EN BANC
Manpower Resources, Inc.
June 28, 2016
G.R. No. 210565
EMMANUEL D. QUINTANAR, BENJAMIN O.
DURANO, CECILIO C. DELAVIN, RICARDO G.
GABORNI, ROMEL G. GERARMAN, JOEL JOHN
P. AGUILAR, RAMIRO T. GAVIOLA, RESTITUTO
D. AGSALUD, MARTIN E. CELIS, PATRICIO L.
ARIOS, MICHAEL S. BELLO, LORENZO C.
QUINLOG, JUNE G. BLAYA, SANTIAGO B.
TOLENTINO, JR., NESTOR A. MAGNAYE,
ARNOLD S. POLVORIDO, ALLAN A. AGAPITO,
ARIEL E. BAUMBAD, JOSE T. LUTIVA, EDGARDO
G. TAPALLA, ROLDAN C. CADAYONA,
REYNALDO V. ALBURO, RUDY C. ULTRA,
MARCELO R. CABILI, ARNOLD B. ASIATEN,
REYMUNDO R. MACABALLUG, JOEL R. DELEÑA,
DANILO T. OQUIÑO, GREG B. CAPARAS and
ROMEO T. ESCARTIN, Petitioners,
vs.
COCA-COLA BOTTLERS, PHILIPPINES, INC.,
Respondent.
DECISION
MENDOZA, J.:
At bench is a Petition for Review on Certiorari under
Rule 45 of the Rules of Court assailing the July 11,
2013 Decision1 and the December 5, 2013
Resolution2 of the Court of Appeals (CA) in CA-G.R.
SP No. 115469, which reversed and set aside the
March 25, 2010 Decision3 and the May 28, 2010
Resolution4 of the National Labor Relations
Commission (NLRC), affirming the August 29, 2008
Decision of the Labor Arbiter (LA), in a case for
illegal dismissal, damages and attorney's fees filed
by the petitioners against respondent Coca-Cola
Bottlers Philippines, Inc. (Coca-Cola).
The gist of the subject controversy, as narrated by
the LA and adopted by the NLRC and the CA, is as
follows:
Complainants allege that they are former employees
directly hired by respondent Coca-Cola on different
dates from 1984 up to 2000, assigned as regular
Route Helpers under the direct supervision of the
Route Sales Supervisors. Their duties consist of
distributing bottled Coca-Cola products to the stores
and customers in their assigned areas/routes, and
they were paid salaries and commissions at the
average of ₱3,000.00 per month. After working for
quite sometime as directly-hired employees of Coca-
Cola, complainants were allegedly transferred
successively as agency workers to the following
manpower agencies, namely, Lipercon Services,
Inc., People's Services, Inc., ROMAC, and the latest
being respondent Interserve Management and
Further, complainants allege that the Department of
Labor and Employment (DOLE) conducted an
inspection of Coca-Cola to determine whether it is
complying with the various mandated labor
standards, and relative thereto, they were declared
to be regular employees of Coca-Cola, which was
held liable to pay complainants the underpayment of
their 13th month pay, emergency cost of living
allowance (ECOLA), and other claims. As soon as
respondents learned of the filing of the claims with
DOLE, they were dismissed on various dates in
January 2004. Their claims were later settled by the
respondent company, but the settlement allegedly
did not include the issues on reinstatement and
payment of CBA benefits. Thus, on November 10,
2006, they filed their complaint for illegal dismissal.
In support of their argument that they were regular
employees of Coca-Cola, the complainants relied on
the pronouncement of the Supreme Court in the
case of CCBPI vs. NOWM", G.R. No. 176024, June
18, 2007, as follows:
"In the case at bar, individual complainants were
directly hired by respondent Coca-Cola as Route
Helpers. They assist in the loading and unloading of
softdrinks. As such they were paid by respondent
Coca-Cola their respective salaries plus
commission. It is of common knowledge in the sales
of softdrinks that salesmen are not alone in making
a truckload of softdrinks for delivery to customers.
Salesmen are usually provided with route helpers or
utility men who does the loading and unloading. The
engagement of the individual complainants to such
activity is usually necessary in the usual business of
respondent Coca-Cola.
Contrary to the Labor Arbiter's conclusion that
respondent Coca-Cola is engaged solely in the
manufacturing is erroneous as it is also engaged in
the sales of the softdrinks it manufactured.
Moreover, having been engaged to perform, such
activity for more than a year all the more bolsters
individual complainants' status as regular
employees notwithstanding the contract, oral or
written, or even if their employment was
subsequently relegated to a labor contractor."
Respondent Coca-Cola denies employer-employee
relationship with the complainants pointing to
respondent Interserve with whom it has a service
agreement as the complainants' employer. As
alleged independent service contractor of
respondent Coca-Cola, respondent Interserve "is
engaged in the business of rendering substitute or
reliever delivery services to its own clients and for
CCBPI in particular, the delivery of CCBPI's
softdrinks and beverage products." It is allegedly
free from the control and direction of CCBPI in all
matters connected with the performance of the work,
except as to the results thereof, pursuant to the
service agreement. Moreover, respondent
Interserve is allegedly highly capitalized with a total
of ₱21,658,220.26 and with total assets of
₱27,509,716.32.
Further, respondent Coca-Cola argued that all
elements of employer-employee relationship exist
between respondent Interserve and the
complainants. It was allegedly Interserve which
solely selected and engaged the services of the
complainants, which paid the latter their salaries,
which was responsible with respect to
the imposition of appropriate disciplinary sanctions
against its erring employees, including the
complainants, without any participation from Coca-
Cola, which personally monitors the route helpers'
performance of their delivery services pointing to
Noel Sambilay as the Interserve Coordinator.
Expounding on the power of control, respondent
Coca-Cola vigorously argued that:
"12. According to Mr. Sambilay, he designates who
among the route helpers, such as complainants
herein, will be assigned for each of the delivery
trucks. Based on the route helpers' performance and
rapport with the truck driver and the other route
helpers, he groups together a team of three (3) to
five (5) route helpers to undertake the loading and
unloading of the softdrink products to the delivery
trucks and to their designated delivery point. It is his
exclusive discretion to determine who among the
route helpers will be grouped together to comprise
an effective team to render the most efficient delivery
service of CCBPI's products.
"13. Similarly, it is Interserve, through Mr. Sambilay,
who takes charge of monitoring the attendance of
the route helpers employed by Interserve. At the
start of the working day, Mr. Sambilay would position
himself at the gate of the CCBPI premises to check
the attendance of the route helpers. He also
maintains a logbook to record the time route helpers
appear for work. In case a route helper is unable to
report for duty, Mr. Sambilay reassigns another
route helper to take his place."
On its part, respondent Interserve merely filed its
position paper, pertaining only to complainants
Quintanar and Cabili totally ignoring all the other
twenty-eight (28) complainants. It maintains that it is
a legitimate job contractor duly registered as such
and it undertakes to perform utility, janitorial,
packaging, and assist in transporting services by
hiring drivers. Complainants Quintanar and Cabili
were allegedly hired as clerks who were assigned to
CCBPI Mendiola Office, under the supervision of
Interserve supervisors. Respondent Coca-Cola
does not allegedly interfere with the manner and the
methods of the complainants' performance at work
as long as the desired results are achieved. While
admitting employer-employee relationship with the
complainants, nonetheless, respondent Interserve
avers that complainants are not its regular
employees as they were allegedly mere contractual
workers whose employment depends on the service
contracts with the clients and the moment the latter
sever said contracts, respondent has allegedly no
choice but to either deploy the complainants to other
principals, and if the latter are unavailable,
respondent cannot allegedly be compelled to retain
them.5
The Decision of the LA
On August 29, 2008, the LA rendered its decision
granting the prayer in the complaint. In its
assessment, the LA explained that the documentary
evidence submitted by both parties confirmed the
petitioners' allegation that they had been working for
Coca-Cola for quite some time. It also noted that
Coca-Cola never disputed the petitioners' contention
that after working for Coca-Cola through the years,
they were transferred to the various service
contractors engaged by it, namely, Interim Services,
Inc. (ISI), Lipercon
Services, Inc. (Lipercon), People Services,
Inc. (PSI), ROMAC, and lastly, Interserve
Management and Manpower Resources,
Inc. (Interserve). In view of said facts, the LA
concluded that the petitioners were simply
employees of Coca-Cola who were "seconded" to
Interserve. 6
The LA opined that it was highly inconceivable for
the petitioners, who were already enjoying a stable
job at a multi-national company, to leave and
become mere agency workers. He dismissed the
contention of Coca-Cola that the petitioners were
employees of Interserve, stressing that they enjoyed
the constitutional right to security of tenure which
Coca-Cola could not compromise by entering into a
service agreement manpower supply contractors,
make petitioners sign employment contracts with
them, and convert their employment status from
regular to contractual. 7
Ultimately, the LA ordered Coca-Cola to reinstate
the petitioners to their former positions and to pay
their full backwages. 8 The dispositive portion of the
decision reads:
WHEREFORE, all the foregoing premises being
considered, judgment is hereby rendered ordering
respondent Coca-Cola Bottlers Phils., Inc. to
reinstate complainants to their former or
substantially equivalent positions, and to pay their
full backwages which as of August 29, 2008 already
amounts to ₱15,319,005.00, without prejudice to
recomputation upon subsequent determination of
the applicable salary rates and benefits due a
regular route helper or substantially equivalent
position on the plantilla of respondent CCBPI.
SO ORDERED.9
The Decision of the NLRC
Similar to the conclusion reached by the LA, the
NLRC found that the petitioners were regular
employees of Coca-Cola. In its decision, dated
March 25, 2010, it found that the relationship
between the parties in the controversy bore a striking
similarity with the facts in the cases of Coca-Cola
Bottlers Philippines, Inc. v. National Organization of
Workingmen 10 (N. O. W) and Magsalin v. National
Organization of Workingmen (Magsalin). 11 The
NLRC, thus, echoed the rulings of the Court in the
said cases which found the employees involved, like
the petitioners in this case, as regular employees of
Coca-Cola. It stated that the entities ISI, Lipercon,
PSI, ROMAC, and Interserve simply "played to feign
that status of an employer so that its alleged
principal would be free from any liabilities and
responsibilities to its employees."12 As far as it is
concerned, Coca-Cola failed to provide evidence
that would place the subject controversy on a
different plane from N.O.W and Magsalin as to
warrant a deviation from the rulings made therein.
As for the quitclaims executed by the petitioners, the
NLRC held that the same could not be used by
Coca-Cola to shield it from liability. The NLRC noted
the Minutes of the National Conciliation and
Mediation Board (NCMB) which stated that the
petitioners agreed to settle their claims with Coca-
Cola only with respect to their claims for violation of
labor standards law, and that their claims for illegal
dismissal would be submitted to the NLRC for
arbitration. 13
Coca-Cola sought reconsideration of the NLRC
decision but its motion was denied.14
The Decision of the CA
Reversing the findings of the LA and the NLRC, the
CA opined that the petitioners were not employees
of Coca-Cola but of Interserve. In its decision, the
appellate court agreed with the contention of Coca-
Cola that it was Interserve who exercised the power
of selection and engagement over the petitioners
considering that the latter applied for their jobs and
went through the pre-employment processes of
Interserve. It noted that the petitioners' contracts of
employment and personal data sheets, which were
filed with Interserve, categorically stipulated that
Interserve had the sole power to assign them
temporarily as relievers for absent employees of
their clients. The CA also noted that the petitioners
had been working for other agencies before they
were hired by Interserve. 15
The CA also gave credence to the position of Coca-
Cola that it was Interserve who paid the petitioners'
salaries. This, coupled with the CA's finding that
Coca-Cola paid Interserve for the services rendered
by the petitioners whenever they substituted for the
regular employees of Coca-Cola, led the CA to
conclude that it was Interserve who exercised the
power of paying the petitioners' wages.
The CA then took into consideration Interserve's
admission that they had to sever the petitioners' from
their contractual employment because its contract
with Coca-Cola expired and there was no demand
for relievers from its other clients. The CA equated
this with Interserve's exercise of its power to fire the
petitioners. 16
Finally, the CA was of the considered view that it was
Interserve which exercised the power of control.
Citing the Affidavit17 of Noel F.
Sambilay (Sambilay), Coordinator of Interserve, the
CA noted that Interserve exercised the power of
control, monitoring the petitioners' attendance,
providing them with their assignments to the delivery
trucks of Coca-Cola, and making sure that they were
able to make their deliveries. 18
The CA then went on to conclude that Interserve was
a legitimate independent contractor. It noted that the
said agency was registered with the Department of
Labor and Employment (DOLE) as an independent
contractor which had provided delivery services for
other beverage products of its clients, and had
shown that it had substantial capitalization and
owned properties and equipment that were used in
the conduct of its business operations. The CA was,
thus, convinced that Interserve ran its own business,
separate and distinct from Coca-Cola. 19
The petitioners sought reconsideration, but they
were rebuffed. 20
Hence, this petition, raising the following
GROUNDS FOR THE PETITION/
ASSIGNMENT OF ERRORS
THE COURT OF APPEALS IS GUILTY OF GRAVE
ABUSE OF DISCRETION AMOUNTING TO LACK
OR IN EXCESS OF JURISDICTION IN:
I.
RENDERING A DECISION THAT IS CONTRARY
TO LAW
AND ESTABLISHED JURISPRUDENCE
II.
MISAPPRECIATING FACTS WHICH GRAVELY
PREJUDICED
THE RIGHTS OF THE PETITIONERS.21
In their petition for review on certiorari, the
petitioners ascribed grave abuse of discretion on the
part of the CA when it reassessed the evidence and
reversed the findings of fact of the LA and the NLRC
that ruled in their favor.22
The petitioners also claimed that the CA violated the
doctrine of stare decisis when it ruled that Interserve
was a legitimate job contractor. Citing Coca Cola
Bottlers, Philippines, Inc. v. Agito (Agito), 23the
petitioners argued that because the parties therein
were the same parties in the subject controversy,
then the appellate court should have followed
precedent and declared Interserve as a labor-only
contractor.24
In further support of their claim that Interserve was a
labor-only contractor and that Coca-Cola, as
principal, should be made ultimately liable for their
claims, the petitioners asserted that Interserve had
no products to manufacture, sell and distribute to
customers and did not perform activities in its own
manner and method other than that dictated by
Coca-Cola. They claimed that it was Coca-Cola that
owned the softdrinks, the trucks and the equipment
used by Interserve and that Coca-Cola assigned
supervisors to ensure that the petitioners perform
their duties. 25
Lastly, the petitioners insisted that both Coca-Cola
and Interserve should be made liable for moral and
exemplary damages, as well as attorney's fees, for
having transgressed the petitioners' right to security
of tenure and due process.26
The Court's Ruling
Essentially, the core issue presented by the
foregoing petition is whether the petitioners were
illegally dismissed from their employment with Coca-
Cola. This, in turn, necessitates a determination of
the characterization of the relationship between
route-helpers such as the petitioners, and softdrink
manufacturers such as Coca-Cola, notwithstanding
the participation of entities such as ISI, Lipercon,
PSI, ROMAC, and Interserve. The petitioners insist
that ISI, Lipercon, PSI, ROMAC, and Interserve are
labor-only contractors, making Coca-Cola still liable
for their claims. The latter, on the other hand, asserts
that the said agencies are independent job
contractors and, thus, liable to the petitioners on
their own.
Procedural Issues
Before the Court proceeds to resolve the case on its
merits, it must first be pointed out that the petitioners
erred in resorting to this petition for review
on certiorari under Rule 45 of the Rules of Court and
alleging, at the same time, that the CA abused its
discretion in rendering the assailed decision.
Well-settled is the rule that grave abuse of discretion
or errors of jurisdiction may be corrected only by the
special civil action of certiorari under Rule 65. Such
corrective remedies do not avail in a petition for
review on certiorariwhich is confined to correcting
errors of judgment only. Considering that the
petitioners have availed of the remedy under Rule
45, recourse to Rule 65 cannot be allowed either as
an add-on or as a substitute for appeal. 27
Moreover, it is observed that from a perusal of the
petitioners' arguments, it is quite apparent that the
petition raises questions of facts, inasmuch as this
Court is being asked to revisit and assess anew the
factual findings of the CA and the NLRC. The
petitioners fundamentally assail the findings of the
CA that the evidence on record did not support their
claims for illegal dismissal against Coca-Cola. In
effect, they would have the Court sift through,
calibrate and re-examine the credibility and
probative value of the evidence on record so as to
ultimately decide whether or not there is sufficient
basis to hold the respondents accountable for their
alleged illegal dismissal. This clearly involves a
factual inquiry, the determination of which is the
statutory function of the NLRC.28
Basic is the rule that the Court is not a trier of facts
and this doctrine applies with greater force in labor
cases. Questions of fact are for the labor tribunals to
resolve.29 Only errors of law are generally reviewed
in petitions for review on certiorari under Rule 45 of
the Rules of Court.
In exceptional cases, however, the Court may be
urged to probe and resolve factual issues when
there is insufficient or insubstantial evidence to
support the findings of the tribunal or the court
below, or when too much is concluded, inferred or
deduced from the bare or incomplete facts submitted
by the parties or, where the LA and the NLRC came
up with conflicting positions. 30 In this case,
considering the conflicting findings of the LA and the
NLRC on one hand, and the CA on the other, the
Court is compelled to resolve the factual issues
along with the legal ones.
Substantial Issues
The Court finds for the petitioners. The reasons are:
First. Contrary to the position taken by Coca-Cola, it
cannot be said that route-helpers, such as the
petitioners no longer enjoy the employee-employer
relationship they had with Coca-Cola since they
became employees of Interserve. A cursory review
of the jurisprudence regarding this matter reveals
that the controversy regarding the characterization
of the relationship between route-helpers and Coca-
Cola is no longer a novel one.
As early as May 2003, the Court in Magsalin struck
down the defense of Coca-Cola that the
complainants therein, who were route-helpers, were
its "temporary" workers. In the said Decision, the
Court explained:
The basic law on the case is Article 280 of the Labor
Code. Its pertinent provisions read:
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.
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.
Coca-Cola Bottlers Phils., Inc. is one of the leading
and largest manufacturers of softdrinks in the
country. Respondent workers have long been in the
service of petitioner company. Respondent workers,
when hired, would go with route salesmen on board
delivery trucks and undertake the laborious task of
loading and unloading softdrink products of
petitioner company to its various delivery points.
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.
The argument of petitioner that its usual business or
trade is softdrink manufacturing and that the work
assigned to respondent workers as sales route
helpers so involves merely "postproduction
activities," one which is not indispensable in the
manufacture of its products, scarcely can be
persuasive. If, as so argued by petitioner company,
only those whose work are directly involved in the
production of softdrinks may be held performing
functions necessary and desirable in its usual
business or trade, there would have then been no
need for it to even maintain regular truck sales route
helpers. The nature of the work performed must be
viewed from a perspective of the business or trade
in its entirety and not on a confined scope.
The repeated rehiring of respondent workers and the
continuing need for their services clearly attest to the
necessity or desirability of their services in the
regular conduct of the business or trade of petitioner
company. The Court of Appeals has found each of
respondents to have worked for at least one year
with petitioner company. While this Court, in Brent
School, Inc. vs. Zamora, has upheld the legality of a
fixed-term employment, it has done so, however,
with a stern admonition that where from the
circumstances it is apparent that the period has been
imposed to preclude the acquisition of tenurial
security by the employee, then it should be struck
down as being contrary to law, morals, good
customs, public order and public policy. The
pernicious practice of having employees, workers
and laborers, engaged for a fixed period
of few months, short of the normal six-month
probationary period of employment, and, thereafter,
to be hired on a day-to-day basis, mocks the law.
Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers
have agreed to be employed on such basis and to
forego the protection given to them on their security
of tenure, demonstrate nothing more than the
serious problem of impoverishment of so many of
our people and the resulting unevenness between
labor and capital. A contract of employment is
impressed with public interest. The provisions of
applicable statutes are deemed written into the
contract, and "the parties are not at liberty to insulate
themselves and their relationships from the impact
of labor laws and regulations by simply contracting
with each other."31
Shortly thereafter, the Court in Bantolino v. Coca-
Cola,32among others, agreed with the unanimous
finding of the LA, the NLRC and the CA that the
route-helpers therein were not simply employees of
Lipercon, Peoples Specialist Services, Inc. or ISI,
which, as Coca-Cola claimed were independent job
contractors, but rather, those of Coca-Cola itself. In
the said case, the Court sustained the finding of the
LA that the testimonies of the complainants therein
were more credible as they sufficiently supplied
every detail of their employment, specifically
identifying their salesmen/drivers were and their
places of assignment, aside from the dates of their
engagement and dismissal.
Then in 2008, in Pacquing v. Coca-Cola Philippines,
Inc. (Pacquing), 33the Court applied the ruling
in Magsalinunder the principle of stare decisis et non
quieta movere (follow past precedents and do not
disturb what has been settled). It was stressed
therein that because the petitioners, as route
helpers, were performing the same functions as the
employees in Magsalin, which were necessary and
desirable in the usual business or trade of Coca-
Cola Philippines, Inc., they were considered regular
employees of Coca-Cola entitled to security of
tenure.
A year later, the Court in Agito34similarly struck down
Coca-Cola's contention that the salesmen therein
were employees of Interserve, notwithstanding the
submission by Coca-Cola of their personal data files
from the records of Interserve; their Contract of
Temporary Employment with Interserve; and the
payroll records of Interserve. In categorically
declaring Interserve as a labor-only contractor, 35 the
Court found that the work of the respondent
salesmen therein, constituting distribution and sale
of Coca-Cola products, was clearly indispensable to
the principal business of petitioner Coca-Cola.36
As to the supposed substantial capital and
investment required of an independent job
contractor, the Court stated that it "does not set an
absolute figure for what it considers substantial
capital for an independent job contractor, but it
measures the same against the type of work which
the contractor is obligated to perform for the
principal."37The Court reiterated that the contractor,
not the employee, had the burden of proof that it has
the substantial capital, investment and tool to
engage in job contracting. As applied to Interserve,
the Court ruled:
The contractor, not the employee, has the burden of
proof that it has the substantial capital, investment,
and tool to engage in job contracting. Although not
the contractor itself (since Interserve no longer
appealed the judgment against it by the Labor
Arbiter), said burden of proof herein falls upon
petitioner who is invoking the supposed status of
Interserve as an independent job contractor.
Noticeably, petitioner failed to submit evidence to
establish that the service vehicles and equipment of
Interserve, valued at ₱510,000.00 and ₱200,000.00,
respectively, were sufficient to carry out its service
contract with petitioner. Certainly, petitioner could
have simply provided the courts with records
showing the deliveries that were undertaken by
Interserve for the Lagro area, the type and number
of equipment necessary for such task, and the
valuation of such equipment. Absent evidence which
a legally compliant company could have easily
provided, the Court will not presume that Interserve
had sufficient investment in service vehicles and
equipment, especially since respondents' allegation
that they were using equipment, such as forklifts and
pallets belonging to petitioner, to carry out their jobs
was uncontroverted.
In sum, Interserve did not have substantial capital or
investment in the form of tools, equipment,
machineries, and work premises; and respondents,
its supposed employees, performed work which was
directly related to the principal business of petitioner.
It is, thus, evident that Interserve falls under the
definition of a labor-only contractor, under Article
106 of the Labor Code; as well as Section 5(i) of the
Rules Implementing Articles 106-109 of the Labor
Code, as amended.38
As for the certification issued by the DOLE stating
that Interserve was an independent job contractor,
the Court ruled:
The certification issued by the DOLE stating that
Interserve is an independent job contractor does not
sway this Court to take it at face value, since the
primary purpose stated in the Articles of
Incorporation of Interserve is misleading. According
to its Articles of Incorporation, the principal business
of Interserve is to provide janitorial and allied
services. The delivery and distribution of Coca-Cola
products, the work for which respondents were
employed and assigned to petitioner, were in no way
allied to janitorial services. While the DOLE may
have found that the capital and/ or investments in
tools and equipment of Interserve were sufficient for
an independent contractor for janitorial services, this
does not mean that such capital and/ or investments
were likewise sufficient to maintain an independent
contracting business for the delivery and distribution
of Coca-Cola products.39
Finally, the Court determined the existence of an
employer-employee relationship between the parties
therein considering that the contract of service
between Coca-Cola and Interserve showed that the
former indeed exercised the power of control over
the complainants therein.40
The Court once more asserted the findings that
route-helpers were indeed employees of Coca-Cola
in Coca-Cola Bottlers Philippines, Inc. v. Dela
Cruz41and, recently, in Basan v. Coca-Cola Bottlers
Philippines, Inc. 42 and that the complainants therein
were illegally dismissed for want of just or authorized
cause. Similar dispositions by the CA were also
upheld by this Court in N.O.W43and Ostani,44through
minute resolutions.
It bears mentioning that the arguments raised by
Coca-Cola in the case at bench even bear a striking
similarity with the arguments it raised before the CA
in N.O.W45and Ostani.46
From all these, a pattern emerges by which Coca-
Cola consistently resorts to various methods in order
to deny its route-helpers the benefits of regular
employment. Despite this, the Court, consistent with
sound pronouncements above, adopts the rulings
made in Pacquing that Interserve was a labor-only
contractor and that Coca-Cola should be held liable
pursuant to the principle of stare decisis et non
quieta movere.
It should be remembered that the doctrine of stare
decisis et non quieta movere is embodied in Article
8 of the Civil Code of the Philippines which provides:
ART. 8. Judicial decisions applying or interpreting
the laws or the Constitution shall form a part of the
legal system of the Philippines.1âwphi1
And, as explained in Fermin v. People:47
The doctrine of stare decisis enjoins adherence to
judicial precedents. It requires courts in a country to
follow the rule established in a decision of the
Supreme Court thereof. That decision becomes a
judicial precedent to be followed in subsequent
cases by all courts in the land. The doctrine of stare
decisis is based on the principle that once a question
of law has been examined and decided, it should be
deemed settled and closed to further argument.48
[Emphasis Supplied]
The Court's ruling in Chinese Young Men's Christian
Association of the Philippine Islands v. Remington
Steel Corporation is also worth citing, viz: 49
Time and again, the court has held that it is a very
desirable and necessary judicial practicethat when a
court has laid down a principle of law as applicable
to a certain state of facts, it will adhere to that
principle and apply it to all future cases in which the
facts are substantially the same.Stare decisis et non
quieta movere. Stand by the decisions and disturb
not what is settled. Stare decisis simply means
that for the sake of certainty, a conclusion reached
in one case should be applied to those that follow if
the facts are substantially the same, even though the
parties may be different. It proceeds from the first
principle of justice that, absent any powerful
countervailing considerations, like cases ought to be
decided alike. Thus, where the same questions
relating to the same event have been put forward by
the parties similarly situated as in a previous case
litigated and decided by a competent court, the rule
of stare decisis is a bar to any attempt to relitigate
the same issue. 50
[Emphases Supplied]
Verily, the doctrine has assumed such value in our
judicial system that the Court has ruled
that "[a]bandonment thereof must be based only on
strong and compelling reasons, otherwise, the
becoming virtue of predictability which is expected
from this Court would be immeasurably affected and
the public's confidence in the stability of the solemn
pronouncements diminished."51 Thus, only upon
showing that circumstances attendant in a particular
case override the great benefits derived by our
judicial system from the doctrine of stare
decisis, can the courts be justified in setting it aside.
In this case, Coca-Cola has not shown any strong
and compelling reason to convince the Court that the
doctrine of stare decisis should not be
applied.1avvphi1 It failed to successfully
demonstrate how or why both the LA and the NLRC
committed grave abuse of discretion in sustaining
the pleas of the petitioners that they were its regular
employees and not of Interserve.
Second. A reading of the decision of the CA and the
pleadings submitted by Coca-Cola before this Court
reveals that they both lean heavily on the service
agreement52 entered into by Coca-Cola and
Interserve; the admission by Interserve that it paid
the petitioners' salaries; and the affidavit of Sambilay
who attested that it was Interserve which exercised
the power of control over the petitioners.
The service agreements entered into by Coca-Cola
and Interserve, the earliest being that dated January
1998,53(another one dated July 11, 2006)54 and the
most recent one dated March 21, 200755 - all reveal
that they were entered into One, after the petitioners
were hired by Coca-Cola (some of whom were hired
as early as 1984),Two, after they were dismissed
from their employment sometime in January
2004,· and Three, after the petitioners filed their
complaint for illegal dismissal on November 10,
2006 with the LA.
To quote with approval the observations of the LA:
x x x The most formidable obstacle against the
respondent's theory of lack of employer-employee
relationship is that complainants have [been]
performing the tasks of route-helpers for several
years and that practically all of them have been
rendering their services as such even before
respondent Interserve entered into a service
agreement with Coca-Cola sometime in 1998. Thus,
the complainants in their position paper categorically
stated the record of their service with Coca-Cola as
having started on the following dates: Emmanuel
Quintanar - October 15, 1994; Benjamin Durano -
November 16, [1987]; Cecilio Delaving - June 10,
1991; Ricardo Gaborni - September 28, 1992;
Romel Gerarman - June 20, 1995; Ramilo Gaviola -
October 10, 1988; Joel John Aguilar - June 1, 1992;
Restituto Agsalud - September 7, 1989; Martin Celis
- August 15, 1995; Patricio Arios - June 2, 1989;
Michael Bello - February 15, 1992; Lorenzo Quinlog
- May 15, 1992; Junne Blaya - September 15, 1997;
Santiago Tolentino, Jr. - May 29, 1989; Nestor
Magnaye - February 15, 1996; Arnold Polvorido -
February 8, 1996; Allan Agapito - April 15, 1995;
Ariel Baumbad - January 15, 1995; Jose Lutiya -
February 15, 1995; Edgardo Tapalla - August
15, 1994; Roldan Cadayona - May 14, 1996;
Raynaldo Alburo - September 15, 1996; Rudy Ultra
- February 28, 1997; Marcelo Cabili - November 15,
1995; Arnold Asiaten - May 2, 1992; Raymundo
Macaballug - July 31, 1995; Joel Delena - January
15, 1991; Danilo Oquino - September 15, 1990;
Greg Caparas - August 15, 1995; and Romeo
Escartin - May 15, 1986.
It should be mentioned that the foregoing allegation
of the complainants' onset of their services with
respondent Coca-Cola has been confirmed by the
Bio-Data Sheets submitted in evidence by the said
respondent (Coca-Cola]. Thus, in the Bio-Data
Sheet of complainant Quintanar (Annex "4"), he
stated therein that he was in the service of
respondent Coca-Cola continuously from 1993 up to
2002. Likewise, complainant Quinlog indicated in his
Bio-data Sheet submitted to respondent Interserve
that he was already in the employ of respondent
Coca-Cola from 1992 (Annex "12"). Complainant
Edgardo Tapalla also indicated in his Bio-Data
Sheet that he was already in the employ of Coca-
Cola since 1995 until he was seconded to Interserve
in 2002 (Annex "20").
As a matter of fact, complainants' allegation that they
were directly hired by respondent Coca-Cola and
had been working with the latter for quite sometime
when they were subsequently referred to successive
agencies such as Lipercon, ROMAC, People's
Services, and most recently, respondent
Interserve, has not been controverted by the
respondents. Even when respondent Coca-Cola
filed its reply to the complainants' position paper,
there is nothing therein which disputed
complainant's statements of their services directly
with the respondent even before it entered into
service agreement with respondent Interserve. 56
As to the payment of salaries, although the CA made
mention that it was Interserve which paid the
petitioners' salaries, no reference was made to any
evidence to support such a conclusion. The Court,
on the other hand, gives credence to the petitioners'
contention that they were employees of Coca-Cola.
Aside from their collective account that it was Coca-
Cola's Route Supervisors who provided their daily
schedules for the distribution of the company's
products, the petitioners' payslips,57 tax
records,58 SSS59 and Pag-Ibig60 records more than
adequately showed that they were being
compensated by Coca-Cola. More convincingly, the
petitioners even presented their employee
Identification Cards,61 which expressly indicated that
they were "[ d]irect hire[es]" of Coca-Cola.
As for the affidavit of Sambilay, suffice it to say that
the same was bereft of evidentiary weight,
considering that he failed to attest not only that he
was already with Interserve at the time of the
petitioners hiring, but also that he had personal
knowledge of the circumstances surrounding the
hiring of the petitioners following their alleged
resignation from Coca-Cola.
Third. As to the characterization of Interserve as a
contractor, the Court finds that, contrary to the
conclusion reached by the CA, the petitioners were
made to suffer under the prohibited practice of labor-
only contracting. Article 106 of the Labor Code
provides the definition of what constitutes labor-only
contracting. Thus:
Article 106. Contractor or subcontractor.- x x x
There is "labor-only" contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among
others, and the workers recruited and placed by
such person are performing activities which are
directly related to the principal business of such
employer. In such cases, the person or intermediary
shall be considered merely as an agent of the
employer who shall be responsible to the workers in
the same manner and extent as if the latter were
directly employed by him.
