cases on labor law

7/23/2019 cases on Labor law

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FERNANDO G. MANAYA,Petitioner,

- versus-

ALABANG COUNTRY CLUB

INCORPORATED,Respondent.

G.R. No. 168988

Present:

YNARES-SANTIAGO,J.,

Chairperson,

AUSTRIA-MARTINEZ,

CHICO-NAZARIO, and

NACHURA,JJ.

Promulgated:

June 19, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

D E C I S I O N

CHICO-NAZARIO,J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure filed by

Fernando G. Manaya (petitioner) assailing: (1) the Decision1[1] of the Court of Appeals in CA-G.R. SP No. 75417,

dated 9 May 2005, granting the Petition of Alabang Country Club Inc. (respondent) and setting aside the Resolutions

dated 30 August 2002 and 30 October 2002 of the National Labor Relations Commission (NLRC); and (2) the

Resolution2[2] of the Court of Appeals dated 21 July 2005 denying petitioners Motion for Reconsideration of its

earlier Decision.

The assailed decision of the Court of Appeals reversed the Resolution of the NLRC dismissing the appeal

of the respondent for failure to perfect its appeal within the statutory period. Instead, the Court of Appeals ordered

the NLRC to give due course to the appeal of the respondent.

The antecedent facts are:

Petitioner alleged that on 21 August 1989, he was initially hired by the respondent as a maintenance

helper3[3] receiving a salary of P198.00 per day. He was later designated as company electrician. He continued to

work for the respondent until 22 August 1998 when the latter, through its Engineering and Maintenance Department

Manager, Engr. Ronnie B. de la Cruz, informed him that his services were no longer required by the company.4[4]

Petitioner alleged that he was forcibly and illegally dismissed without cause and without due process on 22 August

1998.5[5] Hence, he filed a Complaint6[6] before the Labor Arbiter. He claimed that he had not committed any


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infraction of company policies or rules and that he was not paid his service incentive leave pay, holiday pay and 13 th

month pay. He further asserted that with his more or less nine years of service with the respondent, he had become a

regular employee. He, therefore, demanded his reinstatement without loss of seniority rights with full backwages

and all monetary benefits due him.7[7]

In its Answer, respondent denied that petitioner was its employee. It countered by saying that petitioner

was employed by First Staffing Network Corporation (FSNC), with which respondent had an existing Memorandum

of Agreement dated 21 August 1989. Thus, by virtue of a legitimate job contracting, petitioner, as an employee of

FSNC, came to work with respondent, first, as a maintenance helper, and subsequently as an electrician. Respondent

prayed for the dismissal of the complaint insisting that petitioner had no cause of action against it.

In a Decision, dated 20 November 2000, the Labor Arbiter held:

WHEREFORE, premises considered, complainant Fernando G. Manaya is hereby found

to be a regular employee of respondent Alabang Country Club, Inc., as aforediscussed. His

dismissal from the service having been effected without just and valid cause and without the due

observance of due process is hereby declared illegal. Consequently, respondent Alabang Country

Club, Inc. is hereby ordered to reinstate complainant to his former position without loss of

seniority rights and other benefits appurtenant thereto with full backwages in the partial amount of

P160,724.48 as computed by Ms. Ma. Concepcion Manliclic and duly noted by Ms. Ma. Elena L.

Estadilla, OIC-CEU, NCR-South Sector which computation has been made part of the records.

Furthermore, respondent Alabang Country Club, Inc. and First Staffing Network

Corporation are hereby ordered to pay complainant, jointly and severally the following amounts

by way of the following:

1. Service Incentive Leave 2,961.75

2. 13thMonth Pay 15,401.10, and

3. Attorneys fees of ten (10%) percent of the total

monetary award herein adjudged due him, within ten (10) days from receipt hereof.8[8]

Respondent filed an Appeal with the NLRC which dismissed the same.9[9] In a Resolution dated 30August 2002, the NLRC held:

PREMISES CONSIDERED, instant appeal from the Decision of November 20, 2000 is

hereby DISMISSED for failure to perfect appeal within the statutory period of appeal. The

Decision is now final and executory.10[10]

The NLRC found that respondents counsel of record Atty. Angelina A. Mailon of Monsod, Valencia and

Associates received a copy of the Labor Arbiters Decision on or before 11 December 2000 as shown by the postal


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stamp or registry return card.11[11] Said counsel did not file a withdrawal of appearance. Instead, a Memorandum

of Appeal12[12] dated 26 December 2000 was filed by the respondents new counsel, Atty. Arizala of Tierra and

Associates Law Office. Reckoned from 11 December 2000, the date of receipt of the Decision by respondents

previous counsel, the filing of the Memorandum of Appeal by its new counsel on 26 December 2000 was clearly

made beyond the reglementary period. The NLRC held that the failure to perfect an appeal within the statutory

period is not only mandatory but jurisdictional. The appeal having been belatedly filed, the Decision of the Labor

Arbiter had become final and executory.13[13]

Respondent filed a Motion for Reconsideration,14[14] which the NLRC denied in a Resolution dated 30

October 2002.15[15] The NLRC held that the decision of the Labor Arbiter has become final and executory on 28

November 2002; thus, Entry of Judgment, dated 8 January 200316[16] was issued.

Respondent filed a Petition for Certiorari17[17] under Rule 65 of the Rules of Court before the Court of

Appeals. In a Decision dated 9 May 2005,18[18] the Court of Appeals granted the petition and ordered the NLRC to

give due course to respondents appeal of the Labor Arbiters Decision. Petitioner filed a Motion for Reconsideration

which was denied by the Court of Appeals in a Resolution19[19] dated 21 July 2005.

Not to be dissuaded, petitioner filed the instant petition before this Court.

The issue for resolution:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED AN ERROR WHEN ITORDERED THE NLRC TO GIVE DUE COURSE TO THE APPEAL OF RESPONDENT

ALABANG COUNTRY CLUB, INCORPORATED EVEN IF THE SAID APPEAL WAS FILED

BEYOND THE REGLEMENTARY PERIOD OF TEN (10) DAYS FOR PERFECTING AN

APPEAL.20[20]

Essentially, the issue raised by the respondent before the NLRC in assailing the decision of the Labor

Arbiter pertains to the finding of the Labor Arbiter that petitioner was a regular employee of the respondent.


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In granting the petition, the Court of Appeals relied mainly on the case of Aguam v. Court of

Appeals,21[21]where this Court held that litigation must be decided on the merits and not on technicalities. The

appellate court further justified the grant of respondents petition by saying that the negligence of its counsel should

not bind the respondent.22[22]

The Court of Appeals gave credence to respondents claim that its lawyer abandoned the case; hence, they

were not effectively represented by a competent counsel. It further held that the respondent, upon its receipt of the

Decision of the Labor Arbiter on 15 December 2000, filed its appeal on 26 December 2000 through a new lawyer.

The appeal filed by respondent through its new lawyer on 26 December 2000 was well within the reglementary

period, 25 December 2000 being a holiday.

It is axiomatic that when a client is represented by counsel, notice to counsel is notice to client. In the

absence of a notice of withdrawal or substitution of counsel, the Court will rightly assume that the counsel of record

continues to represent his client and receipt of notice by the former is the reckoning point of the reglementary

period.23[23] As heretofore adverted, the original counsel did not file any notice of withdrawal. Neither was there

any intimation by respondent at that time that it was terminating the services of its counsel.

For negligence not to be binding on the client, the same must constitute gross negligence as to amount to a

deprivation of property without due process.24[24] This does not exist in the case at bar. Notice sent to counsel of

record is binding upon the client and the neglect or failure of counsel to inform him of an adverse judgment resulting

in the loss of his right to appeal is not a ground for setting aside a judgment, valid and regular on its face.25[25]Even more, it is respondents duty as a client to be in touch with his counsel so as to be constantly posted

about the case. It is mandated to inquire from its counsel about the status and progress of the case from time to time

and cannot expect that all it has to do is sit back, relax and await the outcome of the case.26[26]

On this score, we hold that the notice to respondents counsel, Atty. Angelina A. Mailon on 11 December

2000 is the controlling date of the receipt of the decision.

We now come to the issue of whether or not the Court of Appeals properly gave due course to the petition

of the respondent before it.

Of relevance is Section 1, Rule VI of the 2005 Revised Rules of the NLRC

Section 1. PERIODS OF APPEAL. Decisions, resolutions or orders of the Labor Arbitershall be final and executory unless appealed to the Commission by any or both parties within ten

(10) calendar days from receipt thereof; and in case of decisions, resolutions or orders of the

Regional Director of the Department of Labor and Employment pursuant to Article 129 of the

Labor Code, within five (5) calendar days from receipt thereof. If the 10 thor 5thday, as the case

may be, falls on a Saturday, Sunday or holiday, the last day to perfect the appeal shall be the first

working day following such Saturday, Sunday or holiday.


