television and production exponents
TRANSCRIPT
TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO P. TUVIERA, petitioners, vs.ROBERTO C. SERVAÑA, respondent.
D E C I S I O N
TINGA, J.:
This petition for review under Rule 45 assails the 21 December 2004 Decision1 and 8 April 2005 Resolution2 of the Court of Appeals declaring Roberto Servaña (respondent) a regular employee of petitioner Television and Production Exponents, Inc. (TAPE). The appellate court likewise ordered TAPE to pay nominal damages for its failure to observe statutory due process in the termination of respondent’s employment for authorized cause.
TAPE is a domestic corporation engaged in the production of television programs, such as the long-running variety program, "Eat Bulaga!". Its president is Antonio P. Tuviera (Tuviera). Respondent Roberto C. Servaña had served as a security guard for TAPE from March 1987 until he was terminated on 3 March 2000.
Respondent filed a complaint for illegal dismissal and nonpayment of benefits against TAPE. He alleged that he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular company guard. He was detailed at Broadway Centrum in Quezon City where "Eat Bulaga!" regularly staged its productions. On 2 March 2000, respondent received a memorandum informing him of his impending dismissal on account of TAPE’s decision to contract the services of a professional security agency. At the time of his termination, respondent was receiving a monthly salary of P6,000.00. He claimed that the holiday pay, unpaid vacation and sick leave benefits and other monetary considerations were withheld from him. He further contended that his dismissal was undertaken without due process and violative of existing labor laws, aggravated by nonpayment of separation pay.3
In a motion to dismiss which was treated as its position paper, TAPE countered that the labor arbiter had no jurisdiction over the case in the absence of an employer-employee relationship between the parties. TAPE made the following assertions: (1) that respondent was initially employed as a security guard for Radio Philippines Network (RPN-9); (2) that he was tasked to assist TAPE during its live productions, specifically, to control the crowd; (3) that when RPN-9 severed its relationship with the security agency, TAPE engaged respondent’s services, as part of the support group and thus a talent, to provide security service to production staff, stars and guests of "Eat Bulaga!" as well as to control the audience during the one-and-a-half hour noontime program; (4) that it was agreed that complainant would render his services until such time that respondent company shall have engaged the services of a professional security agency; (5) that in 1995, when his contract with RPN-9 expired, respondent was retained as a talent and a member of the support group, until such time that TAPE shall have engaged the services of a professional security agency; (6) that respondent was not prevented from seeking other employment, whether or not related to security services, before or after attending to his "Eat Bulaga!" functions; (7) that sometime in late 1999, TAPE started negotiations for the engagement of a professional security agency, the Sun Shield Security Agency; and (8) that on 2 March 2000, TAPE issued memoranda to all talents, whose functions would be rendered redundant by the engagement of the security agency, informing them of the management’s decision to terminate their services.4
TAPE averred that respondent was an independent contractor falling under the talent group category and was working under a special arrangement which is recognized in the industry.5
Respondent for his part insisted that he was a regular employee having been engaged to perform an activity that is necessary and desirable to TAPE’s business for thirteen (13) years.6
On 29 June 2001, Labor Arbiter Daisy G. Cauton-Barcelona declared respondent to be a regular employee of TAPE. The Labor Arbiter relied on the nature of the work of respondent, which is securing and maintaining order in the studio, as necessary and desirable in the usual business activity of TAPE. The Labor Arbiter also ruled that the termination was valid on the ground of redundancy, and ordered the payment of respondent’s separation pay equivalent to one (1)-month pay for every year of service. The dispositive portion of the decision reads:
WHEREFORE, complainant’s position is hereby declared redundant. Accordingly, respondents are hereby ordered to pay complainant his separation pay computed at the rate of one (1)
month pay for every year of service or in the total amount of P78,000.00.7
On appeal, the National Labor Relations Commission (NLRC) in a Decision8 dated 22 April 2002 reversed the Labor Arbiter and considered respondent a mere program employee, thus:
We have scoured the records of this case and we find nothing to support the Labor Arbiter’s conclusion that complainant was a regular employee.
x x x x
The primary standard to determine regularity of employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. This connection can be determined by considering the nature and work performed and its relation to the scheme of the particular business or trade in its entirety. x x x Respondent company is engaged in the business of production of television shows. The records of this case also show that complainant was employed by respondent company beginning 1995 after respondent company transferred from RPN-9 to GMA-7, a fact which complainant does not dispute. His last salary was P5,444.44 per month. In such industry, security services may not be deemed necessary and desirable in the usual business of the employer. Even without the performance of such services on a regular basis, respondent’s company’s business will not grind to a halt.
x x x x
Complainant was indubitably a program employee of respondent company. Unlike [a] regular employee, he did not observe working hours x x x. He worked for other companies, such as M-Zet TV Production, Inc. at the same time that he was working for respondent company. The foregoing indubitably shows that complainant-appellee was a program employee. Otherwise, he would have two (2) employers at the same time.9
Respondent filed a motion for reconsideration but it was denied in a Resolution10 dated 28 June 2002.
Respondent filed a petition for certiorari with the Court of Appeals contending that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter. Respondent asserted that he was a regular employee considering the nature and length of service rendered.11
Reversing the decision of the NLRC, the Court of Appeals found respondent to be a regular employee. We quote the dispositive portion of the decision:
IN LIGHT OF THE FOREGOING, the petition is hereby GRANTED. The Decision dated 22 April 2002 of the public respondent NLRC reversing the Decision of the Labor Arbiter and its Resolution dated 28 June 2002 denying petitioner’s motion for reconsideration are REVERSED and SET ASIDE. The Decision dated 29 June 2001 of the Labor Arbiter is REINSTATED with MODIFICATION in that private respondents are ordered to pay jointly and severally petitioner the amount of P10,000.00 as nominal damages for non-compliance with the statutory due process.
SO ORDERED.12
Finding TAPE’s motion for reconsideration without merit, the Court of Appeals issued a Resolution13 dated 8 April 2005 denying said motion.
TAPE filed the instant petition for review raising substantially the same grounds as those in its petition for certiorari before the Court of Appeals. These matters may be summed up into one main issue: whether an employer-employee relationship exists between TAPE and respondent.
On 27 September 2006, the Court gave due course to the petition and considered the case submitted for decision.14
At the outset, it bears emphasis that the existence of employer-employee relationship is ultimately a question of fact. Generally, only questions of law are entertained in appeals by certiorari to the Supreme Court. This rule, however, is not absolute. Among the several recognized exceptions is when the findings of
the Court of Appeals and Labor Arbiters, on one hand, and that of the NLRC, on the other, are conflicting,15 as obtaining in the case at bar.
Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of employer-employee relationship, namely: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and method by which the work is to be accomplished.16 The most important factor involves the control test. Under the control test, there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end.17
In concluding that respondent was an employee of TAPE, the Court of Appeals applied the "four-fold test" in this wise:
First. The selection and hiring of petitioner was done by private respondents. In fact, private respondents themselves admitted having engaged the services of petitioner only in 1995 after TAPE severed its relations with RPN Channel 9.
By informing petitioner through the Memorandum dated 2 March 2000, that his services will be terminated as soon as the services of the newly hired security agency begins, private respondents in effect acknowledged petitioner to be their employee. For the right to hire and fire is another important element of the employer-employee relationship.
Second. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. . . Payment as admitted by private respondents was given by them on a monthly basis at a rate of P5,444.44.
Third. Of the four elements of the employer-employee relationship, the "control test" is the most important. x x x
The bundy cards representing the time petitioner had reported for work are evident proofs of private respondents’ control over petitioner more particularly with the time he is required to report for work during the noontime program of "Eat Bulaga!" If it were not so, petitioner would be free to report for work anytime even not during the noontime program of "Eat Bulaga!" from 11:30 a.m. to 1:00 p.m. and still gets his compensation for being a "talent." Precisely, he is being paid for being the security of "Eat Bulaga!" during the above-mentioned period. The daily time cards of petitioner are not just for mere record purposes as claimed by private respondents. It is a form of control by the management of private respondent TAPE.18
TAPE asseverates that the Court of Appeals erred in applying the "four-fold test" in determining the existence of employer-employee relationship between it and respondent. With respect to the elements of selection, wages and dismissal, TAPE proffers the following arguments: that it never hired respondent, instead it was the latter who offered his services as a talent to TAPE; that the Memorandum dated 2 March 2000 served on respondent was for the discontinuance of the contract for security services and not a termination letter; and that the talent fees given to respondent were the pre-agreed consideration for the services rendered and should not be construed as wages. Anent the element of control, TAPE insists that it had no control over respondent in that he was free to employ means and methods by which he is to control and manage the live audiences, as well as the safety of TAPE’s stars and guests.19
The position of TAPE is untenable. Respondent was first connected with Agro-Commercial Security Agency, which assigned him to assist TAPE in its live productions. When the security agency’s contract with RPN-9 expired in 1995, respondent was absorbed by TAPE or, in the latter’s language, "retained as talent."20
Clearly, respondent was hired by TAPE. Respondent presented his identification card21 to prove that he is indeed an employee of TAPE. It has been in held that in a business establishment, an identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it.22
Respondent claims to have been receiving P5,444.44 as his monthly salary while TAPE prefers to designate such amount as talent fees. Wages, as defined in the Labor Code, are remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for service rendered or to be rendered. It is beyond dispute that respondent received a fixed amount as monthly compensation for the services he rendered to TAPE.
The Memorandum informing respondent of the discontinuance of his service proves that TAPE had the power to dismiss respondent.
Control is manifested in the bundy cards submitted by respondent in evidence. He was required to report daily and observe definite work hours. To negate the element of control, TAPE presented a certification from M-Zet Productions to prove that respondent also worked as a studio security guard for said company. Notably, the said certificate categorically stated that respondent reported for work on Thursdays from 1992 to 1995. It can be recalled that during said period, respondent was still working for RPN-9. As admitted by TAPE, it absorbed respondent in late 1995.23
TAPE further denies exercising control over respondent and maintains that the latter is an independent contractor.24 Aside from possessing substantial capital or investment, a legitimate job contractor or subcontractor carries on a distinct and independent business and undertakes to perform the job, work or service on its own account and under its own responsibility according to its own manner and method, and free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.25 TAPE failed to establish that respondent is an independent contractor. As found by the Court of Appeals:
We find the annexes submitted by the private respondents insufficient to prove that herein petitioner is indeed an independent contractor. None of the above conditions exist in the case at bar. Private respondents failed to show that petitioner has substantial capital or investment to be qualified as an independent contractor. They likewise failed to present a written contract which specifies the performance of a specified piece of work, the nature and extent of the work and the term and duration of the relationship between herein petitioner and private respondent TAPE.26
TAPE relies on Policy Instruction No. 40, issued by the Department of Labor, in classifying respondent as a program employee and equating him to be an independent contractor.
Policy Instruction No. 40 defines program employees as—
x x x those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours such that on some days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies. The engagement of program employees, including those hired by advertising or sponsoring companies, shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay and the programs in which they will work. The contract shall be duly registered by the station with the Broadcast Media Council within three (3) days from its consummation.27
TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in the policy instruction. It did not even present its contract with respondent. Neither did it comply with the contract-registration requirement.
Even granting arguendo that respondent is a program employee, stills, classifying him as an independent contractor is misplaced. The Court of Appeals had this to say:
We cannot subscribe to private respondents’ conflicting theories. The theory of private respondents that petitioner is an independent contractor runs counter to their very own allegation that petitioner is a talent or a program employee. An independent contractor is not an employee of the employer, while a talent or program employee is an employee. The only difference between a talent or program employee and a regular employee is the fact that a regular employee is entitled to all the benefits that are being prayed for. This is the reason why private respondents try to seek refuge under the concept of an independent contractor theory. For if petitioner were indeed an independent contractor, private respondents will not be liable to pay the benefits prayed for in petitioner’s complaint.28
More importantly, respondent had been continuously under the employ of TAPE from 1995 until his termination in March 2000, or for a span of 5 years. Regardless of whether or not respondent had been performing work that is necessary or desirable to the usual business of TAPE, respondent is still considered a regular employee under Article 280 of the Labor Code which provides:
Art. 280. Regular and Casual Employment.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the employee or where the work or service to be performed is seasonal in nature and employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph. Provided, that, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.
As a regular employee, respondent cannot be terminated except for just cause or when authorized by law.29 It is clear from the tenor of the 2 March 2000 Memorandum that respondent’s termination was due to redundancy. Thus, the Court of Appeals correctly disposed of this issue, viz:
Article 283 of the Labor Code provides that the employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year or service, whichever is higher.
x x x x
We uphold the finding of the Labor Arbiter that "complainant [herein petitioner] was terminated upon [the] management’s option to professionalize the security services in its operations. x x x" However, [we] find that although petitioner’s services [sic] was for an authorized cause, i.e., redundancy, private respondents failed to prove that it complied with service of written notice to the Department of Labor and Employment at least one month prior to the intended date of retrenchment. It bears stressing that although notice was served upon petitioner through a Memorandum dated 2 March 2000, the effectivity of his dismissal is fifteen days from the start of the agency’s take over which was on 3 March 2000. Petitioner’s services with private respondents were severed less than the month requirement by the law.
Under prevailing jurisprudence the termination for an authorized cause requires payment of separation pay. Procedurally, if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Deparment of Labor and Employment written notice 30 days prior to the effectivity of his separation. Where the dismissal is for an authorized cause but due process was not observed, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be liable for non-compliance with procedural requirements of due process.
x x x x
Under recent jurisprudence, the Supreme Court fixed the amount of P30,000.00 as nominal damages. The basis of the violation of petitioners’ right to statutory due process by the private respondents warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances. We believe this form of damages would serve to deter employer from future violations of the statutory due process rights of the employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Considering the
circumstances in the case at bench, we deem it proper to fix it at P10,000.00.30
In sum, we find no reversible error committed by the Court of Appeals in its assailed decision.
However, with respect to the liability of petitioner Tuviera, president of TAPE, absent any showing that he acted with malice or bad faith in terminating respondent, he cannot be held solidarily liable with TAPE.31 Thus, the Court of Appeals ruling on this point has to be modified.
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with MODIFICATION in that only petitioner Television and Production Exponents, Inc. is liable to pay respondent the amount of P10,000.00 as nominal damages for non-compliance with the statutory due process and petitioner Antonio P. Tuviera is accordingly absolved from liability.
SO ORDERED.
REMINGTON INDUSTRIAL SALES
G.R. Nos. 169295-96
CORPORATION,
Petitioner,
Present:
PUNO, J., Chairperson,
SANDOVAL-GUTIERREZ,
- versus -
CORONA,
AZCUNA, and
GARCIA, JJ.
Promulgated:
ERLINDA CASTANEDA,
Respondent.
November 20, 2006
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
D E C I S I O N
PUNO, J.:
Before this Court is the Petition for Review on Certiorari1[1]
filed by Remington Industrial Sales Corporation to reverse and set
aside the Decision2[2] of the Fourth Division of the Court of Appeals
in CA-G.R. SP Nos. 64577 and 68477, dated January 31, 2005, which
dismissed petitioner’s consolidated petitions for certiorari, and its
subsequent Resolution,3[3] dated August 11, 2005, which denied
petitioner’s motion for reconsideration.
The antecedent facts of the case, as narrated by the Court of
Appeals, are as follows:
The present controversy began when private respondent, Erlinda Castaneda (“Erlinda”) instituted on March 2, 1998 a complaint for illegal dismissal, underpayment of wages, non-payment of overtime services, non-payment of service incentive leave pay and non-payment of 13th month pay against Remington before the NLRC, National Capital Region, Quezon City. The complaint impleaded Mr. Antonio Tan in his capacity as the Managing Director of Remington.
Erlinda alleged that she started working in August 1983 as company cook with a salary of Php 4,000.00 for Remington, a corporation engaged in the trading business; that she worked for six (6) days a week, starting as early as 6:00 a.m. because she had to do the marketing and would end at around 5:30 p.m., or even later, after most of the employees, if not all, had left the company premises; that she continuously worked with Remington until she was unceremoniously prevented from reporting for work when Remington transferred to a new site in Edsa, Caloocan City. She averred that she reported for work at the new site in Caloocan City on January 15, 1998, only to be informed that Remington no longer needed her services. Erlinda believed that her dismissal was illegal because she was not given the notices required by law; hence, she filed her complaint for reinstatement without loss of seniority rights, salary differentials, service incentive leave pay, 13th month pay and 10% attorney’s fees.
Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic helper, not a regular employee; Erlinda worked as a cook and this job had nothing to do with Remington’s business of trading in construction or hardware materials, steel plates and wire rope products. It also contended that contrary to Erlinda’s allegations that the (sic) she worked for eight (8) hours a day, Erlinda’s duty was merely to cook lunch and “merienda”, after which her time was hers to spend as she pleased. Remington also maintained that it did not exercise any degree of control and/or supervision over Erlinda’s work as her only concern was to ensure that the employees’ lunch and “merienda” were available and served at the designated time. Remington likewise belied
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Erlinda’s assertion that her work extended beyond 5:00 p.m. as she could only leave after all the employees had gone. The truth, according to Remington, is that Erlinda did not have to punch any time card in the way that other employees of Remington did; she was free to roam around the company premises, read magazines, and to even nap when not doing her assigned chores. Remington averred that the illegal dismissal complaint lacked factual and legal bases. Allegedly, it was Erlinda who refused to report for work when Remington moved to a new location in Caloocan City.
In a Decision4[4] dated January 19, 1999, the labor arbiter
dismissed the complaint and ruled that the respondent was a
domestic helper under the personal service of Antonio Tan, finding
that her work as a cook was not usually necessary and desirable in
the ordinary course of trade and business of the petitioner
corporation, which operated as a trading company, and that the
latter did not exercise control over her functions. On the issue of
illegal dismissal, the labor arbiter found that it was the respondent
who refused to go with the family of Antonio Tan when the
corporation transferred office and that, therefore, respondent could
not have been illegally dismissed.
Upon appeal, the National Labor Relations Commission (NLRC)
rendered a Decision,5[5] dated November 23, 2000, reversing the
labor arbiter, ruling, viz:
We are not inclined to uphold the declaration below that complainant is a domestic helper of the family of Antonio Tan. There was no allegation by respondent that complainant had ever worked in the residence of Mr. Tan. What is clear from the facts narrated by the parties is that complainant continuously did her job as a cook in the office of respondent serving the needed food for lunch and merienda of the employees. Thus, her work as cook inured not for the benefit of the family members of Mr. Tan but solely for the individual employees of respondent.
Complainant as an employee of respondent company is even bolstered by no less than the certification dated May 23, 1997 issued by the corporate secretary of the company certifying that complainant is their bonafide employee. This is a solid evidence which the Labor Arbiter simply brushed aside. But, such error would not be committed here as it would be at the height of injustice if we are to declare that complainant is a domestic helper.
Complainant’s work schedule and being paid a monthly salary of P4,000.00 are clear indication that she is a company employee who had been employed to cater to the food needed by the employees which were being provided by respondent to form part of the benefit granted them.
With regard to the issue of illegal dismissal, we believe that there is more reason to believe that complainant was not dismissed because allegedly she was the one who refused to work in the new office of respondent. However, complainant’s refusal to join the workforce due to poor eyesight could not be considered abandonment of work or voluntary resignation from employment.
Under the Labor Code as amended, an employee who reaches the age of sixty years old (60 years) has the option to retire or to separate from the service with payment of separation pay/retirement benefit.
In this case, we notice that complainant was already 60 years old at the time she filed the complaint praying for separation pay or retirement benefit and some money claims.
Based on Article 287 of the Labor Code as amended, complainant is entitled to be paid her separation
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pay/retirement benefit equivalent to one-half (1/2) month for every year of service. The amount of separation pay would be based on the prescribed minimum wage at the time of dismissal since she was then underpaid. In as much as complainant is underpaid of her wages, it behooves that she should be paid her salary differential for the last three years prior to separation/retirement.
xxx
xxx
xxx
WHEREFORE, premises considered, the assailed decision is hereby, SET ASIDE, and a new one is hereby entered ordering respondents to pay complainant the following:
1. Salary differential
- 2. Service Incentive Leave Pay - 2,650.00 3. 13th Month Pay differential - 1,001.76 4. Separation Pay/retirement benefit - 36,075.00
Total -
SO ORDERED.
Petitioner moved to reconsider this decision but the NLRC
denied the motion. This denial of its motion prompted petitioner to
file a Petition for Certiorari6[6] with the Court of Appeals, docketed
as CA-G.R. SP No. 64577, on May 4, 2001, imputing grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of
the NLRC in (1) reversing in toto the decision of the labor arbiter,
and (2) awarding in favor of respondent salary differential, service
incentive leave pay, 13th month pay differential and separation
benefits in the total sum of P51,747.88.
While the petition was pending with the Court of Appeals, the
NLRC rendered another Decision7[7] in the same case on August 29,
2001. How and why another decision was rendered is explained in
that decision as follows:
On May 17, 2001, complainant filed a Manifestation praying for a resolution of her Motion for Reconsideration and, in support thereof, alleges that, sometime December 18, 2000, she mailed her Manifestation and Motion for Reconsideration registered as Registered Certificate No. 188844; and that the said mail was received by the NLRC, through a certain Roland Hernandez, on December 26, 2000. Certifications to this effect was issued by the Postmaster of the Sta. Mesa Post Office bearing the date May 11, 2001 (Annexes A and B, Complainant’s Manifestation).
Evidence in support of complainant’s having actually filed a Motion for Reconsideration within the reglementary period having been sufficiently established, a determination of its merits is thus, in order.
On the merits, the NLRC found respondent’s motion for
reconsideration meritorious leading to the issuance of its second
decision with the following dispositive portion:
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WHEREFORE, premises considered, the decision dated November 23, 2000, is MODIFIED by increasing the award of retirement pay due the complainant in the total amount of SIXTY TWO THOUSAND FOUR HUNDRED THIRTY-SEVEN and 50/100 (P62,437.50). All other monetary relief so adjudged therein are maintained and likewise made payable to the complainant.
SO ORDERED.
Petitioner challenged the second decision of the NLRC,
including the resolution denying its motion for reconsideration,
through a second Petition for Certiorari8[8] filed with the Court of
Appeals, docketed as CA-G.R. SP No. 68477 and dated January 8,
2002, this time imputing grave abuse of discretion amounting to
lack of or excess of jurisdiction on the part of the NLRC in (1)
issuing the second decision despite losing its jurisdiction due to the
pendency of the first petition for certiorari with the Court of
Appeals, and (2) assuming it still had jurisdiction to issue the
second decision notwithstanding the pendency of the first petition
for certiorari with the Court of Appeals, that its second decision has
no basis in law since respondent’s motion for reconsideration,
which was made the basis of the second decision, was not filed
under oath in violation of Section 14, Rule VII9[9] of the New Rules
of Procedure of the NLRC and that it contained no certification as to
why respondent’s motion for reconsideration was not decided on
time as also required by Section 10, Rule VI10[10] and Section 15,
Rule VII11[11] of the aforementioned rules.
Upon petitioner’s motion, the Court of Appeals ordered the
consolidation of the two (2) petitions, on January 24, 2002, pursuant
to Section 7, par. b(3), Rule 3 of the Revised Rules of the Court of
Appeals. It summarized the principal issues raised in the
consolidated petitions as follows:
1. Whether respondent is petitioner’s regular employee or a domestic helper;
2. Whether respondent was illegally dismissed; and
3. Whether the second NLRC decision promulgated during the pendency of the first petition for certiorari has basis in law.
On January 31, 2005, the Court of Appeals dismissed the
consolidated petitions for lack of merit, finding no grave abuse of
discretion on the part of the NLRC in issuing the assailed decisions.
On the first issue, it upheld the ruling of the NLRC that
respondent was a regular employee of the petitioner since the
former worked at the company premises and catered not only to
the personal comfort and enjoyment of Mr. Tan and his family, but
also to that of the employees of the latter. It agreed that petitioner
enjoys the prerogative to control respondent’s conduct in
undertaking her assigned work, particularly the nature and situs of
her work in relation to the petitioner’s workforce, thereby
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establishing the existence of an employer-employee relationship
between them.
On the issue of illegal dismissal, it ruled that respondent has
attained the status of a regular employee in her service with the
company. It noted that the NLRC found that no less than the
company’s corporate secretary certified that respondent is a
bonafide company employee and that she had a fixed schedule and
routine of work and was paid a monthly salary of P4,000.00; that
she served with petitioner for 15 years starting in 1983, buying and
cooking food served to company employees at lunch and merienda;
and that this work was usually necessary and desirable in the
regular business of the petitioner. It held that as a regular
employee, she enjoys the constitutionally guaranteed right to
security of tenure and that petitioner failed to discharge the burden
of proving that her dismissal on January 15, 1998 was for a just or
authorized cause and that the manner of dismissal complied with
the requirements under the law.
Finally, on petitioner’s other arguments relating to the alleged
irregularity of the second NLRC decision, i.e., the fact that
respondent’s motion for reconsideration was not under oath and
had no certification explaining why it was not resolved within the
prescribed period, it held that such violations relate to procedural
and non-jurisdictional matters that cannot assume primacy over the
substantive merits of the case and that they do not constitute
grave abuse of discretion amounting to lack or excess of jurisdiction
that would nullify the second NLRC decision.
The Court of Appeals denied petitioner’s contention that the
NLRC lost its jurisdiction to issue the second decision when it
received the order indicating the Court of Appeals’ initial action on
the first petition for certiorari that it filed. It ruled that the NLRC’s
action of issuing a decision in installments was not prohibited by its
own rules and that the need for a second decision was justified by
the fact that respondent’s own motion for reconsideration remained
unresolved in the first decision. Furthermore, it held that under
Section 7, Rule 65 of the Revised Rules of Court,12[12] the filing of a
petition for certiorari does not interrupt the course of the principal
case unless a temporary restraining order or a writ of preliminary
injunction has been issued against the public respondent from
further proceeding with the case.
From this decision, petitioner filed a motion for reconsideration
on February 22, 2005, which the Court of Appeals denied through a
resolution dated August 11, 2005.
Hence, the present petition for review.
The petitioner raises the following errors of law: (1) the Court
of Appeals erred in affirming the NLRC’s ruling that the respondent
was petitioner’s regular employee and not a domestic helper; (2)
the Court of Appeals erred in holding that petitioner was guilty of
illegal dismissal; and (3) the Court of Appeals erred when it held
that the issuance of the second NLRC decision is proper.
12
The petition must fail. We affirm that respondent was a regular
employee of the petitioner and that the latter was guilty of illegal
dismissal.
Before going into the substantive merits of the present
controversy, we shall first resolve the propriety of the issuance of
the second NLRC decision.
The petitioner contends that the respondent’s motion for
reconsideration, upon which the second NLRC decision was based,
was not under oath and did not contain a certification as to why it
was not decided on time as required under the New Rules of
Procedure of the NLRC.13[13] Furthermore, the former also raises
for the first time the contention that respondent’s motion was filed
beyond the ten (10)-calendar day period required under the same
Rules,14[14] since the latter received a copy of the first NLRC
decision on December 6, 2000, and respondent filed her motion
only on December 18, 2000. Thus, according to petitioner, the
respondent’s motion for reconsideration was a mere scrap of paper
and the second NLRC decision has no basis in law.
We do not agree.
It is well-settled that the application of technical rules of
procedure may be relaxed to serve the demands of substantial
justice, particularly in labor cases.15[15] Labor cases must be
decided according to justice and equity and the substantial merits
of the controversy.16[16] Rules of procedure are but mere tools
designed to facilitate the attainment of justice.17[17] Their strict
and rigid application, which would result in technicalities that tend
to frustrate rather than promote substantial justice, must always be
avoided.18[18]
This Court has consistently held that the requirement of
verification is formal, and not jurisdictional. Such requirement is
merely a condition affecting the form of the pleading, non-
compliance with which does not necessarily render it fatally
defective. Verification is simply intended to secure an assurance
that the allegations in the pleading are true and correct and not the
product of the imagination or a matter of speculation, and that the
pleading is filed in good faith.19[19] The court may order the
correction of the pleading if verification is lacking or act on the
pleading although it is not verified, if the attending circumstances
are such that strict compliance with the rules may be dispensed
with in order that the ends of justice may thereby be served.20[20]
13
14
15
16
17
18
19
20
Anent the argument that respondent’s motion for
reconsideration, on which the NLRC’s second decision was based,
was filed out of time, such issue was only brought up for the first
time in the instant petition where no new issues may be raised by a
party in his pleadings without offending the right to due process of
the opposing party.
Nonetheless, the petitioner asserts that the respondent
received a copy of the NLRC’s first decision on December 6, 2000,
and the motion for reconsideration was filed only on December 18,
2000, or two (2) days beyond the ten (10)-calendar day period
requirement under the New Rules of Procedure of the NLRC and
should not be allowed.21[21]
This contention must fail.
Under Article 22322[22] of the Labor Code, the decision of the
NLRC shall be final and executory after ten (10) calendar days from
the receipt thereof by the parties.
While it is an established rule that the perfection of an appeal
in the manner and within the period prescribed by law is not only
mandatory but jurisdictional, and failure to perfect an appeal has
the effect of rendering the judgment final and executory, it is
equally settled that the NLRC may disregard the procedural lapse
where there is an acceptable reason to excuse tardiness in the
taking of the appeal.23[23] Among the acceptable reasons
recognized by this Court are (a) counsel's reliance on the footnote
of the notice of the decision of the Labor Arbiter that "the aggrieved
party may appeal. . . within ten (10) working days";24[24] (b)
fundamental consideration of substantial justice;25[25] (c)
prevention of miscarriage of justice or of unjust enrichment, as
where the tardy appeal is from a decision granting separation pay
which was already granted in an earlier final decision;26[26] and (d)
special circumstances of the case combined with its legal
merits27[27] or the amount and the issue involved.28[28]
We hold that the particular circumstances in the case at bar, in
accordance with substantial justice, call for a liberalization of the
application of this rule. Notably, respondent’s last day for filing her
motion for reconsideration fell on December 16, 2000, which was a
Saturday. In a number of cases,29[29] we have ruled that if the
tenth day for perfecting an appeal fell on a Saturday, the appeal
shall be made on the next working day. The reason for this ruling is
21
22
23
24
25
26
27
28
29
that on Saturdays, the office of the NLRC and certain post offices
are closed. With all the more reason should this doctrine apply to
respondent’s filing of the motion for reconsideration of her cause,
which the NLRC itself found to be impressed with merit. Indeed,
technicality should not be permitted to stand in the way of
equitably and completely resolving the rights and obligations of the
parties for the ends of justice are reached not only through the
speedy disposal of cases but, more importantly, through a
meticulous and comprehensive evaluation of the merits of a case.
