1 01. FIRST DIVISION G.R. No. 84484 November 15, 1989 INSULAR LIFE ASSURANCE CO., LTD.

, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents. Tirol & Tirol for petitioner. Enojas, Defensor & Teodosio Cabado Law Offices for private respondent. Company. However, the Agent shall observe and conform to all rules and regulations which the Company may from time to time prescribe. ILLEGAL AND UNETHICAL PRACTICES. The Agent is prohibited from giving, directly or indirectly, rebates in any form, or from making any misrepresentation or over-selling, and, in general, from doing or committing acts prohibited in the Agent's Manual and in circulars of the Office of the Insurance Commissioner. TERMINATION. The Company may terminate the contract at will, without any previous notice to the Agent, for or on account of ... (explicitly specified causes). ... Either party may terminate this contract by giving to the other notice in writing to that effect. It shall become ipso facto cancelled if the Insurance Commissioner should revoke a Certificate of Authority previously issued or should the Agent fail to renew his existing Certificate of Authority upon its expiration. The Agent shall not have any right to any commission on renewal of premiums that may be paid after the termination of this agreement for any cause whatsoever, except when the termination is due to disability or death in line of service. As to commission corresponding to any balance of the first year's premiums remaining unpaid at the termination of this agreement, the Agent shall be entitled to it if the balance of the first year premium is paid, less actual cost of collection, unless the termination is due to a violation of this contract, involving criminal liability or breach of trust. ASSIGNMENT. No Assignment of the Agency herein created or of commissions or other compensations shall be valid without the prior consent in writing of the Company. ... Some four years later, in April 1972, the parties entered into another contract an Agency Manager's Contract and to implement his end of it Basiao organized an agency or office to which he gave the name M. Basiao and Associates, while concurrently fulfilling his commitments under the first contract with the Company. 2 In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao sued the Company in a civil action and this, he was later to claim, prompted the latter to terminate also his engagement under the first contract and to stop payment of his commissions starting April 1, 1980. 3

NARVASA, J.: On July 2, 1968, Insular Life Assurance Co., Ltd. (hereinafter simply called the Company) and Melecio T. Basiao entered into a contract 1 by which: 1. Basiao was "authorized to solicit within the Philippines applications for insurance policies and annuities in accordance with the existing rules and regulations" of the Company; 2. he would receive "compensation, in the form of commissions ... as provided in the Schedule of Commissions" of the contract to "constitute a part of the consideration of ... (said) agreement;" and 3. the "rules in ... (the Company's) Rate Book and its Agent's Manual, as well as all its circulars ... and those which may from time to time be promulgated by it, ..." were made part of said contract. The contract also contained, among others, provisions governing the relations of the parties, the duties of the Agent, the acts prohibited to him, and the modes of termination of the agreement, viz.: RELATION WITH THE COMPANY. The Agent shall be free to exercise his own judgment as to time, place and means of soliciting insurance. Nothing herein contained shall therefore be construed to create the relationship of employee and employer between the Agent and the

2 Basiao thereafter filed with the then Ministry of Labor a complaint 4 against the Company and its president. Without contesting the termination of the first contract, the complaint sought to recover commissions allegedly unpaid thereunder, plus attorney's fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's employee, but an independent contractor and that the Company had no obligation to him for unpaid commissions under the terms and conditions of his contract. 5 The Labor Arbiter to whom the case was assigned found for Basiao. He ruled that the underwriting agreement had established an employer-employee relationship between him and the Company, and this conferred jurisdiction on the Ministry of Labor to adjudicate his claim. Said official's decision directed payment of his unpaid commissions "... equivalent to the balance of the first year's premium remaining unpaid, at the time of his termination, of all the insurance policies solicited by ... (him) in favor of the respondent company ..." plus 10% attorney's fees. 6 This decision was, on appeal by the Company, affirmed by the National Labor Relations Commission. 7 Hence, the present petition for certiorari and prohibition. The chief issue here is one of jurisdiction: whether, as Basiao asserts, he had become the Company's employee by virtue of the contract invoked by him, thereby placing his claim for unpaid commissions within the original and exclusive jurisdiction of the Labor Arbiter under the provisions of Section 217 of the Labor Code, 8 or, contrarily, as the Company would have it, that under said contract Basiao's status was that of an independent contractor whose claim was thus cognizable, not by the Labor Arbiter in a labor case, but by the regular courts in an ordinary civil action. The Company's thesis, that no employer-employee relation in the legal and generally accepted sense existed between it and Basiao, is drawn from the terms of the contract they had entered into, which, either expressly or by necessary implication, made Basiao the master of his own time and selling methods, left to his judgment the time, place and means of soliciting insurance, set no accomplishment quotas and compensated him on the basis 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. Without denying that the above were indeed the expressed implicit conditions of Basiao's contract with the Company, the respondents contend that they do not constitute the decisive determinant of the nature of his engagement, invoking precedents to the effect that the critical feature distinguishing the status of an employee from that of an independent contractor is control, that is, whether or not the party who engages the services of another has the power to control the latter's conduct in rendering such services. Pursuing the argument, the respondents draw attention to the provisions of Basiao's contract obliging him to "... observe and conform to all rules and regulations which the Company may from time to time prescribe ...," as well as to the fact that the Company prescribed the qualifications of applicants for insurance, processed their applications and determined the amounts of insurance cover to be issued as indicative of the control, which made Basiao, in legal contemplation, an employee of the Company. 9 It is true that the "control test" expressed in the following pronouncement of the Court in the 1956 case of Viana vs. Alejo Al-Lagadan 10 ... In determining the existence of employer-employee relationship, the following elements are generally considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees' conduct although the latter is the most important element (35 Am. Jur. 445). ... has been followed and applied in later cases, some fairly recent. 11 Indeed, it is without question a valid test of the character of a contract or agreement to render service. It should, however, be obvious that not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Realistically, it would be a rare contract of service that gives untrammelled freedom to the party hired and eschews any intervention whatsoever in his performance of the engagement. Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to

