SECOND DIVISION
[G.R. No. 162994. September 17, 2004]
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.
TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES,
INC. respondent.
RESOLUTION
TINGA, J.:
Confronting the Court in this petition is a novel question, with constitutional
overtones, involving the validity of the policy of a pharmaceutical company
prohibiting its employees from marrying employees of any competitor company.
This is a Petition for Review on Certiorari assailing the Decision[1] dated May 19,
2003 and the Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R.
SP No. 62434.[2]
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome
Philippines, Inc. (Glaxo) as medical representative on October 24, 1995, after
Tecson had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates, among
others, that he agrees to study and abide by existing company rules; to disclose to
management any existing or future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies and should management
find that such relationship poses a possible conflict of interest, to resign from the
company.
The Employee Code of Conduct of Glaxo similarly provides that an employee is
expected to inform management of any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug
companies. If management perceives a conflict of interest or a potential conflict
between such relationship and the employees employment with the company, the
management and the employee will explore the possibility of a transfer to another
department in a non-counterchecking position or preparation for employment
outside the company after six months.
Tecson was initially assigned to market Glaxos products in the Camarines Sur-
Camarines Norte sales area.
Subsequently, Tecson entered into a romantic relationship with Bettsy, an
employee of Astra Pharmaceuticals[3] (Astra), a competitor of Glaxo. Bettsy was
Astras Branch Coordinator in Albay. She supervised the district managers and
medical representatives of her company and prepared marketing strategies for
Astra in that area.
Even before they got married, Tecson received several reminders from his District
Manager regarding the conflict of interest which his relationship with Bettsy might
engender. Still, love prevailed, and Tecson married Bettsy in September 1998.
In January 1999, Tecsons superiors informed him that his marriage to Bettsy gave
rise to a conflict of interest. Tecsons superiors reminded him that he and Bettsy
should decide which one of them would resign from their jobs, although they told
him that they wanted to retain him as much as possible because he was performing
his job well.
Tecson requested for time to comply with the company policy against entering into
a relationship with an employee of a competitor company. He explained that Astra,
Bettsys employer, was planning to merge with Zeneca, another drug company;
and Bettsy was planning to avail of the redundancy package to be offered by
Astra. With Bettsys separation from her company, the potential conflict of interest
would be eliminated. At the same time, they would be able to avail of the attractive
redundancy package from Astra.
In August 1999, Tecson again requested for more time resolve the problem. In
September 1999, Tecson applied for a transfer in Glaxos milk division, thinking
that since Astra did not have a milk division, the potential conflict of interest would
be eliminated. His application was denied in view of Glaxos least-movement-
possible policy.
In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-
Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his
request was denied.
Tecson sought Glaxos reconsideration regarding his transfer and brought the
matter to Glaxos Grievance Committee. Glaxo, however, remained firm in its
decision and gave Tescon until February 7, 2000 to comply with the transfer order.
Tecson defied the transfer order and continued acting as medical representative
in the Camarines Sur-Camarines Norte sales area.
During the pendency of the grievance proceedings, Tecson was paid his salary,
but was not issued samples of products which were competing with similar
products manufactured by Astra. He was also not included in product conferences
regarding such products.
Because the parties failed to resolve the issue at the grievance machinery level,
they submitted the matter for voluntary arbitration. Glaxo offered Tecson a
separation pay of one-half () month pay for every year of service, or a total
of P50,000.00 but he declined the offer. On November 15, 2000, the National
Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid
Glaxos policy on relationships between its employees and persons employed with
competitor companies, and affirming Glaxos right to transfer Tecson to another
sales territory.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing
the NCMB Decision.
On May 19, 2003, the Court of Appeals promulgated its Decision denying
the Petition for Review on the ground that the NCMB did not err in rendering
its Decision. The appellate court held that Glaxos policy prohibiting its employees
from having personal relationships with employees of competitor companies is a
valid exercise of its management prerogatives.[4]
Tecson filed a Motion for Reconsideration of the appellate courts Decision, but the
motion was denied by the appellate court in its Resolution dated March 26, 2004.[5]
Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals
erred in affirming the NCMBs finding that the Glaxos policy prohibiting its
employees from marrying an employee of a competitor company is valid; and (ii)
the Court of Appeals also erred in not finding that Tecson was constructively
dismissed when he was transferred to a new sales territory, and deprived of the
opportunity to attend products seminars and training sessions.[6]
Petitioners contend that Glaxos policy against employees marrying employees of
competitor companies violates the equal protection clause of the Constitution
because it creates invalid distinctions among employees on account only of
marriage. They claim that the policy restricts the employees right to marry.[7]
They also argue that Tecson was constructively dismissed as shown by the
following circumstances: (1) he was transferred from the Camarines Sur-
Camarines Norte sales area to the Butuan-Surigao-Agusan sales area, (2) he
suffered a diminution in pay, (3) he was excluded from attending seminars and
training sessions for medical representatives, and (4) he was prohibited from
promoting respondents products which were competing with Astras products.[8]
In its Comment on the petition, Glaxo argues that the company policy prohibiting
its employees from having a relationship with and/or marrying an employee of a
competitor company is a valid exercise of its management prerogatives and does
not violate the equal protection clause; and that Tecsons reassignment from the
Camarines Norte-Camarines Sur sales area to the Butuan City-Surigao City and
Agusan del Sur sales area does not amount to constructive dismissal.[9]
Glaxo insists that as a company engaged in the promotion and sale of
pharmaceutical products, it has a genuine interest in ensuring that its employees
avoid any activity, relationship or interest that may conflict with their responsibilities
to the company. Thus, it expects its employees to avoid having personal or family
interests in any competitor company which may influence their actions and
decisions and consequently deprive Glaxo of legitimate profits. The policy is also
aimed at preventing a competitor company from gaining access to its secrets,
procedures and policies.[10]
It likewise asserts that the policy does not prohibit marriage per se but only
proscribes existing or future relationships with employees of competitor
companies, and is therefore not violative of the equal protection clause. It
maintains that considering the nature of its business, the prohibition is based on
valid grounds.[11]
According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra, posed a
real and potential conflict of interest. Astras products were in direct competition
with 67% of the products sold by Glaxo. Hence, Glaxos enforcement of the
foregoing policy in Tecsons case was a valid exercise of its management
prerogatives.[12] In any case, Tecson was given several months to remedy the
situation, and was even encouraged not to resign but to ask his wife to resign from
Astra instead.[13]
Glaxo also points out that Tecson can no longer question the assailed company
policy because when he signed his contract of employment, he was aware that
such policy was stipulated therein. In said contract, he also agreed to resign from
respondent if the management finds that his relationship with an employee of a
competitor company would be detrimental to the interests of Glaxo.[14]
Glaxo likewise insists that Tecsons reassignment to another sales area and his
exclusion from seminars regarding respondents new products did not amount to
constructive dismissal.
It claims that in view of Tecsons refusal to resign, he was relocated from the
Camarines Sur-Camarines Norte sales area to the Butuan City-Surigao City and
Agusan del Sur sales area. Glaxo asserts that in effecting the reassignment, it also
considered the welfare of Tecsons family. Since Tecsons hometown was in
Agusan del Sur and his wife traces her roots to Butuan City, Glaxo assumed that
his transfer from the Bicol region to the Butuan City sales area would be favorable
to him and his family as he would be relocating to a familiar territory and minimizing
his travel expenses.[15]
In addition, Glaxo avers that Tecsons exclusion from the seminar concerning the
new anti-asthma drug was due to the fact that said product was in direct
competition with a drug which was soon to be sold by Astra, and hence, would
pose a potential conflict of interest for him. Lastly, the delay in Tecsons receipt of
his sales paraphernalia was due to the mix-up created by his refusal to transfer to
the Butuan City sales area (his paraphernalia was delivered to his new sales area
instead of Naga City because the supplier thought he already transferred to
Butuan).[16]
The Court is tasked to resolve the following issues: (1) Whether the Court of
Appeals erred in ruling that Glaxos policy against its employees marrying
employees from competitor companies is valid, and in not holding that said policy
violates the equal protection clause of the Constitution; (2) Whether Tecson was
constructively dismissed.
The Court finds no merit in the petition.
The stipulation in Tecsons contract of employment with Glaxo being questioned by
petitioners provides:
10. You agree to disclose to management any existing or future relationship you
may have, either by consanguinity or affinity with co-employees or employees of
competing drug companies. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily from the Company as a
matter of Company policy.
[17]
The same contract also stipulates that Tecson agrees to abide by the existing
company rules of Glaxo, and to study and become acquainted with such
policies.[18] In this regard, the Employee Handbook of Glaxo expressly informs its
employees of its rules regarding conflict of interest:
1. Conflict of Interest
Employees should avoid any activity, investment relationship, or interest that may
run counter to the responsibilities which they owe Glaxo Wellcome.
Specifically, this means that employees are expected:
a. To avoid having personal or family interest, financial or otherwise, in any
competitor supplier or other businesses which may consciously or unconsciously
influence their actions or decisions and thus deprive Glaxo Wellcome of legitimate
profit.
b. To refrain from using their position in Glaxo Wellcome or knowledge of Company
plans to advance their outside personal interests, that of their relatives, friends and
other businesses.
c. To avoid outside employment or other interests for income which would impair
their effective job performance.
d. To consult with Management on such activities or relationships that may lead to
conflict of interest.
1.1. Employee Relationships
Employees with existing or future relationships either by consanguinity or affinity
with co-employees of competing drug companies are expected to disclose such
relationship to the Management. If management perceives a conflict or potential
conflict of interest, every effort shall be made, together by management and the
employee, to arrive at a solution within six (6) months, either by transfer to another
department in a non-counter checking position, or by career preparation toward
outside employment after Glaxo Wellcome.Employees must be prepared for
possible resignation within six (6) months, if no other solution is feasible.[19]
No reversible error can be ascribed to the Court of Appeals when it ruled that
Glaxos policy prohibiting an employee from having a relationship with an employee
of a competitor company is a valid exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information from competitors,
especially so that it and Astra are rival companies in the highly competitive
pharmaceutical industry.
The prohibition against personal or marital relationships with employees of
competitor companies upon Glaxos employees is reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy, Glaxo only
aims to protect its interests against the possibility that a competitor company will
gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be denied.
No less than the Constitution recognizes the right of enterprises to adopt and
enforce such a policy to protect its right to reasonable returns on investments and
to expansion and growth.[20] Indeed, while our laws endeavor to give life to the
constitutional policy on social justice and the protection of labor, it does not mean
that every labor dispute will be decided in favor of the workers. The law also
recognizes that management has rights which are also entitled to respect and
enforcement in the interest of fair play.[21]
As held in a Georgia, U.S.A case,[22] it is a legitimate business practice to guard
business confidentiality and protect a competitive position by even-handedly
disqualifying from jobs male and female applicants or employees who are married
to a competitor. Consequently, the court ruled than an employer that discharged
an employee who was married to an employee of an active competitor did not
violate Title VII of the Civil Rights Act of 1964.[23] The Court pointed out that the
policy was applied to men and women equally, and noted that the employers
business was highly competitive and that gaining inside information would
constitute a competitive advantage.
The challenged company policy does not violate the equal protection clause of the
Constitution as petitioners erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed only to the state or those
acting under color of its authority.[24] Corollarily, it has been held in a long array of
U.S. Supreme Court decisions that the equal protection clause erects no shield
against merely private conduct, however, discriminatory or wrongful.[25] The only
exception occurs when the state[26] in any of its manifestations or actions has been
found to have become entwined or involved in the wrongful private
conduct.[27] Obviously, however, the exception is not present in this
case. Significantly, the company actually enforced the policy after repeated
requests to the employee to comply with the policy. Indeed, the application of the
policy was made in an impartial and even-handed manner, with due regard for the
lot of the employee.
In any event, from the wordings of the contractual provision and the policy in its
employee handbook, it is clear that Glaxo does not impose an absolute prohibition
against relationships between its employees and those of competitor
companies. Its employees are free to cultivate relationships with and marry
persons of their own choosing. What the company merely seeks to avoid is a
conflict of interest between the employee and the company that may arise out of
such relationships. As succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is not
aimed at restricting a personal prerogative that belongs only to the
individual. However, an employees personal decision does not detract the
employer from exercising management prerogatives to ensure maximum profit and
business success. . . [28]
The Court of Appeals also correctly noted that the assailed company policy which
forms part of respondents Employee Code of Conduct and of its contracts with its
employees, such as that signed by Tecson, was made known to him prior to his
employment. Tecson, therefore, was aware of that restriction when he signed his
employment contract and when he entered into a relationship with Bettsy. Since
Tecson knowingly and voluntarily entered into a contract of employment with
Glaxo, the stipulations therein have the force of law between them and, thus,
should be complied with in good faith.[29] He is therefore estopped from questioning
said policy.
The Court finds no merit in petitioners contention that Tecson was constructively
dismissed when he was transferred from the Camarines Norte-Camarines Sur
sales area to the Butuan City-Surigao City-Agusan del Sur sales area, and when
he was excluded from attending the companys seminar on new products which
were directly competing with similar products manufactured by Astra. Constructive
dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or unlikely; when there
is a demotion in rank or diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the
employee.[30] None of these conditions are present in the instant case. The record
does not show that Tecson was demoted or unduly discriminated upon by reason
of such transfer. As found by the appellate court, Glaxo properly exercised its
management prerogative in reassigning Tecson to the Butuan City sales area:
. . . In this case, petitioners transfer to another place of assignment was merely in
keeping with the policy of the company in avoidance of conflict of interest, and thus
validNote that [Tecsons] wife holds a sensitive supervisory position as Branch
Coordinator in her employer-company which requires her to work in close
coordination with District Managers and Medical Representatives. Her duties
include monitoring sales of Astra products, conducting sales drives, establishing
and furthering relationship with customers, collection, monitoring and managing
Astras inventoryshe therefore takes an active participation in the market war
characterized as it is by stiff competition among pharmaceutical
companies.Moreover, and this is significant, petitioners sales territory covers
Camarines Sur and Camarines Norte while his wife is supervising a branch of her
employer in Albay. The proximity of their areas of responsibility, all in the same
Bicol Region, renders the conflict of interest not only possible, but actual, as
learning by one spouse of the others market strategies in the region would be
inevitable. [Managements] appreciation of a conflict of interest is therefore not
merely illusory and wanting in factual basis[31]
In Abbott Laboratories (Phils.), Inc. v. National Labor Relations
Commission,[32] which involved a complaint filed by a medical representative
against his employer drug company for illegal dismissal for allegedly terminating
his employment when he refused to accept his reassignment to a new area, the
Court upheld the right of the drug company to transfer or reassign its employee in
accordance with its operational demands and requirements. The ruling of the Court
therein, quoted hereunder, also finds application in the instant case:
By the very nature of his employment, a drug salesman or medical representative
is expected to travel. He should anticipate reassignment according to the demands
of their business. It would be a poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for opening or expansion or
to areas where the need for pushing its products is great. More so if such
reassignments are part of the employment contract.[33]
As noted earlier, the challenged policy has been implemented by Glaxo impartially
and disinterestedly for a long period of time. In the case at bar, the record shows
that Glaxo gave Tecson several chances to eliminate the conflict of interest brought
about by his relationship with Bettsy. When their relationship was still in its initial
stage, Tecsons supervisors at Glaxo constantly reminded him about its effects on
his employment with the company and on the companys interests. After Tecson
married Bettsy, Glaxo gave him time to resolve the conflict by either resigning from
the company or asking his wife to resign from Astra. Glaxo even expressed its
desire to retain Tecson in its employ because of his satisfactory performance and
suggested that he ask Bettsy to resign from her company instead.Glaxo likewise
acceded to his repeated requests for more time to resolve the conflict of interest.
When the problem could not be resolved after several years of waiting, Glaxo was
constrained to reassign Tecson to a sales area different from that handled by his
wife for Astra. Notably, the Court did not terminate Tecson from employment but
only reassigned him to another area where his home province, Agusan del Sur,
was included. In effecting Tecsons transfer, Glaxo even considered the welfare of
Tecsons family. Clearly, the foregoing dispels any suspicion of unfairness and bad
faith on the part of Glaxo.[34]
WHEREFORE, the Petition is DENIED for lack of merit. Costs against petitioners.
SO ORDERED.
[1]
Penned by Associate Justice Rosmari D. Carandang and concurred in by Justices Conrado M.
Vasquez, Jr. and Mercedes Gozo-Dadole. Rollo,pp. 22-32.
[2]
Duncan Association of Detailman-PTGWO and Pedro A. Tecson, petitioners, v. Glaxo
Wellcome Philippines, Inc., respondent.
[3]
Now Astra Zeneca Pharmaceuticals, Inc.
[4]
Rollo, pp. 28-32.
[5]
Id. at 55.
[6]
Id. at 9.
[7]
Id. at 9-11.
[8]
Id. at 14-17.
[17]
See Decision of the Court of Appeals; Rollo, pp. 23-24.
[18]
Item No. 6 of Tecsons employment contract cited by the Court of Appeals in its Decision, Id.
[19]
Excerpt of Glaxos Employee Handbook, Annex A of respondents Comment, Id. at 114.
[20]
Section 3, Article XIII of the Constitution provides:
The State shall regulate the relations between workers and employers, recognizing the right of
labor to its just share in the fruits of production and the right of enterprises to reasonable returns
on investments, and to expansion and growth.
[21]
Sta. Catalina College v. National Labor Relations Commission, G.R. No. 144483, November
19, 2003.
[22]
Emory v. Georgia Hospital Service Association (1971), DC Ga., 4 CCH EPD 7785, 4 BNA FEP
Cas 891, affd (CA5) 446 F2d 897, 4 CCH EPD 7786; Cited 45 Am Jr 2d Sec. 469.
[23]
42 USCS 2000e2002e17. Title VII prohibits certain employers, employment agencies, labor
organizations, and joint labor-management training committees from discriminating against
applicants and employees on the basis of race or color, religion, sex, national origin, or opposition
to discriminatory practices.
There is no similar legislation in the Philippines.
[24]
Avery v. Midland County, 390 US 474, 20 L. Ed 2d 45, 88 S Ct 1114, on remand (Tex) 430
SW2d 487; Cooper v. Aaron, 358 US 1, 3 L Ed 2d 5, 78 S Ct 1401.
[25]
District of Columbia v. Carter, 409 US 418, 34 L.Ed.2d 613, 93 S. Ct. 602, 35 L.Ed.2d 694, 93
S. Ct. 1411; Moose Lodge No. 107 v. Irvis, 407 US 163, 32 L.Ed.2d 627, 92 S. Ct. 1965; United
States v. Price, 383 US 787, 16 L.Ed. 2d 267, 86 S. Ct. 1152; Burton v. Wilmington Parking
Authority, 365 US 715, 6 L.Ed.2d 45, 81 S. Ct. 856; Shelley v. Kraemer, 334 US 1, 92 L.Ed.1161,
68 S. Ct. 836, 3 ALR2d 441; United States v. Classic, 313 US 299, 85 L.Ed 1368, 61 S. Ct. 1031,
86 L.Ed 565, 62 S. Ct. 51; Nixon v. Condon, 286 US 73, 76 L.Ed. 984, 52 S. Ct. 484, 88 ALR 458;
Iowa-Des Moines Nat. Bank v. Bennet, 284 US 239, 76 L.Ed 265, 52 S. Ct. 133;
Corrigan v. Buckley, 271 US 323, 70 L.Ed. 969, 46 S. Ct. 521; U.S. Adickes v. S. H. Kress & Co.,
N.Y., 90 S. Ct. 1598, 398 U.S. 144, 26 L. Ed. 2d 142.
[26]
The equal protection clause contained in the Fourteenth Amendment of the U.S. Constitution
is a restriction on the state governments and operates exclusively upon them. It does not extend
to authority exercised by the Government of the United States. 16 A AM JUR 2d 742.
[27]
Gilmore v. Montgomery, 417 US 556, 41 L Ed 2d 304, 94 S Ct 2416; Evans v. Newton, 382 US
296, 15 L Ed 2d 373, 86 S Ct 486; Anderson v. Martin, 375 US 399, 11 L Ed 2d 430, 84 S Ct 454;
Peterson v. Greenville, 373 US 244, 10 L Ed 2d 323, 83 S Ct 1119; Burton v. Wilmington Parking
Authority, supra note 25.
[28]
Decision of the Court of Appeals, Rollo, p. 28.
[29]
Article 1159, Civil Code. See National Sugar Trading and/or the Sugar Regulatory
Administration v. Philippine National Bank, G.R. No. 151218, January 18, 2003, 396 SCRA
528; Pilipinas Hino, Inc. v. Court of Appeals, G.R. No. 126570, August 18, 2000, 338 SCRA 355.
[30]
Leonardo v. National Labor Relations Commission, et al., G.R. Nos. 125303, and 126937, June
16, 2000, 333 SCRA 589.
[31]
Rollo, pp. 30-31.
[32]
G.R. No. L-76959, October 12, 1987, 154 SCRA 713.
