Labor Cases

G.R. No. L-21278 December 27, 1966

FEATI UNIVERSITY, petitioner, vs.HON. JOSE S. BAUTISTA, Presiding Judge of the Court of Industrial Relations and FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondents.

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G.R. No. L-21462 December 27, 1966

FEATI UNIVERSITY, petitioner-appellant, vs.FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.

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G.R. No. L-21500 December 27, 1966

FEATI UNIVERSITY, petitioner-appellant, vs.FEATI UNIVERSITY FACULTY CLUB-PAFLU, respondent-appellee.

Rafael Dinglasan for petitioner.Cipriano Cid and Associates for respondents.

ZALDIVAR, J.:

This Court, by resolution, ordered that these three cases be considered together, and the parties were allowed to file only one brief for the three cases.

On January 14, 1963, the President of the respondent Feati University Faculty Club-PAFLU — hereinafter referred to as Faculty Club — wrote a letter to Mrs. Victoria L. Araneta, President of petitioner Feati University — hereinafter referred to as University — informing her of the organization of the Faculty Club into a registered labor union. The Faculty Club is composed of members who are professors and/or instructors of the University. On January 22, 1963, the President of the Faculty Club sent another letter containing twenty-six demands that have connection with the employment of the members of the Faculty Club by the University, and requesting an answer within ten days from receipt thereof. The President of the University answered the two letters, requesting that she be given at least thirty days to study thoroughly the different phases of the demands. Meanwhile counsel for the University, to whom the demands were referred, wrote a letter to the President of the Faculty Club demanding proof of its majority status and designation as a bargaining representative. On February 1, 1963, the President of the Faculty Club again wrote the President of the University rejecting the latter's request for extension of time, and on the same day he filed a notice of strike with the Bureau of Labor alleging as reason therefor the refusal of the University to bargain collectively. The parties were called to conferences at the Conciliation Division of the Bureau of Labor but efforts to conciliate them failed. On February 18, 1963, the members of the Faculty Club declared a strike and established picket lines in the premises of the University, resulting in the disruption of classes in the University. Despite further efforts of the officials from the Department of Labor to effect a settlement of the differences between the management of the University and the striking faculty members no satisfactory agreement was arrived at. On March 21, 1963, the President of the Philippines certified to the Court of Industrial Relations the dispute between the management of the University and the Faculty Club pursuant to the provisions of Section 10 of Republic Act No. 875.

In connection with the dispute between the University and the Faculty Club and certain incidents related to said dispute, various cases were filed with the Court of Industrial Relations — hereinafter referred to as CIR. The three cases now before this Court stemmed from those cases that were filed with the CIR.

CASE NO. G.R. NO. L-21278

On May 10, 1963, the University filed before this Court a "petition for certiorari and prohibition with writ of preliminary injunction", docketed as G.R. No. L-21278, praying: (1) for the issuance of the writ of preliminary injunction enjoining respondent Judge Jose S. Bautista of the CIR to desist from proceeding in CIR Cases Nos. 41-IPA, 1183-MC, and V-30; (2) that the proceedings in Cases Nos. 41-IPA and 1183-MC be annulled; (3) that the orders dated March 30, 1963 and April 6, 1963 in Case No. 41-IPA, the order dated April 6, 1963 in Case No. 1183-MC, and the order dated April 29, 1963 in Case No. V-30, all be annulled; and (4) that the respondent Judge be ordered to dismiss said cases Nos. 41-IPA, 1183-MC and V-30 of the CIR.

On May 10, 1963, this Court issued a writ of preliminary injunction, upon the University's filing a bond of P1,000.00, ordering respondent Judge Jose S. Bautista as Presiding Judge of the CIR, until further order from this Court, "to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations)."1 On December 4, 1963, this Court ordered the injunction bond increased to P100,000.00; but on January 23, 1964, upon a motion for reconsideration by the University, this Court reduced the bond to P50,000.00.

A brief statement of the three cases — CIR Cases 41-IPA, 1183-MC and V-30 — involved in the Case G.R. No. L-21278, is here necessary.

CIR Case No. 41-IPA, relates to the case in connection with the strike staged by the members of the Faculty Club. As we have stated, the dispute between the University and the Faculty Club was certified on March 21, 1963 by the President of the Philippines to the CIR. On the strength of the presidential certification, respondent Judge Bautista set the case for hearing on March 23, 1963. During the hearing, the Judge endeavored to reconcile the part and it was agreed upon that the striking faculty members would return to work and the University would readmit them under a status quo arrangement. On that very same day, however, the University, thru counsel filed a motion to dismiss the case upon the ground that the CIR has no jurisdiction over the case, because (1) the Industrial Peace Act is not applicable to the University, it being an educational institution, nor to the members of the Faculty Club, they being independent contractors; and (2) the presidential certification is violative of Section 10 of the Industrial Peace Act, as the University is not an industrial establishment and there was no industrial dispute which could be certified to the CIR. On March 30, 1963 the respondent Judge issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is applicable to both parties in the case and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification. In the same order, the respondent Judge, believing that the dispute could not be decided promptly, ordered the strikers to return immediately to work and the University to take them back under the last terms and conditions existing before the dispute arose, as per agreement had during the hearing on March 23, 1963; and likewise enjoined the University, pending adjudication of the case, from dismissing any employee or laborer without previous authorization from the CIR. The University filed on April 1, 1963 a motion for reconsideration of the order of March 30, 1963 by the CIR en banc, and at the same time asking that the motion for reconsideration be first heard by the CIR en banc. Without the motion for reconsideration having been acted upon by the CIR en banc, respondent Judge set the case for hearing on the merits for May 8, 1963. The University moved for the cancellation of said hearing upon the ground that the court en banc should first hear the motion for reconsideration and resolve the issues raised therein before the case is heard on the merits. This motion for cancellation of the hearing was denied. The respondent Judge, however, cancelled the scheduled hearing when counsel for the University manifested that he would take up before the Supreme Court, by a petition for certiorari, the matter regarding the actuations of the respondent Judge and the issues raised in the motion for reconsideration, specially the issue relating to the jurisdiction of the CIR. The order of March 30, 1963 in Case 41-IPA is one of the orders sought to be annulled in the case, G.R. No. L-21278.

Before the above-mentioned order of March 30, 1963 was issued by respondent Judge, the University had employed professors and/or instructors to take the places of those professors and/or instructors who had struck. On April 1, 1963, the Faculty Club filed with the CIR in Case 41-IPA a petition to declare in contempt of court certain parties, alleging that the University refused to accept back to work the returning strikers, in violation of the return-to-work order of March 30, 1963. The University filed, on April 5,1963, its opposition to the petition for contempt, denying the allegations of the Faculty Club and alleging by way of special defense that there was still the motion for reconsideration of the order of March 30, 1963 which had not yet been acted upon by the CIR en banc. On April 6, 1963, the respondent Judge issued an order stating that "said replacements are hereby warned and cautioned, for the time being, not to disturb nor in any manner commit any act tending to disrupt the effectivity of the order of March 30,1963, pending the final resolution of the same."2 On April 8, 1963, there placing professors and/or instructors concerned filed, thru counsel, a motion for reconsideration by the CIR en banc of the order of respondent Judge of April 6, 1963. This order of April 6, 1963 is one of the orders that are sought to be annulled in case G.R. No. L-21278.

CIR Case No. 1183-MC relates to a petition for certification election filed by the Faculty Club on March 8, 1963 before the CIR, praying that it be certified as the sole and exclusive bargaining representative of all the employees of the University. The University filed an opposition to the petition for certification election and at the same time a motion to dismiss said petition, raising the very same issues raised in Case No. 41-IPA, claiming that the petition did not comply with the rules promulgated by the CIR; that the Faculty Club is not a legitimate labor union; that the members of the Faculty Club cannot unionize for collective bargaining purposes; that the terms of the individual contracts of the professors, instructors, and teachers, who are members of the Faculty Club, would expire on March 25 or 31, 1963; and that the CIR has no jurisdiction to take cognizance of the petition because the Industrial Peace Act is not applicable to the members of the Faculty Club nor to the University. This case was assigned to Judge Baltazar Villanueva of the CIR. Before Judge Villanueva could act on the motion to dismiss, however, the Faculty Club filed on April 3, 1963 a motion to withdraw the petition on the ground that the labor dispute (Case No. 41-IPA) had

already been certified by the President to the CIR and the issues raised in Case No. 1183-MC were absorbed by Case No. 41-IPA. The University opposed the withdrawal, alleging that the issues raised in Case No. 1183-MC were separate and distinct from the issues raised in Case No. 41-IPA; that the questions of recognition and majority status in Case No. 1183-MC were not absorbed by Case No. 41-IPA; and that the CIR could not exercise its power of compulsory arbitration unless the legal issue regarding the existence of employer-employee relationship was first resolved. The University prayed that the motion of the Faculty Club to withdraw the petition for certification election be denied, and that its motion to dismiss the petition be heard. Judge Baltazar Villanueva, finding that the reasons stated by the Faculty Club in the motion to withdraw were well taken, on April 6, 1963, issued an order granting the withdrawal. The University filed, on April 24, 1963, a motion for reconsideration of that order of April 6, 1963 by the CIR en banc. This order of April 6, 1963 in Case No. 1183-MC is one of the orders sought to be annulled in the case, G.R. No. L-21278, now before Us.

CIR Case No. V-30 relates to a complaint for indirect contempt of court filed against the administrative officials of the University. The Faculty Club, through the Acting Chief Prosecutor of the CIR, filed with the CIR a complaint docketed as Case No. V-30, charging President Victoria L. Araneta, Dean Daniel Salcedo, Executive Vice-President Rodolfo Maslog, and Assistant to the President Jose Segovia, as officials of the University, with indirect contempt of court, reiterating the same charges filed in Case No. 41-IPA for alleged violation of the order dated March 30, 1963. Based on the complaint thus filed by the Acting Chief Prosecutor of the CIR, respondent Judge Bautista issued on April 29, 1963 an order commanding any officer of the law to arrest the above named officials of the University so that they may be dealt with in accordance with law, and the same time fixed the bond for their release at P500.00 each. This order of April 29, 1963 is also one of the orders sought to be annulled in the case, G.R. No. L-2l278.

The principal allegation of the University in its petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278, now before Us, is that respondent Judge Jose S. Bautista acted without, or in excess of, jurisdiction, or with grave abuse of discretion, in taking cognizance of, and in issuing the questioned orders in, CIR Cases Nos. 41-IPA 1183-MC and V-30. Let it be noted that when the petition for certiorari and prohibition with preliminary injunction was filed on May 10, 1963 in this case, the questioned order in CIR Cases Nos. 41-IPA, 1183-MC and V-30 were still pending action by the CIR en banc upon motions for reconsideration filed by the University.

On June 10, 1963, the Faculty Club filed its answer to the petition for certiorari and prohibition with preliminary injunction, admitting some allegations contained in the petition and denying others, and alleging special defenses which boil down to the contentions that (1) the CIR had acquired jurisdiction to take cognizance of Case No. 41-IPA by virtue of the presidential certification, so that it had jurisdiction to issue the questioned orders in said Case No. 41-IPA; (2) that the Industrial Peace Act (Republic Act 875) is applicable to the University as an employer and to the members of the Faculty Club as employees who are affiliated with a duly registered labor union, so that the Court of Industrial Relations had jurisdiction to take cognizance of Cases Nos. 1183-MC and V-30 and to issue the questioned orders in those two cases; and (3) that the petition for certiorari and prohibition with preliminary injunction was prematurely filed because the orders of the CIR sought to be annulled were still the subjects of pending motions for reconsideration before the CIR en banc when said petition for certiorari and prohibition with preliminary injunction was filed before this Court.

CASE G.R. NO. L-21462

This case, G.R. No. L-21462, involves also CIR Case No. 1183-MC. As already stated Case No. 1183-MC relates to a petition for certification election filed by the Faculty Club as a labor union, praying that it be certified as the sole and exclusive bargaining representative of all employees of the University. This petition was opposed by the University, and at the same time it filed a motion to dismiss said petition. But before Judge Baltazar Villanueva could act on the petition for certification election and the motion to dismiss the same, Faculty Club filed a motion to withdraw said petition upon the ground that the issue raised in Case No. 1183-MC were absorbed by Case No. 41-IPA which was certified by the President of the Philippines. Judge Baltazar Villanueva, by order April 6, 1963, granted the motion to withdraw. The University filed a motion for reconsideration of that order of April 6, 1963 by the CIR en banc. That motion for reconsideration was pending action by the CIR en banc when the petition forcertiorari and prohibition with preliminary injunction in Case G.R. no. L-21278 was filed on May 10, 1963. As earlier stated this Court, in Case G.R. No. L-21278, issued a writ of preliminary injunction on May 10, 1963, ordering respondent Judge Bautista, until further order from this Court, to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations).

On June 5, 1963, that is, after this Court has issued the writ of preliminary injunction in Case G.R. No. L-21278, the CIR en banc issued a resolution denying the motion for reconsideration of the order of April 6, 1963 in Case No. 1183-MC.

On July 8, 1963, the University filed before this Court a petition for certiorari, by way of an appeal from the resolution of the CIR en banc, dated June 5, 1963, denying the motion for reconsideration of the order of April 6, 1963 in Case No. 1183-MC. This petition was docketed as G.R. No. L-21462. In its petition for certiorari, the University alleges (1) that the resolution of the Court of Industrial Relations of June 5, 1963 was null and void because it was issued in violation of the writ of preliminary injunction issued in Case G.R. No. L-21278; (2) that the issues of employer-employee relationship, the alleged status as a labor union, majority representation and designation as bargaining representative in an appropriate unit of the Faculty Club should have been resolved first in Case No. 1183-MC prior to the determination of the issues in Case No. 41-IPA and therefore the motion to withdraw the petition for certification election should not have been granted upon the ground that the issues in the first case have been absorbed in the second case; and (3) the lower court acted without or in excess of jurisdiction in taking cognizance of the petition for certification election and that the same should have been dismissed instead of having been ordered withdrawn. The University prayed that the proceedings in Case No. 1183-MC and the order of April 6, 1963 and the resolution of June 5, 1963 issued therein be annulled, and that the CIR be ordered to dismiss Case No. 1183-MC on the ground of lack of jurisdiction.

The Faculty Club filed its answer, admitting some, and denying other, allegations in the petition for certiorari; and specially alleging that the lower court's order granting the withdrawal of the petition for certification election was in accordance with law, and that the resolution of the court en banc on June 5, 1963 was not a violation of the writ of preliminary injunction issued in Case G.R. No. L-21278 because said writ of injunction was issued against Judge Jose S. Bautista and not against the Court of Industrial Relations, much less against Judge Baltazar Villanueva who was the trial judge of Case No. 1183-MC.

CASE G.R. NO. L-21500

This case, G.R. No. L-21500, involves also CIR Case No. 41-IPA. As earlier stated, Case No. 41-IPA relates to the strike staged by the members of the Faculty Club and the dispute was certified by the President of the Philippines to the CIR. The University filed a motion to dismiss that case upon the ground that the CIR has no jurisdiction over the case, and on March 30, 1963 Judge Jose S. Bautista issued an order denying the motion to dismiss and declaring that the Industrial Peace Act is applicable to both parties in the case and that the CIR had acquired jurisdiction over the case by virtue of the presidential certification; and in that same order Judge Bautista ordered the strikers to return to work and the University to take them back under the last terms and conditions existing before the dispute arose; and enjoined the University from dismissing any employee or laborer without previous authority from the court. On April 1, 1963, the University filed a motion for reconsideration of the order of March 30, 1963 by the CIR en banc. That motion for reconsideration was pending action by the CIR en banc when the petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278 was filed on May 10, 1963. As we have already stated, this Court in said case G.R. No. L-21278, issued a writ of preliminary injunction on May 10, 1963 ordering respondent Judge Jose S. Bautista, until further order from this Court, to desist and refrain from further proceeding in the premises (Cases Nos. 41-IPA, 1183-MC and V-30 of the Court of Industrial Relations).

On July 2, 1963, the University received a copy of the resolution of the CIR en banc, dated May 7, 1963 but actually received and stamped at the Office of the Clerk of the CIR on June 28, 1963, denying the motion for reconsideration of the order dated March 30, 1963 in Case No. 41-IPA.

On July 23, 1963, the University filed before this Court a petition for certiorari, by way of an appeal from the resolution of the Court of Industrial Relations en banc dated May 7, 1963 (but actually received by said petitioner on July 2, 1963) denying the motion for reconsideration of the order of March 30, 1963 in Case No. 41-IPA. This petition was docketed as G.R. No. L-21500. In its petition for certiorari the University alleges (1) that the resolution of the CIR en banc, dated May 7, 1963 but filed with the Clerk of the CIR on June 28, 1963, in Case No. 41-IPA, is null and void because it was issued in violation of the writ of preliminary injunction issued by this Court in G.R. No. L-21278; (2) that the CIR, through its Presiding Judge, had no jurisdiction to take cognizance of Case No. 41-IPA and the order of March 30, 1963 and the resolution dated May 7, 1963 issued therein are null and void; (3) that the certification made by the President of the Philippines is not authorized by Section 10 of Republic Act 875, but is violative thereof; (4) that the Faculty Club has no right to unionize or organize as a labor union for collective bargaining purposes and to be certified as a collective bargaining agent within the purview of the Industrial Peace Act, and consequently it has no right to strike and picket on the ground of petitioner's alleged refusal to bargain collectively where such duty does not exist in law and is not enforceable against an educational institution; and (5) that the return-to-work order of March 30, 1963 is improper and illegal. The petition prayed that the proceedings in Case No. 41-IPA be annulled, that the order dated March 30, 1963 and the resolution dated May 7, 1963 be revoked, and that the lower court be ordered to dismiss Case 41-IPA on the ground of lack of jurisdiction.

On September 10, 1963, the Faculty Club, through counsel, filed a motion to dismiss the petition for certiorari on the ground that the petition being filed by way of an appeal from the orders of the Court of Industrial Relations denying the motion to dismiss in Case No. 41-IPA, the petition for certiorari is not proper because the orders appealed from are interlocutory in nature.

This Court, by resolution of September 26, 1963, ordered that these three cases (G.R. Nos. L-21278, L-21462 and L-21500) be considered together and the motion to dismiss in Case G.R. No. L-21500 be taken up when the cases are decided on the merits after the hearing.

Brushing aside certain technical questions raised by the parties in their pleadings, We proceed to decide these three cases on the merits of the issues raised.

The University has raised several issues in the present cases, the pivotal one being its claim that the Court of Industrial Relations has no jurisdiction over the parties and the subject matter in CIR Cases 41-IPA, 1183-MC and V-30, brought before it, upon the ground that Republic Act No. 875 is not applicable to the University because it is an educational institution and not an industrial establishment and hence not an "employer" in contemplation of said Act; and neither is Republic Act No. 875 applicable to the members of the Faculty Club because the latter are independent contractors and, therefore, not employees within the purview of the said Act.

In support of the contention that being an educational institution it is beyond the scope of Republic Act No. 875, the University cites cases decided by this Court: Boy Scouts of the Philippines vs. Juliana Araos, L-10091, Jan. 29, 1958; University of San Agustin vs. CIR, et al., L-12222, May 28, 1958; Cebu Chinese High School vs. Philippine Land-Air-Sea Labor Union, PLASLU, L-12015, April 22, 1959; La Consolacion College, et al. vs. CIR, et al., L-13282, April 22, 1960; University of the Philippines, et al. vs. CIR, et al., L-15416, April 8, 1960; Far Eastern University vs. CIR, L-17620, August 31, 1962. We have reviewed these cases, and also related cases subsequent thereto, and We find that they do not sustain the contention of the University. It is true that this Court has ruled that certain educational institutions, like the University of Santo Tomas, University of San Agustin, La Consolacion College, and other juridical entities, like the Boy Scouts of the Philippines and Manila Sanitarium, are beyond the purview of Republic Act No. 875 in the sense that the Court of Industrial Relations has no jurisdiction to take cognizance of charges of unfair labor practice filed against them, but it is nonetheless true that the principal reason of this Court in ruling in those cases that those institutions are excluded from the operation of Republic Act 875 is that those entities are not organized, maintained and operated for profit and do not declare dividends to stockholders. The decision in the case of University of San Agustin vs. Court of Industrial Relations, G.R. No. L-12222, May 28, 1958, is very pertinent. We quote a portion of the decision:

It appears that the University of San Agustin, petitioner herein, is an educational institution conducted and managed by a "religious non-stock corporation duly organized and existing under the laws of the Philippines." It was organized not for profit or gain or division of the dividends among its stockholders, but solely for religious and educational purposes. It likewise appears that the Philippine Association of College and University Professors, respondent herein, is a non-stock association composed of professors and teachers in different colleges and universities and that since its organization two years ago, the university has adopted a hostile attitude to its formation and has tried to discriminate, harass and intimidate its members for which reason the association and the members affected filed the unfair labor practice complaint which initiated this proceeding. To the complaint of unfair labor practice, petitioner filed an answer wherein it disputed the jurisdiction of the Court of Industrial Relations over the controversy on the following grounds:

"(a) That complainants therein being college and/or university professors were not "industrial" laborers or employees, and the Philippine Association of College and University Professors being composed of persons engaged in the teaching profession, is not and cannot be a legitimate labor organization within the meaning of the laws creating the Court of Industrial Relations and defining its powers and functions;

"(b) That the University of San Agustin, respondent therein, is not an institution established for the purpose of gain or division of profits, and consequently, it is not an "industrial" enterprise and the members of its teaching staff are not engaged in "industrial" employment (U.S.T. Hospital Employees Association vs. Sto. Tomas University Hospital, G.R. No. L-6988, 24 May 1954; and San Beda College vs. Court of Industrial Relations and National Labor Union, G.R. No. L-7649, 29 October 1955; 51 O.G. (Nov. 1955) 5636-5640);

"(c) That, as a necessary consequence, alleged controversy between therein complainants and respondent is not an "industrial" dispute, and the Court of Industrial Relations has no jurisdiction, notonly on the parties but also over the subject matter of the complaint."

The issue now before us is: Since the University of San Agustin is not an institution established for profit or gain, nor an industrial enterprise, but one established exclusively for educational purposes, can it be said that its relation with its professors is one of employer and employee that comes under the jurisdiction of the Court of Industrial Relations? In other words, do the provisions of the Magna Carta on unfair labor practice apply to the relation between petitioner and members of respondent association?

The issue is not new. Thus, in the case of Boy Scouts of the Philippines v. Juliana V. Araos, G.R. No. L-10091, promulgated on January 29, 1958, this Court, speaking thru Mr. Justice Montemayor, answered the query in the negative in the following wise:

"The main issue involved in the present case is whether or not a charitable institution or one organized not for profit but for more elevated purposes, charitable, humanitarian, etc., like the Boy Scouts of the Philippines, is included in the definition of "employer" contained in Republic Act 875, and whether the employees of said institution fall under the definition of "employee" also contained in the same Republic Act. If they are included, then any act which may be considered unfair labor practice, within the meaning of said Republic Act, would come under the jurisdiction of the Court of Industrial Relations; but if they do not fall within the scope of said Republic Act, particularly, its definitions of employer and employee, then the Industrial Court would have no jurisdiction at all.

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"On the basis of the foregoing considerations, there is every reason to believe that our labor legislation from Commonwealth Act No. 103, creating the Court of Industrial Relations, down through the Eight-Hour Labor Law, to the Industrial Peace Act, was intended by the Legislature to apply only to industrial employment and to govern the relations between employers engaged in industry and occupations for purposes of profit and gain, and their industrial employees, but not to organizations and entities which are organized, operated and maintained not for profit or gain, but for elevated and lofty purposes, such as, charity, social service, education and instruction, hospital and medical service, the encouragement and promotion of character, patriotism and kindred virtues in youth of the nation, etc.

"In conclusion, we find and hold that Republic Act No. 875, particularly, that portion thereof regarding labor disputes and unfair labor practice, does not apply to the Boy Scouts of the Philippines, and consequently, the Court of Industrial Relations had no jurisdiction to entertain and decide the action or petition filed by respondent Araos. Wherefore, the appealed decision and resolution of the CIR are hereby set aside, with costs against respondent."

There being a close analogy between the relation and facts involved in the two cases, we cannot but conclude that the Court of Industrial Relations has no jurisdiction to entertain the complaint for unfair labor practice lodged by respondent association against petitioner and, therefore, we hereby set aside the order and resolution subject to the present petition, with costs against respondent association.

The same doctrine was confirmed in the case of University of Santo Tomas v. Hon. Baltazar Villanueva, et al.,G.R. No. L-13748, October 30, 1959, where this Court ruled that:

In the present case, the record reveals that the petitioner University of Santo Tomas is not an industry organized for profit but an institution of learning devoted exclusively to the education of the youth. The Court of First Instance of Manila in its decision in Civil Case No. 28870, which has long become final and consequently the settled law in the case, found as established by the evidence adduced by the parties therein (herein

petitioner and respondent labor union) that while the University collects fees from its students, all its income is used for the improvement and enlargement of the institution. The University declares no dividend, and the members of the corporation who founded it, as ordained in its articles of incorporation, receive no material compensation for the time and sacrifice they render to the University and its students. The respondent union itself in a case before the Industrial Court (Case No. 314-MC) has averred that "the University of Santo Tomas, like the San Beda College, is an educational institution operated not for profit but for the sole purpose of educating young men." (See Annex "B" to petitioner's motion to dismiss.). It is apparent, therefore, that on the face of the record the University of Santo Tomas is not a corporation created for profit but an educational institution and therefore not an industrial or business organization.

In the case of La Consolacion College, et al. vs. CIR, et al., G.R. No. L-13282, April 22, 1960, this Court repeated the same ruling when it said:

The main issue in this appeal by petitioner is that the industry trial court committed an error in holding that it has jurisdiction to act in this case even if it involves unfair labor practice considering that the La Consolacion College is not a business enterprise but an educational institution not organized for profit.

If the claim that petitioner is an educational institution not operated for profit is true, which apparently is the case, because the very court a quo found that it has no stockholder, nor capital . . . then we are of the opinion that the same does not come under the jurisdiction of the Court of Industrial Relations in view of the ruling in the case of Boy Scouts of the Philippines v. Juliana V. Araos, G.R. No. L-10091, decided on January 29, 1958.

It is noteworthy that the cases of the University of San Agustin, the University of Santo Tomas, and La Consolacion College, cited above, all involve charges of unfair labor practice under Republic Act No. 875, and the uniform rulings of this Court are that the Court of Industrial Relations has no jurisdiction over the charges because said Act does not apply to educational institutions that are not operated or maintained for profit and do not declare dividends. On the other hand, in the cases of Far Eastern University v. CIR, et al., G.R. No. L-17620, August 31, 1962, this Court upheld the decision of the Court of Industrial Relations finding the Far Eastern University, also an educational institution, guilty of unfair labor practice. Among the findings of fact in said case was that the Far Eastern University made profits from the school year 1952-1953 to 1958-1959. In affirming the decision of the lower court, this Court had thereby ratified the ruling of the Court of Industrial Relations which applied the Industrial Peace Act to educational institutions that are organized, operated and maintained for profit.

It is also noteworthy that in the decisions in the cases of the Boy Scouts of the Philippines, the University of San Agustin, the University of Sto. Tomas, and La Consolacion College, this Court was not unanimous in the view that the Industrial Peace Act (Republic Act No. 875) is not applicable to charitable, eleemosynary or non-profit organizations — which include educational institutions not operated for profit. There are members of this Court who hold the view that the Industrial Peace Act would apply also to non-profit organizations or entities — the only exception being the Government, including any political subdivision or instrumentality thereof, in so far as governmental functions are concerned. However, in the Far Eastern University case this Court is unanimous in supporting the view that an educational institution that is operated for profit comes within the scope of the Industrial Peace Act. We consider it a settled doctrine of this Court, therefore, that the Industrial Peace Act is applicable to any organization or entity — whatever may be its purpose when it was created — that is operated for profit or gain.

Does the University operate as an educational institution for profit? Does it declare dividends for its stockholders? If it does not, it must be declared beyond the purview of Republic Act No. 875; but if it does, Republic Act No. 875 must apply to it. The University itself admits that it has declared dividends.3 The CIR in its order dated March 30, 1963 in CIR Case No. 41-IPA — which order was issued after evidence was heard — also found that the University is not for strictly educational purposes and that "It realizes profits and parts of such earning is distributed as dividends to private stockholders or individuals (Exh. A and also 1 to 1-F, 2-x 3-x and 4-x)"4 Under this circumstance, and in consonance with the rulings in the decisions of this Court, above cited, it is obvious that Republic Act No. 875 is applicable to herein petitioner Feati University.

But the University claims that it is not an employer within the contemplation of Republic Act No. 875, because it is not an industrial establishment. At most, it says, it is only a lessee of the services of its professors and/or instructors pursuant to a contract of services entered into between them. We find no merit in this claim. Let us clarify who is an "employer" under the Act. Section 2(c) of said Act provides:

Sec. 2. Definitions.—As used in this Act —

(c) The term employer include any person acting in the interest of an employer, directly or indirectly, but shall not include any labor organization (otherwise than when acting as an employer) or any one acting in the capacity or agent of such labor organization.

It will be noted that in defining the term "employer" the Act uses the word "includes", which it also used in defining "employee". [Sec. 2 (d)], and "representative" [Sec. 2(h)]; and not the word "means" which the Act uses in defining the terms "court" [Sec. 2(a)], "labor organization" [Sec. 2(e)], "legitimate labor organization [Sec. 2(f)], "company union" [Sec. 2(g)], "unfair labor practice" [Sec. 2(i)], "supervisor" [Sec. 2(k)], "strike" [Sec. 2(l)] and "lock-out" [Sec. 2(m)]. A methodical variation in terminology is manifest. This variation and distinction in terminology and phraseology cannot be presumed to have been the inconsequential product of an oversight; rather, it must have been the result of a deliberate and purposeful act, more so when we consider that as legislative records show, Republic Act No. 875 had been meticulously and painstakingly drafted and deliberated upon. In using the word "includes" and not "means", Congress did not intend to give a complete definition of "employer", but rather that such definition should be complementary to what is commonly understood as employer. Congress intended the term to be understood in a broad meaning because, firstly, the statutory definition includes not only "a principal employer but also a person acting in the interest of the employer"; and, secondly, the Act itself specifically enumerated those who are not included in the term "employer", namely: (1) a labor organization (otherwise than when acting as an employer), (2) anyone acting in the capacity of officer or agent of such labor organization [Sec. 2(c)], and (3) the Government and any political subdivision or instrumentality thereof insofar as the right to strike for the purpose of securing changes or modifications in the terms and conditions of employment is concerned (Section 11). Among these statutory exemptions, educational institutions are not included; hence, they can be included in the term "employer". This Court, however, has ruled that those educational institutions that are not operated for profit are not within the purview of Republic Act No. 875.5

As stated above, Republic Act No. 875 does not give a comprehensive but only a complementary definition of the term "employer". The term encompasses those that are in ordinary parlance "employers." What is commonly meant by "employer"? The term "employer" has been given several acceptations. The lexical definition is "one who employs; one who uses; one who engages or keeps in service;" and "to employ" is "to provide work and pay for; to engage one's service; to hire." (Webster's New Twentieth Century Dictionary, 2nd ed., 1960, p. 595). The Workmen's Compensation Act defines employer as including "every person or association of persons, incorporated or not, public or private, and the legal representative of the deceased employer" and "includes the owner or lessee of a factory or establishment or place of work or any other person who is virtually the owner or manager of the business carried on in the establishment or place of work but who, for reason that there is an independent contractor in the same, or for any other reason, is not the direct employer of laborers employed there." [Sec. 39(a) of Act No. 3428.] The Minimum Wage Law states that "employer includes any person acting directly or indirectly in the interest of the employer in relation to an employee and shall include the Government and the government corporations". [Rep. Act No. 602, Sec. 2(b)]. The Social Security Act defines employer as "any person, natural or juridical, domestic or foreign, who carries in the Philippines any trade, business, industry, undertaking, or activity of any kind and uses the services of another person who is under his orders as regards the employment, except the Government and any of its political subdivisions, branches or instrumentalities, including corporations owned or controlled by the Government." (Rep. Act No. 1161, Sec. 8[c]).

This Court, in the cases of the The Angat River Irrigation System, et al. vs. Angat River Workers' Union (PLUM), et al., G.R. Nos. L-10934 and L-10944, December 28, 1957, which cases involve unfair labor practices and hence within the purview of Republic Act No. 875, defined the term employer as follows:

An employer is one who employs the services of others; one for whom employees work and who pays their wages or salaries (Black Law Dictionary, 4th ed., p. 618).

An employer includes any person acting in the interest of an employer, directly or indirectly (Sec. 2-c, Rep. Act 875).

Under none of the above definitions may the University be excluded, especially so if it is considered that every professor, instructor or teacher in the teaching staff of the University, as per allegation of the University itself, has a contract with the latter for teaching services, albeit for one semester only. The University engaged the services of the professors, provided them work, and paid them compensation or salary for their services. Even if the University may be considered as a lessee of services under a contract between it and the members of its Faculty, still it is included in the term "employer". "Running through the word `employ' is the thought that there has been an agreement on the part of one person to perform a certain service in return for compensation to be paid by an employer. When you ask how a man is employed, or what is his employment, the thought that he is under agreement to perform some service or services for another is predominant and paramount." (Ballentine Law

Dictionary, Philippine ed., p. 430, citing Pinkerton National Detective Agency v. Walker, 157 Ga. 548, 35 A. L. R. 557, 560, 122 S.E. Rep. 202).

To bolster its claim of exception from the application of Republic Act No. 875, the University contends that it is not state that the employers included in the definition of 2 (c) of the Act. This contention can not be sustained. In the first place, Sec. 2 (c) of Republic Act No. 875 does not state that the employers included in the definition of the term "employer" are only and exclusively "industrial establishments"; on the contrary, as stated above, the term "employer" encompasses all employers except those specifically excluded by the Act. In the second place, even the Act itself does not refer exclusively to industrial establishments and does not confine its application thereto. This is patent inasmuch as several provisions of the Act are applicable to non-industrial workers, such as Sec. 3, which deals with "employees' right to self-organization"; Sections 4 and 5 which enumerate unfair labor practices; Section 8 which nullifies private contracts contravening employee's rights; Section 9 which relates to injunctions in any case involving a labor dispute; Section 11 which prohibits strikes in the government; Section 12 which provides for the exclusive collective bargaining representation for labor organizations; Section 14 which deals with the procedure for collective bargaining; Section 17 which treats of the rights and conditions of membership in labor organizations; Sections 18, 19, 20 and 21 which provide respectively for the establishment of conciliation service, compilation of collective bargaining contracts, advisory labor-management relations; Section 22 which empowers the Secretary of Labor to make a study of labor relations; and Section 24 which enumerates the rights of labor organizations. (See Dissenting Opinion of Justice Concepcion in Boy Scouts of the Philippines v. Juliana Araos, G.R. No. L-10091, January 29, 1958.)

This Court, in the case of Boy Scouts of the Philippines v. Araos, supra, had occasion to state that the Industrial Peace Act "refers only to organizations and entities created and operated for profits, engaged in a profitable trade, occupation or industry". It cannot be denied that running a university engages time and attention; that it is an occupation or a business from which the one engaged in it may derive profit or gain. The University is not an industrial establishment in the sense that an industrial establishment is one that is engaged in manufacture or trade where raw materials are changed or fashioned into finished products for use. But for the purposes of the Industrial Peace Act the University is an industrial establishment because it is operated for profit and it employs persons who work to earn a living. The term "industry", for the purposes of the application of our labor laws should be given a broad meaning so as to cover all enterprises which are operated for profit and which engage the services of persons who work to earn a living.

The word "industry" within State Labor Relations Act controlling labor relations in industry, cover labor conditions in any field of employment where the objective is earning a livelihood on the one side and gaining of a profit on the other. Labor Law Sec. 700 et seq. State Labor Relations Board vs. McChesney, 27 N.Y.S. 2d 866, 868." (Words and Phrases, Permanent Edition, Vol. 21, 1960 edition p. 510).

The University urges that even if it were an employer, still there would be no employer-employee relationship between it and the striking members of the Faculty Club because the latter are not employees within the purview of Sec. 2(d) of Republic Act No. 875 but are independent contractors. This claim is untenable.

Section 2 (d) of Republic Act No. 875 provides:

(d) The term "employee" shall include any employee and shall not be limited to the employee of a particular employer unless the act explicitly states otherwise and shall include any individual whose work has ceased as a consequence of, or in connection with, any current labor dispute or because of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment.

This definition is again, like the definition of the term "employer" [Sec. 2(c)], by the use of the term "include", complementary. It embraces not only those who are usually and ordinarily considered employees, but also those who have ceased as employees as a consequence of a labor dispute. The term "employee", furthermore, is not limited to those of a particular employer. As already stated, this Court in the cases of The Angat River Irrigation System, et al. v. Angat River Workers' Union (PLUM), et al., supra, has defined the term "employer" as "one who employs the services of others; one for whom employees work and who pays their wages or salaries. "Correlatively, an employee must be one who is engaged in the service of another; who performs services for another; who works for salary or wages. It is admitted by the University that the striking professors and/or instructors are under contract to teach particular courses and that they are paid for their services. They are, therefore, employees of the University.

In support of its claim that the members of the Faculty Club are not employees of the University, the latter cites as authority Francisco's Labor Laws, 2nd ed., p. 3, which states:

While the term "workers" as used in a particular statute, has been regarded as limited to those performing physical labor, it has been held to embrace stenographers and bookkeepers. Teachers are not included, however.

It is evident from the above-quoted authority that "teachers" are not to be included among those who perform "physical labor", but it does not mean that they are not employees. We have checked the source of the authority, which is 31 Am. Jur., Sec. 3, p. 835, and the latter cites Huntworth v. Tanner, 87 Wash 670, 152 P. 523, Ann Cas 1917 D 676. A reading of the last case confirms Our view.

That teachers are "employees' has been held in a number of cases (Aebli v. Board of Education of City and County of San Francisco, 145 P. 2d 601, 62 Col. App 2.d 706; Lowe & Campbell Sporting Goods Co. v. Tangipahoa Parish School Board, La. App., 15 So. 2d 98, 100; Sister Odelia v. Church of St. Andrew, 263 N. W. 111, 112, 195 Minn. 357, cited in Words and Phrases, Permanent ed., Vol. 14, pp. 806-807). This Court in the Far Eastern University case, supra, considered university instructors as employees and declared Republic Act No. 875 applicable to them in their employment relations with their school. The professors and/or instructors of the University neither ceased to be employees when they struck, for Section 2 of Rep. Act 875 includes among employees any individual whose work has ceased as consequence of, or in connection with a current labor dispute. Striking employees maintain their status as employees of the employer. (Western Cartridge Co. v. NLRB, C.C.A. 7, 139 F2d 855, 858).

The contention of the University that the professors and/or instructors are independent contractors, because the University does not exercise control over their work, is likewise untenable. This Court takes judicial notice that a university controls the work of the members of its faculty; that a university prescribes the courses or subjects that professors teach, and when and where to teach; that the professors' work is characterized by regularity and continuity for a fixed duration; that professors are compensated for their services by wages and salaries, rather than by profits; that the professors and/or instructors cannot substitute others to do their work without the consent of the university; and that the professors can be laid off if their work is found not satisfactory. All these indicate that the university has control over their work; and professors are, therefore, employees and not independent contractors. There are authorities in support of this view.