3 be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the business of insurance, and is on that account subject to regulation by the State with respect, not only to the relations between insurer and insured but also to the internal affairs of the insurance company. 12 Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules which prescribe the qualifications of persons who may be insured, subject insurance applications to processing and approval by the Company, and also reserve to the Company the determination of the premiums to be paid and the schedules of payment. None of these really invades the agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee relationship between him and the company. There is no dearth of authority holding persons similarly placed as respondent Basiao to be independent contractors, instead of employees of the parties for whom they worked. In Mafinco Trading Corporation vs. Ople,13 the Court ruled that a person engaged to sell soft drinks for another, using a truck supplied by the latter, but with the right to employ his own workers, sell according to his own methods subject only to prearranged routes, observing no working hours fixed by the other party and obliged to secure his own licenses and defray his own selling expenses, all in consideration of a peddler's discount given by the other party for at least 250 cases of soft drinks sold daily, was not an employee but an independent contractor. In Investment Planning Corporation of the Philippines us. Social Security System 14 a case almost on all fours with the present one, this Court held that there was no employeremployee relationship between a commission agent and an investment company, but that the former was an independent contractor where said agent and others similarly placed were: (a) paid compensation in the form of commissions based on percentages of their sales, any balance of commissions earned being payable to their legal representatives in the event of death or registration; (b) required to put up performance bonds; (c) subject to a set of rules and regulations governing the performance of their duties under the agreement with the company and termination of their services for certain causes; (d) not required to report for work at any time, nor to devote their time exclusively to working for the company nor to submit a record of their activities, and who, finally, shouldered their own selling and transportation expenses. More recently, in Sara vs. NLRC, 15 it was held that one who had been engaged by a rice miller to buy and sell rice and palay without compensation except a certain percentage of what he was able to buy or sell, did work at his own pleasure without any supervision or control on the part of his principal and relied on his own resources in the performance of his work, was a plain commission agent, an independent contractor and not an employee. The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the latter might from time to time prescribe. No showing has been made that any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent such showing, the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting insurance." The Labor Arbiter's decision makes reference to Basiao's claim of having been connected with the Company for twenty-five years. Whatever this is meant to imply, the obvious reply would be that what is germane here is Basiao's status under the contract of July 2, 1968, not the length of his relationship with the Company. The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the respondent NLRC in affirming the Arbiter's decision. This

4 conclusion renders it unnecessary and premature to consider Basiao's claim for commissions on its merits. WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set aside, and that complaint of private respondent Melecio T. Basiao in RAB Case No. VI-001083 is dismissed. No pronouncement as to costs. SO ORDERED. Cruz, Gancayco, Grio-Aquino, and Medialdea, JJ., concur.

5 02. 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. 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 Delos 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-vispetitioner 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

BELLOSILLO, J.: 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. 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

6 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 Delos 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

7 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 preemployment 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. 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 P 125,000 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) wasmonthly starting on the first month of the

8 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

9 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. SO ORDERED. Davide, Jr., Vitug, Panganiban and Quisumbing, JJ., concur.

10 03. THIRD DIVISION [G.R. No. 142689. October 17, 2002] POLICARPIO T. CUEVAS, petitioner, vs. BAIS STEEL CORPORATION and STEVEN CHAN, respondents. DECISION PANGANIBAN, J.: The timely perfection of an appeal is a mandatory requirement. One cannot escape the rigid observance of this rule by claiming ignorance or oversight. Neither can it be trifled with as a mere technicality to suit the interest of a party. Verily, the periods for filing petitions for review and for certiorari are to be observed religiously. Just as a losing party has the privilege to file an appeal within the prescribed period, so does the winner have the right to enjoy the finality of the decision. Statement of the Case Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the January 6, 2000 Decision[1] and the March 15, 2000 Resolution[2]of the Court of Appeals[3](CA) in CA-GR SP No. 52936. The decretal portion of the Decisions reads as follows: The foregoing considered, the contested Decision is hereby nullified and set aside, and the December 23, 1997 Decision by the Labor Arbiter, directing the dismissal of the complaint is reinstated.[4] The assailed Resolution denied petitioners Motion for Reconsideration. The CA reversed the Decision of the Fourth Division of the National Labor Relations Commission[5] (NLRC), which had disposed as follows: WHEREFORE, premises considered, the decision of the Labor Arbiter dated December 23, 1997, is hereby NULLIFIED AND SET ASIDE and a new one entered, ordering respondentappellee, BAIS STEEL CORPORATION, to pay complainant-appellant, POLICARPIO T. CUEVAS, the following: a) Separation pay equivalent to one (1) month pay for every year of actual service, with a fraction of six (6) months being considered as one (1) year in the amount of P26,929.75; b) Backwages from the time of his illegal dismissal on October 24, 1996 up to the time of promulgation of the decision in the amount of P115,750.40; c) To pay complainant-appellant attorneys fees equivalent to ten (10)% percent on top of the total judgment award. All other claims are hereby dismissed for lack of merit.[6] The Facts The factual antecedents of the case are summarized by the NLRC as follows: Herein complainant starting July 16, 1991, works as boiler tender for the respondent Bais Steel Corporation, a galvanizing plant located at Tanjay, Negros Oriental, owned and managed by the president Antonio Steven L. Chan. His daily rate/salary was P165.34 with overtime pay and night shift differentials. On September 2, 1996, complainant filed an illegal suspension case against respondent company denominated as NLRC Sub-RAB Case No. 09-0105-96-D. The case was dismissed with prejudice per order dated September 30, 1996. The dismissal was anchored on the agreement that respondent company will delete or erase from the 201 file of complainant the alleged violation on sleeping rules. Sometime *I+n the second week of September 1996, complainant tried to organize a union, but his attention was called by the owner of the respondent company, Mr. Antonio Steven L. Chan. On October 17, 1996, complainant was notified in writing regarding his transfer to the Crating Section with a specific job[,] strictly that of making coco lumber crates only (from Boiler Tender) with a work schedule from 8:00 a.m. to 5:00 p.m.