Expounding on the concept, the Court
in Agito explained:
The law clearly establishes an employer-employee
relationship between the principal employer and the
contractor's employee upon a finding that the
contractor is engaged in '1abor-only" contracting.
Article 106 of the Labor Code categorically states:
"There is 'labor-only' contracting where the person
supplying workers to an employer does not have
substantial capital or investment in the form of tools,
equipment, machineries, work premises, among
others, and the workers recruited and placed by
such persons are performing activities which are
directly related to the principal business of such
employer." Thus, performing activities directly
related to the principal business of the employer is
only one of the two indicators that "labor-only"
contracting exists; the other is lack of substantial
capital or investment. The Court finds that both
indicators exist in the case at bar.
[Emphases and Underscoring Supplied]
In this case, the appellate court considered the
evidence of Interserve that it was registered with the
DOLE as independent contractor and that it had a
total capitalization of ₱27,509,716.32 and
machineries and equipment worth
62
P12,538859.55. As stated above, however, the
possession of substantial capital is only one
element. Labor-only contracting exists when any of
the two elements is present. 63 Thus, even if the
Court would indulge Coca-Cola and admit that
Interserve had more than sufficient capital or
investment in the form of tools, equipment,
machineries, work premises, still, it cannot be
denied that the petitioners were performing activities
which were directly related to the principal business
of such employer. Also, it has been ruled that no
absolute figure is set for what is considered
'substantial capital' because the same is measured
against the type of work which the contractor is
obligated to perform for the principal. 64
More importantly, even if Interserve were to be
considered as a legitimate job contractor, Coca-Cola
failed to rebut the allegation that petitioners were
transferred from being its employees to become the
employees of ISI, Lipercon, PSI, and ROMAC, which
were labor-only contractors. Well-settled is the rule
that "[t]he contractor, not the employee, has the
burden of proof that it has the substantial capital,
investment, and tool to engage in job
contracting." 65 In this case, the said burden of proof
lies with Coca-Cola although it was not the
contractor itself, but it was the one invoking the
supposed status of these entities as independent job
contractors.
Fourth. In this connection, even granting that the
petitioners were last employed by Interserve, the
record is bereft of any evidence that would show that
the petitioners voluntarily resigned from their·
employment with Coca-Cola only to be later hired by
Interserve. Other than insisting that the petitioners
were last employed by Interserve, Coca-Cola failed
not only to show by convincing evidence how it
severed its employer relationship with the
petitioners, but also to prove that the termination of
its relationship with them was made through any of
the grounds sanctioned by law.
The rule is long and well-settled that, in illegal
dismissal cases such as the one at bench, the
burden of proof is upon the employer to show that
the employees' termination from service is for a just
and valid cause. 66 The employer's case succeeds
or fails on the strength of its evidence and not the
weakness of that adduced by the employee,67 in
keeping with the principle that the scales of justice
must be tilted in favor of the latter in case doubts
exist over the evidence presented by the parties.68
For failure to overcome this burden, the Court
concurs in the observation of the LA that it was
highly inconceivable for the petitioners, who were
already enjoying a stable job at a multi-national
company, to leave and become mere agency
workers. Indeed, it is contrary to human experience
that one would leave a stable employment in a
company like Coca-Cola, only to become a worker
of an agency like Interserve, and be assigned back
to his original employer - Coca-Cola.
Although it has been said that among the four (4)
tests to determine the existence of any employer-
employee relationship, it is the "control test" that is
most persuasive, the courts cannot simply ignore the
other circumstances obtaining in each case in order
to determine whether an employer-employee
relationship exists between the parties.
WHEREFORE, the petition is GRANTED. The July
11, 2013 Decision and the December 5, 2013
Resolution of the Court of Appeals, in CA-G.R. SP
No. 115469 are REVERSED and SET ASIDE and
the August 29, 2008 Decision of the Labor Arbiter in
NLRC Case Nos. 12-13956-07 and 12-14277-07, as
affirmed in toto by the National Labor Relations
Commission, is hereby REINSTATED.
SO ORDERED.
G.R. No. 202961 February 4, 2015
EMER MILAN, RANDY MASANGKAY, WILFREDO
JAVIER, RONALDO DAVID, BONIFACIO
MATUNDAN, NORA MENDOZA, et al., Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
·SOLID MILLS, INC., and/or PHILIP
ANG, Respondents.
DECISION
LEONEN, J.:
An employer is allowed to withhold terminal pay and
benefits pending the employee's return of its
properties.
Petitioners are respondent Solid Mills, Inc.' s (Solid
Mills) employees.1 They are represented by the
National Federation of Labor Unions (NAFLU), their
collective bargaining agent.2
As Solid Mills’ employees, petitionersand their
families were allowed to occupy SMI Village, a
property owned by Solid Mills.3 According to Solid
Mills, this was "[o]ut of liberality and for the
convenience of its employees . . . [and] on the
condition that the employees . . . would vacate the
premises anytime the Company deems fit."4
In September 2003, petitioners were informed that
effective October 10, 2003, Solid Mills would cease
its operations due to serious business
losses. NAFLU recognized Solid Mills’ closure due
5
to serious business losses in the memorandum of
agreement dated September 1, 2003.6 The
memorandum of agreement provided for Solid Mills’
grant of separation pay less accountabilities,
accrued sick leave benefits, vacation leave benefits,
and 13th month pay to the employees.7 Pertinent
portions of the agreement provide:
WHEREAS, the COMPANYhas incurred substantial
financial losses and is currently experiencing further
severe financial losses;
WHEREAS, in view of such irreversible financial
losses, the COMPANY will cease its operations on
October 10, 2003;
WHEREAS, all employees of the COMPANY on
account of irreversible financial losses, will
bedismissed from employment effective October 10,
2003;
In view thereof, the parties agree as follows:
1. That UNION acknowledges that the COMPANY is
experiencing severe financial losses and as a
consequence of which, management is constrained
to cease the company’s operations.
2. The UNION acknowledges that under Article 283
of the Labor Code, separation pay is granted to
employees who are dismissed due to closures or
cessation of operations NOT DUE to serious
business losses.
3. The UNION acknowledges that in view of the
serious business losses the Company has been
experiencing as seen in their audited financial
statements, employees ARE NOT granted
separation benefits under the law.
4. The COMPANY, by way of goodwill and in the
spirit of generosity agrees to grant financial
assistance less accountabilities to members of the
Union based on length of service to be computed as
follows: (Italics in this paragraph supplied)
Number of days - 12.625 for every year of service
5. In view of the above, the members of the UNION
will receive such financial assistance on an equal
monthly installments basis based on the following
schedule:
First Check due on January 5, 2004 and every 5th of
the month thereafter until December 5, 2004.
6. The COMPANY commits to pay any accrued
benefits the Union members are entitled to,
specifically those arising from sick and vacation
leave benefits and 13th month pay, less
accountabilities based on the following schedule:
One Time Cash Payment to bedistributed anywhere
from. . . .
....
8. The foregoing agreement is entered into with full
knowledge by the parties of their rights under the law
and they hereby bind themselves not to conduct any
concerted action of whatsoever kind, otherwise the
grant of financial assistance as discussed above will
be withheld.8 (Emphasis in the original)
Solid Mills filed its Department of Labor and
Employment termination report on September 2,
2003.9
Later, Solid Mills, through Alfredo Jingco, sent to
petitioners individual notices to vacate SMI Village.10
Petitioners were no longer allowed to report for work
by October 10, 2003.11 They were required to sign a
memorandum of agreement with release and
quitclaim before their vacation and sick leave
benefits, 13th month pay, and separation pay would
be released.12 Employees who signed the
memorandum of agreement were considered to
have agreed to vacate SMI Village, and to the
demolition of the constructed houses inside as
condition for the release of their termination benefits
and separation pay.13 Petitioners refused to sign the
documents and demanded to be paid their benefits
and separation pay.14
Hence, petitioners filed complaintsbefore the Labor
Arbiter for alleged non-payment of separation pay,
accrued sick and vacation leaves, and 13th month
pay.15 They argued that their accrued benefits and
separation pay should not be withheld becausetheir
payment is based on company policy and
practice.16 Moreover, the 13th month pay is based
on law, specifically, Presidential Decree No.
851.17 Their possession of Solid Mills property is not
an accountability that is subject to clearance
procedures.18 They had already turned over to
SolidMills their uniforms and equipment when Solid
Mills ceased operations.19
On the other hand, Solid Mills argued that
petitioners’ complaint was premature because they
had not vacated its property.20
The Labor Arbiter ruled in favor of
21
petitioners. According to the Labor Arbiter, Solid
Mills illegallywithheld petitioners’ benefits and
separation pay.22 Petitioners’ right to the payment of
their benefits and separation pay was vestedby law
and contract.23 The memorandum of agreement
dated September 1, 2003 stated no condition to the
effect that petitioners must vacate SolidMills’
property before their benefits could be given to
them.24Petitioners’ possession should not be
construed as petitioners’ "accountabilities" that must
be cleared first before the release of benefits.25 Their
possession "is not by virtue of any employer-
employee relationship."26 It is a civil issue, which
isoutside the jurisdiction of the Labor Arbiter.27
The dispositive portion of the Labor Arbiter’s
decision reads:
WHEREFORE, premises considered, judgment is
entered ORDERING respondents SOLID MILLS,
INC. and/or PHILIP ANG (President), in solido to pay
the remaining 21 complainants:
1) 19 of which, namely EMER MILAN, RAMON
MASANGKAY, ALFREDO JAVIER, RONALDO
DAVID, BONIFACIO MATUNDAN, NORA
MENDOZA, MYRNA IGCAS, RAUL DE LAS ALAS,
RENATO ESTOLANO, REX S. DIMAFELIX,
MAURA MILAN, JESSICA BAYBAYON, ALFREDO
MENDOZA, ROBERTO IGCAS, ISMAEL MATA,
CARLITO DAMIAN, TEODORA MAHILOM,
MARILOU LINGA, RENATO LINGA their separation
pay of 12.625 days’ pay per year of service, pro-
rated 13th month pay for 2003 and accrued vacation
and sick leaves, plus 12% interest p.a. from date of
filing of the leadcase/judicial demand on 12/08/03
until actual payment and/or finality;
2) the remaining 2 of which, complainants
CLEOPATRA ZACARIAS, as she already received
on 12/19/03 her accrued 13th month pay for 2003,
accrued VL/SL total amount of ₱15,435.16, likewise,
complainant Jerry L. Sesma as he already received
his accrued 13th month pay for 2003, SL/VL in the
total amount of ₱10,974.97, shall be paid only their
separation pay of 12.625 days’ pay per year of
service but also with 12% interest p.a. from date of
filing of the lead case/judicial demand on 12/08/03
until actual payment and/or finality, which
computation as of date, amount to as shown in the
attached computation sheet.
3) Nine (9) individual complaintsviz., of Maria Agojo,
Joey Suarez, Ronaldo Vergara, Ronnie Vergara,
Antonio R. Dulo, Sr., Bryan D. Durano, Silverio P.
Durano, Sr., Elizabeth Duarte and Purificacion
Malabanan are DISMISSED WITH PREJUDICE due
to amicable settlement, whereas, that of [RONIE
ARANAS], [EMILITO NAVARRO], [NONILON
PASCO], [GENOVEVA PASCO], [OLIMPIO A.
PASCO] are DISMISSED WITHOUT PREJUDICE,
for lack of interest and/or failure to prosecute.
The Computation and Examination unit is directed to
cause the computation of the award in Pars. 2 and 3
above.28(Emphasis in the original)
Solid Mills appealed to the National Labor Relations
Commission.29 It prayed for, among others, the
dismissal of the complaints against it and the
reversal of the Labor Arbiter’s decision.30
The National Labor Relations Commission affirmed
paragraph 3 of the Labor Arbiter’s dispositive
portion, but reversed paragraphs 1 and 2. Thus:
WHEREFORE, the Decision of Labor Arbiter
Renaldo O. Hernandez dated 10/17/05 is
AFFIRMED in so far as par. 3 thereof is concerned
but modified in that paragraphs 1 and 2 thereof are
REVERSED and SET ASIDE. Accordingly, the
following complainants, namely: Emir Milan, Ramon
Masangkay, Alfredo Javier, Ronaldo David,
Bonifacio Matundan, Nora Mendoza, Myrna Igcas,
Raul De Las Alas, Renato Estolano, Rex S.
Dimaf[e]lix, Maura Milan, Jessica Baybayon, Alfredo
Mendoza, Roberto Igcas, Cleopatra Zacarias and
Jerry L. Sesma’s monetary claims in the form of
separation pay, accrued 13th month pay for 2003,
accrued vacation and sick leave pays are held in
abeyance pending compliance of their
accountabilities to respondent company by turning
over the subject lots they respectively occupy at SMI
Village Sucat
Muntinlupa City, Metro Manila to herein respondent
company.31
The National Labor Relations Commission noted
that complainants Marilou Linga, Renato Linga,
IsmaelMata, and Carlito Damian were already paid
their respective separation pays and
32
benefits. Meanwhile, Teodora Mahilom already
retired longbefore Solid Mills’ closure.33 She was
already given her retirement benefits.34
The National Labor Relations Commission ruled that
because of petitioners’ failure to vacate Solid Mills’
property, Solid Mills was justified in withholding their
benefits and separation pay.35 Solid Mills granted
the petitioners the privilege to occupy its property on
accountof petitioners’ employment.36 It had the
prerogative toterminate such privilege.37 The
termination of Solid Mills and petitioners’ employer-
employee relationship made it incumbent upon
petitioners to turn over the property to Solid Mills.38
Petitioners filed a motion for partial reconsideration
on October 18, 2010,39 but this was denied in the
November 30, 2010 resolution.40
Petitioners, thus, filed a petition for certiorari41 before
the Court of Appeals to assail the National
LaborRelations Commission decision of August 31,
2010 and resolution of November 30, 2010.42
On January 31, 2012, the Court of Appeals issued a
decision dismissing petitioners’ petition,43 thus:
WHEREFORE, the petition is hereby ordered
DISMISSED.44
The Court of Appeals ruled thatSolid Mills’ act of
allowing its employees to make temporary
dwellingsin its property was a liberality on its part. It
may be revoked any time at its discretion.45 As a
consequence of Solid Mills’ closure and the resulting
termination of petitioners, the employer-employee
relationship between them ceased to exist. There
was no more reason for them to stay in Solid Mills’
property.46 Moreover, the memorandum of
agreement between Solid Mills and the union
representing petitioners provided that Solid Mills’
payment of employees’ benefits should be "less
accountabilities."47
On petitioners’ claim that there was no evidence that
Teodora Mahilom already received her retirement
pay, the Court of Appeals ruled that her complaint
filed before the Labor Arbiter did not include a claim
for retirement pay. The issue was also raised for the
first time on appeal, which is not allowed.48 In any
case, she already retired before Solid Mills ceased
its operations.49
The Court of Appeals agreed with the National Labor
Relations Commission’s deletion of interest since it
found that Solid Mills’ act of withholding payment of
benefits and separation pay was proper. Petitioners’
terminal benefits and pay were withheld because of
petitioners’ failure to vacate Solid Mills’ property.50
Finally, the Court of Appeals noted that Carlito
Damian already received his separation pay and
benefits.51Hence, he should no longer be awarded
these claims.52
In the resolution promulgated on July 16, 2012, the
Court of Appeals denied petitioners’ motion for
reconsideration.53
Petitioners raise in this petition the following errors:
I
WHETHER OR NOT THE HONORABLE COURT
OF APPEALS COMMITTED REVERSIBLE ERROR
WHEN IT RULED THAT PAYMENT OF THE
MONETARY CLAIMS OF PETITIONERS SHOULD
BE HELD IN ABEYANCE PENDING COMPLIANCE
OF THEIR ACCOUNTABILITIES TO
RESPONDENT SOLID MILLS BY TURNING OVER
THE SUBJECT LOTS THEY RESPECTIVELY
OCCUPY AT SMI VILLAGE, SUCAT,
MUNTINLUPA CITY.
II
WHETHER OR NOT THE HONORABLE COURT
OF APPEALS COMMITTED REVERSIBLE ERROR
WHEN IT UPHELD THE RULING OF THE NLRC
DELETING THE INTEREST OF 12% PER ANNUM
IMPOSED BY THE HONORABLE LABOR
ARBITER HERNANDEZ ON THE AMOUNTDUE
FROM THE DATE OF FILING OF THE LEAD
CASE/JUDICIAL DEMAND ON DECEMBER 8,
2003 UNTIL ACTUAL PAYMENT AND/OR
FINALITY.
III
WHETHER OR NOT THE HONORABLE COURT
OF APPEALS COMMITTED REVERSIBLE ERROR
WHEN IT UPHELD THE RULING OF THE NLRC
DENYING THE CLAIM OF TEODORA MAHILOM
FOR PAYMENT OF RETIREMENT BENEFITS
DESPITE LACK OF ANY EVIDENCE THAT SHE
RECEIVED THE SAME.
IV
WHETHER OR NOT PETITIONER CARLITO
DAMIAN IS ENTITLED TO HIS MONETARY
BENEFITS FROM RESPONDENT SOLID MILLS.54
Petitioners argue that respondent Solid Mills and
NAFLU’s memorandum of agreement has no
provision stating that benefits shall be paid only upon
return of the possession of respondent Solid Mills’
property.55 It only provides that the benefits shall be
"less accountabilities," which should not be
interpreted to include such possession.56 The fact
that majority of NAFLU’s members were not
occupants of respondent Solid Mills’ property is
evidence that possession of the property was not
contemplated in the agreement.57 "Accountabilities"
should be interpreted to refer only to accountabilities
that wereincurred by petitioners while they were
performing their duties asemployees at the
worksite.58 Moreover, applicable laws, company
practice, or policies do not provide that 13th month
pay, and sick and vacation leave pay benefits, may
be withheld pending satisfaction of liabilities by the
employee.59
Petitioners also point out thatthe National Labor
Relations Commission and the Court of Appeals
have no jurisdiction to declare that petitioners’ act of
withholding possession of respondent Solid Mills’
property is illegal.60The regular courts have
jurisdiction over this issue.61 It is independent from
the issue of payment of petitioners’ monetary
benefits.62
For these reasons, and because, according to
petitioners, the amount of monetary award is no
longer in question, petitioners are entitled to 12%
interest per annum.63
Petitioners also argue that Teodora Mahilom and
Carlito Damian are entitled to their claims. They
insistthat Teodora Mahilom did not receive her
retirement benefits and that Carlito Damian did not
receive his separation benefits.64
Respondents Solid Mills and Philip Ang,in their joint
comment, argue that petitioners’ failure to turn over
respondentSolid Mills’ property "constituted an
unsatisfied accountability" for which reason
"petitioners’ benefits could rightfully be
withheld."65 The term "accountability" should be
given its natural and ordinary meaning.66 Thus, it
should be interpreted as "a state of being liable or
responsible," or "obligation."67 Petitioners’
differentiation between accountabilities incurred
while performing jobs at the worksite and
accountabilities incurred outside the worksite is
baseless because the agreement with
NAFLUmerely stated "accountabilities," without
qualification.68
On the removal of the award of 12% interest per
annum, respondents argue that such removal was
proper since respondent Solid Mills was justified in
withholding the monetary claims.69 Respondents
argue that Teodora Mahilom had no more cause of
action for retirement benefits claim.70 She had
already retired more than a decade before Solid
Mills’ closure. She also already received her
retirement benefits in 1991.71 Teodora Mahilom’s
claim was also not included in the complaint filed
before the Labor Arbiter.It was improper to raise this
claim for the first time on appeal. In any case,
Teodora Mahilom’s claim was asserted long after
the three-year prescriptive period provided in Article
291 of the Labor Code.72
Lastly, according to respondents, it would be unjust
if Carlito Damian would be allowed to receive
monetary benefits again, which he, admittedly,
already received from Solid Mills.73
I
The National Labor Relations Commission may
preliminarily determine issues related to rights
arising from an employer-employee relationship
The National Labor Relations Commission has
jurisdiction to determine, preliminarily, the
parties’rights over a property, when it is necessary
to determine an issue related to rights or claims
arising from an employer-employee relationship.
Article 217 provides that the Labor Arbiter, in his or
her original jurisdiction, and the National Labor
Relations Commission, in its appellate jurisdiction,
may determine issues involving claims arising from
employeremployee relations. Thus:
ART. 217. JURISDICTION OF LABOR ARBITERS
AND THE COMMISSION. – (1) Except as otherwise
provided under this Code, the Labor Arbiters shall
have original and exclusive jurisdiction to hear and
decide within thirty (30) calendar days after the
submission of the case by the parties for decision
without extension, even in the absence of
stenographic notes, the following cases involving
workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement,
those cases that workers may file involving wages,
rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and other
forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of
this Code, including questions involving the legality
of strikes and lockouts; and
6. Except claims for Employees Compensation,
Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee
relations including those of persons in domestic or
household service, involving an amount exceeding
five thousand pesos (₱5,000.00), regardless of
whether accompanied with a claim for
reinstatement.
(2) The Commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
(Emphasis supplied)
Petitioners’ claim that they have the right to the
immediate release of their benefits as employees
separated from respondent Solid Mills is a question
arising from the employer-employee relationship
between the parties.
Claims arising from an employer-employee
relationship are not limited to claims by an
employee. Employers may also have claims against
the employee, which arise from the same
relationship. In Bañez v. Valdevilla,74 this court ruled
that Article 217 of the Labor Code also applies to
employers’ claim for damages, which arises from or
is connected with the labor issue. Thus: Whereas
this Court in a number of occasions had applied the
jurisdictional provisions of Article 217 to claims for
damages filed by employees, we hold that by the
designating clause "arising from the employer-
employee relations" Article 217 should apply with
equal force to the claim of an employer for actual
damages against its dismissed employee, where the
basis for the claim arises from or is necessarily
connected with the factof termination, and should be
entered as a counterclaim in the illegal dismissal
case.75
Bañez was cited in Domondon v. National Labor
Relations Commission.76 One of the issues in
Domondonis whether the Labor Arbiter has
jurisdiction to decide an issue on the transfer of
ownership of a vehicle assigned to the employee. It
was argued that only regular courts have jurisdiction
to decide the issue.77
This court ruled that since the transfer of ownership
of the vehicle to the employee was connected to his
separation from the employer and arose from the
employer-employee relationship of the parties, the
employer’s claim fell within the LaborArbiter’s
jurisdiction.78
As a general rule, therefore, a claim only needs to
be sufficiently connected to the labor issue
raisedand must arise from an employeremployee
relationship for the labortribunals to have
jurisdiction.
In this case, respondent Solid Mills claims that its
properties are in petitioners’ possession by virtue of
their status as its employees. Respondent Solid Mills
allowed petitioners to use its property as an act of
liberality. Put in other words, it would not have
allowed petitioners to use its property had they not
been its employees. The return of its properties in
petitioners’ possession by virtue of their status as
employees is an issue that must be resolved to
determine whether benefits can be released
immediately. The issue raised by the employer is,
therefore, connected to petitioners’ claim for benefits
and is sufficiently intertwined with the parties’
employeremployee relationship. Thus, it is properly
within the labor tribunals’ jurisdiction.
II
Institution of clearance procedures has legal bases
Requiring clearance before the release of last
payments to the employee is a standard procedure
among employers, whether public or private.
Clearance procedures are instituted to ensure that
the properties, real or personal, belonging to the
employer but are in the possession of the separated
employee, are returned tothe employer before the
employee’s departure.
As a general rule, employers are prohibited from
withholding wages from employees. The Labor
Code provides:
Art. 116. Withholding of wages and kickbacks
prohibited.It shall be unlawful for any person, directly
or indirectly, to withhold any amount from the wages
of a worker or induce him to give up any part of his
wages by force, stealth, intimidation, threat or by any
other means whatsoever without the worker’s
consent.
The Labor Code also prohibits the elimination or
diminution of benefits. Thus:
Art. 100. Prohibition against elimination or
diminution of benefits. Nothing in this Book shall be
construed to eliminate or in any way diminish
supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code.
However, our law supports the employers’ institution
of clearance procedures before the release of
wages. As an exception to the general rule that
wages may not be withheld and benefits may not be
diminished, the Labor Code provides:
Art. 113. Wage deduction.No employer, in his own
behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:
1. In cases where the worker is insured with his
consent by the employer, and the deduction is to
recompense the employer for the amount paid by
him as premium on the insurance;
2. For union dues, in cases where the right of the
worker or his union to check-off has been recognized
by the employer or authorized in writing by the
individual worker concerned; and
3. In cases where the employer is authorized by law
or regulations issued by the Secretary of Labor and
Employment. (Emphasis supplied)
The Civil Code provides that the employer is
authorized to withhold wages for debts due:
Article 1706. Withholding of the wages, except for a
debt due, shall not be made by the employer.
"Debt" in this case refers to any obligation due from
the employee to the employer. It includes any
accountability that the employee may have to the
employer. There is no reason to limit its scope to
uniforms and equipment, as petitioners would argue.
More importantly, respondent Solid Mills and
NAFLU, the union representing petitioners, agreed
that the release of petitioners’ benefits shall be "less
accountabilities."
"Accountability," in its ordinary sense, means
obligation or debt. The ordinary meaning of the term
"accountability" does not limit the definition of
accountability to those incurred in the worksite. As
long as the debt or obligation was incurred by virtue
of the employer-employee relationship, generally, it
shall be included in the employee’s accountabilities
that are subject to clearance procedures.
It may be true that not all employees enjoyed the
privilege of staying in respondent Solid Mills’
property. However, this alone does not imply that
this privilege when enjoyed was not a result of the
employer-employee relationship. Those who did
avail of the privilege were employees of respondent
Solid Mills. Petitioners’ possession should,
therefore, be included in the term "accountability."
Accountabilities of employees are personal. They
need not be uniform among all employees in order
to be included in accountabilities incurred by virtue
of an employer-employee relationship. Petitioners
do not categorically deny respondent Solid Mills’
ownership of the property, and they do not claim
superior right to it. What can be gathered from the
findings ofthe Labor Arbiter, National Labor
Relations Commission, and the Court ofAppeals is
that respondent Solid Mills allowed the use of its
property for the benefit of petitioners as its
employees. Petitioners were merely allowed to
possess and use it out of respondent Solid Mills’
liberality. The employer may, therefore, demand the
property at will.79
The return of the property’s possession became an
obligation or liability on the part of the employees
when the employer-employee relationship ceased.
Thus, respondent Solid Mills has the right to withhold
petitioners’ wages and benefitsbecause of this
existing debt or liability. In Solas v. Power and
Telephone Supply Phils., Inc., et al., this court
recognized this right of the employer when it ruled
that the employee in that case was not constructively
dismissed.80 Thus:
There was valid reason for respondents’ withholding
of petitioner’s salary for the month of February 2000.
Petitioner does not deny that he is indebted to his
employer in the amount of around 95,000.00.
Respondents explained that petitioner’s salary for
the period of February 1-15, 2000 was applied as
partial payment for his debt and for withholding taxes
on his income; while for the period of February 15-
28, 2000, petitioner was already on absence without
leave, hence, was not entitled to any pay.81
The law does not sanction a situation where
employees who do not even assert any claim over
the employer’s property are allowed to take all the
benefits out of their employment while they
simultaneously withhold possession of their
employer’s property for no rightful reason.
Withholding of payment by the employer does not
mean that the employer may renege on its obligation
to pay employees their wages, termination
payments, and due benefits. The employees’
benefits are also not being reduced. It is only
subjectedto the condition that the employees return
properties properly belonging to the employer. This
is only consistent with the equitable principle that "no
one shall be unjustly enriched or benefited at the
expense of another."82
For these reasons, we cannot hold that petitioners
are entitled to interest of their withheldseparation
benefits. These benefits were properly withheld by
respondent Solid Mills because of their refusal to
return its property.
III
Mahilom and Damian are not entitled to the benefits
claimed
Teodora Mahilom is not entitled to separation
benefits.
Both the National Labor Relations Commission and
the Court of Appeals found that Teodora Mahilom
already retired long before respondent Solid Mills’
closure. They found that she already received her
retirement benefits. We have no reason to disturb
this finding. This court is not a trier of facts. Findings
of the National Labor Relations Commission,
especially when affirmed by the Court of Appeals,
are binding upon this court.83
Moreover, Teodora Mahilom’s claim for retirement
benefits was not included in her complaint filed
before the Labor Arbiter. Hence, it may not be raised
in the appeal.
Similarly, the National Labor Relations Commission
and the Court of Appeals found that Carlito Damian
already received his terminal benefits. Hence, he
may no longer claim terminal benefits. The fact that
respondent Solid Mills has not yet demolished
Carlito Damian’s house in SMI Village is not
evidence that he did not receive his benefits. Both
the National Labor Relations Commission and the
Court of Appeals found that he executed an affidavit
stating that he already received the benefits.
A bsent any showing that the National Labor
Relations Commission and the Court of Appeals
misconstrued these facts, we will not reverse these
findings.
Our laws provide for a clear preference for labor.
This is in recognition of the asymmetrical power of
those with capital when they are left to negotiate with
their workers without the standards and protection of
law. In cases such as these, the collective
bargaining unit of workers are able to get more
benefits and in exchange, the owners are able to
continue with the program of cutting their losses or
wind down their operations due to serious business
losses. The company in this case did all that was
required by law.
The preferential treatment given by our law to labor,
however, is not a license for abuse.84 It is not a signal
to commit acts of unfairness that will unreasonably
infringe on the property rights of the company. Both
labor and employer have social utility, and the law is
not so biased that it does not find a middle ground to
give each their due.
Clearly, in this case, it is for the workers to return
their housing in exchange for the release of their
benefits.1âwphi1This is what they agreed upon. It is
what is fair in the premises.
WHEREFORE, the petition is DENIED. The Court of
Appeals' decision is AFFIRMED.
MARVIC M.V.F. LEONEN
Associate Justice
G.R. No. 189255 June 17, 2015
JESUS G. REYES, Petitioner,
vs.
GLAUCOMA RESEARCH FOUNDATION, INC.,
EYE REFERRAL CENTER and MANUEL B.
AGULTO, Respondents.
DECISION
PERALTA, J.:
Before the Court is a petition for review on certiorari
seeking to reverse and set aside the Decision1 and
Resolution2 of the Court of Appeals (CA), dated April
20, 2009 and August 25, 2009, respectively, in CA-
G.R. SP No. 104261. The assailed CA Decision
annulled the Decision of the National Labor
Relations Commission (NLRC) in NLRC NCR Case
No. 05-0441-05 and reinstated the Decision of the
Labor Arbiter (LA) in the same case, while the CA
Resolution denied petitioner's motion for
reconsideration.
The instant petition arose from a complaint for illegal
dismissal filed by petitioner against respondents with
the NLRC, National Capital Region, Quezon City.
Petitioner alleged that: on August 1, 2003, he was
hired by respondent corporation as administrator of
the latter's Eye Referral Center (ERC); he performed
his duties as administrator and continuously
received his monthly salary of ₱20,000.00 until the
end of January 2005; beginning February 2005,
respondent withheld petitioner's salary without
notice but he still continued to report for work; on
April 11, 2005, petitioner wrote a letter to respondent
Manuel Agulto (Agulto), who is the Executive
Director of respondent corporation, informing the
latter that he has not been receiving his salaries
since February 2005 as well as his 14th month pay
for 2004; petitioner did not receive any response
from Agulto; on April 21, 2005, petitioner was
informed by the Assistant to the Executive Director
as well as the Assistant Administrative Officer, that
he is no longer the Administrator of the ERC;
subsequently, petitioner’s office was padlocked and
closed without notice; he still continued to report for
work but on April 29, 2005 he was no longer allowed
by the security guard on duty to enter the premises
of the ERC.
On their part, respondents contended that: upon
petitioner's representation that he is an expert
incorporate organizational structure and
management affairs, they engaged his services as a
consultant or adviser in the formulation of an
updated organizational set-up and employees'
manual which is compatible with their present
condition; based on his claim that there is a need for
an administrator for the ERC, he later designated
himself as such on a trial basis; there is no employer-
employee relationship between them because
respondents had no control over petitioner in terms
of working hours as he reports for work at anytime of
the day and leaves as he pleases; respondents also
had no control as to the manner in which he
performs his alleged duties as consultant; he
became overbearing and his relationship with the
employees and officers of the company soured
leading to the filing of three complaints against him;
petitioner was not dismissed as he was the one who
voluntarily severed his relations with respondents.