The principal consideration in determining whether a workman is an employee or an independent contractor is the right to control the manner of doing the work, and it is not the actual exercise of the right by interfering with the work, but the right to control, which constitutes the test. (Amalgamated Roofing Co. v. Travelers' Ins. Co., 133 N.E. 259, 261, 300 Ill. 487, quoted in Words and Phrases, Permanent ed., Vol. 14, p. 576).

Where, under Employers' Liability Act, A was instructed when and where to work . . . he is an employee, and not a contractor, though paid specified sum per square. (Heine v. Hill, Harris & Co., 2 La. App. 384, 390, in Words and Phrases, loc, cit.) .

Employees are those who are compensated for their labor or services by wages rather than by profits. (People vs. Distributors Division, Smoked Fish Workers Union Local No. 20377, Sup. 7 N. Y. S. 2d 185, 187 in Words and Phrases, loc, cit.)

Services of employee or servant, as distinguished from those of a contractor, are usually characterized by regularity and continuity of work for a fixed period or one of indefinite duration, as contrasted with employment to do a single act or a series of isolated acts; by compensation on a fixed salary rather than one regulated by value or amount of work; . . . (Underwood v. Commissioner of Internal Revenue, C.C.A., 56 F. 2d 67, 71 in Words and Phrases, op. cit., p. 579.)

Independent contractors can employ others to work and accomplish contemplated result without consent of contractee, while "employee" cannot substitute another in his place without consent of his employer. (Luker Sand & Gravel Co. v. Industrial Commission, 23 P. 2d 225, 82 Utah, 188, in Words and Phrases, Vol. 14, p. 576).

Moreover, even if university professors are considered independent contractors, still they would be covered by Rep. Act No. 875. In the case of the Boy Scouts of the Philippines v. Juliana Araos, supra, this Court observed that Republic Act No. 875 was modelled after the Wagner Act, or the National Labor Relations Act, of the United States, and this Act did not exclude "independent contractors" from the orbit of "employees". It was in the subsequent legislation — the Labor Management Relation Act (Taft-Harley Act) — that "independent contractors" together with agricultural laborers, individuals in

domestic service of the home, supervisors, and others were excluded. (See Rothenberg on Labor Relations, 1949, pp. 330-331).

It having been shown that the members of the Faculty Club are employees, it follows that they have a right to unionize in accordance with the provisions of Section 3 of the Magna Carta of Labor (Republic Act No. 875) which provides as follows:

Sec. 3. Employees' right to self-organization.—Employees shall have the right to self-organization and to form, join or assist labor organizations of their own choosing for the purpose of collective bargaining through representatives of their own choosing and to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection. . . .

We agree with the statement of the lower court, in its order of March 30, 1963 which is sought to be set aside in the instant case, that the right of employees to self-organization is guaranteed by the Constitution, that said right would exist even if Republic Act No. 875 is repealed, and that regardless of whether their employers are engaged in commerce or not. Indeed, it is Our considered view that the members of the faculty or teaching staff of private universities, colleges, and schools in the Philippines, regardless of whether the university, college or school is run for profit or not, are included in the term "employees" as contemplated in Republic Act No. 875 and as such they may organize themselves pursuant to the above-quoted provision of Section 3 of said Act. Certainly, professors, instructors or teachers of private educational institutions who teach to earn a living are entitled to the protection of our labor laws — and one such law is Republic Act No. 875.

The contention of the University in the instant case that the members of the Faculty Club can not unionize and the Faculty Club can not exist as a valid labor organization is, therefore, without merit. The record shows that the Faculty Club is a duly registered labor organization and this fact is admitted by counsel for the University.5a

The other issue raised by the University is the validity of the Presidential certification. The University contends that under Section 10 of Republic Act No. 875 the power of the President of the Philippines to certify is subject to the following conditions, namely: (1) that here is a labor dispute, and (2) that said labor dispute exists in an industry that is vital to the national interest. The University maintains that those conditions do not obtain in the instant case. This contention has also no merit.

We have previously stated that the University is an establishment or enterprise that is included in the term "industry" and is covered by the provisions of Republic Act No. 875. Now, was there a labor dispute between the University and the Faculty Club?

Republic Act No. 875 defines a labor dispute as follows:

The term "labor dispute" includes any controversy concerning terms, tenure or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment regardless of whether the disputants stand in proximate relation of employer and employees.

The test of whether a controversy comes within the definition of "labor dispute" depends on whether the controversy involves or concerns "terms, tenure or condition of employment" or "representation." It is admitted by the University, in the instant case, that on January 14, 1963 the President of the Faculty Club wrote to the President of the University a letter informing the latter of the organization of the Faculty Club as a labor union, duly registered with the Bureau of Labor Relations; that again on January 22, 1963 another letter was sent, to which was attached a list of demands consisting of 26 items, and asking the President of the University to answer within ten days from date of receipt thereof; that the University questioned the right of the Faculty Club to be the exclusive representative of the majority of the employees and asked proof that the Faculty Club had been designated or selected as exclusive representative by the vote of the majority of said employees; that on February 1, 1963 the Faculty Club filed with the Bureau of Labor Relations a notice of strike alleging as reason therefor the refusal of the University to bargain collectively with the representative of the faculty members; that on February 18, 1963 the members of the Faculty Club went on strike and established picket lines in the premises of the University, thereby disrupting the schedule of classes; that on March 1, 1963 the Faculty Club filed Case No. 3666-ULP for unfair labor practice against the University, but which was later dismissed (on April 2, 1963 after Case 41-IPA was certified to the CIR); and that on March 7, 1963 a petition for certification election, Case No. 1183-MC, was filed by the Faculty Club in the CIR.6 All these admitted facts show that the controversy between the University and the Faculty Club involved terms and conditions of employment, and the question of representation. Hence, there was a labor dispute between the University and the Faculty Club, as contemplated by Republic Act No. 875. It having been shown that the University is an institution operated for profit, that is an employer, and that there is an employer-employee relationship, between the University and the members of the

Faculty Club, and it having been shown that a labor dispute existed between the University and the Faculty Club, the contention of the University, that the certification made by the President is not only not authorized by Section 10 of Republic Act 875 but is violative thereof, is groundless.

Section 10 of Republic Act No. 875 provides:

When in the opinion of the President of the Philippines there exists a labor dispute in an industry indispensable to the national interest and when such labor dispute is certified by the President to the Court of Industrial Relations, said Court may cause to be issued a restraining order forbidding the employees to strike or the employer to lockout the employees, and if no other solution to the dispute is found, the Court may issue an order fixing the terms and conditions of employment.

This Court had occasion to rule on the application of the above-quoted provision of Section 10 of Republic Act No. 875. In the case of Pampanga Sugar Development Co. v. CIR, et al., G.R. No. L-13178, March 24, 1961, it was held:

It thus appears that when in the opinion of the President a labor dispute exists in an industry indispensable to national interest and he certifies it to the Court of Industrial Relations the latter acquires jurisdiction to act thereon in the manner provided by law. Thus the court may take either of the following courses: it may issue an order forbidding the employees to strike or the employer to lockout its employees, or, failing in this, it may issue an order fixing the terms and conditions of employment. It has no other alternative. It can not throw the case out in the assumption that the certification was erroneous.

xxx xxx xxx

. . . The fact, however, is that because of the strike declared by the members of the minority union which threatens a major industry the President deemed it wise to certify the controversy to the Court of Industrial Relations for adjudication. This is the power that the law gives to the President the propriety of its exercise being a matter that only devolves upon him. The same is not the concern of the industrial court. What matters is that by virtue of the certification made by the President the case was placed under the jurisdiction of said court. (Emphasis supplied)

To certify a labor dispute to the CIR is the prerogative of the President under the law, and this Court will not interfere in, much less curtail, the exercise of that prerogative. The jurisdiction of the CIR in a certified case is exclusive (Rizal Cement Co., Inc. v. Rizal Cement Workers Union (FFW), et al., G.R. No. L-12747, July 30, 1960). Once the jurisdiction is acquired pursuant to the presidential certification, the CIR may exercise its broad powers as provided in Commonwealth Act 103. All phases of the labor dispute and the employer-employee relationship may be threshed out before the CIR, and the CIR may issue such order or orders as may be necessary to make effective the exercise of its jurisdiction. The parties involved in the case may appeal to the Supreme Court from the order or orders thus issued by the CIR.

And so, in the instant case, when the President took into consideration that the University "has some 18,000 students and employed approximately 500 faculty members", that `the continued disruption in the operation of the University will necessarily prejudice the thousand of students", and that "the dispute affects the national interest",7and certified the dispute to the CIR, it is not for the CIR nor this Court to pass upon the correctness of the reasons of the President in certifying the labor dispute to the CIR.

The third issue raised by the University refers to the question of the legality of the return-to-work order (of March 30, 1963 in Case 41-IPA) and the order implementing the same (of April 6, 1963). It alleges that the orders are illegal upon the grounds: (1) that Republic Act No. 875, supplementing Commonwealth Act No. 103, has withdrawn from the CIR the power to issue a return-to-work order; (2) that the only power granted by Section 10 of Republic Act No. 875 to the CIR is to issue an order forbidding the employees to strike or forbidding the employer to lockout the employees, as the case may be, before either contingency had become a fait accompli; (3) that the taking in by the University of replacement professors was valid, and the return-to-work order of March 30, 1963 constituted impairment of the obligation of contracts; and (4) the CIR could not issue said order without having previously determined the legality or illegality of the strike.

The contention of the University that Republic Act No. 875 has withdrawn the power of the Court of Industrial Relations to issue a return-to-work order exercised by it under Commonwealth Act No. 103 can not be sustained. When a case is certified by the President to the Court of Industrial Relations, the case thereby comes under the

operation of Commonwealth Act No. 103, and the Court may exercise the broad powers and jurisdiction granted to it by said Act. Section 10 of Republic Act No. 875 empowers the Court of Industrial Relations to issue an order "fixing the terms of employment." This clause is broad enough to authorize the Court to order the strikers to return to work and the employer to readmit them. This Court, in the cases of the Philippine Marine Officers Association vs. The Court of Industrial Relations, Compania Maritima, et al.; and Compañia Martima, et al. vs. Philippine Marine Radio Officers Association and CIR, et al., G.R. Nos. L-10095 and L-10115, October 31, 1957, declared:

We cannot subscribe to the above contention. We agree with counsel for the Philippine Radio Officers' Association that upon certification by the President under Section 10 of Republic Act 875, the case comes under the operation of Commonwealth Act 103, which enforces compulsory arbitration in cases of labor disputes in industries indispensable to the national interest when the President certifies the case to the Court of Industrial Relations. The evident intention of the law is to empower the Court of Industrial Relations to act in such cases, not only in the manner prescribed under Commonwealth Act 103, but with the same broad powers and jurisdiction granted by that act. If the Court of Industrial Relations is granted authority to find a solution to an industrial dispute and such solution consists in the ordering of employees to return back to work, it cannot be contended that the Court of Industrial Relations does not have the power or jurisdiction to carry that solution into effect. And of what use is its power of conciliation and arbitration if it does not have the power and jurisdiction to carry into effect the solution it has adopted? Lastly, if the said court has the power to fix the terms and conditions of employment, it certainly can order the return of the workers with or without backpay as a term or condition of employment.

The foregoing ruling was reiterated by this Court in the case of Hind Sugar Co. v. CIR, et al., G.R. No. L-13364, July 26, 1960.

When a case is certified to the CIR by the President of the Philippines pursuant to Section 10 of Republic Act No. 875, the CIR is granted authority to find a solution to the industrial dispute; and the solution which the CIR has found under the authority of the presidential certification and conformable thereto cannot be questioned (Radio Operators Association of the Philippines vs. Philippine Marine Radio Officers Association, et al., L-10112, Nov. 29, 1957, 54 O.G. 3218).

Untenable also is the claim of the University that the CIR cannot issue a return-to-work order after strike has been declared, it being contended that under Section 10 of Republic Act No. 875 the CIR can only prevent a strike or a lockout — when either of this situation had not yet occurred. But in the case of Bisaya Land Transportation Co., Inc. vs. Court of Industrial Relations, et al., No. L-10114, Nov. 26, 1957, 50 O.G. 2518, this Court declared:

There is no reason or ground for the contention that Presidential certification of labor dispute to the CIR is limited to the prevention of strikes and lockouts. Even after a strike has been declared where the President believes that public interest demands arbitration and conciliation, the President may certify the ease for that purpose. The practice has been for the Court of Industrial Relations to order the strikers to work, pending the determination of the union demands that impelled the strike. There is nothing in the law to indicate that this practice is abolished." (Emphasis supplied)

Likewise untenable is the contention of the University that the taking in by it of replacements was valid and the return-to-work order would be an impairment of its contract with the replacements. As stated by the CIR in its order of March 30, 1963, it was agreed before the hearing of Case 41-IPA on March 23, 1963 that the strikers would return to work under the status quo arrangement and the University would readmit them, and the return-to-work order was a confirmation of that agreement. This is a declaration of fact by the CIR which we cannot disregard. The faculty members, by striking, have not abandoned their employment but, rather, they have only ceased from their labor (Keith Theatre v. Vachon et al., 187 A. 692). The striking faculty members have not lost their right to go back to their positions, because the declaration of a strike is not a renunciation of their employment and their employee relationship with the University (Rex Taxicab Co. vs. CIR, et al., 40 O.G., No. 13, 138). The employment of replacements was not authorized by the CIR. At most, that was a temporary expedient resorted to by the University, which was subject to the power of the CIR to allow to continue or not. The employment of replacements by the University prior to the issuance of the order of March 30, 1963 did not vest in the replacements a permanent right to the positions they held. Neither could such temporary employment bind the University to retain permanently the replacements.

Striking employees maintained their status as employees of the employer (Western Castridge Co. v. National Labor Relations Board, C.C.A. 139 F. 2d 855, 858) ; that employees who took the place of strikers do not

displace them as `employees." ' (National Labor Relations Board v. A. Sartorius & Co., C.C.A. 2, 140 F. 2d 203, 206, 207.)

It is clear from what has been said that the return-to-work order cannot be considered as an impairment of the contract entered into by petitioner with the replacements. Besides, labor contracts must yield to the common good and such contracts are subject to the special laws on labor unions, collective bargaining, strikes and similar subjects (Article 1700, Civil Code).

Likewise unsustainable is the contention of the University that the Court of Industrial Relations could not issue the return-to-work order without having resolved previously the issue of the legality or illegality of the strike, citing as authority therefor the case of Philippine Can Company v. Court of Industrial Relations, G.R. No. L-3021, July 13, 1950. The ruling in said case is not applicable to the case at bar, the facts and circumstances being very different. The Philippine Can Company case, unlike the instant case, did not involve the national interest and it was not certified by the President. In that case the company no longer needed the services of the strikers, nor did it need substitutes for the strikers, because the company was losing, and it was imperative that it lay off such laborers as were not necessary for its operation in order to save the company from bankruptcy. This was the reason of this Court in ruling, in that case, that the legality or illegality of the strike should have been decided first before the issuance of the return-to-work order. The University, in the case before Us, does not claim that it no longer needs the services of professors and/or instructors; neither does it claim that it was imperative for it to lay off the striking professors and instructors because of impending bankruptcy. On the contrary, it was imperative for the University to hire replacements for the strikers. Therefore, the ruling in the Philippine Can case that the legality of the strike should be decided first before the issuance of the return-to-work order does not apply to the case at bar. Besides, as We have adverted to, the return-to-work order of March 30, 1963, now in question, was a confirmation of an agreement between the University and the Faculty Club during a prehearing conference on March 23, 1963.

The University also maintains that there was no more basis for the claim of the members of the Faculty Club to return to their work, as their individual contracts for teaching had expired on March 25 or 31, 1963, as the case may be, and consequently, there was also no basis for the return-to-work order of the CIR because the contractual relationships having ceased there were no positions to which the members of the Faculty Club could return to. This contention is not well taken. This argument loses sight of the fact that when the professors and instructors struck on February 18, 1963, they continued to be employees of the University for the purposes of the labor controversy notwithstanding the subsequent termination of their teaching contracts, for Section 2(d) of the Industrial Peace Act includes among employees "any individual whose work has ceased a consequence of, or in connection with, any current labor dispute or of any unfair labor practice and who has not obtained any other substantially equivalent and regular employment."

The question raised by the University was resolved in a similar case in the United States. In the case of Rapid Roller Co. v. NLRB 126 F. 2d 452, we read:

On May 9, 1939 the striking employees, eighty-four in number, offered to the company to return to their employment. The company believing it had not committed any unfair labor practice, refused the employees' offer and claimed the right to employ others to take the place of the strikers, as it might see fit. This constituted discrimination in the hiring and tenure of the striking employees. When the employees went out on a strike because of the unfair labor practice of the company, their status as employees for the purpose of any controversy growing out of that unfair labor practice was fixed. Sec. 2 (3) of the Act. Phelps Dodge Corp. v. National Labor Relations Board, 313 U.S. 177, 61 S. Ct. 845, 85. L. ed. 1271, 133 A.L.R. 1217.

For the purpose of such controversy they remained employees of the company. The company contended that they could not be their employees in any event since the "contract of their employment expired by its own terms on April 23, 1939."

In this we think the company is mistaken for the reason we have just pointed out, that the status of the employees on strike became fixed under Sec. 2 (3) of the Act because of the unfair labor practice of the company which caused the strike.

The University, furthermore, claims that the information for indirect contempt filed against the officers of the University (Case No. V-30) as well as the order of April 29, 1963 for their arrest were improper, irregular and illegal because (1) the officers of the University had complied in good faith with the return-to-work order and in those cases that they did not, it was due to circumstance beyond their control; (2) the return-to-work order and the order implementing the same were illegal; and (3) even assuming that the order was legal, the same was not Yet final because there was a motion to reconsider it.

Again We find no merit in this claim of Petitioner. We have already ruled that the CIR had jurisdiction to issue the order of March 30, 1963 in CIR Case 41-IPA, and the return-to-work provision of that order is valid and legal. Necessarily the order of April 6, 1963 implementing that order of March 30, 1963 was also valid and legal.

Section 6 of Commonwealth Act No. 103 empowers the Court of Industrial Relations of any Judge thereof to punish direct and indirect contempts as provided in Rule 64 (now Rule 71) of the Rules of Court, under the same procedure and penalties provided therein. Section 3 of Rule 71 enumerates the acts which would constitute indirect contempt, among which is "disobedience or resistance to lawful writ, process, order, judgment, or command of a court," and the person guilty thereof can be punished after a written charge has been filed and the accused has been given an opportunity to be heard. The last paragraph of said section provides:

But nothing in this section shall be so construed as to prevent the court from issuing process to bring the accused party into court, or from holding him in custody pending such proceedings.

The provision authorizes the judge to order the arrest of an alleged contemner (Francisco, et al. v. Enriquez, L-7058, March 20, 1954, 94 Phil., 603) and this, apparently, is the provision upon which respondent Judge Bautista relied when he issued the questioned order of arrest.

The contention of petitioner that the order of arrest is illegal is unwarranted. The return-to-work order allegedly violated was within the court's jurisdiction to issue.

Section 14 of Commonwealth Act No. 103 provides that in cases brought before the Court of Industrial Relations under Section 4 of the Act (referring to strikes and lockouts) the appeal to the Supreme Court from any award, order or decision shall not stay the execution of said award, order or decision sought to be reviewed unless for special reason the court shall order that execution be stayed. Any award, order or decision that is appealed is necessarily not final. Yet under Section 14 of Commonwealth Act No. 103 that award, order or decision, even if not yet final, is executory, and the stay of execution is discretionary with the Court of Industrial Relations. In other words, the Court of Industrial Relations, in cases involving strikes and lockouts, may compel compliance or obedience of its award, order or decision even if the award, order or decision is not yet final because it is appealed, and it follows that any disobedience or non-compliance of the award, order or decision would constitute contempt against the Court of Industrial Relations which the court may punish as provided in the Rules of Court. This power of the Court of Industrial Relations to punish for contempt an act of non-compliance or disobedience of an award, order or decision, even if not yet final, is a special one and is exercised only in cases involving strikes and lockouts. And there is reason for this special power of the industrial court because in the exercise of its jurisdiction over cases involving strikes and lockouts the court has to issue orders or make decisions that are necessary to effect a prompt solution of the labor dispute that caused the strike or the lockout, or to effect the prompt creation of a situation that would be most beneficial to the management and the employees, and also to the public — even if the solution may be temporary, pending the final determination of the case. Otherwise, if the effectiveness of any order, award, or decision of the industrial court in cases involving strikes and lockouts would be suspended pending appeal then it can happen that the coercive powers of the industrial court in the settlement of the labor disputes in those cases would be rendered useless and nugatory.

The University points to Section 6 of Commonwealth Act No. 103 which provides that "Any violation of any order, award, or decision of the Court of Industrial Relations shall after such order, award or decision has become final, conclusive and executory constitute contempt of court," and contends that only the disobedience of orders that are final (meaning one that is not appealed) may be the subject of contempt proceedings. We believe that there is no inconsistency between the above-quoted provision of Section 6 and the provision of Section 14 of Commonwealth Act No. 103. It will be noted that Section 6 speaks of order, award or decision that is executory. By the provision of Section 14 an order, award or decision of the Court of Industrial Relations in cases involving strikes and lockouts are immediately executory, so that a violation of that order would constitute an indirect contempt of court.

We believe that the action of the CIR in issuing the order of arrest of April 29, 1963 is also authorized under Section 19 of Commonwealth Act No. 103 which provides as follows:

SEC. 19. Implied condition in every contract of employment.—In every contract of employment whether verbal or written, it is an implied condition that when any dispute between the employer and the employee or laborer has been submitted to the Court of Industrial Relations for settlement or arbitration pursuant to the provisions of this Act . . . and pending award, or decision by the Court of such dispute . . . the employee or laborer shall not strike or walk out of his employment when so enjoined by the Court after hearing and when public interest so requires, and if he has already done so, that he shall forthwith return to it, upon order of the Court, which

shall be issued only after hearing when public interest so requires or when the dispute cannot, in its opinion, be promptly decided or settled; and if the employees or laborers fail to return to work, the Court may authorize the employer to accept other employees or laborers. A condition shall further be implied that while such dispute . . . is pending, the employer shall refrain from accepting other employees or laborers, unless with the express authority of the Court, and shall permit the continuation in the service of his employees or laborers under the last terms and conditions existing before the dispute arose. . . . A violation by the employer or by the employee or laborer of such an order or the implied contractual condition set forth in this section shall constitute contempt of the Court of Industrial Relations and shall be punished by the Court itself in the same manner with the same penalties as in the case of contempt of a Court of First Instance. . . .

We hold that the CIR acted within its jurisdiction when it ordered the arrest of the officers of the University upon a complaint for indirect contempt filed by the Acting Special Prosecutor of the CIR in CIR Case V-30, and that order was valid. Besides those ordered arrested were not yet being punished for contempt; but, having been charged, they were simply ordered arrested to be brought before the Judge to be dealt with according to law. Whether they are guilty of the charge or not is yet to be determined in a proper hearing.

Let it be noted that the order of arrest dated April 29, 1963 in CIR Case V-30 is being questioned in Case G.R. No. L-21278 before this Court in a special civil action for certiorari. The University did not appeal from that order. In other words, the only question to be resolved in connection with that order in CIR Case V-30 is whether the CIR had jurisdiction, or had abused its discretion, in issuing that order. We hold that the CIR had jurisdiction to issue that order, and neither did it abuse its discretion when it issued that order.

In Case G.R. No. L-21462 the University appealed from the order of Judge Villanueva of the CIR in Case No. 1183-MC, dated April 6, 1963, granting the motion of the Faculty Club to withdraw its petition for certification election, and from the resolution of the CIR en banc, dated June 5, 1963, denying the motion to reconsider said order of April 6, 1963. The ground of the Faculty Club in asking for the withdrawal of that petition for certification election was because the issues involved in that petition were absorbed by the issues in Case 41-IPA. The University opposed the petition for withdrawal, but at the same time it moved for the dismissal of the petition for certification election.

It is contended by the University before this Court, in G.R. L-21462, that the issues of employer-employee relationship between the University and the Faculty Club, the alleged status of the Faculty Club as a labor union, its majority representation and designation as bargaining representative in an appropriate unit of the Faculty Club should have been resolved first in Case No. 1183-MC prior to the determination of the issues in Case No. 41-IPA, and, therefore, the motion to withdraw the petition for certification election should not have been granted upon the ground that the issues in the first case were absorbed in the second case.

We believe that these contentions of the University in Case G.R. No. L-21462 have been sufficiently covered by the discussion in this decision of the main issues raised in the principal case, which is Case G.R. No. L-21278. After all, the University wanted CIR Case 1183-MC dismissed, and the withdrawal of the petition for certification election had in a way produced the situation desired by the University. After considering the arguments adduced by the University in support of its petition for certiorari by way of appeal in Case G.R. No. L-21278, We hold that the CIR did not commit any error when it granted the withdrawal of the petition for certification election in Case No. 1183-MC. The principal case before the CIR is Case No. 41-IPA and all the questions relating to the labor disputes between the University and the Faculty Club may be threshed out, and decided, in that case.

In Case G.R. No. L-21500 the University appealed from the order of the CIR of March 30, 1963, issued by Judge Bautista, and from the resolution of the CIR en banc promulgated on June 28, 1963, denying the motion for the reconsideration of that order of March 30, 1963, in CIR Case No. 41-IPA. We have already ruled that the CIR has jurisdiction to issue that order of March 30, 1963, and that order is valid, and We, therefore, hold that the CIR did not err in issuing that order of March 30, 1963 and in issuing the resolution promulgated on June 28, 1963 (although dated May 7, 1963) denying the motion to reconsider that order of March 30, 1963.

IN VIEW OF THE FOREGOING, the petition for certiorari and prohibition with preliminary injunction in Case G.R. No. L-21278 is dismissed and the writs prayed for therein are denied. The writ of preliminary injunction issued in Case G.R. No. L-21278 is dissolved. The orders and resolutions appealed from, in Cases Nos. L-21462 and L-21500, are affirmed, with costs in these three cases against the petitioner-appellant Feati University. It is so ordered.

Concepcion, C.J., Dizon, Regala, Makalintal, Bengzon, J.P., Sanchez and Castro, JJ., concur.

Reyes, J.B.L., J., concurs but reserves his vote on the teacher's right to strike.

Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-21212 September 23, 1966

CITIZENS' LEAGUE OF FREEWORKERS AND/OR BALBINO EPIS, NICOLAS ROJO, ET AL., petitioners, vs.HON. MACAPANTON ABBAS, Judge of the Court of First Instance of Davao and TEOFILO GERONIMO and EMERITA MENDEZ, respondents.

Carlos Dominguez, Jr. for petitioners. C. S. Nitorreda for respondents.

DIZON, J.:

Petition for certiorari with a prayer for the issuance of a writ of preliminary injunction filed by the Citizens' League of Freeworkers, a legitimate labor organization, — hereinafter referred to as the Union — and its members against the spouses Teofilo Geronimo and Emerita Mendez, and the Hon. Macapanton Abbas, as judge of the Court of First Instance of Davao. Its purpose is to set aside the writ of preliminary injunction issued by the latter in Civil Case No. 3966 and restrain him from proceeding with the case, on the ground that the controversy involves a labor dispute and is, therefore, within the exclusive jurisdiction of the Court of Industrial Relations.

It appears that on March 11, 1963, respondents-spouses owners and operators of auto-calesas in Davao City, filed a complaint with the Court of First Instance of Davao (Civil Case No. 3966) to restrain the Union and its members, who were drivers of the spouses in said business, from interfering with its operation, from committing certain acts complained of in connection therewith, and to recover damages. The complaint alleged that the defendants named therein used to lease the auto-calesas of the spouses on a daily rental basis; that, unable to get the spouses to recognize said defendants as employees instead of lessees and to bargain with it on that basis, the Union declared a strike on February 20, 1963 and since then had paralyzed plaintiffs' business operations through threats, intimidation and violence. The complaint also prayed for the issuance of a writ of preliminary injunction ex-parte restraining defendants therein from committing said acts of violence and intimidation during the pendency of the case.

On March 11, 1963 the respondent judge granted the writ prayed for, while deferring action on petitioners' motion to dissolve said writ to March 20 of the same year.

Meanwhile, on March 12, 1963, petitioners filed a complaint for unfair labor practice against the respondents-spouses with the Court of Industrial Relations on the ground, among others, of the latter's refusal to bargain with them. 1awphîl.nèt

On March 18, 1963, petitioners filed a motion to declare the writ of preliminary injunction void on the ground that the same had expired by virtue of Section 9 (d) of Republic Act 875. In his order of March 21, 1963, however, the respondent judge denied said motion on the ground that there was no employer-employee relationship between respondents-spouses and the individual petitioners herein and that, consequently, the Rules of Court and not Republic Act No. 875 applied to the matter of injunction. Thereupon the petition under consideration was filed.

In the case of Isabelo Doce vs. Workmen's Compensation Commission, et al. (G.R. No. L-9417, December 22, 1958), upon a similar if not an altogether identical set of facts, We held:

This case falls squarely within our ruling in National Labor Union v. Dinglasan, 52 O.G., No. 4, 1933, wherein this Court held that a driver of a jeep who operates the same under the boundary system is considered an employee within the meaning of the law and as such the case comes under the jurisdiction of the Court of Industrial Relations. In that case, Benedicto Dinglasan was the owner and operator of TPU jeepneys which were driven by petitioner under verbal contracts that they will pay P7.50 for 10 hours use under the so called "boundary system." The drivers did not receive salaries or wages from the owner. Their day's earnings were

the excess over the P7.50 they paid for the use of the jeepneys. In the event that they did not earn more, the owner did not have to pay them anything. In holding that the employer-employee relationship existed between the owner of the jeepneys and the drivers even if the latter worked under the boundary system, this Court said:

"The only features that would make the relationship of lessor and lessee between the respondent, owner of the jeeps, and the drivers, members of the petitioner union, are the fact that he does not pay them any fixed wage but their compensation is the excess of the total amount of fares earned or collected by them over and above the amount of P7.50 which they agreed to pay to the respondent, and the fact that the gasoline burned by the jeeps is for the account of the drivers. These two features are not, however, sufficient to withdraw the relationship, between them from that of employer-employee, because the estimated earnings for fares must be over and above the amount they agreed to pay to the respondent for a ten-hour shift or ten-hour a day operation of the jeeps. Not having any interest in the business because they did not invest anything in the acquisition of the jeeps and did not participate in the management thereof, their service as drivers of the jeeps being their only contribution to the business, the relationship of lessor and lessee cannot be sustained."

Even assuming, arguendo, that the respondent court had jurisdiction to issue the abovementioned writ of preliminary injunction in Civil Case No. 3966 at the time it was issued, We are of the opinion, and so hold, that it erred in denying petitioners' motion to set aside said writ upon expiration of the period of thirty days from its issuance, upon the wrong ground that there was no labor dispute between the parties and that, therefore, the provisions of Republic Act No. 875 did not apply to the case. As stated heretofore, there was a labor dispute between the parties from the beginning.

Moreover, upon the filing of the unfair labor practice case on March 12, 1963, the Court of Industrial Relations acquired complete jurisdiction over the labor dispute and the least that could be done in Civil Case No. 3966 is either to dismiss it or suspend proceedings therein until the final resolution of the former.

Wherefore, judgment is hereby rendered setting aside the writ of preliminary injunction issued by the respondent judge in Civil Case No. 3966 of the Court of First Instance of Davao, with costs.

Concepcion, C.J., Reyes, J.B.L., Barrera, Makalintal, Bengzon, J.P., Zaldivar, Sanchez and Castro, JJ., concur. Regala, J., took no part.

FIRST DIVISION

OSCAR VILLAMARIA, JR. G.R. No. 165881Petitioner,Present:

PANGANIBAN, C.J.,Chairperson,

- versus - YNARES-SANTIAGO,AUSTRIA-MARTINEZ.CALLEJO, SR., andCHICO-NAZARIO, JJ. COURT OF APPEALS and Promulgated:JERRY V. BUSTAMANTE,Respondents. April 19, 2006 x-----------------------------------------------------------------------------------------x

D E C I S I O N

CALLEJO, SR., J.: Before us is a Petition for Review on Certiorari under Rule 65 of the Revised Rules of Court assailing the Decision[1] and Resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 78720 which set aside the Resolution[3] of the National Labor Relations Commission (NLRC) in NCR-30-08-03247-00, which in turn affirmed the Decision[4] of the Labor Arbiter dismissing the complaint filed by respondent Jerry V. Bustamante.

Petitioner Oscar Villamaria, Jr. was the owner of Villamaria Motors, a sole

proprietorship engaged in assembling passenger jeepneys with a public utility franchise to operate along the Baclaran-Sucat route. By 1995, Villamaria stopped assembling jeepneys and retained only nine, four of which he operated by employing drivers on a boundary basis. One of those drivers was respondent Bustamante who drove the jeepney with Plate No. PVU-660. Bustamante remittedP450.00 a day to Villamaria as boundary and kept the residue of his daily earnings as compensation for driving the vehicle. In August 1997, Villamaria verbally agreed to sell the jeepney to Bustamante under the boundary-hulog scheme, where Bustamante would remit to Villarama P550.00 a day for a period of four years; Bustamante would then become the owner of the vehicle and continue to drive the same under Villamarias franchise. It was also agreed that Bustamante would make a downpayment of P10,000.00.

On August 7, 1997, Villamaria executed a contract entitled Kasunduan ng Bilihan ng Sasakyan sa Pamamagitan ng Boundary-Hulog[5] over the passenger jeepney with Plate No. PVU-660, Chassis No. EVER95-38168-C and Motor No. SL-26647. The parties agreed that if Bustamante failed to pay the boundary-hulogfor three days, Villamaria Motors would hold on to the vehicle until Bustamante paid his arrears, including a penalty of P50.00 a day; in case Bustamante failed to remit the daily boundary-hulog for a period of one week, the Kasunduan would cease to have legal effect and Bustamante would have to return the vehicle to Villamaria Motors.

Under the Kasunduan, Bustamante was prohibited from driving the vehicle without prior authority from Villamaria Motors. Thus, Bustamante was authorized to operate the vehicle to transport passengers only and not for other purposes. He was also required to display an identification card in front of the windshield of the vehicle; in case of failure to do so, any fine that may be imposed by government authorities would be charged against his account. Bustamante further obliged himself to pay for the cost of replacing any parts of the vehicle that would be lost or damaged due to his negligence. In case the vehicle sustained serious damage, Bustamante was obliged to notify Villamaria Motors before commencing repairs. Bustamante was not allowed to wear slippers, short pants or undershirts while driving. He was required to be polite and respectful towards the passengers. He was also obliged to notify Villamaria Motors in case the vehicle was leased for two or more days and was required to attend any meetings which may be called from time to time. Aside from the boundary-hulog, Bustamante was also obliged to pay for the annual registration fees of the vehicle and the premium for the vehicles comprehensive insurance. Bustamante promised to strictly comply with the rules and regulations imposed by Villamaria for the upkeep and maintenance of the jeepney. Bustamante continued driving the jeepney under the supervision and control of Villamaria. As agreed upon, he made daily remittances of P550.00 in payment of the purchase price of the vehicle. Bustamante failed to pay for the annual registration fees of the vehicle, but Villamaria allowed him to continue driving the jeepney.

In 1999, Bustamante and other drivers who also had the same arrangement with Villamaria Motors failed to pay their respective boundary-hulog. This prompted Villamaria to serve a Paalala,[6] reminding them that under the Kasunduan, failure to pay the daily boundary-hulog for one week, would mean their respective jeepneys would be returned to him without any complaints. He warned the drivers that the Kasunduan would henceforth be strictly enforced and urged them to comply with their obligation to avoid litigation.

On July 24, 2000, Villamaria took back the jeepney driven by Bustamante and barred the latter from driving the vehicle.

On August 15, 2000, Bustamante filed a Complaint[7] for Illegal Dismissal against Villamaria and his wife Teresita. In his Position Paper,[8] Bustamante alleged that he was employed by Villamaria in July 1996 under the boundary system, where he was required to remit P450.00 a day. After one year of continuously working for them, the spouses Villamaria presented the Kasunduan for his signature, with the assurance that he (Bustamante) would own the jeepney by March 2001 after paying P550.00 in daily installments and that he would thereafter continue driving the vehicle along the same route under the same franchise. He further narrated that in July 2000, he informed the Villamaria spouses that the surplus engine of the jeepney needed to be replaced, and was assured that it would be done.However, he was later arrested and his drivers license was confiscated because apparently, the replacement engine that was installed was taken from a stolen vehicle.Due to negotiations with the apprehending authorities, the jeepney was not impounded. The Villamaria spouses took the jeepney from him on July 24, 2000, and he was no longer allowed to drive the vehicle since then unless he paid them P70,000.00.

Bustamante prayed that judgment be rendered in his favor, thus:

WHEREFORE, in the light of the foregoing, it is most respectfully prayed that judgment be rendered ordering the respondents, jointly and severally, the following:

1. Reinstate complainant to his former position

without loss of seniority rights and execute a Deed of Sale in favor of the complainant relative to the PUJ with Plate No. PVU-660;

2. Ordering the respondents to pay backwages in the amount of P400.00 a day and other benefits computed from July 24, 2000 up to the time of his actual reinstatement;

3. Ordering respondents to return the amount

of P10,000.00 and P180,000.00 for the expenses incurred by the complainant in the repair and maintenance of the subject jeep;

4. Ordering the respondents to refund the

amount of One Hundred (P100.00) Pesos per day counted from August 7, 1997 up to June 2000 or a total of P91,200.00;

5. To pay moral and exemplary damages of not

less than P200,000.00; 6. Attorneys fee[s] of not less than 10% of the

monetary award. Other just and equitable reliefs under the

premises are also being prayed for.[9] In their Position Paper,[10] the spouses Villamaria admitted the existence of the Kasunduan, but alleged that Bustamante failed to pay the P10,000.00 downpayment and the vehicles annual registration fees. They further alleged that Bustamante eventually failed to remit the requisite boundary-hulog of P550.00 a day, which prompted them to issue the Paalaala. Instead of complying with his obligations, Bustamante stopped making his remittances despite his daily trips and even brought the jeepney to the province without permission. Worse, the jeepney figured in an accident and its license plate was confiscated; Bustamante even abandoned the vehicle in a gasoline station in Sucat, Paraaque City for two weeks. When the security guard at the gasoline station requested that the vehicle be retrieved and Teresita Villamaria asked Bustamante for the keys, Bustamante told her: Di kunin ninyo. When the vehicle was finally retrieved, the tires were worn, the alternator was gone, and the battery was no longer working.

Citing the cases of Cathedral School of Technology v. NLRC[11] and Canlubang Security Agency Corporation v. NLRC,[12] the spouses Villamaria argued that Bustamante was not illegally dismissed since the Kasunduan executed on August 7, 1997 transformed the employer-employee relationship into that of vendor-vendee. Hence, the spouses concluded, there was no legal basis to hold them liable for illegal dismissal. They prayed that the case be dismissed for lack of jurisdiction and patent lack of merit.