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No motion or request for extension of the period within which to perfect an appeal shall

be allowed.

Remarkably, in highly exceptional instances, we have allowed the relaxing of the rules on the application

of the reglementary periods of appeal.27[27] Thus:

InRamos v. Bagasao, 96 SCRA 395, we excused the delay of four days in the filing of a notice of

appeal because the questioned decision of the trial court was served upon appellant Ramos at a

time when her counsel of record was already dead. Her new counsel could only file the appeal four

days after the prescribed reglementary period was over. In Republic v. Court of Appeals, 83 SCRA

453, we allowed the perfection of an appeal by the Republic despite the delay of six days to

prevent a gross miscarriage of justice since the Republic stood to lose hundreds of hectares of land

already titled in its name and had since then been devoted for educational purposes. In Olacao v.

National Labor Relations Commission, 177 SCRA 38, 41, we accepted a tardy appeal considering

that the subject matter in issue had theretofore been judicially settled, with finality, in another

case. The dismissal of the appeal would have had the effect of the appellant being ordered twice to

make the same reparation to the appellee.28[28]

We pronounced in those cases that technicality should not be allowed to stand in the way of equitably and

completely resolving the rights and obligations of the parties.

In all these, the Court allowed liberal interpretation given the extraordinary circumstances that justify a

deviation from an otherwise stringent rule.29[29]

Clearly, emphasized in these cases is that the policy of liberal interpretation is qualified by the requirement

that there must be exceptional circumstances to allow the relaxation of the rules.30[30]

Absent exceptional circumstances, we adhere to the rule that certain procedural precepts must remain

inviolable, like those setting the periods for perfecting an appeal or filing a petition for review, for it is doctrinally

entrenched that the right to appeal is a statutory right and one who seeks to avail oneself of that right must comply

with the statute or rules. The rules, particularly the requirements for perfecting an appeal within the reglementary

period specified in the law, must be strictly followed as they are considered indispensable interdictions against

needless delays and for orderly discharge of judicial business. Furthermore, the perfection of an appeal in the

manner and within the period permitted by law is not only mandatory but also jurisdictional and the failure to perfectthe appeal renders the judgment of the court final and executory. Just as a losing party has the right to file an appeal

within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of

his/her case.31[31]

In this particular case, we adhere to the strict interpretation of the rule for the following reasons:

Firstly, in this case, entry of judgment had already been made32[32] which rendered the Decision of the

Labor Arbiter as final and executory.


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Secondly, it is a basic and irrefragable rule that in carrying out and in interpreting the provisions of the

Labor Code and its implementing regulations, the workingmans welfare should be the primordial and paramount

consideration. The interpretation herein made gives meaning and substance to the liberal and compassionate spirit of

the law enunciated in Article 4 of the Labor Code that all doubts in the implementation and interpretation of the

provisions of the Labor Code including its implementing rules and regulations shall be resolved in favor of

labor.33[33]

In the case ofBunagan v. Sentinel34[34]we declared that:

[T]hat the perfection of an appeal within the statutory or reglementary period is not only

mandatory, but jurisdictional, and failure to do so renders the questioned decision final and

executory and deprives the appellate court of jurisdiction to alter the final judgment, much less to

entertain the appeal. The underlying purpose of this principle is to prevent needless delay, a

circumstance which would allow the employer to wear out the efforts and meager resources of the

worker to the point that the latter is constrained to settle for less than what is due him. This Court

has declared that although the NLRC is not bound by the technical rules of procedure and is

allowed to be liberal in the interpretation of the rules in deciding labor cases, such liberality should

not be applied where it would render futile the very purpose for which the principle of liberality is

adopted. The liberal interpretation stems from the mandate that the workingmans welfareshould be the primordial and paramount consideration. We see no reason in this case to waive

the rules on the perfection of appeal.35[35]

The Court is aware that the NLRC is not bound by the technical rules of procedure and is

allowed to be liberal in the interpretation of rules in deciding labor cases. However, such

liberality should not be applied in the instant case as it would render futile the very purpose

for which the principle of liberality is adopted. The liberal interpretation in favor of labor stems

from the mandate that the workingmans welfare should be the primordial and paramount

consideration. x x x.36[36] (Emphases supplied.)

Indeed, there is no room for liberality in the instant case as it would render futile the very purpose forwhich the principle of liberality is adopted. As so rightfully enunciated, the liberal interpretation in favor of labor

stems from the mandate that the workingmans welfare should be the primordial and paramount consideration. This

Court has repeatedly ruled that delay in the settlement of labor cases cannot be countenanced. Not only does it

involve the survival of an employee and his loved ones who are dependent on him for food, shelter, clothing,

medicine and education; it also wears down the meager resources of the workers to the point that, not infrequently,

they either give up or compromise for less than what is due them.37[37]

Without doubt, to allow the appeal of the respondent as what the Court of Appeals had done and remand

the case to the NLRC would only result in delay to the detriment of the petitioner. In Narag v. National Labor


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Relations Commission,38[38] citing Vir-Jen Shipping and Marine Services, Inc. v. National Labor Relations

Commission,39[39]we held that delay in most instances gives the employers more opportunity not only to prepare

even ingenious defenses, what with well-paid talented lawyers they can afford, but even to wear out the efforts and

meager resources of the workers, to the point that not infrequently the latter either give up or compromise for less

than what is due them.40[40]

Nothing is more settled in our jurisprudence than the rule that when the conflicting interest of loan and

capital are weighed on the scales of social justice, the heavier influence of the latter must be counter-balanced by the

sympathy and compassion the law must accord the under-privileged worker.41[41]

Thirdly, respondent has not shown sufficient justification to reverse the findings of the Labor Arbiter as

affirmed by the NLRC.

Pertinent provision of the Labor Code provides:

ART. 223. APPEAL. Decisions, awards, or orders of the Labor Arbiter are final and executory

unless appealed to the Commission by any or both parties within ten (10) calendar days from

receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the

following grounds:

(a) If there is prima facie evidence of abuse of discretion on the part of the Labor

Arbiter;

(b) If the decision, order or award was secured through fraud or coercion, including graft

an corruption;

(c) If made purely on question of law; and

(d) If serious errors in the finding of facts are raised which would cause grave or irreparable

damage or injury to the appellant.

Under the above provision, to obtain a reversal of the decision of the Labor Arbiter, the respondent must be

able to show in his appeal that any one of the above instances exists.

Respondent failed to show the existence of any of the above. A more than perfunctory reading of theDecision of the Labor Arbiter shows that the same is supported by the evidence on record.

Respondent narrates that it had a contract of services, first, with Supreme Construction (Supreme). Supreme

assigned petitioner to work with the respondent starting as a painter and moving on to perform electrical jobs.

Respondent terminated its contract with Supreme and entered into another contract of services with another job-

contracting agency, First Staffing Network Corporation. Petitioner continued to work for the respondent which

claimed that the former was supplied by FNSC to it as part of its contract to supply the manpower requirements of

the respondent. Petitioner is not the employee of the respondent. He was directly hired first by Supreme then later by

FNSC and deployed to work with the respondent based on the contract of services between respondent and these

job-contracting agencies. All these considered, respondent insists that petitioner is therefore not its employee.


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We do not agree to this submission of the respondent. The Labor Arbiter concluded otherwise and this

finds support from the evidence, thus:

[R]espondent was not able to convincingly disprove complainants claims that at the outset, he was

directly hired by it as a maintenance helper on 21 August 1989. Although said respondent alleges

that complainant was hired by its job contractor, Supreme Construction, it failed to submit in

evidence the Contract of Service it had entered into in order to establish the entry of complainant

as deployed by said company for his duties at Alabang Country Club, Inc. pursuant to the said

Agreement. It can therefore be readily presumed that said respondent did not produce the said

document because the production of the same will readily prove complainants assertion of having

been hired long before said contractor Supreme Construction entered into the picture. We have

noted complainants admission of having been later coerced to sign up with said Supreme

Construction by respondent Alabang Country Club, Inc. which he did as he was told in his fear of

losing his job.

As shown by respondent Alabang Country Club, Inc.s own evidence, it later terminated

its contract of service or Memorandum of Agreement with Supreme Construction and entered into

a new contract of service with respondent First Staffing Network Corporation effective on 16 June

1994. However by said respondents own allegation, even with the absence of complainants

supposed direct employer Supreme Construction, he still remained in its employ until he signed up

with respondent First Staffing Network Corporation on 11 February 1996. This indeed runscounter to the normal course of human experience such that when a contractor losses (sic) his

contract of service he packs up along with all his employees, but in this case, complainant was not

terminated from the service notwithstanding the expiration/termination of the contract of service

of his alleged direct employer. Complainant remained working with respondent Alabang Country

Club, Inc. despite the severance of the contractual relations between itself and Supreme

Construction.