11 On October 20, 1996, this being a Sunday, complainant worked for half-day, in order to look for some money for the tuition fee of his son. His application for leave was left to his immediate supervisor which was approved as is the practice during a Sunday. While on the way out from the company premises together with other co-workers, they met the owner, Mr. Antonio Steven L. Chan [who] inquired where they [were] going. Complainant informed him that he [was] on half-day and already off-duty, to attend to some personal problems. The owner informed him that [his] supervisor ha[d] no authority to approve [his] leave and [told him] to return to work. Complainant insisted and went on half-day leave. The following day, October 21, 1996, complainant reported for work, but the retaliatory acts of management [were] already felt by complainant starting from his demotion, reduction in working hours and oppression. Realizing the pressures being exerted by respondent, he decided to apply for leave of absence on October 22, 1996. The same was disapproved[;] nonetheless, complainant did not report for work as he ha[d] to consult a lawyer about his problem, and submitted a medical certificate to justify HIS LEAVE OF ABSENCE THE FOLLOWING DAY. On October 23, 1996, complainant informed the resident-manager, Mr. Roberto dela Rosa, that if given his separation pay, he [would] just resign. This proposal was accepted by management. Thus, complainant signed a management prepared letter of resignation[,] believing to be paid his separation pay as agreed. After signing said resignation letter, complainant alleged that he was made to sign another document which he refused[;] then and there respondent refused to pay him the agreed separation pay. Interpreting the aforestated action of the respondent as constructive dismissal or forced resignation, complainant filed the instant complaint for illegal dismissal, and non-payment of separation pay. Complainant likewise, prays for moral and exemplary damages as well as attorneys fees. Respondent, on the other hand, avers that complainant personally delivered his resignation letter to the respondents Resident Manager and failed to report for work effective October 24, 1996. And that he is considered to have abandoned work, if he considers himself not resigned, since more than two (2) months had elapsed since he last reported for work up to the time of the filing of this complaint. during the scheduled mandatory conference and hearings, the parties failed to arrive at an amicable settlement; hence, [they] were directed to submit their respective position papers and other documentary evidence. A full-blown hearing followed as evidenced by the transcript of stenographic notes and formal offer of exhibits and opposition thereto attached to the records of the case. On December 23, 1997, the Labor Arbiter a quo, rendered the assailed decision.[7] (Citations omitted) Respondents received a copy of the July 24, 1998 Decision rendered by the NLRC on September 18, 1998. Six days later or on September 24, 1998, they filed a Motion for Reconsideration, which was denied in a Resolution dated November 27, 1998. On February 19, 1999, they filed with this Court a Petition for Certiorari[8] under Rule 65. However, in accordance with St. Martin Funeral Homes v. NLRC,[9] it was referred to the CA in a Resolution[10] dated March 17, 1999. The CA dismissed the Petition on the following grounds: 1. Absence of explanation on service by registered mail; and 2. Lack of a verified statement on material date when the notice of denial of the Motion for Reconsideration was received. We, therefore, have no way of finding out if herein Petition for Certiorari was filed within the reglementary period. Not being sufficient in form, herein Petition is hereby DISMISSED.[11] Thereafter, respondents filed an Urgent Motion for Reconsideration alleging that their failure to submit the above-mentioned requisites was inadvertent and not intended to delay the prosecution of the case.[12] On July 2, 1999, the CA denied their Motion.[13] On August 17,

