SECOND DIVISION maintains a separate line of business does not extinguish the It was further expressly stipulated that
inguish the It was further expressly stipulated that the assignment of
[G.R. No. 80680. January 26, 1989.]
DANILO B. TABAS, EDUARDO A. BONDOC, RAMON
M. BRIONES, EDUARDO R. ERISPE, JOEL
MADRIAGA, ARTHUR M. ESPINO, AMARO BONA,
FERDINAND CRUZ, FEDERICO A. BELITA, ROBERTO
P. ISLES, ELMER ARMADA, EDUARDO UDOG, PETER
TIANSING, MIGUELITA QUIAMBAO, NOMER
MATAGA, VIOLY ESTEBAN and LYDIA ORTEGA,
petitioners, vs. CALIFORNIA MANUFACTURING
COMPANY, INC., LILY VICTORIA A. AZARCON,
NATIONAL LABOR RELATIONS COMMISSION, and
HON. EMERSON C. TUMANON, respondents.
V.E. Del Rosario & Associates for respondent CMC.
The Solicitor General for public respondent.
Banzuela, Flores, Miralles, Raneses, Sy, Taquio and
Associates for petitioners.
Mildred A. Ramos for respondent Lily Victoria A. Azarcon.
SYLLABUS
1. LABOR LAW; EMPLOYER-EMPLOYEE
RELATIONSHIP; DETERMINATION, DEPENDENT UPON
CERTAIN STANDARDS. The determination of whether or
not there is an employer-employee relation depends upon four
standards: (1) the manner of selection and engagement of the
putative employee; (2) the mode of payment of wages; (3) the
presence or absence of a power of dismissal; and (4) the
presence or absence of a power to control the putative
employee's conduct. Of the four, the right-of-control test has
been held to be the decisive factor.
2. ID.; ID.; EMPLOYER AND "LABOR ONLY"
CONTRACTOR; BOTH LIABLE FOR ANY VALID LABOR
CLAIMS EVEN IN THE ABSENCE OF DIRECT
EMPLOYEE-EMPLOYER RELATIONSHIP BETWEEN THE
EMPLOYER AND THE EMPLOYEES. It has been likewise
held, based on Article 106 of the Labor Code, that
notwithstanding the absence of a direct employer-employee
relationship between the employer in whose favor work had
been contracted out by a "labor-only" contractor, and the
employees, the former has the responsibility, together with the
"labor-only" contractor, for any valid labor claims, by operation
of law. The reason, so we held, is that the "labor-only"
contractor is considered "merely an agent of the employer," and
liability must be shouldered by either one or shared by both.
3. ID.; "MANPOWER SERVICES"; CONSTRUED.
There is no doubt that in the case at bar, Livi performs
"manpower services," meaning to say, it contracts out labor in
favor of clients. We hold that it is one notwithstanding its
vehement claims to the contrary, and notwithstanding the
provision of the contract that it is "an independent contractor."
The nature of one's business is not determined by self-serving
appellations one attaches thereto but by the tests provided by
statute and prevailing case law. The bare fact that Livi
equal fact that it has provided California with workers to
pursue the latter's own business.
4. ID.; EMPLOYER-EMPLOYEE RELATIONSHIP;
CASUAL EMPLOYEES BECOME REGULAR AFTER
SERVICE OF ONE (1) YEAR. The fact that the petitioners
have been hired on a "temporary or seasonal" basis merely is
no argument either. As we held in Philippine Bank of
Communications v. NLRC, a temporary or casual employee,
under Article 218 of the Labor Code, becomes regular after
service of one year, unless he has been contracted for a specific
project. And we cannot say that merchandising is a specific
project for the obvious reason that it is an activity related to the
day-to-day operations of California. The records show that the
petitioners had been given an initial six-month contract,
renewed for another six months. Accordingly, under Article
281 of the Code, they had become regular employees of
California and had acquired a secure tenure. Hence, they
cannot be separated without due process of law.
DECISION
SARMIENTO, J p:
On July 21, 1986, July 23, 1986, and July 28, 1986, the
petitioners petitioned the National Labor Relations
Commission for reinstatement and payment of various
benefits, including minimum wage, overtime pay, holiday pay,
thirteenth-month pay, and emergency cost of living allowance
pay, against the respondent, the California Manufacturing
Company. 1
On October 7, 1986, after the cases had been consolidated, the
California Manufacturing Company (California) filed a motion
to dismiss as well as a position paper denying the existence of
an employer-employee relation between the petitioners and the
company and, consequently, any liability for payment of
money claims. 2 On motion of the petitioners, Livi Manpower
Services, Inc. was impleaded as a party-respondent.
It appears that the petitioners were, prior to their stint with
California, employees of Livi Manpower Services, Inc. (Livi),
which subsequently assigned them to work as "promotional
merchandisers" 3 for the former firm pursuant to a manpower
supply agreement. Among other things, the agreement
provided that California "has no control or supervision
whatsoever over [Livi's] workers with respect to how they
accomplish their work or perform [California's] obligation"; 4
the Livi "is an independent contractor and nothing herein
contained shall be construed as creating between [California]
and [Livi] . . . the relationship of principal[-]agent or
employer[-] employee"; 5 that "it is hereby agreed that it is the
sole responsibility of [Livi] to comply with all existing as well
as future laws, rules and regulations pertinent to employment
of labor"; 6 and that "[California] is free and harmless from
any liability arising from such laws or from any accident that
may befall workers and employees of [Livi] while in the
performance of their duties for [California]." 7
workers to California shall be on a "seasonal and contractual
basis"; that "[c]ost of living allowance and the 10 legal holidays
will be charged directly to [California] at cost'; and that
"[p]ayroll for the preceeding [sic] week [shall] be delivered by
[Livi] at [California's] premises." 8
The petitioners were then made to sign employment contracts
with durations of six months, upon the expiration of which they
signed new agreements with the same period, and so on. Unlike
regular California employees, who received not less than
P2,823.00 a month in addition to a host of fringe benefits and
bonuses, they received P38.56 plus P15.00 in allowance daily.
Cdpr
The petitioners now allege that they had become regular
California employees and demand, as a consequence whereof,
similar benefits. They likewise claim that pending further
proceedings below, they were notified by California that they
would not be rehired. As a result, they filed an amended
complaint charging California with illegal dismissal.
California admits having refused to accept the petitioners back
to work but deny liability therefor for the reason that it is not, to
begin with, the petitioners' employer and that the
"retrenchment" had been forced by business losses as well as
expiration of contracts. 9 It appears that thereafter, Livi
reabsorbed them into its labor pool on a "wait-in or standby"
status. 10
Amid these factual antecedents, the Court finds the single most
important issue to be: Whether the petitioners are California's or
Livi's employees.
The labor arbiter's decision, 11 a decision affirmed on appeal,
12 ruled against the existence of any employer-employee
relation between the petitioners and California ostensibly in the
light of the manpower supply contract, supra, and consequently,
against the latter's liability as and for the money claims
demanded. In the same breath, however, the labor arbiter
absolved Livi from any obligation because the "retrenchment"
in question was allegedly "beyond its control." 13 He assessed
against the firm, nevertheless, separation pay and attorney's
fees.
We reverse.
The existence of an employer-employees relation is a question
of law and being such, it cannot be made the subject of
agreement. Hence, the fact that the manpower supply agreement
between Livi and California had specifically designated the
former as the petitioners' employer and had absolved the latter
from any liability as an employer, will not erase either party's
obligations as an employer, if an employer-employee relation
otherwise exists between the workers and either firm. At any
rate, since the agreement was between Livi and California, they
alone are bound by it, and the petitioners cannot be made to
suffer from its adverse consequences.
This Court has consistently ruled that the determination of
whether or not there is an employer-employee relation depends
upon four standards: (1) the manner of selection and
engagement of the putative employee; (2) the mode of payment
of wages; (3) the presence or absence of a power of dismissal;
and (4) the presence or absence of a power to control the
putative employee's conduct. 14 Of the four, the right-of-control
test has been held to be the decisive factor. 15
On the other hand, we have likewise held, based on Article 106
of the Labor Code, hereinbelow reproduced:
ART. 106. Contractor or subcontractor. Whenever an
employee enters into a contract with another person for the
performance of the former's work, the employees of the
contractor and of the latter's subcontractor, if any, shall be paid
in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay
wages of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor
or subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent
that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict
or prohibit the contracting out of labor to protect the rights of
workers established under this Code. In so prohibiting or
restricting, he may make appropriate distinctions between labor-
only contracting and job contracting as well as differentiations
within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes
of this Code, to prevent any violation or circumvention of any
provisions of this Code. LLpr
There is "labor-only" contracting where the person supplying
workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed
by such person are performing activities which are directly
related to the principal business of such employer. In such
cases, the person or intermediary shall be considered merely as
an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were
directly employed by him.
that notwithstanding the absence of a direct employer-employee
relationship between the employer in whose favor work had
been contracted out by a "labor-only" contractor, and the
employees, the former has the responsibility, together with the
"labor-only" contractor, for any valid labor claims, 16 by
operation of law. The reason, so we held, is that the "labor-only"
contractor is considered "merely an agent of the employer," 17
and liability must be shouldered by either one or shared by
both. 18
There is no doubt that in the case at bar, Livi performs
"manpower services," 19 meaning to say, it contracts out labor
in favor of clients. We hold that it is one notwithstanding its
vehement claims to the contrary, and notwithstanding the
provision of the contract that it is "an independent contractor."
20 The nature of one's business is not determined by self-
serving appellations one attaches thereto but by the tests
provided by statute and prevailing case law. 21 The bare fact
that Livi maintains a separate line of business does not
extinguish the equal fact that it has provided California with
workers to pursue the latter's own business. In this connection,
we do not agree that the petitioners had been made to perform
activities "which are not directly related to the general business
of manufacturing," 22 California's purported "principal
operation activity." 23 The petitioners had been charged with
"merchandizing [sic] promotion or sale of the products of
[California] in the different sales outlets in Metro Manila
including task and occational [sic] price tagging," 24 an
activity that is doubtless, an integral part of the manufacturing
business. It is not, then, as if Livi had served as its
(California's) promotions or sales arm or agent, or otherwise,
rendered a piece of work it (California) could not have itself
done; Livi, as a placement agency, had simply supplied it with
the manpower necessary to carry out its (California's)
merchandising activities, using its (California's) premises and
equipment. 25
Neither Livi nor California can therefore escape liability, that
is, assuming one exists.
The fact that the petitioners have allegedly admitted being
Livi's "direct employees" 26 in their complaints is nothing
conclusive. For one thing, the fact that the petitioners were
(are), will not absolve California since liability has been
imposed by legal operation. For another, and as we indicated,
the relations of parties must be judged from case to case and
the decree of law, and not by declarations of parties.
The fact that the petitioners have been hired on a "temporary or
seasonal" basis merely is no argument either. As we held in
Philippine Bank of Communications v. NLRC, 27 a temporary
or casual employee, under Article 218 of the Labor Code,
becomes regular after service of one year, unless he has been
contracted for a specific project. And we cannot say that
merchandising is a specific project for the obvious reason that
it is an activity related to the day-to-day operations of
California.
It would have been different, we believe, had Livi been
discretely a promotions firm, and that California had hired it to
perform the latter's merchandising activities. For then, Livi
would have been truly the employer of its employees, and
California, its client. The client, in that case, would have been
a mere patron, and not an employer. The employees would not
in that event be unlike waiters, who, although at the service of
customers, are not the latter's employees, but of the restaurant.
As we pointed out in the Philippine Bank of Communications
case:
xxx xxx xxx
. . . The undertaking given by CESI in favor of the bank was
not the performance of a specific job for instance, the
carriage and delivery of documents and parcels to the
addresses thereof. There appear to be many companies today
which perform this discrete service, companies with their own
personnel who pick up documents and packages from the
offices of a client or customer, and who deliver such materials
utilizing their own delivery vans or motorcycles to the
addressees. In the present case, the undertaking of CESI was to
provide its client the bank with a certain number of persons able
to carry out the work of messengers. Such undertaking of CESI
was complied with when the requisite number of persons were
assigned or seconded to the petitioner bank. Orpiada utilized the
premises and office equipment of the bank and not those of
CESI. Messengerial work the delivery of documents to
designated persons whether within or without the bank premises
is of course directly related to the day-to-day operations of
the bank. Section 9(2) quoted above does not require for its
applicability that the petitioner must be engaged in the delivery
of items as a distinct and separate line of business.
Succinctly put, CESI is not a parcel delivery company: as its
name indicates, it is a recruitment and placement corporation
placing bodies, as it were, in different client companies for
longer or shorter periods of time, . . . 28
In the case at bar, Livi is admittedly an "independent contractor
providing temporary services of manpower to its client." 29
When it thus provided California with manpower, it supplied
California with personnel, as if such personnel had been
directly hired by California. Hence, Article 106 of the Code
applies. LLjur
The Court need not therefore consider whether it is Livi or
California which exercises control over the petitioner vis-a-vis
the four barometers referred to earlier, since by fiction of law,
either or both shoulder responsibility.
It is not that by dismissing the terms and conditions of the
manpower supply agreement, we have, hence, considered it
illegal. Under the Labor Code, genuine job contracts are
permissible, provided they are genuine job contracts. But, as we
held in Philippine Bank of Communications, supra, when such
arrangements are resorted to "in anticipation of, and for the very
purpose of making possible, the secondment 30 of the
employees from the true employer, the Court will be justified in
expressing its concern. For then that would compromise the
rights of the workers, especially their right to security of tenure.
This brings us to the question: What is the liability of either Livi
or California?
The records show that the petitioners had been given an initial
six-month contract, renewed for another six months.
Accordingly, under Article 281 of the Code, they had become
regular employees of California and had acquired a
secure tenure. Hence, they cannot be separated without due
process of law.
California resists reinstatement on the ground, first, and as we
said, that the petitioners are not its employees, and second, by
reason of financial distress brought about by "unfavorable
political and economic atmosphere," 31 "coupled by the
February Revolution." 32 As to the first objection, we reiterate
that the petitioners are its employees and who, by virtue of the
required one-year length-of-service, have acquired a regular
status. As to the second, we are not convinced that California
has shown enough evidence, other than its bare say-so, that it
had in fact suffered serious business reverses as a result alone of
the prevailing political and economic climate. We further find
the attribution to the February Revolution as a cause for its
alleged losses to be gratuitous and without basis in fact.
California should be warned that retrenchment of workers,
unless clearly warranted, has serious consequences not only on
the State's initiatives to maintain a stable employment record for
the country, but more so, on the workingman himself, amid an
environment that is desperately scarce in jobs. And, the
National Labor Relations Commission should have known
better than to fall for such unwarranted excuses and nebulous
claims.
WHEREFORE, the petition is GRANTED. Judgment is hereby
RENDERED: (1) SETTING ASIDE the decision, dated March
20, 1987, and the resolution, dated August 19, 1987; (2)
ORDERING the respondent, the California Manufacturing
Company, to REINSTATE the petitioners with full status and
rights of regular employees; and (3) ORDERING the
respondent, the California Manufacturing Company, and the
respondents, Livi Manpower Service, Inc. and/or Lily-Victoria
A. Azarcon, to PAY, jointly and severally, unto the petitioners:
(a) backwages and differential pays effective as and from the
time they had acquired a regular status under the second
paragraph, of Section 281, of the Labor Code, but not to exceed
three (3) years, and (b) all such other and further benefits as
may be provided by existing collective bargaining agreement(s)
or other relations, or by law, beginning such time; and (4)
ORDERING the private respondents to PAY unto the petitioners
attorney's fees equivalent to ten (10%) percent of all money
claims hereby awarded, in addition to those money claims.
The private respondents are likewise ORDERED to PAY the
costs of this suit.
IT IS SO ORDERED.
127238 August 25, 1998
Coca-Cola Bottlers, Phils., Inc. v. Hingpit
THIRD DIVISION
[G.R. No. 127238. August 25, 1998.]
COCA-COLA Bottlers, Phils., Inc., petitioner, vs. DELFIN
HINGPIT, GABRIEL FRANCISCO, JR., CECILIO
PINAR, JR., ABUNDIO BALATERO, NARITO
MANLULUYO, SECERO ZAMORA, MEDARDO
GABINES, ENRIQUE BANGALAO, JULITO APAT,
SOTERO PANDAN, NELSON UMALI, and the
NATIONAL LABOR RELATIONS COMMISSION,
respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION;
NATIONAL LABOR RELATIONS COMMISSION (NLRC);
APPEALED CASES; WHILE IT IS WITHIN ITS
COMPETENCE TO DISAGREE WITH AND SET ASIDE
THE FINDINGS AND DECISION OF THE LABOR
ARBITERS, IT STANDS TO REASON TO STATE AN
ACCEPTABLE CAUSE THEREFOR; NOT PRESENT IN
CASE AT BAR. While it is within respondent Commission's
competence, as an appellate agency reviewing decisions of
Labor Arbiters, to disagree with and set aside the latter's
findings, it stands to reason that it should state an acceptable
cause therefor. It would otherwise be a whimsical, capricious,
oppressive, illogical, unreasonable exercise of quasi-judicial
prerogative, subject to invalidation by the extraordinary writ of
certiorari. But that, regrettably, is precisely what respondent
Commission appears to have done. It overturned the Labor
Arbiter's factual determination regarding LIPERCON's being a
legitimate independent contractor without stating the reason
therefor, without any explanation whatever as to why the
Arbiter's evidentiary premises were not worthy of credit, or why
the inferences drawn therefrom were unacceptable, as a matter
of law or logic.
2. ID.; LABOR CODE; LABOR RELATIONS;
LABOR-ONLY CONTRACTOR, DISTINGUISHED FROM
INDEPENDENT LABOR CONTRACTOR; CASE AT BAR.
Respondent Commission grounded its reversal of the
Arbiter's adjudgment solely on a 1989 judgment of this Court,
Guarin, et al. vs. Lipercon in which LIPERCON had also
been involved as a labor contractor of another company. There,
the Court held LIPERCON to be a "labor-only" contractor; and
declared that the NLRC's finding that it "was not a mere
labor-only contractor because it has substantial capital or
investment in the form of tools, equipment, machineries, work
premises, . . ." was "based on insubstantial evidence, as the
NLRC (had merely) pointed out that 'it (LIPERCON) claims to
be possessed among others, of substantial capital and equipment
essential to carry out its business as a general independent
contractor' . . ." In other words, in Guarin, LIPERCON was held
to have failed to discharge its burden of proof that "it has
substantial capital, investment, tools, etc." Not so in the case at
bar. Here there is substantial evidence, detailed by the Labor
Arbiter, to establish LIPERCON's character as an independent
contractor in the real sense of the word, which makes the
Labor Arbiter's ruling more acceptable than respondent
Commission's on the same matter, being founded solely on an
inapplicable precedent. Also more deserving of assent is said
Labor Arbiter's conclusion that the complainants' acceptance of
employment in LIPERCON in December, 1986 lasting for a
period of some two years effectively operated as cessation
of the prior relationship they had with PIONEER and COCA-
COLA in consequence of which they became entitled to
separation pay from COCA-COLA, PIONEER being merely
its hiring agent. The evidence therefore satisfactorily
establishes that complainants were employees of LIPERCON.
It was LIPERCON that terminated their services at which time,
as found by the Labor Arbiter, the complainants "signed
quitclaim and release documents" in favor of LIPERCON,
COCA-COLA was not privy either to that act of employment-
termination or execution of "quitclaim and release documents,"
or to the earlier act of creation of the employment relationship
between the complainants and LIPERCON. COCA-COLA was
in no position to intervene in any manner in the creation or
termination of the relationship between complainants and
LIPERCON. It was therefore erroneous for respondent
Commission to demand that COCA-COLA present proof of
just cause for the termination of the services of complainants,
the latter not being its employees, but LIPERCON's. For the
same reason, it was erroneous for the NLRC to expect COCA-
COLA to present its payrolls to show the salaries and wages of
the complainants although, it must be mentioned, COCA-
COLA did cause presentation of LIPERCON's payrolls to
show the salaries and wages of the complainants. And it was
grave error for respondent Commission to conclude that
because proof of just cause for complainants' removal from
their employment in LIPERCON was not presented by COCA-
COLA, said complainants had been dismissed without just
cause and due process. aAHSEC
DECISION
NARVASA, C .J p:
The special civil action of certiorari at bar concerns seven (7)
cases against petitioner Coca-Cola Bottling, Phils., Inc.
instituted in the Regional Arbitration Branch of the National
Labor Relations Commission in Cebu City over a period of
four years or so, by eleven (11) persons claiming to be
employees of the company's Tagbilaran City plant. These were:
cdrep
(1) RAB Case No. VII-07-12-0657-88 initiated on
August 9, 1988 by Delfin Hingpit for "illegal dismissal, back
wages and damages;"
(2) RAB Case No. VII-05-0398-89 filed on February
13, 1989 by Gabriel Francisco for "unjust dismissal, non-
payment of overtime pay and service incentive;"
(3) RAB Case No. VII-02-0189-90 jointly filed on
February 7, 1990 by Nelson Umali, Medardo Gabines, Enrique
Bangalao, Julito Apat and Sotero Pandan for 'illegal dismissal,"
"separation pay," "service incentive leave," and "Cost of Living
Allowance mandated by law;"
(4) RAB Case No. VII-02-0169-90 initiated by Severo
Zamora on February 12, 1990 for "illegal dismissal," "service
incentive leave," "retirement pay," and "separation pay;"
(5) RAB Case No. VII-10-0896-89 filed by Cecilio Pinar
on March 9, 1992 for "unjust dismissal" and "separation pay;"
(6) RAB Case No. VII-11-1026-89 initiated by Abundio
Balatero also on March 9, 1992 for "unjust dismissal," "non-
payment of overtime pay" and "separation pay;" and
(7) RAB Case No. VII-10-0897-89 commenced by
Narito Manluluyo.
In the first two (2) cases RAB Case No. VII-07-12-0657-88
and RAB Case No. VII-05-0398-89 the respondents
impleaded were Coca-Cola Bottling, Phils., Inc. (COCA-
COLA) and its Tagbilaran Branch Manager, Godofredo
Bagares. In the other five (5), the respondents named, aside
from COCA-COLA, were Pioneer Multi Services, Inc. and
Lipercon Services, Inc.
COCA-COLA is a corporation duly organized under Philippine
laws with principal offices at Ace Building, Legaspi Village,
Makati, Metro Manila, engaged in the bottling, distribution and
sale of soft drink products. 1 It maintains, among others, a
bottling plant in Tagbilaran City, with sales offices and bodegas
in strategic places to serve the surrounding areas in Bohol
Province.
Pioneer Multi-Services Co. (PIONEER) and Lipercon Services,
Inc. (LIPERCON), are manning companies with which COCA
COLA successively entered into contracts for the supply of the
manpower needs of its plant in Tagbilaran. COCA-COLA's
contract with PIONEER was executed on May 28, 1983, and
that with LIPERCON, five (5) years later, on December 17,
1988.
The seven (7) cases against COCA COLA were heard together
after issues had been joined; and judgment thereon was handed
down by the Executive Labor Arbiter on February 7, 1995. 2
The judgment found that complainants were supplied as
workers to COCA-COLA first by PIONEER, and later, by
LIPERCON; that whereas LIPERCON was an independent
contractor, PIONEER was not; that in any case, "(w)hen
Lipercon entered into the picture, . . . complainants were
already regular employees of the respondent firm," and hence
the subsequent "coming in of Lipercon did not deprive . . .
(them of) the right to claim separation pay . . . as reinstatement
is no longer feasible." COCA-COLA was therefore sentenced
"to pay the complainants the sum of Seventy One Thousand Six
Hundred Fifty Six (P71,656.00) Pesos in concept of separation
pay" in differing amounts. The complaint was dismissed as
regards Godofredo Bagares (COCA COLA's Branch Manager at
Tagbilaran), his liability not having been established.
The eleven complainants appealed from the Decision of the
Arbiter imputing reversible error to the latter "when he merely
awarded separation pay instead of reinstatement with
backwages, despite his finding of illegal dismissal, without
even explaining in his decision why complainants could not be
reinstated." The appeal was filed only by Hingpit who
represented that he was taking the appeal also in behalf of the
other complainants. In its Decision of February 28, 1996, the
Fourth Division of the National Labor Relations Commission
(Cebu City) "AFFIRMED with MODIFICATION" the appealed
judgment, commanding COCA-COLA to pay to complainants
an Increased amount of P2,022,076.94 representing full back
wages and "13th month pay, holiday pay, service incentive
leave pay, cost of living allowance and rest day pay." 3 Both
COCA-COLA and the complainants moved for reconsideration
of the Decision. By Resolution of October 3, 1996, 4 COCA-
COLA's motion for reconsideration was denied, while that of
the complainants was granted in the sense that COCA-COLA
was additionally "ordered to reinstate . . . (them) to their former
position without loss of seniority rights and other privileges."