[33]
Id. at 719.
[34]
Decision of the Court of Appeals, Rollo, pp. 24-27.
THIRD DIVISION ratings were favorably recommended to SNMI. Astorga landed last in the
SMART COMMUNICATIONS, INC., G.R. No. 148132 performance evaluation, thus, she was not recommended by SMART. SMART,
Petitioner, nonetheless, offered her a supervisory position in the Customer Care Department,
- versus - but she refused the offer because the position carried lower salary rank and rate.
REGINA M. ASTORGA, Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But
Respondent. on March 3, 1998, SMART issued a memorandum advising Astorga of the
x---------------------------------------------------x termination of her employment on ground of redundancy, effective April 3,
SMART COMMUNICATIONS, INC., G.R. No. 151079 1998. Astorga received it on March 16, 1998.[7]
Petitioner,
- versus - The termination of her employment prompted Astorga to file a Complaint[8] for
REGINA M. ASTORGA, illegal dismissal, non-payment of salaries and other benefits with prayer for moral
Respondent. and exemplary damages against SMART and Ann Margaret V. Santiago
x---------------------------------------------------x (Santiago). She claimed that abolishing CSMG and, consequently, terminating her
REGINA M. ASTORGA, G.R. No. 151372 employment was illegal for it violated her right to security of tenure. She also
Petitioner, Present: posited that it was illegal for an employer, like SMART, to contract out services
- versus - YNARES-SANTIAGO, J., which will displace the employees, especially if the contractor is an in-house
SMART COMMUNICATIONS, INC. and ANN Chairperson, agency.[9]
MARGARET V. SANTIAGO, AUSTRIA-MARTINEZ, SMART responded that there was valid termination. It argued that Astorga was
Respondents. CORONA,* dismissed by reason of redundancy, which is an authorized cause for termination
NACHURA, and of employment, and the dismissal was effected in accordance with the
REYES, JJ. requirements of the Labor Code. The redundancy of Astorgas position was the
Promulgated: result of the abolition of CSMG and the creation of a specialized and more
x------------------------------------------------------------------------------------x technically equipped SNMI, which is a valid and legitimate exercise of
DECISION management prerogative.[10]
NACHURA, J.: In the meantime, on May 18, 1998, SMART sent a letter to Astorga demanding
For the resolution of the Court are three consolidated petitions for review that she pay the current market value of the Honda Civic Sedan which was given
on certiorari under Rule 45 of the Rules of Court. G.R. No. 148132 assails to her under the companys car plan program, or to surrender the same to the
the February 28, 2000 Decision[1] and the May 7, 2001 Resolution[2] of the Court of company for proper disposition.[11] Astorga, however, failed and refused to do
Appeals (CA) in CA-G.R. SP. No. 53831. G.R. Nos. 151079 and 151372 question either, thus prompting SMART to file a suit for replevin with the Regional Trial
the June 11, 2001 Decision[3] and the December 18, 2001 Resolution[4] in CA-G.R. Court of Makati (RTC) on August 10, 1998.The case was docketed as Civil Case
SP. No. 57065. No. 98-1936 and was raffled to Branch 57.[12]
Regina M. Astorga (Astorga) was employed by respondent Smart Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction; (ii)
Communications, Incorporated (SMART) on May 8, 1997 as District Sales failure to state a cause of action; (iii) litis pendentia; and (iv) forum-
Manager of the Corporate Sales Marketing Group/ Fixed Services Division shopping. Astorga posited that the regular courts have no jurisdiction over the
(CSMG/FSD). She was receiving a monthly salary of P33,650.00. As District Sales complaint because the subject thereof pertains to a benefit arising from an
Manager, Astorga enjoyed additional benefits, namely, annual performance employment contract; hence, jurisdiction over the same is vested in the labor
incentive equivalent to 30% of her annual gross salary, a group life and tribunal and not in regular courts.[13]
hospitalization insurance coverage, and a car plan in the amount of P455,000.00.[5]
Pending resolution of Astorgas motion to dismiss the replevin case, the Labor
In February 1998, SMART launched an organizational realignment to achieve Arbiter rendered a Decision[14] dated August 20, 1998, declaring Astorgas
more efficient operations. This was made known to the employees on February dismissal from employment illegal. While recognizing SMARTs right to abolish any
27, 1998.[6] Part of the reorganization was the outsourcing of the marketing and of its departments, the Labor Arbiter held that such right should be exercised in
sales force. Thus, SMART entered into a joint venture agreement with NTT of good faith and for causes beyond its control. The Arbiter found the abolition of
Japan, and formed SMART-NTT Multimedia, Incorporated (SNMI). Since SNMI CSMG done neither in good faith nor for causes beyond the control of SMART, but
was formed to do the sales and marketing work, SMART abolished the a ploy to terminate Astorgas employment. The Arbiter also ruled that contracting
CSMG/FSD, Astorgas division. out the functions performed by Astorga to an in-house agency like SNMI was
To soften the blow of the realignment, SNMI agreed to absorb the CSMG illegal, citing Section 7(e), Rule VIII-A of the Rules Implementing the Labor Code.
personnel who would be recommended by SMART. SMART then conducted a Accordingly, the Labor Arbiter ordered:
performance evaluation of CSMG personnel and those who garnered the highest
WHEREFORE, judgment is hereby rendered declaring the dismissal of [Astorga]
to be illegal and unjust. [SMART and Santiago] are hereby ordered to:
1. Reinstate [Astorga] to [her] former position or to a substantially equivalent
position, without loss of seniority rights and other privileges, with full backwages,
inclusive of allowances and other benefits from the time of [her] dismissal to the
date of reinstatement, which computed as of this date, are as follows:
(a) Astorga
BACKWAGES; (P33,650.00 x 4 months) = P134,600.00
UNPAID SALARIES (February 15, 1998- April 3, 1998)
February 15-28, 1998 = P 16,823.00
March 1-31, [1998] = P 33,650.00
April 1-3, 1998 = P 3,882.69
CAR MAINTENANCE ALLOWANCE
(P2,000.00 x 4) = P 8,000.00
FUEL ALLOWANCE (300 liters/mo. x
4 mos. at P12.04/liter) = P 14,457.83
TOTAL = P211,415.52
xxxx
3. Jointly and severally pay moral damages in the amount of P500,000.00 x x x
and exemplary damages in the amount of P300,000.00. x x x
4. Jointly and severally pay 10% of the amount due as attorneys fees.
SO ORDERED.[15]
Subsequently, on March 29, 1999, the RTC issued an Order[16] denying Astorgas
motion to dismiss the replevin case. In so ruling, the RTC ratiocinated that:
Assessing the [submission] of the parties, the Court finds no merit in the motion to
dismiss.
As correctly pointed out, this case is to enforce a right of possession over a
company car assigned to the defendant under a car plan privilege
arrangement.The car is registered in the name of the plaintiff. Recovery thereof via
replevin suit is allowed by Rule 60 of the 1997 Rules of Civil Procedure, which is
undoubtedly within the jurisdiction of the Regional Trial Court.
In the Complaint, plaintiff claims to be the owner of the company car and despite
demand, defendant refused to return said car. This is clearly sufficient statement
of plaintiffs cause of action.
Neither is there forum shopping. The element of litis penden[t]ia does not appear
to exist because the judgment in the labor dispute will not constitute res judicata to
bar the filing of this case.
WHEREFORE, the Motion to Dismiss is hereby denied for lack of merit.SO
ORDERED.[17]
Astorga filed a motion for reconsideration, but the RTC denied it on June 18,
1999.[18]
Astorga elevated the denial of her motion via certiorari to the CA, which, in its
February 28, 2000 Decision,[19] reversed the RTC ruling.Granting the petition and,
consequently, dismissing the replevin case, the CA held that the case is
intertwined with Astorgas complaint for illegal dismissal; thus, it is the labor tribunal
that has rightful jurisdiction over the complaint. SMARTs motion for
reconsideration having been denied,[20] it elevated the case to this Court, now
docketed as G.R. No. 148132.
Meanwhile, SMART also appealed the unfavorable ruling of the Labor Arbiter in
the illegal dismissal case to the National Labor Relations Commission (NLRC). In
its September 27, 1999 Decision,[21] the NLRC sustained Astorgas
dismissal. Reversing the Labor Arbiter, the NLRC declared the abolition of CSMG
and the creation of SNMI to do the sales and marketing services for SMART a valid
organizational action. It overruled the Labor Arbiters ruling that SNMI is an in-
house agency, holding that it lacked legal basis. It also declared that contracting,
subcontracting and streamlining of operations for the purpose of increasing
efficiency are allowed under the law. The NLRC further found erroneous the Labor
Arbiters disquisition that redundancy to be valid must be impelled by economic
reasons, and upheld the redundancy measures undertaken by SMART.
The NLRC disposed, thus:
WHEREFORE, the Decision of the Labor Arbiter is hereby reversed and set
aside. [Astorga] is further ordered to immediately return the company vehicle
assigned to her. [Smart and Santiago] are hereby ordered to pay the final wages
of [Astorga] after [she] had submitted the required supporting papers therefor.
SO ORDERED.[22]
Astorga filed a motion for reconsideration, but the NLRC denied it on December
21, 1999.[23]
Astorga then went to the CA via certiorari. On June 11, 2001, the CA rendered a
Decision[24] affirming with modification the resolutions of the NLRC. In gist, the CA
agreed with the NLRC that the reorganization undertaken by SMART resulting in
the abolition of CSMG was a legitimate exercise of management prerogative. It
rejected Astorgas posturing that her non-absorption into SNMI was tainted with
bad faith. However, the CA found that SMART failed to comply with the mandatory
one-month notice prior to the intended termination. Accordingly, the CA imposed
a penalty equivalent to Astorgas one-month salary for this non-compliance. The
CA also set aside the NLRCs order for the return of the company vehicle holding
that this issue is not essentially a labor concern, but is civil in nature, and thus,
within the competence of the regular court to decide. It added that the matter had
not been fully ventilated before the NLRC, but in the regular court.
Astorga filed a motion for reconsideration, while SMART sought partial
reconsideration, of the Decision. On December 18, 2001, the CA resolved the
motions, viz.:
WHEREFORE, [Astorgas] motion for reconsideration is hereby PARTIALLY
GRANTED. [Smart] is hereby ordered to pay [Astorga] her backwages from 15
February 1998 to 06 November 1998. [Smarts] motion for reconsideration is
outrightly DENIED.
SO ORDERED.[25]
Astorga and SMART came to us with their respective petitions for review assailing
the CA ruling, docketed as G.R Nos. 151079 and 151372. On February 27, 2002,
this Court ordered the consolidation of these petitions with G.R. No. 148132.[26]
In her Memorandum, Astorga argues:
I THAT ASTORGA CAN NO LONGER BE CONSIDERED AS AN EMPLOYEE OF
THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF ASTORGAS
DISMISSAL DESPITE THE FACT THAT HER DISMISSAL WAS EFFECTED IN
CLEAR VIOLATION OF THE CONSTITUTIONAL RIGHT TO SECURITY OF TENURE,
CONSIDERING THAT THERE WAS NO GENUINE GROUND FOR HER DISMISSAL.
II
SMARTS REFUSAL TO REINSTATE ASTORGA DURING THE PENDENCY OF THE
APPEAL AS REQUIRED BY ARTICLE 223 OF THE LABOR CODE, ENTITLES
ASTORGA TO HER SALARIES DURING THE PENDENCY OF THE APPEAL.
III
THE COURT OF APPEALS WAS CORRECT IN HOLDING THAT THE REGIONAL
TRIAL COURT HAS NO JURISDICTION OVER THE COMPLAINT FOR RECOVERY
OF A CAR WHICH ASTORGA ACQUIRED AS PART OF HER EMPLOYEE (sic)
BENEFIT.[27]
On the other hand, Smart in its Memoranda raises the following issues:
I That the action commenced by SMART against Astorga in the RTC of Makati City
WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION
OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH
APPLICABLE DECISION OF THE HONORABLE SUPREME COURT AND HAS SO
FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION WHEN IT RULED THAT SMART DID NOT COMPLY WITH THE
NOTICE REQUIREMENTS PRIOR TO TERMINATING ASTORGA ON THE GROUND
OF REDUNDANCY.
II
WHETHER THE NOTICES GIVEN BY SMART TO ASTORGA AND THE
DEPARTMENT OF LABOR AND EMPLOYMENT ARE SUBSTANTIAL COMPLIANCE
WITH THE NOTICE REQUIREMENTS BEFORE TERMINATION.
III
WHETHER THE RULE ENUNCIATED IN SERRANO VS. NATIONAL LABOR
RELATIONS COMMISSION FINDS APPLICATION IN THE CASE AT BAR
CONSIDERING THAT IN THE SERRANO CASE THERE WAS ABSOLUTELY NO
NOTICE AT ALL.[28]
IV
WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION
OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH
APPLICABLE DECISION[S] OF THE HONORABLE SUPREME COURT AND HAS SO
FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION WHEN IT RULED THAT THE REGIONAL TRIAL COURT DOES NOT
HAVE JURISDICTION OVER THE COMPLAINT FOR REPLEVIN FILED BY SMART
TO RECOVER ITS OWN COMPANY VEHICLE FROM A FORMER EMPLOYEE WHO
WAS LEGALLY DISMISSED.
V property as to require its return to plaintiff, is outside the pale of competence of a
WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE
THAT THE SUBJECT OF THE REPLEVIN CASE IS NOT THE ENFORCEMENT OF
A CAR PLAN PRIVILEGE BUT SIMPLY THE RECOVERY OF A COMPANY CAR.
VI
WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE
SMART UNDER THE LABOR CODE.[29]
The Court shall first deal with the propriety of dismissing the replevin case filed
with the RTC of Makati City allegedly for lack of jurisdiction, which is the issue
raised in G.R. No. 148132.
Replevin is an action whereby the owner or person entitled to repossession of
goods or chattels may recover those goods or chattels from one who has
wrongfully distrained or taken, or who wrongfully detains such goods or chattels. It
is designed to permit one having right to possession to recover property in specie
from one who has wrongfully taken or detained the property.[30] The term may refer
either to the action itself, for the recovery of personalty, or to the provisional remedy
traditionally associated with it, by which possession of the property may be
obtained by the plaintiff and retained during the pendency of the action.[31]
was one for replevin hardly admits of doubt.
In reversing the RTC ruling and consequently dismissing the case for lack of
jurisdiction, the CA made the following disquisition, viz.:
[I]t is plain to see that the vehicle was issued to [Astorga] by [Smart] as part of the
employment package. We doubt that [SMART] would extend [to Astorga] the same
car plan privilege were it not for her employment as district sales manager of the
company. Furthermore, there is no civil contract for a loan between [Astorga] and
[Smart]. Consequently, We find that the car plan privilege is a benefit arising out of
employer-employee relationship. Thus, the claim for such falls squarely within the
original and exclusive jurisdiction of the labor arbiters and the NLRC.[32]
We do not agree. Contrary to the CAs ratiocination, the RTC rightfully assumed
jurisdiction over the suit and acted well within its discretion in denying Astorgas
motion to dismiss. SMARTs demand for payment of the market value of the car or,
in the alternative, the surrender of the car, is not a labor, but a civil, dispute. It
involves the relationship of debtor and creditor rather than employee-employer
relations.[33] As such, the dispute falls within the jurisdiction of the regular courts.
In Basaya, Jr. v. Militante,[34] this Court, in upholding the jurisdiction of the RTC
over the replevin suit, explained:
Replevin is a possessory action, the gist of which is the right of possession in the
plaintiff. The primary relief sought therein is the return of the property in specie
wrongfully detained by another person. It is an ordinary statutory proceeding to
adjudicate rights to the title or possession of personal property. The question of
whether or not a party has the right of possession over the property involved and
if so, whether or not the adverse party has wrongfully taken and detained said
labor tribunal and beyond the field of specialization of Labor Arbiters.
xxxx
The labor dispute involved is not intertwined with the issue in the Replevin
Case. The respective issues raised in each forum can be resolved independently
on the other. In fact in 18 November 1986, the NLRC in the case before it had
issued an Injunctive Writ enjoining the petitioners from blocking the free ingress
and egress to the Vessel and ordering the petitioners to disembark and
vacate. That aspect of the controversy is properly settled under the Labor
Code. So also with petitioners right to picket. But the determination of the question
of who has the better right to take possession of the Vessel and whether petitioners
can deprive the Charterer, as the legal possessor of the Vessel, of that right to
possess in addressed to the competence of Civil Courts.
In thus ruling, this Court is not sanctioning split jurisdiction but defining avenues of
jurisdiction as laid down by pertinent laws.
The CA, therefore, committed reversible error when it overturned the RTC ruling
and ordered the dismissal of the replevin case for lack of jurisdiction.
Having resolved that issue, we proceed to rule on the validity of Astorgas dismissal.
Astorga was terminated due to redundancy, which is one of the authorized causes
for the dismissal of an employee. The nature of redundancy as an authorized
cause for dismissal is explained in the leading case of Wiltshire File Co., Inc. v.
National Labor Relations Commission,[35] viz:
x x x redundancy in an employers personnel force necessarily or even ordinarily
refers to duplication of work. That no other person was holding the same position
that private respondent held prior to termination of his services does not show that
his position had not become redundant. Indeed, in any well organized business
enterprise, it would be surprising to find duplication of work and two (2) or more
people doing the work of one person. We believe that redundancy, for purposes of
the Labor Code, exists where the services of an employee are in excess of what
is reasonably demanded by the actual requirements of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity of a position or
positions may be the outcome of a number of factors, such as overhiring of
workers, decreased volume of business, or dropping of a particular product line or
service activity previously manufactured or undertaken by the enterprise.
The characterization of an employees services as superfluous or no longer
necessary and, therefore, properly terminable, is an exercise of business judgment
on the part of the employer. The wisdom and soundness of such characterization
or decision is not subject to discretionary review provided, of course, that a
violation of law or arbitrary or malicious action is not shown.[36]
Astorga claims that the termination of her employment was illegal and tainted with
bad faith. She asserts that the reorganization was done in order to get rid of
her. But except for her barefaced allegation, no convincing evidence was offered
to prove it. This Court finds it extremely difficult to believe that SMART would enter
into a joint venture agreement with NTT, form SNMI and abolish CSMG/FSD
simply for the sole purpose of easing out a particular employee, such as
Astorga. Moreover, Astorga never denied that SMART offered her a supervisory
position in the Customer Care Department, but she refused the offer because the
position carried a lower salary rank and rate. If indeed SMART simply wanted to
get rid of her, it would not have offered her a position in any department in the
enterprise.
Astorga also states that the justification advanced by SMART is not true because
there was no compelling economic reason for redundancy. But contrary to her
claim, an employer is not precluded from adopting a new policy conducive to a
more economical and effective management even if it is not experiencing
economic reverses. Neither does the law require that the employer should suffer
financial losses before he can terminate the services of the employee on the
ground of redundancy. [37]
We agree with the CA that the organizational realignment introduced by SMART,
which culminated in the abolition of CSMG/FSD and termination of Astorgas
employment was an honest effort to make SMARTs sales and marketing
departments more efficient and competitive. As the CA had taken pains to
elucidate:
x x x a careful and assiduous review of the records will yield no other conclusion
than that the reorganization undertaken by SMART is for no purpose other than its
declared objective as a labor and cost savings device. Indeed, this Court finds no
fault in SMARTs decision to outsource the corporate sales market to SNMI in order
to attain greater productivity. [Astorga] belonged to the Sales Marketing Group
under the Fixed Services Division (CSMG/FSD), a distinct sales force of SMART
in charge of selling SMARTs telecommunications services to the corporate
market. SMART, to ensure it can respond quickly, efficiently and flexibly to its
customers requirement, abolished CSMG/FSD and shortly thereafter assigned its
functions to newly-created SNMI Multimedia Incorporated, a joint venture company
of SMART and NTT of Japan, for the reason that CSMG/FSD does not have the
necessary technical expertise required for the value added services. By
transferring the duties of CSMG/FSD to SNMI, SMART has created a more
competent and specialized organization to perform the work required for corporate
accounts. It is also relieved SMART of all administrative costs management, time
and money-needed in maintaining the CSMG/FSD. The determination to
outsource the duties of the CSMG/FSD to SNMI was, to Our mind, a sound
business judgment based on relevant criteria and is therefore a legitimate exercise
of management prerogative.
Indeed, out of our concern for those lesser circumstanced in life, this Court has
inclined towards the worker and upheld his cause in most of his conflicts with his
employer. This favored treatment is consonant with the social justice policy of the
Constitution. But while tilting the scales of justice in favor of workers, the
fundamental law also guarantees the right of the employer to reasonable returns
for his investment.[38] In this light, we must acknowledge the prerogative of the
employer to adopt such measures as will promote greater efficiency, reduce
overhead costs and enhance prospects of economic gains, albeit always within the
framework of existing laws. Accordingly, we sustain the reorganization and
redundancy program undertaken by SMART.