Finally, as to petitioner’s argument that the NLRC had already
lost its jurisdiction to decide the case when it filed its petition for
certiorari with the Court of Appeals upon the denial of its motion for
reconsideration, suffice it to state that under Section 7 of Rule
6530[30] of the Revised Rules of Court, the petition shall not
interrupt the course of the principal case unless a temporary
restraining order or a writ of preliminary injunction has been issued
against the public respondent from further proceeding with the
case. Thus, the mere pendency of a special civil action for
certiorari, in connection with a pending case in a lower court, does
not interrupt the course of the latter if there is no writ of
injunction.31[31] Clearly, there was no grave abuse of discretion on
the part of the NLRC in issuing its second decision which modified
the first, especially since it failed to consider the respondent’s
motion for reconsideration when it issued its first decision.
Having resolved the procedural matters, we shall now delve
into the merits of the petition to determine whether respondent is a
domestic helper or a regular employee of the petitioner, and
whether the latter is guilty of illegal dismissal.
Petitioner relies heavily on the affidavit of a certain Mr. Antonio
Tan and contends that respondent is the latter’s domestic helper
and not a regular employee of the company since Mr. Tan has a
separate and distinct personality from the petitioner. It maintains
that it did not exercise control and supervision over her functions;
and that it operates as a trading company and does not engage in
the restaurant business, and therefore respondent’s work as a
cook, which was not usually necessary or desirable to its usual line
of business or trade, could not make her its regular employee.
This contention fails to impress.
In Apex Mining Company, Inc. v. NLRC,32[32] this Court
held that a househelper in the staff houses of an industrial company
was a regular employee of the said firm. We ratiocinated that:
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms “househelper” or “domestic servant” are defined as follows:
“The term ‘househelper’ as used herein is synonymous to the term ‘domestic servant’ and shall refer to any person, whether male or female, who renders services in and about the employer’s home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer’s family.”
30
31
32
The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the employer’s home to minister exclusively to the personal comfort and enjoyment of the employer’s family. Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and similar househelps.
xxx
xxx
xxx
The criteria is the personal comfort and enjoyment of the family of the employer in the home of said employer. While it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in a home or in a company staffhouse may be similar in nature, the difference in their circumstances is that in the former instance they are actually serving the family while in the latter case, whether it is a corporation or a single proprietorship engaged in business or industry or any other agricultural or similar pursuit, service is being rendered in the staffhouses or within the premises of the business of the employer. In such instance, they are employees of the company or employer in the business concerned entitled to the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic servant is assigned to certain aspects of the business of the employer that such househelper or domestic servant may be considered as such an employee. The Court finds no merit in making any such distinction. The mere fact that the househelper or domestic servant is working within the premises of the business of the employer and in relation to or in connection with its business, as in its staffhouses for its guest or even for its officers and employees, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular employee of the employer and not as a mere family househelper or domestic servant as contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended.
In the case at bar, the petitioner itself admits in its position
paper33[33] that respondent worked at the company premises and
her duty was to cook and prepare its employees’ lunch and
merienda. Clearly, the situs, as well as the nature of respondent’s
work as a cook, who caters not only to the needs of Mr. Tan and his
family but also to that of the petitioner’s employees, makes her fall
squarely within the definition of a regular employee under the
doctrine enunciated in the Apex Mining case. That she works
within company premises, and that she does not cater exclusively
to the personal comfort of Mr. Tan and his family, is reflective of the
existence of the petitioner’s right of control over her functions,
which is the primary indicator of the existence of an employer-
employee relationship.
Moreover, it is wrong to say that if the work is not directly related to
the employer's business, then the person performing such work
could not be considered an employee of the latter. The
determination of the existence of an employer-employee
relationship is defined by law according to the facts of each case,
regardless of the nature of the activities involved.34[34] Indeed, it
would be the height of injustice if we were to hold that despite the
fact that respondent was made to cook lunch and merienda for the
petitioner’s employees, which work ultimately redounded to the
33
34
benefit of the petitioner corporation, she was merely a domestic
worker of the family of Mr. Tan.
We note the findings of the NLRC, affirmed by the Court of Appeals,
that no less than the company’s corporate secretary has certified
that respondent is a bonafide company employee;35[35] she had a
fixed schedule and routine of work and was paid a monthly salary of
P4,000.00;36[36] she served with the company for 15 years starting
in 1983, buying and cooking food served to company employees at
lunch and merienda, and that this service was a regular feature of
employment with the company.37[37]
Indubitably, the Court of Appeals, as well as the NLRC,
correctly held that based on the given circumstances, the
respondent is a regular employee of the petitioner.
Having determined that the respondent is petitioner’s regular
employee, we now proceed to ascertain the legality of her dismissal
from employment.
Petitioner contends that there was abandonment on
respondent’s part when she refused to report for work when the
corporation transferred to a new location in Caloocan City, claiming
that her poor eyesight would make long distance travel a problem.
Thus, it cannot be held guilty of illegal dismissal.
On the other hand, the respondent claims that when the
petitioner relocated, she was no longer called for duty and that
when she tried to report for work, she was told that her services
were no longer needed. She contends that the petitioner dismissed
her without a just or authorized cause and that she was not given
prior notice, hence rendering the dismissal illegal.
We rule for the respondent.
As a regular employee, respondent enjoys the right to security
of tenure under Article 27938[38] of the Labor Code and may only
be dismissed for a just39[39] or authorized40[40] cause, otherwise
the dismissal becomes illegal and the employee becomes entitled
to reinstatement and full backwages computed from the time
compensation was withheld up to the time of actual reinstatement.
Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment.41[41] It is a form of neglect
of duty; hence, a just cause for termination of employment by the
35
36
37
38
39
40
41
employer under Article 282 of the Labor Code, which enumerates
the just causes for termination by the employer.42[42] For a valid
finding of abandonment, these two factors should be present: (1)
the failure to report for work or absence without valid or justifiable
reason; and (2) a clear intention to sever employer-employee
relationship, with the second as the more determinative factor
which is manifested by overt acts from which it may be deduced
that the employee has no more intention to work.43[43] The intent
to discontinue the employment must be shown by clear proof that it
was deliberate and unjustified.44[44] This, the petitioner failed to
do in the case at bar.
Alongside the petitioner’s contention that it was the
respondent who quit her employment and refused to return to
work, greater stock may be taken of the respondent’s immediate
filing of her complaint with the NLRC. Indeed, an employee who
loses no time in protesting her layoff cannot by any reasoning be
said to have abandoned her work, for it is well-settled that the filing
of an employee of a complaint for illegal dismissal with a prayer for
reinstatement is proof enough of her desire to return to work, thus,
negating the employer’s charge of abandonment.45[45]
In termination cases, the burden of proof rests upon the
employer to show that the dismissal is for a just and valid cause;
failure to do so would necessarily mean that the dismissal was
illegal.46[46] The employer’s case succeeds or fails on the strength
of its evidence and not on the weakness of the employee’s
defense.47[47] If doubt exists between the evidence presented by
the employer and the employee, the scales of justice must be tilted
in favor of the latter.48[48]
IN VIEW WHEREOF, the petition is DENIED for lack of merit.
The assailed Decision dated January 31, 2005, and the Resolution
dated August 11, 2005, of the Court of Appeals in CA-G.R. SP Nos.
64577 and 68477 are AFFIRMED. Costs against petitioner.
SALLY MIGUEL, MATILDE ALMIRA, JURINDA AGONCILLO, ANACORETA AYUDA, PURITA BALINDAN, GILDA BARCO, ZENAIDA BARTOLO, JOSE BOLANTE, MERCEDES CASING, MYRNA CORDERO, ALFREDO DAGUNDON, TERESITA DAGUNDON, LEONOR ESPINELI, JUENITA GALLEVO, JOSEFH GARIBAY, ZENAIDA GATERS, MARITA GRAZA, OTILLA HADLOC, ERLINDA IBARRA, LORNA JANIOLA, ENGRACIA LACAMBRA, MERLIE LEANILLO, MIGUELA LIVELO, JANALITA LOPEZ, ROSEMARIE LOPO, AMELIA MENDOZA, JUDITH NIETO, NORA NIMO, JULIANA NUESTRO, THELMA ORTIZ, GLORIA PALARCA, SALVADOR PAASILAN, SANTIAGO PELLOSIS, NELIA PESTANO, SALVACION RICARIO, HILDA SALAYSAY, NELIDA SANTIAGO, ANACETA TAMUNDONG, GABRIELA TANEDO, EMMA TORRECAMPO, EDWIN VELASCO, GLORIA VELASCO, VICTORIA BOLANTE, SATURNINA ALAMAN, EMELITA ALMERA, VIRGINIA AMACIO, ROSALINDA BUENDIA, RIZALINA SAMINI, ESTER DELA PENA, EMELITA DELOS SANTOS, MILAGROS DIOSO, AMELIA DIPAD, JELLY INOLINO, LOLITA LLABUS, MARITES MARIANO, EUFEMIA MERCADO, JENNY MOLINO, SIONEDA ORNOS, MORLIE PALMIS, EMELIE SACANLE, ENAIDA SIMBULAN, EMMA VANIEGAS,
42
43
44
45
46
47
48
EVANGELINE BALTAZAR, VIRGINA AGPOLDO, JULIA MALANA, AGNES PINEDA, EDITNA CABIAO, DOLORES DIAZ, DOLORES MENDOZA, EMELIA MENDOZA, HERMIE SALVANIA, FELICIDAD LOPEZ, EDITHA CABRAL, NERY DELA CRUZ, ANGELITO FLORES, ANITA FLORES, MELBA PAHIMNAYAN, JACINTA TADIPA, LETICIA VILLANUEVA, ENITA NOLASCO, LERMA RELATO, LETACIA SARAMBAO, GLORIA BELLOSILLO, AMELITA VILLON, ASTERIO ALAMAN, ROBERTO VALERIO, REBECCA ALEMANIA, JOVITA BAQUILALA, TESSIE GARCIA, AMELIA PINTOY, VIRGINIA TEODOSIO, MA. AIDA ESTARIS, RHIETY SORIA, CARMEN CURA, NIDA AMPONG, CHARITO DE LEON, REMEDIOS PANDARAWAN, APOLONIA RIVERA, LETICIA PEREZ, DIOSALINE GOMEZ, ROSALINDA DAELISAN, MERELYN DOLORIEL, AGNES ISIP, ELVIRA MADRIAGA, EPIFANIO MALAGUENO, CONCEPCION MANANSALA, TERESITA MAYORES, LEVY MAJERA, ZENAIDA PANGILINAN, SUSAN PASACSAC, CELIA RAPIZ, VIOLY SANDANG, ADELAIDA SICAD, ALFREDO TORREFIEL, SOFIA TORREFIEL, ESTER VILLEGAS, ELMA ANTANG, DOMETILIA BARCEBAL, CLARITA SALA, MARCELINA BALUYOT, CLEOFE IGNACIO, PHOEBE BARGO, IMELDA CELANO, VENUS PEDREREA, ELVIRA MENDIOLA, EVELYN SALVADOR, LOLITA BERNABE, GLORIA CABANGANAN, ELVIRA VEDASTO, LUZVIMINDA, TORRES, IRANDA LABRADOR, FEDERICO BALIZA, JULIETA BALIZA, MARILOU LATOZA, BERNADETTE PONTERES, JULIETA TAYSON, IRENE BERCASIO, DONATO MENDOZA, BIBIANA CATIBOG, FLORANTE MENDOZA, REBECCA EDRALIN, SALLY BELAZON, EXEQUILA JORGE, EVANGELINE GANENAS, FE DUPAYA, LOLITA GATCHALIAN, ANA OVAL, ROSITA DESIATCO, MARLYN QUILANG, ANITA LIMBO, IMELDA ALMONGUERA, FE SEGUNDO, NITA FEDELIN, REBECCA FADREQUELA, TERESITA ALCEDO, ERLINDA YMANA, EVELYNDA ZAMORA, VIRGINIA PARAYNO, MARITA GUTIERREZ, MARGARITA CAPINIG, LUDIVINA CABOTESA, JOSEFINA TIMOLO, VIRGINIA ANCHETA, LORENA MALAGUENO, MALANA JULIA, MARILOU AGUILAR, ALEGA BRIGIDA, AMPONG LILIA, APIADO EMMA, ROMARIE BACOLOD, MONICO BARCEBAL, ELIZABETH ESCUREL, RENATO ESCUREL, LEODIVILLA LEBUDAN, MERCEDES MARFIL, ANICETA SAPURCO, SUSAN SARMIENTO, ADELA TABOR, and HERMINIA VALDEZ, petitioners, vs. JCT GROUP, INC.,* and VICENTE CUEVAS, respondents.
D E C I S I O N
PANGANIBAN, J.:
Labor arbiters are required to state the factual and legal bases of their decisions. They thereby conform to the requirement of due process and fair play, because parties to the controversy are informed of why and how such decisions were reached. When no factual findings support the conclusions made in a labor decision, a remand of the case for further proceedings may become necessary.
The Case
Before us is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of Court, challenging the October 15, 2002 Decision[2]and the March 21, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 51228. The assailed Decision disposed as follows:
“WHEREFORE, the petition is GIVEN DUE COURSE and the assailed decisions of the National Labor Relations Commission and the labor arbiter are ANNULED and SET ASIDE. Let this case be remanded to the Arbitration Branch of the National Labor Relations Commission for further proceedings.”[4]
The March 21, 2003 Resolution denied reconsideration.
The Facts
The facts are narrated by the CA as follows:
“For several years, Glorious Sun Garment Manufacturing Company (or ‘Glorious Sun’) was a garment exporter until it folded up in October 1994. Thereafter, De Soliel [sic][5] Apparel Manufacturing Corporation [or ‘De Soleil’] and American Inter-Fashion Corporation (or ‘AIFC’) took over Glorious Sun’s manufacturing plant, facilities and equipment and absorbed its employees, including the [petitioners].
“Following the 1986 EDSA Revolution, the Presidential Commission on Good Government (or ‘PCGG’) sequestered De Soleil and AIFC and took over their assets and operations.
“On April 24, 1989, JCT Group, Inc. (or ‘JCT’) and De Soleil, thru its Officer-In-Charge and Head of the PCGG Management Team, executed a Management and Operating Agreement (or ‘MOA’) for the purpose of servicing De Soleil’s export quota to ensure its rehabilitation and preserve its viability and profitability. The MOA,
which was for a period of one year commencing on May 1, 1989 and renewable yearly at the option of JCT, expired on May 1, 1990 as it was not renewed.
“In July 1990, De Soleil ceased business operations, effectively terminating [petitioners’] employment.
“In April 1993, [petitioners] filed complaints for illegal dismissal and payment of backwages and other monetary claims before the National Labor Relations Commission (or ‘NLRC’) Arbitration Branch against De Soleil, AIFC, PCGG, Glorious Sun, JCT, Nemesio Co and Vicente Cuevas III (or ‘Cuevas’). The cases were eventually consolidated.
“On May 26, 1993, JCT and Cuevas x x x filed a motion to dismiss founded on lack of jurisdiction over the subject matter of the action because of the absence of [an] employer-employee relationship between them and [petitioners].
“Without resolving the motion to dismiss, Labor Arbiter Vladimir P.L. Sampang rendered a decision dated April 18, 1995 disposing as follows:
’WHEREFORE, judgment is hereby rendered:
‘1) Declaring [De Soleil, AIFC, PCGG, Glorious Sun, JCT, Nemesio Co and Cuevas] jointly and severally guilty of illegal dismissal and to pay complainants backwages, separation pay, service incentive leave pay, 13th month pay, unpaid salaries as computed by the Research and Information Unit x x x;
‘2) Declaring [De Soleil, AIFC, PCGG, Glorious Sun, JCT, Nemesio Co and Cuevas] liable for the payment of attorney’s fees equivalent to ten (10%) percent of the total awards or P3,691,743.06.
“The monetary award, inclusive of attorney’s fees, aggregated P41,313,094.98 as per computation of the Research and Information Unit. Considering the amount involved, [Respondents JCT and Cuevas] and Glorious Sun filed separate motions with the NLRC for reduction of the appeal bond in order to appeal the labor arbiter’s decision.
“In an order dated September 20, 1995, the NLRC reduced the amount of the appeal bond to P5,000,000.00 [which respondents and Glorious Sun were each required to submit]. [Respondents] filed a motion for reconsideration of said order by way of further reduction of the bond to P500,000.00. However, the motion was denied per order dated April 15, 1996. [Respondents] elevated the matter to the Supreme Court via a petition for certiorari (G.R. No. 125749) but it was denied per resolution dated September 2, 1996. [Respondents’ petition was denied with finality in a resolution dated November 13, 1996.[6]]
“Meanwhile, on May 4, 1995, Glorious Sun and [respondents] appealed the labor arbiter’s decision to the NLRC. [Petitioners] filed a motion to dismiss both appeals on the ground that the same were not perfected for failure to post a bond as required [under] Art. 223 of the Labor Code.
“In a decision dated September 12, 1996, the NLRC modified the labor arbiter’s decision by absolving Glorious Sun from liability and dismissing [respondents’] appeal. x x x
“Aggrieved, [respondents] instituted [a] special civil action for certiorari before the Supreme Court. Conformably with the pronouncement in St. Martin Funeral Home vs. NLRC (295 SCRA 494), however, the petition was referred to the [CA] for appropriate action and disposition.”[7]
Ruling of the Court of Appeals
The CA reversed the Decision of the NLRC and remanded the case to the labor arbiter for further proceedings. The appellate court ruled that the circumstances presented factual questions whose resolution had to precede that of the issue of whether private respondents were liable to petitioners. It found no factual basis for the ruling that JCT had become the employer of petitioners after the cessation of operations of Glorious Sun. Similarly, the Decisions of the NLRC and the labor arbiter failed to explain the reason for holding Cuevas solidarily liable with AIF, De Soleil and JCT.[8]
Hence, this Petition.[9]
The Issue
Petitioners state the issues in this wise:
“1. Whether or not, [the] Court of Appeals committed grave abuse of discretion amounting to lack or x x x excess of jurisdiction in giving due course to x x x respondents’ Petition despite the said x x x respondents’ [failure] to perfect their appeal with the National Labor Relations Commission.
“2. Whether or not, [the] Court of Appeals committed grave abuse of discretion amounting to lack or x x x excess of jurisdiction in giving due course to x x x respondents’ Petition [when] the labor arbiter and the National Labor Relations Commission did not commit grave abuse of discretion in rendering their respective decisions.
“3. Whether or not, [the] Court of Appeals committed grave abuse of discretion amounting to lack or x x x excess of jurisdiction in giving due course to x x x respondents’ Petition despite the [fact that] x x x respondents failed to file a motion for reconsideration [of] the September 12, 1996 Decision of the National Labor Relations Commission.”[10]
The Court’s Ruling
The Petition has no merit.
First Issue:The NLRC’s Grave Abuse of Discretion
As the second issue is intertwined with the first and the third issues, it will be resolved first. Petitioners contend that the CA should not have remanded the case for further proceedings, because the labor arbiter and the NLRC had committed no grave abuse of discretion in their Decisions.[11]
We disagree.
Grave abuse of discretion implies such capricious and whimsical exercise of judgment as to be equivalent to lack or excess of jurisdiction. That is, power is arbitrarily or despotically exercised by reason of passion, prejudice, or personal hostility; and caprice is so patent or so gross as to amount to an evasion of a positive duty, or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.[12]
No Findings of Fact
In the present factual milieu, the labor arbiter and the NLRC gravely abused their discretion when they ruled in favor of herein petitioners without determining the existence of an employer-employee relationship between them and respondents. The Decisions were silent on why JCT and Cuevas were held liable. The following observations of the appellate court are in point:
“In finding for [petitioners], the labor arbiter considered them regular employees for the reason that ‘they performed duties, responsibilities and functions necessary and desirable to the business of garments manufacturing and exportation x x x’ and ‘had been also working x x x for more than one year at the time of the cessation of business operation.’
“Save for his conclusion that [petitioners] were regular employees, the labor arbiter made no determination whether there was employer-employee relationship between [respondents] and [petitioners] and, if so, whether [respondents] assumed the obligations of [petitioners’] previous employers. There is no dispute that given the nature of their functions and length of services, [petitioners] were regular employees. But the question is: who was/were their employer/s?
“x x x Moreover, it does not appear from the decisions of the NLRC and the labor arbiter that JCT x x x became the employer of [petitioners] by virtue of its MOA with De Soleil.
x x x x x x x x x
“The NLRC decision is silent on the basis for its ruling that JCT became the employer of [petitioners] after Glorious Sun ceased operations, save for its conclusion that petitioners ‘were absorbed by, or their work continued under x x x JCT’. Similarly, the NLRC decision, just like that of the labor arbiter, does not state the reason
for the decreed solidary liability of Cuevas x x x with JCT, De Soleil and AIF.
“Moreover, the computation [of] the monetary award totaling P37,557,317.08 (exclusive of attorney’s fees) covers a period starting on [petitioners’] initial employment (with Glorious Sun), some dating back to 1978. However, the NLRC made no finding that JCT (on the supposition that it became [petitioners’] employer pursuant to the MOA dated April 24, 1989) had assumed the obligations of petitioners’ previous employers, i.e., Glorious Sun, AIF and De Soleil.
“Given the factual backdrop of the case, several nagging questions have not been resolved. Among them: x x x Was there [an] employer-employee relationship between JCT and [petitioners] and, if so, when should such relationship be reckoned? x x x Why was Cuevas adjudged solidary liable with AIF, De Soleil and JCT?”[13]
The facts and the law on which decisions are based must be clearly and distinctly expressed.[14] The failure of the labor arbiter and the NLRC to express the basis for their Decisions was an evasion of their constitutional duty, an evasion that constituted grave abuse of discretion.
Relevant to the present case is Saballa v. National Labor Relations Commission,[15] which explained how the decision of an administrative body must be drawn:
“This Court has previously held that judges and arbiters should draw up their decisions and resolutions with due care, and make certain that they truly and accurately reflect their conclusions and their final dispositions. x x x. The same thing goes for the findings of fact made by the NLRC, as it is a settled rule that such findings are entitled to great respect and even finality when supported by substantial evidence; otherwise, they shall be struck down for being whimsical and capricious and arrived at with grave abuse of discretion. It is a requirement of due process and fair play that the parties to a litigation be informed of how it was decided, with an explanation of the factual and legal reasons that led to the conclusions of the court. A decision that does not clearly and distinctly state the facts and the law on which it is based leaves the parties in the dark as to how it was reached and is especially prejudicial to the losing party, who is unable to pinpoint the possible errors of the court for review by a higher tribunal.”[16]
Remand for Further Proceedings
Where a judgment fails to make findings of fact, the case may be remanded to the lower tribunal to enable it to determine them.[17] It is necessary to remand the present case for further proceedings, because the labor arbiter and the NLRC failed to make the factual findings needed to resolve the controversy.
The defense of respondents is anchored on an alleged lack of employer-employee relationship with petitioners as stipulated in the former’s MOA with De Soleil.[18] JCT further claims that any relationship with De Soleil and the latter’s employees was severed upon the termination of that Agreement.[19] It is therefore imperative to determine the nature of the MOA -- whether or not it partook only of a consultancy agreement, in which no employer-employee relationship existed between respondents and petitioners.
The test for determining an employer-employee relationship hinges on resolving who has the power to select employees, who pays for their wages, who has the power to dismiss them, and who exercises control in the methods and the results by which the work is accomplished.[20] The last factor, the “control test,” is the most important.[21] In resolving the status of an MOA, the test for determining an employer-employee relationship has to be applied.[22]
Indeed, the only way to find out whether Respondents JCT and Cuevas are liable to petitioners is by remanding the case to the lower court. To uphold the Decisions of the labor arbiter and the NLRC at this stage would amount to depriving respondents of property without due process. In sum, the CA did not commit reversible error in finding grave abuse of discretion on the part of the NLRC and the labor arbiter for their failure to state the facts upon which their conclusions had been based.
Remand in Recognition of the Policy Favoring Employees
To repeat, a decision with nothing to support it is a patent nullity.[23] It should be struck down and set aside as void.[24] Acting with utmost regard for the rights of petitioners, however, the CA did not outrightly set aside the Decisions of the NLRC and the labor arbiter. Instead, the CA remanded the case for further proceedings to allow petitioners to prove their claim of illegal dismissal. The remand of the case, instead of the dismissal of the Complaint, was beneficial to petitioners and was made in consideration of the policy to protect and promote the general welfare of employees.
Second Issue:Alleged Procedural Infirmities
The first and the third issues raised by petitioners refer to alleged procedural infirmities. They argue that because respondents allegedly failed to post the appeal bond, the latter failed to perfect their appeal to the NLRC.[25] Petitioners also argue that because respondents also failed to file a motion for reconsideration of the NLRC’s Decision,[26] the latter’s Petition for Certiorari filed with the CA should have been denied outright.
Posting of anAppeal Bond
Article 223 of the Labor Code regulates the posting of an appeal bond. The pertinent portion states as follows:
In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission, in the amount equivalent to the monetary award in the judgment appealed from.
This requirement is intended to discourage employers from using an appeal to delay or even evade their obligation to satisfy their employees’ just and lawful claims.[27] Such a requirement has been relaxed in several cases, however, following the rule that substantial justice is better served by allowing appeals on the merits.[28] The policy of labor laws is to liberally construe rules of procedure[29] and settle controversies according to their merits, not to dismiss them by reason of technicalities.[30]
In the present case, the Decision of the labor arbiter is a patent nullity, because it failed to state the factual and legal bases for its conclusions. The award granted -- the basis for the appeal bond -- was a staggering P37,557,359.08,[31] for which no factual findings against respondents had been made. On April 26, 1995, the latter filed with the NLRC an Urgent Motion for the Reduction of the Bond. The Motion was later elevated to this Court, which decided on it with finality only on November 13, 1996. Under the circumstances, the CA did not err in liberally construing the provision of the law requiring the filing of a bond and in holding that the NLRC should have given respondents ample time to post the appeal bond.
Filing of a Motion for Reconsideration
The requirement of a motion for reconsideration, as a prerequisite to the filing of a petition for certiorari, is waived under any of the following conditions: where the decision is a patent nullity, where the issue raised is one purely of law, or where the questions raised are exactly the same as those already squarely presented to and passed upon by the court a quo.[32] Taken together, the circumstances of the present controversy place the case within the exceptions to the rule requiring a motion for reconsideration. As the Court has declared above, the NLRC Decision is a patent nullity and would, if sustained, violate respondents’ right to due process.
Final Observation
The Court observes that the CA made a finding that the Decisions of the labor arbiter and the NLRC had included a monetary award for individuals who were not signatories to the Complaint.[33] Those individuals are not parties to the case and must thus be dropped therefrom.
The Arbitration Branch of the National Labor Relations Commission must determine whether there was an employer-employee relationship between the JCT Group, Inc., and Vicente Cuevas on the one hand and, on the other, petitioners who had signed the Complaint; and, if there was, when respondents’ liability should commence and when it should end.
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against petitioners.
SO ORDERED.
WACK WACK GOLF & COUNTRY CLUB, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, MARTINA G. CAGASAN, CARMENCITA F. DOMINGUEZ, and BUSINESS STAFFING AND MANAGEMENT, INC., respondents.
D E C I S I O N
CALLEJO, SR., J.:
This is a petition for review of the Resolution[1] of the Court of Appeals (CA) in CA-G.R. SP No. 63658, dismissing the petition for certiorari before it for being insufficient in form and the subsequent resolution denying the motion for reconsideration thereof.
The undisputed antecedent facts are as follows:
On November 29, 1996, a fire destroyed a large portion of the main clubhouse of the Wack Wack Golf and Country Club (Wack Wack), including its kitchen. In view of the reconstruction of the whole clubhouse complex, Wack Wack filed a notice with the Department of Labor and Employment (DOLE) on April 14, 1997 that it was going to suspend the operations of the Food and Beverage (F & B) Department one (1) month thereafter. Notices to 54 employees (out of a complement of 85 employees in the department) were also sent out, informing them that they need not report for work anymore after April 14, 1997 but that they would still be paid their salaries up to May 14, 1997. They were further told that they would be informed once full operations in Wack Wack resume.