The initial Memorandum of Agreement entered into by respondents Alabang Country

Club, Inc. and First Staffing Network Corporation was dated, 16 June 1994, and was apparently

renewed thereafter providing under Article III On Compensation thereof, the following, viz:

3.01 For and in consideration of the performance by FIRST

STAFFING of its obligations under this AGREEMENT, the CLIENT agrees topay the former based on the schedule of billing rates which shall be specified in

the Personnel Requisition Form signed by the CLIENT. The schedule of billing

rates is as follows, to wit:

BILLING RATES/HOUR PLUS 10% VALUE ADDED TAX

Covered Pos.

A B C

Waiters Accounting Supervisor

Janitors Data Encoders

Bag Boy Gen. Clerks

Stewards SecretaryCook Helpers Receptionist

Messengers Secretary

Cashier

xxx.

Nowhere, does complainants position of electrician appear as covered in the said

contract. Finally, suffice it for Us to stress that the said contract covers almost all of respondents

Alabang Country Club, Inc.s workforce including those whose jobs or activities are directly

related to said respondents business, emphasizing in no uncertain terms that respondent First


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Staffing Network Corporation was not a truly bonafide job contractor, as it did not contract out

specific service but merely supplied work personnel, a clear indication, that it was engaged in a

job only contracting which is prohibited by law.

Besides, the said respondent First Staffing Network Corporation failed to prove that it is a

bonafide job contractor by showing that it had an adequate capital or investment in tools,

equipments and machineries and premises for that matter, and so did respondent Alabang Country

Club, Inc. fail to establish the same. For that matter, respondent First Staffing Network

Corporation had waived its right to present any evidence in its favor in this case.

Obviously, herein respondent Alabang Country Club, Inc. actually resorted to contracting

out all the positions for its workforce in violation of law in its desire to circumvent said employees

rights as regular employees under the law.42[42]

The existence of an employer-employee relationship between petitioner and respondent is

fortified by the fact that during his stint with the respondent, petitioner was given the opportunity

to attend a seminar/training on refrigeration and air conditioning from 16 January 1995 to 18

February 1995.43[43] A certificate of participation signed by three of respondents officials was

issued to the petitioner.

Equally significant is Article 106 of the Labor Code, as amended, which provides that legitimate jobcontracting is permitted, but labor-only contracting is prohibited. The said provision reads:

Art. 106. CONTRACTOR OR SUBCONTRACTOR. Whenever an employer enters into

a contract with another person for the performance of the formers work, the employees of the

contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions

of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in

accordance with this Code, the employer shall be jointly and severally liable with his contractor or

subcontractor to such employees to the extent of the work performed under the contract, in the

same manner and extent that he is liable to employees directly employed by him.

The Secretary of Labor may, by appropriate regulations, restrict or prohibit thecontracting out of labor to protect the rights of workers established under the Code. In so

prohibiting or restricting, he may make appropriate distinctions between labor only contracting

and job contracting as well as differentiations within these types of contracting and determine who

among the parties involved shall be considered the employer for purposes of this Code, to prevent

any violation or circumvention of any provision of this Code.

There is laboronly contracting where the person supplying workers to an employer does

not have substantial capital or investment in the form of tools, equipment, machineries, work

premises, among others, and the workers recruited and placed by such person are performing

activities which are directly related to the principal business of such employer. In such cases, the

person or intermediary shall be considered merely as an agent of the employer who shall be

responsible to the workers in the same manner and extent as if the latter were directly employed

by him.


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Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended

by Department Order No. 18, distinguishes between legitimate and labor only contracting:

Section 3. Trilateral Relationship in Contracting Arrangements. - In

legitimate contracting, there exists a trilateral relationship under which there is a

contract for a specific job, work or service between the principal and the contractor

or subcontractor, and a contract of employment between the contractor and

subcontractor and its workers. Hence, there are three parties involved in these

arrangements, the principal which decides to farm out a job or service to a contractor

or subcontractor, the contractor or subcontractor which has the capacity to

independently undertake the performance of the job, work or service, and the

contractual workers engaged by the contractor or subcontractor to accomplish the

job, work or service.

Section 5. Prohibition against laboronly contracting. Labor-only contracting

is hereby declared prohibited. For this purpose, labor only contracting shall refer to

an arrangement where the contractor or subcontractor merely recruits, supplies or

places workers to perform a job, work or service for a principal, and any of the

following elements are present:

i) The contractor or subcontractor does not have substantialcapital or investment which relates to the job, work or service

to be performed and the employees recruited, supplied or

placed by such contractor or subcontractor are performing

activities which are directly related to the main business of the

principal, or

ii) The contractor does not exercise the right to control over

the performance of the work of the contractual employee.

The foregoing provisions shall be without prejudice to the application of Article 248(c) of

the Labor Code, as amended.

Substantial capital or investment refers to capital stocks and subscribed capitalization in

the case of corporations, tools, equipments, implements, machineries and work premises, actuallyand directly used by the contractor or subcontractor in the performance or completion of the job,

work or service contracted out.

The right to control shall refer to the right reserved to the person for whom the services of

the contractual workers are performed, to determine not only the end to be achieved, but also the

manner and means to be used in reaching that end.

The test to determine the existence of independent contractorship is whether one claiming

to be an independent contractor has contracted to do the work according to his on methods and

without being subject to the control of the employer, except only as to the results of the work.

In legitimate labor contracting, the law creates an employer-employee relationship for a

limited purpose, i.e., to ensure that the employees are paid their wages. The principal employerbecomes jointly and severally liable with the job contractor, only for the payment of the

employees wages whenever the contractor fails to pay the same. Other than that, the principal

employer is not responsible for any claim made by the employees. 44[44]


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Despite respondents disavowal of the existence of the employer-employee relationship between it and

petitioner and its insistence that petitioner is an employee first, of Supreme and subsequently, of FSNC, the totality

of the facts and surrounding circumstances of the case convey otherwise.

On this point, the law is clear-cut. In laboronly contracting, the statute creates an employeremployee

relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered

merely an agent of the principal employer and the latter is responsible to the employees of the laboronly contractor

as if such employees had been directly employed by the principal employer.

The Labor Code and its implementing rules empower the Labor Arbiter to be the trier of facts in labor

cases. Much reliance is placed on findings of facts of the Arbiter having had the opportunity to talk to and discuss

with the parties and their witnesses the factual matters of the case during the conciliation phase.45[45] We, thus,

give full credence to the findings of facts of the labor arbiter.

WHEREFORE, premises considered, the Petition is GRANTED. The Decision of the Court of Appeals

dated 9 May 2005 and its Resolution dated 21 July 2005 is REVERSED. The Decision of the Labor Arbiter dated

20 November 2000 is REINSTATED. Let the records of the above-entitled case be remanded to the Labor Arbiter

for immediate execution of the Decision. No costs.


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ESTER M. ASUNCION,petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, Second Division,

MABINI MEDICAL CLINIC and DR. WILFRIDO JUCO, respondents.

D E C I S I O N

KAPUNAN,J.:

In her petition filed before this Court, Ester Asuncion prays that the Decision, dated November 29, 1996, and the

Resolution, dated February 20,1997, of the public respondent National Labor Relations Commission, Second

Division, in NLRC CA. 011188 which reversed the Decision of the Labor Arbiter, dated May 15, 1996 be set aside.

The antecedents of this case are as follows:

On August 16, 1993, petitioner Ester M. Asuncion was employed as an accountant/bookkeeper by the respondent

Mabini Medical Clinic. Sometime in May 1994, certain officials of the NCR-Industrial Relations Division of the

Department of Labor and Employment conducted a routine inspection of the premises of the respondent company

and discovered upon the disclosure of the petitioner of (documents) violations of the labor standards law such as the

non-coverage from the SSS of the employees. Consequently, respondent Company was made to correct these

violations.

On August 9, 1994, the private respondent, Medical Director Wilfrido Juco, issued a memorandum to petitioner

charging her with the following offenses:

1. Chronic Absentism (sic) You have incurred since Aug. 1993 up to the present 35 absences and 23 half-days.

2. Habitual tardiness You have late (sic) for 108 times. As shown on the record book.

3. Loitering and wasting of company time on several occasions and witnessed by several employees.

4. Getting salary of an absent employee without acknowledging or signing for it.

5. Disobedience and insubordination - continued refusal to sign memos given to you.i[1]

Petitioner was required to explain within two (2) days why she should not be terminated based on the above charges.

Three days later, in the morning of August 12, 1994, petitioner submitted her response to the memorandum. On the

same day, respondent Dr. Juco, through a letter dated August 12, 1994, dismissed the petitioner on the ground of

disobedience of lawful orders and for her failure to submit her reply within the two-day period.

This prompted petitioner to file a case for illegal termination before the NLRC.