However, as aptly found by the CA, SMART failed to comply with the mandated
one (1) month notice prior to termination. The record is clear that Astorga received
the notice of termination only on March 16, 1998[39] or less than a month prior to its
effectivity on April 3, 1998. Likewise, the Department of Labor and Employment
was notified of the redundancy program only on March 6, 1998.[40]
Article 283 of the Labor Code clearly provides:
Art. 283. Closure of establishment and reduction of personnel. The employer may
also terminate the employment of any employee due to the installation of labor
saving devices, redundancy, retrenchment to prevent losses or the closing or that in labor cases, the burden of proving payment of monetary claims rests on the
cessation of operation of the establishment or undertaking unless the closing is for employer.[44] SMART failed to discharge the onus probandi. Accordingly, it must be
the purpose of circumventing the provisions of this Title, by serving a written notice held liable for Astorgas salary from February 15, 1998 until the effective date of
on the workers and the Ministry of Labor and Employment at least one (1) month her termination, on April 3, 1998.
before the intended date thereof x x x. However, the award of backwages to Astorga by the CA should be deleted for lack
SMARTs assertion that Astorga cannot complain of lack of notice because the of basis. Backwages is a relief given to an illegally dismissed employee. Thus,
organizational realignment was made known to all the employees as early as before backwages may be granted, there must be a finding of unjust or illegal
February 1998 fails to persuade. Astorgas actual knowledge of the reorganization dismissal from work.[45] The Labor Arbiter ruled that Astorga was illegally
cannot replace the formal and written notice required by the law. In the written dismissed. But on appeal, the NLRC reversed the Labor Arbiters ruling and
notice, the employees are informed of the specific date of the termination, at least categorically declared Astorgas dismissal valid. This ruling was affirmed by the CA
a month prior to the effectivity of such termination, to give them sufficient time to in its assailed Decision. Since Astorgas dismissal is for an authorized cause, she
find other suitable employment or to make whatever arrangements are needed to is not entitled to backwages. The CAs award of backwages is totally inconsistent
cushion the impact of termination. In this case, notwithstanding Astorgas with its finding of valid dismissal.
knowledge of the reorganization, she remained uncertain about the status of her WHEREFORE, the petition of SMART docketed as G.R. No. 148132
employment until SMART gave her formal notice of termination. But such notice is GRANTED. The February 28, 2000 Decision and the May 7, 2001 Resolution of
was received by Astorga barely two (2) weeks before the effective date of the Court of Appeals in CA-G.R. SP. No. 53831 are SET
termination, a period very much shorter than that required by law. ASIDE. The Regional Trial Court of Makati City, Branch 57 is DIRECTED to
Be that as it may, this procedural infirmity would not render the termination of proceed with the trial of Civil Case No. 98-1936 and render its Decision with
Astorgas employment illegal. The validity of termination can exist independently of reasonable dispatch.
the procedural infirmity of the dismissal.[41] In DAP Corporation v. CA,[42] we found On the other hand, the petitions of SMART and Astorga docketed as G.R. Nos.
the dismissal of the employees therein valid and for authorized cause even if the 151079 and 151372 are DENIED. The June 11, 2001 Decision and the December
employer failed to comply with the notice requirement under Article 283 of the 18, 2001 Resolution in CA-G.R. SP. No. 57065,
Labor Code. This Court upheld the dismissal, but held the employer liable for non- are AFFIRMED with MODIFICATION. Astorga is declared validly
compliance with the procedural requirements. dismissed.However, SMART is ordered to pay Astorga P50,000.00 as indemnity
The CA, therefore, committed no reversible error in sustaining Astorgas dismissal for its non-compliance with procedural due process, her separation pay equivalent
and at the same time, awarding indemnity for violation of Astorga's statutory rights. to one (1) month pay, and her salary from February 15, 1998 until the effective
However, we find the need to modify, by increasing, the indemnity awarded by the date of her termination on April 3, 1998. The award of backwages is DELETED for
CA to Astorga, as a sanction on SMART for non-compliance with the one-month lack of basis. SO ORDERED.
mandatory notice requirement, in light of our ruling in Jaka Food Processing
Corporation v. Pacot,[43] viz.: *
In lieu of Associate Justice Minita V. Chico-Nazario per Special Order No. 484
[I]f the dismissal is based on a just cause under Article 282 but the employer failed dated January 11, 2008.
[1]
to comply with the notice requirement, the sanction to be imposed upon him should Penned by Associate Justice Elvi John S. Asuncion (dismissed), with Associate
be tempered because the dismissal process was, in effect, initiated by an act Justices Corona Ibay-Somera (retired) and Portia Alio-Hormachuelos,
imputable to the employee, and (2) if the dismissal is based on an authorized cause concurring; rollo (G.R. No. 148132), pp. 146-152.
[2]
under Article 283 but the employer failed to comply with the notice requirement, Rollo, pp. 164-165.
[3]
the sanction should be stiffer because the dismissal process was initiated by the Penned by Associate Justice Romeo Brawner (retired), with Associate Justices
employers exercise of his management prerogative. Remedios Salazar-Fernando and Josefina Guevara-Salonga,
concurring; rollo (G.R. No. 151079), pp. 24-36.
We deem it proper to increase the amount of the penalty on SMART to P50,000.00. [4]
Id. at 42-45.
[5]
As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to Rollo (G.R. No. 151372), pp. 58-59.
[6]
separation pay equivalent to at least one (1) month salary or to at least one (1) Rollo (G.R. No. 151079), p. 46.
[7]
months pay for every year of service, whichever is higher. The records show that Rollo (G.R. No. 151372), p. 62.
[8]
Astorgas length of service is less than a year. She is, therefore, also entitled to Id. at 40-42.
[9]
separation pay equivalent to one (1) month pay. Id. at 43-54.
[10]
Finally, we note that Astorga claimed non-payment of wages from February 15, Id. at 68-78.
[11]
1998. This assertion was never rebutted by SMART in the proceedings a quo. No Rollo (G.R. No. 148132), p. 47.
[12]
proof of payment was presented by SMART to disprove the allegation. It is settled Id. at 30-34.
[13]
Id. at 51-59.
[14]
Rollo (G.R. No. 151372), pp. 79-92.
[15]
Id. at 90-92.
[16]
Rollo (G.R. No. 148132), pp. 79-80.
[17]
Id.
[18]
Id. at 110.
[19]
Id. at 146-152.
[20]
Id. at 164-165.
[21]
Rollo (G.R. No. 151079), pp. 102-120.
[22]
Id. at 120.
[23]
Id. at 122.
[24]
Id. at 24-36.
[25]
Id. at 45.
[26]
Rollo (G.R. No. 151372), p. 175.
[27]
Rollo (G.R. No. 151079), p. 250.
[28]
Id. at 273.
[29]
Rollo (G.R. No. 148132), p. 266.
[30]
Blacks Law Dictionary, Fifth Edition, p. 1168.
[31]
Tillson v. Court of Appeals, G.R. No. 89870, May 28, 1991, 197 SCRA 587,
598.
[32]
Id. at 148.
[33]
See Nestle Philippines Inc. v. National Labor Relations Commission, G. R. No.
85197, March 18, 1991, 195 SCRA 340, 343.
[34]
G.R. L-75837, December 11, 1987, 156 SCRA 299, 303-304.
[35]
G.R. No. 82249, February 7, 1991, 193 SCRA 665, 672.
[36]
Dole Philippines, Inc. v. National Labor Relations Commission, 417 Phil. 428,
440 (2001).
[37]
Id.
[38]
Asian Alcohol Corporation v. National Labor Relations Commission, 364 Phil.
912, 924-925 (1999).
[39]
Rollo (G.R. No. 151372), p. 62.
[40]
Id. at 56.
[41]
DAP Corporation v. Court of Appeals, G.R. No. 165811, December 14, 2005,
477 SCRA 792, 798.
[42]
Id.
[43]
G.R. No. 151378, March 28, 2005, 454 SCRA 119, 125-126.
[44]
G & M (Phil.), Inc. v. Batomalaque, G.R. No. 151849, June 23, 2005, 461 SCRA
111, 118.
[45]
Filflex Industrial & Manufacturing Corporation v. National Labor Relations
Commission, G.R. No. 115395, February 12, 1998, 286 SCRA 245, 253.
SECOND DIVISION
PHILIPPINE LONG DISTANCE G.R. No. 143511
TELEPHONE COMPANY,
Petitioner, Present:
CARPIO, J., Chairperson,
CARPIO MORALES,*
PERALTA,
- versus - ABAD, and
MENDOZA, JJ.
JOEY B. TEVES, Promulgated:
Respondent. November 15, 2010
DECISION
PERALTA, J.:
For review on certiorari are the Decision[1] dated April 24, 2000 and the
Resolution[2] dated May 31, 2000 of the Court of Appeals (CA) in CA- G.R. SP No.
50852, affirming the Decision of the National Labor Relations Commission (NLRC)
which ordered the reinstatement of respondent Joey B. Teves to his former position
without loss of seniority rights and other privileges appurtenant thereto with full
backwages until actually reinstated.
The antecedent facts are as follows:
Respondent was employed by petitioner Philippine Long Distance Telephone
Company in 1981 as Clerk II until his termination from service on June 1, 1992.
Petitioner terminated respondent through an Inter-Office Memorandum[3] dated
May 29, 1992 on account of his three (3) unauthorized leaves of absence
committed within three (3) years in violation of petitioners rules and regulations.
Respondent was absent from August 23 to September 3, 1990 as his wife gave
birth on August 25 but was only discharged from the hospital on September 2,
1990 due to complications; since they had no household help, he had to attend to
his wife's needs in the hospital, as well as the needs of their four kids, including
bringing them to school. Respondent called up through a third party to inform
petitioner that he would go on an extended leave. Upon his reporting for work on
September 4, 1990, he wrote petitioner a letter[4] confirming his leave of absence
without pay for that period and stating the reasons thereof, with his wife's medical
certificate attached. Dissatisfied, petitioner required respondent to submit further
explanation which the latter did reiterating his previous explanation. However, in
petitioner's Inter-Office Memorandum[5] dated October 3, 1990, it found
respondents explanation to be unacceptable and unmeritorious for the latter's
failure to call, notify or request petitioner for such leave; thus, petitioner suspended
respondent from work without pay for 20 days, effective October 8, 1990.
Respondent was absent from May 29 to June 12, 1991. He was sent a
Memorandum[6] reminding him of the July 2, 1990 Memorandum requiring written
application prior to a leave of absence without pay and was directed to report for
work on June 13, 1991 at ten o'clock in the evening lest he be meted a disciplinary
action. Respondent reported for work on even date, and was required to explain in
writing why no disciplinary action should be taken against him for his unauthorized
leave of absence. In a Memorandum[7] dated June 17, 1991, respondent explained
that his absences were due to the fact that his eldest and youngest daughter were
sick and had to be confined at the nearby clinic; and the medical certificate
confirming said confinement was to follow. Further, respondent alleged that he had
relayed said message to an officemate, Luis V. Marquez, who unfortunately did
not also report for work. As petitioner found respondents explanation insufficient,
respondent was suspended without pay for 45 days effective July 17, 1991.
Eight months thereafter, respondent availed of a seven-day leave of absence and
extended such leave to complete his annual vacation leave, which was to end on
February 11, 1992. However, respondent failed to report for work from February
11 to February 19, 1992. Petitioner then sent him a Memorandum[8] dated
February 19, 1992, directing him to report for duty within 72 hours, otherwise, his
services would be terminated for abandonment of work. Respondent reported for
duty and was served another Memorandum requiring him to explain in writing why
no disciplinary action should be taken against him for his unauthorized
absences. In his explanation, respondent stated that he incurred said absences
because he had many accounts in the office which were already due and
demandable and thought of prolonging such payment by absenting himself. He
further stated that he realized that what he did was wrong and only worsened his
situation and asked for another chance. Petitioner found such explanation totally
unacceptable. Thus, in an Inter-Office Memorandum[9] dated May 29, 1992
addressed to respondent, the latter was terminated from service effective June 1,
1992 due to his third unauthorized absence within a three-year period.
On March 9, 1993, respondent filed a Complaint for illegal suspension, illegal
dismissal, payment of two Christmas bonuses and monthly rice subsidy. Petitioner
filed its Position Paper.
On May 13, 1994, Labor Arbiter (LA) Benigno C. Villarente, Jr. rendered his
Decision,[10] the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered declaring that the dismissal of
complainant is LEGAL. Conformably with the preceding discussions, however,
respondent is hereby directed to extend complainant financial assistance in the
amount of TWENTY THOUSAND PESOS (P20,000.00).
Complainant's claims for bonuses and rice subsidy have not been substantiated
and are, therefore, hereby DISMISSED. [11]
In his decision, the LA found that (1) respondent had committed his third
unauthorized absence within a three-year period and did not offer an acceptable
reason therefor; (2) respondent's repeated unauthorized absences displayed his
irresponsibility and lackluster attitude towards work; (3) the reasons for his
absences which related to the need to attend to his family cannot mitigate his
apparent neglect of duty to his employer; and (4) his absences were in violation of
petitioner's rules and regulations. The LA found that respondent was not denied
due process, since he was notified of all his infractions and was allowed each time
to submit his explanation. The LA awarded financial assistance to respondent as
a measure of compassionate justice taking into consideration respondent's 11
years of service and since the infraction committed did not amount to a serious
misconduct nor did it involve moral turpitude.
Respondent interposed an appeal with the NLRC.
On January 30, 1997, the NLRC rendered its Decision[12] reversing the LAs
Decision, the decretal portion of which reads:
WHEREFORE, the instant appeal is hereby given due course. The appealed
decision is hereby SET ASIDE. Respondent is hereby declared guilty of illegally
terminating complainant Joey B. Teves' employment. As such, respondent
Philippine Long Distance Telephone Company is hereby ordered to reinstate
complainant to his former position without loss of seniority rights and other
privileges appurtenant thereto with full backwages until actually reinstated.
Respondents are likewise ordered to pay complainant's unpaid wages for the
period covering 15-31 May 1992, 13th month pay, Christmas Bonuses, accrued
rice subsidy of one (1) sack a month, or its money equivalent of P350.00 at the
time of his dismissal.[13]
In reversing the LA, the NLRC found that respondent's absences from August 23
to September 3, 1990 was brought to petitioner's attention when respondent called
through a third party that respondent would go on an extended leave. Moreover,
the reason for his prolonged absence, i.e., the unforeseen complications of his
wife's condition after giving birth, supported by a medical certificate, was an
eventuality that needed to be attended to with priority which should have been
accorded credence and favorably considered; and that dismissing such
explanation and placing respondent under suspension, when his leave of absence
was without pay, merely exacerbated his family's plight.
The NLRC found that respondent's failure to verify whether his message for
petitioner through a co-employee that his (respondent) two daughters were sick
and confined at a nearby clinic was duly delivered constituted a neglect of duty.
However, the NLRC took into consideration respondent's reason for such absence
and stated that certain leniency should have been accorded respondent and that
his suspension for 45 days was too harsh for the said offense.
While the NLRC found the reason offered by respondent for his absences from
February 11 to 19, 1992 unacceptable and unreasonable, respondent should have
only been penalized accordingly. The NLRC found that respondent's dismissal
from service was illegal, since he had been heavily punished for each and every
offense imputed to him and that in his eleven years of service, this was the first
time that he was falsely charged.
The NLRC found that petitioner failed to controvert respondent's claims for unpaid
salary from May 15 to 31, 1990, 13th month pay and Christmas bonuses and rice
subsidy for one month or its money equivalent.
Petitioner's motion for reconsideration was denied by the NLRC in a
Resolution[14] dated February 26, 1997.
On May 29, 1997, petitioner filed before us a Petition for Certiorari with prayer for
the issuance of a temporary restraining order and/or injunction assailing the
January 30, 1997 Decision and February 26, 1997 Resolution of the NLRC.
Respondent filed his Comment thereto. Petitioner then filed a Reply.
On November 12, 1997, respondent filed a Manifestation[15] stating that he had
already been reinstated by petitioner effective November 10, 1997[16]in compliance
with the NLRC Decision.
Subsequently, in a Resolution[17] dated December 9, 1998, we referred the petition
to the CA in accordance with the St. Martin Funeral Home v. National Labor
Relations Commission[18] ruling.
On April 24, 2000, the CA rendered its assailed Decision, which affirmed and
reiterated the NLRC decision.
The CA found that (1) petitioner complied with the two-notice requirement which
was essential to respondent's right to due process; (2) respondent was given a
notice to explain in writing why no disciplinary action should be meted on him for
his unauthorized absences from February 11 to 19, 1992; and (3) when
respondents explanation proved unacceptable to petitioner, respondent was sent
another notice informing him of his termination by reason ofthree unauthorized
absences within a three-year period, a conduct which was circumscribed in
petitioner's rules and regulations. Notwithstanding compliance with the
requirement of due process, the CA affirmed the illegality of respondent's dismissal
finding that respondent's comportment cannot be characterized as grave so as to
constitute grave misconduct; that his first two leaves of absence were satisfactorily
justified; and that he should not have been suspended from service by reason of
such absences. However, the CA found that respondents failure to report for work
on February 11 to 19, 1992 appeared to be the only unauthorized and unjustified
leave of absence during his 11 years of stay with petitioner, and it did not merit the
harsh penalty of dismissal.
Petitioner filed a motion for reconsideration, but was denied by the CA in a
Resolution dated May 31, 2000.
Hence, this petition. Petitioner raises the following arguments in its Memorandum.
A.
IT IS ALREADY SETTLED THAT RESPONDENT'S PREVIOUS ABSENCES
WERE UNJUSTIFIED AND UNAUTHORIZED IN LIGHT OF HIS VOLUNTARY
ACCEPTANCE AND COMPLIANCE WITH THE SUSPENSIONS IMPOSED IN
CONNECTION WITH SAID ABSENCES. HENCE, THE HONORABLE COURT OF
APPEALS GRAVELY ERRED IN RULING THAT RESPONDENT MERELY
COMMITTED ONE INSTANCE OF UNAUTHORIZED ABSENCE.
B.
THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ERROR AND
ABUSE OF DISCRETION IN FINDING THAT RESPONDENT WAS ILLEGALLY
DISMISSED CONSIDERING THAT:
1. THE TERMINATION OF RESPONDENT'S SERVICES IS JUSTIFIED
APPLYING THE TOTALITY OF INFRACTIONS DOCTRINE.
2. THERE IS SUBSTANTIAL AND UNDISPUTED EVIDENCE ESTABLISHING
THAT RESPONDENT IS AN ABSENTEE EMPLOYEE WHO HAS A
PROPENSITY TO SIMPLY DISAPPEAR WITHOUT EVEN GIVING HIS
EMPLOYER THE COURTESY OF A PRIOR NOTICE.[19]
Petitioner contends that the CA erred when it found that (1) what was involved in
this case was merely one instance of an unauthorized leave of absence as all of
respondent's absences where he was previously sanctioned were unauthorized;
(2) the imposition of the penalty of suspension to respondent was justified and he
had long been estopped from questioning the same; (3) respondent was
suspended not so much for the reason behind the absences, but because of the
manner by which he incurred the absence, i.e., by not informing petitioner causing
undue prejudice to the company's operations; (4) respondent had a propensity to
simply disappear without giving petitioner the courtesy of a prior notice; and (5)
respondent never questioned the suspensions meted on him, but instead
voluntarily complied with the suspensions without protest.
Petitioner argues that respondent's past infractions could be used as supporting
justification to a subsequent similar offense which would merit respondent's
dismissal; that the CA erred when it did not apply the totality of infractions doctrine
but limited respondent's offenses to just one offense; and that respondent's acts of
absenting himself without prior notice, despite previous disciplinary actions, should
be considered in its totality and not in isolation from one another.
Petitioner contends that the management's right to prescribe rules and regulations
cannot be denied and that the employer may justly discharge from employment an
employee who violates company rules and regulations. Petitioner avers that
respondents length of service in the company cannot work in his favor, but should
be taken against him.
The issue for resolution is whether or not sufficient ground exists for respondent's
dismissal from service.
Respondent was terminated from employment by reason of his third unauthorized
absence from February 11 to 19, 1992. Respondent absented himself because he
had many accounts in the office which were already due and demandable, and he
thought that absenting himself from work would prolong the payment of his
financial obligations; and that he realized that his action was wrong which
worsened his situation and asked for another chance. Such explanation was found
by petitioner to be unacceptable; thus, respondent was terminated effective June
1, 1992 for committing three unauthorized absences within a three-year period.
Petitioner found respondent to have committed the other two incidents of
unauthorized absences from August 23 to September 3, 1990 and from May 29 to
June 12, 1991.
The LA found that respondents dismissal was legal. However, the NLRC found
that the two previous incidents of respondents alleged unauthorized absences
were justified, and that while his absence from February 11 to 19, 1992 was
unacceptable and unreasonable, he should have been penalized therefor
accordingly, but not with dismissal from service. The CA affirmed the NLRCs
findings and concluded that respondents absences from February 11 to 19, 1992
was his first and only unauthorized absences during his 11 years of stay, and it did
not merit the harsh penalty of dismissal.