The Wack Wack Golf Employees Union branded the suspension of operations of the F & B Department as arbitrary, discriminatory and constitutive of union-busting, so they filed a notice of strike with the DOLE’s National Conciliation and Mediation Board (NCMB). Several meetings between the officers of Wack Wack and the Union, headed by its President, Crisanto Baluyot, Sr., and assisted by its counsel, Atty. Pedro T. De Quiroz, were held until the parties entered into an amicable settlement. An Agreement[2] was forged whereby a special separation benefit/retirement package for interested Wack Wack employees, especially those in the F & B Department was offered. The terms and conditions thereof reads as follows:
1. The UNION and the affected employees of F & B who are members of the UNION hereby agree to accept the special separation benefit package agreed upon between the CLUB management on the one hand, and the UNION officers and the UNION lawyer on the other, in the amount equivalent to one-and-one-half months salary for every year of service, regardless of the number of years of service rendered. That, in addition, said employees shall also receive the other benefits due them, namely, the cash equivalent of unused vacation and sick leave credits, proportionate 13th month pay; and other benefits, if any, computed without premium;
2. That the affected F & B employees who have already signified intention to be separated from the service under the special separation benefit package shall receive their separation pay as soon as possible;
3. That the same package shall, likewise, be made available to other employees who are members of the bargaining unit and who may or may not be affected by future similar suspensions of operations. The UNION re-affirms and recognizes that it is the sole prerogative of the management of the Club to suspend part or all of its operations as may be necessitated by the exigencies of the situation and the general welfare of its membership. The closure of the West Course, which is scheduled for conversion to an All-Weather Championship golf course, is cited as an example. It is, however, agreed that if a sufficient number of employees, other than F & B employees, would apply for availment of the package within the next two months, the Club may no longer go through the process of formally notifying the Department of Labor. The processing and handling of benefits for these other employees shall be done over a transition period within one year;
4. All qualified employees who may have been separated from the service under the above package shall be considered under a priority basis for employment by concessionaires and/or contractors, and even by the Club upon full resumption of operations, upon the recommendation of the UNION. The Club may
even persuade an employee-applicant for availment under the package to remain on his/her job, or be assigned to another position.[3]
Respondent Carmencita F. Dominguez, who was then working in the Administrative Department of Wack Wack, was the first to avail of the special separation package.[4] Computed at 1½ months for every year of service pursuant to the Agreement, her separation pay amounted to P91,116.84, while economic benefits amounted to P6,327.53.[5] On September 18, 1997, Dominguez signed a Release and Quitclaim[6] in favor of Wack Wack.
Respondent Martina B. Cagasan was Wack Wack’s Personnel Officer who, likewise, volunteered to avail of the separation package.[7] On September 30, 1997, she received from Wack Wack the amount of P469,495.66 as separation pay and other economic benefits amounting to P17,010.50.[8] A Release and Quitclaim[9] was signed on September 30, 1997.
The last one to avail of the separation package was Crisanto Baluyot, Sr. who, in a Letter[10] dated January 16, 1998 addressed to Mr. Bienvenido Juan, Administrative Manager of Wack Wack, signified his willingness to avail of the said early retirement package. The total amount of P688,290.30[11] was received and the Release and Quitclaim[12] signed on May 14, 1998.
On October 15, 1997, Wack Wack entered into a Management Contract[13] with Business Staffing and Management, Inc. (BSMI), a corporation engaged in the business as Management Service Consultant undertaking and managing for a fee projects which are specialized and technical in character like marketing, promotions, merchandising, financial management, operation management and the like.[14] BSMI was to provide management services for Wack Wack in the following operational areas:
1. Golf operations management;2. Management and maintenance of building facilities;3 .Management of food and beverage operation;4. Management of materials and procurement functions;5. To provide and undertake administrative and support
services for the [said] projects.[15]
Pursuant to the Agreement, the retired employees of Wack Wack by reason of their experience were given priority by BSMI in hiring. On October 21, 1997, respondents Cagasan and Dominguez filed their respective applications[16] for employment with BSMI. They were eventually hired by BSMI to their former positions in Wack Wack as project employees and were issued probationary contracts.[17]
Aside from BSMI, Wack Wack also engaged several contractors which were assigned in various operating functions of the club, to wit:
1. Skills and Talent Employment Promotion (STEP) whose 90 workers are designated as locker attendants, golf bag attendants, nurses, messengers, technical support engineer, golf director, agriculturist, utilities and gardeners;
2. Marvel Manpower Agency - whose 19 employees are designated as sweepers, locker attendants, drive range attendant, telephone operator, workers and secretaries;
3 City Service Corporation – contractor for janitorial services for the whole club;
4. Microstar Business and Management Services, Inc. whose 15 employees are designated in the Finance and Accounting departments.[18]
Due to these various management service contracts, BSMI undertook an organizational analysis and manpower evaluation to determine its efficacy, and to streamline its operations. In the course of its assessment, BSMI saw that the positions of Cagasan and Dominguez were redundant. In the case of respondent Cagasan, her tasks as personnel officer were likewise being taken cared of by the different management service contractors; on the other hand, Dominguez’s work as telephone operator was taken over by the personnel of the accounting department. Thus, in separate Letters[19] dated February 27, 1998, the services of Dominguez and Cagasan were terminated. With respect to Baluyot, he applied for the position of Chief Porter on May 12, 1998. The position, however, was among those recommended to be abolished by the BSMI, so he was offered the position of Caddie Master Aide with a starting salary of P5,500.00 a month. Baluyot declined the offer. Pending Wack Wack’s approval of the proposed abolition of the position of Chief Porter, Baluyot was temporarily accepted to the position with a monthly salary of P12,000.00. In July 1998, Baluyot decided not to accept the position of Caddie Master Aide; thus, BSMI continued with its plan to abolish the said position of Chief Porter and Baluyot was dismissed from the service.
Thereafter, the three (3) employees filed their respective complaints with the National Labor Relations Commission (NLRC) for illegal dismissal and damages against Wack Wack and BSMI.
The complainants averred that they were dismissed without cause. They accepted the separation package upon the assurance that they would be given their former work and assignments once the Food and Beverage Department of Wack Wack resumes its operations. On the other hand, the respondents therein alleged that the dismissal of the complainants were made pursuant to a study and evaluation of the different jobs and positions and found them to be redundant.
In a Decision[20] dated January 25, 2000, the Labor Arbiter found that the dismissal of Dominguez and Cagasan was for a valid and authorized cause, and dismissed their complaints.
The position of personnel manager occupied by Martina Cagasan was redundated as it is allegedly not necessary, because her functions will be taken over [by] the field superintendent and the company’s personnel and operations manager. The work of Carmencita Dominguez on the other hand as telephone operator will be taken over by the accounting department personnel. Such move really are intended to streamline operations. While admittedly, they are still necessary in the operations of Wack Wack, their jobs can be assigned to some other personnel, who will be performing dual functions and does save Wack Wack money. This is feasible on account of the fact that they are functions pertaining to administrative work.[21]
As to Baluyot, however, the Labor Arbiter found that while the position of chief porter had been abolished, the caddie master aide had been created. Their functions were one and the same. The porters, upon instructions from the chief porter, are the ones who bring down the golf bags of the players from the vehicle. The caddie master receives them and counts the number of clubs inside the golf set. After the game, the same procedure is repeated before the golf sets are loaded once more into the vehicle.[22] The Labor Arbiter found that the dismissal of Baluyot as Chief Porter was unjustified and can not be considered redundant in the case at bar. It was a means resorted to in order to unduly sever Baluyot’s relationship with BSMI without justifiable cause. The Labor Arbiter therefore found Baluyot’s dismissal to be illegal. The dispositive portion of the decision reads as follows:
CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered dismissing the complaints of Carmencita F. Dominguez and Martina Cagasan for lack of merit. Finding Crisanto Baluyot’s dismissal to be illegal. Consequently, he should immediately be reinstated to his former position as Chief Porter or Caddie Master, and paid his backwages which, as of December 31, 1999, has accumulated in the sum of P180,000.00 by BSMI.
All other claims are dismissed for lack of merit.[23]
Since Baluyot no longer appealed the decision, complainants Dominguez and Cagasan filed a Partial Appeal on the ground of prima facie abuse of discretion on the part of the Labor Arbiter and serious errors in his findings of facts and law. Their claims were anchored on the Agreement between the Union and management, that they were promised to be rehired upon the full resumption of operations of Wack Wack. They asserted that Wack Wack and BSMI should not avoid responsibility to their employment, by conniving with each other to render useless and meaningless the Agreement.
BSMI also appealed to the NLRC, alleging that the Labor Arbiter committed grave abuse of discretion in finding Baluyot’s dismissal to be illegal, when in fact his position as Chief Porter was abolished pursuant to a bona fide reorganization of Wack Wack. It was not motivated by factors other than the promotion of the interest and welfare of the company.
On September 27, 2000, the NLRC rendered its Decision[24] ordering Wack Wack to reinstate Carmencita F. Dominguez and Martina Cagasan to their positions in respondent Wack Wack Golf & Country Club with full backwages and other benefits from the date of their dismissal until actually reinstated. It anchored its ruling on the Agreement dated June 16, 1997 reached between the Union and Wack Wack, particularly Section 4[25] thereof. The NLRC directed Wack Wack to reinstate the respondents and pay their backwages since “Business Staffing and Management, Inc. (BSMI) is a contractor who [merely] supplies workers to respondent Wack Wack. It has nothing to do with the grievance of the complainants with their employer, respondent Wack Wack.”
Wack Wack and BSMI filed a motion for reconsideration which was denied in the Resolution[26] dated December 15, 2000.
Wack Wack, now the petitioner, consequently filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 63658 alleging the following:
A. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND DENIAL OF DUE PROCESS IN HOLDING THAT RESPONDENTS CAGASAN AND DOMINGUEZ HAVE REGAINED THEIR JOBS OR EMPLOYMENT PURSUANT TO THE AGREEMENT BETWEEN PETITIONER AND WACK WACK GOLF EMPLOYEES UNION.
B. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND DENIAL OF DUE PROCESS IN RULING THAT RESPONDENT BSMI IS NOT AN INDEPENDENT CONTRACTOR BUT A MERE SUPPLIER OF WORKERS TO THE PETITIONER.
C. RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION AND DENIAL OF DUE PROCESS IN HOLDING PETITIONER LIABLE FOR THE REINSTATEMENT OF RESPONDENTS CAGASAN AND DOMINGUEZ AND FOR THE PAYMENT OF THEIR SUPPOSED BACKWAGES DESPITE THE ABSENCE OF EMPLOYER-EMPLOYEE RELATION BETWEEN THEM.[27]
Likewise, BSMI also assailed the resolutions of the NLRC and filed its own petition for certiorari with the CA, docketed as CA-G.R. SP No. 63553.[28] A perusal of the petition which is attached to the records reveal that BSMI ascribes grave abuse of discretion on the part of the NLRC in ruling that: (a) the private respondents have regained their employment pursuant to the Agreement between Wack Wack and the Wack Wack Golf Employees Union; (b) the dismissal of private respondents was made pursuant to the petitioner’s exercise of its management prerogatives; and (c) the petitioner (BSMI) is liable for the reinstatement of private respondents and the payment of their backwages.[29]
On April 3, 2001, the CA (Twelfth Division) dismissed the petition on the ground that the petitioner therein failed to attach an Affidavit of Service as required in Section 11, Rule 13 of the 1997 Rules of Civil Procedure. Moreover, the verification and certification against forum shopping was insufficient for having been executed by the general manager who claimed to be the duly-authorized representative of the petitioner, but did not show any proof of authority, i.e., a board resolution, to the effect.
A motion for reconsideration was, consequently, filed appending thereto the requisite documents of proof of authority. It asserted that in the interest of substantial justice, the CA should decide the case on its merits.
BSMI filed a Comment[30] to the Motion for Reconsideration of the petitioner, also urging the CA to set aside technicalities and to consider the legal issues involved: (a) whether or not there is a guaranty of employment in favor of the complainants under the Agreement between the petitioner and the Union; (b) whether or not the termination of the employment of the complainants, based on redundancy, is legal and valid; and (c) who are the parties liable for the reinstatement of the complainants and the payment of backwages. It further added that it shares the view of the petitioner, that the assailed resolutions of the NLRC are tainted with legal infirmities. For this reason, it was also constrained to file its own petition for certiorari with the CA, docketed as CA-G.R. SP No. 63553 pending with the Special Fourth Division, just to stress that there is no guaranty of perpetual employment in favor of the complainants.
On August 31, 2001, the CA denied petitioner’s motion for reconsideration.
The petitioner is now before the Court, assailing the twin resolutions of the CA. It points out that BSMI has filed its petition for certiorari before the CA one day late and yet, the Special Fourth Division admitted the petition in the interest of substantial justice, and directed the respondents to file a comment thereon;[31] whereas, in the instant case, the mere lack of proof of authority of Wack Wack’s General Manager to sign the certificate of non-forum shopping was considered fatal by the CA’s Twelfth Division. It further asserts that its petition for certiorari is meritorious, considering that the NLRC committed grave abuse of discretion in ordering Wack Wack to reinstate the respondents Cagasan and Dominguez, and to pay their backwages when indubitable evidence shows that the said respondents were no longer employees of Wack Wack when they filed their complaints with the Labor Arbiter.
There is merit in the petition.
In Novelty Philippines, Inc. v. Court of Appeals,[32] the Court recognized the authority of the general manager to sue on behalf of the corporation and to sign the requisite verification and certification of non-forum shopping. The general manager is also one person who is in the best position to know the state of affairs of the corporation. It was also error for the CA not to admit the requisite proof of authority when in the Novelty case, the Court ruled that the subsequent submission of the requisite documents constituted substantial compliance with procedural rules. There is ample jurisprudence holding that the subsequent and substantial compliance of an appellant may call for the relaxation of the rules of procedure in the interest of justice.[33] While it is true that rules of procedure are intended to promote rather than frustrate the ends of justice, and while the swift unclogging of court dockets is a laudable objective, it nevertheless must not be met at the expense of substantial justice.[34] It was, therefore, reversible error for the CA to have dismissed the petition for certiorari before it. The ordinary recourse for us to take is to remand the case to the CA for proper disposition on the merits; however, considering that the records are now before us, we deem it necessary to resolve the instant case in order to ensure harmony in the rulings and expediency.
Indeed, the merits of the case constitute special or compelling reasons for us to overlook the technical rules in this case. With the dismissal of its petition for certiorari before the CA, the petitioner by virtue of the NLRC decision is compelled to reinstate respondents Cagasan and Dominguez and pay their full backwages from the time of their dismissal until actual reinstatement when the attendant circumstances, however, show that the respondents had no cause of action against the petitioner for illegal dismissal and damages.
It must be recalled that said respondents availed of the special separation package offered by the petitioner. This special separation package was thought of and agreed by the two parties (Wack Wack and the Union) after a series of discussions and negotiations to avert any labor unrest due to the closure of Wack Wack.[35] Priority was given to the employees of the F & B Department, but was, likewise, offered to the other employees who may wish to avail of the separation package due to the reconstruction of Wack Wack. Respondents do not belong to the F & B Department and yet, on their own volition opted to avail of the special separation package. The applications which were similarly worded read as follows:
TO : WACK WACK GOLF & COUNTRY CLUBBOARD OF DIRECTORS AND MANAGEMENT
Based on the information that the Club and the employees’ Union have reached an agreement on a special separation benefit package equivalent to one-and-one-half months salary for every year of service, regardless of the number of years of service, for employees who have been affected and may be affected by ongoing as well as forthcoming Club renovation, construction and related activities and reportedly even for those who may not be affected but wish to avail of an early retirement under the above package arrangement, I hereby register my desire to be separated from the Club and receive the benefits under the above stated package.[36]
Thereafter, the respondents signed their respective release and quitclaims after receiving their money benefits.
It cannot be said that the respondents in the case at bar did not fully comprehend and realize the consequences of their acts. Herein respondents are not unlettered persons who need special protection. They held responsible positions in the petitioner-employer, so they presumably understood the contents of the documents they signed. There is no showing that the execution thereof was tainted with deceit or coercion. Further, the respondents were paid hefty amounts of separation pay indicating that their separation from the company was for a valuable consideration. Where the person making the waiver has done so voluntarily, with a full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as being a valid and binding undertaking.[37] As in contracts, these quitclaims amount to a valid and binding compromise agreement between the parties which deserve to be respected.[38]
We reiterate what was stated in the case of Periquet v. NLRC [39] that:
Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It
is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. …[40]
When the respondents voluntarily signed their quitclaims and accepted the separation package offered by the petitioner, they, thenceforth, already ceased to be employees of the petitioner. Nowhere does it appear in the Agreement that the petitioner assured the respondents of continuous employment in Wack Wack. Qualified employees were given priority in being hired by its concessionaires and/or contractors such as BSMI when it entered into a management contract with the petitioner.
This brings us to the threshold issue on whether or not BSMI is an independent contractor or a labor-only contractor. The NLRC posits that BSMI is merely a supplier of workers or a labor-only contractor; hence, the petitioner remains to be the principal employer of the respondents and liable for their reinstatement and payment of backwages.
The ruling of the NLRC is wrong. An independent contractor is one who undertakes “job contracting,” i.e., a person who: (a) carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (b) has substantial capital or investment in the form of tools, equipments, machineries, work premises and other materials which are necessary in the conduct of the business. Jurisprudential holdings are to the effect that in determining the existence of an independent contractor relationship, several factors may be considered, such as, but not necessarily confined to, whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of work; the control and supervision of the work to another; the employer’s power with respect to the hiring, firing, and payment of the contractor’s workers; the control of the premises; the duty to supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment.[41]
There is indubitable evidence showing that BSMI is an independent contractor, engaged in the management of projects, business operations, functions, jobs and other kinds of business ventures, and has sufficient capital and resources to undertake its principal business. It had provided management services to various industrial and commercial business establishments. Its Articles of Incorporation proves its sufficient capitalization. In December 1993, Labor Secretary Bienvenido Laguesma, in the case of In re Petition for Certification Election Among the Regular Rank-and-File Employees Workers of Byron-Jackson (BJ) Services International Incorporated, Federation of Free Workers (FFW)-Byron Jackson Services Employees Chapter,[42] recognized BSMI as an independent contractor. As a legitimate job contractor, there can be no doubt as to the existence of an employer-employee relationship between the contractor and the workers.[43]
BSMI admitted that it employed the respondents, giving the said retired employees some degree of priority merely because of their work experience with the petitioner, and in order to have a smooth transition of operations.[44] In accordance with its own recruitment policies, the respondents were made to sign applications for employment, accepting the condition that they were hired by BSMI as probationary employees only. Not being contrary to law, morals, good custom, public policy and public order, these employment contracts, which the parties are bound are considered valid. Unfortunately, after a study and evaluation of its personnel organization, BSMI was impelled to terminate the services of the respondents on the ground of redundancy. This right to hire and fire is another element of the employer-employee relationship[45] which actually existed between the respondents and BSMI, and not with Wack Wack.
There being no employer-employee relationship between the petitioner and respondents Cagasan and Dominguez, the latter have no cause of action for illegal dismissal and damages against the petitioner. Consequently, the petitioner cannot be validly ordered to reinstate the respondents and pay them their claims for backwages.
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals and the NLRC are SET ASIDE and REVERSED. The
complaints of respondents Cagasan and Dominguez are DISMISSED. No costs.
SO ORDERED.
Puno, (Chairman), Austria-M
PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS PETER HENRICHSEN, Petitioners, vs.KLAUS K. SCHONFELD, Respondent.
D E C I S I O N
CALLEJO, SR., J.:
Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 76563. The CA decision reversed the Resolution of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 029319-01, which, in turn, affirmed the Decision of the Labor Arbiter in NLRC NCR Case No. 30-12-04787-00 dismissing the complaint of respondent Klaus K. Schonfeld.
The antecedent facts are as follows:
Respondent is a Canadian citizen and was a resident of New Westminster, British Columbia, Canada. He had been a consultant in the field of environmental engineering and water supply and sanitation. Pacicon Philippines, Inc. (PPI) is a corporation duly established and incorporated in accordance with the laws of the Philippines. The primary purpose of PPI was to engage in the business of providing specialty and technical services both in and out of the Philippines.2 It is a subsidiary of Pacific Consultants International of Japan (PCIJ). The president of PPI, Jens Peter Henrichsen, who was also the director of PCIJ, was based in Tokyo, Japan. Henrichsen commuted from Japan to Manila and vice versa, as well as in other countries where PCIJ had business.
In 1997, PCIJ decided to engage in consultancy services for water and sanitation in the Philippines. In October 1997, respondent was employed by PCIJ, through Henrichsen, as Sector Manager of PPI in its Water and Sanitation Department. However, PCIJ assigned him as PPI sector manager in the Philippines. His salary was to be paid partly by PPI and PCIJ.
On January 7, 1998, Henrichsen transmitted a letter of employment to respondent in Canada, requesting him to accept the same and affix his conformity thereto. Respondent made some revisions in the letter of employment and signed the contract.3 He then sent a copy to Henrichsen. The letter of employment reads:
Mr. Klaus K. SchonfeldII-365 Ginger DriveNew Westminster, B.C.Canada V3L 5L5Tokyo 7
January 1998
Dear Mr. Schonfeld,
Letter of Employment
This Letter of Employment with the attached General Conditions of Employment constitutes the agreement under which you will be engaged by our Company on the terms and conditions defined hereunder. In case of any discrepancies or contradictions between this Letter of Employment and the General Conditions of Employment, this Letter of Employment will prevail.
You will, from the date of commencement, be ["seconded"] to our subsidiary Pacicon Philippines, Inc. in Manila, hereinafter referred as Pacicon. Pacicon will provide you with a separate contract, which will define that part of the present terms and conditions for which Pacicon is responsible. In case of any discrepancies or contradictions between the present Letter of Employment and the contract with Pacicon Philippines, Inc. or in the case that Pacicon should not live up to its obligations, this Letter of Employment will prevail.
1. Project Country: The Philippines with possible short-term assignments in other countries.
2. Duty Station: Manila, the Philippines.
3. Family Status: Married.
4. Position: Sector Manager, Water and Sanitation.
5. Commencement: 1st October 1997.
6. Remuneration: US$7,000.00 per month. The amount will be paid partly as a local salary (US$2,100.00 per month) by Pacicon and partly as an offshore salary (US$4,900.00) by PCI to bank accounts to be nominated by you.
A performance related component corresponding to 17.6% of the total annual remuneration, subject to satisfactory performance against agreed tasks and targets, paid offshore.
7. Accommodation: The company will provide partly furnished accommodation to a rent including association fees, taxes and VAT not exceeding the Pesos equivalent of US$2,900.00 per month.
8. Transportation: Included for in the remuneration.
9. Leave Travels: You are entitled to two leave travels per year.
10. Shipment of Personal
Effects: The maximum allowance is US$4,000.00.
11. Mobilization
Travel: Mobilization travel will be from New Westminster, B.C., Canada.
This letter is send (sic) to you in duplicate; we kindly request you to sign and return one copy to us.
Yours sincerely,
Pacific Consultants InternationalJens Peter Henrichsen
Above terms and conditions accepted
Date: 2 March 1998
(Sgd.)Klaus Schonfeld
as annotated and initialed4
Section 21 of the General Conditions of Employment appended to the letter of employment reads:
21 Arbitration
Any question of interpretation, understanding or fulfillment of the conditions of employment, as well as any question arising between the Employee and the Company which is in consequence of or connected with his employment with the Company and which can not be settled amicably, is to be finally settled, binding to both parties through written submissions, by the Court of Arbitration in London.5
Respondent arrived in the Philippines and assumed his position as PPI Sector Manager. He was accorded the status of a resident alien.
As required by Rule XIV (Employment of Aliens) of the Omnibus Rules Implementing the Labor Code, PPI applied for an Alien Employment Permit (Permit) for respondent before the Department of Labor and Employment (DOLE). It appended respondent’s contract of employment to the application.1awphi1.net
On February 26, 1999, the DOLE granted the application and issued the Permit to respondent. It reads:
Republic of the PhilippinesDepartment of Labor & EmploymentNational Capital Region
ALIEN EMPLOYMENT PERMIT
ISSUED TO: SCHONFELD, KLAUS KURT
DATE OF BIRTH: January 11, 1942 NATIONALITY: Canadian
POSITION: VP – WATER & SANITATION
EMPLOYER: PACICON PHILIPPINES, INC.
ADDRESS: 27/F Rufino Pacific Towers Bldg., Ayala Ave., Makati City
P E R M I T
ISSUED ON: February 26, 1999 SIGNATURE OF BEARER:
VALID UNTIL: January 7, 2000 (Sgd.)
APPROVED: BIENVENIDO S. LAGUESMA
By: MAXIMO B. ANITOREGIONAL DIRECTOR
(Emphasis supplied)6
Respondent received his compensation from PPI for the following periods: February to June 1998, November to December 1998, and January to August 1999. He was also reimbursed by PPI for the expenses he incurred in connection with his work as sector manager. He reported for work in Manila except for occasional assignments abroad, and received instructions from Henrichsen.7
On May 5, 1999, respondent received a letter from Henrichsen informing him that his employment had been terminated effective August 4, 1999 for the reason that PCIJ and PPI had not been successful in the water and sanitation sector in the Philippines.8
However, on July 24, 1999, Henrichsen, by electronic mail,9
requested respondent to stay put in his job after August 5, 1999, until such time that he would be able to report on certain projects and discuss all the opportunities he had developed.10 Respondent continued his work with PPI until the end of business hours on October 1, 1999.
Respondent filed with PPI several money claims, including unpaid salary, leave pay, air fare from Manila to Canada, and cost of shipment of goods to Canada. PPI partially settled some of his claims (US$5,635.99), but refused to pay the rest.
On December 5, 2000, respondent filed a Complaint11 for Illegal Dismissal against petitioners PPI and Henrichsen with the Labor Arbiter. It was docketed as NLRC-NCR Case No. 30-12-04787-00.
In his Complaint, respondent alleged that he was illegally dismissed; PPI had not notified the DOLE of its decision to close one of its departments, which resulted in his dismissal; and they failed to notify him that his employment was terminated after August 4, 1999. Respondent also claimed for separation pay and other unpaid benefits. He alleged that the company acted in bad faith and disregarded his rights. He prayed for the following reliefs:
1. Judgment be rendered in his favor ordering the respondents to reinstate complainant to his former position without loss of seniority and other privileges and benefits, and to pay his full backwages from the time compensation was with held (sic) from him up to the time of his actual reinstatement. In the alternative, if reinstatement is no longer feasible, respondents must pay the complainant full backwages, and separation pay equivalent to one month pay for every year of service, or in the amount of US$16,400.00 as separation pay;
2. Judgment be rendered ordering the respondents to pay the outstanding monetary obligation to complainant in the amount of US$10,131.76 representing the balance of unpaid salaries, leave pay, cost of his air travel and shipment of goods from Manila to Canada; and
3. Judgment be rendered ordering the respondent company to pay the complainant damages in the amount of no less than US $10,000.00 and to pay 10% of the total monetary award as attorney’s fees, and costs.
Other reliefs just and equitable under the premises are, likewise, prayed for.12 1awphi1.net
Petitioners filed a Motion to Dismiss the complaint on the following grounds: (1) the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was improperly laid. It averred that respondent was a Canadian citizen, a transient expatriate who had left the Philippines. He was employed and dismissed by PCIJ, a foreign corporation with principal office in Tokyo, Japan. Since respondent’s cause of action was based on his letter of employment executed in Tokyo, Japan dated January 7, 1998, under the principle of lex loci contractus, the complaint should have been filed in Tokyo, Japan. Petitioners claimed that respondent did not offer any justification for filing his complaint against PPI before the NLRC in the Philippines. Moreover, under Section 12 of the General Conditions of Employment appended to the letter of employment dated January 7, 1998, complainant and PCIJ had agreed that any employment-related dispute should be brought before the London Court of Arbitration. Since even the Supreme Court had already ruled that such an agreement on venue is valid, Philippine courts have no jurisdiction.13
Respondent opposed the Motion, contending that he was employed by PPI to work in the Philippines under contract separate from his January 7, 1998 contract of employment with PCIJ. He insisted that his employer was PPI, a Philippine-registered corporation; it is inconsequential that PPI is a wholly-owned subsidiary of PCIJ because the two corporations have separate and distinct personalities; and he received orders and instructions from Henrichsen who was the president of PPI. He further insisted that the principles of forum non conveniens and lex loci contractus do not apply, and that although he is a Canadian citizen, Philippine Labor Laws apply in this case.
Respondent adduced in evidence the following contract of employment dated January 9, 1998 which he had entered into with Henrichsen:
Mr. Klaus K. Schonfeld
II-365 Ginger DriveNew Westminster, B.C.Canada V3L 5L5
Manila 9 January, 1998
Dear Mr. Schonfeld,
Letter of Employment
This Letter of Employment with the attached General Conditions of Employment constitutes the agreement, under which you will be engaged by Pacicon Philippines, Inc. on the terms and conditions defined hereunder.
1. Project Country: The Philippines with possible assignments in other countries.
2. Duty Station: Manila, the Philippines.
3. Family Status: Married.
4. Position: Sector Manager – Water and Sanitation Sector.
5. Commencement: 1 January, 1998.
6. Remuneration: US$3,100.00 per month payable to a bank account to be nominated by you.
7. Accommodation: The company will provide partly furnished accommodation to a rent including association fees, taxes and VAT not exceeding the Pesos equivalent of US$2300.00 per month.
8. Transportation: Included for in the remuneration.
9. Shipment of Personal The maximum allowance is US$2500.00 in Effects: connection with initial shipment of personal effects from Canada.
10. Mobilization Travel: Mobilization travel will be from New Westminster, B.C., Canada.
This letter is send (sic) to you in duplicate; we kindly request you to sign and return one copy to us.
Yours sincerely,
Pacicon Philippines, Inc.Jens Peter HenrichsenPresident14
According to respondent, the material allegations of the complaint, not petitioners’ defenses, determine which quasi-judicial body has jurisdiction. Section 21 of the Arbitration Clause in the General Conditions of Employment does not provide for an exclusive venue where the complaint against PPI for violation of the Philippine Labor Laws may be filed. Respondent pointed out that PPI had adopted two inconsistent positions: it was first alleged that he should have filed his complaint in Tokyo, Japan; and it later insisted that the complaint should have been filed in the London Court of Arbitration.15
In their reply, petitioners claimed that respondent’s employer was PCIJ, which had exercised supervision and control over him, and not PPI. Respondent was dismissed by PPI via a letter of Henrichsen under the letterhead of PCIJ in Japan.16 The letter of employment dated January 9, 1998 which respondent relies upon did not bear his (respondent’s) signature nor that of Henrichsen.
On August 2, 2001, the Labor Arbiter rendered a decision granting petitioners’ Motion to Dismiss. The dispositive portion reads:
WHEREFORE, finding merit in respondents’ Motion to Dismiss, the same is hereby granted. The instant complaint filed by the complainant is dismissed for lack of merit.