COCA COLA thereupon commenced the present certiorari
action on December 11, 1996 through which it seeks the setting
aside of the Commission's Decision of February 28, 1996 and
its Resolution of October 3, 1996. The Court required the
respondents to comment on the petition and, upon a bond of
P2,022,076.94, issued a temporary restraining order stopping
execution of the Commission's challenged dispositions. 5
On February 4, 1997, a pleading traversing the petition, entitled
"Comments/Objection to Temporary Restraining Order," was
filed by ten (10) of the complainants themselves: Hingpit,
Francisco, Pinar, Manluluyo, Zamora, Gabines, Bangalao, Apat,
Pandan, Umali; 6 and on February 12, 1997, another pleading,
"Private Respondents' Supplemental Comment," was submitted
by the same ten (10) parties. 7 On March 26, 1997, a
COMMENT on behalf of the National Labor Relations
Commission was filed by the Solicitor General's Office. 8 On
June 13, 1997, COCA COLA filed its "REPLY (to Private
Respondents' Supplemental Comment)," and on August 27,
1997, its "REPLY (To Public Respondent's Comment)."
It appears that all the complainants, except Delfin Hingpit and
Gabriel Francisco, were originally recruited by PIONEER
which detailed them, under its contract with COCA COLA, in
the latter's Tagbilaran Plant, some being assigned as utility
workers, and others, as bottling crew members. 9 Three years
afterwards, they were absorbed by LIPERCON when it replaced
PIONEER as COCA-COLA's labor supplier.
It appears that Hingpit was recruited by LIPERCON for the
Tagbilaran COCA-COLA plant, and first assigned as bottling
crew member on November 24, 1984. Sometime in 1988,
Hingpit, being then involved in a labor case against his
employer, sent a letter to then President Corazon C. Aquino
asking that she help him obtain permanent employment in
COCA COLA. This, brought about a conciliation conference in
the Bohol Labor Extension Office in Tagbilaran City; and
there, an agreement was reached between Hingpit and COCA
COLA, represented by its Tagbilaran Personnel Officer, Ms.
Suzette Gotera. According to Hingpit, 10 Ms. Gotera had
offered him "the position of driver-helper or security guard if I
possess the necessary qualifications for the aforesaid position,"
and he had "accepted her offer as a truck-helper in the
meantime that I have not secured a driver's license." On the
basis of this amicable agreement, and after obtaining a
clearance from Lipercon Services, Inc., Hingpit was hired by
COCA COLA on a probationary basis for a period of six (6)
months effective May 16, 1988.
Hingpit was then required, among other things, to take
examinations to qualify for permanent placement and to submit
a police clearance. He submitted a police clearance issued by
the Integrated National Police Command of Bohol which
stated that he was a resident of Batuan, Bohol, and that he had
no criminal record thereat. Unfortunately for him, not only did
he obtain failing marks in the qualifying examinations, but the
police clearance submitted by him was shortly afterwards
revealed to be false, belied by a certification of the Office of
the City Fiscal of Tagbilaran City to the effect that he was then
facing charges of physical injuries in no less than three (3)
cases. As a result, his services considered temporary or
probationary were terminated on July 22, 1988, on the
ground that he had (1) failed to measure up to the standards of
the firm, having flunked the required qualifying tests, and (2)
been shown to be dishonest, for not disclosing that he had been
charged with 3 counts of physical injuries. 11
Gabriel Francisco originally worked as bottling crew member
of San Miguel Corporation at its Tagbilaran Plant from 1971
until 1976. He was re-employed in 1979, and assigned to the
beer department of COCA-COLA. In 1979, he was hired by
PIONEER, which as aforestated had concluded a contract to
supply COCA-COLA's manpower needs. He worked under
this arrangement until PIONEER was replaced by LIPERCON,
in December 1986. He continued working as bottling crew
member until he was separated from employment on
December 15, 1988. 12
The other complainant-employees Cecilio Pinar, Jr.,
Abundio Balatero, Narito Manluluyo, Secero Zamora,
Medardo Gabines, Enrique Bangalao, Julito Apat, Sotero
Pandan, Nelson Umali were, as already stated, found by the
Labor Arbiter to have been first placed in the COCA COLA
Tagbilaran plant by their recruiter, PIONEER, and after the
latter's contract expired, were recruited by LIPERCON and
again assigned at the same Tagbilaran plant.
The Executive Labor Arbiter's decision of February 7, 1995 13
found that while PIONEER was a "labor only contractor," 14
LIPERCON which had also undertaken to provide COCA
COLA with manpower for such services as the repair and
maintenance of machines, activities related to projects, yard
cleaning, utility jobs; loading and unloading of full and empty
bottles 15 was a legitimate labor contractor. It had
substantial capital of its own; paid its recruited employees
regularly even before receiving its stipulated fees from COCA
COLA; had control over complainants-workers who could not
get inside the premises of COCA COLA without its written
authority; attended to providing route helpers with requisition
slips; kept the signed daily time records of its recruited
employees; monitored their hours of work, and saw to it that
they were at their places of work at the appointed hours; and
could receive, and act with finality on, complaints concerning
its recruited workers presented by COCA COLA's regular
employees or supervisors. 16
The Executive Labor Arbiter's decision declared that when the
complainants were discharged from LIPERCON, they signed
documents of quitclaim and release, a fact "not refuted" by
them. 17 Consequently, LIPERCON was absolved from
liability. The judgment was quick to point out, however, that
"when LIPERCON entered into the picture" after the lapse
of COCA COLA's earlier contract with PIONEER said
complainants
". . . were already regular employees of the respondent firm
(COCA COLA)." Its entry, even if viewed as a consequence of
a legitimate business of a manpower servicing firm, resulted to
(sic) the illegal termination of the complainants who at that
point in time had already acquired regular status. The coming in
of Lipercon did not deprive the complainants of the right to
claim separation pay. Their severance from respondent firm, it
appears, was forced upon them. It is only fair, thus, that they be
given the benefits that they deserve while placed under Pioneer
Multi-Services, Inc. Considering that their termination was not
legal and valid, they should be paid one month pay for every
year of service as reinstatement is no longer feasible." 18
For this reason, COCA-COLA was sentenced "to pay the
complainants the sum of Seventy One Thousand Six Hundred
Fifty Six (P71,656.00) Pesos in concept of separation pay" in
differing amounts.
Respondent Commission saw the case differently. It opined that
(1) LIPERCON was a labor-only, not an independent labor
contractor; and (2) COCA COLA not having presented evidence
to establish any just cause for the termination of complainants'
employment, such termination must be held illegal; and having,
as well, failed to submit the payrolls corresponding to the
complainants, its monetary liability to them should be
increased. cdasia
In this special civil action of certiorari, COCA COLA submits
that respondent Commission acted with grave abuse of
discretion
1) in completely ignoring the fact that Hingpit had no
capacity to take an appeal in behalf of the other complainants;
2) in not ruling that the Labor Arbiter's decision had
long become final and executory because the complainants,
except Hingpit, had already lost their right of appeal;
3) in disregarding the Labor Arbiter's findings that
complainants were not regular employees of COCA COLA;
4) even granting arguendo that complainants were
employees of COCA COLA, in requiring the latter to pay the
former even when they did nothing;
5) in awarding complainants "rest day pay" despite their
admission that they did not work seven days a week;
6) in holding complainants to be entitled to holiday pay,
service incentive leave pay, cost of living allowance, 13th
month pay, without any factual basis and contrary to the
evidence on record;
7) in not allowing Hingpit to raise the issue of his
alleged employment with COCA COLA although the same was
already subject of a compromise agreement; and
8) in not ruling that Hingpit had been validly dismissed,
having failed to meet the company standards for a probationary
employee.
The Court will deal with Delfin Hingpit first. It seems fairly
evident from the record that his services were validly
terminated. As already narrated, on the basis of his compromise
agreement with the Tagbilaran Personnel Officer of COCA
COLA (entered into under the auspices of the Bohol Labor
Extension Office), and after obtaining a clearance from
LIPERCON, Hingpit was employed by COCA COLA on a
probationary basis for a period of six (6) months effective May
16, 1988. However, Hingpit subsequently flunked the
qualifying examinations for regular employment, and was later
discovered to have misled COCA COLA by submitting a police
clearance contradicted by the records of the Fiscal's Office of
Tagbilaran City showing that he was then facing three (3)
charges of physical injuries. Upon the facts, therefore, there can
be no question: first, of the propriety of his contract of
probationary employment not only executed before Labor
officials, but also admitted by him as freely and voluntarily
entered into and second, of the fact that he had not only
failed the qualifying examinations, but had also presented a
false clearance. Hence, his services were properly terminated on
July 22, 1988, for (1) failing to qualify for the job, and (2) for
dishonesty. 19
Turning to another point, respondent Commission reversed the
Labor Arbiter's conclusion that LIPERCON was an independent
labor contractor. It declared it instead to be a mere "labor-only"
contractor, as the term is defined and described in the Labor
Code 20 and the Omnibus Rules Implementing said Code. 21
On this basis, it held that complainants were not employees of
LIPERCON, but of COCA COLA.
In so ruling respondent Commission unaccountably ignored the
evidence on which the Labor Arbiter had based his contrary
conclusion. That evidence, consisting chiefly of the testimony
of Filomena Legaspi, Head of LIPERCON's Accounting
Division, is summarized by the Arbiter as follows: 22
"The Lipercon has indeed substantial capital of its own is
proven by the testimony of its personnel-in-charge in Tagbilaran
City, Filomena Legaspi. Legaspi affirmed the fact that
Lipercon paid its employees (the complainants herein)
regularly even before it is paid of its billing (TSN, p. 49,
September 2, 1992). She also testified that she had control over
the complainants. Without her signature, they cannot get inside
the premises of respondent firm. She signed their daily time
records and monitored their hours of work. She saw to it that
they were in their positions and places of work. And if the
regular employees of CCBPI or their supervisors complain,
they notify and inform her of these complaints. With regard to
the route helpers, these were covered by requisition slips (TSN,
p. 47, Sept. 2, 1992). In fact, after Lipercon's contract with
respondent expired in December 1988, it was she who assigned
some workers like Cecilio Pinar, Jr. and Abundio Balatero to
SMC (TSN, pp. 34, 35, 42-49, September 2, 1992). The
payrolls of Lipercon (Exhs. '1' and '2' for CCBPI) and the
resignation letter addressed to Ms. Perla Caete (Exh. '4') by
Gabriel Francisco, Jr. points out that complainants were indeed
employees of Lipercon. The aforecited facts were not refuted
by the complainants.
"xxx xxx xxx
". . . Lipercon proved to be an independent contractor. Aside
from hiring its own employees and paying the workers their
salaries, it also exercised supervision and control over them
which is the most important aspect in determining employer-
employee relations (Mafinco Trading Corp. v. Ople, 70 SCRA
139; Rosario Brothers Inc. vs. Ople, 131 SCRA 72). That it
indeed has substantial capital is proven by the fact that it did
not depend upon its billing on respondent regarding payment
of workers' salaries. And when complainants were separated
from Lipercon, they signed quitclaim and release
documents. . ."
While it is within respondent Commission's competence, as an
appellate agency reviewing decisions of Labor Arbiters, to
disagree with and set aside the latter's findings, it stands to
reason that it should state an acceptable cause therefor. It
would otherwise be a whimsical, capricious, oppressive,
illogical, unreasonable exercise of quasi-judicial prerogative,
subject to invalidation by the extraordinary writ of certiorari.
But that, regrettably, is precisely what respondent Commission
appears to have done. It overturned the Labor Arbiter's factual
determination regarding LIPERCON's being a legitimate
independent contractor without stating the reason therefor,
without any explanation whatever as to why the Arbiter's
evidentiary premises were not worthy of credit, or why the
inferences drawn therefrom were unacceptable, as a matter of
law or logic.
Respondent Commission grounded its reversal of the Arbiter's
adjudgment solely on a 1989 judgment of this Court, Guarin et
al. v. Lipercon 23 in which LIPERCON had also been
involved as a labor contractor of another company. 24 There,
the Court held LIPERCON to be a "labor-only" contractor; and
declared that the NLRC's finding that it "was not a mere
labor-only contractor because it has substantial capital or
investment in the form of tools, equipment, machineries, work
premises, . . . was "based on insubstantial evidence, as the
NLRC (had merely) pointed out that 'it (LIPERCON) claims to
be possessed among others, of substantial capital and equipment
essential to carry out its business as a general independent
contractor' . . . , "In other words, in Guarin, LIPERCON was
held to have failed to discharge its burden of proof that "it has
substantial capital, investment, tools, etc."
Not so in the case at bar. Here, there is substantial evidence,
detailed by the Labor Arbiter, to establish LIPERCON's
character as an independent contractor in the real sense of the
word, 25 which makes the Labor Arbiter's ruling more
acceptable than respondent Commission's on the same matter,
being founded solely on an inapplicable precedent. Also more
deserving of assent is said Labor Arbiter's conclusion that the
complainants' acceptance of employment in LIPERCON in
December, 1986 lasting for a period of some two years
effectively operated as a cessation of the prior relationship they
had with PIONEER and COCA COLA in consequence of which
they became entitled to separation pay from COCA COLA,
PIONEER being merely its hiring agent.
The evidence therefore satisfactorily establishes that
complainants were employees of LIPERCON. It was
LIPERCON that terminated their services at which time, as
found by the Labor Arbiter, the complainants "signed quitclaim
and release documents" in favor of LIPERCON. COCA COLA
was not privy either to that act of employment-termination or
execution of "quitclaim and release documents," or to the earlier
act of creation of the employment relationship between the
complainants and LIPERCON. COCA COLA was in no
position to intervene in any manner in the creation or
termination of the relationship between complainants and
LIPERCON.
It was therefore erroneous for respondent Commission to
demand that COCA COLA present proof of just cause for the
termination of the services of complainants, the latter not being
its employees, but LIPERCON's. For the same reason, it was
erroneous for the NLRC to expect COCA COLA to present its
payrolls to show the salaries and wages of the complainants
although, it must be mentioned, COCA COLA did cause
presentation of LIPERCON's payrolls relative to its employees,
including complainants. And it was grave error for respondent
Commission to conclude that because proof of just cause for
complainants' removal from their employment in LIPERCON
was not presented by COCA COLA, said complainants had
been dismissed without just cause and due process.
What has been said makes it unnecessary to address the other
substantive issues raised by COCA COLA. 26 And the adjective
issue that it sets up respecting the validity of Hingpit's
having attempted to appeal from the Labor Arbiter's decision in
behalf of the other complainants appears to be too
unsubstantial to merit consideration. All things considered, and
except as regards Delfin Hingpit, the Court is satisfied that the
Decision of the Executive Labor Arbiter fairly and reasonably
disposed of the controversy, and is worthy of adoption as the
ultimate adjudgment of this case.
WHEREFORE, the petition for certiorari is GRANTED, and
the challenged Decision of the Fifth Division of the National
Labor Relations Commission promulgated on February 28,
1996 is NULLIFIED AND SET ASIDE. The Decision of the
Executive Labor Arbiter, Cebu City, dated February 7, 1995 is
REINSTATED and hereby AFFIRMED, with the sole
modification that the complaint of DELFIN HINGPIT is
dismissed, for lack of merit. No pronouncement as to costs.
SO ORDERED. Cdphil
FIRST DIVISION
[G.R. No. 119930. March 12, 1998.]
INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION (Fourth
Division, Cebu City), LABOR ARBITER NICASIO P.
ANINON and PANTALEON DE LOS REYES, respondents.
Sycip Salazar Hernandez and Gatmaitan for petitioner.
The Solicitor General for respondents.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR
CODE; EMPLOYMENT; EMPLOYER-EMPLOYEE
RELATIONSHIP; EXISTENCE THEREOF NOT NEGATED
BY EXPRESSLY REPUDIATING IT IN CONTRACT. It is
axiomatic that the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in the
management contract and providing therein that the "employee"
is an independent contractor when the terms of the agreement
clearly show otherwise. For, the employment status of a person
is defined and prescribed by law and not by what the parties say
it should be. In determining the status of the management
contract, the "four-fold test" on employment has to be applied.
2. ID.; ID.; ID.; FOUR-FOLD TEST; SELECTION
AND ENGAGEMENT OF EMPLOYEE. Petitioner
contends that De los Reyes was never required to go through
the pre-employment procedures and that, the probationary
employment status was reserved only to employees of
petitioner. On this score, it insists that the first requirement of
selection and engagement of the employee was not met. A look
at the provisions of the contract shows that private respondent
was appointed as Acting Unit Manager only upon
recommendation of the District Manager. This indicates that
private respondent was hired by petitioner because of the
favorable endorsement of its duly authorized officer. But, this
approbation could only have been based on the performance of
De los Reyes as agent under the agency contract so that there
can be no other conclusion arrived under this premises than the
fact that the agency or underwriter phase of the relationship of
De los Reyes with petitioner was nothing more than a trial or
probationary period for his eventual appointment as Acting Unit
Manager of petitioner. Then, again, the very designation of the
appointment of private respondent as "acting" unit manager
obviously implies a temporary employment status which may
be made permanent only upon compliance with company
standards such as those enumerated under Sec. 6 of the
management contract.
3. ID.; ID.; ID.; ID.; PAYMENT OF WAGES; CASE
AT BAR. On the matter of payment of wages, petitioner
points out that respondent was compensated strictly on
commission basis, the amount of which was totally dependent
on his total output. But, the manager's contract speaks
differently. The above provisions unquestionably demonstrate
that the performance requirement imposed on De los Reyes was
applicable quarterly while his entitlement to the free portion
(P300) and the validated portion (P1,200) was monthly starting
on the first month of the twelve (12) months of the
appointment. Thus, it has to be admitted that even before the
end of the first quarter and prior to the so-called quarterly
performance evaluation, private respondent was already
entitled to be paid both the free and validated portions of the
UDF, every month because his production performance could
not be determined until after the lapse of the quarter involved.
This indicates quite clearly that the unit manager's quarterly
performance had no bearing at all on his entitlement at least to
the free portion of the UDF which for all intents and purposes
comprised the salary regularly paid to him by petitioner. Thus
it cannot be validly claimed that the financial assistance
consisting of the free portion of the UDF was purely dependent
on the premium production of agent. Be that as it may, it is
worth considering that the payment of compensation by way of
commission does not militate against the conclusion that
private respondent was an employee of petitioner. Under Art.
97 of the Labor Code, "wage" shall mean "however
designated, capable of being expressed in terms of money,
whether fixed or ascertained on a time, task, price or
commission basis . . ."
4. ID.; ID.; ID.; ID.; POWER OF DISMISSAL AND
CONTROL; CASE AT BAR. A perusal of the appointment
of complainant as Acting Unit Manager reveals that. 1.
Complainant was to "exclusively" serve respondent company.
Thus it is provided: . . 7.7 Other of Termination: This
appointment may likewise be terminated for any of the
following causes: . . . 7..7..2. Your entering the service of the
government or another life insurance company; 7..7..3. Your
accepting a managerial or supervisory position in any firm
doing business in the Philippines without the written consent of
the Company; . . . It would not be amiss to state that
respondent's duty to collect the company's premiums using
company receipts under Sec. 7.4 of the management contract is
further evidence of petitioner's control over respondent.
Exclusivity of service, control of assignments and removal of,
agents under private respondent's unit, collection of premiums,
furnishing of company facilities and materials as well as
capital described as Unit Development Fund are but hallmarks
of the management system in which herein private respondent
worked. This obtaining, there is no escaping the conclusion
that private respondents Pantaleon de los Reyes was an
employee, of herein petitioner.
DECISION
BELLOSILLO, J p:
On 17 June 1994 respondent Labor Arbiter dismissed for lack
of jurisdiction NLRC RAB-VII Case No. 03-0309-94 filed by
private respondent Pantaleon de los Reyes against petitioner
Insular Life Assurance Co., Ltd. (INSULAR LIFE), for illegal
dismissal and nonpayment of salaries and back wages after
finding no employer-employee relationship between De los
Reyes and petitioner INSULAR LIFE. 1 On appeal by private
respondent, the order of dismissal was reversed by the National
Labor Relations Commission (NLRC) which ruled that
respondent De los Reyes was an employee of petitioner. 2
Petitioner's motion for reconsideration having been denied, the
NLRC remanded the case to the Labor Arbiter for hearing on
the merits. cdtai
Seeking relief through this special civil action for certiorari with
prayer for a restraining order and/or preliminary injunction,
petitioner now comes to us praying for annulment of the
decision of respondent NLRC dated 3 March 1995 and its Order
dated 6 April 1995 denying the motion for reconsideration of
the decision. It faults NLRC for acting without jurisdiction
and/or with grave abuse of discretion when, contrary to
established facts and pertinent law and jurisprudence, it
reversed the decision of the Labor Arbiter and held instead that
the complaint was properly filed as an employer-employee
relationship existed between petitioner and private respondent.
Petitioner reprises the stand it assumed below that it never had
any employer-employee relationship with private respondent,
this being an express agreement between them in the agency
contracts, particularly reinforced by the stipulation therein that
De los Reyes was allowed discretion to devise ways and means
to fulfill his obligations as agent and would be paid commission
fees based on his actual output. It further insists that the nature
of this work status as described in the contracts had already
been squarely resolved by the Court in the earlier case of
Insular Life Assurance Co., Ltd. v. NLRC and Basiao 3 where
the complainant therein, Melecio Basiao, was similarly situated
as respondent De los Reyes in that he was appointed first as an
agent and then promoted as agency manager, and the contracts
under which he was appointed contained terms and conditions
identical to those of De los Reyes. Petitioner concludes that
since Basiao was declared by the Court to be an independent
contractor and not an employee of petitioner, there should be no
reason why the status of De los Reyes herein vis-a-vis petitioner
should not be similarly determined.
We reject the submissions of petitioner and hold that respondent
NLRC acted appropriately within the bounds of the law. The
records of the case are replete with telltale indicators of an
existing employer-employee relationship between the two
parties despite written contractual disavowals.
These facts are undisputed: on 21 August 1992 petitioner
entered into an agency contract with respondent Pantaleon de
los Reyes 4 authorizing the latter to solicit within the
Philippines applications for life insurance and annuities for
which he would be paid compensation in the form of
commissions. The contract was prepared by petitioner in its
entirety and De los Reyes merely signed his conformity thereto.
It contained the stipulation that no employer-employee
relationship shall be created between the parties and that the
agent shall be free to exercise his own judgment as to time,
place and means of soliciting insurance. De los Reyes however
was prohibited by petitioner from working for any other life
insurance company, and violation of this stipulation was
sufficient ground for termination of the contract. Aside from
soliciting insurance for the petitioner, private respondent was
required to submit to the former all completed applications for
insurance within ninety (90) consecutive days, deliver policies,
receive and collect initial premiums and balances of first year
premiums, renewal premiums, deposits on applications and
payments on policy loans. Private respondent was also bound to
turn over to the company immediately any and all sums of
money collected by him. In a written communication by
petitioner to respondent De los Reyes, the latter was urged to
register with the Social Security System as a self-employed
individual as provided under PD No. 1636. 5
On 1 March 1993 petitioner and private respondent entered into
another contract 6 where the latter was appointed as Acting Unit
Manager under its office the Cebu DSO V (157). As such,
the duties and responsibilities of De los Reyes included the
recruitment, training, organization and development within his
designated territory of a sufficient number of qualified,
competent and trustworthy underwriters, and to supervise and
coordinate the sales efforts of the underwriters in the active
solicitation of new business and in the furtherance of the
agency's assigned goals. It was similarly provided in the
management contract that the relation of the acting unit
manager and/or the agents of his unit to the company shall be
that of independent contractor. If the appointment was
terminated for any reason other than for cause, the acting unit
manager would be reverted to agent status and assigned to any
unit. As in the previous agency contract, De los Reyes together
with his unit force was granted freedom to exercise judgment as
to time, place and means of soliciting insurance. Aside from
being granted override commissions, the acting unit manager
was given production bonus, development allowance and a unit
development financing scheme euphemistically termed
"financial assistance" consisting of payment to him of a free
portion of P300.00 per month and a validate portion of
P1,200.00. While the latter amount was deemed as an advance
against expected commissions, the former was not and would
be freely given to the unit manager by the company only upon
fulfillment by him of certain manpower and premium quota
requirements. The agents and underwriters recruited and trained
by the acting unit manager would be attached to the unit but
petitioner reserved the right to determine if such assignment
would be, made or, for any reason, to reassign them elsewhere.
