising from employer-employee relations, including those of
persons in domestic or household service, involving an
amount exceeding five thousand pesos (P5,000.00)
regardless of whether accompanied with a claim for
reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over
all cases decided by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of
collective bargaining agreements and those arising from the
interpretation or enforcement of company personnel policies shall be
disposed of by the Labor Arbiter by referring the same to the
grievance machinery and voluntary arbitration as may be provided in
said agreements. (emphasis and underscoring supplied)
xxxx
Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators.
- The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have
original and exclusive jurisdiction to hear and decide all unresolved
grievances arising from the interpretation or implementation of the
QUIASON, J.:
This is a petition for certiorari to reverse the Decision dated August 16, 1991
of the Voluntary Arbitrator, respondent Israel D. Damasco, declaring as valid
the separation from employment of petitioner.
II
According to petitioner's version, Baylas was his girlfriend, whom he visited
at the ladies' dormitory in the afternoon of November 27, 1990. At the
dormitory, petitioner saw Rosemarie Basa who told him that Baylas was not
around. To prove that Basa was lying, he peeped behind the divider and saw
Baylas hiding there. When Baylas ran towards her room, petitioner followed
her. While running, Baylas lost her balance and fell down. However,
petitioner got hold of her to prevent her from hitting the floor and to help her
to her feet. He denied having kissed and embraced her. He admitted that
Subong arrived and pulled him away from Baylas. He also admitted that he
voluntarily surrendered to the security guards.
III
Petitioner contends that the grievance procedure provided for in the
Collective Bargaining Agreement was not followed; hence, the Voluntary
Arbitrator exceeded his authority when he took cognizance of the labor case.
Section 2, Article X of the Collective Bargaining Agreement specifies the
instances when the grievance machinery may be availed of, thus:
Any protest or misunderstanding concerning any ruling,
practice or working conditions in the Company, or any
dispute arising as to the meaning, application or claim of
violation of any provision of this Agreement or any complaint
that any employee may have against the COMPANY shall
constitute a grievance ( Rollo, p. 27).
The instant case is not a grievance that must be submitted to the grievance
machinery. What are subject of the grievance procedure for adjustment and
resolution are grievances arising from the interpretation or implementation of
the collective bargaining agreement (Labor Code of the Philippines, as
amended by R.A. No. 6715, Art. 260).
The acts of petitioner involved a violation of the Code of Employee Discipline,
particularly the provision penalizing the immoral conduct of employees.
Consequently, there was no justification for petitioner to invoke the grievance
machinery provisions of the Collective Bargaining Agreement (Auxilio, Jr. v.
National Labor Relations Commission, 188 SCRA 263 [1990]).
The case of petitioner was submitted to voluntary arbitration by agreement of
the president of the labor union to which petitioner belongs, and his
employer, through its personnel officer. Petitioner himself voluntarily
submitted to the jurisdiction of the Voluntary Arbitrator when he, through his
counsel, filed his position paper with the Voluntary Arbitrator and even
submitted additional documentary evidence. In addition thereto, during the
initial conference on March 27, 1991, the parties manifested that they were
not questioning the authority of the Voluntary Arbitrator.
It is the policy of the State to promote voluntary arbitration as a mode of
settling labor disputes (Manguiat, Mechanisms of Voluntary Arbitration in
Labor Disputes 2-6 [1978]).
Petitioner claims that he was denied due process of law because no hearing
was held and he was not given an opportunity to cross-examine the
witnesses.
We held in Stayfast Philippines Corp. v. National Labor Relation Commission,
218 SCRA 596 (1993) that:
The essence of due process is simply an opportunity to be
heard, or as applied to administrative proceedings, an
opportunity to explain one's side or an opportunity to seek a
reconsideration of the action or ruling complained of.
A formal or trial-type hearing is not at all times and in all
instances essential. The requirements are satisfied where
the parties are fair and reasonable opportunity to explain
their side of the controversy at hand. What is frowned upon
is the absolute lack of notice and hearing. . . .
(at p. 601).
Concerning the allegation that petitioner was not allowed to cross-examine
the witnesses, the record shows that the parties had agreed not to crossexamine their witnesses anymore.
Petitioner alleges that the quarrel between Baylas and him was a purely
private affair. We do not agree with this contention. It will be noted that not
only did the incident happen within the company premises, i.e. the ladies'
dormitory which was located inside the plant site, but both of them are
employees of private respondent. Management would then be at the mercy
of its employees if it cannot enforce discipline within company premises
solely because the quarrel is purely personal matter. The harassment of an
employee by a co-employee within the company premises even after office
hours is a work-related matter considering that the peace of the company is
thereby affected. The Code of Employee Discipline is very clear that immoral
conduct "within the company premises regardless of whether or not [it is]
committed during working time" is punishable.
The pretext of petitioner that he was merely helping Baylas is belied by the
eyewitnesses. Petitioner admitted that it took Subong to pull him away from
Baylas. His alleged act of chivalry is nothing more than a chance to gratify
his amorous feelings.
should not be dismissed for having been absent without official leave.
In her letter,7 Axalan claimed that she held online classes while attending the
seminar. She explained that she was under the impression that faculty
members would not be marked absent even if they were not physically
present in the classroom as long as they conducted online classes.
DECISION
CARPIO, J.:
The Case
1
Convinced that she could not be deemed absent since she held online
classes, Axalan opted not to write the letter of admission and contrition the
university president requested.9 The Dean wrote Axalan that the university
president had created an ad hoc grievance committee to investigate the
AWOL charge.10
In her letter,13 Axalan explained that before going to Baguio City for the
seminar, she sought the approval of Vice-President for Academics Alicia
Sayson. In a letter,14 VP Sayson denied having approved Axalans application
for official leave. The VP stated in her letter that it was the university
president, Maria Assumpta David, who must approve the application.
After conducting hearings and receiving evidence, the ad hoc grievance
committee found Axalan to have incurred AWOL on both instances and
recommended that Axalan be suspended without pay for six months on each
AWOL charge.15 The university president approved the committees
recommendation.
The university president then wrote Axalan informing her that she incurred
absences without official leave when she attended the seminars on website
development in Quezon City and on advanced paralegal training in Baguio
City on 18-22 November 2002 and on 28 January-3 February 2003,
respectively. In the same letter, the university president informed Axalan that
the total penalty of one-year suspension without pay for both AWOL charges
would be effective immediately.16
On 1 December 2003, Axalan filed a complaint17 against the university for
The university moved to dismiss the complaint on the ground that the Labor
Arbiter had no jurisdiction over the subject matter of the complaint. The
university maintained that jurisdiction lay in the voluntary arbitrator.18
In denying the universitys motion to dismiss, the Labor Arbiter held that there
being no existing collective bargaining agreement between the parties, no
grievance machinery was constituted, which barred resort to voluntary
arbitration.19
Meanwhile, upon the expiration of the one-year suspension, Axalan promptly
resumed teaching at the university on 1 October 2004.1wphi1
The Ruling of the Labor Arbiter
On 11 October 2004, the Labor Arbiter rendered a Decision holding that the
suspension of Axalan amounted to constructive dismissal entitling her to
reinstatement and payment of backwages, salary differentials, damages, and
attorneys fees, thus:
WHEREFORE, premises laid, judgment is hereby rendered declaring that the
suspension of complainant amounted to constructive dismissal, and as such,
she is entitled to reinstatement and payment of her full backwages reckoned
from the time it was withheld from her up to the time of reinstatement.
Accordingly, Respondent University of the Immaculate Conception acting
through its President, Respondent Mo. Maria Assumpta David, RVM, is
directed to reinstate the complainant to her former position without loss of
seniority rights and to pay her the sum of Five Hundred Forty Three
Thousand Four Hundred Fifty Two Pesos (P543,452.00) representing her
backwages, salary differentials (diminution) and damages plus ten percent
(10%) thereof as attorneys fees or the sum of P54,345.20.
The Respondent UIC and its President are hereby directed to inform this
Office of the mode of compliance it will avail itself by reason of the Order of
reinstatement.
SO ORDERED.20
The university appealed the Labor Arbiters Decision to the National Labor
Relations Commission (NLRC). It challenged the jurisdiction of the Labor
Arbiter insisting that the voluntary arbitrator had jurisdiction over the labor
dispute. The university pointed out that when the Labor Arbiter rendered his
Decision on 11 October 2004, Axalan had returned to work on 1 October
SO ORDERED.24
Dissatisfied, the university filed in this Court the instant petition for review on
certiorari.
income. Axalan maintains that the award of damages was just proper
considering that her suspension was without basis and amounted to unfair
labor practice.
The Issues
The issues for resolution are (1) whether the voluntary arbitrator had
jurisdiction over the labor dispute; (2) whether Axalan was constructively
dismissed; and (3) whether the Labor Arbiters computation of backwages,
damages, and attorneys fees was correct.
The Courts Ruling
The petition is impressed with merit.
The university contends that based on the transcript of stenographic notes
from the ad hoc grievance committee hearing held on 20 February 2003, the
parties agreed that the voluntary arbitrator would have jurisdiction over the
labor dispute. The university maintains that Axalans suspension does not
constitute constructive dismissal and that the Labor Arbiters decision treating
it as such is an attempt to make it appear that the voluntary arbitrator has no
jurisdiction. The university points out that for constructive dismissal to exist,
there must be severance of employment by the employee because of
unbearable act of discrimination, insensibility, or disdain on the part of the
employer leaving the employee with no choice but to forego continued
employment. The university claims that on the contrary, Axalan eagerly
reported for work as soon as the one-year suspension was over. The
university further argues that assuming Axalan is entitled to backwages, it
should have been based on Axalans average gross monthly income at the
time she was suspended in SY2003-2004, which was P14,145.00, not on her
average gross monthly income in SY2002-2003, which was P18,502.00.
Private respondent Axalan counters that the university raises the same
factual issues already decided unanimously by the Labor Arbiter, the NLRC,
and the Court of Appeals. On the issue of jurisdiction, Axalan stresses that
the present labor case, being a complaint for constructive dismissal and
unfair labor practice, is within the jurisdiction of the Labor Arbiter. On the
finding of constructive dismissal, Axalan points out that the Labor Arbiters
factual finding of constructive dismissal, when affirmed by the NLRC and the
Court of Appeals, binds this Court. Axalan claims that both AWOL charges
against her were without basis and were only a form of harassment
amounting to unfair labor practice. As to the computation of the award of
backwages, Axalan points out that her average gross monthly income in
SY2002-2003 was reduced in SY2003-2004 precisely because she was not
given an overload of two extra assignments resulting in the diminution of her
Well-settled is the rule that the jurisdiction of this Court in a petition for review
on certiorari is limited to reviewing only errors of law, not of fact, unless the
factual findings being assailed are not supported by the evidence on record
or the impugned judgment is based on a misapprehension of facts. Patently
erroneous findings of the Labor Arbiter, even when affirmed by the NLRC and
the Court of Appeals, are not binding on this Court. 25
As to the first issue, Article 217 of the Labor Code states that unfair labor
practices and termination disputes fall within the original and exclusive
jurisdiction of the Labor Arbiter:
ART. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except
as otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide x x x the following
cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
x x x x (Emphasis supplied)
Article 262 of the same Code provides the exception:
ART. 262. Jurisdiction over other labor disputes. The Voluntary Arbitrator or
panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear
and decide all other labor disputes including unfair labor practices and
bargaining deadlocks. (Emphasis supplied)
In San Miguel Corp. v. NLRC,26 the Court ruled that for the exception to
apply, there must be agreement between the parties clearly conferring
jurisdiction to the voluntary arbitrator. Such agreement may be stipulated in a
collective bargaining agreement. However, in the absence of a collective
bargaining agreement, it is enough that there is evidence on record showing
the parties have agreed to resort to voluntary arbitration. 27
As can be gleaned from the transcript of stenographic notes of the
administrative hearing held on 20 February 2003, the parties in this case
clearly agreed to resort to voluntary arbitration. To quote the exact words of
the parties counsels:
Atty. Dante Sandiego: x x x So, are we to understand that the decision of the
President shall be without prejudice to the right of the employees to contest
the validity or legality of his dismissal or of the disciplinary action imposed
upon him by asking for voluntary arbitration under the Labor Code or when
applicable availing himself of the grievance machinery under the Labor Code
which ends in voluntary arbitration. That will be the steps that we will have to
follow.