In his Reply,[13] Bustamante claimed that Villamaria exercised control and supervision over the conduct of his employment. He maintained that the rulings of the Court in National Labor Union v. Dinglasan,[14] Magboo v. Bernardo,[15] and Citizen's League of Free Workers v. Abbas[16] are germane to the issue as they define the nature of the owner/operator-driver relationship under the boundary system. He further reiterated that it was the Villamaria spouses who presented theKasunduan to him and that he conformed thereto only upon their representation that he would own the vehicle after four years. Moreover, it appeared that the Paalalawas duly received by him, as he, together with other drivers, was made to affix his signature on a blank piece of paper purporting to be an attendance sheet. On March 15, 2002, the Labor Arbiter rendered judgment[17] in favor of the spouses Villamaria and ordered the complaint dismissed on the following ratiocination:

Respondents presented the contract of Boundary-Hulog, as well as the PAALALA, to prove their claim that complainant violated the terms of their contract and afterwards abandoned the vehicle assigned to him. As against the foregoing, [the] complaints (sic) mere allegations to the contrary cannot prevail. Not having been illegally dismissed, complainant is not entitled to damages and attorney's fees.[18]

Bustamante appealed the decision to the NLRC,[19] insisting that

the Kasunduan did not extinguish the employer-employee relationship between him and Villamaria. While he did not receive fixed wages, he kept only the excess of the boundary-hulog which he was required to remit daily to Villamaria under the agreement. Bustamante maintained that he remained an employee because he was engaged to perform activities which were necessary or desirable to Villamarias trade or business.

The NLRC rendered judgment[20] dismissing the appeal for lack of merit, thus:

WHEREFORE, premises considered, complainant's appeal is hereby DISMISSED for reasons not stated in the Labor Arbiter's decision but mainly on a jurisdictional issue, there being none over the subject matter of the controversy.[21]

The NLRC ruled that under the Kasunduan, the juridical relationship

between Bustamante and Villamaria was that of vendor and vendee, hence, the Labor Arbiter had no jurisdiction over the complaint. Bustamante filed a Motion for Reconsideration, which the NLRC resolved to deny on May 30, 2003.[22]

Bustamante elevated the matter to the CA via Petition for Certiorari, alleging that the NLRC erred

I

IN DISMISSING PETITIONERS APPEAL FOR REASON NOT STATED IN THE LABOR ARBITERS DECISION, BUT MAINLY ON JURISDICTIONAL ISSUE;

IIIN DISREGARDING THE LAW AND PREVAILING JURISPRUDENCE WHEN IT DECLARED THAT THE RELATIONSHIP WHICH WAS ESTABLISHED BETWEEN PETITIONER AND THE PRIVATE RESPONDENT WAS DEFINITELY A MATTER WHICH IS BEYOND THE PROTECTIVE MANTLE OF OUR LABOR LAWS.[23]

Bustamante insisted that despite the Kasunduan, the relationship between him and Villamaria continued to be that of employer-employee and as such, the Labor Arbiter had jurisdiction over his complaint. He further alleged that it is common knowledge that operators of passenger jeepneys (including taxis) pay their drivers not on a regular monthly basis but on commission or boundary basis, or even the boundary-hulog system. Bustamante asserted that he was dismissed from employment without any lawful or just cause and without due notice.

For his part, Villamaria averred that Bustamante failed to adduce proof of their employer-employee relationship. He further pointed out that the Dinglasan case pertains to the boundary system and not the boundary-hulog system, hence inapplicable in the instant case. He argued that upon the execution of the Kasunduan, the juridical tie between him and Bustamante was transformed into a vendor-vendee relationship. Noting that he was engaged in the manufacture and sale of jeepneys and not in the business of transporting passengers for consideration, Villamaria contended that the daily fees which Bustmante paid were actually periodic installments for the the vehicle and were not the same fees as understood in the boundary system. He added that the boundary-hulog plan was basically a scheme to help the driver-buyer earn money and eventually pay for the unit in full, and for the owner to profit not from the daily earnings of the driver-buyer but from the purchase price of the unit sold. Villamaria further asserted that the apparently restrictive conditions in the Kasunduan did not mean that the means and method of driver-buyers conduct was controlled, but were mere ways to preserve the vehicle for the benefit of both parties: Villamaria would be able to collect the agreed purchase price, while Bustamante would be assured that the vehicle would still be in good running condition even after four years. Moreover, the right of vendor to impose certain conditions on the buyer should be respected until full ownership of the property is vested on the latter. Villamaria insisted that the parallel circumstances obtaining in Singer Sewing Machine Company v. Drilon[24] has analogous application to the instant issue.

In its Decision[25] dated August 30, 2004, the CA reversed and set aside the NLRC decision. The fallo of the decision reads:

UPON THE VIEW WE TAKE IN THIS CASE, THUS, the impugned resolutions of the NLRC must be, as they are hereby are, REVERSED AND SET ASIDE, and judgment entered in favor of petitioner:

1. Sentencing private respondent Oscar Villamaria, Jr. to pay petitioner Jerry Bustamante separation pay computed from the time of his employment up to the time of termination based on the prevailing minimum wage at the time of termination; and,

2. Condemning private

respondent Oscar Villamaria, Jr. to pay petitioner Jerry Bustamante back wages computed from the time of his dismissal up to March 2001 based on the prevailing minimum wage at the time of his dismissal.

Without Costs.

SO ORDERED.[26]

The appellate court ruled that the Labor Arbiter had jurisdiction over

Bustamantes complaint. Under the Kasunduan, the relationship between him and Villamaria was dual: that of vendor-vendee and employer-employee. The CA ratiocinated that Villamarias exercise of control over Bustamantes conduct in operating the jeepney is inconsistent with the formers claim that he was not engaged in the transportation business. There was no evidence that petitioner was allowed to let some other person drive the jeepney.

The CA further held that, while the power to dismiss was not mentioned in the Kasunduan, it did not mean that Villamaria could not exercise it. It explained that the existence of an employment relationship did not depend on how the worker was paid but on the presence or absence of control over the means and method of the employees work. In this case, Villamarias directives (to drive carefully, wear an identification card, don decent attire, park the vehicle in his garage, and to inform him about provincial trips, etc.) was a means to control the way in which Bustamante was to go about his work. In view of Villamarias supervision and control as employer, the fact that the boundary represented installment payments of the purchase price on the jeepney did not remove the parties employer-employee relationship.

While the appellate court recognized that a weeks default in paying the boundary-hulog constituted an additional cause for terminating Bustamantes employment, it held that the latter was illegally dismissed. According to the CA, assuming that Bustamante failed to make the required payments as claimed by Villamaria, the latter nevertheless failed to take steps to recover the unit and waited for Bustamante to abandon it. It also pointed out that Villamaria neither submitted any police report to support his claim that the vehicle figured in a mishap nor presented the affidavit of the gas station guard to substantiate the claim that Bustamante abandoned the unit.

Villamaria received a copy of the decision on September 8, 2004, and filed, on September 17, 2004, a motion for reconsideration thereof. The CA denied the motion in a Resolution[27] dated November 2, 2004, and Villamaria received a copy thereof on November 8, 2004. Villamaria, now petitioner, seeks relief from this Court via petition for review on certiorari under Rule 65 of the Rules of Court, alleging that the CA committed grave abuse of its discretion amounting to excess or lack of jurisdiction in reversing the decision of the Labor Arbiter and the NLRC. He claims that the CA erred in ruling that the juridical relationship between him and respondent under the Kasunduan was a combination of employer-employee and vendor-vendee relationships.The terms and conditions of the Kasunduan clearly state that he and respondent Bustamante had entered into a conditional deed of sale over the jeepney; as such, their employer-employee relationship had been transformed into that of vendor-vendee. Petitioner insists that he had the right to reserve his title on the jeepney until after the purchase price thereof had been paid in full. In his Comment on the petition, respondent avers that the appropriate remedy of petitioner was an appeal via a petition for review on certiorari under Rule 45 of the Rules of Court and not a special civil action of certiorari under Rule 65. He argues that petitioner failed to establish that the CA committed grave abuse of its discretion amounting to excess or lack of jurisdiction in its decision, as the said ruling is in accord with law and the evidence on record.

Respondent further asserts that the Kasunduan presented to him by petitioner which provides for a boundary-hulog scheme was a devious circumvention of the Labor Code of the Philippines. Respondent insists that his juridical relationship with petitioner is that of employer-employee because he was engaged to perform activities which were necessary or desirable in the usual business of petitioner, his employer. In his Reply, petitioner avers that the Rules of Procedure should be liberally construed in his favor; hence, it behooves the Court to resolve the merits of his petition. We agree with respondents contention that the remedy of petitioner from the CA decision was to file a petition for review on certiorari under Rule 45 of the Rules of Court and not the independent action of certiorari under Rule 65. Petitioner had 15 days from receipt of the CA resolution denying his motion for the reconsideration within which to file the petition under Rule 45.[28] But instead of doing so, he filed a petition for certiorari under Rule 65 on November 22, 2004, which did not, however, suspend the running of the 15-day reglementary period; consequently, the CA decision became final and executory upon the lapse of the reglementary period for appeal. Thus, on this procedural lapse, the instant petition stands to be dismissed.[29] It must be stressed that the recourse to a special civil action under Rule 65 of the Rules of Court is proscribed by the remedy of appeal under Rule 45. As the Court elaborated in Tomas Claudio Memorial College, Inc. v. Court of Appeals:[30]

We agree that the remedy of the aggrieved party from a decision or final resolution of the CA is to file a petition for review on certiorari under Rule 45 of the Rules of Court, as amended, on questions of facts or issues of law within fifteen days from notice of the said resolution. Otherwise, the decision of the CA shall become final and executory. The remedy under Rule 45 of the Rules of Court is a mode of appeal to this Court from the decision of the CA. It is a continuation of the appellate process over the original case. A review is not a matter of right but is a matter of judicial discretion. The aggrieved party may, however, assail the decision of the CA via a petition for certiorari under Rule 65 of the Rules of Court within sixty days from notice of the decision of the CA or its resolution denying the motion for reconsideration of the same. This is based on the premise

that in issuing the assailed decision and resolution, the CA acted with grave abuse of discretion, amounting to excess or lack of jurisdiction and there is no plain, speedy and adequate remedy in the ordinary course of law. A remedy is considered plain, speedy and adequate if it will promptly relieve the petitioner from the injurious effect of the judgment and the acts of the lower court. The aggrieved party is proscribed from filing a petition for certiorari if appeal is available, for the remedies of appeal and certiorari are mutually exclusive and not alternative or successive. The aggrieved party is, likewise, barred from filing a petition for certiorari if the remedy of appeal is lost through his negligence. A petition for certiorari is an original action and does not interrupt the course of the principal case unless a temporary restraining order or a writ of preliminary injunction has been issued against the public respondent from further proceeding. A petition for certiorari must be based on jurisdictional grounds because, as long as the respondent court acted within its jurisdiction, any error committed by it will amount to nothing more than an error of judgment which may be corrected or reviewed only by appeal.[31]

However, we have also ruled that a petition for certiorari under Rule 65

may be considered as filed under Rule 45, conformably with the principle that rules of procedure are to be construed liberally, provided that the petition is filed within the reglementary period under Section 2, Rule 45 of the Rules of Court, and where valid and compelling circumstances warrant that the petition be resolved on its merits.[32] In this case, the petition was filed within the reglementary period and petitioner has raised an issue of substance: whether the existence of a boundary-hulog agreement negates the employer-employee relationship between the vendor and vendee, and, as a corollary, whether the Labor Arbiter has jurisdiction over a complaint for illegal dismissal in such case.

We resolve these issues in the affirmative.

The rule is that, the nature of an action and the subject matter thereof, as well as, which court or agency of the government has jurisdiction over the same, are determined by the material allegations of the complaint in relation to the law involved and the character of the reliefs prayed for, whether or not the complainant/plaintiff is entitled to any or all of such reliefs.[33] A prayer or demand for relief is not part of the petition of the cause of action; nor does it enlarge the cause of action stated or change the legal effect of what is alleged.[34] In determining which body has jurisdiction over a case, the better policy is to consider not only the status or relationship of the parties but also the nature of the action that is the subject of their controversy.[35]

Article 217 of the Labor Code, as amended, vests on the Labor Arbiter exclusive original jurisdiction only over the following:

x x x (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:

1. Unfair labor

practice cases;2. Termination

disputes;3. If accompanied

with a claim for reinstatement, those cases that workers may file involving wage, rates of pay, hours of work, and other terms and conditions of employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;

5. Cases arising from violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and

6. Excepclaims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relationship, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

(c) Cases arising from the interpretation or

implementation of collective bargaining agreements, and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements.

In the foregoing cases, an employer-employee relationship is an

indispensable jurisdictional requisite.[36] The jurisdiction of Labor Arbiters and the NLRC under Article 217 of the Labor Code is limited to disputes arising from an employer-employee relationship which can only be resolved by reference to the Labor Code, other labor statutes or their collective bargaining agreement.[37] Not every dispute between an employer and employee involves matters that only the Labor Arbiter and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. Actions between employers and employees where the employer-employee relationship is merely incidental is within the exclusive original jurisdiction of the regular courts.[38] When the principal relief is to be granted under labor legislation or a collective bargaining agreement, the case falls within the exclusive jurisdiction of the Labor Arbiter and the NLRC even though a claim for damages might be asserted as an incident to such claim.[39]

We agree with the ruling of the CA that, under the boundary-hulog scheme incorporated in the Kasunduan, a dual juridical relationship was created between petitioner and respondent: that of employer-employee and vendor-vendee. The Kasunduan did not extinguish the employer-employee relationship of the parties extant before the execution of said deed.

As early as 1956, the Court ruled in National Labor Union v. Dinglasan[40] that the jeepney owner/operator-driver relationship under the boundary system is that of employer-employee and not lessor-lessee. This doctrine was affirmed, under similar factual settings, in Magboo v. Bernardo[41] and Lantaco, Sr. v. Llamas,[42] and was analogously applied to govern the relationships between auto-calesa owner/operator and driver,[43] bus owner/operator and conductor,[44] and taxi owner/operator and driver.[45]

The boundary system is a scheme by an owner/operator engaged in transporting passengers as a common carrier to primarily govern the compensation of the driver, that is, the latters daily earnings are remitted to the owner/operator less the excess of the boundary which represents the drivers compensation. Under this system, the owner/operator exercises control and supervision over the driver. It is unlike in lease of chattels where the lessor loses complete control over the chattel leased but the lessee is still ultimately responsible for the consequences of its use. The management of the business is still in the hands of the owner/operator, who, being the holder of the certificate of public convenience, must see to it that the driver follows the route prescribed by the franchising and regulatory authority, and the rules promulgated with regard to the business operations. The fact that the driver does not receive fixed wages but only the excess of the boundary given to the owner/operator is not sufficient to change the relationship between them. Indubitably, the driver performs activities which are usually necessary or desirable in the usual business or trade of the owner/operator.[46]

Under the Kasunduan, respondent was required to remit P550.00 daily to petitioner, an amount which represented the boundary of petitioner as well as respondents partial payment (hulog) of the purchase price of the jeepney.

Respondent was entitled to keep the excess of his daily earnings as his daily wage. Thus, the daily remittances also had a dual purpose: that of petitioners boundary and respondents partial payment (hulog) for the vehicle. This dual purpose was expressly stated in the Kasunduan. The well-settled rule is that an obligation is not novated by an instrument that expressly recognizes the old one, changes only the terms of payment, and adds other obligations not incompatible with the old provisions or where the new contract merely supplements the previous one. [47] The two obligations of the respondent to remit to petitioner the boundary-hulog can stand together.

In resolving an issue based on contract, this Court must first examine the contract itself, keeping in mind that when the terms of the agreement are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of its stipulations shall prevail.[48] The intention of the contracting parties should be ascertained by looking at the words used to project their intention, that is, all the words, not just a particular word or two or more words standing alone. The various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly. [49] The parts and clauses must be interpreted in relation to one another to give effect to the whole. The legal effect of a contract is to be determined from the whole read together.[50]

Under the Kasunduan, petitioner retained supervision and control over the conduct of the respondent as driver of the jeepney, thus:

Ang mga patakaran, kaugnay ng bilihang ito sa pamamagitan ng boundary hulog ay ang mga sumusunod:

1. Pangangalagaan at pag-iingatan ng

TAUHAN NG IKALAWANG PANIG ang sasakyan ipinagkatiwala sa kanya ng TAUHAN NG UNANG PANIG.

2. Na ang sasakyan nabanggit ay gagamitin

lamang ng TAUHAN NG IKALAWANG PANIG sa paghahanapbuhay bilang pampasada o pangangalakal sa malinis at maayos na pamamaraan.

3. Na ang sasakyan nabanggit ay hindi

gagamitin ng TAUHAN NG IKALAWANG PANIG sa mga bagay na makapagdudulot ng kahihiyan, kasiraan o pananagutan sa TAUHAN NG UNANG PANIG.

4. Na hindi ito mamanehohin ng hindi

awtorisado ng opisina ng UNANG PANIG. 5. Na ang TAUHAN NG IKALAWANG PANIG

ay kinakailangang maglagay ng ID Card sa harap ng windshield upang sa pamamagitan nito ay madaliang malaman kung ang nagmamaneho ay awtorisado ng VILLAMARIA MOTORS o hindi.

6. Na sasagutin ng TAUHAN NG IKALAWANG

PANIG ang [halaga ng] multa kung sakaling mahuli ang sasakyang ito na hindi nakakabit ang ID card sa wastong lugar o anuman kasalanan o kapabayaan.

7. Na sasagutin din ng TAUHAN NG

IKALAWANG PANIG ang materyales o piyesa na papalitan ng nasira o nawala ito dahil sa kanyang kapabayaan.

8. Kailangan sa VILLAMARIA MOTORS pa rin

ang garahe habang hinuhulugan pa rin ng TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan.

9. Na kung magkaroon ng mabigat na kasiraan

ang sasakyang ipinagkaloob ng TAUHAN NG UNANG PANIG, ang TAUHAN NG IKALAWANG PANIG ay obligadong itawag ito muna sa VILLAMARIA MOTORS bago ipagawa sa alin mang Motor Shop na awtorisado ng VILLAMARIA MOTORS.

10. Na hindi pahihintulutan ng TAUHAN NG

IKALAWANG PANIG sa panahon ng pamamasada na ang nagmamaneho ay naka-tsinelas, naka short pants at nakasando lamang. Dapat ang nagmamaneho ay laging nasa maayos ang kasuotan upang igalang ng mga pasahero.

11. Na ang TAUHAN NG IKALAWANG PANIG

o ang awtorisado niyang driver ay magpapakita ng magandang asal sa mga pasaheros at hindi dapat magsasalita ng masama kung sakali man may pasaherong pilosopo upang maiwasan ang anumang kaguluhan na maaaring kasangkutan.

12. Na kung sakaling hindi makapagbigay ng

BOUNDARY HULOG ang TAUHAN NG IKALAWANG PANIG sa loob ng tatlong (3) araw ay ang opisina ng VILLAMARIA MOTORS ang may karapatang mangasiwa ng nasabing sasakyan hanggang matugunan ang lahat ng responsibilidad. Ang halagang dapat bayaran sa opisina ay may karagdagang multa ng P50.00 sa araw-araw na ito ay nasa pangangasiwa ng VILLAMARIA MOTORS.

13. Na kung ang TAUHAN NG IKALAWANG

PANIG ay hindi makapagbigay ng BOUNDARY HULOG sa loob ng isang linggo ay nangangahulugan na ang kasunduang ito ay wala ng bisa at kusang ibabalik ng TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan sa TAUHAN NG UNANG PANIG.

14. Sasagutin ng TAUHAN NG IKALAWANG

PANIG ang bayad sa rehistro, comprehensive insurance taon-taon at kahit anong uri ng aksidente habang ito ay hinuhulugan pa sa TAUHAN NG UNANG PANIG.


ay obligadong dumalo sa pangkalahatang pagpupulong ng VILLAMARIA MOTORS sa tuwing tatawag ang mga tagapangasiwa nito upang maipaabot ang anumang mungkahi sa ikasusulong ng samahan.


ay makikiisa sa lahat ng mga patakaran na magkakaroon ng pagbabago o karagdagan sa mga darating na panahon at hindi magiging hadlang sa lahat ng mga balakin ng VILLAMARIA MOTORS sa lalo pang ipagtatagumpay at ikakatibay ng Samahan.


ay hindi magiging buwaya sa pasahero upang hindi kainisan ng kapwa driver at maiwasan ang pagkakasangkot sa anumang gulo.

18. Ang nasabing sasakyan ay hindi

kalilimutang siyasatin ang kalagayan lalo na sa umaga bago pumasada, at sa hapon o gabi naman ay sisikapin mapanatili ang kalinisan nito.

19. Na kung sakaling ang nasabing sasakyan

ay maaarkila at aabutin ng dalawa o higit pang araw sa lalawigan ay dapat lamang na ipagbigay alam muna ito sa VILLAMARIA MOTORS upang maiwasan ang mga anumang suliranin.


ay iiwasan ang pakikipag-unahan sa kaninumang sasakyan upang maiwasan ang aksidente.

21. Na kung ang TAUHAN NG IKALAWANG

PANIG ay mayroon sasabihin sa VILLAMARIA MOTORS mabuti man or masama ay iparating agad ito sa kinauukulan at iwasan na iparating ito kung [kani-kanino] lamang upang maiwasan ang anumang usapin. Magsadya agad sa opisina ng VILLAMARIA MOTORS.

22. Ang mga nasasaad sa KASUNDUAN ito ay

buong galang at puso kong sinasang-ayunan at buong sikap na pangangalagaan ng TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan at gagamitin lamang ito sa paghahanapbuhay at wala nang iba pa.[51]

The parties expressly agreed that petitioner, as vendor, and respondent,

as vendee, entered into a contract to sell the jeepney on a daily installment basis ofP550.00 payable in four years and that petitioner would thereafter become its owner. A contract is one of conditional sale, oftentimes referred to as contract to sell, if the ownership or title over theproperty sold is retained by the vendor, and is not passed to the vendee unless and until there is full payment of the purchase price and/or upon faithful compliance with the other terms and conditions that may lawfully be stipulated. [52] Such payment or satisfaction of other preconditions, as the case may be, is a positive suspensive condition, the failure of which is not a breach of contract, casual or serious, but simply an event that would prevent the obligation of the vendor to convey title from acquiring binding force.[53] Stated differently, the efficacy or obligatory force of the vendor's obligation to transfer title is subordinated to the happening of a future and uncertain event so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed.[54] The vendor may extrajudicially terminate the operation of the contract, refuse conveyance, and retain the sums or installments already received, where such rights are expressly provided for.[55]

Under the boundary-hulog scheme, petitioner retained ownership of the jeepney although its material possession was vested in respondent as its driver. In case respondent failed to make his P550.00 daily installment payment for a week, the agreement would be of no force and effect and respondent would have to return the jeepney to petitioner; the employer-employee relationship would likewise be terminated unless petitioner would allow respondent to continue driving the jeepney on a boundary basis of P550.00 daily despite the termination of their vendor-vendee relationship.

The juridical relationship of employer-employee between petitioner and respondent was not negated by the foregoing stipulation in the Kasunduan, considering that petitioner retained control of respondents conduct as driver of the vehicle. As correctly ruled by the CA:

The exercise of control by private respondent over petitioners conduct in operating the jeepney he was driving is inconsistent with private respondents claim that he is, or was, not engaged in the transportation business; that, even if petitioner was allowed to let some other person drive the unit, it was not shown that he did so; that the existence of an employment relation is not dependent on how the worker is paid but on the presence or absence of control over the means and method of the work; that the amount earned in excess of the boundary hulog is equivalent to wages; and that the fact that the power of dismissal was not mentioned in

the Kasunduan did not mean that private respondent never exercised such power, or could not exercise such power.

Moreover, requiring petitioner to drive the unit for

commercial use, or to wear an identification card, or to don a decent attire, or to park the vehicle in Villamaria Motors garage, or to inform Villamaria Motors about the fact that the unit would be going out to the province for two days of more, or to drive the unit carefully, etc. necessarily related to control over the means by which the petitioner was to go about his work; that the ruling applicable here is not Singer Sewing Machine but National Labor Union since the latter case involved jeepney owners/operators and jeepney drivers, and that the fact that the boundary here represented installment payment of the purchase price on the jeepney did not withdraw the relationship from that of employer-employee, in view of the overt presence of supervision and control by the employer.[56]

Neither is such juridical relationship negated by petitioners claim that the

terms and conditions in the Kasunduan relative to respondents behavior and deportment as driver was for his and respondents benefit: to insure that respondent would be able to pay the requisite daily installment of P550.00, and that the vehicle would still be in good condition despite the lapse of four years. What is primordial is that petitioner retained control over the conduct of the respondent as driver of the jeepney.

Indeed, petitioner, as the owner of the vehicle and the holder of the

franchise, is entitled to exercise supervision and control over the respondent, by seeing to it that the route provided in his franchise, and the rules and regulations of the Land Transportation Regulatory Board are duly complied with. Moreover, in a business establishment, an identification card is usually provided not just as a security measure but to mainly identify the holder thereof as a bona fide employee of the firm who issues it.[57]

As respondents employer, it was the burden of petitioner to prove that respondents termination from employment was for a lawful or just cause, or, at the very least, that respondent failed to make his daily remittances of P550.00 as boundary. However, petitioner failed to do so. As correctly ruled by the appellate court:

It is basic of course that termination of employment must be effected in accordance with law. The just and authorized causes for termination of employment are enumerated under Articles 282, 283 and 284 of the Labor Code.

Parenthetically, given the peculiarity of the

situation of the parties here, the default in the remittance of the boundary hulog for one week or longer may be considered an additional cause for termination of employment. The reason is because the Kasunduan would be of no force and effect in the event that the purchaser failed to remit the boundaryhulog for one week. The Kasunduan in this case pertinently stipulates:

13. Na kung ang TAUHAN NG

IKALAWANG PANIG ay hindi makapagbigay ng BOUNDARY HULOG sa loob ng isang linggo ay NANGANGAHULUGAN na ang kasunduang ito ay wala ng bisa at kusang ibabalik ng TAUHAN NG IKALAWANG PANIG ang nasabing sasakyan sa TAUHAN NG UNANG PANIG na wala ng paghahabol pa.

Moreover, well-settled is the rule that, the employer has the burden of proving that the dismissal of an employee is for a just cause. The failure of the employer to discharge this burden means that the dismissal is not justified and that the employee is entitled to reinstatement and back wages.

In the case at bench, private respondent in his

position paper before the Labor Arbiter, alleged that petitioner failed to pay the miscellaneous fee of P10,000.00 and the yearly registration of the unit; that petitioner also stopped remitting the boundary hulog, prompting him (private respondent) to issue a Paalala, which petitioner however ignored; that petitioner even brought the unit to his (petitioners) province without informing him (private respondent) about it; and that petitioner eventually abandoned the vehicle at a gasoline station after figuring in an accident. But private respondent failed to substantiate these allegations with solid, sufficient proof. Notably, private respondents allegation viz, that he retrieved the vehicle from the gas station, where petitioner abandoned it, contradicted

his statement in the Paalala that he would enforce the provision (in the Kasunduan) to the effect that default in the remittance of the boundary hulog for one week would result in the forfeiture of the unit. The Paalala reads as follows: Sa lahat ng mga kumukuha ng sasakyanSa pamamagitan ng BOUNDARY HULOG Nais ko pong ipaalala sa inyo ang Kasunduan na inyong pinirmahan particular na ang paragrapo 13 na nagsasaad na kung hindi kayo makapagbigay ng Boundary Hulog sa loob ng isang linggo ay kusa ninyong ibabalik and nasabing sasakyan na inyong hinuhulugan ng wala ng paghahabol pa. Mula po sa araw ng inyong pagkatanggap ng Paalala na ito ay akin na pong ipatutupad ang nasabing Kasunduan kayat aking pinaaalala sa inyong lahat na tuparin natin ang nakalagay sa kasunduan upang maiwasan natin ito. Hinihiling ko na sumunod kayo sa hinihingi ng paalalang ito upang hindi na tayo makaabot pa sa korte kung sakaling hindi ninyo isasauli ang inyong sasakyan na hinuhulugan na ang mga magagastos ay kayo pa ang magbabayad sapagkat ang hindi ninyo pagtupad sa kasunduan ang naging dahilan ng pagsampa ng kaso. Sumasainyo Attendance: 8/27/99(The Signatures appearing hereininclude (sic) that of petitioners) (Sgd.)OSCAR VILLAMARIA, JR. If it were true that petitioner did not remit the boundary hulog for one week or more, why did private respondent not forthwith take steps to recover the unit, and why did he have to wait for petitioner to abandon it? On another point, private respondent did not submit any police report to support his claim that petitioner really figured in a vehicular mishap. Neither did he present the affidavit of the guard from the gas station to substantiate his claim that petitioner abandoned the unit there.[58]

Petitioners claim that he opted not to terminate the employment of

respondent because of magnanimity is negated by his (petitioners) own evidence that he took the jeepney from the respondent only on July 24, 2000.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The

decision of the Court of Appeals in CA-G.R. SP No. 78720 is AFFIRMED. Costs against petitioner.

SO ORDERED.

SECOND DIVISION

[G.R. No. 142293. February 27, 2003]

VICENTE SY, TRINIDAD PAULINO, 6BS TRUCKING CORPORATION, and SBT[1] TRUCKING CORPORATION, petitioners, vs. HON. COURT OF APPEALS and JAIME SAHOT, respondents.

D E C I S I O N

QUISUMBING, J.:

This petition for review seeks the reversal of the decision [2] of the Court of Appeals dated February 29, 2000, in CA-G.R. SP No. 52671, affirming with modification the decision[3] of the National Labor Relations Commission promulgated on June 20, 1996 in NLRC NCR CA No. 010526-96. Petitioners also pray for the reinstatement of the decision[4] of the Labor Arbiter in NLRC NCR Case No. 00-09-06717-94.

http://sc.judiciary.gov.ph/jurisprudence/2003/feb2003/142293.htm#_ftn4




Culled from the records are the following facts of this case:

Sometime in 1958, private respondent Jaime Sahot[5] started working as a truck helper for petitioners family-owned trucking business named Vicente Sy Trucking. In 1965, he became a truck driver of the same family business, renamed T. Paulino Trucking Service, later 6Bs Trucking Corporation in 1985, and thereafter known as SBT Trucking Corporation since 1994. Throughout all these changes in names and for 36 years, private respondent continuously served the trucking business of petitioners.

In April 1994, Sahot was already 59 years old. He had been incurring absences as he was suffering from various ailments. Particularly causing him pain was his left thigh, which greatly affected the performance of his task as a driver. He inquired about his medical and retirement benefits with the Social Security System (SSS) on April 25, 1994, but discovered that his premium payments had not been remitted by his employer.

Sahot had filed a week-long leave sometime in May 1994. On May 27th, he was medically examined and treated for EOR, presleyopia, hypertensive retinopathy G II (Annexes G-5 and G-3, pp. 48, 104, respectively),[6] HPM, UTI, Osteoarthritis (Annex G-4, p. 105),[7] and heart enlargement (Annex G, p. 107).[8] On said grounds, Belen Paulino of the SBT Trucking Service management told him to file a formal request for extension of his leave. At the end of his week-long absence, Sahot applied for extension of his leave for the whole month of June, 1994. It was at this time when petitioners allegedly threatened to terminate his employment should he refuse to go back to work.

At this point, Sahot found himself in a dilemma. He was facing dismissal if he refused to work, But he could not retire on pension because petitioners never paid his correct SSS premiums. The fact remained he could no longer work as his left thigh hurt abominably. Petitioners ended his dilemma. They carried out their threat and dismissed him from work, effective June 30, 1994. He ended up sick, jobless and penniless.

On September 13, 1994, Sahot filed with the NLRC NCR Arbitration Branch, a complaint for illegal dismissal, docketed as NLRC NCR Case No. 00-09-06717-94. He prayed for the recovery of separation pay and attorneys fees against Vicente Sy and Trinidad Paulino-Sy, Belen Paulino, Vicente Sy Trucking, T. Paulino Trucking Service, 6Bs Trucking and SBT Trucking, herein petitioners.

For their part, petitioners admitted they had a trucking business in the 1950s but denied employing helpers and drivers. They contend that private respondent was not illegally dismissed as a driver because he was in fact petitioners industrial partner. They add that it was not until the year 1994, when SBT Trucking Corporation was established, and only then did respondent Sahot become an employee of the company, with a monthly salary that reached P4,160.00 at the time of his separation.

Petitioners further claimed that sometime prior to June 1, 1994, Sahot went on leave and was not able to report for work for almost seven days. On June 1, 1994, Sahot asked permission to extend his leave of absence until June 30, 1994. It appeared that from the expiration of his leave, private respondent never reported back to work nor did he file an extension of his leave. Instead, he filed the complaint for illegal dismissal against the trucking company and its owners.

Petitioners add that due to Sahots refusal to work after the expiration of his authorized leave of absence, he should be deemed to have voluntarily resigned from his work.They contended that Sahot had all the time to extend his leave or at least inform petitioners of his health condition. Lastly, they cited NLRC Case No. RE-4997-76, entitledManuelito Jimenez et al. vs. T. Paulino Trucking Service, as a defense in view of the alleged similarity in the factual milieu and issues of said case to that of Sahots, hence they are in pari material and Sahots complaint ought also to be dismissed.

The NLRC NCR Arbitration Branch, through Labor Arbiter Ariel Cadiente Santos, ruled that there was no illegal dismissal in Sahots case. Private respondent had failed to report to work. Moreover, said the Labor Arbiter, petitioners and private respondent were industrial partners before January 1994. The Labor Arbiter concluded by ordering petitioners to pay financial assistance of P15,000 to Sahot for having served the company as a regular employee since January 1994 only.

On appeal, the National Labor Relations Commission modified the judgment of the Labor Arbiter. It declared that private respondent was an employee, not an industrial partner, since the start. Private respondent Sahot did not abandon his job but his employment was terminated on account of his illness, pursuant to Article 284[9] of the Labor Code. Accordingly, the NLRC ordered petitioners to pay private respondent separation pay in the amount of P60,320.00, at the rate of P2,080.00 per year for 29 years of service.

Petitioners assailed the decision of the NLRC before the Court of Appeals. In its decision dated February 29, 2000, the appellate court affirmed with modification the judgment of the NLRC. It held that private respondent was indeed an employee of petitioners since 1958. It also increased the amount of separation pay awarded to private respondent to P74,880, computed at the rate of P2,080 per year for 36 years of service from 1958 to 1994. It decreed:

WHEREFORE, the assailed decision is hereby AFFIRMED with MODIFICATION. SB Trucking Corporation is hereby directed to pay complainant Jaime Sahot the sum of SEVENTY-FOUR THOUSAND EIGHT HUNDRED EIGHTY (P74,880.00) PESOS as and for his separation pay.[10]

Hence, the instant petition anchored on the following contentions:

I

RESPONDENT COURT OF APPEALS IN PROMULGATING THE QUESTION[ED] DECISION AFFIRMING WITH MODIFICATION THE DECISION OF NATIONAL LABOR RELATIONS COMMISSION DECIDED NOT IN ACCORD WITH LAW AND PUT AT NAUGHT ARTICLE 402 OF THE CIVIL CODE.[11]

II

RESPONDENT COURT OF APPEALS VIOLATED SUPREME COURT RULING THAT THE NATIONAL LABOR RELATIONS COMMISSION IS BOUND BY THE FACTUAL FINDINGS OF THE LABOR ARBITER AS THE LATTER WAS IN A BETTER POSITION TO OBSERVE THE DEMEANOR AND DEPORTMENT OF THE WITNESSES IN THE CASE OF ASSOCIATION OF INDEPENDENT UNIONS IN THE PHILIPPINES VERSUS NATIONAL CAPITAL REGION (305 SCRA 233).[12]

III

PRIVATE RESPONDENT WAS NOT DISMISS[ED] BY RESPONDENT SBT TRUCKING CORPORATION.[13]

Three issues are to be resolved: (1) Whether or not an employer-employee relationship existed between petitioners and respondent Sahot; (2) Whether or not there was valid dismissal; and (3) Whether or not respondent Sahot is entitled to separation pay.

Crucial to the resolution of this case is the determination of the first issue. Before a case for illegal dismissal can prosper, an employer-employee relationship must first be established.[14]

Petitioners invoke the decision of the Labor Arbiter Ariel Cadiente Santos which found that respondent Sahot was not an employee but was in fact, petitioners industrial partner.[15] It is contended that it was the Labor Arbiter who heard the case and had the opportunity to observe the demeanor and deportment of the parties. The same conclusion, aver petitioners, is supported by substantial evidence.[16] Moreover, it is argued that the findings of fact of the Labor Arbiter was wrongly overturned by the NLRC when the latter made the following pronouncement:

We agree with complainant that there was error committed by the Labor Arbiter when he concluded that complainant was an industrial partner prior to 1994. A computation of the age of complainant shows that he was only twenty-three (23) years when he started working with respondent as truck helper. How can we entertain in our mind that a twenty-three (23) year old man, working as a truck helper, be considered an industrial partner. Hence we rule that complainant was only an employee, not a partner of respondents from the time complainant started working for respondent.[17]

Because the Court of Appeals also found that an employer-employee relationship existed, petitioners aver that the appellate courts decision gives an imprimatur to the illegal finding and conclusion of the NLRC.

Private respondent, for his part, denies that he was ever an industrial partner of petitioners. There was no written agreement, no proof that he received a share in petitioners profits, nor was there anything to show he had any participation with respect to the running of the business.[18]

The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.[19]

As found by the appellate court, petitioners owned and operated a trucking business since the 1950s and by their own allegations, they determined private respondents wages and rest day.[20] Records of the case show that private respondent actually engaged in work as an employee. During the entire course of his employment he did not have the freedom to determine where he would go, what he would do, and how he would do it. He merely followed instructions of petitioners and was content to do so, as long as he was paid his wages. Indeed, said the CA, private respondent had worked as a truck helper and driver of petitioners not for his own pleasure but under the latters control.

















Article 1767[21] of the Civil Code states that in a contract of partnership two or more persons bind themselves to contribute money, property or industry to a common fund, with the intention of dividing the profits among themselves.[22] Not one of these circumstances is present in this case. No written agreement exists to prove the partnership between the parties. Private respondent did not contribute money, property or industry for the purpose of engaging in the supposed business. There is no proof that he was receiving a share in the profits as a matter of course, during the period when the trucking business was under operation. Neither is there any proof that he had actively participated in the management, administration and adoption of policies of the business. Thus, the NLRC and the CA did not err in reversing the finding of the Labor Arbiter that private respondent was an industrial partner from 1958 to 1994.

On this point, we affirm the findings of the appellate court and the NLRC. Private respondent Jaime Sahot was not an industrial partner but an employee of petitioners from 1958 to 1994. The existence of an employer-employee relationship is ultimately a question of fact[23] and the findings thereon by the NLRC, as affirmed by the Court of Appeals, deserve not only respect but finality when supported by substantial evidence. Substantial evidence is such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion.[24]

Time and again this Court has said that if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter.[25] Here, we entertain no doubt. Private respondent since the beginning was an employee of, not an industrial partner in, the trucking business.

Coming now to the second issue, was private respondent validly dismissed by petitioners?