Aside from soliciting insurance, De los Reyes was also
expressly obliged to participate in the company's conservation
program, i.e., preservation and maintenance of existing
insurance policies, and to accept moneys duly receipted on
agent's receipts provided the same were turned over to the
company. As long as he was unit manager in an acting capacity,
De los Reyes was prohibited from working for other life
insurance companies or with the government. He could not also
accept a managerial or supervisory position in any firm doing
business in the Philippines without the written consent of
petitioner.
Private respondent worked concurrently as agent and Acting
Unit Manager until he was notified by petitioner on 18
November 1993 that his services were terminated effective 18
December 1993. On 7 March 1994 he filed a complaint before
the Labor Arbiter on the ground that he was illegally dismissed
and that he was not paid his salaries and separation pay.
Petitioner filed a motion to dismiss the complaint of De los
Reyes for lack of jurisdiction, citing the absence of employer-
employee relationship. It reasoned out that based on the criteria
for determining the existence of such relationship or the so-
called "four-fold test," i.e., (a) selection and engagement of
employee, (b) payment of wages, (c) power of dismissal, and,
(d) power of control, De los Reyes was not an employee but an
independent contractor.
On 17 June 1994 the motion of petitioner was granted by the
Labor Arbiter and the case was dismissed on the ground that
the element of control was not sufficiently established since the
rules and guidelines set by petitioner in its agency agreement
with respondent De los Reyes were formulated only to achieve
the desired result without dictating the means or methods of
attaining it.
Respondent NLRC however appreciated the evidence from a
different perspective. It determined that respondent De los
Reyes was under the effective control of petitioner in the
critical and most important aspects of his work as Unit
Manager. This conclusion was derived from the provisions in
the contract which appointed private respondent as Acting Unit
Manager, to wit: (a) De los Reyes was to serve exclusively the
company, therefore, he was not an independent contractor; (b)
he was required to meet certain manpower and production
quota; and, (c) petitioner controlled the assignment to and
removal of soliciting agents from his unit.
The NLRC also took into account other circumstances showing
that petitioner exercised employer's prerogatives over De los
Reyes, e.g., (a) limiting the work of respondent De los Reyes
to selling a life insurance policy known as "Salary Deduction
Insurance", only to members of the Philippine National Police,
public and private school teachers and other employees of
private companies; (b) assigning private respondent to a
particular place and table where he worked whenever he was
not in the field; (c) paying private respondent during the period
of twelve (12) months of his appointment as Acting Unit
Manager the amount of P1,500.00 as Unit Development
Financing of which 20% formed his salary and the rest, i.e.,
80%, as advance of his expected commissions; and, (d)
promising that upon completion of certain requirements, he
would be promoted to Unit Manager with the right of
petitioner to revert him to agent status when warranted.
Parenthetically, both petitioner and respondent NLRC treated
the agency contract and the management contract entered into
between petitioner and De los Reyes as contracts of agency. We
however hold otherwise. Unquestionably there exist major
distinctions between the two agreements. While the first has the
earmarks of an agency contract, the second is far removed from
the concept of agency in that provided therein are
conditionalities that indicate an employer-employee
relationship. The NLRC therefore was correct in finding that
private respondent was an employee of petitioner, but this holds
true only insofar as the management contract is concerned. In
view thereof, the Labor Arbiter has jurisdiction over the case.
It is axiomatic that the existence of an employer-employee
relationship cannot be negated by expressly repudiating it in the
management contract and providing therein that the "employee"
is an independent contractor when the terms of the agreement
clearly show otherwise. For, the employment status of a person
is defined and prescribed by law and not by what the parties say
it should be. 7 In determining the status of the management
contract, the "four-fold test" on employment earlier mentioned
has to be applied.
Petitioner contends that De los Reyes was never required to go
through the pre-employment procedures and that the
probationary employment status was reserved only to
employees of petitioner. On this score, it insists that the first
requirement of selection and engagement of the employee was
not met. cdtai
A look at the provisions of the contract shows that private
respondent was appointed as Acting Unit Manager only upon
recommendation of the District Manager. 8 This indicates that
private respondent was hired by petitioner because of the
favorable endorsement of its duly authorized officer. But, this
approbation could only have been based on the performance of
De los Reyes as agent under the agency contract so that there
can be no other conclusion arrived under this premise than the
fact that the agency or underwriter phase of the relationship of
De los Reyes with petitioner was nothing more than a trial or
probationary period for his eventual appointment as Acting Unit
Manager of petitioner. Then, again, the very designation of the
appointment of private respondent as "acting" unit manager
obviously implies a temporary employment status which may
be made permanent only upon compliance with company
standards such as those enumerated under Sec. 6 of the
management contract. 9
On the matter of payment of wages, petitioner points out that
respondent was compensated strictly on commission basis, the
amount of which was totally dependent on his total output. But,
the manager's contract, speaks differently. Thus
4. Performance Requirements. To maintain your
appointment as Acting Unit Manager you must meet the
following manpower and production requirements:
Quarter Active Calendar Year
Production Agents Cumulative FYP
Production
1st 2 P125,000
2nd 3 250,000
3rd 4 375,000
4th 5 500,000
5.4. Unit Development Financing (UDF). As an Acting
Unit Manager you shall be given during the first 12 months of
your appointment a financial assistance which is composed of
two parts:
5.4.1 Free Portion amounting to P300 per month, subject to
your meeting prescribed minimum performance requirement on
manpower and premium production. The free portion is not
payable by you.
5.4.2 Validate Portion amounting to P1,200 per month, also
subject to meeting the same prescribed minimum performance
requirements on manpower and premium production. The
validated portion is an advance against expected compensation
during the UDF period and thereafter as may be necessary.
The above provisions unquestionably demonstrate that the
performance requirement imposed on De los Reyes was
applicable quarterly while his entitlement to the free portion
(P300) and the validated portion (P1,200) was monthly starting
on the first month of the twelve (12) months of the
appointment. Thus, it has to be admitted that even before the
end of the first quarter and prior to the so-called quarterly
performance evaluation, private respondent was already entitled
to be paid both the free and validated portions of the UDF every
month because his production performance could not be
determined until after the lapse of the quarter involved. This
indicates quite clearly that the unit manager's quarterly
performance had no bearing at all on his entitlement at least to
the free portion of the UDF which for all intents and purposes
comprised the salary regularly paid to him by petitioner. Thus it
cannot be validly claimed that the financial assistance
consisting of the free portion of the UDF was purely dependent
on the premium production of the agent. Be that as it may, it is
worth considering that the payment of compensation by way of
commission does not militate against the conclusion that private
respondent was an employee of petitioner. Under Art. 97 of the
Labor Code, "wage" shall mean "however designated, capable
of being expressed in terms of money, whether fixed or
ascertained on a time, task, price or commission basis . . . " 10
As to the matter involving the power of dismissal and control
by the employer, the latter of which is the most important of the
test, petitioner asserts that its termination of De los Reyes was
but an exercise of its inherent right as principal under the
contracts and that the rules and guidelines it set forth in the
contract cannot, by any stretch of the imagination, be deemed as
an exercise of control over the private respondent as these were
merely directives that fixed the desired result without dictating
the means or method to be employed in attaining it. The
following factual findings of the NLRC 11 however contradict
such claims:
A perusal of the appointment of complainant as Acting Unit
Manager reveals that:
1. Complainant was to "exclusively" serve respondent
company. Thus it is provided: . . . 7..7 Other causes of
Termination: This appointment may likewise be terminated for
any of the following causes: . . . 7..7..2. Your entering the
service of the government or another life insurance company;
7..7..3. Your accepting a managerial or supervisory position in
any firm doing business in the Philippines without the written
consent of the Company; . . .
2. Complainant was required to meet certain
manpower and production quotas.
3. Respondent (herein petitioner) controlled the
assignment and removal of soliciting agents to and from
complainant's unit, thus: . . . 7..2. Assignment of Agents:
Agents recruited and trained by you shall be attached to your
unit unless for reasons of Company policy, no such assignment
should be made. The Company retains the exclusive right to
assign new soliciting agents to the unit. It is agreed that the
Company may remove or transfer any soliciting agents
appointed and assigned to the said unit . . .
It would not be amiss to state that respondent's duty to collect
the company's premiums using company receipts under Sec.
7.4 of the management contract is further evidence of
petitioner's control over respondent, thus:
xxx xxx xxx
7.4. Acceptance and Remittance of Premiums. . . . the
Company hereby authorizes you to accept and to receive sums
of money in payment of premiums, loans, deposits on
applications, with or without interest, due from policyholders
and applicants for insurance, and the like, specially from
policyholders of business solicited and sold by the agents
attached to your unit provided however, that all such payments
shall be duly receipted by you on the corresponding
Company's "Agents' Receipt" to be provided you for this
purpose and to be covered by such rules and accounting
regulations the Company may issue from time to time on the
matter. Payments received by you shall be turned over to the
Company's designated District or Service Office clerk or
directly to the Home Office not later than the next working day
from receipt thereof . . .
Petitioner would have us apply our ruling in Insular Life
Assurance Co., Ltd. v. NLRC and Basiao 12 to the instant case
under the doctrine of stare decisis, postulating that both cases
involve parties similarly situated and facts which are almost
identical.
But we are not convinced that the cited case is on all fours with
the case at bar. In Basiao, the agent was appointed Agency
Manager under an Agency Manager Contract. To implement
his end of the agreement, Melecio Basiao organized an agency
office to which he gave the name M. Basiao and Associates.
The Agency Manager Contract practically contained the same
terms and conditions as the Agency Contract earlier entered
into, and the Court observed that "drawn from the terms of the
contract they had entered into, (which) either expressly or by
necessary implication, Basiao (was) made the master of his own
time and selling methods, left to his own judgment the time,
place and means of soliciting insurance, set no accomplishment
quotas and compensated him on the bases of results obtained.
He was not bound to observe any schedule of working hours or
report to any regular station; he could seek and work on his
prospects anywhere and at anytime he chose to and was free to
adopt the selling methods he deemed most effective." Upon
these premises, Basiao was considered as agent an
independent contractor of petitioner INSULAR LIFE.
Unlike Basiao, herein respondent De los Reyes was appointed
Acting Unit Manager, not agency manager. There is no
evidence that to implement his obligations under the
management contract, De los Reyes had organized an office.
Petitioner in fact has admitted that it provided De los Reyes a
place and a table at its office where he reported for and worked
whenever he was not out in the field. Placed under petitioner's
Cebu District Service Office, the unit was given a name by
petitioner De los Reyes and Associates and assigned
Code No. 11753 and Recruitment No. 109398. Under the
managership contract, De los Reyes was obliged to work
exclusively for petitioner in life insurance solicitation and was
imposed premium production quotas. Of course, the acting unit
manager could not underwrite other lines of insurance because
his Permanent Certificate of Authority was for life insurance
only and for no other. He was proscribed from accepting a
managerial or supervisory position in any other office including
the government without the written consent of petitioner. De los
Reyes could only be promoted to permanent unit manager if he
met certain requirements and his promotion was recommended
by the petitioner's District Manager and Regional Manager and
approved by its Division Manager. As Acting Unit Manager, De
los Reyes performed functions beyond mere solicitation of
insurance business for petitioner. As found by the NLRC, he
exercised administrative functions which were necessary and
beneficial to the business of INSULAR LIFE.
In Great Pacific Life Insurance Company v. NLRC 13 which is
closer in application than Basiao to this present controversy, we
found that "the relationships of the Ruiz brothers and Grepalife
were those of employer-employee. First, their work at the time
of their dismissal as zone supervisor and district manager was
necessary and desirable to the usual business of the insurance
company. They were entrusted with supervisory, sales and other
functions to guard Grepalife's business interests and to bring in
more clients to the company, and even with administrative
functions to ensure that all collections, reports and data are
faithfully brought to the company . . . A cursory reading of their
respective functions as enumerated in their contracts reveals
that the company practically dictates the manner by which their
jobs are to be carried out . . . " We need elaborate no further.
Exclusivity of service, control of assignments and removal of
agents under private respondent's unit, collection of premiums,
furnishing of company facilities and materials as well as capital
described as Unit Development Fund are but hallmarks of the
management system in which herein private respondent
worked. This obtaining, there is no escaping the conclusion that
private respondent Pantaleon de los Reyes was an employee of
herein petitioner.
WHEREFORE, the petition of Insular Life Assurance
Company, Ltd., is DENIED and the Decision of the National
Labor Relations Commission dated 3 March 1995 and its Order
of 6 April 1996 sustaining it are AFFIRMED. Let this case be
REMANDED to the Labor Arbiter a quo who is directed to hear
and dispose of this case with deliberate dispatch in light of the
views expressed herein. cda
SO ORDERED.
FIRST DIVISION
[G.R. No. 170087. August 31, 2006.]
ANGELINA FRANCISCO, petitioner, vs. NATIONAL
LABOR RELATIONS COMMISSION, KASEI
CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO
ACEDO, DELFIN LIZA, IRENE BALLESTEROS,
TRINIDAD LIZA and RAMON ESCUETA, respondents.
DECISION
YNARES-SANTIAGO, J p:
This petition for review on certiorari under Rule 45 of the Rules
of Court seeks to annul and set aside the Decision and
Resolution of the Court of Appeals dated October 29, 2004 1
and October 7, 2005, 2 respectively, in CA-G.R. SP No. 78515
dismissing the complaint for constructive dismissal filed by
herein petitioner Angelina Francisco. The appellate court
reversed and set aside the Decision of the National Labor
Relations Commission (NLRC) dated April 15, 2003, 3 in
NLRC NCR CA No. 032766-02 which affirmed with
modification the decision of the Labor Arbiter dated July 31,
2002, 4 in NLRC-NCR Case No. 30-10-0-489-01, finding that
private respondents were liable for constructive dismissal.
IcDHaT
In 1995, petitioner was hired by Kasei Corporation during its
incorporation stage. She was designated as Accountant and
Corporate Secretary and was assigned to handle all the
accounting needs of the company. She was also designated as
Liaison Officer to the City of Makati to secure business permits,
construction permits and other licenses for the initial operation
of the company. 5
Although she was designated as Corporate Secretary, she was
not entrusted with the corporate documents; neither did she
attend any board meeting nor required to do so. She never
prepared any legal document and never represented the
company as its Corporate Secretary. However, on some
occasions, she was prevailed upon to sign documentation for
the company. 6
In 1996, petitioner was designated Acting Manager. The
corporation also hired Gerry Nino as accountant in lieu of
petitioner. As Acting Manager, petitioner was assigned to
handle recruitment of all employees and perform management
administration functions; represent the company in all dealings
with government agencies, especially with the Bureau of
Internal Revenue (BIR), Social Security System (SSS) and in
the city government of Makati; and to administer all other
matters pertaining to the operation of Kasei Restaurant which is
owned and operated by Kasei Corporation. 7
For five years, petitioner performed the duties of Acting
Manager. As of December 31, 2000 her salary was P27,500.00
plus P3,000.00 housing allowance and a 10% share in the profit
of Kasei Corporation. 8
In January 2001, petitioner was replaced by Liza R. Fuentes as
Manager. Petitioner alleged that she was required to sign a
prepared resolution for her replacement but she was assured WHEREFORE, premises considered, judgment is hereby
that she would still be connected with Kasei Corporation. rendered as follows:
Timoteo Acedo, the designated Treasurer, convened a meeting 1. finding complainant an employee of respondent
of all employees of Kasei Corporation and announced that corporation;
nothing had changed and that petitioner was still connected 2. declaring complainant's dismissal as illegal;
with Kasei Corporation as Technical Assistant to Seiji Kamura 3. ordering respondents to reinstate complainant to her
and in charge of all BIR matters. 9 former position without loss of seniority rights and jointly and
Thereafter, Kasei Corporation reduced her salary by P2,500.00 severally pay complainant her money claims in accordance with
a month beginning January up to September 2001 for a total the following computation:
reduction of P22,500.00 as of September 2001. Petitioner was a. Backwages 10/2001 07/2002 275,000.00
not paid her mid-year bonus allegedly because the company (27,500 x 10 mos.)
was not earning well. On October 2001, petitioner did not b. Salary Differentials (01/2001 09/2001) 22,500.00
receive her salary from the company. She made repeated c. Housing Allowance (01/2001 07/2002)57,000.00
follow-ups with the company cashier but she was advised that d. Midyear Bonus 200127,500.00
the company was not earning well. 10 e. 13th Month Pay 27,500.00
On October 15, 2001, petitioner asked for her salary from f. 10% share in the profits of Kasei
Acedo and the rest of the officers but she was informed that Corp. from 1996-2001 361,175.00
she is no longer connected with the company. 11 g. Moral and exemplary damages 100,000.00
Since she was no longer paid her salary, petitioner did not h. 10% Attorney's fees 87,076.50
report for work and filed an action for constructive dismissal P957,742.50
before the labor arbiter. EHASaD If reinstatement is no longer feasible, respondents are ordered to
Private respondents averred that petitioner is not an employee pay complainant separation pay with additional backwages that
of Kasei Corporation. They alleged that petitioner was hired in would accrue up to actual payment of separation pay. cIECTH
1995 as one of its technical consultants on accounting matters SO ORDERED. 14
and act concurrently as Corporate Secretary. As technical On April 15, 2003, the NLRC affirmed with modification the
consultant, petitioner performed her work at her own discretion Decision of the Labor Arbiter, the dispositive portion of which
without control and supervision of Kasei Corporation. reads:
Petitioner had no daily time record and she came to the office PREMISES CONSIDERED, the Decision of July 31, 2002 is
any time she wanted. The company never interfered with her hereby MODIFIED as follows:
work except that from time to time, the management would ask 1) Respondents are directed to pay complainant
her opinion on matters relating to her profession. Petitioner did separation pay computed at one month per year of service in
not go through the usual procedure of selection of employees, addition to full backwages from October 2001 to July 31, 2002;
but her services were engaged through a Board Resolution 2) The awards representing moral and exemplary
designating her as technical consultant. The money received by damages and 10% share in profit in the respective accounts of
petitioner from the corporation was her professional fee subject P100,000.00 and P361,175.00 are deleted;
to the 10% expanded withholding tax on professionals, and 3) The award of 10% attorney's fees shall be based on
that she was not one of those reported to the BIR or SSS as one salary differential award only;
of the company's employees. 12 4) The awards representing salary differentials, housing
Petitioner's designation as technical consultant depended solely allowance, mid year bonus and 13th month pay are
upon the will of management. As such, her consultancy may be AFFIRMED.
terminated any time considering that her services were only SO ORDERED. 15
temporary in nature and dependent on the needs of the On appeal, the Court of Appeals reversed the NLRC decision,
corporation. thus:
To prove that petitioner was not an employee of the WHEREFORE, the instant petition is hereby GRANTED. The
corporation, private respondents submitted a list of employees decision of the National Labor Relations Commissions dated
for the years 1999 and 2000 duly received by the BIR showing April 15, 2003 is hereby REVERSED and SET ASIDE and a
that petitioner was not among the employees reported to the new one is hereby rendered dismissing the complaint filed by
BIR, as well as a list of payees subject to expanded private respondent against Kasei Corporation, et al. for
withholding tax which included petitioner. SSS records were constructive dismissal.
also submitted showing that petitioner's latest employer was SO ORDERED. 16
Seiji Corporation. 13 The appellate court denied petitioner's motion for
The Labor Arbiter found that petitioner was illegally reconsideration, hence, the present recourse.
dismissed, thus:
The core issues to be resolved in this case are (1) whether there
was an employer-employee relationship between petitioner and
private respondent Kasei Corporation; and if in the affirmative,
(2) whether petitioner was illegally dismissed.
Considering the conflicting findings by the Labor Arbiter and
the National Labor Relations Commission on one hand, and the
Court of Appeals on the other, there is a need to reexamine the
records to determine which of the propositions espoused by the
contending parties is supported by substantial evidence. 17
We held in Sevilla v. Court of Appeals 18 that in this
jurisdiction, there has been no uniform test to determine the
existence of an employer-employee relation. Generally, courts
have relied on the so-called right of control test where the
person for whom the services are performed reserves a right to
control not only the end to be achieved but also the means to be
used in reaching such end. In addition to the standard of right-
of-control, the existing economic conditions prevailing between
the parties, like the inclusion of the employee in the payrolls,
can help in determining the existence of an employer-employee
relationship.
However, in certain cases the control test is not sufficient to
give a complete picture of the relationship between the parties,
owing to the complexity of such a relationship where several
positions have been held by the worker. There are instances
when, aside from the employer's power to control the employee
with respect to the means and methods by which the work is to
be accomplished, economic realities of the employment
relations help provide a comprehensive analysis of the true
classification of the individual, whether as employee,
independent contractor, corporate officer or some other
capacity. caIEAD
The better approach would therefore be to adopt a two-tiered
test involving: (1) the putative employer's power to control the
employee with respect to the means and methods by which the
work is to be accomplished; and (2) the underlying economic
realities of the activity or relationship.
This two-tiered test would provide us with a framework of
analysis, which would take into consideration the totality of
circumstances surrounding the true nature of the relationship
between the parties. This is especially appropriate in this case
where there is no written agreement or terms of reference to
base the relationship on; and due to the complexity of the
relationship based on the various positions and responsibilities
given to the worker over the period of the latter's employment.
The control test initially found application in the case of Viaa
v. Al-Lagadan and Piga, 19 and lately in Leonardo v. Court of
Appeals, 20 where we held that there is an employer-employee
relationship when the person for whom the services are
performed reserves the right to control not only the end
achieved but also the manner and means used to achieve that
end.
In Sevilla v. Court of Appeals, 21 we observed the need to
consider the existing economic conditions prevailing between
the parties, in addition to the standard of right-of-control like
the inclusion of the employee in the payrolls, to give a clearer
picture in determining the existence of an employer-employee
relationship based on an analysis of the totality of economic
circumstances of the worker.
Thus, the determination of the relationship between employer
and employee depends upon the circumstances of the whole
economic activity, 22 such as: (1) the extent to which the
services performed are an integral part of the employer's
business; (2) the extent of the worker's investment in
equipment and facilities; (3) the nature and degree of control
exercised by the employer; (4) the worker's opportunity for
profit and loss; (5) the amount of initiative, skill, judgment or
foresight required for the success of the claimed independent
enterprise; (6) the permanency and duration of the relationship
between the worker and the employer; and (7) the degree of
dependency of the worker upon the employer for his continued
employment in that line of business. 23
The proper standard of economic dependence is whether the
worker is dependent on the alleged employer for his continued
employment in that line of business. 24 In the United States,
the touchstone of economic reality in analyzing possible
employment relationships for purposes of the Federal Labor
Standards Act is dependency. 25 By analogy, the benchmark of
economic reality in analyzing possible employment
relationships for purposes of the Labor Code ought to be the
economic dependence of the worker on his employer.
By applying the control test, there is no doubt that petitioner is
an employee of Kasei Corporation because she was under the
direct control and supervision of Seiji Kamura, the
corporation's Technical Consultant. She reported for work
regularly and served in various capacities as Accountant,
Liaison Officer, Technical Consultant, Acting Manager and
Corporate Secretary, with substantially the same job functions,
that is, rendering accounting and tax services to the company
and performing functions necessary and desirable for the
proper operation of the corporation such as securing business
permits and other licenses over an indefinite period of
engagement. CTHDcE
Under the broader economic reality test, the petitioner can
likewise be said to be an employee of respondent corporation
because she had served the company for six years before her
dismissal, receiving check vouchers indicating her
salaries/wages, benefits, 13th month pay, bonuses and
allowances, as well as deductions and Social Security
contributions from August 1, 1999 to December 18, 2000. 26
When petitioner was designated General Manager, respondent
corporation made a report to the SSS signed by Irene
Ballesteros. Petitioner's membership in the SSS as manifested
by a copy of the SSS specimen signature card which was
signed by the President of Kasei Corporation and the inclusion
of her name in the on-line inquiry system of the SSS evinces
the existence of an employer-employee relationship between
petitioner and respondent corporation. 27
It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued
employment in the latter's line of business.