Note that on the first AWOL incident, the university even offered to drop the
AWOL charge against Axalan if she would only write a letter of contrition. But
Axalan adamantly refused knowing fully well that the administrative case
would take its course leading to possible sanctions. She cannot now be
heard that the imposition of the penalty of six-month suspension without pay
for each AWOL charge is unreasonable. We are convinced that Axalan was
validly suspended for cause and in accord with procedural due process.
The Court recognizes the right of employers to discipline its employees for
serious violations of company rules after affording the latter due process and
if the evidence warrants. The university, after affording Axalan due process
and finding her guilty of incurring AWOL on two separate occasions, acted
well within the bounds of labor laws in imposing the penalty of six-month
suspension without pay for each incidence of AWOL.
The law protects both the welfare of employees and the prerogatives of
management.31 Courts will not interfere with prerogatives of management on
the discipline of employees, as long as they do not violate labor laws,
collective bargaining agreements if any, and general principles of fairness
and justice.32
WHEREFORE, we GRANT the petition. The 13 December 2007 Decision of the
Court of Appeals in CA-G.R. SP No. 00812 affirming the 15 August 2005 and the 24
October 2005 Resolutions of the National Labor Relations Commission in NLRC CA
No. M-008333-2005, which sustained the 11 October 2004 Decision of the Labor
Arbiter in RAB-11-12-01187-03, is SET ASIDE.No pronouncement as to costs.
SO ORDERED.
ANTONIO T. CARPIO
Associate Justice
G.R. No. 89894 January 3, 1997
M. RAMIREZ INDUSTRIES and/or MANNY RAMIREZ, petitioner,
vs.
THE HONORABLE SECRETARY OF LABOR AND EMPLOYMENT AND CAROLYN
ALFONSO, WILLIAM DE LA TORRE, RODULFO CANDIA, CLARISSA HERMOSA, GINA
CABIGAS, ELIZABETH, ENDRINA, ORLANDO SEGUERRA, RODEO SEGUERRA,
JOSELITO DE LA TORRE, MA. THERESA DE LA RIARTE, LUISA DE LA RIARTE, MARIO
MANCAO, REX DEIPARINE, PAULINO VILLAVER, ROGELIO PARAN, LIJCILA
CAEZARES, ROBERTA DELA TORRE, JUANITA DELA TORRE, SUSAN VILLAVER,
MENDOZA, J.:
This is a petition for certiorari to set aside the orders of the Secretary of
Labor and Employment, dated May 12, 1989 and August 22, 1989, affirming
the order of the Director of the Regional Office No. VII of the Department of
Labor in Cebu City, granting the claims for salary differentials and emergency
cost of living allowances (ECOLAs) of private respondents in the total
amount of P430,901.75.
The facts are as follows:
Petitioner M. Ramirez Industries is a single proprietorship in Tungkop,
Minglanilla, Cebu. It is engaged in the manufacture of handmade rattan
baskets for export abroad, principally to Japan, and has in its employ from
400 to 500 employees. 1
On April 1, 1986, Carolyn Alfonso and 260 other employees filed a complaint
with the Regional Office No. VII of the Department of Labor in Cebu City,
alleging non-payment of minimum wage, living allowances and noncompliance with other labor standard laws against M. Ramirez Industries
and/or Manny Ramirez, its proprietor. 2
Accordingly, an inspection was conducted in the company premises on the
same day by Labor Standard Officer Juanito Yallosa. 3 After verifying the
allegations of the complaint, the case was docketed as LSED Case No. 02886. Meantime it appears that private respondents stopped working on April 8,
1986. 4
On April 11, 1986, petitioner filed an ex parte motion to dismiss the case
alleging voluntary desistance by private respondents. Attached to the motion
was a letter, signed by 215 employees, affirming their decision to desist from
proceeding with their claim against petitioner. 5
The motion was set for conference on May 7, 1986. Both petitioner and
private respondents were notified, 6 but only private respondents appeared.
Private respondents opposed the motion on the ground that they were not
signatories to the letter of affirmation supporting the motion to dismiss. 7
The Regional Director denied petitioner's motion in an order dated May 22,
1986, after finding that 90 per cent of the signatures in the letter were not
those of the complainants, 8 while complainants, whose signatures appeared
in the letters, had been deceived into signing the letters.
On June 11, 1986, petitioner filed a motion to remand the case to the
National Labor Relations Commission, contending that the matter was
outside the jurisdiction of the Regional Director. 9 Without acting on the
motion, the Regional Director on July 18, 1986 ordered petitioner to pay
10
furnished a copy of the inspection report containing the findings and because
instead of denying its motion to dismiss for lack of jurisdiction and thereafter
giving it a hearing, the Regional Director simply issued his questioned order.
As already stated, after petitioner had filed a motion to dismiss the case
based on the alleged desistance of the complainants, the Regional Office
called the parties to a conference, but only private respondents came.
Petitioner did not appear. After its motion was denied, the case was again set
for conciliation conference on June 18, 1989, but again petitioner did not
come, insisting instead on the remand of the case to the NLRC.
If petitioner attended the hearing on its motion to dismiss (based on alleged
desistance of employees) it would have known who the complainants were
because it would have been furnished a copy of the complaint.
Nor can petitioner pretend that it did not know what the nature of private
respondents' claims was because petitioner in fact moved for the remand of
the case to the NLRC on the ground that it involved a claim "within the
original exclusive jurisdiction of the Labor Arbiter of said commission."
Petitioner could only have invoked the original and exclusive jurisdiction of
Labor Arbiters precisely because it knew the nature of the claims of private
respondent.
As this Court has time and again stated:
The essence of due process is that a party be afforded
reasonable opportunity to be heard and to submit any
evidence he may have in support of his defense. In
administrative proceedings such as the one at bench, due
process simply means the opportunity to explain one's side
or the opportunity to seek a reconsideration of the action or
ruling complained
of. 19
The Regional Director therefore rightly concluded in his order of July 29,
1986:
The records showed that the respondent [now petitioner]
was afforded ample time to defend and present evidences to
refute the complainants allegations, but failed to avail of
those opportunities. 20
The fact is that, as the Secretary of Labor and Employment stated in his
order of May 26, 1989:
opportunities.
The complainants, therefore, are entitled to the difference of
what has been provided by law less the amount actually
received by them.
....
Contrary to the claim of petitioner, the order of the Regional Director states
the ultimate facts, to wit: that private respondents were employed by
petitioner in 1986; that on April 1, 1986 private respondents, led by Carolyn
Alfonso, filed the case complaining of nonpayment of the minimum wage,
living allowance and noncompliance with labor standards laws; that petitioner
stopped business operations on April 8, 1986; that private respondents were
entitled to wage differentials; and that petitioner failed to refute the private
respondents' allegations despite opportunity given to petitioner.
These are the facts on which the order was based. The order of the
Secretary of Labor and Employment, which petitioner seems to consider as
adequate contains no more recital of the facts than the order of the Regional
Director in question. The only difference between the two is that the
Secretary's order, aside from stating the facts, also states the proceedings in
the case. Thus, the Secretary's order reads:
The factual background are as follows:
This case is for non-payment of minimum wage, living
allowance and non-compliance with other labor standard
laws which was filed on April 1, 1986 by Carolyn Alfonso and
260 others against respondent herein..
On the strength of Office Order No. 23 dated April 1, 1986,
Labor Standard and Welfare Officer, Mr. Juanito Yallosa,
conducted a complaint inspection at the respondent's
premises. Consequently, several conciliation hearings were
held until it was reset to April 18, 1986.
However, on April 14, 1986, respondent filed an Ex-Parte
Motion to Dismiss the case on the ground of complainants'
voluntary desistance from pursuing their case and attaching
therein their letter of affirmation to said desistance.
On May 7, 1986, both parties again were called for a
conference. Complainants appeared while respondent did
not. In said hearing complainants vehemently objected to
June 8, 2007
on forum shopping; (2) whether the NLRC correctly ruled on the merits of the
case instead of remanding the case to the Labor Arbiter; (3) whether
respondents were employees of petitioner; and (4) whether their dismissal
was illegal.
Respondents complaint in the inspection case before the DOLE Regional
Director alleged that they were under the employ of petitioner at the time of
the filing of said complaint. Pending the resolution thereof, they claimed to
have been dismissed; hence, the filing of the present illegal dismissal case
before the Labor Arbiter. The causes of action in these two complaints are
different, i.e., one for violation of labor standard laws, and the other, for illegal
dismissal, but the entitlement of respondents to the reliefs prayed for hinges
on the same issue of the existence of an employer-employee relationship.
While the decision on the said issue by one tribunal may operate as res
judicata on the other, dismissal of the present illegal dismissal case on the
ground of forum shopping, would work injustice to respondents because it is
the law itself which provides for two separate remedies for their distinct
causes of action.
Under Article 2179 of the Labor Code, termination cases fall under the
jurisdiction of Labor Arbiters. Whereas, Article 12810 of the same Code vests
the Secretary of Labor or his duly authorized representatives with the power
to inspect the employers records to determine and compel compliance with
labor standard laws. The exercise of the said power by the Secretary or his
duly authorized representatives is exclusive to cases where employeremployee relationship still exists. Thus, in cases where the complaint for
violation of labor standard laws preceded the termination of the employee
and the filing of the illegal dismissal case, it would not be in consonance with
justice to charge the complainants with engaging in forum shopping when the
remedy available to them at the time their causes of action arose was to file
separate cases before different fora. Besides, in the instant case, respondent
Danny Oberio disclosed in the verification the pendency of the case
regarding wage differential.11 In addition, said case was discussed in detail in
the position paper,12 evincing the absence of any intention on the part of
respondents to mislead the Labor Arbiter.
Similarly, in Benguet Management Corporation v. Court of Appeals,13
petitioner filed separate actions to enjoin the foreclosure of real estate
mortgages before the Regional Trial Courts of San Pablo City and Zambales
which has jurisdiction over the place where the properties were located. In
both cases, petitioner contended, among others, that the loan secured by
said mortgages imposed unauthorized penalties, interest and charges. The
Court did not find the mortgagors guilty of forum shopping considering that
since injunction is enforceable only within the territorial limits of the trial court,
the mortgagor is left without remedy as to the properties located outside the
jurisdiction of the issuing court, unless an application for injunction is made
with another court which has jurisdiction over the latter properties.
By parity of reasoning, it would be unfair to hold respondents in the instant
case guilty of forum shopping because the recourse available to them after
their termination, but pending resolution of the inspection case before the
DOLE, was to file a case for illegal dismissal before the Labor Arbiter who
has jurisdiction over termination disputes.
More importantly, substantial justice dictates that this case be resolved on
the merits considering that the NLRC and the Court of Appeals correctly
found that there existed an employer-employee relationship between
petitioner and respondents and that the latters dismissal was illegal, as will
be discussed hereunder.
In the same vein, the NLRC correctly ruled on the merits instead of
remanding the case to the Labor Arbiter. Respondents specifically raised the
issue of the existence of employer-employee relationship but petitioner
refused to submit evidence to disprove such relationship on the erroneous
contention that to do so would constitute a waiver of the right to question the
jurisdiction of the NLRC to resolve the case on the merits. 14 This is rather odd
because it was the stand of petitioner in the inspection case before the DOLE
that the case should be certified to the NLRC for the resolution of the issue of
employer-employee relationship. But when the same issue was proffered
before the NLRC, it refused to present evidence and instead sought the
dismissal of the case invoking the pendency of the inspection case before
the DOLE. Petitioner refused to meet head on the substantial aspect of this
controversy and resorted to technicalities to delay its disposition. It must be
stressed that labor tribunals are not bound by technical rules and the Court
would sustain the expedient disposition of cases so long as the parties are
not denied due process.15 The rule is that, due process is not violated where
a person is given the opportunity to be heard, but chooses not to give his or
her side of the case.16 Significantly, petitioner never claimed that it was
denied due process. Indeed, no such denial exists because it had all the
opportunities to present evidence before the labor tribunals below, the Court
of Appeals, and even before this Court, but chose not to do so for reasons
which will not warrant the sacrifice of substantial justice over technicalities.
On the third issue, respondents employment with petitioner passed the "fourfold test" on employer-employee relations, namely: (1) the selection and
engagement of the employee, or the power to hire; (2) the payment of
wages; (3) the power to dismiss; and (4) the power to control the employee.
Petitioner failed to controvert with substantial evidence the allegation of
respondents that they were hired by the former on various dates from 1974
to 1997. If petitioner did not hire respondents and if it was the director alone
who chose the talents, petitioner could have easily shown, being in
possession of the records, a contract to such effect. However, petitioner
merely relied on its contention that respondents were piece rate contractors
who were paid by results.17 Note that under Policy Instruction No. 40,
petitioner is obliged to execute the necessary contract specifying the nature
of the work to be performed, rates of pay, and the programs in which they will
work. Moreover, project or contractual employees are required to be apprised
of the project they will undertake under a written contract. This was not
complied with by the petitioner, justifying the reasonable conclusion that no
such contracts exist and that respondents were in fact regular employees.
