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EN BANC being respondent Interserve Management and

Manpower Resources, Inc.

June 28, 2016
Further, complainants allege that the Department of
G.R. No. 210565 Labor and Employment (DOLE) conducted an
EMMANUEL D. QUINTANAR, BENJAMIN O. inspection of Coca-Cola to determine whether it is
DURANO, CECILIO C. DELAVIN, RICARDO G. complying with the various mandated labor
GABORNI, ROMEL G. GERARMAN, JOEL JOHN standards, and relative thereto, they were declared
P. AGUILAR, RAMIRO T. GAVIOLA, RESTITUTO to be regular employees of Coca-Cola, which was
D. AGSALUD, MARTIN E. CELIS, PATRICIO L. held liable to pay complainants the underpayment of
ARIOS, MICHAEL S. BELLO, LORENZO C. their 13th month pay, emergency cost of living
QUINLOG, JUNE G. BLAYA, SANTIAGO B. allowance (ECOLA), and other claims. As soon as
TOLENTINO, JR., NESTOR A. MAGNAYE, respondents learned of the filing of the claims with
ARNOLD S. POLVORIDO, ALLAN A. AGAPITO, DOLE, they were dismissed on various dates in
ARIEL E. BAUMBAD, JOSE T. LUTIVA, EDGARDO January 2004. Their claims were later settled by the
respondent company, but the settlement allegedly
REYNALDO V. ALBURO, RUDY C. ULTRA, did not include the issues on reinstatement and
MARCELO R. CABILI, ARNOLD B. ASIATEN, payment of CBA benefits. Thus, on November 10,
2006, they filed their complaint for illegal dismissal.
DANILO T. OQUIÑO, GREG B. CAPARAS and In support of their argument that they were regular
ROMEO T. ESCARTIN, Petitioners, employees of Coca-Cola, the complainants relied on
vs. the pronouncement of the Supreme Court in the
Respondent. 18, 2007, as follows:
DECISION "In the case at bar, individual complainants were
MENDOZA, J.: directly hired by respondent Coca-Cola as Route
Helpers. They assist in the loading and unloading of
At bench is a Petition for Review on Certiorari under softdrinks. As such they were paid by respondent
Rule 45 of the Rules of Court assailing the July 11, Coca-Cola their respective salaries plus
2013 Decision1 and the December 5, 2013 commission. It is of common knowledge in the sales
Resolution2 of the Court of Appeals (CA) in CA-G.R. of softdrinks that salesmen are not alone in making
SP No. 115469, which reversed and set aside the a truckload of softdrinks for delivery to customers.
March 25, 2010 Decision3 and the May 28, 2010 Salesmen are usually provided with route helpers or
Resolution4 of the National Labor Relations utility men who does the loading and unloading. The
Commission (NLRC), affirming the August 29, 2008 engagement of the individual complainants to such
Decision of the Labor Arbiter (LA), in a case for activity is usually necessary in the usual business of
illegal dismissal, damages and attorney's fees filed respondent Coca-Cola.
by the petitioners against respondent Coca-Cola
Bottlers Philippines, Inc. (Coca-Cola). Contrary to the Labor Arbiter's conclusion that
respondent Coca-Cola is engaged solely in the
The gist of the subject controversy, as narrated by manufacturing is erroneous as it is also engaged in
the LA and adopted by the NLRC and the CA, is as the sales of the softdrinks it manufactured.
Moreover, having been engaged to perform, such
Complainants allege that they are former employees activity for more than a year all the more bolsters
directly hired by respondent Coca-Cola on different individual complainants' status as regular
dates from 1984 up to 2000, assigned as regular employees notwithstanding the contract, oral or
Route Helpers under the direct supervision of the written, or even if their employment was
Route Sales Supervisors. Their duties consist of subsequently relegated to a labor contractor."
distributing bottled Coca-Cola products to the stores
Respondent Coca-Cola denies employer-employee
and customers in their assigned areas/routes, and
they were paid salaries and commissions at the relationship with the complainants pointing to
average of ₱3,000.00 per month. After working for respondent Interserve with whom it has a service
quite sometime as directly-hired employees of Coca- agreement as the complainants' employer. As
Cola, complainants were allegedly transferred alleged independent service contractor of
successively as agency workers to the following respondent Coca-Cola, respondent Interserve "is
manpower agencies, namely, Lipercon Services, engaged in the business of rendering substitute or
Inc., People's Services, Inc., ROMAC, and the latest reliever delivery services to its own clients and for
CCBPI in particular, the delivery of CCBPI's
softdrinks and beverage products." It is allegedly Interserve supervisors. Respondent Coca-Cola
free from the control and direction of CCBPI in all does not allegedly interfere with the manner and the
matters connected with the performance of the work, methods of the complainants' performance at work
except as to the results thereof, pursuant to the as long as the desired results are achieved. While
service agreement. Moreover, respondent admitting employer-employee relationship with the
Interserve is allegedly highly capitalized with a total complainants, nonetheless, respondent Interserve
of ₱21,658,220.26 and with total assets of avers that complainants are not its regular
₱27,509,716.32. employees as they were allegedly mere contractual
workers whose employment depends on the service
Further, respondent Coca-Cola argued that all contracts with the clients and the moment the latter
elements of employer-employee relationship exist sever said contracts, respondent has allegedly no
between respondent Interserve and the choice but to either deploy the complainants to other
complainants. It was allegedly Interserve which principals, and if the latter are unavailable,
solely selected and engaged the services of the respondent cannot allegedly be compelled to retain
complainants, which paid the latter their salaries, them.5
which was responsible with respect to
The Decision of the LA
the imposition of appropriate disciplinary sanctions
against its erring employees, including the On August 29, 2008, the LA rendered its decision
complainants, without any participation from Coca- granting the prayer in the complaint. In its
Cola, which personally monitors the route helpers' assessment, the LA explained that the documentary
performance of their delivery services pointing to evidence submitted by both parties confirmed the
Noel Sambilay as the Interserve Coordinator. petitioners' allegation that they had been working for
Expounding on the power of control, respondent Coca-Cola for quite some time. It also noted that
Coca-Cola vigorously argued that: Coca-Cola never disputed the petitioners' contention
that after working for Coca-Cola through the years,
"12. According to Mr. Sambilay, he designates who they were transferred to the various service
among the route helpers, such as complainants contractors engaged by it, namely, Interim Services,
herein, will be assigned for each of the delivery Inc. (ISI), Lipercon
trucks. Based on the route helpers' performance and
rapport with the truck driver and the other route Services, Inc. (Lipercon), People Services,
helpers, he groups together a team of three (3) to Inc. (PSI), ROMAC, and lastly, Interserve
five (5) route helpers to undertake the loading and Management and Manpower Resources,
unloading of the softdrink products to the delivery Inc. (Interserve). In view of said facts, the LA
trucks and to their designated delivery point. It is his concluded that the petitioners were simply
exclusive discretion to determine who among the employees of Coca-Cola who were "seconded" to
route helpers will be grouped together to comprise Interserve. 6
an effective team to render the most efficient delivery
service of CCBPI's products. The LA opined that it was highly inconceivable for
the petitioners, who were already enjoying a stable
"13. Similarly, it is Interserve, through Mr. Sambilay, job at a multi-national company, to leave and
who takes charge of monitoring the attendance of become mere agency workers. He dismissed the
the route helpers employed by Interserve. At the contention of Coca-Cola that the petitioners were
start of the working day, Mr. Sambilay would position employees of Interserve, stressing that they enjoyed
himself at the gate of the CCBPI premises to check the constitutional right to security of tenure which
the attendance of the route helpers. He also Coca-Cola could not compromise by entering into a
maintains a logbook to record the time route helpers service agreement manpower supply contractors,
appear for work. In case a route helper is unable to make petitioners sign employment contracts with
report for duty, Mr. Sambilay reassigns another them, and convert their employment status from
route helper to take his place." regular to contractual. 7

On its part, respondent Interserve merely filed its Ultimately, the LA ordered Coca-Cola to reinstate
position paper, pertaining only to complainants the petitioners to their former positions and to pay
Quintanar and Cabili totally ignoring all the other their full backwages. 8 The dispositive portion of the
twenty-eight (28) complainants. It maintains that it is decision reads:
a legitimate job contractor duly registered as such
and it undertakes to perform utility, janitorial, WHEREFORE, all the foregoing premises being
packaging, and assist in transporting services by considered, judgment is hereby rendered ordering
hiring drivers. Complainants Quintanar and Cabili respondent Coca-Cola Bottlers Phils., Inc. to
were allegedly hired as clerks who were assigned to reinstate complainants to their former or
CCBPI Mendiola Office, under the supervision of substantially equivalent positions, and to pay their
full backwages which as of August 29, 2008 already temporarily as relievers for absent employees of
amounts to ₱15,319,005.00, without prejudice to their clients. The CA also noted that the petitioners
recomputation upon subsequent determination of had been working for other agencies before they
the applicable salary rates and benefits due a were hired by Interserve. 15
regular route helper or substantially equivalent
position on the plantilla of respondent CCBPI. The CA also gave credence to the position of Coca-
Cola that it was Interserve who paid the petitioners'
SO ORDERED.9 salaries. This, coupled with the CA's finding that
Coca-Cola paid Interserve for the services rendered
The Decision of the NLRC by the petitioners whenever they substituted for the
Similar to the conclusion reached by the LA, the regular employees of Coca-Cola, led the CA to
NLRC found that the petitioners were regular conclude that it was Interserve who exercised the
employees of Coca-Cola. In its decision, dated power of paying the petitioners' wages.
March 25, 2010, it found that the relationship The CA then took into consideration Interserve's
between the parties in the controversy bore a striking admission that they had to sever the petitioners' from
similarity with the facts in the cases of Coca-Cola their contractual employment because its contract
Bottlers Philippines, Inc. v. National Organization of with Coca-Cola expired and there was no demand
Workingmen 10 (N. O. W) and Magsalin v. National for relievers from its other clients. The CA equated
Organization of Workingmen (Magsalin). 11 The this with Interserve's exercise of its power to fire the
NLRC, thus, echoed the rulings of the Court in the petitioners. 16
said cases which found the employees involved, like
the petitioners in this case, as regular employees of Finally, the CA was of the considered view that it was
Coca-Cola. It stated that the entities ISI, Lipercon, Interserve which exercised the power of control.
PSI, ROMAC, and Interserve simply "played to feign Citing the Affidavit17 of Noel F.
that status of an employer so that its alleged Sambilay (Sambilay), Coordinator of Interserve, the
principal would be free from any liabilities and CA noted that Interserve exercised the power of
responsibilities to its employees."12 As far as it is control, monitoring the petitioners' attendance,
concerned, Coca-Cola failed to provide evidence providing them with their assignments to the delivery
that would place the subject controversy on a trucks of Coca-Cola, and making sure that they were
different plane from N.O.W and Magsalin as to able to make their deliveries. 18
warrant a deviation from the rulings made therein.
The CA then went on to conclude that Interserve was
As for the quitclaims executed by the petitioners, the a legitimate independent contractor. It noted that the
NLRC held that the same could not be used by said agency was registered with the Department of
Coca-Cola to shield it from liability. The NLRC noted Labor and Employment (DOLE) as an independent
the Minutes of the National Conciliation and contractor which had provided delivery services for
Mediation Board (NCMB) which stated that the other beverage products of its clients, and had
petitioners agreed to settle their claims with Coca- shown that it had substantial capitalization and
Cola only with respect to their claims for violation of owned properties and equipment that were used in
labor standards law, and that their claims for illegal the conduct of its business operations. The CA was,
dismissal would be submitted to the NLRC for thus, convinced that Interserve ran its own business,
arbitration. 13 separate and distinct from Coca-Cola. 19

Coca-Cola sought reconsideration of the NLRC The petitioners sought reconsideration, but they
decision but its motion was denied.14 were rebuffed. 20

The Decision of the CA Hence, this petition, raising the following

Reversing the findings of the LA and the NLRC, the GROUNDS FOR THE PETITION/
CA opined that the petitioners were not employees ASSIGNMENT OF ERRORS
of Coca-Cola but of Interserve. In its decision, the
appellate court agreed with the contention of Coca- THE COURT OF APPEALS IS GUILTY OF GRAVE
Cola that it was Interserve who exercised the power ABUSE OF DISCRETION AMOUNTING TO LACK
of selection and engagement over the petitioners OR IN EXCESS OF JURISDICTION IN:
considering that the latter applied for their jobs and I.
went through the pre-employment processes of
Interserve. It noted that the petitioners' contracts of RENDERING A DECISION THAT IS CONTRARY
employment and personal data sheets, which were TO LAW
filed with Interserve, categorically stipulated that AND ESTABLISHED JURISPRUDENCE
Interserve had the sole power to assign them
II. Before the Court proceeds to resolve the case on its
merits, it must first be pointed out that the petitioners
MISAPPRECIATING FACTS WHICH GRAVELY erred in resorting to this petition for review
PREJUDICED on certiorari under Rule 45 of the Rules of Court and
THE RIGHTS OF THE PETITIONERS.21 alleging, at the same time, that the CA abused its
In their petition for review on certiorari, the discretion in rendering the assailed decision.
petitioners ascribed grave abuse of discretion on the Well-settled is the rule that grave abuse of discretion
part of the CA when it reassessed the evidence and or errors of jurisdiction may be corrected only by the
reversed the findings of fact of the LA and the NLRC special civil action of certiorari under Rule 65. Such
that ruled in their favor.22 corrective remedies do not avail in a petition for
The petitioners also claimed that the CA violated the review on certiorariwhich is confined to correcting
doctrine of stare decisis when it ruled that Interserve errors of judgment only. Considering that the
was a legitimate job contractor. Citing Coca Cola petitioners have availed of the remedy under Rule
Bottlers, Philippines, Inc. v. Agito (Agito), 23the 45, recourse to Rule 65 cannot be allowed either as
an add-on or as a substitute for appeal. 27
petitioners argued that because the parties therein
were the same parties in the subject controversy, Moreover, it is observed that from a perusal of the
then the appellate court should have followed petitioners' arguments, it is quite apparent that the
precedent and declared Interserve as a labor-only petition raises questions of facts, inasmuch as this
contractor.24 Court is being asked to revisit and assess anew the
In further support of their claim that Interserve was a factual findings of the CA and the NLRC. The
labor-only contractor and that Coca-Cola, as petitioners fundamentally assail the findings of the
principal, should be made ultimately liable for their CA that the evidence on record did not support their
claims, the petitioners asserted that Interserve had claims for illegal dismissal against Coca-Cola. In
no products to manufacture, sell and distribute to effect, they would have the Court sift through,
customers and did not perform activities in its own calibrate and re-examine the credibility and
probative value of the evidence on record so as to
manner and method other than that dictated by
Coca-Cola. They claimed that it was Coca-Cola that ultimately decide whether or not there is sufficient
owned the softdrinks, the trucks and the equipment basis to hold the respondents accountable for their
used by Interserve and that Coca-Cola assigned alleged illegal dismissal. This clearly involves a
supervisors to ensure that the petitioners perform factual inquiry, the determination of which is the
their duties. 25 statutory function of the NLRC.28

Lastly, the petitioners insisted that both Coca-Cola Basic is the rule that the Court is not a trier of facts
and Interserve should be made liable for moral and and this doctrine applies with greater force in labor
exemplary damages, as well as attorney's fees, for cases. Questions of fact are for the labor tribunals to
having transgressed the petitioners' right to security resolve.29 Only errors of law are generally reviewed
of tenure and due process.26 in petitions for review on certiorari under Rule 45 of
the Rules of Court.
The Court's Ruling
In exceptional cases, however, the Court may be
Essentially, the core issue presented by the urged to probe and resolve factual issues when
foregoing petition is whether the petitioners were there is insufficient or insubstantial evidence to
illegally dismissed from their employment with Coca- support the findings of the tribunal or the court
Cola. This, in turn, necessitates a determination of below, or when too much is concluded, inferred or
the characterization of the relationship between deduced from the bare or incomplete facts submitted
route-helpers such as the petitioners, and softdrink by the parties or, where the LA and the NLRC came
manufacturers such as Coca-Cola, notwithstanding up with conflicting positions. 30 In this case,
the participation of entities such as ISI, Lipercon, considering the conflicting findings of the LA and the
PSI, ROMAC, and Interserve. The petitioners insist NLRC on one hand, and the CA on the other, the
that ISI, Lipercon, PSI, ROMAC, and Interserve are Court is compelled to resolve the factual issues
labor-only contractors, making Coca-Cola still liable along with the legal ones.
for their claims. The latter, on the other hand, asserts
that the said agencies are independent job Substantial Issues
contractors and, thus, liable to the petitioners on The Court finds for the petitioners. The reasons are:
their own.
First. Contrary to the position taken by Coca-Cola, it
Procedural Issues cannot be said that route-helpers, such as the
petitioners no longer enjoy the employee-employer
relationship they had with Coca-Cola since they can be assessed by looking into the nature of the
became employees of Interserve. A cursory review services rendered and its relation to the general
of the jurisprudence regarding this matter reveals scheme under which the business or trade is
that the controversy regarding the characterization pursued in the usual course. It is distinguished from
of the relationship between route-helpers and Coca- a specific undertaking that is divorced from the
Cola is no longer a novel one. normal activities required in carrying on the
particular business or trade. But, although the work
As early as May 2003, the Court in Magsalin struck to be performed is only for a specific project or
down the defense of Coca-Cola that the seasonal, where a person thus engaged has been
complainants therein, who were route-helpers, were performing the job for at least one year, even if the
its "temporary" workers. In the said Decision, the performance is not continuous or is merely
Court explained: intermittent, the law deems the repeated and
The basic law on the case is Article 280 of the Labor continuing need for its performance as being
Code. Its pertinent provisions read: sufficient to indicate the necessity or desirability of
that activity to the business or trade of the employer.
Art. 280. Regular and Casual Employment. The The employment of such person is also then
provisions of written agreement to the contrary deemed to be regular with respect to such activity
notwithstanding and regardless of the oral and while such activity exists.
agreement of the parties, an employment shall be
deemed to be regular where the employee has been The argument of petitioner that its usual business or
engaged to perform activities which are usually trade is softdrink manufacturing and that the work
necessary or desirable in the usual business or trade assigned to respondent workers as sales route
of the employer, except where the employment has helpers so involves merely "postproduction
been fixed for a specific project or undertaking the activities," one which is not indispensable in the
completion or termination of which has been manufacture of its products, scarcely can be
determined at the time of the engagement of the persuasive. If, as so argued by petitioner company,
employee or where the work or services to be only those whose work are directly involved in the
performed is seasonal in nature and the employment production of softdrinks may be held performing
is for the duration of the season. functions necessary and desirable in its usual
business or trade, there would have then been no
An employment shall be deemed to be casual if it is need for it to even maintain regular truck sales route
not covered by the preceding paragraph: Provided, helpers. The nature of the work performed must be
That, any employee who has rendered at least one viewed from a perspective of the business or trade
year of service, whether such service is continuous in its entirety and not on a confined scope.
or broken, shall be considered a regular employee
with respect to the activity in which he is employed The repeated rehiring of respondent workers and the
and his employment shall continue while such continuing need for their services clearly attest to the
necessity or desirability of their services in the
activity exists.
regular conduct of the business or trade of petitioner
Coca-Cola Bottlers Phils., Inc. is one of the leading company. The Court of Appeals has found each of
and largest manufacturers of softdrinks in the respondents to have worked for at least one year
country. Respondent workers have long been in the with petitioner company. While this Court, in Brent
service of petitioner company. Respondent workers, School, Inc. vs. Zamora, has upheld the legality of a
when hired, would go with route salesmen on board fixed-term employment, it has done so, however,
delivery trucks and undertake the laborious task of with a stern admonition that where from the
loading and unloading softdrink products of circumstances it is apparent that the period has been
petitioner company to its various delivery points. imposed to preclude the acquisition of tenurial
security by the employee, then it should be struck
Even while the language of law might have been down as being contrary to law, morals, good
more definitive, the clarity of its spirit and intent, i.e., customs, public order and public policy. The
to ensure a "regular" worker's security of tenure, pernicious practice of having employees, workers
however, can hardly be doubted. In determining and laborers, engaged for a fixed period
whether an employment should be considered
regular or non-regular, the applicable test is the of few months, short of the normal six-month
reasonable connection between the particular probationary period of employment, and, thereafter,
activity performed by the employee in relation to the to be hired on a day-to-day basis, mocks the law.
usual business or trade of the employer. The Any obvious circumvention of the law cannot be
standard, supplied by the law itself, is whether the countenanced. The fact that respondent workers
work undertaken is necessary or desirable in the have agreed to be employed on such basis and to
usual business or trade of the employer, a fact that forego the protection given to them on their security
of tenure, demonstrate nothing more than the not the employee, had the burden of proof that it has
serious problem of impoverishment of so many of the substantial capital, investment and tool to
our people and the resulting unevenness between engage in job contracting. As applied to Interserve,
labor and capital. A contract of employment is the Court ruled:
impressed with public interest. The provisions of
applicable statutes are deemed written into the The contractor, not the employee, has the burden of
contract, and "the parties are not at liberty to insulate proof that it has the substantial capital, investment,
themselves and their relationships from the impact and tool to engage in job contracting. Although not
of labor laws and regulations by simply contracting the contractor itself (since Interserve no longer
with each other."31 appealed the judgment against it by the Labor
Arbiter), said burden of proof herein falls upon
Shortly thereafter, the Court in Bantolino v. Coca- petitioner who is invoking the supposed status of
Cola,32among others, agreed with the unanimous Interserve as an independent job contractor.
finding of the LA, the NLRC and the CA that the Noticeably, petitioner failed to submit evidence to
route-helpers therein were not simply employees of establish that the service vehicles and equipment of
Lipercon, Peoples Specialist Services, Inc. or ISI, Interserve, valued at ₱510,000.00 and ₱200,000.00,
which, as Coca-Cola claimed were independent job respectively, were sufficient to carry out its service
contractors, but rather, those of Coca-Cola itself. In contract with petitioner. Certainly, petitioner could
the said case, the Court sustained the finding of the have simply provided the courts with records
LA that the testimonies of the complainants therein showing the deliveries that were undertaken by
were more credible as they sufficiently supplied Interserve for the Lagro area, the type and number
every detail of their employment, specifically of equipment necessary for such task, and the
identifying their salesmen/drivers were and their valuation of such equipment. Absent evidence which
places of assignment, aside from the dates of their a legally compliant company could have easily
engagement and dismissal. provided, the Court will not presume that Interserve
had sufficient investment in service vehicles and
Then in 2008, in Pacquing v. Coca-Cola Philippines, equipment, especially since respondents' allegation
Inc. (Pacquing), 33the Court applied the ruling that they were using equipment, such as forklifts and
in Magsalinunder the principle of stare decisis et non pallets belonging to petitioner, to carry out their jobs
quieta movere (follow past precedents and do not was uncontroverted.
disturb what has been settled). It was stressed
therein that because the petitioners, as route In sum, Interserve did not have substantial capital or
helpers, were performing the same functions as the investment in the form of tools, equipment,
employees in Magsalin, which were necessary and machineries, and work premises; and respondents,
desirable in the usual business or trade of Coca- its supposed employees, performed work which was
Cola Philippines, Inc., they were considered regular directly related to the principal business of petitioner.
employees of Coca-Cola entitled to security of It is, thus, evident that Interserve falls under the
definition of a labor-only contractor, under Article
A year later, the Court in Agito34similarly struck down 106 of the Labor Code; as well as Section 5(i) of the
Coca-Cola's contention that the salesmen therein Rules Implementing Articles 106-109 of the Labor
were employees of Interserve, notwithstanding the Code, as amended.38
submission by Coca-Cola of their personal data files
from the records of Interserve; their Contract of As for the certification issued by the DOLE stating
Temporary Employment with Interserve; and the that Interserve was an independent job contractor,
payroll records of Interserve. In categorically the Court ruled:
declaring Interserve as a labor-only contractor, 35 the The certification issued by the DOLE stating that
Court found that the work of the respondent Interserve is an independent job contractor does not
salesmen therein, constituting distribution and sale sway this Court to take it at face value, since the
of Coca-Cola products, was clearly indispensable to
primary purpose stated in the Articles of
the principal business of petitioner Coca-Cola.36 Incorporation of Interserve is misleading. According
As to the supposed substantial capital and to its Articles of Incorporation, the principal business
investment required of an independent job of Interserve is to provide janitorial and allied
contractor, the Court stated that it "does not set an services. The delivery and distribution of Coca-Cola
absolute figure for what it considers substantial products, the work for which respondents were
capital for an independent job contractor, but it employed and assigned to petitioner, were in no way
measures the same against the type of work which allied to janitorial services. While the DOLE may
the contractor is obligated to perform for the have found that the capital and/ or investments in
principal."37The Court reiterated that the contractor, tools and equipment of Interserve were sufficient for
an independent contractor for janitorial services, this
does not mean that such capital and/ or investments Time and again, the court has held that it is a very
were likewise sufficient to maintain an independent desirable and necessary judicial practicethat when a
contracting business for the delivery and distribution court has laid down a principle of law as applicable
of Coca-Cola products.39 to a certain state of facts, it will adhere to that
principle and apply it to all future cases in which the
Finally, the Court determined the existence of an facts are substantially the same.Stare decisis et non
employer-employee relationship between the parties quieta movere. Stand by the decisions and disturb
therein considering that the contract of service not what is settled. Stare decisis simply means
between Coca-Cola and Interserve showed that the that for the sake of certainty, a conclusion reached
former indeed exercised the power of control over in one case should be applied to those that follow if
the complainants therein.40 the facts are substantially the same, even though the
The Court once more asserted the findings that parties may be different. It proceeds from the first
route-helpers were indeed employees of Coca-Cola principle of justice that, absent any powerful
in Coca-Cola Bottlers Philippines, Inc. v. Dela countervailing considerations, like cases ought to be
Cruz41and, recently, in Basan v. Coca-Cola Bottlers decided alike. Thus, where the same questions
Philippines, Inc. 42 and that the complainants therein relating to the same event have been put forward by
were illegally dismissed for want of just or authorized the parties similarly situated as in a previous case
cause. Similar dispositions by the CA were also litigated and decided by a competent court, the rule
upheld by this Court in N.O.W43and Ostani,44through of stare decisis is a bar to any attempt to relitigate
minute resolutions. the same issue. 50

It bears mentioning that the arguments raised by [Emphases Supplied]

Coca-Cola in the case at bench even bear a striking Verily, the doctrine has assumed such value in our
similarity with the arguments it raised before the CA judicial system that the Court has ruled
in N.O.W45and Ostani.46 that "[a]bandonment thereof must be based only on
From all these, a pattern emerges by which Coca- strong and compelling reasons, otherwise, the
becoming virtue of predictability which is expected
Cola consistently resorts to various methods in order
to deny its route-helpers the benefits of regular from this Court would be immeasurably affected and
employment. Despite this, the Court, consistent with the public's confidence in the stability of the solemn
sound pronouncements above, adopts the rulings pronouncements diminished."51 Thus, only upon
made in Pacquing that Interserve was a labor-only showing that circumstances attendant in a particular
contractor and that Coca-Cola should be held liable case override the great benefits derived by our
judicial system from the doctrine of stare
pursuant to the principle of stare decisis et non
quieta movere. decisis, can the courts be justified in setting it aside.