Petitioner claims that respondent is an absentee employee who has a propensity
to simply disappear without giving his employer the courtesy of prior notice; and
that respondent was not sanctioned for the reasons given for his absences, but
because of his failure to inform or give prior notice to petitioner.
We find partial merit in this argument.
Respondents first alleged unauthorized absences were from August 23 to
September 3, 1990, wherein he went on leave without pay. In his letter dated
September 4, 1990 addressed to petitioner, which he submitted upon reporting for
work, as well as in his response dated September 10, 1990 to petitioner's
memorandum dated September 7, 1990, respondent explained that his absences
were due to the fact that his wife gave birth on August 25, but was only discharged
from the hospital on September 2, 1990 due to complications; and that since they
had no household help, he had to attend to his wife's needs in the hospital, as well
as the needs of their four kids, including bringing them to school. Petitioner found
the explanation unacceptable and unmeritorious as he did not bother to call, notify
or request for a leave of absence; thus, respondent was suspended from service
without pay equivalent to 20 days.
Respondents second alleged unauthorized absences were from May 29 to June
12, 1991. When asked to explain his absences during the said period, respondent
explained that his eldest and youngest daughters were sick and were confined at
a nearby clinic; and that he relayed such emergency and the fact that he would not
be able to report for work to a co-employee, Luis V. Marquez, who unfortunately
did not also report for work. Petitioner noted respondent's negligence in failing to
notify it of his intention to go on leave, or to verify whether the request for leave,
allegedly through a third party, had been approved. Petitioner suspended
respondent for 45 days.
Notably, the alleged two prior incidents of respondents unauthorized absences
above-mentioned were due to a family emergency or sickness. Respondents
explanations should have been given a kind consideration by petitioner. An
employee cannot anticipate when sickness or emergencies in the family may
happen, thus, he may not be able to give prior notice or seek prior approval of his
absence, but could only do so after the occurrence of the incident.
However, respondent had shown that he had given petitioner prior notice of his
absences from August 23 to September 3, 1990. As the NLRC found, petitioner
admitted that on August 23, 1990, he (respondent) called up through a third party
to inform PLDT that he would go on an extended leave. Such admission was even
reiterated in petitioners petition for certiorari filed with us. Notably, when
respondent returned for work on September 4, 1990, he immediately submitted a
letter to petitioner explaining his absence and attaching a medical certificate
thereto to attest to the reason of his absence. Thus, the suspension imposed on
him was not proper.
As to respondent's second unauthorized absence, while respondent had relayed
his inability to report for work on May 29, 1991 to a co-employee, who unfortunately
did not also report for work, he was negligent in not verifying whether his notice of
absence had reached petitioner, and the duration of his absence. In fact, in
petitioner's Inter-Office Memorandum dated June 12, 1991 sent to respondent, the
former asked the latter to report for duty on June 13, 1991 as he had been absent
since May 29, to which respondent complied. While respondent offered a justifiable
reason for his absences from May 29 to June 12, 1990, i.e., his two daughters and space classification than what she and her husband were entitled to on
were sick and confined at a nearby clinic, however, we find that he failed to give vacation travel in violation of the company policy which served as PAL's basis for
petitioner prior notice of his absence, thus, such absence was properly considered losing its trust and confidence on the employee. We considered the infraction
as unauthorized. committed, together with her twenty years of employment in the company, as
reflecting her regrettable lack of loyalty to the company, which loyalty she should
Thus, respondents absence from February 11 to 19, 1991 which was made to
prolong payment of his demandable financial obligations in the office, and which have strengthened instead of betrayed. In contrast, the instant infraction committed
by respondent during his eleven-year stay with petitioner did not involve the
absence was found by both the NLRC and the CA to be unjustified, was
respondents second unauthorized absence. We find that respondent's termination betrayal of petitioner's trust and confidence. Moreover, there was no basis for
respondent's termination, on the ground that he had committed his third
for committing three unauthorized absences within a three-year period had no
unauthorized absence within the three-year period as discussed earlier in the
basis; thus, there was no valid cause for respondent's dismissal.
decision.
Even assuming that respondent's absenteeism constitutes willful disobedience,
Considering that respondent was illegally dismissed from service, he is entitled to
such offense does not warrant respondent's dismissal.[20] Not every case of
insubordination or willful disobedience by an employee reasonably deserves the be reinstated, without loss of seniority rights and the payment of backwages from
the time respondents compensation was withheld from him until his reinstatement
penalty of dismissal.[21] There must be a reasonable proportionality between the
offense and the penalty.[22] on November 12, 1997. However, since we find that respondent's absence from
February 11 to 19, 1992 was unjustified and unauthorized, thus, his suspension
Petitioner's claim that the alleged previous infractions may be used as supporting for thirty days would be in order. Hence, the amount equivalent to the thirty-day
justification to a subsequent similar offense, which would merit dismissal, finds no suspension, which respondent should have served for his absence on February 11
application in this case. Respondent's absence from August 23 to September 3, to 19, 1992, should be deducted from the backwages to be awarded to him.
1990 was justified and not unauthorized as there was prior notice. His absence
WHEREFORE, the Decision dated April 24, 2000 and the Resolution dated May
from May 29 to June 12, 1991, although found to be unauthorized, was not at all
31, 2000 of the Court of Appeals in CA-G.R. SP No. 50852, are
unjustified. Thus, his absence during the period from February 11 to 19, 1991,
hereby AFFIRMED with MODIFICATION that the amount equivalent to
being the only unauthorized and unjustified absence and his second unauthorized
absence, should not merit the penalty of dismissal. respondents thirty-day suspension is deducted from the award of backwages from
the time his compensation was withheld up to his reinstatement on November 12,
While management has the prerogative to discipline its employees and to impose 1997. SO ORDERED.
appropriate penalties on erring workers, pursuant to company rules and
regulations, however, such management prerogatives must be exercised in good *
Designated as an additional member in lieu of Associate Justice Antonio Eduardo B. Nachura,
faith for the advancement of the employers interest and not for the purpose of per raffle dated November 3, 2010.
defeating or circumventing the rights of the employees under special laws and valid [1]
Penned by Associate Justice Martin S. Villarama, Jr. (now a member of this Court), with
agreements.[23] The Court is wont to reiterate that while an employer has its own Associate Justices Cancio C. Garcia and Romeo J. Callejo, Sr. (retired members of this Court),
concurring; rollo, pp. 32-39.
interest to protect, and pursuant thereto, it may terminate an employee for a just [2]
Id. at 41.
cause, such prerogative to dismiss or lay off an employee must be exercised [3]
Id. at 51.
without abuse of discretion. Its implementation should be tempered with [4]
Id at 42.
compassion and understanding. The employer should bear in mind that, in the [5]
Id. at 43.
[6]
execution of said prerogative, what is at stake is not only the employees position, Id. at 45.
[7]
but his very livelihood, his very breadbasket. [24] Id. at 47.
[8]
Id. at 48.
Dismissal is the ultimate penalty that can be meted to an employee.[25] Even where [9]
Id. at 51.
[12]
a worker has committed an infraction, a penalty less punitive may suffice, whatever Penned by Commissioner Ireneo B. Bernardo, with Presiding Commissioner Lourdes C. Javier
and Commissioner Joaquin A. Tanodra, concurring; id. at 58-73.
missteps maybe committed by labor ought not to be visited with a consequence so [15]
CA rollo, pp. 85-86.
severe.[26] This is not only the laws concern for the workingman. There is, in [18]
G.R. No. 130866, September 16, 1998, 295 SCRA 494.
addition, his or her family to consider. Unemployment brings untold hardships and [19]
Rollo, pp. 219-220.
sorrows upon those dependent on the wage-earner.[27] [20]
Procter and Gamble Philippines v. Bondesto, 468 Phil. 932, 942 (2004).
[23]
See Marival Trading Inc. v. NLRC, G.R. No. 169600, June 26, 2007, 525 SCRA 708, 730.
Petitioner contends that respondent's length of service in the company cannot [25]
Procter and Gamble Philippines v. Bondesto, supra note 20.
work in his favor but, if to be considered at all, should even be taken against him [26]
See De Guzman v. NLRC, 371 Phil. 192, 205 (1999).
relying on the case of Philippine Airlines, Inc. (PAL) v. NLRC.[28] PAL has no [27]
Id., citing Meracap v. International Ceramics Manufacturing Co., Inc., 92 SCRA 412 (1979); see
application in this case as it involves a case of a supervisor occupying a position also Michael Inc. v. NLRC, 326 Phil. 472, 476 (1996); Almira v. B.F. Goodrich Phils. Inc., 157 Phil.
110, 121-122 (1974).
of responsibility, who used trip passes which were falsified to reflect higher priority [28]
G.R. No. 87353, July 3, 1991, 198 SCRA 748.
 SECOND DIVISION
MANOLO A. PEAFLOR, G.R. No. 177114
Petitioner,
Present:
- versus - CARPIO, J., Chairperson,
BRION,
OUTDOOR CLOTHING MANUFACTURING DEL CASTILLO,
CORPORATION, NATHANIEL T. SYFU, President, ABAD, and
MEDYLENE M. DEMOGENA, Finance Manager, and PEREZ, JJ.
PAUL U. LEE, Chairman, Promulgated:
Respondents.
January 21, 2010
x ------------------------------------------------------------------------------------------x
DECISION
BRION, J:
Petitioner Manolo A. Peaflor (Peaflor) seeks the reversal of the Court of Appeals
(CA) decision[1] dated December 29, 2006 and its resolution[2]dated March 14,
2007, through the present petition for review on certiorari filed under Rule 45 of the
Rules of Court. The assailed CA decision affirmed the September 24,
2002 decision[3] of the National Labor Relations Commission (NLRC) that in turn
reversed the August 15, 2001decision[4] of the Labor Arbiter.[5]
THE FACTUAL ANTECEDENTS
Peaflor was hired on September 2, 1999 as probationary Human Resource
Department (HRD) Manager of respondent Outdoor Clothing Manufacturing
Corporation (Outdoor Clothing or the company). As HRD head, Peaflor was
expected to (1) secure and maintain the right quality and quantity of people needed
by the company; (2) maintain the harmonious relationship between the employees
and management in a role that supports organizational goals and individual
aspirations; and (3) represent the company in labor cases or proceedings. Two staff
members were assigned to work with him to assist him in undertaking these
functions.
Peaflor claimed that his relationship with Outdoor Clothing went well during the first
few months of his employment; he designed and created the companys Policy
Manual, Personnel Handbook, Job Expectations, and Organizational Set-Up during
this period. His woes began when the companys Vice President for Operations,
Edgar Lee (Lee), left the company after a big fight between Lee and Chief
Corporate Officer Nathaniel Syfu (Syfu).Because of his close association with Lee,
Peaflor claimed that he was among those who bore Syfus ire.
When Outdoor Clothing began undertaking its alleged downsizing program due to
negative business returns, Peaflor alleged that his department had been singled
out. On the pretext of retrenchment, Peaflors two staff members were dismissed,
leaving him as the only member of Outdoor Clothings HRD and compelling him to
perform all personnel-related work. He worked as a one-man department, carrying
out all clerical, administrative and liaison work; he personally went to various
government offices to process the companys papers.
When an Outdoor Clothing employee, Lynn Padilla (Padilla), suffered injuries in a
bombing incident, the company required Peaflor to attend to her hospitalization
needs; he had to work outside office premises to undertake this task. As he was
acting on the companys orders, Peaflor considered himself to be on official
business, but was surprised when the company deducted six days salary
corresponding to the time he assisted Padilla.According to Finance Manager
Medylene Demogena (Demogena), he failed to submit his trip ticket, but Peaflor
belied this claim as a trip ticket was required only when a company vehicle was
used and he did not use any company vehicle when he attended to his off-premises
work.[6]
After Peaflor returned from his field work on March 13, 2000, his officemates
informed him that while he was away, Syfu had appointed Nathaniel Buenaobra
(Buenaobra) as the new HRD Manager. This information was confirmed by Syfus
memorandum of March 10, 2000 to the entire office stating that Buenaobra was the
concurrent HRD and Accounting Manager.[7] Peaflor was surprised by the news; he
also felt betrayed and discouraged.He tried to talk to Syfu to clarify the matter, but
was unable to do so. Peaflor claimed that under these circumstances, he had no
option but to resign. He submitted a letter to Syfu declaring his irrevocable
resignation from his employment with Outdoor Clothing effective at the close of
office hours on March 15, 2000.[8]
Peaflor then filed a complaint for illegal dismissal with the labor arbiter, claiming
that he had been constructively dismissed. He included in his complaint a prayer
for reinstatement and payment of backwages, illegally deducted salaries, damages,
attorneys fees, and other monetary claims.
Outdoor Clothing denied Peaflors allegation of constructive dismissal. It posited
instead that Peaflor had voluntarily resigned from his work. Contrary to Peaflors
statement that he had been dismissed from employment upon Syfus appointment
of Buenaobra as the new HRD Manager on March 10, 2000, Peaflor had in fact
continued working for the company until his resignation on March 15, 2000. The
company cited as evidence the security report that Peaflor himself prepared and
signed on March 13, 2000.[9]
Outdoor Clothing disclaimed liability for any of Peaflors monetary claims. Since
Peaflor had voluntarily resigned, Outdoor Clothing alleged that he was not entitled
to any backwages and damages. The company likewise denied making any illegal
deduction from Peaflors salary; while deductions were made, they were due to
Peaflors failure to report for work during the dates the company questioned. As a
probationary employee, he was not yet entitled to any leave credit that would offset
his absences.
In his August 15, 2001 decision, the labor arbiter found that Peaflor had been
illegally dismissed.[10] Outdoor Clothing was consequently ordered to reinstate
Peaflor to his former or to an equivalent position, and to pay him his illegally
deducted salary for six days, proportionate 13th month pay, attorneys fees, moral
and exemplary damages.
Outdoor Clothing appealed the labor arbiters decision with the NLRC. It insisted
that Peaflor had not been constructively dismissed, claiming that Peaflor tendered
his resignation on March 1, 2000 because he saw no future with the corporation
due to its dire financial standing. Syfu alleged that he was compelled to appoint
Buenaobra as concurrent HRD Manager through a memorandum dated March 1,
2000 to cover the position that Peaflor would soon vacate.[11] The appointment was
also made to address the personnel matters that had to be taken cared of while
Peaflor was on unauthorized leave. Incidentally, Outdoor Clothing alleged that
Peaflor had already been given two notices, on March 6 and 11, 2000 (absence
without official leave memoranda or the AWOL memoranda), for his unauthorized
absences. In a memorandum dated March 3, 2000 addressed to Syfu, Buenaobra
accepted the appointment.[12]
Peaflor contested Syfus March 1, 2000 memorandum, Buenaobras March 3,
2000 memorandum, and the AWOL memoranda, claiming these pieces of evidence
were fabricated and were never presented before the labor arbiter. He pointed out
that nothing in this resignation letter indicated that it was submitted to and received
by Syfu on March 1, 2000. He claimed that it was submitted on March 15, 2000,
the same date he made his resignation effective. The AWOL memoranda could not
be relied on, as he was never furnished copies of these. Moreover, he could not be
on prolonged absence without official leave, as his residence was just a few meters
away from the office.
The NLRC apparently found Outdoor Clothings submitted memoranda sufficient to
overturn the labor arbiters decision.[13] It characterized Peaflors resignation as a
response, not to the allegedly degrading and hostile treatment that he was
subjected to by Syfu, but to Outdoor Clothings downward financial
spiral. Buenaobras appointment was made only after Peaflor had submitted his
resignation letter, and this was made to cover the vacancy Peaflors resignation
would create. Thus, Peaflor was not eased out from his position as HRD
manager. No malice likewise was present in the companys decision to dismiss
Peaflors two staff members; the company simply exercised its management
prerogative to address the financial problems it faced.Peaflor, in fact, drafted the
dismissal letters of his staff members. In the absence of any illegal dismissal, no
basis existed for the monetary awards the labor arbiter granted.
Peaflor anchored his certiorari petition with the CA on the claim that the NLRC
decision was tainted with grave abuse of discretion, although he essentially
adopted the same arguments he presented before the labor arbiter and the NLRC.
In a decision dated December 29, 2006,[14] the CA affirmed the NLRCs decision,
stating that Peaflor failed to present sufficient evidence supporting his claim that he
had been constructively dismissed. The CA ruled that Peaflors resignation was
knowingly and voluntarily made.Accordingly, it dismissed
Peaflors certiorari petition. It likewise denied the motion for reconsideration that
Peaflor subsequently filed.[15] Faced with these CA actions, Peaflor filed with us the
present petition for review on certiorari.
THE PARTIES ARGUMENTS
Peaflor insists that, contrary to the findings of the NLRC and the CA, he had been
constructively dismissed from his employment with Outdoor Clothing. He alleges
that the dismissal of his two staff members, the demeaning liaison work he had to
perform as HRD Manager, the salary deduction for his alleged unauthorized
absences, and the appointment of Buenaobra as the new HRD manager even
before he tendered his resignation, were clear acts of discrimination that made his
continued employment with the Outdoor Clothing unbearable. He was thus forced
to resign.
Outdoor Clothing claims that Peaflor voluntarily resigned from his work and his
contrary allegations were all unsubstantiated. The HRD was not singled out for
retrenchment, but was simply the first to lose its staff members because the
company had to downsize. Thus, all HRD work had to be performed by
Peaflor. Instead of being grateful that he was not among those immediately
dismissed due to the companys retrenchment program, Peaflor unreasonably felt
humiliated in performing work that logically fell under his department; insisted on
having a full staff complement; absented himself from work without official leave;
and demanded payment for his unauthorized absences.
THE ISSUE and THE COURTS RULING
The Court finds the petition meritorious.
A preliminary contentious issue is Outdoor Clothings argument that we should
dismiss the petition outright because it raises questions of facts, not the legal
questions that should be raised in a Rule 45 petition.[16]
We see no merit in this argument as the rule that a Rule 45 petition deals only with
legal issues is not an absolute rule; it admits of exceptions. In the labor law setting,
we wade into factual issues when conflict of factual findings exists among the labor
arbiter, the NLRC, and the CA. This is the exact situation that obtains in the present
case since the labor arbiter found facts supporting the conclusion that there had
been constructive dismissal, while the NLRCs and the CAs factual findings
contradicted the labor arbiters findings.[17] Under this situation, the conflicting
factual findings below are not binding on us, and we retain the authority to pass on
the evidence presented and draw conclusions therefrom.[18]
The petition turns on the question of whether Peaflors undisputed resignation was
a voluntary or a forced one, in the latter case making it a constructive dismissal
equivalent to an illegal dismissal. A critical fact necessary in resolving this issue
is whether Peaflor filed his letter of resignation before or after the
appointment of Buenaobra as the new/concurrent HRD manager. This
question also gives rise to the side issue of when Buenaobras appointment was
made. If the resignation letter was submitted before Syfus appointment of
Buenaobra as new HRD manager, little support exists for Peaflors allegation that
he had been forced to resign due to the prevailing abusive and hostile working
environment. Buenaobras appointment would then be simply intended to cover the
vacancy created by Peaflors resignation. On the other hand, if the resignation letter
was submitted after the appointment of Buenaobra, then factual basis exists
indicating that Peaflor had been constructively dismissed as his resignation was a
response to the unacceptable appointment of another person to a position he still
occupied.
The question of when Peaflor submitted his resignation letter arises because this
letter undisputably made was undated. Despite Peaflors claim of having
impressive intellectual and academic credentials,[19] his resignation letter, for some
reason, was undated. Thus, the parties have directly opposing claims on the
matter. Peaflor claims that he wrote and filed the letter on the same date he made
his resignation effective March 15, 2000. Outdoor Clothing, on the other hand,
contends that the letter was submitted on March 1, 2000, for which reason Syfu
issued a memorandum of the same date appointing Buenaobra as the concurrent
HRD manager; Syfus memorandum cited Peaflors intention to resign so he could
devote his time to teaching. The company further cites in support of its case
Buenaobras March 3, 2000 memorandum accepting his appointment. Another
piece of evidence is the Syfu memorandum of March 10, 2000, which informed the
office of the appointment of Buenaobra as the concurrent Head of HRD the position
that Peaflor occupied. Two other memoranda are alleged to exist, namely, the
AWOL memoranda of March 6 and 11, 2000, allegedly sent to Penaflor.
Several reasons arising directly from these pieces of evidence lead us to conclude
that Peaflor did indeed submit his resignation letter on March, 15, 2000, i.e., on the
same day that it was submitted.
First, we regard the Syfu memorandum of March 1, 2000 and the memorandum of
Buenaobra of March 3, 2000 accepting the position of HRD Head to be highly
suspect. In our view, these memoranda, while dated, do not constitute conclusive
evidence of their dates of preparation and
communication. Surprisingly, Peaflor was never informed about these memoranda
when they directly concerned him, particularly the turnover of responsibilities to
Buenaobra if indeed Peaflor had resigned on March 1, 2000 and a smooth
turnover to Buenaobra was intended. Even the recipients of these communications
do not appear to have signed for and dated their receipt. The AWOL memoranda,
to be sure, should have been presented with proof of service if they were to have
any binding effect on Peaflor.