In a Decision, dated May 15, 1996, Labor Arbiter Manuel Caday rendered judgment declaring that the petitioner

was illegally dismissed. The Labor Arbiter found that the private respondents were unable to prove the allegation of

chronic absenteeism as it failed to present in evidence the time cards, logbooks or record book which complainantsigned recording her time in reporting for work. These documents, according to the Labor Arbiter, were in the

possession of the private respondents. In fact, the record book was mentioned in the notice of termination. Hence,

the non-presentation of these documents gives rise to the presumption that these documents were intentionally

suppressed since they would be adverse to private respondents claim. Moreover, the Labor Arbiter ruled that the

petitioners absences were with the conformity of the private respondents as both parties had agreed beforehand that

petitioner would not report to work on Saturdays. The handwritten listing of the days when complainant was absent

from work or late in reporting for work and even the computerized print-out, do not suffice to prove that petitioners

absences were unauthorized as they could easily be manufactured.ii[2]Accordingly, the dispositive portion of the

decision states, to wit:


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WHEREFORE, Premises Considered, judgment is hereby rendered declaring the dismissal of the complainant as

illegal and ordering the respondent company to immediately reinstate her to her former position without loss of

seniority rights and to pay the complainants backwages and other benefits, as follows:

1) P73,500.00 representing backwages as of the date of this decision until she is actually reinstated in the service;

2) P20,000.00 by way of moral damages and another P20,000.00 representing exemplary damages; and

3) 10% of the recoverable award in this case representing attorneys fees.

SO ORDERED.iii[3]

On appeal, public respondent NLRC rendered the assailed decision which set aside the Labor Arbiters ruling.

Insofar as finding the private respondents as having failed to present evidence relative to petitioners absences and

tardiness, the NLRC agrees with the Labor Arbiter. However, the NLRC ruled that petitioner had admitted the

tardiness and absences though offering justifications for the infractions. The decretal portion of the assailed decision

reads:

WHEREFORE, premises considered, the appealed decision is hereby VACATED and SET ASIDE and a NEW

ONE entered dismissing the complaint for illegal dismissal for lack of merit.

However, respondents Mabini Medical Clinic and Dr. Wilfrido Juco are jointly and solidarily ordered to pay

complainant Ester Asuncion the equivalent of her three (3) months salary for and as a penalty for respondents non-

observance of complainants right to due process.

SO ORDERED.iv[4]

Petitioner filed a motion for reconsideration which the public respondent denied in its Resolution, dated February

19, 1997. Hence, petitioner through a petition for certiorariunder Rule 65 of the Rules of Court seeks recourse to

this Court and raises the following issue:

THE PUBLIC RESPONDENT ERRED IN FINDING THAT THE PETITIONER WAS DISMISSED BY THEPRIVATE RESPONDENT FOR A JUST OR AUTHORIZED CAUSE.

The petition is impressed with merit.

Although, it is a legal tenet that factual findings of administrative bodies are entitled to great weight and respect, we

are constrained to take a second look at the facts before us because of the diversity in the opinions of the Labor

Arbiter and the NLRC.v[5]A disharmony between the factual findings of the Labor Arbiter and those of the NLRC

opens the door to a review thereof by this Court.vi[6]

It bears stressing that a workers employment is property in the constitutional sense. He cannot be deprived of his

work without due process. In order for the dismissal to be valid, not only must it be based on just cause supported by

clear and convincing evidence,vii[7]the employee must also be given an opportunity to be heard and defend

himself. viii[8]It is the employer who has the burden of proving that the dismissal was with just or authorized

cause.ix[9]The failure of the employer to discharge this burden means that the dismissal is not justified and that the

employee is entitled to reinstatement and backwages.x[10]

In the case at bar, there is a paucity of evidence to establish the charges of absenteeism and tardiness. We note that

the employer company submitted mere handwritten listing and computer print-outs. The handwritten listing was not

signed by the one who made the same. As regards the print-outs, while the listing was computer generated, the

entries of time and other annotations were again handwritten and unsigned.xi[11]


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We find that the handwritten listing and unsigned computer print-outs were unauthenticated and, hence, unreliable.

Mere self-serving evidence of which the listing and print-outs are of that nature should be rejected as evidence

without any rational probative value even in administrative proceedings. For this reason, we find the findings of the

Labor Arbiter to be correct. On this point, the Labor Arbiter ruled, to wit:

x x x In the instant case, while the Notice of Termination served on the complainant clearly mentions the record

book upon which her tardiness (and absences) was based, the respondent (company) failed to establish (through) anyof these documents and the handwritten listing, notwithstanding, of (sic) the days when complainant was absent

from work or late in reporting for work and even the computerized print-outs, do not suffice to prove the

complainants absences were unauthorized as they could easily be manufactured. x x xxii[12]

InIBM Philippines, Inc. v. NLRC,xiii[13]this Court clarified that the liberality of procedure in administrative

actions is not absolute and does not justify the total disregard of certain fundamental rules of evidence. Such that

evidence without any rational probative value may not be made the basis of order or decision of administrative

bodies. The Courts ratiocination in that case is relevant to the propriety of rejecting the unsigned handwritten listings

and computer print-outs submitted by private respondents which we quote, to wit:

However, the liberality of procedure in administrative actions is subject to limitations imposed by basic

requirements of due process. As this Court said inAng Tibay v. CIR, the provision for flexibility in administrative

procedure does not go so far as to justify orders without a basis in evidence having rational probative value. Morespecifically, as held in Uichico v. NLRC:

It is true that administrative and quasi-judicial bodies like the NLRC are not bound by the technical rules of

procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to

disregard certain fundamental evidentiary rules. While the rules of evidence prevailing in the courts of law or equity

are not controlling in proceedings before the NLRC, the evidence presented before it must at least have a modicum

of admissibility for it to be given some probative value. The Statement of Profit and Losses submitted by Crispa,

Inc. to prove its alleged losses, without the accompanying signature of a certified public accountant or audited by an

independent auditor, are nothing but self-serving documents which ought to be treated as a mere scrap of paper

devoid of any probative value.

The computer print-outs, which constitute the only evidence of petitioners, afford no assurance of their authenticity

because they are unsigned. The decisions of this Court, while adhering to a liberal view in the conduct ofproceedings before administrative agencies, have nonetheless consistently required some proof of authenticity or

reliability as condition for the admission of documents.

InJarcia Machine Shop and Auto Supply, Inc. v. NLRC,xiv[14]this Court held as incompetent unsigned daily time

records presented to prove that the employee was neglectful of his duties:

Indeed, the DTRs annexed to the present petition would tend to establish private respondents neglectful attitude

towards his work duties as shown by repeated and habitual absences and tardiness and propensity for working

undertime for the year 1992. But the problem with these DTRs is that they are neither originals nor certified true

copies. They are plain photocopies of the originals, if the latter do exist. More importantly, they are not even signed

by private respondent nor by any of the employers representatives. x x x.

In the case at bar, both the handwritten listing and computer print-outs being unsigned, the authenticity thereof is

highly suspect and devoid of any rational probative value especially in the light of the existence of the official record

book of the petitioners alleged absences and tardiness in the possession of the employer company.

Ironically, in the memorandum charging petitioner and notice of termination, private respondents referred to the

record book as its basis for petitioners alleged absenteeism and tardiness. Interestingly, however, the record book

was never presented in evidence. Private respondents had possession thereof and the opportunity to present the

same. Being the basis of the charges against the petitioner, it is without doubt the best evidence available to

substantiate the allegations. The purpose of the rule requiring the production of the best evidence is the prevention of


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fraud, because if a party is in possession of such evidence and withholds it, and seeks to substitute inferior evidence

in its place, the presumption naturally arises that the better evidence is withheld for fraudulent purposes which its

production would expose and defeat.xv[15]Thus, private respondents unexplained and unjustified non-presentation

of the record book, which is the best evidence in its possession and control of the charges against the petitioner,

casts serious doubts on the factual basis of the charges of absenteeism and tardiness.

We find that private respondents failed to present a single piece of credible evidence to serve as the basis for theircharges against petitioner and consequently, failed to fulfill their burden of proving the facts which constitute the

just cause for the dismissal of the petitioner. However, the NLRC ruled that despite such absence of evidence, there

was an admission on the part of petitioner in her Letter dated August 11, 1994 wherein she wrote:

I am quite surprised why I have incurred 35 absences since August 1993 up to the present. I can only surmise that

Saturdayswere not included in my work week at your clinic. If you will please recall, per agreement with you, my

work days at your clinic is from Monday to Friday without Saturday work. As to my other supposed absences, I

believe that said absences were authorized and therefore cannot be considered as absences which need not be

explained (sic). It is also extremely difficult to understand why it is only now that I am charged to explain alleged

absences incurred way back August 1993.xvi[16]

In reversing the decision of the Labor Arbiter, public respondent NLRC relied upon the supposed admission of the

petitioner of her habitual absenteeism and chronic tardiness.