It should be remembered that the doctrine of stare In this case, Coca-Cola has not shown any strong
decisis et non quieta movere is embodied in Article and compelling reason to convince the Court that the
8 of the Civil Code of the Philippines which provides: doctrine of stare decisis should not be
applied.1avvphi1 It failed to successfully
ART. 8. Judicial decisions applying or interpreting demonstrate how or why both the LA and the NLRC
the laws or the Constitution shall form a part of the committed grave abuse of discretion in sustaining
legal system of the Philippines.1âwphi1 the pleas of the petitioners that they were its regular
employees and not of Interserve.
And, as explained in Fermin v. People:47
Second. A reading of the decision of the CA and the
The doctrine of stare decisis enjoins adherence to pleadings submitted by Coca-Cola before this Court
judicial precedents. It requires courts in a country to reveals that they both lean heavily on the service
follow the rule established in a decision of the agreement52 entered into by Coca-Cola and
Supreme Court thereof. That decision becomes a Interserve; the admission by Interserve that it paid
judicial precedent to be followed in subsequent the petitioners' salaries; and the affidavit of Sambilay
cases by all courts in the land. The doctrine of stare who attested that it was Interserve which exercised
decisis is based on the principle that once a question the power of control over the petitioners.
of law has been examined and decided, it should be
deemed settled and closed to further argument.48 The service agreements entered into by Coca-Cola
and Interserve, the earliest being that dated January
[Emphasis Supplied] 1998,53(another one dated July 11, 2006)54 and the
most recent one dated March 21, 200755 - all reveal
The Court's ruling in Chinese Young Men's Christian
that they were entered into One, after the petitioners
Association of the Philippine Islands v. Remington
were hired by Coca-Cola (some of whom were hired
Steel Corporation is also worth citing, viz: 49
as early as 1984),Two, after they were dismissed
from their employment sometime in January had been working with the latter for quite sometime
2004,· and Three, after the petitioners filed their when they were subsequently referred to successive
complaint for illegal dismissal on November 10, agencies such as Lipercon, ROMAC, People's
2006 with the LA. Services, and most recently, respondent
Interserve, has not been controverted by the
To quote with approval the observations of the LA: respondents. Even when respondent Coca-Cola
x x x The most formidable obstacle against the filed its reply to the complainants' position paper,
respondent's theory of lack of employer-employee there is nothing therein which disputed
relationship is that complainants have [been] complainant's statements of their services directly
performing the tasks of route-helpers for several with the respondent even before it entered into
years and that practically all of them have been service agreement with respondent Interserve. 56
rendering their services as such even before As to the payment of salaries, although the CA made
respondent Interserve entered into a service mention that it was Interserve which paid the
agreement with Coca-Cola sometime in 1998. Thus, petitioners' salaries, no reference was made to any
the complainants in their position paper categorically evidence to support such a conclusion. The Court,
stated the record of their service with Coca-Cola as on the other hand, gives credence to the petitioners'
having started on the following dates: Emmanuel contention that they were employees of Coca-Cola.
Quintanar - October 15, 1994; Benjamin Durano - Aside from their collective account that it was Coca-
November 16, [1987]; Cecilio Delaving - June 10, Cola's Route Supervisors who provided their daily
1991; Ricardo Gaborni - September 28, 1992; schedules for the distribution of the company's
Romel Gerarman - June 20, 1995; Ramilo Gaviola - products, the petitioners' payslips,57 tax
October 10, 1988; Joel John Aguilar - June 1, 1992; records,58 SSS59 and Pag-Ibig60 records more than
Restituto Agsalud - September 7, 1989; Martin Celis adequately showed that they were being
- August 15, 1995; Patricio Arios - June 2, 1989; compensated by Coca-Cola. More convincingly, the
Michael Bello - February 15, 1992; Lorenzo Quinlog petitioners even presented their employee
- May 15, 1992; Junne Blaya - September 15, 1997; Identification Cards,61 which expressly indicated that
Santiago Tolentino, Jr. - May 29, 1989; Nestor they were "[ d]irect hire[es]" of Coca-Cola.
Magnaye - February 15, 1996; Arnold Polvorido -
February 8, 1996; Allan Agapito - April 15, 1995; As for the affidavit of Sambilay, suffice it to say that
Ariel Baumbad - January 15, 1995; Jose Lutiya - the same was bereft of evidentiary weight,
February 15, 1995; Edgardo Tapalla - August considering that he failed to attest not only that he
was already with Interserve at the time of the
15, 1994; Roldan Cadayona - May 14, 1996; petitioners hiring, but also that he had personal
Raynaldo Alburo - September 15, 1996; Rudy Ultra knowledge of the circumstances surrounding the
- February 28, 1997; Marcelo Cabili - November 15, hiring of the petitioners following their alleged
1995; Arnold Asiaten - May 2, 1992; Raymundo resignation from Coca-Cola.
Macaballug - July 31, 1995; Joel Delena - January
15, 1991; Danilo Oquino - September 15, 1990; Third. As to the characterization of Interserve as a
Greg Caparas - August 15, 1995; and Romeo contractor, the Court finds that, contrary to the
Escartin - May 15, 1986. conclusion reached by the CA, the petitioners were
made to suffer under the prohibited practice of labor-
It should be mentioned that the foregoing allegation only contracting. Article 106 of the Labor Code
of the complainants' onset of their services with provides the definition of what constitutes labor-only
respondent Coca-Cola has been confirmed by the contracting. Thus:
Bio-Data Sheets submitted in evidence by the said
respondent (Coca-Cola]. Thus, in the Bio-Data Article 106. Contractor or subcontractor.- x x x
Sheet of complainant Quintanar (Annex "4"), he
stated therein that he was in the service of There is "labor-only" contracting where the person
respondent Coca-Cola continuously from 1993 up to supplying workers to an employer does not have
2002. Likewise, complainant Quinlog indicated in his substantial capital or investment in the form of tools,
Bio-data Sheet submitted to respondent Interserve equipment, machineries, work premises, among
that he was already in the employ of respondent others, and the workers recruited and placed by
Coca-Cola from 1992 (Annex "12"). Complainant such person are performing activities which are
Edgardo Tapalla also indicated in his Bio-Data directly related to the principal business of such
Sheet that he was already in the employ of Coca- employer. In such cases, the person or intermediary
Cola since 1995 until he was seconded to Interserve shall be considered merely as an agent of the
in 2002 (Annex "20"). employer who shall be responsible to the workers in
the same manner and extent as if the latter were
As a matter of fact, complainants' allegation that they directly employed by him.
were directly hired by respondent Coca-Cola and
Expounding on the concept, the Court Fourth. In this connection, even granting that the
in Agito explained: petitioners were last employed by Interserve, the
record is bereft of any evidence that would show that
The law clearly establishes an employer-employee the petitioners voluntarily resigned from their·
relationship between the principal employer and the employment with Coca-Cola only to be later hired by
contractor's employee upon a finding that the Interserve. Other than insisting that the petitioners
contractor is engaged in '1abor-only" contracting. were last employed by Interserve, Coca-Cola failed
Article 106 of the Labor Code categorically states: not only to show by convincing evidence how it
"There is 'labor-only' contracting where the person severed its employer relationship with the
supplying workers to an employer does not have petitioners, but also to prove that the termination of
substantial capital or investment in the form of tools, its relationship with them was made through any of
equipment, machineries, work premises, among the grounds sanctioned by law.
others, and the workers recruited and placed by
such persons are performing activities which are The rule is long and well-settled that, in illegal
directly related to the principal business of such dismissal cases such as the one at bench, the
employer." Thus, performing activities directly burden of proof is upon the employer to show that
related to the principal business of the employer is the employees' termination from service is for a just
only one of the two indicators that "labor-only" and valid cause. 66 The employer's case succeeds
contracting exists; the other is lack of substantial or fails on the strength of its evidence and not the
capital or investment. The Court finds that both weakness of that adduced by the employee,67 in
indicators exist in the case at bar. keeping with the principle that the scales of justice
must be tilted in favor of the latter in case doubts
[Emphases and Underscoring Supplied] exist over the evidence presented by the parties.68
In this case, the appellate court considered the For failure to overcome this burden, the Court
evidence of Interserve that it was registered with the concurs in the observation of the LA that it was
DOLE as independent contractor and that it had a highly inconceivable for the petitioners, who were
total capitalization of ₱27,509,716.32 and already enjoying a stable job at a multi-national
machineries and equipment worth company, to leave and become mere agency
P12,538859.55. As stated above, however, the workers. Indeed, it is contrary to human experience
possession of substantial capital is only one that one would leave a stable employment in a
element. Labor-only contracting exists when any of company like Coca-Cola, only to become a worker
the two elements is present. 63 Thus, even if the of an agency like Interserve, and be assigned back
Court would indulge Coca-Cola and admit that to his original employer - Coca-Cola.
Interserve had more than sufficient capital or
investment in the form of tools, equipment, Although it has been said that among the four (4)
machineries, work premises, still, it cannot be tests to determine the existence of any employer-
denied that the petitioners were performing activities employee relationship, it is the "control test" that is
which were directly related to the principal business most persuasive, the courts cannot simply ignore the
of such employer. Also, it has been ruled that no other circumstances obtaining in each case in order
absolute figure is set for what is considered to determine whether an employer-employee
'substantial capital' because the same is measured relationship exists between the parties.
against the type of work which the contractor is
obligated to perform for the principal. 64 WHEREFORE, the petition is GRANTED. The July
11, 2013 Decision and the December 5, 2013
More importantly, even if Interserve were to be Resolution of the Court of Appeals, in CA-G.R. SP
considered as a legitimate job contractor, Coca-Cola No. 115469 are REVERSED and SET ASIDE and
failed to rebut the allegation that petitioners were the August 29, 2008 Decision of the Labor Arbiter in
transferred from being its employees to become the NLRC Case Nos. 12-13956-07 and 12-14277-07, as
employees of ISI, Lipercon, PSI, and ROMAC, which affirmed in toto by the National Labor Relations
were labor-only contractors. Well-settled is the rule Commission, is hereby REINSTATED.
that "[t]he contractor, not the employee, has the
burden of proof that it has the substantial capital, SO ORDERED.
investment, and tool to engage in job
contracting." 65 In this case, the said burden of proof
lies with Coca-Cola although it was not the G.R. No. 202961 February 4, 2015
contractor itself, but it was the one invoking the
supposed status of these entities as independent job EMER MILAN, RANDY MASANGKAY, WILFREDO
MATUNDAN, NORA MENDOZA, et al., Petitioners,
vs. 3. The UNION acknowledges that in view of the
NATIONAL LABOR RELATIONS COMMISSION, serious business losses the Company has been
·SOLID MILLS, INC., and/or PHILIP experiencing as seen in their audited financial
ANG, Respondents. statements, employees ARE NOT granted
separation benefits under the law.
4. The COMPANY, by way of goodwill and in the
LEONEN, J.: spirit of generosity agrees to grant financial
An employer is allowed to withhold terminal pay and assistance less accountabilities to members of the
benefits pending the employee's return of its Union based on length of service to be computed as
properties. follows: (Italics in this paragraph supplied)

Petitioners are respondent Solid Mills, Inc.' s (Solid Number of days - 12.625 for every year of service
Mills) employees.1 They are represented by the 5. In view of the above, the members of the UNION
National Federation of Labor Unions (NAFLU), their will receive such financial assistance on an equal
collective bargaining agent.2 monthly installments basis based on the following
As Solid Mills’ employees, petitionersand their
families were allowed to occupy SMI Village, a First Check due on January 5, 2004 and every 5th of
property owned by Solid Mills.3 According to Solid the month thereafter until December 5, 2004.
Mills, this was "[o]ut of liberality and for the
convenience of its employees . . . [and] on the 6. The COMPANY commits to pay any accrued
condition that the employees . . . would vacate the benefits the Union members are entitled to,
premises anytime the Company deems fit."4 specifically those arising from sick and vacation
leave benefits and 13th month pay, less
In September 2003, petitioners were informed that accountabilities based on the following schedule:
effective October 10, 2003, Solid Mills would cease
its operations due to serious business One Time Cash Payment to bedistributed anywhere
losses. NAFLU recognized Solid Mills’ closure due
from. . . .
to serious business losses in the memorandum of
agreement dated September 1, 2003.6 The ....
memorandum of agreement provided for Solid Mills’ 8. The foregoing agreement is entered into with full
grant of separation pay less accountabilities, knowledge by the parties of their rights under the law
accrued sick leave benefits, vacation leave benefits,
and they hereby bind themselves not to conduct any
and 13th month pay to the employees.7 Pertinent concerted action of whatsoever kind, otherwise the
portions of the agreement provide: grant of financial assistance as discussed above will
WHEREAS, the COMPANYhas incurred substantial be withheld.8 (Emphasis in the original)
financial losses and is currently experiencing further Solid Mills filed its Department of Labor and
severe financial losses; Employment termination report on September 2,
WHEREAS, in view of such irreversible financial 2003.9
losses, the COMPANY will cease its operations on
Later, Solid Mills, through Alfredo Jingco, sent to
October 10, 2003; petitioners individual notices to vacate SMI Village.10
WHEREAS, all employees of the COMPANY on Petitioners were no longer allowed to report for work
account of irreversible financial losses, will by October 10, 2003.11 They were required to sign a
bedismissed from employment effective October 10, memorandum of agreement with release and
2003; quitclaim before their vacation and sick leave
In view thereof, the parties agree as follows: benefits, 13th month pay, and separation pay would
be released.12 Employees who signed the
1. That UNION acknowledges that the COMPANY is memorandum of agreement were considered to
experiencing severe financial losses and as a have agreed to vacate SMI Village, and to the
consequence of which, management is constrained demolition of the constructed houses inside as
to cease the company’s operations. condition for the release of their termination benefits
and separation pay.13 Petitioners refused to sign the
2. The UNION acknowledges that under Article 283 documents and demanded to be paid their benefits
of the Labor Code, separation pay is granted to and separation pay.14
employees who are dismissed due to closures or
cessation of operations NOT DUE to serious Hence, petitioners filed complaintsbefore the Labor
business losses. Arbiter for alleged non-payment of separation pay,
accrued sick and vacation leaves, and 13th month total amount of ₱10,974.97, shall be paid only their
pay.15 They argued that their accrued benefits and separation pay of 12.625 days’ pay per year of
separation pay should not be withheld becausetheir service but also with 12% interest p.a. from date of
payment is based on company policy and filing of the lead case/judicial demand on 12/08/03
practice.16 Moreover, the 13th month pay is based until actual payment and/or finality, which
on law, specifically, Presidential Decree No. computation as of date, amount to as shown in the
851.17 Their possession of Solid Mills property is not attached computation sheet.
an accountability that is subject to clearance
procedures.18 They had already turned over to 3) Nine (9) individual complaintsviz., of Maria Agojo,
SolidMills their uniforms and equipment when Solid Joey Suarez, Ronaldo Vergara, Ronnie Vergara,
Mills ceased operations.19 Antonio R. Dulo, Sr., Bryan D. Durano, Silverio P.
Durano, Sr., Elizabeth Duarte and Purificacion
On the other hand, Solid Mills argued that Malabanan are DISMISSED WITH PREJUDICE due
petitioners’ complaint was premature because they to amicable settlement, whereas, that of [RONIE
had not vacated its property.20 ARANAS], [EMILITO NAVARRO], [NONILON
The Labor Arbiter ruled in favor of PASCO] are DISMISSED WITHOUT PREJUDICE,
petitioners. According to the Labor Arbiter, Solid for lack of interest and/or failure to prosecute.
Mills illegallywithheld petitioners’ benefits and
separation pay.22 Petitioners’ right to the payment of The Computation and Examination unit is directed to
their benefits and separation pay was vestedby law cause the computation of the award in Pars. 2 and 3
and contract.23 The memorandum of agreement above.28(Emphasis in the original)
dated September 1, 2003 stated no condition to the
effect that petitioners must vacate SolidMills’ Solid Mills appealed to the National Labor Relations
property before their benefits could be given to Commission.29 It prayed for, among others, the
them.24Petitioners’ possession should not be dismissal of the complaints against it and the
construed as petitioners’ "accountabilities" that must reversal of the Labor Arbiter’s decision.30
be cleared first before the release of benefits.25 Their
The National Labor Relations Commission affirmed
possession "is not by virtue of any employer- paragraph 3 of the Labor Arbiter’s dispositive
employee relationship."26 It is a civil issue, which portion, but reversed paragraphs 1 and 2. Thus:
isoutside the jurisdiction of the Labor Arbiter.27
WHEREFORE, the Decision of Labor Arbiter
The dispositive portion of the Labor Arbiter’s Renaldo O. Hernandez dated 10/17/05 is
decision reads: AFFIRMED in so far as par. 3 thereof is concerned
WHEREFORE, premises considered, judgment is but modified in that paragraphs 1 and 2 thereof are
entered ORDERING respondents SOLID MILLS, REVERSED and SET ASIDE. Accordingly, the
INC. and/or PHILIP ANG (President), in solido to pay following complainants, namely: Emir Milan, Ramon
the remaining 21 complainants: Masangkay, Alfredo Javier, Ronaldo David,
Bonifacio Matundan, Nora Mendoza, Myrna Igcas,
1) 19 of which, namely EMER MILAN, RAMON Raul De Las Alas, Renato Estolano, Rex S.
MASANGKAY, ALFREDO JAVIER, RONALDO Dimaf[e]lix, Maura Milan, Jessica Baybayon, Alfredo
DAVID, BONIFACIO MATUNDAN, NORA Mendoza, Roberto Igcas, Cleopatra Zacarias and
MENDOZA, MYRNA IGCAS, RAUL DE LAS ALAS, Jerry L. Sesma’s monetary claims in the form of
RENATO ESTOLANO, REX S. DIMAFELIX, separation pay, accrued 13th month pay for 2003,
MAURA MILAN, JESSICA BAYBAYON, ALFREDO accrued vacation and sick leave pays are held in
MENDOZA, ROBERTO IGCAS, ISMAEL MATA, abeyance pending compliance of their
CARLITO DAMIAN, TEODORA MAHILOM, accountabilities to respondent company by turning
MARILOU LINGA, RENATO LINGA their separation over the subject lots they respectively occupy at SMI
pay of 12.625 days’ pay per year of service, pro- Village Sucat
rated 13th month pay for 2003 and accrued vacation
and sick leaves, plus 12% interest p.a. from date of Muntinlupa City, Metro Manila to herein respondent
filing of the leadcase/judicial demand on 12/08/03 company.31
until actual payment and/or finality; The National Labor Relations Commission noted
2) the remaining 2 of which, complainants that complainants Marilou Linga, Renato Linga,
CLEOPATRA ZACARIAS, as she already received IsmaelMata, and Carlito Damian were already paid
on 12/19/03 her accrued 13th month pay for 2003, their respective separation pays and
accrued VL/SL total amount of ₱15,435.16, likewise, benefits. Meanwhile, Teodora Mahilom already
complainant Jerry L. Sesma as he already received retired longbefore Solid Mills’ closure.33 She was
his accrued 13th month pay for 2003, SL/VL in the already given her retirement benefits.34
The National Labor Relations Commission ruled that In the resolution promulgated on July 16, 2012, the
because of petitioners’ failure to vacate Solid Mills’ Court of Appeals denied petitioners’ motion for
property, Solid Mills was justified in withholding their reconsideration.53
benefits and separation pay.35 Solid Mills granted
the petitioners the privilege to occupy its property on Petitioners raise in this petition the following errors:
accountof petitioners’ employment.36 It had the I
prerogative toterminate such privilege.37 The
termination of Solid Mills and petitioners’ employer- WHETHER OR NOT THE HONORABLE COURT
employee relationship made it incumbent upon OF APPEALS COMMITTED REVERSIBLE ERROR
petitioners to turn over the property to Solid Mills.38 WHEN IT RULED THAT PAYMENT OF THE
Petitioners filed a motion for partial reconsideration BE HELD IN ABEYANCE PENDING COMPLIANCE
on October 18, 2010,39 but this was denied in the OF THEIR ACCOUNTABILITIES TO
November 30, 2010 resolution.40 RESPONDENT SOLID MILLS BY TURNING OVER
Petitioners, thus, filed a petition for certiorari41 before THE SUBJECT LOTS THEY RESPECTIVELY
the Court of Appeals to assail the National OCCUPY AT SMI VILLAGE, SUCAT,
LaborRelations Commission decision of August 31, MUNTINLUPA CITY.
2010 and resolution of November 30, 2010.42 II
On January 31, 2012, the Court of Appeals issued a WHETHER OR NOT THE HONORABLE COURT
decision dismissing petitioners’ petition,43 thus: OF APPEALS COMMITTED REVERSIBLE ERROR
WHEREFORE, the petition is hereby ordered WHEN IT UPHELD THE RULING OF THE NLRC
The Court of Appeals ruled thatSolid Mills’ act of ARBITER HERNANDEZ ON THE AMOUNTDUE
allowing its employees to make temporary FROM THE DATE OF FILING OF THE LEAD
dwellingsin its property was a liberality on its part. It CASE/JUDICIAL DEMAND ON DECEMBER 8,
may be revoked any time at its discretion.45 As a 2003 UNTIL ACTUAL PAYMENT AND/OR
consequence of Solid Mills’ closure and the resulting FINALITY.
termination of petitioners, the employer-employee
relationship between them ceased to exist. There III
was no more reason for them to stay in Solid Mills’ WHETHER OR NOT THE HONORABLE COURT
property.46 Moreover, the memorandum of OF APPEALS COMMITTED REVERSIBLE ERROR
agreement between Solid Mills and the union WHEN IT UPHELD THE RULING OF THE NLRC
representing petitioners provided that Solid Mills’
payment of employees’ benefits should be "less FOR PAYMENT OF RETIREMENT BENEFITS
On petitioners’ claim that there was no evidence that RECEIVED THE SAME.
Teodora Mahilom already received her retirement IV
pay, the Court of Appeals ruled that her complaint
filed before the Labor Arbiter did not include a claim WHETHER OR NOT PETITIONER CARLITO
for retirement pay. The issue was also raised for the DAMIAN IS ENTITLED TO HIS MONETARY
first time on appeal, which is not allowed.48 In any BENEFITS FROM RESPONDENT SOLID MILLS.54
case, she already retired before Solid Mills ceased
its operations.49 Petitioners argue that respondent Solid Mills and
NAFLU’s memorandum of agreement has no
The Court of Appeals agreed with the National Labor provision stating that benefits shall be paid only upon
Relations Commission’s deletion of interest since it return of the possession of respondent Solid Mills’
found that Solid Mills’ act of withholding payment of property.55 It only provides that the benefits shall be
benefits and separation pay was proper. Petitioners’ "less accountabilities," which should not be
terminal benefits and pay were withheld because of interpreted to include such possession.56 The fact
petitioners’ failure to vacate Solid Mills’ property.50 that majority of NAFLU’s members were not
occupants of respondent Solid Mills’ property is
Finally, the Court of Appeals noted that Carlito evidence that possession of the property was not
Damian already received his separation pay and contemplated in the agreement.57 "Accountabilities"
benefits.51Hence, he should no longer be awarded should be interpreted to refer only to accountabilities
these claims.52 that wereincurred by petitioners while they were
performing their duties asemployees at the
worksite.58 Moreover, applicable laws, company monetary benefits again, which he, admittedly,
practice, or policies do not provide that 13th month already received from Solid Mills.73
pay, and sick and vacation leave pay benefits, may
be withheld pending satisfaction of liabilities by the I
employee.59 The National Labor Relations Commission may
Petitioners also point out thatthe National Labor preliminarily determine issues related to rights
Relations Commission and the Court of Appeals arising from an employer-employee relationship
have no jurisdiction to declare that petitioners’ act of The National Labor Relations Commission has
withholding possession of respondent Solid Mills’ jurisdiction to determine, preliminarily, the
property is illegal.60The regular courts have parties’rights over a property, when it is necessary
jurisdiction over this issue.61 It is independent from to determine an issue related to rights or claims
the issue of payment of petitioners’ monetary arising from an employer-employee relationship.
Article 217 provides that the Labor Arbiter, in his or
For these reasons, and because, according to her original jurisdiction, and the National Labor
petitioners, the amount of monetary award is no Relations Commission, in its appellate jurisdiction,
longer in question, petitioners are entitled to 12% may determine issues involving claims arising from
interest per annum.63 employeremployee relations. Thus:
Petitioners also argue that Teodora Mahilom and ART. 217. JURISDICTION OF LABOR ARBITERS
Carlito Damian are entitled to their claims. They AND THE COMMISSION. – (1) Except as otherwise
insistthat Teodora Mahilom did not receive her provided under this Code, the Labor Arbiters shall
retirement benefits and that Carlito Damian did not
have original and exclusive jurisdiction to hear and
receive his separation benefits.64 decide within thirty (30) calendar days after the
Respondents Solid Mills and Philip Ang,in their joint submission of the case by the parties for decision
comment, argue that petitioners’ failure to turn over without extension, even in the absence of
respondentSolid Mills’ property "constituted an stenographic notes, the following cases involving
unsatisfied accountability" for which reason workers, whether agricultural or non-agricultural:
"petitioners’ benefits could rightfully be 1. Unfair labor practice cases;
withheld."65 The term "accountability" should be
given its natural and ordinary meaning.66 Thus, it 2. Termination disputes;
should be interpreted as "a state of being liable or
responsible," or "obligation."67 Petitioners’ 3. If accompanied with a claim for reinstatement,
differentiation between accountabilities incurred those cases that workers may file involving wages,
while performing jobs at the worksite and rates of pay, hours of work and other terms and
accountabilities incurred outside the worksite is conditions of employment;
baseless because the agreement with
4. Claims for actual, moral, exemplary and other
NAFLUmerely stated "accountabilities," without
forms of damages arising from the employer-
employee relations;
On the removal of the award of 12% interest per
5. Cases arising from any violation of Article 264 of
annum, respondents argue that such removal was
this Code, including questions involving the legality
proper since respondent Solid Mills was justified in
of strikes and lockouts; and
withholding the monetary claims.69 Respondents
argue that Teodora Mahilom had no more cause of 6. Except claims for Employees Compensation,
action for retirement benefits claim.70 She had Social Security, Medicare and maternity benefits, all
already retired more than a decade before Solid other claims, arising from employer-employee
Mills’ closure. She also already received her relations including those of persons in domestic or
retirement benefits in 1991.71 Teodora Mahilom’s household service, involving an amount exceeding
claim was also not included in the complaint filed five thousand pesos (₱5,000.00), regardless of
before the Labor Arbiter.It was improper to raise this whether accompanied with a claim for
claim for the first time on appeal. In any case, reinstatement.
Teodora Mahilom’s claim was asserted long after
the three-year prescriptive period provided in Article (2) The Commission shall have exclusive appellate
291 of the Labor Code.72 jurisdiction over all cases decided by Labor Arbiters.
(Emphasis supplied)
Lastly, according to respondents, it would be unjust
if Carlito Damian would be allowed to receive Petitioners’ claim that they have the right to the
immediate release of their benefits as employees
separated from respondent Solid Mills is a question II
arising from the employer-employee relationship
between the parties. Institution of clearance procedures has legal bases

Claims arising from an employer-employee Requiring clearance before the release of last
relationship are not limited to claims by an payments to the employee is a standard procedure
employee. Employers may also have claims against among employers, whether public or private.
the employee, which arise from the same Clearance procedures are instituted to ensure that
relationship. In Bañez v. Valdevilla,74 this court ruled the properties, real or personal, belonging to the
that Article 217 of the Labor Code also applies to employer but are in the possession of the separated
employers’ claim for damages, which arises from or employee, are returned tothe employer before the
is connected with the labor issue. Thus: Whereas employee’s departure.
this Court in a number of occasions had applied the As a general rule, employers are prohibited from
jurisdictional provisions of Article 217 to claims for withholding wages from employees. The Labor
damages filed by employees, we hold that by the Code provides:
designating clause "arising from the employer-
employee relations" Article 217 should apply with Art. 116. Withholding of wages and kickbacks
equal force to the claim of an employer for actual prohibited.It shall be unlawful for any person, directly
damages against its dismissed employee, where the or indirectly, to withhold any amount from the wages
basis for the claim arises from or is necessarily of a worker or induce him to give up any part of his
connected with the factof termination, and should be wages by force, stealth, intimidation, threat or by any
entered as a counterclaim in the illegal dismissal other means whatsoever without the worker’s
case.75 consent.

Bañez was cited in Domondon v. National Labor The Labor Code also prohibits the elimination or
Relations Commission.76 One of the issues in diminution of benefits. Thus:
Domondonis whether the Labor Arbiter has
jurisdiction to decide an issue on the transfer of Art. 100. Prohibition against elimination or
ownership of a vehicle assigned to the employee. It diminution of benefits. Nothing in this Book shall be
was argued that only regular courts have jurisdiction construed to eliminate or in any way diminish
to decide the issue.77 supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.
This court ruled that since the transfer of ownership
of the vehicle to the employee was connected to his However, our law supports the employers’ institution
separation from the employer and arose from the of clearance procedures before the release of
employer-employee relationship of the parties, the wages. As an exception to the general rule that
employer’s claim fell within the LaborArbiter’s wages may not be withheld and benefits may not be
jurisdiction.78 diminished, the Labor Code provides:

As a general rule, therefore, a claim only needs to Art. 113. Wage deduction.No employer, in his own
be sufficiently connected to the labor issue behalf or in behalf of any person, shall make any
raisedand must arise from an employeremployee deduction from the wages of his employees, except:
relationship for the labortribunals to have
1. In cases where the worker is insured with his
consent by the employer, and the deduction is to
In this case, respondent Solid Mills claims that its recompense the employer for the amount paid by
properties are in petitioners’ possession by virtue of him as premium on the insurance;
their status as its employees. Respondent Solid Mills
2. For union dues, in cases where the right of the
allowed petitioners to use its property as an act of
worker or his union to check-off has been recognized
liberality. Put in other words, it would not have
by the employer or authorized in writing by the
allowed petitioners to use its property had they not
individual worker concerned; and
been its employees. The return of its properties in
petitioners’ possession by virtue of their status as 3. In cases where the employer is authorized by law
employees is an issue that must be resolved to or regulations issued by the Secretary of Labor and
determine whether benefits can be released Employment. (Emphasis supplied)
immediately. The issue raised by the employer is,
therefore, connected to petitioners’ claim for benefits The Civil Code provides that the employer is
and is sufficiently intertwined with the parties’ authorized to withhold wages for debts due:
employeremployee relationship. Thus, it is properly
Article 1706. Withholding of the wages, except for a
within the labor tribunals’ jurisdiction.
debt due, shall not be made by the employer.
"Debt" in this case refers to any obligation due from the period of February 1-15, 2000 was applied as
the employee to the employer. It includes any partial payment for his debt and for withholding taxes
accountability that the employee may have to the on his income; while for the period of February 15-
employer. There is no reason to limit its scope to 28, 2000, petitioner was already on absence without
uniforms and equipment, as petitioners would argue. leave, hence, was not entitled to any pay.81