SO ORDERED.17
The Labor Arbiter found, among others, that the January 7, 1998 contract of employment between respondent and PCIJ was controlling; the Philippines was only the "duty station" where Schonfeld was required to work under the General Conditions of Employment. PCIJ remained respondent’s employer despite his having been sent to the Philippines. Since the parties had agreed that any differences regarding employer-employee relationship should be submitted to the jurisdiction of the court of arbitration in London, this agreement is controlling.
On appeal, the NLRC agreed with the disquisitions of the Labor Arbiter and affirmed the latter’s decision in toto.18
Respondent then filed a petition for certiorari under Rule 65 with the CA where he raised the following arguments:
I
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE LABOR ARBITER’S DECISION CONSIDERING THAT:
A. PETITIONER’S TRUE EMPLOYER IS NOT PACIFIC CONSULTANTS INTERNATIONAL OF JAPAN BUT RESPONDENT COMPANY, AND THEREFORE, THE LABOR ARBITER HAS JURISDICTION OVER THE INSTANT CASE; AND
B. THE PROPER VENUE FOR THE PRESENT COMPLAINT IS THE ARBITRATION BRANCH OF THE NLRC AND NOT THE COURT OF ARBITRATION IN LONDON.
II
WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION WHEN IT AFFIRMED THE DISMISSAL OF THE COMPLAINT CONSIDERING THAT PETITIONER’S TERMINATION FROM EMPLOYMENT IS ILLEGAL:
A. THE CLOSURE OF RESPONDENT COMPANY’S WATER AND SANITATION SECTOR WAS NOT BONA FIDE.
B. ASSUMING ARGUENDO THAT THE CLOSURE OF RESPONDENT COMPANY’S WATER AND SANITATION SECTOR WAS JUSTIFIABLE, PETITIONER’S DISMISSAL WAS INEFFECTUAL AS THE DEPARTMENT OF LABOR AND EMPLOYMENT (DOLE) AND PETITIONER WAS NOT NOTIFIED THIRTY (30) DAYS BEFORE THE ALLEGED CLOSURE.19
Respondent averred that the absence or existence of a written contract of employment is not decisive of whether he is an employee of PPI. He maintained that PPI, through its president Henrichsen, directed his work/duties as Sector Manager of PPI; proof of this was his letter-proposal to the Development Bank of the Philippines for PPI to provide consultancy services for the Construction Supervision of the Water Supply and Sanitation component of the World Bank-Assisted LGU Urban Water and Sanitation Project.20 He emphasized that as gleaned from Alien Employment Permit (AEP) No. M-029908-5017 issued to him by DOLE on February 26, 1999, he is an employee of PPI. It was PPI president Henrichsen who terminated his employment; PPI also paid his salary and reimbursed his expenses related to transactions abroad. That PPI is a wholly-owned subsidiary of PCIJ is of no moment because the two corporations have separate and distinct personalities.
The CA found the petition meritorious. Applying the four-fold test21 of determining an employer-employee relationship, the CA declared that respondent was an employee of PPI. On the issue of venue, the appellate court declared that, even under the January 7, 1998 contract of employment, the parties were not precluded from bringing a case related thereto in other venues. While there was, indeed, an agreement that issues between the parties were to be resolved in the London Court of Arbitration, the venue is not exclusive, since there is no stipulation that the complaint cannot be filed in any other forum other than in the Philippines.
On November 25, 2004, the CA rendered its decision granting the petition, the decretal portion of which reads:
WHEREFORE, the petition is GRANTED in that the assailed Resolutions of the NLRC are hereby REVERSED and SET ASIDE. Let this case be REMANDED to the Labor Arbiter a quo for disposition of the case on the merits.
SO ORDERED.22
A motion for the reconsideration of the above decision was filed by PPI and Henrichsen, which the appellate court denied for lack of merit.23
In the present recourse, PPI and Henrichsen, as petitioners, raise the following issues:
I
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT AN EMPLOYMENT RELATIONSHIP EXISTED BETWEEN PETITIONERS AND RESPONDENT DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND WAS MERELY "SECONDED" TO PETITIONERS SINCE HIS WORK ASSIGNMENT WAS IN MANILA.
II
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE LABOR ARBITER A QUO HAS JURISDICTION OVER RESPONDENT’S CLAIM DESPITE THE UNDISPUTED FACT THAT RESPONDENT, A FOREIGN NATIONAL, WAS HIRED ABROAD BY A FOREIGN CORPORATION, EXECUTED HIS EMPLOYMENT CONTRACT ABROAD, AND HAD AGREED THAT ANY DISPUTE BETWEEN THEM "SHALL BE FINALLY SETTLED BY THE COURT OF ARBITRATION IN LONDON."24
Petitioners fault the CA for reversing the findings of the Labor Arbiter and the NLRC. Petitioners aver that the findings of the Labor Arbiter, as affirmed by the NLRC, are conclusive on the CA. They maintain that it is not within the province of the appellate court in a petition for certiorari to review the facts and evidence on record since there was no conflict in the factual findings and conclusions of the lower tribunals. Petitioners assert that such findings and conclusions, having been made by agencies with expertise on the subject matter, should be deemed binding and conclusive. They contend that it was the PCIJ which employed respondent as an employee; it merely seconded him to petitioner PPI in the Philippines, and assigned him to work in Manila as Sector Manager. Petitioner PPI, being a wholly-owned subsidiary of PCIJ, was never the employer of respondent.
Petitioners assert that the January 9, 1998 letter of employment which respondent presented to prove his employment with petitioner PPI is of doubtful authenticity since it was unsigned by the purported parties. They insist that PCIJ paid respondent’s salaries and only coursed the same through petitioner PPI. PPI, being its subsidiary, had supervision and control over respondent’s work, and had the responsibilities of monitoring the "daily administration" of respondent. Respondent cannot rely on the pay slips, expenses claim forms, and reimbursement memoranda to prove that he was an employee of petitioner PPI because these documents are of doubtful authenticity.
Petitioners further contend that, although Henrichsen was both a director of PCIJ and president of PPI, it was he who signed the termination letter of respondent upon instructions of PCIJ. This is buttressed by the fact that PCIJ’s letterhead was used to inform him that his employment was terminated. Petitioners further assert that all work instructions came from PCIJ and that petitioner PPI only served as a "conduit." Respondent’s Alien Employment Permit stating that petitioner PPI was his employer is but a necessary consequence of his being "seconded" thereto. It is not sufficient proof that petitioner PPI is respondent’s employer. The entry was only made to comply with the DOLE requirements.
There being no evidence that petitioner PPI is the employer of respondent, the Labor Arbiter has no jurisdiction over respondent’s complaint.
Petitioners aver that since respondent is a Canadian citizen, the CA erred in ignoring their claim that the principlesof forum non conveniens and lex loci contractus are applicable. They also point out that the principal office, officers and staff of PCIJ are stationed in Tokyo, Japan; and the contract of employment of respondent was executed in Tokyo, Japan.
Moreover, under Section 21 of the General Conditions for Employment incorporated in respondent’s January 7, 1998 letter of employment, the dispute between respondent and PCIJ should be settled by the court of arbitration of London. Petitioners claim that the words used therein are sufficient to show the exclusive and restrictive nature of the stipulation on venue.
Petitioners insist that the U.S. Labor-Management Act applies only to U.S. workers and employers, while the Labor Code of the Philippines applies only to Filipino employers and Philippine-based employers and their employees, not to PCIJ. In fine, the jurisdictions of the NLRC and Labor Arbiter do not extend to foreign workers who executed employment agreements with foreign employers abroad, although "seconded" to the Philippines.25
In his Comment,26 respondent maintains that petitioners raised factual issues in their petition which are proscribed under Section 1, Rule 45 of the Rules of Court. The finding of the CA that he had been an employee of petitioner PPI and not of PCIJ is buttressed by his documentary evidence which both the Labor Arbiter and the NLRC ignored; they erroneously opted to dismiss his complaint on the basis of the letter of employment and Section 21 of the General Conditions of Employment. In contrast, the CA took into account the evidence on record and applied case law correctly.
The petition is denied for lack of merit.
It must be stressed that in resolving a petition for certiorari, the CA is not proscribed from reviewing the evidence on record. Under Section 9 of Batas Pambansa Blg. 129, as amended by R.A. No. 7902, the CA is empowered to pass upon the evidence, if and when necessary, to resolve factual issues.27 If it appears that the Labor Arbiter and the NLRC misappreciated the evidence to such an extent as to compel a contrary conclusion if such evidence had been properly appreciated, the factual findings of such tribunals cannot be given great respect and finality.28
Inexplicably, the Labor Arbiter and the NLRC ignored the documentary evidence which respondent appended to his pleadings showing that he was an employee of petitioner PPI; they merely focused on the January 7, 1998 letter of employment and Section 21 of the General Conditions of Employment.
Petitioner PPI applied for the issuance of an AEP to respondent before the DOLE. In said application, PPI averred that respondent is its employee. To show that this was the case, PPI appended a copy of respondent’s employment contract. The DOLE then granted the application of PPI and issued the permit.
It bears stressing that under the Omnibus Rules Implementing the Labor Code, one of the requirements for the issuance of an
employment permit is the employment contract. Section 5, Rule XIV (Employment of Aliens) of the Omnibus Rules provides:
SECTION 1. Coverage. – This rule shall apply to all aliens employed or seeking employment in the Philippines and the present or prospective employers.
SECTION 2. Submission of list. – All employers employing foreign nationals, whether resident or non-resident, shall submit a list of nationals to the Bureau indicating their names, citizenship, foreign and local address, nature of employment and status of stay in the Philippines.
SECTION 3. Registration of resident aliens. – All employed resident aliens shall register with the Bureau under such guidelines as may be issued by it.
SECTION 4. Employment permit required for entry. – No alien seeking employment, whether as a resident or non-resident, may enter the Philippines without first securing an employment permit from the Ministry. If an alien enters the country under a non-working visa and wishes to be employed thereafter, he may only be allowed to be employed upon presentation of a duly approved employment permit.
SECTION 5. Requirements for employment permit applicants. – The application for an employment permit shall be accompanied by the following:
(a) Curriculum vitae duly signed by the applicant indicating his educational background, his work experience and other data showing that he possesses technical skills in his trade or profession.
(b) Contract of employment between the employer and the principal which shall embody the following, among others:
1. That the non-resident alien worker shall comply with all applicable laws and rules and regulations of the Philippines;
2. That the non-resident alien worker and the employer shall bind themselves to train at least two (2) Filipino understudies for a period to be determined by the Minister; and
3. That he shall not engage in any gainful employment other than that for which he was issued a permit.
(c) A designation by the employer of at least two (2) understudies for every alien worker. Such understudies must be the most ranking regular employees in the section or department for which the expatriates are being hired to insure the actual transfer of technology.
Under Section 6 of the Rule, the DOLE may issue an alien employment permit based only on the following:
(a) Compliance by the applicant and his employer with the requirements of Section 2 hereof;
(b) Report of the Bureau Director as to the availability or non-availability of any person in the Philippines who is competent and willing to do the job for which the services of the applicant are desired;
(c) His assessment as to whether or not the employment of the applicant will redound to the national interest;
(d) Admissibility of the alien as certified by the Commission on Immigration and Deportation;
(e) The recommendation of the Board of Investments or other appropriate government agencies if the applicant will be employed in preferred areas of investments or in accordance with the imperative of economic development.
Thus, as claimed by respondent, he had an employment contract with petitioner PPI; otherwise, petitioner PPI would not have filed an application for a Permit with the DOLE. Petitioners are thus estopped from alleging that the PCIJ, not petitioner PPI, had been the employer of respondent all along.
We agree with the conclusion of the CA that there was an employer-employee relationship between petitioner PPI and respondent using the four-fold test. Jurisprudence is firmly settled
that whenever the existence of an employment relationship is in dispute, four elements constitute the reliable yardstick: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer’s power to control the employee’s conduct. It is the so-called "control test" which constitutes the most important index of the existence of the employer-employee relationship–that is, whether the employer controls or has reserved the right to control the employee not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Stated otherwise, an employer-employee relationship exists where the person for whom the services are performed reserves the right to control not only the end to be achieved but also the means to be used in reaching such end.29 We quote with approval the following ruling of the CA:
[T]here is, indeed, substantial evidence on record which would erase any doubt that the respondent company is the true employer of petitioner. In the case at bar, the power to control and supervise petitioner’s work performance devolved upon the respondent company. Likewise, the power to terminate the employment relationship was exercised by the President of the respondent company. It is not the letterhead used by the company in the termination letter which controls, but the person who exercised the power to terminate the employee. It is also inconsequential if the second letter of employment executed in the Philippines was not signed by the petitioner. An employer-employee relationship may indeed exist even in the absence of a written contract, so long as the four elements mentioned in the Mafinco case are all present.30
The settled rule on stipulations regarding venue, as held by this Court in the vintage case of Philippine Banking Corporation v. Tensuan,31 is that while they are considered valid and enforceable, venue stipulations in a contract do not, as a rule, supersede the general rule set forth in Rule 4 of the Revised Rules of Court in the absence of qualifying or restrictive words. They should be considered merely as an agreement or additional forum, not as limiting venue to the specified place. They are not exclusive but, rather permissive. If the intention of the parties were to restrict venue, there must be accompanying language clearly and categorically expressing their purpose and design that actions between them be litigated only at the place named by them.32
In the instant case, no restrictive words like "only," "solely," "exclusively in this court," "in no other court save —," "particularly," "nowhere else but/except —," or words of equal import were stated in the contract.33 It cannot be said that the court of arbitration in London is an exclusive venue to bring forth any complaint arising out of the employment contract.
Petitioners contend that respondent should have filed his Complaint in his place of permanent residence, or where the PCIJ holds its principal office, at the place where the contract of employment was signed, in London as stated in their contract. By enumerating possible venues where respondent could have filed his complaint, however, petitioners themselves admitted that the provision on venue in the employment contract is indeed merely permissive.
Petitioners’ insistence on the application of the principle of forum non conveniens must be rejected. The bare fact that respondent is a Canadian citizen and was a repatriate does not warrant the application of the principle for the following reasons:
First. The Labor Code of the Philippines does not include forum non conveniens as a ground for the dismissal of the complaint.34
Second. The propriety of dismissing a case based on this principle requires a factual determination; hence, it is properly considered as defense.35
Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of Appeals,36 this Court held that:
x x x [a] Philippine Court may assume jurisdiction over the case if it chooses to do so; provided, that the following requisites are met: (1) that the Philippine Court is one to which the parties may conveniently resort to; (2) that the Philippine Court is in a position to make an intelligent decision as to the law and the facts; and, (3) that the Philippine Court has or is likely to have power to enforce its decision. x x x
Admittedly, all the foregoing requisites are present in this case.
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 76563 is AFFIRMED. This case is
REMANDED to the Labor Arbiter for disposition of the case on the merits. Cost against petitioners.
SO ORDERED.
PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs. RICARDO DE VERA, respondent.
D E C I S I O N
GARCIA, J.:
Before us is this appeal by way of a petition for review on certiorari from the 12 September 2002 Decision[1] and the 13 February 2003 Resolution[2] of the Court of Appeals in CA-G.R. SP No. 65178, upholding the finding of illegal dismissal by the National Labor Relations Commission against petitioner.
As culled from the records, the pertinent facts are:
Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of communication services and allied activities, while respondent Ricardo De Vera is a physician by profession whom petitioner enlisted to attend to the medical needs of its employees. At the crux of the controversy is Dr. De Vera’s status vis a vis petitioner when the latter terminated his engagement.
It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981,[3] offered his services to the petitioner, therein proposing his plan of works required of a practitioner in industrial medicine, to include the following:
1. Application of preventive medicine including periodic check-up of employees;
2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for consultation services to employees;
3. Management and treatment of employees that may necessitate hospitalization including emergency cases and accidents;
4. Conduct pre-employment physical check-up of prospective employees with no additional medical fee;
5. Conduct home visits whenever necessary;
6. Attend to certain medical administrative function such as accomplishing medical forms, evaluating conditions of employees applying for sick leave of absence and subsequently issuing proper certification, and all matters referred which are medical in nature.
The parties agreed and formalized respondent’s proposal in a document denominated as RETAINERSHIP CONTRACT[4] which will be for a period of one year subject to renewal, it being made clear therein that respondent will cover “the retainership the Company previously had with Dr. K. Eulau” and that respondent’s “retainer fee” will be at P4,000.00 a month. Said contract was renewed yearly.[5] The retainership arrangement went on from 1981 to 1994 with changes in the retainer’s fee. However, for the years 1995 and 1996, renewal of the contract was only made verbally.
The turning point in the parties’ relationship surfaced in December 1996 when Philcom, thru a letter[6] bearing on the subject boldly written as “TERMINATION – RETAINERSHIP CONTRACT”, informed De Vera of its decision to discontinue the latter’s “retainer’s contract with the Company effective at the close of business hours of December 31, 1996” because management has decided that it would be more practical to provide medical services to its employees through accredited hospitals near the company premises.
On 22 January 1997, De Vera filed a complaint for illegal dismissal before the National Labor Relations Commission (NLRC), alleging that that he had been actually employed by Philcom as its company physician since 1981 and was dismissed without due process. He averred that he was designated as a “company physician on retainer basis” for reasons allegedly known only to Philcom. He likewise professed that since he was not conversant with labor laws, he did not give much attention to the designation as anyway he worked on a full-time basis and was paid a basic monthly salary plus fringe benefits, like any other regular employees of Philcom.
On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a decision[7] dismissing De Vera’s complaint for lack of merit, on the rationale that as a “retained physician” under a valid contract mutually agreed upon by the parties, De Vera was an “independent contractor” and that he “was not dismissed but rather his contract with [PHILCOM] ended when said contract was not renewed after December 31, 1996”.
On De Vera’s appeal to the NLRC, the latter, in a decision[8] dated 23 October 2000, reversed (the word used is “modified”) that of the Labor Arbiter, on a finding that De Vera is Philcom’s “regular employee” and accordingly directed the company to reinstate him to his former position without loss of seniority rights and privileges and with full backwages from the date of his dismissal until actual reinstatement. We quote the dispositive portion of the decision:
WHEREFORE, the assailed decision is modified in that respondent is ordered to reinstate complainant to his former position without loss of seniority rights and privileges with full backwages from the date of his dismissal until his actual reinstatement computed as follows:
Backwages:
a) Basic SalaryFrom Dec. 31, 1996 to Apr. 10, 2000 = 39.33 mos.P44,400.00 x 39.33 mos.
P1,750,185.00b) 13th Month Pay:1/12 of P1,750,185.00
145,848.75c) Travelling allowance:P1,000.00 x 39.33 mos.
39,330.00
GRAND TOTAL P1,935,363.75
The decision stands in other aspects.
SO ORDERED.
With its motion for reconsideration having been denied by the NLRC in its order of 27 February 2001,[9] Philcom then went to the Court of Appeals on a petition for certiorari, thereat docketed as CA-G.R. SP No. 65178, imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC when it reversed the findings of the labor arbiter and awarded thirteenth month pay and traveling allowance to De Vera even as such award had no basis in fact and in law.
On 12 September 2002, the Court of Appeals rendered a decision,[10] modifying that of the NLRC by deleting the award of traveling allowance, and ordering payment of separation pay to De Vera in lieu of reinstatement, thus:
WHEREFORE, premises considered, the assailed judgment of public respondent, dated 23 October 2000, is MODIFIED. The award of traveling allowance is deleted as the same is hereby DELETED. Instead of reinstatement, private respondent shall be paid separation pay computed at one (1) month salary for every year of service computed from the time private respondent commenced his employment in 1981 up to the actual payment of the backwages and separation pay. The awards of backwages and 13th month pay STAND.
SO ORDERED.
In time, Philcom filed a motion for reconsideration but was denied by the appellate court in its resolution of 13 February 2003.[11]
Hence, Philcom’s present recourse on its main submission that -
THE COURT OF APPEALS ERRED IN SUSTAINING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION AND RENDERING THE QUESTIONED DECISION AND RESOLUTION IN A WAY THAT IS NOT IN ACCORD WITH THE FACTS AND APPLICABLE LAWS AND JURISPRUDENCE WHICH DISTINGUISH LEGITIMATE JOB CONTRACTING AGREEMENTS FROM THE EMPLOYER-EMPLOYEE RELATIONSHIP.
We GRANT.
Under Rule 45 of the Rules of Court, only questions of law may be reviewed by this Court in decisions rendered by the Court of Appeals. There are instances, however, where the Court departs from this rule and reviews findings of fact so that substantial justice may be served. The exceptional instances are where:
“xxx xxx xxx (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the Court of Appeals are contrary to those of the trial court; (8) said findings of facts are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondents; and (10) the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record.”[12]
As we see it, the parties’ respective submissions revolve on the primordial issue of whether an employer-employee relationship exists between petitioner and respondent, the existence of which is, in itself, a question of fact[13] well within the province of the NLRC. Nonetheless, given the reality that the NLRC’s findings are at odds with those of the labor arbiter, the Court, consistent with its ruling in Jimenez vs. National Labor Relations Commission,[14] is constrained to look deeper into the attendant circumstances obtaining in this case, as appearing on record.
In a long line of decisions,[15] the Court, in determining the existence of an employer-employee relationship, has invariably adhered to the four-fold test, to wit: [1] the selection and engagement of the employee; [2] the payment of wages; [3] the power of dismissal; and [4] the power to control the employee’s conduct, or the so-called “control test”, considered to be the most important element.
Applying the four-fold test to this case, we initially find that it was respondent himself who sets the parameters of what his duties would be in offering his services to petitioner. This is borne by no less than his 15 May 1981 letter[16] which, in full, reads:
“May 15, 1981
Mrs. Adela L. VicenteVice President, Industrial RelationsPhilCom, Paseo de RoxasMakati, Metro Manila
M a d a m :
I shall have the time and effort for the position of Company physician with your corporation if you deemed it necessary. I have the necessary qualifications, training and experience required by such position and I am confident that I can serve the best interests of your employees, medically.
My plan of works and targets shall cover the duties and responsibilities required of a practitioner in industrial medicine which includes the following:
1. Application of preventive medicine including periodic check-up of employees;
2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours daily for consultation services to employees;
3. Management and treatment of employees that may necessitate hospitalization including emergency cases and accidents;
4. Conduct pre-employment physical check-up of prospective employees with no additional medical fee;
5. Conduct home visits whenever necessary;
6. Attend to certain medical administrative functions such as accomplishing medical forms, evaluating conditions of employees applying for sick leave of absence and subsequently issuing proper certification, and all matters referred which are medical in nature.
On the subject of compensation for the services that I propose to render to the corporation, you may state an offer based on your belief that I can very well qualify for the job having worked with your organization for sometime now.
I shall be very grateful for whatever kind attention you may extend on this matter and hoping that it will merit acceptance, I remain
Very truly yours,(signed)RICARDO V. DE VERA, M.D.”
Significantly, the foregoing letter was substantially the basis of the labor arbiter’s finding that there existed no employer-employee relationship between petitioner and respondent, in addition to the following factual settings:
The fact that the complainant was not considered an employee was recognized by the complainant himself in a signed letter to the respondent dated April 21, 1982 attached as Annex G to the respondent’s Reply and Rejoinder. Quoting the pertinent portion of said letter:
‘To carry out your memo effectively and to provide a systematic and workable time schedule which will serve the best interests of both the present and absent employee, may I propose an extended two-hour service (1:00-3:00 P.M.) during which period I can devote ample time to both groups depending upon the urgency of the situation. I shall readjust my private schedule to be available for the herein proposed extended hours, should you consider this proposal.
As regards compensation for the additional time and services that I shall render to the employees, it is dependent on your evaluation of the merit of my proposal and your confidence on my ability to carry out efficiently said proposal.’
The tenor of this letter indicates that the complainant was proposing to extend his time with the respondent and seeking additional compensation for said extension. This shows that the respondent PHILCOM did not have control over the schedule of the complainant as it [is] the complainant who is proposing his own schedule and asking to be paid for the same. This is proof that the complainant understood that his relationship with the respondent PHILCOM was a retained physician and not as an employee. If he were an employee he could not negotiate as to his hours of work.
The complainant is a Doctor of Medicine, and presumably, a well-educated person. Yet, the complainant, in his position paper, is claiming that he is not conversant with the law and did not give much attention to his job title- on a ‘retainer basis’. But the same complainant admits in his affidavit that his service for the respondent was covered by a retainership contract [which] was renewed every year from 1982 to 1994. Upon reading the contract dated September 6, 1982, signed by the complainant himself (Annex ‘C’ of Respondent’s Position Paper), it clearly states that is a retainership contract. The retainer fee is indicated thereon and the duration of the contract for one year is also clearly indicated in paragraph 5 of the Retainership Contract. The complainant cannot claim that he was unaware that the ‘contract’ was good only for one year, as he signed the same without any objections. The complainant also accepted its renewal every year thereafter until 1994. As a literate person and educated person, the complainant cannot claim that he does not know what contract he signed and that it was renewed on a year to year basis.[17]
The labor arbiter added the indicia, not disputed by respondent, that from the time he started to work with petitioner, he never was included in its payroll; was never deducted any contribution for remittance to the Social Security System (SSS); and was in fact subjected by petitioner to the ten (10%) percent withholding tax for his professional fee, in accordance with the National Internal Revenue Code, matters which are simply inconsistent with an employer-employee relationship. In the precise words of the labor arbiter:
“xxx xxx xxx After more than ten years of services to PHILCOM, the complainant would have noticed that no SSS deductions were
made on his remuneration or that the respondent was deducting the 10% tax for his fees and he surely would have complained about them if he had considered himself an employee of PHILCOM. But he never raised those issues. An ordinary employee would consider the SSS payments important and thus make sure they would be paid. The complainant never bothered to ask the respondent to remit his SSS contributions. This clearly shows that the complainant never considered himself an employee of PHILCOM and thus, respondent need not remit anything to the SSS in favor of the complainant.”[18]
Clearly, the elements of an employer-employee relationship are wanting in this case. We may add that the records are replete with evidence showing that respondent had to bill petitioner for his monthly professional fees.[19] It simply runs against the grain of common experience to imagine that an ordinary employee has yet to bill his employer to receive his salary.
We note, too, that the power to terminate the parties’ relationship was mutually vested on both. Either may terminate the arrangement at will, with or without cause.[20]
Finally, remarkably absent from the parties’ arrangement is the element of control, whereby the employer has reserved the right to control the employee not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished.[21]
Here, petitioner had no control over the means and methods by which respondent went about performing his work at the company premises. He could even embark in the private practice of his profession, not to mention the fact that respondent’s work hours and the additional compensation therefor were negotiated upon by the parties.[22] In fine, the parties themselves practically agreed on every terms and conditions of respondent’s engagement, which thereby negates the element of control in their relationship. For sure, respondent has never cited even a single instance when petitioner interfered with his work.
Yet, despite the foregoing, all of which are extant on record, both the NLRC and the Court of Appeals ruled that respondent is petitioner’s regular employee at the time of his separation.
Partly says the appellate court in its assailed decision:
Be that as it may, it is admitted that private respondent’s written ‘retainer contract’ was renewed annually from 1981 to 1994 and the alleged ‘renewal’ for 1995 and 1996, when it was allegedly terminated, was verbal.
Article 280 of the Labor code (sic) provides:
‘The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.’
‘An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one (1) year of service, whether such is continuous or broken, shall be considered a regular with respect to the activity in which he is employed and his employment shall continue while such activity exists.’
Parenthetically, the position of company physician, in the case of petitioner, is usually necessary and desirable because the need for medical attention of employees cannot be foreseen, hence, it is necessary to have a physician at hand. In fact, the importance and desirability of a physician in a company premises is recognized by Art. 157 of the Labor Code, which requires the presence of a physician depending on the number of employees and in the case at bench, in petitioner’s case, as found by public respondent, petitioner employs more than 500 employees.
Going back to Art. 280 of the Labor Code, it was made therein clear that the provisions of a written agreement to the contrary notwithstanding or the existence of a mere oral agreement, if the employee is engaged in the usual business or trade of the employer, more so, that he rendered service for at least one year, such employee shall be considered as a regular employee. Private
respondent herein has been with petitioner since 1981 and his employment was not for a specific project or undertaking, the period of which was pre-determined and neither the work or service of private respondent seasonal. (Emphasis by the CA itself).
We disagree to the foregoing ratiocination.
The appellate court’s premise that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. For, we take it that any agreement may provide that one party shall render services for and in behalf of another, no matter how necessary for the latter’s business, even without being hired as an employee. This set-up is precisely true in the case of an independent contractorship as well as in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the appellate court, is not the yardstick for determining the existence of an employment relationship. As it is, the provision merely distinguishes between two (2) kinds of employees, i.e., regular and casual. It does not apply where, as here, the very existence of an employment relationship is in dispute.[23]
Buttressing his contention that he is a regular employee of petitioner, respondent invokes Article 157 of the Labor Code, and argues that he satisfies all the requirements thereunder. The provision relied upon reads:
ART. 157. Emergency medical and dental services. – It shall be the duty of every employer to furnish his employees in any locality with free medical and dental attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the number of employees exceeds fifty (50) but not more than two hundred (200) except when the employer does not maintain hazardous workplaces, in which case the services of a graduate first-aider shall be provided for the protection of the workers, where no registered nurse is available. The Secretary of Labor shall provide by appropriate regulations the services that shall be required where the number of employees does not exceed fifty (50) and shall determine by appropriate order hazardous workplaces for purposes of this Article;
(b) The services of a full-time registered nurse, a part-time physician and dentist, and an emergency clinic, when the number of employees exceeds two hundred (200) but not more than three hundred (300); and
(c) The services of a full-time physician, dentist and full-time registered nurse as well as a dental clinic, and an infirmary or emergency hospital with one bed capacity for every one hundred (100) employees when the number of employees exceeds three hundred (300).