We do not subscribe to the findings of the NLRC that the above quoted letter of petitioner amounted to an admission

of her alleged absences. As explained by petitioner, her alleged absences were incurred on Saturdays. According to

petitioner, these should not be considered as absences as there was an arrangement between her and the private

respondents that she would not be required to work on Saturdays. Private respondents have failed to deny the

existence of this arrangement. Hence, the decision of the NLRC that private respondent had sufficient grounds to

terminate petitioner as she admitted the charges of habitual absences has no leg to stand on.

Neither have the private respondents shown by competent evidence that the petitioner was given any warning or

reprimanded for her alleged absences and tardiness. Private respondents claimed that they sent several notices to the

petitioner warning her of her absences, however, petitioner refused to receive the same. On this point, the Labor

Arbiter succinctly observed:

The record is bereft of any showing that complainant was ever warned of her absences prior to her dismissal on

August 9, 1994. The alleged notices of her absences from August 17, until September 30, 1993, from October until

November 27, 1993, from December 1, 1993 up to February 26, 1994 and the notice dated 31 May 1994 reminding

complainant of her five (5) days absences, four (4) half-days and tardiness for 582 minutes (Annex "1" to "1-D"

attached to respondent' Rejoinder), fail to show that the notices were received by the complainant. The allegation of

the respondents that the complainant refused to received (sic) the same is self-serving and merits scant

consideration. xxxxvii[17]

The Court, likewise, takes note of the fact that the two-day period given to petitioner to explain and answer the

charges against her was most unreasonable, considering that she was charged with several offenses and infractions

(35 absences, 23 half-days and 108 tardiness), some of which were allegedly committed almost a year before, not to

mention the fact that the charges leveled against her lacked particularity.

Apart from chronic absenteeism and habitual tardiness, petitioner was also made to answer for loitering and wasting

of company time, getting salary of an absent employee without acknowledging or signing for it and disobedience

and insubordination.xviii[18]Thus, the Labor Arbiter found that actually petitioner tried to submit her explanation

on August 11, 1994 or within the two-day period given her, but private respondents prevented her from doing so by

instructing their staff not to accept complainants explanation, which was the reason why her explanation was

submitted a day later.xix[19]


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The law mandates that every opportunity and assistance must be accorded to the employee by the management to

enable him to prepare adequately for his defense.xx[20]InRuffy v. NLRC,xxi[21]the Court held that what would

qualify as sufficient or ample opportunity, as required by law, would be every kind of assistance that management

must accord to the employee to enable him to prepare adequately for his defense. In the case at bar, private

respondents cannot be gainsaid to have given petitioner the ample opportunity to answer the charges leveled against

her.

From the foregoing, there are serious doubts in the evidence on record as to the factual basis of the charges against

petitioner. These doubts shall be resolved in her favor in line with the policy under the Labor Code to afford

protection to labor and construe doubts in favor of labor.xxii[22]The consistent rule is that if doubts exist between

the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.

The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable

cause.xxiii[23]Not having satisfied its burden of proof, we conclude that the employer dismissed the petitioner

without any just cause. Hence, the termination is illegal.

Having found that the petitioner has been illegally terminated, she is necessarily entitled to reinstatement to her

former previous position without loss of seniority and the payment of backwages.xxiv[24]

WHEREFORE, the Decision of the National Labor Relations Commission, dated November 29, 1996 and the

Resolution, dated February 20, 1997 are hereby REVERSEDand SETASIDE, and the Decision of the LaborArbiter, dated May 15, 1996 REINSTATED.


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G.R. No. 98107 August 18, 1997

BENJAMIN C. JUCO, petitioner,vs.

NATIONAL LABOR RELATIONS COMMISSION and NATIONAL HOUSING CORPORATION, respondents.

HERMOSISIMA, JR., J .:

This is a petition for certiorarito set aside the Decision of the National Labor Relations Commission (NLRC) dated March 14, 1991, whichreversed the Decision dated May 21, 1990 of Labor Arbiter Manuel R Caday, on the ground of lack of jurisdiction.

Petitioner Benjamin C. Juco was hired as a project engineer of respondent National Housing Corporation (NHC) from November 16, 1970 toMay 14, 1975. On May 14, 1975, he was separated from the service for having been implicated in a crime of theft and/or malversation ofpublic funds.

On March 25, 1977, petitioner filed a complaint for illegal dismissal against the NHC with the Department of Labor.

On September 17, 1977, the Labor Arbiter rendered a decision dismissing the complaint on the ground that the NLRC had no jurisdiction

over the case.1

Petitioner then elevated the case to the NLRC which rendered a decision on December 28, 1982,reversing the decision of the Labor Arbiter.

2

Dissatisfied with the decision of the NLRC, respondent NHC appealed before this Court and on January17, 1985, we rendered a decision, the dispositive portion thereof reads as follows:

WHEREFORE, the petition is hereby GRANTED. The questioned decision of therespondent National Labor Relations Commission is SET ASIDE. The decision of theLabor Arbiter dismissing the case before it for lack of jurisdiction is REINSTATED.

3

On January 6, 1989, petitioner filed with the Civil Service Commission a complaint for illegal dismissal,with preliminary mandatory injunction.

4

On February 6, 1989, respondent NHC moved for the dismissal of the complaint on the ground that theCivil Service Commission has no jurisdiction over the case.

5

On April 11, 1989, the Civil Service Commission issued an order dismissing the complaint for lack ofjurisdiction. It ratiocinated that:

The Board finds the comment and/or motion to dismiss meritorious. It was not disputedthat NHC is a government corporation without an original charter but organized/created

under the Corporation Code.

Article IX, Section 2 (1) of the 1987 Constitution provides:

The civil service embraces all branches, subdivisions, instrumentalitiesand agencies of the Government, including government owned andcontrolled corporations with original charters. (emphasis supplied)


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From the aforequoted constitutional provision, it is clear that respondent NHC is notwithin the scope of the civil service and is therefore beyond the jurisdiction of this Board.Moreover, it is pertinent to state that the 1987 Constitution was ratified and becameeffective on February 2, 1987.

WHEREFORE, for lack of jurisdiction, the instant complaint is hereby dismissed.6

On April 28, 1989, petitioner filed with respondent NLRC a complaint for illegal dismissal with preliminarymandatory injunction against respondent NHC.

7

On May 21, 1990, respondent NLRC thru Labor Arbiter Manuel R. Caday ruled that petitioner was illegallydismissed from his employment by respondent as there was evidence in the record that the criminal caseagainst him was purely fabricated, prompting the trial court to dismiss the charges against him. Hence, heconcluded that the dismissal was illegal as it was devoid of basis, legal or factual.

He further ruled that the complaint is not barred by prescription considering that the period from which toreckon the reglementary period of four years should be from the date of the receipt of the decision of theCivil Service Commission promulgated on April 11, 1989. He also ratiocinated that:

It appears . . . complainant filed the complaint for illegal dismissal with the Civil ServiceCommission on January 6, 1989 and the same was dismissed on April 11, 1989 afterwhich on April 28, 1989, this case was filed by the complainant. Prior to that, this casewas ruled upon by the Supreme Court on January 17, 1985 which enjoined thecomplainant to go to the Civil Service Commission which in fact, complainant did. Underthe circumstances, there is merit on the contention that the running of the reglementaryperiod of four (4) years was suspended with the filing of the complaint with the saidCommission. Verily, it was not the fault of the respondent for failing to file the complaintas alleged by the respondent but due to, in the words of the complainant, a "legal knot"that has to be untangled.

8

Thereafter, the Labor Arbiter rendered a decision, the dispositive portion of which reads:

Premises considered, judgment is hereby rendered declaring the dismissal of thecomplainant as illegal and ordering the respondent to immediately reinstate him to hisformer position without loss of seniority rights with full back wages inclusive of allowanceand to his other benefits or equivalent computed from the time it is withheld from himwhen he was dismissed on March 27, 1977, until actually reinstated.

9

On June 1, 1990, respondent NHC filed its appeal before the NLRC and on March 14, 1991, the NLRCpromulgated a decision which reversed the decision of Labor Arbiter Manuel R. Caday on the ground oflack of jurisdiction.

10

The primordial issue that confronts us is whether or not public respondent committed grave abuse of

discretion in holding that petitioner is not governed by the Labor Code.

Under the laws then in force, employees of government-owned and/or controlled corporations weregoverned by the Civil Service Law and not by the Labor Code. Hence,

Article 277 of the Labor Code (PD 442) then provided:


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The terms and conditions of employment of all government employees, includingemployees of government-owned and controlled corporations shall be governed by theCivil Service Law, rules and regulations . . . .

The 1973 Constitution, Article II-B, Section 1(1), on the other hand provided:

The Civil Service embraces every branch, agency, subdivision and instrumentality of thegovernment, including government-owned or controlled corporations.