In Domasig v. National Labor Relations Commission, 28 we
held that in a business establishment, an identification card is
provided not only as a security measure but mainly to identify
the holder thereof as a bona fide employee of the firm that
issues it. Together with the cash vouchers covering petitioner's
salaries for the months stated therein, these matters constitute
substantial evidence adequate to support a conclusion that
petitioner was an employee of private respondent.
We likewise ruled in Flores v. Nuestro 29 that a corporation
who registers its workers with the SSS is proof that the latter
were the former's employees. The coverage of Social Security
Law is predicated on the existence of an employer-employee
relationship.
Furthermore, the affidavit of Seiji Kamura dated December 5,
2001 has clearly established that petitioner never acted as
Corporate Secretary and that her designation as such was only
for convenience. The actual nature of petitioner's job was as
Kamura's direct assistant with the duty of acting as Liaison
Officer in representing the company to secure construction
permits, license to operate and other requirements imposed by
government agencies. Petitioner was never entrusted with
corporate documents of the company, nor required to attend the
meeting of the corporation. She was never privy to the
preparation of any document for the corporation, although once
in a while she was required to sign prepared documentation for
the company. 30
The second affidavit of Kamura dated March 7, 2002 which
repudiated the December 5, 2001 affidavit has been allegedly
withdrawn by Kamura himself from the records of the case. 31
Regardless of this fact, we are convinced that the allegations in
the first affidavit are sufficient to establish that petitioner is an
employee of Kasei Corporation.
Granting arguendo, that the second affidavit validly repudiated
the first one, courts do not generally look with favor on any
retraction or recanted testimony, for it could have been secured
by considerations other than to tell the truth and would make
solemn trials a mockery and place the investigation of the truth
at the mercy of unscrupulous witnesses. 32 A recantation does
not necessarily cancel an earlier declaration, but like any other
testimony the same is subject to the test of credibility and
should be received with caution. 33
Based on the foregoing, there can be no other conclusion that
petitioner is an employee of respondent Kasei Corporation. She
was selected and engaged by the company for compensation,
and is economically dependent upon respondent for her
continued employment in that line of business. Her main job
function involved accounting and tax services rendered to
respondent corporation on a regular basis over an indefinite
period of engagement. Respondent corporation hired and
engaged petitioner for compensation, with the power to dismiss
her for cause. More importantly, respondent corporation had the
power to control petitioner with the means and methods by
which the work is to be accomplished. aHTEIA
The corporation constructively dismissed petitioner when it
reduced her salary by P2,500 a month from January to
September 2001. This amounts to an illegal termination of
employment, where the petitioner is entitled to full backwages.
Since the position of petitioner as accountant is one of trust and
confidence, and under the principle of strained relations,
petitioner is further entitled to separation pay, in lieu of
reinstatement. 34
A diminution of pay is prejudicial to the employee and amounts
to constructive dismissal. Constructive dismissal is an
involuntary resignation resulting in cessation of work resorted
to when continued employment becomes impossible,
unreasonable or unlikely; when there is a demotion in rank or a
diminution in pay; or when a clear discrimination, insensibility
or disdain by an employer becomes unbearable to an employee.
35 In Globe Telecom, Inc. v. Florendo-Flores, 36 we ruled that
where an employee ceases to work due to a demotion of rank or
a diminution of pay, an unreasonable situation arises which
creates an adverse working environment rendering it impossible
for such employee to continue working for her employer.
Hence, her severance from the company was not of her own
making and therefore amounted to an illegal termination of
employment.
In affording full protection to labor, this Court must ensure
equal work opportunities regardless of sex, race or creed. Even
as we, in every case, attempt to carefully balance the fragile
relationship between employees and employers, we are mindful
of the fact that the policy of the law is to apply the Labor Code
to a greater number of employees. This would enable
employees to avail of the benefits accorded to them by law, in
line with the constitutional mandate giving maximum aid and
protection to labor, promoting their welfare and reaffirming it as
a primary social economic force in furtherance of social justice
and national development.
WHEREFORE, the petition is GRANTED. The Decision and
Resolution of the Court of Appeals dated October 29, 2004 and
October 7, 2005, respectively, in CA-G.R. SP No. 78515 are
ANNULLED and SET ASIDE. The Decision of the National
Labor Relations Commission dated April 15, 2003 in NLRC
NCR CA No. 032766-02, is REINSTATED. The case is
REMANDED to the Labor Arbiter for the recomputation of
petitioner Angelina Francisco's full backwages from the time
she was illegally terminated until the date of finality of this
decision, and separation pay representing one-half month pay
for every year of service, where a fraction of at least six months
shall be considered as one whole year.
SO ORDERED.
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.
C. Dominguez, Jr. for petitioners.
C. L. Nitorreda for respondents.
SYLLABUS
1. LABOR; BOUNDARY SYSTEM; EMPLOYER-
EMPLOYEE RELATIONSHIP. In National Labor Union vs.
Dinglasan, 98 Phil., 649; 52 Off. Gaz., No. 4, 1933 and Isabelo
Doce vs. Workmen's Compensation Commission, et al., 104
Phil., 946 this Court held that a driver who operates a jeep, is an
"employee" of the owner of the vehicle within the meaning of
the law and, as a consequence, any labor dispute between them
falls under the jurisdiction of the Court of Industrial Relations.
Thus, in the case at bar, upon filing by petitioners of a
complaint for unfair labor practice against the respondents-
spouses, owners and operators of auto-calesas in Davao, with
the Court of Industrial Relations, said Court acquired complete
and exclusive jurisdiction over the labor dispute and the least
that should have been done in Civil Case No. 3966 was either to
dismiss it or suspend proceedings therein until final resolution
of the former.
DECISION
DIZON, J p:
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 shift or ten-hour a day operation of the jeeps. Not having any
of preliminary injunction ex-parte restraining defendants interest in the business because they did not invest anything in
therein from committing said acts of violence and intimidation the acquisition of the jeeps and did not participate in the
during the pendency of the case. management thereof, their service as drivers of the jeeps being
On March 11, 1963 the respondent judge granted the writ their only contribution to the business, the relationship of lessor
prayed for, while deferring action on petitioners' motion to and lessee cannot be sustained.'"
dissolve said writ to March 20 of the same year. Even assuming, arguendo, that the respondent court had
Meanwhile, on March 12, 1963, petitioners filed a complaint jurisdiction to issue the abovementioned writ of preliminary
for unfair labor practice against the respondents-spouses with injunction in Civil Case No. 3966 at the time it was issued, We
the Court of Industrial Relations on the ground, among others, are of the opinion, and so hold, that it erred in denying
of the latter's refusal to bargain with them. petitioners' motion to set aside said writ upon expiration of the
On March 18, 1963, petitioners filed a motion to declare the period of thirty days from its issuance, upon the wrong ground
writ of preliminary injunction void on the ground that the same that there was no labor dispute between the parties and that,
had expired by virtue of Section 9 (d) of Republic Act 875. In therefore, the provisions of Republic Act No. 875 did not apply
his order of March 21, 1963, however, the respondent judge to the case. As stated heretofore, there was a labor dispute
denied said motion on the ground that there was no employer- between the parties from the beginning.
employee relationship between respondents-spouses and the Moreover, upon the filing of the unfair labor practice case on
individual petitioners herein and that, consequently, the Rules March 12, 1963, the Court of Industrial Relations acquired
of Court and not Republic Act No. 875 applied to the matter of complete jurisdiction over the labor dispute and the least that
injunction. Thereupon the petition under consideration was could be done in Civil Case No. 3966 is either to dismiss it or
filed. suspend proceedings therein until the final resolution of the
In the case of Isabelo Doce vs. Workmen's Compensation former.
Commission et al. (104 Phil., 946), upon a similar if not an Wherefore, judgment is hereby rendered setting aside the writ
altogether identical set of facts, We held: of preliminary injunction issued by the respondent judge in
"This case falls squarely within our ruling in National Labor Civil Case No. 3966 of the Court of First Instance of Davao,
Union vs. Dinglasan, 98 Phil., 649; 52 Off. Gaz., No. 4, 1933, with costs.
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 respondents 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
FIRST DIVISION
[G.R. No. 165881. April 19, 2006.]
OSCAR VILLAMARIA, JR., petitioner, vs. COURT OF
APPEALS and JERRY V. BUSTAMANTE, respondents.
DECISION
CALLEJO, SR., J p:
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. aETASc
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 remitted P450.00 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 Villamaria's
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-hulog for 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
vehicle's comprehensive insurance. Bustamante promised to
strictly comply with the rules and regulations imposed by
Villamaria for the upkeep and maintenance of the jeepney.
CTDacA
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 driver's
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.
DTSaHI
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. Attorney's 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 vehicle's 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. cIEHAC
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 Bustamante insisted that despite the Kasunduan, the
under the boundary system. He further reiterated that it was the relationship between him and Villamaria continued to be that
Villamaria spouses who presented the Kasunduan to him and of employer-employee and as such, the Labor Arbiter had
that he conformed thereto only upon their representation that he jurisdiction over his complaint. He further alleged that it is
would own the vehicle after four years. Moreover, it appeared common knowledge that operators of passenger jeepneys
that the Paalala was duly received by him, as he, together with (including taxis) pay their drivers not on a regular monthly
other drivers, was made to affix his signature on a blank piece basis but on commission or boundary basis, or even the
of paper purporting to be an "attendance sheet." boundary-hulog system. Bustamante asserted that he was
On March 15, 2002, the Labor Arbiter rendered judgment 17 in dismissed from employment without any lawful or just cause
favor of the spouses Villamaria and ordered the complaint and without due notice. STcDIE
dismissed on the following ratiocination: For his part, Villamaria averred that Bustamante failed to
Respondents presented the contract of Boundary-Hulog, as well adduce proof of their employer-employee relationship. He
as the PAALALA, to prove their claim that complainant further pointed out that the Dinglasan case pertains to the
violated the terms of their contract and afterwards abandoned boundary system and not the boundary-hulog system, hence
the vehicle assigned to him. As against the foregoing, [the] inapplicable in the instant case. He argued that upon the
complaint's (sic) mere allegations to the contrary cannot prevail. execution of the Kasunduan, the juridical tie between him and
Not having been illegally dismissed, complainant is not entitled Bustamante was transformed into a vendor-vendee
to damages and attorney's fees. 18 relationship. Noting that he was engaged in the manufacture
Bustamante appealed the decision to the NLRC, 19 insisting and sale of jeepneys and not in the business of transporting
that the Kasunduan did not extinguish the employer-employee passengers for consideration, Villamaria contended that the
relationship between him and Villamaria. While he did not daily fees which Bustmante paid were actually periodic
receive fixed wages, he kept only the excess of the boundary- installments for the vehicle and were not the same fees as
hulog which he was required to remit daily to Villamaria under understood in the boundary system. He added that the
the agreement. Bustamante maintained that he remained an boundary-hulog plan was basically a scheme to help the driver-
employee because he was engaged to perform activities which buyer earn money and eventually pay for the unit in full, and
were necessary or desirable to Villamaria's trade or business. for the owner to profit not from the daily earnings of the
CSHEca driver-buyer but from the purchase price of the unit sold.
The NLRC rendered judgment 20 dismissing the appeal for lack Villamaria further asserted that the apparently restrictive
of merit, thus: conditions in the Kasunduan did not mean that the means and
WHEREFORE, premises considered, complainant's appeal is method of driver-buyer's conduct was controlled, but were
hereby DISMISSED for reasons not stated in the Labor mere ways to preserve the vehicle for the benefit of both
Arbiter's decision but mainly on a jurisdictional issue, there parties: Villamaria would be able to collect the agreed purchase
being none over the subject matter of the controversy. 21 price, while Bustamante would be assured that the vehicle
The NLRC ruled that under the Kasunduan, the juridical would still be in good running condition even after four years.
relationship between Bustamante and Villamaria was that of Moreover, the right of vendor to impose certain conditions on
vendor and vendee, hence, the Labor Arbiter had no jurisdiction the buyer should be respected until full ownership of the
over the complaint. Bustamante filed a Motion for property is vested on the latter. Villamaria insisted that the
Reconsideration, which the NLRC resolved to deny on May 30, parallel circumstances obtaining in Singer Sewing Machine
2003. 22 Company v. Drilon 24 has analogous application to the instant
Bustamante elevated the matter to the CA via Petition for issue.
Certiorari, alleging that the NLRC erred In its Decision 25 dated August 30, 2004, the CA reversed and
I set aside the NLRC decision. The fallo of the decision reads:
IN DISMISSING PETITIONER'S APPEAL "FOR REASON UPON THE VIEW WE TAKE IN THIS CASE, THUS, the
NOT STATED IN THE LABOR ARBITER'S DECISION, BUT impugned resolutions of the NLRC must be, as they are hereby
MAINLY ON JURISDICTIONAL ISSUE;" are, REVERSED AND SET ASIDE, and judgment entered in
II favor of petitioner:
IN DISREGARDING THE LAW AND PREVAILING 1. Sentencing private respondent Oscar Villamaria, Jr.
JURISPRUDENCE WHEN IT DECLARED THAT THE to pay petitioner Jerry Bustamante separation pay computed
RELATIONSHIP WHICH WAS ESTABLISHED BETWEEN from the time of his employment up to the time of termination
PETITIONER AND THE PRIVATE RESPONDENT WAS based on the prevailing minimum wage at the time of
DEFINITELY A MATTER WHICH IS BEYOND THE termination; and, DETcAH
PROTECTIVE MANTLE OF OUR LABOR LAWS. 23 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 Bustamante's complaint. Under the Kasunduan, the
relationship between him and Villamaria was dual: that of
vendor-vendee and employer-employee. The CA ratiocinated
that Villamaria's exercise of control over Bustamante's conduct
in operating the jeepney is inconsistent with the former's 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 employee's work. In this case, Villamaria's
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
Villamaria's 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 week's default in
paying the boundary-hulog constituted an additional cause for
terminating Bustamante's 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. SDTIaE
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. aIDHET
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 respondent's 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. SDEHCc
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:
. . . (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; EDHCSI
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. Except claims 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. cSHIaA
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
latter's daily earnings are remitted to the owner/operator less the
excess of the boundary which represents the driver's
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 respondent's 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 petitioner's boundary and respondent's 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. STaAcC
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. AcISTE
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. STcADa
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.
15. Na ang TAUHAN NG IKALAWANG 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.
16. Na ang TAUHAN NG IKALAWANG PANIG 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.
17. Na ang TAUHAN NG IKALAWANG PANIG 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.
20. Na ang TAUHAN NG IKALAWANG PANIG ay
iiwasan ang pakikipag-unahan sa kaninumang sasakyan upang
maiwasan ang aksidente. AHSaTI
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 of P550.00 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 the property 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. AEHTIC
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 respondent's conduct as driver of the vehicle.
As correctly ruled by the CA:
The exercise of control by private respondent over petitioner's
conduct in operating the jeepney he was driving is inconsistent
with private respondent's 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 petitioner's
claim that the terms and conditions in the Kasunduan relative
to respondent's behavior and deportment as driver was for his
and respondent's 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.
DHcEAa
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 respondent's employer, it was the burden of petitioner to
prove that respondent's 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 boundary hulog 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. CacEIS
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 (petitioner's) 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
respondent's 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 sasakyan
"Sa 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 kaya't aking
pinaaalala sa inyong lahat na tuparin natin ang nakalagay sa
kasunduan upang maiwasan natin ito. IDCHTE
"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 herein
include (sic) that of petitioner's) (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
Petitioner's claim that he opted not to terminate the employment
of respondent because of magnanimity is negated by his
(petitioner's) 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. cETDIA
SO ORDERED.
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.
DECISION
FERNAN, C.J p:
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. prLL
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
(P3.00) 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: prcd
"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 supervisors. If you have many due dates for certain day, advise
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 saw 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. cdrep
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 check (sic) if it is match (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
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 P3.00 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 . . ."
12 No 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. LibLex
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 disciplinary 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. llcd
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.
EN BANC
[G.R. No. L-18353. July 31, 1963.]
SAN MIGUEL BREWERY INC., ETC., petitioner, vs.
DEMOCRATIC LABOR ORGANIZATION, ET AL.,
respondents.
Paredes, Poblador, Cruz & Nazareno for petitioner.
Delfin N. Mercader for respondents.
SYLLABUS
1. LABOR LAWS; EIGHT-HOUR LABOR LAW; NO
APPLICATION TO OUTSIDE OR FIELD SALES
PERSONNEL. Where after the morning roll call the outside
or field sales personnel leave the plant of the company to go on
their respective sales routes and they do not have a daily time
record but the sales routes are so planned that they can be
completed within 8 hours at most, and they receive monthly
salaries and sales commissions in variable amounts, so that they
are made to work beyond the required eight hours similar to
piece work, "pakiao", or commission basis regardless of the
time employed, and the employees' participation depends on
their industry, it is held that the Eight-Hour Labor Law has no
application to said outside or field sales personnel and that they
are not entitled to overtime compensation.
2. ID.; ID.; NIGHT SALARY DIFFERENTIALS
RETROACTIVE. Watchmen who rendered night duties once
every three weeks continuously during the period of their
employment should be paid 25% Additional compensation for
work from 6:00 to 12:00 p.m. 75% additional compensation for
work from 12:01 to 6:00 in the morning retroactive prior to date
of demand because a similar claim had been filed long before
and had been the subject of negotiation between the union and
the company which culminated in a strike which fizzled out
with the understanding that such claim should be settled in
court.
3. ID.; ID.; SUNDAYS AND HOLIDAYS PAY.
Watchmen who work on Sundays and holidays are entitled to
extra pay for work done during these days although they are
paid on a monthly basis and are given one day off. Section 4 of
Commonwealth Act No. 444 expressly provides that no
employer may compel an employee to work during Sundays
and legal holidays unless he is paid an additional sum of his
regular compensation. This proviso is mandatory, regardless of
the nature of the compensation. The only exception is with
regard to public utilities who perform some public service.
DECISION
BAUTISTA ANGELO, J p:
On January 27, 1953, the Democratic Labor Association filed a
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.
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 or 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
commission 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 P.01 to
P.01 1/2 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 service rendered in excess if 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 piecework, "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 in 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 are 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.G.A. Okl., 118 F. 2d 202, as follows:
"The reasons for excluding an outside salesman are fairly
apparent. Such salesman, to a great 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 as the extra
work they perform, they can be considered as employees paid
on piecework, "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 Hours 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 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
periods specified by them in their testimony and that watchmen
Zoilo Lliga, Inocentes Prescillas and Daniel Cauyca rendered
night duties once every three weeks continuously during the
period of their 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 Work 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.
SECOND DIVISION
[G.R. No. 156367. May 16, 2005.]
AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs.
ANTONIO BAUTISTA, respondent.
Tagle-Chua Cruz & Aquino for petitioner.
Joseph D. Sagampud, Jr. for respondent.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR
STANDARDS; RIGHT TO SERVICE INCENTIVE LEAVE;
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".
A careful perusal of the pertinent 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
definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot be determined
with reasonable certainty." 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. 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, petitioner's 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. aICcHA
2. ID.; ID.; "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. 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 the Bureau of Working Conditions (BWC), Advisory
Opinion to Philippine Technical-Clerical Commercial
Employees Association 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. 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 employee's
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
employee's time and performance are constantly supervised by
the employer.
3. ID.; ID.; ID.; RESPONDENT, ALTHOUGH
EMPLOYED AS A BUS DRIVER-CONDUCTOR, IS NOT A
FIELD PERSONNEL BUT A REGULAR EMPLOYEE WHO
PERFORMS TASKS USUALLY NECESSARY AND
DESIRABLE TO THE USUAL TRADE OF PETITIONER'S
TRANSPORT BUSINESS. 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 conductor's 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. 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 petitioner's business. Accordingly, respondent is
entitled to the grant of service incentive leave. SaCDTA
4. ID.; ID.; PRESCRIPTION OF CLAIMS; 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 WORKER'S RIGHT TO THE
BENEFITS BEING CLAIMED WAS COMMITTED; IF
CAUSE OF ACTION ACCRUED MORE THAN THREE
YEARS (3) YEARS BEFORE THE FILING OF THE MONEY
CLAIM, SAID CAUSE OF ACTION HAS ALREADY
PRESCRIBED. 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. 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. 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. ASETHC
5. ID.; ID.; ID.; THREE-YEAR PRESCRIPTIVE
PERIOD COMMENCES, NOT AT THE END OF THE YEAR
WHEN 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
EMPLOYEE'S SERVICES, AS THE CASE MAY BE.
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 employee's
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 workingman's welfare should be
the primordial and paramount consideration. 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.
6. ID.; ID.; ID.; RESPONDENT'S CLAIM FOR
MONETARY EQUIVALENT OF HIS SERVICE INCENTIVE
LEAVE WAS FILED WITHIN THE PRESCRIPTIVE
PERIOD. 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. ECTIcS
DECISION
CHICO-NAZARIO, J p:
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. EACIcH
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 respondent's 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 respondent's
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. aEHIDT
Furthermore, petitioner avers that in the exercise of its
management prerogative, respondent's 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. . . ."
Records show that complainant, in his position paper, admitted
that he was paid on a commission basis. AcSCaI
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.
xxx xxx xxx
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 respondent's claim of service incentive leave pay.
acCETD
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:
xxx xxx xxx
(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
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. CSTDIE
Therefore, petitioner's 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 the Bureau 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 employer. [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 employee's 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. TcDAHS
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 employee's
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
employee's 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 conductor's 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 petitioner's
business. Accordingly, respondent is entitled to the grant of
service incentive leave. IcESaA
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
respondent's 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 commutation of his accumulated leave credits. His cause of
service incentive leave of five days with pay." Service incentive action to claim the payment of his accumulated service
leave is a right which accrues to every employee who has incentive leave thus accrued from the time when his employer
served "within 12 months, whether continuous or broken dismissed him and failed to pay his accumulated leave credits.
reckoned from the date the employee started working, including ATICcS
authorized absences and paid regular holidays unless the Therefore, the prescriptive period with respect to his claim for
working days in the establishment as a matter of practice or service incentive leave pay only commenced from the time the
policy, or that provided in the employment contracts, is less employer failed to compensate his accumulated service
than 12 months, in which case said period shall be considered incentive leave pay at the time of his dismissal. Since
as one year." It is also "commutable to its money equivalent if respondent had filed his money claim after only one month
not used or exhausted at the end of the year." In other words, an from the time of his dismissal, necessarily, his money claim
employee who has served for one year is entitled to it. He may was filed within the prescriptive period provided for by Article
use it as leave days or he may collect its monetary value. To 291 of the Labor Code.
limit the award to three years, as the solicitor general WHEREFORE, premises considered, the instant petition is
recommends, is to unduly restrict such right. 17 [Italics hereby DENIED. The assailed Decision of the Court of
supplied] TCSEcI Appeals in CA-G.R. SP. No. 68395 is hereby AFFIRMED. No
Correspondingly, it can be conscientiously deduced that the Costs. ITSCED
cause of action of an entitled employee to claim his service SO ORDERED.
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 employee's
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
workingman's 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
THIRD DIVISION
[G.R. No. 126383. November 28, 1997.]
SAN JUAN DE DIOS HOSPITAL EMPLOYEES
ASSOCIATION-AFW/MA. CONSUELO MAQUILING,
LEONARDO MARTINEZ, DOMINGO ELA, JR.,
RODOLFO CALUCIN, JR., PERLA MENDOZA, REX
RAPHAEL REYES, ROGELIO BELMONTE, AND 375
OTHER EMPLOYEE-UNION MEMBERS, petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, and
SAN JUAN DE DIOS HOSPITAL, respondents.
Edgar B. Martir for petitioners.
Padilla Law Office for public respondent.
Quiason Makalintal Barrot Torres and Ibarra for St.
Anthony College.
SYNOPSIS
Petitioners sent a written request for the expeditious
implementation and payment by respondent, San Juan de Dios
Hospital, of the "40-Hours/5-Day workweek" with compensable
weekly two days off as provided for by Republic Act 5901 as
clarified for enforcement by the Secretary of Labor's Policy
Instructions No. 54 dated April 12, 1988. Respondent hospital
failed to give a favorable response; thus, petitioners filed a
complaint regarding their "claims for statutory benefits under
the above-cited law and policy issuance." The Labor Arbiter,
however, dismissed the complaint. Petitioners appealed before
public respondent National Labor Relations Commission
(NLRC), which affirmed the Labor Arbiter's decision. Hence,
this petition, ascribing grave abuse of discretion on the part of
NLRC in concluding that Policy Instructions No. 54 "proceeds
from a wrong interpretation of RA 5901" and Article 83 of the
Labor Code. The core issue is whether Policy Instructions No.