In ABS-CBN v. Marquez,18 the Court held that the failure of the employer to
produce the contract mandated by Policy Instruction No. 40 is indicative that
the so called talents or project workers are in reality, regular employees.
Thus
Policy Instruction No. 40 pertinently provides:
Program employees are those whose skills, talents or services are engaged
by the station for a particular or specific program or undertaking and who are
not required to observe normal working hours such that on some days they
work for less than eight (8) hours and on other days beyond the normal work
hours observed by station employees and are allowed to enter into
employment contracts with other persons, stations, advertising agencies or
sponsoring companies. The engagement of program employees, including
those hired by advertising or sponsoring companies, shall be under a
written contract specifying, among other things, the nature of the work to
be performed, rates of pay, and the programs in which they will work.
The contract shall be duly registered by the station with the Broadcast
Media Council within three days from its consummation. (Emphasis
supplied)
Ironically, however, petitioner failed to adduce an iota proof that the
requirements for program employment were even complied with by it. It is
basic that project or contractual employees are appraised of the project they
will work under a written contract, specifying, inter alia, the nature of work to
be performed and the rates of pay and the program in which they will work.
Sadly, however, no such written contract was ever presented by the
petitioner. Petitioner is in the best of position to present these documents.
And because none was presented, we have every reason to surmise that no
such written contract was ever accomplished by the parties, thereby belying
petitioners posture.
Worse, there was no showing of compliance with the requirement that after
every engagement or production of a particular television series, the required
reports were filed with the proper government agency, as provided no less
under the very Policy Instruction invoked by the petitioner, nor under the
Omnibus Implementing Rules of the Labor Code for project employees. This
alone bolsters respondents contention that they were indeed petitioners
regular employees since their employment was not only for a particular
program.
Moreover, the engagement of respondents for a period ranging from 2 to 25
years and the fact that their drama programs were aired not only in Bacolod
City but also in the sister stations of DYWB in the Visayas and Mindanao
areas, undoubtedly show that their work is necessary and indispensable to
the usual business or trade of petitioner. The test to determine whether
employment is regular or not is the reasonable connection between the
particular activity performed by the employee in relation to the usual business
or trade of the employer. Also, 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. Thus, even assuming that respondents were
initially hired as project/contractual employees who were paid per drama or
per project/contract, the engagement of their services for 2 to 25 years justify
their classification as regular employees, their services being deemed
indispensable to the business of petitioner.19
As to the payment of wages, it was petitioner who paid the same as shown
by the payroll bearing the name of petitioner company in the heading with the
respective salaries of respondents opposite their names. Anent the power of
control, dismissal, and imposition of disciplinary measures, which are
indicative of an employer-employee relationship,20 the same were duly
proven by the following: (1) memorandum21 duly noted by Wilfredo Alejaga,
petitioners station manager, calling the attention of the "Drama Department"
to the late submission of scripts by writers and the tardiness and absences of
directors and talents, as well as the imposable fines of P100 to P200 for
future infractions; (2) the memorandum22 of the station manager directing
respondent Oberio to explain why no disciplinary action should be taken
against him for punching the time card of a certain Mrs. Fe Oberio who was
not physically present in their office; and (3) the station managers
memorandum23 suspending respondent Oberio for six days for the said
infraction which constituted violation of petitioners network policy. All these,
taken together, unmistakably show the existence of an employer-employee
relationship. Not only did petitioner possess the power of control over their
work but also the power to discipline them through the imposition of fines and
suspension for violation of company rules and policies.
Finally, we find that respondents were illegally dismissed. In labor cases, the
employer has the burden of proving that the dismissal was for a just cause;
failure to show this would necessarily mean that the dismissal was unjustified
and, therefore, illegal. To allow an employer to dismiss an employee based
on mere allegations and generalities would place the employee at the mercy
of his employer; and the right to security of tenure, which this Court is bound
to protect, would be unduly emasculated.24 In this case, petitioner merely
contended that it was respondents who ceased to report to work, and never
presented any substantial evidence to support said allegation. Petitioner
therefore failed to discharge its burden, hence, respondents were correctly
declared to have been illegally dismissed.
Furthermore, if doubts exist between the evidence presented by the
employer and the employee, the scales of justice must be tilted in favor of the
latter the employer must affirmatively show rationally adequate evidence
that the dismissal was for a justifiable cause. It is a time-honored rule that in
controversies between a laborer and his master, doubts reasonably arising
from the evidence should be resolved in the formers favor. The policy is to
extend the doctrine to a greater number of employees who can avail of the
benefits under the law, which is in consonance with the avowed policy of the
State to give maximum aid and protection of labor.25
When a person is illegally dismissed, he is entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages. In the
event, however, that reinstatement is no longer feasible, or if the employee
decides not to be reinstated, the employer shall pay him separation pay in
lieu of reinstatement. Such a rule is likewise observed in the case of a
strained employer-employee relationship or when the work or position
formerly held by the dismissed employee no longer exists. In sum, an illegally
dismissed employee is entitled to: (1) either reinstatement if viable or
separation pay if reinstatement is no longer viable, and (2) backwages. In the
instant controversy, reinstatement is no longer viable considering the strained
relations between petitioner and respondents. As admitted by the latter, the
complaint filed before the DOLE strained their relations with petitioner who
eventually dismissed them from service. Payment of separation pay instead
of reinstatement would thus better promote the interest of both parties.
Respondents separation pay should be computed based on their respective
one (1) month pay, or one-half (1/2) month pay for every year of service,
whichever is higher, reckoned from their first day of employment up to finality
of this decision. Full backwages, on the other hand, should be computed
from the date of their dismissal until the finality of this decision. 26
WHEREFORE, the petition is DENIED. The July 30, 2004 Decision of the
Court of Appeals in CA-G.R. SP No. 77098, finding respondents to be regular
employees of petitioner and holding them to be illegally dismissed and
directing petitioner to pay full backwages, is AFFIRMED with the
MODIFICATION that petitioner is ordered to pay respondents their
SO ORDERED.
1. Illegal deduction of wages
CONSUELO YNARES-SANTIAGO
Associate Justice
DECISION
2. Underpayment of COLA
CHICO-NAZARIO, J.:
3. Nonpayment of overtime pay
The Petition brought before this Court is a special civil action under Rule 65
of the Revised Rules of Court, with petitioners praying for the issuance of a
writ of certiorari and a temporary restraining order (TRO) enjoining from
execution the Order1 dated 24 January 1996 issued by public respondent
Alex E. Maraan, then Department of Labor and Employment (DOLE)
Regional Director for the Cordillera Administrative Region (CAR), in CAR009507-CI-25.
Petitioner Rizal Security and Protective Service, Inc. (Rizal Security) is a
corporation organized under Philippine laws and is doing business as a
security agency. Petitioner Rufino S. Antonio, Jr. (Antonio) is the president of
the aforesaid corporation. On the other hand, private respondents were
formerly employed by petitioner Rizal Security as security guards detailed at
Rainbow End Village in Baguio City.
The instant case arose on 19 May 1995, when private respondents Rico
Gomez (Gomez) and Edwin O. Tupas (Tupas), who were then still employed
as security guards of petitioner Rizal Security, filed a Complaint with the
DOLE-CAR Regional Office, docketed as CAR00-9507-CI-25, to seek
TOTAL
1. Rico E. Gomez
P 99,088.125
2. Rolando Tupas
P110,377.170
5. Roberto P. Ruiz
P110,604.92
6. Ronnie Llabres
P 9,608.25
7. Dennis Llabres
P 6,626.60
8. Sandy Figer
P 3,247.05
P560,989.705
3. Detecio S. Vicente
P107,904.92
4. Edwin Tupas
P113,532.67
WHEREAS, the Order has now become final and executory but
respondent has not yet effected the necessary payments of the
Monetary Awards due the employee/s concerned.
NOW THEREFORE, pursuant to the provisions of the Labor Code as
amended as well as the Rules in the disposition of Labor Standard
Cases in the Regional Office, you are hereby directed to cause
Messers. Rufino Antonio/ Dominador Valmonte and/or Rizal Security
and Protective Service with business address at 37 Rainbow End
Village, Tacay Road, Pinsao Proper, Baguio City or wherever
they/he/it may be found to pay the amount of FIVE HUNDRED
SIXTY THOUSAND NINE HUNDRED EIGHTY-NINE (P560,989.70)
PESOS and 70/100 plus legal fee for execution in the amount of
FIVE THOUSAND ONE HUNDRED (P5,100.00) PESOS from the
goods, chattels or other properties of the respondent/s and to tender
to the concerned employees through the Department of Labor and
Employment their claims as aforementioned.7
Petitioners are now asking for the issuance of a writ of certiorari and a
Temporary Restraining Order to enjoin public respondents from executing the
Order of 24 January 1996 and from enforcing the Writ of Execution.
Petitioners pray that this Court order that the case be endorsed, on the
ground of lack of jurisdiction, from the DOLE-CAR Regional Office to the
National Labor Relations Commission (NLRC) and that judgment be
rendered annulling and setting aside the 24 January 1996 Order and
quashing the 12 March 1996 Writ of Execution.
Petitioners presented the following assignment of errors:
I. THE HONORABLE DOLE REGIONAL DIRECTOR GRAVELY
ERRED IN ISSUING THE ORDER DATED JANUARY 24, 1996
WITHOUT OR IN EXCESS OF HIS JURISDICTION AND IN NOT
ENDORSING THE CASE TO THE APPROPRIATE BRANCH OF
THE NATIONAL LABOR RELATIONS COMMISSION FOR
HEARING.
II. THE HONORABLE DOLE REGIONAL DIRECTOR GRAVELY
ERRED IN ISSUING THE WRIT OF EXECUTION AGAINST
PETITIONERS PREMATURELY AND CONTRARY TO LAW OR
WITHOUT DUE PROCESS OF LAW.
III. GRANTING FOR THE SAKE OF ARGUMENT THAT THE
ORDER DATED JANUARY 24, 1996 IS VALID, THE HONORABLE
DOLE REGIONAL DIRECTOR GRAVELY ERRED IN DECLARING
PETITIONER RUFINO ANTONIO AS LIABLE JOINTLY AND
However, the foregoing is obviously not the notice contemplated under the
Labor Code. The inspection report is undeniably a distinct and separate
document from the Order dated 24 January 1996. More than merely restating the findings on the inspection report, the Order of 24 January 1996
ruled on the Manifestation and Motion of the petitioners assailing the
jurisdiction of the DOLE-CAR Regional Office by refusing to dismiss and
retaining jurisdiction over CAR00-9507-CI-25.
Procedural rules are tools designed to facilitate the adjudication of cases and
not defeat justice.23 While the Court, in some instances, allows a relaxation in
the application of the rules, it was never intended to forge a bastion for a
violation of due process. And although it is true that litigation is not a game of
technicalities, it is equally true that every case must be prosecuted in
accordance with the prescribed procedure to insure an orderly and speedy
administration of justice.
NAME
1. ALEXANDER POCDING
2. FIDEL BALANGAY
3. BUAGEN CLYDE
4. DENNIS EPI
TOTAL
xxxx
SO ORDERED.7
EBVSAI filed a motion for reconsideration8 and alleged that the Regional
Director does not have jurisdiction over the subject matter of the case
because the money claim of each private respondent exceeded P5,000.
EBVSAI pointed out that the Regional Director should have endorsed the
case to the Labor Arbiter.
In a supplemental motion for reconsideration,9 EBVSAI questioned the
Regional Director's basis for the computation of the deficiencies due to each
private respondent.
In an Order10 dated 16 January 1997, the Regional Director denied EBVSAI's
motion for reconsideration and supplemental motion for reconsideration. The
Regional Director stated that, pursuant to Republic Act No. 7730 (RA 7730), 11
the limitations under Articles 12912 and 217(6)13 of the Labor Code no longer
apply to the Secretary of Labor's visitorial and enforcement powers under
Article 128(b).14 The Secretary of Labor or his duly authorized
representatives are now empowered to hear and decide, in a summary
proceeding, any matter involving the recovery of any amount of wages and
other monetary claims arising out of employer-employee relations at the time
of the inspection.
EBVSAI appealed to the Secretary of Labor.