More importantly, respondent Solid Mills and The law does not sanction a situation where
NAFLU, the union representing petitioners, agreed employees who do not even assert any claim over
that the release of petitioners’ benefits shall be "less the employer’s property are allowed to take all the
accountabilities." benefits out of their employment while they
simultaneously withhold possession of their
"Accountability," in its ordinary sense, means employer’s property for no rightful reason.
obligation or debt. The ordinary meaning of the term Withholding of payment by the employer does not
"accountability" does not limit the definition of mean that the employer may renege on its obligation
accountability to those incurred in the worksite. As to pay employees their wages, termination
long as the debt or obligation was incurred by virtue payments, and due benefits. The employees’
of the employer-employee relationship, generally, it benefits are also not being reduced. It is only
shall be included in the employee’s accountabilities subjectedto the condition that the employees return
that are subject to clearance procedures. properties properly belonging to the employer. This
It may be true that not all employees enjoyed the is only consistent with the equitable principle that "no
privilege of staying in respondent Solid Mills’ one shall be unjustly enriched or benefited at the
property. However, this alone does not imply that expense of another."82
this privilege when enjoyed was not a result of the For these reasons, we cannot hold that petitioners
employer-employee relationship. Those who did are entitled to interest of their withheldseparation
avail of the privilege were employees of respondent benefits. These benefits were properly withheld by
Solid Mills. Petitioners’ possession should, respondent Solid Mills because of their refusal to
therefore, be included in the term "accountability." return its property.
Accountabilities of employees are personal. They III
need not be uniform among all employees in order
to be included in accountabilities incurred by virtue Mahilom and Damian are not entitled to the benefits
of an employer-employee relationship. Petitioners claimed
do not categorically deny respondent Solid Mills’
ownership of the property, and they do not claim Teodora Mahilom is not entitled to separation
superior right to it. What can be gathered from the benefits.
findings ofthe Labor Arbiter, National Labor Both the National Labor Relations Commission and
Relations Commission, and the Court ofAppeals is the Court of Appeals found that Teodora Mahilom
that respondent Solid Mills allowed the use of its already retired long before respondent Solid Mills’
property for the benefit of petitioners as its closure. They found that she already received her
employees. Petitioners were merely allowed to retirement benefits. We have no reason to disturb
possess and use it out of respondent Solid Mills’ this finding. This court is not a trier of facts. Findings
liberality. The employer may, therefore, demand the of the National Labor Relations Commission,
property at will.79 especially when affirmed by the Court of Appeals,
The return of the property’s possession became an are binding upon this court.83
obligation or liability on the part of the employees Moreover, Teodora Mahilom’s claim for retirement
when the employer-employee relationship ceased. benefits was not included in her complaint filed
Thus, respondent Solid Mills has the right to withhold before the Labor Arbiter. Hence, it may not be raised
petitioners’ wages and benefitsbecause of this in the appeal.
existing debt or liability. In Solas v. Power and
Telephone Supply Phils., Inc., et al., this court Similarly, the National Labor Relations Commission
recognized this right of the employer when it ruled and the Court of Appeals found that Carlito Damian
that the employee in that case was not constructively already received his terminal benefits. Hence, he
dismissed.80 Thus: may no longer claim terminal benefits. The fact that
respondent Solid Mills has not yet demolished
There was valid reason for respondents’ withholding Carlito Damian’s house in SMI Village is not
of petitioner’s salary for the month of February 2000. evidence that he did not receive his benefits. Both
Petitioner does not deny that he is indebted to his the National Labor Relations Commission and the
employer in the amount of around 95,000.00. Court of Appeals found that he executed an affidavit
Respondents explained that petitioner’s salary for stating that he already received the benefits.
A bsent any showing that the National Labor The instant petition arose from a complaint for illegal
Relations Commission and the Court of Appeals dismissal filed by petitioner against respondents with
misconstrued these facts, we will not reverse these the NLRC, National Capital Region, Quezon City.
findings. Petitioner alleged that: on August 1, 2003, he was
hired by respondent corporation as administrator of
Our laws provide for a clear preference for labor. the latter's Eye Referral Center (ERC); he performed
This is in recognition of the asymmetrical power of his duties as administrator and continuously
those with capital when they are left to negotiate with received his monthly salary of ₱20,000.00 until the
their workers without the standards and protection of end of January 2005; beginning February 2005,
law. In cases such as these, the collective respondent withheld petitioner's salary without
bargaining unit of workers are able to get more notice but he still continued to report for work; on
benefits and in exchange, the owners are able to April 11, 2005, petitioner wrote a letter to respondent
continue with the program of cutting their losses or Manuel Agulto (Agulto), who is the Executive
wind down their operations due to serious business Director of respondent corporation, informing the
losses. The company in this case did all that was latter that he has not been receiving his salaries
required by law. since February 2005 as well as his 14th month pay
The preferential treatment given by our law to labor, for 2004; petitioner did not receive any response
however, is not a license for abuse.84 It is not a signal from Agulto; on April 21, 2005, petitioner was
to commit acts of unfairness that will unreasonably informed by the Assistant to the Executive Director
infringe on the property rights of the company. Both as well as the Assistant Administrative Officer, that
he is no longer the Administrator of the ERC;
labor and employer have social utility, and the law is
not so biased that it does not find a middle ground to subsequently, petitioner’s office was padlocked and
give each their due. closed without notice; he still continued to report for
work but on April 29, 2005 he was no longer allowed
Clearly, in this case, it is for the workers to return by the security guard on duty to enter the premises
their housing in exchange for the release of their of the ERC.
benefits.1âwphi1This is what they agreed upon. It is
what is fair in the premises. On their part, respondents contended that: upon
petitioner's representation that he is an expert
WHEREFORE, the petition is DENIED. The Court of incorporate organizational structure and
Appeals' decision is AFFIRMED. management affairs, they engaged his services as a
consultant or adviser in the formulation of an
MARVIC M.V.F. LEONEN updated organizational set-up and employees'
Associate Justice manual which is compatible with their present
condition; based on his claim that there is a need for
an administrator for the ERC, he later designated
G.R. No. 189255 June 17, 2015 himself as such on a trial basis; there is no employer-
employee relationship between them because
JESUS G. REYES, Petitioner, respondents had no control over petitioner in terms
vs. of working hours as he reports for work at anytime of
GLAUCOMA RESEARCH FOUNDATION, INC., the day and leaves as he pleases; respondents also
EYE REFERRAL CENTER and MANUEL B. had no control as to the manner in which he
AGULTO, Respondents. performs his alleged duties as consultant; he
became overbearing and his relationship with the
DECISION employees and officers of the company soured
PERALTA, J.: leading to the filing of three complaints against him;
petitioner was not dismissed as he was the one who
Before the Court is a petition for review on certiorari voluntarily severed his relations with respondents.
seeking to reverse and set aside the Decision1 and On January 20, 2006, the LA assigned to the case
Resolution2 of the Court of Appeals (CA), dated April rendered a Decision3 dismissing petitioner's
20, 2009 and August 25, 2009, respectively, in CA- complaint. The LA held, among others, that
G.R. SP No. 104261. The assailed CA Decision petitioner failed to establish that the elements of an
annulled the Decision of the National Labor employer-employee relationship existed between
Relations Commission (NLRC) in NLRC NCR Case him and respondents because he was unable to
No. 05-0441-05 and reinstated the Decision of the show that he was, in fact, appointed as administrator
Labor Arbiter (LA) in the same case, while the CA of the ERC and received salaries as such; he also
Resolution denied petitioner's motion for failed to deny that during his stint with respondents,
reconsideration. he was, at the same time, a consultant of various
government agencies such as the Manila
International Airport Authority, Manila As to the first ground, petitioner contends that
Intercontinental Port Authority, Anti-Terrorist Task respondents' petition for certiorari filed with the CA
Force for Aviation and Air Transportation Sector; his should have been dismissed on the ground that it
actions were neither supervised nor controlled by was improperly verified because the jurat portion of
the management of the ERC; petitioner, likewise, did the verification states only the community tax
not observe working hours by reporting for work and certificate number of the affiant as evidence of her
leaving therefrom as he pleased; and, he was identity. Petitioner argues that under the 2004 Rules
receiving allowances, not salaries, as a consultant. on Notarial Practice, as amended by a
Resolution8 of this Court, dated February 19, 2008,
On appeal, the NLRC reversed and set aside the a community tax certificate is not among those
Decision of the LA. The NLRC declared petitioner as considered as competent evidence of identity.
respondents' employee, that he was illegally
dismissed and ordered respondents to reinstate him The Court does not agree.
to his former position without loss of seniority rights
and privileges with full backwages. The NLRC held This Court has already ruled that competent
that the basis upon which the conclusion of the LA evidence of identity is not required in cases where
was drawn lacked support; that it was incumbent for the affiant is personally known to the notary public.9
respondents to discharge the burden of proving that Thus, in Jandoquile v. Revilla, Jr.,10 this Court held
petitioner's dismissal was for cause and effected
after due process was observed; and, that
respondents failed to discharge this burden.4 If the notary public knows the affiants personally, he
need not require them to show their valid
Respondents filed a motion for reconsideration, but identification cards.1âwphi1 This rule is supported
it was denied by the NLRC in its Resolution5 dated by the definition of a "jurat" under Section 6, Rule II
May 30, 2008. of the 2004 Rules on Notarial Practice. A "jurat"
Respondents then filed a Petition for Certiorari6 with refers to an act in which an individual on a single
the CA. occasion: (a) appears in person before the notary
public and presents an instrument or document; (b)
In its assailed Decision, the CA annulled and set is personally known to the notary public or identified
aside the judgment of the NLRC and reinstated the by the notary public through competent evidence of
Decision of the LA. The CA held that the LA was identity; (c) signs the instrument or document in the
correct in ruling that, under the control test and the presence of the notary; and (d) takes an oath or
economic reality test, no employer-employee affirmation before the notary public as to such
relationship existed between respondents and instrument or document.11
Also, Section 2(b), Rule IV of the 2004 Rules on
Petitioner filed a motion for reconsideration, but the Notarial Practice provides as follows:
CA denied it in its Resolution dated August 25, 2009.
SEC. 2. Prohibitions –
Hence, the present petition for review on certiorari
based on the following grounds: (a) x x x

I (b) A person shall not perform a notarial act if the

person involved as signatory to the instrument or
DISMISSING RESPONDENTS' PETITION FOR (1) is not in the notary's presence personally at the
CERTIORARI ON THE GROUND THAT time of the notarization; and
RESPONDENTS SUBMITTED A VERIFICATION (2) is not personally known to the notary public or
THATFAILS TO COMPLY WITH THE 2004 RULES otherwise identified by the notary public through
ON NOTARIAL PRACTICE. competent evidence of identity as defined by these
II Rules.

THE HONORABLE COURT OF APPEALS ERRED Moreover, Rule II, Section 6 of the same Rules
THATNO EMPLOYER-EMPLOYEE SEC 6. Jurat. – "Jurat" refers to an act in which an
RELATIONSHIP EXISTS BETWEEN individual on a single occasion:
(a) appears in person before the notary public and
presents an instrument or document;
(b) is personally known to the notary public or justice would not be served. The law abhors
identified by the notary public through competent technicalities that impede the cause of justice. The
evidence of identity as defined by these Rules; court's primary duty is to render or dispense justice.
"It is a more prudent course of action for the court to
(c) signs the instrument or document in the presence excuse a technical lapse and afford the parties a
of the notary; and review of the case on appeal rather than dispose of
(d) takes an oath or affirmation before the notary the case on technicality and cause a grave injustice
public as to such instrument or document. to the parties, giving a false impression of speedy
disposal of cases while actually resulting in more
In legal hermeneutics, "or" is a disjunctive that delay, if not miscarriage of justice."
expresses an alternative or gives a choice of one
among two or more things.12 The word signifies What should guide judicial action is the principle that
disassociation and independence of one thing from a party-litigant should be given the fullest opportunity
another thing in an enumeration.13 to establish the merits of his complaint or defense
rather than for him to lose life, liberty, honor, or
Thus, as earlier stated, if the affiant is personally property on technicalities. The rules of procedure
known to the notary public, the latter need not should be viewed as mere tools designed to facilitate
require the former to show evidence of identity as the attainment of justice. Their strict and rigid
required under the 2004 Rules on Notarial Practice, application, which would result in technicalities that
as amended. tend to frustrate rather than promote substantial
justice, must always be eschewed. At this juncture,
Applying the above rule to the instant case, it is the Court reminds all members of the bench and bar
undisputed that the attorney-in-fact of respondents of the admonition in the often-cited case of Alonso v.
who executed the verification and certificate against Villamor:
forum shopping, which was attached to respondents'
petition filed with the CA, is personally known to the Lawsuits, unlike duels, are not to be won by a
notary public before whom the documents were rapier's thrust. Technicality, when it deserts its
acknowledged. Both attorney-in-fact and the notary proper office as an aid to justice and becomes its
public hold office at respondents' place of business great hindrance and chief enemy, deserves scant
and the latter is also the legal counsel of consideration from courts. There should be no
respondents. vested rights in technicalities.15

In any event, this Court's disquisition in the fairly Anent the second ground, petitioner insists that,
recent case of Heirs of Amada Zaulda v. Isaac based on evidence on record, an employer-
Zaulda14 regarding the import of procedural rules employee relationship exists between him and
vis-à-vis the substantive rights of the parties, is respondents.
instructive, to wit:
The Court is not persuaded.
[G]ranting, arguendo, that there was non-
compliance with the verification requirement, the It is a basic rule of evidence that each party must
prove his affirmative allegation.16 If he claims a right
rule is that courts should not be so strict about
procedural lapses which do not really impair the granted by law, he must prove his claim by
proper administration of justice. After all, the higher competent evidence, relying on the strength of his
objective of procedural rule is to ensure that the own evidence and not upon the weakness of that of
his opponent.17 The test for determining on whom
substantive rights of the parties are protected.
Litigations should, as much as possible, be decided the burden of proof lies is found in the result of an
on the merits and not on technicalities. Every party- inquiry as to which party would be successful if no
litigant must be afforded ample opportunity for the evidence of such matters were given.18 In an illegal
proper and just determination of his case, free from dismissal case, the onus probandi rests on the
the unacceptable plea of technicalities. employer to prove that its dismissal of an employee
was for a valid cause.19 However, before a case for
In Coca-Cola Bottlers v. De la Cruz, where the illegal dismissal can prosper, an employer-employee
verification was marred only by a glitch in the relationship must first be established.20 Thus, in filing
evidence of the identity of the affiant, the Court was a complaint before the LA for illegal dismissal, based
of the considered view that, in the interest of justice, on the premise that he was an employee of
the minor defect can be overlooked and should not respondents, it is incumbent upon petitioner to prove
defeat the petition. the employer-employee relationship by substantial
The reduction in the number of pending cases is
laudable, but if it would be attained by precipitate, if In regard to the above discussion, the issue of
not preposterous, application of technicalities, whether or not an employer-employee relationship
existed between petitioner and respondents is how the work itself is done, not just the end result
essentially a question of fact.22 The factors that thereof.
determine the issue include who has the power to
select the employee, who pays the employee’s Well settled is the rule that where a person who
wages, who has the power to dismiss the employee, works for another performs his job more or less at
and who exercises control of the methods and his own pleasure, in the manner he sees fit, not
results by which the work of the employee is subject to definite hours or conditions of work, and is
accomplished.23 Although no particular form of compensated according to the result of his efforts
evidence is required to prove the existence of the and not the amount thereof, no employer-employee
relationship, and any competent and relevant relationship exists.30
evidence to prove the relationship may be admitted, What was glaring in the present case is the
a finding that the relationship exists must undisputed fact that petitioner was never subject to
nonetheless rest on substantial evidence, which is definite working hours. He never denied that he goes
that amount of relevant evidence that a reasonable to work and leaves therefrom as he pleases.31 In
mind might accept as adequate to justify a fact, on December 1-31, 2004, he went on leave
conclusion.24 without seeking approval from the officers of
Generally, the Court does not review factual respondent company. On the contrary, his
questions, primarily because the Court is not a trier letter32 simply informed respondents that he will be
of facts.25 However, where, like here, there is a away for a month and even advised them that they
conflict between the factual findings of the LA and have the option of appointing his replacement during
the CA, on one hand, and those of the NLRC, on the his absence. This Court has held that there is no
other, it becomes proper for the Court, in the employer-employee relationship where the
exercise of its equity jurisdiction, to review and re- supposed employee is not subject to a set of rules
evaluate the factual issues and to look into the and regulations governing the performance of his
records of the case and re-examine the questioned duties under the agreement with the company and is
findings.26 not required to report for work at any time, nor to
devote his time exclusively to working for the
Etched in an unending stream of cases are four company.33
standards in determining the existence of an
employer-employee relationship, namely: (a) the In this regard, this Court also agrees with the ruling
manner of selection and engagement of the putative of the CA that:
employee; (b) the mode of payment of wages; (c) the Aside from the control test, the Supreme Court has
presence or absence of power of dismissal; and, (d)
also used the economic reality test in determining
the presence or absence of control of the putative whether an employer-employee relationship exists
employee’s conduct. Most determinative among between the parties. Under this test, the economic
these factors is the so-called "control test."27 realities prevailing within the activity or between the
Indeed, the power of the employer to control the parties are examined, taking into consideration the
work of the employee is considered the most totality of circumstances surrounding the true nature
significant determinant of the existence of an of the relationship between the parties. This is
employer-employee relationship.28 This test is especially appropriate when, as in this case, there is
premised on whether the person for whom the no written agreement or contract on which to base
services are performed reserves the right to control the relationship. In our jurisdiction, the benchmark of
both the end achieved and the manner and means economic reality in analyzing possible employment
used to achieve that end.29 relationships for purposes of applying the Labor
Code ought to be the economic dependence of the
In the present case, petitioner contends that, as worker on his employer. In the instant case, as
evidence of respondents' supposed control over shown by the resume of [petitioner], he concurrently
him, the organizational plans he has drawn were held consultancy positions with the Manila
subject to the approval of respondent corporation's International Airport Authority (from 04 March 2001
Board of Trustees. However, the Court agrees with to September 2003 and from 01 November 2004 up
the disquisition of the CA on this matter, to wit: to the present) and the Anti-Terrorist Task Force for
Aviation and Air Transportation Sector (from 16 April
[Respondents'] power to approve or reject the 2004 to 30 June 2004) during his stint with the Eye
organizational plans drawn by [petitioner] cannot be Referral Center (from 01 August 2003 to 29 April
the control contemplated in the "control test." It is but 2005). Accordingly, it cannot be said that the
logical that one who commissions another to do a [petitioner] was wholly dependent on [respondent]
piece of work should have the right to accept or company.34
reject the product. The important factor to consider
in the "control test" is still the element of control over
In bolstering his contention that there was an existence of an employer-employee
employer-employee relationship, petitioner draws 42
relationship. In this regard, even the identification
attention to the pay slips he supposedly received card which was issued to petitioner is not an
from respondent corporation. However, he does not adequate proof of petitioner's claim that he is
dispute the findings of the CA that there are no respondents' employee. In addition, petitioner’s
deductions for SSS and withholding tax from his designation as an administrator neither disproves
compensation, which are the usual deductions from respondents' contention that he was engaged only
employees' salaries. Thus, the alleged pay slips may as a consultant.
not be treated as competent evidence of petitioner's
claim that he is respondents' employee. As a final point, it bears to reiterate that while the
Constitution is committed to the policy of social
In addition, the designation of the payments to justice and the protection of the working class, it
petitioner as salaries, is not determinative of the should not be supposed that every labor dispute will
existence of an employer-employee be automatically decided in favor of
35 43
relationship. Salary is a general term defined as a labor. Management also has its rights which are
remuneration for services given.36 Evidence of this entitled to respect and enforcement in the interest of
fact, in the instant case, was the cash voucher simple fair play.44 Out of its concern for the less
issued in favor of petitioner where it was stated privileged in life, the Court has inclined, more often
therein that the amount of ₱20,000.00 was given as than not, toward the worker and upheld his cause in
petitioner's allowance for the month of December his conflicts with the employer.45 Such favoritism,
2004, although it appears from the pay slip that the however, has not blinded the Court to the rule that
said amount was his salary for the same period. justice is in every case for the deserving, to be
dispensed in the light of the established facts and
Additional evidence of the fact that petitioner was the applicable law and doctrine.46
hired as a consultant and not as an employee of
respondent corporation are affidavits to this effect WHEREFORE, the instant petition is DENIED. The
which were executed by Roy Oliveres37 and Aurea Decision and Resolution of the Court of Appeals,
Luz Esteva,38 who are Medical Records Custodian dated April 20, 2009 and August 25, 2009,
and Administrative Officer, respectively, of respectively, in CA-G.R. SP No. 104261, are
respondent corporation. Petitioner insists in its AFFIRMED.
objection of the use of these affidavits on the ground
that they are, essentially, hearsay. However, this SO ORDERED.
Court has ruled that although the affiants had not
been presented to affirm the contents of their
affidavits and be cross-examined, their affidavits July 5, 2016
may be given evidentiary value; the argument that
such affidavits were hearsay was not G.R. No. 220978
persuasive.39 Likewise, this Court ruled that it was
not necessary for the affiants to appear and testify
and be cross-examined by counsel for the adverse
party.40 To require otherwise would be to negate the
CONCEPCION, Respondents.
rationale and purpose of the summary nature of the
proceedings mandated by the Rules and to make DECISION
mandatory the application of the technical rules of
evidence.41 PERLAS-BERNABE, J.:

These affidavits are corroborated by evidence, as Assailed in this petition for review on certiorari1are
discussed above, showing that petitioner has no the Decision2 dated April 8, 2015 and the
definite working hours and is not subject to the Resolution3 dated October 12, 2015 of the Court of
control of respondents. Appeals (CA) in CA-G.R. SP No. 132953, which
affirmed with modification the Decision4 dated June
Lastly, the Court does not agree with petitioner's 25, 2013 and the Resolution5 dated October 16,
insistence that his being hired as respondent 2013 of the National Labor Relations Commission
corporation's administrator and his designation as (NLRC) in NLRC LAC No. 05-001615-12, and
such in intra-company correspondence proves that ordered petitioner Century Properties, Inc. (CPI) to
he is an employee of the corporation. The fact alone pay respondents Edwin J. Babiano (Babiano) and
that petitioner was designated as an administrator Emma B. Concepcion (Concepcion; collectively,
does not necessarily mean that he is an employee respondents) unpaid commissions in the amounts of
of respondents. Mere title or designation in a P889,932.42 and P591,953.05, respectively.
corporation will not, by itself, determine the
The Facts Clause" when he joined a competitor enterprise
while still working for CPI and provided such
On October 2, 2002, Babiano was hired by CPI as competitor enterprise information regarding CPI' s
Director of Sales, and was eventually6 appointed as marketing strategies; and (c) recruiting CPI
Vice President for Sales effective September 1, personnel to join a competitor.21
2007. As CPI' s Vice President for Sales, Babiano
was remunerated with, inter alia, the following On the other hand, Concepcion resigned as CPI's
benefits: (a) monthly salary of Project Director through a letter22 dated February 23,
P70,000.00; (b) allowance of P50,000.00; and (c) 2009, effective immediately.
0.5% override commission for completed sales. His
employment contract7 also contained a On August 8, 2011, respondents filed a
"Confidentiality of Documents and Non:-Compete complaint23 for non-payment of commissions and
Clause"8which, among others, barred him from damages against CPI and Antonio before the NLRC,
disclosing confidential information, and from working docketed as NLRC Case No. NCR-08-12029-11,
in any business enterprise that is in direct claiming that their repeated demands for the
competition with CPI "while [he is] employed and for payment and release of their commissions remained
a period of one year from date of resignation or unheeded.24
termination from [CPI]." Should Babiano breach any For its part, CPI maintained25 that Babiano is merely
of the terms thereof, his "forms of compensation,
its agent tasked with selling its projects.
including commissions and incentives will be Nonetheless, he was afforded due process in the
forfeited."9 termination of his employment which was based on
During the same period, Concepcion was initially just causes.26 It also claimed to have validly withheld
hired as Sales Agent by CPI and was Babiano' s commissions, considering that they were
eventually10 promoted as Project Director on deemed forfeited for violating the "Confidentiality of
September 1, 2007.11 As such, she signed an Documents and Non-Compete Clause."27 On
employment agreement, denominated as "Contract Concepcion's money claims, CPI asserted that the
of Agency for Project Director"12 which provided, NLRC had no jurisdiction to hear the same because
among others, that she would directly report to there was no employer-employee relations between
Babiano, and receive a monthly subsidy of them, and thus, she should have litigated the same
P60,000.00, 0.5% commission, and cash in an ordinary civil action.28
incentives.13 On March 31, 2008, Concepcion The LA Ruling
executed a similar contract14 anew with CPI in which
she would receive a monthly subsidy of P50,000.00, In a Decision29 dated March 19, 2012, the Labor
0.5% commission, and cash incentives as per Arbiter (LA) ruled in CPI's favor and, accordingly,
company policy. Notably, it was stipulated in both dismissed the complaint for lack of merit.30 The LA
contracts that no employer-employee relationship found that: (a) Babiano's acts of providing
exists between Concepcion and CPI.15 information on CPI’s marketing strategies to the
competitor and spreading false information about
After receiving reports that Babiano provided a CPI and its projects are blatant violations of the
competitor with information regarding CPI's "Confidentiality of Documents and Non-Compete
marketing strategies, spread false information Clause" of his employment contract, thus, resulting
regarding CPI and its projects, recruited CPI's in the forfeiture of his unpaid commissions in
personnel to join the competitor, and for being accordance with the same clause;31 and (b) it had no
absent without official leave (AWOL) for five (5) jurisdiction over Concepcion's money claim as she
days, CPI, through its Executive Vice President for was not an employee but a mere agent of CPI, as
Marketing and Development, Jose Marco R. Antonio clearly stipulated in her engagement contract with
(Antonio), sent Babiano a Notice to Explain16 on the latter.32
February 23, 2009 directing him to explain why he
should not be charged with disloyalty, conflict of Aggrieved, respondents appealed33 to the
interest, and breach of trust and confidence for his NLRC.1âwphi1
The NLRC Ruling
On February 25, 2009, Babiano tendered18 his
resignation and revealed that he had been accepted In a Decision34 dated June 25, 2013, the NLRC
as Vice President of First Global BYO Development reversed and set aside the LA ruling, and entered a
Corporation (First Global), a competitor of CPI.19 On new one ordering CPI to pay Babiano and
March 3, 2009, Babiano was served a Notice of Concepcion the amounts of P685,211.76 and
Termination20 for: (a) incurring AWOL; (b) violating P470,754.62, respectively, representing their
the "Confidentiality of Documents and Non-Compete commissions from August 9, 2008 to August 8, 2011,
as well as 10% attorney's fees of the total monetary dispute that is best resolved by the regular courts
awards.35 and not by labor tribunals.46

While the NLRC initially concurred with the LA that Similarly, the CA echoed the NLRC's finding that
Babiano's acts constituted just cause which would there exists an employer-employee relationship
warrant the termination of his employment from CPI, between Concepcion and CPI, because the latter
it, however, ruled that the forfeiture of all earned exercised control over the performance of her duties
commissions ofBabiano under the "Confidentiality of as Project Director which is indicative of an
Documents and Non-Compete Clause" is employer-employee relationship. Necessarily
confiscatory and unreasonable and hence, contrary therefore, CPI also exercised control over
to law and public policy.36 In this light, the NLRC held Concepcion's duties in recruiting, training, and
that CPI could not invoke such clause to avoid the developing directors of sales because she was
payment of Babiano's commissions since he had supervised by Babiano in the performance of her
already earned those monetary benefits and, thus, functions. The CA likewise observed the presence of
should have been released to him. However, the critical factors which were indicative of an employer-
NLRC limited the grant of the money claims in light employee relationship with CPI, such
of Article 291 (now Article 306)37 of the Labor Code as: (a) Concepcion's receipt of a monthly salary from
which provides for a prescriptive period of three (3) CPI; and (b) that she performed tasks besides
years. Consequently,· the NLRC awarded unpaid selling CPI properties. To add, the title of her
commissions only from August 9, 2008 to August 8, contract which was referred to as "Contract of
2011 - i.e., which was the date when the complaint Agency for Project Director" was not binding and
was filed.38 Meanwhile, contrary to the LA's finding, conclusive, considering that the characterization of
the NLRC ruled that Concepcion was CPI's the juridical relationship is essentially a matter of law
employee, considering that CPI: (a) repeatedly hired that is for the courts to determine, and not the parties
and promoted her since 2002; (b) paid her wages thereof. Moreover, the totality of evidence sustains a
despite referring to it as "subsidy"; and (c) exercised finding of employer-employee relationship between
the power of dismissal and control over her.39 Lastly, CPI and Concepcion.47
the NLRC granted respondents' claim for attorney's
fees since they were forced to litigate and incurred Further, the CA held that despite the NLRC's proper
expenses for the protection of their rights and application of the three (3)-year prescriptive period
interests.40 under Article 291 of the Labor Code, it nonetheless
failed to include all of respondents' earned
Respondents did not assail the NLRC findings. In commissions during that time - i.e., August 9, 2008
contrast, only CPI moved for to August 8, 2011 - thus, necessitating the increase
reconsideration,41 which the NLRC denied in a in award of unpaid commissions in respondents'
Resolution42 dated October 16, 2013. Aggrieved, favor.48
CPI filed a petition for certiorari43before the CA.
Undaunted, CPI sought for reconsideration,49 which
The CA Ruling was, however, denied in a Resolution50 dated
October 12, 2015; hence, this petition.
In a Decision44 dated April 8, 2015, the CA affirmed
the NLRC ruling with modification increasing the The Issue Before the Court
award of unpaid commissions to Babiano and
Concepcion in the amounts of P889,932.42 and The core issue for the Court's resolution is whether
P591,953.05, respectively, and imposing interest of or not the CA erred in denying CPI's petition
six percent (6%) per annum on all monetary awards for certiorari, thereby holding it liable for the unpaid
from the finality of its decision until fully paid.45 commissions of respondents.

The CA held that Babiano properly instituted his The Court's Ruling
claim for unpaid commissions before the labor The petition is partly meritorious.
tribunals as it is a money claim arising from an
employer-employee relationship with CPI. In this I.
relation, the CA opined that CPI cannot withhold
such unpaid commissions on the ground of Article 1370 of the Civil Code provides that "[i]f the
Babiano's alleged breach of the "Confidentiality of terms of a contract are clear and leave no doubt
Documents and Non-Compete Clause" integrated in upon the intention of the contracting parties, the
the latter's employment contract, considering that literal meaning of its stipulations shall
such clause referred to acts done after the cessation control." In Norton Resources and Development
of the employer-employee relationship or to the Corporation v. All Asia Bank Corporation,52the Court
"post-employment" relations of the parties. Thus, had the opportunity to thoroughly discuss the said
any such supposed breach thereof is a civil law rule as follows:
The rule is that where the language of a contract is The undersigned agrees to pay all costs, expenses
plain and unambiguous, its meaning should be and attorney's fees incurred by the Company in
determined without reference to extrinsic facts or connection with the enforcement of the obligations
aids. The intention of the parties must be gathered of the undersigned. The undersigned also agrees to
from that language, and from that language .pay the Company all profits, revenues and income
alone. Stated differently, where the language of a or benefits derived by or accruing to the undersigned
written contract is clear and unambiguous, the resulting from the undersigned's breach of the
contract must be taken to mean that which, on its obligations hereunder. This Agreement shall be
face, it purports to mean, unless some good reason binding upon the undersigned, all employees,
can be assigned to show that the words should be agents, officers, directors, shareholders, partners
understood in a different sense. Courts cannot make and representatives of the undersigned and all heirs,
for the parties better or more equitable agreements successors and assigns of the foregoing.
than they themselves have been satisfied to make,
or rewrite contracts because they operate harshly or Finally, if undersigned breaches any terms of this
inequitably as to one of the parties, or alter them for contract, forms of compensation including
the benefit of one party and to the detriment of the commissions and incentives will be
other, or by construction, relieve one of the parties forfeited. (Emphases and underscoring supplied)
from the terms which he voluntarily consented to, or Verily, the foregoing clause is not only clear and
impose on him those which he did not.53 (Emphases unambiguous in stating that Babiano is barred to
and underscoring supplied) "work for whatsoever capacity x x x with any person
Thus, in the interpretation of contracts, the Court whose business is in direct competition with [CPI]
must first determine whether a provision or while [he is] employed and for a period of one year
stipulation therein is ambiguous. Absent any from date of [his] resignation or termination from the
ambiguity, the provision on its face will be read as it company," it also expressly provided in no uncertain
is written and treated as the binding law of the terms that should Babiano "[breach] any term of [the
parties to the contract.54 employment contract], forms of compensation
including commissions and incentives will be
In the case at bar, CPI primarily invoked the forfeited." Here, the contracting parties - namely
"Confidentiality of Documents and Non-Compete Babiano on one side, and CPI as represented by its
Clause" found in Babiano's employment COO-Vertical, John Victor R. Antonio, and Director
contract to justify the forfeiture of his for Planning and Controls, Jose Carlo R. Antonio, on
commissions, viz.: the other - indisputably wanted the said clause to be
effective even during the existence of the employer-
Confidentiality of Documents and Non-Compete employee relationship between Babiano and CPI,
Clause thereby indicating their intention to be bound by such
All records and documents of the company and all clause by affixing their respective signatures to the
employment contract. More significantly, as CPI's
information pertaining to its business or affairs or
that of its affiliated companies are confidential and Vice President for Sales, Babiano held a highly
no unauthorized disclosure or reproduction or the sensitive and confidential managerial position as he
same will be made by you any time during or after "was tasked, among others, to guarantee the
achievement of agreed sales targets for a project
your employment.
and to ensure that his team has a qualified and
And in order to ensure strict compliance herewith, competent manpower resources by conducting
you shall not work for whatsoever capacity, either as recruitment activities, training sessions, sales rallies,
an employee, agent or consultant with any person motivational activities, and evaluation
whose business is in direct competition with the programs." Hence, to allow Babiano to freely move
company while you are employed and for a period of to direct competitors during and soon after his
one year from date of resignation or termination from employment with CPI would make the latter's trade
the company. secrets vulnerable to exposure, especially in a highly
competitive marketing environment. As such, it is
In the event the undersigned breaches any term of only reasonable that CPI and Babiano agree on such
this contract, the undersigned agrees and stipulation in the latter's employment contract in
acknowledges that damages may not be an order to afford a fair and reasonable protection to
adequate remedy and that in addition to any other CPI.58 Indubitably, obligations arising from
remedies available to the Company at law or in contracts, including employment contracts, have the
equity, the Company is entitled to enforce its rights force of law between the contracting parties and
hereunder by way of injunction, restraining order or should be complied with in good faith.59 Corollary
other relief to enjoin any breach or default of this thereto, parties are bound by the stipulations,
contract. clauses, terms, and conditions they have agreed to,
provided that these stipulations, clauses, terms, and over her person and that she performed functions
conditions are not contrary to law, morals, public that were necessary and desirable to the business
order or public policy,60 as in this case. of CPI; (b) the monthly "subsidy" and cash
incentives that Concepcion was receiving from CPI
Therefore, the CA erred in limiting the are actually remuneration in the concept of wages
"Confidentiality of Documents and Non-Compete as it was regularly given to her on a monthly basis
Clause" only to acts done after the cessation of the without any qualification, save for the "complete
employer-employee relationship or to the "post- submission of documents on what is a sale
employment" relations of the parties. As clearly policy";65 (c) CPI had the power to discipline or even
stipulated, the parties wanted to apply said clause dismiss Concepcion as her engagement contract
during the pendency of Babiano' s employment, and with CPI expressly conferred upon the latter "the
CPI correctly invoked the same before the labor right to discontinue [her] service anytime during the
tribunals to resist the farmer's claim for unpaid Eeriod of engagement should [she] fail to meet the
commissions on account of his breach of the said performance standards,"66 among others, and that
clause while the employer-employee relationship CPI actually exercised such power to dismiss when
between them still subsisted. Hence, there is now a it accepted and approved Concepcion' s resignation
need to determine whether or not Babiano breached letter; and most importantly, (d) as aptly pointed out
said clause while employed by CPI, which would by the CA, CPI possessed the power of control over
then resolve the issue of his entitlement to his unpaid Concepcion because in the performance of her
commissions. duties as Project Director - particularly in the conduct
of recruitment activities, training sessions, and skills
A judicious review of the records reveals that in his
resignation letter61 dated February 25, 2009, development of Sales Directors - she did not
Babiano categorically admitted to CPI Chairman exercise independent discretion thereon, but was
Jose Antonio that on February 12, 2009, he sought still subject to the direct supervision of CPI, acting
through BabiaNo. 67
employment from First Global, and five (5) days
later, was admitted thereto as vice president. From Besides, while the employment agreement of
the foregoing, it is evidently clear that when he Concepcion was denominated as a "Contract of
sought and eventually accepted the said position Agency for Project Director," it should be stressed
with First Global, he was still employed by CPI as he that the existence of employer-employee relations
has not formally resigned at that time. Irrefragably, could not be negated by the mere expedient of
this is a glaring violation of the "Confidentiality of repudiating it in a contract. In the case of Insular Life
Documents and Non-Compete Clause" in his Assurance Co., Ltd. v. NLRC,68 it was ruled that
employment contract with CPI, thus, justifying the one's employment status is defined and prescribed
forfeiture of his unpaid commissions. by law, and not by what the parties say it should
II. be, viz.:

It is axiomatic that the existence of an employer-

Anent the nature of Concepcion' s engagement,
based on case law, the presence of the following employee relationship cannot be negated by
elements evince the existence of an employer- expressly repudiating it in the management contract
employee relationship: (a) the power to hire, i.e., the and providing therein that the "employee" is an
independent contractor when the terms of the
selection and engagement of the employee;(b) the
payment of wages; (c) the power of dismissal; agreement clearly show otherwise. For, the
and (d) the employer's power to control the employment status of a person is defined and
employee's conduct, or the so called "control test." prescribed by law and not by what the parties say it
The control test is commonly regarded as the most should be. In determining the status of the
important indicator of the presence or absence of an management contract, the "four-fold test" on
employer-employee relationship.62 Under this test, employment earlier mentioned has to be
an employer-employee relationship exists where the applied.69 (Emphasis and underscoring supplied)
person for whom the services are performed Therefore, the CA correctly ruled that since there
reserves the right to control not only the end exists an employer-employee relationship between
achieved, but also the manner and means to be Concepcion and CPI, the labor tribunals correctly
used in reaching that end.63 assumed jurisdiction over her money claims.
Guided by these parameters, the Court finds that III.
Concepcion was an employee of CPI considering
that: (a) CPI continuously hired and promoted Finally, CPI contends that Concepcion's failure to
Concepcion from October 2002 until her resignation assail the NLRC ruling awarding her the amount of
on February 23, 2009,64 thus, showing that CPI P470,754.62 representing unpaid commissions
exercised the power of selection and engagement rendered the same final and binding upon her. As
Such, the CA erred in increasing her monetary PHILIPPINE AIRLINES, INC. (PAL), petitioner,
award to P591,953.05.70 vs.
The contention lacks merit. LABOR ARBITER ISABEL P. ORTIGUERRA and
As a general rule, a party who has not appealed PHILIPPINE AIRLINES EMPLOYEES
cannot obtain any affirmative relief other than the ASSOCIATION (PALEA), respondents.
one granted in the appealed Solon Garcia for petitioner.
decision.1avvphi1 However, jurisprudence admits
an exception to the said rule, such as when strict Adolpho M. Guerzon for respondent PALEA.
adherence thereto shall result in the impairment of
the substantive rights of the parties concerned.
In Global Resource for Outsourced Workers, Inc. v. MELO, J.:
In the instant petition for certiorari, the Court is
Indeed, a party who has failed to appeal from a presented the issue of whether or not the formulation
judgment is deemed to have acquiesced to it and of a Code of Discipline among employees is a
can no longer obtain from the appellate court any
shared responsibility of the employer and the
affirmative relief other than what was already employees.
granted under said judgment. However, when strict
adherence to such technical rule will impair a On March 15, 1985, the Philippine Airlines, Inc.
substantive right, such as that of an illegally (PAL) completely revised its 1966 Code of
dismissed employee to monetary compensation as Discipline. The Code was circulated among the
provided by law, then equity dictates that the Court employees and was immediately implemented, and
set aside the rule to pave the way for a full and just some employees were forthwith subjected to the
adjudication of the case. 72 (Emphasis and disciplinary measures embodied therein.
underscoring supplied)
Thus, on August 20, 1985, the Philippine Airlines
In the present case, the CA aptly pointed out that the Employees Association (PALEA) filed a complaint
NLRC failed to account for all the unpaid before the National Labor Relations Commission
commissions due to Concepcion for the period of (NLRC) for unfair labor practice (Case No. NCR-7-
August 9, 2008 to August 8, 201l.73 Indeed, 2051-85) with the following remarks: "ULP with
Concepcion's right to her earned commissions is a arbitrary implementation of PAL's Code of Discipline
substantive right which cannot be impaired by an without notice and prior discussion with Union by
erroneous computation of what she really is entitled Management" (Rollo, p. 41). In its position paper,
to. Hence, following the dictates of equity and in PALEA contended that PAL, by its unilateral
order to arrive at a complete and just resolution of implementation of the Code, was guilty of unfair
the case, and avoid a piecemeal dispensation of labor practice, specifically Paragraphs E and G of
justice over the same, the CA correctly recomputed Article 249 and Article 253 of the Labor Code.
Concepcion' s unpaid commissions, notwithstanding PALEA alleged that copies of the Code had been
her failure to seek a review of the NLRC's circulated in limited numbers; that being penal in
computation of the same. nature the Code must conform with the requirements
of sufficient publication, and that the Code was
In sum, the Court thus holds that the commissions of arbitrary, oppressive, and prejudicial to the rights of
Babiano were properly forfeited for violating the
the employees. It prayed that implementation of the
"Confidentiality of Documents and Non-Compete Code be held in abeyance; that PAL should discuss
Clause." On the other hand, CPI remains liable for the substance of the Code with PALEA; that
the unpaid commissions of Concepcion in the sum employees dismissed under the Code be reinstated
of P591,953.05. and their cases subjected to further hearing; and that
WHEREFORE, the petition is PARTLY GRANTED. PAL be declared guilty of unfair labor practice and
The Decision dated April 8, 2015 and the Resolution be ordered to pay damages (pp. 7-14, Record.)
dated October 12, 2015 of the Court of Appeals (CA)
PAL filed a motion to dismiss the complaint,
in CA-G.R. SP No. 132953 are hereby MODIFIED in asserting its prerogative as an employer to prescibe
that the commissions of respondent Edwin J. rules and regulations regarding employess' conduct
Babiano are deemed FORFEITED. The rest of the in carrying out their duties and functions, and
CA Decision stands. alleging that by implementing the Code, it had not
SO ORDERED. violated the collective bargaining agreement (CBA)
or any provision of the Labor Code. Assailing the
G.R. No. 85985 August 13, 1993 complaint as unsupported by evidence, PAL
maintained that Article 253 of the Labor Code cited
by PALEA reffered to the requirements for Section 7, likewise quoted above, is "objectionable
negotiating a CBA which was inapplicable as indeed for it violates the rule against double jeopardy
the current CBA had been negotiated. thereby ushering in two or more punishment for the
same misdemeanor." (pp. 38-39, Rollo.)
In its reply to PAL's position paper, PALEA
maintained that Article 249 (E) of the Labor Code The labor arbiter also found that PAL "failed to prove
was violated when PAL unilaterally implemented the that the new Code was amply circulated." Noting that
Code, and cited provisions of Articles IV and I of PAL's assertion that it had furnished all its
Chapter II of the Code as defective for, respectively, employees copies of the Code is unsupported by
running counter to the construction of penal laws and documentary evidence, she stated that such "failure"
making punishable any offense within PAL's on the part of PAL resulted in the imposition of
contemplation. These provisions are the following: penalties on employees who thought all the while
that the 1966 Code was still being followed. Thus,
Sec. 2. Non-exclusivity. — This Code does not the arbiter concluded that "(t)he phrase ignorance of
contain the entirety of the rules and regulations of the law excuses no one from compliance . . . finds
the company. Every employee is bound to comply application only after it has been conclusively shown
with all applicable rules, regulations, policies, that the law was circulated to all the parties
procedures and standards, including standards of concerned and efforts to disseminate information
quality, productivity and behaviour, as issued and regarding the new law have been exerted. (p.
promulgated by the company through its duly 39, Rollo.) She thereupon disposed:
authorized officials. Any violations thereof shall be
punishable with a penalty to be determined by the WHEREFORE, premises considered, respondent
gravity and/or frequency of the offense. PAL is hereby ordered as follows:

Sec. 7. Cumulative Record. — An employee's record 1. Furnish all employees with the new Code of
of offenses shall be cumulative. The penalty for an Discipline;
offense shall be determined on the basis of his past
record of offenses of any nature or the absence 2. Reconsider the cases of employees meted with
thereof. The more habitual an offender has been, the penalties under the New Code of Discipline and
greater shall be the penalty for the latest offense. remand the same for further hearing; and
Thus, an employee may be dismissed if the number 3. Discuss with PALEA the objectionable provisions
of his past offenses warrants such penalty in the
specifically tackled in the body of the decision.
judgment of management even if each offense
considered separately may not warrant dismissal. All other claims of the complainant union (is) [are]
Habitual offenders or recidivists have no place in hereby, dismissed for lack of merit.
PAL. On the other hand, due regard shall be given
to the length of time between commission of SO ORDERED. (p. 40, Rollo.)
individual offenses to determine whether the
PAL appealed to the NLRC. On August 19, 1988, the
employee's conduct may indicate occasional lapses
NLRC through Commissioner Encarnacion, with
(which may nevertheless require sterner disciplinary
Presiding Commissioner Bonto-Perez and
action) or a pattern of incorrigibility.
Commissioner Maglaya concurring, found no
Labor Arbiter Isabel P. Ortiguerra handling the case evidence of unfair labor practice committed by PAL
called the parties to a conference but they failed to and affirmed the dismissal of PALEA's charge.
appear at the scheduled date. Interpreting such Nonetheless, the NLRC made the following
failure as a waiver of the parties' right to present observations:
evidence, the labor arbiter considered the case
Indeed, failure of management to discuss the
submitted for decision. On November 7, 1986, a
provisions of a contemplated code of discipline
decision was rendered finding no bad faith on the
which shall govern the conduct of its employees
part of PAL in adopting the Code and ruling that no
would result in the erosion and deterioration of an
unfair labor practice had been committed. However,
otherwise harmonious and smooth relationship
the arbiter held that PAL was "not totally fault free"
between them as did happen in the instant case.
considering that while the issuance of rules and
There is no dispute that adoption of rules of conduct
regulations governing the conduct of employees is a
or discipline is a prerogative of management and is
"legitimate management prerogative" such rules and
imperative and essential if an industry, has to survive
regulations must meet the test of "reasonableness,
in a competitive world. But labor climate has
propriety and fairness." She found Section 1 of the
progressed, too. In the Philippine scene, at no time
Code aforequoted as "an all embracing and all
in our contemporary history is the need for a
encompassing provision that makes punishable any
cooperative, supportive and smooth relationship
offense one can think of in the company"; while
between labor and management more keenly felt if
we are to survive economically. Management can no union or its employees its prerogative of formulating
longer exclude labor in the deliberation and adoption a code of discipline.
of rules and regulations that will affect them.
PAL asserts that when it revised its Code on March
The complainant union in this case has the right to 15, 1985, there was no law which mandated the
feel isolated in the adoption of the New Code of sharing of responsibility therefor between employer
Discipline. The Code of Discipline involves security and employee.
of tenure and loss of employment — a property right!
It is time that management realizes that to attain Indeed, it was only on March 2, 1989, with the
effectiveness in its conduct rules, there should be approval of Republic Act No. 6715, amending Article
candidness and openness by Management and 211 of the Labor Code, that the law explicitly
participation by the union, representing its members. considered it a State policy "(t)o ensure the
In fact, our Constitution has recognized the principle participation of workers in decision and policy-
of "shared responsibility" between employers and making processes affecting the rights, duties and
workers and has likewise recognized the right of welfare." However, even in the absence of said clear
workers to participate in "policy and decision-making provision of law, the exercise of management
process affecting their rights . . ." The latter provision prerogatives was never considered boundless.
was interpreted by the Constitutional Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it
Commissioners to mean participation in was held that management's prerogatives must be
"management"' (Record of the Constitutional without abuse of discretion.
Commission, Vol. II). In San Miguel Brewery Sales Force Union (PTGWO)
In a sense, participation by the union in the adoption vs. Ople (170 SCRA 25 [1989]), we upheld the
of the code if conduct could have accelerated and company's right to implement a new system of
enhanced their feelings of belonging and would have distributing its products, but gave the following
resulted in cooperation rather than resistance to the caveat:
Code. In fact, labor-management cooperation is now So long as a company's management prerogatives
"the thing." (pp. 3-4, NLRC Decision ff. p. 149,
are exercised in good faith for the advancement of
Original Record.) the employer's interest and not for the purpose of
Respondent Commission thereupon disposed: defeating or circumventing the rights of the
employees under special laws or under valid
WHEREFORE, premises considered, we modify the agreements, this Court will uphold them.
appealed decision in the sense that the New Code (at p. 28.)
of Discipline should be reviewed and discussed with
complainant union, particularly the disputed All this points to the conclusion that the exercise of
provisions [.] (T)hereafter, respondent is directed to managerial prerogatives is not unlimited. It is
furnish each employee with a copy of the appealed circumscribed by limitations found in law, a collective
Code of Discipline. The pending cases adverted to bargaining agreement, or the general principles of
in the appealed decision if still in the arbitral level, fair play and justice (University of Sto. Tomas vs.
should be reconsidered by the respondent Philippine NLRC, 190 SCRA 758 [1990]). Moreover, as
Air Lines. Other dispositions of the Labor Arbiter are enunciated in Abbott Laboratories (Phil.), vs.
sustained. NLRC (154 713 [1987]), it must be duly established
that the prerogative being invoked is clearly a
SO ORDERED. (p. 5, NLRC Decision.) managerial one.

PAL then filed the instant petition A close scrutiny of the objectionable provisions of
for certiorari charging public respondents with grave the Code reveals that they are not purely business-
abuse of discretion in: (a) directing PAL "to share its oriented nor do they concern the management
management prerogative of formulating a Code of aspect of the business of the company as in the San
Discipline"; (b) engaging in quasi-judicial legislation Miguel case. The provisions of the Code clearly
in ordering PAL to share said prerogative with the have repercusions on the employee's right to
union; (c) deciding beyond the issue of unfair labor security of tenure. The implementation of the
practice, and (d) requiring PAL to reconsider provisions may result in the deprivation of an
pending cases still in the arbitral level (p. 7, Petition; employee's means of livelihood which, as correctly
p. 8, Rollo.) pointed out by the NLRC, is a property right
(Callanta, vs Carnation Philippines, Inc., 145 SCRA
As stated above, the Principal issue submitted for 268 [1986]). In view of these aspects of the case
resolution in the instant petition is whether which border on infringement of constitutional rights,
management may be compelled to share with the we must uphold the constitutional requirements for
the protection of labor and the promotion of social
justice, for these factors, according to Justice promote the enlightenment of workers concerning
Isagani Cruz, tilt "the scales of justice when there is their rights and obligations . . . as employees." This
doubt, in favor of the worker" (Employees was, of course, amplified by Republic Act No 6715
Association of the Philippine American Life when it decreed the "participation of workers in
Insurance Company vs. NLRC, 199 SCRA 628 decision and policy making processes affecting their
[1991] 635). rights, duties and welfare." PAL's position that it
cannot be saddled with the "obligation" of sharing
Verily, a line must be drawn between management management prerogatives as during the formulation
prerogatives regarding business operations per of the Code, Republic Act No. 6715 had not yet been
se and those which affect the rights of the enacted (Petitioner's Memorandum, p. 44; Rollo, p.
employees. In treating the latter, management 212), cannot thus be sustained. While such
should see to it that its employees are at least "obligation" was not yet founded in law when the
properly informed of its decisions or modes action. Code was formulated, the attainment of a
PAL asserts that all its employees have been harmonious labor-management relationship and the
furnished copies of the Code. Public respondents then already existing state policy of enlightening
found to the contrary, which finding, to say the least workers concerning their rights as employees
is entitled to great respect. demand no less than the observance of
PAL posits the view that by signing the 1989-1991 transparency in managerial moves affecting
collective bargaining agreement, on June 27, 1990, employees' rights.
PALEA in effect, recognized PAL's "exclusive right Petitioner's assertion that it needed the
to make and enforce company rules and regulations implementation of a new Code of Discipline
to carry out the functions of considering the nature of its business cannot be
management without having to discuss the same overemphasized. In fact, its being a local monopoly
with PALEA and much less, obtain the in the business demands the most stringent of
latter's conformity thereto" (pp. 11-12, Petitioner's measures to attain safe travel for its patrons.
Memorandum; pp 180-181, Rollo.) Petitioner's view Nonetheless, whatever disciplinary measures are
is based on the following provision of the agreement: adopted cannot be properly implemented in the
The Association recognizes the right of the absence of full cooperation of the employees. Such
cooperation cannot be attained if the employees are
Company to determine matters of management it
policy and Company operations and to direct its restive on account, of their being left out in the
manpower. Management of the Company includes determination of cardinal and fundamental matters
affecting their employment.
the right to organize, plan, direct and control
operations, to hire, assign employees to work, WHEREFORE, the petition is DISMISSED and the
transfer employees from one department, to questioned decision AFFIRMED. No special
another, to promote, demote, discipline, suspend or pronouncement is made as to costs.
discharge employees for just cause; to lay-off
employees for valid and legal causes, to introduce SO ORDERED.
new or improved methods or facilities or to change
existing methods or facilities and the right to make
and enforce Company rules and regulations to carry
G.R. Nos. 178034 & 178117 G R. Nos. 186984-
out the functions of management.
85 October 17, 2013
The exercise by management of its prerogative shall
be done in a just reasonable, humane and/or lawful
Such provision in the collective bargaining GANZON, INC., Respondents.
agreement may not be interpreted as cession of
employees' rights to participate in the deliberation of
matters which may affect their rights and the REYES, J.:
formulation of policies relative thereto. And one such
mater is the formulation of a code of discipline. For resolution are the –

Indeed, industrial peace cannot be achieved if the (1) third motion for reconsideration1 filed by Eulalio
employees are denied their just participation in the Ganzon (Ganzon), EGI-Managers, Inc. (EGI) and E.
discussion of matters affecting their rights. Thus, Ganzon, Inc. (respondents) on March 27, 2012,
even before Article 211 of the labor Code (P.D. 442) seeking a reconsideration of the Court’s
was amended by Republic Act No. 6715, it was Decision2 dated September 18, 2009 that ordered
already declared a policy of the State, "(d) To the dismissal of their appeal to the National Labor
Relations Commission (NLRC) for failure to post contended in their Motion to Reduce Bond, inter alia,
additional appeal bond in the amount of that the monetary awards of the LA were null and
₱54,083,910.00; and excessive, allegedly with the intention of rendering
them incapable of posting the necessary appeal
(2) motion for reconsideration3 filed by petitioner bond. They claimed that an award of "more than ₱60
Andrew James McBurnie (McBurnie) on September Million Pesos to a single foreigner who had no work
26, 2012, assailing the Court en banc’s permit and who left the country for good one month
Resolution4 dated September 4, 2012 that (1) after the purported commencement of his
accepted the case from the Court’s Third Division employment" was a patent nullity.10 Furthermore,
and (2) enjoined the implementation of the Labor they claimed that because of their business losses
Arbiter’s (LA) decision finding him to be illegally that may be attributed to an economic crisis, they
dismissed by the respondents. lacked the capacity to pay the bond of almost ₱60
Antecedent Facts Million, or even the millions of pesos in premium
required for such bond.
The Decision dated September 18, 2009 provides
On March 31, 2005, the NLRC denied11 the motion
the following antecedent facts and proceedings –
to reduce bond, explaining that "in cases involving
On October 4, 2002, McBurnie, an Australian monetary award, an employer seeking to appeal the
national, instituted a complaint for illegal dismissal [LA’s] decision to the Commission is unconditionally
and other monetary claims against the respondents. required by Art. 223, Labor Code to post bond in the
McBurnie claimed that on May 11, 1999, he signed amount equivalent to the monetary award x x
a five-year employment agreement5with the x."12 Thus, the NLRC required from the respondents
company EGI as an Executive Vice-President who the posting of an additional bond in the amount of
shall oversee the management of the company’s ₱54,083,910.00.
hotels and resorts within the Philippines. He
performed work for the company until sometime in When their motion for reconsideration was
November 1999, when he figured in an accident that denied,13 the respondents decided to elevate the
matter to the Court of Appeals (CA) via the Petition
compelled him to go back to Australia while
recuperating from his injuries. While in Australia, he for Certiorari and Prohibition (With Extremely Urgent
was informed by respondent Ganzon that his Prayer for the Issuance of a Preliminary Injunction
services were no longer needed because their and/or Temporary Restraining Order)14 docketed as
intended project would no longer push through. CA-G.R. SP No. 90845.

The respondents opposed the complaint, In the meantime, in view of the respondents’ failure
contending that their agreement with McBurnie was to post the required additional bond, the NLRC
to jointly invest in and establish a company for the dismissed their appeal in a Resolution15 dated
management of hotels. They did not intend to create March 8, 2006. The respondents’ motion for
an employer-employee relationship, and the reconsideration was denied on June 30,
execution of the employment contract that was being 2006.16 This prompted the respondents to file with
invoked by McBurnie was solely for the purpose of the CA the Petition for Certiorari (With Urgent
allowing McBurnie to obtain an alien work permit in Prayers for the Immediate Issuance of a Temporary
the Philippines. At the time McBurnie left for Restraining Order and a Writ of Preliminary
Australia for his medical treatment, he had not yet Injunction)17 docketed as CA-G.R. SP No. 95916,
obtained a work permit. which was later consolidated with CA-G.R. SP No.
In a Decision6 dated September 30, 2004, the LA
declared McBurnie as having been illegally CA-G.R. SP Nos. 90845 and 95916
dismissed from employment, and thus entitled to On February 16, 2007, the CA issued a
receive from the respondents the following amounts: Resolution18 granting the respondents’ application
(a) US$985,162.00 as salary and benefits for the for a writ of preliminary injunction. It directed the
unexpired term of their employment contract, (b) NLRC, McBurnie, and all persons acting for and
₱2,000,000.00 as moral and exemplary damages, under their authority to refrain from causing the
and (c) attorney’s fees equivalent to 10% of the total execution and enforcement of the LA’s decision in
monetary award. favor of McBurnie, conditioned upon the
Feeling aggrieved, the respondents appealed the respondents’ posting of a bond in the amount of
LA’s Decision to the NLRC.7 On November 5, 2004, ₱10,000,000.00. McBurnie sought reconsideration
of the issuance of the writ of preliminary injunction,
they filed their Memorandum of Appeal8 and Motion
to Reduce Bond9, and posted an appeal bond in the but this was denied by the CA in its
amount of ₱100,000.00. The respondents Resolution19 dated May 29, 2007.
McBurnie then filed with the Court a Petition for On the issue31 of the NLRC’s dismissal of the appeal
Review on Certiorari20 docketed as G.R. Nos. on the ground of the respondents’ failure to post the
178034 and 178117, assailing the CA Resolutions additional appeal bond, the CA also found grave
that granted the respondents’ application for the abuse of discretion on the part of the NLRC,
injunctive writ. On July 4, 2007, the Court denied the explaining that an appeal bond in the amount of
petition on the ground of McBurnie’s failure to ₱54,083,910.00 was prohibitive and excessive.
comply with the 2004 Rules on Notarial Practice and Moreover, the appellate court cited the pendency of
to sufficiently show that the CA committed any the petition for certiorari over the denial of the motion
reversible error.21 A motion for reconsideration was to reduce bond, which should have prevented the
denied with finality in a Resolution22dated October 8, NLRC from immediately dismissing the respondents’
2007. appeal.32

Unyielding, McBurnie filed a Motion for Leave (1) To Undeterred, McBurnie filed a motion for
File Supplemental Motion for Reconsideration and reconsideration. At the same time, the respondents
(2) To Admit the Attached Supplemental Motion for moved that the appeal be resolved on the merits by
Reconsideration,23 which was treated by the Court the CA. On March 3, 2009, the CA issued a
as a second motion for reconsideration, a prohibited Resolution33 denying both motions. McBurnie then
pleading under Section 2, Rule 56 of the Rules of filed with the Court the Petition for Review on
Court. Thus, the motion for leave was denied by the Certiorari34 docketed as G.R. Nos. 186984-85.
Court in a Resolution24 dated November 26, 2007.
The Court’s Resolution dated July 4, 2007 then In the meantime, the NLRC, acting on the CA’s order
became final and executory on November 13, 2007; of remand, accepted the appeal from the LA’s
accordingly, entry of judgment was made in G.R. decision, and in its Decision35 dated November 17,
Nos. 178034 and 178117.25 2009, reversed and set aside the Decision of the LA,
and entered a new one dismissing McBurnie’s
In the meantime, the CA ruled on the merits of CA- complaint. It explained that based on records,
G.R. SP No. 90845 and CA-G.R. SP No. 95916 and McBurnie was never an employee of any of the
rendered its Decision26 dated October 27, 2008, respondents, but a potential investor in a project that
allowing the respondents’ motion to reduce appeal included said respondents, barring a claim of
bond and directing the NLRC to give due course to dismissal, much less, an illegal dismissal. Granting
their appeal. The dispositive portion of the CA that there was a contract of employment executed
Decision reads: by the parties, McBurnie failed to obtain a work
permit which would have allowed him to work for any
WHEREFORE, in view of the foregoing, the petition of the respondents.36 In the absence of such permit,
for certiorari and prohibition docketed as CA GR SP the employment agreement was void and thus,
No. 90845 and the petition for certiorari docketed as could not be the source of any right or obligation.
CA GR SP No. 95916 are GRANTED. Petitioners’
Motion to Reduce Appeal Bond is GRANTED. Court Decision dated September 18, 2009
Petitioners are hereby DIRECTED to post appeal
bond in the amount of ₱10,000,000.00. The NLRC On September 18, 2009, the Third Division of this
is hereby DIRECTED to give due course to Court rendered its Decision37 which reversed the CA
petitioners’ appeal in CA GR SP No. 95916 which is Decision dated October 27, 2008 and Resolution
ordered remanded to the NLRC for further dated March 3, 2009. The dispositive portion reads:
proceedings. WHEREFORE, the petition is GRANTED. The
SO ORDERED.27 Decision of the Court of Appeals in CA-G.R. SP Nos.
90845 and 95916 dated October 27, 2008 granting
On the issue28 of the NLRC’s denial of the respondents’ Motion to Reduce Appeal Bond and
respondents’ motion to reduce appeal bond, the CA ordering the National Labor Relations Commission
ruled that the NLRC committed grave abuse of to give due course to respondents’ appeal, and its
discretion in immediately denying the motion without March 3, 2009 Resolution denying petitioner’s
fixing an appeal bond in an amount that was motion for reconsideration, are REVERSED and
reasonable, as it denied the respondents of their SET ASIDE. The March 8, 2006 and June 30, 2006
right to appeal from the decision of the LA.29 The CA Resolutions of the National Labor Relations
explained that "(w)hile Art. 223 of the Labor Code Commission in NLRC NCR CA NO. 042913-05
requiring bond equivalent to the monetary award is dismissing respondents’ appeal for failure to perfect
explicit, Section 6, Rule VI of the NLRC Rules of an appeal and denying their motion for
Procedure, as amended, recognized as exception a reconsideration, respectively, are REINSTATED
motion to reduce bond upon meritorious grounds and AFFIRMED.
and upon posting of a bond in a reasonable amount
in relation to the monetary award."30 SO ORDERED.38
The Court explained that the respondents’ failure to The Entry of Judgment indicated that the same was
post a bond equivalent in amount to the LA’s made for the Court’s Decision rendered in G.R. Nos.
monetary award was fatal to the appeal.39 Although 186984-85.
an appeal bond may be reduced upon motion by an
employer, the following conditions must first be On March 27, 2012, the respondents filed a Motion
satisfied: (1) the motion to reduce bond shall be for Leave to File Attached Third Motion for
based on meritorious grounds; and (2) a reasonable Reconsideration, with an attached Motion for
amount in relation to the monetary award is posted Reconsideration (on the Honorable Court’s 25
by the appellant. Unless the NLRC grants the motion January 2012 Resolution) with Motion to Refer
to reduce the cash bond within the 10-day These Cases to the Honorable Court En Banc.53 The
reglementary period to perfect an appeal from a third motion for reconsideration is founded on the
judgment of the LA, the employer is mandated to following grounds:
post the cash or surety bond securing the full amount I.
within the said 10-day period.40 The respondents’
initial appeal bond of ₱100,000.00 was grossly THE PREVIOUS 15 MARCH 2010 RESOLUTION
inadequate compared to the LA’s monetary award. OF THE HONORABLE COURT ACTUALLY
The respondents’ first motion for LEAVE TO SUBMIT A SECOND MOTION FOR
reconsideration41 was denied by the Court for lack of
merit via a Resolution42 dated December 14, 2009.
Meanwhile, on the basis of the Court’s Decision, CONTEND THAT THE SUBSEQUENT 25
McBurnie filed with the NLRC a motion for JANUARY 2012 RESOLUTION CANNOT DENY
reconsideration with motion to recall and expunge THE " SECOND MOTION FOR
from the records the NLRC Decision dated RECONSIDERATION " ON THE GROUND THAT IT
November 17, 2009.43 The motion was granted by IS A PROHIBITED PLEADING. MOREOVER, IT IS
the NLRC in its Decision44 dated January 14, 2010.45 RESPECTFULLY CONTENDED THAT THERE
Undaunted by the denial of their first motion for ARE VERY PECULIAR CIRCUMSTANCES AND
reconsideration of the Decision dated September NUMEROUS IMPORTANT ISSUES IN THESE
18, 2009, the respondents filed with the Court a CASES THAT CLEARLY JUSTIFY GIVING DUE
Motion for Leave to Submit Attached Second Motion COURSE TO RESPONDENTS’ "SECOND
for Reconsideration46 and Second Motion for MOTION FOR RECONSIDERATION," WHICH
Reconsideration,47 which motion for leave was ARE:
granted in a Resolution48 dated March 15, 2010. II.
McBurnie was allowed to submit his comment on the
second motion, and the respondents, their reply to THE 10 MILLION PESOS BOND WHICH WAS
the comment. On January 25, 2012, however, the POSTED IN COMPLIANCE WITH THE OCTOBER
Court issued a Resolution49 denying the second 27, 2008 DECISION OF THE COURT OF APPEALS
motion "for lack of merit," "considering that a second IS A SUBSTANTIAL AND SPECIAL MERITORIOUS
motion for reconsideration is a prohibited pleading x CIRCUMSTANCE TO MERIT RECONSIDERATION

The Court’s Decision dated September 18, 2009 III.