In cases of hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay in the premises of the establishment for at least two (2) hours, in the case of those engaged on part-time basis, and not less than eight (8) hours in the case of those employed on full-time basis. Where the undertaking is nonhazardous in nature, the physician and dentist may be engaged on retained basis, subject to such regulations as the Secretary of Labor may prescribe to insure immediate availability of medical and dental treatment and attendance in case of emergency.
Had only respondent read carefully the very statutory provision invoked by him, he would have noticed that in non-hazardous workplaces, the employer may engage the services of a physician “on retained basis.” As correctly observed by the petitioner, while it is true that the provision requires employers to engage the services of medical practitioners in certain establishments depending on the number of their employees, nothing is there in the law which says that medical practitioners so engaged be actually hired as employees,[24] adding that the law, as written, only requires the employer “to retain”, not employ, a part-time physician who needed to stay in the premises of the non-hazardous workplace for two (2) hours.[25]
Respondent takes no issue on the fact that petitioner’s business of telecommunications is not hazardous in nature. As such, what applies here is the last paragraph of Article 157 which, to stress, provides that the employer may engage the services of a physician and dentist “on retained basis”, subject to such regulations as the Secretary of Labor may prescribe. The successive “retainership” agreements of the parties definitely hue to the very statutory provision relied upon by respondent.
Deeply embedded in our jurisprudence is the rule that courts may not construe a statute that is free from doubt. Where the law is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed.[26] As it is, Article 157 of the Labor Code clearly and unequivocally allows employers in non-hazardous establishments to engage “on retained basis” the service of a dentist or physician. Nowhere does the law provide that the physician or dentist so engaged thereby becomes a regular employee. The very phrase that they may be engaged “on retained basis”, revolts against the idea that this engagement gives rise to an employer-employee relationship.
With the recognition of the fact that petitioner consistently engaged the services of respondent on a retainer basis, as shown by their various “retainership contracts”, so can petitioner put an end, with or without cause, to their retainership agreement as therein provided.[27]
We note, however, that even as the contracts entered into by the parties invariably provide for a 60-day notice requirement prior to termination, the same was not complied with by petitioner when it terminated on 17 December 1996 the verbally-renewed retainership agreement, effective at the close of business hours of 31 December 1996.
Be that as it may, the record shows, and this is admitted by both parties,[28] that execution of the NLRC decision had already been made at the NLRC despite the pendency of the present recourse. For sure, accounts of petitioner had already been garnished and released to respondent despite the previous Status Quo Order[29] issued by this Court. To all intents and purposes, therefore, the 60-day notice requirement has become moot and academic if not waived by the respondent himself.
WHEREFORE, the petition is GRANTED and the challenged decision of the Court of Appeals REVERSED and SET ASIDE. The 21 December 1998 decision of the labor arbiter is REINSTATED.
No pronouncement as to costs.
SO ORDERED.
PEDRO CHAVEZ, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC. and ALVIN LEE, Plant Manager, respondents.
D E C I S I O N
CALLEJO, SR., J.:
Before the Court is the petition for review on certiorari of the Resolution[1] dated December 15, 2000 of the Court of Appeals (CA) reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485. The assailed resolution reinstated the Decision dated July 10, 1998 of the National Labor Relations Commission (NLRC), dismissing the complaint for illegal dismissal filed by herein petitioner Pedro Chavez. The said NLRC decision similarly reversed its earlier Decision dated January 27, 1998 which, affirming that of the Labor Arbiter, ruled that the petitioner had been illegally dismissed by respondents Supreme Packaging, Inc. and Mr. Alvin Lee.
The case stemmed from the following facts:
The respondent company, Supreme Packaging, Inc., is in the business of manufacturing cartons and other packaging materials for export and distribution. It engaged the services of the petitioner, Pedro Chavez, as truck driver on October 25, 1984. As such, the petitioner was tasked to deliver the respondent company’s products from its factory in Mariveles, Bataan, to its various customers, mostly in Metro Manila. The respondent company furnished the petitioner with a truck. Most of the petitioner’s delivery trips were made at nighttime, commencing at 6:00 p.m. from Mariveles, and returning thereto in the afternoon two or three days after. The deliveries were made in accordance with the routing slips issued by respondent company indicating the order, time and urgency of delivery. Initially, the petitioner was paid the sum of P350.00 per trip. This was later adjusted to P480.00 per trip and, at the time of his alleged dismissal, the petitioner was receiving P900.00 per trip.
Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent company’s plant manager, his (the petitioner’s) desire to avail himself of the benefits that the regular employees were receiving such as overtime pay, nightshift
differential pay, and 13th month pay, among others. Although he promised to extend these benefits to the petitioner, respondent Lee failed to actually do so.
On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration Branch No. III of the NLRC in San Fernando, Pampanga. Before the case could be heard, respondent company terminated the services of the petitioner. Consequently, on May 25, 1995, the petitioner filed an amended complaint against the respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, 13th month pay, among others. The case was docketed as NLRC Case No. RAB-III-02-6181-95.
The respondents, for their part, denied the existence of an employer-employee relationship between the respondent company and the petitioner. They averred that the petitioner was an independent contractor as evidenced by the contract of service which he and the respondent company entered into. The said contract provided as follows:
That the Principal [referring to Supreme Packaging, Inc.], by these presents, agrees to hire and the Contractor [referring to Pedro Chavez], by nature of their specialized line or service jobs, accepts the services to be rendered to the Principal, under the following terms and covenants heretofore mentioned:
1. That the inland transport delivery/hauling activities to be performed by the contractor to the principal, shall only cover travel route from Mariveles to Metro Manila. Otherwise, any change to this travel route shall be subject to further agreement by the parties concerned.
2. That the payment to be made by the Principal for any hauling or delivery transport services fully rendered by the Contractor shall be on a per trip basis depending on the size or classification of the truck being used in the transport service, to wit:
a) If the hauling or delivery service shall require a truck of six wheeler, the payment on a per trip basis from Mariveles to Metro Manila shall be THREE HUNDRED PESOS (P300.00) and EFFECTIVE December 15, 1984.
b) If the hauling or delivery service require a truck of ten wheeler, the payment on a per trip basis, following the same route mentioned, shall be THREE HUNDRED FIFTY (P350.00) Pesos and Effective December 15, 1984.
3. That for the amount involved, the Contractor will be to [sic] provide for [sic] at least two (2) helpers;
4. The Contractor shall exercise direct control and shall be responsible to the Principal for the cost of any damage to, loss of any goods, cargoes, finished products or the like, while the same are in transit, or due to reckless [sic] of its men utilized for the purpose above mentioned;
5. That the Contractor shall have absolute control and disciplinary power over its men working for him subject to this agreement, and that the Contractor shall hold the Principal free and harmless from any liability or claim that may arise by virtue of the Contractor’s non-compliance to the existing provisions of the Minimum Wage Law, the Employees Compensation Act, the Social Security System Act, or any other such law or decree that may hereafter be enacted, it being clearly understood that any truck drivers, helpers or men working with and for the Contractor, are not employees who will be indemnified by the Principal for any such claim, including damages incurred in connection therewith;
6. This contract shall take effect immediately upon the signing by the parties, subject to renewal on a year-to-year basis.[2]
This contract of service was dated December 12, 1984. It was subsequently renewed twice, on July 10, 1989 and September 28, 1992. Except for the rates to be paid to the petitioner, the terms of the contracts were substantially the same. The relationship of the respondent company and the petitioner was allegedly governed by this contract of service.
The respondents insisted that the petitioner had the sole control over the means and methods by which his work was accomplished. He paid the wages of his helpers and exercised control over them. As such, the petitioner was not entitled to regularization because he was not an employee of the respondent company. The respondents, likewise, maintained that they did not dismiss the petitioner. Rather, the severance of his contractual
relation with the respondent company was due to his violation of the terms and conditions of their contract. The petitioner allegedly failed to observe the minimum degree of diligence in the proper maintenance of the truck he was using, thereby exposing respondent company to unnecessary significant expenses of overhauling the said truck.
After the parties had filed their respective pleadings, the Labor Arbiter rendered the Decision dated February 3, 1997, finding the respondents guilty of illegal dismissal. The Labor Arbiter declared that the petitioner was a regular employee of the respondent company as he was performing a service that was necessary and desirable to the latter’s business. Moreover, it was noted that the petitioner had discharged his duties as truck driver for the respondent company for a continuous and uninterrupted period of more than ten years.
The contract of service invoked by the respondents was declared null and void as it constituted a circumvention of the constitutional provision affording full protection to labor and security of tenure. The Labor Arbiter found that the petitioner’s dismissal was anchored on his insistent demand to be regularized. Hence, for lack of a valid and just cause therefor and for their failure to observe the due process requirements, the respondents were found guilty of illegal dismissal. The dispositive portion of the Labor Arbiter’s decision states:
WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring respondent SUPREME PACKAGING, INC. and/or MR. ALVIN LEE, Plant Manager, with business address at BEPZ, Mariveles, Bataan guilty of illegal dismissal, ordering said respondent to pay complainant his separation pay equivalent to one (1) month pay per year of service based on the average monthly pay of P10,800.00 in lieu of reinstatement as his reinstatement back to work will not do any good between the parties as the employment relationship has already become strained and full backwages from the time his compensation was withheld on February 23, 1995 up to January 31, 1997 (cut-off date) until compliance, otherwise, his backwages shall continue to run. Also to pay complainant his 13th month pay, night shift differential pay and service incentive leave pay hereunder computed as follows:
a) Backwages ………………….. P248,400.00b) Separation Pay ………….…... P140,400.00c) 13th month pay ………….……P 10,800.00d) Service Incentive Leave Pay .. 2,040.00 TOTAL P401,640.00
Respondent is also ordered to pay ten (10%) of the amount due the complainant as attorney’s fees.
SO ORDERED.[3]
The respondents seasonably interposed an appeal with the NLRC. However, the appeal was dismissed by the NLRC in its Decision[4] dated January 27, 1998, as it affirmed in toto the decision of the Labor Arbiter. In the said decision, the NLRC characterized the contract of service between the respondent company and the petitioner as a “scheme” that was resorted to by the respondents who, taking advantage of the petitioner’s unfamiliarity with the English language and/or legal niceties, wanted to evade the effects and implications of his becoming a regularized employee.[5]
The respondents sought reconsideration of the January 27, 1998 Decision of the NLRC. Acting thereon, the NLRC rendered another Decision[6] dated July 10, 1998, reversing its earlier decision and, this time, holding that no employer-employee relationship existed between the respondent company and the petitioner. In reconsidering its earlier decision, the NLRC stated that the respondents did not exercise control over the means and methods by which the petitioner accomplished his delivery services. It upheld the validity of the contract of service as it pointed out that said contract was silent as to the time by which the petitioner was to make the deliveries and that the petitioner could hire his own helpers whose wages would be paid from his own account. These factors indicated that the petitioner was an independent contractor, not an employee of the respondent company.
The NLRC ruled that the contract of service was not intended to circumvent Article 280 of the Labor Code on the regularization of employees. Said contract, including the fixed period of employment contained therein, having been knowingly and voluntarily entered into by the parties thereto was declared valid citing Brent School, Inc. v. Zamora.[7] The NLRC, thus, dismissed the petitioner’s complaint for illegal dismissal.
The petitioner sought reconsideration of the July 10, 1998 Decision but it was denied by the NLRC in its Resolution dated September 7, 1998. He then filed with this Court a petition for certiorari, which was referred to the CA following the ruling in St. Martin Funeral Home v. NLRC.[8]
The appellate court rendered the Decision dated April 28, 2000, reversing the July 10, 1998 Decision of the NLRC and reinstating the decision of the Labor Arbiter. In the said decision, the CA ruled that the petitioner was a regular employee of the respondent company because as its truck driver, he performed a service that was indispensable to the latter’s business. Further, he had been the respondent company’s truck driver for ten continuous years. The CA also reasoned that the petitioner could not be considered an independent contractor since he had no substantial capital in the form of tools and machinery. In fact, the truck that he drove belonged to the respondent company. The CA also observed that the routing slips that the respondent company issued to the petitioner showed that it exercised control over the latter. The routing slips indicated the chronological order and priority of delivery, the urgency of certain deliveries and the time when the goods were to be delivered to the customers.
The CA, likewise, disbelieved the respondents’ claim that the petitioner abandoned his job noting that he just filed a complaint for regularization. This actuation of the petitioner negated the respondents’ allegation that he abandoned his job. The CA held that the respondents failed to discharge their burden to show that the petitioner’s dismissal was for a valid and just cause. Accordingly, the respondents were declared guilty of illegal dismissal and the decision of the Labor Arbiter was reinstated.
In its April 28, 2000 Decision, the CA denounced the contract of service between the respondent company and the petitioner in this wise:
In summation, we rule that with the proliferation of contracts seeking to prevent workers from attaining the status of regular employment, it is but necessary for the courts to scrutinize with extreme caution their legality and justness. Where from the circumstances it is apparent that a contract has been entered into to preclude acquisition of tenurial security by the employee, they should be struck down and disregarded as contrary to public policy and morals. In this case, the “contract of service” is just another attempt to exploit the unwitting employee and deprive him of the protection of the Labor Code by making it appear that the stipulations of the parties were governed by the Civil Code as in ordinary transactions.[9]
However, on motion for reconsideration by the respondents, the CA made a complete turn around as it rendered the assailed Resolution dated December 15, 2000 upholding the contract of service between the petitioner and the respondent company. In reconsidering its decision, the CA explained that the extent of control exercised by the respondents over the petitioner was only with respect to the result but not to the means and methods used by him. The CA cited the following circumstances: (1) the respondents had no say on how the goods were to be delivered to the customers; (2) the petitioner had the right to employ workers who would be under his direct control; and (3) the petitioner had no working time.
The fact that the petitioner had been with the respondent company for more than ten years was, according to the CA, of no moment because his status was determined not by the length of service but by the contract of service. This contract, not being contrary to morals, good customs, public order or public policy, should be given the force and effect of law as between the respondent company and the petitioner. Consequently, the CA reinstated the July 10, 1998 Decision of the NLRC dismissing the petitioner’s complaint for illegal dismissal.
Hence, the recourse to this Court by the petitioner. He assails the December 15, 2000 Resolution of the appellate court alleging that:
(A)
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF JURISDICTION IN GIVING MORE CONSIDERATION TO THE “CONTRACT OF SERVICE” ENTERED INTO BY PETITIONER AND PRIVATE RESPONDENT THAN ARTICLE 280 OF THE LABOR CODE OF THE PHILIPPINES WHICH CATEGORICALLY DEFINES A REGULAR EMPLOYMENT NOTWITHSTANDING ANY WRITTEN AGREEMENT TO THE CONTRARY AND REGARDLESS OF THE ORAL AGREEMENT OF THE PARTIES;
(B)
THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF JURISDICTION IN REVERSING ITS OWN FINDINGS THAT PETITIONER IS A REGULAR EMPLOYEE AND IN HOLDING THAT THERE EXISTED NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PRIVATE RESPONDENT AND PETITIONER IN AS MUCH AS THE “CONTROL TEST” WHICH IS CONSIDERED THE MOST ESSENTIAL CRITERION IN DETERMINING THE EXISTENCE OF SAID RELATIONSHIP IS NOT PRESENT.[10]
The threshold issue that needs to be resolved is whether there existed an employer-employee relationship between the respondent company and the petitioner. We rule in the affirmative.
The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer’s power to control the employee’s conduct.[11] The most important element is the employer’s control of the employee’s conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.[12] All the four elements are present in this case.
First. Undeniably, it was the respondents who engaged the services of the petitioner without the intervention of a third party.
Second. Wages are defined as “remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for service rendered or to be rendered.”[13] That the petitioner was paid on a per trip basis is not significant. This is merely a method of computing compensation and not a basis for determining the existence or absence of employer-employee relationship. One may be paid on the basis of results or time expended on the work, and may or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not.[14] In this case, it cannot be gainsaid that the petitioner received compensation from the respondent company for the services that he rendered to the latter.
Moreover, under the Rules Implementing the Labor Code, every employer is required to pay his employees by means of payroll.[15] The payroll should show, among other things, the employee’s rate of pay, deductions made, and the amount actually paid to the employee. Interestingly, the respondents did not present the payroll to support their claim that the petitioner was not their employee, raising speculations whether this omission proves that its presentation would be adverse to their case.[16]
Third. The respondents’ power to dismiss the petitioner was inherent in the fact that they engaged the services of the petitioner as truck driver. They exercised this power by terminating the petitioner’s services albeit in the guise of “severance of contractual relation” due allegedly to the latter’s breach of his contractual obligation.
Fourth. As earlier opined, of the four elements of the employer-employee relationship, the “control test” is the most important. Compared to an employee, an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under its own responsibility according to its own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.[17] Hence, while an independent contractor enjoys independence and freedom from the control and supervision of his principal, an employee is subject to the employer’s power to control the means and methods by which the employee’s work is to be performed and accomplished.[18]
Although the respondents denied that they exercised control over the manner and methods by which the petitioner accomplished his work, a careful review of the records shows that the latter performed his work as truck driver under the respondents’ supervision and control. Their right of control was manifested by the following attendant circumstances:
1. The truck driven by the petitioner belonged to respondent company;
2. There was an express instruction from the respondents that the truck shall be used exclusively to deliver respondent company’s goods; [19]
3. Respondents directed the petitioner, after completion of each delivery, to park the truck in either of two specific places only, to wit: at its office in Metro Manila at 2320 Osmeña Street, Makati City or at BEPZ, Mariveles, Bataan;[20] and
4. Respondents determined how, where and when the petitioner would perform his task by issuing to him gate passes and routing slips. [21]
a. The routing slips indicated on the column REMARKS, the chronological order and priority of delivery such as 1st drop, 2nd
drop, 3rd drop, etc. This meant that the petitioner had to deliver the same according to the order of priority indicated therein.
b. The routing slips, likewise, showed whether the goods were to be delivered urgently or not by the word RUSH printed thereon.
c. The routing slips also indicated the exact time as to when the goods were to be delivered to the customers as, for example, the words “tomorrow morning” was written on slip no. 2776.
These circumstances, to the Court’s mind, prove that the respondents exercised control over the means and methods by which the petitioner accomplished his work as truck driver of the respondent company. On the other hand, the Court is hard put to believe the respondents’ allegation that the petitioner was an independent contractor engaged in providing delivery or hauling services when he did not even own the truck used for such services. Evidently, he did not possess substantial capitalization or investment in the form of tools, machinery and work premises. Moreover, the petitioner performed the delivery services exclusively for the respondent company for a continuous and uninterrupted period of ten years.
The contract of service to the contrary notwithstanding, the factual circumstances earlier discussed indubitably establish the existence of an employer-employee relationship between the respondent company and the petitioner. It bears stressing that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract and providing therein that the employee is an independent contractor when, as in this case, the facts clearly show otherwise. Indeed, the employment status of a person is defined and prescribed by law and not by what the parties say it should be.[22]
Having established that there existed an employer-employee relationship between the respondent company and the petitioner, the Court shall now determine whether the respondents validly dismissed the petitioner.
As a rule, the employer bears the burden to prove that the dismissal was for a valid and just cause.[23] In this case, the respondents failed to prove any such cause for the petitioner’s dismissal. They insinuated that the petitioner abandoned his job. To constitute abandonment, these two factors must concur: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship.[24] Obviously, the petitioner did not intend to sever his relationship with the respondent company for at the time that he allegedly abandoned his job, the petitioner just filed a complaint for regularization, which was forthwith amended to one for illegal dismissal. A charge of abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so when it includes a prayer for reinstatement.[25]
Neither can the respondents’ claim that the petitioner was guilty of gross negligence in the proper maintenance of the truck constitute a valid and just cause for his dismissal. Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.[26] The negligence, to warrant removal from service, should not merely be gross but also habitual.[27] The single and isolated act of the petitioner’s negligence in the proper maintenance of the truck alleged by the respondents does not amount to “gross and habitual neglect” warranting his dismissal.
The Court agrees with the following findings and conclusion of the Labor Arbiter:
… As against the gratuitous allegation of the respondent that complainant was not dismissed from the service but due to complainant’s breach of their contractual relation, i.e., his violation of the terms and conditions of the contract, we are very much inclined to believe complainant’s story that his dismissal from the
service was anchored on his insistent demand that he be considered a regular employee. Because complainant in his right senses will not just abandon for that reason alone his work especially so that it is only his job where he depends chiefly his existence and support for his family if he was not aggrieved by the respondent when he was told that his services as driver will be terminated on February 23, 1995.[28]
Thus, the lack of a valid and just cause in terminating the services of the petitioner renders his dismissal illegal. Under Article 279 of the Labor Code, an employee who is unjustly dismissed is entitled to reinstatement, without loss of seniority rights and other privileges, and to the payment of full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement.[29] However, as found by the Labor Arbiter, the circumstances obtaining in this case do not warrant the petitioner’s reinstatement. A more equitable disposition, as held by the Labor Arbiter, would be an award of separation pay equivalent to one month for every year of service from the time of his illegal dismissal up to the finality of this judgment in addition to his full backwages, allowances and other benefits.
WHEREFORE, the instant petition is GRANTED. The Resolution dated December 15, 2000 of the Court of Appeals reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485 is REVERSED and SET ASIDE. The Decision dated February 3, 1997 of the Labor Arbiter in NLRC Case No. RAB-III-02-6181-5, finding the respondents guilty of illegally terminating the employment of petitioner Pedro Chavez, is REINSTATED.
SO ORDERED.
HELMA DUMPIT-MURILLO,
- versus -
COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE JAVIER AND EDWARD TAN,
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DECISION
QUISUMBING, J.:
This petition seeks to reverse and set aside both the
Decision49[1] dated January 30, 2004 of the Court of Appeals in CA-
G.R. SP No. 63125 and its Resolution50[2] dated June 23, 2004
denying the motion for reconsideration. The Court of Appeals had
49
50
overturned the Resolution51[3] dated August 30, 2000 of the
National Labor Relations Commission (NLRC) ruling that petitioner
was illegally dismissed.
The facts of the case are as follows:
On October 2, 1995, under Talent Contract No. NT95-1805,52
[4] private respondent Associated Broadcasting Company (ABC)
hired petitioner Thelma Dumpit-Murillo as a newscaster and co-
anchor for Balitang-Balita, an early evening news program. The
contract was for a period of three months. It was renewed under
Talent Contracts Nos. NT95-1915, NT96-3002, NT98-4984 and
NT99-5649.53[5] In addition, petitioner’s services were engaged for
the program “Live on Five.” On September 30, 1999, after four
years of repeated renewals, petitioner’s talent contract expired.
Two weeks after the expiration of the last contract, petitioner sent a
letter to Mr. Jose Javier, Vice President for News and Public Affairs of
ABC, informing the latter that she was still interested in renewing
her contract subject to a salary increase. Thereafter, petitioner
stopped reporting for work. On November 5, 1999, she wrote Mr.
Javier another letter,54[6] which we quote verbatim:
x x x x
Dear Mr. Javier:
On October 20, 1999, I wrote you a letter in answer to your query by way of a marginal note “what terms and conditions” in response to my first letter dated October 13, 1999. To date, or for more than fifteen (15) days since then, I have not received any formal written reply. xxx
In view hereof, should I not receive any formal response from you until Monday, November 8, 1999, I will deem it as a constructive dismissal of my services.
x x x x
A month later, petitioner sent a demand letter55[7] to ABC,
demanding: (a) reinstatement to her former position; (b) payment
of unpaid wages for services rendered from September 1 to
October 20, 1999 and full backwages; (c) payment of 13th month
pay, vacation/sick/service incentive leaves and other monetary
benefits due to a regular employee starting March 31, 1996. ABC
replied that a check covering petitioner’s talent fees for September
16 to October 20, 1999 had been processed and prepared, but that
the other claims of petitioner had no basis in fact or in law.
On December 20, 1999, petitioner filed a complaint56[8] against
ABC, Mr. Javier and Mr. Edward Tan, for illegal constructive dismissal,
nonpayment of salaries, overtime pay, premium pay, separation pay,
holiday pay, service incentive leave pay, vacation/sick leaves and
13th month pay in NLRC-NCR Case No. 30-12-00985-99. She likewise
demanded payment for moral, exemplary and actual damages, as
well as for attorney’s fees.
51
52
53
54
55
56
The parties agreed to submit the case for resolution after
settlement failed during the mandatory conference/conciliation. On
March 29, 2000, the Labor Arbiter dismissed the complaint.57[9]
On appeal, the NLRC reversed the Labor Arbiter in a Resolution
dated August 30, 2000. The NLRC held that an employer-employee
relationship existed between petitioner and ABC; that the subject
talent contract was void; that the petitioner was a regular employee
illegally dismissed; and that she was entitled to reinstatement and
backwages or separation pay, aside from 13th month pay and service
incentive leave pay, moral and exemplary damages and attorney’s
fees. It held as follows:
WHEREFORE, the Decision of the Arbiter dated 29 March 2000 is hereby REVERSED/SET ASIDE and a NEW ONE promulgated:
1) declaring respondents to have illegally dismissed complainant from her regular work therein and thus, ordering them to reinstate her in her former position without loss of seniority right[s] and other privileges and to pay her full backwages, inclusive of allowances and other benefits, including 13th month pay based on her said latest rate of P28,000.00/mo. from the date of her illegal dismissal on 21 October 1999 up to finality hereof, or at complainant’s option, to pay her separation pay of one (1) month pay per year of service based on said latest monthly rate, reckoned from date of hire on 30 September 1995 until finality hereof;
2) to pay complainant’s accrued SILP [Service Incentive Leave Pay] of 5 days pay per year and 13 th
month pay for the years 1999, 1998 and 1997 of P19,236.00 and P84,000.00, respectively and her accrued salary from 16 September 1999 to 20 October 1999 of P32,760.00 plus legal interest at 12% from date of judicial demand on 20 December 1999 until finality hereof;
3) to pay complainant moral damages of P500,000.00, exemplary damages of P350,000.00 and 10% of the total of the adjudged monetary awards as attorney’s fees.
Other monetary claims of complainant are dismissed for lack of merit.
SO ORDERED.
After its motion for reconsideration was denied, ABC elevated
the case to the Court of Appeals in a petition for certiorari under
Rule 65. The petition was first dismissed for failure to attach
particular documents,59[11] but was reinstated on grounds of the
higher interest of justice.60[12]
Thereafter, the appellate court ruled that the NLRC committed
grave abuse of discretion, and reversed the decision of the NLRC.61
[13] The appellate court reasoned that petitioner should not be
allowed to renege from the stipulations she had voluntarily and
knowingly executed by invoking the security of tenure under the
Labor Code. According to the appellate court, petitioner was a
fixed-term employee and not a regular employee within the ambit
57
58
59
60
61
of Article 28062[14] of the Labor Code because her job, as
anticipated and agreed upon, was only for a specified time.63[15]
Aggrieved, petitioner now comes to this Court on a petition for
review, raising issues as follows:
I.
THIS HONORABLE COURT CAN REVIEW THE FINDINGS OF THE HONORABLE COURT OF APPEALS, THE DECISION OF WHICH IS NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THE SUPREME COURT[;]
II.
THE PRO-FORMA TALENT CONTRACTS, AS CORRECTLY FOUND BY THE NLRC – FIRST DIVISION, ARE “ANTI-REGULARIZATION DEVICES” WHICH MUST BE STRUCK DOWN FOR REASONS OF PUBLIC POLICY[;]
62
63
III.
BY REASON OF THE CONTINUOUS AND SUCCESSIVE RENEWALS OF THE THREE-MONTH TALENT CONTRACTS, AN EMPLOYER-EMPLOYEE RELATIONSHIP WAS CREATED AS PROVIDED FOR UNDER ARTICLE 280 OF THE LABOR CODE[;]
IV.
BY THE CONSTRUCTIVE DISMISSAL OF HEREIN PETITIONER, AS A REGULAR EMPLOYEE, THERE WAS A DENIAL OF PETITIONER’S RIGHT TO DUE PROCESS THUS ENTITLING HER TO THE MONEY CLAIMS AS STATED IN THE COMPLAINT[.]64[16]
The issues for our disposition are: (1) whether or not this Court
can review the findings of the Court of Appeals; and (2) whether or
not under Rule 45 of the Rules of Court the Court of Appeals
committed a reversible error in its Decision.
On the first issue, private respondents contend that the issues
raised in the instant petition are mainly factual and that there is no
showing that the said issues have been resolved arbitrarily and
without basis. They add that the findings of the Court of Appeals
are supported by overwhelming wealth of evidence on record as
well as prevailing jurisprudence on the matter.65[17]
Petitioner however contends that this Court can review the
findings of the Court of Appeals, since the appellate court erred in
deciding a question of substance in a way which is not in accord
with law or with applicable decisions of this Court.66[18]
We agree with petitioner. Decisions, final orders or resolutions
of the Court of Appeals in any case — regardless of the nature of
the action or proceeding involved — may be appealed to this Court
through a petition for review. This remedy is a continuation of the
appellate process over the original case,67[19] and considering
there is no congruence in the findings of the NLRC and the Court of
Appeals regarding the status of employment of petitioner, an
exception to the general rule that this Court is bound by the
findings of facts of the appellate court,68[20] we can review such
findings.