54 issued by then Labor Secretary Franklin M. Drilon is valid
or not.
The Supreme Court affirmed the decision appealed from. There
is nothing in the law (Article 83 of the Labor Code) that
supports then Secretary of Labor's assertion that "personnel in
subject hospitals and clinics are entitled to a full weekly wage
for seven (7) days if they have completed the 40-hour/5-day
workweek in any given workweek". Needless to say, the
Secretary of Labor exceeded his authority by including two
days off with pay in contravention of the clear mandate of the
statute. A perusal of Republic Act No. 5901 reveals nothing
therein that gives two days off with pay for health personnel
who complete a 40-hour work or 5-day workweek. The
Explanatory Note of House Bill No. 16630 (later passed into
law as Republic Act No. 5901) explicitly states that the bill's
sole purpose is to shorten the working hours of health personnel
and not to dole out a two days off with pay. SAaTHc
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION;
REPUBLIC ACT NO. 5901 ( AN ACT PRESCRIBING
FORTY HOURS A WEEK OF LABOR FOR GOVERNMENT
AND PRIVATE HOSPITALS OR CLINIC PERSONNEL);
REPEALED WITH THE PASSAGE OF THE LABOR CODE
ON MAY 1, 1974. Policy Instruction No. 54 relies and
purports to implement Republic Act No. 5901, otherwise
known as "An Act Prescribing Forty Hours A Week of Labor
For Government And Private Hospitals Or Clinic Personnel",
enacted on June 21, 1969. Reliance on Republic Act No. 5901,
however is misplaced for the said statute, as correctly ruled by
respondent NLRC, has long been repealed with the passage of
the Labor Code on May 1, 1974, Article 302 of which
explicitly provides: "All labor laws not adopted as part of this
Code either directly or by reference are repealed. All
provisions of existing laws, orders, decrees, rules and
regulations inconsistent herewith are likewise repealed."
2. ID.; LABOR CODE; ARTICLE 83 THEREOF
CONSTRUED; ADMINISTRATIVE INTERPRETATION;
THE COURT MAY STRIKE DOWN INTERPRETATION
THAT DEVIATES FROM THE PROVISION OF THE
STATUTE. Only Article 83 of the Labor Code which
appears to have substantially incorporated or reproduced the
basic provisions of Republic Act No. 5901 may support Policy
Instructions No. 54 on which the latter's validity may be
gauged. A cursory reading of Article 83 of the Labor Code
betrays petitioners' position that "hospital employees" are
entitled to "a full weekly salary with paid two (2) days' off if
they have completed the 40-hours/5-day work week". What
Article 83 merely provides are: (1) the regular office hour of
eight hours a day, five days per week for health personnel, and
(2) where the exigencies of service require that health
personnel work for six days or forty-eight hours then such
health personnel shall be entitled to an additional
compensation of at least thirty percent of their regular wage for
work on the sixth day. There is nothing in the law that supports
then Secretary of Labor's assertion that "personnel in subject
hospitals and clinics are entitled to a full weekly wage for
seven (7) days if they have completed the 40-hour/5-day
workweek in any given workweek." Needless to say, the
Secretary of Labor exceeded his authority by including a two
days off with pay in contravention of the clear mandate of the
statute. Such act the Court shall not countenance.
Administrative interpretation of the law is at best merely
advisory, and the Court will not hesitate to strike down an
administrative interpretation that deviates from the provision of
the statute.
3. ID.; SECRETARY OF LABOR'S POLICY
INSTRUCTIONS NO. 54; DECLARED VOID BY THE
COURT; RATIONALE. Even if the Court was to subscribe
with petitioner's erroneous assertion that Republic Act No.
5901 has neither been amended nor repealed by the Labor
Code, we nevertheless find Policy Instructions No. 54 invalid.
A perusal of Republic Act No. 5901 reveals nothing therein
that gives two days off with pay for health personnel who
complete a 40 or 5-day workweek. In fact, the Explanatory
Note of House Bill No. 16630 (later passed into law as
Republic Act No. 5901) explicitly states that the bill's sole
purpose is to shorten the working hours of health personnel and
not to dole out a two-days off with pay. Further, petitioners'
position is also negated by the very rules and regulations
promulgated by the Bureau of Labor Standards which
implement Republic Act No. 5901. If petitioners are entitled to
two days off with pay, then there appears to be no sense at all
why Section 15 of the implementing rules grants additional
compensation equivalent to the regular rate plus at least twenty-
five percent thereof for work performed on Sunday to health
personnel, or an "additional straight-time pay which must be
equivalent at least to the regular rate" "[f]or work performed in
excess of forty hours a week . . . Policy Instructions No. 54 to
the Court's mind unduly extended the statute. The Secretary of
Labor moreover erred in invoking the "spirit and intent" of
Republic Act No. 5901 and Article 83 of the Labor Code for it
is an elementary rule of statutory construction that when the
language of the law is clear and unequivocal, the law must be
taken to mean exactly what it says. No additions or revisions
may be permitted. Policy Instructions No. 54 being inconsistent
with and repugnant to the provisions of Article 83 of the Labor
Code, as well as to Republic Act No. 5901, should be, as it is
hereby; declared void.
DECISION
FRANCISCO, J p:
Petitioners, the rank-and-file employee-union officers and
members of San Juan De Dios Hospital Employees Association,
sent on July 08, 1991, a "four (4)- page letter with attached
support signatures . . . requesting and pleading for the
expeditious implementation and payment by respondent" Juan
De Dios Hospital "of the '40-HOURS/5-DAY WORKWEEK'
with compensable weekly two (2) days off provided for by
Republic Act 5901 as clarified for enforcement by the Secretary
of Labor's Policy Instructions No. 54 dated April 12, 1988." 1
Respondent hospital failed to give a favorable response; thus,
petitioners filed a complaint regarding their "claims for
statutory benefits under the above-cited law and policy
issuance" 2 , docketed as NLRC NCR Case No. 00-08-04815-
91. On February 26, 1992, the Labor Arbiter 3 dismissed the
complaint. Petitioners appealed before public respondent
National Labor Relations Commission 4 (NLRC), docketed as
NLRC NCR CA 003028-92, which affirmed the Labor Arbiter's
decision. Petitioners' subsequent motion for reconsideration was
denied; hence, this petition under Rule 65 of the Rules of Court
ascribing grave abuse of discretion on the part of NLRC in
concluding that Policy Instructions No. 54 "proceeds from a
wrong interpretation of RA 5901" 5 and Article 83 of the Labor
Code. LLjur
As the Court sees it, the core issue is whether Policy
Instructions No. 54 issued by then Labor Secretary (now
Senator) Franklin M. Drilon is valid or not.
The policy instruction in question provides in full as follows:
"Policy Instruction No. 54
"To: All Concerned
"Subject: Working Hours and Compensation of Hospital/Clinic
Personnel
"This issuance clarifies the enforcement policy of this
Department on the working hours and compensation of
personnel employed by hospitals/clinics with a bed capacity of
100 or more and those located in cities and municipalities with
a population of one million or more.
"Republic Act 5901 took effect on 21 June 1969 prescribes a
40-hour/5 day work week for hospital/clinic personnel. At the
same time, the Act prohibits the diminution of the compensation
of these workers who would suffer a reduction in their weekly
wage by reason of the shortened workweek prescribed by the
Act. In effect, RA 5901 requires that the covered hospital
workers who used to work seven (7) days a week should be
paid for such number of days for working only 5 days or 40
hours a week. cdphil
"The evident intention of RA 5901 is to reduce the number of
hospital personnel, considering the nature of their work and at
the same time guarantee the payment to them of a full weekly
wage for seven (7) days. This is quite clear in the Exemplary
Note of RA 5901 which states:
'As compared with the other employees and laborers, these
hospital and health clinic personnel are over-worked despite the
fact that their duties are more delicate in nature. If we offer
them better working conditions, it is believed that the "brain
drain", that our country suffers nowadays as far as these
personnel are concerned will be considerably lessened. The fact
that these hospitals and health clinics personnel perform duties
which are directly concerned with the health and lives of our
people does not mean that they should work for a longer period
than most employees and laborers. They are also entitled to as
much rest as other workers. Making them work longer than is
necessary may endanger, rather than protect the health of their
patients. Besides, they are not receiving better pay than the
other workers. Therefore, it is just and fair that they may be
made to enjoy the privileges of equal working hours with other
workers except those excepted by law. (Sixth Congress of the
Republic of the Philippines, Third Session, House of
Representatives, H. No. 16630)'
"The Labor Code in its Article 83 adopts and incorporates the
basic provisions of RA 5901 and retains its spirit and intent
which is to shorten the workweek of covered hospital personnel
and at the same time assure them of a full weekly wage.
"Consistent with such spirit and intent, it is the position of the
Department that personnel in subject hospital and clinics are
entitled to a full weekly wage for seven (7) days if they have
completed the 40-hour/5-day workweek in any given
workweek.
"All enforcement and adjudicatory agencies of this Department
shall be guided by this issuance in the disposition of cases
involving the personnel of covered hospitals and clinics.
"Done in the City of Manila, this 12th day of April, 1988.
"(Sgd.) FRANKLIN M. DRILON
Secretary"
(Emphasis Added)
We note that Policy Instruction No. 54 relies and purports to
implement Republic Act No. 5901, otherwise known as "An
Act Prescribing Forty Hours A Week Of Labor For
Government and Private Hospitals Or Clinic Personnel",
enacted on June 21, 1969. Reliance on Republic Act No. 5901,
however, is misplaced for the said statute, as correctly ruled by
respondent NLRC, has long been repealed with the passage of
the Labor Code on May 1, 1974, Article 302 of which
explicitly provides: "All labor laws not adopted as part of this
Code either directly or by reference are hereby repealed. All
provisions of existing laws, orders, decrees, rules and
regulations inconsistent herewith are likewise repealed."
Accordingly, only Article 83 of the Labor Code which appears
to have substantially incorporated or reproduced the basic
provisions of Republic Act No. 5901 may support Policy
Instructions No. 54 on which the latter's validity may be
gauged. Article 83 of the Labor Code states:
"Art. 83. Normal Hours of Work. The normal hours of
work of any employee shall not exceed eight (8) hours a day.
"Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in hospitals
and clinics with a bed capacity of at least one hundred (100)
shall hold regular office hours for eight (8) hours a day, for five
(5) days a week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for
six (6) days or forty-eight (48) hours, in which case they shall
be entitled to an additional compensation of at least thirty per
cent (30%) of their regular wage for work on the sixth day. For
purposes of this Article, "health personnel" shall include:
resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants
and all other hospital or clinic personnel." (Emphasis supplied)
A cursory reading of Article 83 of the Labor Code betrays
petitioners' position that "hospital employees" are entitled to "a
full weekly salary with paid two (2) days' off if they have
completed the 40-hour/5-day workweek". 6 What Article 83
merely provides are: (1) the regular office hour of eight hours a
day, five days per week for health personnel, and (2) where the
exigencies of service require that health personnel work for six
days or forty-eight hours then such health personnel shall be
entitled to an additional compensation of at least thirty percent
of their regular wage for work on the sixth day. There is
nothing in the law that supports then Secretary of Labor's
assertion that "personnel in subject hospitals and clinics are
entitled to a full weekly wage for seven (7) days if they have
completed the 40-hour/5-day workweek in any given
workweek". Needless to say, the Secretary of Labor exceeded
his authority by including a two days off with pay in
contravention of the clear mandate of the statute. Such act the
Court shall not countenance. Administrative interpretation of
the law, we reiterate, is at best merely advisory, 7 and the Court
will not hesitate to strike down an administrative interpretation
that deviates from the provision of the statute.
Indeed, even if we were to subscribe with petitioners' erroneous
assertion that Republic Act No. 5901 has neither been amended
nor repealed by the Labor Code, we nevertheless find Policy
Instructions No. 54 invalid. A perusal of Republic Act No. 5901
8 reveals nothing therein that gives two days off with pay for
health personnel who complete a 40-hour work or 5-day
workweek. In fact, the Explanatory Note of House Bill No.
16630 (later passed into law as Republic Act No. 5901)
explicitly states that the bill's sole purpose is to shorten the
working hours of health personnel and not to dole out a two
days off with pay. Hence:
"The accompanying bill seeks to grant resident physicians, staff
nurses, nutritionists, midwives, attendants and other hospital
and health clinic personnel of public and private hospitals and
clinics, the privilege of enjoying the eight hours a week
exclusive of time for lunch granted by law to all government
employees and workers except those employed in schools and
in courts. At present those hospitals and health clinic personnel
including those employed in private hospitals and clinics, work
six days a week, 8 hours a day or 48 hours a week.
"As compared with the other employees and laborers, these
hospital and health clinic personnel are over-worked despite the
fact that their duties are more delicate in nature. If we offer
them better working conditions, it is believed that the 'brain
drain', that our country suffers nowadays as far as these
personnel are concerned will be considerably lessened. The fact
that these hospitals and health clinic personnel perform duties
which are directly concerned with the health and lives of our
people does not mean that they should work for a longer period
than most employees and laborers. They are also entitled to as
much rest as other workers. Making them work longer than is
necessary may endanger, rather than protect, the health of their
patients. Besides, they are not receiving better pay than the
other workers. Therefore, it is just and fair that they be made to
enjoy the privileges of equal working hours with other workers
except those excepted by law.
"In the light of the foregoing, approval of this bill is strongly
recommended.
"(SGD.) SERGIO H. LOYOLA
"Congressman, 3rd District
Manila" (Annex "F" of petition, emphasis supplied)
Further, petitioners' position is also negated by the very rules
and regulations promulgated by the Bureau of Labor Standards
which implement Republic Act No. 5901. Pertinent portions of
the implementing rules provide:
"RULES AND REGULATIONS IMPLEMENTING
REPUBLIC ACT NO. 5901
"By virtue of Section 79 of the Revised Administrative Code, as and unequivocal, the law must be taken to mean exactly what it
modified by section 18 of Implementation Report for says. 9 No additions or revisions may be permitted. Policy
Reorganization Plan No. 20-A on Labor, vesting in the Bureau Instructions No. 54 being inconsistent with and repugnant to
of Labor Standards the authority to promulgate rules and the provision of Article 83 of the Labor Code, as well as to
regulations to implement wage and hour laws, the following Republic Act No. 5901, should be, as it is hereby, declared
rules and regulations are hereby issued for the implementation void.
of Republic Act No. 5901. LibLex WHEREFORE, the decision appealed from is AFFIRMED. No
"CHAPTER I Coverage costs.
"Section 1. General Statement on Coverage. SO ORDERED.
Republic Act No. 5901, hereinafter referred to as the Act, shall
apply to:
'(a) All hospitals and clinics, including those with a bed
capacity of less than one hundred, which are situated in cities or
municipalities with a population of one million or more; and to
'(b) All hospitals and clinics with a bed capacity of at
least one hundred, irrespective of the size of population of the
city or municipality where they may be situated.'
xxx xxx xxx
"Section 7. Regular Working Day. The regular
working days of covered employees shall be not more than five
days in a workweek. The workweek may begin at any hour and
on any day, including Saturday or Sunday, designated by the
employer.
"Employers are not precluded from changing the time at which
the workday or workweek begins, provided that the change is
not intended to evade the requirements of these regulations on
the payment of additional compensation."
xxx xxx xxx
"Section 15. Additional Pay Under the Act and C. A.
No. 444. (a) Employees of covered hospitals and clinics who
are entitled to the benefits provided under the Eight-Hour Labor
Law, as amended, shall be paid an additional compensation
equivalent to their regular rate plus at least twenty-five percent
thereof for work performed on Sunday and Holidays, not
exceeding eight hours, such employees shall be entitled to an
additional compensation of at least 25% of their regular rate.
"(b) For work performed in excess of forty hours a week,
excluding those rendered in excess of eight hours a day during
the week, employees covered by the Eight-Hour Labor Law
shall be entitled to an additional straight-time pay which must
be equivalent at least to their regular rate."
If petitioners are entitled to two days off with pay, then there
appears to be no sense at all why Section 15 of the
implementing rules grants additional compensation equivalent
to the regular rate plus at least twenty-five percent thereof for
work performed on Sunday to health personnel, or an
"additional straight-time pay which must be equivalent at least
to the regular rate" "[f]or work performed in excess of forty
hours a week . . . Policy Instructions No. 54 to our mind unduly
extended the statute. The Secretary of Labor moreover erred in
invoking the "spirit and intent" of Republic Act No. 5901 and
Article 83 of the Labor Code for it is an elementary rule of
statutory construction that when the language of the law is clear
FIRST DIVISION
[G.R. No. 142824. December 19, 2001.]
INTERPHIL LABORATORIES EMPLOYEES UNION-
FFW, ENRICO GONZALES and MA. THERESA
MONTEJO, petitioners, vs. INTERPHIL
LABORATORIES, INC., AND HONORABLE
LEONARDO A. QUISUMBING, SECRETARY OF
LABOR AND EMPLOYMENT, respondents.
Allan S. Montano for petitioners.
Castillo Laman Tan Pantaleon & San Jose Law Offices for
private respondent.
SYNOPSIS
Interphil Laboratories Employees Union-FFW is the sole and
exclusive bargaining agent of the rank and file employees of
Interphil Laboratories, Inc. The company had a Collective
Bargaining Agreement (CBA) effective from 01 August 1990 to
31 July 1993. A few months before the expiration of the CBA,
some union officers wanted to discuss with the company vice-
president for human resources the details of a new CBA. Upon
failure to have a positive reaction, all the rank-and-file
employees of the company started a work slowdown and an
overtime boycott. Later on, the company filed with the National
Labor Relations Commission (NLRC) a petition to declare
illegal the union's overtime boycott and work slowdown, which
the company considered to be an illegal strike. Meanwhile, the
parties tried to settle things, but failed. The Petitioner union
staged a strike. The Secretary of Labor issued an assumption
order over the labor dispute and issued a return-to-work order.
In the meantime, the labor arbiter submitted his
recommendation on the case filed by the Company. The
Secretary of Labor adopted the recommendation declaring the
overtime boycott and work slowdown as an illegal strike and
declared the union officers concerned to have lost their
employment status. Petitioners moved for its reconsideration,
but was denied. The union went to the Court of Appeals, but the
appellate court dismissed the petition. Hence, this petition for
certiorari before the Supreme Court. HcTSDa
The petition was denied due course and the decision of the
Court of Appeals was affirmed. According to the Court, the
members of the union admitted in their petition that they
decided not to render overtime. Such admission confirmed the
allegation of respondent company that petitioners engaged in
overtime boycott and work slowdown which, according to the
labor arbiter, was taken as a means to coerce the company to
yield to their unreasonable demands. More importantly, such
acts by the employees constituted a violation of their CBA.
Also, the Court could not agree with the petitioners that in
extending substantial separation package to some officers of the
union, the respondent company in effect condoned the illegal
acts they committed. The Court viewed the gesture of the
respondent company as an act of generosity for which it should
not be punished. CaDSHE
SYLLABUS
1. LABOR AND SOCIAL LEGISLATIONS; LABOR
CODE; SECRETARY OF LABOR AND EMPLOYMENT;
VESTED WITH JURISDICTION OVER LABOR AND
LABOR-RELATED DISPUTES; CONSTRUED. The
appellate court also correctly held that the question of the
Secretary of Labor and Employment's jurisdiction over labor
and labor-related disputes was already settled in International
Pharmaceutical, Inc. vs. Hon. Secretary of Labor and
Associated Labor Union (ALU) where the Court declared: In
the present case, the Secretary was explicitly granted by Article
263(g) of the Labor Code the authority to assume jurisdiction
over a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest,
and decide the same accordingly. Necessarily, this authority to
assume jurisdiction over the said labor dispute must include
and extend to all questions and controversies arising therefrom,
including cases over which the labor arbiter has exclusive
jurisdiction. Moreover, Article 217 of the Labor Code is not
without, but contemplates, exceptions thereto. This is evident
from the opening proviso therein reading '(e)xcept as otherwise
provided under this Code . . . .' Plainly, Article 263(g) of the
Labor Code was meant to make both the Secretary (or the
various regional directors) and the labor arbiters share
jurisdiction, subject to certain conditions. Otherwise, the
Secretary would not be able to effectively and efficiently
dispose of the primary dispute. To hold the contrary may even
lead to the absurd and undesirable result wherein the Secretary
and the labor arbiter concerned may have diametrically
opposed rulings. As we have said, '(i)t is fundamental that a
statute is to be read in a manner that would breathe life into it,
rather than defeat it. In fine, the issuance of the assailed orders
is within the province of the Secretary as authorized by Article
263(g) of the Labor Code and Article 217(a) and (5) of the
same Code, taken conjointly and rationally construed to
subserve the objective of the jurisdiction vested in the
Secretary. cSIACD
2. REMEDIAL LAW; EVIDENCE; FACTUAL
FINDINGS OF THE LABOR ARBITER; WHEN
ACCORDED DUE RESPECT BY THE SUPREME COURT;
CASE AT BAR. Anent the alleged misappreciation of the
evidence proffered by the parties, it is axiomatic that the
factual findings of the Labor Arbiter, when sufficiently
supported by the evidence on record, must be accorded due
respect by the Supreme Court. Here, the report and
recommendation of Labor Arbiter Caday was not only adopted
by then Secretary of Labor Quisumbing but it was likewise
affirmed by the Court of Appeals. DAESTI
3. ID.; ID.; PAROL EVIDENCE RULE; NOT
APPLICABLE IN LABOR CASES; EFFECT THEREOF;
CASE AT BAR. The reliance on the parol evidence rule is
misplaced. In labor cases pending before the Commission or
the Labor Arbiter, the rules of evidence prevailing in courts of
law or equity are not controlling. Rules of procedure and
evidence are not applied in a very rigid and technical sense in
labor cases. Hence, the Labor Arbiter is not precluded from
accepting and evaluating evidence other than, and even contrary
to, what is stated in the CBA. In any event, the parties
stipulated: Section 1. Regular Working Hours A normal
workday shall consist of not more than eight (8) hours. The
regular working hours for the Company shall be from 7:30
A.M. to 4:30 P.M. The schedule of shift work shall be
maintained; however the company may change the prevailing
work time at its discretion, should such change be necessary in
the operations of the Company. All employees shall observe
such rules as have been laid down by the company for the
purpose of effecting control over working hours. It is evident
from the foregoing provision that the working hours may be
changed, at the discretion of the company, should such change
be necessary for its operations, and that the employees shall
observe such rules as have been laid down by the company. In
the case before us, Labor Arbiter Caday found that respondent
company had to adopt a continuous 24-hour work daily
schedule by reason of the nature of its business and the
demands of its clients. It was established that the employees
adhered to the said work schedule since 1988. The employees
are deemed to have waived the eight-hour schedule since they
followed, without any question or complaint, the two-shift
schedule while their CBA was still in force and even prior
thereto. The two-shift schedule effectively changed the working
hours stipulated in the CBA. As the employees assented by
practice to this arrangement, they cannot now be heard to claim
that the overtime boycott is justified because they were not
obliged to work beyond eight hours. TaEIAS
DECISION
KAPUNAN, J p:
Assailed in this petition for review on certiorari are the
decision, promulgated on 29 December 1999, and the
resolution, promulgated on 05 April 2000, of the Court of
Appeals in CA-G.R. SP No. 50978.