became final and executory on March 14, 2012.
Thus, entry of judgment51 was made in due course, THE HONORABLE COURT HAS HELD IN
This is to certify that on September 18, 2009 a INTERPRETATION, ESPECIALLY IF THERE ARE
decision rendered in the above-entitled cases was SPECIAL MERITORIOUS CIRCUMSTANCES AND
filed in this Office, the dispositive part of which reads
as follows:
and that the same has, on March 14, 2012 become PESOS TO A SINGLE FOREIGNER WHO HAD NO
final and executory and is hereby recorded in the WORK PERMIT, AND NO WORKING VISA.
Book of Entries of Judgments.52 V.
On September 4, 2012, the Court en banc55 issued
VII. a Resolution56 accepting the case from the Third
THE HONORABLE COURT’S 18 SEPTEMBER Division. It also issued a temporary restraining order
(TRO) enjoining the implementation of the LA’s
SERIOUS IRREGULARITIES. Decision dated September 30, 2004. This prompted
McBurnie’s filing of a Motion for
VIII. Reconsideration, where he invoked the fact that
the Court’s Decision dated September 18, 2009 had
GR NOS. 178034 AND 178117 HAVE BEEN become final and executory, with an entry of
INADVERTENTLY INCLUDED IN THIS CASE. judgment already made by the Court.
IX. Our Ruling
THE HONORABLE COURT DID NOT DULY RULE In light of pertinent law and jurisprudence, and upon
UPON THE OTHER VERY MERITORIOUS taking a second hard look of the parties’ arguments
ARGUMENTS OF THE RESPONDENTS WHICH and the records of the case, the Court has
ARE AS FOLLOWS: ascertained that a reconsideration of this Court’s
Decision dated September 18, 2009 and
Resolutions dated December 14, 2009 and January
25, 2012, along with the lifting of the entry of
judgment in G.R. No. 186984-85, is in order.
The Court’s acceptance of the
OF ANY OF THE RESPONDENTS. third motion for reconsideration
(C) PETITIONER’S POSITIVE LETTER TO At the outset, the Court emphasizes that second and
RESPONDENT MR. EULALIO GANZON CLEARLY subsequent motions for reconsideration are, as a
SHOWS THAT HE WAS NOT ILLEGALLY general rule, prohibited. Section 2, Rule 52 of the
DISMISSED NOR EVEN DISMISSED BY ANY OF Rules of Court provides that "no second motion for
THE RESPONDENTS AND PETITIONER EVEN reconsideration of a judgment or final resolution by
PROMISED TO PAY HIS DEBTS FOR ADVANCES the same party shall be entertained." The rule rests
MADE BY RESPONDENTS. on the basic tenet of immutability of judgments. "At
some point, a decision becomes final and executory
and, consequently, all litigations must come to an
RESORT WHICH IS [NEITHER] OWNED NOR The general rule, however, against second and
CONNECTED WITH ANY OF THE subsequent motions for reconsideration admits of
RESPONDENTS. settled exceptions. For one, the present Internal
Rules of the Supreme Court, particularly Section 3,
Rule 15 thereof, provides:
ABSOLUTELY NO EVIDENCE AT ALL Sec. 3. Second motion for reconsideration. ― The
PRESENTED THAT PETITIONER WAS Court shall not entertain a second motion for
DISMISSED BY THE RESPONDENTS. reconsideration, and any exception to this rule can
only be granted in the higher interest of justice by the
Court en banc upon a vote of at least two-thirds of
its actual membership. There is reconsideration "in
the higher interest of justice" when the assailed
decision is not only legally erroneous, but is likewise
patently unjust and potentially capable of causing
unwarranted and irremediable injury or damage to The Rules of Court was conceived and promulgated
the parties. A second motion for reconsideration can to set forth guidelines in the dispensation of justice
only be entertained before the ruling sought to be but not to bind and chain the hand that dispenses it,
reconsidered becomes final by operation of law or for otherwise, courts will be mere slaves to or robots
by the Court’s declaration. of technical rules, shorn of judicial discretion. That is
precisely why courts in rendering real justice have
x x x x (Emphasis ours) always been, as they in fact ought to be,
In a line of cases, the Court has then entertained and conscientiously guided by the norm that when on the
granted second motions for reconsideration "in the balance, technicalities take a backseat against
higher interest of substantial justice," as allowed substantive rights, and not the other way around.
under the Internal Rules when the assailed decision Truly then, technicalities, in the appropriate
is "legally erroneous," "patently unjust" and language of Justice Makalintal, "should give way to
"potentially capable of causing unwarranted and the realities of the situation." x x x.66 (Citations
irremediable injury or damage to the parties." In omitted)
Tirazona v. Philippine EDS Techno-Service, Inc. Consistent with the foregoing precepts, the Court
(PET, Inc.),59 we also explained that a second has then reconsidered even decisions that have
motion for reconsideration may be allowed in attained finality, finding it more appropriate to lift
instances of "extraordinarily persuasive reasons and entries of judgments already made in these cases.
only after an express leave shall have been In Navarro v. Executive Secretary,67 we reiterated
obtained."60 In Apo Fruits Corporation v. Land Bank the pronouncement in De Guzman that the power to
of the Philippines,61 we allowed a second motion for suspend or even disregard rules of procedure can
reconsideration as the issue involved therein was a be so pervasive and compelling as to alter even that
matter of public interest, as it pertained to the proper which this Court itself has already declared final. The
application of a basic constitutionally-guaranteed Court then recalled in Navarro an entry of judgment
right in the government’s implementation of its after it had determined the validity and
agrarian reform program. In San Miguel Corporation constitutionality of Republic Act No. 9355, explaining
v. NLRC,62 the Court set aside the decisions of the that:
LA and the NLRC that favored claimants-security
guards upon the Court’s review of San Miguel Verily, the Court had, on several occasions,
Corporation’s second motion for reconsideration. In sanctioned the recall of entries of judgment in light
Vir-Jen Shipping and Marine Services, Inc. v. NLRC, of attendant extraordinary circumstances. The
et al.,63 the Court en banc reversed on a third motion power to suspend or even disregard rules of
for reconsideration the ruling of the Court’s Division procedure can be so pervasive and compelling as to
on therein private respondents’ claim for wages and alter even that which this Court itself had already
monetary benefits. declared final. In this case, the compelling concern
is not only to afford the movants-intervenors the right
It is also recognized that in some instances, the to be heard since they would be adversely affected
prudent action towards a just resolution of a case is by the judgment in this case despite not being
for the Court to suspend rules of procedure, for "the original parties thereto, but also to arrive at the
power of this Court to suspend its own rules or to correct interpretation of the provisions of the [Local
except a particular case from its operations Government Code (LGC)] with respect to the
whenever the purposes of justice require it, cannot creation of local government units. x x x.68 (Citations
be questioned."64 In De Guzman v. omitted)
Sandiganbayan, the Court, thus, explained:
In Munoz v. CA,69 the Court resolved to recall an
The rules of procedure should be viewed as mere entry of judgment to prevent a miscarriage of justice.
tools designed to facilitate the attainment of justice. This justification was likewise applied in Tan Tiac
Their strict and rigid application, which would result Chiong v. Hon. Cosico,70 wherein the Court held
in technicalities that tend to frustrate rather than that:
promote substantial justice, must always be
avoided. Even the Rules of Court envision this The recall of entries of judgments, albeit rare, is not
liberality. This power to suspend or even disregard a novelty. In Muñoz v. CA , where the case was
the rules can be so pervasive and encompassing so elevated to this Court and a first and second motion
as to alter even that which this Court itself has for reconsideration had been denied with finality , the
already declared to be final, as we are now Court, in the interest of substantial justice, recalled
compelled to do in this case. x x x. the Entry of Judgment as well as the letter of
transmittal of the records to the Court of
xxxx Appeals.71 (Citation omitted)

In Barnes v. Judge Padilla,72 we ruled:

A final and executory judgment can no longer be jurisprudence, and the degree of the injury and
attacked by any of the parties or be modified, directly damage to the respondents that will inevitably result
or indirectly, even by the highest court of the land. from the implementation of the Court’s Decision
dated September 18, 2009.
However, this Court has relaxed this rule in order to
serve substantial justice considering (a) matters of The rule on appeal bonds
life, liberty, honor or property, (b) the existence of
special or compelling circumstances, (c) the merits We emphasize that the crucial issue in this case
of the case, (d) a cause not entirely attributable to concerns the sufficiency of the appeal bond that was
the fault or negligence of the party favored by the posted by the respondents. The present rule on the
suspension of the rules, (e) a lack of any showing matter is Section 6, Rule VI of the 2011 NLRC Rules
that the review sought is merely frivolous and of Procedure, which was substantially the same
dilatory, and (f) the other party will not be unjustly provision in effect at the time of the respondents’
prejudiced thereby.73 (Citations omitted) appeal to the NLRC, and which reads:

As we shall explain, the instant case also qualifies RULE VI

as an exception to, first, the proscription against APPEALS
second and subsequent motions for reconsideration, Sec. 6. BOND. – In case the decision of the Labor
and second, the rule on immutability of judgments; a Arbiter or the Regional Director involves a monetary
reconsideration of the Decision dated September award, an appeal by the employer may be perfected
18, 2009, along with the Resolutions dated only upon the posting of a cash or surety bond. The
December 14, 2009 and January 25, 2012, is appeal bond shall either be in cash or surety in an
justified by the higher interest of substantial justice. amount equivalent to the monetary award, exclusive
To begin with, the Court agrees with the respondents of damages and attorney’s fees.
that the Court’s prior resolve to grant , and not just xxxx
merely note, in a Resolution dated March 15, 2010
the respondents’ motion for leave to submit their No motion to reduce bond shall be entertained
second motion for reconsideration already except on meritorious grounds and upon the posting
warranted a resolution and discussion of the motion of a bond in a reasonable amount in relation to the
for reconsideration on its merits. Instead of doing monetary award.
this, however, the Court issued on January 25, 2012
a Resolution74 denying the motion to reconsider for The filing of the motion to reduce bond without
lack of merit, merely citing that it was a "prohibited compliance with the requisites in the preceding
pleading under Section 2, Rule 52 in relation to paragraph shall not stop the running of the period to
Section 4, Rule 56 of the 1997 Rules of Civil perfect an appeal. (Emphasis supplied)
Procedure, as amended."75 In League of Cities of
While the CA, in this case, allowed an appeal bond
the Philippines (LCP) v. Commission on
in the reduced amount of ₱10,000,000.00 and then
Elections,76 we reiterated a ruling that when a motion
ordered the case’s remand to the NLRC, this Court’s
for leave to file and admit a second motion for
Decision dated September 18, 2009 provides
reconsideration is granted by the Court, the Court
otherwise, as it reads in part:
therefore allows the filing of the second motion for
reconsideration. In such a case, the second motion The posting of a bond is indispensable to the
for reconsideration is no longer a prohibited perfection of an appeal in cases involving monetary
pleading. Similarly in this case, there was then no awards from the decision of the Labor Arbiter. The
reason for the Court to still consider the respondents’ lawmakers clearly intended to make the bond a
second motion for reconsideration as a prohibited mandatory requisite for the perfection of an appeal
pleading, and deny it plainly on such ground. The by the employer as inferred from the provision that
Court intends to remedy such error through this an appeal by the employer may be perfected "only
resolution. upon the posting of a cash or surety bond." The word
"only" makes it clear that the posting of a cash or
More importantly, the Court finds it appropriate to
surety bond by the employer is the essential and
accept the pending motion for reconsideration and
exclusive means by which an employer’s appeal
resolve it on the merits in order to rectify its prior
may be perfected. x x x.
disposition of the main issues in the petition. Upon
review, the Court is constrained to rule differently on Moreover, the filing of the bond is not only
the petitions. We have determined the grave error in mandatory but a jurisdictional requirement as well,
affirming the NLRC’s rulings, promoting results that that must be complied with in order to confer
are patently unjust for the respondents, as we jurisdiction upon the NLRC. Non-compliance
consider the facts of the case, pertinent law, therewith renders the decision of the Labor Arbiter
final and executory. This requirement is intended to the bond within the 10-day reglementary period
assure the workers that if they prevail in the case, would only render nugatory the legal provisions
they will receive the money judgment in their favor which allow an appellant to seek a reduction of the
upon the dismissal of the employer’s appeal. It is bond. Thus, we explained in Garcia:
intended to discourage employers from using an
appeal to delay or evade their obligation to satisfy The filing of a motion to reduce bond and compliance
their employees’ just and lawful claims. with the two conditions stop the running of the period
to perfect an appeal. x x x
Thus, it behooves the Court to give utmost regard to
the legislative and administrative intent to strictly The NLRC has full discretion to grant or deny the
require the employer to post a cash or surety bond motion to reduce bond, and it may rule on the motion
securing the full amount of the monetary award beyond the 10-day period within which to perfect an
within the 10[-]day reglementary period. Nothing in appeal. Obviously, at the time of the filing of the
the Labor Code or the NLRC Rules of Procedure motion to reduce bond and posting of a bond in a
authorizes the posting of a bond that is less than the reasonable amount, there is no assurance whether
monetary award in the judgment, or would deem the appellant’s motion is indeed based on
such insufficient posting as sufficient to perfect the "meritorious ground" and whether the bond he or she
appeal. posted is of a "reasonable amount." Thus, the
appellant always runs the risk of failing to perfect an
While the bond may be reduced upon motion by the appeal.
employer, this is subject to the conditions that (1) the
motion to reduce the bond shall be based on x x x In order to give full effect to the provisions on
meritorious grounds; and (2) a reasonable amount in motion to reduce bond, the appellant must be
relation to the monetary award is posted by the allowed to wait for the ruling of the NLRC on the
appellant, otherwise the filing of the motion to reduce motion even beyond the 10-day period to perfect an
bond shall not stop the running of the period to appeal. If the NLRC grants the motion and rules that
perfect an appeal. The qualification effectively there is indeed meritorious ground and that the
requires that unless the NLRC grants the reduction amount of the bond posted is reasonable, then the
of the cash bond within the 10-day reglementary appeal is perfected. If the NLRC denies the motion,
period, the employer is still expected to post the cash the appellant may still file a motion for
or surety bond securing the full amount within the reconsideration as provided under Section 15, Rule
said 10-day period. If the NLRC does eventually VII of the Rules. If the NLRC grants the motion for
grant the motion for reduction after the reglementary reconsideration and rules that there is indeed
period has elapsed, the correct relief would be to meritorious ground and that the amount of the bond
reduce the cash or surety bond already posted by posted is reasonable, then the appeal is perfected.
the employer within the 10-day period.77(Emphasis If the NLRC denies the motion, then the decision of
supplied; underscoring ours) the labor arbiter becomes final and executory.

To begin with, the Court rectifies its prior xxxx

pronouncement – the unqualified statement that In any case, the rule that the filing of a motion to
even an appellant who seeks a reduction of an reduce bond shall not stop the running of the period
appeal bond before the NLRC is expected to post a to perfect an appeal is not absolute. The Court may
cash or surety bond securing the full amount of the relax the rule. In Intertranz Container Lines, Inc. v.
judgment award within the 10-day reglementary Bautista, the Court held:
period to perfect the appeal.
"Jurisprudence tells us that in labor cases, an appeal
The suspension of the period to from a decision involving a monetary award may be
perfect the appeal upon the filing of perfected only upon the posting of cash or surety
a motion to reduce bond bond. The Court, however, has relaxed this
To clarify, the prevailing jurisprudence on the matter requirement under certain exceptional
provides that the filing of a motion to reduce bond, circumstances in order to resolve controversies on
coupled with compliance with the two conditions their merits. These circumstances include: (1)
emphasized in Garcia v. KJ Commercial78 for the fundamental consideration of substantial justice; (2)
grant of such motion, namely, (1) a meritorious prevention of miscarriage of justice or of unjust
ground, and (2) posting of a bond in a reasonable enrichment; and (3) special circumstances of the
amount, shall suffice to suspend the running of the case combined with its legal merits, and the amount
period to perfect an appeal from the labor arbiter’s and the issue involved."80 (Citations omitted and
decision to the NLRC.79 To require the full amount of emphasis ours)
A serious error of the NLRC was its outright denial mandate of labor tribunals, the principle equally
of the motion to reduce the bond, without even applies to them.
considering the respondents’ arguments and totally
unmindful of the rules and jurisprudence that allow Given the circumstances of the case, the Court’s
the bond’s reduction. Instead of resolving the motion affirmance in the Decision dated September 18,
to reduce the bond on its merits, the NLRC insisted 2009 of the NLRC’s strict application of the rule on
on an amount that was equivalent to the monetary appeal bonds then demands a re-examination.
award, merely explaining: Again, the emerging trend in our jurisprudence is to
afford every party-litigant the amplest opportunity for
We are constrained to deny respondents’ motion for the proper and just determination of his cause, free
reduction. As held by the Supreme Court in a recent from the constraints of technicalities.86 Section 2,
case, in cases involving monetary award, an Rule I of the NLRC Rules of Procedure also provides
employer seeking to appeal the Labor Arbiter’s the policy that "the Rules shall be liberally construed
decision to the Commission is unconditionally to carry out the objectives of the Constitution, the
required by Art. 223, Labor Code to post bond in the Labor Code of the Philippines and other relevant
amount equivalent to the monetary award (Calabash legislations, and to assist the parties in obtaining
Garments vs. NLRC, G.R. No. 110827, August 8, just, expeditious and inexpensive resolution and
1996). x x x81 (Emphasis ours) settlement of labor disputes."87

When the respondents sought to reconsider, the In accordance with the foregoing, although the
NLRC still refused to fully decide on the motion. It general rule provides that an appeal in labor cases
refused to at least make a preliminary determination from a decision involving a monetary award may be
of the merits of the appeal, as it held: perfected only upon the posting of a cash or surety
bond, the Court has relaxed this requirement under
We are constrained to dismiss respondents’ Motion certain exceptional circumstances in order to resolve
for Reconsideration. Respondents’ contention that controversies on their merits. These circumstances
the appeal bond is excessive and based on a include: (1) the fundamental consideration of
decision which is a patent nullity involves the merits substantial justice; (2) the prevention of miscarriage
of the case. x x x82 of justice or of unjust enrichment; and (3) special
Prevailing rules and jurisprudence circumstances of the case combined with its legal
allow the reduction of appeal bonds. merits, and the amount and the issue
involved.88Guidelines that are applicable in the
By such haste of the NLRC in peremptorily denying reduction of appeal bonds were also explained in
the respondents’ motion without considering the Nicol v. Footjoy Industrial Corporation.89 The bond
respondents’ arguments, it effectively denied the requirement in appeals involving monetary awards
respondents of their opportunity to seek a reduction has been and may be relaxed in meritorious cases,
of the bond even when the same is allowed under including instances in which (1) there was
the rules and settled jurisprudence. It was equivalent substantial compliance with the Rules, (2)
to the NLRC’s refusal to exercise its discretion, as it surrounding facts and circumstances constitute
refused to determine and rule on a showing of meritorious grounds to reduce the bond, (3) a liberal
meritorious grounds and the reasonableness of the interpretation of the requirement of an appeal bond
bond tendered under the circumstances.83 Time and would serve the desired objective of resolving
again, the Court has cautioned the NLRC to give controversies on the merits, or (4) the appellants, at
Article 223 of the Labor Code, particularly the the very least, exhibited their willingness and/or
provisions requiring bonds in appeals involving good faith by posting a partial bond during the
monetary awards, a liberal interpretation in line with reglementary period.90
the desired objective of resolving controversies on
the merits.84 The NLRC’s failure to take action on the In Blancaflor v. NLRC,91 the Court also emphasized
motion to reduce the bond in the manner prescribed that while Article 22392 of the Labor Code, as
amended by Republic Act No. 6715, which requires
by law and jurisprudence then cannot be
countenanced. Although an appeal by parties from a cash or surety bond in an amount equivalent to the
decisions that are adverse to their interests is neither monetary award in the judgment appealed from may
a natural right nor a part of due process, it is an be considered a jurisdictional requirement for the
essential part of our judicial system. Courts should perfection of an appeal, nevertheless, adhering to
proceed with caution so as not to deprive a party of the principle that substantial justice is better served
the right to appeal, but rather, ensure that every by allowing the appeal on the merits to be threshed
party has the amplest opportunity for the proper and out by the NLRC, the foregoing requirement of the
just disposition of their cause, free from the law should be given a liberal interpretation.
constraints of technicalities.85Considering the
As the Court, nonetheless, remains firm on the The foregoing shall not be misconstrued to unduly
importance of appeal bonds in appeals from hinder the NLRC’s exercise of its discretion, given
monetary awards of LAs, we stress that the NLRC, that the percentage of bond that is set by this
pursuant to Section 6, Rule VI of the NLRC Rules of guideline shall be merely provisional. The NLRC
Procedure, shall only accept motions to reduce bond retains its authority and duty to resolve the motion
that are coupled with the posting of a bond in a and determine the final amount of bond that shall be
reasonable amount. Time and again, we have posted by the appellant, still in accordance with the
explained that the bond requirement imposed upon standards of "meritorious grounds" and "reasonable
appellants in labor cases is intended to ensure the amount". Should the NLRC, after considering the
satisfaction of awards that are made in favor of motion’s merit, determine that a greater amount or
appellees, in the event that their claims are the full amount of the bond needs to be posted by
eventually sustained by the courts.93 On the part of the appellant, then the party shall comply
the appellants, its posting may also signify their good accordingly. The appellant shall be given a period of
faith and willingness to recognize the final outcome 10 days from notice of the NLRC order within which
of their appeal. to perfect the appeal by posting the required appeal
At the time of a motion to reduce appeal bond’s filing,
the question of what constitutes "a reasonable Meritorious ground as a condition
amount of bond" that must accompany the motion for the reduction of the appeal bond
may be subject to differing interpretations of litigants.
The judgment of the NLRC which has the discretion In all cases, the reduction of the appeal bond shall
under the law to determine such amount cannot as be justified by meritorious grounds and
yet be invoked by litigants until after their motions to accompanied by the posting of the required appeal
reduce appeal bond are accepted. bond in a reasonable amount.

Given these limitations, it is not uncommon for a The requirement on the existence of a "meritorious
party to unduly forfeit his opportunity to seek a ground" delves on the worth of the parties’
reduction of the required bond and thus, to appeal, arguments, taking into account their respective
when the NLRC eventually disagrees with the rights and the circumstances that attend the case.
party’s assessment. These have also resulted in the The condition was emphasized in University Plans
filing of numerous petitions against the NLRC, citing Incorporated v. Solano,95 wherein the Court held
an alleged grave abuse of discretion on the part of that while the NLRC’s Revised Rules of Procedure
the labor tribunal for its finding on the sufficiency or "allows the [NLRC] to reduce the amount of the
insufficiency of posted appeal bonds. bond, the exercise of the authority is not a matter of
right on the part of the movant, but lies within the
It is in this light that the Court finds it necessary to sound discretion of the NLRC upon a showing of
set a parameter for the litigants’ and the NLRC’s meritorious grounds."96 By jurisprudence, the merit
guidance on the amount of bond that shall hereafter referred to may pertain to an appellant’s lack of
be filed with a motion for a bond’s reduction. To financial capability to pay the full amount of the
ensure that the provisions of Section 6, Rule VI of bond,97 the merits of the main appeal such as when
the NLRC Rules of Procedure that give parties the there is a valid claim that there was no illegal
chance to seek a reduction of the appeal bond are dismissal to justify the award,98 the absence of an
effectively carried out, without however defeating the employer-employee relationship,99 prescription of
benefits of the bond requirement in favor of a claims,100 and other similarly valid issues that are
winning litigant, all motions to reduce bond that are raised in the appeal.101 For the purpose of
to be filed with the NLRC shall be accompanied by determining a "meritorious ground", the NLRC is not
the posting of a cash or surety bond equivalent to precluded from receiving evidence, or from making
10% of the monetary award that is subject of the a preliminary determination of the merits of the
appeal, which shall provisionally be deemed the appellant’s contentions.102
reasonable amount of the bond in the meantime that
an appellant’s motion is pending resolution by the In this case, the NLRC then should have considered
Commission. In conformity with the NLRC Rules, the the respondents’ arguments in the memorandum on
monetary award, for the purpose of computing the appeal that was filed with the motion to reduce the
necessary appeal bond, shall exclude damages and requisite appeal bond. Although a consideration of
attorney’s fees.94 Only after the posting of a bond in said arguments at that point would have been merely
the required percentage shall an appellant’s period preliminary and should not in any way bind the
to perfect an appeal under the NLRC Rules be eventual outcome of the appeal, it was apparent that
deemed suspended. the respondents’ defenses came with an indication
of merit that deserved a full review of the decision of
the LA. The CA, by its Resolution dated February 16,
2007, even found justified the issuance of a Absent an employment permit, any employment
preliminary injunction to enjoin the immediate relationship that McBurnie contemplated with the
execution of the LA’s decision, and this Court, a respondents was void for being contrary to law. A
temporary restraining order on September 4, 2012. void or inexistent contract, in turn, has no force and
effect from the beginning as if it had never been
Significantly, following the CA’s remand of the case entered into. Thus, without an Alien Employment
to the NLRC, the latter even rendered a Decision Permit, the "Employment Agreement" is void and
that contained findings that are inconsistent with could not be the source of a right or obligation. In
McBurnie’s claims. The NLRC reversed and set support thereof, the DOLE issued a certification that
aside the decision of the LA, and entered a new one McBurnie has neither applied nor been issued an
dismissing McBurnie’s complaint. It explained that Alien Employment Permit (p. 204, Records).106
McBurnie was not an employee of the respondents;
thus, they could not have dismissed him from McBurnie moved to reconsider, citing the Court’s
employment. The purported employment contract of Decision of September 18, 2009 that reversed and
the respondents with the petitioner was qualified by set aside the CA’s Decision authorizing the remand.
the conditions set forth in a letter dated May 11, Although the NLRC granted the motion on the said
1999, which reads: ground via a Decision107 that set aside the NLRC’s
Decision dated November 17, 2009, the findings of
May 11, 1999 the NLRC in the November 17, 2009 decision merit
MR. ANDREW MCBURNIE consideration, especially since the findings made
therein are supported by the case records.
Re: Employment Contract
In addition to the apparent merit of the respondents’
Dear Andrew, appeal, the Court finds the reduction of the appeal
bond justified by the substantial amount of the LA’s
It is understood that this Contract is made subject to monetary award. Given its considerable amount, we
the understanding that it is effective only when the find reason in the respondents’ claim that to require
project financing for our Baguio Hotel project pushed an appeal bond in such amount could only deprive
through. them of the right to appeal, even force them out of
business and affect the livelihood of their
The agreement with EGI Managers, Inc. is made
employees.108 In Rosewood Processing, Inc. v.
now to support your need to facilitate your work
NLRC,109 we emphasized: "Where a decision may
permit with the Department of Labor in view of the
be made to rest on informed judgment rather than
expiration of your contract with Pan Pacific.
rigid rules, the equities of the case must be accorded
Regards, their due weight because labor determinations
should not be ‘secundum rationem but also
Sgd. Eulalio Ganzon (p. 203, Records)103 secundum caritatem.’"110
For the NLRC, the employment agreement could not What constitutes a reasonable
have given rise to an employer-employee amount in the determination of the
relationship by reason of legal impossibility. The two final amount of appeal bond
conditions that form part of their agreement, namely,
the successful completion of the project financing for As regards the requirement on the posting of a bond
the hotel project in Baguio City and McBurnie’s in a "reasonable amount," the Court holds that the
acquisition of an Alien Employment Permit, final determination thereof by the NLRC shall be
remained unsatisfied.104 The NLRC concluded that based primarily on the merits of the motion and the
McBurnie was instead a potential investor in a main appeal.
project that included Ganzon, but the said project
Although the NLRC Rules of Procedure, particularly
failed to pursue due to lack of funds. Any work
Section 6 of Rule VI thereof, provides that the bond
performed by McBurnie in relation to the project was
to be posted shall be "in a reasonable amount in
merely preliminary to the business venture and part
relation to the monetary award ," the merit of the
of his "due diligence" study before pursuing the
motion shall always take precedence in the
project, "done at his own instance, not in furtherance
determination. Settled is the rule that procedural
of the employment contract but for his own
rules were conceived, and should thus be applied in
investment purposes."105 Lastly, the alleged
a manner that would only aid the attainment of
employment of the petitioner would have been void
justice. If a stringent application of the rules would
for being contrary to law, since it is undisputed that
hinder rather than serve the demands of substantial
McBurnie did not have any work permit. The NLRC
justice, the former must yield to the latter.111
Thus, in Nicol where the appellant posted a bond of In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583,
₱10,000,000.00 upon an appeal from the LA’s it was held:
award of ₱51,956,314.00, the Court, instead of
ruling right away on the reasonableness of the "The unreasonable and excessive amount of bond
bond’s amount solely on the basis of the judgment would be oppressive and unjust and would have the
award, found it appropriate to remand the case to effect of depriving a party of his right to appeal."
the NLRC, which should first determine the merits of xxxx
the motion. In University Plans,112 the Court also
reversed the outright dismissal of an appeal where In dismissing outright the motion to reduce bond filed
the bond posted in a judgment award of more than by petitioners, NLRC abused its discretion. It should
₱30,000,000.00 was ₱30,000.00. The Court then have fixed an appeal bond in a reasonable amount.
directed the NLRC to first determine the merit, or Said dismissal deprived petitioners of their right to
lack of merit, of the motion to reduce the bond, after appeal the Labor Arbiter’s decision.
the appellant therein claimed that it was under
receivership and thus, could not dispose of its assets xxxx
within a short notice. Clearly, the rule on the posting
NLRC Rules allow reduction of appeal bond on
of an appeal bond should not be allowed to defeat
meritorious grounds (Sec. 6, Rule VI, NLRC Rules
the substantive rights of the parties.113
of Procedure). This Court finds the appeal bond in
Notably, in the present case, following the CA’s the amount of ₱54,083,910.00 prohibitive and
rendition of its Decision which allowed a reduced excessive, which constitutes a meritorious ground to
appeal bond, the respondents have posted a bond allow a motion for reduction thereof.115
in the amount of ₱10,000,000.00. In Rosewood, the
The foregoing declaration of the Court requiring a
Court deemed the posting of a surety bond of
bond in a reasonable amount, taking into account
₱50,000.00, coupled with a motion to reduce the
the merits of the motion and the appeal, is consistent
appeal bond, as substantial compliance with the
with the oft-repeated principle that letter-perfect
legal requirements for an appeal from a
rules must yield to the broader interest of substantial
₱789,154.39 monetary award "considering the clear
merits which appear, res ipsa loquitor, in the appeal
from the LA’s Decision, and the petitioner’s The effect of a denial of the appeal
substantial compliance with rules governing
appeals."114The foregoing jurisprudence strongly to the NLRC
indicate that in determining the reasonable amount
In finding merit in the respondents’ motion for
of appeal bonds, the Court primarily considers the
reconsideration, we also take into account the
merits of the motions and appeals.
unwarranted results that will arise from an
Given the circumstances in this case and the merits implementation of the Court’s Decision dated
of the respondents’ arguments before the NLRC, the September 18, 2009. We emphasize, moreover, that
Court holds that the respondents had posted a bond although a remand and an order upon the NLRC to
in a "reasonable amount", and had thus complied give due course to the appeal would have been the
with the requirements for the perfection of an appeal usual course after a finding that the conditions for
from the LA’s decision. The CA was correct in ruling the reduction of an appeal bond were duly satisfied
that: by the respondents, given such results, the Court
finds it necessary to modify the CA’s order of
In the case of Nueva Ecija I Electric Cooperative, remand, and instead rule on the dismissal of the
Inc. (NEECO I) Employees Association, President complaint against the respondents.
Rodolfo Jimenez, and members, Reynaldo Fajardo,
et al. vs. NLRC, Nueva Ecija I Electric Cooperative, Without the reversal of the Court’s Decision and the
Inc. (NEECO I) and Patricio de la Peña (GR No. dismissal of the complaint against the respondents,
116066, January 24, 2000), the Supreme Court McBurnie would be allowed to claim benefits under
recognized that: "the NLRC, in its Resolution No. 11- our labor laws despite his failure to comply with a
01-91 dated November 7, 1991 deleted the phrase settled requirement for foreign nationals.
"exclusive of moral and exemplary damages as well
Considering that McBurnie, an Australian, alleged
as attorney’s fees in the determination of the amount
illegal dismissal and sought to claim under our labor
of bond, and provided a safeguard against the
laws, it was necessary for him to establish, first and
imposition of excessive bonds by providing that
foremost, that he was qualified and duly authorized
"(T)he Commission may in meritorious cases and
to obtain employment within our jurisdiction. A
upon motion of the appellant, reduce the amount of
requirement for foreigners who intend to work within
the bond."
the country is an employment permit, as provided
under Article 40, Title II of the Labor Code which McBurnie was never an employee of any of the
reads: respondents.120 It explained:

Art. 40. Employment permit for non-resident aliens. All these facts and circumstances prove that
Any alien seeking admission to the Philippines for McBurnie was never an employee of Eulalio Ganzon
employment purposes and any domestic or foreign or the respondent companies, but a potential
employer who desires to engage an alien for investor in a project with a group including Eulalio
employment in the Philippines shall obtain an Ganzon and Martinez but said project did not take
employment permit from the Department of Labor. off because of lack of funds.