The Ruling of the Secretary of Labor
In an Order15 dated 4 October 1999, the Secretary of Labor affirmed with
modification the Regional Director's 19 August 1996 Order. The Secretary of
Labor ordered that the P1,000 received by private respondents Romeo Alejo,
Atong Cenon, Jr., Geofrey Mino, Dennis Epi, and Ricky Doria be deducted
from their respective claims. The Secretary of Labor ruled that, pursuant to
RA 7730, the Court's decision in the Servando16 case is no longer controlling
insofar as the restrictive effect of Article 129 on the visitorial and enforcement
power of the Secretary of Labor is concerned.
The Secretary of Labor also stated that there was no denial of due process
because EBVSAI was accorded several opportunities to present its side but
EBVSAI failed to present any evidence to controvert the findings of the
Regional Director. Moreover, the Secretary of Labor doubted the veracity and
authenticity of EBVSAI's documentary evidence. The Secretary of Labor
noted that these documents were not presented at the initial stage of the
hearing and that the payroll documents did not indicate the periods covered
by EBVSAI's alleged payments.
EVBSAI filed a motion for reconsideration which was denied by the Secretary
of Labor in his 3 January 2000 Order.17
EBVSAI filed a petition for certiorari before the Court of Appeals.
The Ruling of the Court of Appeals
In its 29 May 2001 Decision, the Court of Appeals dismissed the petition and
affirmed the Secretary of Labor's decision. The Court of Appeals adopted the
Secretary of Labor's ruling that RA 7730 repealed the jurisdictional limitation
imposed by Article 129 on Article 128 of the Labor Code. The Court of
Appeals also agreed with the Secretary of Labor's finding that EBVSAI was
accorded due process.
The Court of Appeals also denied EBVSAI's motion for reconsideration in its
26 February 2002 Resolution.
Hence, this petition.
The Issues
This case raises the following issues:
1. Whether the Secretary of Labor or his duly authorized
representatives acquired jurisdiction over EBVSAI; and
2. Whether the Secretary of Labor or his duly authorized
representatives have jurisdiction over the money claims of private
respondents which exceed P5,000.
EBVSAI claims that the Regional Director did not acquire jurisdiction over
EBVSAI because he failed to comply with Section 11, Rule 14 of the 1997
Rules of Civil Procedure.18 EBVSAI points out that the notice of hearing was
served at the Ambuklao Plant, not at EBVSAI's main office in Makati, and that
it was addressed to Leonardo Castro, Jr., EBVSAI's Vice-President.
The Rules on the Disposition of Labor Standards Cases in the Regional
Offices19 (rules) specifically state that notices and copies of orders shall be
served on the parties or their duly authorized representatives at their last
known address or, if they are represented by counsel, through the latter.20
The rules shall be liberally construed21 and only in the absence of any
applicable provision will the Rules of Court apply in a suppletory character.22
In this case, EBVSAI does not deny having received the notices of hearing.
In fact, on 29 March and 13 June 1996, Danilo Burgos and Edwina Manao,
detachment commander and bookkeeper of EBVSAI, respectively, appeared
before the Regional Director. They claimed that the 22 March 1996 notice of
hearing was received late and manifested that the notices should be sent to
the Manila office. Thereafter, the notices of hearing were sent to the Manila
office. They were also informed of EBVSAI's violations and were asked to
present the employment records of the private respondents for verification.
They were, moreover, asked to submit, within 10 days, proof of compliance
or their position paper. The Regional Director validly acquired jurisdiction
over EBVSAI. EBVSAI can no longer question the jurisdiction of the Regional
Director after receiving the notices of hearing and after appearing before the
Regional Director.
On the Regional Director's Jurisdiction over the Money Claims
EBVSAI maintains that under Articles 129 and 217(6) of the Labor Code, the
Labor Arbiter, not the Regional Director, has exclusive and original
jurisdiction over the case because the individual monetary claim of private
respondents exceeds P5,000. EBVSAI also argues that the case falls under
the exception clause in Article 128(b) of the Labor Code. EBVSAI asserts
that the Regional Director should have certified the case to the Arbitration
Branch of the National Labor Relations Commission (NLRC) for a full-blown
hearing on the merits.
In Allied Investigation Bureau, Inc. v. Sec. of Labor, we ruled that:
While it is true that under Articles 129 and 217 of the Labor Code,
the Labor Arbiter has jurisdiction to hear and decide cases where the
aggregate money claims of each employee exceeds P5,000.00, said
provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized
representatives.
Rather, said powers are defined and set forth in Article 128 of the
Labor Code (as amended by R.A. No. 7730) thus:
Art. 128 Visitorial and enforcement power. --- x x x
(b) Notwithstanding the provisions of Article[s] 129 and 217
of this Code to the contrary, and in cases where the
relationship of employer-employee still exists, the Secretary
of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance
orders to give effect to [the labor standards provisions of this
Code and other] labor legislation based on the findings of
labor employment and enforcement officers or industrial
safety engineers made in the course of inspection. The
Secretary or his duly authorized representatives shall issue
writs of execution to the appropriate authority for the
enforcement of their orders, except in cases where the
employer contests the findings of the labor employment and
enforcement officer and raises issues supported by
documentary proofs which were not considered in the course
of inspection.
xxxx
The aforequoted provision explicitly excludes from its coverage
Articles 129 and 217 of the Labor Code by the phrase
"(N)otwithstanding the provisions of Articles 129 and 217of this Code
to the contrary x x x" thereby retaining and further strengthening the
power of the Secretary of Labor or his duly authorized
representatives to issue compliance orders to give effect to the labor
standards provisions of said Code and other labor legislation based
on the findings of labor employment and enforcement officer or
industrial safety engineer made in the course of inspection. 23 (Italics
in the original)
This was further affirmed in our ruling in Cirineo Bowling Plaza, Inc. v.
Sensing,24 where we sustained the jurisdiction of the DOLE Regional Director
and held that "the visitorial and enforcement powers of the DOLE
Regional Director to order and enforce compliance with labor standard
laws can be exercised even where the individual claim exceeds P5,000."
However, if the labor standards case is covered by the exception clause in
Article 128(b) of the Labor Code, then the Regional Director will have to
endorse the case to the appropriate Arbitration Branch of the NLRC. In order
to divest the Regional Director or his representatives of jurisdiction, the
following elements must be present: (a) that the employer contests the
findings of the labor regulations officer and raises issues thereon; (b) that in
order to resolve such issues, there is a need to examine evidentiary matters;
and (c) that such matters are not verifiable in the normal course of
inspection.25 The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt of the
notice of inspection results.26
In this case, the Regional Director validly assumed jurisdiction over the
money claims of private respondents even if the claims exceeded P5,000
because such jurisdiction was exercised in accordance with Article 128(b) of
the Labor Code and the case does not fall under the exception clause.
The Court notes that EBVSAI did not contest the findings of the labor
regulations officer during the hearing or after receipt of the notice of
inspection results. It was only in its supplemental motion for reconsideration
before the Regional Director that EBVSAI questioned the findings of the labor
regulations officer and presented documentary evidence to controvert the
claims of private respondents. But even if this was the case, the Regional
Director and the Secretary of Labor still looked into and considered EBVSAI's
documentary evidence and found that such did not warrant the reversal of
the Regional Director's order. The Secretary of Labor also doubted the
veracity and authenticity of EBVSAI's documentary evidence. Moreover, the
pieces of evidence presented by EBVSAI were verifiable in the normal
course of inspection because all employment records of the employees
should be kept and maintained in or about the premises of the workplace,
which in this case is in Ambuklao Plant, the establishment where private
respondents were regularly assigned.27
WHEREFORE, we DENY the petition. We AFFIRM the 29 May 2001
Decision and the 26 February 2002 Resolution of the Court of Appeals in CAG.R. SP No. 57653.
SO ORDERED.
docketed as NCR00-9902-IS-011.5
After the inspection conducted at respondents premises, the labor inspector
noted that "the records were not made available at the time of the
inspection;" that respondent claimed that petitioners were contractual
employees and/or independent talent workers; and that petitioners were
required to punch their cards.6
In its position paper, respondent argued that the DOLE-NCR had no
jurisdiction over the complaint of the petitioners because of the absence of
an employer-employee relationship. It added that petitioners were free-lance
individuals, performing special services with skills and expertise inherently
exclusive to them like actors, actresses, directors, producers, and script
writers, such that they were treated as special types of workers. 7
Petitioners, on the other hand, averred that they were employees of
respondent, as the elements of an employer-employee relationship existed.
Meanwhile, on April 12, 1999, petitioners filed a complaint for illegal dismissal
against petitioner, with prayer for payment of overtime pay, premium pay for
holiday and rest day, holiday pay, service incentive leave pay, 13th month
pay and attorneys fees before the National Labor Relations Commission
(NLRC). The case was docketed as NLRC-NCR Case No. 00-04-04459-9. 8
On October 11, 1999, DOLE Regional Director Maximo Baguyot Lim issued
an Order9 directing respondent to pay petitioners the total amount of
P2,694,709.00. The dispositive portion of the Order reads as follows:
WHEREFORE, premises considered, this Office finds merit in the complaint.
Accordingly, Respondent Creative Creatures, Inc. and/or Mr. Edmond Ty, is
hereby ordered to pay thirty three (33) Complainants, within ten (10) days
from receipt hereof, the total amount of TWO MILLION SIX HUNDRED
NINETY FOUR THOUSAND SEVEN HUNDRED NINE PESOS
(P2,694,709.00) representing unpaid 13th month pay, vacation and sick
leave benefits, regular holiday pay, rest day and holiday premiums, overtime
pay, educational allowance, and rice allowance presented as follows:
xxxx
Failure to pay Complainants within the given period will constrain this Office
to issue a WRIT OF EXECUTION for the immediate enforcement of this
order.
SO ORDERED.
10
course of inspection.
xxxx
As it is now worded, and as consistently held in a number of cases, 17 the
visitorial and enforcement powers of the Secretary, exercised through his
representatives, encompass compliance with all labor standards laws and
other labor legislation, regardless of the amount of the claims filed by
workers.
It is well to note that the Regional Directors visitorial and enforcement
powers have undergone a series of amendments. Confusion was
engendered with the promulgation of the decision in Servandos Inc. v.
Secretary of Labor and Employment.18 In that case, this Court held that to
harmonize Articles 217 (a) (6),19 129,20 and 128 of the Labor Code, the
Secretary of Labor should be deemed as clothed with plenary visitorial
powers to order the inspection of all establishments where labor is employed,
and to look into all possible violations of labor laws and regulations; but the
power to hear and decide employees claims exceeding P5,000.00 for each
employee should be left to the Labor Arbiter as the exclusive repository of the
power to hear and decide such claims.
medicare, termination pay, and unionism.28 Thus, in addition to the abovementioned documents, other pieces of evidence are considered in
ascertaining the true nature of the parties relationship. This is especially true
in determining the element of "control." The most important index of an
employer-employee relationship is the so-called "control test," that is,
whether the employer controls or has reserved the right to control the
employee, not only as to the result of the work to be done, but also as to the
means and methods by which the same is to be accomplished. 29
In the case at bar, whether or not petitioners were independent
contractors/project employees/free lance workers is a question of fact that
necessitates the examination of evidentiary matters not verifiable in the
normal course of inspection. Indeed, the contracts of independent services,
as well as the check vouchers, were kept and maintained in or about the
premises of the workplace and were, therefore, verifiable in the course of
inspection. However, respondent likewise claimed that petitioners were not
precluded from working outside the service contracts they had entered into
with it (respondent); and that there were instances when petitioners
abandoned their service contracts with the respondent, because they had to
work on another project with a different company. Undoubtedly, the resolution
of these issues requires the examination of evidentiary matters not verifiable
in the normal course of inspection. Verily, the Regional Director and the
Secretary of Labor are divested of jurisdiction to decide the case.