On January 20, 2006, the LA assigned to the case
rendered a Decision3 dismissing petitioner's
complaint. The LA held, among others, that
petitioner failed to establish that the elements of an
employer-employee relationship existed between
him and respondents because he was unable to
show that he was, in fact, appointed as administrator
of the ERC and received salaries as such; he also
failed to deny that during his stint with respondents,
he was, at the same time, a consultant of various
government agencies such as the Manila
International Airport Authority, Manila
Intercontinental Port Authority, Anti-Terrorist Task
Force for Aviation and Air Transportation Sector; his
actions were neither supervised nor controlled by
the management of the ERC; petitioner, likewise, did
not observe working hours by reporting for work and
leaving therefrom as he pleased; and, he was
receiving allowances, not salaries, as a consultant.
On appeal, the NLRC reversed and set aside the
Decision of the LA. The NLRC declared petitioner as
respondents' employee, that he was illegally
dismissed and ordered respondents to reinstate him
to his former position without loss of seniority rights
and privileges with full backwages. The NLRC held
that the basis upon which the conclusion of the LA
was drawn lacked support; that it was incumbent for
respondents to discharge the burden of proving that
petitioner's dismissal was for cause and effected
after due process was observed; and, that
respondents failed to discharge this burden.4
Respondents filed a motion for reconsideration, but
it was denied by the NLRC in its Resolution5 dated
May 30, 2008.
Respondents then filed a Petition for Certiorari6 with
the CA.
In its assailed Decision, the CA annulled and set
aside the judgment of the NLRC and reinstated the
Decision of the LA. The CA held that the LA was
correct in ruling that, under the control test and the
economic reality test, no employer-employee
relationship existed between respondents and
petitioner.
Petitioner filed a motion for reconsideration, but the
CA denied it in its Resolution dated August 25, 2009.
Hence, the present petition for review on certiorari
based on the following grounds:
I (b) A person shall not perform a notarial act if the
THE HONORABLE COURT OF APPEALS ERRED
AND ABUSED ITS DISCRETION IN NOT
DISMISSING RESPONDENTS' PETITION FOR
CERTIORARI ON THE GROUND THAT
RESPONDENTS SUBMITTED A VERIFICATION
THATFAILS TO COMPLY WITH THE 2004 RULES
ON NOTARIAL PRACTICE.
II
THE HONORABLE COURT OF APPEALS ERRED
AND ABUSED ITS DISCRETION IN RULING
THATNO EMPLOYER-EMPLOYEE
RELATIONSHIP EXISTS BETWEEN
RESPONDENTS AND PETITIONER.7
As to the first ground, petitioner contends that
respondents' petition for certiorari filed with the CA
should have been dismissed on the ground that it
was improperly verified because the jurat portion of
the verification states only the community tax
certificate number of the affiant as evidence of her
identity. Petitioner argues that under the 2004 Rules
on Notarial Practice, as amended by a
Resolution8 of this Court, dated February 19, 2008,
a community tax certificate is not among those
considered as competent evidence of identity.
The Court does not agree.
This Court has already ruled that competent
evidence of identity is not required in cases where
the affiant is personally known to the notary public.9
Thus, in Jandoquile v. Revilla, Jr.,10 this Court held
that:
If the notary public knows the affiants personally, he
need not require them to show their valid
identification cards.1âwphi1 This rule is supported
by the definition of a "jurat" under Section 6, Rule II
of the 2004 Rules on Notarial Practice. A "jurat"
refers to an act in which an individual on a single
occasion: (a) appears in person before the notary
public and presents an instrument or document; (b)
is personally known to the notary public or identified
by the notary public through competent evidence of
identity; (c) signs the instrument or document in the
presence of the notary; and (d) takes an oath or
affirmation before the notary public as to such
instrument or document.11
Also, Section 2(b), Rule IV of the 2004 Rules on
Notarial Practice provides as follows:
SEC. 2. Prohibitions –
(a) x x x
person involved as signatory to the instrument or
document –
(1) is not in the notary's presence personally at the
time of the notarization; and
(2) is not personally known to the notary public or
otherwise identified by the notary public through
competent evidence of identity as defined by these
Rules.
Moreover, Rule II, Section 6 of the same Rules
states that:
SEC 6. Jurat. – "Jurat" refers to an act in which an
individual on a single occasion:
(a) appears in person before the notary public and
presents an instrument or document;
(b) is personally known to the notary public or
identified by the notary public through competent
evidence of identity as defined by these Rules;
(c) signs the instrument or document in the presence
of the notary; and
(d) takes an oath or affirmation before the notary
public as to such instrument or document.
In legal hermeneutics, "or" is a disjunctive that
expresses an alternative or gives a choice of one
among two or more things.12 The word signifies
disassociation and independence of one thing from
another thing in an enumeration.13
Thus, as earlier stated, if the affiant is personally
known to the notary public, the latter need not
require the former to show evidence of identity as
required under the 2004 Rules on Notarial Practice,
as amended.
Applying the above rule to the instant case, it is
undisputed that the attorney-in-fact of respondents
who executed the verification and certificate against
forum shopping, which was attached to respondents'
petition filed with the CA, is personally known to the
notary public before whom the documents were
acknowledged. Both attorney-in-fact and the notary
public hold office at respondents' place of business
and the latter is also the legal counsel of
respondents.
In any event, this Court's disquisition in the fairly
recent case of Heirs of Amada Zaulda v. Isaac
Zaulda14 regarding the import of procedural rules
vis-à-vis the substantive rights of the parties, is
instructive, to wit:
[G]ranting, arguendo, that there was non-
compliance with the verification requirement, the
rule is that courts should not be so strict about
procedural lapses which do not really impair the
proper administration of justice. After all, the higher
objective of procedural rule is to ensure that the
substantive rights of the parties are protected.
Litigations should, as much as possible, be decided
on the merits and not on technicalities. Every party-
litigant must be afforded ample opportunity for the
proper and just determination of his case, free from
the unacceptable plea of technicalities.
In Coca-Cola Bottlers v. De la Cruz, where the
verification was marred only by a glitch in the
evidence of the identity of the affiant, the Court was
of the considered view that, in the interest of justice,
the minor defect can be overlooked and should not
defeat the petition.
The reduction in the number of pending cases is
laudable, but if it would be attained by precipitate, if
not preposterous, application of technicalities,
justice would not be served. The law abhors
technicalities that impede the cause of justice. The
court's primary duty is to render or dispense justice.
"It is a more prudent course of action for the court to
excuse a technical lapse and afford the parties a
review of the case on appeal rather than dispose of
the case on technicality and cause a grave injustice
to the parties, giving a false impression of speedy
disposal of cases while actually resulting in more
delay, if not miscarriage of justice."
What should guide judicial action is the principle that
a party-litigant should be given the fullest opportunity
to establish the merits of his complaint or defense
rather than for him to lose life, liberty, honor, or
property on technicalities. The rules of procedure
should be viewed as mere tools designed to facilitate
the attainment of justice. Their strict and rigid
application, which would result in technicalities that
tend to frustrate rather than promote substantial
justice, must always be eschewed. At this juncture,
the Court reminds all members of the bench and bar
of the admonition in the often-cited case of Alonso v.
Villamor:
Lawsuits, unlike duels, are not to be won by a
rapier's thrust. Technicality, when it deserts its
proper office as an aid to justice and becomes its
great hindrance and chief enemy, deserves scant
consideration from courts. There should be no
vested rights in technicalities.15
Anent the second ground, petitioner insists that,
based on evidence on record, an employer-
employee relationship exists between him and
respondents.
The Court is not persuaded.
It is a basic rule of evidence that each party must
prove his affirmative allegation.16 If he claims a right
granted by law, he must prove his claim by
competent evidence, relying on the strength of his
own evidence and not upon the weakness of that of
his opponent.17 The test for determining on whom
the burden of proof lies is found in the result of an
inquiry as to which party would be successful if no
evidence of such matters were given.18 In an illegal
dismissal case, the onus probandi rests on the
employer to prove that its dismissal of an employee
was for a valid cause.19 However, before a case for
illegal dismissal can prosper, an employer-employee
relationship must first be established.20 Thus, in filing
a complaint before the LA for illegal dismissal, based
on the premise that he was an employee of
respondents, it is incumbent upon petitioner to prove
the employer-employee relationship by substantial
evidence.21
In regard to the above discussion, the issue of
whether or not an employer-employee relationship
existed between petitioner and respondents is
essentially a question of fact.22 The factors that
determine the issue include who has the power to
select the employee, who pays the employee’s
wages, who has the power to dismiss the employee,
and who exercises control of the methods and
results by which the work of the employee is
accomplished.23 Although no particular form of
evidence is required to prove the existence of the
relationship, and any competent and relevant
evidence to prove the relationship may be admitted,
a finding that the relationship exists must
nonetheless rest on substantial evidence, which is
that amount of relevant evidence that a reasonable
mind might accept as adequate to justify a
conclusion.24
Generally, the Court does not review factual
questions, primarily because the Court is not a trier
of facts.25 However, where, like here, there is a
conflict between the factual findings of the LA and
the CA, on one hand, and those of the NLRC, on the
other, it becomes proper for the Court, in the
exercise of its equity jurisdiction, to review and re-
evaluate the factual issues and to look into the
records of the case and re-examine the questioned
findings.26
Etched in an unending stream of cases are four
standards in determining the existence of an
employer-employee relationship, namely: (a) the
manner of selection and engagement of the putative
employee; (b) the mode of payment of wages; (c) the
presence or absence of power of dismissal; and, (d)
the presence or absence of control of the putative
employee’s conduct. Most determinative among
these factors is the so-called "control test."27
Indeed, the power of the employer to control the
work of the employee is considered the most
significant determinant of the existence of an
employer-employee relationship.28 This test is
premised on whether the person for whom the
services are performed reserves the right to control
both the end achieved and the manner and means
used to achieve that end.29
In the present case, petitioner contends that, as
evidence of respondents' supposed control over
him, the organizational plans he has drawn were
subject to the approval of respondent corporation's
Board of Trustees. However, the Court agrees with
the disquisition of the CA on this matter, to wit:
[Respondents'] power to approve or reject the
organizational plans drawn by [petitioner] cannot be
the control contemplated in the "control test." It is but
logical that one who commissions another to do a
piece of work should have the right to accept or
reject the product. The important factor to consider
in the "control test" is still the element of control over
how the work itself is done, not just the end result
thereof.
Well settled is the rule that where a person who
works for another performs his job more or less at
his own pleasure, in the manner he sees fit, not
subject to definite hours or conditions of work, and is
compensated according to the result of his efforts
and not the amount thereof, no employer-employee
relationship exists.30
What was glaring in the present case is the
undisputed fact that petitioner was never subject to
definite working hours. He never denied that he goes
to work and leaves therefrom as he pleases.31 In
fact, on December 1-31, 2004, he went on leave
without seeking approval from the officers of
respondent company. On the contrary, his
letter32 simply informed respondents that he will be
away for a month and even advised them that they
have the option of appointing his replacement during
his absence. This Court has held that there is no
employer-employee relationship where the
supposed employee is not subject to a set of rules
and regulations governing the performance of his
duties under the agreement with the company and is
not required to report for work at any time, nor to
devote his time exclusively to working for the
company.33
In this regard, this Court also agrees with the ruling
of the CA that:
Aside from the control test, the Supreme Court has
also used the economic reality test in determining
whether an employer-employee relationship exists
between the parties. Under this test, the economic
realities prevailing within the activity or between the
parties are examined, taking into consideration the
totality of circumstances surrounding the true nature
of the relationship between the parties. This is
especially appropriate when, as in this case, there is
no written agreement or contract on which to base
the relationship. In our jurisdiction, the benchmark of
economic reality in analyzing possible employment
relationships for purposes of applying the Labor
Code ought to be the economic dependence of the
worker on his employer. In the instant case, as
shown by the resume of [petitioner], he concurrently
held consultancy positions with the Manila
International Airport Authority (from 04 March 2001
to September 2003 and from 01 November 2004 up
to the present) and the Anti-Terrorist Task Force for
Aviation and Air Transportation Sector (from 16 April
2004 to 30 June 2004) during his stint with the Eye
Referral Center (from 01 August 2003 to 29 April
2005). Accordingly, it cannot be said that the
[petitioner] was wholly dependent on [respondent]
company.34
In bolstering his contention that there was an
employer-employee relationship, petitioner draws
attention to the pay slips he supposedly received
from respondent corporation. However, he does not
dispute the findings of the CA that there are no
deductions for SSS and withholding tax from his
compensation, which are the usual deductions from
employees' salaries. Thus, the alleged pay slips may
not be treated as competent evidence of petitioner's
claim that he is respondents' employee.
In addition, the designation of the payments to
petitioner as salaries, is not determinative of the
existence of an employer-employee
35
relationship. Salary is a general term defined as a
remuneration for services given.36 Evidence of this
fact, in the instant case, was the cash voucher
issued in favor of petitioner where it was stated
therein that the amount of ₱20,000.00 was given as
petitioner's allowance for the month of December
2004, although it appears from the pay slip that the
said amount was his salary for the same period.
Additional evidence of the fact that petitioner was
hired as a consultant and not as an employee of
respondent corporation are affidavits to this effect
which were executed by Roy Oliveres37 and Aurea
Luz Esteva,38 who are Medical Records Custodian
and Administrative Officer, respectively, of
respondent corporation. Petitioner insists in its
objection of the use of these affidavits on the ground
that they are, essentially, hearsay. However, this
Court has ruled that although the affiants had not
been presented to affirm the contents of their
affidavits and be cross-examined, their affidavits
may be given evidentiary value; the argument that
such affidavits were hearsay was not
persuasive.39 Likewise, this Court ruled that it was
not necessary for the affiants to appear and testify
and be cross-examined by counsel for the adverse
party.40 To require otherwise would be to negate the
rationale and purpose of the summary nature of the
proceedings mandated by the Rules and to make
mandatory the application of the technical rules of
evidence.41
These affidavits are corroborated by evidence, as
discussed above, showing that petitioner has no
definite working hours and is not subject to the
control of respondents.
Lastly, the Court does not agree with petitioner's
insistence that his being hired as respondent
corporation's administrator and his designation as
such in intra-company correspondence proves that
he is an employee of the corporation. The fact alone
that petitioner was designated as an administrator
does not necessarily mean that he is an employee
of respondents. Mere title or designation in a
corporation will not, by itself, determine the
existence of an employer-employee
42
relationship. In this regard, even the identification
card which was issued to petitioner is not an
adequate proof of petitioner's claim that he is
respondents' employee. In addition, petitioner’s
designation as an administrator neither disproves
respondents' contention that he was engaged only
as a consultant.
As a final point, it bears to reiterate that while the
Constitution is committed to the policy of social
justice and the protection of the working class, it
should not be supposed that every labor dispute will
be automatically decided in favor of
43
labor. Management also has its rights which are
entitled to respect and enforcement in the interest of
simple fair play.44 Out of its concern for the less
privileged in life, the Court has inclined, more often
than not, toward the worker and upheld his cause in
his conflicts with the employer.45 Such favoritism,
however, has not blinded the Court to the rule that
justice is in every case for the deserving, to be
dispensed in the light of the established facts and
the applicable law and doctrine.46
WHEREFORE, the instant petition is DENIED. The
Decision and Resolution of the Court of Appeals,
dated April 20, 2009 and August 25, 2009,
respectively, in CA-G.R. SP No. 104261, are
AFFIRMED.
SO ORDERED.
July 5, 2016
G.R. No. 220978
CENTURY PROPERTIES, INC., Petitioner,
vs
EDWIN J. BABIANO and EMMA B.
CONCEPCION, Respondents.
DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1are
the Decision2 dated April 8, 2015 and the
Resolution3 dated October 12, 2015 of the Court of
Appeals (CA) in CA-G.R. SP No. 132953, which
affirmed with modification the Decision4 dated June
25, 2013 and the Resolution5 dated October 16,
2013 of the National Labor Relations Commission
(NLRC) in NLRC LAC No. 05-001615-12, and
ordered petitioner Century Properties, Inc. (CPI) to
pay respondents Edwin J. Babiano (Babiano) and
Emma B. Concepcion (Concepcion; collectively,
respondents) unpaid commissions in the amounts of
P889,932.42 and P591,953.05, respectively.
The Facts
On October 2, 2002, Babiano was hired by CPI as
Director of Sales, and was eventually6 appointed as
Vice President for Sales effective September 1,
2007. As CPI' s Vice President for Sales, Babiano
was remunerated with, inter alia, the following
benefits: (a) monthly salary of
P70,000.00; (b) allowance of P50,000.00; and (c)
0.5% override commission for completed sales. His
employment contract7 also contained a On August 8, 2011, respondents filed a
"Confidentiality of Documents and Non:-Compete
Clause"8which, among others, barred him from
disclosing confidential information, and from working
in any business enterprise that is in direct
competition with CPI "while [he is] employed and for
a period of one year from date of resignation or
termination from [CPI]." Should Babiano breach any
of the terms thereof, his "forms of compensation,
including commissions and incentives will be
forfeited."9
During the same period, Concepcion was initially
hired as Sales Agent by CPI and was
eventually10 promoted as Project Director on
September 1, 2007.11 As such, she signed an
employment agreement, denominated as "Contract
of Agency for Project Director"12 which provided,
among others, that she would directly report to
Babiano, and receive a monthly subsidy of
P60,000.00, 0.5% commission, and cash
incentives.13 On March 31, 2008, Concepcion
executed a similar contract14 anew with CPI in which
she would receive a monthly subsidy of P50,000.00,
0.5% commission, and cash incentives as per
company policy. Notably, it was stipulated in both
contracts that no employer-employee relationship
exists between Concepcion and CPI.15
After receiving reports that Babiano provided a
competitor with information regarding CPI's
marketing strategies, spread false information
regarding CPI and its projects, recruited CPI's
personnel to join the competitor, and for being
absent without official leave (AWOL) for five (5)
days, CPI, through its Executive Vice President for
Marketing and Development, Jose Marco R. Antonio
(Antonio), sent Babiano a Notice to Explain16 on
February 23, 2009 directing him to explain why he
should not be charged with disloyalty, conflict of
interest, and breach of trust and confidence for his
actuations.17
On February 25, 2009, Babiano tendered18 his
resignation and revealed that he had been accepted
as Vice President of First Global BYO Development
Corporation (First Global), a competitor of CPI.19 On
March 3, 2009, Babiano was served a Notice of
Termination20 for: (a) incurring AWOL; (b) violating
the "Confidentiality of Documents and Non-Compete
Clause" when he joined a competitor enterprise
while still working for CPI and provided such
competitor enterprise information regarding CPI' s
marketing strategies; and (c) recruiting CPI
personnel to join a competitor.21
On the other hand, Concepcion resigned as CPI's
Project Director through a letter22 dated February 23,
2009, effective immediately.
complaint23 for non-payment of commissions and
damages against CPI and Antonio before the NLRC,
docketed as NLRC Case No. NCR-08-12029-11,
claiming that their repeated demands for the
payment and release of their commissions remained
unheeded.24
For its part, CPI maintained25 that Babiano is merely
its agent tasked with selling its projects.
Nonetheless, he was afforded due process in the
termination of his employment which was based on
just causes.26 It also claimed to have validly withheld
Babiano' s commissions, considering that they were
deemed forfeited for violating the "Confidentiality of
Documents and Non-Compete Clause."27 On
Concepcion's money claims, CPI asserted that the
NLRC had no jurisdiction to hear the same because
there was no employer-employee relations between
them, and thus, she should have litigated the same
in an ordinary civil action.28
The LA Ruling
In a Decision29 dated March 19, 2012, the Labor
Arbiter (LA) ruled in CPI's favor and, accordingly,
dismissed the complaint for lack of merit.30 The LA
found that: (a) Babiano's acts of providing
information on CPI’s marketing strategies to the
competitor and spreading false information about
CPI and its projects are blatant violations of the
"Confidentiality of Documents and Non-Compete
Clause" of his employment contract, thus, resulting
in the forfeiture of his unpaid commissions in
accordance with the same clause;31 and (b) it had no
jurisdiction over Concepcion's money claim as she
was not an employee but a mere agent of CPI, as
clearly stipulated in her engagement contract with
the latter.32
Aggrieved, respondents appealed33 to the
NLRC.1âwphi1
The NLRC Ruling
In a Decision34 dated June 25, 2013, the NLRC
reversed and set aside the LA ruling, and entered a
new one ordering CPI to pay Babiano and
Concepcion the amounts of P685,211.76 and
P470,754.62, respectively, representing their
commissions from August 9, 2008 to August 8, 2011,
as well as 10% attorney's fees of the total monetary
awards.35
While the NLRC initially concurred with the LA that
Babiano's acts constituted just cause which would
warrant the termination of his employment from CPI,
it, however, ruled that the forfeiture of all earned
commissions ofBabiano under the "Confidentiality of
Documents and Non-Compete Clause" is
confiscatory and unreasonable and hence, contrary
to law and public policy.36 In this light, the NLRC held
that CPI could not invoke such clause to avoid the
payment of Babiano's commissions since he had
already earned those monetary benefits and, thus,
should have been released to him. However, the
NLRC limited the grant of the money claims in light
of Article 291 (now Article 306)37 of the Labor Code
which provides for a prescriptive period of three (3)
years. Consequently,· the NLRC awarded unpaid
commissions only from August 9, 2008 to August 8,
2011 - i.e., which was the date when the complaint
was filed.38 Meanwhile, contrary to the LA's finding,
the NLRC ruled that Concepcion was CPI's
employee, considering that CPI: (a) repeatedly hired
and promoted her since 2002; (b) paid her wages
despite referring to it as "subsidy"; and (c) exercised
the power of dismissal and control over her.39 Lastly,
the NLRC granted respondents' claim for attorney's
fees since they were forced to litigate and incurred
expenses for the protection of their rights and
interests.40
Respondents did not assail the NLRC findings. In
contrast, only CPI moved for
reconsideration,41 which the NLRC denied in a
Resolution42 dated October 16, 2013. Aggrieved,
CPI filed a petition for certiorari43before the CA.
The CA Ruling
In a Decision44 dated April 8, 2015, the CA affirmed
the NLRC ruling with modification increasing the
award of unpaid commissions to Babiano and
Concepcion in the amounts of P889,932.42 and
P591,953.05, respectively, and imposing interest of
six percent (6%) per annum on all monetary awards
from the finality of its decision until fully paid.45
The CA held that Babiano properly instituted his
claim for unpaid commissions before the labor
tribunals as it is a money claim arising from an
employer-employee relationship with CPI. In this
relation, the CA opined that CPI cannot withhold
such unpaid commissions on the ground of
Babiano's alleged breach of the "Confidentiality of
Documents and Non-Compete Clause" integrated in
the latter's employment contract, considering that
such clause referred to acts done after the cessation
of the employer-employee relationship or to the
"post-employment" relations of the parties. Thus,
any such supposed breach thereof is a civil law
dispute that is best resolved by the regular courts
and not by labor tribunals.46
Similarly, the CA echoed the NLRC's finding that
there exists an employer-employee relationship
between Concepcion and CPI, because the latter
exercised control over the performance of her duties
as Project Director which is indicative of an
employer-employee relationship. Necessarily
therefore, CPI also exercised control over
Concepcion's duties in recruiting, training, and
developing directors of sales because she was
supervised by Babiano in the performance of her
functions. The CA likewise observed the presence of
critical factors which were indicative of an employer-
employee relationship with CPI, such
as: (a) Concepcion's receipt of a monthly salary from
CPI; and (b) that she performed tasks besides
selling CPI properties. To add, the title of her
contract which was referred to as "Contract of
Agency for Project Director" was not binding and
conclusive, considering that the characterization of
the juridical relationship is essentially a matter of law
that is for the courts to determine, and not the parties
thereof. Moreover, the totality of evidence sustains a
finding of employer-employee relationship between
CPI and Concepcion.47
Further, the CA held that despite the NLRC's proper
application of the three (3)-year prescriptive period
under Article 291 of the Labor Code, it nonetheless
failed to include all of respondents' earned
commissions during that time - i.e., August 9, 2008
to August 8, 2011 - thus, necessitating the increase
in award of unpaid commissions in respondents'
favor.48
Undaunted, CPI sought for reconsideration,49 which
was, however, denied in a Resolution50 dated
October 12, 2015; hence, this petition.
The Issue Before the Court
The core issue for the Court's resolution is whether
or not the CA erred in denying CPI's petition
for certiorari, thereby holding it liable for the unpaid
commissions of respondents.
The Court's Ruling
The petition is partly meritorious.
I.
Article 1370 of the Civil Code provides that "[i]f the
terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the
literal meaning of its stipulations shall
51
control." In Norton Resources and Development
Corporation v. All Asia Bank Corporation,52the Court
had the opportunity to thoroughly discuss the said
rule as follows:
The rule is that where the language of a contract is
plain and unambiguous, its meaning should be
determined without reference to extrinsic facts or
aids. The intention of the parties must be gathered
from that language, and from that language
alone. Stated differently, where the language of a
written contract is clear and unambiguous, the
contract must be taken to mean that which, on its
face, it purports to mean, unless some good reason
can be assigned to show that the words should be
understood in a different sense. Courts cannot make
for the parties better or more equitable agreements
than they themselves have been satisfied to make,
or rewrite contracts because they operate harshly or
inequitably as to one of the parties, or alter them for
the benefit of one party and to the detriment of the
other, or by construction, relieve one of the parties
from the terms which he voluntarily consented to, or
impose on him those which he did not.53 (Emphases
and underscoring supplied)
Thus, in the interpretation of contracts, the Court
must first determine whether a provision or
stipulation therein is ambiguous. Absent any
ambiguity, the provision on its face will be read as it
is written and treated as the binding law of the
parties to the contract.54
In the case at bar, CPI primarily invoked the
"Confidentiality of Documents and Non-Compete
Clause" found in Babiano's employment
55
contract to justify the forfeiture of his
commissions, viz.:
Confidentiality of Documents and Non-Compete
Clause
All records and documents of the company and all
information pertaining to its business or affairs or
that of its affiliated companies are confidential and
no unauthorized disclosure or reproduction or the
same will be made by you any time during or after
your employment.
And in order to ensure strict compliance herewith,
you shall not work for whatsoever capacity, either as
an employee, agent or consultant with any person
whose business is in direct competition with the
company while you are employed and for a period of
one year from date of resignation or termination from
the company.
In the event the undersigned breaches any term of
this contract, the undersigned agrees and
acknowledges that damages may not be an
adequate remedy and that in addition to any other
remedies available to the Company at law or in
equity, the Company is entitled to enforce its rights
hereunder by way of injunction, restraining order or
other relief to enjoin any breach or default of this
contract.
The undersigned agrees to pay all costs, expenses
and attorney's fees incurred by the Company in
connection with the enforcement of the obligations
of the undersigned. The undersigned also agrees to
.pay the Company all profits, revenues and income
or benefits derived by or accruing to the undersigned
resulting from the undersigned's breach of the
obligations hereunder. This Agreement shall be
binding upon the undersigned, all employees,
agents, officers, directors, shareholders, partners
and representatives of the undersigned and all heirs,
successors and assigns of the foregoing.
Finally, if undersigned breaches any terms of this
contract, forms of compensation including
commissions and incentives will be
56
forfeited. (Emphases and underscoring supplied)
Verily, the foregoing clause is not only clear and
unambiguous in stating that Babiano is barred to
"work for whatsoever capacity x x x with any person
whose business is in direct competition with [CPI]
while [he is] employed and for a period of one year
from date of [his] resignation or termination from the
company," it also expressly provided in no uncertain
terms that should Babiano "[breach] any term of [the
employment contract], forms of compensation
including commissions and incentives will be
forfeited." Here, the contracting parties - namely
Babiano on one side, and CPI as represented by its
COO-Vertical, John Victor R. Antonio, and Director
for Planning and Controls, Jose Carlo R. Antonio, on
the other - indisputably wanted the said clause to be
effective even during the existence of the employer-
employee relationship between Babiano and CPI,
thereby indicating their intention to be bound by such
clause by affixing their respective signatures to the
employment contract. More significantly, as CPI's
Vice President for Sales, Babiano held a highly
sensitive and confidential managerial position as he
"was tasked, among others, to guarantee the
achievement of agreed sales targets for a project
and to ensure that his team has a qualified and
competent manpower resources by conducting
recruitment activities, training sessions, sales rallies,
motivational activities, and evaluation
57
programs." Hence, to allow Babiano to freely move
to direct competitors during and soon after his
employment with CPI would make the latter's trade
secrets vulnerable to exposure, especially in a highly
competitive marketing environment. As such, it is
only reasonable that CPI and Babiano agree on such
stipulation in the latter's employment contract in
order to afford a fair and reasonable protection to
CPI.58 Indubitably, obligations arising from
contracts, including employment contracts, have the
force of law between the contracting parties and
should be complied with in good faith.59 Corollary
thereto, parties are bound by the stipulations,
clauses, terms, and conditions they have agreed to,
provided that these stipulations, clauses, terms, and
conditions are not contrary to law, morals, public
order or public policy,60 as in this case.
Therefore, the CA erred in limiting the
"Confidentiality of Documents and Non-Compete
Clause" only to acts done after the cessation of the
employer-employee relationship or to the "post-
employment" relations of the parties. As clearly
stipulated, the parties wanted to apply said clause
during the pendency of Babiano' s employment, and
CPI correctly invoked the same before the labor
tribunals to resist the farmer's claim for unpaid
commissions on account of his breach of the said
clause while the employer-employee relationship
between them still subsisted. Hence, there is now a
need to determine whether or not Babiano breached
said clause while employed by CPI, which would
then resolve the issue of his entitlement to his unpaid
commissions.
A judicious review of the records reveals that in his
resignation letter61 dated February 25, 2009,
Babiano categorically admitted to CPI Chairman
Jose Antonio that on February 12, 2009, he sought
employment from First Global, and five (5) days
later, was admitted thereto as vice president. From
the foregoing, it is evidently clear that when he
sought and eventually accepted the said position
with First Global, he was still employed by CPI as he
has not formally resigned at that time. Irrefragably,
this is a glaring violation of the "Confidentiality of
Documents and Non-Compete Clause" in his
employment contract with CPI, thus, justifying the
forfeiture of his unpaid commissions.
II.
Anent the nature of Concepcion' s engagement,
based on case law, the presence of the following
elements evince the existence of an employer-
employee relationship: (a) the power to hire, i.e., 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, or the so called "control test."
The control test is commonly regarded as the most
important indicator of the presence or absence of an
employer-employee relationship.62 Under this test,
an employer-employee relationship exists where the
person for whom the services are performed
reserves the right to control not only the end
achieved, but also the manner and means to be
used in reaching that end.63
Guided by these parameters, the Court finds that
Concepcion was an employee of CPI considering
that: (a) CPI continuously hired and promoted
Concepcion from October 2002 until her resignation
on February 23, 2009,64 thus, showing that CPI
exercised the power of selection and engagement
over her person and that she performed functions
that were necessary and desirable to the business
of CPI; (b) the monthly "subsidy" and cash
incentives that Concepcion was receiving from CPI
are actually remuneration in the concept of wages
as it was regularly given to her on a monthly basis
without any qualification, save for the "complete
submission of documents on what is a sale
policy";65 (c) CPI had the power to discipline or even
dismiss Concepcion as her engagement contract
with CPI expressly conferred upon the latter "the
right to discontinue [her] service anytime during the
Eeriod of engagement should [she] fail to meet the
performance standards,"66 among others, and that
CPI actually exercised such power to dismiss when
it accepted and approved Concepcion' s resignation
letter; and most importantly, (d) as aptly pointed out
by the CA, CPI possessed the power of control over
Concepcion because in the performance of her
duties as Project Director - particularly in the conduct
of recruitment activities, training sessions, and skills
development of Sales Directors - she did not
exercise independent discretion thereon, but was
still subject to the direct supervision of CPI, acting
through BabiaNo. 67
Besides, while the employment agreement of
Concepcion was denominated as a "Contract of
Agency for Project Director," it should be stressed
that the existence of employer-employee relations
could not be negated by the mere expedient of
repudiating it in a contract. In the case of Insular Life
Assurance Co., Ltd. v. NLRC,68 it was ruled that
one's employment status is defined and prescribed
by law, and not by what the parties say it should
be, viz.:
It is axiomatic that the existence of an employer-
employee relationship cannot be negated by
expressly repudiating it in the management contract
and providing therein that the "employee" is an
independent contractor when the terms of the
agreement clearly show otherwise. For, the
employment status of a person is defined and
prescribed by law and not by what the parties say it
should be. In determining the status of the
management contract, the "four-fold test" on
employment earlier mentioned has to be
applied.69 (Emphasis and underscoring supplied)
Therefore, the CA correctly ruled that since there
exists an employer-employee relationship between
Concepcion and CPI, the labor tribunals correctly
assumed jurisdiction over her money claims.