Petitioners contend that it was private respondent who refused to go back to work. The decision of the Labor Arbiter pointed out that during the conciliation proceedings, petitioners requested respondent Sahot to report back for work. However, in the same proceedings, Sahot stated that he was no longer fit to continue working, and instead he demanded separation pay. Petitioners then retorted that if Sahot did not like to work as a driver anymore, then he could be given a job that was less strenuous, such as working as a checker. However, Sahot declined that suggestion. Based on the foregoing recitals, petitioners assert that it is clear that Sahot was not dismissed but it was of his own volition that he did not report for work anymore.

In his decision, the Labor Arbiter concluded that:

While it may be true that respondents insisted that complainant continue working with respondents despite his alleged illness, there is no direct evidence that will prove that complainants illness prevents or incapacitates him from performing the function of a driver. The fact remains that complainant suddenly stopped working due to boredom or otherwise when he refused to work as a checker which certainly is a much less strenuous job than a driver.[26]

But dealing the Labor Arbiter a reversal on this score the NLRC, concurred in by the Court of Appeals, held that:

While it was very obvious that complainant did not have any intention to report back to work due to his illness which incapacitated him to perform his job, such intention cannot be construed to be an abandonment. Instead, the same should have been considered as one of those falling under the just causes of terminating an employment. The insistence of respondent in making complainant work did not change the scenario.

It is worthy to note that respondent is engaged in the trucking business where physical strength is of utmost requirement (sic). Complainant started working with respondent as truck helper at age twenty-three (23), then as truck driver since 1965. Complainant was already fifty-nine (59) when the complaint was filed and suffering from various illness triggered by his work and age.

x x x[27]

In termination cases, the burden is upon the employer to show by substantial evidence that the termination was for lawful cause and validly made.[28] Article 277(b) of the Labor Code puts the burden of proving that the dismissal of an employee was for a valid or authorized cause on the employer, without distinction whether the employer admits or does not admit the dismissal.[29] For an employees dismissal to be valid, (a) the dismissal must be for a valid cause and (b) the employee must be afforded due process.[30]

Article 284 of the Labor Code authorizes an employer to terminate an employee on the ground of disease, viz:

Art. 284. Disease as a ground for termination- An employer may terminate the services of an employee who has been found to be suffering from any disease and whose

continued employment is prohibited by law or prejudicial to his health as well as the health of his co-employees: xxx

However, in order to validly terminate employment on this ground, Book VI, Rule I, Section 8 of the Omnibus Implementing Rules of the Labor Code requires:

Sec. 8. Disease as a ground for dismissal- Where the employee suffers from a disease and his continued employment is prohibited by law or prejudicial to his health or to the health of his co-employees, the employer shall not terminate his employment unless there is a certification by competent public health authority that the disease is of such nature or at such a stage that it cannot be cured within a period of six (6) months even with proper medical treatment. If the disease or ailment can be cured within the period, the employer shall not terminate the employee but shall ask the employee to take a leave. The employer shall reinstate such employee to his former position immediately upon the restoration of his normal health. (Italics supplied).

As this Court stated in Triple Eight integrated Services, Inc. vs. NLRC, [31] the requirement for a medical certificate under Article 284 of the Labor Code cannot be dispensed with; otherwise, it would sanction the unilateral and arbitrary determination by the employer of the gravity or extent of the employees illness and thus defeat the public policy in the protection of labor.

In the case at bar, the employer clearly did not comply with the medical certificate requirement before Sahots dismissal was effected. In the same case of Sevillana vs. I.T. (International) Corp., we ruled:

Since the burden of proving the validity of the dismissal of the employee rests on the employer, the latter should likewise bear the burden of showing that the requisites for a valid dismissal due to a disease have been complied with. In the absence of the required certification by a competent public health authority, this Court has ruled against the validity of the employees dismissal. It is therefore incumbent upon the private respondents to prove by the quantum of evidence required by law that petitioner was not dismissed, or if dismissed, that the dismissal was not illegal; otherwise, the dismissal would be unjustified. This Court will not sanction a dismissal premised on mere conjectures and suspicions, the evidence must be substantial and not arbitrary and must be founded on clearly established facts sufficient to warrant his separation from work.[32]

In addition, we must likewise determine if the procedural aspect of due process had been complied with by the employer.

From the records, it clearly appears that procedural due process was not observed in the separation of private respondent by the management of the trucking company. The employer is required to furnish an employee with two written notices before the latter is dismissed: (1) the notice to apprise the employee of the particular acts or omissions for which his dismissal is sought, which is the equivalent of a charge; and (2) the notice informing the employee of his dismissal, to be issued after the employee has been given reasonable opportunity to answer and to be heard on his defense.[33] These, the petitioners failed to do, even only for record purposes. What management did was to threaten the employee with dismissal, then actually implement the threat when the occasion presented itself because of private respondents painful left thigh.

All told, both the substantive and procedural aspects of due process were violated. Clearly, therefore, Sahots dismissal is tainted with invalidity.

On the last issue, as held by the Court of Appeals, respondent Jaime Sahot is entitled to separation pay. The law is clear on the matter. An employee who is terminated because of disease is entitled to separation pay equivalent to at least one month salary or to one-half month salary for every year of service, whichever is greater xxx.[34]Following the formula set in Art. 284 of the Labor Code, his separation pay was computed by the appellate court at P2,080 times 36 years (1958 to 1994) or P74,880. We agree with the computation, after noting that his last monthly salary was P4,160.00 so that one-half thereof is P2,080.00. Finding no reversible error nor grave abuse of discretion on the part of appellate court, we are constrained to sustain its decision. To avoid further delay in the payment due the separated worker, whose claim was filed way back in 1994, this decision is immediately executory. Otherwise, six percent (6%) interest per annum should be charged thereon, for any delay, pursuant to provisions of the Civil Code.

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals dated February 29, 2000 is AFFIRMED. Petitioners must pay private respondent Jaime Sahot his separation pay for 36 years of service at the rate of one-half monthly pay for every year of service, amounting to P74,880.00, with interest of six per centum (6%) per annum from finality of this decision until fully paid.

Costs against petitioners.

SO ORDERED.
















Manila

THIRD DIVISION

G.R. Nos. 83380-81 November 15, 1989

MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter, Department of Labor and Employment, National Capital Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ, EUGENIO L. ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA, GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA ANGELES, respondents.

Ledesma, Saludo & Associates for petitioners.

Pablo S. Bernardo for private respondents.

FERNAN, C.J.:

This petition for certiorari involving two separate cases filed by private respondents against herein petitioners assails the decision of respondent National Labor Relations Commission in NLRC CASE No. 7-2603-84 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Makati Haberdashery and/or Toppers Makati, et al." and NLRC CASE No. 2-428-85 entitled "Sandigan Ng Manggagawang Pilipino (SANDIGAN)-TUCP etc., et al. v. Toppers Makati, et al.", affirming the decision of the Labor Arbiter who jointly heard and decided aforesaid cases, finding: (a) petitioners guilty of illegal dismissal and ordering them to reinstate the dismissed workers and (b) the existence of employer-employee relationship and granting respondent workers by reason thereof their various monetary claims.

The undisputed facts are as follows:

Individual complainants, private respondents herein, have been working for petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on a piece-rate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday.

Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday and during peak periods even on Sundays and holidays.

On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a complaint docketed as NLRC NCR Case No. 7-2603-84 for (a) underpayment of the basic wage; (b) underpayment of living allowance; (c) non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of service incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5. 1

During the pendency of NLRC NCR Case No. 7-2603-84, private respondent Dioscoro Pelobello left with Salvador Rivera, a salesman of petitioner Haberdashery, an open package which was discovered to contain a "jusi" barong tagalog. When confronted, Pelobello replied that the same was ordered by respondent Casimiro Zapata for his customer. Zapata allegedly admitted that he copied the design of petitioner Haberdashery. But in the afternoon, when again questioned about said barong, Pelobello and Zapata denied ownership of the same. Consequently a memorandum was issued to each of them to explain on or before February 4, 1985 why no action should be taken against them for accepting a job order which is prejudicial and in direct competition with the business of the company. 2 Both respondents allegedly did not submit their explanation and did not report for work. 3 Hence, they were dismissed by petitioners on February 4, 1985. They countered by filing a complaint for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 on February 5, 1985. 4

On June 10, 1986, Labor Arbiter Ceferina J. Diosana rendered judgment, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in NLRC NCR Case No. 2-428-85 finding respondents guilty of illegal dismissal and ordering them to reinstate Dioscoro Pelobello and Casimiro Zapata to their respective or similar positions without loss of seniority rights, with full backwages from July 4, 1985 up to actual reinstatement. The charge of unfair labor practice is dismissed for lack of merit.

In NLRC NCR Case No. 7-26030-84, the complainants' claims for underpayment re violation of the minimum wage law is hereby ordered dismissed for lack of merit.

Respondents are hereby found to have violated the decrees on the cost of living allowance, service incentive leave pay and the 13th Month Pay. In view thereof, the economic analyst of the Commission is directed to compute the monetary awards due each complainant based on the available records of the respondents retroactive as of three years prior to the filing of the instant case.

SO ORDERED. 5

From the foregoing decision, petitioners appealed to the NLRC. The latter on March 30, 1988 affirmed said decision but limited the backwages awarded the Dioscoro Pelobello and Casimiro Zapata to only one (1) year. 6

After their motion for reconsideration was denied, petitioners filed the instant petition raising the following issues:

I

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT AN EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN PETITIONER HABERDASHERY AND RESPONDENTS WORKERS.

II

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS WORKERS ARE ENTITLED TO MONETARY CLAIMS DESPITE THE FINDING THAT THEY ARE NOT ENTITLED TO MINIMUM WAGE.

III

THE SUBJECT DECISIONS ERRONEOUSLY CONCLUDED THAT RESPONDENTS PELOBELLO AND ZAPATA WERE ILLEGALLY DISMISSED. 7

The first issue which is the pivotal issue in this case is resolved in favor of private respondents. We have repeatedly held in countless decisions that the test of employer-employee relationship is four-fold: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. It is the so called "control test" that is the most important element. 8 This simply means the determination of whether the employer controls or has reserved the right to control the employee not only as to the result of the work but also as to the means and method by which the same is to be accomplished. 9

The facts at bar indubitably reveal that the most important requisite of control is present. As gleaned from the operations of petitioner, when a customer enters into a contract with the haberdashery or its proprietor, the latter directs an employee who may be a tailor, pattern maker, sewer or "plantsadora" to take the customer's measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision is actively manifested in all these aspects — the manner and quality of cutting, sewing and ironing.

Furthermore, the presence of control is immediately evident in this memorandum issued by Assistant Manager Cecilio B. Inocencio, Jr. dated May 30, 1981 addressed to Topper's Makati Tailors which reads in part:

4. Effective immediately, new procedures shall be followed:

A. To follow instruction and orders from the undersigned Roger Valderama, Ruben Delos Reyes and Ofel Bautista. Other than this person (sic) must ask permission to

the above mentioned before giving orders or instructions to the tailors.

B. Before accepting the job orders tailors must check the materials, job orders, due dates and other things to maximize the efficiency of our production. The materials should be checked (sic) if it is matched (sic) with the sample, together with the number of the job order.

C. Effective immediately all job orders must be finished one day before the due date. This can be done by proper scheduling of job order and if you will cooperate with your supervisors. If you have many due dates for certain day, advise Ruben or Ofel at once so that they can make necessary adjustment on due dates.

D. Alteration-Before accepting alteration person attending on customs (sic) must ask first or must advise the tailors regarding the due dates so that we can eliminate what we call 'Bitin'.

E. If there is any problem regarding supervisors or co-tailor inside our shop, consult with me at once settle the problem. Fighting inside the shop is strictly prohibited. Any tailor violating this memorandum will be subject to disciplinary action.

For strict compliance. 10

From this memorandum alone, it is evident that petitioner has reserved the right to control its employees not only as to the result but also the means and methods by which the same are to be accomplished. That private respondents are regular employees is further proven by the fact that they have to report for work regularly from 9:30 a.m. to 6:00 or 7:00 p.m. and are paid an additional allowance of P 3.00 daily if they report for work before 9:30 a.m. and which is forfeited when they arrive at or after 9:30 a.m. 11

Since private respondents are regular employees, necessarily the argument that they are independent contractors must fail. As established in the preceding paragraphs, private respondents did not exercise independence in their own methods, but on the contrary were subject to the control of petitioners from the beginning of their tasks to their completion. Unlike independent contractors who generally rely on their own resources, the equipment, tools, accessories, and paraphernalia used by private respondents are supplied and owned by petitioners. Private respondents are totally dependent on petitioners in all these aspects.

Coming now to the second issue, there is no dispute that private respondents are entitled to the Minimum Wage as mandated by Section 2(g) of Letter of Instruction No. 829, Rules Implementing Presidential Decree No. 1614 and reiterated in Section 3(f), Rules Implementing Presidential Decree 1713 which explicitly states that, "All employees paid by the result shall receive not less than the applicable new minimum wage rates for eight (8) hours work a day, except where a payment by result rate has been established by the Secretary of Labor. ..." 12No such rate has been established in this case.

But all these notwithstanding, the question as to whether or not there is in fact an underpayment of minimum wages to private respondents has already been resolved in the decision of the Labor Arbiter where he stated: "Hence, for lack of sufficient evidence to support the claims of the complainants for alleged violation of the minimum wage, their claims for underpayment re violation of the Minimum Wage Law under Wage Orders Nos. 1, 2, 3, 4, and 5 must perforce fall." 13

The records show that private respondents did not appeal the above ruling of the Labor Arbiter to the NLRC; neither did they file any petition raising that issue in the Supreme Court. Accordingly, insofar as this case is concerned, that issue has been laid to rest. As to private respondents, the judgment may be said to have attained finality. For it is a well-settled rule in this jurisdiction that "an appellee who has not himself appealed cannot obtain from the appellate court-, any affirmative relief other than the ones granted in the decision of the court below. " 14

As a consequence of their status as regular employees of the petitioners, they can claim cost of living allowance. This is apparent from the provision defining the employees entitled to said allowance, thus: "... All workers in the private sector, regardless of their position, designation or status, and irrespective of the method by which their wages are paid. " 15

Private respondents are also entitled to claim their 13th Month Pay under Section 3(e) of the Rules and Regulations Implementing P.D. No. 851 which provides:

Section 3. Employers covered. — The Decree shall apply to all employers except to:

xxx xxx xxx

(e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned. (Emphasis supplied.)

On the other hand, while private respondents are entitled to Minimum Wage, COLA and 13th Month Pay, they are not entitled to service incentive leave pay because as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code. For the same reason private respondents cannot also claim holiday pay (Section 1(e), Rule IV, Implementing Regulations, Book III, Labor Code).

With respect to the last issue, it is apparent that public respondents have misread the evidence, for it does show that a violation of the employer's rules has been committed and the evidence of such transgression, the copied barong tagalog, was in the possession of Pelobello who pointed to Zapata as the owner. When required by their employer to explain in a memorandum issued to each of them, they not only failed to do so but instead went on AWOL (absence without official leave), waited for the period to explain to expire and for petitioner to dismiss them. They thereafter filed an action for illegal dismissal on the far-fetched ground that they were dismissed because of union activities. Assuming that such acts do not constitute abandonment of their jobs as insisted by private respondents, their blatant disregard of their employer's memorandum is undoubtedly an open defiance to the lawful orders of the latter, a justifiable ground for termination of employment by the employer expressly provided for in Article 283(a) of the Labor Code as well as a clear indication of guilt for the commission of acts inimical to the interests of the employer, another justifiable ground for dismissal under the same Article of the Labor Code, paragraph (c). Well established in our jurisprudence is the right of an employer to dismiss an employee whose continuance in the service is inimical to the employer's interest. 16

In fact the Labor Arbiter himself to whom the explanation of private respondents was submitted gave no credence to their version and found their excuses that said barong tagalog was the one they got from the embroiderer for the Assistant Manager who was investigating them, unbelievable.

Under the circumstances, it is evident that there is no illegal dismissal of said employees. Thus, We have ruled that:

No employer may rationally be expected to continue in employment a person whose lack of morals, respect and loyalty to his employer, regard for his employer's rules, and appreciation of the dignity and responsibility of his office, has so plainly and completely been bared.

That there should be concern, sympathy, and solicitude for the rights and welfare of the working class, is meet and proper. That in controversies between a laborer and his master, doubts reasonably arising from the evidence, or in the interpretation of agreements and writings should be resolved in the former's favor, is not an unreasonable or unfair rule. But that disregard of the employer's own rights and interests can be justified by that concern and solicitude is unjust and unacceptable. (Stanford Microsystems, Inc. v. NLRC, 157 SCRA 414-415 [1988] ).

The law is protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer.17 More importantly, while the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will automatically be decided in favor of labor. 18

Finally, it has been established that the right to dismiss or otherwise impose discriplinary sanctions upon an employee for just and valid cause, pertains in the first place to the employer, as well as the authority to determine the existence of said cause in accordance with the norms of due process. 19

There is no evidence that the employer violated said norms. On the contrary, private respondents who vigorously insist on the existence of employer-employee relationship, because of the supervision and control of their employer over them, were the very ones who exhibited their lack of respect and regard for their employer's rules.

Under the foregoing facts, it is evident that petitioner Haberdashery had valid grounds to terminate the services of private respondents.

WHEREFORE, the decision of the National Labor Relations Commission dated March 30, 1988 and that of the Labor Arbiter dated June 10, 1986 are hereby modified. The complaint filed by Pelobello and Zapata for illegal dismissal docketed as NLRC NCR Case No. 2-428-85 is dismissed for lack of factual and legal bases. Award of service incentive leave pay to private respondents is deleted.

SO ORDERED.

FIRST DIVISION

[G.R. No. 113542. February 24, 1998]

CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P. COSTALES, JR. in his capacity as union president, petitioner, vs.UNDERSECRETARY BIENVENIDO E. LAGUESMA and CORFARM GRAINS, INC., respondents.

[G.R. No. 114911. February 24, 1998]

CAURDANETAAN PIECE WORKERS ASSOCIATION as represented by JUANITO P. COSTALES, JR., president, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, CORFARM GRAINS, INC. and/or TEODY C. RAPISORA and HERMINIO RABANG, respondents.

D E C I S I O N

PANGANIBAN, J.:

The Court reiterates some fundamental labor doctrines: (1) this Court may review factual determinations where the findings of the med-arbiter conflict with those of the undersecretary of labor; (2) an employer-employee relationship may be established by substantial evidence; (3) procedural due process is satisfied by the grant of an opportunity to be heard and an actual adversarial-type trial is not required; (4) the NLRC commits grave abuse of discretion when it remands a case to the labor arbiter in spite of ample pieces of evidence on record which are sufficient to decide the case directly; and (5) where illegal dismissal is proven, the workers are entitled to back wages and other similar benefits without deductions or conditions.

Statement of the Case

These doctrines are used by the Court in resolving these consolidated petitions for certiorari under Rule 65, challenging the resolutions of Undersecretary Bienvenido Laguesma and the National Labor Relations Commission.

First Case

In G.R. No. 113542, hereafter referred to as the First Case, Petitioner Caurdanetaan Piece Workers Union/Association (CPWU) prays for the nullification and reversal of Undersecretary Laguesmas Order dated January 4, 1994 in OS-MA-A-8-119-93 (RO100-9207-RU-001), which granted Respondent Corfarms motion for

reconsideration and dismissed petitioners prayer for certification election. The dispositive portion of the assailed Order reads as follows:[1]

WHEREFORE, the questioned Order is hereby set aside and a new one issued dismissing the petition for certification election for lack of merit.

In his earlier Order dated September 7, 1993, Laguesma affirmed Med-Arbiter Sinamar E. Limos order of March 18, 1993 which disposed as follows:[2]

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, the above-entitled petition is hereby granted. Consequently, the motion to dismiss filed by Corfarm Grains, Inc. is denied.

Let a certification election be conducted among the rank-and-file employees of Corfarm Grains, Inc., within ten (10) days from receipt hereof, with the following choices:

1. Caurdanetaan Piece Workers Union;

2. No Union

A pre-election conference is hereby set on March 29, 1993 at 2:00 o clock in the afternoon at the DOLE, Dagupan District Office, Mayombo District, Dagupan City to thresh out the mechanics of the Certification Election. Employer Corfarm Grains, Inc. is hereby directed to present its employment records for the period covering January to June 1992 evidencing payment of salaries of its employees.

Let the parties be notified accordingly.

Aggrieved by Respondent Laguesmas subsequent Order dated January 27, 1994[3] denying its motion for reconsideration, petitioner filed this recourse before this Court.

Second Case

In G.R. No. 114911, hereafter referred to as the Second Case, petitioner assails the Resolution promulgated on February 16, 1994 in NLRC CA No. L-001109[4] by the National Labor Relations Commission (Respondent NLRC),[5] the dispositive portion of which reads:[6]

WHEREFORE, the Decision of the Labor Arbiter dated 14 September 1993 is hereby SET ASIDE. Let the records of the case be REMANDED to the Arbitration Branch of origin for immediate appropriate proceedings.

The labor arbiters decision that was reversed by Respondent NLRC disposed as follows:[7]

WHEREFORE, judgment is hereby rendered as follows:

1. Declaring individual complainants dismissal illegal;2. Declaring respondent guilty of unfair labor practice;3. Ordering respondent to pay the 92[8] complainants the following:

a) 13th month pay limited to three years in the amount of P4,788.00 each;

b) service incentive leave pay in the amount of P855.00 each for three years;

c) underpaid wages covering the period June 1989 to June 1992 which amount to P47,040.00 each;

d) backwages reckoned from June 1992, the date of dismissal[,] to September 1993, the date of promulgation of the decision or a period of 14 months, in the amount of P22,344.00 each;

e) refund of P12.00/day deduction limited to three years which amounts to P12,096 each; and

f) to pay the complainants P1,000.00 each as damages.

4. To reinstate the complainants to their former position[s] immediately.

All other claims are hereby dismissed for lack of merit.

In a Resolution promulgated on March 28, 1994, Respondent NLRC denied petitioners motion for reconsideration.[9]

The Facts

In his Consolidated Memorandum, the solicitor general recited the following pertinent facts, which we find amply supported by the records:[10]

Petitioner union has ninety-two (92) members who worked as cargador at the warehouse and ricemills of private respondent [referring to Respondent Corfarm] at Umingan, Pangasinan since 1982. As cargadores, they loaded, unloaded and piled sacks of palay from the warehouse to the cargo trucks and those brought by cargo trucks for delivery to different places. They were paid by private respondent on a piece rate basis. When private respondent denied some benefits to these cargadores, the latter organized petitioner union. Upon learning of its formation, private respondent barred its members from working with them and replaced [them] with non-members of the union sometime in the middle of 1992.

On July 9, 1992, petitioner filed [a petition] for certification election before the Regional Office No. I of the Department of Labor and Employment, San Fernando, La Union docketed as RO100-9207-RU-001.

While this petition for certification election was pending, petitioner also filed on November 16, 1992, a complaint for illegal dismissal, unfair labor practice, refund of illegal deductions, payment of wage differentials, various pecuniary benefits provided by laws, damages, legal interest, reinstatement and attorneys fees, against private respondent before the Regional Arbitration Branch No. 1 of Dagupan City, docketed as NLRC RAB Case No. 01-117-0184-92.

On November 24, 1992, Labor Arbiter Ricardo Olairez in NLRC Case No. Sub-Rab 01-117-0184-92, directed the parties to submit position paper on or before December 14, 1992, and to appear for hearing on the said date. Only the complainant petitioner submitted its position paper on December 3, 1992.

Likewise in the scheduled hearing on December 14, 1992, private respondent did not appear[;] thus Labor Arbiter Olairez allowed the president of petitioner union Juanito Costales to testify and present its evidence ex-parte.

On December 16 1992, another notice was sent to the parties to appear on [the] January 7, 1993 hearing by Labor Arbiter Emiliano de Asis.

Before the scheduled hearing on January 7, 1993, complainant petitioner filed a motion to amend complaint and to admit amended complaint. It also filed the following:

1. Affidavit of Juanito Costales, Jr., dated November 24, 1992;

2. Joint affidavit of Ricardo Aban, Armando Casing, Benjamin Corpuz, Danny Margadejas, Fidel Fortunato, Henry de los Reyes, Anthony de Luna, Warlito Arguilles, Dominador Aguda, Marcelino Cayuda, Jr., Jaime Costales and Juanito Mendenilla dated December 30, 1992;

3. Joint affidavit of Juanito Costales and Armando Casing dated January 7, 1993;

4. Affidavit signed by individual union members.

On March 18, 1993, Med-Arbiter Sinamar E. Limos issued an Order granting the petition for certification election earlier filed.

Meanwhile, Labor Arbiter Rolando D. Gambito in the illegal dismissal case issued the May 20, 1993 Order, the dispositive portion [of] which reads:

WHEREFORE, respondents are hereby ordered to submit their position paper, together with their documentary evidence, if any, within TEN (10) days from

receipt of the order, otherwise we will be constrained to resolve this case based on available evidence on record.

On September 7, 1993, public respondent Laguesma issued a Resolution denying the appeal filed by private respondent against the order of Med-Arbiter Limos granting the petition for certification election.

Acting on said denial, private respondent filed a motion for reconsideration which was granted in an Order dated January 4, 1994 by public respondent Laguesma dismissing the petition for certification election for lack of employer-employee relationship.

Petitioner in turn filed a motion for reconsideration of the January 4, 1994, Order but it was denied by public respondent Laguesma in his January 27, 1994 Order which reaffirmed the dismissal of petition for certification election.

Thus, the union filed its first petition for certiorari assailing the Orders of January 4 and 27, 1994 of public respondent Laguesma dismissing the petition for certification election. The said petition is captioned as Caurdanetaan Piece Workers Union, petitioner, vs. Hon. Bienvenido Laguesma, et al., respondents, docketed as G.R. No. 113542 and raffled to the Second Division of this Honorable Court.

On September 14, 1993, Labor Arbiter Rolando D. Gambito issued his decision finding the dismissal of petitioners members illegal. On appeal by both parties, Respondent NLRC -- as earlier stated -- set aside the appealed decision and remanded the case to the labor arbiter for further proceedings. Petitioners motion for reconsideration was later denied.

The solicitor general, who was supposed to represent both public respondents, joined petitioner and filed a Manifestation and Motion (In Lieu of Comment) dated July 25, 1994, praying that the petition in the First Case be granted and that judgment be rendered annulling[11] the assailed Orders of Respondent Laguesma. The Republics counsel likewise filed another Manifestation and Motion (In Lieu of Comment) dated October 4, 1994 in the Second Case, praying that judgment be rendered annulling the resolution of Public Respondent NLRC dated February 16, 1994 and March 28, 1994 and order[ing] public respondent to proceed with the case instead of remanding the same to the labor arbiter of origin.[12]

In a Resolution dated March 29, 1995,[13] this Court ordered the consolidation of the two cases.[14]

Public Respondents Rulings

In the First Case

Public Respondent Laguesma premised the dismissal of the petition for certification election on the absence of an employer-employee relationship between petitioners members and private respondent. Professing reliance on the control test in determining employer-employee relationship, his Order dated January 4, 1994[15] explained:

It is settled in this jurisdiction that the most important factor in determining the existence of employer-employee relationship is the control test or the question of whether or not the supposed employer exercises control over the means and methods by which the work is to be done. In the instant case, it is not disputed that movant does not exercise any degree of control over how the loading or unloading of cavans of palays to or from the trucks, to or from the rice mills. Movants only concern is that said cavans of palay are loaded/unloaded. Absent therefore, the power to control not only the end to be achieved but also the means to be used in reaching such end, no employer-employee relationship could be said to have been established. We also noted that some of petitioners members including its president, Juanito Costales, Jr., admitted in separate sworn statements that they offer and actually perform loading and unloading work for various rice mills in Pangasinan and that the performance of said work depends on the availability of work in said mills. They also categorically stated that there is no employer-employee relationship between petitioner and movant. To our mind, said declarations being made against interest deserve much evidentiary weight. Considering therefore, the foregoing, we have no alternative but to dismiss the petition for lack of employer-employee relationship.

In the Second Case

On the other hand, Respondent NLRC ordered the remand of the case to the arbitration branch for further proceedings because the issues at hand need further threshing out. Stressing the principle that allegations must be proved by competent and credible evidence, it held:[16]

There is no question that under the Rules of the Commission, complaints may be resolved on the basis of the Position Papers submitted by the parties and that the parties may be deemed to have waived their right to present evidence after they have been given an opportunity to do so. These procedural rules, however should be read in conjunction with the time[-]honored principle that allegations must be proved and established by competent and credible evidence. In other words, mere allegations would not suffice despite the absence of evidence to the contrary.

In subject case, complainants-appellants allegations that they are laborers of respondents-appellants receiving P45.00 per days work of eight hours (p. 2, Amended Position Paper dated December 14, 1992, p. 31 Records; p. 2 Amended Complaint dated 16 December 1992, p. 70, Records) appears to be in conflict with their earlier assertions that they are paid on the basis of the number of cavans of palay moved, piled, hauled and unloaded from trucks or haulers multiplied by P0.12 [per] sack or cavan. And for the days earning respondents used to be obliged to pay P57.00 per days earning -- (p. 2, Position Paper dated 24 November 1992; p. 17, Records).

Similarly attached to the records is a narrative report of [the] DOLE inspector where it was mentioned that Juanito Costales, Jr., is the owner of Carcado Contracting Services and is not an employee of Corefarm [sic] Grains (Narrative Report dated August 4, 1992, p. 10 Records).

Another reason why subject case should be remanded to the Labor Arbiter below is the fact that the personality of complainant union has been raised in issue before the proper forum and adverse decision on the matter will definitely affect the whole proceedings.

Furthermore, records show that an Amended Complaint was filed on December 23, 1992. This amended complaint made no mention of the affidavits of Juanito Costales, Jr. and the 92 other workers which documents were filed in January 1993. Likewise, the amended complaint contains but a general statement that the 92 workers of Corefarm [sic] Grains have been employed since 1982 which was adopted by the Labor Arbiter below in his decision notwithstanding the fact that a number of these workers started working with respondent after 1982. Some of whom worked with the company in 1990 (Joint Affidavit dated 7 January 1993, pp. 96-98, Records). Notwithstanding this fact, the Labor Arbiter in the decision under consideration allowed refund of alleged deduction for a period of three years. In the same manner, payment of salary differential was also granted.

Indeed the issues at hand need further threshing out. Under the Rules, the Labor Arbiter is authorized to thresh out issues (sec. 4, Rule V). As it is, we are not convinced by the conclusions of the Labor Arbiter.

The ends of justice would better be served if all parties are granted further opportunity to ventilate their respective positions.

The Issues

In its Consolidated Memorandum dated September 19, 1995 filed before us, petitioner raises the following grounds in support of its petition:[17]

1. Grave abuse of discretion or acting in excess of jurisdiction, which is equivalent to lack of jurisdiction on the part of public respondent in setting aside the labor arbiters decision and in remanding this case to the office of origin for further proceedings is not necessary when in fact the mandatory requirements of due process have been observed by the labor arbiter in rendering decision on the case;

2. Remand of the case to office of origin for further proceedings on matters already passed upon properly by the labor arbiter is contrary to the rule of speedy labor justice and the [sic] social justice and to afford protection to labor policy of the Philippine Constitution, which is a command that should not be disregarded by the courts in resolving labor cases;

3. Remand of the case to the labor arbiter would only prolong social unrest and the suffering of injurious effects of illegal dismissal by the 92 illegally dismissed workers[;] hence, said remand of the case without justification constitutes an oppressive act committed by public respondent.

Simply put, the issues are as follows:

1. Whether Respondent Laguesma acted with grave abuse of discretion in ordering the dismissal of the petition for certification election

2 Whether Respondent NLRC acted with grave abuse of discretion in remanding the illegal dismissal case to the labor arbiter for further proceedings.

The present controversy hinges on whether an employer-employee relationship between the CPWU members and Respondent Corfarm has been established by substantial evidence.

The Courts Ruling

The two petitions are meritorious.

Main Issue: Employer-Employee Relationship

First Case: Certification Election

Petitioner contends that Respondent Laguesma committed grave abuse of discretion in dismissing the petition for certification election by relying on private respondents bare allegation, in its motion for reconsideration, of lack of employer-employee relationship.[18] According to petitioner, Respondent Laguesma cannot reverse his Decision in the absence of a concomitant change in his factual findings.[19] Petitioner insists that all its members were employees of private respondent, viz.:[20]

The 92 workers, who are all union members of petitioner herein, have been rendering actual manual services as cargadores in the warehouse and rice mills of private respondent, performing activities usually related to or desirable by [sic] the business or trade of private respondent who is engaged in the buy and sell of palay as well as warehousing of said commodity and milling the same for sale to customers in the form of milled rice. The 92 workers have performed their activities for the last ten (10) years prior to their having been illegally dismissed from employment on June 18, 1992 or thereabouts.

Petitioner adds that many of its members received Christmas bonuses from private respondent.[21]

On the other hand, Respondent Corfarm describes the contentions of petitioner as

off-tangent, if not irrelevant. --

First, the authority of the DOLE Secretary to decide appeals in representation cases is undeniable (see e.g., Sections 9 and 10 of Rule V, Book V, of the Implementing Rules and Regulations of the Labor Code; also Art. 259, appeal from certification election orders, labor code). Second, petitioner completely misses the point that thegranting and denial of a motion for reconsideration involves the exercise of discretion. As submitted by the Public Respondent in its Comment, among the ends to which a Motion for Reconsideration is addressed, one is precisely to convince the court that its ruling is erroneous and improper, contrary to law or the evidence, x x x (Emphasis found in the original.)

Corfarm insists that the challenged Order of Respondent Laguesma dated January 4, 1994 rests on solid findings of fact which should be accorded respect and finality.[22] It attacks the petitioners allegation -- that it has 92 workers who worked as cargador at its warehouses -- as gratuitous and not supported by any evidence x x x [because] as late as this time of day in the litigation of this case, who exactly are those 92 workers cannot be known from the records.[23] (Emphasis in original.)

Private respondent further argues that RJL Martinez Fishing Corp. vs. NLRC,[24] cited by the solicitor general, has a factual situation different from the case at bar. Waiting time, unlike that in RJL Martinez Fishing Corp., does not obtain here.

[25] Likewise allegedly inapplicable are the rulings in Villavilla vs. Court of Appeals[26] and in Brotherhood Labor Unity Movement vs. Zamora.[27]

Respondent Corfarm denies that it had the power of control, rationalizing that petitioners members were street-hired workers engaged from time to time to do loading and unloading work x x x[;] [t]here [was] no superintendent-in-charge x x x to give orders x x x[;] [and] there [were] no gate passes issued, nor tools, equipment and paraphernalia issued by Corfarm for loading/unloading x x x. [28] It attributes error to the solicitor generals reliance on Article 280[29] of the Labor Code. Citing Brent School, Inc. vs. Zamora,[30]private respondent asserts that a literal application of such article will result in absurdity, where petitioners members will be regular employees not only of respondents but also of several other rice mills, where they were allegedly also under service. Finally, Corfarm submits that the OSGs position is negated by the fact that petitioners members contracted for loading and unloading services with respondent company when such work was available and when they felt like it x x x.[31]

We rule for petitioners. Section 5, Rule 133 of the Rules of Court mandates that in cases filed before administrative or quasi-judicial bodies, like the Department of Labor, a fact may be established by substantial evidence, i.e. that amount of evidence which a reasonable mind might accept as adequate to justify a conclusion.[32] Also fundamental is the rule granting not only respect but even finality to factual findings of the Department of Labor, if supported by substantial evidence. Such findings are binding upon this Court, unless petitioner is able to show that the secretary of labor (or the undersecretary acting in his place) has arbitrarily disregarded or misapprehended evidence before him to such an extent as to compel a contrary conclusion if such evidence were properly appreciated. This is rooted in the principle that this Court is not a trier of facts, and that the determinations made by administrative bodies on matters falling within their respective fields of specialization or expertise are accorded respect.[33] Also well-settled is the doctrine that the existence of an employer-employee relationship is ultimately a question of fact and that the findings thereon by the labor authorities shall be accorded not only respect but even finality when supported by substantial evidence.[34] Finally, in certiorari proceedings under Rule 65, this Court does not, as a rule, evaluate the sufficiency of evidence upon which the labor officials based their determinations. The inquiry is essentially limited to whether they acted without or in excess of jurisdiction or with grave abuse of discretion. [35] However, this doctrine is not absolute. Where the labor officers findings are contrary to those of the med-arbiter, the Court -- in the exercise of its equity jurisdiction -- may wade into and reevaluate such findings,[36] which we now embark on in this case.[37]

To determine the existence of an employer-employee relation, this Court has consistently applied the four-fold test which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the power to dismiss, and (4) the power to control -- the last being the most important element.[38]

Our examination of the case records indubitably shows the presence of an employer-employee relationship. Relying on the evidence adduced by the petitioners, Respondent Laguesma himself affirmed the presence of such connection. Thus, in his Order dated September 7, 1993, he astutely held:[39]

Anent the first issue, we find the annexes submitted by the respondent company not enough to prove that herein petitioner is indeed an independent contractor. The existence of an independent contractor relationship is generally established by the following criteria. The contractor is carrying on an independent business; [the] nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision over the workers; payment of the contractors workers; the control and the supervision over the workers; the control of the premises; the duty to supply the premises, tools, appliances, materials and laborers, and the mode, manner and terms of payment. [Brotherhood Labor Unity Movement of the Philippines vs. Zamora, 147 SCRA 49 (198) [sic] ].

None of the above criteria exists in the case at bar. The absence of a written contract which specifies the performance of a specified piece of work, the nature and extent of the work and the term and duration of the relationship between herein petitioner and respondent company belies the latters [sic] allegation that the former is indeed and [sic] independent contractor.

Also, respondent failed to show by clear and convincing proof that herein respondent has the substantial capital or investment to qualify as an independent contractor under the law. The premises, tools, equipments [sic] and paraphernalia are all supplied by respondent company. It is only the manpower or labor force which the alleged contractor supplies, suggesting the existence of a labor only contracting scheme which is prohibited by law. Further, if herein petitioner is indeed an independent contractor, it should have offered its services to other companies and not to work [sic] exclusively for the respondent company. It is therefore, clear that the alleged J.P. Costales, Jr. Cargador Services cannot be considered as an independent contractor as defined by law.

In his subsequent order, Respondent Laguesma inexplicably reversed his above ruling and held that there was no employer-employee relationship on the

ground that Respondent Corfarm exercised no power of control over the alleged employees.

It may be asked, why the sudden change of mind on the part of Respondent Laguesma? No additional pieces of evidence were adduced and no existing ones were identified by Laguesma to support such strange reversal. The unblemished fact is that private respondent was the recruiter and employer of petitioners members.

Shoppers Gain Supermart vs. NLRC[40] provides the standard to determine whether a worker is an independent contractor:

The applicable law is not Article 280 of the Labor Code which is cited by petitioners, but Art. 106, which provides:

Art. 106. Contractor or subcontractor. -- Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code.

x x x x x x x x x

x x x x x x x x x

There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such 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. (emphasis supplied)

In accordance with the above provision, petitioner corporation is deemed the direct employer of the private respondents and thus liable for all benefits to which such workers are entitled, like wages, separation benefits and so forth. There is no denying the fact that private respondents work as merchandisers, cashiers, baggers, check-out personnel, sales ladies, warehousemen and so forth were directly related, necessary and vital to the day-to-day operations of the supermarket; their jobs involved normal and regular functions in the ordinary business of the petitioner corporation. Given the nature of their functions and responsibilities, it is improbable that petitioner did not exercise direct control over their work. Moreover, there is no evidence--as in fact, petitioners do not even allege--that aside from supplying the manpower, the labor agencies have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others.