12 1999, they filed a second Motion for Reconsideration,[14] which was again denied in a Resolution dated August 20, 1999.[15] Undeterred, they filed a third Motion for Reconsideration on September 8, 1999,[16] which the CA granted in a Resolution[17] dated October 1, 1999, with the following instructions: Without necessarily giving due course to the Petition for Certiorari, the Comment, not a motion to dismiss, should be submitted within a period of ten (10) days from notice. The Reply, if any, should also be submitted within a period of ten (10) days from receipt of a copy of the Comment.[18] After the parties submitted their respective Comment and Reply,[19] the CA rendered the assailed Decision granting the Petition for Certiorari. Ruling of the Court of Appeals The CA held that, based on the facts in hand, Petitioner Cuevas had voluntarily submitted his resignation letter to the resident manager on October 23, 1996. Hence, he was not illegally dismissed by respondents. Furthermore, the appellate court observed that petitioner had not raised any question of law when he filed with his Notice of Appeal and Memorandum of Appeal from the Decision of the Labor Arbiter. The CA cited Article 223 of the Labor Code, which states: Art. 223. Appeal. -- Decisions, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: (a) If there is prima facie evidence of abuse of discretion on the part of the Labor Arbiter. (d) If serious errors in the findings of facts are raised which would cause grave or irreparable damage or injury to the appellant. It opined that the NLRC had no basis whatsoever to entertain the appeal submitted by petitioner, because none of the above-mentioned grounds was presented. The CA ignored the issue of the timeliness of the filing of the certiorari Petition. Hence, this recourse to this Court.[20] Issues In his Memorandum, petitioner raises the following issues for the Courts consideration: I Whether or not the Court of Appeals -- former First Division departed from the accepted and usual course of judicial proceedings in issuing the assailed Decision/Resolution granting the Petition for Certiorari of respondent BSC/Steven Chan considering that it was made after the latters third Motion for Reconsideration and despite the fact that the same was filed out of time and has failed to comply with the material date rule and explanation on the service to the adverse party; II Whether or not the Court of Appeals -- former First Division whimsically and capriciously granted the Petition for Certiorari and annulled and set-aside the Decision and Resolution of the NLRC-Fourth Division issued in accordance with law and jurisprudence and merits of the case thereon; III Whether or not the Court of Appeals -- former First Division exceeded its jurisdiction and contravened settled doctrines and principles in law particularly on employment termination when it issued the assailed Decision and Resolution*.+[21]

(b) If the decision, order or award was secured through fraud or coercion, including graft and corruption; (c) If made purely on questions of law; and

13 In sum, the main issue before this Court is whether the CA acted correctly in giving due course and granting respondents late Petition for Certiorari. This Courts Ruling The Petition is meritorious. Main Issue: Timeliness of the Appeal to the CA The records reveal that respondents received a copy of the NLRC Decision on September 18, 1998. On September 24, 1998, they filed a Motion for Reconsideration, which was denied on November 27, 1998. On February 19, 1999, they filed their Petition for Certiorari, which this Court referred to the CA. Section 3, Rule 46 of the Rules of Court, provides: Section 3. Contents and filing of petition; effect of non-compliance with requirements. xxx xxx xxx However, the CAs dismissal of their appeal did not deter respondents from committing more grievous blunders. In their Urgent Motion for Reconsideration dated June 25, 1999, they stated that they had received notice of the NLRCs denial of their Motion for Reconsideration on December 21, 1998. Under Section 4, Rule 65 of the Rules of Court, a Petition for Certiorari shall be filed not later than sixty (60) days from notice of the judgment, the order or the resolution sought to be assailed. Furthermore, it provides: If the petitioner had filed a motion for new trial or reconsideration in due time after notice of said judgment, order or resolution, the period herein fixed shall be interrupted. If the motion is denied, the aggrieved party may file the petition within the remaining period, but [it] shall not be less than five (5) days in any event, reckoned from notice of such denial. xxx.[23] Applying the above-mentioned rule, the 60-day period for filing a Petition for Certiorari was interrupted when respondents filed their Motion for Reconsideration on September 24, 1998. When their Motion was denied, they had a remaining period of fifty-four (54) days, or until February 15, 1999, within which to file their Petition for Certiorari.[24] However, they filed their Petition only on February 19, 1999, thereby prompting the CA to issue on July 2, 1999, another Resolution of denial, reiterating its dismissal of their Petition for having been filed late. In another Motion for Reconsideration filed on August 17, 1999, respondents reasoned that they were allegedly not aware of Supreme Court Circular No. 39-98, which had taken effect on September 1, 1998. This Motion was, however, denied by the CA since a second Motion for Reconsideration was a prohibited pleading. On September 8, 1999, respondents filed a third Motion for Reconsideration, arguing that the Motion filed on August 17, 1999 was not a Second Motion for Reconsideration. They contended that it was a plea for reconsideration of the CAs Resolution dated June 22, 1999, which had reiterated its dismissal of their Petition for being four (4) days late. Citing Siguenza v. Court of Appeals,[25] respondents contend that rules of procedure should not to be applied in a very rigid and technical manner. They are supposed to be used only to help secure, not override, substantial justice. Further, a short delay does not warrant the dismissal of an appeal.

In actions filed under Rule 65, the petition shall further indicate the material dates showing when notice of the judgment or final order or resolution subject thereof was received, when a motion for new trial or reconsideration, if any, was filed and when notice of the denial thereof was received. xxx xxx xxx

The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient ground for the dismissal of the petition.[22] In the present case, not only did respondents fail to include an explanation for the service by registered mail but, more important, their Petition also lacked a verified statement on the material date of their receipt of the notice of the NLRCs denial of their Motion for Reconsideration. Hence, the CA properly dismissed their Petition.