Although we had earlier ruled in National Housing Corporation v.Juco,

11that employees of government-owned and/or controlled corporations, whether created by special

law or formed as subsidiaries under the general Corporation Law, are governed by the Civil Service Lawand not by the Labor Code, this ruling has been supplanted by the 1987 Constitution. Thus, the saidConstitution now provides:

The civil service embraces all branches, subdivisions, instrumentalities, and agencies ofthe Government, including government owned or controlled corporations with originalcharter. (Article IX-B, Section 2[1])

In National Service Corporation (NASECO) v. National Labor Relations Commission,12

we had theoccasion to apply the present Constitution in deciding whether or not the employees of NASECO arecovered by the Civil Service Law or the Labor Code notwithstanding that the case arose at the time whenthe 1973 Constitution was still in effect. We ruled that the NLRC has jurisdiction over the employees ofNASECO on the ground that it is the 1987 Constitution that governs because it is the Constitution in placeat the time of the decision. Furthermore, we ruled that the new phrase "with original charter" means thatgovernment-owned and controlled corporations refer to corporations chartered by special law asdistinguished from corporations organized under the Corporation Code. Thus, NASECO which had beenorganized under the general incorporation statute and a subsidiary of the National InvestmentDevelopment Corporation, which in turn was a subsidiary of the Philippine National Bank, is exluded fromthe purview of the Civil Service Commission.

We see no cogent reason to depart from the ruling in the aforesaid case.

In the case at bench, the National Housing Corporation is a government owned corporation organized in1959 in accordance with Executive Order No. 399, otherwise known as the Uniform Charter ofGovernment Corporation, dated January 1, 1959. Its shares of stock are and have been one hundredpercent (100%) owned by the Government from its incorporation under Act 1459, the former corporationlaw. The government entities that own its shares of stock are the Government Service Insurance System,the Social Security System, the Development Bank of the Philippines, the National Investment andDevelopment Corporation and the People's Homesite and Housing Corporation.

13Considering the fact

that the NHA had been incorporated under Act 1459, the former corporation law, it is but correct to saythat it is a government-owned or controlled corporation whose employees are subject to the provisions ofthe Labor Code. This observation is reiterated in the recent case of Trade Union of the Philippines andAllied Services (TUPAS) v. National Housing

Corporation, 14where we held that the NHA is now within the jurisdiction of the Department of Labor andEmployment, it being a government-owned and/or controlled corporation without an original charter.Furthermore, we also held that the workers or employees of the NHC (now NHA) undoubtedly have theright to form unions or employee's organization and that there is no impediment to the holding of acertification election among them as they are covered by the Labor Code.

Thus, the NLRC erred in dismissing petitioner's complaint for lack of jurisdiction because the rule now isthat the Civil Service now covers only government-owned or controlled corporations with original charters.


20/94

15

Having been incorporated under the Corporation Law, its relations with its personnel are governed bythe Labor Code and come under the jurisdiction of the National Labor Relations Commission.

One final point. Petitioners have been tossed from one forum to another for a simple illegal dismissalcase. It is but apt that we put an end to his dilemna in the interest of justice.

WHEREFORE, the decision of the NLRC in NLRC NCR-04-02036089 dated March 14, 1991 is herebyREVERSED and the Decision of the Labor Arbiter dated May 21, 1990 is REINSTATED.

SO ORDERED.


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G.R. No. 86773 February 14, 1992

SOUTHEAST ASIAN FISHERIES DEVELOPMENT CENTER-AQUACULTURE DEPARTMENT

(SEAFDEC-AQD), DR. FLOR LACANILAO (CHIEF), RUFIL CUEVAS (HEAD, ADMINISTRATIVEDIV.), BEN DELOS REYES (FINANCE OFFICER), petitioners,

vs.

NATIONAL LABOR RELATIONS COMMISSION and JUVENAL LAZAGA, respondents.

Ramon Encarnacion for petitioners.

Caesar T. Corpus for private respondent.

NOCON, J.:

This is a petition for certiorarito annul and set aside the July 26, 1988 decision of the National Labor Relations

Commission sustaining the labor arbiter, in holding herein petitioners Southeast Asian Fisheries Development

Center-Aquaculture Department (SEAFDEC-AQD), Dr. Flor Lacanilao, Rufil Cuevas and Ben de los Reyes liable to

pay private respondent Juvenal Lazaga the amount of P126,458.89 plus interest thereon computed from May 16,

1986 until full payment thereof is made, as separation pay and other post-employment benefits, and the resolution

denying the petitioners' motion for reconsideration of said decision dated January 9, 1989.

The antecedent facts of the case are as follows:

SEAFDEC-AQD is a department of an international organization, the Southeast Asian Fisheries Development

Center, organized through an agreement entered into in Bangkok, Thailand on December 28, 1967 by the

governments of Malaysia, Singapore, Thailand, Vietnam, Indonesia and the Philippines with Japan as the sponsoring

country (Article 1, Agreement Establishing the SEAFDEC).

On April 20, 1975, private respondent Juvenal Lazaga was employed as a Research Associate an a probationary

basis by the SEAFDEC-AQD and was appointed Senior External Affairs Officer on January 5, 1983 with a monthly

basic salary of P8,000.00 and a monthly allowance of P4,000.00. Thereafter, he was appointed to the position ofProfessional III and designated as Head of External Affairs Office with the same pay and benefits.

On May 8, 1986, petitioner Lacanilao in his capacity as Chief of SEAFDEC-AQD sent a notice of termination to

private respondent informing him that due to the financial constraints being experienced by the department, his

services shall be terminated at the close of office hours on May 15, 1986 and that he is entitled to separation benefits

equivalent to one (1) month of his basic salary for every year of service plus other benefits (Rollo, p. 153).


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Upon petitioner SEAFDEC-AQD's failure to pay private respondent his separation pay, the latter filed on March 18,

1987 a complaint against petitioners for non-payment of separation benefits plus moral damages and attorney's fees

with the Arbitration Branch of the NLRC (Annex "C" of Petition for Certiorari).

Petitioners in their answer with counterclaim alleged that the NLRC has no jurisdiction over the case inasmuch as

the SEAFDEC-AQD is an international organization and that private respondent must first secure clearances fromthe proper departments for property or money accountability before any claim for separation pay will be paid, and

which clearances had not yet been obtained by the private respondent.

A formal hearing was conducted whereby private respondent alleged that the non-issuance of the clearances by the

petitioners was politically motivated and in bad faith. On the other hand, petitioners alleged that private respondent

has property accountability and an outstanding obligation to SEAFDEC-AQD in the amount of P27,532.11.

Furthermore, private respondent is not entitled to accrued sick leave benefits amounting to P44,000.00 due to his

failure to avail of the same during his employment with the SEAFDEC-AQD (Annex "D",Id.).

On January 12, 1988, the labor arbiter rendered a decision, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents:

1. To pay complainant P126,458.89, plus legal interest thereon computed from May 16, 1986 until

full payment thereof is made, as separation pay and other post-employment benefits;

2. To pay complainant actual damages in the amount of P50,000, plus 10% attorney's fees.

All other claims are hereby dismissed.

SO ORDERED. (Rollo, p. 51, Annex "E")

On July 26, 1988, said decision was affirmed by the Fifth Division of the NLRC except as to the award of

P50,000.00 as actual damages and attorney's fees for being baseless. (Annex "A", p. 28, id.)

On September 3, 1988, petitioners filed a Motion for Reconsideration (Annex "G", id.) which was denied on January

9, 1989. Thereafter, petitioners instituted this petition for certiorarialleging that the NLRC has no jurisdiction to

hear and decide respondent Lazaga's complaint since SEAFDEC-AQD is immune from suit owing to its

international character and the complaint is in effect a suit against the State which cannot be maintained without its

consent.

The petition is impressed with merit.

Petitioner Southeast Asian Fisheries Development Center-Aquaculture Department (SEAFDEC-AQD) is an

international agency beyond the jurisdiction of public respondent NLRC.

It was established by the Governments of Burma, Kingdom of Cambodia, Republic of Indonesia, Japan, Kingdom ofLaos, Malaysia. Republic of the Philippines, Republic of Singapore, Kingdom of Thailand and Republic of Vietnam

(Annex "H", Petition).

The Republic of the Philippines became a signatory to the Agreement establishing SEAFDEC on January 16,1968.

Its purpose is as follows:

The purpose of the Center is to contribute to the promotion of the fisheries development in

Southeast Asia by mutual co-operation among the member governments of the Center, hereinafter


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called the "Members", and through collaboration with international organizations and

governments external to the Center. (Agreement Establishing the SEAFDEC, Art. 1; Annex "H"

Petition) (p.310,Rollo)

SEAFDEC-AQD was organized during the Sixth Council Meeting of SEAFDEC on July 3-7, 1973 in Kuala

Lumpur, Malaysia as one of the principal departments of SEAFDEC (Annex "I", id.) to be established in Iloilo forthe promotion of research in aquaculture. Paragraph 1, Article 6 of the Agreement establishing SEAFDEC

mandates:

1. The Council shall be the supreme organ of the Center and all powers of the Center shall be

vested in the Council.