It is undeniable that petitioners members worked as cargadores for private respondent. They loaded, unloaded and piled sacks of palay from the warehouses to the cargo trucks and from the cargo trucks to the buyers. This work is directly related, necessary and vital to the operations of Corfarm. Moreover, Corfarm did not even allege, much less prove, that petitioners members have substantial capital or investment in the form of tools, equipment, machineries, [and] work premises, among others. Furthermore, said respondent did not contradict petitioners allegation that it paid wages directly to these workers without the intervention of any third-party independent contractor. It also wielded the power of dismissal over petitioners; in fact, its exercise of this power was the progenitor of the Second Case. Clearly, the workers are not independent contractors.

Applying Article 280[41] of the Labor Code, we hold that the CPWU members were regular employees of private respondent. Their tasks were essential in the usual business of private respondent.

As we have ruled in an earlier case, the question of whether an employer-employee relationship exists in a certain situation has bedevilled the courts. Businessmen, with the aid of lawyers, have tried to avoid or sidestep such relationship, because that juridical vinculum engenders obligations connected with workmens compensation, social security, medicare, minimum wage, termination pay and unionism.[42] All too familiarly, Respondent Corfarm sought refuge from these obligations. However, the records of this case clearly support the existence of the juridical vinculum.

RJL Martinez Fishing Corporation,[43] cited by the solicitor general, is relevant because petitioners members were also made to wait for loading and unloading of cavans ofpalay to and from the storage areas and to and from the milling areas. [44] This waiting time does not denigrate the regular employment of petitioners members. As ruled in that case:[45]

x x x Besides, the continuity of employment is not the determining factor, but rather whether the work of the laborer is part of the regular business or occupation of the employer.(fn: Article 281, Labor Code, as

amended; Philippine Fishing Boat Officers and Engineer[s] Union vs. Court of Industrial Relations, 112 SCRA 159 (1982). We are thus in accord with the findings of respondent NLRC in this regard.

Although it may be that private respondents alternated their employment on different vessels when they were not assigned to petitioners boats, that did not affect their employee status. The evidence also establishes that petitioners had a fleet of fishing vessels with about 65 ship captains, and as private respondents contended, when they finished with one vessel they were instructed to wait for the next. As respondent NLRC had found:

We further find that the employer-employee relationship between the parties herein is not co-terminous with each loading and unloading job. As earlier shown, respondents are engaged in the business of fishing. For this purpose, they have a fleet of fishing vessels. Under this situation, respondents activity of catching fish is a continuous process and could hardly be considered as seasonal in nature. So that the activities performed by herein complainants, i.e. unloading the catch of tuna fish from respondents vessels and then loading the same to refrigerated vans, are necessary or desirable in the business of respondents. This circumstance makes the employment of complainants a regular one, in the sense that it does not depend on any specific project or seasonal activity. (fn: NLRC Decision, p. 94, Rollo.)

Alleged Admission of Lack ofEmployer-Employee Relationship

Respondent Corfarm argues that some of petitioners members including its president, Juanito P. Costales, Jr.[,] admitted that they work for various rice mills in Pangasinan and that there is no employer-employee relations between them and private respondents. It adds that the solicitor general, by arguing that there was an employer-employee relationship, attempts to substitute [his] judgment [with] that of public respondent undersecretary x x x who found such admissions against self-interest on the part of petitioners members x x x.[46]

These arguments are negligible. The alleged admissions cannot be taken against petitioners cause. First, the contents of the admissions are highly suspect. The records reveal that the admissions of Juanito Costales, Jr.,[47] Carlito Costales[48] and Juanito Medenilla[49] were in the form of affidavits[50] of adhesion which were identical in content, differentiated only by the typewritten names and the signatures of the workers. Second, only three of the workers executed such affidavits. Clearly, the admissions in such affidavits cannot work against petitioner unions cause. Such pro forma and identical affidavits do not prove lack of employer-employee relationship against all members of petitioner. Third, the employer-employee relationship is clearly proven by substantial evidence. Corfarm sorely failed to show that petitioners members were independent contractors. We rule that no particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may show the relationship. If only documentary evidence would be required to demonstrate that relationship, no scheming employer would ever be brought before the bar of justice.[51]Fourth, and in any event, the alleged admissions of the three workers that they worked with other rice mills do not work against them. Assuming arguendo that they did work with other rice mills, this was required by the imperative of meeting their basic needs.[52]

The employer-employee relationship having been duly established, the holding of a certification election necessarily follows. It bears stressing that there should be no unnecessary obstacle to the holding of such election,[53] for it is a statutory policy that should not be circumvented.[54] We have held that, in the absence of a legal impediment, the holding of a certification election is the most democratic method of determining the employees choice of their bargaining representative. It is the best means to settle controversies and disputes involving union representation. Indeed, it is the keystone of industrial democracy.[55]

Second Case: Illegal Dismissal

Petitioner assails the NLRC for setting aside the labor arbiters decision and remanding the case for further proceedings. Petitioner argues that the order of remand will only prolong the agony of the 92 union members and their families for living or existing without jobs and earnings to give them support. Further, petitioner contends:[56]

The Labor Arbiter had rendered a decision (Annex D, Petition) on September 14, 1993 in favor of petitioner based on the available records of the case after giving more than ample opportunities to private respondents herein to submit their position paper and other pleadings alleging their evidences [sic] against the causes of action of petitioner

alleged in the complaint for illegal dismissal, unfair labor practice, non-payment of various benefits granted by existing laws during their employment, illegal deductions or diminution of their underpaid daily wages, non-payment of wage increases and other causes of action pleaded by the complainant or herein petitioner.

In short, Labor Arbiter Rolando Gambito rendered his decision based on the records of the case including evidence available on record and after observing due process of law.

To support his opposition against the remand of the case, petitioner recites the chronological events of the case, viz::[57]

In the case at bar, private respondents were notified earlier in the latter part of 1992 regarding the pendency of the complaint for illegal dismissal, unfair labor practice, damages, etc., but said respondents did not appear during the initial hearing of the case [before] Labor Arbiter Ricardo Olairez, then the Arbiter handling the case. The case was re-set for hearing at some other dates. On April 22, 1993, Atty. Alfonso C. Bince, Jr. appeared as counsel for respondents at Dagupan City. Atty. Bince committed to the Labor Arbiter that the former will file the position paper for his clients (Corfarm Grains, Inc., et al .) within ten (10) days from April 22, 1993, but still private respondents Position Paper was not filed.

On May 20, 1993, Labor Arbiter Rolando Gambito, who took over the case for illegal dismissal, etc. filed by petitioner, issued an order to private respondents directing the latter (respondents) to submit their Position Paper together with THEIR DOCUMENTARY EXHIBITS, if any, within 10 days from receipt of the order. Still, private respondents counsel failed to submit private respondents Position Paper relative to the petitioners complaint for illegal dismissal, unfair labor practice, etc. which is involved in G.R. No. 114911 pending action by this Honorable Court.

Thus, the Labor Arbiter rendered his decision on the case in favor of petitioner and/or the 92 illegally dismissed workers based on the position paper filed by the latter and available records of the case. (Emphasis in original.)

On the other hand, Respondent Corfarm submits that the labor arbiters decision should be set aside not only for lack of competent and credible evidence but also for lack of procedural due process. Corfarm further contends that in spite of the pendency of its motions to cross-examine petitioners witnesses and to suspend proceedings, the labor arbiter ordered the submission of its position paper and documentary evidence within ten (10) days.[58] Respondent Corfarm insists:[59]

Indeed, although proceedings before a Labor Arbiter are supposed to be non-litigious and the technicalities in the courts of law need not be strictly applied, the proceedings should nevertheless be subject to the requirements of due process as provided in Section 7, Rule 7 of the NLRC Rules of Procedure. (See also Phil. Telegraph and Telephone Corp. vs. NLRC, 183 SCRA 451).

We agree with petitioner. Private respondent was not denied procedural due process, and the labor arbiters decision was based on competent, credible and substantial evidence.

Procedural Due Process Observed

Private respondent had been duly informed of the pendency of the illegal dismissal case, but it chose not to participate therein without any known justifiable cause. The labor arbiter sent notices of hearing or arbitration to the parties, requiring them to submit position papers at 1:30 p.m. on November 14, 1992.[60] Respondent Corfarm did not attend the hearing. According to Respondent NLRC, there was no proof that Respondent Corfarm received such notice. In any case, petitioner filed a Motion to Admit Amended Complaint on December 23, 1992. Again, another notice for hearing or arbitration on January 7, 1993 was sent to the parties.[61] This was received by petitioners counsel as evidenced by the registry return receipt duly signed by private respondents counsel, Atty. Alfonso Bince, Jr. It was only on January 28, 1993, however, that Atty. Bince entered his appearance as counsel for Respondent Corfarm.[62] On May 10, 1993, Corfarm was again given a new period of ten (10) days within which to submit its position paper and documentary evidence; otherwise, [the labor arbiter] will be constrained to resolve this case based on available evidence on record.[63] As evidenced by a registry return receipt, a copy of said directive was received by respondents counsel on May 25, 1993. Still and all, Corfarm failed to file its position paper. Clearly, private respondent was given an opportunity to present its evidence, but it failed or refused to avail itself of this opportunity without any legal reason. Due process is not violated where a person is given the opportunity to be heard, but chooses not to give his side of the case.[64]

Labor Arbiters Decision Basedon Credible, Competent and Substantial Evidence

Contrary to the conclusions of the NLRC and the arguments of private respondent, the findings of the labor arbiter on the question of illegal dismissal were based on credible, competent and substantial evidence.

It is to be borne in mind that proceedings before labor agencies merely require the parties to submit their respective affidavits and position papers. Adversarial trial is addressed to the sound discretion of the labor arbiter. To establish a cause of action, only substantial evidence is necessary, i.e., such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if other minds equally reasonable might conceivably opine otherwise.[65] As ruled in Manalo vs. Roldan-Confesor:[66]

Clear and convincing proof is x x x more than mere preponderance, but not to extent of such certainty as is required beyond reasonable doubt as in criminal cases x x x (fn: Blacks Law Dictionary, 5th Ed., p. 227, citing Fred C. Walker Agency, Inc. v. Lucas, 215 Va. 535, 211 S.E. 2d 88, 92) while substantial evidence x x x consists of more than a mere scintilla of evidence but may be somewhat less than a preponderance x x x x (fn: Ibid., p. 1281, citing Marker v. Finch, D.C. Del., 322 F. Supp. 905, 910) Consequently, in the hierarchy of evidentiary values, We find proof beyond reasonable doubt at the highest level, followed by clear and convincing evidence, preponderance of evidence, and substantial evidence, in that order.

Evidence to determine the validity of petitioners claims, which the labor arbiter relied upon, was available to Respondent NLRC. These pieces of evidence are in the case records, as aptly pointed out by the solicitor general:[67]

[Regarding] the quoted second sentence of public respondent NLRCs Resolution that allegations must be proved and established by competent evidence, and that mere allegations would not suffice despite the absence of evidence to the contrary, suffice it to say that there is ample evidence on record to support the Labor Arbiters decision, to wit: 1) Narrative report of DOLE inspector Crisanto Rey Dingle noting some violation of underpayment of minimum wage and underpayment of 13th month pay (page 10, record); 2) affidavit of union officers and individual union members, stating their various claims (page 80-195, Record). Despite such evidence and an opportunity afforded to private respondent to present its evidence and position paper as borne out by the notice of hearing issued by Labor Arbiter Olairez dated November 14, 1992, with advice to the parties to submit their position paper (p. 14 Record) and the Order issued by Labor Arbiter Gambito dated May 20, 1993; requiring private respondents to submit their position paper, together with their documentary evidence (p. 247, record), private respondent failed to submit its position paper and countervailing evidence which should have met squarely the allegations and evidence adduced by the petitioner. Thus, in the absence of private respondents position paper and countervailing evidence, the Labor Arbiter cannot be faulted in deciding the case based on the available evidence on record.

It must be stressed that labor laws mandate the speedy administration of justice, with least attention to technicalities but without sacrificing the fundamental requisites of due process. In this light, the NLRC, like the labor arbiter, is authorized to decide cases based on the position papers and other documents submitted, without resorting to the technical rules of evidence.[68] Verily, Respondent NLRC noted several documentary evidence sufficient to arrive at a just decision. Indeed, the evidence on record clearly supports the conclusion of the labor arbiter that the petitioners were employees of respondent, and that they were illegally dismissed.[69]

The NLRC points to conflicts and inconsistencies in the evidence on record. We are not convinced. These alleged inconsistencies are too flimsy and too tenuous to preclude a just decision. The finding that Juanito Costales, Jr. was an employee of respondent was allegedly inconsistent with his admission that he was the owner of Carcado Contracting Services. As earlier observed, the inconsistency is irrelevant. Juan Costales, Jr. was an employee of Corfarm. Owning this alleged outfit is not inconsistent with such employment. The NLRC also questioned the amount of the employees compensation. In one instance, the workers stated that they were receiving P45.00 per days work of eight hours. In another, they claimed that they were paid P0.12 per sack or cavan. These allegedly differ from their allegation that Corfarm used to be obliged to pay P57.00 per days earning. The alleged inconsistencies are more apparent than real. Records reveal that the P57 was the promised compensation; however, there was an unauthorized deduction of P12; thus, the amount of P45 per day.[70] The claim of P0.12 per sack or cavan is the basic computation of how workers or haulers earn their wage for the day.[71]In any event, the alleged inconsistencies do not affect or diminish the established fact that petitioners members were regular employees who were illegally dismissed.

Why Respondent NLRC refused to rule directly on the appeal escapes us. The remand of a case or an issue to the labor arbiter for further proceedings is

unnecessary, considering that the NLRC was in a position to resolve the dispute based on the records before it and particularly where the ends of justice would be served thereby.[72]Remanding the case would needlessly delay the resolution of the case which has been pending since 1992.[73] As already observed, the evidence on record clearly supports the findings of the labor arbiter.

Pursuant to the doctrine that this Court has a duty to settle, whenever possible, the entire controversy in a single proceeding, leaving no root or branch to bear the seeds of future litigation, we now resolve all issues.[74]

It is axiomatic that in illegal dismissal cases, the employer always has the burden of proof,[75] and his failure to discharge this duty results in a finding that the dismissal was unjustified.[76] Having defaulted from filing its position paper, Respondent Corfarm is deemed to have waived its right to present evidence and counter the allegations of petitioners members.

In the same light, we sustain the labor arbiters holding in respect of unfair labor practice.[77] As ruled by Labor Arbiter Rolando D. Gambito:[78]

The last issue: Instead of sitting down with the individual complainants or the union officers to discuss their demands, respondents resorted to mass lay-off of all the members of the union and replaced them with outsiders. This is clearly a case of union busting which Art. 248 of the Labor Code prohibits. Art. 248 provides that It shall be unlawful for an employer to commit any of the following unfair labor practice (a) To interfere with, restrain or coerce employees in the exercise of their right to self-organization; (b) x x x (c) To contract out service or functions being performed by union members when such will interfere with, restrain or coerce employees in the exercise of their rights to self-organization.

In view of recent jurisprudence,[79] we are correcting some items in the labor arbiters decision. The thirteenth month pay awarded should be computed for each year of service from the time each employee was hired up to the date of his actual reinstatement. The same computation applies to the award of the service incentive leave[80] and underpaid wages. Each employee is to be paid the remaining underpaid wages from the date of his or her hiring in accordance with the then prevailing wage legislations.Likewise, a refund of P12 shall be computed for each day of service of each employee, to be reckoned from the date such employee was hired. The damages awarded should be sustained because the employer acted in bad faith.[81] Back wages are to be computed from the date of dismissal up to the date of actual reinstatement without any deductions or conditions. This is in consonance with Fernandez, et al. vs. National Labor Relations Commission:[82]

x x x Accordingly, the award to petitioners of backwages for three years should be modified in accordance with Article 279 of the Labor Code, as amended by R.A. 6715, by giving them full backwages without conditions and limitations, the dismissals having occurred after the effectivity of the amendatory law on March 21, 1989.Thus, the Court held in Bustamante:

The clear legislative intent of the amendment in Rep. Act No. 6715 is to give more benefits to workers than was previously given them under the Mercury Drugrule or the deduction of earnings elsewhere rule. Thus, a closer adherence to the legislative policy behind Rep. Act No. 6715 points to full backwages as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal.

WHEREFORE, both petitions are GRANTED. In G.R. No. 113542, Respondent Laguesmas Orders dated January 4, 1994 and January 27, 1994 are REVERSED and SET ASIDE; whereas his Order dated September 7, 1993 is REINSTATED. In G.R. No. 114911, Respondent NLRCs Resolutions promulgated on February 16, 1994 and March 28, 1994 are likewise REVERSED AND SET ASIDE. The Labor Arbiters decision dated September 14, 1993 is reinstated with MODIFICATIONS as set out in this Decision.Respondent NLRC is ORDERED to COMPUTE the monetary benefits awarded in accordance with this Decision and to submit its compliance thereon within thirty days from notice of this Decision.

SO ORDERED.

FIRST DIVISION

[G.R. No. 120969. January 22, 1998]

ALEJANDRO MARAGUINOT, JR. and PAULINO ENERO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) composed of Presiding Commissioner RAUL T. AQUINO, Commissioner ROGELIO I. RAYALA and Commissioner VICTORIANO R. CALAYCAY (Ponente), VIC DEL ROSARIO and VIVA FILMS, respondents.

D E C I S I O N

DAVIDE, JR., J.:

By way of this special civil action for certiorari under Rule 65 of the Rules of Court, petitioners seek to annul the 10 February 1995 Decision[1] of the National Labor Relations Commission (hereafter NLRC), and its 6 April 1995 Resolution [2] denying the motion to reconsider the former in NLRC-NCR-CA No. 006195-94. The decision reversed that of the Labor Arbiter in NLRC-NCR-Case No. 00-07-03994-92.

The parties present conflicting sets of facts.

Petitioner Alejandro Maraguinot, Jr. maintains that he was employed by private respondents on 18 July 1989 as part of the filming crew with a salary of P375.00 per week. About four months later, he was designated Assistant Electrician with a weekly salary of P400.00, which was increased to P450.00 in May 1990. In June 1991, he was promoted to the rank of Electrician with a weekly salary of P475.00, which was increased to P593.00 in September 1991.

Petitioner Paulino Enero, on his part, claims that private respondents employed him in June 1990 as a member of the shooting crew with a weekly salary of P375.00, which was increased to P425.00 in May 1991, then to P475.00 on 21 December 1991.[3]

Petitioners tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Viva Films warehouse, assisting in the fixing of the lighting system, and performing other tasks that the cameraman and/or director may assign.[4]

Sometime in May 1992, petitioners sought the assistance of their supervisor, Mrs. Alejandria Cesario, to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. In June 1992, Mrs. Cesario informed petitioners that Mr. Vic del Rosario would agree to increase their salary only if they signed a blank employment contract. As petitioners refused to sign, private respondents forced Enero to go on leave in June 1992, then refused to take him back when he reported for work on 20 July 1992. Meanwhile, Maraguinot was dropped from the company payroll from 8 to 21 June 1992, but was returned on 22 June 1992. He was again asked to sign a blank employment contract, and when he still refused, private respondents terminated his services on 20 July 1992.[5] Petitioners thus sued for illegal dismissal[6] before the Labor Arbiter.

On the other hand, private respondents claim that Viva Films (hereafter VIVA) is the trade name of Viva Productions, Inc., and that it is primarily engaged in the distribution and exhibition of movies -- but not in the business of making movies; in the same vein, private respondent Vic del Rosario is merely an executive producer, i.e., the financier who invests a certain sum of money for the production of movies distributed and exhibited by VIVA.[7]

Private respondents assert that they contract persons called producers -- also referred to as associate producers[8] -- to produce or make movies for private respondents; and contend that petitioners are project employees of the associate producers who, in turn, act as independent contractors. As such, there is no employer-employee relationship between petitioners and private respondents.

Private respondents further contend that it was the associate producer of the film Mahirap Maging Pogi, who hired petitioner Maraguinot. The movie shot from 2 July up to 22 July 1992, and it was only then that Maraguinot was released upon payment of his last salary, as his services were no longer needed. Anent petitioner Enero, he was hired for the movie entitled Sigaw ng Puso, later re-titled Narito ang Puso. He went on vacation on 8 June 1992, and by the time he reported for work on 20 July 1992, shooting for the movie had already been completed.[9]

After considering both versions of the facts, the Labor Arbiter found as follows:

On the first issue, this Office rules that complainants are the employees of the respondents. The producer cannot be considered as an independent contractor but should be considered only as a labor-only contractor and as such, acts as a mere agent of the real employer, the herein respondents. Respondents even failed to name and specify who are the producers. Also, it is an admitted fact that the complainants received their salaries from the respondents. The case cited by the respondents, Rosario Brothers, Inc. vs.Ople, 131 SCRA 72 does not apply in this case.

It is very clear also that complainants are doing activities which are necessary and essential to the business of the respondents, that of movie-making. Complainant Maraguinot worked as an electrician while complainant Enero worked as a crew [member].[10]

Hence, the Labor Arbiter, in his decision of 20 December 1993, decreed as follows:

WHEREFORE, judgment is hereby rendered declaring that complainants were illegally dismissed.

Respondents are hereby ordered to reinstate complainants to their former positions without loss [of] seniority rights and pay their backwages starting July 21, 1992 to December 31, 1993 temporarily computed in the amount of P38,000.00 for complainant Paulino Enero and P46,000.00 for complainant Alejandro Maraguinot, Jr. and thereafter until actually reinstated.

Respondents are ordered to pay also attorneys fees equivalent to ten (10%) and/or P8,400.00 on top of the award.[11]

Private respondents appealed to the NLRC (docketed as NLRC NCR-CA No. 006195-94). In its decision[12] of 10 February 1995, the NLRC found the following circumstances of petitioners work clearly established:

1. Complainants [petitioners herein] were hired for specific movie projects and their employment was co-terminus with each movie project the completion/termination of which are pre-determined, such fact being made known to complainants at the time of their engagement.

x x x

2. Each shooting unit works on one movie project at a time. And the work of the shooting units, which work independently from each other, are not continuous in nature but depends on the availability of movie projects.

3. As a consequence of the non-continuous work of the shooting units, the total working hours logged by complainants in a month show extreme variations... For instance, complainant Maraguinot worked for only 1.45 hours in June 1991 but logged a total of 183.25 hours in January 1992. Complainant Enero logged a total of only 31.57 hours in September 1991 but worked for 183.35 hours the next month, October 1991.

4. Further shown by respondents is the irregular work schedule of complainants on a daily basis. Complainant Maraguinot was supposed to report on 05 August 1991 but reported only on 30 August 1991, or a gap of 25 days. Complainant Enero worked on 10 September 1991 and his next scheduled working day was 28 September 1991, a gap of 18 days.

5. The extremely irregular working days and hours of complainants work explain the lump sum payment for complainants services for each movie project. Hence, complainants were paid a standard weekly salary regardless of the number of working days and hours they logged in. Otherwise, if the principle of no work no pay was strictly applied, complainants earnings for certain weeks would be very negligible.

6. Respondents also alleged that complainants were not prohibited from working with such movie companies like Regal, Seiko and FPJ Productions whenever they are not working for the independent movie producers engaged by respondents... This allegation was never rebutted by complainants and should be deemed admitted.

The NLRC, in reversing the Labor Arbiter, then concluded that these circumstances, taken together, indicated that complainants (herein petitioners) were project employees.

After their motion for reconsideration was denied by the NLRC in its Resolution[13] of 6 April 1995, petitioners filed the instant petition, claiming that the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in: (1) finding that petitioners were project employees; (2) ruling that petitioners were not illegally dismissed; and (3) reversing the decision of the Labor Arbiter.

To support their claim that they were regular (and not project) employees of private respondents, petitioners cited their performance of activities that were necessary or desirable in the usual trade or business of private respondents and added that their work was continuous, i.e., after one project was completed they were assigned to another project. Petitioners thus considered themselves part of a work pool from which private respondents drew workers for assignment to different projects. Petitioners lamented that there was no basis for the NLRCs conclusion that they were project employees, while the associate producers were independent contractors; and thus reasoned that as regular employees, their dismissal was illegal since the same was premised on a false cause, namely, the completion of a project, which was not among the causes for dismissal allowed by the Labor Code.

http://sc.judiciary.gov.ph/jurisprudence/1998/jan1998/120969.htm#_edn13













Private respondents reiterate their version of the facts and stress that their evidence supports the view that petitioners are project employees; point to petitioners irregular work load and work schedule; emphasize the NLRCs finding that petitioners never controverted the allegation that they were not prohibited from working with other movie companies; and ask that the facts be viewed in the context of the peculiar characteristics of the movie industry.

The Office of the Solicitor General (OSG) is convinced that this petition is improper since petitioners raise questions of fact, particularly, the NLRCs finding that petitioners were project employees, a finding supported by substantial evidence; and submits that petitioners reliance on Article 280 of the Labor Code to support their contention that they should be deemed regular employees is misplaced, as said section merely distinguishes between two types of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits.

The OSG likewise rejects petitioners contention that since they were hired not for one project, but for a series of projects, they should be deemed regular employees. CitingMamansag v. NLRC,[14] the OSG asserts that what matters is that there was a time-frame for each movie project made known to petitioners at the time of their hiring. In closing, the OSG disagrees with petitioners claim that the NLRCs classification of the movie producers as independent contractors had no basis in fact and in law, since, on the contrary, the NLRC took pains in explaining its basis for its decision.

As regards the propriety of this action, which the Office of the Solicitor General takes issue with, we rule that a special civil action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the NLRC acted in total disregard of evidence material to or decisive of the controversy.[15] In the instant case, petitioners allege that the NLRCs conclusions have no basis in fact and in law, hence the petition may not be dismissed on procedural or jurisdictional grounds.

The judicious resolution of this case hinges upon, first, the determination of whether an employer-employee relationship existed between petitioners and private respondents or any one of private respondents. If there was none, then this petition has no merit; conversely, if the relationship existed, then petitioners could have been unjustly dismissed.

A related question is whether private respondents are engaged in the business of making motion pictures. Del Rosario is necessarily engaged in such business as he finances the production of movies. VIVA, on the other hand, alleges that it does not make movies, but merely distributes and exhibits motion pictures. There being no further proof to this effect, we cannot rely on this self-serving denial. At any rate, and as will be discussed below, private respondents evidence even supports the view that VIVA is engaged in the business of making movies.

We now turn to the critical issues. Private respondents insist that petitioners are project employees of associate producers who, in turn, act as independent contractors. It is settled that the contracting out of labor is allowed only in case of job contracting. Section 8, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code describes permissible job contracting in this wise:

Sec. 8. Job contracting. -- There is job contracting permissible under the Code if the following conditions are met:

(1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and

(2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business.

Assuming that the associate producers are job contractors, they must then be engaged in the business of making motion pictures. As such, and to be a job contractor under the preceding description, associate producers must have tools, equipment, machinery, work premises, and other materials necessary to make motion pictures.However, the associate producers here have none of these. Private respondents evidence reveals that the movie-making equipment are supplied to the producers and owned by VIVA. These include generators,[16] cables and wooden platforms,[17] cameras and shooting equipment;[18] in fact, VIVA likewise owns the trucks used to transport the equipment.[19] It is thus clear that the associate producer merely leases the equipment from VIVA.[20] Indeed, private respondents Formal Offer of Documentary Evidence stated one of the purposes of Exhibit 148 as:

To prove further that the independent Producers rented Shooting Unit No. 2 from Viva to finish their films.[21]

While the purpose of Exhibits 149, 149-A and 149-B was:

[T]o prove that the movies of Viva Films were contracted out to the different independent Producers who rented Shooting Unit No. 3 with a fixed budget and time-frame of at least 30 shooting days or 45 days whichever comes first.[22]

Private respondents further narrated that VIVAs generators broke down during petitioners last movie project, which forced the associate producer concerned to rent generators, equipment and crew from another company.[23] This only shows that the associate producer did not have substantial capital nor investment in the form of tools, equipment and other materials necessary for making a movie. Private respondents in effect admit that their producers, especially petitioners last producer, are not engaged in permissible job contracting.

If private respondents insist that their associate producers are labor contractors, then these producers can only be labor-only contractors, defined by the Labor Code as follows:

Art. 106. Contractor or subcontractor.-- x x x

There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such 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.

A more detailed description is provided by Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code:

Sec. 9. Labor-only contracting. -- (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person:

(1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and

(2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed.

(b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary 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.

(c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers.

As labor-only contracting is prohibited, the law considers the person or entity engaged in the same a mere agent or intermediary of the direct employer. But even by the preceding standards, the associate producers of VIVA cannot be considered labor-only contractors as they did not supply, recruit nor hire the workers. In the instant case, it was Juanita Cesario, Shooting Unit Supervisor and an employee of VIVA, who recruited crew members from an available group of free-lance workers which includes the complainants Maraguinot and Enero.[24] And in their Memorandum, private respondents declared that the associate producer hires the services of... 6) camera crew which includes (a) cameraman; (b) the utility crew; (c) the technical staff; (d) generator man and electrician; (e) clapper; etc....[25] This clearly showed that the associate producers did not supply the workers required by the movie project.

The relationship between VIVA and its producers or associate producers seems to be that of agency,[26] as the latter make movies on behalf of VIVA, whose business is to make movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and VIVA, with the latter being the direct employer.

The employer-employee relationship between petitioners and VIVA can further be established by the control test. While four elements are usually considered in














determining the existence of an employment relationship, namely: (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 employees conduct, the most important element is the employers control of the employees conduct, not only as to the result of the work to be done but also as to the means and methods to accomplish the same.[27] These four elements are present here. In their position paper submitted to the Labor Arbiter, private respondents narrated the following circumstances:

[T]he PRODUCER has to work within the limits of the budget he is given by the company, for as long as the ultimate finish[ed] product is acceptable to the company...

To ensure that quality films are produced by the PRODUCER who is an independent contractor, the company likewise employs a Supervising PRODUCER, a Project accountant and a Shooting unit supervisor. The Companys Supervising PRODUCER is Mr. Eric Cuatico, the Project accountant varies from time to time, and the Shooting Unit Supervisor is Ms. Alejandria Cesario.

The Supervising PRODUCER acts as the eyes and ears of the company and of the Executive Producer to monitor the progress of the PRODUCERs work accomplishment. He is there usually in the field doing the rounds of inspection to see if there is any problem that the PRODUCER is encountering and to assist in threshing out the same so that the film project will be finished on schedule. He supervises about 3 to 7 movie projects simultaneously [at] any given time by coordinating with each film PRODUCER. The Project Accountant on the other hand assists the PRODUCER in monitoring the actual expenses incurred because the company wants to insure that any additional budget requested by the PRODUCER is really justified and warranted especially when there is a change of original plans to suit the tast[e] of the company on how a certain scene must be presented to make the film more interesting and more commercially viable. (emphasis ours)

VIVAs control is evident in its mandate that the end result must be a quality film acceptable to the company. The means and methods to accomplish the result are likewise controlled by VIVA, viz., the movie project must be finished within schedule without exceeding the budget, and additional expenses must be justified; certain scenes are subject to change to suit the taste of the company; and the Supervising Producer, the eyes and ears of VIVA and del Rosario, intervenes in the movie-making process by assisting the associate producer in solving problems encountered in making the film.

It may not be validly argued then that petitioners are actually subject to the movie directors control, and not VIVAs direction. The director merely instructs petitioners on how to better comply with VIVAs requirements to ensure that a quality film is completed within schedule and without exceeding the budget. At bottom, the director is akin to a supervisor who merely oversees the activities of rank-and-file employees with control ultimately resting on the employer.

Moreover, appointment slips [28] issued to all crew members state:

During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management.

The words superiors and Top Management can only refer to the superiors and Top Management of VIVA. By commanding crew members to observe the rules and regulations promulgated by VIVA, the appointment slips only emphasize VIVAs control over petitioners.

Aside from control, the element of selection and engagement is likewise present in the instant case and exercised by VIVA. A sample appointment slip offered by private respondents to prove that members of the shooting crew except the driver are project employees of the Independent Producers[29] reads as follows:

VIVA PRODUCTIONS, INC.

16 Sct. Albano St.

Diliman, Quezon City

PEDRO NICOLAS Date: June 15, 1992

__________________

APPOINTMENT SLIP

You are hereby appointed as SOUNDMAN for the film project entitled MANAMBIT. This appointment shall be effective upon the commencement of the said project and shall continue to be effective until the completion of the same.

For your services you shall receive the daily/weekly/monthly compensation of P812.50.

During the term of this appointment you shall comply with the duties and responsibilities of your position as well as observe the rules and regulations promulgated by your superiors and by Top Management.

Very truly yours,

(an illegible signature)

CONFORME:

___________________

Name of appointee

Signed in the presence of:

_____________________

Notably, nowhere in the appointment slip does it appear that it was the producer or associate producer who hired the crew members; moreover, it is VIVAs corporate name which appears on the heading of the appointment slip. What likewise tells against VIVA is that it paid petitioners salaries as evidenced by vouchers, containing VIVAs letterhead, for that purpose.[30]

All the circumstances indicate an employment relationship between petitioners and VIVA alone, thus the inevitable conclusion is that petitioners are employees only of VIVA.

The next issue is whether petitioners were illegally dismissed. Private respondents contend that petitioners were project employees whose employment was automatically terminated with the completion of their respective projects. Petitioners assert that they were regular employees who were illegally dismissed.

It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a work pool;[31] and, while petitioners were initially hired possibly as project employees, they had attained the status of regular employees in view of VIVAs conduct.

A project employee or a member of a work pool may acquire the status of a regular employee when the following concur:

1) There is a continuous rehiring of project employees even after cessation of a project;[32] and

2) The tasks performed by the alleged project employee are vital, necessary and indispensable to the usual business or trade of the employer.[33]

However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment.[34]

In the instant case, the evidence on record shows that petitioner Enero was employed for a total of two (2) years and engaged in at least eighteen (18) projects, while petitioner Maraguinot was employed for some three (3) years and worked on at least twenty-three (23) projects.[35] Moreover, as petitioners tasks involved, among other chores, the loading, unloading and arranging of movie equipment in the shooting area as instructed by the cameramen, returning the equipment to the Viva Films warehouse, and assisting in the fixing of the lighting system, it may not be gainsaid that these tasks were vital, necessary and indispensable to the usual business or trade of the employer.As regards the underscored phrase, it has been held that this is ascertained by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety.[36]

A recent pronouncement of this Court anent project or work pool employees who had attained the status of regular employees proves most instructive:

The denial by petitioners of the existence of a work pool in the company because their projects were not continuous is amply belied by petitioners themselves who admit that: xxx











A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of coddling labor at the expense of capital and at the same time enables the workers to attain the status of regular employees. Clearly, the continuous rehiring of the same set of employees within the framework of the Lao Group of Companies is strongly indicative that private respondents were an integral part of a work pool from which petitioners drew its workers for its various projects.

In a final attempt to convince the Court that private respondents were indeed project employees, petitioners point out that the workers were not regularly maintained in the payroll and were free to offer their services to other companies when there were no on-going projects. This argument however cannot defeat the workers status of regularity.We apply by analogy the case of Industrial-Commercial-Agricultural Workers Organization v. CIR [16 SCRA 562, 567-68 (1966)] which deals with regular seasonal employees.There we held: xxx

Truly, the cessation of construction activities at the end of every project is a foreseeable suspension of work. Of course, no compensation can be demanded from the employer because the stoppage of operations at the end of a project and before the start of a new one is regular and expected by both parties to the labor relations. Similar to the case of regular seasonal employees, the employment relation is not severed by merely being suspended. [citing Manila Hotel Co. v. CIR , 9 SCRA 186 (1963)] The employees are, strictly speaking, not separated from services but merely on leave of absence without pay until they are reemployed. Thus we cannot affirm the argument that non-payment of salary or non-inclusion in the payroll and the opportunity to seek other employment denote project employment.[37] (underscoring supplied)

While Lao admittedly involved the construction industry, to which Policy Instruction No. 20/Department Order No. 19[38] regarding work pools specifically applies, there seems to be no impediment to applying the underlying principles to industries other than the construction industry.[39] Neither may it be argued that a substantial distinction exists between the projects undertaken in the construction industry and the motion picture industry. On the contrary, the raison d' etre of both industries concern projects with a foreseeable suspension of work.

At this time, we wish to allay any fears that this decision unduly burdens an employer by imposing a duty to re-hire a project employee even after completion of the project for which he was hired. The import of this decision is not to impose a positive and sweeping obligation upon the employer to re-hire project employees. What this decision merely accomplishes is a judicial recognition of the employment status of a project or work pool employee in accordance with what is fait accompli, i.e., the continuous re-hiring by the employer of project or work pool employees who perform tasks necessary or desirable to the employers usual business or trade. Let it not be said that this decision coddles labor, for as Lao has ruled, project or work pool employees who have gained the status of regular employees are subject to the no work-no pay principle, to repeat:

A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of coddling labor at the expense of capital and at the same time enables the workers to attain the status of regular employees.

The Courts ruling here is meant precisely to give life to the constitutional policy of strengthening the labor sector,[40] but, we stress, not at the expense of management. Lest it be misunderstood, this ruling does not mean that simply because an employee is a project or work pool employee even outside the construction industry, he is deemed, ipso jure, a regular employee. All that we hold today is that once a project or work pool employee has been: (1) continuously, as opposed to intermittently, re-hired by the same employer for the same tasks or nature of tasks; and (2) these tasks are vital, necessary and indispensable to the usual business or trade of the employer, then the employee must be deemed a regular employee, pursuant to Article 280 of the Labor Code and jurisprudence. To rule otherwise would allow circumvention of labor laws in industries not falling within the ambit of Policy Instruction No. 20/Department Order No. 19, hence allowing the prevention of acquisition of tenurial security by project or work pool employees who have already gained the status of regular employees by the employers conduct.

In closing then, as petitioners had already gained the status of regular employees, their dismissal was unwarranted, for the cause invoked by private respondents for petitioners dismissal, viz., completion of project, was not, as to them, a valid cause for dismissal under Article 282 of the Labor Code. As such, petitioners are now entitled to back wages and reinstatement, without loss of seniority rights and

other benefits that may have accrued.[41] Nevertheless, following the principles of suspension of work and no pay between the end of one project and the start of a new one, in computing petitioners back wages, the amounts corresponding to what could have been earned during the periods from the date petitioners were dismissed until their reinstatement when petitioners respective Shooting Units were not undertaking any movie projects, should be deducted.

Petitioners were dismissed on 20 July 1992, at a time when Republic Act No. 6715 was already in effect. Pursuant to Section 34 thereof which amended Section 279 of the Labor Code of the Philippines and Bustamante v. NLRC,[42] petitioners are entitled to receive full back wages from the date of their dismissal up to the time of their reinstatement, without deducting whatever earnings derived elsewhere during the period of illegal dismissal, subject, however, to the above observations.

WHEREFORE, the instant petition is GRANTED. The assailed decision of the National Labor Relations Commission in NLRC NCR CA No. 006195-94 dated 10 February 1995, as well as its Resolution dated 6 April 1995, are hereby ANNULLED and SET ASIDE for having been rendered with grave abuse of discretion, and the decision of the Labor Arbiter in NLRC NCR Case No. 00-07-03994-92 is REINSTATED, subject, however, to the modification above mentioned in the computation of back wages.