We would like to emphasize that "to contest" means to raise questions as to
the amounts complained of or the absence of violation of labor standards
laws; or, as in the instant case, issues as to the complainants right to labor
standards benefits. To be sure, raising lack of jurisdiction alone is not the
"contest" contemplated by the exception clause.30 It is necessary that the
employer contest the findings of the labor regulations officer during the
hearing or after receipt of the notice of inspection results. 31 More importantly,
the key requirement for the Regional Director and the DOLE Secretary to be
divested of jurisdiction is that the evidentiary matters be not verifiable in the
course of inspection. Where the evidence presented was verifiable in the
normal course of inspection, even if presented belatedly by the employer, the
Regional Director, and later the DOLE Secretary, may still examine it; and
these officers are not divested of jurisdiction to decide the case. 32
In sum, respondent contested the findings of the labor inspector during and
after the inspection and raised issues the resolution of which necessitated
the examination of evidentiary matters not verifiable in the normal course of
inspection. Hence, the Regional Director was divested of jurisdiction and
should have endorsed the case to the appropriate Arbitration Branch of the
NLRC.33 Considering, however, that an illegal dismissal case had been filed
by petitioners wherein the existence or absence of an employer-employee
relationship was also raised, the CA correctly ruled that such endorsement
Date of
Hiring
Position
Joaquin
Buenavista
March 14,
1994
Operator
January 5,
1993
Welder
Henry
Fabroa
January
1993
Welder/Ope
rator
Ricardo
Cape
Bertuldo
Tulod
Welder/Assi
stant
Operator
November
13, 1994
Willy
Dondoyano
Welder
January
1993
Glen
Villariasa
Welder3
February
1993
Although they worked for Norkis Trading as skilled workers assigned in the
operation of industrial and welding machines owned and used by Norkis
Trading for its business, they were not treated as regular employees by
Norkis Trading. Instead, they were regarded by Norkis Trading as members
of PASAKA, a cooperative organized under the Cooperative Code of the
Philippines, and which was deemed an independent contractor that merely
deployed the respondents to render services for Norkis Trading. 4 The
respondents nonetheless believed that they were regular employees of
Norkis Trading, citing in their Position Paper5 the following circumstances that
allegedly characterized their employment with the company:
The work of the operators involves operating industrial machines, such as,
press machine, hydraulic machine, and spotweld machine. On the other
hand, the welders used the welding machines. The machines used by
complainants herein respondents in their work are all owned by respondent
Norkis Trading herein petitioner and these are installed and located in the
working area of the complainants inside the companys premises.
The complainants produced steel crates which are exported directly by
respondent Norkis Trading to Japan. These crates are used as containers of
motorcycle machines and are shipped from Japan back to respondent Norkis
Trading.
from PASAKA, now charging them with the following violations of the
cooperatives rules and regulations: (1) serious misconduct or willful
disobedience of superiors instructions or orders; (2) gross and habitual
neglect of duties by abandoning work without permission; (3) absences
without filing leave of absence; and (4) wasting time or loitering on
companys time or leaving their post temporarily without permission during
office hours.11 Copies of the memoranda12 sent to Fabroa and Cape form part
of the records.
The materials and supplies used by complainants in their work are supplied
by respondent Norkis Trading through Benjamin Gulbin, the companys
Stockman, upon the request of Tirso Maslog, a Leadman also employed by
respondent Norkis Trading.
The records include copies of the memoranda13 sent to Fabroa and Cape.
The suspension prompted the respondents to file with the NLRC the
complaint for illegal suspension against Norkis Trading and PASAKA.
The 15-day suspension of the respondents was extended for another period
of 15 days, from September 22, 1999 to October 12, 1999. 14 Copies of
PASAKAs separate letters15 to Buenavista, Fabroa, Cape and Dondoyano on
the cooperatives decision to extend the suspension form part of the records.
Despite having served respondent Norkis Trading for many years and
performing the same functions as regular employees, complainants were not
accorded regular status. It was made to appear that complainants are not
employees of said company but that of respondent PASAKA. 6
Against the foregoing scenario, the respondents, together with several other
complainants,7 filed on June 9, 1999 with the Department of Labor and
Employment (DOLE) a complaint against Norkis Trading and PASAKA for
labor-only contracting and non-payment of minimum wage and overtime pay.
The complaint was docketed as LSED Case No. RO700-9906-CI-CS-168.
The filing of the complaint for labor-only contracting allegedly led to the
suspension of the respondents membership with PASAKA. On July 22,
1999, they were served by PASAKA with memoranda charging them with a
violation of the rule against commission of acts injurious or prejudicial to the
interest or welfare of the cooperative. The memoranda cited that the
respondents filing of a case against Norkis Trading had greatly prejudiced
the interest and welfare of the cooperative.8 In their answer9 to the
memoranda, the respondents explained that they merely wanted to be
recognized as regular employees of Norkis Trading. The case records
include copies of the memoranda sent to respondents Buenavista, Fabroa
and Dondoyano.10
On August 16, 1999, the respondents received another set of memoranda
On October 13, 1999, the respondents were to report back to work but during
the hearing in their NLRC case, they were informed by PASAKA that they
would be transferred to Norkis Tradings sister company, Porta Coeli
Industrial Corporation (Porta Coeli), as washers of Multicab vehicles.
The respondents opposed the transfer as it would allegedly result in a
change of employers, from Norkis Trading to Porta Coeli. The respondents
also believed that the transfer would result in a demotion since from being
skilled workers in Norkis Trading, they would be reduced to being utility
workers.These circumstances made the respondents amend their complaint
for illegal suspension, to include the charges of unfair labor practice, illegal
dismissal, damages and attorneys fees.
For their part, both Norkis Trading and PASAKA claimed that the respondents
were not employees of Norkis Trading. They insisted that the respondents
were members of PASAKA, which served as an independent contractor that
merely supplied services to Norkis International Co., Inc. (Norkis
International) pursuant to a job contract16 which PASAKA and Norkis
International executed on January 14, 1999 for 121,500 pieces of F/GFSeries Reinforcement Production. After PASAKA received reports from its
coordinator at Norkis International of the respondents low efficiency and
violation of the cooperatives rules, and after giving said respondents the
chance to present their side, a penalty of suspension was imposed upon
Before the legality or illegality of a dismissal can be put in issue, the fact of
dismissal itself must, first, be clearly established. In the instant case, We find
that complainants herein respondents failed to prove with convincing
evidence the fact that they were dismissed from employment. This
observation is derived from their very own allegation in their position paper.
The first paragraph of page 5 of the complainants position paper clearly
shows that they were not yet dismissed from their employment. The said
paragraph states:
SO ORDERED.28
The truth, as the record would show is that, complainants were only offered
another post in order to save the contractual relations between their
cooperative and Norkis Trading as the latter finds the complainants
performance not satisfactory. The complainants took this offer as a demotion
xxxx
by then DOLE Secretary Patricia Sto. Tomas (Sec. Sto. Tomas) in her Orders
dated February 7, 2002 and October 14, 2002.30 When the rulings of the
DOLE Secretary were appealed before the CA via the petitions for certiorari
docketed as CA-G.R. SP No. 73880 and CA-G.R. SP No. 74619, the CA
affirmed the Orders of the DOLE Secretary.31 A motion for reconsideration of
the CA decision was denied in a Resolution32 dated October 9, 2007. The two
petitions docketed as G.R. Nos. 180078-79, which were brought before this
Court to question the CAs rulings, were later denied with finality by this Court
in the Resolutions dated December 5, 200733 and April 14, 2008.34
The Ruling of the NLRC
On April 18, 2002, the NLRC rendered its Decision35 affirming with
modification the decision of LA Gutierrez. It held that the respondents were
not illegally suspended from work, as it was their membership in the
cooperative that was suspended after they were found to have violated the
cooperatives rules and regulations. It also declared that the respondents
dismissal was not established by substantial evidence. The NLRC however
declared that the LA had no jurisdiction over the dispute because the
respondents were not employees, but members of PASAKA. The suspension
of the respondents as members of PASAKA for alleged violation of the
cooperatives rules and regulations was not a labor dispute, but an intracorporate dispute.36 The complaint was also declared to have been filed
against the wrong party because the respondents were found by the NLRC
to have been deployed by PASAKA to Norkis International pursuant to a job
contract.
The dispositive portion of the NLRCs Decision reads:
WHEREFORE, the Decision dated June 1, 2000 of the Labor Arbiter is
AFFIRMED, with respect to the DISMISSAL of the complainants herein
respondents for lack of merit [sic], but deleting the portion directing the
complainants to report back to respondent PASAKA for work assignment and
to accept them back to work being an internal concern of PASAKA.
SO ORDERED.37
The respondents motion for reconsideration was denied by the NLRC in a
Resolution38 dated December 18, 2003. Undaunted, the respondents
questioned the NLRCs rulings before the CA via a petition for certiorari.
The Ruling of the CA
Finding merit in the petition for certiorari, the CA rendered its decision
reversing and setting aside the decision and resolution of the NLRC. The
As regards the first ground, the petitioner questions the CAs reversal of LA
Gutierrezs and the NLRCs rulings, and argues that said rulings should have
been accorded great weight and finality by the appellate court as these were
allegedly supported by substantial evidence.
On this matter, the settled rule is that factual findings of labor officials, who
are deemed to have acquired expertise in matters within their jurisdiction, are
generally accorded not only respect but even finality by the courts when
supported by substantial evidence, i.e., the amount of relevant evidence
which a reasonable mind might accept as adequate to support a conclusion.
We emphasize, nonetheless, that these findings are not infallible. When
there is a showing that they were arrived at arbitrarily or in disregard of the
evidence on record, they may be examined by the courts. The CA can then
grant a petition for certiorari if it finds that the NLRC, in its assailed decision
or resolution, has made a factual finding that is not supported by substantial
evidence. It is within the jurisdiction of the CA, whose jurisdiction over labor
cases has been expanded to review the findings of the NLRC. 47
We have thus explained in Cocomangas Hotel Beach Resort v. Visca 48 that
the CA can take cognizance of a petition for certiorari if it finds that the NLRC
committed grave abuse of discretion by capriciously, whimsically, or arbitrarily
disregarding evidence which are material to or decisive of the controversy.
The CA cannot make this determination without looking into the evidence
presented by the parties. The appellate court needs to evaluate the
materiality or significance of the evidence, which are alleged to have been
capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to
all other evidence on record.
This case falls within the exception to the general rule that findings of fact of
labor officials are to be accorded respect and finality on appeal. As our
discussions in the other grounds that are raised in this petition will
demonstrate, the CA has correctly held that the NLRC has disregarded facts
and evidence that are material to the outcome of the respondents case. No
error can be ascribed to the appellate court for making its own assessment of
the facts that are significant to the case to determine the presence or
absence of grave abuse of discretion on the part of the NLRC, even if the
CAs findings turn out to be different from the factual findings of both the LA
and NLRC.
Norkis Trading is the principal
employer of the respondents,
This Court agrees with the finding of the DOLE Regional Director, as affirmed
by the Secretary of Labor in her assailed Order, that petitioners among them,
herein petitioner were engaged in labor-only contracting.
First. PASAKA failed to prove that it has substantial capitalization or
investment in the form of tools, equipment, machineries, work premises,
among others, to qualify as an independent contractor. PASAKAs claim that
it has machineries and equipment worth P 344,273.02 as reflected in its
Financial Statements and Supplementary Schedules is belied by private
respondents among them, herein respondents evidence which consisted of
pictures showing machineries and equipment which were owned by and
located at the premises of petitioner NORKIS TRADING (as earlier noted,
some of the pictures showed some of the private respondents operating said
machines). Indeed it makes one wonder why, if PASAKA indeed had such
machineries and equipment worth P 344,273.02, private respondents were
using machineries and equipment owned by and located at the premises of
NORKIS TRADING.
Even granting that indeed PASAKA had machineries and equipment worth P
344,273.02, it was not shown that said machineries and equipment were
actually used in the performance or completion of the job, work, or service
that it was contracted to render under its supposed job contract.
xxxx
Second. PASAKA likewise did not carry out an independent business from
NORKIS TRADING. While PASAKA was issued its Certificate of Registration
on July 18, 1991, all it could show to prove that it carried out an independent
business as a job contractor were the Project Contract dated January 2,
1998 with NORKIS TRADING, and the Project Contract dated December 18,
1998 with NORKIS INTERNATIONAL. However, as earlier discussed, the
Project Contract dated December 18, 1998 with NORKIS INTERNATIONAL
is nothing more than an afterthought by the petitioners to confuse its workers
and defeat their rightful claims. The same can be said of the Project Contract
with WICKER and VINE, INC., considering that it was executed only on
February 1, 2000. Verily, said contract was submitted only to strengthen
PASAKAs claim that it is a legitimate job contractor.
Together with his finding that PASAKA evidently lacked substantial capital or
investment required from legitimate job contractors, Regional Director
Balanag ruled that the cooperative failed to dispute the respondents
allegation that officers of Norkis Trading supervised their work and paid their
salaries. In conclusion, PASAKA and Norkis Trading were declared solidarily
liable for the monetary awards made in favor of therein claimants-employees,
which included herein respondents. A motion for reconsideration of the Order
was denied by the Regional Director.