III.
Finally, CPI contends that Concepcion's failure to
assail the NLRC ruling awarding her the amount of
P470,754.62 representing unpaid commissions
rendered the same final and binding upon her. As
Such, the CA erred in increasing her monetary
award to P591,953.05.70
The contention lacks merit.
As a general rule, a party who has not appealed
cannot obtain any affirmative relief other than the
one granted in the appealed
decision.1avvphi1 However, jurisprudence admits
an exception to the said rule, such as when strict
adherence thereto shall result in the impairment of
the substantive rights of the parties concerned.
In Global Resource for Outsourced Workers, Inc. v.
Velasco:71
Indeed, a party who has failed to appeal from a
judgment is deemed to have acquiesced to it and
can no longer obtain from the appellate court any
affirmative relief other than what was already
granted under said judgment. However, when strict
adherence to such technical rule will impair a
substantive right, such as that of an illegally
dismissed employee to monetary compensation as
provided by law, then equity dictates that the Court
set aside the rule to pave the way for a full and just
adjudication of the case. 72 (Emphasis and
underscoring supplied)
In the present case, the CA aptly pointed out that the
NLRC failed to account for all the unpaid
commissions due to Concepcion for the period of
August 9, 2008 to August 8, 201l.73 Indeed,
Concepcion's right to her earned commissions is a
substantive right which cannot be impaired by an
erroneous computation of what she really is entitled
to. Hence, following the dictates of equity and in
order to arrive at a complete and just resolution of
the case, and avoid a piecemeal dispensation of
justice over the same, the CA correctly recomputed
Concepcion' s unpaid commissions, notwithstanding
her failure to seek a review of the NLRC's
computation of the same.
In sum, the Court thus holds that the commissions of
Babiano were properly forfeited for violating the
"Confidentiality of Documents and Non-Compete
Clause." On the other hand, CPI remains liable for
the unpaid commissions of Concepcion in the sum
of P591,953.05.
WHEREFORE, the petition is PARTLY GRANTED.
The Decision dated April 8, 2015 and the Resolution
dated October 12, 2015 of the Court of Appeals (CA)
in CA-G.R. SP No. 132953 are hereby MODIFIED in
that the commissions of respondent Edwin J.
Babiano are deemed FORFEITED. The rest of the
CA Decision stands.
SO ORDERED.
G.R. No. 85985 August 13, 1993
PHILIPPINE AIRLINES, INC. (PAL), petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
LABOR ARBITER ISABEL P. ORTIGUERRA and
PHILIPPINE AIRLINES EMPLOYEES
ASSOCIATION (PALEA), respondents.
Solon Garcia for petitioner.
Adolpho M. Guerzon for respondent PALEA.
MELO, J.:
In the instant petition for certiorari, the Court is
presented the issue of whether or not the formulation
of a Code of Discipline among employees is a
shared responsibility of the employer and the
employees.
On March 15, 1985, the Philippine Airlines, Inc.
(PAL) completely revised its 1966 Code of
Discipline. The Code was circulated among the
employees and was immediately implemented, and
some employees were forthwith subjected to the
disciplinary measures embodied therein.
Thus, on August 20, 1985, the Philippine Airlines
Employees Association (PALEA) filed a complaint
before the National Labor Relations Commission
(NLRC) for unfair labor practice (Case No. NCR-7-
2051-85) with the following remarks: "ULP with
arbitrary implementation of PAL's Code of Discipline
without notice and prior discussion with Union by
Management" (Rollo, p. 41). In its position paper,
PALEA contended that PAL, by its unilateral
implementation of the Code, was guilty of unfair
labor practice, specifically Paragraphs E and G of
Article 249 and Article 253 of the Labor Code.
PALEA alleged that copies of the Code had been
circulated in limited numbers; that being penal in
nature the Code must conform with the requirements
of sufficient publication, and that the Code was
arbitrary, oppressive, and prejudicial to the rights of
the employees. It prayed that implementation of the
Code be held in abeyance; that PAL should discuss
the substance of the Code with PALEA; that
employees dismissed under the Code be reinstated
and their cases subjected to further hearing; and that
PAL be declared guilty of unfair labor practice and
be ordered to pay damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint,
asserting its prerogative as an employer to prescibe
rules and regulations regarding employess' conduct
in carrying out their duties and functions, and
alleging that by implementing the Code, it had not
violated the collective bargaining agreement (CBA)
or any provision of the Labor Code. Assailing the
complaint as unsupported by evidence, PAL
maintained that Article 253 of the Labor Code cited
by PALEA reffered to the requirements for
negotiating a CBA which was inapplicable as indeed
the current CBA had been negotiated.
In its reply to PAL's position paper, PALEA
maintained that Article 249 (E) of the Labor Code
was violated when PAL unilaterally implemented the
Code, and cited provisions of Articles IV and I of
Chapter II of the Code as defective for, respectively,
running counter to the construction of penal laws and
making punishable any offense within PAL's
contemplation. These provisions are the following:
Sec. 2. Non-exclusivity. — This Code does not
contain the entirety of the rules and regulations of
the company. Every employee is bound to comply
with all applicable rules, regulations, policies,
procedures and standards, including standards of
quality, productivity and behaviour, as issued and
promulgated by the company through its duly
authorized officials. Any violations thereof shall be
punishable with a penalty to be determined by the
gravity and/or frequency of the offense.
Sec. 7. Cumulative Record. — An employee's record
of offenses shall be cumulative. The penalty for an
offense shall be determined on the basis of his past
record of offenses of any nature or the absence
thereof. The more habitual an offender has been, the
greater shall be the penalty for the latest offense.
Thus, an employee may be dismissed if the number
of his past offenses warrants such penalty in the
judgment of management even if each offense
considered separately may not warrant dismissal.
Habitual offenders or recidivists have no place in
PAL. On the other hand, due regard shall be given
to the length of time between commission of
individual offenses to determine whether the
employee's conduct may indicate occasional lapses
(which may nevertheless require sterner disciplinary
action) or a pattern of incorrigibility.
Labor Arbiter Isabel P. Ortiguerra handling the case
called the parties to a conference but they failed to
appear at the scheduled date. Interpreting such
failure as a waiver of the parties' right to present
evidence, the labor arbiter considered the case
submitted for decision. On November 7, 1986, a
decision was rendered finding no bad faith on the
part of PAL in adopting the Code and ruling that no
unfair labor practice had been committed. However,
the arbiter held that PAL was "not totally fault free"
considering that while the issuance of rules and
regulations governing the conduct of employees is a
"legitimate management prerogative" such rules and
regulations must meet the test of "reasonableness,
propriety and fairness." She found Section 1 of the
Code aforequoted as "an all embracing and all
encompassing provision that makes punishable any
offense one can think of in the company"; while
Section 7, likewise quoted above, is "objectionable
for it violates the rule against double jeopardy
thereby ushering in two or more punishment for the
same misdemeanor." (pp. 38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove
that the new Code was amply circulated." Noting that
PAL's assertion that it had furnished all its
employees copies of the Code is unsupported by
documentary evidence, she stated that such "failure"
on the part of PAL resulted in the imposition of
penalties on employees who thought all the while
that the 1966 Code was still being followed. Thus,
the arbiter concluded that "(t)he phrase ignorance of
the law excuses no one from compliance . . . finds
application only after it has been conclusively shown
that the law was circulated to all the parties
concerned and efforts to disseminate information
regarding the new law have been exerted. (p.
39, Rollo.) She thereupon disposed:
WHEREFORE, premises considered, respondent
PAL is hereby ordered as follows:
1. Furnish all employees with the new Code of
Discipline;
2. Reconsider the cases of employees meted with
penalties under the New Code of Discipline and
remand the same for further hearing; and
3. Discuss with PALEA the objectionable provisions
specifically tackled in the body of the decision.
All other claims of the complainant union (is) [are]
hereby, dismissed for lack of merit.
SO ORDERED. (p. 40, Rollo.)
PAL appealed to the NLRC. On August 19, 1988, the
NLRC through Commissioner Encarnacion, with
Presiding Commissioner Bonto-Perez and
Commissioner Maglaya concurring, found no
evidence of unfair labor practice committed by PAL
and affirmed the dismissal of PALEA's charge.
Nonetheless, the NLRC made the following
observations:
Indeed, failure of management to discuss the
provisions of a contemplated code of discipline
which shall govern the conduct of its employees
would result in the erosion and deterioration of an
otherwise harmonious and smooth relationship
between them as did happen in the instant case.
There is no dispute that adoption of rules of conduct
or discipline is a prerogative of management and is
imperative and essential if an industry, has to survive
in a competitive world. But labor climate has
progressed, too. In the Philippine scene, at no time
in our contemporary history is the need for a
cooperative, supportive and smooth relationship
between labor and management more keenly felt if
we are to survive economically. Management can no
longer exclude labor in the deliberation and adoption
of rules and regulations that will affect them.
The complainant union in this case has the right to
feel isolated in the adoption of the New Code of
Discipline. The Code of Discipline involves security
of tenure and loss of employment — a property right!
It is time that management realizes that to attain
effectiveness in its conduct rules, there should be
candidness and openness by Management and
participation by the union, representing its members.
In fact, our Constitution has recognized the principle
of "shared responsibility" between employers and
workers and has likewise recognized the right of
workers to participate in "policy and decision-making
process affecting their rights . . ." The latter provision
was interpreted by the Constitutional
Commissioners to mean participation in
"management"' (Record of the Constitutional
Commission, Vol. II).
In a sense, participation by the union in the adoption
of the code if conduct could have accelerated and
enhanced their feelings of belonging and would have
resulted in cooperation rather than resistance to the
Code. In fact, labor-management cooperation is now
"the thing." (pp. 3-4, NLRC Decision ff. p. 149,
Original Record.)
Respondent Commission thereupon disposed:
WHEREFORE, premises considered, we modify the
appealed decision in the sense that the New Code
of Discipline should be reviewed and discussed with
complainant union, particularly the disputed
provisions [.] (T)hereafter, respondent is directed to
furnish each employee with a copy of the appealed
Code of Discipline. The pending cases adverted to
in the appealed decision if still in the arbitral level,
should be reconsidered by the respondent Philippine
Air Lines. Other dispositions of the Labor Arbiter are
sustained.
SO ORDERED. (p. 5, NLRC Decision.)
PAL then filed the instant petition
for certiorari charging public respondents with grave
abuse of discretion in: (a) directing PAL "to share its
management prerogative of formulating a Code of
Discipline"; (b) engaging in quasi-judicial legislation
in ordering PAL to share said prerogative with the
union; (c) deciding beyond the issue of unfair labor
practice, and (d) requiring PAL to reconsider
pending cases still in the arbitral level (p. 7, Petition;
p. 8, Rollo.)
As stated above, the Principal issue submitted for
resolution in the instant petition is whether
management may be compelled to share with the
union or its employees its prerogative of formulating
a code of discipline.
PAL asserts that when it revised its Code on March
15, 1985, there was no law which mandated the
sharing of responsibility therefor between employer
and employee.
Indeed, it was only on March 2, 1989, with the
approval of Republic Act No. 6715, amending Article
211 of the Labor Code, that the law explicitly
considered it a State policy "(t)o ensure the
participation of workers in decision and policy-
making processes affecting the rights, duties and
welfare." However, even in the absence of said clear
provision of law, the exercise of management
prerogatives was never considered boundless.
Thus, in Cruz vs. Medina (177 SCRA 565 [1989]) it
was held that management's prerogatives must be
without abuse of discretion.
In San Miguel Brewery Sales Force Union (PTGWO)
vs. Ople (170 SCRA 25 [1989]), we upheld the
company's right to implement a new system of
distributing its products, but gave the following
caveat:
So long as a company's management prerogatives
are exercised in good faith for the advancement of
the employer's interest and not for the purpose of
defeating or circumventing the rights of the
employees under special laws or under valid
agreements, this Court will uphold them.
(at p. 28.)
All this points to the conclusion that the exercise of
managerial prerogatives is not unlimited. It is
circumscribed by limitations found in law, a collective
bargaining agreement, or the general principles of
fair play and justice (University of Sto. Tomas vs.
NLRC, 190 SCRA 758 [1990]). Moreover, as
enunciated in Abbott Laboratories (Phil.), vs.
NLRC (154 713 [1987]), it must be duly established
that the prerogative being invoked is clearly a
managerial one.
A close scrutiny of the objectionable provisions of
the Code reveals that they are not purely business-
oriented nor do they concern the management
aspect of the business of the company as in the San
Miguel case. The provisions of the Code clearly
have repercusions on the employee's right to
security of tenure. The implementation of the
provisions may result in the deprivation of an
employee's means of livelihood which, as correctly
pointed out by the NLRC, is a property right
(Callanta, vs Carnation Philippines, Inc., 145 SCRA
268 [1986]). In view of these aspects of the case
which border on infringement of constitutional rights,
we must uphold the constitutional requirements for
the protection of labor and the promotion of social
justice, for these factors, according to Justice
Isagani Cruz, tilt "the scales of justice when there is
doubt, in favor of the worker" (Employees
Association of the Philippine American Life
Insurance Company vs. NLRC, 199 SCRA 628
[1991] 635).
Verily, a line must be drawn between management
prerogatives regarding business operations per
se and those which affect the rights of the
employees. In treating the latter, management
should see to it that its employees are at least
properly informed of its decisions or modes action.
PAL asserts that all its employees have been
furnished copies of the Code. Public respondents
found to the contrary, which finding, to say the least
is entitled to great respect.
PAL posits the view that by signing the 1989-1991
collective bargaining agreement, on June 27, 1990,
PALEA in effect, recognized PAL's "exclusive right
to make and enforce company rules and regulations
to carry out the functions of
management without having to discuss the same
with PALEA and much less, obtain the
latter's conformity thereto" (pp. 11-12, Petitioner's
Memorandum; pp 180-181, Rollo.) Petitioner's view
is based on the following provision of the agreement:
The Association recognizes the right of the
Company to determine matters of management it
policy and Company operations and to direct its
manpower. Management of the Company includes
the right to organize, plan, direct and control
operations, to hire, assign employees to work,
transfer employees from one department, to
another, to promote, demote, discipline, suspend or
discharge employees for just cause; to lay-off
employees for valid and legal causes, to introduce
new or improved methods or facilities or to change
existing methods or facilities and the right to make
and enforce Company rules and regulations to carry
out the functions of management.
The exercise by management of its prerogative shall
be done in a just reasonable, humane and/or lawful
manner.
Such provision in the collective bargaining
agreement may not be interpreted as cession of
employees' rights to participate in the deliberation of
matters which may affect their rights and the
formulation of policies relative thereto. And one such
mater is the formulation of a code of discipline.
Indeed, industrial peace cannot be achieved if the
employees are denied their just participation in the
discussion of matters affecting their rights. Thus,
even before Article 211 of the labor Code (P.D. 442)
was amended by Republic Act No. 6715, it was
already declared a policy of the State, "(d) To
promote the enlightenment of workers concerning
their rights and obligations . . . as employees." This
was, of course, amplified by Republic Act No 6715
when it decreed the "participation of workers in
decision and policy making processes affecting their
rights, duties and welfare." PAL's position that it
cannot be saddled with the "obligation" of sharing
management prerogatives as during the formulation
of the Code, Republic Act No. 6715 had not yet been
enacted (Petitioner's Memorandum, p. 44; Rollo, p.
212), cannot thus be sustained. While such
"obligation" was not yet founded in law when the
Code was formulated, the attainment of a
harmonious labor-management relationship and the
then already existing state policy of enlightening
workers concerning their rights as employees
demand no less than the observance of
transparency in managerial moves affecting
employees' rights.
Petitioner's assertion that it needed the
implementation of a new Code of Discipline
considering the nature of its business cannot be
overemphasized. In fact, its being a local monopoly
in the business demands the most stringent of
measures to attain safe travel for its patrons.
Nonetheless, whatever disciplinary measures are
adopted cannot be properly implemented in the
absence of full cooperation of the employees. Such
cooperation cannot be attained if the employees are
restive on account, of their being left out in the
determination of cardinal and fundamental matters
affecting their employment.
WHEREFORE, the petition is DISMISSED and the
questioned decision AFFIRMED. No special
pronouncement is made as to costs.
SO ORDERED.
G.R. Nos. 178034 & 178117 G R. Nos. 186984-
85 October 17, 2013
ANDREW JAMES MCBURNIE, Petitioner,
vs.
EULALIO GANZON, EGI-MANAGERS, INC. and E.
GANZON, INC., Respondents.
RESOLUTION
REYES, J.:
For resolution are the –
(1) third motion for reconsideration1 filed by Eulalio
Ganzon (Ganzon), EGI-Managers, Inc. (EGI) and E.
Ganzon, Inc. (respondents) on March 27, 2012,
seeking a reconsideration of the Court’s
Decision2 dated September 18, 2009 that ordered
the dismissal of their appeal to the National Labor
Relations Commission (NLRC) for failure to post
additional appeal bond in the amount of
₱54,083,910.00; and
(2) motion for reconsideration3 filed by petitioner
Andrew James McBurnie (McBurnie) on September
26, 2012, assailing the Court en banc’s
Resolution4 dated September 4, 2012 that (1)
accepted the case from the Court’s Third Division
and (2) enjoined the implementation of the Labor
Arbiter’s (LA) decision finding him to be illegally
dismissed by the respondents.
Antecedent Facts
The Decision dated September 18, 2009 provides
the following antecedent facts and proceedings –
On October 4, 2002, McBurnie, an Australian
national, instituted a complaint for illegal dismissal
and other monetary claims against the respondents.
McBurnie claimed that on May 11, 1999, he signed
a five-year employment agreement5with the
company EGI as an Executive Vice-President who
shall oversee the management of the company’s
hotels and resorts within the Philippines. He
performed work for the company until sometime in
November 1999, when he figured in an accident that
compelled him to go back to Australia while
recuperating from his injuries. While in Australia, he
was informed by respondent Ganzon that his
services were no longer needed because their
intended project would no longer push through.
The respondents opposed the complaint,
contending that their agreement with McBurnie was
to jointly invest in and establish a company for the
management of hotels. They did not intend to create
an employer-employee relationship, and the
execution of the employment contract that was being
invoked by McBurnie was solely for the purpose of
allowing McBurnie to obtain an alien work permit in
the Philippines. At the time McBurnie left for
Australia for his medical treatment, he had not yet
obtained a work permit.
In a Decision6 dated September 30, 2004, the LA
declared McBurnie as having been illegally
dismissed from employment, and thus entitled to
receive from the respondents the following amounts:
(a) US$985,162.00 as salary and benefits for the
unexpired term of their employment contract, (b)
₱2,000,000.00 as moral and exemplary damages,
and (c) attorney’s fees equivalent to 10% of the total
monetary award.
Feeling aggrieved, the respondents appealed the
LA’s Decision to the NLRC.7 On November 5, 2004,
they filed their Memorandum of Appeal8 and Motion
to Reduce Bond9, and posted an appeal bond in the
amount of ₱100,000.00. The respondents
contended in their Motion to Reduce Bond, inter alia,
that the monetary awards of the LA were null and
excessive, allegedly with the intention of rendering
them incapable of posting the necessary appeal
bond. They claimed that an award of "more than ₱60
Million Pesos to a single foreigner who had no work
permit and who left the country for good one month
after the purported commencement of his
employment" was a patent nullity.10 Furthermore,
they claimed that because of their business losses
that may be attributed to an economic crisis, they
lacked the capacity to pay the bond of almost ₱60
Million, or even the millions of pesos in premium
required for such bond.
On March 31, 2005, the NLRC denied11 the motion
to reduce bond, explaining that "in cases involving
monetary award, an employer seeking to appeal the
[LA’s] decision to the Commission is unconditionally
required by Art. 223, Labor Code to post bond in the
amount equivalent to the monetary award x x
x."12 Thus, the NLRC required from the respondents
the posting of an additional bond in the amount of
₱54,083,910.00.
When their motion for reconsideration was
denied,13 the respondents decided to elevate the
matter to the Court of Appeals (CA) via the Petition
for Certiorari and Prohibition (With Extremely Urgent
Prayer for the Issuance of a Preliminary Injunction
and/or Temporary Restraining Order)14 docketed as
CA-G.R. SP No. 90845.
In the meantime, in view of the respondents’ failure
to post the required additional bond, the NLRC
dismissed their appeal in a Resolution15 dated
March 8, 2006. The respondents’ motion for
reconsideration was denied on June 30,
2006.16 This prompted the respondents to file with
the CA the Petition for Certiorari (With Urgent
Prayers for the Immediate Issuance of a Temporary
Restraining Order and a Writ of Preliminary
Injunction)17 docketed as CA-G.R. SP No. 95916,
which was later consolidated with CA-G.R. SP No.
90845.
CA-G.R. SP Nos. 90845 and 95916
On February 16, 2007, the CA issued a
Resolution18 granting the respondents’ application
for a writ of preliminary injunction. It directed the
NLRC, McBurnie, and all persons acting for and
under their authority to refrain from causing the
execution and enforcement of the LA’s decision in
favor of McBurnie, conditioned upon the
respondents’ posting of a bond in the amount of
₱10,000,000.00. McBurnie sought reconsideration
of the issuance of the writ of preliminary injunction,
but this was denied by the CA in its
Resolution19 dated May 29, 2007.
McBurnie then filed with the Court a Petition for
Review on Certiorari20 docketed as G.R. Nos.
178034 and 178117, assailing the CA Resolutions
that granted the respondents’ application for the
injunctive writ. On July 4, 2007, the Court denied the
petition on the ground of McBurnie’s failure to
comply with the 2004 Rules on Notarial Practice and
to sufficiently show that the CA committed any
reversible error.21 A motion for reconsideration was
denied with finality in a Resolution22dated October 8,
2007.
Unyielding, McBurnie filed a Motion for Leave (1) To
File Supplemental Motion for Reconsideration and
(2) To Admit the Attached Supplemental Motion for
Reconsideration,23 which was treated by the Court
as a second motion for reconsideration, a prohibited
pleading under Section 2, Rule 56 of the Rules of
Court. Thus, the motion for leave was denied by the
Court in a Resolution24 dated November 26, 2007.
The Court’s Resolution dated July 4, 2007 then
became final and executory on November 13, 2007;
accordingly, entry of judgment was made in G.R.
Nos. 178034 and 178117.25
In the meantime, the CA ruled on the merits of CA-
G.R. SP No. 90845 and CA-G.R. SP No. 95916 and
rendered its Decision26 dated October 27, 2008,
allowing the respondents’ motion to reduce appeal
bond and directing the NLRC to give due course to
their appeal. The dispositive portion of the CA
Decision reads:
WHEREFORE, in view of the foregoing, the petition
for certiorari and prohibition docketed as CA GR SP
No. 90845 and the petition for certiorari docketed as
CA GR SP No. 95916 are GRANTED. Petitioners’
Motion to Reduce Appeal Bond is GRANTED.
Petitioners are hereby DIRECTED to post appeal
bond in the amount of ₱10,000,000.00. The NLRC
is hereby DIRECTED to give due course to
petitioners’ appeal in CA GR SP No. 95916 which is
ordered remanded to the NLRC for further
proceedings.
SO ORDERED.27
On the issue28 of the NLRC’s denial of the
respondents’ motion to reduce appeal bond, the CA
ruled that the NLRC committed grave abuse of
discretion in immediately denying the motion without
fixing an appeal bond in an amount that was
reasonable, as it denied the respondents of their
right to appeal from the decision of the LA.29 The CA
explained that "(w)hile Art. 223 of the Labor Code
requiring bond equivalent to the monetary award is
explicit, Section 6, Rule VI of the NLRC Rules of
Procedure, as amended, recognized as exception a
motion to reduce bond upon meritorious grounds
and upon posting of a bond in a reasonable amount
in relation to the monetary award."30
On the issue31 of the NLRC’s dismissal of the appeal
on the ground of the respondents’ failure to post the
additional appeal bond, the CA also found grave
abuse of discretion on the part of the NLRC,
explaining that an appeal bond in the amount of
₱54,083,910.00 was prohibitive and excessive.
Moreover, the appellate court cited the pendency of
the petition for certiorari over the denial of the motion
to reduce bond, which should have prevented the
NLRC from immediately dismissing the respondents’
appeal.32
Undeterred, McBurnie filed a motion for
reconsideration. At the same time, the respondents
moved that the appeal be resolved on the merits by
the CA. On March 3, 2009, the CA issued a
Resolution33 denying both motions. McBurnie then
filed with the Court the Petition for Review on
Certiorari34 docketed as G.R. Nos. 186984-85.
In the meantime, the NLRC, acting on the CA’s order
of remand, accepted the appeal from the LA’s
decision, and in its Decision35 dated November 17,
2009, reversed and set aside the Decision of the LA,
and entered a new one dismissing McBurnie’s
complaint. It explained that based on records,
McBurnie was never an employee of any of the
respondents, but a potential investor in a project that
included said respondents, barring a claim of
dismissal, much less, an illegal dismissal. Granting
that there was a contract of employment executed
by the parties, McBurnie failed to obtain a work
permit which would have allowed him to work for any
of the respondents.36 In the absence of such permit,
the employment agreement was void and thus,
could not be the source of any right or obligation.
Court Decision dated September 18, 2009
On September 18, 2009, the Third Division of this
Court rendered its Decision37 which reversed the CA
Decision dated October 27, 2008 and Resolution
dated March 3, 2009. The dispositive portion reads:
WHEREFORE, the petition is GRANTED. The
Decision of the Court of Appeals in CA-G.R. SP Nos.
90845 and 95916 dated October 27, 2008 granting
respondents’ Motion to Reduce Appeal Bond and
ordering the National Labor Relations Commission
to give due course to respondents’ appeal, and its
March 3, 2009 Resolution denying petitioner’s
motion for reconsideration, are REVERSED and
SET ASIDE. The March 8, 2006 and June 30, 2006
Resolutions of the National Labor Relations
Commission in NLRC NCR CA NO. 042913-05
dismissing respondents’ appeal for failure to perfect
an appeal and denying their motion for
reconsideration, respectively, are REINSTATED
and AFFIRMED.
SO ORDERED.38
The Court explained that the respondents’ failure to
post a bond equivalent in amount to the LA’s
monetary award was fatal to the appeal.39 Although
an appeal bond may be reduced upon motion by an
employer, the following conditions must first be
satisfied: (1) the motion to reduce bond shall be
based on meritorious grounds; and (2) a reasonable
amount in relation to the monetary award is posted
by the appellant. Unless the NLRC grants the motion
to reduce the cash bond within the 10-day
reglementary period to perfect an appeal from a
judgment of the LA, the employer is mandated to
post the cash or surety bond securing the full amount
within the said 10-day period.40 The respondents’
initial appeal bond of ₱100,000.00 was grossly
inadequate compared to the LA’s monetary award.
The respondents’ first motion for
reconsideration41 was denied by the Court for lack of
merit via a Resolution42 dated December 14, 2009.
Meanwhile, on the basis of the Court’s Decision,
McBurnie filed with the NLRC a motion for
reconsideration with motion to recall and expunge
from the records the NLRC Decision dated
November 17, 2009.43 The motion was granted by
the NLRC in its Decision44 dated January 14, 2010.45
Undaunted by the denial of their first motion for
reconsideration of the Decision dated September
18, 2009, the respondents filed with the Court a
Motion for Leave to Submit Attached Second Motion
for Reconsideration46 and Second Motion for
Reconsideration,47 which motion for leave was
granted in a Resolution48 dated March 15, 2010.
McBurnie was allowed to submit his comment on the
second motion, and the respondents, their reply to
the comment. On January 25, 2012, however, the
Court issued a Resolution49 denying the second
motion "for lack of merit," "considering that a second
motion for reconsideration is a prohibited pleading x
x x."50
The Court’s Decision dated September 18, 2009
became final and executory on March 14, 2012.
Thus, entry of judgment51 was made in due course,
as follows:
ENTRY OF JUDGMENT
This is to certify that on September 18, 2009 a
decision rendered in the above-entitled cases was
filed in this Office, the dispositive part of which reads
as follows:
xxxx
and that the same has, on March 14, 2012 become
final and executory and is hereby recorded in the
Book of Entries of Judgments.52
The Entry of Judgment indicated that the same was
made for the Court’s Decision rendered in G.R. Nos.
186984-85.
On March 27, 2012, the respondents filed a Motion
for Leave to File Attached Third Motion for
Reconsideration, with an attached Motion for
Reconsideration (on the Honorable Court’s 25
January 2012 Resolution) with Motion to Refer
These Cases to the Honorable Court En Banc.53 The
third motion for reconsideration is founded on the
following grounds:
I.
THE PREVIOUS 15 MARCH 2010 RESOLUTION
OF THE HONORABLE COURT ACTUALLY
GRANTED RESPONDENTS’ "MOTION FOR
LEAVE TO SUBMIT A SECOND MOTION FOR
RECONSIDERATION."
HENCE, RESPONDENTS RESPECTFULLY
CONTEND THAT THE SUBSEQUENT 25
JANUARY 2012 RESOLUTION CANNOT DENY
THE " SECOND MOTION FOR
RECONSIDERATION " ON THE GROUND THAT IT
IS A PROHIBITED PLEADING. MOREOVER, IT IS
RESPECTFULLY CONTENDED THAT THERE
ARE VERY PECULIAR CIRCUMSTANCES AND
NUMEROUS IMPORTANT ISSUES IN THESE
CASES THAT CLEARLY JUSTIFY GIVING DUE
COURSE TO RESPONDENTS’ "SECOND
MOTION FOR RECONSIDERATION," WHICH
ARE:
II.
THE 10 MILLION PESOS BOND WHICH WAS
POSTED IN COMPLIANCE WITH THE OCTOBER
27, 2008 DECISION OF THE COURT OF APPEALS
IS A SUBSTANTIAL AND SPECIAL MERITORIOUS
CIRCUMSTANCE TO MERIT RECONSIDERATION
OF THIS APPEAL.
III.
THE HONORABLE COURT HAS HELD IN
NUMEROUS LABOR CASES THAT WITH
RESPECT TO ARTICLE 223 OF THE LABOR
CODE, THE REQUIREMENTS OF THE LAW
SHOULD BE GIVEN A LIBERAL
INTERPRETATION, ESPECIALLY IF THERE ARE
SPECIAL MERITORIOUS CIRCUMSTANCES AND
ISSUES.
IV. THE LA’S JUDGMENT WAS PATENTLY VOID
SINCE IT AWARDS MORE THAN ₱60 MILLION
PESOS TO A SINGLE FOREIGNER WHO HAD NO
WORK PERMIT, AND NO WORKING VISA.
V.
PETITIONER MCBURNIE DID NOT IMPLEAD THE
NATIONAL LABOR RELATIONS COMMISSION
(NLRC) IN HIS APPEAL HEREIN, MAKING THE
APPEAL INEFFECTIVE AGAINST THE NLRC.
VI.
NLRC HAS DISMISSED THE COMPLAINT OF
PETITIONER MCBURNIE IN ITS NOVEMBER 17,
2009 DECISION.
VII.
THE HONORABLE COURT’S 18 SEPTEMBER
2009 DECISION WAS TAINTED WITH VERY
SERIOUS IRREGULARITIES.
VIII.
GR NOS. 178034 AND 178117 HAVE BEEN
INADVERTENTLY INCLUDED IN THIS CASE.
IX.
THE HONORABLE COURT DID NOT DULY RULE
UPON THE OTHER VERY MERITORIOUS
ARGUMENTS OF THE RESPONDENTS WHICH
ARE AS FOLLOWS:
(A) PETITIONER NEVER ATTENDED ANY OF ALL
14 HEARINGS BEFORE THE [LA] (WHEN 2
MISSED HEARINGS MEAN DISMISSAL).
(B) PETITIONER REFERRED TO HIMSELF AS A
"VICTIM" OF LEISURE EXPERTS, INC., BUT NOT
OF ANY OF THE RESPONDENTS.
(C) PETITIONER’S POSITIVE LETTER TO
RESPONDENT MR. EULALIO GANZON CLEARLY
SHOWS THAT HE WAS NOT ILLEGALLY
DISMISSED NOR EVEN DISMISSED BY ANY OF
THE RESPONDENTS AND PETITIONER EVEN
PROMISED TO PAY HIS DEBTS FOR ADVANCES
MADE BY RESPONDENTS.
(D) PETITIONER WAS NEVER EMPLOYED BY
ANY OF THE RESPONDENTS. PETITIONER
PRESENTED WORK FOR CORONADO BEACH
RESORT WHICH IS [NEITHER] OWNED NOR
CONNECTED WITH ANY OF THE
RESPONDENTS.