Being an intergovernmental organization, SEAFDEC including its Departments (AQD), enjoys functional

independence and freedom from control of the state in whose territory its office is located.

As Senator Jovito R. Salonga and Former Chief Justice Pedro L. Yap stated in their book, Public International Law

(p. 83, 1956 ed.):

Permanent international commissions and administrative bodies have been created by the

agreement of a considerable number of States for a variety of international purposes, economic or

social and mainly non-political. Among the notable instances are the International Labor

Organization, the International Institute of Agriculture, the International Danube Commission. In

so far as they are autonomous and beyond the control of any one State, they have a distinct

juridical personality independent of the municipal law of the State where they are situated. As

such, according to one leading authority "they must be deemed to possess a species of

international personality of their own." (Salonga and Yap, Public International Law, 83 [1956 ed.])

Pursuant to its being a signatory to the Agreement, the Republic of the Philippines agreed to be represented by one

Director in the governing SEAFDEC Council (Agreement Establishing SEAFDEC, Art. 5, Par. 1, Annex "H", ibid.)

and that its national laws and regulations shall apply only insofar as its contribution to SEAFDEC of "an agreed

amount of money, movable and immovable property and services necessary for the establishment and operation of

the Center" are concerned (Art. 11, ibid.). It expressly waived the application of the Philippine laws on the

disbursement of funds of petitioner SEAFDEC-AQD (Section 2, P.D. No. 292).

The then Minister of Justice likewise opined that Philippine Courts have no jurisdiction over SEAFDEC-AQD in

Opinion No. 139, Series of 1984

4. One of the basic immunities of an international organization is immunity from local

jurisdiction, i.e.,that it is immune from the legal writs and processes issued by the tribunals of the

country where it is found. (SeeJenks,Id., pp. 37-44) The obvious reason for this is that the

subjection of such an organization to the authority of the local courts would afford a convenient

medium thru which the host government may interfere in there operations or even influence or

control its policies and decisions of the organization; besides, such subjection to local jurisdiction

would impair the capacity of such body to discharge its responsibilities impartially on behalf of its

member-states. In the case at bar, for instance, the entertainment by the National Labor Relations

Commission of Mr. Madamba's reinstatement cases would amount to interference by the

Philippine Government in the management decisions of the SEARCA governing board; even

worse, it could compromise the desired impartiality of the organization since it will have to suit its

actuations to the requirements of Philippine law, which may not necessarily coincide with the

interests of the other member-states. It is precisely to forestall these possibilities that in cases

where the extent of the immunity is specified in the enabling instruments of international

organizations, jurisdictional immunity from the host country is invariably among the first

accorded. (SeeJenks,Id.; See alsoBowett, The Law of International Institutions, pp. 284-1285).


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Respondent Lazaga's invocation of estoppel with respect to the issue of jurisdiction is unavailing because estoppel

does not apply to confer jurisdiction to a tribunal that has none over a cause of action. Jurisdiction is conferred by

law. Where there is none, no agreement of the parties can provide one. Settled is the rule that the decision of a

tribunal not vested with appropriate jurisdiction is null and void. Thus, in Calimlim vs.Ramirez, this Court held:

A rule, that had been settled by unquestioned acceptance and upheld in decisions so numerous tocite is that the jurisdiction of a court over the subject matter of the action is a matter of law and

may not be conferred by consent or agreement of the parties. The lack of jurisdiction of a court

may be raised at any stage of the proceedings, even on appeal. This doctrine has been qualified by

recent pronouncements which it stemmed principally from the ruling in the cited case of

Sibonghanoy. It is to be regretted, however, that the holding in said case had been applied to

situations which were obviously not contemplated therein. The exceptional circumstances

involved in Sibonghanoywhich justified the departure from the accepted concept of non-

waivability of objection to jurisdiction has been ignored and, instead a blanket doctrine had been

repeatedly upheld that rendered the supposed ruling inSibonghanoynot as the exception, but

rather the general rule, virtually overthrowing altogether the time-honored principle that the issue

of jurisdiction is not lost by waiver or by estoppel. (Calimlim vs. Ramirez, G.R. No. L-34362, 118

SCRA 399; [1982])

Respondent NLRC'S citation of the ruling of this Court in Lacanilao v.De Leon(147 SCRA 286 [1987]) to justify

its assumption of jurisdiction over SEAFDEC is misplaced. On the contrary, the Court in said case explained why it

took cognizance of the case. Said the Court:

We would note, finally, that the present petition relates to a controversy between two claimants to

the same position; this is not a controversy between the SEAFDEC on the one hand, and an officer

or employee, or a person claiming to be an officer or employee, of the SEAFDEC, on the other

hand. There is before us no question involving immunity from the jurisdiction of the Court, there

being no plea for such immunity whether by or on behalf of SEAFDEC, or by an official of

SEAFDEC with the consent of SEAFDEC (Id., at 300; emphasis supplied).

WHEREFORE, finding SEAFDEC-AQD to be an international agency beyond the jurisdiction of the courts or local

agency of the Philippine government, the questioned decision and resolution of the NLRC dated July 26, 1988 andJanuary 9, 1989, respectively, are hereby REVERSED and SET ASIDE for having been rendered without

jurisdiction. No costs.


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G.R. No. 85750 September 28, 1990

INTERNATIONAL CATHOLIC IMMIGRATION COMMISSION, petitionervsHON. PURA CALLEJA IN HER CAPACITY AS DIRECTOR OF THE BUREAU OF LABOR RELATIONSAND TRADE UNIONS OF THE PHILIPPINES AND ALLIED SERVICES (TUPAS) WFTU respondents.

G.R. No. 89331 September 28, 1990

KAPISANAN NG MANGGAGAWA AT TAC SA IRRI-ORGANIZED LABOR ASSOCIATION IN LINEINDUSTRIES AND AGRICULTURE, petitioner,vsSECRETARY OF LABOR AND EMPLOYMENT AND INTERNATIONAL RICE RESEARCH INSTITUTE,INC., respondents.

Araullo, Zambrano, Gruba, Chua Law Firm for petitioner in 85750.

Dominguez, Armamento, Cabana & Associates for petitioner in G.R. No. 89331.

Jimenez & Associates for IRRI.

Alfredo L. Bentulan for private respondent in 85750.

MELENCIO-HERRERA, J .:

Consolidated on 11 December 1989, these two cases involve the validity of the claim of immunity by theInternational Catholic Migration Commission (ICMC) and the International Rice Research Institute, Inc.(IRRI) from the application of Philippine labor laws.

I

Facts and Issues

A. G.R. No. 85750 the International Catholic Migration Commission (ICMC) Case.

As an aftermath of the Vietnam War, the plight of Vietnamese refugees fleeing from South Vietnam'scommunist rule confronted the international community.


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In response to this crisis, on 23 February 1981, an Agreement was forged between the PhilippineGovernment and the United Nations High Commissioner for Refugees whereby an operating center forprocessing Indo-Chinese refugees for eventual resettlement to other countries was to be established inBataan (Annex "A", Rollo, pp. 22-32).

ICMC was one of those accredited by the Philippine Government to operate the refugee processingcenter in Morong, Bataan. It was incorporated in New York, USA, at the request of the Holy See, as anon-profit agency involved in international humanitarian and voluntary work. It is duly registered with theUnited Nations Economic and Social Council (ECOSOC) and enjoys Consultative Status, Category II. Asan international organization rendering voluntary and humanitarian services in the Philippines, itsactivities are parallel to those of the International Committee for Migration (ICM) and the InternationalCommittee of the Red Cross (ICRC) [DOLE Records of BLR Case No. A-2-62-87, ICMC v. Calleja, Vol.1].

On 14 July 1986, Trade Unions of the Philippines and Allied Services (TUPAS) filed with the then Ministryof Labor and Employment a Petition for Certification Election among the rank and file members employedby ICMC The latter opposed the petition on the ground that it is an international organization registeredwith the United Nations and, hence, enjoys diplomatic immunity.

On 5 February 1987, Med-Arbiter Anastacio L. Bactin sustained ICMC and dismissed the petition for lackof jurisdiction.

On appeal by TUPAS, Director Pura Calleja of the Bureau of Labor Relations (BLR), reversed the Med-Arbiter's Decision and ordered the immediate conduct of a certification election. At that time, ICMC'srequest for recognition as a specialized agency was still pending with the Department of Foreign Affairs(DEFORAF).