In WPP Marketing Communications, Inc. v. McBurnie further claims that in conformity with the
Galera,117 we held that a foreign national’s failure to provision of the employment contract pertaining to
seek an employment permit prior to employment the obligation of the respondents to provide housing,
poses a serious problem in seeking relief from the respondents assigned him Condo Unit # 812 of the
Court.118 Thus, although the respondent therein Makati Cinema Square Condominium owned by the
appeared to have been illegally dismissed from respondents. He was also allowed to use a Hyundai
employment, we explained: car. If it were true that the contract of employment
was for working visa purposes only, why did the
This is Galera’s dilemma: Galera worked in the respondents perform their obligations to him?
Philippines without proper work permit but now
wants to claim employee’s benefits under Philippine There is no question that respondents assigned him
labor laws. Condo Unit # 812 of the MCS, but this was not free
of charge. If it were true that it is part of the
xxxx compensation package as employee, then McBurnie
The law and the rules are consistent in stating that would not be obligated to pay anything, but clearly,
the employment permit must be acquired prior to he admitted in his letter that he had to pay all the
employment. The Labor Code states: "Any alien expenses incurred in the apartment.
seeking admission to the Philippines for employment Assuming for the sake of argument that the
purposes and any domestic or foreign employer who employment contract is valid between them, record
desires to engage an alien for employment in the shows that McBurnie worked from September 1,
Philippines shall obtain an employment permit from 1999 until he met an accident on the last week of
the Department of Labor." Section 4, Rule XIV, Book October. During the period of employment, the
I of the Implementing Rules and Regulations respondents must have paid his salaries in the sum
provides: of US$26,000.00, more or less.
"Employment permit required for entry. – No alien However, McBurnie failed to present a single
seeking employment, whether as a resident or non- evidence that [the respondents] paid his salaries like
resident, may enter the Philippines without first payslip, check or cash vouchers duly signed by him
securing an employment permit from the Ministry. If or any document showing proof of receipt of his
an alien enters the country under a non-working visa compensation from the respondents or activity in
and wishes to be employed thereafter, he may be furtherance of the employment contract. Granting
allowed to be employed upon presentation of a duly again that there was a valid contract of employment,
approved employment permit." it is undisputed that on November 1, 1999, McBurnie
left for Australia and never came back. x x
Galera cannot come to this Court with unclean
hands. To grant Galera’s prayer is to sanction the x.121 (Emphasis supplied)
violation of the Philippine labor laws requiring aliens Although the NLRC’s Decision dated November 17,
to secure work permits before their employment. We 2009 was set aside in a Decision dated January 14,
hold that the status quo must prevail in the present 2010, the Court’s resolve to now reconsider its
case and we leave the parties where they are. This Decision dated September 18, 2009 and to affirm the
ruling, however, does not bar Galera from seeking CA’s Decision and Resolution in the respondents’
relief from other jurisdictions.119 (Citations omitted favor effectively restores the NLRC’s basis for
and underscoring ours) rendering the Decision dated November 17, 2009.
Clearly, this circumstance on the failure of McBurnie More importantly, the NLRC’s findings on the
to obtain an employment permit, by itself, contractual relations between McBurnie and the
necessitates the dismissal of his labor complaint. respondents are supported by the records.
Furthermore, as has been previously discussed, the First, before a case for illegal dismissal can prosper,
NLRC has ruled in its Decision dated November 17, an employer-employee relationship must first be
2009 on the issue of illegal dismissal. It declared that established.122Although an employment agreement
forms part of the case records, respondent Ganzon NLRC, more so in the absence of any showing that
signed it with the notation "per my note."123 The the NLRC should now rule differently on the case’s
respondents have sufficiently explained that the note merits. In Medline Management, Inc. v.
refers to the letter124 dated May 11, 1999 which Roslinda,127 the Court ruled that when there is
embodied certain conditions for the employment’s enough basis on which the Court may render a
effectivity. As we have previously explained, proper evaluation of the merits of the case, the Court
however, the said conditions, particularly on the may dispense with the time-consuming procedure of
successful completion of the project financing for the remanding a case to a labor tribunal in order "to
hotel project in Baguio City and McBurnie’s prevent delays in the disposition of the case," "to
acquisition of an Alien Employment Permit, failed to serve the ends of justice" and when a remand "would
materialize. Such defense of the respondents, which serve no purpose save to further delay its disposition
was duly considered by the NLRC in its Decision contrary to the spirit of fair play."128 In Real v. Sangu
dated November 17, 2009, was not sufficiently Philippines, Inc.,129 we again ruled:
rebutted by McBurnie.
With the foregoing, it is clear that the CA erred in
Second, McBurnie failed to present any employment affirming the decision of the NLRC which dismissed
permit which would have authorized him to obtain petitioner’s complaint for lack of jurisdiction. In cases
employment in the Philippines. This circumstance such as this, the Court normally remands the case
negates McBurnie’s claim that he had been to the NLRC and directs it to properly dispose of the
performing work for the respondents by virtue of an case on the merits. "However, when there is enough
employer-employee relationship. The absence of basis on which a proper evaluation of the merits of
the employment permit instead bolsters the claim petitioner’s case may be had, the Court may
that the supposed employment of McBurnie was dispense with the time-consuming procedure of
merely simulated, or did not ensue due to the non- remand in order to prevent further delays in the
fulfillment of the conditions that were set forth in the disposition of the case." "It is already an accepted
letter of May 11, 1999. rule of procedure for us to strive to settle the entire
controversy in a single proceeding, leaving no root
Third, besides the employment agreement, or branch to bear the seeds of litigation. If, based on
McBurnie failed to present other competent the records, the pleadings, and other evidence, the
evidence to prove his claim of an employer- dispute can be resolved by us, we will do so to serve
employee relationship. Given the parties’ conflicting the ends of justice instead of remanding the case to
claims on their true intention in executing the the lower court for further proceedings." x x
agreement, it was necessary to resort to the x.130 (Citations omitted)
established criteria for the determination of an
employer-employee relationship, namely: (1) the It bears mentioning that although the Court resolves
selection and engagement of the employee; (2) the to grant the respondents’ motion for reconsideration,
payment of wages; (3) the power of dismissal; and the other grounds raised in the motion, especially as
(4) the power to control the employee’s they pertain to insinuations on irregularities in the
conduct.125 The rule of thumb remains: the onus Court, deserve no merit for being founded on
probandi falls on the claimant to establish or baseless conclusions. Furthermore, the Court finds
substantiate the claim by the requisite quantum of it unnecessary to discuss the other grounds that are
evidence. Whoever claims entitlement to the raised in the motion, considering the grounds that
benefits provided by law should establish his or her already justify the dismissal of McBurnie’s
right thereto.126 McBurnie failed in this complaint.
regard.1âwphi1 As previously observed by the
NLRC, McBurnie even failed to show through any All these considered, the Court also affirms its
document such as payslips or vouchers that his Resolution dated September 4, 2012; accordingly,
salaries during the time that he allegedly worked for McBurnie’s motion for reconsideration thereof is
the respondents were paid by the company. In the denied.
absence of an employer-employee relationship WHEREFORE, in light of the foregoing, the Court
between McBurnie and the respondents, McBurnie rules as follows:
could not successfully claim that he was dismissed,
much less illegally dismissed, by the latter. Even (a) The motion for reconsideration filed on
granting that there was such an employer-employee September 26, 2012 by petitioner Andrew James
relationship, the records are barren of any document McBurnie is DENIED;
showing that its termination was by the respondents’
dismissal of McBurnie. (b) The motion for reconsideration filed on March 27,
2012 by respondents Eulalio Ganzon, EGI-
Given these circumstances, it would be a circuitous Managers, Inc. and E. Ganzon, Inc. is GRANTED.
exercise for the Court to remand the case to the
(c) The Entry of Judgment issued in G.R. Nos. DECISION
186984-85 is LIFTED. This Court’s Decision dated
September 18, 2009 and Resolutions dated BERSAMIN, J.:
December 14, 2009 and January 25, 2012 are SET Although the practice of law is not a business, an
ASIDE. The Court of Appeals Decision dated attorney is entitled to be properly compensated for
October 27, 2008 and Resolution dated March 3, the professional services rendered for the client,
2009 in CA-G.R. SP No. 90845 and CA-G.R. SP No. who is bound by her express agreement to duly
95916 are AFFIRMED WITH MODIFICATION. In compensate the attorney. The client may not deny
lieu of a remand of the case to the National Labor her attorney such just compensation.
Relations Commission, the complaint for illegal
dismissal filed by petitioner Andrew James The Case
McBurnie against respondents Eulalio Ganzon, EGI-
Managers, Inc. and E. Ganzon, Inc. is DISMISSED. The case initially concerned the execution of a final
decision of the Court of Appeals (CA) in a labor
Furthermore, on the matter of the filing and litigation, but has mutated into a dispute over
acceptance of motions to reduce appeal bond, as attorney's fees between the winning employee and
provided in Section 6, Rule VI of the 2011 NLRC her attorney after she entered into a compromise
Rules of Procedure, the Court hereby RESOLVES agreement with her employer under circumstances
that henceforth, the following guidelines shall be that the attorney has bewailed as designed to
observed: prevent the recovery of just professional fees.

(a) The filing o a motion to reduce appeal bond shall Antecedents

be entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a On August 1, 1988, Kraft Foods (Phils.), Inc. (KFPI)
bond in a reasonable amount is posted; hired Czarina Malvar (Malvar) as its Corporate
Planning Manager. From then on, she gradually rose
(b) For purposes o compliance with condition no. (2), from the ranks, becoming in 1996 the Vice President
a motion shall be accompanied by the posting o a for Finance in the Southeast Asia Region of Kraft
provisional cash or surety bond equivalent to ten Foods International (KFI),KFPI’s mother company.
percent (10,) of the monetary award subject o the On November 29, 1999, respondent Bienvenido S.
appeal, exclusive o damages and attorney's fees; Bautista, as Chairman of the Board of KFPI and
concurrently the Vice President and Area Director
(c) Compliance with the foregoing conditions shall for Southeast Asia of KFI, sent Malvar a memo
suffice to suspend the running o the 1 0-day directing her to explain why no administrative
reglementary period to perfect an appeal from the sanctions should be imposed on her for possible
labor arbiter's decision to the NLRC; breach of trust and confidence and for willful
(d) The NLRC retains its authority and duty to violation of company rules and regulations.
resolve the motion to reduce bond and determine the Following the submission of her written explanation,
final amount o bond that shall be posted by the an investigating body was formed. In due time, she
appellant, still in accordance with the standards o was placed under preventive suspension with pay.
meritorious grounds and reasonable amount; and Ultimately, on March 16, 2000, she was served a
notice of termination.
(e) In the event that the NLRC denies the motion to
reduce bond, or requires a bond that exceeds the Obviously aggrieved, Malvar filed a complaint for
amount o the provisional bond, the appellant shall be illegal suspension and illegal dismissal against KFPI
given a fresh period o ten 1 0) days from notice o the and Bautista in the National Labor Relations
NLRC order within which to perfect the appeal by Commission (NLRC). In a decision dated April 30,
posting the required appeal bond. 2001,1 the Labor Arbiter found and declared her
suspension and dismissal illegal, and ordered her
SO ORDERED. reinstatement, and the payment of her full
backwages, inclusive of allowances and other
benefits, plus attorney’s fees.

G.R. No. 183952 September 9, 2013 On October 22, 2001, the NLRC affirmed the
decision of the Labor Arbiter but additionally ruled
CZARINA T. MALVAR, Petitioner,
that Malvar was entitled to "any and all stock options
and bonuses she was entitled to or would have been
entitled to had she not been illegally dismissed from
her employment," as well as to moral and exemplary
KFPI and Bautista sought the reconsideration of the ₱4,134,910/12
NLRC’s decision, but the NLRC denied their motion mos/20.83 days x 55 909,825.77
to that effect.3 days
Undaunted, KFPI and Bautista assailed the adverse
outcome before the CA on certiorari (CA-G.R. SP 4. Unpaid 13th month
No. 69660), contending that the NLRC thereby pay for Dec 2000
committed grave abuse of discretion. However, the
petition for certiorari was dismissed by the CA on 5. Sick Leave Pay
December 22, 2004, but with the CA reversing the
order of reinstatement and instead directing the
Year 1999 to 2004 = 6 yrs
payment of separation pay to Malvar, and also
reducing the amounts awarded as moral and
exemplary damages.4 ₱344,575.88/20.83 x 15 days x 6 =
After the judgment in her favor became final and
executory on March14, 2006, Malvar moved for the
Year 2005
issuance of a writ of execution.5 The Executive
Labor Arbiter then referred the case to the Research
and Computation Unit (RCU) of the NLRC for the ₱344,575.83/20.83 x
computation of the monetary awards under the 15/12 x 1 20,677.86
judgment. The RCU’s computation ultimately arrived
at the total sum of ₱41,627,593.75.6 6. Vacation Leave Pay

On November 9, 2006, however, Labor Arbiter

Jaime M. Reyno issued an order,7 finding that the Year 1999 to 2004 = 6 years
RCU’s computation lacked legal basis for including
the salary increases that the decision promulgated ₱344,575.88/20.83 x 22 days x 6 =
in CA-G.R. SP No. 69660 did not include. Hence, 2,183,581.83
Labor Arbiter Reyno reduced Malvar’s total
monetary award to ₱27,786,378.11, viz: Year 2005
WHEREFORE, premises considered, in so far as
the computation of complainant’s other benefits and ₱344,575.83/20.83 x
allowances are concerned, the same are in order. 22/12 x 1 30,327.55
However, insofar as the computation of her
backwages and other monetary benefits (separation
pay, unpaid salary for January 1 to 26, 2005,holiday
pay, sick leave pay, vacation leave pay, 13th month 10,790,788.86
pay), the same are hereby recomputed as follows:
Backwages (from 3/7/00-
1. Separation Pay 4/30/01, award in LA 4,651,773.75
Sytian’s Decision
8/1/88-1/26/05 = 16 yrs
Allowances & Other Benefits:
₱344,575.83 x 16 = 5,513,213.28
Management Incentive
2. Unpaid Salary Plan

1/1-26/05 = 87 mos. Cash Dividend on Philip

Morris Shares
₱344,575.83 x 87 = 299,780.97
Car Maintenance 381,702.92
3. Holiday Pay
Gas Allowance 198,000.00
4/1/00-1/26/05 = 55 holidays
Entitlement to a Company of the NLRC and the 31May 2007 Resolution in
438,650.00 NLRC NCR 30-07-02316-00 are hereby

Rice Subsidy 58,650.00 The matter of computation of monetary awards for

private respondent is hereby REMANDED to the
Moral Damages 500,000.00 Labor Arbiter and he is DIRECTED to recompute the
monetary award due to private respondent based on
her salary at the time of her termination, without
Exemplary Damages 200,000.00
including projected salary increases. In computing
the said benefits, the Labor Arbiter is further directed
Attorney’s Fees 500,000.00 to DISREGARD monetary awards arising from: (a)
the management incentive plan and (b) the share
Entitlement to Philip Sch option grant, including cash dividends arising
Subject to therefrom without prejudice to the filing of the
appropriate remedy by the private respondent in the
proper forum. Private respondent’s allowances for
"Share Option Grant" Market Price
car maintenance and gasoline are likewise
DELETED unless private respondent proves, by
appropriate receipts, her entitlement thereto.
27,786,378.11 With respect to the Motion to Exclude the
Undisputed Amount of ₱14,252,192.12 from the
SO ORDERED. coverage of the Writ of Preliminary Injunction and to
order its immediate release, the same is hereby
Both parties appealed the computation to the NLRC,
GRANTED for reasons stated therefor, which
which, on April19, 2007, rendered its decision
amount shall be deducted from the amount to be
setting aside Labor Arbiter Reyno’s November 9,
given to private respondent after proper
2006 order, and adopting the computation by the
As regards the Motions for Reconsideration of the
In its resolution dated May 31, 2007,9 the NLRC
Resolution denying the Motion for Voluntary
denied the respondents’ motion for reconsideration.
Inhibition and the Omnibus Motion dated 30 October
Malvar filed a second motion for the issuance of a 2007, both motions are hereby DENIED for lack of
writ of execution to enforce the decision of the NLRC merit.
rendered on April 19, 2007. After the writ of
execution was issued, a partial enforcement as
effected by garnishing the respondents’ funds Malvar sought reconsideration, but the CA denied
deposited with Citibank worth 37,391,696.06.10 her motion on July30, 2008.14
On July 27, 2007, the respondents went to the CA Aggrieved, Malvar appealed to the Court, assailing
on certiorari (with prayer for the issuance of a the CA’s decision.
temporary restraining order (TRO) or writ of
preliminary injunction), assailing the NLRC’s setting On December 9, 2010, while her appeal was
aside of the computation by Labor Arbiter Reyno pending in this Court, Malvar and the respondents
(CA-G.R. SP No. 99865). The petition mainly argued entered into a compromise agreement, the pertinent
that the NLRC had gravely abused its discretion in dispositive portion of which is quoted as follows:
ruling that: (a) the inclusion of the salary increases
NOW, THEREFORE, for and in consideration of the
and other monetary benefits in the award to Malvar
covenants and understanding between the parties
was final and executory; and (b) the finality of the
herein, the parties hereto have entered into this
ruling in CA-G.R. SP No. 69660 precluded the
Agreement on the following terms and conditions:
respondents from challenging the inclusion of the
salary increases and other monetary benefits. The 1. Simultaneously upon execution of this Agreement
CA issued a TRO, enjoining the NLRC and Malvar in the presence of Ms. Malvar’s attorney, KFPI shall
from implementing the NLRC’s decision.11 pay Ms. Malvar the amount of Philippine Pesos Forty
Million (Php 40,000,000.00), which is in addition to
On April 17, 2008, the CA rendered its decision in
the Philippine Pesos Fourteen Million Two Hundred
CA-G.R. SP No. 99865,12 disposing thusly:
Fifty-Two Thousand One Hundred Ninety-Two and
WHEREFORE, premises considered, the herein Twelve Centavos (Php14,252,192.12) already paid
Petition is GRANTED and the 19 April 2007 Decision to and received by Ms. Malvar from KFPI in
August2008 (both amounts constituting the Malvar and KFPI be held and ordered to pay jointly
"Compromise Payment"). and severally the Intervenor’s contingent fees.

The Compromise Payment includes full and The Motion for Intervention relevantly averred:
complete payment and settlement of Ms. Malvar’s
salaries and wages up to the last day of her xxxx
employment, allowances, 13th and 14th month pay, Lawyers, oftentimes, are caricatured as alligators or
cash conversion of her accrued vacation, sick and some other specie of voracious carnivore; perceived
emergency leaves, separation pay, retirement pay also as leeches sucking dry the blood of their
and such other benefits, entitlements, claims for adversaries, and even their own clients they are
stock, stock options or other forms of equity sworn to serve and protect! As we lay down the facts
compensation whether vested or otherwise and in this case, this popular, rather unpopular,
claims of any and all kinds against KFPI and KFI and perception will be shown wrong. This case is a
Altria Group, Inc., their predecessors-in-interest, reversal of this perception.
their stockholders, officers, directors, agents or
successors-in-interest, affiliates and subsidiaries, up xxxx
to the last day of the aforesaid cessation of her
employment. Here, it is the lawyer who is eaten up alive by the
warring but conspiring litigants who finally settled
2. In consideration of the Compromise Payment, Ms. their differences without the knowledge, much less,
Malvar hereby freely and voluntarily releases and participation, of Petitioner’s counsel that labored
forever discharges KFPI and KFI and Altria Group, hard and did everything to champion her cause.
Inc., their predecessors or successors-in-interest,
stockholders, officers, including Mr. Bautista who xxxx
was impleaded in the Labor Case as a party
This Motion for Intervention will illustrate an
respondent, directors, agents or successors-in-
aberration from the norm where the lawyer ends up
interest, affiliates and subsidiaries from any and all
seeking protection from his client’s and
manner of action, cause of action, sum of money,
Respondents’ indecent and cunning maneuverings.
damages, claims and demands whatsoever in law or
x x x.
in equity which Ms. Malvar or her heirs, successors
and assigns had, or now have against KFPI and/or xxxx
KFI and/or Altria Group, Inc., including but not limited
to, unpaid wages, salaries, separation pay, On 18 March 2008 Petitioner engaged the
retirement pay, holiday pay, allowances, 13th and professional services of Intervenor x x x on a
14th month pay, claims for stock, stock options or contingency basis whereby the former agreed in
other forms of equity compensation whether vested writing to pay the latter contingency fees amounting
or otherwise whether arising from her employment to almost ₱19,600,000.00 (10% of her total claim of
contract, company grant, present and future almost ₱196,000,000.00 in connection with her labor
contractual commitments, company policies or case against Respondents. x x x.
practices, or otherwise, in connection with Ms.
Malvar’s employment with KFPI.15
According to their agreement (Annex "A"), Petitioner
bound herself to pay Intervenor contingency fees as
Thereafter, Malvar filed an undated Motion to follows (a) 10% of ₱14,252, 192.12 upon its
Dismiss/Withdraw Case,16 praying that the appeal collection; (b) 10% of the remaining balance of
be immediately dismissed/withdrawn in view of the ₱41,627,593.75; and (c)10% of the value of the
compromise agreement, and that the case be stock options Petitioner claims to be entitled to, or
considered closed and terminated. roughly ₱154,000,000.00 as of April 2008.

Intervention xxxx

Before the Court could act on Malvar’s Motion to Intervenor’s efforts resulted in the award and partial
Dismiss/Withdraw Case, the Court received on release of Petitioner’s claim amounting to
February 15, 2011 a so-called Motion for ₱14,252,192.12 out of which Petitioner paid
Intervention to Protect Attorney’s Rights17 from The Intervenor 10% or ₱1,425,219.21 as contingency
Law Firm of Dasal, Llasos and Associates, through fees pursuant to their engagement agreement
its Of Counsel Retired Supreme Court Associate (Annex "A"). Copy of the check payment of Petitioner
Justice Josue N. Bellosillo18 (Intervenor), whereby payable to Intervenor’s Of Counsel is attached as
the Intervenor sought, among others, that both Annex "C".
xxxx she had even commended it for its dedication and
devotion to her case through her following letter to
On 12 September 2008 Intervenor filed an Justice Bellosillo, to wit:
exhaustive Petition for Review with the Supreme
Court containing 70 pages, including its Annexes "A" July 16, 2008
to "R", or a total of 419 pages against Respondents
to collect on the balance of Petitioner’s claims Justice Josue Belocillo (sic)
amounting to at least ₱27,000,000.00 and Dear Justice,
₱154,000,000.00 the latter representing the
estimated value of Petitioner’s stock options as of It is almost morning of July 17 as I write this letter to
April 2008. you. Let me first thank you for your continued and
unrelenting lead, help and support in the case. You
xxxx have been our "rock" as far as this case is
On 15 January 2009 Respondents filed their concerned. Jun and I are forever grateful to you for
Comment to the Petition for Review. all your help. I just thought I’d express to you what is
in the innermost of my heart as we proceed in the
xxxx case. It has been around four months now since we
met mid-March early this year.
On 13 April 2009 Intervenor, in behalf of Petitioner,
filed its Reply to the Comment. The most important and immediate aspect of the
case at this time for me is the collection of the
xxxx undisputed amount of Pesos 14million which the
All the pleadings in this Petition have already been Court has clearly directed and ordered the NLRC to
submitted on time with nothing more to be done execute. The only impending constraint for NLRC to
except to await the Resolution of this Honorable execute and collect this amount from the already
Court which, should the petition be decided in her garnished amount of Pesos 41 million at Citibank is
favor, Petitioner would stand to gain the MR of Kraft on the Order of the Court (CA) to
₱182,000,000.00, more or less, which victory would execute collection. We need to get a denial of this
be largely through the efforts of Intervenor.19 (Bold motion for NLRC to execute immediately. We
already obtained commitment from NLRC that all it
emphasis supplied).
needed to execute collection is the denial of the MR.
xxxx Jun and I applaud your initiative and efforts to
mediate with Romulo on potential settlement.
It appears that in July 2009, to the Intervenor’s However, as I expressed to you in several instances,
surprise, Malvar unceremoniously and without any I have serious reservations on the willingness of
justifiable reason terminated its legal service and Romulo to settle within reasonable amounts
required it to withdraw from the case.20 Hence, on specifically as it relates to the stock options. Let us
October 5,2009, the Intervenor reluctantly filed a continue to pursue this route vigorously while not
Manifestation (With Motion to Withdraw as Counsel setting aside our efforts to influence the CA to DENY
for Petitioner),21 in which it spelled out: (a) the terms their Motion on the Undisputed amount of Pesos
of and conditions of the Intervenor’s engagement as 14million.
counsel; (b) the type of legal services already
rendered by the Intervenor for Malvar; (c) the At this point, I cannot overemphasize to you our
absence of any legitimate reason for the termination need for funds. We have made financial
of their attorney-client relationship; (d) the commitments that require us to raise some amount.
reluctance of the Intervenor to withdraw as Malvar’s But we can barely meet our day to day business and
counsel; and (e) the desire of the Intervenor to assert personal requirements given our current situation
and claim its contingent fee notwithstanding its right now.
withdrawal as counsel. The Intervenor prayed that
the Court furnish it with copies of resolutions, Thank you po for your understanding and support.22
decisions and other legal papers issued or to be According to the Intervenor, it was certain that the
issued after its withdrawal as counsel of Malvar in compromise agreement was authored by the
the interest of protecting its interest as her attorney. respondents to evade a possible loss of
The Intervenor indicated that Malvar’s precipitate ₱182,000,000.00 or more as a result of the labor
action had baffled, shocked and even embarrassed litigation, but considering the Intervenor’s interest in
the Intervenor, because it had done everything the case as well as its resolve in pursuing Malvar’s
legally possible to serve and protect her interest. It interest, they saw the Intervenor as a major
added that it could not recall any instance of conflict stumbling block to the compromise agreement that it
or misunderstanding with her, for, on the contrary, was then brewing with her. Obviously, the only way
to remove the Intervenor was to have her terminate
its services as her legal counsel. This prompted the in the same proceeding, after hearing all the affected
Intervenor to bring the matter to the attention of the parties and without prejudice to the finality of the
Court to enable it to recover in full its compensation compromise agreement in so far as it does not
based on its written agreement with her, averring adversely affect the right of the lawyer.26 x x x.
The Intervenor prays for the following reliefs:
a) Granting the Motion for Intervention to Protect
28. Upon execution of the Compromise Agreement Attorney’s Rights in favor of the Intervenor;
and pursuant thereto, Petitioner immediately
received (supposedly) from b) Directing both Petitioner and Respondents jointly
Respondents₱40,000,000.00. But despite the and severally to pay Intervenor its contingent fees;
settlement between the parties, Petitioner did not c) Granting a lien upon all judgments for the payment
pay Intervenor its just compensation as set forth in
of money and executions issued in pursuance of
their engagement agreement; instead, she such judgments; and
immediately moved to Dismiss/Withdraw the
Present Petition. d) Holding in Abeyance in the meantime the
Resolution of the Motion to Dismiss/Withdraw Case
29. To parties’ minds, with the dismissal by filed by Petitioner and granting the Motion only after
Petitioner of Intervenor as her counsel, both Intervenor has been fully paid its just compensation;
Petitioner and Respondents probably thought they and
would be able to settle the case without any cost to
them, with Petitioner saving on Intervenor’s e) Other reliefs just and equitable.27
contingent fees while Respondents able to take
advantage of the absence of Intervenor in Opposing the Motion for Intervention,28 Malvar
determining the settlement price. stresses that there was no truth to the Intervenor’s
claim to defraud it of its professional fees; that the
30. The parties cannot be any more mistaken. Intervenor lacked the legal capacity to intervene
Pursuant to the Second Paragraph of Section 26, because it had ceased to exist after Atty. Marwil N.
Rule 138, of the Revised Rules of Court quoted in Llasos resigned from the Intervenor and Atty.
paragraph 3 hereof, Intervenor is still entitled to Richard B. Dasal became barred from private
recover from Petitioner the full compensation it practice upon his appointment as head of the Legal
deserves as stipulated in its contract. Department of the Small Business Guarantee and
Finance Corporation, a government subsidiary; and
31. All the elements for the full recovery of that Atty. Llasos and Atty. Dasal had personally
Intervenor’s compensation are present. First, the handled her case.
contract between the Intervenor and Petitioner is
reduced into writing. Second, Intervenor is Malvar adds that even assuming, arguendo, that the
dismissed without justifiable cause and at the stage Intervenor still existed as a law firm, it was still not
of proceedings where there is nothing more to be entitled to intervene for the following reasons,
done but to await the Decision or Resolution of the namely: firstly, it failed to attend to her multiple pleas
Present Petition.23 and inquiries regarding the case, as when
communications to the Intervenor through text
xxxx messages were left unanswered; secondly,
In support of the Motion for Intervention, the maintaining that this was a justifiable cause to
Intervenor cites the rulings in Aro v. Nañawa24 and dismiss its services, the Intervenor only heeded her
Law Firm of Raymundo A. Armovit v. Court of repeated demands to withdraw from the case when
Appeals,25 particularly the following passage: Atty. Dasal was confronted about his appointment to
the government subsidiary; thirdly, it was misleading
x x x. While We here reaffirm the rule that "the client and grossly erroneous for the Intervenor to claim that
has an undoubted right to compromise a suit without it had rendered to her full and satisfactory services
the intervention of his lawyer," We hold that when when the truth was that its participation was strictly
such compromise is entered into in fraud of the limited to the preparation, finalization and
lawyer, with intent to deprive him of the fees justly submission of the petition for review with the
due him, the compromise must be subject to the said Supreme Court; and finally, while the Intervenor
fees and that when it is evident that the said fraud is withdrew its services on October 5, 2009, the
committed in confabulation with the adverse party compromise agreement was executed with the
who had knowledge of the lawyer’s contingent respondents on December 9,2010 and notarized on
interest or such interest appears of record and who December 14, 2010, after more than a year and two
would benefit under such compromise, the better months, dispelling any badge of bad faith on their
practice is to settle the matter of the attorney’s fees end.
On June 21, 2011, the respondents filed their in the performance of his duties, act with justice, give
comment to the Intervenor’s Motion for Intervention. everyone his due, and observe honesty and good
faith." The right is also subject to the right of the
On November 18, 2011, the Intervenor submitted its attorney to be compensated. This is clear from
position on the respondent’s comment dated June Section 26, Rule 138 of the Rules of Court, which
21, 2011,29 and thereafter the respondents sent in provides:
their reply.30
Section 26. Change of attorneys. - An attorney may
Issues retire at anytime from any action or special
The issues for our consideration and determination proceeding, by the written consent of his client filed
are two fold, namely: (a) whether or not Malvar’s in court. He may also retire at any time from an
motion to dismiss the petition on the ground of the action or special proceeding, without the consent of
execution of the compromise agreement was his client, should the court, on notice to the client and
proper; and (b) whether or not the Motion for attorney, and on hearing, determine that he ought to
Intervention to protect attorney’s rights can prosper, be allowed to retire. In case of substitution, the name
of the attorney newly employed shall be entered on
and, if so, how much could it recover as attorney’s
fees. the docket of the court in place of the former one,
and written notice of the change shall be given to the
Ruling of the Court adverse party.