Upon appeal, then DOLE Sec. Sto. Tomas affirmed the rulings of Regional
Director Balanag. Both Norkis Trading and PASAKA filed their separate
appeals from the orders of the DOLE Secretary to the CA via the petitions for
certiorari docketed as CA-G.R. SP Nos. 73880 and 74619, but said petitions
were dismissed for lack of merit by the CA in its Decision dated May 7, 2007
and Resolution dated October 9, 2007. The CA held:
All the foregoing considerations affirm by more than substantial evidence that
NORKIS TRADING and PASAKA engaged in labor-only contracting. 53
(Citations omitted and emphasis supplied)
When the case was brought before this Court via the petitions for review on
certiorari docketed as G.R. Nos. 180078-79, we resolved to issue on
December 5, 2007 our Resolution dismissing the appeal for, among other
grounds, the failure of Norkis Trading to sufficiently show any reversible error
in the the CA decision. In our Resolution dated April 14, 2008, we denied with
finality Norkis Tradings motion for reconsideration on the ground that no
substantial argument and compelling reason was adduced to warrant a
reconsideration of our dismissal of the petition. This Courts resolutions,
affirming the findings of the CA, had then become final and executory.
Applying the doctrine of res judicata, all matters that have been fully resolved
with finality by this Courts dismissal of the appeal that stemmed from
Regional Director Balanags Order dated August 22, 2000 in LSED Case No.
RO700-9906-CI-CS-168 are already conclusive between the parties. Res
judicata is defined as a matter adjudged; a thing judicially acted upon or
decided; a thing or matter settled by judgment. Under this doctrine, an
existing final judgment or decree rendered on the merits, and without fraud or
collusion, by a court of competent jurisdiction, upon any matter within its
jurisdiction, is conclusive of the rights of the parties or their privies, in all
other actions or suits in the same or any other judicial tribunal of concurrent
jurisdiction on the points and matters in issue in the first suit.
To state simply, a final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of the parties or their privies
in all later suits on all points and matters determined in the former suit. 54
Res judicata has two aspects: bar by prior judgment and conclusiveness of
judgment as provided under Section 47(b) and (c), Rule 39, respectively, of
the Rules of Court.55 Under the doctrine of conclusiveness of judgment, facts
and issues actually and directly resolved in a former suit cannot be raised in
any future case between the same parties, even if the latter suit may involve
a different cause of action.56
Clearly, res judicata in the concept of conclusiveness of judgment has set in.
In the proceedings before the Regional Director and the LA, there were
identity of parties and identity of issues, although the causes of action in the
two actions were different. First, herein respondents on the one hand, and
Norkis Trading on the other hand, were all parties in the two cases, being
therein complainants and respondent, respectively. As to the second
requisite, the issue of whether PASAKA was a labor-only contractor which
would make Norkis Trading the true employer of the respondents was the
main issue in the two cases, especially since Norkis Trading had been
arguing in both proceedings that it could not be regarded as the herein
respondents employer, harping on the defense that PASAKA was a
legitimate job contractor.
Similarly, in Dole Philippines, Inc. v. Esteva,57 we held that the finding of the
DOLE Regional Director, which had been affirmed by the Undersecretary of
Labor, by authority of the Secretary of Labor, in an Order that has reached
finality and which provided that the cooperative Cannery Multi-Purpose
Cooperative (CAMPCO) was engaged in labor-only contracting should bind
the NLRC in a case for illegal dismissal. We ruled:
While the causes of action in the proceedings before the DOLE and the
NLRC differ, they are, in fact, very closely related. The DOLE Regional Office
conducted an investigation to determine whether CAMPCO was violating
labor laws, particularly, those on labor-only contracting. Subsequently, it ruled
that CAMPCO was indeed engaging in labor-only contracting activities, and
thereafter ordered to cease and desist from doing so. x x x The matter of
whether CAMPCO was a labor-only contractor was already settled and
determined in the DOLE proceedings, which should be conclusive and
binding upon the NLRC. What were left for the determination of the NLRC
were the issues on whether there was illegal dismissal and whether
respondents should be regularized.
x x x For the NLRC to ignore the findings of DOLE Regional Director Parel
and DOLE Undersecretary Trajano is an unmistakable and serious
undermining of the DOLE officials authority.58
The rule on conclusiveness of judgment then now precludes this Court from
re-opening the issues that were already settled with finality in G.R. Nos.
180078-79, which effectively affirmed the CAs findings that PASAKA was
engaged in labor-only contracting, and that Norkis Trading shall be treated as
the employer of the respondents.
In the present petition, Norkis Trading still argues that the NLRC committed
no grave abuse of discretion in ignoring the findings of Regional Director
Balanag considering that his Order had not yet reached finality at the time
the NLRC resolved the appeal from the decision of the LA. This
notwithstanding, this Court holds that the CA still committed no error in
finding grave abuse of discretion on the part of the NLRC by the latters utter
disregard of the findings of the Regional Director that Norkis Trading should
be considered the employer of herein respondents. As correctly observed by
the CA in the assailed Decision dated May 7, 2007:
Surprisingly, the NLRC failed to consider or even make reference to the said
August 22, 2000 Order of the DOLE Regional Director. Considering the
significance of the DOLE Regional Directors findings, the same cannot just
be perfunctorily rejected. For the NLRC to ignore the findings of DOLE
Regional Director is to undermine or disregard of [sic] the visitorial and
enforcement power of the DOLE Secretary and his authorized
representatives under Article 128 of the Labor Code, as amended. It was
grave abuse of discretion then on the part of the NLRC to ignore or simply
sweep under the rug the findings of the DOLE Regional Director.59 (Citation
omitted and emphasis ours)
A reading of the NLRCs Resolution60 dated December 18, 2003 indicates
that while it was confronted with opposing findings of the Regional Director
and the LA on the material issue of labor-only contracting, it failed to even
attempt to review thoroughly the matter, look into the records, reconcile the
differing judgments and make its own appreciation of the evidence presented
by the parties. Instead, it simply brushed aside the rulings of the Regional
Director, without due consideration of the circumstance that said labor official
had the jurisdiction to rule on the issue pursuant to the visitorial and
enforcement powers of the DOLE Secretary and his duly authorized
representatives under Article 12861 of the Labor Code.
The rule in appeals in labor cases provides that the CA can grant a petition
for certiorari if it finds that the NLRC, in its assailed decision or resolution,
committed grave abuse of discretion by capriciously, whimsically or arbitrarily
disregarding evidence which is material or decisive of the controversy.62
Significantly, the Secretary of Labor had already affirmed Regional Director
Balanags Order when the appeal from the LAs rulings was resolved. In the
NLRC Resolution dated December 18, 2003, the Commission nonetheless
merely held:
The photocopies of the Order of the Honorable Secretary of the Department
of Labor and Employment dated February 7, 2002 and the Order of the
Regional Director of the Regional Office of the Department of Labor and
Employment finding the existence of labor-only contracting between
respondent NORKIS [Trading] and respondent PASAKA do not provide
sufficient basis to disturb Our Decision. We are not convinced that the facts
and evidence, which are totally distinct from this case and which were
presented in a separate proceedings and before another Office, would be a
sufficient and valid basis to divest the Labor Arbiter a quo of his authority
which undoubtedly the law vests upon him as his exclusive jurisdiction. The
jurisdiction conferred by Article 217 of the Labor Code upon the Labor Arbiter
is "original and exclusive", and his authority to hear and decide case[s]
vested upon him is to the exclusion of any other court or quasi-judicial body.
By reason of their training, experience, and expertise, Labor Arbiters are in a
better position to resolve controversies, for which they are conferred original
and exclusive jurisdiction by law. Even Article 218 of the Labor Code does
rank and work functions; the intention to dismiss, and the actual dismissal of
the respondents were sufficiently established.
In the absence of a clear showing that the respondents dismissal was for just
or authorized causes, the termination of the respondents employment was
illegal. What may be reasonably deduced from the records was that Norkis
Trading decided on the transfer, after the respondents had earlier filed their
complaint for labor-only contracting against the company. Even Norkis
Tradings contention that the transfer may be deemed a valid exercise of
management prerogative is misplaced. First, the exercise of management
prerogative presupposes that the transfer is only for positions within the
business establishment. Second, the exercise of management prerogative by
employers is not absolute, as it is limited by law and the general principles of
fair play and justice.
WHEREFORE, premises considered, the petition is DENIED.
SO ORDERED.
BIENVENIDO L. REYES
employees from ALU.8 The ALU National President affirmed the expulsion.9
On 17 June 1993, Del Monte terminated Timbal and her co-employees
effective 19 June 1993, noting that the termination was "upon demand of
[ALU] pursuant to Sections 4 and 5 of Article III of the current Collective
Bargaining Agreement."10
Timbal and her co-employees filed separate complaints against Del Monte
and/or its Personnel Manager Warfredo C. Balandra and ALU with the
Regional Arbitration Branch (RAB) of the National Labor Relations
Commission (NLRC) for illegal dismissal, unfair labor practice and
damages.11 The complaints were consolidated and heard before Labor
Arbiter Irving Pedilla. The Labor Arbiter affirmed that all five (5) were illegally
dismissed and ordered Del Monte to reinstate complainants, including
Timbal, to their former positions and to pay their full backwages and other
allowances, though the other claims and charges were dismissed for want of
basis.12
Only Del Monte interposed an appeal with the NLRC. 13 The NLRC reversed
the Labor Arbiter and ruled that all the complainants were validly dismissed. 14
On review, the Court of Appeals ruled that only Timbal was illegally
dismissed.15 At the same time, the appellate court found that Del Monte had
failed to observe procedural due process in dismissing the co-employees,
and thus ordered the company to pay P30,000.00 to each of the coemployees as penalties. The co-employees sought to file a Petition for
Review16 with this Court assailing the ruling of the Court of Appeals affirming
their dismissal, but the petition was denied because it was not timely filed. 17
On the other hand, Del Monte, through the instant petition, assails the Court
of Appeals decision insofar as it ruled that Timbal was illegally dismissed.
Notably, Del Monte does not assail in this petition the award of P30,000.00 to
each of the co-employees, and the ruling of the Court of Appeals in that
regard should now be considered final.
The reason offered by the Court of Appeals in exculpating Timbal revolves
around the problematic relationship between her and Artajo, the complaining
witness against her. As explained by the appellate court:
However, the NLRC should have considered in a different light the
situation of petitioner Nena Timbal. Timbal asserted before the
NLRC, and reiterates in this petition, that the statements of Gemma
Artajo, ALU's sole witness against her, should not be given weight
because Artajo had an ax[e] to grind at the time when she made the
adverse statements against her. Respondents never disputed the
claim of Timbal that in the two (2) collection suits initiated by Timbal
and her husband, Artajo testified for the defendant in the first case
and she was even the defendant in the second case which was won
by Timbal. We find it hard to believe that Timbal would so willingly
render herself vulnerable to expulsion from the Union by revealing to
an estranged colleague her desire to shift loyalty. The strained
relationship between Timbal and Artajo renders doubtful the charge
against the former that she attempted to recruit Artajo to join a rival
union. Inasmuch as the respondents failed to justify the termination
of Timbal's employment, We hold that her reinstatement to her
former position in accordance with the September 27, 1996 decision
of the Labor Arbiter is appropriate.18
The Labor Arbiter, in his favorable ruling to the dismissed employees, had
noted that "complainant Timbal['s] x x x accuser has an axe to grind against
her for an unpaid debt so that her testimony cannot be given credit." 19 The
NLRC, in reversing the Labor Arbiter, did not see it fit to mention the
circumstances of the apparent feud between Timbal and Artajo, except in the
course of narrating Timbal's allegations.
However, in the present petition, Del Monte utilizes a new line of argument in
justifying Timbal's dismissal. While it does not refute the contemporaneous illwill between Timbal and Artajo, it nonetheless alleges that there was a
second witness, Paz Piquero, who testified against Timbal before the
Disloyalty Board.20 Piquero had allegedly corroborated Artajo's allegations
and positively identified Timbal as among those present during the seminar
of the NFL conducted on 14 July 1992 and as having given her transportation
money after the seminar was finished. Del Monte asserts that Piquero was a
disinterested witness against Timbal.21
Del Monte also submits two (2) other grounds for review. It argues that the
decision of the Labor Arbiter, which awarded Timbal full backwages and other
allowances, was inconsistent with jurisprudence which held that an employer
who acted in good faith in dismissing employees on the basis of a closedshop provision is not liable to pay full backwages.22 Finally, Del Monte asserts
that it had, from the incipience of these proceedings consistently prayed that
in the event that it were found with finality that the dismissal of Timbal and
the others is illegal, ALU should be made liable to Del Monte pursuant to the
CBA. The Court of Appeals is faulted for failing to rule upon such claim.