(E) THE [LA] CONCLUDED THAT PETITIONER
WAS DISMISSED EVEN IF THERE WAS
ABSOLUTELY NO EVIDENCE AT ALL
PRESENTED THAT PETITIONER WAS
DISMISSED BY THE RESPONDENTS.
(F) PETITIONER LEFT THE PHILIPPINES FOR
AUSTRALIA JUST 2 MONTHS AFTER THE START
OF THE ALLEGED EMPLOYMENT AGREEMENT,
AND HAS STILL NOT RETURNED TO THE
PHILIPPINES AS CONFIRMED BY THE BUREAU
OF IMMIGRATION.
(G) PETITIONER COULD NOT HAVE SIGNED
AND PERSONALLY APPEARED BEFORE THE
NLRC ADMINISTERING OFFICER AS INDICATED
IN THE COMPLAINT SHEET SINCE HE LEFT THE
COUNTRY 3 YEARS BEFORE THE COMPLAINT
WAS FILED AND HE NEVER CAME BACK.54
On September 4, 2012, the Court en banc55 issued
a Resolution56 accepting the case from the Third
Division. It also issued a temporary restraining order
(TRO) enjoining the implementation of the LA’s
Decision dated September 30, 2004. This prompted
McBurnie’s filing of a Motion for
57
Reconsideration, where he invoked the fact that
the Court’s Decision dated September 18, 2009 had
become final and executory, with an entry of
judgment already made by the Court.
Our Ruling
In light of pertinent law and jurisprudence, and upon
taking a second hard look of the parties’ arguments
and the records of the case, the Court has
ascertained that a reconsideration of this Court’s
Decision dated September 18, 2009 and
Resolutions dated December 14, 2009 and January
25, 2012, along with the lifting of the entry of
judgment in G.R. No. 186984-85, is in order.
The Court’s acceptance of the
third motion for reconsideration
At the outset, the Court emphasizes that second and
subsequent motions for reconsideration are, as a
general rule, prohibited. Section 2, Rule 52 of the
Rules of Court provides that "no second motion for
reconsideration of a judgment or final resolution by
the same party shall be entertained." The rule rests
on the basic tenet of immutability of judgments. "At
some point, a decision becomes final and executory
and, consequently, all litigations must come to an
end."58
The general rule, however, against second and
subsequent motions for reconsideration admits of
settled exceptions. For one, the present Internal
Rules of the Supreme Court, particularly Section 3,
Rule 15 thereof, provides:
Sec. 3. Second motion for reconsideration. ― The
Court shall not entertain a second motion for
reconsideration, and any exception to this rule can
only be granted in the higher interest of justice by the
Court en banc upon a vote of at least two-thirds of
its actual membership. There is reconsideration "in
the higher interest of justice" when the assailed
decision is not only legally erroneous, but is likewise
patently unjust and potentially capable of causing
unwarranted and irremediable injury or damage to
the parties. A second motion for reconsideration can
only be entertained before the ruling sought to be
reconsidered becomes final by operation of law or
by the Court’s declaration.
x x x x (Emphasis ours)
In a line of cases, the Court has then entertained and
granted second motions for reconsideration "in the
higher interest of substantial justice," as allowed
under the Internal Rules when the assailed decision
is "legally erroneous," "patently unjust" and
"potentially capable of causing unwarranted and
irremediable injury or damage to the parties." In
Tirazona v. Philippine EDS Techno-Service, Inc.
(PET, Inc.),59 we also explained that a second
motion for reconsideration may be allowed in
instances of "extraordinarily persuasive reasons and
only after an express leave shall have been
obtained."60 In Apo Fruits Corporation v. Land Bank
of the Philippines,61 we allowed a second motion for
reconsideration as the issue involved therein was a
matter of public interest, as it pertained to the proper
application of a basic constitutionally-guaranteed
right in the government’s implementation of its
agrarian reform program. In San Miguel Corporation
v. NLRC,62 the Court set aside the decisions of the
LA and the NLRC that favored claimants-security
guards upon the Court’s review of San Miguel
Corporation’s second motion for reconsideration. In
Vir-Jen Shipping and Marine Services, Inc. v. NLRC,
et al.,63 the Court en banc reversed on a third motion
for reconsideration the ruling of the Court’s Division
on therein private respondents’ claim for wages and
monetary benefits.
It is also recognized that in some instances, the
prudent action towards a just resolution of a case is
for the Court to suspend rules of procedure, for "the
power of this Court to suspend its own rules or to
except a particular case from its operations
whenever the purposes of justice require it, cannot
be questioned."64 In De Guzman v.
65
Sandiganbayan, the Court, thus, explained:
The rules of procedure should be viewed as mere
tools designed to facilitate the attainment of justice.
Their strict and rigid application, which would result
in technicalities that tend to frustrate rather than
promote substantial justice, must always be
avoided. Even the Rules of Court envision this
liberality. This power to suspend or even disregard
the rules can be so pervasive and encompassing so
as to alter even that which this Court itself has
already declared to be final, as we are now
compelled to do in this case. x x x.
xxxx
The Rules of Court was conceived and promulgated
to set forth guidelines in the dispensation of justice
but not to bind and chain the hand that dispenses it,
for otherwise, courts will be mere slaves to or robots
of technical rules, shorn of judicial discretion. That is
precisely why courts in rendering real justice have
always been, as they in fact ought to be,
conscientiously guided by the norm that when on the
balance, technicalities take a backseat against
substantive rights, and not the other way around.
Truly then, technicalities, in the appropriate
language of Justice Makalintal, "should give way to
the realities of the situation." x x x.66 (Citations
omitted)
Consistent with the foregoing precepts, the Court
has then reconsidered even decisions that have
attained finality, finding it more appropriate to lift
entries of judgments already made in these cases.
In Navarro v. Executive Secretary,67 we reiterated
the pronouncement in De Guzman that the power to
suspend or even disregard rules of procedure can
be so pervasive and compelling as to alter even that
which this Court itself has already declared final. The
Court then recalled in Navarro an entry of judgment
after it had determined the validity and
constitutionality of Republic Act No. 9355, explaining
that:
Verily, the Court had, on several occasions,
sanctioned the recall of entries of judgment in light
of attendant extraordinary circumstances. The
power to suspend or even disregard rules of
procedure can be so pervasive and compelling as to
alter even that which this Court itself had already
declared final. In this case, the compelling concern
is not only to afford the movants-intervenors the right
to be heard since they would be adversely affected
by the judgment in this case despite not being
original parties thereto, but also to arrive at the
correct interpretation of the provisions of the [Local
Government Code (LGC)] with respect to the
creation of local government units. x x x.68 (Citations
omitted)
In Munoz v. CA,69 the Court resolved to recall an
entry of judgment to prevent a miscarriage of justice.
This justification was likewise applied in Tan Tiac
Chiong v. Hon. Cosico,70 wherein the Court held
that:
The recall of entries of judgments, albeit rare, is not
a novelty. In Muñoz v. CA , where the case was
elevated to this Court and a first and second motion
for reconsideration had been denied with finality , the
Court, in the interest of substantial justice, recalled
the Entry of Judgment as well as the letter of
transmittal of the records to the Court of
Appeals.71 (Citation omitted)
In Barnes v. Judge Padilla,72 we ruled:
A final and executory judgment can no longer be
attacked by any of the parties or be modified, directly
or indirectly, even by the highest court of the land.
However, this Court has relaxed this rule in order to
serve substantial justice considering (a) matters of
life, liberty, honor or property, (b) the existence of
special or compelling circumstances, (c) the merits
of the case, (d) a cause not entirely attributable to
the fault or negligence of the party favored by the
suspension of the rules, (e) a lack of any showing
that the review sought is merely frivolous and
dilatory, and (f) the other party will not be unjustly
prejudiced thereby.73 (Citations omitted)
As we shall explain, the instant case also qualifies
as an exception to, first, the proscription against
second and subsequent motions for reconsideration,
and second, the rule on immutability of judgments; a
reconsideration of the Decision dated September
18, 2009, along with the Resolutions dated
December 14, 2009 and January 25, 2012, is
justified by the higher interest of substantial justice.
To begin with, the Court agrees with the respondents
that the Court’s prior resolve to grant , and not just
merely note, in a Resolution dated March 15, 2010
the respondents’ motion for leave to submit their
second motion for reconsideration already
warranted a resolution and discussion of the motion
for reconsideration on its merits. Instead of doing
this, however, the Court issued on January 25, 2012
a Resolution74 denying the motion to reconsider for
lack of merit, merely citing that it was a "prohibited
pleading under Section 2, Rule 52 in relation to
Section 4, Rule 56 of the 1997 Rules of Civil
Procedure, as amended."75 In League of Cities of
the Philippines (LCP) v. Commission on
Elections,76 we reiterated a ruling that when a motion
for leave to file and admit a second motion for
reconsideration is granted by the Court, the Court
therefore allows the filing of the second motion for
reconsideration. In such a case, the second motion
for reconsideration is no longer a prohibited
pleading. Similarly in this case, there was then no
reason for the Court to still consider the respondents’
second motion for reconsideration as a prohibited
pleading, and deny it plainly on such ground. The
Court intends to remedy such error through this
resolution.
More importantly, the Court finds it appropriate to
accept the pending motion for reconsideration and
resolve it on the merits in order to rectify its prior
disposition of the main issues in the petition. Upon
review, the Court is constrained to rule differently on
the petitions. We have determined the grave error in
affirming the NLRC’s rulings, promoting results that
are patently unjust for the respondents, as we
consider the facts of the case, pertinent law,
jurisprudence, and the degree of the injury and
damage to the respondents that will inevitably result
from the implementation of the Court’s Decision
dated September 18, 2009.
The rule on appeal bonds
We emphasize that the crucial issue in this case
concerns the sufficiency of the appeal bond that was
posted by the respondents. The present rule on the
matter is Section 6, Rule VI of the 2011 NLRC Rules
of Procedure, which was substantially the same
provision in effect at the time of the respondents’
appeal to the NLRC, and which reads:
RULE VI
APPEALS
Sec. 6. BOND. – In case the decision of the Labor
Arbiter or the Regional Director involves a monetary
award, an appeal by the employer may be perfected
only upon the posting of a cash or surety bond. The
appeal bond shall either be in cash or surety in an
amount equivalent to the monetary award, exclusive
of damages and attorney’s fees.
xxxx
No motion to reduce bond shall be entertained
except on meritorious grounds and upon the posting
of a bond in a reasonable amount in relation to the
monetary award.
The filing of the motion to reduce bond without
compliance with the requisites in the preceding
paragraph shall not stop the running of the period to
perfect an appeal. (Emphasis supplied)
While the CA, in this case, allowed an appeal bond
in the reduced amount of ₱10,000,000.00 and then
ordered the case’s remand to the NLRC, this Court’s
Decision dated September 18, 2009 provides
otherwise, as it reads in part:
The posting of a bond is indispensable to the
perfection of an appeal in cases involving monetary
awards from the decision of the Labor Arbiter. The
lawmakers clearly intended to make the bond a
mandatory requisite for the perfection of an appeal
by the employer as inferred from the provision that
an appeal by the employer may be perfected "only
upon the posting of a cash or surety bond." The word
"only" makes it clear that the posting of a cash or
surety bond by the employer is the essential and
exclusive means by which an employer’s appeal
may be perfected. x x x.
Moreover, the filing of the bond is not only
mandatory but a jurisdictional requirement as well,
that must be complied with in order to confer
jurisdiction upon the NLRC. Non-compliance
therewith renders the decision of the Labor Arbiter
final and executory. This requirement is intended to
assure the workers that if they prevail in the case,
they will receive the money judgment in their favor
upon the dismissal of the employer’s appeal. It is
intended to discourage employers from using an
appeal to delay or evade their obligation to satisfy
their employees’ just and lawful claims.
xxxx
Thus, it behooves the Court to give utmost regard to
the legislative and administrative intent to strictly
require the employer to post a cash or surety bond
securing the full amount of the monetary award
within the 10[-]day reglementary period. Nothing in
the Labor Code or the NLRC Rules of Procedure
authorizes the posting of a bond that is less than the
monetary award in the judgment, or would deem
such insufficient posting as sufficient to perfect the
appeal.
While the bond may be reduced upon motion by the
employer, this is subject to the conditions that (1) the
motion to reduce the bond shall be based on
meritorious grounds; and (2) a reasonable amount in
relation to the monetary award is posted by the
appellant, otherwise the filing of the motion to reduce
bond shall not stop the running of the period to
perfect an appeal. The qualification effectively
requires that unless the NLRC grants the reduction
of the cash bond within the 10-day reglementary
period, the employer is still expected to post the cash
or surety bond securing the full amount within the
said 10-day period. If the NLRC does eventually
grant the motion for reduction after the reglementary
period has elapsed, the correct relief would be to
reduce the cash or surety bond already posted by
the employer within the 10-day period.77(Emphasis
supplied; underscoring ours)
To begin with, the Court rectifies its prior
pronouncement – the unqualified statement that
even an appellant who seeks a reduction of an
appeal bond before the NLRC is expected to post a
cash or surety bond securing the full amount of the
judgment award within the 10-day reglementary
period to perfect the appeal.
The suspension of the period to
perfect the appeal upon the filing of
a motion to reduce bond
To clarify, the prevailing jurisprudence on the matter
provides that the filing of a motion to reduce bond,
coupled with compliance with the two conditions
emphasized in Garcia v. KJ Commercial78 for the
grant of such motion, namely, (1) a meritorious
ground, and (2) posting of a bond in a reasonable
amount, shall suffice to suspend the running of the
period to perfect an appeal from the labor arbiter’s
decision to the NLRC.79 To require the full amount of
the bond within the 10-day reglementary period
would only render nugatory the legal provisions
which allow an appellant to seek a reduction of the
bond. Thus, we explained in Garcia:
The filing of a motion to reduce bond and compliance
with the two conditions stop the running of the period
to perfect an appeal. x x x
xxxx
The NLRC has full discretion to grant or deny the
motion to reduce bond, and it may rule on the motion
beyond the 10-day period within which to perfect an
appeal. Obviously, at the time of the filing of the
motion to reduce bond and posting of a bond in a
reasonable amount, there is no assurance whether
the appellant’s motion is indeed based on
"meritorious ground" and whether the bond he or she
posted is of a "reasonable amount." Thus, the
appellant always runs the risk of failing to perfect an
appeal.
x x x In order to give full effect to the provisions on
motion to reduce bond, the appellant must be
allowed to wait for the ruling of the NLRC on the
motion even beyond the 10-day period to perfect an
appeal. If the NLRC grants the motion and rules that
there is indeed meritorious ground and that the
amount of the bond posted is reasonable, then the
appeal is perfected. If the NLRC denies the motion,
the appellant may still file a motion for
reconsideration as provided under Section 15, Rule
VII of the Rules. If the NLRC grants the motion for
reconsideration and rules that there is indeed
meritorious ground and that the amount of the bond
posted is reasonable, then the appeal is perfected.
If the NLRC denies the motion, then the decision of
the labor arbiter becomes final and executory.
xxxx
In any case, the rule that the filing of a motion to
reduce bond shall not stop the running of the period
to perfect an appeal is not absolute. The Court may
relax the rule. In Intertranz Container Lines, Inc. v.
Bautista, the Court held:
"Jurisprudence tells us that in labor cases, an appeal
from a decision involving a monetary award may be
perfected only upon the posting of cash or surety
bond. The Court, however, has relaxed this
requirement under certain exceptional
circumstances in order to resolve controversies on
their merits. These circumstances include: (1)
fundamental consideration of substantial justice; (2)
prevention of miscarriage of justice or of unjust
enrichment; and (3) special circumstances of the
case combined with its legal merits, and the amount
and the issue involved."80 (Citations omitted and
emphasis ours)
A serious error of the NLRC was its outright denial
of the motion to reduce the bond, without even
considering the respondents’ arguments and totally
unmindful of the rules and jurisprudence that allow
the bond’s reduction. Instead of resolving the motion
to reduce the bond on its merits, the NLRC insisted
on an amount that was equivalent to the monetary
award, merely explaining:
We are constrained to deny respondents’ motion for
reduction. As held by the Supreme Court in a recent
case, in cases involving monetary award, an
employer seeking to appeal the Labor Arbiter’s
decision to the Commission is unconditionally
required by Art. 223, Labor Code to post bond in the
amount equivalent to the monetary award (Calabash
Garments vs. NLRC, G.R. No. 110827, August 8,
1996). x x x81 (Emphasis ours)
When the respondents sought to reconsider, the
NLRC still refused to fully decide on the motion. It
refused to at least make a preliminary determination
of the merits of the appeal, as it held:
We are constrained to dismiss respondents’ Motion
for Reconsideration. Respondents’ contention that
the appeal bond is excessive and based on a
decision which is a patent nullity involves the merits
of the case. x x x82
Prevailing rules and jurisprudence
allow the reduction of appeal bonds.
By such haste of the NLRC in peremptorily denying
the respondents’ motion without considering the
respondents’ arguments, it effectively denied the
respondents of their opportunity to seek a reduction
of the bond even when the same is allowed under
the rules and settled jurisprudence. It was equivalent
to the NLRC’s refusal to exercise its discretion, as it
refused to determine and rule on a showing of
meritorious grounds and the reasonableness of the
bond tendered under the circumstances.83 Time and
again, the Court has cautioned the NLRC to give
Article 223 of the Labor Code, particularly the
provisions requiring bonds in appeals involving
monetary awards, a liberal interpretation in line with
the desired objective of resolving controversies on
the merits.84 The NLRC’s failure to take action on the
motion to reduce the bond in the manner prescribed
by law and jurisprudence then cannot be
countenanced. Although an appeal by parties from
decisions that are adverse to their interests is neither
a natural right nor a part of due process, it is an
essential part of our judicial system. Courts should
proceed with caution so as not to deprive a party of
the right to appeal, but rather, ensure that every
party has the amplest opportunity for the proper and
just disposition of their cause, free from the
constraints of technicalities.85Considering the
mandate of labor tribunals, the principle equally
applies to them.
Given the circumstances of the case, the Court’s
affirmance in the Decision dated September 18,
2009 of the NLRC’s strict application of the rule on
appeal bonds then demands a re-examination.
Again, the emerging trend in our jurisprudence is to
afford every party-litigant the amplest opportunity for
the proper and just determination of his cause, free
from the constraints of technicalities.86 Section 2,
Rule I of the NLRC Rules of Procedure also provides
the policy that "the Rules shall be liberally construed
to carry out the objectives of the Constitution, the
Labor Code of the Philippines and other relevant
legislations, and to assist the parties in obtaining
just, expeditious and inexpensive resolution and
settlement of labor disputes."87
In accordance with the foregoing, although the
general rule provides that an appeal in labor cases
from a decision involving a monetary award may be
perfected only upon the posting of a cash or surety
bond, the Court has relaxed this requirement under
certain exceptional circumstances in order to resolve
controversies on their merits. These circumstances
include: (1) the fundamental consideration of
substantial justice; (2) the prevention of miscarriage
of justice or of unjust enrichment; and (3) special
circumstances of the case combined with its legal
merits, and the amount and the issue
involved.88Guidelines that are applicable in the
reduction of appeal bonds were also explained in
Nicol v. Footjoy Industrial Corporation.89 The bond
requirement in appeals involving monetary awards
has been and may be relaxed in meritorious cases,
including instances in which (1) there was
substantial compliance with the Rules, (2)
surrounding facts and circumstances constitute
meritorious grounds to reduce the bond, (3) a liberal
interpretation of the requirement of an appeal bond
would serve the desired objective of resolving
controversies on the merits, or (4) the appellants, at
the very least, exhibited their willingness and/or
good faith by posting a partial bond during the
reglementary period.90
In Blancaflor v. NLRC,91 the Court also emphasized
that while Article 22392 of the Labor Code, as
amended by Republic Act No. 6715, which requires
a cash or surety bond in an amount equivalent to the
monetary award in the judgment appealed from may
be considered a jurisdictional requirement for the
perfection of an appeal, nevertheless, adhering to
the principle that substantial justice is better served
by allowing the appeal on the merits to be threshed
out by the NLRC, the foregoing requirement of the
law should be given a liberal interpretation.
As the Court, nonetheless, remains firm on the
importance of appeal bonds in appeals from
monetary awards of LAs, we stress that the NLRC,
pursuant to Section 6, Rule VI of the NLRC Rules of
Procedure, shall only accept motions to reduce bond
that are coupled with the posting of a bond in a
reasonable amount. Time and again, we have
explained that the bond requirement imposed upon
appellants in labor cases is intended to ensure the
satisfaction of awards that are made in favor of
appellees, in the event that their claims are
eventually sustained by the courts.93 On the part of
the appellants, its posting may also signify their good
faith and willingness to recognize the final outcome
of their appeal.
At the time of a motion to reduce appeal bond’s filing,
the question of what constitutes "a reasonable
amount of bond" that must accompany the motion
may be subject to differing interpretations of litigants.
The judgment of the NLRC which has the discretion
under the law to determine such amount cannot as
yet be invoked by litigants until after their motions to
reduce appeal bond are accepted.
Given these limitations, it is not uncommon for a
party to unduly forfeit his opportunity to seek a
reduction of the required bond and thus, to appeal,
when the NLRC eventually disagrees with the
party’s assessment. These have also resulted in the
filing of numerous petitions against the NLRC, citing
an alleged grave abuse of discretion on the part of
the labor tribunal for its finding on the sufficiency or
insufficiency of posted appeal bonds.
It is in this light that the Court finds it necessary to
set a parameter for the litigants’ and the NLRC’s
guidance on the amount of bond that shall hereafter
be filed with a motion for a bond’s reduction. To
ensure that the provisions of Section 6, Rule VI of
the NLRC Rules of Procedure that give parties the
chance to seek a reduction of the appeal bond are
effectively carried out, without however defeating the
benefits of the bond requirement in favor of a
winning litigant, all motions to reduce bond that are
to be filed with the NLRC shall be accompanied by
the posting of a cash or surety bond equivalent to
10% of the monetary award that is subject of the
appeal, which shall provisionally be deemed the
reasonable amount of the bond in the meantime that
an appellant’s motion is pending resolution by the
Commission. In conformity with the NLRC Rules, the
monetary award, for the purpose of computing the
necessary appeal bond, shall exclude damages and
attorney’s fees.94 Only after the posting of a bond in
the required percentage shall an appellant’s period
to perfect an appeal under the NLRC Rules be
deemed suspended.
The foregoing shall not be misconstrued to unduly
hinder the NLRC’s exercise of its discretion, given
that the percentage of bond that is set by this
guideline shall be merely provisional. The NLRC
retains its authority and duty to resolve the motion
and determine the final amount of bond that shall be
posted by the appellant, still in accordance with the
standards of "meritorious grounds" and "reasonable
amount". Should the NLRC, after considering the
motion’s merit, determine that a greater amount or
the full amount of the bond needs to be posted by
the appellant, then the party shall comply
accordingly. The appellant shall be given a period of
10 days from notice of the NLRC order within which
to perfect the appeal by posting the required appeal
bond.
Meritorious ground as a condition
for the reduction of the appeal bond
In all cases, the reduction of the appeal bond shall
be justified by meritorious grounds and
accompanied by the posting of the required appeal
bond in a reasonable amount.
The requirement on the existence of a "meritorious
ground" delves on the worth of the parties’
arguments, taking into account their respective
rights and the circumstances that attend the case.
The condition was emphasized in University Plans
Incorporated v. Solano,95 wherein the Court held
that while the NLRC’s Revised Rules of Procedure
"allows the [NLRC] to reduce the amount of the
bond, the exercise of the authority is not a matter of
right on the part of the movant, but lies within the
sound discretion of the NLRC upon a showing of
meritorious grounds."96 By jurisprudence, the merit
referred to may pertain to an appellant’s lack of
financial capability to pay the full amount of the
bond,97 the merits of the main appeal such as when
there is a valid claim that there was no illegal
dismissal to justify the award,98 the absence of an
employer-employee relationship,99 prescription of
claims,100 and other similarly valid issues that are
raised in the appeal.101 For the purpose of
determining a "meritorious ground", the NLRC is not
precluded from receiving evidence, or from making
a preliminary determination of the merits of the
appellant’s contentions.102
In this case, the NLRC then should have considered
the respondents’ arguments in the memorandum on
appeal that was filed with the motion to reduce the
requisite appeal bond. Although a consideration of
said arguments at that point would have been merely
preliminary and should not in any way bind the
eventual outcome of the appeal, it was apparent that
the respondents’ defenses came with an indication
of merit that deserved a full review of the decision of
the LA. The CA, by its Resolution dated February 16,
2007, even found justified the issuance of a
preliminary injunction to enjoin the immediate
execution of the LA’s decision, and this Court, a
temporary restraining order on September 4, 2012.
Significantly, following the CA’s remand of the case
to the NLRC, the latter even rendered a Decision
that contained findings that are inconsistent with
McBurnie’s claims. The NLRC reversed and set
aside the decision of the LA, and entered a new one
dismissing McBurnie’s complaint. It explained that
McBurnie was not an employee of the respondents;
thus, they could not have dismissed him from
employment. The purported employment contract of
the respondents with the petitioner was qualified by
the conditions set forth in a letter dated May 11,
1999, which reads:
May 11, 1999
MR. ANDREW MCBURNIE
Re: Employment Contract
Dear Andrew,
It is understood that this Contract is made subject to
the understanding that it is effective only when the
project financing for our Baguio Hotel project pushed
through.
The agreement with EGI Managers, Inc. is made
now to support your need to facilitate your work
permit with the Department of Labor in view of the
expiration of your contract with Pan Pacific.
Regards,
Sgd. Eulalio Ganzon (p. 203, Records)103
For the NLRC, the employment agreement could not
have given rise to an employer-employee
relationship by reason of legal impossibility. The two
conditions that form part of their agreement, namely,
the successful completion of the project financing for
the hotel project in Baguio City and McBurnie’s
acquisition of an Alien Employment Permit,
remained unsatisfied.104 The NLRC concluded that
McBurnie was instead a potential investor in a
project that included Ganzon, but the said project
failed to pursue due to lack of funds. Any work
performed by McBurnie in relation to the project was
merely preliminary to the business venture and part
of his "due diligence" study before pursuing the
project, "done at his own instance, not in furtherance
of the employment contract but for his own
investment purposes."105 Lastly, the alleged
employment of the petitioner would have been void
for being contrary to law, since it is undisputed that
McBurnie did not have any work permit. The NLRC
declared:
Absent an employment permit, any employment
relationship that McBurnie contemplated with the
respondents was void for being contrary to law. A
void or inexistent contract, in turn, has no force and
effect from the beginning as if it had never been
entered into. Thus, without an Alien Employment
Permit, the "Employment Agreement" is void and
could not be the source of a right or obligation. In
support thereof, the DOLE issued a certification that
McBurnie has neither applied nor been issued an
Alien Employment Permit (p. 204, Records).106
McBurnie moved to reconsider, citing the Court’s
Decision of September 18, 2009 that reversed and
set aside the CA’s Decision authorizing the remand.
Although the NLRC granted the motion on the said
ground via a Decision107 that set aside the NLRC’s
Decision dated November 17, 2009, the findings of
the NLRC in the November 17, 2009 decision merit
consideration, especially since the findings made
therein are supported by the case records.
In addition to the apparent merit of the respondents’
appeal, the Court finds the reduction of the appeal
bond justified by the substantial amount of the LA’s
monetary award. Given its considerable amount, we
find reason in the respondents’ claim that to require
an appeal bond in such amount could only deprive
them of the right to appeal, even force them out of
business and affect the livelihood of their
employees.108 In Rosewood Processing, Inc. v.
NLRC,109 we emphasized: "Where a decision may
be made to rest on informed judgment rather than
rigid rules, the equities of the case must be accorded
their due weight because labor determinations
should not be ‘secundum rationem but also
secundum caritatem.’"110
What constitutes a reasonable
amount in the determination of the
final amount of appeal bond
As regards the requirement on the posting of a bond
in a "reasonable amount," the Court holds that the
final determination thereof by the NLRC shall be
based primarily on the merits of the motion and the
main appeal.
Although the NLRC Rules of Procedure, particularly
Section 6 of Rule VI thereof, provides that the bond
to be posted shall be "in a reasonable amount in
relation to the monetary award ," the merit of the
motion shall always take precedence in the
determination. Settled is the rule that procedural
rules were conceived, and should thus be applied in
a manner that would only aid the attainment of
justice. If a stringent application of the rules would
hinder rather than serve the demands of substantial
justice, the former must yield to the latter.111
Thus, in Nicol where the appellant posted a bond of
₱10,000,000.00 upon an appeal from the LA’s
award of ₱51,956,314.00, the Court, instead of
ruling right away on the reasonableness of the
bond’s amount solely on the basis of the judgment
award, found it appropriate to remand the case to
the NLRC, which should first determine the merits of
the motion. In University Plans,112 the Court also
reversed the outright dismissal of an appeal where
the bond posted in a judgment award of more than
₱30,000,000.00 was ₱30,000.00. The Court then
directed the NLRC to first determine the merit, or
lack of merit, of the motion to reduce the bond, after
the appellant therein claimed that it was under
receivership and thus, could not dispose of its assets
within a short notice. Clearly, the rule on the posting
of an appeal bond should not be allowed to defeat
the substantive rights of the parties.113
Notably, in the present case, following the CA’s
rendition of its Decision which allowed a reduced
appeal bond, the respondents have posted a bond
in the amount of ₱10,000,000.00. In Rosewood, the
Court deemed the posting of a surety bond of
₱50,000.00, coupled with a motion to reduce the
appeal bond, as substantial compliance with the
legal requirements for an appeal from a
₱789,154.39 monetary award "considering the clear
merits which appear, res ipsa loquitor, in the appeal
from the LA’s Decision, and the petitioner’s
substantial compliance with rules governing
appeals."114The foregoing jurisprudence strongly
indicate that in determining the reasonable amount
of appeal bonds, the Court primarily considers the
merits of the motions and appeals.
Given the circumstances in this case and the merits
of the respondents’ arguments before the NLRC, the
Court holds that the respondents had posted a bond
in a "reasonable amount", and had thus complied
with the requirements for the perfection of an appeal
from the LA’s decision. The CA was correct in ruling
that:
In the case of Nueva Ecija I Electric Cooperative,
Inc. (NEECO I) Employees Association, President
Rodolfo Jimenez, and members, Reynaldo Fajardo,
et al. vs. NLRC, Nueva Ecija I Electric Cooperative,
Inc. (NEECO I) and Patricio de la Peña (GR No.
116066, January 24, 2000), the Supreme Court
recognized that: "the NLRC, in its Resolution No. 11-
01-91 dated November 7, 1991 deleted the phrase
"exclusive of moral and exemplary damages as well
as attorney’s fees in the determination of the amount
of bond, and provided a safeguard against the
imposition of excessive bonds by providing that
"(T)he Commission may in meritorious cases and
upon motion of the appellant, reduce the amount of
the bond."
In the case of Cosico, Jr. vs. NLRC, 272 SCRA 583,
it was held:
"The unreasonable and excessive amount of bond
would be oppressive and unjust and would have the
effect of depriving a party of his right to appeal."
xxxx
In dismissing outright the motion to reduce bond filed
by petitioners, NLRC abused its discretion. It should
have fixed an appeal bond in a reasonable amount.
Said dismissal deprived petitioners of their right to
appeal the Labor Arbiter’s decision.
xxxx
NLRC Rules allow reduction of appeal bond on
meritorious grounds (Sec. 6, Rule VI, NLRC Rules
of Procedure). This Court finds the appeal bond in
the amount of ₱54,083,910.00 prohibitive and
excessive, which constitutes a meritorious ground to
allow a motion for reduction thereof.115
The foregoing declaration of the Court requiring a
bond in a reasonable amount, taking into account
the merits of the motion and the appeal, is consistent
with the oft-repeated principle that letter-perfect
rules must yield to the broader interest of substantial
justice.116
The effect of a denial of the appeal
to the NLRC
In finding merit in the respondents’ motion for
reconsideration, we also take into account the
unwarranted results that will arise from an
implementation of the Court’s Decision dated
September 18, 2009. We emphasize, moreover, that
although a remand and an order upon the NLRC to
give due course to the appeal would have been the
usual course after a finding that the conditions for
the reduction of an appeal bond were duly satisfied
by the respondents, given such results, the Court
finds it necessary to modify the CA’s order of
remand, and instead rule on the dismissal of the
complaint against the respondents.
Without the reversal of the Court’s Decision and the
dismissal of the complaint against the respondents,
McBurnie would be allowed to claim benefits under
our labor laws despite his failure to comply with a
settled requirement for foreign nationals.