Culled from the questioned decision, the facts of the case are as
follows:
Interphil Laboratories Employees Union-FFW is the sole and
exclusive bargaining agent of the rank-and-file employees of
Interphil Laboratories, Inc., a company engaged in the business
of manufacturing and packaging pharmaceutical products. They
had a Collective Bargaining Agreement (CBA) effective from
01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February
1993, Allesandro G. Salazar, 1 Vice-President-Human
Resources Department of respondent company, was approached
by Nestor Ocampo, the union president, and Hernando
Clemente, a union director. The two union officers inquired
about the stand of the company regarding the duration of the
CBA which was set to expire in a few months. Salazar told the
union officers that the matter could be best discussed during the
formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached
Salazar. They inquired once more about the CBA status and
received the same reply from Salazar. In April 1993, Ocampo
requested for a meeting to discuss the duration and effectivity of
the CBA. Salazar acceded and a meeting was held on 15 April
1993 where the union officers asked whether Salazar would be
amenable to make the new CBA effective for two (2) years,
starting 01 August 1993. Salazar, however, declared that it
would still be premature to discuss the matter and that the
company could not make a decision at the moment. The very
next day, or on 16 April 1993, all the rank-and-file employees
of the company refused to follow their regular two-shift work
schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to
6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the
employees stopped working and left their workplace without
sealing the containers and securing the raw materials they were
working on. When Salazar inquired about the reason for their
refusal to follow their normal work schedule, the employees
told him to "ask the union officers." To minimize the damage
the overtime boycott was causing the company, Salazar
immediately asked for a meeting with the union officers. In the
meeting, Enrico Gonzales, a union director, told Salazar that the
employees would only return to their normal work schedule if
the company would agree to their demands as to the effectivity
and duration of the new CBA. Salazar again told the union
officers that the matter could be better discussed during the
formal renegotiations of the CBA. Since the union was
apparently unsatisfied with the answer of the company, the
overtime boycott continued. In addition, the employees started
to engage in a work slowdown campaign during the time they
were working, thus substantially delaying the production of the
company. 2
On 14 May 1993, petitioner union submitted with respondent
company its CBA proposal, and the latter filed its counter-
proposal.
On 03 September 1993, respondent company filed with the
National Labor Relations Commission (NLRC) a petition to
declare illegal petitioner union's "overtime boycott" and "work
slowdown" which, according to respondent company, amounted
to illegal strike. The case, docketed NLRC-NCR Case No. 00-
09-05529-93, was assigned to Labor Arbiter Manuel R. Caday.
On 22 October 1993, respondent company filed with the
National Conciliation and Mediation Board (NCMB) an urgent
request for preventive mediation aimed to help the parties in
their CBA negotiations. 3 The parties, however, failed to arrive
at an agreement and on 15 November 1993, respondent
company filed with the Office of the Secretary of Labor and
Employment a petition for assumption of jurisdiction.
On 24 January 1994, petitioner union filed with the NCMB a
Notice of Strike citing unfair labor practice allegedly committed
by respondent company. On 12 February 1994, the union
staged a strike.
On 14 February 1994, Secretary of Labor Nieves Confesor
issued an assumption order 4 over the labor dispute. On 02
March 1994, Secretary Confesor issued an order directing
respondent company to "immediately accept all striking
workers, including the fifty-three (53) terminated union
officers, shop stewards and union members back to work under
the same terms and conditions prevailing prior to the strike,
and to pay all the unpaid accrued year end benefits of its
employees in 1993." 5 On the other hand, petitioner union was
directed to "strictly and immediately comply with the return-
to-work orders issued by (the) Office . . .." 6 The same order
pronounced that "(a)ll pending cases which are direct offshoots
of the instant labor dispute are hereby subsumed herewith." 7
In the interim, the case before Labor Arbiter Caday continued.
On 16 March 1994, petitioner union filed an "Urgent
Manifestation and Motion to Consolidate the Instant Case and
to Suspend Proceedings" seeking the consolidation of the case
with the labor dispute pending before the Secretary of Labor.
Despite objection by respondent company, Labor Arbiter
Caday held in abeyance the proceedings before him. However,
on 06 June 1994, Acting Labor Secretary Jose S. Brillantes,
after finding that the issues raised would require a formal
hearing and the presentation of evidentiary matters, directed
Labor Arbiters Caday and M. Sol del Rosario to proceed with
the hearing of the cases before them and to thereafter submit
their report and recommendation to his office.
On 05 September 1995, Labor Arbiter Caday submitted his
recommendation to the then Secretary of Labor Leonardo A.
Quisumbing. 8 Then Secretary Quisumbing approved and
adopted the report in his Order, dated 13 August 1997, hence:
WHEREFORE, finding the said Report of Labor Arbiter
Manuel R. Caday to be supported by substantial evidence, this
Office hereby RESOLVES to APPROVE and ADOPT the
same as the decision in this case, and judgment is hereby
rendered:
(1) Declaring the 'overtime boycott' and 'work
slowdown' as illegal strike;
(2) Declaring the respondent union officers namely:
Nestor Ocampo President
Carmelo Santos Vice-President
Marites Montejo Treasurer/Board Member
Rico Gonzales Auditor
Rod Abuan Director
Segundino Flores Director
Hernando Clemente Director
who spearheaded and led the overtime boycott and work
slowdown, to have lost their employment status; and
(3) Finding the respondents guilty of unfair labor
practice for violating the then existing CBA which prohibits
the union or any employee during the existence of the CBA
from staging a strike or engaging in slowdown or interruption
of work and ordering them to cease and desist from further
committing the aforesaid illegal acts.
Petitioner union moved for the reconsideration of the order but
its motion was denied. The union went to the Court of Appeals
via a petition for certiorari. In the now questioned decision
promulgated on 29 December 1999, the appellate court
dismissed the petition. The union's motion for reconsideration
was likewise denied.
Hence, the present recourse where petitioner alleged:
THE HONORABLE FIFTH DIVISION OF THE COURT OF
APPEALS, LIKE THE HONORABLE PUBLIC
RESPONDENT IN THE PROCEEDINGS BELOW,
COMMITTED GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION WHEN IT COMPLETELY DISREGARDED
"PAROL EVIDENCE RULE" IN THE EVALUATION AND
APPRECIATION OF EVIDENCE PROFFERED BY THE
PARTIES.
THE HONORABLE FIFTH DIVISION OF THE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION, WHEN IT DID NOT DECLARE PRIVATE
RESPONDENT'S ACT OF EXTENDING SUBSTANTIAL
SEPARATION PACKAGE TO ALMOST ALL INVOLVED
OFFICERS OF PETITIONER UNION, DURING THE
PENDENCY OF THE CASE, AS TANTAMOUNT TO
CONDONATION, IF INDEED, THERE WAS ANY MISDEED
COMMITTED.
THE HONORABLE FIFTH DIVISION OF THE COURT OF
APPEALS COMMITTED GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK AND/OR EXCESS OF
JURISDICTION WHEN IT HELD THAT THE SECRETARY
OF LABOR AND EMPLOYMENT HAS JURISDICTION
OVER A CASE (A PETITION TO DECLARE STRIKE
ILLEGAL) WHICH HAD LONG BEEN FILED AND
PENDING BEFORE THE LABOR ARBITER. 9
We sustain the questioned decision.
On the matter of the authority and jurisdiction of the Secretary
of Labor and Employment to rule on the illegal strike
committed by petitioner union, it is undisputed that the petition
to declare the strike illegal before Labor Arbiter Caday was
filed long before the Secretary of Labor and Employment issued
the assumption order on 14 February 1994. However, it cannot
be denied that the issues of "overtime boycott" and "work
slowdown" amounting to illegal strike before Labor Arbiter
Caday are intertwined with the labor dispute before the Labor
Secretary. In fact, on 16 March 1994, petitioner union even
asked Labor Arbiter Caday to suspend the proceedings before
him and consolidate the same with the case before the Secretary
of Labor. When Acting Labor Secretary Brillantes ordered
Labor Arbiter Caday to continue with the hearing of the illegal
strike case, the parties acceded and participated in the
proceedings, knowing fully well that there was also a directive
for Labor Arbiter Caday to thereafter submit his report and
recommendation to the Secretary. As the appellate court pointed
out, the subsequent participation of petitioner union in the
continuation of the hearing was in effect an affirmation of the
jurisdiction of the Secretary of Labor.
The appellate court also correctly held that the question of the
Secretary of Labor and Employment's jurisdiction over labor
and labor-related disputes was already settled in International
Pharmaceutical, Inc. vs. Hon. Secretary of Labor and
Associated Labor Union (ALU) 10 where the Court declared:
In the present case, the Secretary was explicitly granted by
Article 263(g) of the Labor Code the authority to assume
jurisdiction over a labor dispute causing or likely to cause a
strike or lockout in an industry indispensable to the national
interest, and decide the same accordingly. Necessarily, this
authority to assume jurisdiction over the said labor dispute must
include and extend to all questions and controversies arising
therefrom, including cases over which the labor arbiter has
exclusive jurisdiction.
Moreover, Article 217 of the Labor Code is not without, but
contemplates, exceptions thereto. This is evident from the
opening proviso therein reading '(e)xcept as otherwise provided
under this Code . . .' Plainly, Article 263(g) of the Labor Code
was meant to make both the Secretary (or the various regional
directors) and the labor arbiters share jurisdiction, subject to
certain conditions. Otherwise, the Secretary would not be able
to effectively and efficiently dispose of the primary dispute. To
hold the contrary may even lead to the absurd and undesirable
result wherein the Secretary and the labor arbiter concerned
may have diametrically opposed rulings. As we have said, '(i)t
is fundamental that a statute is to be read in a manner that
would breathe life into it, rather than defeat it.
In fine, the issuance of the assailed orders is within the province
of the Secretary as authorized by Article 263(g) of the Labor
Code and Article 217(a) and (5) of the same Code, taken
conjointly and rationally construed to subserve the objective of
the jurisdiction vested in the Secretary. 11
Anent the alleged misappreciation of the evidence proffered by
the parties, it is axiomatic that the factual findings of the Labor
Arbiter, when sufficiently supported by the evidence on record,
must be accorded due respect by the Supreme Court. 12 Here,
the report and recommendation of Labor Arbiter Caday was not
only adopted by then Secretary of Labor Quisumbing but was
likewise affirmed by the Court of Appeals. We see no reason to
depart from their findings.
Petitioner union maintained that the Labor Arbiter and the
appellate court disregarded the "parol evidence rule" 13 when
they upheld the allegation of respondent company that the work
schedule of its employees was from 6:00 a.m. to 6:00 p.m. and
from 6:00 p.m. to 6:00 am. According to petitioner union, the
provisions of their CBA on working hours clearly stated that the
normal working hours were "from 7:30 a.m. to 4:30 p.m." 14
Petitioner union underscored that the regular work hours for the
company was only eight (8) hours. It further contended that the
Labor Arbiter as well as the Court of Appeals should not have
admitted any other evidence contrary to what was stated in the
CBA.
The reliance on the parol evidence rule is misplaced. In labor
cases pending before the Commission or the Labor Arbiter, the
rules of evidence prevailing in courts of law or equity are not
controlling. 15 Rules of procedure and evidence are not
applied in a very rigid and technical sense in labor cases. 16
Hence, the Labor Arbiter is not precluded from accepting and
evaluating evidence other than, and even contrary to, what is
stated in, the CBA.
In any event, the parties stipulated:
Section 1. Regular Working Hours A normal workday shall
consist of not more than eight (8) hours. The regular working
hours for the Company shall be from 7:30 A.M. to 4:30 P.M.
The schedule of shift work shall be maintained; however the
company may change the prevailing work time at its
discretion, should such change be necessary in the operations
of the Company. All employees shall observe such rules as
have been laid down by the company for the purpose of
effecting control over working hours. 17
It is evident from the foregoing provision that the working
hours may be changed, at the discretion of the company,
should such change be necessary for its operations, and that the
employees shall observe such rules as have been laid down by
the company. In the case before us, Labor Arbiter Caday found
that respondent company had to adopt a continuous 24-hour
work daily schedule by reason of the nature of its business and
the demands of its clients. It was established that the
employees adhered to the said work schedule since 1988. The
employees are deemed to have waived the eight-hour schedule
since they followed, without any question or complaint, the
two-shift schedule while their CBA was still in force and even
prior thereto. The two-shift schedule effectively changed the
working hours stipulated in the CBA. As the employees
assented by practice to this arrangement, they cannot now be
heard to claim that the overtime boycott is justified because
they were not obliged to work beyond eight hours.
As Labor Arbiter Caday elucidated in his report:
Respondents' attempt to deny the existence of such regular
overtime schedule is belied by their own awareness of the
existence of the regular overtime schedule of 6:00 A.M. to 6:00
P.M. and 6:00 P.M. to 6:00 A.M. of the following day that has
been going on since 1988. Proof of this is the case
undisputedly filed by the union for and in behalf of its
members, wherein it is claimed that the company has not been
computing correctly the night premium and overtime pay for
work rendered between 2:00 A.M. and 6:00 A.M. of the 6:00
P.M. to 6:00 A.M. shift. (tsn pp. 9-10, testimony of Alessandro
G. Salazar during hearing on August 9, 1994). In fact, the
union Vice-President Carmelo C. Santos, demanded that the
company make a recomputation of the overtime records of the
employees from 1987 (Exh. "P"). Even their own witness, union
Director Enrico C. Gonzales, testified that when in 1992 he was
still a Quality Control Inspector at the Sucat Plant of the
company, his schedule was sometime at 6:00 A.M. to 6:00 P.M.,
sometime at 6:00 A.M. to 2:00 P.M., at 2:00 P.M. to 10:00 P.M.
and sometime at 6:00 P.M. to 6:00 A.M., and when on the 6 to 6
shifts, he received the commensurate pay (t.s.n. pp. 7-9, hearing
of January 10, 1994). Likewise, while in the overtime permits,
dated March 1, 6, 8, 9 to 12, 1993, which were passed around
daily for the employees to sign, his name appeared but without
his signatures, he however had rendered overtime during those
dates and was paid because unlike in other departments, it has
become a habit to them to sign the overtime schedule weekly
(t.s.n. pp. 26-31, hearing of January 10, 1994). The awareness
of the respondent union, its officers and members about the
existence of the regular overtime schedule of 6:00 A.M. to 6:00
P.M. and 6:00 P.M. to 6:00 A.M. of the following day will be
further shown in the discussion of the second issue. 18
As to the second issue of whether or not the respondents have
engaged in "overtime boycott" and "work slowdown" from
April 16, 1993 up to March 7, 1994, both amounting to illegal
strike, the evidence presented is equally crystal clear that the
"overtime boycott" and "work slowdown" committed by the
respondents amounted to illegal strike.
As undisputably testified to by Mr. Alessandro G. Salazar, the
company's Vice-President-Human Resources Department,
sometime in February, 1993, he was approached by the union
President Nestor Ocampo and Union Director Hernando
Clemente who asked him as to what was the stand of the
company regarding the duration of the CBA between the
company and which was set to expire on July 31, 1993. He
answered that the matter could be best discussed during the
formal renegotiations which anyway was to start soon. This
query was followed up sometime in March, 1993, and his
answer was the same. In early April, 1993, the union president
requested for a meeting to discuss the duration and effectivity of
the CBA. Acceding to the request, a meeting was held on April
15, 1993 wherein the union officers asked him if he would
agree to make the new CBA effective on August 1, 1993 and the
term thereof to be valid for only two (2) years. When he
answered that it was still premature to discuss the matter, the
very next day, April 16, 1993, all the rank and file employees of
the company refused to follow their regular two-shift work
schedule of 6:00 A.M. to 6:00 P.M. and 6:00 P.M. to 6:00 A.M.,
when after the 8-hours work, they abruptly stopped working at
2:00 P.M. and 2:00 A.M., respectively, leaving their place of
work without sealing the containers and securing the raw
materials they were working on. When he saw the workers
leaving before the end of their shift, he asked them why and
their reply was "asked (sic) the union officers." Alarmed by the
overtime boycott and the damage it was causing the company,
he requested for a meeting with the union officers. In the
meeting, he asked them why the regular work schedule was not
being followed by the employees, and union Director Enrico
Gonzales, with the support of the other union officers, told him
that if management would agree to a two-year duration for the
new CBA and an effectivity date of August 1, 1993, all
employees will return to the normal work schedule of two 12-
hour shifts. When answered that the management could not
decide on the matter at the moment and to have it discussed and
agreed upon during the formal renegotiations, the overtime
boycott continued and the employees at the same time
employed a work slowdown campaign during working hours,
causing considerable delay in the production and complaints
from the clients/customers (Exh. "O", Affidavit of Alessandro
G. Salazar which formed part of his direct testimony). This
testimonial narrations of Salazar was, as earlier said, undisputed
because the respondents' counsel waived his cross examination
(t.s.n. p. 15, hearing on August 9, 1994).
Aside from the foregoing undisputed testimonies of Salazar, the
testimonies of other Department Managers pointing to the union
officers as the instigators of the overtime boycott and work
slowdown, the testimony of Epifanio Salumbides (Exh. "Y") a
union member at the time the concerted activities of the
respondents took place, is quoted hereunder:
"2. Noon Pebrero 1993, ipinatawag ng Presidente ng
Unyon na si Nestor Ocampo ang lahat ng taga-maintenance ng
bawat departamento upang dumalo sa isang miting. Sa miting
na iyon, sinabi ni Rod Abuan, na isang Direktor ng Unyon, na
mayroon ilalabas na memo ang Unyon na nag-uutos sa mga
empleyado ng Kompanya na mag-imbento ng sari-saring
dahilan para lang hindi sila makapagtrabaho ng "overtime".
Sinabihan rin ako ni Tessie Montejo na siya namang Treasurer
ng Unyon na 'Manny, huwag ka na lang pumasok sa Biyernes
para hindi ka masabihan ng magtrabaho ng Sabado at Linggo'
na siya namang araw ng "overtime" ko . . .
"3. Nakalipas ang dalawang buwan at noong unang
bahagi ng Abril 1993, miniting kami ng Shop Stewards namin
na sina Ariel Abenoja, Dany Tansiongco at Vicky Baron.
Sinabihan kami na huwag ng mag-overtime pag nagbigay ng
senyas ang Unyon ng "showtime."
"4. Noong umaga ng ika-15 ng Abril 1993, nagsabi na si
Danny Tansiongco ng "showtime". Dahil dito wala ng
empleyadong nag-overtime at sabay-sabay silang umalis,
maliban sa akin. Ako ay pumasok rin noong Abril 17 at 18,
1993 na Sabado at Linggo.
"5. Noong ika-19 ng Abril 1993, ako ay ipinatawag ni
Ariel Abenoja Shop Steward, sa opisina ng Unyon. Nadatnan ko
doon ang halos lahat ng opisyales ng Unyon na sina:
Nestor Ocampo Presidente
Carmelo Santos Bise-Presidente
Nanding Clemente Director
Tess Montejo Chief Steward
Segundo Flores Director
Enrico Gonzales Auditor
Boy Alcantara Shop Steward
Rod Abuan Director
at marami pang iba na hindi ko na maala-ala. Pagpasok ko,
ako'y pinaligiran ng mga opisyales ng Unyon. Tinanong ako ni
Rod Aguan kung bakit ako "nag-overtime" gayong "Binigyan
ka na namin ng instruction na huwag pumasok, pinilit mo pa
ring pumasok." "Management ka ba o Unyonista." Sinagot ko
na ako ay Unyonista. Tinanong niya muli kung bakit ako
pumasok. Sinabi ko na wala akong maibigay na dahilan para
lang hindi pumasok at "mag-overtime." Pagkatapos nito, ako
ay pinagmumura ng mga opisyales ng Unyon kaya't ako ay
madaliang umalis.
xxx xxx xxx
Likewise, the respondents' denial of having a hand in the work
slowdown since there was no change in the performance and
work efficiency for the year 1993 as compared to the previous
year was even rebuffed by their witness Ma. Theresa Montejo,
a Quality Control Analyst. For on cross-examination, she
(Montejo) admitted that she could not answer how she was
able to prepare the productivity reports from May 1993 to
February 1994 because from April 1993 up to April 1994, she
was on union leave. As such, the productivity reports she had
earlier shown was not prepared by her since she had no
personal knowledge of the reports (t.s.n. pp. 32-35, hearing of
February 27, 1995). Aside from this admission, the comparison
made by the respondents was of no moment, because the
higher production for the years previous to 1993 was reached
when the employees regularly rendered overtime work. But
undeniably, overtime boycott and work slowdown from April
16, 1993 up to March 7, 1994 had resulted not only in financial
losses to the company but also damaged its business
reputation.
Evidently, from all the foregoing, respondents' unjustified
unilateral alteration of the 24-hour work schedule thru their
concerted activities of "overtime boycott" and "work
slowdown" from April 16, 1993 up to March 7, 1994, to force
the petitioner company to accede to their unreasonable
demands, can be classified as a strike on an installment basis,
as correctly called by petitioner company . . . . 19
It is thus undisputed that members of the union by their own
volition decided not to render overtime services in April 1993.
20 Petitioner union even admitted this in its Memorandum,
dated 12 April 1999, filed with the Court of Appeals, as well as
in the petition before this Court, which both stated that
"(s)ometime in April 1993, members of herein petitioner, on
their own volition and in keeping with the regular working
hours in the Company . . . decided not to render overtime." 21
Such admission confirmed the allegation of respondent
company that petitioner engaged in "overtime boycott" and
"work slowdown" which, to use the words of Labor Arbiter
Caday, was taken as a means to coerce respondent company to
yield to its unreasonable demands. DaIAcC
More importantly, the "overtime boycott" or "work slowdown"
by the employees constituted a violation of their CBA, which
prohibits the union or employee, during the existence of the
CBA, to stage a strike or engage in slowdown or interruption of
work. 22 In Ilaw at Buklod ng Manggagawa vs. NLRC, 23 this
Court ruled:
. . . (T)he concerted activity in question would still be illicit
because contrary to the workers' explicit contractual
commitment "that there shall be no strikes, walkouts, stoppage
or slowdown of work, boycotts, secondary boycotts, refusal to
handle any merchandise, picketing, sit-down strikes of any
kind, sympathetic or general strikes, or any other interference
with any of the operations of the COMPANY during the term of
. . . (their collective bargaining) agreement."
What has just been said makes unnecessary resolution of SMC's
argument that the workers' concerted refusal to adhere to the
work schedule in force for the last several years, is a slowdown,
an inherently illegal activity essentially illegal even in the
absence of a no-strike clause in a collective bargaining contract,
or statute or rule. The Court is in substantial agreement with the
petitioner's concept of a slowdown as a "strike on the
installment plan;" as a willful reduction in the rate of work by
concerted action of workers for the purpose of restricting the
output of the employer, in relation to a labor dispute; as an
activity by which workers, without a complete stoppage of
work, retard production or their performance of duties and
functions to compel management to grant their demands. The
Court also agrees that such a slowdown is generally condemned
as inherently illicit and unjustifiable, because while the
employees "continue to work and remain at their positions and
accept the wages paid to them," they at the same time "select
what part of their allotted tasks they care to perform of their
own volition or refuse openly or secretly, to the employer's
damage, to do other work;" in other words, they "work on their
own terms." . . . 24
Finally, the Court cannot agree with the proposition that
respondent company, in extending substantial separation
package to some officers of petitioner union during the
pendency of this case, in effect, condoned the illegal acts they
committed.
Respondent company correctly postured that at the time these
union officers obtained their separation benefits, they were still
considered employees of the company. Hence, the company was
merely complying with its legal obligations. 25 Respondent
company could have withheld these benefits pending the final
resolution of this case. Yet, considering perhaps the financial
hardships experienced by its employees and the economic
situation prevailing, respondent company chose to let its
employees avail of their separation benefits. The Court views
the gesture of respondent company as an act of generosity for
which it should not be punished.
WHEREFORE, the petition is DENIED DUE COURSE and the
29 December 1999 decision of the Court of Appeals is
AFFIRMED.
SO ORDERED.
EN BANC
[G.R. No. L-16275. February 23, 1961.]
PAN AMERICAN WORLD AIRWAYS SYSTEM
(PHILIPPINES), petitioner, vs. PAN AMERICAN
EMPLOYEES ASSOCIATION, respondent.
Ross, Selph & Carrascoso for petitioner.
Jose Espinas for respondent.
SYLLABUS
1. COURTS; COURT OF INDUSTRIAL RELATIONS;
JURISDICTION; EMPLOYER AND EMPLOYEE;
OVERTIME PAY; STATEMENT OF THE JURISDICTIONAL
RULE ON CLAIM FOR OVERTIME PAY. Where the
claimants, at the time of the filing of the petition, were still in
the service of the employer, or, having been separated from
service, should also ask for reinstatement, the claim must be
brought before the Court of Industrial Relations; otherwise,
such claim should be brought before the regular courts.
(NASSCO, vs. CIR, et al., 107 Phil., 1006; 58 Off. Gaz., [36]
5875; PRISCO vs. CIR, et al., 102 Phil., 515; Board of
Liquidation, et al., vs. CIR, 108 Phil., 330; Ajax-International
Corp. vs. Seguritan, 109 Phil., 815, Sampaguita Pictures, Inc.,
et al. vs. CIR, 109 Phil., 818).