For her part, Timbal observes that Piquero's name was mentioned for the first
time in Del Monte's Motion for Partial Reconsideration of the decision of the
Court of Appeals.23 She claims that both Piquero and Artajo were not in good
terms with her after she had won a civil suit for the collection of a sum of
money against their immediate superior, one Virgie Condeza. 24
The legality of Timbal's dismissal is obviously the key issue in this case. We
are particularly called upon to determine whether at this late stage, the Court
may still give credence to the purported testimony of Piquero and justify
Timbal's dismissal based on such testimony.
It bears elaboration that Timbal's dismissal is not predicated on any of the
just or authorized causes for dismissal under Book Six, Title I of the Labor
Code,25 but on the union security clause in the CBA between Del Monte and
ALU. Stipulations in the CBA authorizing the dismissal of employees are of
equal import as the statutory provisions on dismissal under the Labor Code,
since "[a] CBA is the law between the company and the union and
compliance therewith is mandated by the express policy to give protection to
labor."26 The CBA, which covers all regular hourly paid employees at the
pineapple plantation in Bukidnon,27 stipulates that all present and subsequent
employees shall be required to become a member of ALU as a condition of
continued employment. Sections 4 and 5, Article II of the CBA further state:
ARTICLE II
Section 4. Loss of membership in the UNION shall not be a ground
for dismissal by the Company except where loss of membership is
due to:
1. Voluntary resignation from [ALU] earlier than the expiry
date of this [CBA];
2. Non-payment of duly approved and ratified union dues
and fees; and
3. Disloyalty to [ALU] in accordance with its Constitution and
By-Laws as duly registered with the Department of Labor
and Employment.
Section 5. Upon request of [ALU], [Del Monte] shall dismiss from its
service in accordance with law, any member of the bargaining unit
who loses his membership in [ALU] pursuant to the provisions of the
preceding section. [ALU] assumes full responsibility for any such
termination and hereby agrees to hold [Del Monte] free from any
liability by judgment of a competent authority for claims arising out of
dismissals made upon demand of [ALU], and [the] latter shall
reimburse the former of such sums as it shall have paid therefor.
Such reimbursement shall be deducted from union dues and agency
fees until duly paid.28
The CBA obviously adopts a closed-shop policy which mandates, as a
condition of employment, membership in the exclusive bargaining agent. A
April 1993, during a hearing before the Disloyalty Board. The transcription is
not wholly legible, but there appears to be references therein to the name
"Paz Piquero," and her apparent testimony before the Disloyalty Board. We
are unable to reproduce with accuracy, based on the handwritten
stenographic notes, the contents of this seeming testimony of Piquero,
although Del Monte claims before this Court that Piquero had corroborated
Artajo's claims during such testimony, "positively identified [Timbal's]
presence in the NFL seminar on 14 July 1992," and "confirmed that Timbal
gave Artajo P500.00 for recruiting participants in the NFL seminar." 37
In the matter at bar, the Labor Arbiterthe proximate trier of factsand the
Court of Appeals both duly appreciated that the testimony of Artajo against
Timbal could not be given credence, especially in proving Timbal's disloyalty
to ALU. This is due to the prior animosity between the two engendered by the
pending civil complaint filed by Timbal's husband against Artajo. Considering
that the civil complaint was filed just six (6) days prior to the execution of
Artajo's affidavit against Timbal, it would be plainly injudicious to presume
that Artajo possessed an unbiased state of mind as she executed that
affidavit. Such circumstance was considered by the Labor Arbiter, and
especially the Court of Appeals, as they rendered a favorable ruling to
Timbal. The NLRC may have decided against Artajo, but in doing so, it failed
to provide any basis as to why Artajo's testimony should be believed, instead
of disbelieved. No credible disputation was offered by the NLRC to the claim
that Artajo was biased against Timbal; hence, we should adjudge the findings
of the Labor Arbiter and the Court of Appeals as more cogent on that point.
There are evident problems on our part, at this late stage, in appreciating
these raw stenographic notes adverting to the purported testimony of
Piquero, especially as a means of definitively concluding that Timbal was
guilty of disloyalty. Certainly, these notes cannot be appreciated as entries in
the official record, which are presumed prima facie evidence of the facts
therein stated,38 as such records can only be made by a public officer of the
Philippines or by a person in the performance of a duty specially enjoined by
law. These transcripts were not taken during a hearing conducted by any
public office in the Philippines, but they were committed in the course of an
internal disciplinary mechanism devised by a privately organized labor union.
Unless the authenticity of these notes is duly proven before, and appreciated
by the triers of fact, we cannot accord them any presumptive or conclusive
value.
Before this Court, Del Monte does not even present any serious argument
that Artajo's testimony against Timbal was free from prejudice. Instead, it
posits that Piquero's alleged testimony against Timbal before the Disloyalty
Board should be given credence, and that taken with Artajo's testimony,
should sufficiently establish the ground of disloyalty for which Timbal should
be dismissed.
The Court sees the danger to jurisprudence and the rights of workers in
acceding to Del Monte's position. The dismissal for cause of employees must
be justified by substantial evidence, as appreciated by an impartial trier of
facts. None of the trier of facts belowthe Labor Arbiter, the NLRC and the
Court of Appealssaw fit to accord credence to Piquero's testimony, even
assuming that such testimony was properly contained in the record. Even the
NLRC decision, which was adverse to Timbal, made no reference at all to
Piquero's alleged testimony.
Del Monte is able to point to only one instance wherein Piquero's name and
testimony appears on the record. It appears that among the several
attachments to the position paper submitted by the ALU before the NLRCRAB was a copy of the raw stenographic notes transcribed, apparently on 17
Moreover, despite the fact that the apparent record of Piquero's testimony
was appended to ALU's position paper, the position paper itself does not
make any reference to such testimony, or even to Piquero's name for that
matter. The position paper observes that "[t]his testimony of [Artajo] was
directly corroborated by her actual attendance on July 14, 1992 at the agreed
[venue]," but no mention is made that such testimony was also "directly
corroborated" by Piquero. Then again, it was only Artajo, and not Piquero,
who executed an affidavit recounting the allegations against Timbal.
Indeed, we are inclined to agree with Timbal's observation in her Comment
on the present petition that from the time the complaint was filed with the
NLRC-RAB, Piquero's name and testimony were invoked for the first time
only in Del Monte's motion for reconsideration before the Court of Appeals.
Other than the handwritten reference made in the raw stenographic notes
attached to ALU's position paper before the NLRC-RAB, Piquero's name or
testimony was not mentioned either by ALU or Del Monte before any of the
pleadings filed before the NLRC-RAB, the NLRC, and even with those
submitted to the Court of Appeals prior to that court's decision.
In order for the Court to be able to appreciate Piquero's testimony as basis
for finding Timbal guilty of disloyalty, it is necessary that the fact of such
testimony must have been duly established before the NLRC-RAB, the
NLRC, or at the very least, even before the Court of Appeals. It is only after
the fact of such testimony has been established that the triers of fact can
come to any conclusion as to the veracity of the allegations in the testimony.
It should be mentioned that the Disloyalty Board, in its Resolution finding
Timbal guilty of disloyalty, did mention that Artajo's testimony "was
corroborated by Paz Piquero who positively identified and testified that Nena
Timbal was engaged in recruitment of ALU members at [Del Monte] to attend
NFL seminars."39
The Disloyalty Board may have appreciated Piquero's testimony in its own
finding that Timbal was guilty, yet the said board cannot be considered as a
wholly neutral or dispassionate tribunal since it was constituted by the very
organization that stood as the offended party in the disloyalty charge. Without
impugning the integrity of ALU and the mechanisms it has employed for the
internal discipline of its members, we nonetheless hold that in order that the
dismissal of an employee may be validated by this Court, it is necessary that
the grounds for dismissal are justified by substantial evidence as duly
appreciated by an impartial trier of facts.40 The existence of Piquero's
testimony was appreciated only by the Disloyalty Board, but not by any of the
impartial tribunals which heard Timbal's case. The appreciation of such
testimony by the Disloyalty Board without any similar affirmation or
concurrence by the NLRC-RAB, the NLRC, or the Court of Appeals, cannot
satisfy the substantive due process requirement as a means of upholding
Timbal's dismissal.
All told, we see no error on the part of the Court of Appeals when it held that
Timbal was illegally dismissed.
We now turn to the second issue raised, whether the Labor Arbiter correctly
awarded full backwages to Timbal.
Del Monte cites a jurisprudential rule that an employer who acted in good
faith in dismissing employees on the basis of a closed- shop provision may
not be penalized even if the dismissal were illegal. Such a doctrine is
admittedly supported by the early case of National Labor Union v. Zip
Venetian Blind41 and the later decision in 1989 of Soriano v. Atienza,42
wherein the Court affirmed the disallowance of backwages or "financial
assistance" in dismissals under the aforementioned circumstance.
However, the Court now recognizes that this doctrine is inconsistent with
Article 279 of the Labor Code, as amended by Republic Act No. 6715, which
took effect just five (5) days after Soriano was promulgated. It is now
provided in the Labor Code that "[a]n employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and
to his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement." Thus, where reinstatement is adjudged, the award of
backwages and other benefits continues beyond the date of the labor
arbiter's decision ordering reinstatement and extends up to the time said
order of reinstatement is actually carried out.43
Rep. Act No. 6715 effectively mitigated previous jurisprudence which had
limited the extent to which illegally dismissed employees could claim for
backwages. We explained in Ferrer v. NLRC:44
With the passage of Republic Act No. 6715 which took effect on
March 21, 1989, Article 279 of the Labor Code was amended to read
as follows:
Security of Tenure. In cases of regular employment, the
employer shall not terminate the services of an employee
except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be
entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary
equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
and as implemented by Section 3, Rule 8 of the 1990 New Rules of
Procedure of the National Labor Relations Commission, it would
seem that the Mercury Drug Rule (Mercury Drug Co., Inc. vs. Court
of Industrial Relations, 56 SCRA 694 [1974]) which limited the award
of back wages of illegally dismissed workers to three (3) years
"without deduction or qualification" to obviate the need for further
proceedings in the course of execution, is no longer applicable.
A legally dismissed employee may now be paid his back wages,
allowances, and other benefits for the entire period he was out of
work subject to the rule enunciated before the Mercury Drug Rule,
which is that the employer may, however, deduct any amount which
the employee may have earned during the period of his illegal
termination (East Asiatic Company, Ltd. vs. Court of Industrial
Relations, 40 SCRA 521 [1971]). Computation of full back wages and
presentation of proof as to income earned elsewhere by the illegally
dismissed employee after his termination and before actual
reinstatement should be ventilated in the execution proceedings
before the Labor Arbiter concordant with Section 3, Rule 8 of the
vs.
ABOITIZ JEBSEN MARITIME, INC. and GENERAL CHARTERERS, INC.,
Respondents.
DECISION
Should the parties fail to agree on the arbitrator, the same shall be
drawn by lottery from a list of arbitrators furnished by the Bureau of
Labor Relations of the Department of Labor and Employment.
xxxx
Thus, as the law indubitably precludes the Labor Arbiter from enforcing
money claims arising from the implementation of the CBA, the CBA herein
complementarily recognizes that it is the Voluntary Arbitrators which have
jurisdiction to hear the claim. The Labor Arbiter correctly refused to exercise
jurisdiction over Del Monte's cross-claim, and the Court of Appeals would
have no basis had it acted differently. At the same time, even as we affirm the
award of backwages against Del Monte, our ruling should not operate to
prejudice in any way whatever causes of action Del Monte may have against
ALU, in accordance with the CBA.
WHEREFORE, the instant petition is DENIED. The assailed Decision of the
Court of Appeals dated 26 August 2002 is AFFIRMED. Costs against
petitioner.
SO ORDERED.
Quisumbing, J., Chairperson, Carpio, Carpio Morales, and Velasco, Jr., JJ.,
concur.
PERALTA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the
Rules of Court seeking to reverse and set aside the Decision 1 and
Resolution2 dated July 11, 2005 and April 18, 2006 of the Court of Appeals
(CA) in CA-G.R. SP No. 76489.
The factual and procedural antecedents of the case, as summarized by the
CA, are as follows:
Nelson R. Dulay (Nelson, for brevity) was employed by [herein respondent]
General Charterers Inc. (GCI), a subsidiary of co-petitioner [herein corespondent] Aboitiz Jebsen Maritime Inc. since 1986. He initially worked as
an ordinary seaman and later as bosun on a contractual basis. From
September 3, 1999 up to July 19, 2000, Nelson was detailed in petitioners
vessel, the MV Kickapoo Belle.