Second,we find it surprising that these pieces of evidence pointing to a March 1,
2000 resignation specifically, Syfus March 1, 2000memorandum to Buenaobra
about Penaflors resignation and Buenaobras own acknowledgment and
acceptance were only presented to the NLRC on appeal, not before the labor
arbiter. The matter was not even mentioned in the companys position paper filed
with the labor arbiter.[20] While the presentation of evidence at the NLRC level on
appeal is not unheard of in labor cases,[21] still sufficient explanation must be
adduced to explain why this irregular practice should be allowed. In the present
case, Outdoor Clothing totally failed to explain the reason for its omission. This
failure, to us, is significant, as these were the clinching pieces of evidence that
allowed the NLRC to justify the reversal of the labor arbiters decision.
Third, the circumstances and other evidence surrounding Peaflors resignation
support his claim that he was practically compelled to resign from the company.
Foremost among these is the memorandum of March 10, 2000 signed by Syfu
informing the whole office (To: All concerned) about the designation of Buenaobra
as concurrent Accounting and HRD Manager. In contrast with the suspect
memoranda we discussed above, this memorandum properly bore signatures
acknowledging receipt and dates of receipt by at least five company officials,
among them the readable signature of Demogene and one Agbayani; three of them
acknowledged receipt on March 13, 2000, showing that indeed it was only on that
day that the appointment of Buenaobra to the HRD position was disclosed. This
evidence is fully consistent with Peaflors position that it was only in the afternoon
of March 13, 2000 that he was told, informally at that, that Buenaobra had taken
over his position. It explains as well why as late as March 13, 2000, Peaflor still
prepared and signed a security report,[22] and is fully consistent with his position
that on that day he was still working on the excuse letter of certain sales personnel
of the company.[23]
We note that the company only belatedly questioned the motivation that Peaflor
cited for his discriminatory treatment, i.e., that he was caught in the bitter fight
between Syfu and Lee, then Vice President for Operations, that led the latter to
leave the company.[24] After Lee left, Peaflor alleged that those identified with Lee
were singled out for adverse treatment, citing in this regard the downsizing of HRD
that occurred on or about this time and which resulted in his one-man HRD
operation. We say this downsizing was only alleged as the company totally failed
despite Penaflors claim of discriminatory practice to adduce evidence showing that
there had indeed been a legitimate downsizing. Other than its bare claim that it
was facing severe financial problems, Outdoor Clothing never presented any
evidence to prove both the reasons for its alleged downsizing and the fact of such
downsizing. No evidence was ever offered to rebut Peaflors claim that his staff
members were dismissed to make his life as HRD Head difficult. To be sure,
Peaflors participation in the termination of his staff members employment cannot
be used against him, as the termination of employment was a management
decision that Peaflor, at his level, could not have effectively contested without
putting his own job on the line.
Peaflors own service with the company deserves close scrutiny. He started
working for the company on September 2, 1999 so that by March 1, 2000, his
probationary period would have ended and he would have become a regular
employee. We find it highly unlikely that Peaflor would resign on March 1, 2000
and would then simply leave given his undisputed record of having successfully
worked within his probationary period on the companys Policy Manual, Personnel
Handbook, Job Expectations, and Organizational Set-up. It does not appear sound
and logical to us that an employee would tender his resignation on the very same
day he was entitled by law to be considered a regular employee, especially when
a downsizing was taking place and he could have availed of its benefits if he would
be separated from the service as a regular employee. It was strange, too, that he
would submit his resignation on March 1, 2000 and keep completely quiet about
this development until its effective date on March 15, 2000. In the usual course,
the turnover alone of responsibilities and work loads to the successor in a small
company would have prevented the matter from being completely under wraps for
10 days before any announcement was ever made. That Peaflor was caught by
surprise by the turnover of his post to Buenaobra is in fact indicated by the
companys own evidence that Peaflor still submitted a security report on March 13,
2000. On the whole, Peaflors record with the company is not that of a company
official who would simply and voluntarily tender a precipitate resignation on the
excuse that he would devote his time to teaching a lame excuse at best considering
that March is the month the semester usually ends and is two or three months
away from the start of another school year.
In our view, it is more consistent with human experience that Peaflor indeed
learned of the appointment of Buenaobra only on March 13, 2000and reacted to
this development through his resignation letter after realizing that he would only
face hostility and frustration in his working environment. Three very basic labor law
principles support this conclusion and militate against the companys case.
The first is the settled rule that in employee termination disputes, the employer
bears the burden of proving that the employees dismissal was for just and valid
cause.[25] That Peaflor did indeed file a letter of resignation does not help the
companys case as, other than the fact of resignation, the company must still prove
that the employee voluntarily resigned.[26] There can be no valid resignation where
the act was made under compulsion or under circumstances approximating
compulsion, such as when an employees act of handing in his resignation was a
reaction to circumstances leaving him no alternative but to resign.[27] In sum, the For your information and guidance.
evidence does not support the existence of voluntariness in Peaflors resignation. Thank you. Nathaniel Syfu. President and COO
Another basic principle is that expressed in Article 4 of the Labor Code that all Cc: All departments, Bulletin Board
[8]
CA rollo, p. 203; the resignation letter reads:
doubts in the interpretation and implementation of the Labor Code should be
Mr. Nathaniel Y. Syfu
interpreted in favor of the workingman. This principle has been extended by
Chief Corporate Officer
jurisprudence to cover doubts in the evidence presented by the employer and the Outdoor Clothing Manufacturing Corporation
employee.[28] As shown above, Peaflor has, at very least, shown serious doubts Sir:
about the merits of the companys case, particularly in the appreciation of the Please accept my irrevocable resignation effective at the close of office on March
clinching evidence on which the NLRC and CA decisions were based. In such 15, 2000.
contest of evidence, the cited Article 4 compels us to rule in Peaflors favor. Thus, Thank you Very truly yours, Manolo A. Peaflor
we find that Peaflor was constructively dismissed given the hostile and [11]
Rollo, p. 66; Syfus March 1, 2000 memorandum reads:
discriminatory working environment he found himself in, particularly evidenced by To: Edwin Buenaobra
the escalating acts of unfairness against him that culminated in the appointment of From: Nathaniel Syfu
another HRD manager without any prior notice to him. Where no less than the Date: March 1, 2000
companys chief corporate officer was against him, Peaflor had no alternative but Subject: HR Manager Resignation
to resign from his employment.[29] Mr. Manolo A. Peaflor has informed me of his intention to resign effective March 15,
Last but not the least, we have repeatedly given significance in abandonment and 2000 to be a full time teacher in a school he is presently connected with.
As such, due to the limited time provided, management has no other alternative but
constructive dismissal cases to the employees reaction to the termination of his
to appoint you as concurrent Human Resources Head to fill in the position of Manolo
employment and have asked the question: is the complaint against the employer A. Peaflor. We will formalize this announcement prior to March 15,
merely a convenient afterthought subsequent to an abandonment or a voluntary 2000. Meanwhile, please coordinate with Manny for the pending HR matters labor
resignation? We find from the records that Peaflor sought almost immediate official cases now with him. He was already advised of this stopgap measure.
recourse to contest his separation from service through a complaint for illegal I trust you will handle this added assignment to the best of your capacity.
dismissal.[30] This is not the act of one who voluntarily resigned; his immediate Nathaniel Syfu, Chief Corporate Officer.
complaints characterize him as one who deeply felt that he had been wronged. [16]
RULES OF COURT, Rule 45, Section 1.
[17]
WHEREFORE, we GRANT the petitioners petition for review on certiorari, The labor arbiter cited the performance of clerical and liaison work by an HRD
and REVERSE the decision and resolution of the Court of Appeals in CA-G.R. SP manager and the appointment of a new HRD manager as basis for concluding that
No. 87865 promulgated on December 29, 2006 and March 14, 2007, Peaflors resignation letter was involuntarily executed.On the other hand, the NLRC
respectively. We REINSTATE the decision of the labor arbiter dated August 15, declared the Peaflor tendered his resignation because he saw no future in becoming a
2001, with the MODIFICATION that, due to the strained relations between the regular employee because Outdoor Clothing was financially unstable; see rollo, pp. 49-
parties, respondents are additionally ordered to pay separation pay equivalent to 51 and 97-98.
[18]
R&E Transport, Inc. et al. v. Latag, 369 Phil. 1113 (1999); Mendoza v. NLRC, 467
the petitioners one months salary. Costs against the respondents.
Phil. 355 (2004).
SO ORDERED. [21]
See PAL Employees Savings and Loan Association, Inc. v. NLRC, et al., 329 Phil.
[1]
Penned by Associate Justice Edgardo P. Cruz, with Associate Justice Jose C. Reyes 581 (1996).
and Associate Justice Enrico A. Lanzanas (retired) concurring; rollo, pp. 22-31. [24]
Outdoor Clothing never disputed that there was a fight between Syfu and Lee in any
[3]
Penned by Commissioner Alberto R. Quimpo, and concurred in by Commissioner of the pleadings it filed before the labor arbiter, the NLRC, and the CA. It was only in
Roy V. Seeres and Commissioner Vicente S.E. Veloso; id. at 85-100. the Memorandum it filed before the Court that it denied such allegation.
[5]
Labor Arbiter Florentino R. Darlucio. [25]
Consolidated Broadcasting System, Inc. v. Oberio, et al., G.R. No. 168424, June 8,
[7]
Id. at 66; the March 10, 2000 memorandum reads: 2007, 524 SCRA 365.
To: All concerned [26]
Vicente v. Court of Appeals, G.R. No. 175988, August 24, 2007, 531 SCRA 240.
From: Accounting Department [27]
See Metro Transit Organization, Inc. v. NLRC, 348 Phil. 334 (1998).
Date: March 10, 2000 [28]
Fujitsu Computer Products Corporation of the Philippines v. Court of Appeals, 494
Re: Human Resources Department Phil. 697 (2005).
This is to inform you that Mr. Edwin Buenaobra is concurrently our Accounting and [29]
Unicorm Safety Glass, Inc. v. Basarte, 486 Phil. 493 (2004).
Human Resources Department Manager. Aside from his present task in [30]
The records do not contain a categorical statement when the illegal dismissal
Accounting, he is now responsible to oversee the operation of Human Resources complaint was actually filed before the labor arbiter. Peaflor stated in his Memorandum
Department, which includes acquiring, motivating, maintaining, and developing before the Court that it was filed on March 14, 2000 a day after he learned of
people in their jobs for the achievement of individual, company and societys goal. Buenaobras appointment, but Outdoor Clothing stated in its appeal with the NLRC that
Any transaction and problems pertaining to Human Resources can now be coursed the complaint was filed on May 20, 2000. Either way, the Court believes that
through him. This memo shall take effect immediately. Peaflor sought recourse against his illegal dismissal within a reasonable period.
FIRST DIVISION
[G.R. No. 138051. June 10, 2004]
JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING
CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on certiorari[1] assailing the 26 March
1999 Decision[2] of the Court of Appeals in CA-G.R. SP No. 49190 dismissing the
petition filed by Jose Y. Sonza (SONZA). The Court of Appeals affirmed the
findings of the National Labor Relations Commission (NLRC), which affirmed the
Labor Arbiters dismissal of the case for lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed
an Agreement (Agreement) with the Mel and Jay Management and Development
Corporation (MJMDC). ABS-CBN was represented by its corporate officers while
MJMDC was represented by SONZA, as President and General Manager, and
Carmela Tiangco (TIANGCO), as EVP and Treasurer. Referred to in the
Agreement as AGENT, MJMDC agreed to provide SONZAs services exclusively
to ABS-CBN as talent for radio and television. The Agreement listed the services
SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m., Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m., Sundays.[3]
ABS-CBN agreed to pay for SONZAs services a monthly talent fee of P310,000
for the first year and P317,000 for the second and third year of the
Agreement.ABS-CBN would pay the talent fees on the 10th and 25th days of the
month.
On 1 April 1996, SONZA wrote a letter to ABS-CBNs President, Eugenio Lopez III,
which reads:
Dear Mr. Lopez,
We would like to call your attention to the Agreement dated May 1994 entered into
by your good self on behalf of ABS-CBN with our company relative to our talent
JOSE Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of recent events
concerning his programs and career. We consider these acts of the station
violative of the Agreement and the station as in breach thereof. In this connection,
we hereby serve notice of rescission of said Agreement at our instance effective
as of date.
Mr. Sonza informed us that he is waiving and renouncing recovery of the remaining
amount stipulated in paragraph 7 of the Agreement but reserves the right to seek
recovery of the other benefits under said Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.) JOSE Y. SONZA
President and Gen. Manager[4]
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the
Department of Labor and Employment, National Capital Region in Quezon
City.SONZA complained that ABS-CBN did not pay his salaries, separation pay,
service incentive leave pay, 13th month pay, signing bonus, travel allowance and
amounts due under the Employees Stock Option Plan (ESOP).
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no
employer-employee relationship existed between the parties. SONZA filed an
Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees through his
account at PCIBank, Quezon Avenue Branch, Quezon City. In July 1996, ABS-
CBN opened a new account with the same bank where ABS-CBN deposited
SONZAs talent fees and other payments due him under the Agreement.
In his Order dated 2 December 1996, the Labor Arbiter[5] denied the motion to
dismiss and directed the parties to file their respective position papers. The Labor
Arbiter ruled:
In this instant case, complainant for having invoked a claim that he was an
employee of respondent company until April 15, 1996 and that he was not paid
certain claims, it is sufficient enough as to confer jurisdiction over the instant case
in this Office. And as to whether or not such claim would entitle complainant to
recover upon the causes of action asserted is a matter to be resolved only after
and as a result of a hearing. Thus, the respondents plea of lack of employer-
employee relationship may be pleaded only as a matter of defense. It behooves
upon it the duty to prove that there really is no employer-employee relationship
between it and the complainant.
The Labor Arbiter then considered the case submitted for resolution. The parties
submitted their position papers on 24 February 1997.
On 11 March 1997, SONZA filed a Reply to Respondents Position Paper with
Motion to Expunge Respondents Annex 4 and Annex 5 from the Records.Annexes
4 and 5 are affidavits of ABS-CBNs witnesses Soccoro Vidanes and Rolando V.
Cruz. These witnesses stated in their affidavits that the prevailing practice in the
television and broadcast industry is to treat talents like SONZA as independent
contractors.
The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the
complaint for lack of jurisdiction.[6] The pertinent parts of the decision read as
follows:
xxx
While Philippine jurisprudence has not yet, with certainty, touched on the true
nature of the contract of a talent, it stands to reason that a talent as above-
described cannot be considered as an employee by reason of the peculiar
circumstances surrounding the engagement of his services.
It must be noted that complainant was engaged by respondent by reason of
his peculiar skills and talent as a TV host and a radio broadcaster. Unlike an
ordinary employee, he was free to perform the services he undertook to
render in accordance with his own style. The benefits conferred to complainant
under the May 1994 Agreement are certainly very much higher than those
generally given to employees. For one, complainant Sonzas monthly talent fees
amount to a staggering P317,000. Moreover, his engagement as a talent was
covered by a specific contract. Likewise, he was not bound to render eight (8)
hours of work per day as he worked only for such number of hours as may be
necessary.
The fact that per the May 1994 Agreement complainant was accorded some
benefits normally given to an employee is inconsequential. Whatever benefits
complainant enjoyed arose from specific agreement by the parties and not
by reason of employer-employee relationship. As correctly put by the
respondent, All these benefits are merely talent fees and other contractual benefits
and should not be deemed as salaries, wages and/or other remuneration accorded
to an employee, notwithstanding the nomenclature appended to these
benefits. Apropos to this is the rule that the term or nomenclature given to a
stipulated benefit is not controlling, but the intent of the parties to the Agreement
conferring such benefit.
The fact that complainant was made subject to respondents Rules and
Regulations, likewise, does not detract from the absence of employer-
employee relationship. As held by the Supreme Court, The line should be drawn
between rules that merely serve as guidelines towards the achievement of the
mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the
party hired to the use of such means. The first, which aim only to promote the
result, create no employer-employee relationship unlike the second, which address
both the result and the means to achieve it. (Insular Life Assurance Co., Ltd. vs.
NLRC, et al., G.R. No. 84484, November 15, 1989).
x x x (Emphasis supplied)[7]
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a
Decision affirming the Labor Arbiters decision. SONZA filed a motion for
reconsideration, which the NLRC denied in its Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before the Court
of Appeals assailing the decision and resolution of the NLRC. On 26 March 1999,
the Court of Appeals rendered a Decision dismissing the case.[8]
Hence, this petition.
The Rulings of the NLRC and Court of Appeals
The Court of Appeals affirmed the NLRCs finding that no employer-employee
relationship existed between SONZA and ABS-CBN. Adopting the NLRCs
decision, the appellate court quoted the following findings of the NLRC:
x x x the May 1994 Agreement will readily reveal that MJMDC entered into the
contract merely as an agent of complainant Sonza, the principal. By all indication
and as the law puts it, the act of the agent is the act of the principal itself. This fact
is made particularly true in this case, as admittedly MJMDC is a management
company devoted exclusively to managing the careers of Mr. Sonza and his
broadcast partner, Mrs. Carmela C. Tiangco. (Opposition to Motion to Dismiss)
Clearly, the relations of principal and agent only accrues between complainant
Sonza and MJMDC, and not between ABS-CBN and MJMDC. This is clear from
the provisions of the May 1994 Agreement which specifically referred to MJMDC
as the AGENT. As a matter of fact, when complainant herein unilaterally rescinded
said May 1994 Agreement, it was MJMDC which issued the notice of rescission in
behalf of Mr. Sonza, who himself signed the same in his capacity as President.
Moreover, previous contracts between Mr. Sonza and ABS-CBN reveal the fact
that historically, the parties to the said agreements are ABS-CBN and Mr.
Sonza. And it is only in the May 1994 Agreement, which is the latest Agreement
executed between ABS-CBN and Mr. Sonza, that MJMDC figured in the said
Agreement as the agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is a mere labor-only contractor of ABS-
CBN such that there exist[s] employer-employee relationship between the latter
and Mr. Sonza. On the contrary, We find it indubitable, that MJMDC is an agent,
not of ABS-CBN, but of the talent/contractor Mr. Sonza, as expressly admitted by
the latter and MJMDC in the May 1994 Agreement.
It may not be amiss to state that jurisdiction over the instant controversy indeed
belongs to the regular courts, the same being in the nature of an action for alleged
breach of contractual obligation on the part of respondent-appellee. As squarely
apparent from complainant-appellants Position Paper, his claims for compensation
for services, 13th month pay, signing bonus and travel allowance against
respondent-appellee are not based on the Labor Code but rather on the provisions
of the May 1994 Agreement, while his claims for proceeds under Stock Purchase
Agreement are based on the latter. A portion of the Position Paper of complainant-
appellant bears perusal:
Under [the May 1994 Agreement] with respondent ABS-CBN, the latter
contractually bound itself to pay complainant a signing bonus consisting of shares
of stocks with FIVE HUNDRED THOUSAND PESOS (P500,000.00).
Similarly, complainant is also entitled to be paid 13th month pay based on an
amount not lower than the amount he was receiving prior to effectivity of (the)
Agreement.
Under paragraph 9 of (the May 1994 Agreement), complainant is entitled to a
commutable travel benefit amounting to at least One Hundred Fifty Thousand
Pesos (P150,000.00) per year.
Thus, it is precisely because of complainant-appellants own recognition of the fact
that his contractual relations with ABS-CBN are founded on the New Civil Code,
rather than the Labor Code, that instead of merely resigning from ABS-CBN,
complainant-appellant served upon the latter a notice of rescission of Agreement
with the station, per his letter dated April 1, 1996, which asserted that instead of
referring to unpaid employee benefits, he is waiving and renouncing recovery of
the remaining amount stipulated in paragraph 7 of the Agreement but reserves the
right to such recovery of the other benefits under said Agreement. (Annex 3 of the
respondent ABS-CBNs Motion to Dismiss dated July 10, 1996).