14 We hold, however, that procedural rules setting the period for perfecting an appeal or filing a petition for review are generally inviolable. It is doctrinally entrenched that appeal is not a constitutional right, but a mere statutory privilege. Hence, parties who seek to avail themselves of it must comply with the statutes or rules allowing it. The requirements for perfecting an appeal within the reglementary period specified in law must, as a rule, be strictly followed. Such requirements are considered indispensable interdictions against needless delays and are necessary for the orderly discharge of the judicial business. Furthermore, the perfection of an appeal in the manner and within the period permitted by law is not only mandatory, but also jurisdictional. Failure to perfect the appeal renders the judgment of the court final and executory. Just as a losing party has the privilege to file an appeal within the prescribed period, so does the winner also have the correlative right to enjoy the finality of the decision.[26] This Court may deign to veer away from the general rule only if, on its face, the appeal appears to be absolutely meritorious. Indeed, this Court has in a number of instances relaxed procedural rules in order to serve substantial justice. However, we see no reason to do so in this case. The delay incurred by respondents was simply inexcusable. They explain that they were not aware of SC Circular 39-98, which had been published in several newspapers of general circulation in the country on July 26, 1998, and had taken effect on September 1, 1998. Respondents filed their Petition for Certiorari on February 19, 1999, some seven (7) months after the Circular had been published in major newspapers, five (5) months after taking effect. This Court must emphasize once again that lawyers are dutybound to keep abreast of legal developments and to participate in continuing legal education programs.[27] We repeat: the timely perfection of an appeal is a mandatory requirement, which cannot be trifled with as a mere technicality to suit the interest of a party. The rules on periods for filing appeals are to be observed religiously, and parties who seek to avail themselves of the privilege must comply with the rules.[28] In view of the foregoing, we find no necessity to pass upon the other issues raised, especially regarding the legality of petitioners dismissal. After all, the NLRCs Decision has become final and, whether right or wrong, is no longer reviewable on appeal. It has become the law of the case.[29] WHEREFORE, the Petition is GRANTED and the assailed Decision and Resolution SET ASIDE. SO ORDERED. Puno, (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales, JJ., concur.

15 04. EN BANC G.R. No. 118651 October 16, 1997 PIONEER TEXTURIZING CORP. and/or JULIANO LIM, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, PIONEER TEXTURIZING WORKERS UNION and LOURDES A. DE JESUS, respondents. Labor Arbiter held petitioners guilty of illegal dismissal. Petitioners were accordingly ordered to reinstate de Jesus to her previous position without loss of seniority rights and with full backwages from the time of her suspension on August 19, 1992. Dissatisfied with the Labor Arbiter's decision, petitioners appealed to public respondent National Labor Relations Commission (NLRC). In its July 21, 1994 decision, the NLRC 1 ruled that de Jesus was negligent in presuming that the ribs of P.O. No. 3853 should likewise be trimmed for having the same style and design as P.O. No. 3824, thus petitioners cannot be entirely faulted for dismissing de Jesus. The NLRC declared that the status quo between them should be maintained and affirmed the Labor Arbiter's order of reinstatement, but without backwages. The NLRC further "directed petitioner to pay de Jesus her back salaries from the date she filed her motion for execution on September 21, 1993 up to the date of the promulgation of [the] decision." 2 Petitioners filed their partial motion for reconsideration which the NLRC denied, hence this petition anchored substantially on the alleged NLRC's error in holding that de Jesus is entitled to reinstatement and back salaries. On March 6, 1996, petitioners filed its supplement to the petition amplifying further their arguments. In a resolution dated February 20, 1995, the Court required respondents to comment thereon. Private respondent de Jesus and the Office of the Solicitor General, in behalf of public respondent NLRC, subsequently filed their comments. Thereafter, petitioners filed two rejoinders [should be replies] to respondents' respective comments. Respondents in due time filed their rejoinders. There are two interrelated and crucial issues, namely: (1) whether or not de Jesus was illegally dismissed, and (2) whether or not an order for reinstatement needs a writ of execution. Petitioners insist that the NLRC gravely abused its discretion in holding that de Jesus is entitled to reinstatement to her previous position for she was not illegally dismissed in the first place. In support thereof, petitioners quote portions of the NLRC decision which stated that "respondents [petitioners herein] cannot be entirely faulted for dismissing the complainant" 3 and that there was "no illegal dismissal to speak of in the case at bar". 4 Petitioners further add that de Jesus breached the trust reposed in her, hence her dismissal from service is proper on the basis of loss of confidence, citing as authority the cases of Ocean Terminal Services, Inc. v. NLRC, 197 SCRA 491; Coca-Cola Bottlers

FRANCISCO, J.: The facts are as follows: Private respondent Lourdes A. de Jesus is petitioners' reviser/trimmer since 1980. As reviser/trimmer, de Jesus based her assigned work on a paper note posted by petitioners. The posted paper which contains the corresponding price for the work to be accomplished by a worker is identified by its P.O. Number. On August 15, 1992, de Jesus worked on P.O. No. 3853 by trimming the cloths' ribs. She thereafter submitted tickets corresponding to the work done to her supervisor. Three days later, de Jesus received from petitioners' personnel manager a memorandum requiring her to explain why no disciplinary action should be taken against her for dishonesty and tampering of official records and documents with the intention of cheating as P.O. No. 3853 allegedly required no trimming. The memorandum also placed her under preventive suspension for thirty days starting from August 19, 1992. In her handwritten explanation, de Jesus maintained that she merely committed a mistake in trimming P.O. No. 3853 as it has the same style and design as P.O. No. 3824 which has an attached price list for trimming the ribs and admitted that she may have been negligent in presuming that the same work was to be done with P.O. No. 3853, but not for dishonesty or tampering. Petitioners' personnel department, nonetheless, terminated her from employment and sent her a notice of termination dated September 18, 1992. On September 22, 1992, de Jesus filed a complaint for illegal dismissal against petitioners. The Labor Arbiter who heard the case noted that de Jesus was amply accorded procedural due process in her termination from service. Nevertheless, after observing that de Jesus made some further trimming on P.O. No. 3853 and that her dismissal was not justified, the