2. EMPLOYER AND EMPLOYEE; OVERTIME
WORK; WHEN MEAL PERIOD CONSIDERED OVERTIME
WORK. Where during the so-called meal period, the
laborers are required to stand by for emergency work, or where
said meals hour is not one of complete rest, such period is
considered overtime.
3. ID.; ID.; COMPENSATION BY CIR'S
EXAMINING DIVISION NOT UNDUE DELEGATION OF
JUDICIAL FUNCTION; LACK OF SPECIFIC AMOUNT OF
OVERTIME PAY IN DECISION DOES NOT MAKE IT
INCOMPLETE. Computation of overtime pay involves, at
the most, a mechanical act, and its being computed by the
Chief, Examining Division of the CIR, is not undue delegation
of its judicial functions; the lack of a specific amount of
overtime pay in the decision does not render it incomplete.
DECISION
REYES, J.B.L., J p:
Appeal by certiorari from the decision of the Court of Industrial
Relations in Case No. 1055 - V dated October 10, 1959, and its
resolution en banc denying the motion for reconsideration filed
by the petitioner herein.
The dispositive portion of the appealed decision reads:
"WHEREFORE, the Court orders the Chief of the Examining
Division or his representative to compute the overtime
compensation due the aforesaid fourteen (14) aircraft mechanics
and the two employees from the Communication Department,
based on the time sheet of said employees from February 23
1952 up to the including July 15, 1958 and to submit his report
within 30 days for further disposition by the Court; and the
company shall show to the Court Examiner such time sheets
and other documents that may be necessary in the aforesaid
computation; and two (2) representatives for the company and
two (2) representatives for the union shall be chosen to help the
Court Examiner in said computation.
"The company is also ordered to permanently adopt the
straight 8- hour shift inclusive of meal period which is
mutually beneficial to the parties.
"SO ORDERED."
In this appeal, petitioner advances five propositions which,
briefly, are as follows: (1) the Industrial Court has no
jurisdiction to order the payment of overtime compensation, it
being a mere monetary claim cognizable by regular courts; (2)
the finding that the one-hour meal period should be considered
overtime work (deducting 15 minutes as time allotted for
eating) is not supported by substantial evidence; (3) the court
below had no authority to delegate its judicial functions by
ordering the Chief of the Examining Division or his
representative to compute the overtime pay; (4) the finding that
there was no agreement to withdraw Case No. 1055 - V in
consideration of the wage increases in the Collective
Bargaining Contract (Exh. "A") is not supported by substantial
evidence; and (5) the court below had no authority to order the
Company to adopt a straight 8-hour shift inclusive of meal
period.
On the issue of jurisdiction over claims for overtime pay, we
have since definitely ruled in a number of recent decisions that
the Industrial Court may properly take cognizance of such
cases if, at the time of the petition, the complainants were still
in the service of the employer, or, having been separated from
such service, should ask for reinstatement; otherwise, such
claims should be brought before the regular courts.(NASSCO
vs. CIR, et al., L-13888, April 29, 1960; FRISCO vs. CIR, et
al., L-13806, May 23, 1960; Board of Liquidators, et al., vs.
CIR, et al., L-15485, May 23, 1960; Sta. Cecilia Sawmills Co.
vs. CIR, L-14254 & L-14255, May 27, 1960; Ajax-
International Corp. vs. Seguritan, L-16038, October 25, 1960;
Sampaguita Pictures, Inc., et al. vs. CIR, L-16404, October 25,
1960). Since, in the instant case, there is no question that the
employees claiming overtime compensation were still in the
service of the company when the case was filed, the
jurisdiction of the Court of Industrial Relations cannot be
assailed. In fact, since it is not pretended that, thereafter, the
complainants were discharged or otherwise terminated their
relationship with the company for any reason, all of said
complainants could still be with the company up to the present.
Petitioner herein claims that the one-hour meal period should
not be considered as overtime work (after deducting 15
minutes), because the evidence showed that complainants
could rest completely and were not in any manner under the
control of the company during that period. The court below
found, on the contrary, that during the so-called meal period,
the mechanics were required to stand by for emergency work;
that if they happened not to be available when called, they
were reprimanded by the leadman; that as in fact it happened on
many occasions, the mechanics had been called from their
meals or told to hurry up eating to perform work during this
period. Far from being unsupported by substantial evidence, the
record clearly confirms the above factual findings of the
Industrial Court.
Similarly, this Court is satisfied with the finding that there was
no agreement to withdraw Case No. 1055-V in consideration of
the wage increases obtained by the union and set forth in the
Collective Bargaining Agreement Exhibits "A". As reasoned out
by the court below, such alleged agreement would have been
incorporated in the contract if it existed. The fact that the union
filed a motion to dismiss without prejudice, after the Collective
Bargaining Contract had been signed, did not necessarily mean
that it had agreed to withdraw the case in consideration of the
wage increases. The motion itself (Annex "B", Petition for
Certiorari) was expressly based on an understanding that the
company would "formulate a schedule of work which shall be
in consonance with C. A. 444". All in all, there is substantial
evidence in the record to support the finding of the court below
that no such agreement was made.
It is next contended that in ordering the Chief of the Examining
Division or his representative to compute the compensation due,
the Industrial Court unduly delegated its judicial functions and
thereby rendered an incomplete decision. We do not believe so.
Computation of the overtime pay involves a mechanical
function, at most. And the report would still have to be
submitted to the Industrial Court for its approval, by the very
terms of the order itself. That there was no specification of the
amount of overtime pay in the decision did not make it
incomplete, since this matter would necessarily be made clear
enough in the implementation of the decision (see Malate
Taxicab & Garage, Inc. vs. CIR, et al., L-8718, May 11, 1956).
The Industrial Court's order for permanent adoption of a straight
8-hour shift including the meal period was but a consequence of
its finding that the meal hour was not one of complete rest, but
was actually a work hour, since, for its duration, the laborers
had to be on ready call. Of course, if the Company practices in
this regard should be modified to afford the mechanics a real
rest during that hour (f. ex., by installing an entirely different
emergency crew, or any similar arrangement), then the
modification of this part of the decision may be sought from the
Court below. As things now stand, we see no warrant for
altering the decision.
The judgment appealed from is affirmed. Costs against
appellant.
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.
SYNOPSIS
Respondents, employees of petitioner Mercury Drug, Co., filed
a petition with the Court of Industrial Relations (CIR) praying
among others for payment of their unpaid wages for work done
on Sundays and legal holidays and of additional compensation
for nighttime work. Respondents alleged that they were coerced
by petitioner into entering into contracts of employment
waiving the said benefits. Petitioner filed an answer after its
motion to dismiss was denied. The Industrial Court rendered
judgment in favor of respondents ruling that an agreement in a
contract of employment which would exclude the 25%
additional compensation for work done during Sundays and
holidays is null and void, and ordered petitioner to pay
respondents two additional sums equivalent to 25% of their
respective basic salaries for services rendered on Sundays and
legal holidays, and additional compensation for nighttime
services. Hence, the present recourse of petitioner, alleging
among others, that it was contrary to public policy to declare
the contracts of employment null and void.
The Supreme Court held that the entire employment contracts
were not declared null and void but only the provision on
salaries which excluded additional compensation for services
rendered on Sundays and legal holidays; that while the broad
powers of the CIR under Commonwealth Act 103 may have
been curtailed by Republic Act 875 limiting them to the four
categories expressed therein, our jurisprudence has upheld the
CIR's assumption of jurisdiction over claims for night work;
and that additional compensation for nighttime work is founded
on public policy which cannot be waived.
Petition dismissed and the decision and resolution appealed
from are affirmed.
SYLLABUS
1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS;
REVIEW ON CERTIORARI; GRAVE ABUSE OF
DISCRETION; SHOWING THEREOF IS THE ONLY
GROUND FOR REVERSAL OF FINDINGS OF COURT OF
INDUSTRIAL RELATIONS; CASE AT BAR. We do not
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 findings on this matter is unwarranted. (Sanchez vs.
Court of Industrial Relations, 27 SCRA 490)
2. LABOR AND SOCIAL LEGISLATIONS; LABOR
LAWS; COURT OF INDUSTRIAL RELATIONS. NOT
DEPRIVED OF JURISDICTION TO SETTLE CLAIMS FOR
NIGHT DIFFERENTIALS BY PASSAGE OF R.A.. 875.
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 v. Bautista, L-16440,
February 29, 1964, were discussed lengthily. Thus . . . . "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.' . . . 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. . . . 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, ct al.,
G.R. No. L-13805, 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. L-9055,
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. vs. CIR, G.R. No. L-17788, May 25, 1962]"
3. CIVIL LAW; OBLIGATIONS AND CONTRACTS;
EMPLOYMENT CONTRACT WAIVING ADDITIONAL
COMPENSATION FOR NIGHTTIME WORK, VOID. 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.
4. REMEDIAL LAW; EVIDENCE; TESTIMONIAL
EVIDENCE; QUALITY NOT QUANTITY OF WITNESSES,
PRIMORDIAL CONSIDERATION IN APPRAISAL OF
EVIDENCE. 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) v.
Sy Indong Company Rice And Corn Mill (11 SCRA 277) We
had occasion to re-examine the ruling in Dimayuga. We stated:
". . . This Court fully agrees with the respondent that quality and
not quantity of witnesses should be the primordial consideration
in the appraisal of evidence.
DECISION
GUTIERREZ, JR., J p:
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 26% 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, 1966, this
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 is respondent
Mercury Drug Company, Inc., an existing corporation which
has a separate and distinct personality from its incorporators,
stockholders and/or officers, 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
accruing 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
backwages corresponding 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 claim for the reason that the same are contrary to law. Payment
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 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 DECLARE
POLICY ON COLLECTIVE BARGAINING FREEDOM
EXPRESSED 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) (Italics 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 employees or laborers excluded from its
provisions. (Section 2, ibid.) cdll
"The Court is not impressed by the argument that under the
contracts of employment the petitioners are not entitled to such
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 null 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 P2,400.000, 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, yon 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 "1")
(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 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 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. LLjur
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 findings 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 the
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 v. 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 v. Bautista,
L-16440, February 29, 1964, 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 875]', [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. 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
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. L-9055,
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 decides, 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 vs. 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. cdll
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 fort 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 fat
that only three of the private respondents testified in court foes
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) v. Sy Indong Company Rice And Corn Mill (11
SCRA 277) We had occasion to re-examine the ruling in
Dimayuga. We stated: LLpr
"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 his 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 petitioners on this point is therefore unfounded'.
Moreover 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 personally 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
commitment's is anachronistic in this time and age. cdphil
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 a 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 II) and protection to labor (Section 9, Article II) 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 places in
contractually disadvantageous positions and who sign waivers
or provisions contrary to law and public policy. LexLib
WHEREFORE, the petition is hereby dismissed. The decision
and resolution appealed from are affirmed with costs against the
petitioner.
SO ORDERED.
THIRD DIVISION
[G.R. No. 146073. January 13, 2003.]
JERRY E. ACEDERA, ANTONIO PARILLA, AND
OTHERS LISTED IN ANNEX "A," 1 petitioners-
appellants, vs. INTERNATIONAL CONTAINER
TERMINAL SERVICES, INC. (ICTSI), NATIONAL
LABOR RELATIONS COMMISSION and HON. COURT
OF APPEALS, respondents-appellants.
Gilbert P. Lorenzo for petitioners.
Jimeno Jalandoni & Cope Law Offices for private
respondent.
SYNOPSIS
Petitioners are employees of private respondent International
Container Terminal Services, Inc. (ICTSI) and are
officers/members of Associated Port Checkers & Workers
Union-International Container Terminal Services, Inc. Local
Chapter (APCWU-ICTSI), a labor organization duly registered
as a local affiliate of the Associated Port Checkers & Workers
Union (APCWU). ICTSI went on a retrenchment program and
laid off its on-call employees. This prompted the APCWU-
ICTSI to file a notice of strike which included as cause of
action not only the retrenchment of the employees but also
[CTSI's use of 365 days as divisor in the computation of wages,
even if the employees' work week consisted only of five days as
agreed upon in the Collective Bargaining Agreement (CBA).
The dispute respecting the retrenchment was resolved by a
compromise settlement, while that respecting the computation
of wages was referred to the Labor Arbiter. Subsequently,
APCWU, on behalf of its members and other employees
similarly situated, filed with the Labor Arbiter a complaint
against ICTSI which was dismissed. Petitioners filed with the
Labor Arbiter a Complaint-in-Intervention with Motion to
Intervene, but the same was denied upon finding that they are
already well represented by APCWU. The denial of petitioners'
intervention was affirmed by the NLRC. Petitioners filed a
petition for certiorari with the Supreme Court which referred
the petition to the Court of Appeals (CA). The CA dismissed the
petition. Hence, this present petition. SaHcAC
In denying the petition, the Supreme Court ruled that a labor
union is one such party authorized to represent its members
under Article 242 (a) of the Labor Code which provides that a
union may act as the representative of its members for the
purpose of collective bargaining. This authority includes the
power to represent its members for the purpose of enforcing the
provisions of the CBA. While a party acting in a representative
capacity, such as a union, may be permitted to intervene in a
case, ordinarily, a person whose interests are already
represented will not be permitted to do the same except when
there is a suggestion of fraud or collusion or that the
representative will not act in good faith for the protection of all
interests represented by him.
Petitioners cite the dismissal of the case filed by APCWU, first
by the Labor Arbiter, and later by the CA. The dismissal of the
case does not, however, by itself show the existence of fraud or
collusion or a lack of good faith on the part of APCWU. There
must be clear and convincing evidence of fraud or collusion or
lack of good faith independently of the dismissal. This
petitioners failed to proffer.
SYLLABUS
1. LABOR AND SOCIAL LEGISLATION; LABOR
CODE; LABOR RELATIONS; LABOR ORGANIZATIONS;
RIGHTS OF LEGITIMATE LABOR ORGANIZATION; A
UNION MAY ACT AS REPRESENTATIVE OF ITS
MEMBERS FOR THE PURPOSE OF COLLECTIVE
BARGAINING; CASE AT BAR. A labor union is one such
party authorized to represent its members under Article 242(a)
of the Labor Code which provides that a union may act as the
representative of its members for the purpose of collective
bargaining. This authority includes the power to represent its
members for the purpose of enforcing the provisions of the
CBA. That APCWU acted in a representative capacity "for and
in behalf of its Union members and other employees similarly
situated," the title of the case filed by it at the Labor Arbiter's
Office so expressly states.
2. REMEDIAL LAW; ACTIONS; PARTIES TO
CIVIL ACTIONS; REPRESENTATIVES AS PARTIES; A
PERSON WHOSE INTERESTS ARE ALREADY
REPRESENTED WILL NOT BE PERMITTED TO
INTERVENE IN A REPRESENTATIVE ACTION;
EXCEPTIONS. While a party acting in a representative
capacity, such as a union, may be permitted to intervene in a
case, ordinarily, a person whose interests are already
represented will not be permitted to do the same except when
there is a suggestion of fraud or collusion or that the
representative will not act in good faith for the protection of all
interests represented by him. Petitioners-appellants cite the
dismissal of the case filed by ICTSI, first by the Labor Arbiter,
and later by the Court of Appeals. The dismissal of the case
does not, however, by itself show the existence of fraud or
collusion or a lack of good faith on the part of APCWU. There
must be clear and convincing evidence of fraud or collusion or
lack of good faith independently of the dismissal. This,
petitioners-appellants failed to proffer. ISaTCD
DECISION
CARPIO-MORALES, J p:
For consideration is the petition for review on certiorari
assailing the decision of the Court of Appeals affirming that of
the National Labor Relations Commission (NLRC) which
affirmed the decision of the Labor Arbiter denying herein
petitioners-appellants' Complaint-in-Intervention with Motion
for Intervention. IcADSE
The antecedent facts are as follows:
Petitioners-appellants Jerry Acedera, et al. are employees of
herein private respondent International Container Terminal
Services, Inc. (ICTSI) and are officers/members of Associated
Port Checkers & Workers Union-International Container
Terminal Services, Inc. Local Chapter (APCWU-ICTSI), a
labor organization duly registered as a local affiliate of the
Associated Port Checkers & Workers Union (APCWU).
When ICTSI started its operations in 1988, it determined the
rate of pay of its employees by using 304 days, the number of
days of work of the employees in a year, as divisor. 2
On September 28, 1990, ICTSI entered into its first Collective
Bargaining Agreement (CBA) with APCWU with a term of five
years effective until September 28, 1995. 3 The CBA was
renegotiated and thereafter renewed through a second CBA that
took effect on September 29, 1995, effective for another five
years. 4 Both CBAs contained an identically-worded provision
on hours and days of work reading:
Article IX
Regular Hours of Work and Days of Labor
Section 1. The regular working days in a week shall be five (5)
days on any day from Monday to Sunday, as may be scheduled
by the COMPANY, upon seven (7) days prior notice unless any
of this day is declared a special holiday. 5 (Emphasis omitted)
In accordance with the above-quoted provision of the CBA, the
employees' work week was reduced to five days or a total of
250 days a year. ICTSI, however, continued using the 304-day
divisor in computing the wages of the employees. 6
On November 10, 1990, the Regional Tripartite Wage and
Productivity Board (RTWPB) in the National Capital Region
decreed a P17.00 daily wage increase for all workers and
employees receiving P125.00 per day or lower in the National
Capital Region. 7 The then president of APCWU, together with
some union members, thus requested the ICTSI's Human
Resource Department/Personnel Manager to compute the actual
monthly increase in the employees' wages by multiplying the
RTWPB mandated increase by 365 days and dividing the
product by 12 months. 8
Heeding the proposal and following the implementation of the
new wage order, ICTSI stopped using 304 days as divisor and
started using 365 days in determining the daily wage of its
employees and other consequential compensation, even if the
employees' work week consisted of only five days as agreed
upon in the CBA. 9
In early 1997, ICTSI went on a retrenchment program and laid
off its on-call employees. 10 This prompted the APCWU-ICTSI
to file a notice of strike which included as cause of action not
only the retrenchment of the employees but also ICTSI's use of
365 days as divisor in the computation of wages. 11 The dispute
respecting the retrenchment was resolved by a compromise
settlement 12 while that respecting the computation of wages
was referred to the Labor Arbiter. 13
On February 26, 1997, APCWU, on behalf of its members and
other employees similarly situated, filed with the Labor Arbiter
a complaint against ICTSI which was dismissed for APCWU's
failure to file its position paper. 14 Upon the demand of herein
petitioners-appellants, APCWU filed a motion to revive the case
which was granted. APCWU thereupon filed its position paper
on August 22, 1997. 15
On December 8, 1997, petitioners-appellants filed with the
Labor Arbiter a Complaint-in-Intervention with Motion to
Intervene. 16 In the petition at bar, they justified their move to
intervene in this wise:
[S]hould the union succeed in prosecuting the case and in
getting a favorable reward it is actually they that would benefit
from the decision. On the other hand, should the union fail to
prove its case, or to prosecute the case diligently, the individual
workers or members of the union would suffer great and
immeasurable loss. . . . [t]hey wanted to insure by their
intervention that the case would thereafter be prosecuted with
all due diligence and would not again be dismissed for lack of
interest to prosecute on the part of the union. 17
The Labor Arbiter rendered a decision, the dispositive portion
of which reads:
WHEREFORE, decision is hereby rendered declaring that the
correct divisor in computing the daily wage and other labor
standard benefits of the employees of respondent ICTSI who
are members of complainant Union as well as the other
employees similarly situated is two hundred fifty (250) days
such that said respondent is hereby ordered to pay the
employees concerned the differentials representing the
underpayment of said salaries and other benefits reckoned three
(3) years back from February 26, 1997, the date of filing of this
complaint or computed from February 27 1994 until paid, but
for purposes of appeal, the salary differentials are temporarily
computed for one year in the amount of Four Hundred Sixty
Eight Thousand Forty Pesos (P468,040.00). 18
In the same decision, the Labor Arbiter denied petitioners-
appellants' Complaint-in-Intervention with Motion for
Intervention upon a finding that they are already well
represented by APCWU. 19
On appeal, the NLRC reversed the decision of the Labor Arbiter
and dismissed APCWU's complaint for lack of merit. 20 The
denial of petitioners-appellants' intervention was, however,
affirmed. 21
Unsatisfied with the decision of the NLRC, APCWU filed a
petition for certiorari with the Court of Appeals while
petitioners-appellants filed theirs with this Court which referred
the petition 22 to the Court of Appeals.
The Court of Appeals dismissed APCWU's petition on the
following grounds: failure to allege when its motion for
reconsideration of the NLRC decision was filed, failure to
attach the necessary appendices to the petition, and failure to
file its motion for extension to file its petition within the
reglementary period. 23
As for petitioners-appellants' petition for certiorari, it was
dismissed by the Court of Appeals in this wise:
It is clear from the records that herein petitioners, claiming to
be employees of respondent ICTSI, are already well represented
by its employees union, APCWU, in the petition before this
Court (CA-G.R. SP. No. 53266) although the same has been
dismissed. The present petition is, therefore a superfluity that
deserves to be dismissed. Furthermore, only Acedera signed
the Certificate of non-forum shopping. On this score alone, this
petition should likewise be dismissed. We find that the same
has no merit considering that herein petitioners have not
presented any meritorious argument that would justify the
reversal of the Decision of the NLRC.
Article IX of the CBA provides:
REGULAR HOURS OF WORK AND DAYS OF LABOR
"Section 1. The regular working days in a week shall
be five (5) days on any day from Monday to Sunday, as may be
scheduled by the COMPANY, upon seven (7) days prior notice
unless any of this day is declared a special holiday. "
This provision categorically states the required number of
working days an employee is expected to work for a week. It
does not, however, indicate the manner in which an employee's
salary is to be computed. In fact, nothing in the CBA makes
any referral to any divisor which should be the basis for
determining the salary. The NLRC, therefore, correctly ruled
that ". . . the absence of any express or specific provision in the
CBA that 250 days should be used as divisor altogether makes
the position of the Union untenable."
xxx xxx xxx
Considering that herein petitioners themselves requested that
365 days be used as the divisor in computing their wage
increase and later did not raise or object to the same during the
negotiations of the new CBA, they are clearly estopped to now
complain of such computation only because they no longer
benefit from it. Indeed, the 365 divisor for the past seven (7)
years has already become practice and law between the
company and its employees. 24 (Italics supplied)
xxx xxx xxx
Hence, the present petition of petitioners-appellants who fault
the Court of Appeals as follows:
I real party in interest. A representative may be a trustee of an
. . . IN REJECTING THE CBA OF THE PARTIES AS THE
SOURCE OF THE DIVISOR TO DETERMINE THE
WORKERS' DAILY RATE TOTALLY DISREGARDED THE
APPLICABLE LANDMARK DECISIONS OF THE
HONORABLE SUPREME COURT ON THE MATTER.
II
. . . [IN] DISREGARD[ING] APPLICABLE DECISIONS OF
THIS HONORABLE COURT WHEN IT RULED THAT THE
PETITIONERS-APPELLANTS ARE ALREADY IN
ESTOPPEL.
III
. . . IN RULING THAT THE PETITIONERS-APPELLANTS
HAVE NO LEGAL RIGHT TO INTERVENE IN AND
PURSUE THIS CASE AND THAT THEIR INTERVENTION
IS A SUPERFLUITY.
IV
. . . IN HOLDING, ALTHOUGH MERELY AS AN OBITER
DICTUM, THAT ONLY PETITIONER JERRY ACEDERA
SIGNED THE CERTIFICATE OF NON-FORUM SHOPPING.
25
The third assigned error respecting petitioners-appellants' right
to intervene shall first be passed upon, it being determinative of
their right to raise the other assigned errors.
Petitioners-appellants anchor their right to intervene on Rule 19
of the 1997 Rules of Civil Procedure, Section 1 of which reads:
Section 1. Who may intervene. A person who has legal
interest in the matter in litigation, or in the success of either of
the parties, or an interest against both, or is so situated to be
adversely affected by a distribution or other disposition of
property in the custody of the court or of an officer thereof may,
with leave of court, be allowed to intervene in the action. The
court shall consider whether or not the intervention will unduly
delay or prejudice the adjudication of the rights of the original
parties, and whether or not the intervenor's right may be fully
protected in a separate proceeding.