Considering that McBurnie, an Australian, alleged
illegal dismissal and sought to claim under our labor
laws, it was necessary for him to establish, first and
foremost, that he was qualified and duly authorized
to obtain employment within our jurisdiction. A
requirement for foreigners who intend to work within
the country is an employment permit, as provided
under Article 40, Title II of the Labor Code which
reads:
Art. 40. Employment permit for non-resident aliens.
Any alien seeking admission to the Philippines for
employment purposes and any domestic or foreign
employer who desires to engage an alien for
employment in the Philippines shall obtain an
employment permit from the Department of Labor.
In WPP Marketing Communications, Inc. v.
Galera,117 we held that a foreign national’s failure to
seek an employment permit prior to employment
poses a serious problem in seeking relief from the
Court.118 Thus, although the respondent therein
appeared to have been illegally dismissed from
employment, we explained:
This is Galera’s dilemma: Galera worked in the
Philippines without proper work permit but now
wants to claim employee’s benefits under Philippine
labor laws.
xxxx
The law and the rules are consistent in stating that
the employment permit must be acquired prior to
employment. The Labor Code states: "Any alien
seeking admission to the Philippines for employment
purposes and any domestic or foreign employer who
desires to engage an alien for employment in the
Philippines shall obtain an employment permit from
the Department of Labor." Section 4, Rule XIV, Book
I of the Implementing Rules and Regulations
provides:
"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 be
allowed to be employed upon presentation of a duly
approved employment permit."
Galera cannot come to this Court with unclean
hands. To grant Galera’s prayer is to sanction the
violation of the Philippine labor laws requiring aliens
to secure work permits before their employment. We
hold that the status quo must prevail in the present
case and we leave the parties where they are. This
ruling, however, does not bar Galera from seeking
relief from other jurisdictions.119 (Citations omitted
and underscoring ours)
Clearly, this circumstance on the failure of McBurnie
to obtain an employment permit, by itself,
necessitates the dismissal of his labor complaint.
Furthermore, as has been previously discussed, the
NLRC has ruled in its Decision dated November 17,
2009 on the issue of illegal dismissal. It declared that
McBurnie was never an employee of any of the
respondents.120 It explained:
All these facts and circumstances prove that
McBurnie was never an employee of Eulalio Ganzon
or the respondent companies, but a potential
investor in a project with a group including Eulalio
Ganzon and Martinez but said project did not take
off because of lack of funds.
McBurnie further claims that in conformity with the
provision of the employment contract pertaining to
the obligation of the respondents to provide housing,
respondents assigned him Condo Unit # 812 of the
Makati Cinema Square Condominium owned by the
respondents. He was also allowed to use a Hyundai
car. If it were true that the contract of employment
was for working visa purposes only, why did the
respondents perform their obligations to him?
There is no question that respondents assigned him
Condo Unit # 812 of the MCS, but this was not free
of charge. If it were true that it is part of the
compensation package as employee, then McBurnie
would not be obligated to pay anything, but clearly,
he admitted in his letter that he had to pay all the
expenses incurred in the apartment.
Assuming for the sake of argument that the
employment contract is valid between them, record
shows that McBurnie worked from September 1,
1999 until he met an accident on the last week of
October. During the period of employment, the
respondents must have paid his salaries in the sum
of US$26,000.00, more or less.
However, McBurnie failed to present a single
evidence that [the respondents] paid his salaries like
payslip, check or cash vouchers duly signed by him
or any document showing proof of receipt of his
compensation from the respondents or activity in
furtherance of the employment contract. Granting
again that there was a valid contract of employment,
it is undisputed that on November 1, 1999, McBurnie
left for Australia and never came back. x x
x.121 (Emphasis supplied)
Although the NLRC’s Decision dated November 17,
2009 was set aside in a Decision dated January 14,
2010, the Court’s resolve to now reconsider its
Decision dated September 18, 2009 and to affirm the
CA’s Decision and Resolution in the respondents’
favor effectively restores the NLRC’s basis for
rendering the Decision dated November 17, 2009.
More importantly, the NLRC’s findings on the
contractual relations between McBurnie and the
respondents are supported by the records.
First, before a case for illegal dismissal can prosper,
an employer-employee relationship must first be
established.122Although an employment agreement
forms part of the case records, respondent Ganzon
signed it with the notation "per my note."123 The
respondents have sufficiently explained that the note
refers to the letter124 dated May 11, 1999 which
embodied certain conditions for the employment’s
effectivity. As we have previously explained,
however, the said conditions, particularly on the
successful completion of the project financing for the
hotel project in Baguio City and McBurnie’s
acquisition of an Alien Employment Permit, failed to
materialize. Such defense of the respondents, which
was duly considered by the NLRC in its Decision
dated November 17, 2009, was not sufficiently
rebutted by McBurnie.
Second, McBurnie failed to present any employment
permit which would have authorized him to obtain
employment in the Philippines. This circumstance
negates McBurnie’s claim that he had been
performing work for the respondents by virtue of an
employer-employee relationship. The absence of
the employment permit instead bolsters the claim
that the supposed employment of McBurnie was
merely simulated, or did not ensue due to the non-
fulfillment of the conditions that were set forth in the
letter of May 11, 1999.
Third, besides the employment agreement,
McBurnie failed to present other competent
evidence to prove his claim of an employer-
employee relationship. Given the parties’ conflicting
claims on their true intention in executing the
agreement, it was necessary to resort to the
established criteria for the determination of an
employer-employee relationship, namely: (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.125 The rule of thumb remains: the onus
probandi falls on the claimant to establish or
substantiate the claim by the requisite quantum of
evidence. Whoever claims entitlement to the
benefits provided by law should establish his or her
right thereto.126 McBurnie failed in this
regard.1âwphi1 As previously observed by the
NLRC, McBurnie even failed to show through any
document such as payslips or vouchers that his
salaries during the time that he allegedly worked for
the respondents were paid by the company. In the
absence of an employer-employee relationship
between McBurnie and the respondents, McBurnie
could not successfully claim that he was dismissed,
much less illegally dismissed, by the latter. Even
granting that there was such an employer-employee
relationship, the records are barren of any document
showing that its termination was by the respondents’
dismissal of McBurnie.
Given these circumstances, it would be a circuitous
exercise for the Court to remand the case to the
NLRC, more so in the absence of any showing that
the NLRC should now rule differently on the case’s
merits. In Medline Management, Inc. v.
Roslinda,127 the Court ruled that when there is
enough basis on which the Court may render a
proper evaluation of the merits of the case, the Court
may dispense with the time-consuming procedure of
remanding a case to a labor tribunal in order "to
prevent delays in the disposition of the case," "to
serve the ends of justice" and when a remand "would
serve no purpose save to further delay its disposition
contrary to the spirit of fair play."128 In Real v. Sangu
Philippines, Inc.,129 we again ruled:
With the foregoing, it is clear that the CA erred in
affirming the decision of the NLRC which dismissed
petitioner’s complaint for lack of jurisdiction. In cases
such as this, the Court normally remands the case
to the NLRC and directs it to properly dispose of the
case on the merits. "However, when there is enough
basis on which a proper evaluation of the merits of
petitioner’s case may be had, the Court may
dispense with the time-consuming procedure of
remand in order to prevent further delays in the
disposition of the case." "It is already an accepted
rule of procedure for us to strive to settle the entire
controversy in a single proceeding, leaving no root
or branch to bear the seeds of litigation. If, based on
the records, the pleadings, and other evidence, the
dispute can be resolved by us, we will do so to serve
the ends of justice instead of remanding the case to
the lower court for further proceedings." x x
x.130 (Citations omitted)
It bears mentioning that although the Court resolves
to grant the respondents’ motion for reconsideration,
the other grounds raised in the motion, especially as
they pertain to insinuations on irregularities in the
Court, deserve no merit for being founded on
baseless conclusions. Furthermore, the Court finds
it unnecessary to discuss the other grounds that are
raised in the motion, considering the grounds that
already justify the dismissal of McBurnie’s
complaint.
All these considered, the Court also affirms its
Resolution dated September 4, 2012; accordingly,
McBurnie’s motion for reconsideration thereof is
denied.
WHEREFORE, in light of the foregoing, the Court
rules as follows:
(a) The motion for reconsideration filed on
September 26, 2012 by petitioner Andrew James
McBurnie is DENIED;
(b) The motion for reconsideration filed on March 27,
2012 by respondents Eulalio Ganzon, EGI-
Managers, Inc. and E. Ganzon, Inc. is GRANTED.
(c) The Entry of Judgment issued in G.R. Nos.
186984-85 is LIFTED. This Court’s Decision dated
September 18, 2009 and Resolutions dated
December 14, 2009 and January 25, 2012 are SET
ASIDE. The Court of Appeals Decision dated
October 27, 2008 and Resolution dated March 3,
2009 in CA-G.R. SP No. 90845 and CA-G.R. SP No.
95916 are AFFIRMED WITH MODIFICATION. In
lieu of a remand of the case to the National Labor
Relations Commission, the complaint for illegal
dismissal filed by petitioner Andrew James
McBurnie against respondents Eulalio Ganzon, EGI-
Managers, Inc. and E. Ganzon, Inc. is DISMISSED.
Furthermore, on the matter of the filing and
acceptance of motions to reduce appeal bond, as
provided in Section 6, Rule VI of the 2011 NLRC
Rules of Procedure, the Court hereby RESOLVES
that henceforth, the following guidelines shall be
observed:
(a) The filing o a motion to reduce appeal bond shall
be entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a
bond in a reasonable amount is posted;
(b) For purposes o compliance with condition no. (2),
a motion shall be accompanied by the posting o a
provisional cash or surety bond equivalent to ten
percent (10,) of the monetary award subject o the
appeal, exclusive o damages and attorney's fees;
(c) Compliance with the foregoing conditions shall
suffice to suspend the running o the 1 0-day
reglementary period to perfect an appeal from the
labor arbiter's decision to the NLRC;
(d) The NLRC retains its authority and duty to
resolve the motion to reduce bond and determine the
final amount o bond that shall be posted by the
appellant, still in accordance with the standards o
meritorious grounds and reasonable amount; and
(e) In the event that the NLRC denies the motion to
reduce bond, or requires a bond that exceeds the
amount o the provisional bond, the appellant shall be
given a fresh period o ten 1 0) days from notice o the
NLRC order within which to perfect the appeal by
posting the required appeal bond.
SO ORDERED.
G.R. No. 183952 September 9, 2013
CZARINA T. MALVAR, Petitioner,
vs.
KRAFT FOOD PHILS., INC. and/or BIENVENIDO
BAUTISTA, KRAFT FOODS
INTERNATIONAL, Respondents.
DECISION
BERSAMIN, J.:
Although the practice of law is not a business, an
attorney is entitled to be properly compensated for
the professional services rendered for the client,
who is bound by her express agreement to duly
compensate the attorney. The client may not deny
her attorney such just compensation.
The Case
The case initially concerned the execution of a final
decision of the Court of Appeals (CA) in a labor
litigation, but has mutated into a dispute over
attorney's fees between the winning employee and
her attorney after she entered into a compromise
agreement with her employer under circumstances
that the attorney has bewailed as designed to
prevent the recovery of just professional fees.
Antecedents
On August 1, 1988, Kraft Foods (Phils.), Inc. (KFPI)
hired Czarina Malvar (Malvar) as its Corporate
Planning Manager. From then on, she gradually rose
from the ranks, becoming in 1996 the Vice President
for Finance in the Southeast Asia Region of Kraft
Foods International (KFI),KFPI’s mother company.
On November 29, 1999, respondent Bienvenido S.
Bautista, as Chairman of the Board of KFPI and
concurrently the Vice President and Area Director
for Southeast Asia of KFI, sent Malvar a memo
directing her to explain why no administrative
sanctions should be imposed on her for possible
breach of trust and confidence and for willful
violation of company rules and regulations.
Following the submission of her written explanation,
an investigating body was formed. In due time, she
was placed under preventive suspension with pay.
Ultimately, on March 16, 2000, she was served a
notice of termination.
Obviously aggrieved, Malvar filed a complaint for
illegal suspension and illegal dismissal against KFPI
and Bautista in the National Labor Relations
Commission (NLRC). In a decision dated April 30,
2001,1 the Labor Arbiter found and declared her
suspension and dismissal illegal, and ordered her
reinstatement, and the payment of her full
backwages, inclusive of allowances and other
benefits, plus attorney’s fees.
On October 22, 2001, the NLRC affirmed the
decision of the Labor Arbiter but additionally ruled
that Malvar was entitled to "any and all stock options
and bonuses she was entitled to or would have been
entitled to had she not been illegally dismissed from
her employment," as well as to moral and exemplary
damages.2
KFPI and Bautista sought the reconsideration of the ₱4,134,910/12
NLRC’s decision, but the NLRC denied their motion mos/20.83 days x 55 909,825.77
to that effect.3 days
Undaunted, KFPI and Bautista assailed the adverse
outcome before the CA on certiorari (CA-G.R. SP 4. Unpaid 13th month
344,575.83
No. 69660), contending that the NLRC thereby pay for Dec 2000
committed grave abuse of discretion. However, the
petition for certiorari was dismissed by the CA on 5. Sick Leave Pay
December 22, 2004, but with the CA reversing the
order of reinstatement and instead directing the
Year 1999 to 2004 = 6 yrs
payment of separation pay to Malvar, and also
reducing the amounts awarded as moral and
exemplary damages.4 ₱344,575.88/20.83 x 15 days x 6 =
1,488,805.79
After the judgment in her favor became final and
executory on March14, 2006, Malvar moved for the
Year 2005
issuance of a writ of execution.5 The Executive
Labor Arbiter then referred the case to the Research
and Computation Unit (RCU) of the NLRC for the ₱344,575.83/20.83 x
1,509,483.65
computation of the monetary awards under the 15/12 x 1 20,677.86
judgment. The RCU’s computation ultimately arrived
at the total sum of ₱41,627,593.75.6 6. Vacation Leave Pay

On November 9, 2006, however, Labor Arbiter

Jaime M. Reyno issued an order,7 finding that the Year 1999 to 2004 = 6 years
RCU’s computation lacked legal basis for including
the salary increases that the decision promulgated ₱344,575.88/20.83 x 22 days x 6 =
in CA-G.R. SP No. 69660 did not include. Hence, 2,183,581.83
Labor Arbiter Reyno reduced Malvar’s total
monetary award to ₱27,786,378.11, viz: Year 2005
WHEREFORE, premises considered, in so far as
the computation of complainant’s other benefits and ₱344,575.83/20.83 x
2,213,909.36
allowances are concerned, the same are in order. 22/12 x 1 30,327.55
However, insofar as the computation of her
backwages and other monetary benefits (separation
pay, unpaid salary for January 1 to 26, 2005,holiday
pay, sick leave pay, vacation leave pay, 13th month 10,790,788.86
pay), the same are hereby recomputed as follows:
Backwages (from 3/7/00-
1. Separation Pay 4/30/01, award in LA 4,651,773.75
Sytian’s Decision
8/1/88-1/26/05 = 16 yrs
Allowances & Other Benefits:
₱344,575.83 x 16 = 5,513,213.28
Management Incentive
7,355,166.58
2. Unpaid Salary Plan

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

2,711,646.00
Morris Shares
₱344,575.83 x 87 = 299,780.97
Car Maintenance 381,702.92
3. Holiday Pay
Gas Allowance 198,000.00
4/1/00-1/26/05 = 55 holidays
 Entitlement to a Company
438,650.00
Driver
Rice Subsidy 58,650.00
Moral Damages 500,000.00
Exemplary Damages 200,000.00
Attorney’s Fees 500,000.00
Entitlement to Philip Sch
Subject to
G
"Share Option Grant" Market Price
27,786,378.11
SO ORDERED.
Both parties appealed the computation to the NLRC,
which, on April19, 2007, rendered its decision
setting aside Labor Arbiter Reyno’s November 9,
2006 order, and adopting the computation by the
RCU.8
In its resolution dated May 31, 2007,9 the NLRC
denied the respondents’ motion for reconsideration.
Malvar filed a second motion for the issuance of a
writ of execution to enforce the decision of the NLRC
rendered on April 19, 2007. After the writ of
execution was issued, a partial enforcement as
effected by garnishing the respondents’ funds
deposited with Citibank worth 37,391,696.06.10
On July 27, 2007, the respondents went to the CA
on certiorari (with prayer for the issuance of a
temporary restraining order (TRO) or writ of
preliminary injunction), assailing the NLRC’s setting
aside of the computation by Labor Arbiter Reyno
(CA-G.R. SP No. 99865). The petition mainly argued
that the NLRC had gravely abused its discretion in
ruling that: (a) the inclusion of the salary increases
and other monetary benefits in the award to Malvar
was final and executory; and (b) the finality of the
ruling in CA-G.R. SP No. 69660 precluded the
respondents from challenging the inclusion of the
salary increases and other monetary benefits. The
CA issued a TRO, enjoining the NLRC and Malvar
from implementing the NLRC’s decision.11
On April 17, 2008, the CA rendered its decision in
CA-G.R. SP No. 99865,12 disposing thusly:
WHEREFORE, premises considered, the herein
Petition is GRANTED and the 19 April 2007 Decision
of the NLRC and the 31May 2007 Resolution in
NLRC NCR 30-07-02316-00 are hereby
REVERSED and SET ASIDE.
The matter of computation of monetary awards for
private respondent is hereby REMANDED to the
Labor Arbiter and he is DIRECTED to recompute the
monetary award due to private respondent based on
her salary at the time of her termination, without
including projected salary increases. In computing
the said benefits, the Labor Arbiter is further directed
to DISREGARD monetary awards arising from: (a)
the management incentive plan and (b) the share
option grant, including cash dividends arising
therefrom without prejudice to the filing of the
appropriate remedy by the private respondent in the
proper forum. Private respondent’s allowances for
car maintenance and gasoline are likewise
DELETED unless private respondent proves, by
appropriate receipts, her entitlement thereto.
With respect to the Motion to Exclude the
Undisputed Amount of ₱14,252,192.12 from the
coverage of the Writ of Preliminary Injunction and to
order its immediate release, the same is hereby
GRANTED for reasons stated therefor, which
amount shall be deducted from the amount to be
given to private respondent after proper
computation.
As regards the Motions for Reconsideration of the
Resolution denying the Motion for Voluntary
Inhibition and the Omnibus Motion dated 30 October
2007, both motions are hereby DENIED for lack of
merit.
SO ORDERED.13
Malvar sought reconsideration, but the CA denied
her motion on July30, 2008.14
Aggrieved, Malvar appealed to the Court, assailing
the CA’s decision.
On December 9, 2010, while her appeal was
pending in this Court, Malvar and the respondents
entered into a compromise agreement, the pertinent
dispositive portion of which is quoted as follows:
NOW, THEREFORE, for and in consideration of the
covenants and understanding between the parties
herein, the parties hereto have entered into this
Agreement on the following terms and conditions:
1. Simultaneously upon execution of this Agreement
in the presence of Ms. Malvar’s attorney, KFPI shall
pay Ms. Malvar the amount of Philippine Pesos Forty
Million (Php 40,000,000.00), which is in addition to
the Philippine Pesos Fourteen Million Two Hundred
Fifty-Two Thousand One Hundred Ninety-Two and
Twelve Centavos (Php14,252,192.12) already paid
to and received by Ms. Malvar from KFPI in
August2008 (both amounts constituting the
"Compromise Payment").
The Compromise Payment includes full and
complete payment and settlement of Ms. Malvar’s
salaries and wages up to the last day of her
employment, allowances, 13th and 14th month pay,
cash conversion of her accrued vacation, sick and
emergency leaves, separation pay, retirement pay
and such other benefits, entitlements, claims for
stock, stock options or other forms of equity
compensation whether vested or otherwise and
claims of any and all kinds against KFPI and KFI and
Altria Group, Inc., their predecessors-in-interest,
their stockholders, officers, directors, agents or
successors-in-interest, affiliates and subsidiaries, up
to the last day of the aforesaid cessation of her
employment.
2. In consideration of the Compromise Payment, Ms.
Malvar hereby freely and voluntarily releases and
forever discharges KFPI and KFI and Altria Group,
Inc., their predecessors or successors-in-interest,
stockholders, officers, including Mr. Bautista who
was impleaded in the Labor Case as a party
respondent, directors, agents or successors-in-
interest, affiliates and subsidiaries from any and all
manner of action, cause of action, sum of money,
damages, claims and demands whatsoever in law or
in equity which Ms. Malvar or her heirs, successors
and assigns had, or now have against KFPI and/or
KFI and/or Altria Group, Inc., including but not limited
to, unpaid wages, salaries, separation pay,
retirement pay, holiday pay, allowances, 13th and
14th month pay, claims for stock, stock options or
other forms of equity compensation whether vested
or otherwise whether arising from her employment
contract, company grant, present and future
contractual commitments, company policies or
practices, or otherwise, in connection with Ms.
Malvar’s employment with KFPI.15
xxxx
Thereafter, Malvar filed an undated Motion to
Dismiss/Withdraw Case,16 praying that the appeal
be immediately dismissed/withdrawn in view of the
compromise agreement, and that the case be
considered closed and terminated.
Intervention
Before the Court could act on Malvar’s Motion to
Dismiss/Withdraw Case, the Court received on
February 15, 2011 a so-called Motion for
Intervention to Protect Attorney’s Rights17 from The
Law Firm of Dasal, Llasos and Associates, through
its Of Counsel Retired Supreme Court Associate
Justice Josue N. Bellosillo18 (Intervenor), whereby
the Intervenor sought, among others, that both
Malvar and KFPI be held and ordered to pay jointly
and severally the Intervenor’s contingent fees.
The Motion for Intervention relevantly averred:
xxxx
Lawyers, oftentimes, are caricatured as alligators or
some other specie of voracious carnivore; perceived
also as leeches sucking dry the blood of their
adversaries, and even their own clients they are
sworn to serve and protect! As we lay down the facts
in this case, this popular, rather unpopular,
perception will be shown wrong. This case is a
reversal of this perception.
xxxx
Here, it is the lawyer who is eaten up alive by the
warring but conspiring litigants who finally settled
their differences without the knowledge, much less,
participation, of Petitioner’s counsel that labored
hard and did everything to champion her cause.
xxxx
This Motion for Intervention will illustrate an
aberration from the norm where the lawyer ends up
seeking protection from his client’s and
Respondents’ indecent and cunning maneuverings.
x x x.
xxxx
On 18 March 2008 Petitioner engaged the
professional services of Intervenor x x x on a
contingency basis whereby the former agreed in
writing to pay the latter contingency fees amounting
to almost ₱19,600,000.00 (10% of her total claim of
almost ₱196,000,000.00 in connection with her labor
case against Respondents. x x x.
xxxx
According to their agreement (Annex "A"), Petitioner
bound herself to pay Intervenor contingency fees as
follows (a) 10% of ₱14,252, 192.12 upon its
collection; (b) 10% of the remaining balance of
₱41,627,593.75; and (c)10% of the value of the
stock options Petitioner claims to be entitled to, or
roughly ₱154,000,000.00 as of April 2008.
xxxx
Intervenor’s efforts resulted in the award and partial
release of Petitioner’s claim amounting to
₱14,252,192.12 out of which Petitioner paid
Intervenor 10% or ₱1,425,219.21 as contingency
fees pursuant to their engagement agreement
(Annex "A"). Copy of the check payment of Petitioner
payable to Intervenor’s Of Counsel is attached as
Annex "C".
xxxx
On 12 September 2008 Intervenor filed an
exhaustive Petition for Review with the Supreme
Court containing 70 pages, including its Annexes "A"
to "R", or a total of 419 pages against Respondents
to collect on the balance of Petitioner’s claims
amounting to at least ₱27,000,000.00 and
₱154,000,000.00 the latter representing the
estimated value of Petitioner’s stock options as of
April 2008.
xxxx
On 15 January 2009 Respondents filed their
Comment to the Petition for Review.
xxxx
On 13 April 2009 Intervenor, in behalf of Petitioner,
filed its Reply to the Comment.
xxxx
All the pleadings in this Petition have already been
submitted on time with nothing more to be done
except to await the Resolution of this Honorable
Court which, should the petition be decided in her
favor, Petitioner would stand to gain
₱182,000,000.00, more or less, which victory would
be largely through the efforts of Intervenor.19 (Bold
emphasis supplied).
xxxx
It appears that in July 2009, to the Intervenor’s
surprise, Malvar unceremoniously and without any
justifiable reason terminated its legal service and
required it to withdraw from the case.20 Hence, on
October 5,2009, the Intervenor reluctantly filed a
Manifestation (With Motion to Withdraw as Counsel
for Petitioner),21 in which it spelled out: (a) the terms
of and conditions of the Intervenor’s engagement as
counsel; (b) the type of legal services already
rendered by the Intervenor for Malvar; (c) the
absence of any legitimate reason for the termination
of their attorney-client relationship; (d) the
reluctance of the Intervenor to withdraw as Malvar’s
counsel; and (e) the desire of the Intervenor to assert
and claim its contingent fee notwithstanding its
withdrawal as counsel. The Intervenor prayed that
the Court furnish it with copies of resolutions,
decisions and other legal papers issued or to be
issued after its withdrawal as counsel of Malvar in
the interest of protecting its interest as her attorney.
The Intervenor indicated that Malvar’s precipitate
action had baffled, shocked and even embarrassed
the Intervenor, because it had done everything
legally possible to serve and protect her interest. It
added that it could not recall any instance of conflict
or misunderstanding with her, for, on the contrary,
she had even commended it for its dedication and
devotion to her case through her following letter to
Justice Bellosillo, to wit:
July 16, 2008
Justice Josue Belocillo (sic)
Dear Justice,
It is almost morning of July 17 as I write this letter to
you. Let me first thank you for your continued and
unrelenting lead, help and support in the case. You
have been our "rock" as far as this case is
concerned. Jun and I are forever grateful to you for
all your help. I just thought I’d express to you what is
in the innermost of my heart as we proceed in the
case. It has been around four months now since we
met mid-March early this year.
The most important and immediate aspect of the
case at this time for me is the collection of the
undisputed amount of Pesos 14million which the
Court has clearly directed and ordered the NLRC to
execute. The only impending constraint for NLRC to
execute and collect this amount from the already
garnished amount of Pesos 41 million at Citibank is
the MR of Kraft on the Order of the Court (CA) to
execute collection. We need to get a denial of this
motion for NLRC to execute immediately. We
already obtained commitment from NLRC that all it
needed to execute collection is the denial of the MR.
Jun and I applaud your initiative and efforts to
mediate with Romulo on potential settlement.
However, as I expressed to you in several instances,
I have serious reservations on the willingness of
Romulo to settle within reasonable amounts
specifically as it relates to the stock options. Let us
continue to pursue this route vigorously while not
setting aside our efforts to influence the CA to DENY
their Motion on the Undisputed amount of Pesos
14million.
At this point, I cannot overemphasize to you our
need for funds. We have made financial
commitments that require us to raise some amount.
But we can barely meet our day to day business and
personal requirements given our current situation
right now.
Thank you po for your understanding and support.22
According to the Intervenor, it was certain that the
compromise agreement was authored by the
respondents to evade a possible loss of
₱182,000,000.00 or more as a result of the labor
litigation, but considering the Intervenor’s interest in
the case as well as its resolve in pursuing Malvar’s
interest, they saw the Intervenor as a major
stumbling block to the compromise agreement that it
was then brewing with her. Obviously, the only way
to remove the Intervenor was to have her terminate
its services as her legal counsel. This prompted the
Intervenor to bring the matter to the attention of the
Court to enable it to recover in full its compensation
based on its written agreement with her, averring
thus:
xxxx
28. Upon execution of the Compromise Agreement
and pursuant thereto, Petitioner immediately
received (supposedly) from
Respondents₱40,000,000.00. But despite the
settlement between the parties, Petitioner did not
pay Intervenor its just compensation as set forth in
their engagement agreement; instead, she
immediately moved to Dismiss/Withdraw the
Present Petition.
29. To parties’ minds, with the dismissal by
Petitioner of Intervenor as her counsel, both
Petitioner and Respondents probably thought they
would be able to settle the case without any cost to
them, with Petitioner saving on Intervenor’s
contingent fees while Respondents able to take
advantage of the absence of Intervenor in
determining the settlement price.
30. The parties cannot be any more mistaken.
Pursuant to the Second Paragraph of Section 26,
Rule 138, of the Revised Rules of Court quoted in
paragraph 3 hereof, Intervenor is still entitled to
recover from Petitioner the full compensation it
deserves as stipulated in its contract.
31. All the elements for the full recovery of
Intervenor’s compensation are present. First, the
contract between the Intervenor and Petitioner is
reduced into writing. Second, Intervenor is
dismissed without justifiable cause and at the stage
of proceedings where there is nothing more to be
done but to await the Decision or Resolution of the
Present Petition.23
xxxx
In support of the Motion for Intervention, the
Intervenor cites the rulings in Aro v. Nañawa24 and
Law Firm of Raymundo A. Armovit v. Court of
Appeals,25 particularly the following passage:
x x x. While We here reaffirm the rule that "the client
has an undoubted right to compromise a suit without
the intervention of his lawyer," We hold that when
such compromise is entered into in fraud of the
lawyer, with intent to deprive him of the fees justly
due him, the compromise must be subject to the said
fees and that when it is evident that the said fraud is
committed in confabulation with the adverse party
who had knowledge of the lawyer’s contingent
interest or such interest appears of record and who
would benefit under such compromise, the better
practice is to settle the matter of the attorney’s fees
in the same proceeding, after hearing all the affected
parties and without prejudice to the finality of the
compromise agreement in so far as it does not
adversely affect the right of the lawyer.26 x x x.
The Intervenor prays for the following reliefs:
a) Granting the Motion for Intervention to Protect
Attorney’s Rights in favor of the Intervenor;
b) Directing both Petitioner and Respondents jointly
and severally to pay Intervenor its contingent fees;
c) Granting a lien upon all judgments for the payment
of money and executions issued in pursuance of
such judgments; and
d) Holding in Abeyance in the meantime the
Resolution of the Motion to Dismiss/Withdraw Case
filed by Petitioner and granting the Motion only after
Intervenor has been fully paid its just compensation;
and
e) Other reliefs just and equitable.27
Opposing the Motion for Intervention,28 Malvar
stresses that there was no truth to the Intervenor’s
claim to defraud it of its professional fees; that the
Intervenor lacked the legal capacity to intervene
because it had ceased to exist after Atty. Marwil N.
Llasos resigned from the Intervenor and Atty.
Richard B. Dasal became barred from private
practice upon his appointment as head of the Legal
Department of the Small Business Guarantee and
Finance Corporation, a government subsidiary; and
that Atty. Llasos and Atty. Dasal had personally
handled her case.
Malvar adds that even assuming, arguendo, that the
Intervenor still existed as a law firm, it was still not
entitled to intervene for the following reasons,
namely: firstly, it failed to attend to her multiple pleas
and inquiries regarding the case, as when
communications to the Intervenor through text
messages were left unanswered; secondly,
maintaining that this was a justifiable cause to
dismiss its services, the Intervenor only heeded her
repeated demands to withdraw from the case when
Atty. Dasal was confronted about his appointment to
the government subsidiary; thirdly, it was misleading
and grossly erroneous for the Intervenor to claim that
it had rendered to her full and satisfactory services
when the truth was that its participation was strictly
limited to the preparation, finalization and
submission of the petition for review with the
Supreme Court; and finally, while the Intervenor
withdrew its services on October 5, 2009, the
compromise agreement was executed with the
respondents on December 9,2010 and notarized on
December 14, 2010, after more than a year and two
months, dispelling any badge of bad faith on their
end.
On June 21, 2011, the respondents filed their
comment to the Intervenor’s Motion for Intervention.
On November 18, 2011, the Intervenor submitted its
position on the respondent’s comment dated June
21, 2011,29 and thereafter the respondents sent in
their reply.30
Issues
The issues for our consideration and determination
are two fold, namely: (a) whether or not Malvar’s
motion to dismiss the petition on the ground of the
execution of the compromise agreement was
proper; and (b) whether or not the Motion for
Intervention to protect attorney’s rights can prosper,
and, if so, how much could it recover as attorney’s
fees.
Ruling of the Court
We shall decide the issues accordingly.
1.