16 Phil., Inc. v. NLRC, 172 SCRA 751, and Piedad v. Lanao del Norte Electric Cooperative, 5154 SCRA 500. The arguments lack merit. The entire paragraph which comprises the gist of the NLRC's decision from where petitioners derived and isolated the aforequoted portions of the NLRC's observation reads in full as follows: We cannot fully subscribe to the complainant's claim that she trimmed the ribs of PO3853 in the light of the sworn statement of her supervisor Rebecca Madarcos (Rollo, p. 64) that no trimming was necessary because the ribs were already of the proper length. The complainant herself admitted in her sinumpaang salaysay (Rollo, p. 45) that "Aking napansin na hindi pantay-pantay ang lapad ng mga ribs PO3853 mas maigsi ang nagupit ko sa mga ribs ng PO3853 kaysa sa mga ribs ng mga nakaraang PO's. The complainant being an experienced reviser/trimmer for almost twelve (12) years should have called the attention of her supervisor regarding her observation of PO3853. It should be noted that complainant was trying to claim as production output 447 pieces of trimmed ribs of PO3853 which respondents insists that complainant did not do any. She was therefore negligent in presuming that the ribs of PO3853 should likewise be trimmed for having the same style and design as PO3824. Complainant cannot pass on the blame to her supervisor whom she claimed checked the said tickets prior to the submission to the Accounting Department. As explained by respondent, what the supervisor does is merely not the submission of tickets and do some checking before forwarding the same to the Accounting Department. It was never disputed that it is the Accounting Department who does the detailed checking and computation of the tickets as has been the company policy and practice. Based on the foregoing and considering that respondent cannot be entirely faulted for dismissing complainant as the complainant herself was also negligent in the performance of her job, We hereby rule that status quo between them should be maintained as a matter of course. We thus affirm the decision of Labor Arbiter reinstating the complainant but without backwages. The award of backwages in general are granted on grounds of equity for earnings which a worker or employee has lost due to his illegal dismissal. (Indophil Acrylic Mfg. Corporation vs. NLRC, G.R. No. 96488 September 27, 1993) There being no illegal dismissal to speak in the case at bar, the award for backwages should necessarily be deleted. 6 We note that the NLRC's decision is quite categorical in finding that de Jesus was merely negligent in the performance of her duty. Such negligence, the Labor Arbiter delineated, was brought about by the petitioners' plain improvidence. Thus: After careful assessment of the allegations and documents available on record, we are convinced that the penalty of dismissal was not justified. At the outset, it is remarkable that respondents did not deny nor dispute that P.O. 3853 has the same style and design as P.O. 3824; that P.O. 3824 was made as guide for the work done on P.O. 3853; and, most importantly, that the notation correction on P.O. 3824 was made only after the error was discovered by respondents' Accounting Department. Be that as it may, the factual issue in this case is whether or not complainant trimmed the ribs of P.O. 3853? Respondents maintained that she did not because the record in Accounting Department allegedly indicates that no trimming is to be done on P.O. 3853. Basically, this allegation is unsubstantiated. It must be emphasized that in termination cases the burden of proof rests upon the employer. In the instant case, respondents' mere allegation that P.O. 3853 need not be trimmed does not satisfy the proof required to warrant complainant's dismissal. Now, granting that the Accounting record is correct, we still believe that complainant did some further trimming on P.O. 3853 based on the following grounds: Firstly, Supervisor Rebecca Madarcos who ought to know the work to be performed because she was in-charged of assigning jobs, reported no anomally when the tickets were submitted to her.