On the second issue, private respondents contend that the
Court of Appeals did not err when it upheld the validity of the talent
contracts voluntarily entered into by petitioner. It further stated
that prevailing jurisprudence has recognized and sustained the
absence of employer-employee relationship between a talent and
the media entity which engaged the talent’s services on a per
talent contract basis, citing the case of Sonza v. ABS-CBN
Broadcasting Corporation.69[21]
Petitioner avers however that an employer-employee
relationship was created when the private respondents started to
64
65
66
67
68
69
merely renew the contracts repeatedly fifteen times or for four
consecutive years.70[22]
Again, we agree with petitioner. The Court of Appeals committed
reversible error when it held that petitioner was a fixed-term
employee. Petitioner was a regular employee under contemplation of
law. The practice of having fixed-term contracts in the industry does
not automatically make all talent contracts valid and compliant with
labor law. The assertion that a talent contract exists does not
necessarily prevent a regular employment status.71[23]
Further, the Sonza case is not applicable. In Sonza, the
television station did not instruct Sonza how to perform his job. How
Sonza delivered his lines, appeared on television, and sounded on
radio were outside the television station’s control. Sonza had a free
hand on what to say or discuss in his shows provided he did not
attack the television station or its interests. Clearly, the television
station did not exercise control over the means and methods of the
performance of Sonza’s work.72[24] In the case at bar, ABC had
control over the performance of petitioner’s work. Noteworthy too,
is the comparatively low P28,000 monthly pay of petitioner73[25]
vis the P300,000 a month salary of Sonza,74[26] that all the more
bolsters the conclusion that petitioner was not in the same situation
as Sonza.
The contract of employment of petitioner with ABC had the
following stipulations:
x x x x
1. SCOPE OF SERVICES – TALENT agrees to devote his/her talent, time, attention and best efforts in the performance of his/her duties and responsibilities as Anchor/Program Host/Newscaster of the Program, in accordance with the direction of ABC and/or its authorized representatives.
1.1. DUTIES AND RESPONSIBILITIES a. Render his/her services as a newscaster on the
Program;b. Be involved in news-gathering operations by
conducting interviews on- and off-the-air;c. Participate in live remote coverages when called
upon;d. Be available for any other news assignment,
such as writing, research or camera work;e. Attend production meetings;f. On assigned days, be at the studios at least one
(1) hour before the live telecasts;g. Be present promptly at the studios and/or other
place of assignment at the time designated by ABC;h. Keep abreast of the news;i. Give his/her full cooperation to ABC and its duly
authorized representatives in the production and promotion of the Program; and
j. Perform such other functions as may be assigned to him/her from time to time.
x x x x
1.3 COMPLIANCE WITH STANDARDSOTHER RULES AND REGULATIONS – TALENT agrees that he/she will promptly and faithfully comply with the requests and instructions, as well as the program
70
71
72
73
74
standards, policies, rules and regulations of ABC, the KBP and the government or any of its agencies and instrumentalities.75[27]
x x x x
In Manila Water Company, Inc. v. Pena,76[28] we said that the
elements to determine the existence of an employment relationship
are: (a) the selection and engagement of the employee, (b) the
payment of wages, (c) the power of dismissal, and (d) the employer’s
power to control. The most important element is the employer’s control
of the employee’s conduct, not only as to the result of the work to be
done, but also as to the means and methods to accomplish it.77[29]
The duties of petitioner as enumerated in her employment
contract indicate that ABC had control over the work of petitioner.
Aside from control, ABC also dictated the work assignments and
payment of petitioner’s wages. ABC also had power to dismiss her.
All these being present, clearly, there existed an employment
relationship between petitioner and ABC.
Concerning regular employment, the law provides for two kinds
of employees, namely: (1) those who are engaged to perform
activities which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those who have
rendered at least one year of service, whether continuous or
broken, with respect to the activity in which they are employed.78
[30] In other words, regular status arises from either the nature of
work of the employee or the duration of his employment.79[31] In
Benares v. Pancho,80[32] we very succinctly said:
…[T]he primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee vis-à-vis the usual trade or business of the employer. This connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. If the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.81[33]
In our view, the requisites for regularity of employment have
been met in the instant case. Gleaned from the description of the
scope of services aforementioned, petitioner’s work was necessary
or desirable in the usual business or trade of the employer which
includes, as a pre-condition for its enfranchisement, its participation
in the government’s news and public information dissemination. In
addition, her work was continuous for a period of four years. This
repeated engagement under contract of hire is indicative of the
75
76
77
78
79
80
81
necessity and desirability of the petitioner’s work in private
respondent ABC’s business.82[34]
The contention of the appellate court that the contract was
characterized by a valid fixed-period employment is untenable. For
such contract to be valid, it should be shown that the fixed period was
knowingly and voluntarily agreed upon by the parties. There should
have been no force, duress or improper pressure brought to bear upon
the employee; neither should there be any other circumstance that
vitiates the employee’s consent.83[35] It should satisfactorily appear
that the employer and the employee dealt with each other on more or
less equal terms with no moral dominance being exercised by the
employer over the employee.84[36] Moreover, fixed-term employment
will not be considered valid where, from the circumstances, it is
apparent that periods have been imposed to preclude acquisition of
tenurial security by the employee.85[37]
In the case at bar, it does not appear that the employer and
employee dealt with each other on equal terms. Understandably, the
petitioner could not object to the terms of her employment contract
because she did not want to lose the job that she loved and the
workplace that she had grown accustomed to,86[38] which is exactly
what happened when she finally manifested her intention to negotiate.
Being one of the numerous newscasters/broadcasters of ABC and
desiring to keep her job as a broadcasting practitioner, petitioner was left
with no choice but to affix her signature of conformity on each renewal of
her contract as already prepared by private respondents; otherwise,
private respondents would have simply refused to renew her contract.
Patently, the petitioner occupied a position of weakness vis-à-vis the
employer. Moreover, private respondents’ practice of repeatedly
extending petitioner’s 3-month contract for four years is a circumvention
of the acquisition of regular status. Hence, there was no valid fixed-term
employment between petitioner and private respondents.
While this Court has recognized the validity of fixed-term
employment contracts in a number of cases, it has consistently
emphasized that when the circumstances of a case show that the
periods were imposed to block the acquisition of security of tenure,
they should be struck down for being contrary to law, morals, good
customs, public order or public policy.87[39]
As a regular employee, petitioner is entitled to security of tenure
and can be dismissed only for just cause and after due compliance with
procedural due process. Since private respondents did not observe due
process in constructively dismissing the petitioner, we hold that there
was an illegal dismissal.
82
83
84
85
86
87
WHEREFORE, the challenged Decision dated January 30, 2004
and Resolution dated June 23, 2004 of the Court of Appeals in CA-
G.R. SP No. 63125, which held that the petitioner was a fixed-term
employee, are REVERSED and SET ASIDE. The NLRC decision is
AFFIRMED.
Costs against private respondents.
SO ORDERED.
ABS-CBN BROADCASTING
G.R. No. 164156
CORPORATION,
Petitioner,
Present
PANGANIBAN, C.J., Chairperson,
YNARES-SANTIAGO,
- versus -
AUSTRIA-MARTINEZ,
CALLEJO, SR., and
CHICO-NAZARIO, JJ.
MARLYN NAZARENO,
Promulgated:
MERLOU GERZON,
JENNIFER DEIPARINE,
and JOSEPHINE LERASAN,
Respondents.
September 26, 2006
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D E C I S I O N
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the
Decision88[1] of the Court of Appeals (CA) in CA-G.R. SP No. 76582
and the Resolution denying the motion for reconsideration thereof.
The CA affirmed the Decision89[2] and Resolution90[3] of the
National Labor Relations Commission (NLRC) in NLRC Case No. V-
000762-2001 (RAB Case No. VII-10-1661-2001) which likewise
affirmed, with modification, the decision of the Labor Arbiter
declaring the respondents Marlyn Nazareno, Merlou Gerzon,
Jennifer Deiparine and Josephine Lerasan as regular employees.
The Antecedents
Petitioner ABS-CBN Broadcasting Corporation (ABS-CBN) is
engaged in the broadcasting business and owns a network of
television and radio stations, whose operations revolve around the
broadcast, transmission, and relay of telecommunication signals. It
sells and deals in or otherwise utilizes the airtime it generates from
its radio and television operations. It has a franchise as a
broadcasting company, and was likewise issued a license and
authority to operate by the National Telecommunications
Commission.
Petitioner employed respondents Nazareno, Gerzon, Deiparine,
and Lerasan as production assistants (PAs) on different dates. They
were assigned at the news and public affairs, for various radio
programs in the Cebu Broadcasting Station, with a monthly
compensation of P4,000. They were issued ABS-CBN employees’
identification cards and were required to work for a minimum of
eight hours a day, including Sundays and holidays. They were
made to perform the following tasks and duties:
a) Prepare, arrange airing of commercial broadcasting based on the daily operations log and digicart of respondent ABS-CBN;
b) Coordinate, arrange personalities for air
interviews; c) Coordinate, prepare schedule of reporters for
scheduled news reporting and lead-in or incoming reports; d) Facilitate, prepare and arrange airtime schedule
for public service announcement and complaints; e) Assist, anchor program interview, etc; and f) Record, log clerical reports, man based control
radio.91[4]
88
89
90
91
Their respective working hours were as follows:
Name
Time
No. of Hours
1. Marlene Nazareno4:30 A.M.-8:00 A.M.
7 ½
8:00 A.M.-12:00 noon
2. Jennifer Deiparine4:30 A.M.-12:00M.N. (sic)7 ½
3. Joy Sanchez
1:00 P.M.-10:00 P.M.(Sunday)9 hrs.
9:00 A.M.-6:00 P.M. (WF)9 hrs.
4. Merlou Gerzon
9:00 A.M.-6:00 P.M.
9 hrs.92[5]
The PAs were under the control and supervision of Assistant
Station Manager Dante J. Luzon, and News Manager Leo Lastimosa.
On December 19, 1996, petitioner and the ABS-CBN Rank-and-
File Employees executed a Collective Bargaining Agreement (CBA)
to be effective during the period from December 11, 1996 to
December 11, 1999. However, since petitioner refused to recognize
PAs as part of the bargaining unit, respondents were not included to
the CBA.93[6]
On July 20, 2000, petitioner, through Dante Luzon, issued a
Memorandum informing the PAs that effective August 1, 2000, they
would be assigned to non-drama programs, and that the DYAB
studio operations would be handled by the studio technician. Thus,
their revised schedule and other assignments would be as follows:
Monday – Saturday4:30 A.M. – 8:00 A.M. – Marlene Nazareno.Miss Nazareno will then be assigned at the Research
Dept.From 8:00 A.M. to 12:00
92
93
4:30 P.M. – 12:00 MN – Jennifer Deiparine Sunday5:00 A.M. – 1:00 P.M. – Jennifer Deiparine1:00 P.M. – 10:00 P.M. – Joy Sanchez
Respondent Gerzon was assigned as the full-time PA
of the TV News Department reporting directly to Leo Lastimosa.
On October 12, 2000, respondents filed a Complaint for
Recognition of Regular Employment Status, Underpayment of
Overtime Pay, Holiday Pay, Premium Pay, Service Incentive Pay,
Sick Leave Pay, and 13th Month Pay with Damages against the
petitioner before the NLRC. The Labor Arbiter directed the parties to
submit their respective position papers. Upon respondents’ failure
to file their position papers within the reglementary period, Labor
Arbiter Jose G. Gutierrez issued an Order dated
April 30, 2001, dismissing the complaint without prejudice for
lack of interest to pursue the case. Respondents received a copy of
the Order on May 16, 2001.94[7] Instead of re-filing their complaint
with the NLRC within 10 days from May 16, 2001, they filed, on June
11, 2001, an Earnest Motion to Refile Complaint with Motion to
Admit Position Paper and Motion to Submit Case For Resolution.95[8]
The Labor Arbiter granted this motion in an Order dated June 18,
2001, and forthwith admitted the position paper of the
complainants. Respondents made the following allegations:
1. Complainants were engaged by respondent ABS-CBN as regular and full-time employees for a continuous period of more than five (5) years with a monthly salary rate of Four Thousand (P4,000.00) pesos beginning 1995 up until the filing of this complaint on November 20, 2000.
Machine copies of complainants’ ABS-CBN
Employee’s Identification Card and salary vouchers are hereto attached as follows, thus:
I. Jennifer Deiparine:Exhibit “A”
- ABS-CBN Employee’s Identification CardExhibit “B”,- ABS-CBN Salary Voucher from Nov.Exhibit “B-1” & 1999 to July 2000 at Exhibit “B-2”
Date employed: September 15, 1995Length of service: 5 years & nine (9) months II. Merlou Gerzon - ABS-CBN Employee’s Identification
CardExhibit “C”Exhibit “D”Exhibit “D-1” &Exhibit “D-2”- ABS-CBN Salary Voucher from March
1999 to January 2001 at P4,000.00
Date employed: September 1, 1995
Length of service: 5 years & 10 months
III. Marlene Nazareno
Exhibit “E”- ABS-CBN Employee’s Identification Card
Exhibit “E”- ABS-CBN Salary Voucher from Nov.
Exhibit “E-1” & 1999 to December 2000
Exhibit :E-2”
Date employed: April 17, 1996
Length of service: 5 years and one (1) month
94
95
IV. Joy Sanchez Lerasan
Exhibit “F”- ABS-CBN Employee’s Identification Card
Exhibit “F-1”- ABS-CBN Salary Voucher from Aug.
Exhibit “F-2” & 2000 to Jan. 2001
Exhibit “F-3”
Exhibit “F-4”- Certification dated July 6, 2000
Acknowledging regular status of
Complainant Joy Sanchez Lerasan
Signed by ABS-CBN Administrative
Officer May Kima Hife
Date employed: April 15, 1998
Length of service: 3 yrs. and one (1) month96[9]
Respondents insisted that they belonged to a “work pool” from
which petitioner chose persons to be given specific assignments at
its discretion, and were thus under its direct supervision and control
regardless of nomenclature. They prayed that judgment be
rendered in their favor, thus:
WHEREFORE, premises considered, this Honorable
Arbiter is most respectfully prayed, to issue an order compelling defendants to pay complainants the following:
1. One Hundred Thousand Pesos (P100,000.00) each and by way of moral damages;
2. Minimum wage differential;
3. Thirteenth month pay differential;4. Unpaid service incentive leave benefits;5. Sick leave;6. Holiday pay;7. Premium pay;8. Overtime pay;9. Night shift differential. Complainants further pray of this Arbiter to declare
them regular and permanent employees of respondent ABS-CBN as a condition precedent for their admission into the existing union and collective bargaining unit of respondent company where they may as such acquire or otherwise perform their obligations thereto or enjoy the benefits due therefrom.
Complainants pray for such other reliefs as are just
and equitable under the premises.97[10]
96
For its part, petitioner alleged in its position paper that the
respondents were PAs who basically assist in the conduct of a
particular program ran by an anchor or talent. Among their duties
include monitoring and receiving incoming calls from listeners and
field reporters and calls of news sources; generally, they perform
leg work for the anchors during a program or a particular
production. They are considered in the industry as “program
employees” in that, as distinguished from regular or station
employees, they are basically engaged by the station for a
particular or specific program broadcasted by the radio station.
Petitioner asserted that as PAs, the complainants were issued talent
information sheets which are updated from time to time, and are
thus made the basis to determine the programs to which they shall
later be called on to assist. The program assignments of
complainants were as follows:
a. Complainant Nazareno assists in the
programs:1) Nagbagang Balita (early morning
edition)2) Infor Hayupan3) Arangkada (morning edition)4) Nagbagang Balita (mid-day edition) b. Complainant Deiparine assists in the
programs:1) Unzanith2) Serbisyo de Arevalo3) Arangkada (evening edition)4) Balitang K (local version)5) Abante Subu6) Pangutana Lang c. Complainant Gerzon assists in the
program:1) On Mondays and Tuesdays:(a) Unzanith(b) Serbisyo de Arevalo(c) Arangkada (evening edition)(d) Balitang K (local version)(e) Abante Sugbu(f) Pangutana Lang2) On Thursdays
Nagbagang Balita3) On Saturdays(a) Nagbagang Balita(b) Info Hayupan
(c) Arangkada (morning edition)
(d) Nagbagang Balita (mid-day edition)4) On Sundays:(a) Siesta Serenata(b) Sunday Chismisan(c) Timbangan sa Hustisya(d) Sayri ang Lungsod(e) Haranahan98[11]
Petitioner maintained that PAs, reporters, anchors and talents
occasionally “sideline” for other programs they produce, such as
drama
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98
talents in other productions. As program employees, a PA’s
engagement is coterminous with the completion of the program,
and may be extended/renewed provided that the program is on-
going; a PA may also be assigned to new programs upon the
cancellation of one program and the commencement of another. As
such program employees, their compensation is computed on a
program basis, a fixed amount for performance services
irrespective of the time consumed. At any rate, petitioner claimed,
as the payroll will show, respondents were paid all salaries and
benefits due them under the law.99[12]
Petitioner also alleged that the Labor Arbiter had no
jurisdiction to involve the CBA and interpret the same, especially
since respondents were not covered by the bargaining unit.
On July 30, 2001, the Labor Arbiter rendered judgment in favor
of the respondents, and declared that they were regular employees
of petitioner; as such, they were awarded monetary benefits. The
fallo of the decision reads:
WHEREFORE, the foregoing premises
considered, judgment is hereby rendered declaring the complainants regular employees of the respondent ABS-CBN Broadcasting Corporation and directing the same respondent to pay complainants as follows:
I -Merlou A. Gerzon
P12,025.00II -Marlyn Nazareno 12,025.00III -Jennifer Deiparine
12,025.00IV -Josephine Sanchez Lerazan 12,025.00
_________
P48,100.00 plus ten (10%) percent Attorney’s Fees or a TOTAL
aggregate amount of PESOS: FIFTY TWO THOUSAND NINE HUNDRED TEN (P52,910.00).
Respondent Veneranda C. Sy is absolved
from any liability.
SO ORDERED.100[13]
However, the Labor Arbiter did not award money
benefits as provided in the CBA on his belief that he had no
99
100
jurisdiction to interpret and apply the agreement, as the same was
within the jurisdiction of the Voluntary Arbitrator as provided in
Article 261 of the Labor Code.
Respondents’ counsel received a copy of the decision on
August 29, 2001. Respondent Nazareno received her copy on
August 27, 2001, while the other respondents received theirs on
September 8, 2001. Respondents signed and filed their Appeal
Memorandum on September 18, 2001.
For its part, petitioner filed a motion for reconsideration, which
the Labor Arbiter denied and considered as an appeal, conformably
with Section 5, Rule V, of the NLRC Rules of Procedure. Petitioner
forthwith appealed the decision to the NLRC, while respondents
filed a partial appeal.
In its appeal, petitioner alleged the following:
1. That the Labor Arbiter erred in reviving or re-opening this case which had long been dismissed without prejudice for more than thirty (30) calendar days;
2. That the Labor Arbiter erred in depriving the
respondent of its Constitutional right to due process of law; 3. That the Labor Arbiter erred in denying
respondent’s Motion for Reconsideration on an interlocutory order on the ground that the same is a prohibited pleading;
4. That the Labor Arbiter erred when he ruled that the complainants are regular employees of the respondent;
5. That the Labor Arbiter erred when he ruled that the complainants are entitled to 13th month pay, service incentive leave pay and salary differential; and
6. That the Labor Arbiter erred when he ruled that complainants are entitled to attorney’s fees.101[14]
On November 14, 2002, the NLRC rendered judgment
modifying the decision of the Labor Arbiter. The fallo of the
decision reads:
WHEREFORE, premises considered, the decision of
Labor Arbiter Jose G. Gutierrez dated 30 July 2001 is SET ASIDE and VACATED and a new one is entered ORDERING respondent ABS-CBN Broadcasting Corporation, as follows:
1. To pay complainants of their wage differentials
and other benefits arising from the CBA as of 30 September 2002 in the aggregate amount of Two Million
101
Five Hundred, Sixty-One Thousand Nine Hundred Forty-Eight Pesos and 22/100 (P2,561,948.22), broken down as follows:
a. Deiparine, Jennifer-
b. Gerzon, Merlou-
716,113.49c. Nazareno, Marlyn
- 716,113.49d. Lerazan, Josephine Sanchez -
413,607.75
Total-
2. To deliver to the complainants Two Hundred
Thirty-Three (233) sacks of rice as of 30 September 2002 representing their rice subsidy in the CBA, broken down as follows:
a. Deiparine, Jennifer-
60 Sacksb. Gerzon, Merlou
-60 Sacksc. Nazareno, Marlyn
-60 Sacksd. Lerazan, Josephine Sanchez -
53 Sacks
Total
233 Sacks; and 3. To grant to the complainants all the benefits of
the CBA after 30 September 2002.
SO ORDERED.102[15]
The NLRC declared that the Labor Arbiter acted conformably
with the Labor Code when it granted respondents’ motion to refile
the complaint and admit their position paper. Although respondents
were not parties to the CBA between petitioner and the ABS-CBN
Rank-and-File Employees Union, the NLRC nevertheless granted
and computed respondents’ monetary benefits based on the 1999
CBA, which was effective until September 2002. The NLRC also
ruled that the Labor Arbiter had jurisdiction over the complaint of
respondents because they acted in their individual capacities and
not as members of the union. Their claim for monetary benefits was
within the context of Article 217(6) of the Labor Code. The validity
of respondents’ claim does not depend upon the interpretation of
the CBA.
102
The NLRC ruled that respondents were entitled to the benefits
under the CBA because they were regular employees who
contributed to the profits of petitioner through their labor. The
NLRC cited the ruling of this Court in New Pacific Timber & Supply
Company v. National Labor Relations Commission.103[16]
Petitioner filed a motion for reconsideration, which the NLRC
denied.
Petitioner thus filed a petition for certiorari under Rule 65 of
the Rules of Court before the CA, raising both procedural and
substantive issues, as follows: (a) whether the NLRC acted without
jurisdiction in admitting the appeal of respondents; (b) whether the
NLRC committed palpable error in scrutinizing the reopening and
revival of the complaint of respondents with the Labor Arbiter upon
due notice despite the lapse of 10 days from their receipt of the July
30, 2001 Order of the Labor Arbiter; (c) whether respondents were
regular employees; (d) whether the NLRC acted without jurisdiction
in entertaining and resolving the claim of the respondents under
the CBA instead of referring the same to the Voluntary Arbitrators
as provided in the CBA; and (e) whether the NLRC acted with grave
abuse of discretion when it awarded monetary benefits to
respondents under the CBA although they are not members of the
appropriate bargaining unit.
On February 10, 2004, the CA rendered judgment dismissing
the petition. It held that the perfection of an appeal shall be upon
the expiration of the last day to appeal by all parties, should there
be several parties to a case. Since respondents received their
copies of the decision on September 8, 2001 (except respondent
Nazareno who received her copy of the decision on August 27,
2001), they had until September 18, 2001 within which to file their
Appeal Memorandum. Moreover, the CA declared that respondents’
failure to submit their position paper on time is not a ground to
strike out the paper from the records, much less dismiss a
complaint.
Anent the substantive issues, the appellate court stated that
respondents are not mere project employees, but regular
employees who perform tasks necessary and desirable in the usual
trade and business of petitioner and not just its project employees.
Moreover, the CA added, the award of benefits accorded to rank-
and-file employees under the 1996-1999 CBA is a necessary
consequence of the NLRC ruling that respondents, as PAs, are
regular employees.
Finding no merit in petitioner’s motion for reconsideration, the
CA denied the same in a Resolution104[17] dated June 16, 2004.
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104
Petitioner thus filed the instant petition for review on certiorari
and raises the following assignments of error:
1. THE HONORABLE COURT OF APPEALS ACTED WITHOUT JURISDICTION AND GRAVELY ERRED IN UPHOLDING THE NATIONAL LABOR RELATIONS COMMISSION NOTWITHSTANDING THE PATENT NULLITY OF THE LATTER’S DECISION AND RESOLUTION.
2. THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC FINDING RESPONDENTS REGULAR EMPLOYEES.
3. THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN AFFIRMING THE RULING OF THE NLRC AWARDING CBA BENEFITS TO RESPONDENTS.105[18]
Considering that the assignments of error are interrelated, the
Court shall resolve them simultaneously.
Petitioner asserts that the appellate court committed palpable
and serious error of law when it affirmed the rulings of the NLRC,
and entertained respondents’ appeal from the decision of the Labor
Arbiter despite the admitted lapse of the reglementary period
within which to perfect
105
the same. Petitioner likewise maintains that the 10-day period
to appeal must be reckoned from receipt of a party’s counsel, not
from the time the party learns of the decision, that is, notice to
counsel is notice to party and not the other way around. Finally,
petitioner argues that the reopening of a complaint which the Labor
Arbiter has dismissed without prejudice is a clear violation of
Section 1, Rule V of the NLRC Rules; such order of dismissal had
already attained finality and can no longer be set aside.
Respondents, on the other hand, allege that their late appeal is
a non-issue because it was petitioner’s own timely appeal that
empowered the NLRC to reopen the case. They assert that
although the appeal was filed 10 days late, it may still be given due
course in the interest of substantial justice as an exception to the
general rule that the negligence of a counsel binds the client. On
the issue of the late filing of their position paper, they maintain that
this is not a ground to strike it out from the records or dismiss the
complaint.
We find no merit in the petition.
We agree with petitioner’s contention that the perfection of an
appeal within the statutory or reglementary period is not only
mandatory, but also jurisdictional; failure to do so renders the
assailed decision final and executory and deprives the appellate
court or body of the legal authority to alter the final judgment,
much less entertain the appeal. However, this Court has time and
again ruled that in exceptional cases, a belated appeal may be
given due course if greater injustice may occur if an appeal is not
given due course than if the reglementary period to appeal were
strictly followed.106[19] The Court resorted to this extraordinary
measure even at the expense of sacrificing order and efficiency if
only to serve the greater principles of substantial justice and
equity.107[20]
In the case at bar, the NLRC did not commit a grave abuse of
its discretion in giving Article 223108[21] of the Labor Code a liberal
application to prevent the miscarriage of justice. Technicality
should not be allowed to stand in the way of equitably and
completely resolving the rights and obligations of the parties.109[22]
We have held in a catena of cases that technical rules are not
binding in labor cases and are not to be applied strictly if the result
would be detrimental to the workingman.110[23]
106
107
108
109
110
Admittedly, respondents failed to perfect their appeal from the
decision of the Labor Arbiter within the reglementary period
therefor. However, petitioner perfected its appeal within the
period, and since petitioner had filed a timely appeal, the NLRC
acquired jurisdiction over the case to give due course to its appeal
and render the decision of November 14, 2002. Case law is that
the party who failed to appeal from the decision of the Labor Arbiter
to the NLRC can still participate in a separate appeal timely filed by
the adverse party as the situation is considered to be of greater
benefit to both parties.111[24]
We find no merit in petitioner’s contention that the Labor
Arbiter abused his discretion when he admitted respondents’
position paper which had been belatedly filed. It bears stressing
that the Labor Arbiter is mandated by law to use every reasonable
means to ascertain the facts in each case speedily and objectively,
without technicalities of law or procedure, all in the interest of due
process.112[25] Indeed, as stressed by the appellate court,
respondents’ failure to submit a position paper on time is not a
ground for striking out the paper from the records, much less for
dismissing a complaint.113[26] Likewise, there is simply no truth to
petitioner’s assertion that it was denied due process when the
Labor Arbiter admitted respondents’ position paper without
requiring it to file a comment before admitting said position paper.
The essence of due process in administrative proceedings is simply
an opportunity to explain one’s side or an opportunity to seek
reconsideration of the action or ruling complained of. Obviously,
there is nothing in the records that would suggest that petitioner
had absolute lack of opportunity to be heard.114[27] Petitioner had
the right to file a motion for reconsideration of the Labor Arbiter’s
admission of respondents’ position paper, and even file a Reply
thereto. In fact, petitioner filed its position paper on April 2, 2001.
It must be stressed that Article 280 of the Labor Code was encoded
in our statute books to hinder the circumvention by unscrupulous
employers of the employees’ right to security of tenure by
indiscriminately and absolutely ruling out all written and oral
agreements inharmonious with the concept of regular employment
defined therein.115[28]
We quote with approval the following pronouncement of the
NLRC:
The complainants, on the other hand, contend that respondents assailed the Labor Arbiter’s order dated 18 June 2001 as violative of the NLRC Rules of Procedure and as such is violative of their right to procedural due process. That while suggesting that an Order be instead issued by the Labor Arbiter for complainants to refile this case, respondents impliedly submit that there is not any
111
112
113
114
115
substantial damage or prejudice upon the refiling, even so, respondents’ suggestion acknowledges complainants right to prosecute this case, albeit with the burden of repeating the same procedure, thus, entailing additional time, efforts, litigation cost and precious time for the Arbiter to repeat the same process twice. Respondent’s suggestion, betrays its notion of prolonging, rather than promoting the early resolution of the case.
Although the Labor Arbiter in his Order dated 18 June
2001 which revived and re-opened the dismissed case without prejudice beyond the ten (10) day reglementary period had inadvertently failed to follow Section 16, Rule V, Rules Procedure of the NLRC which states:
“A party may file a motion to revive or re-
open a case dismissed without prejudice within ten (10) calendar days from receipt of notice of the order dismissing the same; otherwise, his only remedy shall be to re-file the case in the arbitration branch of origin.”
the same is not a serious flaw that had prejudiced the
respondents’ right to due process. The case can still be refiled because it has not yet prescribed. Anyway, Article 221 of the Labor Code provides:
“In any proceedings before the
Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively and without regard to technicalities of law or procedure, all in the interest of due process.”
The admission by the Labor Arbiter of the
complainants’ Position Paper and Supplemental Manifestation which were belatedly filed just only shows that he acted within his discretion as he is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process. Indeed, the failure to submit a position paper on time is not a ground for striking out the paper from the records, much less for dismissing a complaint in the case of the complainant. (University of Immaculate Conception vs. UIC Teaching and Non-Teaching Personnel Employees, G.R. No. 144702, July 31, 2001).
“In admitting the respondents’ position paper
albeit late, the Labor Arbiter acted within her discretion. In fact, she is enjoined by law to use every reasonable means to ascertain the facts in each case speedily and objectively, without technicalities of law or procedure, all in the interest of due process”. (Panlilio vs. NLRC, 281 SCRA 53).
The respondents were given by the Labor Arbiter the
opportunity to submit position paper. In fact, the respondents had filed their position paper on 2 April 2001. What is material in the compliance of due process is the fact that the parties are given the opportunities to submit position papers.