No pronouncement as to costs.

SO ORDERED.

THIRD DIVISION

[G.R. No. 129076. November 25, 1998]

ORLANDO FARM GROWERS ASSOCIATION/GLICERIO AOVER, petitioner, vs. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (FIFTH DIVISION), ANTONIO PAQUIT, ESTHER BONGGOT, FRANCISCO BAUG, LEOCADIO ORDONO, REBECCA MOREN, MARCELINA HONTIVEROS, MARTIN ORDONO, TITO ORDONO, FE ORDONO, ERNIE COLON, EUSTIQUIO GELDO, DANNY SAM, JOEL PIAMONTE, FEDERICO PASTOLERO, VIRGINIA BUSANO, EDILMIRO ALDION, EUGENIO BETICAN, JR. and BERNARDO OPERIO, respondents.

D E C I S I O N

ROMERO, J.:

It is a settled doctrine that an employer-employee relationship can be deduced from the existence of the following elements: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct.

The principal issue to be resolved in the instant petition is whether or not an unregistered association may be an employer independent of the respective members it represents.

The evidence reveals the ensuing facts:

Petitioner Orlando Farms Growers Association, with co-petitioner Glicerio Aover as its President, is an association of landowners engaged in the production of export quality bananas located in Kinamayan, Sto. Tomas, Davao del Norte, established for the sole purpose of dealing collectively with Stanfilco on matters concerning technical services, canal maintenance, irrigation and pest control, among others. Respondents, on the other hand, were hired as farm workers by several member-landowners but, nonetheless, were made to perform functions as packers and harvesters in the plantation of petitioner association.

After respondents were dismissed on various dates from January 8, 1993 to July 30, 1994, several complaints were filed against petitioner for illegal dismissal and monetary benefits. Based on similar grounds, the same were consolidated in the office of Labor Arbiter Newton R. Sancho who, in a decision dated September 6, 1995, ordered their reinstatement, viz:

"WHEREFORE, judgment is hereby rendered declaring the dismissal of the 20 above-named complainants ILLEGAL, and ordering respondents Orlando Farms Growers Association/Glicerio Anover to REINSTATE them immediately to their former or equivalent positions, and to PAY individual complainants their respective backwages and other benefits (wage differentials, 13th month pay and holiday pay) appearing opposite their names above set forth, including moral damages and attorney's fees, in the total amount of P1,047,720.92 only.







All other claims are dismissed for lack of merit.

As becoming a collective association, respondents liabilities to complainants are joint and solidary, with its responsible officers.

The case of Loran Paquit and Lovilla Dorlones[1] is dropped for having been amicably settled.

In case of appeal, backwages and other benefits shall accrue but in no case exceeding 3 years, without any qualification or deduction.

SO ORDERED."[2]

On appeal, the National Labor Relations Commission (NLRC) affirmed the same in toto in a decision dated December 26, 1996. Its motion for reconsideration having been denied on February 25, 1997, petitioner filed the instant petition for cetiorari.

Petitioner alleged that the NLRC erred in finding that respondents were its employees and not of the individual landownners which fact can easily be deduced from the payments made by the latter of respondent's Social Security System (SSS) contributions. Moreover, it could have never exercised the power of control over them with regard to the manner and method by which the work was to be accomplished, which authority remain vested with the landowners despite becoming members thereof.

The arguments adduced before us do not warrant the nullification of the findings made by the Labor Arbiter and the NLRC as the determination of the existence of an employer-employee relationship between the party-litigants, being a question of fact, is amply supported by substantial evidence, as can be gathered from a perfunctory reading, not only of the pleadings submitted, but from the assailed decision, as well. Thus, the authority of this Court to review the findings of the NLRC is limited to allegations of lack of jurisdiction or grave abuse of discretion.

The contention that petitioner, being an unregistered association and having been formed solely to serve as an effective medium for dealing collectively with Stanfilco, does not exist in law and, therefore, cannot be considered an employer, is misleading. This assertion can easily be dismissed by reference to Article 212(e) of the Labor Code, as amended, which defines an employer as any person acting in the interest of an employer, directly or indirectly. Following a careful scrutiny of the said provision, the Court concludes that the law does not require an employer to be registered before he may come within the purview of the Labor Code, consistent with the established rule in statutory construction that when the law does not distinguish, we should not distinguish. To do otherwise would bring about a situation whereby employees are denied, not only redress of their grievances, but, more importantly, the protection and benefits accorded to them by law if their employer happens to be an unregistered association.

To reiterate, as held in the case of Filipinas Broacasting Network, Inc. v. NLRC,[3] the following are generally considered in the determination of the existence of an employer-employee relationship: (1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control; of these four, the last one being the most important.

In the instant case, the following circumstances which support the existence of employer-employee relations cannot be denied. During the subsistence of the association, several circulars and memoranda were issued concerning, among other things, absences without formal request, loitering in the work area and disciplinary measures with which every worker is enjoined to comply. Furthermore, the employees were issued identification cards which the Court, in the case of Domasig v. NLRC,[4] construed, not only as a security measure but mainly to identify the holder as a bonafide employee of the firm. However, what makes the relationship explicit is the power of the petitioner to enter into compromise agreements involving money claims filed by three employees, namely: Lorna Paquit, Lovella Dorlones and Jasmine Espanola. If petitioner's disclaimer were to believed, what benefit would accrue to it in settling an employer-employee dispute to which it allegedly lay no claim?

In spite of the overwhelming evidence sufficient to justify a conclusion that respondents were indeed employees of petitioner, the latter, nevertheless, maintain the preposterous claim that the ID card, circulars and memoranda were issued merely to facilitate the efficient use of common resources, as well as to promote uniform rules in the work establishment. On this score, we defer to the observations made by the NLRC when it ruled that, while the original purpose of the formation of the association was merely to provide the landowners a unified voice in dealing with Stanfilco, petitioner however exceeded its avowed intentions when its subsequent actions reenforced only too clearly its admitted role of employer. As reiterated all too often, factual findings of the NLRC, particularly when they coincide with those of the Labor Arbiter, are accorded respect, even finality, and will not be disturbed for as long as such findings are supported by substantial evidence.[5]

Prescinding from the foregoing, we now address the issue of whether or not petitioner had a valid ground to dismiss respondents from their respective employment.

It is settled that in termination disputes, the employer bears the burden of proving that the dismissal is for just cause, failing which it would mean that the dismissal is not justified and the employer is entitled to reinstatement.[6] The dismissal of employees must be made within the parameters of the law and pursuant to the basic tenets of equity, justice and fair play.[7] In Brahm Industries, Inc. v. NLRC,[8] the Court explained that there are two (2) facets of valid termination of employment: (a) the legality of the act of dismissal, i.e., the dismissal must be under any of the just causes provided under Art. 282[9] of the Labor Code; and (b) the legality of the manner of dismissal, which means that there must be observance of the requirements of due process, otherwise known as the two-notice rule. Thus, "the employer is required to furnish the employee with a written notice containing a statement of the cause for termination and to afford said employee ample opportunity to be heard and to defend himself with the assistance of his representative, if he so desires. The employer is also required to notify the worker in writing of the decision to dismiss him, stating clearly the reasons therefore."[10]

In the instant case, petitioner severed employment relations when it whimsically dismissed the respondents in utter disregard of the safeguards underscored in the Constitution, as well as in the Labor Code. Petitioner failed to controvert the allegation that it was responsible for the dismissal of the employees. Instead of denying the same or otherwise imputing liability on its member-landowner by naming the employees allegedly in his employ, petitioner was silent on the issue and harped on the non-existence of employer-employee relationship between the parties, which contention we find to be tangential. However related the issue might seem, it would have been more relevant for the petitioner to have presented ample evidence before the NLRC and this Court to justify its exoneration from liability. Having failed in this respect, we deem it fatal to its defense.

For having been dismissed without a valid cause and for non-observance of the due process requirement, respondents, consistent with recent jurisprudence laid down in the case ofBustamante v. NLRC,[11] are entitled to receive full backwages from the date of their dismissal up to the time of their reinstatement. The order, therefore, of the labor arbiter limiting backwages to a period of three (3) years in the event of an appeal, is erroneous.

WHEREFORE, in view of the foregoing, the petition is hereby DISMISSED and the decision of the National Labor Relations Commission dated September 6, 1995 is AFFIRMED subject to the deletion of the award of moral damages and attorney's fees. The Court, however, is remanding this case to Labor Arbiter Newton R. Sancho to specify in the dispositive portion of his decision the names of the respondents and the amount that each is entitled to.

SO ORDERED.


Manila

SECOND DIVISION

G.R. No. 101761. March 24, 1993.

NATIONAL SUGAR REFINERIES CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION, (PACIWU) TUCP, respondents.

Jose Mario C. Bunag for petitioner.

The Solicitor General and the Chief Legal Officer, NLRC, for public respondent.

Zoilo V. de la Cruz for private respondent.

D E C I S I O N

REGALADO, J p:

The main issue presented for resolution in this original petition for certiorari is whether supervisory employees, as defined in Article 212 (m), Book V of the Labor Code, should be considered as officers or members of the managerial staff under Article 82,

http://sc.judiciary.gov.ph/jurisprudence/1998/nov1998/129076.htm#_edn11











Book III of the same Code, and hence are not entitled to overtime rest day and holiday pay.

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to Proclamation No. 50. 1 Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,, Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day Maintenance Supervisor and Motorpool Supervisor.

On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. The JE Program was designed to rationalized the duties and functions of all positions, reestablish levels of responsibility, and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility, training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees including the members of respondent union were granted salary adjustments and increases in benefits commensurate to their actual duties and functions.

We glean from the records that for about ten years prior to the JE Program, the members of respondent union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended. With the implementation of the JE Program, the following adjustments were made: (1) the members of respondent union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay prior to the JE Program, with the union members now enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rank-and-file employee; (3) longevity pay was increased on top of alignment adjustments; (4) they were entitled to increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for rest day/holiday work.

On May 11, 1990, petitioner NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery.

Two years after the implementation of the JE Program, specifically on June 20, 1990, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.

On January 7, 1991, Executive Labor Arbiter Antonio C. Pido rendered a decision 2 disposing as follows:

"WHEREFORE, premises considered, respondent National Sugar refineries Corporation is hereby directed to —

1. pay the individual members of complainant union the usual overtime pay, rest day pay and holiday pay enjoyed by them instead of the P100.00 special allowance which was implemented on June 11, 1988; and

2. pay the individual members of complainant union the difference in money value between the P100.00 special allowance and the overtime pay, rest day pay and holiday pay that they ought to have received from June 1, 1988.

All other claims are hereby dismissed for lack of merit.

SO ORDERED."

In finding for the members therein respondent union, the labor ruled that the along span of time during which the benefits were being paid to the supervisors has accused the payment thereof to ripen into contractual obligation; at the complainants cannot be estopped from questioning the validity of the new compensation package despite the fact that they have been receiving the benefits therefrom, considering that respondent union was formed only a year after the implementation of the Job Evaluation Program, hence there was no way for the individual supervisors to express their collective

response thereto prior to the formation of the union; and the comparative computations presented by the private respondent union showed that the P100.00 special allowance given NASUREFCO fell short of what the supervisors ought to receive had the overtime pay rest day pay and holiday pay not been discontinued, which arrangement, therefore, amounted to a diminution of benefits.

On appeal, in a decision promulgated on July 19, 1991 by its Third Division, respondent National Labor Relations Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial employees, as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay. Respondent NLRC declared that these supervisory employees are merely exercising recommendatory powers subject to the evaluation, review and final action by their department heads; their responsibilities do not require the exercise of discretion and independent judgment; they do not participate in the formulation of management policies nor in the hiring or firing of employees; and their main function is to carry out the ready policies and plans of the corporation. 3 Reconsideration of said decision was denied in a resolution of public respondent dated August 30, 1991. 4

Hence this petition for certiorari, with petitioner NASUREFCO asseverating that public respondent commission committed a grave abuse of discretion in refusing to recognized the fact that the members of respondent union are members of the managerial staff who are not entitled to overtime, rest day and holiday pay; and in making petitioner assume the "double burden" of giving the benefits due to rank-and-file employees together with those due to supervisors under the JE Program.

We find creditable merit in the petition and that the extraordinary writ of certiorari shall accordingly issue.

The primordial issue to be resolved herein is whether the members of respondent union are entitled to overtime, rest day and holiday pay. Before this can be resolved, however it must of necessity be ascertained first whether or not the union members, as supervisory employees, are to be considered as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code.

It is not disputed that the members of respondent union are supervisory employees, as defined employees, as defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads:

"(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the employer effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of those above definitions are considered rank-and-file employees of this Book."

Respondent NLRC, in holding that the union members are entitled to overtime, rest day and holiday pay, and in ruling that the latter are not managerial employees, adopted the definition stated in the aforequoted statutory provision.

Petitioner, however, avers that for purposes of determining whether or not the members of respondent union are entitled to overtime, rest day and holiday pay, said employees should be considered as "officers or members of the managerial staff" as defined under Article 82, Book III of the Labor Code on "Working Conditions and Rest Periods" and amplified in Section 2, Rule I, Book III of the Rules to Implement the Labor Code, to wit:

"Art. 82 Coverage. — The provisions of this title shall apply to employees in all establishments and undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in Appropriate regulations.

"As used herein, 'managerial employees' refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff." (Emphasis supplied.)

xxx xxx xxx

'Sec. 2. Exemption. — The provisions of this rule shall not apply to the following persons if they qualify for exemption under the condition set forth herein:

xxx xxx xxx

(b) Managerial employees, if they meet all of the following conditions, namely:

(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof:

(2) They customarily and regularly direct the work of two or more employees therein:

(3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight.

(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:

(1) The primary duty consists of the performance of work directly related to management policies of their employer;

(2) Customarily and regularly exercise discretion and independent judgment;

(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii) execute under general supervision special assignments and tasks; and

(4) Who do not devote more 20 percent of their hours worked in a work-week to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2), and above."

It is the submission of petitioner that while the members of respondent union, as supervisors, may not be occupying managerial positions, they are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to apply only to the provisions on Labor Relations, while the right of said employees to the questioned benefits should be considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff, as contemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules. In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and so forth, the union members are supervisory employees. In terms of working conditions and rest periods and entitlement to the questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto.

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its own rights which, as such, are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life, this Court has inclined more often than not toward the worker and upheld his cause in his conflicts with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. 5

This is one such case where we are inclined to tip the scales of justice in favor of the employer.

The question whether a given employee is exempt from the benefits of the law is a factual one dependent on the circumstances of the particular case, In determining whether an employee is within the terms of the statutes, the criterion is the character of the work performed, rather than the title of the employee's position. 6

Consequently, while generally this Court is not supposed to review the factual findings of respondent commission, substantial justice and the peculiar circumstances obtaining herein mandate a deviation from the rule.

A cursory perusal of the Job Value Contribution Statements 7 of the union members will readily show that these supervisory employees are under the direct supervision of their respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing, controlling communicating and in making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise responsible for the effective and efficient operation of their

respective departments. More specifically, their duties and functions include, among others, the following operations whereby the employee:

1) assists the department superintendent in the following:

a) planning of systems and procedures relative to department activities;

b) organizing and scheduling of work activities of the department, which includes employee shifting scheduled and manning complement;

c) decision making by providing relevant information data and other inputs;

d) attaining the company's set goals and objectives by giving his full support;

e) selecting the appropriate man to handle the job in the department; and

f) preparing annual departmental budget;

2) observes, follows and implements company policies at all times and recommends disciplinary action on erring subordinates;

3) trains and guides subordinates on how to assume responsibilities and become more productive;

4) conducts semi-annual performance evaluation of his subordinates and recommends necessary action for their development/advancement;

5) represents the superintendent or the department when appointed and authorized by the former;

6) coordinates and communicates with other inter and intra department supervisors when necessary;

7) recommends disciplinary actions/promotions;

8) recommends measures to improve work methods, equipment performance, quality of service and working conditions;

9) sees to it that safety rules and regulations and procedure and are implemented and followed by all NASUREFCO employees, recommends revisions or modifications to said rules when deemed necessary, and initiates and prepares reports for any observed abnormality within the refinery;

10) supervises the activities of all personnel under him and goes to it that instructions to subordinates are properly implemented; and

11) performs other related tasks as may be assigned by his immediate superior.

From the foregoing, it is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their primary duty consists of the performance of work directly related to management policies of their employer; (2) they customarily and regularly exercise discretion and independent judgment; (3) they regularly and directly assist the managerial employee whose primary duty consist of the management of a department of the establishment in which they are employed (4) they execute, under general supervision, work along specialized or technical lines requiring special training, experience, or knowledge; (5) they execute, under general supervision, special assignments and tasks; and (6) they do not devote more than 20% of their hours worked in a work-week to activities which are not directly and clearly related to the performance of their work hereinbefore described.

Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should be considered as officers and members of the managerial staff and are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday.

The distinction made by respondent NLRC on the basis of whether or not the union members are managerial employees, to determine the latter's entitlement to the questioned benefits, is misplaced and inappropriate. It is admitted that these union members are supervisory employees and this is one instance where the

nomenclatures or titles of their jobs conform with the nature of their functions. Hence, to distinguish them from a managerial employee, as defined either under Articles 82 or 212 (m) of the Labor Code, is puerile and in efficacious. The controversy actually involved here seeks a determination of whether or not these supervisory employees ought to be considered as officers or members of the managerial staff. The distinction, therefore, should have been made along that line and its corresponding conceptual criteria.

II. We likewise no not subscribe to the finding of the labor arbiter that the payment of the questioned benefits to the union members has ripened into a contractual obligation.

A. Prior to the JE Program, the union members, while being supervisors, received benefits similar to the rank-and-file employees such as overtime, rest day and holiday pay, simply because they were treated in the same manner as rank-and-file employees, and their basic pay was nearly on the same level as those of the latter, aside from the fact that their specific functions and duties then as supervisors had not been properly defined and delineated from those of the rank-and-file. Such fact is apparent from the clarification made by petitioner in its motion for reconsideration 8 filed with respondent commission in NLRC Case No. CA No. I-000058, dated August 16, 1991, wherein, it lucidly explained:

"But, complainants no longer occupy the same positions they held before the JE Program. Those positions formerly classified as 'supervisory' and found after the JE Program to be rank-and-file were classified correctly and continue to receive overtime, holiday and restday pay. As to them, the practice subsists.

"However, those whose duties confirmed them to be supervisory, were re-evaluated, their duties re-defined and in most cases their organizational positions re-designated to confirm their superior rank and duties. Thus, after the JE program, complainants cannot be said to occupy the same positions." 9

It bears mention that this positional submission was never refuted nor controverted by respondent union in any of its pleadings filed before herein public respondent or with this Court. Hence, it can be safely concluded therefrom that the members of respondent union were paid the questioned benefits for the reason that, at that time, they were rightfully entitled thereto. Prior to the JE Program, they could not be categorically classified as members or officers of the managerial staff considering that they were then treated merely on the same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive of voluntary employer practice, which cannot be now be unilaterally withdrawn by petitioner. To be considered as such, it should have been practiced over a long period of time, and must be shown to have been consistent and deliberate. 10

The test or rationale of this rule on long practice requires an indubitable showing that the employer agreed to continue giving the benefits knowingly fully well that said employees are not covered by the law requiring payment thereof. 11 In the case at bar, respondent union failed to sufficiently establish that petitioner has been motivated or is wont to give these benefits out of pure generosity.

B. It remains undisputed that the implementation of the JE Program, the members of private respondent union were re-classified under levels S-5 S-8 which were considered under the program as managerial staff purposes of compensation and benefits, that they occupied re-evaluated positions, and that their basic pay was increased by an average of 50% of their basic salary prior to the JE Program. In other words, after the JE Program there was an ascent in position, rank and salary. This in essence is a promotion which is defined as the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in salary. 12

Quintessentially, with the promotion of the union members, they are no longer entitled to the benefits which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by law requires prior compliance with the conditions set forth therein. With the promotion of the members of respondent union, they occupied positions which no longer met the requirements imposed by law. Their assumption of these positions removed them from the coverage of the law, ergo, their exemption therefrom.

As correctly pointed out by petitioner, if the union members really wanted to continue receiving the benefits which attach to their former positions, there was nothing to prevent them from refusing to accept their promotions and their corresponding benefits. As the sating goes by, they cannot have their cake and eat it too or, as petitioner suggests, they could not, as a simple matter of law and fairness, get the best of both worlds at the expense of NASUREFCO.

Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of management, provided it is done in good faith. In the case at bar,

private respondent union has miserably failed to convince this Court that the petitioner acted implementing the JE Program. There is no showing that the JE Program was intended to circumvent the law and deprive the members of respondent union of the benefits they used to receive.

Not so long ago, on this particular score, we had the occasion to hold that:

". . . it is the prerogative of the management to regulate, according to its discretion and judgment, all aspects of employment. This flows from the established rule that labor law does not authorize the substitution of the judgment of the employer in the conduct of its business. Such management prerogative may be availed of without fear of any liability so long as it is exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating on circumventing the rights of employees under special laws or valid agreement and are not exercised in a malicious, harsh, oppressive, vindictive or wanton manner or out of malice or spite." 13

WHEREFORE, the impugned decision and resolution of respondent National Labor Relations Commission promulgated on July 19, 1991 and August 30, 1991, respectively, are hereby ANNULLED and SET ASIDE for having been rendered and adopted with grave abuse of discretion, and the basic complaint of private respondent union is DISMISSED.


Manila

EN BANC

G.R. No. L-18353 July 31, 1963

SAN MIGUEL BREWERY, INC., petitioner, vs.DEMOCRATIC LABOR ORGANIZATION, ET AL., respondents.

Paredes, Poblador, Cruz and Nazareno for petitioner.Delfin N. Mercader for respondents.

BAUTISTA ANGELO, J.:

On January 27, 1955, the Democratic Labor Association filed complaint against the San Miguel Brewery, Inc. embodying 12 demands for the betterment of the conditions of employment of its members. The company filed its answer to the complaint specifically denying its material averments and answering the demands point by point. The company asked for the dismissal of the complaint.

At the hearing held sometime in September, 1955, the union manifested its desire to confine its claim to its demands for overtime, night-shift differential pay, and attorney's fees, although it was allowed to present evidence on service rendered during Sundays and holidays, or on its claim for additional separation pay and sick and vacation leave compensation.1äwphï1.ñët

After the case had been submitted for decision, Presiding Judge Jose S. Bautista, who was commissioned to receive the evidence, rendered decision expressing his disposition with regard to the points embodied in the complaint on which evidence was presented. Specifically, the disposition insofar as those points covered by this petition for review are concerned, is as follows:

1. With regard to overtime compensation, Judge Bautista held that the provisions of the Eight-Hour Labor Law apply to the employees concerned for those working in the field or engaged in the sale of the company's products outside its premises and consequently they should be paid the extra compensation accorded them by said law in addition to the monthly salary and commission earned by them, regardless of the meal allowance given to employees who work up to late at night.

2. As to employees who work at night, Judge Bautista decreed that they be paid their corresponding salary differentials for work done at night prior to January 1, 1949 with the present qualification: 25% on the basis of their salary to those who work from 6:00 to 12:00 p.m., and 75% to those who work from 12:01 to 6:00 in the morning.

3. With regard to work done during Sundays and holidays, Judge Bautista also decreed that the employees concerned be paid an additional

compensation of 25% as provided for in Commonwealth Act No. 444 even if they had been paid a compensation on monthly salary basis.

The demands for the application of the Minimum Wage Law to workers paid on "pakiao" basis, payment of accumulated vacation and sick leave and attorney's fees, as well as the award of additional separation pay, were either dismissed, denied, or set aside.

Its motion for reconsideration having been denied by the industrial court en banc, which affirmed the decision of the court a quo with few exceptions, the San Miguel Brewery, Inc. interposed the present petition for review.

Anent the finding of the court a quo, as affirmed by the Court of Industrial Relations, to the effect that outside or field sales personnel are entitled to the benefits of the Eight-Hour Labor Law, the pertinent facts are as follows:

After the morning roll call, the employees leave the plant of the company to go on their respective sales routes either at 7:00 a.m. for soft drinks trucks, or 8:00 a.m. for beer trucks. They do not have a daily time record. The company never require them to start their work as outside sales personnel earlier than the above schedule.

The sales routes are so planned that they can be completed within 8 hours at most, or that the employees could make their sales on their routes within such number of hours variable in the sense that sometimes they can be completed in less than 8 hours, sometimes 6 to 7 hours, or more. The moment these outside or field employees leave the plant and while in their sales routes they are on their own, and often times when the sales are completed, or when making short trip deliveries only, they go back to the plant, load again, and make another round of sales. These employees receive monthly salaries and sales commissions in variable amounts. The amount of compensation they receive is uncertain depending upon their individual efforts or industry. Besides the monthly salary, they are paid sales commission that range from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month, at the rate of P0.01 to P0.01-½ per case.

It is contended that since the employees concerned are paid a commission on the sales they make outside of the required 8 hours besides the fixed salary that is paid to them, the Court of Industrial Relations erred in ordering that they be paid an overtime compensation as required by the Eight-Hour Labor Law for the reason that the commission they are paid already takes the place of such overtime compensation. Indeed, it is claimed, overtime compensation is an additional pay for work or services rendered in excess of 8 hours a day by an employee, and if the employee is already given extra compensation for labor performed in excess of 8 hours a day, he is not covered by the law. His situation, the company contends, can be likened to an employee who is paid on piece-work, "pakiao", or commission basis, which is expressly excluded from the operation of the Eight-Hour Labor Law.1

We are in accord with this view, for in our opinion the Eight-Hour Labor Law only has application where an employee or laborer is paid on a monthly or daily basis, or is paid a monthly or daily compensation, in which case, if he is made to work beyond the requisite period of 8 hours, he should be paid the additional compensation prescribed by law. This law has no application when the employee or laborer is paid on a piece-work, "pakiao", or commission basis, regardless of the time employed. The philosophy behind this exemption is that his earnings in the form of commission based on the gross receipts of the day. His participation depends upon his industry so that the more hours he employs in the work the greater are his gross returns and the higher his commission. This philosophy is better explained in Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, as follows:

The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day.

True it is that the employees concerned are paid a fixed salary for their month of service, such as Benjamin Sevilla, a salesman, P215; Mariano Ruedas, a truck driver, P155; Alberto Alpaza and Alejandro Empleo, truck helpers, P125 each, and sometimes they work in excess of the required 8-hour period of work, but for their extra work they are paid a commission which is in lieu of the extra compensation to which they are entitled. The record shows that these employees during the period of their employment were paid sales commission ranging from P30, P40, sometimes P60, P70, to sometimes P90, P100 and P109 a month depending on the volume of their sales and their rate of commission per case. And so, insofar is the extra work they perform, they can be considered as employees paid on piece work, "pakiao", or commission basis. The Department of Labor, called upon to implement, the Eight-Hour

Labor Law, is of this opinion when on December 9, 1957 it made the ruling on a query submitted to it, thru the Director of the Bureau of Labor Standards, to the effect that field sales personnel receiving regular monthly salaries, plus commission, are not subject to the Eight-Hour Labor Law. Thus, on this point, said official stated:

. . . Moreover, when a fieldman receives a regular monthly salary plus commission on percentage basis of his sales, it is also the established policy of the Office to consider his commission as payment for the extra time he renders in excess of eight hours, thereby classifying him as if he were on piecework basis, and therefore, technically speaking, he is not subject to the Eight-Hour Labor Law.

We are, therefore, of the opinion that the industrial court erred in holding that the Eight-Hour Labor Law applies to the employees composing the outside service force and in ordering that they be paid the corresponding additional compensation.

With regard to the claim for night salary differentials, the industrial court found that claimants Magno Johnson and Jose Sanchez worked with the respondent company during the period specified by them in their testimony and that watchmen Zoilo Illiga, Inocentes Prescillas and Daniel Cayuca rendered night duties once every three weeks continuously during the period of the employment and that they were never given any additional compensation aside from their monthly regular salaries. The court found that the company started paying night differentials only in January, 1949 but never before that time. And so it ordered that the employees concerned be paid 25% additional compensation for those who worked from 6:00 to 12:00 p.m. and 75% additional compensation for those who worked from 12:01 to 6: 00 in the morning. It is now contended that this ruling is erroneous because an award for night shift differentials cannot be given retroactive effect but can only be entertained from the date of demand which was on January 27, 1953, citing in support thereof our ruling in Earnshaws Docks & Honolulu Iron Works v. The Court of Industrial Relations, et al., L-8896, January 25, 1957.

This ruling, however, has no application here for it appears that before the filing of the petition concerning this claim a similar one had already been filed long ago which had been the subject of negotiations between the union and the company which culminated in a strike in 1952. Unfortunately, however, the strike fizzled out and the strikers were ordered to return to work with the understanding that the claim for night salary differentials should be settled in court. It is perhaps for this reason that the court a quo granted this claim in spite of the objection of the company to the contrary.

The remaining point to be determined refers to the claim for pay for Sundays and holidays for service performed by some claimants who were watchmen or security guards. It is contended that these employees are not entitled to extra pay for work done during these days because they are paid on a monthly basis and are given one day off which may take the place of the work they may perform either on Sunday or any holiday.

We disagree with this claim because it runs counter to law. Section 4 of Commonwealth Act No. 444 expressly provides that no person, firm or corporation may compel an employee or laborer to work during Sundays and legal holidays unless he is paid an additional sum of 25% of his regular compensation. This proviso is mandatory, regardless of the nature of compensation. The only exception is with regard to public utilities who perform some public service.

WHEREFORE, the decision of the industrial court is hereby modified as follows: the award with regard to extra work performed by those employed in the outside or field sales force is set aside. The rest of the decision insofar as work performed on Sundays and holidays covering watchmen and security guards, as well as the award for night salary differentials, is affirmed. No costs.

Bengzon, C.J., Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.Padilla, J., took no part.

SECOND DIVISION

[G.R. No. 156367. May 16, 2005]

AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO BAUTISTA, respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

Before Us is a Petition for Review on Certiorari assailing the Decision[1] and Resolution[2] of the Court of Appeals affirming the Decision[3] of the National Labor Relations Commission (NLRC). The NLRC ruling modified the Decision of the Labor Arbiter (finding respondent entitled to the award of 13th month pay and service incentive leave pay) by deleting the award of 13th month pay to respondent.

THE FACTS

Since 24 May 1995, respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a month basis.

On 03 January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without giving any warning.

Respondent averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas, Isabela. Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondents pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter of termination.

Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus.

Petitioner, on the other hand, maintained that respondents employment was replete with offenses involving reckless imprudence, gross negligence, and dishonesty. To support its claim, petitioner presented copies of letters, memos, irregularity reports, and warrants of arrest pertaining to several incidents wherein respondent was involved.

Furthermore, petitioner avers that in the exercise of its management prerogative, respondents employment was terminated only after the latter was provided with an opportunity to explain his side regarding the accident on 03 January 2000.

On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter Monroe C. Tabingan promulgated a Decision,[4] the dispositive portion of which reads:

WHEREFORE, all premises considered, it is hereby found that the complaint for Illegal Dismissal has no leg to stand on. It is hereby ordered DISMISSED, as it is hereby DISMISSED.

However, still based on the above-discussed premises, the respondent must pay to the complainant the following:

a. his 13th month pay from the date of his hiring to the date of his dismissal, presently computed at P78,117.87;

b. his service incentive leave pay for all the years he had been in service with the respondent, presently computed at P13,788.05.

All other claims of both complainant and respondent are hereby dismissed for lack of merit.[5]

Not satisfied with the decision of the Labor Arbiter, petitioner appealed the decision to the NLRC which rendered its decision on 28 September 2001, the decretal portion of which reads:

[T]he Rules and Regulations Implementing Presidential Decree No. 851, particularly Sec. 3 provides:

Section 3. Employers covered. The Decree shall apply to all employers except to:

xxx xxx xxx

e) employers of those who are paid on purely commission, boundary, or task basis, performing a specific work, irrespective of the time consumed in the performance thereof. xxx.

Records show that complainant, in his position paper, admitted that he was paid on a commission basis.

In view of the foregoing, we deem it just and equitable to modify the assailed Decision by deleting the award of 13th month pay to the complainant.

WHEREFORE, the Decision dated 29 September 2000 is MODIFIED by deleting the award of 13th month pay. The other findings are AFFIRMED.[6]

In other words, the award of service incentive leave pay was maintained. Petitioner thus sought a reconsideration of this aspect, which was subsequently denied in a Resolution by the NLRC dated 31 October 2001.

Displeased with only the partial grant of its appeal to the NLRC, petitioner sought the review of said decision with the Court of Appeals which was subsequently denied by the appellate court in a Decision dated 06 May 2002, the dispositive portion of which reads:

WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit; and the assailed Decision of respondent Commission in NLRC NCR CA No. 026584-2000 is hereby AFFIRMED in toto. No costs.[7]

Hence, the instant petition.

ISSUES

1. Whether or not respondent is entitled to service incentive leave;

2. Whether or not the three (3)-year prescriptive period provided under Article 291 of the Labor Code, as amended, is applicable to respondents claim of service incentive leave pay.

RULING OF THE COURT

The disposition of the first issue revolves around the proper interpretation of Article 95 of the Labor Code vis--vis Section 1(D), Rule V, Book III of the Implementing Rules and Regulations of the Labor Code which provides:

Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE

(a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.

Book III, Rule V: SERVICE INCENTIVE LEAVE

SECTION 1. Coverage. This rule shall apply to all employees except:

(d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; . . .

A careful perusal of said provisions of law will result in the conclusion that the grant of service incentive leave has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to employees classified as field personnel. The phrase other employees whose performance is unsupervised by the employer must not be understood as a separate classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the interpretation of the

http://sc.judiciary.gov.ph/jurisprudence/2005/may2005/156367.htm#_ftn7







definition of field personnel under the Labor Code as those whose actual hours of work in the field cannot be determined with reasonable certainty.[8]

The same is true with respect to the phrase those who are engaged on task or contract basis, purely commission basis. Said phrase should be related with field personnel, applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow.[9] Hence, employees engaged on task or contract basis or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall under the classification of field personnel.

Therefore, petitioners contention that respondent is not entitled to the grant of service incentive leave just because he was paid on purely commission basis is misplaced. What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to respondent is whether or not he is a field personnel.

According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. This definition is further elaborated in theBureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial Employees Association[10] which states that:

As a general rule, [field personnel] are those whose performance of their job/service is not supervised by the employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. [Emphasis ours]

To this discussion by the BWC, the petitioner differs and postulates that under said advisory opinion, no employee would ever be considered a field personnel because every employer, in one way or another, exercises control over his employees. Petitioner further argues that the only criterion that should be considered is the nature of work of the employee in that, if the employees job requires that he works away from the principal office like that of a messenger or a bus driver, then he is inevitably a field personnel.

We are not persuaded. At this point, it is necessary to stress that the definition of a field personnel is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employees performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and performance are constantly supervised by the employer.

As observed by the Labor Arbiter and concurred in by the Court of Appeals:

It is of judicial notice that along the routes that are plied by these bus companies, there are its inspectors assigned at strategic places who board the bus and inspect the passengers, the punched tickets, and the conductors reports. There is also the mandatory once-a-week car barn or shop day, where the bus is regularly checked as to its mechanical, electrical, and hydraulic aspects, whether or not there are problems thereon as reported by the driver and/or conductor. They too, must be at specific place as [sic] specified time, as they generally observe prompt departure and arrival from their point of origin to their point of destination. In each and every depot, there is always the Dispatcher whose function is precisely to see to it that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. These, are present in the case at bar. The driver, the complainant herein, was therefore under constant supervision while in the performance of this work. He cannot be considered a field personnel.[11]

We agree in the above disquisition. Therefore, as correctly concluded by the appellate court, respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioners business. Accordingly, respondent is entitled to the grant of service incentive leave.

The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to.

The response to this query inevitably leads us to the correlative issue of whether or not the three (3)-year prescriptive period under Article 291 of the Labor Code is applicable to respondents claim of service incentive leave pay.

Article 291 of the Labor Code states that all money claims arising from employer-employee relationship shall be filed within three (3) years from the time the cause of action accrued; otherwise, they shall be forever barred.

In the application of this section of the Labor Code, the pivotal question to be answered is when does the cause of action for money claims accrue in order to determine the reckoning date of the three-year prescriptive period.

It is settled jurisprudence that a cause of action has three elements, to wit, (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of the obligation of the defendant to the plaintiff.[12]

To properly construe Article 291 of the Labor Code, it is essential to ascertain the time when the third element of a cause of action transpired. Stated differently, in the computation of the three-year prescriptive period, a determination must be made as to the period when the act constituting a violation of the workers right to the benefits being claimed was committed. For if the cause of action accrued more than three (3) years before the filing of the money claim, said cause of action has already prescribed in accordance with Article 291.[13]

Consequently, in cases of nonpayment of allowances and other monetary benefits, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three (3) years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within three (3) years before the filing of the complaint.[14]

It is essential at this point, however, to recognize that the service incentive leave is a curious animal in relation to other benefits granted by the law to every employee. In the case of service incentive leave, the employee may choose to either use his leave credits or commute it to its monetary equivalent if not exhausted at the end of the year.[15]Furthermore, if the employee entitled to service incentive leave does not use or commute the same, he is entitled upon his resignation or separation from work to the commutation of his accrued service incentive leave. As enunciated by the Court in Fernandez v. NLRC:[16]

The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that [e]very employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. Service incentive leave is a right which accrues to every employee who has served within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contracts, is less than 12 months, in which case said period shall be considered as one year. It is also commutable to its money equivalent if not used or exhausted at the end of the year. In other words, an employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the solicitor general recommends, is to unduly restrict such right.[17] [Italics supplied]

Correspondingly, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment.

Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employees services, as the case may be.

The above construal of Art. 291, vis--vis the rules on service incentive leave, is in keeping with the rudimentary principle that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingmans welfare should be the primordial and paramount consideration.[18] The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor.[19]

In the case at bar, respondent had not made use of his service incentive leave nor demanded for its commutation until his employment was terminated by petitioner. Neither did petitioner compensate his accumulated service incentive leave pay at the time of his dismissal. It was only upon his filing of a complaint for illegal dismissal, one













month from the time of his dismissal, that respondent demanded from his former employer commutation of his accumulated leave credits. His cause of action to claim the payment of his accumulated service incentive leave thus accrued from the time when his employer dismissed him and failed to pay his accumulated leave credits.

Therefore, the prescriptive period with respect to his claim for service incentive leave pay only commenced from the time the employer failed to compensate his accumulated service incentive leave pay at the time of his dismissal. Since respondent had filed his money claim after only one month from the time of his dismissal, necessarily, his money claim was filed within the prescriptive period provided for by Article 291 of the Labor Code.

WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No Costs.

SO ORDERED.


Manila

THIRD DIVISION

G.R. Nos. 64821-23 January 29, 1993

UNIVERSITY OF PANGASINAN FACULTY UNION, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION and UNIVERSITY OF PANGASINAN, respondents.

Tanopo & Serafica for petitioner.

Hermogenes S. Decano for private respondents.