We shall decide the issues accordingly. A client may at any time dismiss his attorney or
substitute another in his place, but if the contract
1. between client and attorney has been reduced to
writing and the dismissal of the attorney was without
Client’s right to settle litigation
justifiable cause, he shall be entitled to recover from
by compromise agreement, and
the client the full compensation stipulated in the
to terminate counsel; limitations
contract. However, the attorney may, in the
A compromise agreement is a contract, whereby the discretion of the court, intervene in the case to
parties undertake reciprocal obligations to avoid protect his rights. For the payment of his
litigation, or put an end to one already compensation the attorney shall have a lien upon all
commenced.31 The client may enter into a judgments for the payment of money, and
compromise agreement with the adverse party to executions issued in pursuance of such judgment,
terminate the litigation before a judgment is rendered in the case wherein his services had been
rendered therein.32 If the compromise agreement is retained by the client. (Bold emphasis supplied)
found to be in order and not contrary to law, morals,
In fine, it is basic that an attorney is entitled to have
good customs and public policy, its judicial approval
and to receive a just and reasonable compensation
is in order.33 A compromise agreement, once
for services performed at the special instance and
approved by final order of the court, has the force of
request of his client. The attorney who has acted in
res judicata between the parties and will not be
good faith and honesty in representing and serving
disturbed except for vices of consent or forgery.34
the interests of the client should be reasonably
A client has an undoubted right to settle her litigation compensated for his service.38
without the intervention of the attorney, for the
former is generally conceded to have exclusive
control over the subject matter of the litigation and Compromise agreement is to be approved
may at anytime, if acting in good faith, settle and despite favorable action on the
adjust the cause of action out of court before Intervenor’s Motion for Intervention
judgment, even without the attorney’s
35 On considerations of equity and fairness, the Court
intervention. It is important for the client to show,
however, that the compromise agreement does not disapproves of the tendencies of clients
adversely affect third persons who are not parties to compromising their cases behind the backs of their
the agreement.36 attorneys for the purpose of unreasonably reducing
or completely setting to naught the stipulated
By the same token, a client has the absolute right to contingent fees.39 Thus, the Court grants the
terminate the attorney-client relationship at any time Intervenor’s Motion for Intervention to Protect
with or without cause.37 But this right of the client is Attorney’s Rights as a measure of protecting the
not unlimited because good faith is required in Intervenor’s right to its stipulated professional fees
terminating the relationship. The limitation is based that would be denied under the compromise
on Article 19 of the Civil Code, which mandates that agreement. The Court does so in the interest of
"every person must, in the exercise of his rights and
protecting the rights of the practicing Bar rendering of the services rendered, taking into account the
professional services on contingent fee basis. facts determinative thereof,43 the history of the
Intervenor’s legal representation of Malvar can
Nonetheless, the claim for attorney’s fees does not provide a helpful predicate for resolving the dispute
void or nullify the compromise agreement between between her and the Intervenor.
Malvar and the respondents. There being no
obstacles to its approval, the Court approves the The records reveal that on March 18, 2008, Malvar
compromise agreement. The Court adds, however, engaged the professional services of the Intervenor
that the Intervenor is not left without a remedy, for to represent her in the case of illegal dismissal. At
the payment of its adequate and reasonable that time, the case was pending in the CA at the
compensation could not be annulled by the respondents’ instance after the NLRC had set aside
settlement of the litigation without its participation the RCU’s computation of Malvar’s backwages and
and conformity. It remains entitled to the monetary benefits, and had upheld the computation
compensation, and its right is safeguarded by the arrived at by the NLRC Computation Unit. On April
Court because its members are officers of the Court 17, 2008, the CA set aside the assailed resolution of
who are as entitled to judicial protection against the NLRC, and remanded the case to the Labor
injustice or imposition of fraud committed by the Arbiter for the computation of her monetary awards.
client as much as the client is against their abuses It was at this juncture that the Intervenor
as her counsel. In other words, the duty of the Court commenced its legal service, which included the
is not only to ensure that the attorney acts in a proper following incidents, namely:
and lawful manner, but also to see to it that the
attorney is paid his just fees. Even if the a) Upon the assumption of its professional duties as
compensation of the attorney is dependent only on Malvar’s counsel, a Motion for Reconsideration of
winning the litigation, the subsequent withdrawal of the Decision of the Court of Appeals dated April 17,
the case upon the client’s initiative would not deprive 2008 consisting of thirty-eight pages was filed before
the attorney of the legitimate compensation for the Court of Appeals on May 6, 2008.
professional services rendered.40 b) On June 2, 2009, Intervenors filed a Comment to
The basis of the intervention is the written Respondents’ Motion for Partial Reconsideration,
agreement on contingent fees contained in the said Comment consisted 8 pages.
engagement executed on March 19, 2008 between c) In the execution proceedings before Labor Arbiter
Malvar and the Intervenor,41 the pertinent portion of Jaime Reyno, Intervenor prepared and filed on
which stipulated that the Intervenor would "collect Malvar’s behalf an "Ex-Parte Motion to Release to
ten percent (10%) of the amount of
Complainant the Undisputed amount of
Ph₱14,252,192.12 upon its collection and another ₱14,252,192.12" in NLRC NCR Case No. 30-07-
ten percent (10%) of the remaining balance of 02716-00.
Ph₱41,627,593.75 upon collection thereof, and also
ten percent (10%) of whatever is the value of the d) On July 29, 2000, Intervenor prepared and filed
stock option you are entitled to under the Decision." before theLabor Arbiter a Comment to Respondents’
There is no question that such arrangement was a Opposition to the "Ex-Parte Motion to Release" and
contingent fee agreement that was valid in this a "Motion Reiterating Immediate Implementation of
jurisdiction, provided the fees therein fixed were the Writ of Execution"
e) On August 6, 2008, Intervenor prepared and filed
We hold that the contingent fee of 10% of before the Labor Arbiter Malvar’s Motion Reiterating
₱41,627,593.75 and 10% of the value of the stock Motion to Release the Amount of ₱14,252,192.12.44
option was reasonable. The ₱41,627,593.75 was
already awarded to Malvar by the NLRC but the The decision promulgated on April 17, 200845 and
award became the subject of the appeal in this Court the resolution promulgated on July 30, 200846 by the
because the CA reversed the NLRC. Be that as it CA prompted Malvar to appeal on August 15, 2008
may, her subsequent change of mind on the amount to this Court with the assistance of the Intervenor. All
sought from the respondents as reflected in the the subsequent pleadings, including the reply of
compromise agreement should not negate or bar the April 13, 2009,47 were prepared and filed in Malvar’s
Intervenor’s recovery of the agreed attorney’s fees. behalf by the Intervenor.

Considering that in the event of a dispute between Malvar should accept that the practice of law was not
the attorney and the client as to the amount of fees, limited to the conduct of cases or litigations in court
and the intervention of the courts is sought, the but embraced also the preparation of pleadings and
determination requires that there be evidence to other papers incidental to the cases or litigations as
prove the amount of fees and the extent and value well as the management of such actions and
proceedings on behalf of the
clients.48 Consequently, fairness and justice To be sure, the Intervenor’s withdrawal from the
demand that the Intervenor be accorded full case neither cancelled nor terminated the written
recognition as her counsel who discharged its agreement on the contingent attorney’s fees. Nor did
responsibility for Malvar’s cause to its successful the withdrawal constitute a waiver of the agreement.
end. On the contrary, the agreement continued between
them because the Intervenor’s Manifestation (with
But, as earlier pointed out, although a client may Motion to Withdraw as Counsel for
dismiss her lawyer at any time, the dismissal must Petitioner)explicitly called upon the Court to
be for a justifiable cause if a written contract between safeguard its rights under the written agreement, to
the lawyer and the client exists.49 wit:
Considering the undisputed existence of the written WHEREFORE, premises considered, undersigned
agreement on contingent fees, the question begging counsel respectfully pray that instant Motion to
to be answered is: Was the Intervenor dismissed for Withdraw as Counsel for Petitioner be granted and
a justifiable cause? their attorney’s lien pursuant to the written
agreement be reflected in the judgment or decision
We do not think so.
that may be rendered hereafter conformably with
In the absence of the lawyer’s fault, consent or par. 2, Sec. 26, Rule 138 of the Rules of Court.
waiver, a client cannot deprive the lawyer of his just
fees already earned in the guise of a justifiable Undersigned counsel further requests that they be
reason. Here, Malvar not only downplayed the worth furnished copy of the decision, resolutions and other
of the Intervenor’s legal service to her but also legal processes of this Honorable Court to enable
attempted to camouflage her intent to defraud her them to protect their interests.51
lawyer by offering excuses that were not only Were the respondents also liable?
inconsistent with her actions but, most importantly,
fell short of being justifiable. The respondents would be liable if they were shown
to have connived with Malvar in the execution of the
The letter Malvar addressed to Retired Justice compromise agreement, with the intention of
Bellosillo, who represented the Intervenor, depriving the Intervenor of its attorney’s fees.
debunked her allegations of unsatisfactory legal Thereby, they would be solidarily liable with her for
service because she thereby lavishly lauded the the attorney’s fees as stipulated in the written
Intervenor for its dedication and devotion to the agreement under the theory that they unfairly and
prosecution of her case and to the protection of her unjustly interfered with the Intervenor’s professional
interests. Also significant was that the attorney-client relationship with Malvar.
relationship between her and the Intervenor was not
severed upon Atty. Dasal’s appointment to public The respondents insist that they were not bound by
office and Atty. Llasos’ resignation from the law firm. the written agreement, and should not be held liable
In other words, the Intervenor remained as her under it.1âwphi1
counsel of record, for, as we held in Rilloraza, Africa,
De Ocampo and Africa v. Eastern We disagree with the respondents’ insistence. The
Telecommunication Philippines, Inc.,50 a client who respondents were complicit in Malvar’s move to
employs a law firm engages the entire law firm; deprive the Intervenor of its duly earned contingent
hence, the resignation, retirement or separation from fees.
the law firm of the handling lawyer does not
First of all, the unusual timing of Malvar’s letter
terminate the relationship, because the law firm is terminating the Intervenor’s legal representation of
bound to provide a replacement. her, of her Motion to Dismiss/Withdraw Case, and of
The stipulations of the written agreement between the execution of compromise agreement manifested
Malvar and the Intervenors, not being contrary to her desire to evade her legal obligation to pay to the
law, morals, public policy, public order or good Intervenor its attorney’s fees for the legal services
customs, were valid and binding on her. They rendered. The objective of her withdrawal of the
expressly gave rise to the right of the Intervenor to case was to release the respondents from all her
demand compensation. In a word, she could not claims and causes of action in consideration of the
simply walk away from her contractual obligations settlement in the stated amount of ₱40,000.000.00,
towards the Intervenor, for Article 1159 of the Civil a sum that was measly compared to what she was
Code provides that obligations arising from contracts legally entitled to, which, to begin with, already
have the force of law between the parties and should included the ₱41,627,593.75 and the value of the
be complied with in good faith. stock option already awarded to her. In other words,
she thereby waived more than what she was lawfully
expected to receive from the respondents.
Secondly, the respondents suddenly turned around concerns could have led her to accept the
from their strong stance of berating her demand as respondents’ offer, which offer could be further
offensive to all precepts of justice and fair play and reduced by the Intervenor’s expected demand for
as a form of unjust enrichment for her to a compensation. Thereby, she and the respondents
surprisingly generous surrender to her demand, became joint tort-feasors who acted adversely
allowing to her through their compromise agreement against the interests of the Intervenor. Joint tort-
the additional amount of ₱40,000,000.00 on top of feasors are those who command, instigate, promote,
the₱14,252,192.12 already received by her in encourage, advise, countenance, cooperate in, aid
August 2008. The softening unavoidably gives the or abet the commission of a tort, or who approve of
impression that they were now categorically it after it is done, if done for their benefit.54
conceding that Malvar deserved much more. Under
those circumstances, it is plausible to conclude that They are also referred to as those who act together
her termination of the Intervenor’s services was in committing wrong or whose acts, if independent of
instigated by their prodding in order to remove the each other, unite in causing a single injury.55 Under
Intervenor from the picture for being a solid Article 2194 of the Civil Code, joint tort-feasors are
obstruction to the settlement for a much lower solidarily liable for the resulting damage. As regards
liability, and thereby save for themselves and for her the extent of their respective liabilities, the Court said
some more amount. in Far Eastern Shipping Company v. Court of
Thirdly, the compromise agreement was silent on
the Intervenor’s contingent fee, indicating that the x x x. Where several causes producing an injury are
objective of the compromise agreement was to concurrent and each is an efficient cause without
secure a huge discount from its liability towards which the injury would not have happened, the injury
Malvar. may be attributed to all or any of the causes and
recovery may be had against any or all of the
Finally, contrary to the stipulation in the compromise responsible persons although under the
agreement, only Malvar, minus the respondents, circumstances of the case, it may appear that one of
filed the Motion to Dismiss/Withdraw Case. them was more culpable, and that the duty owed by
them to the injured person was not same. No actor’s
At this juncture, the Court notes that the compromise negligence ceases to be a proximate cause merely
agreement would have Malvar waive even the because it does not exceed the negligence of other
substantial stock options already awarded by the acts. Each wrongdoer is responsible for the entire
NLRC’s decision,52 which ordered the respondents result and is liable as though his acts were the sole
to pay to her, among others, the value of the stock cause of the injury.
options and all other bonuses she was entitled to or
would have been entitled to had she not been There is no contribution between joint tort-feasors
illegally dismissed from her employment. This ruling whose liability is solidary since both of them are
was affirmed by the CA.53 But the waiver could not liable for the total damage. Where the concurrent or
negate the Intervenor’s right to 10% of the value of successive negligent acts or omissions of two or
the stock options she was legally entitled to under more persons, although acting independently, are in
the decisions of the NLRC and the CA, for that right combination the direct and proximate cause of a
was expressly stated in the written agreement single injury to a third person, it is impossible to
between her and the Intervenor. Thus, the determine in what proportion each contributed to the
Intervenor should be declared entitled to recover full injury and either of them is responsible for the whole
compensation in accordance with the written injury. x x x
agreement because it did not assent to the waiver of
the stock options, and did not waive its right to that Joint tort-feasors are each liable as principals, to the
part of its compensation. same extent and in the same manner as if they had
performed the wrongful act themselves. It is likewise
These circumstances show that Malvar and the not an excuse for any of the joint tort-feasors that
respondents needed an escape from greater liability individual participation in the tort was insignificant as
towards the Intervenor, and from the possible compared to that of the other.57 To stress, joint tort-
obstacle to their plan to settle to pay. It cannot be feasors are not liable pro rata. The damages cannot
simply assumed that only Malvar would be liable be apportioned among them, except by themselves.
towards the Intervenor at that point, considering that They cannot insist upon an apportionment, for the
the Intervenor, had it joined the negotiations as her purpose of each paying an aliquot part. They are
lawyer, would have tenaciously fought all the way for jointly and severally liable for the whole
her to receive literally everything that she was amount.58 Thus, as joint tort-feasors, Malvar and the
entitled to, especially the benefits from the stock respondents should be held solidarily liable to the
option. Her rush to settle because of her financial
Intervenor. There is no way of appreciating these DECISION
circumstances except in this light.
That the value of the stock options that Malvar
waived under the compromise agreement has not This is a petition for review on certiorari1 assailing
been fixed as yet is no hindrance to the the Resolution2 dated September 30, 2005 of the
implementation of this decision in favor of the Court of Appeals (CA) in CA-G.R. SP No. 85556
Intervenor. The valuation could be reliably made at which approved the joint compromise agreement
a subsequent time from the finality of this executed by respondent Alejandro Cruz-Herrera
adjudication. It is enough for the Court to hold the (Herrera) and the former employees of Podden
respondents and Malvar solidarily liable for the 10% International Philippines, Inc. (Podden), namely:
of that value of the stock options. Josephine Solano, Adelaida Fernandez,· Alejandro
Yuan, Jocelyn Lavares, Mary Jane Olaso, Melanie
As a final word, it is necessary to state that no court Briones, Rowena Patron, Ma. Luisa Cruz, Susan
can shirk from enforcing the contractual stipulations Tapales, Rusty Bautista, and Janet Yuan
in the manner they have agreed upon and written. (complainants).
As a rule, the courts, whether trial or appellate, have
no power to make or modify contracts between the The Antecedents
parties. Nor can the courts save the parties from Respondent Herrera was the President of Podden
disadvantageous provisions.59 The same precepts while complainants were assemblers and/or line
hold sway when it comes to enforcing fee leader assigned at the production department.3 In
arrangements entered into in writing between clients 1993, the complainants were terminated from
and attorneys. In the exercise of their supervisory employment due to financial reverses. Upon
authority over attorneys as officers of the Court, the verification, however, with the Department of Labor
courts are bound to respect and protect the and Employment, no such report of financial
attorney’s lien as a necessary means to preserve the reverses or even retrenchment was filed. This
decorum and respectability of the Law prompted the complainants to file a complaint for
Profession.60Hence, the Court must thwart any and
illegal dismissal, monetary claims and damages
every effort of clients already served by their against Podden and Herrera.4 They engaged the
attorneys’ worthy services to deprive them of their services of Atty. Emmanuel D. Agustin (Atty.
hard-earned compensation. Truly, the duty of the Agustin) to handle the case5 upon the verbal
courts is not only to see to it that attorneys act in a agreement that he will be paid on a contingency
proper and lawful manner, but also to see to it that basis at the rate of ten percent (10%) of the final
attorneys are paid their just and lawful fees.61
monetary award or such amount of attorney’s fees
WHEREFORE, the Court APPROVES the that will be finally determined.
compromise agreement; GRANTS the Motion for Proceedings before the Labor Arbiter
Intervention to Protect Attorney's Rights; and
ORDERS Czarina T. Malvar and respondents Kraft The complainants, thru Atty. Agustin, obtained a
Food Philippines Inc. and Kraft Foods International favorable ruling before the Labor Arbiter (LA) who
to jointly and severally pay to Intervenor Law Firm, disposed as follows in its Decision6 dated
represented by Retired Associate Justice Josue N. September 27, 1998, to wit:
Bellosillo, its stipulated contingent fees of 10% of
₱41,627,593.75, and the further sum equivalent to WHEREFORE, premises considered, [Podden and
10% of the value of the stock option. No Herrera] are hereby directed/ordered to immediately
pronouncement on costs of suit. reinstate the complainants to their former positions
without loss of seniority rights and other privileges
SO ORDERED. with full backwages from date of dismissal up to
actual date of reinstatement which as of this month
is more or less in the amount as follows:
G.R. No. 174564 February 12, 2014
1. JOSEPHINE SOLANO [P]238,680.00
BAUTISTA, and JANET YUAN, Petitioners,
LEJANDRO YUAN [P]238,680.00 Atty. Agustin opposed Herrera’s motion and argued
that the issuance of a writ of execution is ministerial
because the LA decision has long been final and
OCELYN LAVARES [P]238,680.00
executory there being no appeal taken therefrom.
He further claimed that the alleged Waivers and
MARY JANE OLASO [P]238,680.00 Quitclaims were part of a scheme adopted by
Podden to evade its liability and defraud the
MELANIE BRIONES [P]238,680.00 complainants.11

Resolving the conflict, the LA issued its

ROWENA PATRON [P]238,680.00 Order12 dated May 15, 2000 denying the motion for
the issuance of a writ of execution. The LA sustained
MA. LUISA CRUZ [P]238,680.00 as valid the Waivers and Quitclaims signed by all
and not just nine of the complainants, based on the
following findings:
USAN TAPALES [P]238,680.00
A cursory examination of the records reveal[s] that
RUSTY BAUTISTA [P]238,680.00 complainants, all eleven (11) of them, had indeed
executed their respective waiver and quitclaim thru
an instrument entitled "Pagtalikod sa Karapatang
JANET YUAN [P]238,680.00
Maghabol" absolving [Podden and Herrera] from any
and all liabilities that may arise against the latter to
TAL [P]2,625,480.00 these cases. The instruments were signed by the
complainants and sworn to before Notary Public
[Podden and Herrera] are further ordered to pay Amparo G. Ocampo. Considering the fact that the
complainants their money claims representing their complainants, through their common counsel,
underpayment of wages, 13th month pay, premium received a copy of the Decision in these cases on
pay for holidays and rest days and service incentive December 28, 1998, it could only be supposed that
leave pay to be computed by the Fiscal Examiner of as of that date they signed the instrument of waiver
the Research, Information and Computation Unit of and quitclaim on March 2, 1999, April 8, 1999 and
the Commission in due time. March 31, 2000, they were already properly
apprised about the decision having been issued in
[Podden and Herrera] are furthermore ordered to
their favor, more particularly the contents thereof, by
pay each complainant the amount of [P]40,000.00
their esteemed counsel. The fact that complainants
as moral and exemplary damages, as well as ten
would execute such waiver and quitclaim,
(10%) of the total awards as attorney’s fee.
notwithstanding, only shows the spontaneity and
SO ORDERED.7 voluntariness of their deed.

No appeal was taken from the foregoing judgment Moreover, and as the instrument of waiver and
hence, on February 2, 1999, a motion for execution quitclaim would show, the letter was written in the
was filed. The motion was set for a hearing on vernacular of Filipino language. Complainants who
February 10, 1999 but was reset twice upon the are all presumed to be knowledgeable about the
parties’ request for the purpose of exploring the national language could not have been misled with
possibility of settlement.8 respect to the real meaning and plain import of the
words used in the instrument. That complainants
On March 20, 1999, Herrera filed a Manifestation meant and understood what they signed in the
and Motion to deny issuance of the writ stating, instrument is best shown by the fact that in the
among others, that Podden ceased operations on subsequent hearings scheduled to take up the
December 1, 1994 or almost four years before motion for writ of execution and the opposition
judgment was rendered by the LA on the illegal thereto (considering the relative importance of the
dismissal complaint and that nine of the eleven matters raised and substantial awards to the
employees have executed Waivers and Quitclaims complainants)[,] complainants have failed to show
rendering any execution of the judgment up in any of them.13
Accordingly, the quitclaims were held to have
On July 20, 1999, the Computation and Examination superseded the matter of issuing a writ of execution.
Unit of the National Labor Relations Commission Anent Atty. Agustin’s fees, the LA held that he is
(NLRC) released the computation of the total entitled to ten percent (10%) of the total monetary
monetary award granted by the LA amounting to award obtained by the complainants from the
₱3,358,441.84.10 compromise agreement. The order disposed thus:
WHEREFORE, premises considered, the motion for WHEREAS, the parties have agreed that [Herrera]
writ of execution is denied on [the] ground that shall pay each of the [complainants] immediately
complainants have already settled their cases with upon the signing of the Joint Compromise
[Podden and Herrera]. Agreement the amount of Php 35,000.00 to each;

On account of the settlement, however, [Podden and WHEREAS, the parties have agreed that [Herrera]
Herrera] are hereby ordered to pay complainants’ shall pay the costs of the suit and attorney’s fees of
counsel ten (10%) percent of the amount received [the complainants] equivalent to 10% (ten percent)
by complainants as attorney’s fees. of the total settlement agreement;

SO ORDERED.14 WHEREAS, the parties, their heirs, and assigns,

agree to have the present case dismissed WITH
Ruling of the NLRC PREJUDICE, immediately; x x x.19
On appeal, the NLRC reversed the LA Order dated In its assailed Resolution20 dated September 30,
May 15, 2000 for the reason that it unlawfully 2005, the CA found the joint compromise agreement
amended, altered and modified the final and consistent with law, public order and public policy,
executory LA Decision dated September 27, 1998. and consequently stamped its approval thereon and
The quitclaims were also held invalid based on the entered judgment in accordance therewith, viz:
unconscionably low amount received by each of the
complainants thereunder which ranged between Finding the above terms and conditions not contrary
₱10,000.000 and ₱20,000.00 as against the to law, public order and public policy, the parties’
judgment award of ₱238,680.00 for each individual prayer that the foregoing joint compromise
complainant. This factor was found by the NLRC to agreement be approved and the extant case be
be a clear proof that the quitclaims were indeed dismissed with prejudice is GRANTED and the
wangled from the unsuspecting complainants. The agreement ADMITTED. Judgment is hereby entered
NLRC Resolution15 dated May 7, 2003 thus held: in accordance thereto.

WHEREFORE, the appeal is GRANTED. The Order Parties are enjoined to strictly comply with this
a quo of May 15, 2000 is hereby reversed and set judgment on compromise.
aside and a new one entered ordering the Labor
Arbiter a quo to immediately issue the corresponding SO ORDERED.21
writ of execution for the enforcement of the decision Atty. Agustin moved for the reconsideration of the
rendered in this case. foregoing resolution but his motion was denied in the
The quitclaims executed by the complainants are CA Resolution22dated September 8, 2006.
hereby nullified. However, any amount received by Displeased, Atty. Agustin, with the complainants
the complainants under the quitclaims shall be named as his co-petitioners, interposed the present
deducted from the award due each of them. recourse contending that the resolutions of the CA
SO ORDERED.16 violated the principle of res judicata because they
amended and altered the final and executory LA
The NLRC reiterated the foregoing judgment in the Decision dated
Order17 dated May 31, 2004 which denied Podden
and Herrera’s motion for reconsideration. On August September 27, 1998 and NLRC Resolution dated
13, 2004, the NLRC issued an Entry of Judgment May 7, 2003 on the basis of an unconscionable
declaring that its Order dated May 31, 2004 has compromise agreement that was executed without
become final and executory on June 20, 2004.18 his knowledge and consent. Atty. Agustin prays that
the joint compromise agreement be set aside, the LA
Ruling of the CA Decision dated September 27, 1998 executed and
Herrera ordered to pay him ₱335,844.18 as
On August 6, 2004, Herrera filed a petition for attorney’s fees pursuant to the final and executory
certiorari before the CA assailing the issuances of monetary award originally obtained by the
the NLRC. During the pendency of the petition or on complainants before the LA.
August 30, 2005, a joint compromise agreement was
submitted to the CA narrating as follows: Our Ruling

WHEREAS, the parties have discussed their We deny the petition.

differences; claims, counterclaims and other issues
in the above-entitled cases and have decided to The petition is dismissible outright for being
amicably and mutually settle the same; accompanied by a defective certification of non-
forum shopping having been signed by Atty. Agustin
instead of the complainants as the principal parties.
It has been repeatedly emphasized that in the case any time before judgment, if acting in good faith,
of natural persons, the certification against forum compromise, settle, and adjust his cause of action
shopping must be signed by the principal parties out of court without his attorney’s intervention,
themselves and not by the attorney.23 The purpose knowledge, or consent, even though he has agreed
of the rule rests mainly on practical sensibility. As with his attorney not to do so. Hence, the absence of
explained in Clavecilla v. Quitain:24 a counsel’s knowledge or consent does not
invalidate a compromise agreement.29
x x x [T]he certification (against forum shopping)
must be signed by the plaintiff or any of the principal Neither can a final judgment preclude a client from
parties and not by the attorney. For such certification entering into a compromise. Rights may be waived
is a peculiar personal representation on the part of through a compromise agreement, notwithstanding
the principal party, an assurance given to the court a final judgment that has already settled the rights of
or other tribunal that there are no other pending the contracting parties provided the compromise is
cases involving basically the same parties, issues shown to have been voluntarily, freely and
and causes of action. intelligently executed by the parties, who had full
knowledge of the judgment. Additionally, it must not
x x x Obviously it is the petitioner, and not always the be contrary to law, morals, good customs and public
counsel whose professional services have been policy.30
retained for a particular case, who is in the best
position to know whether he or it actually filed or In the present case, the allegations of vitiated
caused the filing of a petition in that case. Hence, a consent proffered by Atty. Agustin are all
certification against forum shopping by counsel is a presumptions and suppositions that have no bearing
defective certification.25 as evidence. There is no proof that the complainants
were forced, intimidated or defrauded into executing
The Court has espoused leniency and overlooked the quitclaims. On the contrary, the LA correctly
such procedural misstep in cases bearing observed that, based on the following facts, the
substantial merit complemented by the written complainants voluntarily entered into and fully
authority or general power of attorney granted by the understood the contents and effect of the quitclaims,
parties to the actual signatory.26However, no to wit: (1) they have already received a copy and
analogous justifiable reasons exist in the case at bar hence aware of the LA Decision dated September
neither do the claims of Atty. Agustin merit 27, 1998 when they signed the quitclaims on March
substantial consideration to justify a relaxation of the 2, 1999, April 8, 1999 and March 31, 2000; (2) the
rule. quitclaims were written in Filipino language which is
known to and understood by the complainants; (3)
It is apparent that the complainants did not seek the
instant review because they have already settled none of the complainants attended the hearings on
their dispute with Herrera before the CA. It is Atty. the motion for execution of the LA Decision dated
Agustin’s personal resolve to pursue this recourse September 27, 1998; (4) they were consistent in
their manifestations before the NLRC and the CA
premised on his unwavering stance that the joint
compromise agreement signed by the complainants that they have already settled their claims against
was inequitable and devious as they were denied the Podden and Herrera hence, their request for the
bigger monetary award adjudged by a final and termination of the appeals filed by Atty. Agustin
before the said tribunals.
executory judgment.