They stress that they have complied with the requisites for
intervention because (1) they are the ones who stand to gain or
lose by the direct legal operation and effect of any judgment
that may be rendered in this case, (2) no undue delay or
prejudice would result from their intervention since their
Complaint-in-Intervention with Motion for Intervention was
filed while the Labor Arbiter was still hearing the case and
before any decision thereon was rendered, and (3) it was not
possible for them to file a separate case as they would be guilty
of forum shopping because the only forum available for them
was the Labor Arbiter. 26
Petitioners-appellants, however, failed to consider, in addition
to the rule on intervention, the rule on representation, thusly:
Sec. 3. Representatives as parties. Where the action is
allowed to be prosecuted or defended by a representative or
someone acting in a fiduciary capacity, the beneficiary shall be
included in the title of the case and shall be deemed to be the
express trust, a guardian, an executor or administrator, or a
party authorized by law or these Rules . . . 27 (Italics supplied)
A labor union is one such party authorized to represent its
members under Article 242(a) of the Labor Code which
provides that a union may act as the representative of its
members for the purpose of collective bargaining. This
authority includes the power to represent its members for the
purpose of enforcing the provisions of the CBA. That APCWU
acted in a representative capacity "for and in behalf of its Union
members and other employees similarly situated," the title of
the case filed by it at the Labor Arbiter's Office so expressly
states.
While a party acting in a representative capacity, such as a
union, may be permitted to intervene in a case, ordinarily, a
person whose interests are already represented will not be
permitted to do the same 28 except when there is a suggestion
of fraud or collusion or that the representative will not act in
good faith for the protection of all interests represented by him.
29
Petitioners-appellants cite the dismissal of the case filed by
ICTSI, first by the Labor Arbiter, and later by the Court of
Appeals. 30 The dismissal of the case does not, however, by
itself show the existence of fraud or collusion or a lack of good
faith on the part of APCWU. There must be clear and
convincing evidence of fraud or collusion or lack of good faith
independently of the dismissal. This, petitioners-appellants
failed to proffer.
Petitioners-appellants likewise express their fear that APCWU
would not prosecute the case diligently because of its
"sweetheart relationship" with ICTSI. 31 There is nothing on
record, however, to support this alleged relationship which
allegation surfaces as a mere afterthought because it was never
raised early on. It was raised only in petitioners-appellants'
reply to ICTSI's comment in the petition at bar, the last pleading
submitted to this Court, which was filed on June 20, 2001 or
more than 42 months after petitioners-appellants filed their
Complaint-in-Intervention with Motion to Intervene with the
Labor Arbiter. aTADCE
To reiterate, for a member of a class to be permitted to intervene
in a representative action, fraud or collusion or lack of good
faith on the part of the representative must be proven. It must be
based on facts borne on record. Mere assertions, as what
petitioners-appellants proffer, do not suffice.
The foregoing discussion leaves it unnecessary to discuss the
other assigned errors.
WHEREFORE, the present petition is hereby DENIED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-41182-3 April 16, 1988
DR. CARLOS L. SEVILLA and LINA O. SEVILLA,
petitioners-appellants,
vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE,
INC., ELISEO S.CANILAO, and SEGUNDINA NOGUERA,
respondents-appellees.
SARMIENTO , J.:
The petitioners invoke the provisions on human relations of the
Civil Code in this appeal by certiorari. The facts are beyond
dispute:
xxx xxx xxx
On the strength of a contract (Exhibit A for the appellant
Exhibit 2 for the appellees) entered into on Oct. 19, 1960 by
and between Mrs. Segundina Noguera, party of the first part;
the Tourist World Service, Inc., represented by Mr. Eliseo
Canilao as party of the second part, and hereinafter referred to
as appellants, the Tourist World Service, Inc. leased the
premises belonging to the party of the first part at Mabini St.,
Manila for the former-s use as a branch office. In the said
contract the party of the third part held herself solidarily liable
with the party of the part for the prompt payment of the
monthly rental agreed on. When the branch office was opened,
the same was run by the herein appellant Una 0. Sevilla payable
to Tourist World Service Inc. by any airline for any fare brought
in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina
Sevilla and 3% was to be withheld by the Tourist World
Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World
Service, Inc. appears to have been informed that Lina Sevilla
was connected with a rival firm, the Philippine Travel Bureau,
and, since the branch office was anyhow losing, the Tourist
World Service considered closing down its office. This was
firmed up by two resolutions of the board of directors of Tourist
World Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13), the
first abolishing the office of the manager and vice-president of
the Tourist World Service, Inc., Ermita Branch, and the
second,authorizing the corporate secretary to receive the
properties of the Tourist World Service then located at the said
branch office. It further appears that on Jan. 3, 1962, the
contract with the appellees for the use of the Branch Office
premises was terminated and while the effectivity thereof was
Jan. 31, 1962, the appellees no longer used it. As a matter of
fact appellants used it since Nov. 1961. Because of this, and to
comply with the mandate of the Tourist World Service, the
corporate secretary Gabino Canilao went over to the branch
office, and, finding the premises locked, and, being unable to
contact Lina Sevilla, he padlocked the premises on June 4,
1962 to protect the interests of the Tourist World Service.
When neither the appellant Lina Sevilla nor any of her
employees could enter the locked premises, a complaint wall
filed by the herein appellants against the appellees with a
prayer for the issuance of mandatory preliminary injunction.
Both appellees answered with counterclaims. For apparent lack
of interest of the parties therein, the trial court ordered the
dismissal of the case without prejudice.
The appellee Segundina Noguera sought reconsideration of the
order dismissing her counterclaim which the court a quo, in an
order dated June 8, 1963, granted permitting her to present
evidence in support of her counterclaim.
On June 17,1963, appellant Lina Sevilla refiled her case
against the herein appellees and after the issues were joined,
the reinstated counterclaim of Segundina Noguera and the new
complaint of appellant Lina Sevilla were jointly heard
following which the court a quo ordered both cases dismiss for
lack of merit, on the basis of which was elevated the instant
appeal on the following assignment of errors:
I. THE LOWER COURT ERRED EVEN IN
APPRECIATING THE NATURE OF PLAINTIFF-
APPELLANT MRS. LINA O. SEVILLA'S COMPLAINT.
II. THE LOWER COURT ERRED IN HOLDING
THAT APPELLANT MRS. LINA 0. SEVILA'S
ARRANGEMENT (WITH APPELLEE TOURIST WORLD
SERVICE, INC.) WAS ONE MERELY OF EMPLOYER-
EMPLOYEE RELATION AND IN FAILING TO HOLD
THAT THE SAID ARRANGEMENT WAS ONE OF JOINT
BUSINESS VENTURE.
III. THE LOWER COURT ERRED IN RULING THAT
PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA IS
ESTOPPED FROM DENYING THAT SHE WAS A MERE
EMPLOYEE OF DEFENDANT-APPELLEE TOURIST
WORLD SERVICE, INC. EVEN AS AGAINST THE
LATTER.
IV. THE LOWER COURT ERRED IN NOT
HOLDING THAT APPELLEES HAD NO RIGHT TO EVICT
APPELLANT MRS. LINA O. SEVILLA FROM THE A.
MABINI OFFICE BY TAKING THE LAW INTO THEIR
OWN HANDS.
V. THE LOWER COURT ERRED IN NOT
CONSIDERING AT .ALL APPELLEE NOGUERA'S
RESPONSIBILITY FOR APPELLANT LINA O. SEVILLA'S
FORCIBLE DISPOSSESSION OF THE A. MABINI
PREMISES.
VI. THE LOWER COURT ERRED IN FINDING THAT
APPELLANT APPELLANT MRS. LINA O. SEVILLA
SIGNED MERELY AS GUARANTOR FOR RENTALS.
On the foregoing facts and in the light of the errors asigned the
issues to be resolved are:
1. Whether the appellee Tourist World Service
unilaterally disco the telephone line at the branch office on
Ermita;
2. Whether or not the padlocking of the office by the
Tourist World Service was actionable or not; and
3. Whether or not the lessee to the office premises
belonging to the appellee Noguera was appellees TWS or TWS
and the appellant.
In this appeal, appealant Lina Sevilla claims that a joint
bussiness venture was entered into by and between her and
appellee TWS with offices at the Ermita branch office and that
she was not an employee of the TWS to the end that her
relationship with TWS was one of a joint business venture
appellant made declarations showing:
1. Appellant Mrs. Lina 0. Sevilla, a prominent figure
and wife of an eminent eye, ear and nose specialist as well as a
imediately columnist had been in the travel business prior to the
establishment of the joint business venture with appellee Tourist
World Service, Inc. and appellee Eliseo Canilao, her compadre,
she being the godmother of one of his children, with her own
clientele, coming mostly from her own social circle (pp. 3-6 tsn.
February 16,1965).
2. Appellant Mrs. Sevilla was signatory to a lease
agreement dated 19 October 1960 (Exh. 'A') covering the
premises at A. Mabini St., she expressly warranting and holding
[sic] herself 'solidarily' liable with appellee Tourist World
Service, Inc. for the prompt payment of the monthly rentals
thereof to other appellee Mrs. Noguera (pp. 14-15, tsn. Jan.
18,1964).
3. Appellant Mrs. Sevilla did not receive any salary
from appellee Tourist World Service, Inc., which had its own,
separate office located at the Trade & Commerce Building; nor
was she an employee thereof, having no participation in nor
connection with said business at the Trade & Commerce
Building (pp. 16-18 tsn Id.).
4. Appellant Mrs. Sevilla earned commissions for her
own passengers, her own bookings her own business (and not
for any of the business of appellee Tourist World Service, Inc.)
obtained from the airline companies. She shared the 7%
commissions given by the airline companies giving appellee
Tourist World Service, Lic. 3% thereof aid retaining 4% for
herself (pp. 18 tsn. Id.)
5. Appellant Mrs. Sevilla likewise shared in the
expenses of maintaining the A. Mabini St. office, paying for the
salary of an office secretary, Miss Obieta, and other sundry
expenses, aside from desicion the office furniture and supplying
some of fice furnishings (pp. 15,18 tsn. April 6,1965), appellee
Tourist World Service, Inc. shouldering the rental and other
expenses in consideration for the 3% split in the co procured by
appellant Mrs. Sevilla (p. 35 tsn Feb. 16,1965).
6. It was the understanding between them that appellant
Mrs. Sevilla would be given the title of branch manager for
appearance's sake only (p. 31 tsn. Id.), appellee Eliseo Canilao
admit that it was just a title for dignity (p. 36 tsn. June 18, 1965-
testimony of appellee Eliseo Canilao pp. 38-39 tsn April 61965-
testimony of corporate secretary Gabino Canilao (pp- 2-5,
Appellants' Reply Brief)
Upon the other hand, appellee TWS contend that the appellant
was an employee of the appellee Tourist World Service, Inc. and
as such was designated manager. 1
xxx xxx xxx
The trial court 2 held for the private respondent on the premise
that the private respondent, Tourist World Service, Inc., being
the true lessee, it was within its prerogative to terminate the
lease and padlock the premises. 3 It likewise found the
petitioner, Lina Sevilla, to be a mere employee of said Tourist
World Service, Inc. and as such, she was bound by the acts of
her employer. 4 The respondent Court of Appeal 5 rendered an
affirmance.
The petitioners now claim that the respondent Court, in
sustaining the lower court, erred. Specifically, they state:
I nature of the relation between Lina Sevilla and Tourist World
THE COURT OF APPEALS ERRED ON A QUESTION OF
LAW AND GRAVELY ABUSED ITS DISCRETION IN
HOLDING THAT "THE PADLOCKING OF THE PREMISES
BY TOURIST WORLD SERVICE INC. WITHOUT THE
KNOWLEDGE AND CONSENT OF THE APPELLANT
LINA SEVILLA ... WITHOUT NOTIFYING MRS. LINA O.
SEVILLA OR ANY OF HER EMPLOYEES AND WITHOUT
INFORMING COUNSEL FOR THE APPELLANT
(SEVILIA), WHO IMMEDIATELY BEFORE THE
PADLOCKING INCIDENT, WAS IN CONFERENCE WITH
THE CORPORATE SECRETARY OF TOURIST WORLD
SERVICE (ADMITTEDLY THE PERSON WHO
PADLOCKED THE SAID OFFICE), IN THEIR ATTEMP
AMICABLY SETTLE THE CONTROVERSY BETWEEN
THE APPELLANT (SEVILLA) AND THE TOURIST
WORLD SERVICE ... (DID NOT) ENTITLE THE LATTER
TO THE RELIEF OF DAMAGES" (ANNEX "A" PP. 7,8
AND ANNEX "B" P. 2) DECISION AGAINST DUE
PROCESS WHICH ADHERES TO THE RULE OF LAW.
II
THE COURT OF APPEALS ERRED ON A QUESTION OF
LAW AND GRAVELY ABUSED ITS DISCRETION IN
DENYING APPELLANT SEVILLA RELIEF BECAUSE SHE
HAD "OFFERED TO WITHDRAW HER COMP PROVIDED
THAT ALL CLAIMS AND COUNTERCLAIMS LODGED
BY BOTH APPELLEES WERE WITHDRAWN." (ANNEX
"A" P. 8)
III
THE COURT OF APPEALS ERRED ON A QUESTION OF
LAW AND GRAVELY ABUSED ITS DISCRETION IN
DENYING-IN FACT NOT PASSING AND RESOLVING-
APPELLANT SEVILLAS CAUSE OF ACTION FOUNDED
ON ARTICLES 19, 20 AND 21 OF THE CIVIL CODE ON
RELATIONS.
IV
THE COURT OF APPEALS ERRED ON A QUESTION OF
LAW AND GRAVELY ABUSED ITS DISCRETION IN
DENYING APPEAL APPELLANT SEVILLA RELIEF YET
NOT RESOLVING HER CLAIM THAT SHE WAS IN JOINT
VENTURE WITH TOURIST WORLD SERVICE INC. OR
AT LEAST ITS AGENT COUPLED WITH AN INTEREST
WHICH COULD NOT BE TERMINATED OR REVOKED
UNILATERALLY BY TOURIST WORLD SERVICE INC. 6
As a preliminary inquiry, the Court is asked to declare the true
Service, Inc. The respondent Court of see fit to rule on the
question, the crucial issue, in its opinion being "whether or not
the padlocking of the premises by the Tourist World Service,
Inc. without the knowledge and consent of the appellant Lina
Sevilla entitled the latter to the relief of damages prayed for and
whether or not the evidence for the said appellant supports the
contention that the appellee Tourist World Service, Inc.
unilaterally and without the consent of the appellant
disconnected the telephone lines of the Ermita branch office of
the appellee Tourist World Service, Inc. 7 Tourist World
Service, Inc., insists, on the other hand, that Lina SEVILLA was
a mere employee, being "branch manager" of its Ermita
"branch" office and that inferentially, she had no say on the
lease executed with the private respondent, Segundina Noguera.
The petitioners contend, however, that relation between the
between parties was one of joint venture, but concede that
"whatever might have been the true relationship between
Sevilla and Tourist World Service," the Rule of Law enjoined
Tourist World Service and Canilao from taking the law into
their own hands, 8 in reference to the padlocking now
questioned.
The Court finds the resolution of the issue material, for if, as the
private respondent, Tourist World Service, Inc., maintains, that
the relation between the parties was in the character of
employer and employee, the courts would have been without
jurisdiction to try the case, labor disputes being the exclusive
domain of the Court of Industrial Relations, later, the Bureau Of
Labor Relations, pursuant to statutes then in force. 9
In this jurisdiction, there has been no uniform test to determine
the evidence of an employer-employee relation. In general, we
have relied on the so-called right of control test, "where the
person for whom the services are performed reserves a right to
control not only the end to be achieved but also the means to be
used in reaching such end." 10 Subsequently, however, we have
considered, in addition to the standard of right-of control, the
existing economic conditions prevailing between the parties,
like the inclusion of the employee in the payrolls, in
determining the existence of an employer-employee
relationship. 11
The records will show that the petitioner, Lina Sevilla, was not
subject to control by the private respondent Tourist World
Service, Inc., either as to the result of the enterprise or as to the
means used in connection therewith. In the first place, under the
contract of lease covering the Tourist Worlds Ermita office, she
had bound herself in solidum as and for rental payments, an
arrangement that would be like claims of a master-servant
relationship. True the respondent Court would later minimize
her participation in the lease as one of mere guaranty, 12 that
does not make her an employee of Tourist World, since in any
case, a true employee cannot be made to part with his own
money in pursuance of his employer's business, or otherwise,
assume any liability thereof. In that event, the parties must be
bound by some other relation, but certainly not employment.
In the second place, and as found by the Appellate Court,
'[w]hen the branch office was opened, the same was run by the
herein appellant Lina O. Sevilla payable to Tourist World
Service, Inc. by any airline for any fare brought in on the effort
of Mrs. Lina Sevilla. 13 Under these circumstances, it cannot be
said that Sevilla was under the control of Tourist World Service,
Inc. "as to the means used." Sevilla in pursuing the business,
obviously relied on her own gifts and capabilities.
It is further admitted that Sevilla was not in the company's
payroll. For her efforts, she retained 4% in commissions from
airline bookings, the remaining 3% going to Tourist World.
Unlike an employee then, who earns a fixed salary usually, she
earned compensation in fluctuating amounts depending on her
booking successes.
The fact that Sevilla had been designated 'branch manager"
does not make her, ergo, Tourist World's employee. As we said,
employment is determined by the right-of-control test and
certain economic parameters. But titles are weak indicators.
In rejecting Tourist World Service, Inc.'s arguments however,
we are not, as a consequence, accepting Lina Sevilla's own, that
is, that the parties had embarked on a joint venture or otherwise,
a partnership. And apparently, Sevilla herself did not recognize
the existence of such a relation. In her letter of November 28,
1961, she expressly 'concedes your [Tourist World Service,
Inc.'s] right to stop the operation of your branch office 14 in
effect, accepting Tourist World Service, Inc.'s control over the
manner in which the business was run. A joint venture,
including a partnership, presupposes generally a of standing
between the joint co-venturers or partners, in which each party
has an equal proprietary interest in the capital or property
contributed 15 and where each party exercises equal rights in
the conduct of the business. 16 furthermore, the parties did not
hold themselves out as partners, and the building itself was
embellished with the electric sign "Tourist World Service, Inc.
17in lieu of a distinct partnership name.
It is the Court's considered opinion, that when the petitioner,
Lina Sevilla, agreed to (wo)man the private respondent, Tourist
World Service, Inc.'s Ermita office, she must have done so
pursuant to a contract of agency. It is the essence of this
contract that the agent renders services "in representation or on
behalf of another. 18 In the case at bar, Sevilla solicited airline
fares, but she did so for and on behalf of her principal, Tourist
World Service, Inc. As compensation, she received 4% of the
proceeds in the concept of commissions. And as we said,
Sevilla herself based on her letter of November 28, 1961, pre-
assumed her principal's authority as owner of the business
undertaking. We are convinced, considering the circumstances
and from the respondent Court's recital of facts, that the ties had
contemplated a principal agent relationship, rather than a joint
managament or a partnership..
But unlike simple grants of a power of attorney, the agency
that we hereby declare to be compatible with the intent of the
parties, cannot be revoked at will. The reason is that it is one
coupled with an interest, the agency having been created for
mutual interest, of the agent and the principal. 19 It appears
that Lina Sevilla is a bona fide travel agent herself, and as
such, she had acquired an interest in the business entrusted to
her. Moreover, she had assumed a personal obligation for the
operation thereof, holding herself solidarily liable for the
payment of rentals. She continued the business, using her own
name, after Tourist World had stopped further operations. Her
interest, obviously, is not to the commissions she earned as a
result of her business transactions, but one that extends to the
very subject matter of the power of management delegated to
her. It is an agency that, as we said, cannot be revoked at the
pleasure of the principal. Accordingly, the revocation
complained of should entitle the petitioner, Lina Sevilla, to
damages.
As we have stated, the respondent Court avoided this issue,
confining itself to the telephone disconnection and padlocking
incidents. Anent the disconnection issue, it is the holding of the
Court of Appeals that there is 'no evidence showing that the
Tourist World Service, Inc. disconnected the telephone lines at
the branch office. 20 Yet, what cannot be denied is the fact that
Tourist World Service, Inc. did not take pains to have them
reconnected. Assuming, therefore, that it had no hand in the
disconnection now complained of, it had clearly condoned it,
and as owner of the telephone lines, it must shoulder
responsibility therefor.
The Court of Appeals must likewise be held to be in error with
respect to the padlocking incident. For the fact that Tourist
World Service, Inc. was the lessee named in the lease con-tract
did not accord it any authority to terminate that contract
without notice to its actual occupant, and to padlock the
premises in such fashion. As this Court has ruled, the
petitioner, Lina Sevilla, had acquired a personal stake in the
business itself, and necessarily, in the equipment pertaining
thereto. Furthermore, Sevilla was not a stranger to that contract
having been explicitly named therein as a third party in charge
of rental payments (solidarily with Tourist World, Inc.). She
could not be ousted from possession as summarily as one
would eject an interloper.
The Court is satisfied that from the chronicle of events, there
was indeed some malevolent design to put the petitioner, Lina
Sevilla, in a bad light following disclosures that she had
worked for a rival firm. To be sure, the respondent court speaks
of alleged business losses to justify the closure '21 but there is
no clear showing that Tourist World Ermita Branch had in fact
sustained such reverses, let alone, the fact that Sevilla had
moonlit for another company. What the evidence discloses, on
the other hand, is that following such an information (that
Sevilla was working for another company), Tourist World's
board of directors adopted two resolutions abolishing the office
of 'manager" and authorizing the corporate secretary, the
respondent Eliseo Canilao, to effect the takeover of its branch
office properties. On January 3, 1962, the private respondents
ended the lease over the branch office premises, incidentally,
without notice to her.
It was only on June 4, 1962, and after office hours significantly,
that the Ermita office was padlocked, personally by the
respondent Canilao, on the pretext that it was necessary to
Protect the interests of the Tourist World Service. " 22 It is
strange indeed that Tourist World Service, Inc. did not find such
a need when it cancelled the lease five months earlier. While
Tourist World Service, Inc. would not pretend that it sought to
locate Sevilla to inform her of the closure, but surely, it was
aware that after office hours, she could not have been anywhere
near the premises. Capping these series of "offensives," it cut
the office's telephone lines, paralyzing completely its business
operations, and in the process, depriving Sevilla articipation
therein.
This conduct on the part of Tourist World Service, Inc. betrays a
sinister effort to punish Sevillsa it had perceived to be disloyalty
on her part. It is offensive, in any event, to elementary norms of
justice and fair play.
We rule therefore, that for its unwarranted revocation of the
contract of agency, the private respondent, Tourist World
Service, Inc., should be sentenced to pay damages. Under the
Civil Code, moral damages may be awarded for "breaches of
contract where the defendant acted ... in bad faith. 23
We likewise condemn Tourist World Service, Inc. to pay further
damages for the moral injury done to Lina Sevilla from its
brazen conduct subsequent to the cancellation of the power of
attorney granted to her on the authority of Article 21 of the
Civil Code, in relation to Article 2219 (10) thereof
ART. 21. Any person who wilfully causes loss or injury to
another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage. 24
ART. 2219. Moral damages 25 may be recovered in
the following and analogous cases:
xxx xxx xxx
(10) Acts and actions refered into article 21, 26, 27, 28,
29, 30, 32, 34, and 35.

The respondent, Eliseo Canilao, as a joint tortfeasor is likewise

hereby ordered to respond for the same damages in a solidary
capacity.

Insofar, however, as the private respondent, Segundina Noguera

is concerned, no evidence has been shown that she had
connived with Tourist World Service, Inc. in the disconnection
and padlocking incidents. She cannot therefore be held liable as
a cotortfeasor.

The Court considers the sums of P25,000.00 as and for moral

damages,24 P10,000.00 as exemplary damages, 25 and
P5,000.00 as nominal 26 and/or temperate 27 damages, to be
just, fair, and reasonable under the circumstances.

WHEREFORE, the Decision promulgated on January 23, 1975

as well as the Resolution issued on July 31, 1975, by the
respondent Court of Appeals is hereby REVERSED and SET
ASIDE. The private respondent, Tourist World Service, Inc.,
and Eliseo Canilao, are ORDERED jointly and severally to
indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as
and for moral damages, the sum of P10,000.00, as and for
exemplary damages, and the sum of P5,000.00, as and for
nominal and/or temperate damages.

Costs against said private respondents.

SO ORDERED.