ROMERO, J.:

In the instant petition for mandamus and certiorari, petitioner union seeks to enjoin the respondent National Labor Relations Commission (NLRC) to resolve, or direct the Labor Arbiter to hear and decide, the merits of three of petitioner's unresolved complaints, and to annul and set aside the resolution of the NLRC affirming the decision of the Executive Labor Arbiter dismissing the petitioner's complaints for violation of certain labor standards laws but requiring respondent university to integrate the cost of living allowance into the basic pay of the covered employees and reminding it to pay its employees at intervals not exceeding sixteen (16) days.

The uncontroverted facts show that on various dates, petitioner filed the following complaints against the University of Pangasinan (University for brevity) before the Arbitration Branch of the NLRC in Dagupan City:

1. October 14, 1980: for nonpayment of benefits under P.D. No. 1713 and emergency cost of living allowance (ecola) to part-time teachers, and for prompt and accurate computation of benefits under P.D. No. 451 and the payment of ecolas;

2. November 7, 1980: for nonpayment of all ecolas to instructors from October 18-31, 1980;

3. November 20, 1980: for nonpayment of ecolas under P.D. Nos. 525, 1123, 1614, 1634, 1678 and 1713 for November 1-15, 1980, and extra loads during typhoons "Nitang" and "Osang" on July 21 and 25, 1980, respectively;

4. April 13, 1981: for violation of P.D. No. 1751 and nonpayment of extra loads on February 12-13, 1980 (Anniversary celebration);

5. April 27, 1981: for nonpayment of all ecolas for April 1-15, 1981 to faculty members who were also members of the union;

6. May 21, 1981: for violation of Wage Order No. 1 and delayed payment of salaries; and

7. June 17, 1981: for nonpayment of salary differentials for summer under P.D. No. 451. 1

The Regional Director in San Fernando, La Union certified six (6) of these complaints to Labor Arbiter Pedro Fernandez of the Dagupan City District Office of the then Ministry of Labor and Employment for compulsory arbitration. 2 According to the petitioner, it was made to understand by Fernandez that the seventh complaint should also be discussed in its position paper. Accordingly, petitioner filed a position paper discussing the merits of all the seven complaints. On the other hand, the University limited its discussion to only four: the complaints filed on April 13, 1981, April 27, 1981, May 21, 1981 and June 17, 1981. Petitioner was of the view that Executive Labor Arbiter Sotero L. Tumang adopted the stand of the University on the four complaints and accordingly dismissed them in his decision of January 25, 1982. 3

Observing that in its position paper, the petitioner included matters which were "beyond the scope of the issues alleged in the complaints," said Labor Arbiter discussed the four complaints individually. On the April 13, 1981 complaint, he ruled that because at the time P.D. No. 1123 took effect on May 1, 1977, the University had not increased its tuition fees, there was of "nothing to integrate." 4 However, from June 16, 1979 when the University increased its tuition fees, it was obligated to cause the integration of the across-the-board increase of P60.00 in emergency allowance into the basic pay as mandated by P.D. Nos. 1123 and 1751.

On the alleged nonpayment of extra loads handled by the employees on February 12 and 13, 1981 when classes were suspended, Tumang stated that Consuelo Abad, the petitioner's president, had no cause to complain because her salary was fully paid and that, since there were "no complainants for the alleged nonpayment of extra loads for two days," the issue had become academic.

With respect to the April 27, 1981 complaint, Tumang said that since the salary paid to Consuelo Abad and other faculty members for the April 1-15, 1981 period had been earned "as part of their salary for the ten-month period," she was no longer entitled to an emergency cost of living allowance. He added that "payment of emergency cost of living allowance is based on actual work performed except when they (employees) are on leave with pay." Hence, because classes ended in March 1981, the teachers who did not report for work could not be considered on leave with pay and, therefore, they were not entitled to an emergency cost of living allowance.

As regards the May 21, 1981 complaint alleging violation of Wage Order No. 1, Tumang found that the University had actually implemented the additional living allowance of P2.00 a day required therein. On the alleged delay in the payment of salaries of the employees, he rationalized that delays could not be avoided but he reminded the University to pay its employees on time.

The June 17, 1981 complaint was also resolved in favor of the University. Stating that P.D. No. 451 which mandates salary increases is dependent on enrollment and allowable deductions, Tumang ruled that, again, Consuelo Abad had no cause to complain as she had been paid out of the allowable 12.74% for distribution which was a "substantial compliance with P.D. No. 451." 5 The dispositive portion of the decision states:

IN THE LIGHT OF THE FOREGOING CONSIDERATION, the above-entitled cases are dismissed for lack of merit. Respondent however, is required to integrate the allowance of P60.00 under P.D. 1123 into the basic pay of the covered employees if the same has not as yet been complied with. Respondent is also reminded to pay the employees at intervals not exceeding sixteen (16) days pursuant to Article 102 of the Labor Code.

SO ORDERED.

The petitioner appealed the said decision to the NLRC. In its resolution of June 20, 1993, the NLRC affirmed the decision of Executive Labor Article Tumang. Hence, the instant petition for mandamus and certiorari with the following prayer:

WHEREFORE, the foregoing premises considered, it is respectfully prayed that this petition be given due course and that judgment issue:

1. Declaring petitioner as possessed with capacity to represent its members in the complaints it filed thru its president, Miss Consuelo Abad, against private respondent,

and the complaints are pertaining to the members who are entitled under the law to the claims sought herein, not to Miss Abad alone;

2. Annulling and setting aside the appealed resolution insofar as the issues of nonpayment of Ecola for April 1-15, 1981 and nonpayment of salary differentials for summer of 1981 under P.D. No. 451 are concerned;

3. Ordering private respondent to pay covered members of petitioner their Ecola for April 1-15, 1981 and their salary differentials for summer of 1981 pursuant to the mandate of P.D. 451;

4. Enjoining public respondent to resolve on the merits the issues of nonpayment of extra loads of February 12-13, 1980 and violation of Wage Order No. 1 which were properly brought on appeal to said office;

5. Enjoining public respondent to resolve on the merits the issues or grievances alleged in the complaints filed on October 14, November 7 and November 20, all in 1980, which were not resolved by the labor arbiter but nonetheless appealed to public respondents, or

6. Enjoining public respondent to order or direct the labor arbiter to resolve on the merits the said issues or grievances alleged in the complaints mentioned in the next preceding paragraph;

7. Attorney's fee in such amount as this Honorable Tribunal may deem just and reasonable in the premises;

8. Ordering private respondent to pay costs of suit, including this appeal.

Petitioner further prays for safeguards and/or measures to insure the correct computation of the amount of claims herein sought due to each covered member of petitioner, and for such other reliefs just and equitable in the premises. 6

We shall first deal with the propriety of the special civil action of mandamus. In this regard, petitioner contends that the NLRC should have, in the exercise of its appellate jurisdiction, resolved the issues raised in the three (3) complaints filed on October 14, November 7 and November 20, 1980 or, in the alternative, ordered the Labor Arbiter to hear and decide the aforementioned three (3) complaints, it having the power of supervision over Labor Arbiters.

Sec. 3, Rule 65 of the Rules of Court provides:

Sec. 3. Petition for Mandamus. — When any tribunal, corporation, board, or person unlawfully neglects the performance of an act which the law specifically enjoins as a duty resulting from an office, trust, or station, or unlawfully excludes another from the use and enjoyment of a right or office to which such other is entitled, and there is no other plain, speedy and adequate remedy in the ordinary course of law, the person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered commanding the defendant, immediately or at some other specified time, to do the act required to be done to protect the rights of the petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful acts of the defendant.

As succinctly provided in this section, anyone who wishes to avail of the remedy of mandamus must state in a verified petition "the facts with certainty." On account of this requirement, mandamus is never issued in doubtful cases and showing of a clear and certain right on the part of the petitioner is required. 7 Indeed, while the labor arbiter is duty bound to resolve all complaints referred to him for arbitration and, therefore, he may be compelled bymandamus to decide them (although not in any particular way or in favor of anyone), 8 we find that the peculiar circumstances in this case do not merit the issuance of the writ of mandamus.

Petitioner admits that only six of the complaints were certified to Labor Arbiter Fernandez for compulsory arbitration. It failed, however, to allege why this was the case or whether it had exerted any effort to include the remaining complaint in the certification. What it stresses is the alleged assurance of Labor Arbiter Fernandez that the seventh complaint may be discussed in its position paper. It turned out, however, that, according to the unrebutted allegation of the Solicitor General, Labor Arbiter Fernandez inhibited himself from handling the cases referred to him as he was teaching at the University. Hence, Labor Arbiter Fernandez forwarded the complaints to the Assistant Director for Arbitration in Regional Office No. 1 in San Fernando, La Union for appropriate action. He should have forwarded all of the complaints to the said Assistant Director, but it appears that Fernandez turned over only four of them. In turn, the Assistant Director referred only complaints Nos. 5, 6 and 7, which had been docketed as RBI-C-24-81, LS-42-81 and LS-43-81, to Executive Labor Arbiter Sotero L. Tumang for compulsory arbitration. However, while only these three docket numbers appear on the caption of the decision, the same actually resolved four complaints, as earlier mentioned. 9

From these facts, one may infer that there must have been a mishandling of the complaints and/or the records of the cases. However, the petitioner failed to substantiate by evidence such negligence on the part of the public respondents as to warrant the issuance of a writ of mandamus. 10 Its officials even neglected the simple act of verifying from the MOLE office in Dagupan City whether the records of all the cases filed had been forwarded to the proper official who should resolve them. 11 Infact, nowhere in its pleadings 12 is there an allegation to that effect.

On the contrary, the petitioner took Fernandez' words seriously and allowed the proceedings to reach its inevitable conclusion. When it received a copy of the decision, the petitioner should have taken note of Executive Labor Arbiter Tumang's observation therein that it had discussed matters "beyond the scope of the issues alleged in the complaints." In its memorandum of appeal, it should have prayed for the inclusion of the three complaints inasmuch as in labor cases, an appeal may be treated as a motion for reconsideration orvice-versa. 13 The fact that three complaints had been omitted did not escape the attention of the NLRC which stated in its resolution that "since those cases were not consolidated it is now too late to consolidate them" with the four decided cases.14 We agree with the NLRC that the said complaints should proceed separately as long as their resolution would not conflict with the resolvedcases. 15 It should be added that under Art. 217(b) of the Labor Code, the NLRC has "exclusive appellate jurisdiction over all cases decided by the Labor Arbiters." Needless to say, the NLRC could not have acted on matters outside of the cases appealed to it.

Petitioner's contention that the cases filed by Consuelo Abad as its president should affect, not only herself, but all the other union members similarly situated as she was, is well taken. The uncontroverted allegation of the petitioner is that it is the holder of Registration Certificate No. 9865-C, having been registered with the then Ministry of Labor and Employment on February 16, 1978. As such, petitioner possessed the legal personality to sue and be sued under its registered name. 16 Corollarily, its president, Consuelo Abad, correctly filed the complaints even if some of them involved rights and interest purely or exclusively appertaining to individual employees, it appearing that she signed the complaints "for and in behalf of the University of Pangasinan Faculty Union." 17

The University's contention that petitioner had no legal personality to institute and prosecute money claims must, therefore, fail. To quote then Associate Justice Teehankee in Heirs of Teodelo M. Cruz v. CIR, 18 "[w]hat should be borne in mind is that the interest of the individual worker can be better protected on the whole by a strong union aware of its moral and legal obligations to represent the rank and file faithfully and secure for them the best wages and working terms and conditions. . . . Although this was stated within the context of collective bargaining, it applies equally well to cases, such as the present wherein the union, through its president, presented its individual members' grievances through proper proceedings. While the complaints might nothave disclosed the identities of the individual employees claiming monetary benefits, 19 such technical defect should not be taken against the claimants, especially because the University appears to have failed to demand a bill of particulars during the proceedings before the Labor Arbiter.

On the merits of the petition, the NLRC did not abuse its discretion in resolving the appeal from the decision of Executive Labor Arbiter Tumang except for the disallowance of the emergency cost of living allowance to members of the petitioner. The Rules Implementing P.D. No. 1713 which took effect on August 18, 1980 provide:

Sec. 6. Allowances of full-time and part-time employees. — Employees shall be paid in full the monthly allowance on the basis of the scales provided in Section 3 hereof, regardless of the number of their regular working days if they incur no absences during the month. If they incur absences without pay, the amounts corresponding to the absences may be deducted from the monthly allowance provided that in

determining the equivalent daily allowance of such deduction, the applicable monthly allowance shall be divided by thirty (30) days.

xxx xxx xxx

(Emphasis supplied).

This Section, which is a virtual reproduction of Section 12 of the old Rules Implementing P.D. No. 1123, has been interpreted by this Court as requiring that the full amount of the cost of living allowance mandated by law should be given monthly to each employee if the latter has worked continuously for each month, regardless of the number of the regular working days. 20 But more apropos is the ruling of this Court in University of Pangasinan Faculty Union v. University of Pangasinan and NLRC, 21 a case involving the same parties as in the instant petition and dealing with a complaint filed by the petitioner on December 18, 1981 seeking, among others, the payment of emergency cost of living allowances for November 7 to December 5, 1981, a semestral break. The Court held therein:

. . . The "No work, no pay" principle does not apply in the instant case. The petitioner's members received their regular salaries during this period. It is clear from the . . . law that it contemplates a "no work" situation where the employees voluntarily absent themselves. Petitioners, in the case at bar, certainly do not, ad voluntatem absent themselves during semestral breaks. Rather, they are constrained to take mandatory leave from work. For this, they cannot be faulted nor can they be begrudged that which is due them under the law. To a certain extent, the private respondent can specify dates when no classes would be held. Surely, it was not the intention of the framers of the law to allow employers to withhold employee benefits by the simple expedient of unilaterally imposing "no work" days and consequently avoiding compliance with the mandate of the law for those days.

As interpreted and emphasized in the same case, the law granting emergency cost of living allowances was designed to augment the income of the employees to enable them to cope with the rising cost of living and inflation. Clearly, it was enacted in pursuance of the State's duty to protect labor and to alleviate the plight of the workers. To uphold private respondent's interpretation of the law would be running counter to the intent of the law and the Constitution.

WHEREFORE, the petition for mandamus is hereby DISMISSED. The decision of the NLRC is AFFIRMED subject to the MODIFICATION that private respondent University of Pangasinan shall pay its regular and fulltime teachers and employees emergency cost of living allowance for the period April 1-15, 1981. Costs against private respondent.

SO ORDERED.


Manila

EN BANC

G.R. No. L-15422 November 30, 1962

NATIONAL DEVELOPMENT COMPANY, petitioner, vs.COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS UNION, respondents.

Government Corporate Counsel Simeon M. Gopengco and Lorenzo R. Mosqueda for petitioner.Eulogio R. Lerum for respondent National Textile Workers Union.Mariano B. Tuason for respondent Court of Industrial Relations.

REGALA, J.:

This is a case for review from the Court of Industrial Relations. The pertinent facts are the following:

At the National Development Co., a government-owned and controlled corporation, there were four shifts of work. One shift was from 8 a.m. to 4 p.m., while the three other shifts were from 6 a.m. to 2 p.m; then from 2 p.m. to 10 p.m. and, finally, from 10 p.m. to 6 a.m. In each shift, there was a one-hour mealtime period, to wit: From (1) 11 a.m. to 12 noon for those working between 6 a.m. and 2 p.m. and from (2) 7 p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.

The records disclose that although there was a one-hour mealtime, petitioner nevertheless credited the workers with eight hours of work for each shift and paid them for the same number of hours. However, since 1953, whenever workers in one shift were required to continue working until the next shift, petitioner instead of crediting them with eight hours of overtime work, has been paying them for six hours only, petitioner that the two hours corresponding to the mealtime periods should not be included in computing compensation. On the other hand, respondent National Textile Workers Union whose members are employed at the NDC, maintained the opposite view and asked the Court of Industrial Relations to order the payment of additional overtime pay corresponding to the mealtime periods.

After hearing, Judge Arsenio I. Martinez of the CIR issued an order dated March 19, 1959, holding that mealtime should be counted in the determination of overtime work and accordingly ordered petitioner to pay P101,407.96 by way of overtime compensation. Petitioner filed a motion for reconsideration but the same was dismissed by the CIR en banc on the ground that petitioner failed to furnish the union a copy of its motion.

Thereafter, petitioner appealed to this Court, contending, first, that the CIR has no jurisdiction over claims for overtime compensation and, secondary that the CIR did not make "a correct appraisal of the facts, in the light of the evidence" in holding that mealtime periods should be included in overtime work because workers could not leave their places of work and rest completely during those hours.

In support of its contention that the CIR lost its jurisdiction over claims for overtime pay upon the enactment of the Industrial Peace Act (Republic Act No. 875), petitioner cites a number of decisions of this Court. On May 23, 1960, however, We ruled in Price Stabilization Corp. v. Court of Industrial Relations, et al., G.R. No. L-13206, that

Analyzing these cases, the underlying principle, it will be noted in all of them, though not stated in express terms, is that where the employer-employee relationship is still existing or is sought to be reestablished because of its wrongful severance, (as where the employee seeks reinstatement) the Court of Industrial Relations has jurisdiction over all claims arising out of, or in connection with the employment, such as those related to the Minimum Wage Law and the Eight-Hour Labor Law. After the termination of their relationship and no reinstatement is sought, such claims become mere money claims, and come within the jurisdiction of the regular courts,

We are aware that in 2 cases, some statements implying a different view have been made, but we now hold and declare the principle set forth in the next preceding paragraph as the one governing all cases of this nature.

This has been the constant doctrine of this Court since May 23, 1960.1

A more recent definition of the jurisdiction of the CIR is found in Campos, et al. v. Manila Railroad Co., et al., G.R. No. L-17905, May 25, 1962, in which We held that, for such jurisdiction to come into play, the following requisites must be complied with: (a) there must exist between the parties an employer-employee relationship or the claimant must seek his reinstatement; and (b) the controversy must relate to a case certified by the President to the CIR as one involving national interest, or must arise either under the Eight-Hour Labor Law, or under the Minimum Wage Law. In default of any of these circumstances, the claim becomes a mere money claim that comes under the jurisdiction of the regular courts. Here, petitioner does not deny the existence of an employer-employee relationship between it and the members of the union. Neither is there any question that the claim is based on the Eight-Hour Labor Law (Com. Act No. 444, as amended). We therefore rule in favor of the jurisdiction of the CIR over the present claim.

The other issue raised in the appeal is whether or not, on the basis of the evidence, the mealtime breaks should be considered working time under the following provision of the law;

The legal working day for any person employed by another shall be of not more than eight hours daily.When the work is not continuous, the time during which the laborer is not working and can leave his working place and can rest completely shall not be counted. (Sec. 1, Com. Act No. 444, as amended. Emphasis ours.)

It will be noted that, under the law, the idle time that an employee may spend for resting and during which he may leave the spot or place of work though not the premises2 of his employer, is not counted as working time only where the work is broken or is not continuous.

The determination as to whether work is continuous or not is mainly one of fact which We shall not review as long as the same is supported by evidence. (Sec. 15, Com. Act No. 103, as amended, Philippine Newspaper Guild v. Evening News, Inc., 86 Phil. 303).

That is why We brushed aside petitioner's contention in one case that workers who worked under a 6 a.m. to 6 p.m. schedule had enough "free time" and therefore should not be credited with four hours of overtime and held that the finding of the CIR "that claimants herein rendered services to the Company from 6:00 a.m. to 6:00 p.m. including Sundays and holidays, . . . implies either that they were not allowed to leave the spot of their working place, or that they could not rest completely" (Luzon Stevedoring Co., Inc. v. Luzon Marine Department Union, et al., G.R. No. L-9265, April 29, 1957).

Indeed, it has been said that no general rule can be laid down is to what constitutes compensable work, rather the question is one of fact depending upon particular circumstances, to be determined by the controverted in cases. (31 Am. Jurisdiction Sec. 626 pp. 878.)

In this case, the CIR's finding that work in the petitioner company was continuous and did not permit employees and laborers to rest completely is not without basis in evidence and following our earlier rulings, shall not disturb the same. Thus, the CIR found:

While it may be correct to say that it is well-high impossible for an employee to work while he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating can be segregated or deducted from his work, if the same is continuous and the employee can leave his working place rest completely. The time cards show that the work was continuous and without interruption. There is also the evidence adduced by the petitioner that the pertinent employees can freely leave their working place nor rest completely. There is furthermore the aspect that during the period covered the computation the work was on a 24-hour basis and previously stated divided into shifts.

From these facts, the CIR correctly concluded that work in petitioner company was continuous and therefore the mealtime breaks should be counted as working time for purposes of overtime compensation.

Petitioner gives an eight-hour credit to its employees who work a single shift say from 6 a.m. to 2 p.m. Why cannot it credit them sixteen hours should they work in two shifts?

There is another reason why this appeal should dismissed and that is that there is no decision by the CIR en bancfrom which petitioner can appeal to this Court. As already indicated above, the records show that petitioner's motion for reconsideration of the order of March 19, 1959 was dismissed by the CIR en banc because of petitioner's failure to serve a copy of the same on the union.

Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth Act No. 103, states:

The movant shall file the motion (for reconsideration), in six copies within five (5) days from the date on which he receives notice of the order or decision, object of the motion for reconsideration, the same to be verified under oath with respect to the correctness of the allegations of fact, and serving a copy thereof personally or by registered mail, on the adverse party. The latter may file an answer, in six (6) copies, duly verified under oath. (Emphasis ours.)

In one case (Bien, et al. v. Castillo, etc., et al., G.R. No. L-7428, May 24, 1955), We sustained the dismissal of a motion for reconsideration filed outside of the period provided in the rules of the CIR. A motion for reconsideration, a copy of which has not been served on the adverse party as required by the rules, stands on the same footing. For "in the very nature of things, a motion for reconsideration against a ruling or decision by one Judge is in effect an appeal to the Court of Industrial Relations, en banc," the purpose being "to substitute the decision or order of a collegiate court for the ruling or decision of any judge." The provision in Commonwealth Act No. 103 authorizing the presentation of a motion for reconsideration of a decision or order of the judge to the CIR,en banc and not direct appeal therefore to this Court, is also in accord with the principal of exhaustion of administrative remedies before resort can be

made to this Court. (Broce, et al., v. The Court of Industrial Relations, et al., G.R. No. L-12367, October 29, 1959).

Petitioner's motion for reconsideration having been dismissed for its failure to serve a copy of the same on the union, there is no decision of the CIR en banc that petitioner can bring to this Court for review.

WHEREFORE, the order of March 19, 1959 and the resolution of April 27, 1959 are hereby affirmed and the appeal is dismissed, without pronouncement as to costs.

Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and Makalintal concur.Bengzon, C.J., took no part.


Manila

SECOND DIVISION

G.R. No. L-30452 September 30, 1982

MERCURY DRUG CO., INC., petitioner, vs.NARDO DAYAO, ET AL., respondents,

Caparas & Ilagan for petitioner.

Gerardo P. Cabo Chan and Elias Banzali for respondents.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the decision of the Court of Industrial Relations dated March 30, 1968 in Case No. 1926-V and the Resolution of the Court en banc dated July 6, 1968 denying two separate motions for reconsideration filed by petitioners and respondents.

The factual background of Case No. 1926-V is summarized by the respondent Court of Industrial Relations as follows:

This is a verified petition dated March 17, 1964 which was subsequently amended on July 31, 1964 filed by Nardo Dayao and 70 others against Mercury Drug Co., Inc., and/or Mariano Que, President & General Manager, and Mercury Drug Co., Inc., Employees Association praying, with respect to respondent corporation and its president and general manager: 1) payment of their unpaid back wages for work done on Sundays and legal holidays plus 25c/c additional compensation from date of their employment up to June 30, 1962; 2) payment of extra compensation on work done at night; 3) reinstatement of Januario Referente and Oscar Echalar to their former positions with back salaries; and, as against the respondent union, for its disestablishment and the refund of all monies it had collected from petitioners.

In separate motions, respondent management and respondent union move to dismiss, the first on the ground that:

I. The petition states no cause of action.

II. This Court has no jurisdiction over the subject of the claims of petitioners Januario Referente and Oscar Echalar.

III. There is another action pending between the same parties, namely, Mercury Drug Co., Inc., and/or Mariano Que and Nardo Dayao.

while on the other hand, the second alleges that this Court has no jurisdiction over the acts complained of against the respondent union.

For reasons stated in the Order dated March 24, 1965, two Court resolved the motions to dismiss, as follows:

1. Ground No. 1 of management's motion to dismiss was denied for lack of merit.

2. Its second ground was found meritorious and, accordingly Januario Referente and Oscar Echalar were dropped as party petitioners in this case.

3. The third ground was denied, holding that there still exists the employer- employee relationship between Nardo Dayao and the management.

4. With respect to the fourth ground, the Court held that on the basis of section 7-A of C.A. No. 444, as amended by R.A. No. 1993, 'it can be safely said that,

counting backward the three (3) year prescriptive period from the date of the filing of the instant petition - March 20, 1964 - all-of petitioners' claims have not yet prescribed.'

5. In so far as respondent union's motion is concerned, the Court held that 'petitioners' cause of action against the respondent Association should be dismissed without prejudice to the refiling of the same as an unfair labor practice case.'

Only the respondent management moved to reconsider the Order of March 24, 1965 but the same was denied by the Court en banc in a resolution dated August 26, 1965. Respondent submitted an answer to the amended petition which was subsequently amended on January 6, 1966, containing some admissions and some denials of the material averments of the amended petition. By way of affirmative and special defenses,, respondents alleged that petitioners have no cause of action against Mariano Que because their employer respondent Mercury Drug Company, Inc., an existing corporation which has a separate and distinct personality from its incorporators stockholders and/or officer, that the company being a service enterprise is excluded from the coverage of the Eight Hour Labor Law, as amended; that no court has the power to set wages, rates of pay, hours of employment, or other conditions of employment to the extent of disregarding an agreement thereon between the respondent company and the petitioners, and of fixing night differential wages; that the petitioners were fully paid for services rendered under the terms and conditions of the individual contracts of employment; that the petition having been verified by only three of the petitioners without showing that the others authorized the inclusion of their names as petitioners does not confer jurisdiction to this Court; that there is no employer-employee relationship between management and petitioner Nardo Dayao and that his claim has been released and/or barred by another action and that petitioners' claims accuring before March 20, 1961 have prescribed." (Annex "P", pp. 110-112, rollo).

After hearing on the merits, the respondent court rendered its decision. The dispositive portion of the March 30, 1968 decision reads:

IN VIEW OF THE FOREGOING, the Court hereby resolves that:

1. The claim of the petitioners for payment of back wages correspoding to the first four hours work rendered on every other Sunday and first four hours on legal holidays should be denied for lack of merit.

2. Respondent Mercury Drug Company, Inc.. is hereby ordered to pay the sixty- nine (69) petitioners:

(a) An additional sum equivalent to 25% of their respective basic or regular salaries for services rendered on Sundays and legal

holidays during the period from March 20. 1961 up to June 30, 1962; and

(b) Another additional sum or premium equivalent to 25% of their respective basic or regular salaries for nighttime services rendered from March 20, 1961 up to June 30, 1962.

3. Petitioners' petition to convert them to monthly employees should be, as it is hereby, denied for lack of merit.

4. Respondent Mariano Que, being an officer and acted only as an agent in behalf of the respondent corporation, should be absolved from the money claims of herein petitioners whose employer, according to the pleadings and evidence, is the Mercury Drug Company,, Inc.

To expedite the computation of the money award, the Chief Court Examiner or his authorized representative is hereby directed to proceed to the office of the respondent corporation at Bambang Street, Sta. Cruz, Manila, the latter to make available to said employee its records, like time records, payrolls and other pertinent papers, and compute the money claims awarded in this decision and, upon the completion thereof, to submit his report as soon as possible for further disposition of the Court.

Not satisfied with the decision, the respondents filed a motion for its reconsideration. The motion for reconsideration, was however, denied by the Court en banc in its Resolution dated July 6, 1968.

Petitioner Mercury Drug Company, Inc., assigned the following errors in this petition:

I

RESPONDENT CIR ERRED IN DECLARING THE CONTRACTS OF EMPLOYMENT, EXHIBITS "A" AND "B", NULL AND VOID AS BEING CONTRARY TO PUBLIC POLICY AND IN SUSTAINING, ACCORDINGLY, PRIVATE RESPONDENTS' CLAIMS FOR 25% SUNDAY AND LEGAL HOLIDAY PREMIUMS BECAUSE SUCH DECLARATION AND AWARD ARE NOT SUPPORTED BY SUBSTANTIAL EVIDENCE, THUS INFRINGING UPON THE CARDINAL RIGHTS OF THE PETITIONER; AND ALSO BECAUSE THE VALIDITY OF SAID t CONTRACTS OF EMPLOYMENT HAS NOT BEEN RAISED.

II

RESPONDENT CIR ERRED IN SUSTAINING PRIVATE RESPONDENTS' CLAIMS FOR NIGHTTIME WORK PREMIUMS NOT ONLY BECAUSE OF THE DECLARED POLICY ON COLLECTIVE BARGAINING FREEDOM EX. PRESSED IN REPUBLIC ACT 875 AND THE EXPRESS PROHIBITION IN SECTION 7 OF SAID STATUTE, BUT ALSO BECAUSE OF THE WAIVER OF SAID CLAIMS AND THE TOTAL ABSENCE OF EVIDENCE THEREON.

III

RESPONDENT CIR ERRED IN MAKING AWARDS IN FAVOR OF THE PRIVATE RESPONDENTS WHO NEITHER GAVE EVIDENCE NOR EVEN APPEARED TO SHOW THEIR INTEREST.

Three issues are discussed by the petitioner in its first assignment of error. The first issue refers to its allegation that the respondent Court erred in declaring the contracts of employment null and void and contrary to law. This allegation is premised upon the following finding of the respondent court:

But the Court finds merit in the claim for the payment of additional compensation for work done on Sundays and holidays. While an employer may compel his employees to

perform service on such days, the law nevertheless imposes upon him the obligation to pay his employees at least 25% additional of their basic or regular salaries.

No person, firm or corporation, business establishment or place of center of labor shall compel an employee or laborer to work during Sundays and legal holidays unless he is paid an additional sum of at least twenty-five per centum of his regular remuneration: PROVIDED, HOWEVER, That this prohibition shall not apply to public utilities performing some public service such as supplying gas, electricity, power, water, or providing means of transportation or communication. (Section 4, C. A. No. 444) (Emphasis supplied)

Although a service enterprise, respondent company's employees are within the coverage of C. A. No. 444, as amended known as the Eight Hour Labor Law, for they do not fall within the category or class of employees or laborers excluded from its provisions. (Section 2, Ibid.)

The Court is not impressed by the argument that under the contracts of employment the petitioners are not entitled to such claim for the reason that the same are contrary to law. Payment of extra or additional pay for services rendered during Sundays and legal holidays is mandated by law. Even assuming that the petitioners had agreed to work on Sundays and legal holidays without any further consideration than their monthly salaries, they are not barred nevertheless from claiming what is due them, because such agreement is contrary to public policy and is declared nun and void by law.

Any agreement or contract between employer and the laborer or employee contrary to the provisions of this Act shall be null and void ab initio.

Under the cited statutory provision, the petitioners are justified to receive additional amount equivalent to 25% of their respective basic or regular salaries for work done on Sundays and legal holidays for the period from March 20, 1961 to June 30, 1962. (Decision, pp. 119-120, rollo)

From a perusal of the foregoing statements of the respondent court, it can be seen readily that the petitioner-company based its arguments in its first assignment of error on the wrong premise. The contracts of employment signed by the private respondents are on a standard form, an example of which is that of private respondent Nardo Dayao quoted hereunder:

Mercury Drug Co., Inc. 1580 Bambang, Manila October 30, 1959

Mr. Nardo Dayao 1015 Sta. Catalina Rizal Ave., Exten.

Dear Mr. Dayao:

You are hereby appointed as Checker, in the Checking Department of MERCURY DRUG CO., INC., effective July 1, 1959 and you shall receive an annual compensation the amount of Two Thousand four hundred pesos only (P2,400.00), that includes the additional compensation for work on Sundays and legal holidays.

Your firm being a Service Enterprise, you will be required to perform work every day in a year as follows:

8 Hours work on regular days and-all special Holidays that may be declared but with the 25% additional compensation;

4 Hours work on every other Sundays of the month;

For any work performed in excess of the hours as above mentioned, you shall be paid 25 % additional compensation per hour.

This appointment may be terminated without notice for cause and without cause upon thirty days written notice.

This supersedes your appointment of July 1, 1959.

Very truly yours,

MERCURY DRUG CO., INC.

(Sgd.) MARIANO QUE General Manager

ACCEPTED WITH FULL CONFORMITY:

(Sgd.) NARDO DAYAO (EXH. "A" and "l ") (Decision, pp. 114-115, rollo)

These contracts were not declared by the respondent court null and void in their entirety. The respondent court, on the basis of the conflicting evidence presented by the parties, in effect: 1) rejected the theory of the petitioner company that the 25% additional compensation claimed by the private respondents for the four-hour work they rendered during Sundays and legal holidays provided in their contracts of employment were covered by the private respondents' respective monthly salaries; 2) gave credence to private respondents', (Nardo Dayao, Ernesto Talampas and Josias Federico) testimonies that the 25% additional compensation was not included in the private respondents' respective monthly salaries and 3) ruled that any agreement in a contract of employment which would exclude the 25% additional compensation for work done during Sundays and holidays is null and void as mandated by law.

On the second issue, the petitioner-company reiterated its stand that under the,- respective contracts of employment of the private respondents, the subject 25 % additional compensation had already been included in the latter's respective monthly salaries. This contention is based on the testimony of its lone witness, Mr. Jacinto Concepcion and pertinent exhibits. Thus:

Exhibit A shows that for the period of October 30, 1960, the annual compensation of private respondent Nardo Dayao, including the additional compensation for the work he renders during the first four (4) hours on every other Sunday and on the eight (8) Legal Holidays at the time was P2,400.00 or P200.00 per month. These amounts did not represent basic salary only, but they represented the basic daily wage of Nardo Dayao considered to be in the amount of P7.36 x 305 ordinary working days at the time or in the total amount of P2,144.80. So plus the amount of P156.40 which is the equivalent of the Sunday and Legal Holiday rate at P9.20 basic rate of P7.36 plus 25% thereof or P1.84) x 17, the latter figure representing 13 Sundays and 4 Legal Holidays of 8 hours each. ...

xxx xxx xxx

That the required minimum 25% Sunday and Legal Holiday additional compensation was paid to and received by the employees for the work they rendered on every other Sunday and on the eight Legal Holidays for the period October, 1959 to June 30, 1962 is further corroborated by Exhibits 5, 6, 8, 9 and 9-A and the testimony of Mr. Jacinto Concepcion thereon. (Brief for the Petitioner, pp. 24, 27).

The aforesaid computations were not given credence by the respondent court. In fact the same computations were not even mentioned in the court's decision which shows that the court found such computations incredible. The computations, supposedly patterned after the WAS Interpretative Bulletin No. 2 of the Department Labor demonstrated in Exhibits "6", "7", "8", "9", and "9-A", miserably failed to show the exact and correct annual salary as stated in the respective contracts of employment of the respondent employees. The figures arrived at in each case did not tally with the annual salaries on to the employees' contracts of employment, the difference varying from P1.20 to as much as P14.40 always against the interest of the employees. The petitioner's defense consists of mathematical computations made after the filing of the

case in order to explain a clear attempt to make its employees work without the extra compensation provided by law on Sundays and legal holidays.

In not giving weight to the evidence of the petitioner company, the respondent court sustained the private respondents' evidence to the effect that their 25% additional compensation for work done on Sundays and Legal Holidays were not included in their respective monthly salaries. The private respondents presented evidence through the testimonies of Nardo Dayao, Ernesto Talampas, and Josias Federico who are themselves among the employees who filed the case for unfair labor practice in the respondent court and are private respondents herein. The petitioner- company's contention that the respondent court's conclusion on the issue of the 25% additional compensation for work done on Sundays and legal holidays during the first four hours that the private respondents had to work under their respective contracts of employment was not supported by substantial evidence is, therefore, unfounded. Much less do We find any grave abuse of discretion on the part of the respondent court in its interpretation of the employment contract's provision on salaries. In view of the controlling doctrine that a grave abuse of discretion must be shown in order to warrant our disturbing the findings of the respondent court, the reversal of the court's endings on this matter is unwarranted. (Sanchez vs. Court of Industrial Relations, 27 SCRA 490).

The last issue raised in the first assignment of error refers to a procedural matter. The petitioner-company contends that ,-the question as to whether or not the contracts of employment were null and void was not put in issue, hence, the respondent court pursuant to the Rules of Court should have refrained from ruling that such contracts of employment were null and void. In this connection We restate our finding that the respondent court did not declare the contracts of employment null and void in their entirety. Only the objectionable features violative of law were nullified. But even granting that the Court of Industrial Relations declared the contracts of employment wholly void, it could do so notwithstanding the procedural objection. In Sanchez u. Court of Industrial Relations, supra, this Court speaking through then Justice, now Chief Justice Enrique M. Fernando, stated:

xxx xxx xxx

Moreover, petitioners appear to be oblivious of the statutory mandate that respondent Court in the hearing, investigation and determination of any question or controversy and in the exercise of any of its duties or power is to act 'according to justice and equity and substantial merits of the case, without regard to technicalities or legal forms and shall not be bound by any technical rules of legal evidence' informing its mind 'in such manner as it may deem just and equitable.' Again, this Court has invariably accorded the most hospitable scope to the breadth and amplitude with which such provision is couched. So it has been from the earliest case decided in 1939 to a 1967 decision.

Two issues are raised in the second assignment of error by the petitioner-company. The first hinges on the jurisdiction of the respondent court to award additional compensation for nighttime work. Petitioner wants Us to re- examine Our rulings on the question of nighttime work. It contends that the respondent court has no jurisdiction to award additional compensation for nighttime work because of the declared policy on freedom of collective bargaining expressed in Republic Act 875 and the express prohibition in Section 7 of the said statute. A re- examination of the decisions on nighttime pay differential was the focus of attention in Rheem of the Philippines, Inc. et al., v. Ferrer, et al (19 SCRA 130). The earliest cases cited by the petitioner-company, Naric v. Naric Workers Union L-12075, - May 29, 1959 and Philippine Engineers' Syndicate u. Bautista, L-16440, February 29, 196.4, were discussed lengthily. Thus -

xxx xxx xxx

2. On the claim for night differentials, no extended discussion is necessary. To be read as controlling here is Philippine Engineers' Syndicate, Inc. vs. Hon. Jose S. Bautista, et al., L-16440, February 29, 1964, where this Court, speaking thru Mr. Chief Justice Cesar Bengzon, declared —

Only one issue is raised: whether or not upon the enactment of Republic Act 875, the CIR lost its jurisdiction over claims for additional compensation for regular night work. Petitioner says that this Act reduced the jurisdiction of respondent court

and limited it to specific cases which this Court has defined as: ... (1) when the labor dispute affects an industry which is indispensable to the national interest and is so certified by the President to the industrial court (Sec. 10, Republic Act 875); (2) when the controversy refers to minimum wage under the Minimum Wage Law (Republic Act 602); (3) when it involves hours of employment under the Eight-Hour Labor Law (Commonwealth Act 444) and (4) when it involves an unfair labor practice [Sec. 5(a), Republic Act 8751', [Paflu, et al. vs. Tan, et al., 52 Off. Gaz, No. 13, 5836].