“Due process requirements are satisfied
where the parties are given the opportunities to submit position papers”. (Laurence vs. NLRC, 205 SCRA 737).
Thus, the respondent was not deprived of its
Constitutional right to due process of law.116[29]
We reject, as barren of factual basis, petitioner’s contention
that respondents are considered as its talents, hence, not regular
employees of the broadcasting company. Petitioner’s claim that
the functions performed by the respondents are not at all
necessary, desirable, or even vital to its trade or business is belied
by the evidence on record.
116
Case law is that this Court has always accorded respect and
finality to the findings of fact of the CA, particularly if they coincide
with those of the Labor Arbiter and the National Labor Relations
Commission, when supported by substantial evidence.117[30] The
question of whether respondents are regular or project employees
or independent contractors is essentially factual in nature;
nonetheless, the Court is constrained to resolve it due to its
tremendous effects to the legions of production assistants working
in the Philippine broadcasting industry.
We agree with respondents’ contention that where a person
has rendered at least one year of service, regardless of the nature
of the activity performed, or where the work is continuous or
intermittent, the employment is considered regular as long as the
activity exists, the reason being that a customary appointment is
not indispensable before one may be formally declared as having
attained regular status. Article 280 of the Labor Code provides:
ART. 280. REGULAR AND CASUAL EMPLOYMENT.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.
In Universal Robina Corporation v. Catapang,118[31] the Court
reiterated the test in determining whether one is a regular
employee:
The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be
117
118
determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.119[32]
As elaborated by this Court in Magsalin v. National
Organization of Working Men:120[33]
Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a “regular” worker’s security of tenure, however, can hardly be doubted. In determining whether an employment should be considered regular or non-regular, the applicable test is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by the law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is divorced from the normal activities required in carrying on the particular business or trade. But, although the work to be performed is only for a specific project or seasonal, where a person thus engaged has been performing the job for at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the business or trade of the employer. The employment of such person is also then deemed to be regular with respect to such activity and while such activity exists.121[34]
Not considered regular employees are “project employees,”
the completion or termination of which is more or less determinable
at the time of employment, such as those employed in connection
with a particular construction project, and “seasonal employees”
whose employment by its nature is only desirable for a limited
period of time. Even then, any employee who has rendered at least
one year of service, whether continuous or intermittent, is deemed
regular with respect to the activity performed and while such
activity actually exists.
It is of no moment that petitioner hired respondents as
“talents.” The fact that respondents received pre-agreed “talent
fees” instead of salaries, that they did not observe the required
office hours, and that they were permitted to join other productions
during their free time are not conclusive of the nature of their
119
120
121
employment. Respondents cannot be considered “talents” because
they are not actors or actresses or radio specialists or mere clerks
or utility employees. They are regular employees who perform
several different duties under the control and direction of ABS-CBN
executives and supervisors.
Thus, there are two kinds of regular employees under the law:
(1) those engaged to perform activities which are necessary or
desirable in the usual business or trade of the employer; and (2)
those casual employees who have rendered at least one year of
service, whether continuous or broken, with respect to the
activities in which they are employed.122[35]
The law overrides such conditions which are prejudicial to the
interest of the worker whose weak bargaining situation necessitates
the succor of the State. What determines whether a certain
employment is regular or otherwise is not the will or word of the
employer, to which the worker oftentimes acquiesces, much less
the procedure of hiring the employee or the manner of paying the
salary or the actual time spent at work. It is the character of the
activities performed in relation to the particular trade or
business taking into account all the circumstances, and in some
cases the length of time of its performance and its continued
existence.123[36] It is obvious that one year after they were
employed by petitioner, respondents became regular employees by
operation of law.124[37]
122
123
124
Additionally, respondents cannot be considered as project or
program employees because no evidence was presented to show
that the duration and scope of the project were determined or
specified at the time of their engagement. Under existing
jurisprudence, project could refer to two distinguishable types of
activities. First, a project may refer to a particular job or
undertaking that is within the regular or usual business of the
employer, but which is distinct and separate, and identifiable as
such, from the other undertakings of the company. Such job or
undertaking begins and ends at determined or determinable times.
Second, the term project may also refer to a particular job or
undertaking that is not within the regular business of the employer.
Such a job or undertaking must also be identifiably separate and
distinct from the ordinary or regular business operations of the
employer. The job or undertaking also begins and ends at
determined or determinable times.125[38]
The principal test is whether or not the project employees were
assigned to carry out a specific project or undertaking, the duration
and scope of which were specified at the time the employees were
engaged for that project.126[39]
In this case, it is undisputed that respondents had continuously
performed the same activities for an average of five years. Their
assigned tasks are necessary or desirable in the usual business or
trade of the petitioner. The persisting need for their services is
sufficient evidence of the necessity and indispensability of such
services to petitioner’s business or trade.127[40] While length of
time may not be a sole controlling test for project employment, it
can be a strong factor to determine whether the employee was
hired for a specific undertaking or in fact tasked to perform
functions which are vital, necessary and indispensable to the usual
trade or business of the employer.128[41] We note further that
petitioner did not report the termination of respondents’
employment in the particular “project” to the Department of Labor
and Employment Regional Office having jurisdiction over the
workplace within 30 days following the date of their separation from
work, using the prescribed form on employees’ termination/
dismissals/suspensions.129[42]
As gleaned from the records of this case, petitioner itself is not
certain how to categorize respondents. In its earlier pleadings,
petitioner classified respondents as program employees, and in
later pleadings, independent contractors. Program employees, or
project employees, are different from independent contractors
125
126
127
128
129
because in the case of the latter, no employer-employee
relationship exists.
Petitioner’s reliance on the ruling of this Court in Sonza v. ABS-
CBN Broadcasting Corporation130[43] is misplaced. In that case, the
Court explained why Jose Sonza, a well-known television and radio
personality, was an independent contractor and not a regular
employee:
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’S services to co-host its
television and radio programs because of SONZA’S peculiar skills, talent and celebrity status. SONZA contends that the “discretion used by respondent in specifically selecting and hiring complainant over other broadcasters of possibly similar experience and qualification as complainant belies respondent’s claim of independent contractorship.”
Independent contractors often present themselves to
possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered into the Agreement with SONZA but would have hired him through its personnel department just like any other employee.
In any event, the method of selecting and engaging
SONZA does not conclusively determine his status. We must consider all the circumstances of the relationship, with the control test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points out that ABS-CBN granted him benefits and privileges “which he would not have enjoyed if he were truly the subject of a valid job contract.”
All the talent fees and benefits paid to
SONZA were the result of negotiations that led to the Agreement. If SONZA were ABS-CBN’s employee, there would be no need for the parties to stipulate on benefits such as “SSS, Medicare, x x x and 13th month pay which the law automatically incorporates into every employer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee relationship.
SONZA’s talent fees, amounting to P317,000
monthly in the second and third year, are so huge and out of the ordinary that they indicate more an independent contractual relationship rather than an employer-employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZA’S unique skills, talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA
and not to MJMDC does not negate the status of SONZA as an independent contractor. The parties expressly agreed on such mode of payment. Under the Agreement, MJMDC is the AGENT of SONZA, to whom MJMDC would have to
130
turn over any talent fee accruing under the Agreement.131
[44]
In the case at bar, however, the employer-employee
relationship between petitioner and respondents has been proven.
First. In the selection and engagement of respondents, no
peculiar or unique skill, talent or celebrity status was required from
them because they were merely hired through petitioner’s
personnel department just like any ordinary employee.
Second. The so-called “talent fees” of respondents correspond
to wages given as a result of an employer-employee relationship.
Respondents did not have the power to bargain for huge talent
fees, a circumstance negating independent contractual relationship.
Third. Petitioner could always discharge respondents should it
find their work unsatisfactory, and respondents are highly
dependent on the petitioner for continued work.
Fourth. The degree of control and supervision exercised by
petitioner over respondents through its supervisors negates the
allegation that respondents are independent contractors.
The presumption is that when the work done is an
integral part of the regular business of the employer and
when the worker, relative to the employer, does not furnish
an independent business or professional service, such work
is a regular employment of such employee and not an
independent contractor.132[45] The Court will peruse beyond any
such agreement to examine the facts that typify the parties’ actual
relationship.133[46]
It follows then that respondents are entitled to the benefits
provided for in the existing CBA between petitioner and its rank-
and-file employees. As regular employees, respondents are entitled
to the benefits granted to all other regular employees of
petitioner under the CBA.134[47] We quote with approval the
ruling of the appellate court, that the reason why production
assistants were excluded from the CBA is precisely because they
131
132
133
134
were erroneously classified and treated as project employees by
petitioner:
x x x The award in favor of private respondents of the benefits accorded to rank-and-file employees of ABS-CBN under the 1996-1999 CBA is a necessary consequence of public respondent’s ruling that private respondents as production assistants of petitioner are regular employees. The monetary award is not considered as claims involving the interpretation or implementation of the collective bargaining agreement. The reason why production assistants were excluded from the said agreement is precisely because they were classified and treated as project employees by petitioner.
As earlier stated, it is not the will or word of the
employer which determines the nature of employment of an employee but the nature of the activities performed by such employee in relation to the particular business or trade of the employer. Considering that We have clearly found that private respondents are regular employees of petitioner, their exclusion from the said CBA on the misplaced belief of the parties to the said agreement that they are project employees, is therefore not proper. Finding said private respondents as regular employees and not as mere project employees, they must be accorded the benefits due under the said Collective Bargaining Agreement.
A collective bargaining agreement is a contract
entered into by the union representing the employees and the employer. However, even the non-member employees are entitled to the benefits of the contract. To accord its benefits only to members of the union without any valid reason would constitute undue discrimination against non-members. A collective bargaining agreement is binding on all employees of the company. Therefore, whatever benefits are given to the other employees of ABS-CBN must likewise be accorded to private respondents who were regular employees of petitioner.135[48]
Besides, only talent-artists were excluded from the CBA and
not production assistants who are regular employees of the
respondents. Moreover, under Article 1702 of the New Civil Code:
“In case of doubt, all labor legislation and all labor contracts shall
be construed in favor of the safety and decent living of the laborer.”
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED
for lack of merit. The assailed Decision and Resolution of the Court
of Appeals in CA-G.R. SP No. 76582 are AFFIRMED. Costs against
petitioner.
135
SO ORDERED.
JOHN F. McLEOD, Petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION (First Division), FILIPINAS SYNTHETIC FIBER CORPORATION (FILSYN), FAR EASTERN TEXTILE MILLS, INC., STA. ROSA TEXTILES, INC., (PEGGY MILLS, INC.), PATRICIO L. LIM, and ERIC HU, Respondents.
D E C I S I O N
CARPIO, J.:
The Case
This is a petition for review1 to set aside the Decision2 dated 15 June 2000 and the Resolution3 dated 27 December 2000 of the Court of Appeals in CA-G.R. SP No. 55130. The Court of Appeals affirmed with modification the 29 December 1998 Decision4 of the National Labor Relations Commission (NLRC) in NLRC NCR 02-00949-95.
The Facts
The facts, as summarized by the Labor Arbiter and adopted by the NLRC and the Court of Appeals, are as follows:
On February 2, 1995, John F. McLeod filed a complaint for retirement benefits, vacation and sick leave benefits, non-payment of unused airline tickets, holiday pay, underpayment of salary and 13th month pay, moral and exemplary damages, attorney’s fees plus interest against Filipinas Synthetic Corporation (Filsyn), Far Eastern Textile Mills, Inc., Sta. Rosa Textiles, Inc., Patricio Lim and Eric Hu.
In his Position Paper, complainant alleged that he is an expert in textile manufacturing process; that as early as 1956 he was hired as the Assistant Spinning Manager of Universal Textiles, Inc. (UTEX); that he was promoted to Senior Manager and worked for UTEX till 1980 under its President, respondent Patricio Lim; that in 1978 Patricio Lim formed Peggy Mills, Inc. with respondent Filsyn having controlling interest; that complainant was absorbed by Peggy Mills as its Vice President and Plant Manager of the plant at Sta. Rosa, Laguna; that at the time of his retirement complainant was receiving P60,000.00 monthly with vacation and sick leave benefits; 13th month pay, holiday pay and two round trip business class tickets on a Manila-London-Manila itinerary every three years which is convertible to cas[h] if unused; that in January 1986, respondents failed to pay vacation and leave credits and requested complainant to wait as it was short of funds but the same remain unpaid at present; that complainant is entitled to such benefit as per CBA provision (Annex "A"); that respondents likewise failed to pay complainant’s holiday pay up to the present; that complainant is entitled to such benefits as per CBA provision (Annex "B"); that in 1989 the plant union staged a strike and in 1993 was found guilty of staging an illegal strike; that from 1989 to 1992 complainant was entitled to 4 round trip business class plane tickets on a Manila-London-Manila itinerary but this benefit not (sic) its monetary equivalent was not given; that on August 1990 the respondents reduced complainant’s monthly salary of P60,000.00 by P9,900.00 till November 1993 or a period of 39 months; that in 1991 Filsyn sold Peggy Mills, Inc. to Far Eastern Textile Mills, Inc. as per agreement (Annex "D") and this was renamed as Sta. Rosa Textile with Patricio Lim as Chairman and President; that complainant worked for Sta. Rosa until November 30 that from time to time the owners of Far Eastern consulted with complainant on technical aspects of reoperation of the plant as per correspondence (Annexes "D-1" and "D-2"); that when complainant reached and applied retirement age at the end of 1993, he was only given a reduced 13th month pay of P44,183.63, leaving a balance of P15,816.87; that thereafter the owners of Far Eastern Textiles decided for cessation of operations of Sta. Rosa Textiles; that on two occasions, complainant wrote letters (Annexes "E-1" to "E-2") to Patricio Lim requesting for his retirement and other benefits; that in the last quarter of 1994 respondents offered complainant compromise settlement of only P300,000.00 which complainant rejected; that again complainant wrote a letter (Annex "F") reiterating his demand for full payment of all benefits and to no avail, hence this complaint; and that he is entitled to all his money claims pursuant to law.
On the other hand, respondents in their Position Paper alleged that complainant was the former Vice-President and Plant Manager of Peggy Mills, Inc.; that he was hired in June 1980 and Peggy Mills closed operations due to irreversible losses at the end of July 1992 but the corporation still exists at present; that its assets were acquired by Sta. Rosa Textile Corporation which was established in April 1992 but still remains non-operational at present; that complainant was hired as consultant by Sta. Rosa Textile in November 1992 but he resigned on November 30, 1993; that Filsyn and Far Eastern Textiles are separate legal entities and have no employer relationship with complainant; that respondent Patricio Lim is the President and Board Chairman of Sta. Rosa Textile Corporation; that respondent Eric Hu is a Taiwanese and is Director of Sta. Rosa Textiles, Inc.; that complainant has no cause of action against Filsyn, Far Eastern Textile Ltd., Sta. Rosa Textile Corporation and Eric Hu; that Sta. Rosa only acquired the assets and not the liabilities of Peggy Mills, Inc.; that Patricio Lim was only impleaded as Board Chairman of Sta. Rosa Textile and not as private individual; that while complainant was Vice President and Plant Manager of Peggy Mills, the union staged a strike up to July 1992 resulting in closure of operations due to irreversible losses as per Notice (Annex "1"); that complainant was relied upon to settle the labor problem but due to his lack of attention and absence the strike continued resulting in closure of the company; and losses to Sta. Rosa which acquired its assets as per their financial statements (Annexes "2" and "3"); that the attendance records of complainant from April 1992 to November 1993 (Annexes "4" and "5") show that he was either absent or worked at most two hours a day; that Sta. Rosa and Peggy Mills are interposing counterclaims for damages in the total amount of P36,757.00 against complainant; that complainant’s monthly salary at Peggy Mills was P50,495.00 and not P60,000.00; that Peggy Mills, does not have a retirement program; that whatever amount complainant is entitled should be offset with the counterclaims; that complainant worked only for 12 years from 1980 to 1992; that complainant was only hired as a consultant and not an employee by Sta. Rosa Textile; that complainant’s attendance record of absence and two hours daily work during the period of the strike wipes out any vacation/sick leave he may have accumulated; that there is no basis for complainant’s claim of two (2) business class airline tickets; that complainant’s pay already included the holiday pay; that he is entitled to holiday pay as consultant by Sta. Rosa; that he has waived this benefit in his 12 years of work with Peggy Mills; that he is not entitled to 13th month pay as consultant; and that he is not entitled to moral and exemplary damages and attorney’s fees.
In his Reply, complainant alleged that all respondents being one and the same entities are solidarily liable for all salaries and benefits and complainant is entitled to; that all respondents have the same address at 12/F B.A. Lepanto Building, Makati City; that their counsel holds office in the same address; that all respondents have the same offices and key personnel such as Patricio Lim and Eric Hu; that respondents’ Position Paper is verified by Marialen C. Corpuz who knows all the corporate officers of all respondents; that the veil of corporate fiction may be pierced if it is used as a shield to perpetuate fraud and confuse legitimate issues; that complainant never accepted the change in his position from Vice-President and Plant Manger to consultant and it is incumbent upon respondents to prove that he was only a consultant; that the Deed of Dation in Payment with Lease (Annex "C") proves that Sta. Rosa took over the assets of Peggy Mills as early as June 15, 1992 and not 1995 as alleged by respondents; that complainant never resigned from his job but applied for retirement as per letters (Annexes "E-1", "E-2" and "F"); that documents "G", "H" and "I" show that Eric Hu is a top official of Peggy Mills that the closure of Peggy Mills cannot be the fault of complainant; that the strike was staged on the issue of CBA negotiations which is not part of the usual duties and responsibilities as Plant Manager; that complainant is a British national and is prohibited by law in engaging in union activities; that as per Resolution (Annex "3") of the NLRC in the proper case, complainant testified in favor of management; that the alleged attendance record of complainant was lifted from the logbook of a security agency and is hearsay evidence; that in the other attendance record it shows that complainant was reporting daily and even on Saturdays; that his limited hours was due to the strike and cessation of operations; that as plant manager complainant was on call 24 hours a day; that respondents must pay complainant the unpaid portion of his salaries and his retirement benefits that cash voucher No. 17015 (Annex "K") shows that complainant drew the monthly salary of P60,000.00 which was reduced to P50,495.00 in August 1990 and therefore without the consent of complainant; that complainant was assured that he will be paid the deduction as soon as the company improved its financial standing but this assurance was never fulfilled; that Patricio Lim promised complainant his retirement pay as per the latter’s letters (Annexes "E-1", "E-2" and "F"); that the law itself provides for retirement benefits; that Patricio Lim by way of Memorandum (Annex "M") approved vacation and sick leave benefits of 22 days per year effective 1986; that Peggy Mills required monthly paid employees to sign an acknowledgement that their monthly compensation
includes holiday pay; that complainant was not made to sign this undertaking precisely because he is entitled to holiday pay over and above his monthly pay; that the company paid for complainant’s two (2) round trip tickets to London in 1983 and 1986 as reflected in the complainant’s passport (Annex "N"); that respondents claim that complainant is not entitled to 13th month pay but paid in 1993 and all the past 13 years; that complainant is entitled to moral and exemplary damages and attorney’s fees; that all doubts must be resolved in favor of complainant; and that complainant reserved the right to file perjury cases against those concerned.
In their Reply, respondents alleged that except for Peggy Mills, the other respondents are not proper persons in interest due to the lack of employer-employee relationship between them and complainant; that undersigned counsel does not represent Peggy Mills, Inc.
In a separate Position Paper, respondent Peggy Mills alleged that complainant was hired on February 10, 1991 as per Board Minutes (Annex "A"); that on August 19, 1987, the workers staged an illegal strike causing cessation of operations on July 21, 1992; that respondent filed a Notice of Closure with the DOLE (Annex "B"); that all employees were given separation pay except for complainant whose task was extended to December 31, 1992 to wind up the affairs of the company as per vouchers (Annexes "C" and "C-1"); that respondent offered complainant his retirement benefits under RA 7641 but complainant refused; that the regular salaries of complainant from closure up to December 31, 1992 have offset whatever vacation and sick leaves he accumulated; that his claim for unused plane tickets from 1989 to 1992 has no policy basis, the company’s formula of employees monthly rate x 314 days over 12 months already included holiday pay; that complainant’s unpaid portion of the 13th month pay in 1993 has no basis because he was only an employee up to December 31, 1992; that the 13th month pay was based on his last salary; and that complainant is not entitled to damages.5
On 3 April 1998, the Labor Arbiter rendered his decision with the following dispositive portion:
WHEREFORE, premises considered, We hold all respondents as jointly and solidarily liable for complainant’s money claims as adjudicated above and computed below as follows:
Retirement Benefits (one month salary for every year of service)
6/80 - 11/30/93 = 14 years
P60,000 x 14.0 mos. …………………… P840,000.00
Vacation and Sick Leave (3 yrs.)
P2,000.00 x 22 days x 3 yrs. …………… 132,000.00
Underpayment of Salaries (3 yrs.)
P60,000 - P50,495 = P9,505
P 9,505 x 36.0 mos. …………………... 342,180.00
Holiday Pay (3 yrs.)
P2,000 x 30 days ………………………. 60,000.00
Underpayment of 13th month pay (1993) ……... 15,816.87
Moral Damages ……………………………….. 3,000,000.00
Exemplary Damages ………………………….. 1,000,000.00
10% Attorney’s Fees …………………………. 138,999.68
TOTAL P 5,528,996.55
Unused Airline Tickets (3 yrs.)
(To be converted in Peso upon payment)
$2,450.00 x 3.0 [yrs.]..……………… $7,350.00
SO ORDERED.6
Filipinas Synthetic Fiber Corporation (Filsyn), Far Eastern Textile Mills, Inc. (FETMI), Sta. Rosa Textiles, Inc. (SRTI), Patricio L. Lim (Patricio), and Eric Hu appealed to the NLRC. The NLRC rendered its decision on 29 December 1998, thus:
WHEREFORE, the Decision dated 3 April 1998 is hereby REVERSED and SET ASIDE and a new one is entered ORDERING respondent Peggy Mills, Inc. to pay complainant his retirement pay equivalent to 22.5 days for every year of service for his twelve (12) years of service from 1980 to 1992 based on a salary rate of P50,495.00 a month.
All other claims are DISMISSED for lack of merit.
SO ORDERED.7
John F. McLeod (McLeod) filed a motion for reconsideration which the NLRC denied in its Resolution of 30 June 1999.8 McLeod thus filed a petition for certiorari before the Court of Appeals assailing the decision and resolution of the NLRC.9
The Ruling of the Court of Appeals
On 15 June 2000, the Court of Appeals rendered judgment as follows:
WHEREFORE, the decision dated December 29, 1998 of the NLRC is hereby AFFIRMED with the MODIFICATION that respondent Patricio Lim is jointly and solidarily liable with Peggy Mills, Inc., to pay the following amounts to petitioner John F. McLeod:
1. retirement pay equivalent to 22.5 days for every year of service for his twelve (12) years of service from 1980 to 1992 based on a salary rate of P50,495, a month;
2. moral damages in the amount of one hundred thousand (P100,000.00) Pesos;
3. exemplary damages in the amount of fifty thousand (P50,000.00) Pesos; and
4. attorney’s fees equivalent to 10% of the total award.
No costs is awarded.
SO ORDERED.10
The Court of Appeals rejected McLeod’s theory that all respondent corporations are the same corporate entity which should be held solidarily liable for the payment of his monetary claims.
The Court of Appeals ruled that the fact that (1) all respondent corporations have the same address; (2) all were represented by the same counsel, Atty. Isidro S. Escano; (3) Atty. Escano holds office at respondent corporations’ address; and (4) all respondent corporations have common officers and key personnel, would not justify the application of the doctrine of piercing the veil of corporate fiction.
The Court of Appeals held that there should be clear and convincing evidence that SRTI, FETMI, and Filsyn were being used as alter ego, adjunct or business conduit for the sole benefit of Peggy Mills, Inc. (PMI), otherwise, said corporations should be treated as distinct and separate from each other.
The Court of Appeals pointed out that the Articles of Incorporation of PMI show that it has six incorporators, namely, Patricio, Jose Yulo, Jr., Carlos Palanca, Jr., Cesar R. Concio, Jr., E. A. Picasso, and Walter Euyang. On the other hand, the Articles of Incorporation of Filsyn show that it has 10 incorporators, namely, Jesus Y. Yujuico, Carlos Palanca, Jr., Patricio, Ang Beng Uh, Ramon A. Yulo, Honorio Poblador, Jr., Cipriano Azada, Manuel Tomacruz, Ismael Maningas, and Benigno Zialcita, Jr.
The Court of Appeals pointed out that PMI and Filsyn have only two interlocking incorporators and directors, namely, Patricio and Carlos Palanca, Jr.
Reiterating the ruling of this Court in Laguio v. NLRC,11 the Court of Appeals held that mere substantial identity of the incorporators of two corporations does not necessarily imply fraud, nor warrant the piercing of the veil of corporate fiction.
The Court of Appeals also pointed out that when SRTI and PMI executed the Dation in Payment with Lease, it was clear that SRTI did not assume the liabilities PMI incurred before the execution of the contract.
The Court of Appeals held that McLeod failed to substantiate his claim that all respondent corporations should be treated as one corporate
entity. The Court of Appeals thus upheld the NLRC’s finding that no employer-employee relationship existed between McLeod and respondent corporations except PMI.
The Court of Appeals ruled that Eric Hu, as an officer of PMI, should be exonerated from any liability, there being no proof of malice or bad faith on his part. The Court of Appeals, however, ruled that McLeod was entitled to recover from PMI and Patricio, the company’s Chairman and President.
The Court of Appeals pointed out that Patricio deliberately and maliciously evaded PMI’s financial obligation to McLeod. The Court of Appeals stated that, on several occasions, despite his approval, Patricio refused and ignored to pay McLeod’s retirement benefits. The Court of Appeals stated that the delay lasted for one year prompting McLeod to initiate legal action. The Court of Appeals stated that although PMI offered to pay McLeod his retirement benefits, this offer for P300,000 was still below the "floor limits" provided by law. The Court of Appeals held that an employee could demand payment of retirement benefits as a matter of right.
The Court of Appeals stated that considering that PMI was no longer in operation, its "officer should be held liable for acting on behalf of the corporation."
The Court of Appeals also ruled that since PMI did not have a retirement program providing for retirement benefits of its employees, Article 287 of the Labor Code must be followed. The Court of Appeals thus upheld the NLRC’s finding that McLeod was entitled to retirement pay equivalent to 22.5 days for every year of service from 1980 to 1992 based on a salary rate of P50,495 a month.
The Court of Appeals held that McLeod was not entitled to payment of vacation, sick leave and holiday pay because as Vice President and Plant Manager, McLeod is a managerial employee who, under Article 82 of the Labor Code, is not entitled to these benefits.
The Court of Appeals stated that for McLeod to be entitled to payment of service incentive leave and holidays, there must be an agreement to that effect between him and his employer.
Moreover, the Court of Appeals rejected McLeod’s argument that since PMI paid for his two round-trip tickets Manila-London in 1983 and 1986, he was also "entitled to unused airline tickets." The Court of Appeals stated that the fact that PMI granted McLeod "free transport to and from Manila and London for the year 1983 and 1986 does not ipso facto characterize it as regular that would establish a prevailing company policy."
The Court of Appeals also denied McLeod’s claims for underpayment of salaries and his 13th month pay for the year 1994. The Court of Appeals upheld the NLRC’s ruling that it could be deduced from McLeod’s own narration of facts that he agreed to the reduction of his compensation from P60,000 to P50,495 in August 1990 to November 1993.
The Court of Appeals found the award of moral damages for P50,000 in order because of the "stubborn refusal" of PMI and Patricio to respect McLeod’s valid claims.
The Court of Appeals also ruled that attorney’s fees equivalent to 10% of the total award should be given to McLeod under Article 2208, paragraph 2 of the Civil Code.12
Hence, this petition.
The Issues
McLeod submits the following issues for our consideration:
1. Whether the challenged Decision and Resolution of the 14th Division of the Court of Appeals promulgated on 15 June 2000 and 27 December 2000, respectively, in CA-G.R. SP No. 55130 are in accord with law and jurisprudence;
2. Whether an employer-employee relationship exists between the private respondents and the petitioner for purposes of determining employer liability to the petitioner;
3. Whether the private respondents may avoid their financial obligations to the petitioner by invoking the veil of corporate fiction;
4. Whether petitioner is entitled to the relief he seeks against the private respondents;
5. Whether the ruling of [this] Court in Special Police and Watchman Association (PLUM) Federation v. National Labor Relations Commission cited by the Office of the Solicitor General is applicable to the case of petitioner; and
6. Whether the appeal taken by the private respondents from the Decision of the labor arbiter meets the mandatory requirements recited in the Labor Code of the Philippines, as amended.13
The Court’s Ruling
The petition must fail.
McLeod asserts that the Court of Appeals should not have upheld the NLRC’s findings that he was a managerial employee of PMI from 20 June 1980 to 31 December 1992, and then a consultant of SRTI up to 30 November 1993. McLeod asserts that if only for this "brazen assumption," the Court of Appeals should not have sustained the NLRC’s ruling that his cause of action was only against PMI.
These assertions do not deserve serious consideration.
Records disclose that McLeod was an employee only of PMI.14
PMI hired McLeod as its acting Vice President and General Manager on 20 June 1980.15 PMI confirmed McLeod’s appointment as Vice President/Plant Manager in the Special Meeting of its Board of Directors on 10 February 1981.16 McLeod himself testified during the hearing before the Labor Arbiter that his "regular employment" was with PMI.17
When PMI’s rank-and-file employees staged a strike on 19 August 1989 to July 1992, PMI incurred serious business losses.18
This prompted PMI to stop permanently plant operations and to send a notice of closure to the Department of Labor and Employment on 21 July 1992.19
PMI informed its employees, including McLeod, of the closure.20
PMI paid its employees, including managerial employees, except McLeod, their unpaid wages, sick leave, vacation leave, prorated 13th month pay, and separation pay. Under the compromise agreement between PMI and its employees, the employer-employee relationship between them ended on 25 November 1992.21
Records also disclose that PMI extended McLeod’s service up to 31 December 1992 "to wind up some affairs" of the company.22
McLeod testified on cross-examination that he received his last salary from PMI in December 1992.23
It is thus clear that McLeod was a managerial employee of PMI from 20 June 1980 to 31 December 1992.