Evidently, it is precisely by reason of the alleged violation of the May 1994
Agreement and/or the Stock Purchase Agreement by respondent-appellee that
complainant-appellant filed his complaint. Complainant-appellants claims being
anchored on the alleged breach of contract on the part of respondent-appellee, the
same can be resolved by reference to civil law and not to labor law. Consequently,
they are within the realm of civil law and, thus, lie with the regular courts. As held
in the case of Dai-Chi Electronics Manufacturing vs. Villarama, 238 SCRA 267, 21
November 1994, an action for breach of contractual obligation is intrinsically
a civil dispute.[9] (Emphasis supplied)
The Court of Appeals ruled that the existence of an employer-employee
relationship between SONZA and ABS-CBN is a factual question that is within the
jurisdiction of the NLRC to resolve.[10] A special civil action for certiorari extends
only to issues of want or excess of jurisdiction of the NLRC.[11] Such action cannot
cover an inquiry into the correctness of the evaluation of the evidence which served
as basis of the NLRCs conclusion.[12] The Court of Appeals added that it could not
re-examine the parties evidence and substitute the factual findings of the NLRC
with its own.[13]
The Issue
In assailing the decision of the Court of Appeals, SONZA contends that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS
DECISION AND REFUSING TO FIND THAT AN EMPLOYER-EMPLOYEE
RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-CBN, DESPITE THE
WEIGHT OF CONTROLLING LAW, JURISPRUDENCE AND EVIDENCE TO
SUPPORT SUCH A FINDING.[14]
The Courts Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the decision of the Court of
Appeals affirming the NLRC ruling which upheld the Labor Arbiters dismissal of
the case for lack of jurisdiction.
The present controversy is one of first impression. Although Philippine labor laws
and jurisprudence define clearly the elements of an employer-employee
relationship, this is the first time that the Court will resolve the nature of the
relationship between a television and radio station and one of its talents. There is
no case law stating that a radio and television program host is an employee of the
broadcast station.
The instant case involves big names in the broadcast industry, namely Jose Jay
Sonza, a known television and radio personality, and ABS-CBN, one of the biggest
television and radio networks in the country.
SONZA contends that the Labor Arbiter has jurisdiction over the case because he
was an employee of ABS-CBN. On the other hand, ABS-CBN insists that the Labor
Arbiter has no jurisdiction because SONZA was an independent contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship is a question of
fact. Appellate courts accord the factual findings of the Labor Arbiter and the NLRC
not only respect but also finality when supported by substantial
evidence.[15] Substantial evidence means such relevant evidence as a reasonable
mind might accept as adequate to support a conclusion.[16] A party cannot prove
the absence of substantial evidence by simply pointing out that there is contrary
evidence on record, direct or circumstantial. The Court does not substitute its own
judgment for that of the tribunal in determining where the weight of evidence lies
or what evidence is credible.[17]
SONZA maintains that all essential elements of an employer-employee
relationship are present in this case. Case law has consistently held that the
elements of an employer-employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employers power to control the employee on the means and
methods by which the work is accomplished.[18] The last element, the so-
called control test, is the most important element.[19]
A. Selection and Engagement of Employee
ABS-CBN engaged SONZAs services to co-host its television and radio programs
because of SONZAs peculiar skills, talent and celebrity status. SONZA contends
that the discretion used by respondent in specifically selecting and hiring
complainant over other broadcasters of possibly similar experience and
qualification as complainant belies respondents claim of independent
contractorship.
Independent contractors often present themselves to possess unique skills,
expertise or talent to distinguish them from ordinary employees. The specific
selection and hiring of SONZA, because of his unique skills, talent and
celebrity status not possessed by ordinary employees, is a circumstance
indicative, but not conclusive, of an independent contractual relationship. If
SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN
would not have entered into the Agreement with SONZA but would have hired him
through its personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not conclusively
determine his status. We must consider all the circumstances of the relationship,
with the control test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees
going to MJMDC. SONZA asserts that this mode of fee payment shows that he
was an employee of ABS-CBN. SONZA also points out that ABS-CBN granted him
benefits and privileges which he would not have enjoyed if he were truly the subject
of a valid job contract.
All the talent fees and benefits paid to SONZA were the result of negotiations that
led to the Agreement. If SONZA were ABS-CBNs employee, there would be no
need for the parties to stipulate on benefits such as SSS, Medicare, x x x and
13th month pay[20] which the law automatically incorporates into every employer-
employee contract.[21] Whatever benefits SONZA enjoyed arose from contract and
not because of an employer-employee relationship.[22]
SONZAs talent fees, amounting to P317,000 monthly in the second and third year,
are so huge and out of the ordinary that they indicate more an independent
contractual relationship rather than an employer-employee relationship. ABS-CBN
agreed to pay SONZA such huge talent fees precisely because of SONZAs unique
skills, talent and celebrity status not possessed by ordinary employees. Obviously,
SONZA acting alone possessed enough bargaining power to demand and receive
such huge talent fees for his services. The power to bargain talent fees way above
the salary scales of ordinary employees is a circumstance indicative, but not
conclusive, of an independent contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not negate
the status of SONZA as an independent contractor. The parties expressly agreed
on such mode of payment. Under the Agreement, MJMDC is the AGENT of
SONZA, to whom MJMDC would have to turn over any talent fee accruing under
the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their
relationship. SONZA failed to show that ABS-CBN could terminate his services on
grounds other than breach of contract, such as retrenchment to prevent losses as
provided under labor laws.[23]
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as
long as AGENT and Jay Sonza shall faithfully and completely perform each
condition of this Agreement.[24] Even if it suffered severe business losses, ABS-
CBN could not retrench SONZA because ABS-CBN remained obligated to pay
SONZAs talent fees during the life of the Agreement. This circumstance indicates
an independent contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-
CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its undertaking in
the Agreement to continue paying SONZAs talent fees during the remaining life of
the Agreement even if ABS-CBN cancelled SONZAs programs through no fault of
SONZA.[25]
SONZA assails the Labor Arbiters interpretation of his rescission of the Agreement
as an admission that he is not an employee of ABS-CBN. The Labor Arbiter stated
that if it were true that complainant was really an employee, he would merely
resign, instead. SONZA did actually resign from ABS-CBN but he also, as
president of MJMDC, rescinded the Agreement. SONZAs letter clearly bears this
out.[26] However, the manner by which SONZA terminated his relationship with
ABS-CBN is immaterial. Whether SONZA rescinded the Agreement or resigned
from work does not determine his status as employee or independent contractor.
D. Power of Control
Since there is no local precedent on whether a radio and television program host
is an employee or an independent contractor, we refer to foreign case law in
analyzing the present case. The United States Court of Appeals, First Circuit,
recently held in Alberty-Vlez v. Corporacin De Puerto Rico Para La Difusin
Pblica (WIPR)[27] that a television program host is an independent contractor. We
quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an independent contractor. First, a
television actress is a skilled position requiring talent and training not
available on-the-job. x x x In this regard, Alberty possesses a masters degree in
public communications and journalism; is trained in dance, singing, and modeling;
taught with the drama department at the University of Puerto Rico; and acted in
several theater and television productions prior to her affiliation with Desde Mi
Pueblo. Second, Alberty provided the tools and instrumentalities necessary
for her to perform. Specifically, she provided, or obtained sponsors to provide,
the costumes, jewelry, and other image-related supplies and services necessary
for her appearance. Alberty disputes that this factor favors independent contractor
status because WIPR provided the equipment necessary to tape the
show. Albertys argument is misplaced. The equipment necessary for Alberty to
conduct her job as host of Desde Mi Pueblo related to her appearance on the
show. Others provided equipment for filming and producing the show, but these
were not the primary tools that Alberty used to perform her particular function. If
we accepted this argument, independent contractors could never work on
collaborative projects because other individuals often provide the equipment
required for different aspects of the collaboration. x x x
Third, WIPR could not assign Alberty work in addition to filming Desde Mi
Pueblo. Albertys contracts with WIPR specifically provided that WIPR hired her
professional services as Hostess for the Program Desde Mi Pueblo. There is no
evidence that WIPR assigned Alberty tasks in addition to work related to these
tapings. x x x[28] (Emphasis supplied)
Applying the control test to the present case, we find that SONZA is not an
employee but an independent contractor. The control test is the most
important test our courts apply in distinguishing an employee from an
independent contractor.[29] This test is based on the extent of control the hirer
exercises over a worker.The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse holds
true as well the less control the hirer exercises, the more likely the worker is
considered an independent contractor.[30]
First, SONZA contends that ABS-CBN exercised control over the means and
methods of his work.
SONZAs argument is misplaced. ABS-CBN engaged SONZAs services
specifically to co-host the Mel & Jay programs. ABS-CBN did not assign any other
work to SONZA. To perform his work, SONZA only needed his skills and talent.
How SONZA delivered his lines, appeared on television, and sounded on radio
were outside ABS-CBNs control. SONZA did not have to render eight hours of
work per day. The Agreement required SONZA to attend only rehearsals and
tapings of the shows, as well as pre- and post-production staff meetings.[31] ABS-
CBN could not dictate the contents of SONZAs script. However, the Agreement
prohibited SONZA from criticizing in his shows ABS-CBN or its interests.[32] The
clear implication is that SONZA had a free hand on what to say or discuss in his
shows provided he did not attack ABS-CBN or its interests.
We find that ABS-CBN was not involved in the actual performance that produced
the finished product of SONZAs work.[33] ABS-CBN did not instruct SONZA how to
perform his job. ABS-CBN merely reserved the right to modify the program format
and airtime schedule for more effective programming.[34] ABS-CBNs sole concern
was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN
did not exercise control over the means and methods of performance of SONZAs
work.
SONZA claims that ABS-CBNs power not to broadcast his shows proves ABS-
CBNs power over the means and methods of the performance of his work.Although
ABS-CBN did have the option not to broadcast SONZAs show, ABS-CBN was still
obligated to pay SONZAs talent fees. Thus, even if ABS-CBN was completely
dissatisfied with the means and methods of SONZAs performance of his work, or
even with the quality or product of his work, ABS-CBN could not dismiss or even
discipline SONZA. All that ABS-CBN could do is not to broadcast SONZAs show
but ABS-CBN must still pay his talent fees in full.[35]
Clearly, ABS-CBNs right not to broadcast SONZAs show, burdened as it was by
the obligation to continue paying in full SONZAs talent fees, did not amount to
control over the means and methods of the performance of SONZAs work. ABS-
CBN could not terminate or discipline SONZA even if the means and methods of
performance of his work - how he delivered his lines and appeared on television -
did not meet ABS-CBNs approval. This proves that ABS-CBNs control was limited
only to the result of SONZAs work, whether to broadcast the final product or not. In
either case, ABS-CBN must still pay SONZAs talent fees in full until the expiry of
the Agreement.
In Vaughan, et al. v. Warner, et al.,[36] the United States Circuit Court of Appeals
ruled that vaudeville performers were independent contractors although the
management reserved the right to delete objectionable features in their shows.
Since the management did not have control over the manner of performance of
the skills of the artists, it could only control the result of the work by deleting
objectionable features.[37]
SONZA further contends that ABS-CBN exercised control over his work by
supplying all equipment and crew. No doubt, ABS-CBN supplied the equipment,
crew and airtime needed to broadcast the Mel & Jay programs. However, the
equipment, crew and airtime are not the tools and instrumentalities SONZA
needed to perform his job. What SONZA principally needed were his talent or skills
and the costumes necessary for his appearance. [38] Even though ABS-CBN
provided SONZA with the place of work and the necessary equipment, SONZA
was still an independent contractor since ABS-CBN did not supervise and control
his work. ABS-CBNs sole concern was for SONZA to display his talent during the
airing of the programs.[39]
A radio broadcast specialist who works under minimal supervision is an
independent contractor.[40] SONZAs work as television and radio program host
required special skills and talent, which SONZA admittedly possesses. The
records do not show that ABS-CBN exercised any supervision and control over
how SONZA utilized his skills and talent in his shows.
Second, SONZA urges us to rule that he was ABS-CBNs employee because ABS-
CBN subjected him to its rules and standards of performance. SONZA claims that
this indicates ABS-CBNs control not only [over] his manner of work but also the
quality of his work.
The Agreement stipulates that SONZA shall abide with the rules and standards of
performance covering talents[41] of ABS-CBN. The Agreement does not require
SONZA to comply with the rules and standards of performance prescribed for
employees of ABS-CBN. The code of conduct imposed on SONZA under the
Agreement refers to the Television and Radio Code of the Kapisanan ng mga
Broadcaster sa Pilipinas (KBP), which has been adopted by the COMPANY (ABS-
CBN) as its Code of Ethics.[42] The KBP code applies to broadcasters, not to
employees of radio and television stations. Broadcasters are not necessarily
employees of radio and television stations. Clearly, the rules and standards of
performance referred to in the Agreement are those applicable to talents and not
to employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired party indicate
that the latter is an employee of the former.[43] In this case, SONZA failed to show
that these rules controlled his performance. We find that these general rules are
merely guidelines towards the achievement of the mutually desired result, which
are top-rating television and radio programs that comply with standards of the
industry. We have ruled that:
Further, not every form of control that a party reserves to himself over the conduct
of the other party in relation to the services being rendered may be accorded the
effect of establishing an employer-employee relationship. The facts of this case fall
squarely with the case of Insular Life Assurance Co., Ltd. vs. NLRC. In said case,
we held that:
Logically, the line should be drawn between rules that merely serve as guidelines
towards the achievement of the mutually desired result without dictating the means
or methods to be employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of such means. The
first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used
to achieve it.[44]
The Vaughan case also held that one could still be an independent contractor
although the hirer reserved certain supervision to insure the attainment of the
desired result. The hirer, however, must not deprive the one hired from performing
his services according to his own initiative.[45]
Lastly, SONZA insists that the exclusivity clause in the Agreement is the most
extreme form of control which ABS-CBN exercised over him.
This argument is futile. Being an exclusive talent does not by itself mean that
SONZA is an employee of ABS-CBN. Even an independent contractor can validly
provide his services exclusively to the hiring party. In the broadcast industry,
exclusivity is not necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in the
entertainment industry.[46] This practice is not designed to control the means and
methods of work of the talent, but simply to protect the investment of the broadcast
station. The broadcast station normally spends substantial amounts of money,
time and effort in building up its talents as well as the programs they appear in and
thus expects that said talents remain exclusive with the station for a commensurate
period of time.[47] Normally, a much higher fee is paid to talents who agree to work
exclusively for a particular radio or television station. In short, the huge talent fees
partially compensates for exclusivity, as in the present case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiters finding that he is a talent of MJMDC, which
contracted out his services to ABS-CBN. The Labor Arbiter ruled that as a talent
of MJMDC, SONZA is not an employee of ABS-CBN. SONZA insists that MJMDC
is a labor-only contractor and ABS-CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the labor-only
contractor; (2) the employee who is ostensibly under the employ of the labor-only
contractor; and (3) the principal who is deemed the real employer. Under this
scheme, the labor-only contractor is the agent of the principal. The law makes
the principal responsible to the employees of the labor-only contractor as if the
principal itself directly hired or employed the employees.[48] These circumstances
are not present in this case.
There are essentially only two parties involved under the Agreement, namely,
SONZA and ABS-CBN. MJMDC merely acted as SONZAs agent. The Agreement
expressly states that MJMDC acted as the AGENT of SONZA. The records do not
show that MJMDC acted as ABS-CBNs agent. MJMDC, which stands for Mel and
Jay Management and Development Corporation, is a corporation organized and
owned by SONZA and TIANGCO. The President and General Manager of MJMDC
is SONZA himself. It is absurd to hold that MJMDC, which is owned, controlled,
headed and managed by SONZA, acted as agent of ABS-CBN in entering into the
Agreement with SONZA, who himself is represented by MJMDC. That would make
MJMDC the agent of both ABS-CBN and SONZA.
As SONZA admits, MJMDC is a management company devoted exclusively to
managing the careers of SONZA and his broadcast partner, TIANGCO.MJMDC is
not engaged in any other business, not even job contracting. MJMDC does not
have any other function apart from acting as agent of SONZA or TIANGCO to
promote their careers in the broadcast and television industry.[49]
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor Blas
Ople on 8 January 1979 finally settled the status of workers in the broadcast
industry. Under this policy, the types of employees in the broadcast industry are
the station and program employees.
Policy Instruction No. 40 is a mere executive issuance which does not have the
force and effect of law. There is no legal presumption that Policy Instruction No. 40
determines SONZAs status. A mere executive issuance cannot exclude
independent contractors from the class of service providers to the broadcast
industry.The classification of workers in the broadcast industry into only two groups
under Policy Instruction No. 40 is not binding on this Court, especially when the
classification has no basis either in law or in fact.
Affidavits of ABS-CBNs Witnesses
SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro Vidanes
and Rolando Cruz without giving his counsel the opportunity to cross-examine
these witnesses. SONZA brands these witnesses as incompetent to attest on the
prevailing practice in the radio and television industry. SONZA views the affidavits
of these witnesses as misleading and irrelevant.
While SONZA failed to cross-examine ABS-CBNs witnesses, he was never
prevented from denying or refuting the allegations in the affidavits. The Labor
Arbiter has the discretion whether to conduct a formal (trial-type) hearing after the
submission of the position papers of the parties, thus:
Section 3. Submission of Position Papers/Memorandum
xxx
These verified position papers shall cover only those claims and causes of action
raised in the complaint excluding those that may have been amicably settled, and
shall be accompanied by all supporting documents including the affidavits of their
respective witnesses which shall take the place of the latters direct testimony. x x
x
Section 4. Determination of Necessity of Hearing. Immediately after the
submission of the parties of their position papers/memorandum, the Labor Arbiter
shall motu propio determine whether there is need for a formal trial or hearing. At
this stage, he may, at his discretion and for the purpose of making such
determination, ask clarificatory questions to further elicit facts or information,
including but not limited to the subpoena of relevant documentary evidence, if any
from any party or witness.[50]
The Labor Arbiter can decide a case based solely on the position papers and the
supporting documents without a formal trial.[51] The holding of a formal hearing or
trial is something that the parties cannot demand as a matter of right.[52] If the Labor
Arbiter is confident that he can rely on the documents before him, he cannot be
faulted for not conducting a formal trial, unless under the particular circumstances
of the case, the documents alone are insufficient. The proceedings before a Labor
Arbiter are non-litigious in nature. Subject to the requirements of due process, the
technicalities of law and the rules obtaining in the courts of law do not strictly apply
in proceedings before a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like SONZA as independent contractors.
SONZA argues that if such practice exists, it is void for violating the right of labor
to security of tenure.
The right of labor to security of tenure as guaranteed in the Constitution[53] arises
only if there is an employer-employee relationship under labor laws. Not every
performance of services for a fee creates an employer-employee relationship. To
hold that every person who renders services to another for a fee is an employee -
to give meaning to the security of tenure clause - will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to offer their
services as independent contractors. The right to life and livelihood guarantees
this freedom to contract as independent contractors. The right of labor to security
of tenure cannot operate to deprive an individual, possessed with special skills,
expertise and talent, of his right to contract as an independent contractor. An
individual like an artist or talent has a right to render his services without any one
controlling the means and methods by which he performs his art or craft. This Court
will not interpret the right of labor to security of tenure to compel artists and talents
to render their services only as employees. If radio and television program hosts Sandigan Savings and Loan Bank, Inc. v. NLRC, 324 Phil. 348 (1996); Magnolia
can render their services only as employees, the station owners and managers Dairy Products Corporation v. NLRC, 322 Phil. 508 (1996).
[16]
can dictate to the radio and television hosts what they say in their shows. This is Madlos v. NLRC, 324 Phil. 498 (1996).
[17]
Domasig v. National Labor Relations Commission, G.R. No. 118101, 16 September
not conducive to freedom of the press.
1996, 261 SCRA 779.
[18]
Different Tax Treatment of Talents and Broadcasters De Los Santos v. NLRC, 423 Phil. 1020 (2001); Traders Royal Bank v. NLRC, 378 Phil.
1081 (1999); Aboitiz Shipping Employees Association v. National Labor Relations
The National Internal Revenue Code (NIRC)[54] in relation to Republic Act No. Commission, G.R. No. 78711, 27 June 1990, 186 SCRA 825; Ruga v. National
7716,[55] as amended by Republic Act No. 8241,[56] treats talents, television and Labor Relations Commission, G.R. Nos. 72654-61, 22 January 1990, 181 SCRA
radio broadcasters differently. Under the NIRC, these professionals are subject to 266.
the 10% value-added tax (VAT) on services they render. Exempted from the VAT [19]
Ibid.
[20]
are those under an employer-employee relationship.[57] This different tax treatment Paragraph 10 of the Agreement provides: The COMPANY shall provide him with the
accorded to talents and broadcasters bolters our conclusion that they are following benefits: SSS, Medicare, Healthcare, executive life and accident
independent contractors, provided all the basic elements of a contractual insurance, and a 13th-month pay based on an amount not lower than the amount
he was receiving prior to the effectivity of this Agreement.
relationship are present as in this case. [21]
Presidential Decree No. 851 (Requiring All Employers to Pay their Employees a 13th-
Nature of SONZAs Claims month Pay) for the 13th month pay; Republic Act No. 1161 (Social Security Law)
for the SSS benefits; and Republic Act No. 7875 (National Health Insurance Act of
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, 1995) for the Philhealth insurance.
separation pay, service incentive leave, signing bonus, travel allowance, and [22]
Article 1157 of the Civil Code explicitly provides:
amounts due under the Employee Stock Option Plan. We agree with the findings Obligations arise from:
of the Labor Arbiter and the Court of Appeals that SONZAs claims are all based (1) Law;
on the May 1994 Agreement and stock option plan, and not on the Labor (2) Contracts;
Code. Clearly, the present case does not call for an application of the Labor Code (3) Quasi-contracts;
(4) Acts or omissions punished by law; and
provisions but an interpretation and implementation of the May 1994 Agreement.