Client’s right to settle litigation
by compromise agreement, and
to terminate counsel; limitations
A compromise agreement is a contract, whereby the
parties undertake reciprocal obligations to avoid
litigation, or put an end to one already
commenced.31 The client may enter into a
compromise agreement with the adverse party to
terminate the litigation before a judgment is
rendered therein.32 If the compromise agreement is
found to be in order and not contrary to law, morals,
good customs and public policy, its judicial approval
is in order.33 A compromise agreement, once
approved by final order of the court, has the force of
res judicata between the parties and will not be
disturbed except for vices of consent or forgery.34
A client has an undoubted right to settle her litigation
without the intervention of the attorney, for the
former is generally conceded to have exclusive
control over the subject matter of the litigation and
may at anytime, if acting in good faith, settle and
adjust the cause of action out of court before
judgment, even without the attorney’s
35
intervention. It is important for the client to show,
however, that the compromise agreement does not
adversely affect third persons who are not parties to
the agreement.36
By the same token, a client has the absolute right to
terminate the attorney-client relationship at any time
with or without cause.37 But this right of the client is
not unlimited because good faith is required in
terminating the relationship. The limitation is based
on Article 19 of the Civil Code, which mandates that
"every person must, in the exercise of his rights and
in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good
faith." The right is also subject to the right of the
attorney to be compensated. This is clear from
Section 26, Rule 138 of the Rules of Court, which
provides:
Section 26. Change of attorneys. - An attorney may
retire at anytime from any action or special
proceeding, by the written consent of his client filed
in court. He may also retire at any time from an
action or special proceeding, without the consent of
his client, should the court, on notice to the client and
attorney, and on hearing, determine that he ought to
be allowed to retire. In case of substitution, the name
of the attorney newly employed shall be entered on
the docket of the court in place of the former one,
and written notice of the change shall be given to the
adverse party.
A client may at any time dismiss his attorney or
substitute another in his place, but if the contract
between client and attorney has been reduced to
writing and the dismissal of the attorney was without
justifiable cause, he shall be entitled to recover from
the client the full compensation stipulated in the
contract. However, the attorney may, in the
discretion of the court, intervene in the case to
protect his rights. For the payment of his
compensation the attorney shall have a lien upon all
judgments for the payment of money, and
executions issued in pursuance of such judgment,
rendered in the case wherein his services had been
retained by the client. (Bold emphasis supplied)
In fine, it is basic that an attorney is entitled to have
and to receive a just and reasonable compensation
for services performed at the special instance and
request of his client. The attorney who has acted in
good faith and honesty in representing and serving
the interests of the client should be reasonably
compensated for his service.38
2.
Compromise agreement is to be approved
despite favorable action on the
Intervenor’s Motion for Intervention
On considerations of equity and fairness, the Court
disapproves of the tendencies of clients
compromising their cases behind the backs of their
attorneys for the purpose of unreasonably reducing
or completely setting to naught the stipulated
contingent fees.39 Thus, the Court grants the
Intervenor’s Motion for Intervention to Protect
Attorney’s Rights as a measure of protecting the
Intervenor’s right to its stipulated professional fees
that would be denied under the compromise
agreement. The Court does so in the interest of
protecting the rights of the practicing Bar rendering
professional services on contingent fee basis.
Nonetheless, the claim for attorney’s fees does not
void or nullify the compromise agreement between
Malvar and the respondents. There being no
obstacles to its approval, the Court approves the
compromise agreement. The Court adds, however,
that the Intervenor is not left without a remedy, for
the payment of its adequate and reasonable
compensation could not be annulled by the
settlement of the litigation without its participation
and conformity. It remains entitled to the
compensation, and its right is safeguarded by the
Court because its members are officers of the Court
who are as entitled to judicial protection against
injustice or imposition of fraud committed by the
client as much as the client is against their abuses
as her counsel. In other words, the duty of the Court
is not only to ensure that the attorney acts in a proper
and lawful manner, but also to see to it that the
attorney is paid his just fees. Even if the
compensation of the attorney is dependent only on
winning the litigation, the subsequent withdrawal of
the case upon the client’s initiative would not deprive
the attorney of the legitimate compensation for
professional services rendered.40
The basis of the intervention is the written
agreement on contingent fees contained in the
engagement executed on March 19, 2008 between
Malvar and the Intervenor,41 the pertinent portion of
which stipulated that the Intervenor would "collect
ten percent (10%) of the amount of
Ph₱14,252,192.12 upon its collection and another
ten percent (10%) of the remaining balance of
Ph₱41,627,593.75 upon collection thereof, and also
ten percent (10%) of whatever is the value of the
stock option you are entitled to under the Decision."
There is no question that such arrangement was a
contingent fee agreement that was valid in this
jurisdiction, provided the fees therein fixed were
reasonable.42
We hold that the contingent fee of 10% of
₱41,627,593.75 and 10% of the value of the stock
option was reasonable. The ₱41,627,593.75 was
already awarded to Malvar by the NLRC but the
award became the subject of the appeal in this Court
because the CA reversed the NLRC. Be that as it
may, her subsequent change of mind on the amount
sought from the respondents as reflected in the
compromise agreement should not negate or bar the
Intervenor’s recovery of the agreed attorney’s fees.
Considering that in the event of a dispute between
the attorney and the client as to the amount of fees,
and the intervention of the courts is sought, the
determination requires that there be evidence to
prove the amount of fees and the extent and value
of the services rendered, taking into account the
facts determinative thereof,43 the history of the
Intervenor’s legal representation of Malvar can
provide a helpful predicate for resolving the dispute
between her and the Intervenor.
The records reveal that on March 18, 2008, Malvar
engaged the professional services of the Intervenor
to represent her in the case of illegal dismissal. At
that time, the case was pending in the CA at the
respondents’ instance after the NLRC had set aside
the RCU’s computation of Malvar’s backwages and
monetary benefits, and had upheld the computation
arrived at by the NLRC Computation Unit. On April
17, 2008, the CA set aside the assailed resolution of
the NLRC, and remanded the case to the Labor
Arbiter for the computation of her monetary awards.
It was at this juncture that the Intervenor
commenced its legal service, which included the
following incidents, namely:
a) Upon the assumption of its professional duties as
Malvar’s counsel, a Motion for Reconsideration of
the Decision of the Court of Appeals dated April 17,
2008 consisting of thirty-eight pages was filed before
the Court of Appeals on May 6, 2008.
b) On June 2, 2009, Intervenors filed a Comment to
Respondents’ Motion for Partial Reconsideration,
said Comment consisted 8 pages.
c) In the execution proceedings before Labor Arbiter
Jaime Reyno, Intervenor prepared and filed on
Malvar’s behalf an "Ex-Parte Motion to Release to
Complainant the Undisputed amount of
₱14,252,192.12" in NLRC NCR Case No. 30-07-
02716-00.
d) On July 29, 2000, Intervenor prepared and filed
before theLabor Arbiter a Comment to Respondents’
Opposition to the "Ex-Parte Motion to Release" and
a "Motion Reiterating Immediate Implementation of
the Writ of Execution"
e) On August 6, 2008, Intervenor prepared and filed
before the Labor Arbiter Malvar’s Motion Reiterating
Motion to Release the Amount of ₱14,252,192.12.44
The decision promulgated on April 17, 200845 and
the resolution promulgated on July 30, 200846 by the
CA prompted Malvar to appeal on August 15, 2008
to this Court with the assistance of the Intervenor. All
the subsequent pleadings, including the reply of
April 13, 2009,47 were prepared and filed in Malvar’s
behalf by the Intervenor.
Malvar should accept that the practice of law was not
limited to the conduct of cases or litigations in court
but embraced also the preparation of pleadings and
other papers incidental to the cases or litigations as
well as the management of such actions and
proceedings on behalf of the
clients.48 Consequently, fairness and justice
demand that the Intervenor be accorded full
recognition as her counsel who discharged its
responsibility for Malvar’s cause to its successful
end.
But, as earlier pointed out, although a client may
dismiss her lawyer at any time, the dismissal must
be for a justifiable cause if a written contract between
the lawyer and the client exists.49
Considering the undisputed existence of the written
agreement on contingent fees, the question begging
to be answered is: Was the Intervenor dismissed for
a justifiable cause?
We do not think so.
In the absence of the lawyer’s fault, consent or
waiver, a client cannot deprive the lawyer of his just
fees already earned in the guise of a justifiable
reason. Here, Malvar not only downplayed the worth
of the Intervenor’s legal service to her but also
attempted to camouflage her intent to defraud her
lawyer by offering excuses that were not only
inconsistent with her actions but, most importantly,
fell short of being justifiable.
The letter Malvar addressed to Retired Justice
Bellosillo, who represented the Intervenor,
debunked her allegations of unsatisfactory legal
service because she thereby lavishly lauded the
Intervenor for its dedication and devotion to the
prosecution of her case and to the protection of her
interests. Also significant was that the attorney-client
relationship between her and the Intervenor was not
severed upon Atty. Dasal’s appointment to public
office and Atty. Llasos’ resignation from the law firm.
In other words, the Intervenor remained as her
counsel of record, for, as we held in Rilloraza, Africa,
De Ocampo and Africa v. Eastern
Telecommunication Philippines, Inc.,50 a client who
employs a law firm engages the entire law firm;
hence, the resignation, retirement or separation from
the law firm of the handling lawyer does not
terminate the relationship, because the law firm is
bound to provide a replacement.
The stipulations of the written agreement between
Malvar and the Intervenors, not being contrary to
law, morals, public policy, public order or good
customs, were valid and binding on her. They
expressly gave rise to the right of the Intervenor to
demand compensation. In a word, she could not
simply walk away from her contractual obligations
towards the Intervenor, for Article 1159 of the Civil
Code provides that obligations arising from contracts
have the force of law between the parties and should
be complied with in good faith.
To be sure, the Intervenor’s withdrawal from the
case neither cancelled nor terminated the written
agreement on the contingent attorney’s fees. Nor did
the withdrawal constitute a waiver of the agreement.
On the contrary, the agreement continued between
them because the Intervenor’s Manifestation (with
Motion to Withdraw as Counsel for
Petitioner)explicitly called upon the Court to
safeguard its rights under the written agreement, to
wit:
WHEREFORE, premises considered, undersigned
counsel respectfully pray that instant Motion to
Withdraw as Counsel for Petitioner be granted and
their attorney’s lien pursuant to the written
agreement be reflected in the judgment or decision
that may be rendered hereafter conformably with
par. 2, Sec. 26, Rule 138 of the Rules of Court.
Undersigned counsel further requests that they be
furnished copy of the decision, resolutions and other
legal processes of this Honorable Court to enable
them to protect their interests.51
Were the respondents also liable?
The respondents would be liable if they were shown
to have connived with Malvar in the execution of the
compromise agreement, with the intention of
depriving the Intervenor of its attorney’s fees.
Thereby, they would be solidarily liable with her for
the attorney’s fees as stipulated in the written
agreement under the theory that they unfairly and
unjustly interfered with the Intervenor’s professional
relationship with Malvar.
The respondents insist that they were not bound by
the written agreement, and should not be held liable
under it.1âwphi1
We disagree with the respondents’ insistence. The
respondents were complicit in Malvar’s move to
deprive the Intervenor of its duly earned contingent
fees.
First of all, the unusual timing of Malvar’s letter
terminating the Intervenor’s legal representation of
her, of her Motion to Dismiss/Withdraw Case, and of
the execution of compromise agreement manifested
her desire to evade her legal obligation to pay to the
Intervenor its attorney’s fees for the legal services
rendered. The objective of her withdrawal of the
case was to release the respondents from all her
claims and causes of action in consideration of the
settlement in the stated amount of ₱40,000.000.00,
a sum that was measly compared to what she was
legally entitled to, which, to begin with, already
included the ₱41,627,593.75 and the value of the
stock option already awarded to her. In other words,
she thereby waived more than what she was lawfully
expected to receive from the respondents.
Secondly, the respondents suddenly turned around
from their strong stance of berating her demand as
offensive to all precepts of justice and fair play and
as a form of unjust enrichment for her to a
surprisingly generous surrender to her demand,
allowing to her through their compromise agreement
the additional amount of ₱40,000,000.00 on top of
the₱14,252,192.12 already received by her in
August 2008. The softening unavoidably gives the
impression that they were now categorically
conceding that Malvar deserved much more. Under
those circumstances, it is plausible to conclude that
her termination of the Intervenor’s services was
instigated by their prodding in order to remove the
Intervenor from the picture for being a solid
obstruction to the settlement for a much lower
liability, and thereby save for themselves and for her
some more amount.
Thirdly, the compromise agreement was silent on
the Intervenor’s contingent fee, indicating that the
objective of the compromise agreement was to
secure a huge discount from its liability towards
Malvar.
Finally, contrary to the stipulation in the compromise
agreement, only Malvar, minus the respondents,
filed the Motion to Dismiss/Withdraw Case.
At this juncture, the Court notes that the compromise
agreement would have Malvar waive even the
substantial stock options already awarded by the
NLRC’s decision,52 which ordered the respondents
to pay to her, among others, the value of the stock
options and all other bonuses she was entitled to or
would have been entitled to had she not been
illegally dismissed from her employment. This ruling
was affirmed by the CA.53 But the waiver could not
negate the Intervenor’s right to 10% of the value of
the stock options she was legally entitled to under
the decisions of the NLRC and the CA, for that right
was expressly stated in the written agreement
between her and the Intervenor. Thus, the
Intervenor should be declared entitled to recover full
compensation in accordance with the written
agreement because it did not assent to the waiver of
the stock options, and did not waive its right to that
part of its compensation.
These circumstances show that Malvar and the
respondents needed an escape from greater liability
towards the Intervenor, and from the possible
obstacle to their plan to settle to pay. It cannot be
simply assumed that only Malvar would be liable
towards the Intervenor at that point, considering that
the Intervenor, had it joined the negotiations as her
lawyer, would have tenaciously fought all the way for
her to receive literally everything that she was
entitled to, especially the benefits from the stock
option. Her rush to settle because of her financial
concerns could have led her to accept the
respondents’ offer, which offer could be further
reduced by the Intervenor’s expected demand for
compensation. Thereby, she and the respondents
became joint tort-feasors who acted adversely
against the interests of the Intervenor. Joint tort-
feasors are those who command, instigate, promote,
encourage, advise, countenance, cooperate in, aid
or abet the commission of a tort, or who approve of
it after it is done, if done for their benefit.54
They are also referred to as those who act together
in committing wrong or whose acts, if independent of
each other, unite in causing a single injury.55 Under
Article 2194 of the Civil Code, joint tort-feasors are
solidarily liable for the resulting damage. As regards
the extent of their respective liabilities, the Court said
in Far Eastern Shipping Company v. Court of
Appeals:56
x x x. Where several causes producing an injury are
concurrent and each is an efficient cause without
which the injury would not have happened, the injury
may be attributed to all or any of the causes and
recovery may be had against any or all of the
responsible persons although under the
circumstances of the case, it may appear that one of
them was more culpable, and that the duty owed by
them to the injured person was not same. No actor’s
negligence ceases to be a proximate cause merely
because it does not exceed the negligence of other
acts. Each wrongdoer is responsible for the entire
result and is liable as though his acts were the sole
cause of the injury.
There is no contribution between joint tort-feasors
whose liability is solidary since both of them are
liable for the total damage. Where the concurrent or
successive negligent acts or omissions of two or
more persons, although acting independently, are in
combination the direct and proximate cause of a
single injury to a third person, it is impossible to
determine in what proportion each contributed to the
injury and either of them is responsible for the whole
injury. x x x
Joint tort-feasors are each liable as principals, to the
same extent and in the same manner as if they had
performed the wrongful act themselves. It is likewise
not an excuse for any of the joint tort-feasors that
individual participation in the tort was insignificant as
compared to that of the other.57 To stress, joint tort-
feasors are not liable pro rata. The damages cannot
be apportioned among them, except by themselves.
They cannot insist upon an apportionment, for the
purpose of each paying an aliquot part. They are
jointly and severally liable for the whole
amount.58 Thus, as joint tort-feasors, Malvar and the
respondents should be held solidarily liable to the
Intervenor. There is no way of appreciating these
circumstances except in this light.
That the value of the stock options that Malvar
waived under the compromise agreement has not
been fixed as yet is no hindrance to the
implementation of this decision in favor of the
Intervenor. The valuation could be reliably made at
a subsequent time from the finality of this
adjudication. It is enough for the Court to hold the
respondents and Malvar solidarily liable for the 10%
of that value of the stock options.
As a final word, it is necessary to state that no court
can shirk from enforcing the contractual stipulations
in the manner they have agreed upon and written.
As a rule, the courts, whether trial or appellate, have
no power to make or modify contracts between the
parties. Nor can the courts save the parties from
disadvantageous provisions.59 The same precepts
hold sway when it comes to enforcing fee
arrangements entered into in writing between clients
and attorneys. In the exercise of their supervisory
authority over attorneys as officers of the Court, the
courts are bound to respect and protect the
attorney’s lien as a necessary means to preserve the
decorum and respectability of the Law
Profession.60Hence, the Court must thwart any and
every effort of clients already served by their
attorneys’ worthy services to deprive them of their
hard-earned compensation. Truly, the duty of the
courts is not only to see to it that attorneys act in a
proper and lawful manner, but also to see to it that
attorneys are paid their just and lawful fees.61
WHEREFORE, the Court APPROVES the
compromise agreement; GRANTS the Motion for
Intervention to Protect Attorney's Rights; and
ORDERS Czarina T. Malvar and respondents Kraft
Food Philippines Inc. and Kraft Foods International
to jointly and severally pay to Intervenor Law Firm,
represented by Retired Associate Justice Josue N.
Bellosillo, its stipulated contingent fees of 10% of
₱41,627,593.75, and the further sum equivalent to
10% of the value of the stock option. No
pronouncement on costs of suit.
SO ORDERED.
G.R. No. 174564 February 12, 2014
ATTY. EMMANUEL D. AGUSTIN, JOSEPHINECOMPLAINANT
SOLANO, ADELAIDA FERNANDEZ, ALEJANDRO
YUAN, JOCELYN LAV ARES, MARY JANE
OLASO, MELANIE BRIONES, ROWENA PATRON,
1. JOSEPHINE SOLANO
MA. LUISA CRUZ, SUSAN TAPALES, RUSTY
BAUTISTA, and JANET YUAN, Petitioners,
2. ADELAIDA FERNANDEZ [P]238,680.00
vs.
ALEJANDRO CRUZ-HERRERA, Respondent.
DECISION
REYES, J.:
This is a petition for review on certiorari1 assailing
the Resolution2 dated September 30, 2005 of the
Court of Appeals (CA) in CA-G.R. SP No. 85556
which approved the joint compromise agreement
executed by respondent Alejandro Cruz-Herrera
(Herrera) and the former employees of Podden
International Philippines, Inc. (Podden), namely:
Josephine Solano, Adelaida Fernandez,· Alejandro
Yuan, Jocelyn Lavares, Mary Jane Olaso, Melanie
Briones, Rowena Patron, Ma. Luisa Cruz, Susan
Tapales, Rusty Bautista, and Janet Yuan
(complainants).
The Antecedents
Respondent Herrera was the President of Podden
while complainants were assemblers and/or line
leader assigned at the production department.3 In
1993, the complainants were terminated from
employment due to financial reverses. Upon
verification, however, with the Department of Labor
and Employment, no such report of financial
reverses or even retrenchment was filed. This
prompted the complainants to file a complaint for
illegal dismissal, monetary claims and damages
against Podden and Herrera.4 They engaged the
services of Atty. Emmanuel D. Agustin (Atty.
Agustin) to handle the case5 upon the verbal
agreement that he will be paid on a contingency
basis at the rate of ten percent (10%) of the final
monetary award or such amount of attorney’s fees
that will be finally determined.
Proceedings before the Labor Arbiter
The complainants, thru Atty. Agustin, obtained a
favorable ruling before the Labor Arbiter (LA) who
disposed as follows in its Decision6 dated
September 27, 1998, to wit:
WHEREFORE, premises considered, [Podden and
Herrera] are hereby directed/ordered to immediately
reinstate the complainants to their former positions
without loss of seniority rights and other privileges
with full backwages from date of dismissal up to
actual date of reinstatement which as of this month
is more or less in the amount as follows:
AMOUNT
[P]238,680.00=([P]135.00/day x 26 d
= [P]3,510/mo. x 68 mos.)
[P]238,680.00
 LEJANDRO YUAN [P]238,680.00
OCELYN LAVARES [P]238,680.00
MARY JANE OLASO [P]238,680.00
MELANIE BRIONES [P]238,680.00
ROWENA PATRON [P]238,680.00
MA. LUISA CRUZ [P]238,680.00
USAN TAPALES [P]238,680.00
RUSTY BAUTISTA [P]238,680.00
JANET YUAN [P]238,680.00
TAL [P]2,625,480.00
[Podden and Herrera] are further ordered to pay
complainants their money claims representing their
underpayment of wages, 13th month pay, premium
pay for holidays and rest days and service incentive
leave pay to be computed by the Fiscal Examiner of
the Research, Information and Computation Unit of
the Commission in due time.
[Podden and Herrera] are furthermore ordered to
pay each complainant the amount of [P]40,000.00
as moral and exemplary damages, as well as ten
(10%) of the total awards as attorney’s fee.
SO ORDERED.7
No appeal was taken from the foregoing judgment
hence, on February 2, 1999, a motion for execution
was filed. The motion was set for a hearing on
February 10, 1999 but was reset twice upon the
parties’ request for the purpose of exploring the
possibility of settlement.8
On March 20, 1999, Herrera filed a Manifestation
and Motion to deny issuance of the writ stating,
among others, that Podden ceased operations on
December 1, 1994 or almost four years before
judgment was rendered by the LA on the illegal
dismissal complaint and that nine of the eleven
employees have executed Waivers and Quitclaims
rendering any execution of the judgment
inequitable.9
On July 20, 1999, the Computation and Examination
Unit of the National Labor Relations Commission
(NLRC) released the computation of the total
monetary award granted by the LA amounting to
₱3,358,441.84.10
Atty. Agustin opposed Herrera’s motion and argued
that the issuance of a writ of execution is ministerial
because the LA decision has long been final and
executory there being no appeal taken therefrom.
He further claimed that the alleged Waivers and
Quitclaims were part of a scheme adopted by
Podden to evade its liability and defraud the
complainants.11
Resolving the conflict, the LA issued its
Order12 dated May 15, 2000 denying the motion for
the issuance of a writ of execution. The LA sustained
as valid the Waivers and Quitclaims signed by all
and not just nine of the complainants, based on the
following findings:
A cursory examination of the records reveal[s] that
complainants, all eleven (11) of them, had indeed
executed their respective waiver and quitclaim thru
an instrument entitled "Pagtalikod sa Karapatang
Maghabol" absolving [Podden and Herrera] from any
and all liabilities that may arise against the latter to
these cases. The instruments were signed by the
complainants and sworn to before Notary Public
Amparo G. Ocampo. Considering the fact that the
complainants, through their common counsel,
received a copy of the Decision in these cases on
December 28, 1998, it could only be supposed that
as of that date they signed the instrument of waiver
and quitclaim on March 2, 1999, April 8, 1999 and
March 31, 2000, they were already properly
apprised about the decision having been issued in
their favor, more particularly the contents thereof, by
their esteemed counsel. The fact that complainants
would execute such waiver and quitclaim,
notwithstanding, only shows the spontaneity and
voluntariness of their deed.
Moreover, and as the instrument of waiver and
quitclaim would show, the letter was written in the
vernacular of Filipino language. Complainants who
are all presumed to be knowledgeable about the
national language could not have been misled with
respect to the real meaning and plain import of the
words used in the instrument. That complainants
meant and understood what they signed in the
instrument is best shown by the fact that in the
subsequent hearings scheduled to take up the
motion for writ of execution and the opposition
thereto (considering the relative importance of the
matters raised and substantial awards to the
complainants)[,] complainants have failed to show
up in any of them.13
Accordingly, the quitclaims were held to have
superseded the matter of issuing a writ of execution.
Anent Atty. Agustin’s fees, the LA held that he is
entitled to ten percent (10%) of the total monetary
award obtained by the complainants from the
compromise agreement. The order disposed thus:
WHEREFORE, premises considered, the motion for
writ of execution is denied on [the] ground that
complainants have already settled their cases with
[Podden and Herrera].
On account of the settlement, however, [Podden and
Herrera] are hereby ordered to pay complainants’
counsel ten (10%) percent of the amount received
by complainants as attorney’s fees.
SO ORDERED.14
Ruling of the NLRC
On appeal, the NLRC reversed the LA Order dated
May 15, 2000 for the reason that it unlawfully
amended, altered and modified the final and
executory LA Decision dated September 27, 1998.
The quitclaims were also held invalid based on the
unconscionably low amount received by each of the
complainants thereunder which ranged between
₱10,000.000 and ₱20,000.00 as against the
judgment award of ₱238,680.00 for each individual
complainant. This factor was found by the NLRC to
be a clear proof that the quitclaims were indeed
wangled from the unsuspecting complainants. The
NLRC Resolution15 dated May 7, 2003 thus held:
WHEREFORE, the appeal is GRANTED. The Order
a quo of May 15, 2000 is hereby reversed and set
aside and a new one entered ordering the Labor
Arbiter a quo to immediately issue the corresponding
writ of execution for the enforcement of the decision
rendered in this case.
The quitclaims executed by the complainants are
hereby nullified. However, any amount received by
the complainants under the quitclaims shall be
deducted from the award due each of them.
SO ORDERED.16
The NLRC reiterated the foregoing judgment in the
Order17 dated May 31, 2004 which denied Podden
and Herrera’s motion for reconsideration. On August
13, 2004, the NLRC issued an Entry of Judgment
declaring that its Order dated May 31, 2004 has
become final and executory on June 20, 2004.18
Ruling of the CA
On August 6, 2004, Herrera filed a petition for
certiorari before the CA assailing the issuances of
the NLRC. During the pendency of the petition or on
August 30, 2005, a joint compromise agreement was
submitted to the CA narrating as follows:
WHEREAS, the parties have discussed their
differences; claims, counterclaims and other issues
in the above-entitled cases and have decided to
amicably and mutually settle the same;
WHEREAS, the parties have agreed that [Herrera]
shall pay each of the [complainants] immediately
upon the signing of the Joint Compromise
Agreement the amount of Php 35,000.00 to each;
WHEREAS, the parties have agreed that [Herrera]
shall pay the costs of the suit and attorney’s fees of
[the complainants] equivalent to 10% (ten percent)
of the total settlement agreement;
WHEREAS, the parties, their heirs, and assigns,
agree to have the present case dismissed WITH
PREJUDICE, immediately; x x x.19
In its assailed Resolution20 dated September 30,
2005, the CA found the joint compromise agreement
consistent with law, public order and public policy,
and consequently stamped its approval thereon and
entered judgment in accordance therewith, viz:
Finding the above terms and conditions not contrary
to law, public order and public policy, the parties’
prayer that the foregoing joint compromise
agreement be approved and the extant case be
dismissed with prejudice is GRANTED and the
agreement ADMITTED. Judgment is hereby entered
in accordance thereto.
Parties are enjoined to strictly comply with this
judgment on compromise.
SO ORDERED.21
Atty. Agustin moved for the reconsideration of the
foregoing resolution but his motion was denied in the
CA Resolution22dated September 8, 2006.
Displeased, Atty. Agustin, with the complainants
named as his co-petitioners, interposed the present
recourse contending that the resolutions of the CA
violated the principle of res judicata because they
amended and altered the final and executory LA
Decision dated
September 27, 1998 and NLRC Resolution dated
May 7, 2003 on the basis of an unconscionable
compromise agreement that was executed without
his knowledge and consent. Atty. Agustin prays that
the joint compromise agreement be set aside, the LA
Decision dated September 27, 1998 executed and
Herrera ordered to pay him ₱335,844.18 as
attorney’s fees pursuant to the final and executory
monetary award originally obtained by the
complainants before the LA.
Our Ruling
We deny the petition.
The petition is dismissible outright for being
accompanied by a defective certification of non-
forum shopping having been signed by Atty. Agustin
instead of the complainants as the principal parties.
It has been repeatedly emphasized that in the case
of natural persons, the certification against forum
shopping must be signed by the principal parties
themselves and not by the attorney.23 The purpose
of the rule rests mainly on practical sensibility. As
explained in Clavecilla v. Quitain:24
x x x [T]he certification (against forum shopping)
must be signed by the plaintiff or any of the principal
parties and not by the attorney. For such certification
is a peculiar personal representation on the part of
the principal party, an assurance given to the court
or other tribunal that there are no other pending
cases involving basically the same parties, issues
and causes of action.
x x x Obviously it is the petitioner, and not always the
counsel whose professional services have been
retained for a particular case, who is in the best
position to know whether he or it actually filed or
caused the filing of a petition in that case. Hence, a
certification against forum shopping by counsel is a
defective certification.25
The Court has espoused leniency and overlooked
such procedural misstep in cases bearing
substantial merit complemented by the written
authority or general power of attorney granted by the
parties to the actual signatory.26However, no
analogous justifiable reasons exist in the case at bar
neither do the claims of Atty. Agustin merit
substantial consideration to justify a relaxation of the
rule.
It is apparent that the complainants did not seek the
instant review because they have already settled
their dispute with Herrera before the CA. It is Atty.
Agustin’s personal resolve to pursue this recourse
premised on his unwavering stance that the joint
compromise agreement signed by the complainants
was inequitable and devious as they were denied the
bigger monetary award adjudged by a final and
executory judgment.
Atty. Agustin ought to be reminded that his
professional relation with his clients is one of agency
under the rules thereof "[t]he acts of an agent are
deemed the acts of the principal only if the agent
acts within the scope of his authority."27 It is clear
that under the circumstances of this case, Atty.
Agustin is acting beyond the scope of his authority
in questioning the compromise agreement between
the complainants, Podden and Herrera.
It is settled that parties may enter into a compromise
agreement without the intervention of their
lawyer.28 This precedes from the equally settled rule
that a client has an undoubted right to settle a suit
without the intervention of his lawyer for he is
generally conceded to have the exclusive control
over the subject-matter of the litigation and may, at
any time before judgment, if acting in good faith,
compromise, settle, and adjust his cause of action
out of court without his attorney’s intervention,
knowledge, or consent, even though he has agreed
with his attorney not to do so. Hence, the absence of
a counsel’s knowledge or consent does not
invalidate a compromise agreement.29
Neither can a final judgment preclude a client from
entering into a compromise. Rights may be waived
through a compromise agreement, notwithstanding
a final judgment that has already settled the rights of
the contracting parties provided the compromise is
shown to have been voluntarily, freely and
intelligently executed by the parties, who had full
knowledge of the judgment. Additionally, it must not
be contrary to law, morals, good customs and public
policy.30
In the present case, the allegations of vitiated
consent proffered by Atty. Agustin are all
presumptions and suppositions that have no bearing
as evidence. There is no proof that the complainants
were forced, intimidated or defrauded into executing
the quitclaims. On the contrary, the LA correctly
observed that, based on the following facts, the
complainants voluntarily entered into and fully
understood the contents and effect of the quitclaims,
to wit: (1) they have already received a copy and
hence aware of the LA Decision dated September
27, 1998 when they signed the quitclaims on March
2, 1999, April 8, 1999 and March 31, 2000; (2) the
quitclaims were written in Filipino language which is
known to and understood by the complainants; (3)
none of the complainants attended the hearings on
the motion for execution of the LA Decision dated
September 27, 1998; (4) they were consistent in
their manifestations before the NLRC and the CA
that they have already settled their claims against
Podden and Herrera hence, their request for the
termination of the appeals filed by Atty. Agustin
before the said tribunals.
Furthermore, it is the complainants themselves who
can impugn the consideration of the compromise as
being unconscionable31 but no such repudiation was
manifested before the Court or the courts a quo.
The ruling in Unicane Workers Union-CLUP v.
NLRC32 cited by Atty. Agustin is not applicable to the
facts at hand. The circumstances which led the
Court to annul the quitclaim in Unicane are not
attendant in the present case. In Unicane, the
attorney-in-fact who signed the quitclaim in behalf of
the employees exceeded the scope of his authority
thus prejudicing the latter. Consequently, it was
ruled that the quitclaim did not bind the employees.
No akin situation exists in the case at bar.
Further, Atty. Agustin’s claim for his unpaid
attorney’s fees cannot nullify the subject joint
compromise agreement.33
A compromise agreement is binding only between
its privies and could not affect the rights of third
persons who were not parties to the agreement. One
such third party is the lawyer who should not be
totally deprived of his compensation because of the
compromise subscribed by the client. Otherwise, the
terms of the compromise agreement will be set
aside, and the client shall be bound to pay the fees
agreed upon with his lawyer. If the adverse party
settled the suit in bad faith, he will be made solidarily
liable with the client for the payment of such fees.