However, McLeod claims that after FETMI purchased PMI in January 1993, he "continued to work at the same plant with the same responsibilities" until 30 November 1993. McLeod claims that FETMI merely renamed PMI as SRTI. McLeod asserts that it was for this reason that when he reached the retirement age in 1993, he asked all the respondents for the payment of his benefits.24
These assertions deserve scant consideration.
What took place between PMI and SRTI was dation in payment with lease. Pertinent portions of the contract that PMI and SRTI executed on 15 June 1992 read:
WHEREAS, PMI is indebted to the Development Bank of the Philippines ("DBP") and as security for such debts (the "Obligations") has mortgaged its real properties covered by TCT Nos. T-38647, T-37136, and T-37135, together with all machineries and improvements found thereat, a complete listing of which is hereto attached as Annex "A" (the "Assets");
WHEREAS, by virtue of an inter-governmental agency arrangement, DBP transferred the Obligations, including the Assets, to the Asset Privatization Trust ("APT") and the latter has received payment for the Obligations from PMI, under APT’s Direct Debt Buy-Out ("DDBO") program thereby causing APT to completely discharge and cancel the mortgage in the Assets and to release the titles of the Assets back to PMI;
WHEREAS, PMI obtained cash advances from SRTC in the total amount of TWO HUNDRED TEN MILLION PESOS (P210,000,000.00) (the "Advances") to enable PMI to consummate the DDBO with APT, with SRTC subrogating APT as PMI’s creditor thereby;
WHEREAS, in payment to SRTC for PMI’s liability, PMI has agreed to transfer all its rights, title and interests in the Assets by way of a dation in payment to SRTC, provided that simultaneous with the dation in payment, SRTC shall grant unto PMI the right to lease the Assets under terms and conditions stated hereunder;
x x x x
NOW THEREFORE, for and in consideration of the foregoing premises, and of the terms and conditions hereinafter set forth, the parties hereby agree as follows:
1. CESSION. In consideration of the amount of TWO HUNDRED TEN MILLION PESOS (P210,000,000.00), PMI hereby cedes, conveys and transfers to SRTC all of its rights, title and interest in and to the Assets by way of a dation in payment.25 (Emphasis supplied)
As a rule, a corporation that purchases the assets of another will not be liable for the debts of the selling corporation, provided the former acted in good faith and paid adequate consideration for such assets, except when any of the following circumstances is present: (1) where the purchaser expressly or impliedly agrees to assume the debts, (2) where the transaction amounts to a consolidation or merger of the corporations, (3) where the purchasing corporation is merely a continuation of the selling corporation, and (4) where the selling corporation fraudulently enters into the transaction to escape liability for those debts.26
None of the foregoing exceptions is present in this case.
Here, PMI transferred its assets to SRTI to settle its obligation to SRTI in the sum of P210,000,000. We are not convinced that PMI fraudulently transferred these assets to escape its liability for any of its debts. PMI had already paid its employees, except McLeod, their money claims.
There was also no merger or consolidation of PMI and SRTI.
Consolidation is the union of two or more existing corporations to form a new corporation called the consolidated corporation. It is a combination by agreement between two or more corporations by which their rights, franchises, and property are united and become those of a single, new corporation, composed generally, although not necessarily, of the stockholders of the original corporations.
Merger, on the other hand, is a union whereby one corporation absorbs one or more existing corporations, and the absorbing corporation survives and continues the combined business.
The parties to a merger or consolidation are called constituent corporations. In consolidation, all the constituents are dissolved and absorbed by the new consolidated enterprise. In merger, all constituents, except the surviving corporation, are dissolved. In both cases, however, there is no liquidation of the assets of the dissolved corporations, and the surviving or consolidated corporation acquires all their properties, rights and franchises and their stockholders usually become its stockholders.
The surviving or consolidated corporation assumes automatically the liabilities of the dissolved corporations, regardless of whether the creditors have consented or not to such merger or consolidation.27
In the present case, there is no showing that the subject dation in payment involved any corporate merger or consolidation. Neither
is there any showing of those indicative factors that SRTI is a mere instrumentality of PMI.
Moreover, SRTI did not expressly or impliedly agree to assume any of PMI’s debts. Pertinent portions of the subject Deed of Dation in Payment with Lease provide, thus:
2. WARRANTIES AND REPRESENTATIONS. PMI hereby warrants and represents the following:
x x x x
(e) PMI shall warrant that it will hold SRTC or its assigns, free and harmless from any liability for claims of PMI’s creditors, laborers, and workers and for physical injury or injury to property arising from PMI’s custody, possession, care, repairs, maintenance, use or operation of the Assets except ordinary wear and tear;28
(Emphasis supplied)
Also, McLeod did not present any evidence to show the alleged renaming of "Peggy Mills, Inc." to "Sta. Rosa Textiles, Inc."
Hence, it is not correct for McLeod to treat PMI and SRTI as the same entity.
Respondent corporations assert that SRTI hired McLeod as consultant after PMI stopped operations.29 On the other hand, McLeod asserts that he was respondent corporations’ employee from 1980 to 30 November 1993.30 However, McLeod failed to present any proof of employer-employee relationship between him and Filsyn, SRTI, or FETMI. McLeod testified, thus:
ATTY. ESCANO:
Do you have any employment contract with Far Eastern Textile?
WITNESS:
It is my belief up the present time.
ATTY. AVECILLA:
May I request that the witness be allowed to go through his Annexes, Your Honor.
ATTY. ESCANO:
Yes, but I want a precise answer to that question. If he has an employment contract with Far Eastern Textile?
WITNESS:
Can I answer it this way, sir? There is not a valid contract but I was under the impression taking into consideration that the closeness that I had at Far Eastern Textile is enough during that period of time of the development of Peggy Mills to reorganize a staff. I was under the basic impression that they might still retain my status as Vice President and Plant Manager of the company.
ATTY. ESCANO:
But the answer is still, there is no employment contract in your possession appointing you in any capacity by Far Eastern?
WITNESS:
There was no written contract, sir.
x x x x
ATTY. ESCANO:
So, there is proof that you were in fact really employed by Peggy Mills?
WITNESS:
Yes, sir.
ATTY. ESCANO:
Of course, my interest now is to whether or not there is a similar document to present that you were employed by the other respondents like Filsyn Corporation?
WITNESS:
I have no document, sir.
ATTY. ESCANO:
What about Far Eastern Textile Mills?
WITNESS:
I have no document, sir.
ATTY. ESCANO:
And Sta. Rosa Textile Mills?
WITNESS:
There is no document, sir.31
x x x x
ATTY. ESCANO:
Q Yes. Let me be more specific, Mr. McLeod. Do you have a contract of employment from Far Eastern Textiles, Inc.?
A No, sir.
Q What about Sta. Rosa Textile Mills, do you have an employment contract from this company?
A No, sir.
x x x x
Q And what about respondent Eric Hu. Have you had any contract of employment from Mr. Eric Hu?
A Not a direct contract but I was taken in and I told to take over this from Mr. Eric Hu. Automatically, it confirms that Mr. Eric Hu, in other words, was under the control of Mr. Patricio Lim at that period of time.
Q No documents to show, Mr. McLeod?
A No. No documents, sir.32
McLeod could have presented evidence to support his allegation of employer-employee relationship between him and any of Filsyn, SRTI, and FETMI, but he did not. Appointment letters or employment contracts, payrolls, organization charts, SSS registration, personnel list, as well as testimony of co-employees, may serve as evidence of employee status.33
It is a basic rule in evidence that parties must prove their affirmative allegations. While technical rules are not strictly followed in the NLRC, this does not mean that the rules on proving allegations are entirely ignored. Bare allegations are not enough. They must be supported by substantial evidence at the very least.34
However, McLeod claims that "for purposes of determining employer liability, all private respondents are one and the same employer" because: (1) they have the same address; (2) they are all engaged in the same business; and (3) they have interlocking directors and officers.35
This assertion is untenable.
A corporation is an artificial being invested by law with a personality separate and distinct from that of its stockholders and from that of other corporations to which it may be connected.36
While a corporation may exist for any lawful purpose, the law will regard it as an association of persons or, in case of two corporations, merge them into one, when its corporate legal entity is used as a cloak for fraud or illegality. This is the doctrine of piercing the veil of corporate fiction. The doctrine applies only when such corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime,37 or when it is made as a shield to confuse the legitimate issues, or where a corporation is the mere alter ego or business conduit of a person, or where the corporation is so organized and controlled and its affairs are so conducted as to make it merely an instrumentality, agency, conduit or adjunct of another corporation.38
To disregard the separate juridical personality of a corporation, the wrongdoing must be established clearly and convincingly. It cannot be presumed.39
Here, we do not find any of the evils sought to be prevented by the doctrine of piercing the corporate veil.
Respondent corporations may be engaged in the same business as that of PMI, but this fact alone is not enough reason to pierce the veil of corporate fiction.40
In Indophil Textile Mill Workers Union v. Calica,41 the Court ruled, thus:
In the case at bar, petitioner seeks to pierce the veil of corporate entity of Acrylic, alleging that the creation of the corporation is a devise to evade the application of the CBA between petitioner Union and private respondent Company. While we do not discount the possibility of the similarities of the businesses of private respondent and Acrylic, neither are we inclined to apply the doctrine invoked by petitioner in granting the relief sought. The fact that the businesses of private respondent and Acrylic are related, that some of the employees of the private respondent are the same persons manning and providing for auxiliary services to the units of Acrylic, and that the physical plants, offices and facilities are situated in the same compound, it is our considered opinion that these facts are not sufficient to justify the piercing of the corporate veil of Acrylic.42 (Emphasis supplied)
Also, the fact that SRTI and PMI shared the same address, i.e., 11/F BA-Lepanto Bldg., Paseo de Roxas, Makati City,43 can be explained by the two companies’ stipulation in their Deed of Dation in Payment with Lease that "simultaneous with the dation in payment, SRTC shall grant unto PMI the right to lease the Assets under terms and conditions stated hereunder."44
As for the addresses of Filsyn and FETMI, Filsyn held office at 12th Floor, BA-Lepanto Bldg., Paseo de Roxas, Makati City,45 while FETMI held office at 18F, Tun Nan Commercial Building, 333 Tun Hwa South Road, Sec. 2, Taipei, Taiwan, R.O.C.46 Hence, they did not have the same address as that of PMI.
That respondent corporations have interlocking incorporators, directors, and officers is of no moment.
The only interlocking incorporators of PMI and Filsyn were Patricio and Carlos Palanca, Jr.47 While Patricio was Director and Board Chairman of Filsyn, SRTI, and PMI,48 he was never an officer of FETMI.
Eric Hu, on the other hand, was Director of Filsyn and SRTI.49
He was never an officer of PMI.
Marialen C. Corpuz, Filsyn’s Finance Officer,50 testified on cross-examination that (1) among all of Filsyn’s officers, only she was the one involved in the management of PMI; (2) only she and Patricio were the common officers between Filsyn and PMI; and (3) Filsyn and PMI are "two separate companies."51
Apolinario L. Posio, PMI’s Chief Accountant, testified that "SRTI is a different corporation from PMI."52
At any rate, the existence of interlocking incorporators, directors, and officers is not enough justification to pierce the veil of corporate fiction, in the absence of fraud or other public policy considerations.53
In Del Rosario v. NLRC,54 the Court ruled that substantial identity of the incorporators of corporations does not necessarily imply fraud.
In light of the foregoing, and there being no proof of employer-employee relationship between McLeod and respondent corporations and Eric Hu, McLeod’s cause of action is only against his former employer, PMI.
On Patricio’s personal liability, it is settled that in the absence of malice, bad faith, or specific provision of law, a stockholder or an officer of a corporation cannot be made personally liable for corporate liabilities.55
To reiterate, a corporation is a juridical entity with legal personality separate and distinct from those acting for and in its behalf and, in general, from the people comprising it. The rule is that obligations incurred by the corporation, acting through its directors, officers, and employees, are its sole liabilities.56
Personal liability of corporate directors, trustees or officers attaches only when (1) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders or other persons; (2) they consent to the issuance of watered down stocks or when, having knowledge of such issuance, do not forthwith file with the corporate secretary their written objection; (3) they agree to hold themselves personally and solidarily liable with the corporation; or (4) they are made by specific provision of law personally answerable for their corporate action.57
Considering that McLeod failed to prove any of the foregoing exceptions in the present case, McLeod cannot hold Patricio solidarily liable with PMI.
The records are bereft of any evidence that Patricio acted with malice or bad faith. Bad faith is a question of fact and is evidentiary. Bad faith does not connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious wrongdoing. It means breach of a known duty through some ill motive or interest. It partakes of the nature of fraud.58
In the present case, there is nothing substantial on record to show that Patricio acted in bad faith in terminating McLeod’s services to warrant Patricio’s personal liability. PMI had no other choice but to stop plant operations. The work stoppage therefore was by necessity. The company could no longer continue with its plant operations because of the serious business losses that it had suffered. The mere fact that Patricio was president and director of PMI is not a ground to conclude that he should be held solidarily liable with PMI for McLeod’s money claims.
The ruling in A.C. Ransom Labor Union-CCLU v. NLRC,59 which the Court of Appeals cited, does not apply to this case. We quote pertinent portions of the ruling, thus:
(a) Article 265 of the Labor Code, in part, expressly provides:
"Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages."
Article 273 of the Code provides that:
"Any person violating any of the provisions of Article 265 of this Code shall be punished by a fine of not exceeding five hundred pesos and/or imprisonment for not less than one (1) day nor more than six (6) months."
(b) How can the foregoing provisions be implemented when the employer is a corporation? The answer is found in Article 212 (c) of the Labor Code which provides:
"(c) ‘Employer’ includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any labor organization or any of its officers or agents except when acting as employer.".
The foregoing was culled from Section 2 of RA 602, the Minimum Wage Law. Since RANSOM is an artificial person, it must have an officer who can be presumed to be the employer, being the "person acting in the interest of (the) employer" RANSOM. The corporation, only in the technical sense, is the employer.
The responsible officer of an employer corporation can be held personally, not to say even criminally, liable for non-payment of back wages. That is the policy of the law.
x x x x
(c) If the policy of the law were otherwise, the corporation employer can have devious ways for evading payment of back wages. In the instant case, it would appear that RANSOM, in 1969, foreseeing the possibility or probability of payment of back wages to the 22 strikers, organized ROSARIO to replace RANSOM, with the latter to be eventually phased out if the 22 strikers win their case. RANSOM actually ceased operations on May 1, 1973, after the December 19, 1972 Decision of the Court of Industrial Relations was promulgated against RANSOM.60 (Emphasis supplied)
Clearly, in A.C. Ransom, RANSOM, through its President, organized ROSARIO to evade payment of backwages to the 22 strikers. This situation, or anything similar showing malice or bad faith on the part of Patricio, does not obtain in the present case. In Santos v. NLRC,61 the Court held, thus:
It is true, there were various cases when corporate officers were themselves held by the Court to be personally accountable for the payment of wages and money claims to its employees. In A.C. Ransom Labor Union-CCLU vs. NLRC, for instance, the Court ruled that under the Minimum Wage Law, the responsible officer of an employer corporation could be held personally liable for nonpayment of backwages for "(i)f the policy of the law were otherwise, the corporation employer (would) have devious ways for evading payment of backwages." In the absence of a clear identification of the officer directly responsible for failure to pay the backwages, the Court considered the President of the corporation as such officer. The case was cited in Chua vs. NLRC in holding personally liable the vice-president of the company, being the highest and most ranking official of the corporation next to the President who was dismissed for the latter’s claim for unpaid wages.
A review of the above exceptional cases would readily disclose the attendance of facts and circumstances that could rightly sanction personal liability on the part of the company officer. In A.C. Ransom, the corporate entity was a family corporation and execution against it could not be implemented because of the disposition posthaste of its leviable assets evidently in order to evade its just and due obligations. The doctrine of "piercing the veil of corporate fiction" was thus clearly appropriate. Chua likewise involved another family corporation, and this time the conflict was between two brothers occupying the highest ranking positions in the company. There were incontrovertible facts which pointed to extreme personal animosity that resulted, evidently in bad faith, in the easing out from the company of one of the brothers by the other.
The basic rule is still that which can be deduced from the Court’s pronouncement in Sunio vs. National Labor Relations Commission; thus:
We come now to the personal liability of petitioner, Sunio, who was made jointly and severally responsible with petitioner company and CIPI for the payment of the backwages of private respondents. This is reversible error. The Assistant Regional Director’s Decision failed to disclose the reason why he was made personally liable. Respondents, however, alleged as grounds thereof, his being the owner of one-half (½) interest of said corporation, and his alleged arbitrary dismissal of private respondents.
Petitioner Sunio was impleaded in the Complaint in his capacity as General Manager of petitioner corporation. There appears to be no evidence on record that he acted maliciously or in bad faith in terminating the services of private respondents. His act, therefore, was within the scope of his authority and was a corporate act.
It is basic that a corporation is invested by law with a personality separate and distinct from those of the persons composing it as well as from that of any other legal entity to which it may be related. Mere ownership by a single stockholder or by another corporation of all or nearly all of the capital stock of a corporation is not of itself sufficient ground for disregarding the separate corporate personality. Petitioner Sunio, therefore, should not have been made personally answerable for the payment of private respondents’ back salaries.62 (Emphasis supplied)
Thus, the rule is still that the doctrine of piercing the corporate veil applies only when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud, or defend crime. In the absence of malice, bad faith, or a specific provision of law making a corporate officer liable, such corporate officer cannot be made personally liable for corporate liabilities. Neither Article 212(c) nor Article 273 (now 272) of the Labor Code expressly makes any corporate officer personally liable for the debts of the corporation.
As this Court ruled in H.L. Carlos Construction, Inc. v. Marina Properties Corporation:63
We concur with the CA that these two respondents are not liable. Section 31 of the Corporation Code (Batas Pambansa Blg. 68) provides:
"Section 31. Liability of directors, trustees or officers. - Directors or trustees who willfully and knowingly vote for or assent to patently unlawful acts of the corporation or who are guilty of gross negligence or bad faith ... shall be liable jointly and severally for all damages resulting therefrom suffered by the corporation, its stockholders and other persons."
The personal liability of corporate officers validly attaches only when (a) they assent to a patently unlawful act of the corporation; or (b) they are guilty of bad faith or gross negligence in directing its affairs; or (c) they incur conflict of interest, resulting in damages to the corporation, its stockholders or other persons.
The records are bereft of any evidence that Typoco acted in bad faith with gross or inexcusable negligence, or that he acted outside the scope of his authority as company president. The unilateral termination of the Contract during the existence of the TRO was indeed contemptible – for which MPC should have merely been cited for contempt of court at the most – and a preliminary injunction would have then stopped work by the second contractor. Besides, there is no showing that the unilateral termination of the Contract was null and void.64
McLeod is not entitled to payment of vacation leave and sick leave as well as to holiday pay. Article 82, Title I, Book Three of the Labor Code, on Working Conditions and Rest Periods, provides:
Coverage. ─ The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.
As used herein, "managerial employees" refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. (Emphasis supplied)
As Vice President/Plant Manager, McLeod is a managerial employee who is excluded from the coverage of Title I, Book Three of the Labor Code. McLeod is entitled to payment of vacation leave and sick leave only if he and PMI had agreed on it. The payment of vacation leave and sick leave depends on the policy of the employer or the agreement between the employer and employee.65
In the present case, there is no showing that McLeod and PMI had an agreement concerning payment of these benefits.
McLeod’s assertion of underpayment of his 13th month pay in December 1993 is unavailing.66 As already stated, PMI stopped plant operations in 1992. McLeod himself testified that he received his last salary from PMI in December 1992. After the termination of the employer-employee relationship between McLeod and PMI, SRTI hired McLeod as consultant and not as employee. Since McLeod was no longer an employee, he was not entitled to the 13th month pay.67 Besides, there is no evidence on record that McLeod indeed received his alleged "reduced 13th month pay of P44,183.63" in December 1993.68
Also unavailing is McLeod’s claim that he was entitled to the "unpaid monetary equivalent of unused plane tickets for the period covering 1989 to 1992 in the amount of P279,300.00."69 PMI has no company policy granting its officers and employees expenses for trips abroad.70 That at one time PMI reimbursed McLeod for his and his wife’s plane tickets in a vacation to London71 could not be deemed as an established practice considering that it happened only once. To be considered a "regular practice," the giving of the benefits should have been done over a long period, and must be shown to have been consistent and deliberate.72
In American Wire and Cable Daily Rated Employees Union v. American Wire and Cable Co., Inc.,73 the Court held that for a bonus to be enforceable, the employer must have promised it, and the parties must have expressly agreed upon it, or it must have had a fixed amount and had been a long and regular practice on the part of the employer.
In the present case, there is no showing that PMI ever promised McLeod that it would continue to grant him the benefit in question. Neither is there any proof that PMI and McLeod had expressly agreed upon the giving of that benefit.
McLeod’s reliance on Annex M74 can hardly carry the day for him. Annex M, which is McLeod’s letter addressed to "Philip Lim, VP Administration," merely contains McLeod’s proposals for the grant of some benefits to supervisory and confidential employees. Contrary to McLeod’s allegation, Patricio did not sign the letter. Hence, the letter does not embody any agreement between McLeod and the management that would entitle McLeod to his money claims.
Neither can McLeod’s assertions find support in Annex U.75
Annex U is the Agreement which McLeod and Universal Textile Mills, Inc. executed in 1959. The Agreement merely contains the renewal of the service agreement which the parties signed in 1956.
McLeod cannot successfully pretend that his monthly salary of P60,000 was reduced without his consent.
McLeod testified that in 1990, Philip Lim explained to him why his salary would have to be reduced. McLeod said that Philip told him that "they were short in finances; that it would be repaid."76
Were McLeod not amenable to that reduction in salary, he could have immediately resigned from his work in PMI.
McLeod knew that PMI was then suffering from serious business losses. In fact, McLeod testified that PMI was not able to operate from August 1989 to 1992 because of the strike. Even before 1989, as Vice President of PMI, McLeod was aware that the company had incurred "huge loans from DBP."77 As it happened, McLeod continued to work with PMI. We find it pertinent to quote some portions of Apolinario Posio’s testimony, to wit:
Q You also stated that before the period of the strike as shown by annex "K" of the reply filed by the complainant which was I think a voucher, the salary of Mr. McLeod was roughly P60,000.00 a month?
A Yes, sir.
Q And as shown by their annex "L" to their reply, that this was reduced to roughly P50,000.00 a month?
A Yes, sir.
Q You stated that this was indeed upon the instruction by the Vice-President of Peggy Mills at that time and that was Mr. Philip Lim, would you not?
A Yes, sir.
Q Of your own personal knowledge, can you say if this was, in fact, by agreement between Mr. Philip Lim or any other officers of Peggy Mills and Mr. McLeod?
A If I recall it correctly, I assume it was an agreement, verbal agreement with, between Mr. Philip Lim and Mr. McLeod, because the voucher that we prepared was actually acknowledged by Mr. McLeod, the reduced amount was acknowledged by Mr. McLeod thru the voucher that we prepared.
Q In other words, Mr. Witness, you mean to tell us that Mr. McLeod continuously received the reduced amount of P50,000.00 by signing the voucher and receiving the amount in question?
A Yes, sir.
Q As far as you remember, Mr. Posio, was there any complaint by Mr. McLeod because of this reduced amount of his salary at that time?
A I don’t have any personal knowledge of any complaint, sir.
Q At least, that is in so far as you were concerned, he said nothing when he signed the voucher in question?
A Yes, sir.
Q Now, you also stated that the reason for what appears to be an agreement between Peggy Mills and Mr. McLeod in so far as the reduction of his salary from P60,000.00 to P50,000.00 a month was because he would have a reduced number of working days in view of the strike at Peggy Mills, is that right?
A Yes, sir.
Q And that this was so because on account of the strike, there was no work to be done in the company?
A Yes, sir.78
x x x x
Q Now, you also stated if you remember during the first time that you testified that in the beginning, the monthly salary of the complainant was P60,000.00, is that correct?
A Yes, sir.
Q And because of the long period of the strike, when there was no work to be done, by agreement with the complainant, his monthly salary was adjusted to only P50,495 because he would not have to report for work on Saturday. Do you remember having made that explanation?
A Yes, sir.
Q You also stated that the complainant continuously received his monthly salary in the adjusted amount of P50,495.00 monthly signing the necessary vouchers or pay slips for that without complaining, is that not right, Mr. Posio?
A Yes, sir.79
Since the last salary that McLeod received from PMI was P50,495, that amount should be the basis in computing his retirement benefits. McLeod must be credited only with his service to PMI as it had a juridical personality separate and distinct from that of the other respondent corporations.
Since PMI has no retirement plan,80 we apply Section 5, Rule II of the Rules Implementing the New Retirement Law which provides:
5.1 In the absence of an applicable agreement or retirement plan, an employee who retires pursuant to the Act shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.
5.2 Components of One-half (1/2) Month Salary. ─ For the purpose of determining the minimum retirement pay due an employee under this Rule, the term "one-half month salary" shall include all of the following:
(a) Fifteen (15) days salary of the employee based on his latest salary rate. x x x
With McLeod having worked with PMI for 12 years, from 1980 to 1992, he is entitled to a retirement pay equivalent to ½ month salary for every year of service based on his latest salary rate of P50,495 a month.
There is no basis for the award of moral damages.
Moral damages are recoverable only if the defendant has acted fraudulently or in bad faith, or is guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligations. The breach must be wanton, reckless, malicious, or in bad faith, oppressive or abusive.81 From the records of the case, the Court finds no ultimate facts to support a conclusion of bad faith on the part of PMI.
Records disclose that PMI had long offered to pay McLeod his money claims. In their Comment, respondents assert that they offered to pay McLeod the sum of P840,000, as "separation benefits, and not P300,000, if only to buy peace and to forestall any complaint" that McLeod may initiate before the NLRC. McLeod admitted at the hearing before the Labor Arbiter that PMI has made this offer ─
ATTY. ESCANO:
x x x According to your own statement in your Position Paper and I am referring to page 8, your unpaid retirement benefit for fourteen (14) years of service at P60,000.00 per year is P840,000.00, is that correct?
WITNESS:
That is correct, sir.
ATTY. ESCANO:
And this amount is correct P840,000.00, according to your Position Paper?
WITNESS:
That is correct, sir.
ATTY. ESCANO:
The question I want to ask is, are you aware that this amount was offered to you sometime last year through your own lawyer, my good friend, Atty. Avecilla, who is right here with us?
WITNESS:
I was aware, sir.
ATTY. ESCANO:
So this was offered to you, is that correct?
WITNESS:
I was told that a fixed sum of P840,000.00 was offered.
ATTY. ESCANO:
And , of course, the reason, if I may assume, that you declined this offer was that, according to you, there are other claims which you would like to raise against the Respondents which, by your impression, they were not willing to pay in addition to this particular amount?
WITNESS:
Yes, sir.
ATTY. ESCANO:
The question now is, if the same amount is offered to you by way of retirement which is exactly what you stated in your own Position Paper, would you accept it or not?
WITNESS:
Not on the concept without all the basic benefits due me, I will refuse.82
x x x x
ATTY. ROXAS:
Q You mentioned in the cross-examination of Atty. Escano that you were offered the separation pay in 1994, is that correct, Mr. Witness?
WITNESS:
A I was offered a settlement of P300,000.00 for complete settlement and that was I think in January or February 1994, sir.
ATTY. ESCANO:
No. What was mentioned was the amount of P840,000.00.
WITNESS:
What did you say, Atty. Escano?
ATTY. ESCANO:
The amount that I mentioned was P840,000.00 corresponding to the . . . . . . .
WITNESS:
May I ask that the question be clarified, your Honor?
ATTY. ROXAS:
Q You mentioned that you were offered for the settlement of your claims in 1994 for P840,000.00, is that right, Mr. Witness?
A During that period in time, while the petition in this case was ongoing, we already filed a case at that period of time, sir. There was a discussion. To the best of my knowledge, they are willing to settle for P840,000.00 and based on what the Attorney told me, I refused to accept because I believe that my position was not in anyway due to a compromise situation to the benefits I am entitled to.83
Hence, the awards for exemplary damages and attorney’s fees are not proper in the present case.84
That respondent corporations, in their appeal to the NLRC, did not serve a copy of their memorandum of appeal upon PMI is of no moment. Section 3(a), Rule VI of the NLRC New Rules of Procedure provides:
Requisites for Perfection of Appeal. ─ (a) The appeal shall be filed within the reglementary period as provided in Section 1 of this Rule; shall be under oath with proof of payment of the required appeal fee and the posting of a cash or surety bond as provided in Section 5 of this Rule; shall be accompanied by a memorandum of appeal x x x and proof of service on the other party of such appeal. (Emphasis supplied)
The "other party" mentioned in the Rule obviously refers to the adverse party, in this case, McLeod. Besides, Section 3, Rule VI of the Rules which requires, among others, proof of service of the memorandum of appeal on the other party, is merely a rundown of the contents of the required memorandum of appeal to be submitted by the appellant. These are not jurisdictional requirements.85
WHEREFORE, we DENY the petition and AFFIRM the Decision of the Court of Appeals in CA-G.R. SP No. 55130, with the following MODIFICATIONS: (a) the retirement pay of John F. McLeod should be computed at ½ month salary for every year of service for 12 years based on his salary rate of P50,495 a month; (b) Patricio L. Lim is absolved from personal liability; and (c) the awards for moral and exemplary damages and attorney’s fees are deleted. No pronouncement as to costs.
SO ORDERED.