(5) Quasi-delicts. (Emphasis supplied)
In effect, SONZAs cause of action is for breach of contract which is intrinsically a [23]
See Article 283, Labor Code.
civil dispute cognizable by the regular courts.[58] [24]
Paragraph 7 of the Agreement states: Provided that the AGENT and Jay Sonza shall
WHEREFORE, we DENY the petition. The assailed Decision of the Court of faithfully and completely perform each condition of this Agreement for and in
Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs consideration of the aforesaid services by the AGENT and its talent, the
COMPANY agrees to pay the AGENT for the first year of this Agreement the
against petitioner. SO ORDERED. amount of THREE HUNDRED TEN THOUSAND PESOS ONLY (P310,000.00) per
month, payable on the 10th and 25th of each month. For the second and third year
[1]
Under Rule 45 of the Rules of Court. of this Agreement, the COMPANY shall pay the amount of THREE HUNDRED
[2]
Penned by Associate Justice Eugenio S. Labitoria with Associate Justices Jesus M. SEVENTEEN THOUSAND PESOS ONLY (P317,000.00) per month, payable
Elbinias and Marina L. Buzon concurring. likewise on the 10th and 25th of the each month.
[3] [25]
Rollo, p. 150. Paragraph 11 of the Agreement states: In the event of cancellation of this Agreement
[4]
Ibid., p. 204. through no fault of the AGENT and its talent, COMPANY agrees to pay the full
[5]
Donato G. Quinto, Jr. amount specified in this Agreement for the remaining period covered by this
[6]
Rollo, pp. 114-130. Agreement, provided that the talent shall not render any service for or in any other
[7]
Ibid., pp. 123-125. radio or television production of any person, firm, corporation or any entity
[8]
Ibid., p. 39. competing with the COMPANY until the expiry hereof.
[9] [26]
Rollo, pp. 37-39. The opening sentence of the second paragraph of SONZAs letter reads:
[10]
Ibid., p. 39. As you are well aware, Mr. Sonza irrevocably resigned in view of recent events concerning
[11]
Ibid. his programs and career. xxx
[12] [27]
Ibid. 361 F.3d 1, 2 March 2004.
[13] [28]
Ibid. See also Spirides v. Reinhardt, 486 F. Supp. 685 (1980).
[14] [29]
Ibid., p. 269. In the United States, aside from the right of control test, there are the economic reality
[15]
Fleischer Company, Inc. v. National Labor Relations Commission, G.R. No. 121608, 26 test and the multi-factor test. The tests are drawn from statutes, regulations, rules,
March 2001, 355 SCRA 105; AFP Mutual Benefit Association, Inc. v. NLRC, G.R. policies, rulings, case law and the like. The right of control test applies under the
No. 102199, 28 January 1997, 267 SCRA 47; Cathedral School of Technology v. federal Internal Revenue Code (IRC). The economic reality test applies to the
NLRC, G.R. No. 101438, 13 October 1992, 214 SCRA 551. See also Ignacio v. federal Fair Labor Standards Act (FLSA).[29] The California Division of Labor
Coca-Cola Bottlers Phils., Inc., 417 Phil. 747 (2001); Gonzales v. National Labor Standards Enforcement (DLSE) uses a hybrid of these two tests often referred to
Relations Commission, G.R. No. 131653, 26 March 2001, 355 SCRA 195; as the multi-factor test in determining who an employee is.

Most courts in the United States have utilized the control test to determine whether one is
an employee. Under this test, a court must consider the hiring partys right to control
the manner and means by which the product is accomplished. Among other factors
relevant to this inquiry are the skills required; the source of the instrumentalities
and tools; the location of the work; the duration of the relationship between the
parties; whether the hiring party has the right to assign additional projects to the
hired party; the extent of the hired partys discretion over when and how long to
work; the method of payment; the hired partys role in hiring and paying assistants;
whether the work is part of the regular business of the hiring party; whether the
hiring party is in business; the provision of employee benefits; and the tax
treatment of the hired party. (www.piercegorman.com, quoted from the article
entitled Management-side employment law advice for the entertainment industry
with subtitle Classification of Workers: Independent Contractors versus Employee
by David Albert Pierce, Esq.)
[30]
www.piercegorman.com, quoted from the article entitled Management-side employment
law advice for the entertainment industry with subtitle Classification of
Workers: Independent Contractors versus Employee by David Albert Pierce, Esq.
[31]
Paragraph 4 of the Agreement provides: AGENT will make available Jay Sonza for
rehearsals and tapings of the Programs on the day and time set by the producer
and director of the Programs and to attend pre and post production staff meetings.
[32]
Paragraph 15 of the Agreement provides: AGENT, talent shall not use the Programs as
a venue to broadcast or announce any criticism on any operational, administrative,
or legal problems, situations or other matter which may occur, exist or alleged to
have occurred or existed within the COMPANY. Likewise, AGENT, talent shall, in
accordance with good broadcast management and ethics, take up with the proper
officers of the COMPANY suggestions or criticisms on any matter or condition
affecting the COMPANY or its relation to the public or third parties.
[33]
In Zhengxing v. Nathanson, 215 F.Supp.2d 114, citing Redd v. Summers, 232 F.3d 933
(D.C. Cir.), plaintiffs superior was not involved in the actual performance that
produced the final product.
[34]
Paragraph 3 of the Agreement provides: The COMPANY reserves the right to modify the
program format and likewise change airtime schedule for more effective
programming.
[35]
The right not to broadcast an independent contractors show also gives the radio and
television station protection in case it deems the contents of the show libelous.
[36]
157 F.2d 26, 8 August 1946.
[38]
In Zhengxing v. Nathanson, 215 F.Supp.2d 114, 5 August 2002, plaintiff was also
provided with the place of work and equipment to be used.
[39]
In the Alberty case, the US Court of Appeals rejected Albertys contention that WIPR
provided the equipment necessary to tape the show. The court held there that the
equipment necessary for Alberty to conduct her job as program host related to her
appearance on the show. Others provided equipment for filming and producing the
show, but these were not the primary tools that Alberty used to perform her
particular function. Since Alberty provided, or obtained sponsors to provide, the
costumes, jewelry, and other image-related supplies and services necessary for
her appearance, she provided the tools and instrumentalities necessary for her to
perform. The US Court of Appeals added that if it accepted Albertys argument,
independent contractors could never work on collaborative projects because other
individuals often provide the equipment required for different aspects of the
collaboration.
The Alberty case further ruled that while control over the manner, location, and hours of work
is often critical to the independent contractor/employee analysis, it must be
considered in light of the work performed and the industry at issue. Considering
the tasks that an actor performs, the court does not believe that the sort of control
identified by Alberty necessarily indicates employee status.
[40]
In Zhengxing, a Chinese language broadcaster and translator was deemed an
independent contractor because she worked under minimal
supervision. The U.S. court also found that plaintiff was required to possess
specialized knowledge before commencing her position as a broadcaster.
[41]
Paragraph 13 of the Agreement provides: AGENT agrees that talent shall abide by the
rules, regulations and standards of performance of the COMPANY covering
talents, and that talent is bound to comply with the Television and Radio Code of
the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted
by the COMPANY as its Code of Ethics. AGENT shall perform and keep all of the
duties and obligations assumed or entered by the AGENT hereunder using its best
talents and abilities. Any violation of or non-conformity with this provision by talent
shall be a valid and sufficient ground for the immediate termination of the
Agreement. (Emphasis supplied)
[43]
AFP Mutual Benefit Association, Inc. v. NLRC, G.R. No. 102199, 28 January 1997, 267
SCRA 47.
[45]
Supra note 36.
[46]
Rollo, p. 302.
[48]
The second paragraph of Article 106 of the Labor Code reads:
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. 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.
[49]
Rollo, p. 90.
[50]
New Rules of Procedure of the National Labor Relations Commission, as amended by
Resolution 3-99, series of 1999.
[51]
University of the Immaculate Concepcion v. U.I.C. Teaching and Non-Teaching
Personnel and Employees Union, 414 Phil. 522 (2001).
[52]
Columbus Philippine Bus Corp. v. NLRC, 417 Phil. 81 (2001).
[53]
Section 3, Article XIII of the Constitution.
[54]
Republic Act No. 8424. BIR Revenue Regulations No. 19-99 also provides the following:
SECTION 1. Scope. Pursuant to the provisions of Sections 244 and 108 of the National
Internal Revenue Code of 1997, in relation to Section 17 of Republic Act No. 7716,
as amended by Section 11 of Republic Act 8241, these Regulations are hereby
promulgated to govern the imposition of value-added tax on sale of services by
persons engaged in the practice of profession or calling and professional services
rendered by general professional partnerships; services rendered by actors,
actresses, talents, singers and emcees, radio and television broadcasters and
choreographers; musical, radio, movie, television and stage directors; and
professional athletes.
SECTION 2. Coverage. Beginning January 1, 2000, general professional partnerships,
professionals and persons described above shall be governed by the provisions of
Revenue Regulation No. 7-95, as amended, otherwise known as the Consolidated
Value-Added Tax Regulations. xxx
[55]
Otherwise known as the Expanded Value-Added Tax Law.
[56]
Act amending Republic Act No. 7716, otherwise known as the Expanded Value-Added
Tax Law and other pertinent provisions of the National Internal Revenue Code, as
amended (December 20, 1996).
[57]
Section 109 of the NIRC provides:
Exempt transactions. The following shall be exempt from the value-added tax:
xxx
(o) Services rendered by individuals pursuant to an employer-employee relationship; xxx
[58]
Singapore Airlines Ltd. v. Hon. Cruz, etc., et al., 207 Phil. 585 (1983).
THIRD DIVISION
[G.R. No. 157214. June 7, 2005]
PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs. RICARDO DE
VERA, respondent.
DECISION
GARCIA, J.:
Before us is this appeal by way of a petition for review on certiorari from the 12
September 2002 Decision[1] and the 13 February 2003 Resolution[2] of the Court of
Appeals in CA-G.R. SP No. 65178, upholding the finding of illegal dismissal by the
National Labor Relations Commission against petitioner.
As culled from the records, the pertinent facts are:
Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation
engaged in the business of communication services and allied activities, while
respondent Ricardo De Vera is a physician by profession whom petitioner enlisted
to attend to the medical needs of its employees. At the crux of the controversy is
Dr. De Veras status vis a vis petitioner when the latter terminated his engagement.
It appears that on 15 May 1981, De Vera, via a letter dated 15 May 1981,[3] offered
his services to the petitioner, therein proposing his plan of works required of a
practitioner in industrial medicine, to include the following:
1. Application of preventive medicine including periodic check-up of employees;
2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours
daily for consultation services to employees;
3. Management and treatment of employees that may necessitate hospitalization
including emergency cases and accidents;
4. Conduct pre-employment physical check-up of prospective employees with no
additional medical fee;
5. Conduct home visits whenever necessary;
6. Attend to certain medical administrative function such as accomplishing medical
forms, evaluating conditions of employees applying for sick leave of absence and
subsequently issuing proper certification, and all matters referred which are
medical in nature.
The parties agreed and formalized respondents proposal in a document
denominated as RETAINERSHIP CONTRACT[4] which will be for a period of one
year subject to renewal, it being made clear therein that respondent will cover the
retainership the Company previously had with Dr. K. Eulau and that respondents
retainer fee will be at P4,000.00 a month. Said contract was renewed yearly.[5] The
retainership arrangement went on from 1981 to 1994 with changes in the retainers
fee. However, for the years 1995 and 1996, renewal of the contract was only made
verbally.
The turning point in the parties relationship surfaced in December 1996 when
Philcom, thru a letter[6] bearing on the subject boldly written as TERMINATION
RETAINERSHIP CONTRACT, informed De Vera of its decision to discontinue the
latters retainers contract with the Company effective at the close of business hours
of December 31, 1996 because management has decided that it would be more
practical to provide medical services to its employees through accredited hospitals
near the company premises.
On 22 January 1997, De Vera filed a complaint for illegal dismissal before the
National Labor Relations Commission (NLRC), alleging that that he had been
actually employed by Philcom as its company physician since 1981 and was
dismissed without due process. He averred that he was designated as a company
physician on retainer basis for reasons allegedly known only to Philcom. He
likewise professed that since he was not conversant with labor laws, he did not
give much attention to the designation as anyway he worked on a full-time basis
and was paid a basic monthly salary plus fringe benefits, like any other regular
employees of Philcom.
On 21 December 1998, Labor Arbiter Ramon Valentin C. Reyes came out with a
decision[7] dismissing De Veras complaint for lack of merit, on the rationale that as
a retained physician under a valid contract mutually agreed upon by the parties,
De Vera was an independent contractor and that he was not dismissed but rather
his contract with [PHILCOM] ended when said contract was not renewed after
December 31, 1996.
On De Veras appeal to the NLRC, the latter, in a decision[8] dated 23 October 2000,
reversed (the word used is modified) that of the Labor Arbiter, on a finding that De
Vera is Philcoms regular employee and accordingly directed the company to
reinstate him to his former position without loss of seniority rights and privileges
and with full backwages from the date of his dismissal until actual reinstatement.
We quote the dispositive portion of the decision:
WHEREFORE, the assailed decision is modified in that respondent is ordered to
reinstate complainant to his former position without loss of seniority rights and
privileges with full backwages from the date of his dismissal until his actual
reinstatement computed as follows:
Backwages:
a) Basic Salary
From Dec. 31, 1996 to Apr. 10, 2000 = 39.33 mos.
P44,400.00 x 39.33 mos. P1,750,185.00
b) 13th Month Pay:
1/12 of P1,750,185.00 145,848.75
c) Travelling allowance:
P1,000.00 x 39.33 mos. 39,330.00
GRAND TOTAL P1,935,363.75
The decision stands in other aspects. SO ORDERED.
With its motion for reconsideration having been denied by the NLRC in its order of
27 February 2001,[9] Philcom then went to the Court of Appeals on a petition
for certiorari, thereat docketed as CA-G.R. SP No. 65178, imputing grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of the NLRC
when it reversed the findings of the labor arbiter and awarded thirteenth month pay
and traveling allowance to De Vera even as such award had no basis in fact and
in law.
On 12 September 2002, the Court of Appeals rendered a decision,[10] modifying
that of the NLRC by deleting the award of traveling allowance, and ordering
payment of separation pay to De Vera in lieu of reinstatement, thus:
WHEREFORE, premises considered, the assailed judgment of public respondent,
dated 23 October 2000, is MODIFIED. The award of traveling allowance is deleted
as the same is hereby DELETED. Instead of reinstatement, private respondent
shall be paid separation pay computed at one (1) month salary for every year of
service computed from the time private respondent commenced his employment
in 1981 up to the actual payment of the backwages and separation pay. The
awards of backwages and 13th month pay STAND.
SO ORDERED.
In time, Philcom filed a motion for reconsideration but was denied by the appellate
court in its resolution of 13 February 2003.[11]
Hence, Philcoms present recourse on its main submission that -
THE COURT OF APPEALS ERRED IN SUSTAINING THE DECISION OF THE
NATIONAL LABOR RELATIONS COMMISSION AND RENDERING THE
QUESTIONED DECISION AND RESOLUTION IN A WAY THAT IS NOT IN
ACCORD WITH THE FACTS AND APPLICABLE LAWS AND JURISPRUDENCE
WHICH DISTINGUISH LEGITIMATE JOB CONTRACTING AGREEMENTS
FROM THE EMPLOYER-EMPLOYEE RELATIONSHIP.
We GRANT.
Under Rule 45 of the Rules of Court, only questions of law may be reviewed by
this Court in decisions rendered by the Court of Appeals. There are instances,
however, where the Court departs from this rule and reviews findings of fact so
that substantial justice may be served. The exceptional instances are where:
xxx xxx xxx (1) the conclusion is a finding grounded entirely on speculation,
surmise and conjecture; (2) the inference made is manifestly mistaken; (3) there is
grave abuse of discretion; (4) the judgment is based on a misapprehension of facts;
(5) the findings of fact are conflicting; (6) the Court of Appeals went beyond the
issues of the case and its findings are contrary to the admissions of both appellant
and appellees; (7) the findings of fact of the Court of Appeals are contrary to those
of the trial court; (8) said findings of facts are conclusions without citation of specific
evidence on which they are based; (9) the facts set forth in the petition as well as
in the petitioners main and reply briefs are not disputed by the respondents; and
(10) the findings of fact of the Court of Appeals are premised on the supposed
absence of evidence and contradicted by the evidence on record.[12]
As we see it, the parties respective submissions revolve on the primordial issue of
whether an employer-employee relationship exists between petitioner and
respondent, the existence of which is, in itself, a question of fact[13] well within the
province of the NLRC. Nonetheless, given the reality that the NLRCs findings are
at odds with those of the labor arbiter, the Court, consistent with its ruling
in Jimenez vs. National Labor Relations Commission,[14] is constrained to look
deeper into the attendant circumstances obtaining in this case, as appearing on
record.
In a long line of decisions,[15] the Court, in determining the existence of an
employer-employee relationship, has invariably adhered to the four-fold test, to wit:
[1] the selection and engagement of the employee; [2] the payment of wages; [3]
the power of dismissal; and [4] the power to control the employees conduct, or the
so-called control test, considered to be the most important element.
Applying the four-fold test to this case, we initially find that it was respondent
himself who sets the parameters of what his duties would be in offering his services
to petitioner. This is borne by no less than his 15 May 1981 letter[16] which, in full,
reads:
May 15, 1981
Mrs. Adela L. Vicente
Vice President, Industrial Relations
PhilCom, Paseo de Roxas
Makati, Metro Manila
Madam:
I shall have the time and effort for the position of Company physician with your
corporation if you deemed it necessary. I have the necessary qualifications,
training and experience required by such position and I am confident that I can
serve the best interests of your employees, medically.
My plan of works and targets shall cover the duties and responsibilities required of
a practitioner in industrial medicine which includes the following:
1. Application of preventive medicine including periodic check-up of employees;
2. Holding of clinic hours in the morning and afternoon for a total of five (5) hours
daily for consultation services to employees;
3. Management and treatment of employees that may necessitate hospitalization
including emergency cases and accidents;
4. Conduct pre-employment physical check-up of prospective employees with no
additional medical fee;
5. Conduct home visits whenever necessary;
6. Attend to certain medical administrative functions such as accomplishing
medical forms, evaluating conditions of employees applying for sick leave of
absence and subsequently issuing proper certification, and all matters referred
which are medical in nature.
On the subject of compensation for the services that I propose to render to the
corporation, you may state an offer based on your belief that I can very well qualify
for the job having worked with your organization for sometime now.
I shall be very grateful for whatever kind attention you may extend on this matter
and hoping that it will merit acceptance, I remain
Very truly yours,
(signed)
RICARDO V. DE VERA, M.D.
Significantly, the foregoing letter was substantially the basis of the labor arbiters
finding that there existed no employer-employee relationship between petitioner
and respondent, in addition to the following factual settings:
The fact that the complainant was not considered an employee was recognized by
the complainant himself in a signed letter to the respondent dated April 21, 1982
attached as Annex G to the respondents Reply and Rejoinder. Quoting the
pertinent portion of said letter:
To carry out your memo effectively and to provide a systematic and workable time
schedule which will serve the best interests of both the present and absent
employee, may I propose an extended two-hour service (1:00-3:00 P.M.) during
which period I can devote ample time to both groups depending upon the urgency
of the situation. I shall readjust my private schedule to be available for the herein
proposed extended hours, should you consider this proposal.
As regards compensation for the additional time and services that I shall render to
the employees, it is dependent on your evaluation of the merit of my proposal and
your confidence on my ability to carry out efficiently said proposal.
The tenor of this letter indicates that the complainant was proposing to extend his
time with the respondent and seeking additional compensation for said extension.
This shows that the respondent PHILCOM did not have control over the schedule
of the complainant as it [is] the complainant who is proposing his own schedule
and asking to be paid for the same. This is proof that the complainant understood
that his relationship with the respondent PHILCOM was a retained physician and
not as an employee. If he were an employee he could not negotiate as to his hours
of work.
The complainant is a Doctor of Medicine, and presumably, a well-educated person.