Petitioner insists that respondents' case falls in none of these categories because as held in two previous cases, night work is not overtime but regular work; and that respondent court's authority to try the case cannot be implied from its general jurisdiction and broad powers' under Commonwealth Act 103 because Republic Act 875 precisely curbed such powers limiting them to certain specific litigations, beyond which it is not permitted to act.

We believe petitioner to be in error. Its position collides with our ruling in the Naric case [National Rice & Corn Corp. (NARIC) vs. NARIC Workers' Union, et al., G.R. No. L-12075, May 29, 1959] where we held;

While it is true that this Court made the above comment in the aforementioned case, it does not intend to convey the Idea that work done at night cannot also be an overtime work. The comment only served to emphasize that the demand which the Shell Company made upon its laborers is not merely overtime work but night work and so there was need to differentiate night work from daytime work. In fact, the company contended that there was no law that required the payment of additional compensation for night work unlike an overtime work which is covered by Commonwealth Act No. 444 (Eight Hour Labor Law). And this Court in that case said that while there was no law actually requiring payment of additional compensation for night work, the industrial court has the power to determine the wages that night workers should receive under Commonwealth Act No. 103, and so it justified the additional compensation in the Shell case for 'hygienic, medical, moral, cultural and sociological reasons.

xxx xxx xxx

True, in Paflu, et al. vs. Tan, et al., supra, and in a series of cases thereafter, We held that the broad powers conferred by Commonwealth Act 103 on the CIR may have been curtailed by Republic Act 875 which limited them to the four categories therein expressed in line with the public policy of allowing settlement of industrial disputes via the collective bargaining process; but We find no cogent reason for concluding that a suit of this nature for extra compensation for night work falls outside the domain of the industrial court. Withal, the record does not show that the employer-employee relation between the 64 respondents and the petitioner had ceased.

After the passage of Republic Act 875, this Court has not only upheld the industrial court's assumption of jurisdiction over cases for salary differentials and overtime pay [Chua Workers Union (NLU) vs. City Automotive Co., et al., G.R. No. L- 11655, April

29, 1959; Prisco vs. CIR, et al., G.R. No. L-13806, May 23, 1960] or for payment of additional compensation for work rendered on Sundays and holidays and for night work [Nassco vs. Almin, et al., G.R. No. L9055, November 28, 1958; Detective & Protective Bureau, Inc. vs. Felipe Guevara, et al., G.R. No. L-8738, May 31, 1957] but has also supported such court's ruling that work performed at night should be paid more than work done at daytime, and that if that work is done beyond the worker's regular hours of duty, he should also be paid additional compensation for overtime work. [Naric vs. Naric Workers' Union. et al., G. R No. L-12075, May 29, 1959, citing Shell Co. vs. National Labor Union, 81 Phil. 315]. Besides, to hold that this case for extra compensation now falls beyond the powers of the industrial court to decide, would amount to a further curtailment of the jurisdiction of said court to an extent which may defeat the purpose of the Magna Carta to the prejudice of labor.' [Luis Recato Dy, et al v-9. CIR, G.R. No. L-17788, May 25,1962]"

The petitioner-company's arguments on the respondent court's alleged lack of jurisdiction over additional compensation for work done at night by the respondents is without merit.

The other issue raised in the second assignment of error is premised on the petitioner-company's contention that the respondent court's ruling on the additional compensation for nighttime work is not supported by substantial evidence.

This contention is untenable. Pertinent portions of the respondent court's decision read:

xxx xxx xxx

There is no serious disagreement between the petitioners and respondent management on the facts recited above. The variance in the evidence is only with respect to the money claims. Witnesses for petitioners declared they worked on regular days and on every other Sunday and also during all holidays; that for services rendered on Sundays and holidays they were not paid for the first four (4) hours and what they only received was the overtime compensation corresponding to the number of hours after or in excess of the first four hours; and that such payment is being indicated in the overtime pay for work done in excess of eight hours on regular working days. It is also claimed that their nighttime services could well be seen on their respective daily time records. .. (Emphasis supplied) (p.116, rollo)

The respondent court's ruling on additional compensation for work done at night is, therefore, not without evidence. Moreover, the petitioner-company did not deny that the private respondents rendered nighttime work. In fact, no additional evidence was necessary to prove that the private respondents were entitled to additional compensation for whether or not they were entitled to the same is a question of law which the respondent court answered correctly. The "waiver rule" is not applicable in the case at bar. Additional compensation for nighttime work is founded on public policy, hence the same cannot be waived. (Article 6, Civil Code). On this matter, We believe that the respondent court acted according to justice and equity and the substantial merits of the case, without regard to technicalities or legal forms and should be sustained.

The third assignment of error is likewise without merit. The fact that only three of the private respondents testified in court does not adversely affect the interests of the other respondents in the case. The ruling in Dimayuga V. Court of Industrial Relations (G.R. No. L-0213, May 27, 1957) has been abandoned in later rulings of this Court.In Philippine Land Air-Sea Labor Union (PLASLU) vs. Sy Indong Company Rice And Corn Mill (11 SCRA 277) We had occasion to re-examine the ruling in Dimayuga We stated:

The latter reversed the decision of the trial Judge as regards the reinstatement with backwages of ... upon the theory that this is not a class suit; that, consequently, it is necessary and imperative that they should personally testify and prove the charges in the complaint', and that, having failed to do so, the decision of the trial Judge in their favor is untenable under the rule laid down in Dimayuga vs. Court of Industrial Relations, G.R. No. L-0213 (May 27,1957).

We do not share the view taken in the resolution appealed from. As the trial Judge correctly said, in Ms dissent from said resolution,:

xxx xxx xxx

In the case of Sanchez v. Court of Industrial Relations, supra, this Court stated:

To the reproach against the challenged order in the brief of petitioners in view of only two of the seven claimants testifying, a statement by this Court in Ormoc Sugar Co., Inc. vs. OSCO Workers Fraternity Labor Union would suffice by way of refutation. Thus: "This Court fully agrees with the respondent that quality and not quantity of witnesses should be the primordial consideration in the appraisal of evidence.' Barely eight days later, in another decision, the above statement was given concrete expression. Thus: 'The bases of the awards were not only the respective affidavits of the claimants but the testimonies of 24 witnesses (because 6 were not given credence by the court below) who Identified the said 239 claimants. The contention of petitions on this point is therefore unfounded Moveover in Philippine Land-Air-Sea Labor Union (PLASLU) v. Sy Indong company Rice & Corn Mill, this Court, through the present Chief Justice rejected as untenable the theory of the Court of Industrial Relations concerning the imperative needs of all the claimants to testify personality and prove their charges in the complaint. As tersely put: 'We do not share the view taken in the resolution appealed from.

The petitioner's contention that its employees fully understood what they signed when they entered into the contracts of employment and that they should be bound by their voluntary commitments is anachronistic in this time and age.

The Mercury Drug Co., Inc., maintains a chain of drugstores that are open every day of the week and, for some stores, up to very late at night because of the nature of the pharmaceutical retail business. The respondents knew that they had to work Sundays and holidays and at night, not as exceptions to the rule but as part of the regular course of employment. Presented with contracts setting their compensation on an annual basis with an express waiver of extra compensation for work on Sundays and holidays, the workers did not have much choice. The private respondents were at a disadvantage insofar as the contractual relationship was concerned. Workers in our country do not have the luxury or freedom of declining job openings or filing resignations even when some terms and conditions of employment are not only onerous and inequitous but illegal. It is precisely because of this situation that the framers of the Constitution embodied the provisions on social justice (Section 6, Article 11) and protection to labor (Section 9, Article I I) in the Declaration of Principles And State Policies.

It is pursuant to these constitutional mandates that the courts are ever vigilant to protect the rights of workers who are placed in contractually disadvantageous positions and who sign waivers or provisions contrary to law and public policy.

WHEREFORE, the petition is hereby dismissed. The decision and resolution appealed from are affirmed with costs against the petitioner.

SO ORDERED.

Republic of the Philippines

Supreme CourtManila

FIRST DIVISION

ABDULJUAHID R. PIGCAULAN, ⃰ G.R. No. 173648

Petitioner,

Present:

- versus - CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,

DEL CASTILLO,

ABAD, ⃰ ⃰ and

SECURITY and CREDITINVESTIGATION, INC. and/orRENE AMBY REYES ,

VILLARAMA, JR., JJ.

Promulgated:

Respondents. January 16, 2012

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

D E C I S I O N

DEL CASTILLO, J.: It is not for an employee to prove non-payment of benefits to which he is entitled by law. Rather, it is on the employer that the burden of proving payment of these claims rests.

This Petition for Review on Certiorari[1] assails the February 24, 2006 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 85515, which granted the petition forcertiorari filed therewith, set aside the March 23, 2004[3] and June 14, 2004[4] Resolutions of the National Labor Relations Commission (NLRC), and dismissed the complaint filed by Oliver R. Canoy (Canoy) and petitioner Abduljuahid R. Pigcaulan (Pigcaulan) against respondent Security and Credit Investigation, Inc. (SCII) and its General Manager, respondent Rene Amby Reyes. Likewise assailed is the June 28, 2006 Resolution[5] denying Canoys and Pigcaulans Motion for Reconsideration.[6]

Factual Antecedents Canoy and Pigcaulan were both employed by SCII as security guards and were assigned to SCIIs different clients. Subsequently, however, Canoy and Pigcaulan filed with the Labor Arbiter separate complaints[7] for underpayment of salaries and non-payment of overtime, holiday, rest day, service incentive leave and 13th month pays. These complaints were later on consolidated as they involved the same causes of action. Canoy and Pigcaulan, in support of their claim, submitted their respective daily time records reflecting the number of hours served and their wages for the same. They likewise presented itemized lists of their claims for the corresponding periods served.

Respondents, however, maintained that Canoy and Pigcaulan were paid their just salaries and other benefits under the law; that the salaries they received were above the statutory minimum wage and the rates provided by the Philippine Association of Detective and Protective Agency Operators (PADPAO) for security guards; that their holiday pay were already included in the computation of their monthly salaries; that they were paid additional premium of 30% in addition to their basic salary whenever they were required to work on Sundays and 200% of their salary for work done on holidays; and, that Canoy and Pigcaulan were paid the corresponding 13th month pay for the years 1998 and 1999. In support thereof, copies of payroll listings[8] and lists of employees who received their 13th month pay for the periods December 1997 to November 1998 and December 1998 to November 1999[9] were presented. In addition, respondents contended that Canoys and Pigcaulans monetary claims should only be limited to the past three years of employment pursuant to the rule on prescription of claims. Ruling of the Labor Arbiter Giving credence to the itemized computations and representative daily time records submitted by Canoy and Pigcaulan, Labor Arbiter Manuel P. Asuncion awarded them their monetary claims in his Decision[10] dated June 6, 2002. The Labor Arbiter held that the payroll listings presented by the respondents did not prove that Canoy and Pigcaulan were duly paid as same were not signed by the latter or by any SCII officer. The 13th month payroll was, however, acknowledged as sufficient proof of payment, for it bears Canoys and Pigcaulans signatures. Thus, without indicating any detailed computation of the judgment award, the Labor Arbiter ordered the payment of overtime pay, holiday pay, service incentive leave pay and proportionate 13th month pay for the year 2000 in favor of Canoy and Pigcaulan, viz:

WHEREFORE, the respondents are hereby ordered to pay the complainants: 1) their salary differentials in the amount of P166,849.60 for Oliver Canoy and P121,765.44 for Abduljuahid Pigcaulan; 2) the sum of P3,075.20 for Canoy and P2,449.71 for Pigcaulan for service incentive leave pay and; [3]) the sum of P1,481.85 for Canoy and P1,065.35 for Pigcaulan as proportionate 13th month pay for the year 2000. The rest of the claims are dismissed for lack of sufficient basis to make an award.

SO ORDERED.[11]

Ruling of the National Labor Relations Commission Respondents appealed to the NLRC. They alleged that there was no basis

for the awards made because aside from the self-serving itemized computations, no representative daily time record was presented by Canoy and Pigcaulan. On the contrary, respondents asserted that the payroll listings they submitted should have been given more probative value. To strengthen their cause, they attached to their Memorandum on Appeal payrolls[12] bearing the individual signatures of Canoy and Pigcaulan to show that the latter have received their salaries, as well as copies of transmittal letters[13] to the bank to show that the salaries reflected in the payrolls were directly deposited to the ATM accounts of SCIIs employees.

The NLRC, however, in a Resolution[14] dated March 23, 2004, dismissed the appeal

and held that the evidence show underpayment of salaries as well as non-payment of service incentive leave benefit. Accordingly, the Labor Arbiters Decision was sustained. The motion for

reconsideration thereto was likewise dismissed by the NLRC in a Resolution[15] dated June 14, 2004. Ruling of the Court of Appeals In respondents petition for certiorari with prayer for the issuance of a temporary restraining order and preliminary injunction[16] before the CA, they attributed grave abuse of discretion on the part of the NLRC in finding that Canoy and Pigcaulan are entitled to salary differentials, service incentive leave pay and proportionate 13th month pay and in arriving at amounts without providing sufficient bases therefor.

The CA, in its Decision[17] dated February 24, 2006, set aside the rulings ofboth the Labor Arbiter and the NLRC after noting that there were no factual and legal bases mentioned in the questioned rulings to support the conclusions made. Consequently, it dismissed all the monetary claims of Canoy and Pigcaulan on the following rationale:

First. The Labor Arbiter disregarded the NLRC rule that, in cases involving money awards and at all events, as far as practicable, the decision shall embody the detailed and full amount awarded. Second. The Labor Arbiter found that the payrolls submitted by SCII have no probative value for being unsigned by Canoy, when, in fact, said payrolls, particularly the payrolls from 1998 to 1999 indicate the individual signatures of Canoy. Third. The Labor Arbiter did not state in his decision the substance of the evidence adduced by Pigcaulan and Canoy as well as the laws or jurisprudence that would show that the two are indeed entitled to the salary differential and incentive leave pays. Fourth. The Labor Arbiter held Reyes liable together with SCII for the payment of the claimed salaries and benefits despite the absence of proof that Reyes deliberately or maliciously designed to evade SCIIs alleged financial obligation; hence the Labor Arbiter ignored that SCII has a corporate personality separate and distinct from Reyes. To justify solidary liability, there must be an allegation and showing that the officers of the corporation deliberately or maliciously designed to evade the financial obligation of the corporation.[18]

Canoy and Pigcaulan filed a Motion for Reconsideration, but same was denied by the CA in a Resolution[19] dated June 28, 2006. Hence, the present Petition for Review on Certiorari.

Issues

The petition ascribes upon the CA the following errors:

I. The Honorable Court of Appeals erred when it dismissed the complaint on mere alleged failure of the Labor Arbiter and the NLRC to observe the prescribed form of decision, instead of remanding the case for reformation of the decision to include the desired detailed computation.

II. The Honorable Court of Appeals erred when it [made]

complainants suffer the consequences of the alleged non-observance by the Labor Arbiter and NLRC of the prescribed forms of decisions considering that they have complied with all needful acts required to support their claims.

III. The Honorable Court of Appeals erred when it

dismissed the complaint allegedly due to absence of legal and factual [bases] despite attendance of substantial evidence in the records.[20]

It is well to note that while the caption of the petition reflects both the names of Canoy and Pigcaulan as petitioners, it appears from its body that it is being filed solely by Pigcaulan. In fact, the Verification and Certification of Non-Forum Shopping was executed by Pigcaulan alone.

In his Petition, Pigcaulan submits that the Labor Arbiter and the NLRC are not strictly

bound by the rules. And even so, the rules do not mandate that a detailed computation of how the amount awarded was arrived at should be embodied in the decision. Instead, a statement of the nature or a description of the amount awarded and the specific figure of the same will suffice. Besides, his and Canoys claims were supported by substantial evidence in the form of the handwritten detailed computations which the Labor Arbiter termed as representative daily time records, showing that they were not properly compensated for work rendered. Thus, the CA should have remanded the case instead of outrightly dismissing it.

In their Comment,[21] respondents point out that since it was only Pigcaulan who filed

the petition, the CA Decision has already become final and binding upon Canoy. As to Pigcaulans arguments, respondents submit that they were able to present sufficient evidence to prove payment of just salaries and benefits, which bits of evidence were unfortunately ignored by the Labor Arbiter and the NLRC. Fittingly, the CA reconsidered these pieces of evidence and properly appreciated

them. Hence, it was correct in dismissing the claims for failure of Canoy and Pigcaulan to discharge their burden to disprove payment.

Pigcaulan, this time joined by Canoy, asserts in his Reply[22] that his filing of the

present petition redounds likewise to Canoys benefit since their complaints were consolidated below. As such, they maintain that any kind of disposition made in favor or against either of them would inevitably apply to the other. Hence, the institution of the petition solely by Pigcaulan does not render the assailed Decision final as to Canoy. Nonetheless, in said reply they appended Canoys affidavit[23] where he verified under oath the contents and allegations of the petition filed by Pigcaulan and also attested to the authenticity of its annexes. Canoy, however, failed to certify that he had not filed any action or claim in another court or tribunal involving the same issues. He likewise explains in said affidavit that his absence during the preparation and filing of the petition was caused by severe financial distress and his failure to inform anyone of his whereabouts.

Our Ruling

The assailed CA Decision is considered final as to Canoy. We have examined the petition and find that same was filed by Pigcaulan solely on his own behalf. This is very clear from the petitions prefatory which is phrased as follows:

COMES NOW Petitioner Abduljuahid R. Pigcaulan, by counsel, unto this Honorable Court x x x. (Emphasis supplied.)

Also, under the heading Parties, only Pigcaulan is mentioned as petitioner and consistent with this, the body of the petition refers only to a petitioner and never in its plural form petitioners. Aside from the fact that the Verification and Certification of Non-Forum Shopping attached to the petition was executed by Pigcaulan alone, it was plainly and particularly indicated under the name of the lawyer who prepared the same, Atty. Josefel P. Grageda, that he is the Counsel for Petitioner Adbuljuahid Pigcaulan only. In view of these, there is therefore, no doubt, that the petition was brought only on behalf of Pigcaulan. Since no appeal from the CA Decision was brought by Canoy, same has already become final and executory as to him. Canoy cannot now simply incorporate in his affidavit a verification of the contents and allegations of the petition as he is not one of the petitioners therein. Suffice it to state that it would have been different had the said petition been filed in behalf of both Canoy and Pigcaulan. In such a case, subsequent submission of a verification may be allowed as non-compliance therewith or a defect therein does not necessarily render the pleading, or the petition as in this case, fatally defective.[24] The court may order its submission or correction, or act on the pleading if the attending circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of justice may be served thereby. Further, a verification is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct.[25] However, even if it were so, we note that Canoy still failed to submit or at least incorporate in his affidavit a certificate of non-forum shopping.

The filing of a certificate of non-forum shopping is mandatory so much sothat non-compliance could only be tolerated by special circumstances and compelling reasons.[26] This Court has held that when there are several petitioners, all of them must execute and sign the certification against forum shopping; otherwise, those who did not sign will be dropped as parties to the case.[27] True, we held that in some cases, execution by only one of the petitioners on behalf of the other petitioners constitutes substantial compliance with the rule on the filing of a certificate of non-forum shopping on the ground of common interest or common cause of action or defense.[28] We, however, find that common interest is not present in the instant petition. To recall, Canoys and Pigcaulans complaints were consolidated because they both sought the same reliefs against the same respondents. This does not, however, mean that they share a common interest or defense.The evidence required to substantiate their claims may not be the same. A particular evidence which could sustain Canoys action may not effectively serve as sufficient to support Pigcaulans claim.

Besides, assuming that the petition is also filed on his behalf, Canoy failed to show

any reasonable cause for his failure to join Pigcaulan to personally sign the Certification of Non-Forum Shopping. It is his duty, as a litigant, to be prudent in pursuing his claims against SCII, especially so, if he was indeed suffering from financial distress. However, Canoy failed to advance any justifiable reason why he did not inform anyone of his whereabouts when he knows that he has a pending case against his former employer. Sadly, his lack of prudence and diligence cannot merit the courts consideration or sympathy. It must be emphasized at this point that procedural rules should not be ignored simply because their non-observance may result in prejudice to a partys substantial rights. The Rules of Court should be followed except only for the most persuasive of reasons.[29]

Having declared the present petition as solely filed by Pigcaulan, this Court shall consider the subsequent pleadings, although apparently filed under his and Canoys name, as solely filed by the former.

There was no substantial evidence to support the grant of overtime pay.

The Labor Arbiter ordered reimbursement of overtime pay, holiday pay, service incentive leave pay and 13th month pay for the year 2000 in favor of Canoy and Pigcaulan. The Labor Arbiter relied heavily on the itemized computations they submitted which he considered as representative daily time records to substantiate the award of salary differentials.The NLRC then sustained the award on the ground that there was substantial evidence of underpayment of salaries and benefits. We find that both the Labor Arbiter and the NLRC erred in this regard. The handwritten itemized computations are self-serving, unreliable and unsubstantial evidence to sustain the grant of salary differentials, particularly overtime pay. Unsigned and unauthenticated as they are, there is no way of verifying the truth of the handwritten entries stated therein.Written only in pieces of paper and solely prepared by Canoy and Pigcaulan, these representative daily time records, as termed by the Labor Arbiter, can hardly be considered as competent evidence to be used as basis to prove that the two were underpaid of their salaries. We find nothing in the records which could substantially support Pigcaulans contention that he had rendered service beyond eight hours to entitle him to overtime pay and during Sundays to entitle him to restday pay. Hence, in the absence of any concrete proof that additional service beyond the normal working hours and days had indeed been rendered, we cannot affirm the grant of overtime pay to Pigcaulan. Pigcaulan is entitled to holiday pay, service incentive leave pay and proportionate 13th month pay for year 2000. However, with respect to the award for holiday pay, service incentive leavepay and 13th month pay, we affirm and rule that Pigcaulan is entitled to these benefits.Article 94 of the Labor Code provides that:

ART. 94. RIGHT TO HOLIDAY PAY. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers;

x x x x While Article 95 of the Labor Code provides:

ART. 95. RIGHT TO SERVICE INCENTIVE LEAVE. (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive of five days with pay.

x x x x Under the Labor Code, Pigcaulan is entitled to his regular rate on holidays even if he

does not work.[30] Likewise, express provision of the law entitles him to service incentive leave benefit for he rendered service for more than a year already. Furthermore, under Presidential Decree No. 851,[31] he should be paid his 13th month pay. As employer, SCII has the burden of proving that it has paid these benefits to its employees.[32]

SCII presented payroll listings and transmittal letters to the bank to show that Canoy

and Pigcaulan received their salaries as well as benefits which it claimed are already integrated in the employees monthly salaries. However, the documents presented do not prove SCIIs allegation. SCII failed to show any other concrete proof by means of records, pertinent files or similar documents reflecting that the specific claims have been paid. With respect to 13th month pay, SCII presented proof that this benefit was paid but only for the years 1998 and 1999. To repeat, the burden of proving payment of these monetary claims rests on SCII, being the employer. It is a rule that one who pleads payment has the burden of proving it. Even when the plaintiff alleges non-payment, still the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment.[33] Since SCII failed to provide convincing proof that it has already settled the claims, Pigcaulan should be paid his holiday pay, service incentive leave benefits and proportionate 13th month pay for the year 2000.

The CA erred in dismissing the claims instead of remanding the case to the Labor Arbiter for a detailed computation of the judgment award. Indeed, the Labor Arbiter failed to provide sufficient basis for the monetaryawards granted. Such failure, however, should not result in prejudice to the substantial rights of the party. While we disallow the grant of overtime pay and restday pay in favor of Pigcaulan, he is nevertheless entitled, as a matter of right, to his holiday pay, service incentive leave pay and 13th month pay for year 2000. Hence, the CA is not correct in dismissing Pigcaulans claims in its entirety. Consistent with the rule that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued, [34]Pigcaulan can only demand the amounts due him for the period within three years preceding the filing of the complaint in 2000. Furthermore, since the records are insufficient to use as bases to properly compute Pigcaulans claims, the case should be remanded to the Labor Arbiter for a detailed computation of the monetary benefits due to him. WHEREFORE, the petition is GRANTED. The Decision dated

February 24, 2006 and Resolution dated June 28, 2006 of the Court of Appeals in CA-G.R. SP No. 85515 are REVERSED and SET ASIDE. Petitioner Abduljuahid R. Pigcaulan is hereby declared ENTITLED to holiday pay and service incentive leave pay for the years 1997-2000 and proportionate 13th month pay for the year 2000. The case is REMANDED to the Labor Arbiter for further proceedings to determine the exact amount and to make a detailed computation of the monetary benefits due Abduljuahid R. Pigcaulan which Security and Credit Investigation Inc. should pay without delay. SO ORDERED.


Manila

FIRST DIVISION

G.R. No. L-39387 June 29, 1982

PAMPANGA SUGAR DEVELOPMENT CO., INC., petitioner, vs.COURT OF INDUSTRIAL RELATIONS AND SUGAR WORKERS ASSOCIATION, respondents.

MAKASIAR, J.:

Petitioner Pampanga Sugar Development Company, Inc. seeks the reversal of the order dated June 6, 1974 of respondent Court of Industrial Relations awarding to respondent Sugar Workers Association's (Union) counsel attorney's fees equivalent to 20% of the judgment in CIR Case No. 4264- ULP and ordering the lower court's Examining Division to compute the wage and fringe benefits differentials due the 28 individual workers who did not execute quitclaims as well as attorney's fees corresponding to 20% of the benefits due to 53 workers who entered into agreements waiving their rights and benefits under the decision dated December 4, 1972 in the aforecited case; also, the setting aside of the CIR resolution of September 3, 1974 denying petitioner's motion for reconsideration of the questioned order (pp. 15 & 57, rec.).

For a better appreciation of this case, certain prefatory facts must be recalled. Sometime in February, 1956, the workers' affiliates of respondent Union staged a strike against petitioner company. This labor dispute was certified by the President to the Court of Industrial Relations which was docketed as Case No. 13-IPA. After six years, the said Court issued an order on November 8, 1962 directing petitioner company to reinstate the members of respondent union. On March 12, 1963 some 88 union members were thus reinstated by petitioner. However, petitioner discriminated against the reemployed workers with respect to wage rates, off-season pay, cost of living allowance, milling bonus and Christmas bonus by depriving them of aforesaid benefits or by granting to some members benefits lesser than those given to members of the Pasudeco Workers Union, another labor group in the service of petitioner. By reason of such denial and/or grant of lower benefits to respondent's members because of their union affiliation and union activities, respondent filed with the CIR a complaint dated September 10, 1964 for unfair labor practice against petitioner which case was docketed as Case No. 4264-ULP.

On December 4, 1972, the CIR handed down a decision adjudging herein petitioner guilty of unfair labor practice acts as charged and finding the same to have been committed, and thereby directing petitioner to cease and desist from further committing the said unfair labor practice acts and directing petitioner to pay wage differentials to certain workers and fringe benefits as would be found due and payable to them and to readmitted seasonal and casual members of respondent union totalling 88 with the exception of 7 workers.

In a resolution dated May 28, 1973, the CIR denied petitioner's motion for reconsideration of aforesaid decision filed on December 14, 1972. Petitioner appealed the above decision and resolution to this Court on June 15, 1973 praying in its petition for the nullification of said decision and motion for being contrary to law, and for the rendition of a new judgment dismissing CIR Case No. 4264-ULP.

This Court, in its resolution of July 31, 1973, denied the said petition for review (docketed as G.R. No. L-36994) for lack of merit. Petitioner then moved for reconsideration of aforesaid denial which was denied on October 4, 1973 for lack of merit. Said resolution denying the motion for reconsideration thus became final and executory on October 12, 1973.

With the finality of the December 4, 1972 decision having been settled, respondent Union filed with the CIR a motion for computation of final judgment and a petition for attorney's lien both dated October 17, 1973 (pp. 47 & 50, rec.).

Petitioner company filed its answer to motion for computation of final judgment and the petition for attorney's lien under date of November 20, 1973 (p. 52, rec.).

The CIR, acting on the aforesaid motions of respondent Union, issued its order of June 6, 1974 approving and granting to respondent's counsel, Atty. Ignacio Lacsina, attorney's fees equivalent to 20% of the total amount of final judgment or whatever recovery or settlement is made and directing its Examining Division to compute the wage and fringe benefits differentials due the 28 individual workers who did not waive or quitclaim their rights established by the decision of December 4, 1972 as well as the attorney's fees equivalent to 20% of the total wage and fringe benefits differentials due the fifty-three (53) individual workers who executed agreements with the company waiving and quitclaiming their rights, benefits and privileges under the aforesaid decision (pp. 15 & 57, rec.).

Petitioner moved for reconsideration of aforecited order on June 26, 1974 and on July 5, 1974, the arguments supporting said motion for reconsideration followed (pp. 63 & 65, rec.).

Respondent Union then filed its motion to strike out the motion for reconsideration dated July 23, 1974 (p. 72, rec.). In a resolution of September 3, 1974, respondent lower court denied petitioner's motion for reconsideration.

Thus, this appeal from the subject order and resolution of the CIR.

Petitioner alleges the following assignment of errors:

1. The Court of Industrial Relations erred in awarding attorney's fees to the union's counsel equivalent to 20% of the total amount of final judgment or whatever recovery or settlement is made thereunder; because, aside from being inequitable, exorbitant, excessive and unconscionable, the same is without legal basis.

2. The Court of Industrial Relations erred in ordering the Chief of its examining division or his duly authorized representative to examine the payrolls, vouchers, books of account and other pertinent documents of petitioner, and to compute the wage and fringe-benefits differentials allegedly due the members of respondent Union because such examination and computation have become academic.

3. The Court of Industrial Relations erred in not denying or dismissing the two motions filed by respondent union on October 18, 1973 praying therein that the union's counsel be awarded attorney's fees and that an order be issued directing the examining division of the court to compute the wage and fringe benefits differentials allegedly due the members of the union under the decision of December 4, 1972.

Respondents, however, contend that —

1. The issue of quitclaims is now res judicata;

2. The CIR finding that 81 members of respondent union are entitled to adjudged benefits is no longer alterable after decision has become final;

3. The CIR power to adjust unfair labor practices is unaffected by individual settlements;

4. The rights of labor are unwaivable; quitclaims null and void; and

5. The question regarding alleged unreasonableness of award of attorney's fees, not raised before Court a quo, is barred on appeal.

After a careful evaluation of the petitioners' and respondents' pleadings, this Court, finds the allegations of petitioner to be without merit.

On the first assignment of error, paragraph (a), the petitioner failed to raise the issue before the trial court. This Court notes that petitioner's answer to the motion for computation of final judgment and to petition for attorney's lien filed by the respondent in the trial court did not raise the foregoing issue. It is a well-settled doctrine in this

jurisdiction that issues not raised in the trial court may not be raised on appeal. Otherwise, there will be no end to litigations thus defeating the ends of justice.

Nevertheless, this Court finds the allegations to be devoid of merit. Petitioner's contention that there is no basis for respondent's petition for attorney's lien filed with the trial court containing allegations relative to attorney's fees as agreed upon between him and his client, the complainant Sugar Workers' Association, is untenable. The written conformity of the President of said Sugar Workers Association on behalf thereof confirms the existence of such an agreement on attorney's fees and constitutes an irrefutable evidence of such agreement. The trial court, therefore, had sufficient evidence upon which it based its decision. The petitioner did not contest the allegations contained in the respondent's petition for attorney's lien before the trial court. This constitutes an implied admission thereof. Moreover, it is evident from the tenor of the trial court's order issued on June 6, 1974 that the said court carefully evaluated the respondent's petition for attorney's lien and even reduced the percentage from 25 IC to 20 %.

On the first assignment of error, paragraph (b), this Court likewise finds the same to be without merit. This issue has already been resolved by this Court when the petitioner filed its first petition for certiorari (G.R. No. L- 36994) seeking nullification of the trial court's judgment on the same issue. Petitioner's allegations were rejected by this Court in said case. It may not now be repeated and raised on appeal before this Court, the same being res judicata.

Be that as it may, the allegations of petitioner to the effect that by reason of the quitclaims there is nothing upon which the attorney's lien attaches, is not valid. This Court finds the quitclaims not valid. Firstly, said quitclaims were secured on December 27, 1972 by petitioner after it lost its case in the lower court when the latter promulgated its decision on the case on December 4, 1972. Obviously in its desire to deny what is due the sugar workers concerned and frustrate the decision of the lower court awarding benefits to them, it used its moral ascendancy as employer over said workers to secure said quitclaims. Predicated on said quitclaims, petitioner filed a petition for certiorari before this Court but the same was denied by the Court on July 31, 1973 and October 4, 1973. Petitioner now has the audacity to return before this Court still invoking said quitclaims, which We again reject.

Secondly, while rights may be waived, the same must not be contrary to law, public order, public policy, morals or good customs or prejudicial to a third person with a right recognized by law (Art. 6, New Civil Code). The quitclaim agreements contain the following provisions in paragraph I 1, No. 3, thereof:

3. Nothing herein stipulated shall be construed as an admission and/or recognition by the Party of The Second Part of its failure refusal and/or omission as employer, to faithfully comply with the pertinent laws, rules and regulations and/or agreements, nor its liability therefor and thereunder.

Needless to state, the foregoing provisions are contrary to law, It exempts the petitioner from any legal liability. The above- quoted provision renders the quitclaim agreements void ab initio in their entirety since they obligated the workers concerned to forego their benefits, while at the same time, exempted the petitioner from any liability that it may choose to reject. This runs counter to Article 22 of the New Civil Code which provides that no one shall be unjustly enriched at the expense of another.

Thirdly, the alleged quitclaim agreements are contrary to public policy. Once a civil action is filed in court, the cause of action may not be the subject of compromise unless the same is by leave of the court concerned. Otherwise, this will render the entire judicial system irrelevant to the prejudice of the national interest. Parties to litigations cannot be allowed to trifle with the judicial system by coming to court and later on agreeing to a compromise without the knowledge and approval of the court. This converts the judiciary into a mere tool of party-litigants who act according to their whims and caprices. This is more so when the court has already rendered its decision on the issues submitted.

In the case at bar, the lower court has already rendered a decision on the issues presented before the alleged quitclaims agreements were made. The quitclaim agreements were secured by petitioner while it filed a petition for certiorari before this Court for a review of the lower court's decision. The quiclaim agreements taken together with the petitioner's petition for certiorari of the trial court's decision clearly and unmistakably shows the bad faith of the petitioner and its outright refusal to comply with its legal obligations. And now it has the temerity to attempt to use this Court as its instrument for the purpose.

This Court rejects the contention of petitioner to the effect that the lien of an attorney on the judgment or decree for the payment of money and the preference thereof which he has secured in favor of his client takes legal effect only from and after, but not before notice of said lien has been entered in the record and served on the adverse

party, citing the cases of Menzi and Co. vs. Bastida (63 Phil. 16) and Macondray & Co. vs. Jose (66 Phil. 590) in support thereof.

This Court finds the petitioner's contentions and citations applicable only when the case has already been decided with finality. In the case at bar, the original case was decided with finality only after this Court denied the petitioner's motion for reconsideration of this Court's denial of its petition for certiorari on the lower court's decision.

This Court is appalled by the attempt of petitioner to mislead it by alleging that the lower court recognized the validity and effectivity of the 53 individual agreements when it declared allegedly that "rights may be waived. " The records show that the lower court qualified its statement to the effect that the waiver must not be contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law citing Article 6 of the New Civil Code. This attempt by petitioner casts a serious doubt on the integrity and good faith not only of the petitioner but also of its counsel.

This Court rejects the allegation of petitioner to the effect that the 53 agreements gave substance to the policy of the Industrial Peace Act of encouraging the parties to make all reasonable efforts to settle their differences by mutual agreement, citing the case of Filomena Dionela, et al. vs. CIR, et al. (L-18334, August 31, 1963).

Petitioner's contention and the case cited in support thereof apply only where there is good faith on the part of the party litigants. In the case at bar, petitioner acted with evident bad faith and malice. Petitioner secured the 53 quitclaim agreements individually with the 53 sugar workers without the intervention of respondent's lawyer who was representing them before the lower court. This subterfuge is tantamount to a sabotage of the interest of respondent association. Needless to say, the means employed by petitioner in dealing with the workers individually, instead of collectively through respondent and its counsel, violates good morals as they undermine the unity of respondent union and fuels industrial disputes, contrary to the declared policy in the Industrial Peace Act.

This Court likewise rejects petitioner's allegation that the 53 quitclaim agreements were in the nature of a compromise citing the case of Republic vs. Estenzo, et al., (L-24656, September 25, 1968, 25 SCRA 122) and Articles 2028 and 2040 of the New Civil Code.

Petitioner's allegations and citations apply only to compromises between the party-litigants done in good faith. In the case at bar, there was no compromise between the petitioner and the respondent Sugar Workers Association. In respect of the 53 quitclaims, these are not compromise agreements between the petitioner and respondent union. They are separate documents of renunciation of individual rights. Compromise involves the mutual renunciation of rights by both parties on a parity basis. The quitclaims, however, bind the workers to renounce their rights while the petitioner not only does not renounce anything but also acquires exemption from any legal liability in connection therewith.

On the First Assignment of Error, Paragraph (c), the petitioner anchors his allegations on the technical procedural requirements of Section 37, Rule 138 of the New Rules of Court. This Court, however, finds petitioner's allegation without merit. Said provision of the Rules of Court is meant to protect the interest of an attorney's client and the adverse party by seeing to it that they are given the opportunity to contest the creation of the attorney's lien. It will be noted from the records that the client Sugar Workers Union was not only notified but also affixed its conformity to the respondents' motion for attorney's lien. With respect to the adverse party, the petitioner in this case, said adverse party's interest was amply protected by the lower court when the latter admitted petitioner's answer to respondent's motion for computation of final judgment and to respondent's counsel's petition for attorney's lien. Petitioner did not raise the aforesaid technicality in its answer before the lower court. It cannot now raise it for the first time on appeal.

On the First Assignment of Error, Paragraph (d), this Court finds petitioner's allegations to the effect that the attorney's fees awarded are inequitable, exorbitant, excessive and unconscionable, citing in the process the case of Meralco Workers' Union vs. Gaerlan (32 SCRA 419), completely without basis nor merit.

Again, petitioner did not raise this issue in the lower court. It cannot now raise said issue for the first time on appeal before this Court. Nevertheless, petitioner has failed to prove any of its allegations. Hence, this Court finds the same worthless. The Meralco case does not apply in this case for the reason that the facts and circusmtances are entirely different.

On the Second Assignment of Error, this Court finds petitioner's allegation to the effect that the lower court erred in ordering the computation of judgment on the ground that

by reason of the quitclaim agreements the computation of judgment has become academic, to be without merit and grossly inane.

The allegations of petitioner are premised on its previous allegations regarding the quitclaims. This Court has earlier stated that the quitclaim agreements are void ab initio. The lower court was correct in directing the computation of judgment, there being a basis therefor.

On the Third Assignment of Error, this Court likewise finds petitioner's allegations which are based on its allegations in support of the first and second assignments of errors, without merit, as heretofore discussed.

WHEREFORE, THE PETITION IS HEREBY DISMISSED AND RESPONDENT CIR (NOW THE NLRC) IS HEREBY DIRECTED TO IMPLEMENT ITS ORDER DATED JUNE 6,1974.

COSTS AGAINST PETITIONER.

SO ORDERED.

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