The following discussions in Gubat v. National
Power Corporation34 elaborate on this matter, viz:
As the validity of a compromise agreement cannot
be prejudiced, so should not be the payment of a
lawyer’s adequate and reasonable compensation for
his services should the suit end by reason of the
settlement. The terms of the compromise subscribed
to by the client should not be such that will amount
to an entire deprivation of his lawyer’s fees,
especially when the contract is on a contingent fee
basis. In this sense, the compromise settlement
cannot bind the lawyer as a third party. A lawyer is
as much entitled to judicial protection against
injustice or imposition of fraud on the part of his client
as the client is against abuse on the part of his
counsel. The duty of the court is not only to ensure
that a lawyer acts in a proper and lawful manner, but
also to see to it that a lawyer is paid his just fees.
Even if the compensation of a counsel is dependent
only upon winning a case he himself secured for his
client, the subsequent withdrawal of the case on the
client’s own volition should never completely deprive
counsel of any legitimate compensation for his
professional services. In all cases, a client is bound
to pay his lawyer for his services. The determination
of bad faith only becomes significant and relevant if
the adverse party will likewise be held liable in
shouldering the attorney’s fees.35 (Citations omitted)
There is truth to Atty. Agustin’s argument that the
compromise agreement did not include or affect his
attorney’s fees granted in the final and executory LA
Decision dated September 27, 1998. Attorney’s fees
become vested right when the order awarding those
fees becomes final and executory and any
compromise agreement removing that right must
include the lawyer’s participation if it is to be valid
against him.36
However, equity dictates that an exception to such
rule be made in this case with the end in view that
the fair share of litigants to the benefits of a suit be
not displaced by a contract for legal services.
It must be noted that the complainants were laborers
who desired to contest their dismissal for being
illegal.1âwphi1 With no clear means to pay for costly
legal services, they hired Atty. Agustin whose
remuneration was subject to the success of the
illegal dismissal suit. Before a judgment was
rendered in their favor, however, the company
closed down and settlement of the suit for an amount
lesser than their monetary claims, instead of
execution of the favorable judgment, guaranteed the
atonement for their illegal termination. To make the
complainants liable for the ₱335,844.18 attorney’s
fees adjudged in the LA Decision of September 27,
1998 would be allowing Atty. Agustin to get a lion’s
share of the ₱385,000.0037 received by the former
from the compromise agreement that terminated the
suit; to allow that to happen will contravene the
raison d'être for contingent fee arrangements.
Contingent fee arrangements "are permitted
because they redound to the benefit of the poor
client and the lawyer ‘especially in cases where the
client has meritorious cause of action, but no means
with which to pay for legal services unless he can,
with the sanction of law, make a contract for a
contingent fee to be paid out of the proceeds of the
litigation. Oftentimes, the contingent fee
arrangement is the only means by which the poor
and helpless can seek redress for injuries sustained
and have their rights vindicated.’"38
Further, a lawyer is not merely the defender of his
client’s cause. He is also, first and foremost, an
officer of the court and participates in the
fundamental function of administering justice in
society. It follows that a lawyer’s compensation for
professional services rendered is subject to the
supervision of the court in order to maintain the
dignity and integrity of the legal profession to which
he belongs.39 "[L]awyering is not a moneymaking
venture and lawyers are not merchants. Law
advocacy, it has been stressed, is not capital that
yields profits. The returns it births are simple rewards
for a job done or service rendered."40
More importantly, Atty. Agustin was not totally
deprived of his fees. Under the joint settlement
agreement, he is entitled to receive ten percent
(10%) of the total settlement. We find the said
amount reasonable considering that the nature of
the case did not involve complicated legal issues
requiring much time, skill and effort.
It cannot be said that Herrera negotiated for the
compromise agreement in bad faith. It remains
undisputed that Podden has ceased operations on
December 1, 1994 or almost four years before the
LA Decision dated September 27, 1998 was
rendered.41 In view thereof, the implementation of
the award became unfeasible and a compromise
settlement was more beneficial to the complainants
as it assured them of reparation, albeit at a reduced
amount. This was the same situation prevailing at
the time when Herrera manifested and reiterated
before the CA that a concession has been reached
by the parties. Thus, the motivating force behind the
settlement was not to deprive or prejudice Atty.
Agustin of his fees, but rather the inability of a
dissolved corporation to fully abide by its adjudged
liabilities and the certainty of payment on the part of
the complainants.
Also, collusion between complainants and Herrera
cannot be inferred from the fact that Atty. Agustin
obtained lesser attorney’s fees under the
compromise agreement as against that which he
could have gained if the LA Decision dated
September 27, 1998 was executed. Unless there is
a showing that the complainants actually received
an amount higher than that stated in the settlement
agreement, it cannot be said that Atty. Agustin was
unlawfully prejudiced. There is no proof submitted
supporting such inference.
Under the above circumstances, Herrera cannot be
made solidarily liable for Atty. Agustin’s fees which,
as a rule, are the personal obligation of his clients,
the complainants. However, pursuant to his
undertaking in the joint compromise agreement,
Herrera is solely bound to compensate Atty. Agustin
at the rate of ten percent (10%) of the total
settlement agreement.42
Since the entire provisions of the joint compromise
agreement are not available in the records and only
the relevant portions thereof were quoted in the CA
Resolution dated September 30, 2005, the Court
deems it reasonable to impose a period of ten (10)
days within which Herrera should fulfill his obligation
to Atty. Agustin.
WHEREFORE, premises considered, the petition is
hereby DENIED. The Resolution dated September
30, 2005 of the Court of Appeals in CA-G.R. SP No.
85556 is AFFIRMED.
Pursuant to his undertaking in the joint compromise
agreement, respondent Alejandro Cruz-Herrera is
ORDERED to pay, give, deliver to Atty. Emmanuel
D. Agustin ten percent (10%) of the total settlement
agreement within a period of ten (10) days from
notice hereof. Both of them are hereby REQUIRED
to report compliance with the foregoing order within
a period of five days thereafter.
SO ORDERED.
G.R. No. 124013 June 5, 1998
ROSARIO MANEJA, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION
and MANILA MIDTOWN HOTEL, respondents.
MARTINEZ, J.:
Assailed in this petition for certiorari under Rule 65
of the Revised Rules of Court are the
Resolution 1 dated June 3, 1994 of the respondent
National Labor Relations Commission in NLRC
NCR-00-10-05297-90, entitled "Rosario
Maneja,Complainant, vs. Manila Midtown
Hotel, Respondent," which dismissed the illegal
dismissal case filed by petitioner against private
respondent company for lack of jurisdiction of the
Labor Arbiter over the case; and its
2
Resolution dated October 20, 1995 denying
petitioner's motion for reconsideration.
Petitioner Rosario Maneja worked with private
respondent Manila Midtown Hotel beginning
January, 1985 as a telephone operator. She was a
member of the National Union of Workers in Hotels,
Restaurants and Allied Industries (NUWHRAIN) with
an existing Collective Bargaining Agreement (CBA)
with private respondent.
In the afternoon of February 13, 1990, a fellow
telephone operator, Rowena Loleng received a
Request for Long Distance Call (RLDC) form and a
deposit of P500.00 from a page boy of the hotel for
a call by a Japanese guest named Hirota Ieda. The
call was unanswered. The P500.00 deposit was
forwarded to the cashier. In the evening, Ieda again
made an RLDC and the page boy collected another
P500.00 which was also given to the operator
Loleng. The second call was also unanswered.
Loleng passed on the RLDC to petitioner for follow-
up. Petitioner monitored the call.
On February 15, 1990, a hotel cashier inquired about
the P1,000.00 deposit made by Ieda. After a search,
Loleng found the first deposit of P500.00 inserted in
the guest folio while the second deposit was
eventually discovered inside the folder for cancelled
calls with deposit and official receipts.
When petitioner saw that the second RLDC form
was not time-stamped, she immediately placed it
inside the machine which stamped the date
"February 15, 1990." Realizing that the RLDC was
filed 2 days earlier, she wrote and changed the date
to February 13, 1990. Loleng then delivered the
RLDC and the money to the cashier. The second
deposit of P500.00 by Ieda was later returned to him.
On March 7, 1990, the chief telephone operator
issued a memorandum 3 to petitioner and Loleng
directing the two to explain the February 15 incident.
Petitioner and Loleng thereafter submitted their
written explanation. 4
On March 20, 1990, a written report 5 was submitted
by the chief telephone operator, with the
recommendation that the offenses committed by the
operators concerned covered violations of the
Offenses Subject to Disciplinary Actions (OSDA): (1)
OSDA 2.01: forging, falsifying official document(s),
and (2) OSDA 1.11: culpable carelessness —
negligence or failure to follow specific instruction(s)
or established procedure(s).
On March 23, 1990, petitioner was served a notice
of dismissal 6 effective April 1, 1990. Petitioner
refused to sign the notice and wrote therein "under
protest."
Meanwhile, a criminal case 7 for Falsification of
Private Documents and Qualified Theft was filed
before the Office of the City Prosecutor of Manila by
private respondent againts Loleng and petitioner.
However, the resolution recommending the filing of
a case for estafa was reversed by 2nd Asst. City
Prosecutor Virgilio M. Patag.
On October 2, 1990, petitioner filed a complaint for
illegal dismissal against private respondent before
the Labor Arbiter. The complaint was later amended
to include a claim for unpaid wages, unpaid vacation
leave conversion and moral damages.
Position papers were filed by the parties. Thereafter,
the motion to set the case for hearing filed by private
respondent was granted by the Labor Arbiter and
trial on the merits ensued.
In his decision 8 dated May 29, 1992, Labor Arbiter
Oswald Lorenzo found that the petitioner was
illegally dismiised. However, in the decision, the
Labor Arbiter stated that:
Preliminary, we hereby state that on the face of the
instant complaint, it is one that revolves on the
matter of the implementation and interpretation of
existing company policies, which per the last par. of
Art. 217 of the Labor Code, as amended, is one
within the jurisdictional ambit of the grievance
procedure under the CBA and thereafter, if
unresolved, one proper for voluntary arbitration. This
observation is re-entrenched by the fact, that
complainant claims she is a member of NUWRAIN
with an existing CBA with respondent hotel.
On this score alone, this case should have
dismissed outright. 9
Despite the aforequoted preliminary statement, the
Labor Arbiter still assumed jurisdiction "since Labor
Arbiters under Article 217 of the same Labor Code,
are conferred original and exclusive jurisdiction of all
termination case(sic.)." The dispositive portion of the
decision states that:
WHEREFORE, premises considered, judgment is
hereby renrdered as follows:
(1) Declaring complainant's dismissal by respondent
hotel as illegally effected;
(2) Ordering respondent to immediately reinstate
complainant to her previous position without loss of
seniority rights;
(3) Ordering further respondent to pay complainant
the full backwages due her, which is computed as
follows:
3/23/90 - 10/31/90 = 7.26/mos.
P2.540 x 7.26/mos. P18,440.40
11/1/90 - 1/7/91 = 2.23/mos.
P3,224.16 x 2.23/mos. 7,189.87
1/8/91 - 4/29/92 = 15.7/mos.
P3,589.16 x 15.7/mos. 56,349.89
P81,980.08
(4) Moreover, respondent is ordered to pay the 13th
month pay due the complainant in the amount of
P6,831.67 including moral and exemplary damages
of P15,000.00 and P10,000.00 respectively, as well
as attorney's fees equivalent to ten (10) percent of
the total award herein in the amount of P11,381.17;
(5) Finally, all other claims are hereby dismissed for
lack of merit.
SO ORDERED.
Private respondent appealed the decision to the
respondent commission on the ground inter alia that
the Laber Arbiter erred in "assuming jurisdiction over
the illegal dismissal case after finding that the case
falls within the jurisdictional ambit of the grievance
procedure under the CBA, and if unresolved, proper
for voluntary arbitration." 10 An Opposition 11 was
filed by petitioner.
In the assailed Resolution 12 dated June 3, 1994,
respondent NLRC dismissed the illegal dismissal
case for lack of Jurisdiction of the Labor Arbiter
because the same should have instead been
subjected to voluntary arbitration.
Petitioner's motion for reconsideration 13 was denied
by respondent NLRC for lack of merit.
In this petition for certiorari, petitioner ascribes to
respondent NLRC grave abuse of discretion in —
1. Ruling that the Labor Arbiter was without
jurisdiction over the illegal dismissal case;
2. Not ruling that private respondent is estopped by
laches from questioning the jurisdiction of the illegal
dismissal case;
3. Reversing the decision of the Labor Arbiter based
on a technicality notwithstanding the merits of the
case.
Petitioner contents that Article 217(a)(2) and (c)
relied upon by respondent NLRC in divesting the
labor arbiter of jurisdiction over the illegal dismissal
case, should be read in conjunction with Article
261 14 of the Labor Code. It is the view of petitioner
that termination cases arising from the interpretation
or enforcement policies pertaining to violations of
Offenses Subject to Disciplinary Actions (OSDA),
are under the jurisdiction of the voluntary arbitrator
only if these are unresolved in the plant-level
grievance machinery. Petitioner insists that her
termination is not an unresolved grievance as there
has been no grievance meeting between the
NUWHRAIN union and the management. The
reason for this, petitioner adds, is that it has been a
company practice that termination cases are not
anymore referred to the grievance machinery but
directly to the labor arbiter.
In its comment, private respondent argues that the
Labor Arbiter should have dismissed the illegal
dismissal case outright after finding that it is within
the jurisdictional ambit of the grievance procedure.
Moreover, private respondent states that the issue
of jurisdiction may be raised at any time and at any
stage of the proceedings even on appeal, and is not
in estoppel by laches as contended by the petitioner.
For its part, public respondent, through the Office of
the Solicitor General, cited the ruling of this Court in
Sanyo Philippines Workers Union- PSSLU vs.
Cañizares 15 in dismissing the case for lack of
jurisdiction of the Labor Arbiter.
The legal issue in this case is whether or not the
Labor Arbiter has jurisdiction over the illegal
dismissal case.
The respondent Commission, in holding that the
Labor Arbiter lacks jurisdiction to hear the illegal
dismissal case, cited as basis therefor Article 217 of
the Labor Code, as amended by Republic Act No.
6715. It said:
White it is conceded that under Article 217(a), Labor
Arbiters shall have original and exclusive jurisdiction
over cases involving "termination disputes," the
Supreme Court, in a fairy recent case ruled:
The procedure introduced in RA 6715 of referring
certain grievances originally and exclusively to the
grievance machinery, and when not settled at this
level, to a panel of voluntary arbitrators outlined in
CBAs does not only include grievances arising from
the interpretation or implementation of the CBA but
applies as well to those arising from the
implementation of company personnel policies. No
other body shall take cognizance of these cases. . .
. (Sanyo vs. Cañizares, 211 SCRA 361,
372) 16
We Find that the respondent Commission has
erroneously interpreted the aforequoted portion of
our ruling in the case of Sanyo, as divesting the
Labor Arbiter of jurisdiction in a termination dispute.
Art. 217 of the Labor Code gives us the clue as to
the jurisdiction of the Labor Arbiter, to wit:
Art. 217. Jurisdiction of Labor Arbiters and the
Commission. a) Except as otherwise provided under
this Code the Labor Arbiters shall have original and
exclusive jurisdiction to hear and decided within
thirty (30) calendar days after the submission of the
case by the parties for decision without extension
even in the absence of stenographic notes, the
following cases involving all workers, whether
agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement,
those cases that workers may file involving wages,
rates of pay, hours of work and other terms and
conditions of employment;
4. Claims for actual, moral, exemplary and other
forms of damages arising from the employer-
employee relations;
5. Cases arising from any violation of Article 264 of
this Code, including questions involving the legality
of strikes and lockouts;
6. Except claims for Employees Compensation,
Social Security, Medicare and maternity benefits, all
other claims, arising from employer-employee
relations, including those of persons in domestic or
household service, involving an amount exceeding
five thousand pesos (P5,000.00) regardless of
whether accompanied with a claim for
reinstatement.
b) The commission shall have exclusive appellate
jurisdiction over all cases decided by Labor Arbiters.
c) Cases arising from the interpretation or
implementation of collective bargaining agreements
and those arising from the interpretation or
enforcement of company personel policies shall be
disposed of by the Labor Arbiter by referring the
same to the grievance machinery and voluntary
arbitration as may be provided in said agreements.
As can be seen from the aforequoted Article,
termination cases fall under the original and
exclusive jurisdiction of the Labor Arbiter. It should
be noted, however, that in the opening there appears
the phrase: "Except as otherwise provided under this
Code . . . ." It is paragraph (c) of the same Article
which respondent Commission has erroneously
interpreted as giving the voluntary arbitrator
jurisdiction over the illegal dismissal case.
However, Article 217 (c) should be read in
conjunction with Article 261 of the Labor Code which
grants to voluntary arbitrators original and exclusive
jurisdiction to hear and decide
all unresolved grievances arising from the
interpretation or implementation of the collective
bargaining agreement and those arising from the
interpretation or enforcement of company personel
policies. Note the phrase "unresolved grievances."
In the case at bar, the termination of petitioner is not
an unresolved grievance.
The stance of the Solicitor General in
the Sanyo case is totally the reverse of its posture in
the case at bar. InSanyo, the Solicitor General was
of the view that a distinction should be made
between a case involving "interpretation or
implementation of Collective Bargaining Agreement"
or interpretation or "enforcement" of company
personel policies, on the one hand and a case
involving termination, on the other hand. It argued
that the dismissal of the private respondents does
not involve an "interpretation or implementation" of a
Collective Bargaining Agreement or "interpretation
or enforcement" of company personel policies but
involves "termination." The Solicitor General further
said that where the dispute is just in the
interpretation, implementation or enforcement stage,
it may be referred to the grievance machinery set up
the Collective Bargaining Agreement or by voluntary
arbitration. Where there was already actual
termination, i.e., violation of rights, it is already
cognizable by the Labor Arbiter. 17 We fully agree
with the theory of the Solicitor General in
the Sanyo case, which is radically apposite to its
position in this case.
Moreover, the dismissal of petitioner does not fall
within the phrase "grievance arising from the
interpretation or implementation of collective
bargaining agreement and those arising from the
interpretation or enforcement of company personel
policies," the jurisdiction of which pertains to the
grievance machinery or thereafter, to a voluntary
arbitrator or panel of voluntary arbitrators. It is to be
stressed that under Article 260 of the Labor Code,
which explains the function of the grievance
machinery and voluntary arbitrator. "(T)he parties to
a Collective Bargaining Agreement shall include
therein provisions that will ensure the mutual
observance of its terms and conditions. They shall
establish a machinery for the adjustment and
resolution of grievances arising from the
interpretation or implementation of their Collective
Bargaining Agreement and those arising from the
interpretation or enforcement of company personel
policies." Article 260 further provides that the parties
to a CBA shall name or designate their respective
representative to the grievance machinery and if the
grievance is unsettled in that level, it shall
automatically be refered to the voluntary arbitrators
designated in advance by the parties to a CBA of the
union and the company. It can thus be deduced that
only disputes involving the union and the company
shall be referred to the grievance machinery or
voluntary arbitrators. 18
In the case at bar, the union does not come into the
picture, not having objected or voiced any dissent to
the dismissal of the herein petitioner. The reason for
this, according to petitioner is that "the practice in
said Hotel in cases of termination is that the latter
cases are not referred anymore to the grievance
committee;" and that "the terminated employee who
wishes to question the legality of his termination
usually goes to the Labor Arbiter for arbitration,
whether the termination arose from the interpretation
or enforcement of the company personnel policies or
otherwise." 19
As we ruled in Sanyo, "Since there has been an
actual termination, the matter falls within the
jurisdiction of the labor Arbiter." The aforequoted
doctrine is applicable foursquare in petitioner's case.
The dismissal of the petitioner does not call for the
interpretation or enforcement of company personnel
policies but is a termination dispute which comes
under the jurisdiction of the Labor Arbiter.
It should be explained that "company personel
policies" are guiding priciples stated in broad, long-
range terms that express the philosophy or beliefs of
an organization's top authority regarding personnel
matters. They deal with matters affecting efficiency
and well-being of employees and include, among
others, the procedure in the administration of wages,
benefits, promotions, transfer and other personnel
movements which are usually not spelled out in the
collective agreement. The usual source of
grievances, however, are the rules and regulations
governing disciplinary actions. 20
The case of Pantranco North Express, Inc. vs.
NLRC 21 sheds further light on the issue of
jurisdiction where the Court cited the Sanyo case
and quoted the decision of therein Labor Arbiter
Olairez in this manner:
In our honest opinion we have jurisdiction over the
complaint on the following grounds:
First, this is a complaint of illegal dismissal of which
original and exclusive jurisdiction under Article 217
has been conferred to the labor Arbiters. The
interpretation of the CBA or enforcement of the
company policy is only corollary to the complaint of
illegal dismissal. Otherwise, an employee who was
on AWOL, or who committed offenses contrary to
the personnel policies(sic) can no longer file a case
of illegal discharge is premised on the interpretation
or enforcement of the company policies(sic).
Second. Respondent voluntarily submitted tha case
to the jurisdiction of this labor tribunal. It adduced
arguments to the legality of its act, whether such act
may be retirement and/or dismissal, and prayed for
reliefs on the merits of the case. A litigant cannot
pray for reliefs on the merits and at the same time
attacks(sic) the jurisdiction of the tribunal. A person
cannot have one's cake and eat it too. . . . .
As to the second ground, petitioner correctly points
out that respondent NLRC should have ruled that
private respondent is estopped by laches in
questioning the jurisdiction of the Labor Arbiter.
Clearly, estoppel lies. The issue of jurisdiction was
mooted by herein private respondent's active
participation in the proceedings below. In Marquez
vs. Secretary of Labor, 22 the Court said:
. . . . The active participation of the against whom the
action was brought, coupled with his failure to object
to the jurisdiction of the court or quasi-judicial body
where the action is pending, is tantamount to an
invocation of that jurisdiction and a willingness to
abide the resolution of the case and will bar said
party from later on impugning the court or body's
jurisdiction.
In the assailed Resolution, 23 respondent NLRC
cited La Naval Drug Corporation vs. Court of
Appeals 24 in holding that private respondent is not
in estopel. Thus,
The operation of the principle of estoppel on the
question of jurisdiction seemingly depends upon
whether the lower court actually had jurisdiction or
not. If it had no jurisdiction, but the case was tried
and decided upon the theory that it had jurisdiction,
the parties are not barred, on appeal, from assailing
such jurisdiction, for the same "must exist as a
matter of law, and may not be conferred by consent
of the parties or by estoppel" (5 C.J.S., 861-
863). However, if the lower court had
jurisdiction, and the case was heard and decided
upon a given theory, such, for instance, as that the
court had no jurisdiction, the party who induced it to
adopt such theory will not be permitted, on appeal,
to assume an inconsistent position — that the lower
court had jurisdiction. Here, the principle of estoppel
applies. The rule that jurisdiction is conferred by law,
and does not depend upon the will of the parties, has
no bearing thereon. (Emphasis ours)
Again, the respondent NLRC has erroneously
interpreted our ruling in the La Naval case. Under
the said ruling, estoppel lies in this case. Private
respondent is stopped from questioning the
jurisdiction of the Labor Arbiter before the
respondent NLRC having actively participated in the
proceedings before the former. At no time before or
during the trial on the merits did private respondent
assail the jurisdiction of the Labor Arbiter. Private
respondent took the cue only from the preliminary
statement in the decision of the Labor Arbiter, which
was a mere obiter, and raised the issue of
jurisdiction before the Commission. It was then too
late. Estoppel had set in.
Turning now to the merits of the case, We uphold the
ruling of the Labor Arbiter that petitioner was illegally
dismissed.
The requisites of a valid dismissal are (1) the
dismissal must be for any of the causes expressed
in the Article 282 of the Labor Code, 25 and (2) the
employee must be given an opportunity to be heard
and to defend himself.26 The substantive and
procedural laws must be strictly complied with
before a worker can be dismissed from his
employment because what is at stake is not only the
employee's position but his livelihood. 27
Petitioner's dismissal was grounded on culpade
carelessness, negligence and failure to follow
specific instruction(s) or established procedure(s)
under OSDA 1.11; and, having forged or falsified
official document(s) under OSDA 2.01.
Private respondent blames petitioner for failure to
follow established procedure in the hotel on a
guest's request for long distance calls. Petitioner,
however, explained that the usual or established
procedures are not followed by the operators and
hotel employees when circumstances warrant. For
instance, the RLDC forms and the deposits are
brought by the page boy directly to the operators
instead of the cashiers if the latter are busy and
cannot attend to the same. Furthermore, she avers
that the telephone operators are not concious of the
serial numbers in the RLDCs and at times, the used
RLDCs are recycled. Even the page boys do not
actually check the serial numbers of all RLDCs in
one batch, except for the first and the last.
On the charge of taking of the money by petitioner,
it is to be noted that the second P500.00 deposit
made by the Japanese guest Ieda was later
discovered to be inserted in the folder for cancelled
calls with deposit and official receipts. Thus, there
exists no basis for personal appropriation by the
petitioner of the money involved. Another reason is
the alleged tampering of RLDC No. 862406. 28 While
petitioner and her co-operator Loleng admitted that
they indeed altered the date appearing therein from
February 15, 1990 to February 13, the same was
purposely made to reflect the true date of the
transaction without any malice whatsoever on their
part.
As pointed out by Labor Arbiter Oswald b. Lorenzo,
thus:
The specifics of the grounds relied by respondent
hotel's dismissal of complainant are those stated in
Annex "F" of the latter's POSITION PAPER, which is
the Notice of Dismissal, notably:
1. OSDA 2.01 — Forging, falsifying official
documents(s)
2. OSDA 1.11 — Culpable negligence or failure to
follow specific instruction(s) or established
procedure(s)
On this score, we are persuated by the
complainant's arguments that under OSDA 1.11,
infractions of this sort is not without qualifications,
which is, that the alleged culpable carelessness,
negligence or failure to follow instruction(s) or
established procedure(s), RESULTING IN LOSS
OR DAMAGE TO COMPANY PROPERTY. From
the facts obtaining in this case, there is no quantum
of proof whatsoever, except the general allegations
in respondent's POSITION PAPER and other
pleadings that loss or damage to company property
resulted from the charged infraction. To our mind,
this is where labor tribunals should come in and help
correct interpretation of company policies which in
the enforcement thereof wreaks havoc to the
constitutional guarantee of security of tenure.
Apparently, the exercise of little flexibility by
complainant and co-employees which is predicated
on good faith should not be taken against them and
more particularly against the complainant herein. In
this case, to sustain the generalized charge of
respondent hotel under OSDA 1.11 would unduly be
sanctioning the imposition of too harsh a penalty —
which is dismissal.
In the same tenor, the respondent's charge under
OSDA 1.11 on the alleged falsification of private
document is also with a qualification, in that the
alleged act of falsification must have been done "IN
SUCH A WAY AS TO MISLEAD THE USER(S)
THEREOF." Again, based on the facts of the
complained act, there appeared no one to have been
misled on the change of date from RLDC #862406
FROM 15 TO 13 February 1990.
As a matter of fact, we are in agreement with the
jurisprudence cited by VIRGILIO M. PATAG, the 2nd
Asst. City Prosecutor of the City of Manila, who
exculpated complainant MANEJA from the charges
of falsification of private documents and qualified
theft under IS No. 90-11083 and marked Annex. "H"
of complainant's POSITION PAPER, when he ruled
that an altercation which makes the document speak
the truth cannot be the foundation of a criminal
action. As to the charge of qualified theft, we too are
of the finding, like the city prosecutor above-
mentioned that there was no evidence on the part of
MANEJA to have unlawfully taken the P500.00
either from the hotel or from guest IEDA on 13
February 1990 and moreover, we too, find no
evidence that complainant MANEJA had intention to
profit thereby nor had misappropriated the P500.00
in question. 29
Given the factual circumstances of the case, we
cannot deduce dishonesty from the act and omission
of petitioner. Our norms of social justice demand that
we credit employees with the presumption of good
faith in the performance of their duties, 30 especially
petitioner who has served private respondent since
1985 up to 1990 without any tinge of dishonesty and
was even named "Model Employee" for the month of
April, 1989. 31
Petitioner has been charged with a very serious
offense — dishonesty. This can irreparably wreck
her life as an employee for no employer will take to
its bosom a dishonest employee. Dismissal is the
supreme penalty that can be meted to an employee
and its imposition cannot be justified where the
evidence is ambivalent. 32 It must, therefore, be
based on a clear and not on an ambiguous or
ambivalent ground. Any ambiguity or ambivalence
on the ground relied upon by an employer in
terminating the services of an employee denies the
latter his full right to contest its legality. Fairness
cannot countenance such ambiguity or
33
ambivalence.
An employer can terminate the services of an
employee only for valid and just causes which must
be supported by clear and convincing evidence. The
employer has the burden of proving that the
dismissal was indeed for a valid and just
cause. 34 Failure to do so result in a finding that the
dismissal was
35
unjustified.
Finding that there was no just cause for dismissal of
petitioner, we now determine if the rudiments of due
process have duly accorded to her.
Well-settled is the dictum that the twin requirements
of notice and hearing constitute the essential
elements of due process in the dismissal of
employees. It is a cardinal rule in our jurisdiction that
the employer must furnish the employee with two
written notice before the termination of employment
can be effected: (a) the first apprises the employee
of the particular acts or omissions for which his
dismissal is sought; and, (b) the second informs the
employee of the employer's decision to dismiss him.
The requirement of a hearing, on the other hand, is
complied with as long as there was an opportunity to
be heard, and not necessarily that an actual hearing
was conducted. 36
In the case at bar, petitioner and her co-operator
Loleng were issued a memorandum on March 7,
1990. On March 11, 1990, they submitted their
written explanation thereto. On March 20, 1990, a
written report was made with a recommendation that
the offences committed by them were covered by
OSDA 1.11 and 2.01. Thereafter, on March 23,
1990, petitioner was served with a notice of
dismissal for said violations effective April 1, 1990.
An examination of the record reveals that no hearing
was ever conducted by private respondent before
petitioner was dismissed. While it may be true that
petitioner submitted a written explanation, no
hearing was actually conducted before her
employment was terminated. She was not accorded
the opportunity to fully defend herself.
Consultations or conferences may not be a
substitute for the actual holding of a hearing. Every
opportunity and assistance must be accorded to the
employee by the management to enable hom to
prepare adequately for his defense, including legal
representation. 37 Considering that petitioner denied
having allegedly taken the second P500.00 deposit
of the Japanese guest which was eventually found;
and, having made the alteration of the date on the
second RLDC merely to reflect the true date of the
transaction, these circumstances should have at
least warranted a separate hearing to enable
petitioner to fully ventilate her side. Absent such
hearing, petitioner's right to due process was clearly
violated. 38
It bears stressing that a worker's employment is
properly in the constitutional sense. He cannot be
deprived of his work without due process of
law. Substantive due process mandates that an
employee can only be dismissed based on just or
authorized causes. Procedural due
process requires further that he can only be
dismissed after he has been given an opportunity to
be heard. The import of due process necessitates
the compliance of these two aspects.
Accordingly, we hold that the labor arbiter did not err
in awarding full backwages in view of this finding that
petitioner was dismissed without just cause and
without due process.
We ruled in the case of Bustamante
39
vs. NLRC that the amount of backwages to be
awarded to an illegally dismissed employee must be
computed from the time he was dismissed to the
time he is actually reinstated, without deducting the
earnings he derived elsewhere pending the
resolution of the case.
Petitioner is likewise entitled to the thirteenth-month
pay. Presidential Decree No.851, as amended by
Memorandum Order No. 28, provides that
employees are entitled to the thirteenth-month pay
benefit regardless of their designation and
irrespective of the method by which their wages are
paid. 40
The award of moral and exemplary damages to
petitioner is also warranted where there is lack of
due process in effecting the dismissal.
Where the termination of the services of an
employee is attended by fraud or bad faith on the
part of the employer, as when the latter knowingly
made false allegations of a supposed valid cause
when none existed, moral and exemplary damages
may be awarded in favor of the former. 41
The anti-social and oppressive abuse of its right to
investigate and dismiss its employees constitute a
violation of Article 1701 of the New Civil Code which
prohibits acts of oppression by either capital or labor
against the other, and Article 21 on human relations.
The grant of moral damages to the employees by
reason of such conduct on the part of the company
is sanctioned by Article 2219, No. 10 of the Civil
Code, which allows recovery of such damages in
actions reffered to in Article 21. 42
The award of attorney's fees amounting to ten
percent (10%) of the total award by the labor arbiter
is justified under Article 111 of the Labor Code.
WHEREFORE, premises considered, the petition is
GRANTED and the assailed resolutions of the
respondent National Labor Relations Commission
dated June 3, 1994 and October 20, 1995 are
hereby REVERSED AND SET ASIDE. The decision
dated May 29, 1992 of the Labor Arbiter is therefore
REINSTATED.
SO ORDERED.