Yet, the complainant, in his position paper, is claiming that he is not conversant
with the law and did not give much attention to his job title- on a retainer basis. But
the same complainant admits in his affidavit that his service for the respondent was
covered by a retainership contract [which] was renewed every year from 1982 to
1994. Upon reading the contract dated September 6, 1982, signed by the
complainant himself (Annex C of Respondents Position Paper), it clearly states
that is a retainership contract. The retainer fee is indicated thereon and the duration
of the contract for one year is also clearly indicated in paragraph 5 of the
Retainership Contract. The complainant cannot claim that he was unaware that
the contract was good only for one year, as he signed the same without any
objections. The complainant also accepted its renewal every year thereafter until
1994. As a literate person and educated person, the complainant cannot claim that
he does not know what contract he signed and that it was renewed on a year to
year basis.[17]
The labor arbiter added the indicia, not disputed by respondent, that from the time
he started to work with petitioner, he never was included in its payroll; was never
deducted any contribution for remittance to the Social Security System (SSS); and
was in fact subjected by petitioner to the ten (10%) percent withholding tax for his
professional fee, in accordance with the National Internal Revenue Code, matters
which are simply inconsistent with an employer-employee relationship. In the
precise words of the labor arbiter:
xxx xxx xxx After more than ten years of services to PHILCOM, the complainant
would have noticed that no SSS deductions were made on his remuneration or
that the respondent was deducting the 10% tax for his fees and he surely would
have complained about them if he had considered himself an employee of
PHILCOM. But he never raised those issues. An ordinary employee would
consider the SSS payments important and thus make sure they would be paid.
The complainant never bothered to ask the respondent to remit his SSS
contributions. This clearly shows that the complainant never considered himself an
employee of PHILCOM and thus, respondent need not remit anything to the SSS
in favor of the complainant.[18]
Clearly, the elements of an employer-employee relationship are wanting in this
case. We may add that the records are replete with evidence showing that
respondent had to bill petitioner for his monthly professional fees.[19] It simply runs
against the grain of common experience to imagine that an ordinary employee has
yet to bill his employer to receive his salary.
We note, too, that the power to terminate the parties relationship was mutually
vested on both. Either may terminate the arrangement at will, with or without
cause.[20]
Finally, remarkably absent from the parties arrangement is the element of control,
whereby the employer has reserved the right to control the employee not only as
to the result of the work done but also as to the means and methods by which the
same is to be accomplished.[21]
Here, petitioner had no control over the means and methods by which respondent
went about performing his work at the company premises. He could even embark
in the private practice of his profession, not to mention the fact that respondents
work hours and the additional compensation therefor were negotiated upon by the
parties.[22] In fine, the parties themselves practically agreed on every terms and
conditions of respondents engagement, which thereby negates the element of
control in their relationship. For sure, respondent has never cited even a single
instance when petitioner interfered with his work.
Yet, despite the foregoing, all of which are extant on record, both the NLRC and
the Court of Appeals ruled that respondent is petitioners regular employee at the
time of his separation.
Partly says the appellate court in its assailed decision:
Be that as it may, it is admitted that private respondents written retainer contract
was renewed annually from 1981 to 1994 and the alleged renewal for 1995 and
1996, when it was allegedly terminated, was verbal.
Article 280 of the Labor code (sic) provides:
The provisions of written agreement to the contrary notwithstanding and
regardless of the oral agreements of the parties, an employment shall be
deemed to be regular where the employee has been engaged to perform in the
usual business or trade of the employer, except where the employment has been
fixed for a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That, any employee who has rendered at
least one (1) year of service, whether such is continuous or broken, shall be
considered a regular with respect to the activity in which he is employed and
his employment shall continue while such activity exists.
Parenthetically, the position of company physician, in the case of petitioner, is
usually necessary and desirable because the need for medical attention of
employees cannot be foreseen, hence, it is necessary to have a physician at hand.
In fact, the importance and desirability of a physician in a company premises is
recognized by Art. 157 of the Labor Code, which requires the presence of a
physician depending on the number of employees and in the case at bench, in
petitioners case, as found by public respondent, petitioner employs more than 500
employees.
Going back to Art. 280 of the Labor Code, it was made therein clear that the
provisions of a written agreement to the contrary notwithstanding or the existence
of a mere oral agreement, if the employee is engaged in the usual business or
trade of the employer, more so, that he rendered service for at least one year, such
employee shall be considered as a regular employee. Private respondent herein
has been with petitioner since 1981 and his employment was not for a specific
project or undertaking, the period of which was pre-determined and neither the
work or service of private respondent seasonal. (Emphasis by the CA itself).
We disagree to the foregoing ratiocination.
The appellate courts premise that regular employees are those who perform
activities which are desirable and necessary for the business of the employer is
not determinative in this case. For, we take it that any agreement may provide that
one party shall render services for and in behalf of another, no matter how
necessary for the latters business, even without being hired as an employee.
This set-up is precisely true in the case of an independent contractorship as well
as in an agency agreement. Indeed, Article 280 of the Labor Code, quoted by the
appellate court, is not the yardstick for determining the existence of an employment
relationship. As it is, the provision merely distinguishes between two (2) kinds of
employees, i.e., regular and casual. It does not apply where, as here, the very
existence of an employment relationship is in dispute.[23]
Buttressing his contention that he is a regular employee of petitioner, respondent
invokes Article 157 of the Labor Code, and argues that he satisfies all the
requirements thereunder. The provision relied upon reads:
ART. 157. Emergency medical and dental services. It shall be the duty of every
employer to furnish his employees in any locality with free medical and dental
attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the number of employees
exceeds fifty (50) but not more than two hundred (200) except when the employer
does not maintain hazardous workplaces, in which case the services of a graduate
first-aider shall be provided for the protection of the workers, where no registered
nurse is available. The Secretary of Labor shall provide by appropriate regulations
the services that shall be required where the number of employees does not
exceed fifty (50) and shall determine by appropriate order hazardous workplaces
for purposes of this Article;
(b) The services of a full-time registered nurse, a part-time physician and dentist,
and an emergency clinic, when the number of employees exceeds two hundred
(200) but not more than three hundred (300); and
(c) The services of a full-time physician, dentist and full-time registered nurse as
well as a dental clinic, and an infirmary or emergency hospital with one bed
capacity for every one hundred (100) employees when the number of employees
exceeds three hundred (300).
In cases of hazardous workplaces, no employer shall engage the services of a
physician or dentist who cannot stay in the premises of the establishment for at
least two (2) hours, in the case of those engaged on part-time basis, and not less
than eight (8) hours in the case of those employed on full-time basis. Where the
undertaking is nonhazardous in nature, the physician and dentist may be engaged
on retained basis, subject to such regulations as the Secretary of Labor may
prescribe to insure immediate availability of medical and dental treatment and
attendance in case of emergency.
Had only respondent read carefully the very statutory provision invoked by him, he
would have noticed that in non-hazardous workplaces, the employer may engage
the services of a physician on retained basis. As correctly observed by the
petitioner, while it is true that the provision requires employers to engage the
services of medical practitioners in certain establishments depending on the
number of their employees, nothing is there in the law which says that medical
practitioners so engaged be actually hired as employees,[24] adding that the law,
as written, only requires the employer to retain, not employ, a part-time physician
who needed to stay in the premises of the non-hazardous workplace for two (2)
hours.[25]
Respondent takes no issue on the fact that petitioners business of
telecommunications is not hazardous in nature. As such, what applies here is the
last paragraph of Article 157 which, to stress, provides that the employer may
engage the services of a physician and dentist on retained basis, subject to such
regulations as the Secretary of Labor may prescribe. The successive retainership
agreements of the parties definitely hue to the very statutory provision relied upon
by respondent.
Deeply embedded in our jurisprudence is the rule that courts may not construe a
statute that is free from doubt. Where the law is clear and unambiguous, it must
be taken to mean exactly what it says, and courts have no choice but to see to it
that the mandate is obeyed.[26] As it is, Article 157 of the Labor Code clearly and
unequivocally allows employers in non-hazardous establishments to engage on
retained basis the service of a dentist or physician. Nowhere does the law provide
that the physician or dentist so engaged thereby becomes a regular employee.
The very phrase that they may be engaged on retained basis, revolts against the
idea that this engagement gives rise to an employer-employee relationship.
With the recognition of the fact that petitioner consistently engaged the services of
respondent on a retainer basis, as shown by their various retainership contracts,
so can petitioner put an end, with or without cause, to their retainership agreement
as therein provided.[27]
We note, however, that even as the contracts entered into by the parties invariably 112 SCRA 47 [1982] and Mafinco Trading Corporation v. Ople, 70 SCRA
provide for a 60-day notice requirement prior to termination, the same was not 139 [1976].
[16]
complied with by petitioner when it terminated on 17 December 1996 the verbally- Rollo, p. 98.
[17]
renewed retainership agreement, effective at the close of business hours of 31 Rollo, at pp. 279-280.
[18]
December 1996. Id. at pp. 280-281.
[19]
Be that as it may, the record shows, and this is admitted by both parties,[28] that Id. at pp. 181-187.
[20]
Item No. 5 of the Retainership Contract which reads: 5. This contract will be for
execution of the NLRC decision had already been made at the NLRC despite the
pendency of the present recourse. For sure, accounts of petitioner had already a period of one year subject to renewal between you and the Company. If
either you or the Company will terminate this Agreement at anytime before
been garnished and released to respondent despite the previous Status Quo
Order[29] issued by this Court. To all intents and purposes, therefore, the 60-day its expiry date, an advance notice of 60 days is required to be served by
the concerned party to the other to avoid unnecessary adjustment
notice requirement has become moot and academic if not waived by the
problems.
respondent himself. [21]
Sara v. Agarrado, 166 SCRA 625 [1988] citing LVN Pictures, Inc. v. Phil.
WHEREFORE, the petition is GRANTED and the challenged decision of the Court Musicians Guild, 1 SCRA 312 [1961]; Investment Planning Corp. v. SSS,
of Appeals REVERSED and SET ASIDE. The 21 December 1998 decision of the 21 SCRA 924 [1967]; SSS v. Court of Appeals, 30 SCRA 210 [1968];
labor arbiter is REINSTATED. and Philippine Refining Co., Inc. v. Court of Appeals, 117 SCRA 84
No pronouncement as to costs. [1982].
[22]
Rollo, at p. 191.
SO ORDERED. [23]
Singer Sewing Machine Company v. Drilon, 193 SCRA 270 [1991].
[24]
Panganiban, (Chairman), Corona, and Carpio-Morales, JJ., concur. Rollo, at p. 774.
[25]
Id., at p. 777.
Sandoval-Gutierrez, J., on official leave. [26]
Ramos v. Court of Appeals, 108 SCRA 728 [1981]; Banawa v. Mirano, 97 SCRA
517 [1980]; Espiritu v. Cipriano, 55 SCRA 533 [1974] and Republic Flour
[1]
Penned by Associate Justice Edgardo F. Sundiam, and concurred in by Mills, Inc. v. Commissioner of Customs, 39 SCRA 269 [1971].
[27]
Associate Justices Bennie A. Adefuin - De La Cruz (ret.) and Wenceslao Supra, See footnote 21.
[28]
I. Agnir, Jr. (ret.) Philcoms Memorandum, Rollo at p. 779 and De Veras Memorandum, Rollo at
[2]
Rollo at p. 62. p. 708.
[29]
[3]
Id. at p.98. Dated 09 June 2003, Rollo at pp. 576-578.
[4]
Id. at p. 100.
[5]
Id. at pp. 101-112.
[6]
Id. at p. 116.
[7]
Id. at pp. 276-285.
[8]
Id. at pp. 327-333.
[9]
Id. at pp. 360-363.
[10]
Id. at pp. 735-743.
[11]
Id. at p. 746.
[12]
Bautista v. Mangaldan Rural Bank, Inc., 230 SCRA 16 [1994] citing De la Puerta
v. Court of Appeals, 181 SCRA 861 [1990].
[13]
Mainland Construction Company, Inc. v. Movilla, 250 SCRA 290 [1995].
[14]
256 SCRA 84 [1996].
[15]
MAM Realty Development Corporation v. National Labor Relations
Commission, 244 SCRA 797 [1995]; Zanotte Shoes v. National Labor
Relations Commission, 241 SCRA 261 [1995]; Singer Sewing Machine
Company v. Drilon, 193 SCRA 270 [1991]; Development Bank of the
Philippines v. National Labor Relations Commission 175 SCRA 537
[1989]; Broadway Motors, Inc. v. National Labor Relations Commission,
156 SCRA 522 [1987]; Brotherhood Labor Unity Movement in the
Philippines v. Zamora, 147 SCRA 49 [1986]; Rosario Brothers, Inc. v.
Ople, 131 SCRA 72 [1984]; SSS v. Cosmos Aerated Water Factory, Inc.,
FIRST DIVISION
G.R. Nos. 109095-109107 February 23, 1995
ELDEPIO LASCO, RODOLFO ELISAN, URBANO BERADOR, FLORENTINO
ESTOBIO, MARCELINO MATURAN, FRAEN BALIBAG, CARMELITO GAJOL,
DEMOSTHENES MANTO, SATURNINO BACOL, SATURNINO LASCO,
RAMON LOYOLA, JOSENIANO B. ESPINA, all represented by MARIANO R.
ESPINA, petitioner,
vs.
UNITED NATIONS REVOLVING FUND FOR NATURAL RESOURCES
EXPLORATION (UNRFNRE) represented by its operations manager, DR.
KYRIACOS LOUCA, OSCAR N. ABELLA, LEON G. GONZAGA, JR., MUSIB M.
BUAT, Commissioners of National Labor Relations Commission (NLRC),
Fifth Division, Cagayan de Oro City and IRVING PETILLA, Labor Arbiter of
Butuan City, respondents.
QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to set
aside the Resolution dated January 25, 1993 of the National Labor Relations
Commission (NLRC), Fifth Division, Cagayan de Oro City.
We dismiss the petition.
I the official functions of an international agency protected by diplomatic immunity.
Petitioners were dismissed from their employment with private respondent, the
United Nations Revolving Fund for Natural Resources Exploration (UNRFNRE),
which is a special fund and subsidiary organ of the United Nations. The UNRFNRE
is involved in a joint project of the Philippine Government and the United Nations
for exploration work in Dinagat Island.
Petitioners are the complainants in NLRC Cases Nos. SRAB 10-03-00067-91 to
10-03-00078-91 and SRAB 10-07-00159-91 for illegal dismissal and damages.
In its Motion to Dismiss, private respondent alleged that respondent Labor Arbiter
had no jurisdiction over its personality since it enjoyed diplomatic immunity
pursuant to the 1946 Convention on the Privileges and Immunities of the United
Nations. In support thereof, private respondent attached a letter from the
Department of Foreign Affairs dated August 26, 1991, which acknowledged its
immunity from suit. The letter confirmed that private respondent, being a special
fund administered by the United Nations, was covered by the 1946 Convention on
the Privileges and Immunities of the United Nations of which the Philippine
Government was an original signatory (Rollo, p. 21).
On November 25, 1991, respondent Labor Arbiter issued an order dismissing the
complaints on the ground that private respondent was protected by diplomatic
immunity. The dismissal was based on the letter of the Foreign Office dated
September 10, 1991.
Petitioners' motion for reconsideration was denied. Thus, an appeal was filed with
the NLRC, which affirmed the dismissal of the complaints in its Resolution dated
January 25, 1993.
Petitioners filed the instant petition for certiorari without first seeking a
reconsideration of the NLRC resolution.
II
Article 223 of the Labor Code of the Philippines, as amended, provides that
decisions of the NLRC are final and executory. Thus, they may only be questioned
through certiorari as a special civil action under Rule 65 of the Revised Rules of
Court.
Ordinarily, certiorari as a special civil action will not lie unless a motion for
reconsideration is first filed before the respondent tribunal, to allow it an opportunity
to correct its assigned errors (Liberty Insurance Corporation v. Court of Appeals,
222 SCRA 37 [1993]).
In the case at bench, petitioners' failure to file a motion for reconsideration is fatal
to the instant petition. Moreover, the petition lacks any explanation for such
omission, which may merit its being considered as falling under the recognized
exceptions to the necessity of filing such motion.
Notwithstanding, we deem it wise to give due course to the petition because of the
implications of the issue in our international relations.
Petitioners argued that the acts of mining exploration and exploitation are outside
Even assuming that private respondent was entitled to diplomatic immunity,
petitioners insisted that private respondent waived it when it engaged in
exploration work and entered into a contract of employment with petitioners.
Petitioners, likewise, invoked the constitutional mandate that the State shall afford
full protection to labor and promote full employment and equality of employment
opportunities for all (1987 Constitution, Art. XIII, Sec. 3).
The Office of the Solicitor General is of the view that private respondent is covered
by the mantle of diplomatic immunity. Private respondent is a specialized agency
of the United Nations. Under Article 105 of the Charter of the United Nations:
1. The Organization shall enjoy in the territory of its Members such privileges and
immunities as are necessary for the fulfillment of its purposes.
2. Representatives of the Members of the United Nations and officials of the
Organization shall similarly enjoy such privileges and immunities as are necessary
for the independent exercise of their functions in connection with the organization.
Corollary to the cited article is the Convention on the Privileges and Immunities of
the Specialized Agencies of the United Nations, to which the Philippines was a
signatory (Vol. 1, Philippine Treaty Series, p. 621). We quote Sections 4 and 5 of
Article III thereof:
Sec. 4. The specialized agencies, their property and assets, wherever
located and by whomsoever held shall enjoy immunity from every form of
legal process except insofar as in any particular case they have expressly
waived their immunity. It is, however, understood that no waiver of
immunity shall extend to any measure of execution (Emphasis supplied).
 Sec. 5. The premises of the specialized agencies shall be inviolable. The of the international organizations to guarantee the smooth discharge of their
property and assets of the specialized agencies, wherever located and by functions.
whomsoever held, shall be immune from search, requisition, confiscation, The diplomatic immunity of private respondent was sufficiently established by the
expropriation and any other form of interference, whether by executive, letter of the Department of Foreign Affairs, recognizing and confirming the
administrative, judicial or legislative action (Emphasis supplied).
immunity of UNRFNRE in accordance with the 1946 Convention on Privileges and
As a matter of state policy as expressed in the Constitution, the Philippine Immunities of the United Nations where the Philippine Government was a party.
Government adopts the generally accepted principles of international law (1987 The issue whether an international organization is entitled to diplomatic immunity
Constitution, Art. II, Sec. 2). Being a member of the United Nations and a party to is a "political question" and such determination by the executive branch is
the Convention on the Privileges and Immunities of the Specialized Agencies of conclusive on the courts and quasi-judicial agencies (The Holy See v. Hon.
the United Nations, the Philippine Government adheres to the doctrine of immunity Eriberto U. Rosario, Jr., G.R. No. 101949, Dec. 1, 1994; International Catholic
granted to the United Nations and its specialized agencies. Both treaties have the Migration Commission v. Calleja, supra).
force and effect of law. Our courts can only assume jurisdiction over private respondent if it expressly
In World Health Organization v. Aquino, 48 SCRA 242, (1972), we had occasion waived its immunity, which is not so in the case at bench (Convention on the
to rule that: Privileges and Immunities of the Specialized Agencies of the United Nations, Art.
III, Sec. 4).
It is a recognized principle of international law and under our system of
separation of powers that diplomatic immunity is essentially a political Private respondent is not engaged in a commercial venture in the Philippines. Its
question and courts should refuse to look beyond a determination by the presence here is by virtue of a joint project entered into by the Philippine
executive branch of the government, and where the plea of diplomatic Government and the United Nations for mineral exploration in Dinagat Island. Its
immunity is recognized and affirmed by the executive branch of the mission is not to exploit our natural resources and gain pecuniarily thereby but to
government as in the case at bar, it is then the duty of the courts to accept help improve the quality of life of the people, including that of petitioners.
the claim of immunity upon appropriate suggestion by the principal law
This is not to say that petitioner have no recourse. Section 31 of the Convention
officer of the government, the Solicitor General or other officer acting on the Privileges and Immunities of the Specialized Agencies of the United Nations
under his direction. Hence, in adherence to the settled principle that courts
states that "each specialized agency shall make a provision for appropriate modes
may not so exercise their jurisdiction by seizure and detention of property,
of settlement of: (a) disputes arising out of contracts or other disputes of private
as to embarrass the executive arm of the government in conducting character to which the specialized agency is a party."
foreign relations, it is accepted doctrine that "in such cases the judicial
department of (this) government follows the action of the political branch WHEREFORE, the petition is DISMISSED.
and will not embarrass the latter by assuming an antagonistic SO ORDERED.
jurisdiction (Emphasis supplied).
Padilla, Davide, Jr., Bellosillo and Kapunan, JJ., concur.
We recognize the growth of international organizations dedicated to specific
universal endeavors, such as health, agriculture, science and technology and
environment. It is not surprising that their existence has evolved into the concept
of international immunities. The reason behind the grant of privileges and
immunities to international organizations, its officials and functionaries is to secure
them legal and practical independence in fulfilling their duties (Jenks, International
Immunities 17 [1961]).
Immunity is necessary to assure unimpeded performance of their functions. The
purpose is "to shield the affairs of international organizations, in accordance with
international practice, from political pressure or control by the host country to the
prejudice of member States of the organization, and to ensure the unhampered
performance of their functions" (International Catholic Migration Commission v.
Calleja, 190 SCRA 130 [1990]).
In the International Catholic Migration Commission case, we held that there is no
conflict between the constitutional duty of the State to protect the rights of workers
and to promote their welfare, and the grant of immunity to international
organizations. Clauses on jurisdictional immunity are now standard in the charters