Subsequently, however, on 15 July 1988, the Philippine Government, through the DEFORAF, grantedICMC the status of a specialized agency with corresponding diplomatic privileges and immunities, asevidenced by a Memorandum of Agreement between the Government and ICMC (Annex "E", Petition,Rollo, pp. 41-43), infra.

ICMC then sought the immediate dismissal of the TUPAS Petition for Certification Election invoking theimmunity expressly granted but the same was denied by respondent BLR Director who, again, orderedthe immediate conduct of a pre-election conference. ICMC's two Motions for Reconsideration weredenied despite an opinion rendered by DEFORAF on 17 October 1988 that said BLR Order violatedICMC's diplomatic immunity.

Thus, on 24 November 1988, ICMC filed the present Petition for Certiorari with Preliminary Injunctionassailing the BLR Order.

On 28 November 1988, the Court issued a Temporary Restraining Order enjoining the holding of thecertification election.

On 10 January 1989, the DEFORAF, through its Legal Adviser, retired Justice Jorge C. Coquia of theCourt of Appeals, filed a Motion for Intervention alleging that, as the highest executive department withthe competence and authority to act on matters involving diplomatic immunity and privileges, and taskedwith the conduct of Philippine diplomatic and consular relations with foreign governments and UNorganizations, it has a legal interest in the outcome of this case.

Over the opposition of the Solicitor General, the Court allowed DEFORAF intervention.


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On 12 July 1989, the Second Division gave due course to the ICMC Petition and required the submittal ofmemoranda by the parties, which has been complied with.

As initially stated, the issue is whether or not the grant of diplomatic privileges and immunites to ICMCextends to immunity from the application of Philippine labor laws.

ICMC sustains the affirmative of the proposition citing (1) its Memorandum of Agreement with thePhilippine Government giving it the status of a specialized agency, ( infra); (2) the Convention on thePrivileges and Immunities of Specialized Agencies, adopted by the UN General Assembly on 21November 1947 and concurred in by the Philippine Senate through Resolution No. 91 on 17 May 1949(the Philippine Instrument of Ratification was signed by the President on 30 August 1949 and depositedwith the UN on 20 March 1950) infra; and (3) Article II, Section 2 of the 1987 Constitution, which declaresthat the Philippines adopts the generally accepted principles of international law as part of the law of theland.

Intervenor DEFORAF upholds ICMC'S claim of diplomatic immunity and seeks an affirmance of theDEFORAF determination that the BLR Order for a certification election among the ICMC employees isviolative of the diplomatic immunity of said organization.

Respondent BLR Director, on the other hand, with whom the Solicitor General agrees, cites State policyand Philippine labor laws to justify its assailed Order, particularly, Article II, Section 18 and Article III,Section 8 of the 1987 Constitution, infra; and Articles 243 and 246 of the Labor Code, as amended, i bid.In addition, she contends that a certification election is not a litigation but a mere investigation of a non-adversary, fact-finding character. It is not a suit against ICMC its property, funds or assets, but is the soleconcern of the workers themselves.

B. G.R. No. 89331(The International Rice Research Institute [IRRI] Case).

Before a Decision could be rendered in the ICMC Case, the Third Division, on 11 December 1989,resolved to consolidate G.R. No. 89331 pending before it with G.R. No. 85750, the lower-numbered casepending with the Second Division, upon manifestation by the Solicitor General that both cases involvesimilar issues.

The facts disclose that on 9 December 1959, the Philippine Government and the Ford and RockefellerFoundations signed a Memorandum of Understanding establishing the International Rice ResearchInstitute (IRRI) at Los Baos, Laguna. It was intended to be an autonomous, philanthropic, tax-free, non-profit, non-stock organization designed to carry out the principal objective of conducting "basic researchon the rice plant, on all phases of rice production, management, distribution and utilization with a view toattaining nutritive and economic advantage or benefit for the people of Asia and other major rice-growingareas through improvement in quality and quantity of rice."

Initially, IRRI was organized and registered with the Securities and Exchange Commission as a privatecorporation subject to all laws and regulations. However, by virtue of Pres. Decree No. 1620, promulgated

on 19 April 1979, IRRI was granted the status, prerogatives, privileges and immunities of an internationalorganization.

The Organized Labor Association in Line Industries and Agriculture (OLALIA), is a legitimate labororganization with an existing local union, the Kapisanan ng Manggagawa at TAC sa IRRI (Kapisanan, forshort) in respondent IRRI.

On 20 April 1987, the Kapisanan filed a Petition for Direct Certification Election with Region IV, RegionalOffice of the Department of Labor and Employment (DOLE).


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IRRI opposed the petition invoking Pres. Decree No. 1620 conferring upon it the status of an internationalorganization and granting it immunity from all civil, criminal and administrative proceedings underPhilippine laws.

On 7 July 1987, Med-Arbiter Leonardo M. Garcia, upheld the opposition on the basis of Pres. Decree No.

1620 and dismissed the Petition for Direct Certification.

On appeal, the BLR Director, who is the public respondent in the ICMC Case, set aside the Med-Arbiter'sOrder and authorized the calling of a certification election among the rank-and-file employees of IRRI.Said Director relied on Article 243 of the Labor Code, as amended, infraand Article XIII, Section 3 of the1987 Constitution,

1and held that "the immunities and privileges granted to IRRI do not include exemption

from coverage of our Labor Laws." Reconsideration sought by IRRI was denied.

On appeal, the Secretary of Labor, in a Resolution of 5 July 1989, set aside the BLR Director's Order,dismissed the Petition for Certification Election, and held that the grant of specialized agency status bythe Philippine Government to the IRRI bars DOLE from assuming and exercising jurisdiction over IRRISaid Resolution reads in part as follows:

Presidential Decree No. 1620 which grants to the IRRI the status, prerogatives, privilegesand immunities of an international organization is clear and explicit. It provides incategorical terms that:

Art. 3The Institute shall enjoy immunity from any penal, civil and administrativeproceedings, except insofar as immunity has been expressly waived by the Director-General of the Institution or his authorized representative.

Verily, unless and until the Institute expressly waives its immunity, no summons,subpoena, orders, decisions or proceedings ordered by any court or administrative orquasi-judicialagency are enforceable as against the Institute. In the case at bar therewas no such waiver made by the Director-General of the Institute. Indeed, the Institute, atthe very first opportunity already vehemently questioned the jurisdiction of thisDepartment by filing an ex-parte motion to dismiss the case.

Hence, the present Petition for Certiorari filed by Kapisanan alleging grave abuse of discretion byrespondent Secretary of Labor in upholding IRRI's diplomatic immunity.

The Third Division, to which the case was originally assigned, required the respondents to comment onthe petition. In a Manifestation filed on 4 August 1990, the Secretary of Labor declared that it was "notadopting as his own" the decision of the BLR Director in the ICMC Case as well as the Comment of theSolicitor General sustaining said Director. The last pleading was filed by IRRI on 14 August 1990.

Instead of a Comment, the Solicitor General filed a Manifestation and Motion praying that he be excusedfrom filing a comment "it appearing that in the earlier case of International Catholic Migration Commission

v. Hon. Pura Calleja, G.R. No. 85750. the Office of the Solicitor General had sustained the stand ofDirector Calleja on the very same issue now before it, which position has been superseded by respondentSecretary of Labor in G.R. No. 89331," the present case. The Court acceded to the Solicitor General'sprayer.

The Court is now asked to rule upon whether or not the Secretary of Labor committed grave abuse ofdiscretion in dismissing the Petition for Certification Election filed by Kapisanan.


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Kapisanan contends that Article 3 of Pres. Decree No. 1620 granting IRRI the status, privileges,prerogatives and immunities of an international organization, invoked by the Secretary of Labor, isunconstitutional in so far as it deprives the Filipino workers of their fundamental and constitutional right toform trade unions for the purpose of collective bargaining as enshrined in the 1987 Constitution.

A procedural issue is also raised. Kapisanan faults respondent Secretary of Labor for entertaining IRRI'Sappeal from the Order of the Director of the Bureau of Labor Relations directing the holding of acertification election. Kapisanan contends that pursuant to Sections 7, 8, 9 and 10 of Rule V

2of the

Omnibus Rules Implementing the Labor Code, the Order of the BLR Director had become final andunappeable and that, therefore, the Secretary of Labor had no more jurisdiction over the said appeal.

On the other hand, in entertaining the appeal, the Secretary of Labor relied on Section 25 of Rep. Act. No.6715, which took effect on 21 March 1989, providing for the direct filing of appeal from the Med-Arbiter tothe Office of the Secretary of Labor and Employment instead of to the Director of the Bureau of LaborRelations in cases involving certification election orders.

III

Findings in Both Cases.

There can be no question that diplomatic immunity has, in fact, been granted ICMC and IRRI.

Article II of the Memorandum of Agreement between the Philippine Government and ICMC provides thatICMC shall have a status "simil

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