Atty. Agustin ought to be reminded that his Furthermore, it is the complainants themselves who
professional relation with his clients is one of agency can impugn the consideration of the compromise as
under the rules thereof "[t]he acts of an agent are being unconscionable31 but no such repudiation was
deemed the acts of the principal only if the agent manifested before the Court or the courts a quo.
acts within the scope of his authority."27 It is clear The ruling in Unicane Workers Union-CLUP v.
that under the circumstances of this case, Atty. NLRC32 cited by Atty. Agustin is not applicable to the
Agustin is acting beyond the scope of his authority facts at hand. The circumstances which led the
in questioning the compromise agreement between Court to annul the quitclaim in Unicane are not
the complainants, Podden and Herrera. attendant in the present case. In Unicane, the
It is settled that parties may enter into a compromise attorney-in-fact who signed the quitclaim in behalf of
agreement without the intervention of their the employees exceeded the scope of his authority
lawyer.28 This precedes from the equally settled rule thus prejudicing the latter. Consequently, it was
that a client has an undoubted right to settle a suit ruled that the quitclaim did not bind the employees.
without the intervention of his lawyer for he is No akin situation exists in the case at bar.
generally conceded to have the exclusive control
over the subject-matter of the litigation and may, at
Further, Atty. Agustin’s claim for his unpaid It must be noted that the complainants were laborers
attorney’s fees cannot nullify the subject joint who desired to contest their dismissal for being
compromise agreement.33 illegal.1âwphi1 With no clear means to pay for costly
legal services, they hired Atty. Agustin whose
A compromise agreement is binding only between remuneration was subject to the success of the
its privies and could not affect the rights of third illegal dismissal suit. Before a judgment was
persons who were not parties to the agreement. One rendered in their favor, however, the company
such third party is the lawyer who should not be closed down and settlement of the suit for an amount
totally deprived of his compensation because of the lesser than their monetary claims, instead of
compromise subscribed by the client. Otherwise, the execution of the favorable judgment, guaranteed the
terms of the compromise agreement will be set atonement for their illegal termination. To make the
aside, and the client shall be bound to pay the fees complainants liable for the ₱335,844.18 attorney’s
agreed upon with his lawyer. If the adverse party fees adjudged in the LA Decision of September 27,
settled the suit in bad faith, he will be made solidarily 1998 would be allowing Atty. Agustin to get a lion’s
liable with the client for the payment of such fees. share of the ₱385,000.0037 received by the former
The following discussions in Gubat v. National from the compromise agreement that terminated the
Power Corporation34 elaborate on this matter, viz: suit; to allow that to happen will contravene the
As the validity of a compromise agreement cannot raison d'être for contingent fee arrangements.
be prejudiced, so should not be the payment of a Contingent fee arrangements "are permitted
lawyer’s adequate and reasonable compensation for because they redound to the benefit of the poor
his services should the suit end by reason of the client and the lawyer ‘especially in cases where the
settlement. The terms of the compromise subscribed client has meritorious cause of action, but no means
to by the client should not be such that will amount with which to pay for legal services unless he can,
to an entire deprivation of his lawyer’s fees, with the sanction of law, make a contract for a
especially when the contract is on a contingent fee contingent fee to be paid out of the proceeds of the
basis. In this sense, the compromise settlement litigation. Oftentimes, the contingent fee
cannot bind the lawyer as a third party. A lawyer is arrangement is the only means by which the poor
as much entitled to judicial protection against and helpless can seek redress for injuries sustained
injustice or imposition of fraud on the part of his client and have their rights vindicated.’"38
as the client is against abuse on the part of his
counsel. The duty of the court is not only to ensure Further, a lawyer is not merely the defender of his
that a lawyer acts in a proper and lawful manner, but client’s cause. He is also, first and foremost, an
also to see to it that a lawyer is paid his just fees. officer of the court and participates in the
fundamental function of administering justice in
Even if the compensation of a counsel is dependent society. It follows that a lawyer’s compensation for
only upon winning a case he himself secured for his professional services rendered is subject to the
client, the subsequent withdrawal of the case on the supervision of the court in order to maintain the
client’s own volition should never completely deprive dignity and integrity of the legal profession to which
counsel of any legitimate compensation for his he belongs.39 "[L]awyering is not a moneymaking
professional services. In all cases, a client is bound venture and lawyers are not merchants. Law
to pay his lawyer for his services. The determination advocacy, it has been stressed, is not capital that
of bad faith only becomes significant and relevant if yields profits. The returns it births are simple rewards
the adverse party will likewise be held liable in for a job done or service rendered."40
shouldering the attorney’s fees.35 (Citations omitted)
More importantly, Atty. Agustin was not totally
There is truth to Atty. Agustin’s argument that the deprived of his fees. Under the joint settlement
compromise agreement did not include or affect his agreement, he is entitled to receive ten percent
attorney’s fees granted in the final and executory LA (10%) of the total settlement. We find the said
Decision dated September 27, 1998. Attorney’s fees amount reasonable considering that the nature of
become vested right when the order awarding those the case did not involve complicated legal issues
fees becomes final and executory and any requiring much time, skill and effort.
compromise agreement removing that right must
include the lawyer’s participation if it is to be valid It cannot be said that Herrera negotiated for the
against him.36 compromise agreement in bad faith. It remains
undisputed that Podden has ceased operations on
However, equity dictates that an exception to such December 1, 1994 or almost four years before the
rule be made in this case with the end in view that LA Decision dated September 27, 1998 was
the fair share of litigants to the benefits of a suit be rendered.41 In view thereof, the implementation of
not displaced by a contract for legal services. the award became unfeasible and a compromise
settlement was more beneficial to the complainants ROSARIO MANEJA, petitioner,
as it assured them of reparation, albeit at a reduced vs.
amount. This was the same situation prevailing at NATIONAL LABOR RELATIONS COMMISSION
the time when Herrera manifested and reiterated and MANILA MIDTOWN HOTEL, respondents.
before the CA that a concession has been reached
by the parties. Thus, the motivating force behind the
settlement was not to deprive or prejudice Atty. MARTINEZ, J.:
Agustin of his fees, but rather the inability of a
dissolved corporation to fully abide by its adjudged Assailed in this petition for certiorari under Rule 65
liabilities and the certainty of payment on the part of of the Revised Rules of Court are the
the complainants. Resolution 1 dated June 3, 1994 of the respondent
National Labor Relations Commission in NLRC
Also, collusion between complainants and Herrera NCR-00-10-05297-90, entitled "Rosario
cannot be inferred from the fact that Atty. Agustin Maneja,Complainant, vs. Manila Midtown
obtained lesser attorney’s fees under the Hotel, Respondent," which dismissed the illegal
compromise agreement as against that which he
dismissal case filed by petitioner against private
could have gained if the LA Decision dated respondent company for lack of jurisdiction of the
September 27, 1998 was executed. Unless there is Labor Arbiter over the case; and its
a showing that the complainants actually received 2
Resolution dated October 20, 1995 denying
an amount higher than that stated in the settlement petitioner's motion for reconsideration.
agreement, it cannot be said that Atty. Agustin was
unlawfully prejudiced. There is no proof submitted Petitioner Rosario Maneja worked with private
supporting such inference. respondent Manila Midtown Hotel beginning
January, 1985 as a telephone operator. She was a
Under the above circumstances, Herrera cannot be member of the National Union of Workers in Hotels,
made solidarily liable for Atty. Agustin’s fees which, Restaurants and Allied Industries (NUWHRAIN) with
as a rule, are the personal obligation of his clients, an existing Collective Bargaining Agreement (CBA)
the complainants. However, pursuant to his
with private respondent.
undertaking in the joint compromise agreement,
Herrera is solely bound to compensate Atty. Agustin In the afternoon of February 13, 1990, a fellow
at the rate of ten percent (10%) of the total telephone operator, Rowena Loleng received a
settlement agreement.42 Request for Long Distance Call (RLDC) form and a
deposit of P500.00 from a page boy of the hotel for
Since the entire provisions of the joint compromise a call by a Japanese guest named Hirota Ieda. The
agreement are not available in the records and only call was unanswered. The P500.00 deposit was
the relevant portions thereof were quoted in the CA forwarded to the cashier. In the evening, Ieda again
Resolution dated September 30, 2005, the Court made an RLDC and the page boy collected another
deems it reasonable to impose a period of ten (10) P500.00 which was also given to the operator
days within which Herrera should fulfill his obligation Loleng. The second call was also unanswered.
to Atty. Agustin. Loleng passed on the RLDC to petitioner for follow-
WHEREFORE, premises considered, the petition is up. Petitioner monitored the call.
hereby DENIED. The Resolution dated September On February 15, 1990, a hotel cashier inquired about
30, 2005 of the Court of Appeals in CA-G.R. SP No. the P1,000.00 deposit made by Ieda. After a search,
85556 is AFFIRMED. Loleng found the first deposit of P500.00 inserted in
Pursuant to his undertaking in the joint compromise the guest folio while the second deposit was
agreement, respondent Alejandro Cruz-Herrera is eventually discovered inside the folder for cancelled
ORDERED to pay, give, deliver to Atty. Emmanuel calls with deposit and official receipts.
D. Agustin ten percent (10%) of the total settlement When petitioner saw that the second RLDC form
agreement within a period of ten (10) days from was not time-stamped, she immediately placed it
notice hereof. Both of them are hereby REQUIRED inside the machine which stamped the date
to report compliance with the foregoing order within "February 15, 1990." Realizing that the RLDC was
a period of five days thereafter. filed 2 days earlier, she wrote and changed the date
SO ORDERED. to February 13, 1990. Loleng then delivered the
RLDC and the money to the cashier. The second
deposit of P500.00 by Ieda was later returned to him.

G.R. No. 124013 June 5, 1998 On March 7, 1990, the chief telephone operator
issued a memorandum 3 to petitioner and Loleng
directing the two to explain the February 15 incident.
Petitioner and Loleng thereafter submitted their termination case(sic.)." The dispositive portion of the
written explanation. 4 decision states that:

On March 20, 1990, a written report 5 was submitted WHEREFORE, premises considered, judgment is
by the chief telephone operator, with the hereby renrdered as follows:
recommendation that the offenses committed by the
operators concerned covered violations of the (1) Declaring complainant's dismissal by respondent
Offenses Subject to Disciplinary Actions (OSDA): (1) hotel as illegally effected;
OSDA 2.01: forging, falsifying official document(s), (2) Ordering respondent to immediately reinstate
and (2) OSDA 1.11: culpable carelessness — complainant to her previous position without loss of
negligence or failure to follow specific instruction(s) seniority rights;
or established procedure(s).
(3) Ordering further respondent to pay complainant
On March 23, 1990, petitioner was served a notice
the full backwages due her, which is computed as
of dismissal 6 effective April 1, 1990. Petitioner follows:
refused to sign the notice and wrote therein "under

Meanwhile, a criminal case 7 for Falsification of 3/23/90 - 10/31/90 = 7.26/mos.

Private Documents and Qualified Theft was filed
before the Office of the City Prosecutor of Manila by P2.540 x 7.26/mos. P18,440.40
private respondent againts Loleng and petitioner.
11/1/90 - 1/7/91 = 2.23/mos.
However, the resolution recommending the filing of
a case for estafa was reversed by 2nd Asst. City P3,224.16 x 2.23/mos. 7,189.87
Prosecutor Virgilio M. Patag.
1/8/91 - 4/29/92 = 15.7/mos.
On October 2, 1990, petitioner filed a complaint for
illegal dismissal against private respondent before P3,589.16 x 15.7/mos. 56,349.89
the Labor Arbiter. The complaint was later amended
to include a claim for unpaid wages, unpaid vacation
leave conversion and moral damages. (4) Moreover, respondent is ordered to pay the 13th
month pay due the complainant in the amount of
Position papers were filed by the parties. Thereafter,
P6,831.67 including moral and exemplary damages
the motion to set the case for hearing filed by private
of P15,000.00 and P10,000.00 respectively, as well
respondent was granted by the Labor Arbiter and
as attorney's fees equivalent to ten (10) percent of
trial on the merits ensued.
the total award herein in the amount of P11,381.17;
In his decision 8 dated May 29, 1992, Labor Arbiter
(5) Finally, all other claims are hereby dismissed for
Oswald Lorenzo found that the petitioner was
lack of merit.
illegally dismiised. However, in the decision, the
Labor Arbiter stated that: SO ORDERED.
Preliminary, we hereby state that on the face of the Private respondent appealed the decision to the
instant complaint, it is one that revolves on the respondent commission on the ground inter alia that
matter of the implementation and interpretation of the Laber Arbiter erred in "assuming jurisdiction over
existing company policies, which per the last par. of the illegal dismissal case after finding that the case
Art. 217 of the Labor Code, as amended, is one falls within the jurisdictional ambit of the grievance
within the jurisdictional ambit of the grievance procedure under the CBA, and if unresolved, proper
procedure under the CBA and thereafter, if for voluntary arbitration." 10 An Opposition 11 was
unresolved, one proper for voluntary arbitration. This filed by petitioner.
observation is re-entrenched by the fact, that
complainant claims she is a member of NUWRAIN In the assailed Resolution 12 dated June 3, 1994,
with an existing CBA with respondent hotel. respondent NLRC dismissed the illegal dismissal
case for lack of Jurisdiction of the Labor Arbiter
On this score alone, this case should have because the same should have instead been
dismissed outright. 9 subjected to voluntary arbitration.
Despite the aforequoted preliminary statement, the Petitioner's motion for reconsideration 13 was denied
Labor Arbiter still assumed jurisdiction "since Labor by respondent NLRC for lack of merit.
Arbiters under Article 217 of the same Labor Code,
are conferred original and exclusive jurisdiction of all In this petition for certiorari, petitioner ascribes to
respondent NLRC grave abuse of discretion in —
1. Ruling that the Labor Arbiter was without grievance machinery, and when not settled at this
jurisdiction over the illegal dismissal case; level, to a panel of voluntary arbitrators outlined in
CBAs does not only include grievances arising from
2. Not ruling that private respondent is estopped by the interpretation or implementation of the CBA but
laches from questioning the jurisdiction of the illegal applies as well to those arising from the
dismissal case; implementation of company personnel policies. No
3. Reversing the decision of the Labor Arbiter based other body shall take cognizance of these cases. . .
on a technicality notwithstanding the merits of the . (Sanyo vs. Cañizares, 211 SCRA 361,
case. 372) 16

Petitioner contents that Article 217(a)(2) and (c) We Find that the respondent Commission has
relied upon by respondent NLRC in divesting the erroneously interpreted the aforequoted portion of
labor arbiter of jurisdiction over the illegal dismissal our ruling in the case of Sanyo, as divesting the
case, should be read in conjunction with Article Labor Arbiter of jurisdiction in a termination dispute.
261 14 of the Labor Code. It is the view of petitioner Art. 217 of the Labor Code gives us the clue as to
that termination cases arising from the interpretation the jurisdiction of the Labor Arbiter, to wit:
or enforcement policies pertaining to violations of
Offenses Subject to Disciplinary Actions (OSDA), Art. 217. Jurisdiction of Labor Arbiters and the
are under the jurisdiction of the voluntary arbitrator Commission. a) Except as otherwise provided under
only if these are unresolved in the plant-level this Code the Labor Arbiters shall have original and
grievance machinery. Petitioner insists that her exclusive jurisdiction to hear and decided within
termination is not an unresolved grievance as there thirty (30) calendar days after the submission of the
has been no grievance meeting between the case by the parties for decision without extension
NUWHRAIN union and the management. The even in the absence of stenographic notes, the
reason for this, petitioner adds, is that it has been a following cases involving all workers, whether
company practice that termination cases are not agricultural or non-agricultural:
anymore referred to the grievance machinery but
directly to the labor arbiter. 1. Unfair labor practice cases;

In its comment, private respondent argues that the 2. Termination disputes;

Labor Arbiter should have dismissed the illegal
3. If accompanied with a claim for reinstatement,
dismissal case outright after finding that it is within those cases that workers may file involving wages,
the jurisdictional ambit of the grievance procedure. rates of pay, hours of work and other terms and
Moreover, private respondent states that the issue conditions of employment;
of jurisdiction may be raised at any time and at any
stage of the proceedings even on appeal, and is not 4. Claims for actual, moral, exemplary and other
in estoppel by laches as contended by the petitioner. forms of damages arising from the employer-
employee relations;
For its part, public respondent, through the Office of
the Solicitor General, cited the ruling of this Court in 5. Cases arising from any violation of Article 264 of
Sanyo Philippines Workers Union- PSSLU vs. this Code, including questions involving the legality
Cañizares 15 in dismissing the case for lack of of strikes and lockouts;
jurisdiction of the Labor Arbiter.
6. Except claims for Employees Compensation,
The legal issue in this case is whether or not the Social Security, Medicare and maternity benefits, all
Labor Arbiter has jurisdiction over the illegal other claims, arising from employer-employee
dismissal case. relations, including those of persons in domestic or
household service, involving an amount exceeding
The respondent Commission, in holding that the five thousand pesos (P5,000.00) regardless of
Labor Arbiter lacks jurisdiction to hear the illegal whether accompanied with a claim for
dismissal case, cited as basis therefor Article 217 of reinstatement.
the Labor Code, as amended by Republic Act No.
6715. It said: b) The commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
White it is conceded that under Article 217(a), Labor
Arbiters shall have original and exclusive jurisdiction c) Cases arising from the interpretation or
over cases involving "termination disputes," the implementation of collective bargaining agreements
Supreme Court, in a fairy recent case ruled: and those arising from the interpretation or
enforcement of company personel policies shall be
The procedure introduced in RA 6715 of referring disposed of by the Labor Arbiter by referring the
certain grievances originally and exclusively to the
same to the grievance machinery and voluntary machinery and voluntary arbitrator. "(T)he parties to
arbitration as may be provided in said agreements. a Collective Bargaining Agreement shall include
therein provisions that will ensure the mutual
As can be seen from the aforequoted Article, observance of its terms and conditions. They shall
termination cases fall under the original and establish a machinery for the adjustment and
exclusive jurisdiction of the Labor Arbiter. It should resolution of grievances arising from the
be noted, however, that in the opening there appears interpretation or implementation of their Collective
the phrase: "Except as otherwise provided under this Bargaining Agreement and those arising from the
Code . . . ." It is paragraph (c) of the same Article interpretation or enforcement of company personel
which respondent Commission has erroneously policies." Article 260 further provides that the parties
interpreted as giving the voluntary arbitrator to a CBA shall name or designate their respective
jurisdiction over the illegal dismissal case. representative to the grievance machinery and if the
However, Article 217 (c) should be read in grievance is unsettled in that level, it shall
conjunction with Article 261 of the Labor Code which automatically be refered to the voluntary arbitrators
grants to voluntary arbitrators original and exclusive designated in advance by the parties to a CBA of the
jurisdiction to hear and decide union and the company. It can thus be deduced that
all unresolved grievances arising from the only disputes involving the union and the company
interpretation or implementation of the collective shall be referred to the grievance machinery or
bargaining agreement and those arising from the voluntary arbitrators. 18
interpretation or enforcement of company personel In the case at bar, the union does not come into the
policies. Note the phrase "unresolved grievances." picture, not having objected or voiced any dissent to
In the case at bar, the termination of petitioner is not the dismissal of the herein petitioner. The reason for
an unresolved grievance. this, according to petitioner is that "the practice in
The stance of the Solicitor General in said Hotel in cases of termination is that the latter
the Sanyo case is totally the reverse of its posture in cases are not referred anymore to the grievance
the case at bar. InSanyo, the Solicitor General was committee;" and that "the terminated employee who
of the view that a distinction should be made wishes to question the legality of his termination
between a case involving "interpretation or usually goes to the Labor Arbiter for arbitration,
whether the termination arose from the interpretation
implementation of Collective Bargaining Agreement"
or interpretation or "enforcement" of company or enforcement of the company personnel policies or
personel policies, on the one hand and a case otherwise." 19
involving termination, on the other hand. It argued As we ruled in Sanyo, "Since there has been an
that the dismissal of the private respondents does actual termination, the matter falls within the
not involve an "interpretation or implementation" of a jurisdiction of the labor Arbiter." The aforequoted
Collective Bargaining Agreement or "interpretation doctrine is applicable foursquare in petitioner's case.
or enforcement" of company personel policies but The dismissal of the petitioner does not call for the
involves "termination." The Solicitor General further interpretation or enforcement of company personnel
said that where the dispute is just in the policies but is a termination dispute which comes
interpretation, implementation or enforcement stage, under the jurisdiction of the Labor Arbiter.
it may be referred to the grievance machinery set up
the Collective Bargaining Agreement or by voluntary It should be explained that "company personel
arbitration. Where there was already actual policies" are guiding priciples stated in broad, long-
termination, i.e., violation of rights, it is already range terms that express the philosophy or beliefs of
cognizable by the Labor Arbiter. 17 We fully agree an organization's top authority regarding personnel
with the theory of the Solicitor General in matters. They deal with matters affecting efficiency
the Sanyo case, which is radically apposite to its and well-being of employees and include, among
position in this case. others, the procedure in the administration of wages,
benefits, promotions, transfer and other personnel
Moreover, the dismissal of petitioner does not fall movements which are usually not spelled out in the
within the phrase "grievance arising from the collective agreement. The usual source of
interpretation or implementation of collective grievances, however, are the rules and regulations
bargaining agreement and those arising from the governing disciplinary actions. 20
interpretation or enforcement of company personel
policies," the jurisdiction of which pertains to the The case of Pantranco North Express, Inc. vs.
grievance machinery or thereafter, to a voluntary NLRC 21 sheds further light on the issue of
arbitrator or panel of voluntary arbitrators. It is to be jurisdiction where the Court cited the Sanyo case
stressed that under Article 260 of the Labor Code, and quoted the decision of therein Labor Arbiter
which explains the function of the grievance Olairez in this manner:
In our honest opinion we have jurisdiction over the to assume an inconsistent position — that the lower
complaint on the following grounds: court had jurisdiction. Here, the principle of estoppel
applies. The rule that jurisdiction is conferred by law,
First, this is a complaint of illegal dismissal of which and does not depend upon the will of the parties, has
original and exclusive jurisdiction under Article 217 no bearing thereon. (Emphasis ours)
has been conferred to the labor Arbiters. The
interpretation of the CBA or enforcement of the Again, the respondent NLRC has erroneously
company policy is only corollary to the complaint of interpreted our ruling in the La Naval case. Under
illegal dismissal. Otherwise, an employee who was the said ruling, estoppel lies in this case. Private
on AWOL, or who committed offenses contrary to respondent is stopped from questioning the
the personnel policies(sic) can no longer file a case jurisdiction of the Labor Arbiter before the
of illegal discharge is premised on the interpretation respondent NLRC having actively participated in the
or enforcement of the company policies(sic). proceedings before the former. At no time before or
during the trial on the merits did private respondent
Second. Respondent voluntarily submitted tha case assail the jurisdiction of the Labor Arbiter. Private
to the jurisdiction of this labor tribunal. It adduced respondent took the cue only from the preliminary
arguments to the legality of its act, whether such act statement in the decision of the Labor Arbiter, which
may be retirement and/or dismissal, and prayed for was a mere obiter, and raised the issue of
reliefs on the merits of the case. A litigant cannot jurisdiction before the Commission. It was then too
pray for reliefs on the merits and at the same time late. Estoppel had set in.
attacks(sic) the jurisdiction of the tribunal. A person
cannot have one's cake and eat it too. . . . . Turning now to the merits of the case, We uphold the
ruling of the Labor Arbiter that petitioner was illegally
As to the second ground, petitioner correctly points dismissed.
out that respondent NLRC should have ruled that
private respondent is estopped by laches in The requisites of a valid dismissal are (1) the
questioning the jurisdiction of the Labor Arbiter. dismissal must be for any of the causes expressed
in the Article 282 of the Labor Code, 25 and (2) the
Clearly, estoppel lies. The issue of jurisdiction was employee must be given an opportunity to be heard
mooted by herein private respondent's active and to defend himself.26 The substantive and
participation in the proceedings below. In Marquez procedural laws must be strictly complied with
vs. Secretary of Labor, 22 the Court said: before a worker can be dismissed from his
. . . . The active participation of the against whom the employment because what is at stake is not only the
action was brought, coupled with his failure to object employee's position but his livelihood. 27
to the jurisdiction of the court or quasi-judicial body Petitioner's dismissal was grounded on culpade
where the action is pending, is tantamount to an carelessness, negligence and failure to follow
invocation of that jurisdiction and a willingness to specific instruction(s) or established procedure(s)
abide the resolution of the case and will bar said under OSDA 1.11; and, having forged or falsified
party from later on impugning the court or body's official document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to
In the assailed Resolution, 23 respondent NLRC follow established procedure in the hotel on a
cited La Naval Drug Corporation vs. Court of guest's request for long distance calls. Petitioner,
Appeals 24 in holding that private respondent is not however, explained that the usual or established
in estopel. Thus, procedures are not followed by the operators and
The operation of the principle of estoppel on the hotel employees when circumstances warrant. For
question of jurisdiction seemingly depends upon instance, the RLDC forms and the deposits are
whether the lower court actually had jurisdiction or brought by the page boy directly to the operators
not. If it had no jurisdiction, but the case was tried instead of the cashiers if the latter are busy and
and decided upon the theory that it had jurisdiction, cannot attend to the same. Furthermore, she avers
the parties are not barred, on appeal, from assailing that the telephone operators are not concious of the
such jurisdiction, for the same "must exist as a serial numbers in the RLDCs and at times, the used
matter of law, and may not be conferred by consent RLDCs are recycled. Even the page boys do not
of the parties or by estoppel" (5 C.J.S., 861- actually check the serial numbers of all RLDCs in
863). However, if the lower court had one batch, except for the first and the last.
jurisdiction, and the case was heard and decided On the charge of taking of the money by petitioner,
upon a given theory, such, for instance, as that the it is to be noted that the second P500.00 deposit
court had no jurisdiction, the party who induced it to made by the Japanese guest Ieda was later
adopt such theory will not be permitted, on appeal, discovered to be inserted in the folder for cancelled
calls with deposit and official receipts. Thus, there As a matter of fact, we are in agreement with the
exists no basis for personal appropriation by the jurisprudence cited by VIRGILIO M. PATAG, the 2nd
petitioner of the money involved. Another reason is Asst. City Prosecutor of the City of Manila, who
the alleged tampering of RLDC No. 862406. 28 While exculpated complainant MANEJA from the charges
petitioner and her co-operator Loleng admitted that of falsification of private documents and qualified
they indeed altered the date appearing therein from theft under IS No. 90-11083 and marked Annex. "H"
February 15, 1990 to February 13, the same was of complainant's POSITION PAPER, when he ruled
purposely made to reflect the true date of the that an altercation which makes the document speak
transaction without any malice whatsoever on their the truth cannot be the foundation of a criminal
part. action. As to the charge of qualified theft, we too are
of the finding, like the city prosecutor above-
As pointed out by Labor Arbiter Oswald b. Lorenzo, mentioned that there was no evidence on the part of
thus: MANEJA to have unlawfully taken the P500.00
The specifics of the grounds relied by respondent either from the hotel or from guest IEDA on 13
hotel's dismissal of complainant are those stated in February 1990 and moreover, we too, find no
Annex "F" of the latter's POSITION PAPER, which is evidence that complainant MANEJA had intention to
the Notice of Dismissal, notably: profit thereby nor had misappropriated the P500.00
in question. 29
1. OSDA 2.01 — Forging, falsifying official
documents(s) Given the factual circumstances of the case, we
cannot deduce dishonesty from the act and omission
2. OSDA 1.11 — Culpable negligence or failure to of petitioner. Our norms of social justice demand that
follow specific instruction(s) or established we credit employees with the presumption of good
procedure(s) faith in the performance of their duties, 30 especially
petitioner who has served private respondent since
On this score, we are persuated by the 1985 up to 1990 without any tinge of dishonesty and
complainant's arguments that under OSDA 1.11, was even named "Model Employee" for the month of
infractions of this sort is not without qualifications, April, 1989. 31
which is, that the alleged culpable carelessness,
negligence or failure to follow instruction(s) or Petitioner has been charged with a very serious
established procedure(s), RESULTING IN LOSS offense — dishonesty. This can irreparably wreck
OR DAMAGE TO COMPANY PROPERTY. From her life as an employee for no employer will take to
the facts obtaining in this case, there is no quantum its bosom a dishonest employee. Dismissal is the
of proof whatsoever, except the general allegations supreme penalty that can be meted to an employee
in respondent's POSITION PAPER and other and its imposition cannot be justified where the
pleadings that loss or damage to company property evidence is ambivalent. 32 It must, therefore, be
resulted from the charged infraction. To our mind, based on a clear and not on an ambiguous or
this is where labor tribunals should come in and help ambivalent ground. Any ambiguity or ambivalence
correct interpretation of company policies which in on the ground relied upon by an employer in
the enforcement thereof wreaks havoc to the terminating the services of an employee denies the
constitutional guarantee of security of tenure. latter his full right to contest its legality. Fairness
Apparently, the exercise of little flexibility by cannot countenance such ambiguity or
complainant and co-employees which is predicated ambivalence.
on good faith should not be taken against them and
more particularly against the complainant herein. In An employer can terminate the services of an
this case, to sustain the generalized charge of employee only for valid and just causes which must
respondent hotel under OSDA 1.11 would unduly be be supported by clear and convincing evidence. The
sanctioning the imposition of too harsh a penalty — employer has the burden of proving that the
which is dismissal. dismissal was indeed for a valid and just
cause. 34 Failure to do so result in a finding that the
In the same tenor, the respondent's charge under dismissal was
OSDA 1.11 on the alleged falsification of private unjustified.
document is also with a qualification, in that the
alleged act of falsification must have been done "IN Finding that there was no just cause for dismissal of
SUCH A WAY AS TO MISLEAD THE USER(S) petitioner, we now determine if the rudiments of due
THEREOF." Again, based on the facts of the process have duly accorded to her.
complained act, there appeared no one to have been Well-settled is the dictum that the twin requirements
misled on the change of date from RLDC #862406 of notice and hearing constitute the essential
FROM 15 TO 13 February 1990. elements of due process in the dismissal of
employees. It is a cardinal rule in our jurisdiction that
the employer must furnish the employee with two We ruled in the case of Bustamante
written notice before the termination of employment vs. NLRC that the amount of backwages to be
can be effected: (a) the first apprises the employee awarded to an illegally dismissed employee must be
of the particular acts or omissions for which his computed from the time he was dismissed to the
dismissal is sought; and, (b) the second informs the time he is actually reinstated, without deducting the
employee of the employer's decision to dismiss him. earnings he derived elsewhere pending the
The requirement of a hearing, on the other hand, is resolution of the case.
complied with as long as there was an opportunity to
be heard, and not necessarily that an actual hearing Petitioner is likewise entitled to the thirteenth-month
was conducted. 36 pay. Presidential Decree No.851, as amended by
Memorandum Order No. 28, provides that
In the case at bar, petitioner and her co-operator employees are entitled to the thirteenth-month pay
Loleng were issued a memorandum on March 7, benefit regardless of their designation and
1990. On March 11, 1990, they submitted their irrespective of the method by which their wages are
written explanation thereto. On March 20, 1990, a paid. 40
written report was made with a recommendation that
the offences committed by them were covered by The award of moral and exemplary damages to
OSDA 1.11 and 2.01. Thereafter, on March 23, petitioner is also warranted where there is lack of
1990, petitioner was served with a notice of due process in effecting the dismissal.
dismissal for said violations effective April 1, 1990. Where the termination of the services of an
An examination of the record reveals that no hearing employee is attended by fraud or bad faith on the
was ever conducted by private respondent before part of the employer, as when the latter knowingly
petitioner was dismissed. While it may be true that made false allegations of a supposed valid cause
petitioner submitted a written explanation, no when none existed, moral and exemplary damages
hearing was actually conducted before her may be awarded in favor of the former. 41
employment was terminated. She was not accorded The anti-social and oppressive abuse of its right to
the opportunity to fully defend herself.
investigate and dismiss its employees constitute a
Consultations or conferences may not be a violation of Article 1701 of the New Civil Code which
substitute for the actual holding of a hearing. Every prohibits acts of oppression by either capital or labor
opportunity and assistance must be accorded to the against the other, and Article 21 on human relations.
employee by the management to enable hom to The grant of moral damages to the employees by
prepare adequately for his defense, including legal reason of such conduct on the part of the company
representation. 37 Considering that petitioner denied is sanctioned by Article 2219, No. 10 of the Civil
having allegedly taken the second P500.00 deposit Code, which allows recovery of such damages in
of the Japanese guest which was eventually found; actions reffered to in Article 21. 42
and, having made the alteration of the date on the The award of attorney's fees amounting to ten
second RLDC merely to reflect the true date of the percent (10%) of the total award by the labor arbiter
transaction, these circumstances should have at is justified under Article 111 of the Labor Code.
least warranted a separate hearing to enable
petitioner to fully ventilate her side. Absent such WHEREFORE, premises considered, the petition is
hearing, petitioner's right to due process was clearly GRANTED and the assailed resolutions of the
violated. 38 respondent National Labor Relations Commission
dated June 3, 1994 and October 20, 1995 are
It bears stressing that a worker's employment is hereby REVERSED AND SET ASIDE. The decision
properly in the constitutional sense. He cannot be dated May 29, 1992 of the Labor Arbiter is therefore
deprived of his work without due process of REINSTATED.
law. Substantive due process mandates that an
employee can only be dismissed based on just or SO ORDERED.
authorized causes. Procedural due
process requires further that he can only be
dismissed after he has been given an opportunity to
be heard. The import of due process necessitates
the compliance of these two aspects.

Accordingly, we hold that the labor arbiter did not err

in awarding full backwages in view of this finding that
petitioner was dismissed without just cause and
without due process.