On August 13, 2000, or 25 days after the completion of his employment
contract, Nelson died due to acute renal failure secondary to septicemia. At
the time of his death, Nelson was a bona fide member of the Associated
Marine Officers and Seamans Union of the Philippines (AMOSUP), GCIs
collective bargaining agent. Nelsons widow, Merridy Jane, thereafter claimed
for death benefits through the grievance procedure of the Collective
Bargaining Agreement (CBA) between AMOSUP and GCI. However, on
January 29, 2001, the grievance procedure was "declared deadlocked" as
petitioners refused to grant the benefits sought by the widow.
On March 5, 2001, Merridy Jane filed a complaint with the NLRC SubRegional Arbitration Board in General Santos City against GCI for death and
medical benefits and damages.
Merridy Jane averred that the P20,000.00 already received by Joven Mar
should be considered advance payment of the total claim of US$90,000.[00].
[Herein respondents], on the other hand, asserted that the NLRC had no
jurisdiction over the action on account of the absence of employer-employee
relationship between GCI and Nelson at the time of the latters death. Nelson
also had no claims against petitioners for sick leave allowance/medical
benefit by reason of the completion of his contract with GCI. They further
alleged that private respondent is not entitled to death benefits because
petitioners are only liable for such "in case of death of the seafarer during the
term of his contract pursuant to the POEA contract" and the cause of his
death is not work-related. Petitioners admitted liability only with respect to
article 20(A)2 [of the CBA]. x x x
xxxx
However, as petitioners stressed, the same was already discharged.
The Labor Arbiter ruled in favor of private respondent. It took cognizance of
the case by virtue of Article 217 (a), paragraph 6 of the Labor Code and the
existence of a reasonable causal connection between the employeremployee relationship and the claim asserted. It ordered the petitioner to pay
P4,621,300.00, the equivalent of US$90,000.00 less P20,000.00, at the time
of judgment x x x
xxxx
The Labor Arbiter also ruled that the proximate cause of Nelsons death was
not work-related.
On appeal, [the NLRC] affirmed the Labor Arbiters decision as to the grant of
death benefits under the CBA but reversed the latters ruling as to the
proximate cause of Nelsons death.3
Herein respondents then filed a special civil action for certiorari with the CA
contending that the NLRC committed grave abuse of discretion in affirming
the jurisdiction of the NLRC over the case; in ruling that a different provision
of the CBA covers the death claim; in reversing the findings of the Labor
Arbiter that the cause of death is not work-related; and, in setting aside the
release and quitclaim executed by the attorney-in-fact and not considering
the P20,000.00 already received by Merridy Jane through her attorney-infact.
On July 11, 2005, the CA promulgated its assailed Decision, the dispositive
portion of which reads as follows:
The Commission, its Regional Offices and the Regional Directors of the
Department of Labor and Employment shall not entertain disputes,
grievances or matters under the exclusive and original jurisdiction of the
Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately
dispose and refer the same to the Grievance Machinery or Voluntary
Arbitration provided in the Collective Bargaining Agreement.
From the foregoing, it is clear that the parties, in the first place, really
intended to bring to conciliation or voluntary arbitration any dispute or conflict
in the interpretation or application of the provisions of their CBA. It is settled
that when the parties have validly agreed on a procedure for resolving
grievances and to submit a dispute to voluntary arbitration then that
procedure should be strictly observed.7
It may not be amiss to point out that the abovequoted provisions of the CBA
are in consonance with Rule VII, Section 7 of the present Omnibus Rules
and Regulations Implementing the Migrant Workers and Overseas Filipinos
Act of 1995, as amended by Republic Act No. 10022, which states that "[f]or
OFWs with collective bargaining agreements, the case shall be submitted for
voluntary arbitration in accordance with Articles 261 and 262 of the Labor
Code." The Court notes that the said Omnibus Rules and Regulations were
promulgated by the Department of Labor and Employment (DOLE) and the
Department of Foreign Affairs (DFA) and that these departments were
mandated to consult with the Senate Committee on Labor and Employment
It is true that R.A. 8042 is a special law governing overseas Filipino workers.
However, a careful reading of this special law would readily show that there
is no specific provision thereunder which provides for jurisdiction over
disputes or unresolved grievances regarding the interpretation or
implementation of a CBA. Section 10 of R.A. 8042, which is cited by
petitioner, simply speaks, in general, of "claims arising out of an employeremployee relationship or by virtue of any law or contract involving Filipino
No less than the Philippine Constitution provides, under the third paragraph,
Section 3, Article XIII, thereof that "[t]he State shall promote the principle of
shared responsibility between workers and employers and the preferential
use of voluntary modes in settling disputes, including conciliation, and shall
enforce their mutual compliance therewith to foster industrial peace."
Consistent with this constitutional provision, Article 211 of the Labor Code
provides the declared policy of the State "[t]o promote and emphasize the
primacy of free collective bargaining and negotiations, including voluntary
arbitration, mediation and conciliation, as modes of settling labor or industrial
disputes."
On the basis of the foregoing, the Court finds no error in the ruling of the CA
that the voluntary arbitrator has jurisdiction over the instant case.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 76489 dated July 11, 2005 and April 18,
2006, respectively, are AFFIRMED.
SO ORDERED.
DIOSDADO M. PERALTA*
Associate Justice
NARVASA, J.:
The question on which the petitioner's success in the instant appeal
depends, and to which he would have us give an affirmative answer, is
whether or not, having recovered separation pay by judgment of the Labor
Arbiter which held that he had been fired by respondent DM Transit
Corporation without just cause he may subsequently recover moral
damages by action in a regular court, upon the theory that the manner of his
dismissal from employment was tortious and therefore his cause of action
rendered on June 29, 1984. This is the judgment now subject of the present
petition for review on certiorari. The decision was reached by a vote of 3 to 2.
The dissenters, placing reliance on certain of our pronouncements, opined
that Primero's causes of action were cognizable by the courts, that existence
of employment relations was not alone decisive of the issue of jurisdiction,
and that such relations may indeed give rise to "civil" as distinguished from
purely labor disputes, as where an employer's right to dismiss his employee
is exercised tortiously, in a manner oppressive to labor, contrary to morals,
good customs or public policy. 11
Primero has appealed to us from this judgment of the IAC praying that we
overturn the majority view and sustain the dissent.
Going by the literal terms of the law, it would seem clear that at the time that
Primero filed his complaints for illegal dismissal and recovery of backwages,
etc. with the Labor Arbiter, the latter possessed original and exclusive
jurisdiction also over claims for moral and other forms of damages; this, in
virtue of Article 265 12 of PD 442, otherwise known as the Labor Code,
effective from May 1, 1974. In other words, in the proceedings before the
Labor Arbiter, Primero plainly had the right to plead and prosecute a claim
not only for the reliefs specified by the Labor Code itself for unlawful
termination of employment, but also for moral or other damages under the
Civil Code arising from or connected with that termination of employment.
And this was the state of the law when he moved for the dismissal of his
claims before the Labor Arbiter, for reinstatement and recovery of back
wages, so that he might later file a damage suit "in a civil court which has
exclusive jurisdiction over his complaint ... founded on tortious acts, breach
of employment contract ... and consequent effects (thereof)." 13
The legislative intent appears clear to allow recovery in proceedings before
Labor Arbiters of moral and other forms of damages, in all cases or matters
arising from employer-employee relations. This would no doubt include,
particularly, instances where an employee has been unlawfully dismissed. In
such a case the Labor Arbiter has jurisdiction to award to the dismissed
employee not only the reliefs specifically provided by labor laws, but also
moral and other forms of damages governed by the Civil Code. Moral
damages would be recoverable, for example, where the dismissal of the
employee was not only effected without authorized cause and/or due process
for which relief is granted by the Labor Code but was attended by bad
faith or fraud, or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs or public policy 14 for which the
obtainable relief is determined by the Civil Code 15 (not the Labor Code).
Stated otherwise, if the evidence adduced by the employee before the Labor
Arbiter should establish that the employer did indeed terminate the
employee's services without just cause or without according him due
process, the Labor Arbiter's judgment shall be for the employer to reinstate
the employee and pay him his back wages or, exceptionally, for the
employee simply to receive separation pay. These are reliefs explicitly
prescribed by the Labor Code. 16 But any award of moral damages by the
Labor Arbiter obviously cannot be based on the Labor Code but should be
grounded on the Civil Code. Such an award cannot be justified solely upon
the premise (otherwise sufficient for redress under the Labor Code) that the
employer fired his employee without just cause or due process. Additional
facts must be pleaded and proven to warrant the grant of moral damages
under the Civil Code, these being, to repeat, that the act of dismissal was
attended by 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, grave anxiety, etc., resulted
therefrom. 17
It is clear that the question of the legality of the act of dismissal is intimately
related to the issue of the legality of the manner by which that act of
dismissal was performed. But while the Labor Code treats of the nature of,
and the remedy available as regards the first the employee's separation
from employment it does not at all deal with the second the manner of
that separation which is governed exclusively by the Civil Code. In
addressing the first issue, the Labor Arbiter applies the Labor Code; in
addressing the second, the Civil Code. And this appears to be the plain and
patent intendment of the law. For apart from the reliefs expressly set out in
the Labor Code flowing from illegal dismissal from employment, no other
damages may be awarded to an illegally dismissed employee other than
those specified by the Civil Code. Hence, the fact that the issue-of whether or
not moral or other damages were suffered by an employee and in the
affirmative, the amount that should properly be awarded to him in the
circumstances-is determined under the provisions of the Civil Code and not
the Labor Code, obviously was not meant to create a cause of action
independent of that for illegal dismissal and thus place the matter beyond the
Labor Arbiter's jurisdiction.
Thus, an employee who has been illegally dismissed (i.e., discharged without
just cause or being accorded due process), in such a manner as to cause
him to suffer moral damages (as determined by the Civil Code), has a cause
of action for reinstatement and recovery of back wages and damages. When
he institutes proceedings before the Labor Arbiter, he should make a claim
for all said reliefs. He cannot, to be sure, be permitted to prosecute his claims
But this was precisely what Primero's counsel did. He split Primero's cause
of action; and he made one of the split parts the subject of a cause of action
before a court of justice. Consequently, the judgment of the Labor Arbiter
granting Primero separation pay operated as a bar to his subsequent action
for the recovery of damages before the Court of First Instance under the
doctrine of res judicata, The rule is that the prior "judgment or order is, with
respect to the matter directly adjudged or as to any other matter that could
have been raised in relation thereto, conclusive between the parties and their
successors in interest by title subsequent to the commencement of the action
or special proceeding, litigating for the same thing and under the same title
and in the same capacity. 19
We are not unmindful of our previous rulings on the matter cited in the
dissent to the decision of the Court of Appeals subject of the instant petition,
20
notably, Quisaba v. Sta Ines-Melale Veneer & Plywood Inc., where a
distinction was drawn between the right of the employer to dismiss an
employee, which was declared to be within the competence of labor
agencies to pass upon, and the "manner in which the right was exercised
and the effects flowing therefrom," declared to be a matter cognizable only by
the regular courts because "intrinsically civil." 21 We opine that it is this very
distinction which the law has sought to eradicate as being so tenuous and so
difficult to observe, 22 and, of course, as herein pointed out, as giving rise to
split jurisdiction, or to multiplicity of actions, "a situation obnoxious to the
orderly administration of justice. 23 Actually we merely reiterate in this
decision the doctrine already laid down in other cases (Garcia v. Martinez, 84
SCRA 577; Ebon v. de Guzman, 13 SCRA 52; Bengzon v. Inciong, 91 SCRA
248; Pepsi-Cola Bottling Co. v. Martinez, 112 SCRA 578; Aguda v. Vallejos,
113 SCRA 69; Getz v. C.A., 116 SCRA 86; Cardinal Industries v. Vallejos, 114
SCRA 471; Sagmit v. Sibulo, 133 SCRA 359) to the effect that the grant of
jurisdiction to the Labor Arbiter by Article 217 of the Labor Code is sufficiently
comprehensive to include claims for moral and exemplary damages sought
to be recovered from an employer by an employee upon the theory of his
illegal dismissal. Rulings to the contrary are deemed abandoned or modified
accordingly.
WHEREFORE, the petition is DISMISSED, without pronouncement as to
costs.
Teehankee, C.J., Cruz, Paras, * and Gancayco, JJ., concur.