17 Incidentally, supervisor Madarcos testimony is suspect because if she could recall what she ordered the complainant to do seven (7) months ago (to revise the collars and plackets of shirts) there was no reason for her not to detect the alleged tampering at the time complainant submitted her tickets, after all, that was part of her job, if not her main job. Secondly, she did not exceed her quota, otherwise she could have simply asked for more. That her output was remarkably big granting it is true, is well explained in that the parts she had trimmed were lesser compared to those which she had cut before. In this connection, respondents misinterpreted the handwritten explanation of the complainant dated 20 August 1992, because the letter never admits that she never trimmed P.O. 3853, on the contrary the following sentence, Sa katunayan nakapagbawas naman talaga ako na di ko inaasahang inalis na pala ang presyo ng Sec. 9 P.O. 3853 na ito. is crystal clear that she did trim the ribs on P.O. 3853. 7 Gleaned either from the Labor Arbiter's observations or from the NLRC's assessment, it distinctly appears that petitioners' accusation of dishonesty and tampering of official records and documents with intention of cheating against de Jesus was not substantiated by clear and convincing evidence. Petitioners simply failed, both before the Labor Arbiter and the NLRC, to discharge the burden of proof and to validly justify de Jesus' dismissal from service. The law, in this light, directs the employers, such as herein petitioners, not to terminate the services of an employee except for a just or authorized cause under the Label Code. 8 Lack of a just cause in the dismissal from service of an employee, as in this case, renders the dismissal illegal, despite the employer's observance of procedural due process. 9 And while the NLRC stated that "there was no illegal dismissal to speak of in the case at bar" and that petitioners cannot be entirely faulted therefor, said statements are inordinate pronouncements which did not remove the assailed dismissal from the realm of illegality. Neither can these pronouncements preclude us from holding otherwise. We also find the imposition of the extreme penalty of dismissal against de Jesus as certainly harsh and grossly disproportionate to the negligence committed, especially where said employee holds a faithful and an untarnished twelve-year service record. While an employer has the inherent right to discipline its employees, we have always held that this right must always be exercised humanely, and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction. 10 The employer should bear in mind that, in the exercise of such right, what is at stake is not only the employee's position but her livelihood as well. Equally unmeritorious is petitioners' assertion that the dismissal is justified on the basis of loss of confidence. While loss of confidence, as correctly argued by petitioners, is one of the valid grounds for termination of employment, the same, however, cannot be used as a pretext to vindicate each and every instance of unwarranted dismissal. To be a valid ground, it must be shown that the employee concerned is responsible for the misconduct or infraction and that the nature of his participation therein rendered him absolutely unworthy of the trust and confidence demanded by his position. 11 In this case, petitioners were unsuccessful in establishing their accusations of dishonesty and tampering of records with intention of cheating. Indeed, even if petitioners' allegations against de Jesus were true, they just the same failed to prove that her position needs the continued and unceasing trust of her employers. The breach of trust must be related to the performance of the employee's functions. 12 Surely, de Jesus who occupies the position of a reviser/trimmer does not require the petitioners' perpetual and full confidence. In this regard, petitioners' reliance on the cases of Ocean Terminal Services, Inc. v.NLRC; Coca-Cola Bottlers Phil., Inc. v. NLRC; and Piedad v. Lanao del Norte Electric Cooperative, which when perused involve positions that require the employers' full trust and confidence, is wholly misplaced. In Ocean Terminal Services, for instance, the dismissed employee was designated as expediter and canvasser whose responsibility is mainly to make emergency procurements of tools and equipments and was entrusted with the necessary cash for buying them. The case of Coca-Cola Bottlers, on the other hand, involves a sales agent whose job exposes him to the everyday financial transactions involving the employer's goods and funds, while that ofPiedad concerns a bill collector who essentially handles the employer's cash collections. Undoubtedly, the position of a reviser/trimmer could not be equated with that of a canvasser, sales agent, or a bill collector. Besides, the involved employees in the three aforementioned cases were clearly proven guilty of infractions unlike private respondent in the case at bar. Thus, petitioners

18 dependence on these cited cases is inaccurate, to say the least. More, whether or not de Jesus meets the day's quota of work she, just the same, is paid the daily minimum wage.13 Corollary to our determination that de Jesus was illegally dismissed is her imperative entitlement to reinstatement and backwages as mandated by law. 14 Whence, we move to the second issue, i.e., whether or not an order for reinstatement needs a writ of execution. Petitioners' theory is that an order for reinstatement is not self-executory. They stress that there must be a writ of execution which may be issued by the NLRC or by the Labor Arbiter motu proprio or on motion of an interested party. They further maintain that even if a writ of execution was issued, a timely appeal coupled by the posting of appropriate supersedeas bond, which they did in this case, effectively forestalled and stayed execution of the reinstatement order of the Labor Arbiter. As supporting authority, petitioners emphatically cite and bank on the case of Maranaw Hotel Resort Corporation (Century Park Sheraton Manila) v. NLRC, 238 SCRA 190. Private respondent de Jesus, for her part, maintains that petitioners should have reinstated her immediately after the decision of the Labor Arbiter ordering her reinstatement was promulgated since the law mandates that an order for reinstatement is immediately executory. An appeal, she says, could not stay the execution of a reinstatement order for she could either be admitted back to work or merely reinstated in the payroll without need of a writ of execution. De Jesus argues that a writ of execution is necessary only for the enforcement of decisions, orders, or awards which have acquired finality. In effect, de Jesus is urging the Court to re-examine the ruling laid down in Maranaw. Article 223 of the Labor Code, as amended by R.A. No. 6715 which took effect on March 21, 1989, pertinently provides: Art. 223. Appeal. Decision, awards, or orders of the Labor Arbiter are final and executory unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt of such decisions, awards, or orders. Such appeal may be entertained only on any of the following grounds: xxx xxx xxx In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. xxx xxx xxx We initially interpreted the aforequoted provision in Inciong v. NLRC. 15 The Court 16 made this brief comment: The decision of the Labor Arbiter in this case was rendered on December 18, 1988, or three (3) months before Article 223 of the Labor Code was amended by Republic Act 6715 (which became law on March 21, 1989), providing that a decision of the Labor Arbiter ordering the reinstatement of a dismissed or separated employee shall be immediately executory insofar as the reinstatement aspect is concerned, and the posting of an appeal bond by the employer shall not stay such execution. Since this new law contains no provision giving it retroactive effect (Art. 4, Civil Code), the amendment may not be applied to this case. which the Court adopted and applied in Callanta v. NLRC. 17 In Zamboanga City Water District v. Buat, 18 the Court construed Article 223 to mean exactly what it says. We said: Under the said provision of law, the decision of the Labor Arbiter reinstating a dismissed or separated employee insofar as the reinstatement aspect is concerned, shall be immediately executory, even pending appeal. The employer shall reinstate the employee concerned either by: (a) actually admitting him back to work under the same terms and conditions prevailing prior to his dismissal or separation; or (b) at the option of the employer, merely reinstating him in the payroll. Immediate reinstatement is mandated and is not stayed by the fact that the employer has appealed, or has posted a cash or surety bond pending appeal. 19 We expressed a similar view a year earlier in Medina v. Consolidated Broadcasting System (CBS) DZWX 20 and laid down the rule that an employer who fails to comply with an order of reinstatement makes him liable for the employee's salaries. Thus:

19 Petitioners construe the above paragraph to mean that the refusal of the employer to reinstate an employee as directed in an executory order of reinstatement would make it liable to pay the latter's salaries. This interpretation is correct. Under Article 223 of the Labor Code, as amended, an employer has two options in order for him to comply with an order of reinstatement, which is immediately executory, even pending appeal. Firstly, he can admit the dismissed employee back to work under the same terms and conditions prevailing prior to his dismissal or separation or to a substantially equivalent position if the former position is already filled up as we have ruled in Union of Supervisors (RB) NATU vs. Sec. of Labor, 128 SCRA 442 [1984]; and Pedroso vs. Castro, 141 SCRA 252 [1986]. Secondly, he can reinstate the employee merely in the payroll. Failing to exercise any of the above options, the employer can be compelled under pain of contempt, to pay instead the salary of the employee. This interpretation is more in consonance with the constitutional protection to labor (Section 3, Art. XIII, 1987 Constitution). The right of a person to his labor is deemed to be property within the meaning of the constitutional guaranty that no one shall be deprived of life, liberty, and property without due process of law. Therefore, he should be protected against any arbitrary and unjust deprivation of his job (Bondoc vs. People's Bank and Trust Co., Inc., 103 SCRA 599 [1981]). The employee should not be left without any remedy in case the employer unreasonably delays reinstatement. Therefore, we hold that the unjustified refusal of the employer to reinstate an illegally dismissed employee entitles the employee to payment of his salaries . . . . 21 The Court, however, deviated from this construction in the case of Maranaw. Reinterpreting the import of Article 223 in Maranaw, the Court 22 declared that the reinstatement aspect of the Labor Arbiter's decision needs a writ of execution as it is not self-executory, a declaration the Court recently reiterated and adopted in Archilles Manufacturing Corp. v. NLRC. 23 We note that prior to the enactment of R.A. No. 6715, Article 223 24 of the Labor Code contains no provision dealing with the reinstatement of an illegally dismissed employee. The amendment introduced by R.A. No. 6715 is an innovation and a far departure from the old law indicating thereby the legislature's unequivocal intent to insert a new rule that will govern the reinstatement aspect of a decision or resolution in any given labor dispute. In fact, the law as now worded employs the phrase "shall immediately be executory" without qualification emphasizing the need for prompt compliance. As a rule, "shall" in a statute commonly denotes an imperative obligation and is inconsistent with the idea of discretion 25 and that the presumption is that the word "shall", when used in a statute, is mandatory. 26 An appeal or posting of bond, by plain mandate of the law, could not even forestall nor stay the executory nature of an order of reinstatement. The law, moreover, is unambiguous and clear. Thus, it must be applied according to its plain and obvious meaning, according to its express terms. In Globe-Mackay Cable and Radio Corporation v. NLRC, 27 we held that: Under the principles of statutory construction, if a statute is clear, plain and free from ambiguity, it must be given its literal meaning and applied without attempted interpretation. This plain-meaning rule or verba legis derived from themaxim index animi sermo est (speech is the index of intention) rests on the valid presumption that the words employed by the legislature in a statute correctly express its intent or will and preclude the court from construing it differently. The legislature is presumed to know the meaning of the words, to have used words advisedly, and to have expressed its intent by the use of such words as are found in the statute. Verba legis non est recedendum, or from the words of a statute there should be no departure. 28 And in conformity with the executory nature of the reinstatement order, Rule V, Section 16 (3) of the New Rules of Procedure of the NLRC strictly requires the Labor Arbiter to direct the employer to immediately reinstate the dismissed employee. Thus: In case the decision includes an order of reinstatement, the Labor Arbiter shall direct the employer to immediately reinstate the dismissed or separated employee even pending appeal. The order of reinstatement shall indicate that the employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. In declaring that reinstatement order is not self-executory and needs a writ of execution, the Court, in Maranaw, adverted to the rule provided under Article 224. We said: It must be stressed, however, that although the reinstatement aspect of the decision is immediately executory, it does not follow that it is self-executory. There must be a writ of execution which may be issuedmotu proprio or on motion of an interested party. Article 224 of the Labor Code provides:

20 Art. 224. Execution of decision, orders or awards. (a) The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter, or med-arbitter or voluntary arbitrator may, motu proprio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory . . . (emphasis supplied) The second paragraph of Section 1, Rule VIII of the New Rules of Procedure of the NLRC also provides: The Labor Arbiter, POEA Administrator, or the Regional Director, or his duly authorized hearing officer of origin shall, motu proprio or on motion of any interested party, issue a writ of execution on a judgment only within five (5) years from the date it becomes final and executory . . . . No motion for execution shall be entertained nor a writ he issued unless the Labor Arbiter is in possession of the records of the case which shall include an entry of judgment. (emphasis supplied) xxx xxx xxx In the absence then of an order for the issuance of a writ of execution on the reinstatement aspect of the decision of the Labor Arbiter, the petitioner was under no legal obligation to admit back to work the private respondent under the terms and conditions prevailing prior to her dismissal or, at the petitioner's option, to merely reinstate her in the payroll. An option is a right of election to exercise a privilege, and the option in Article 223 of the Labor Code is exclusively granted to the employer. The event that gives rise for its exercise is not the reinstatement decree of a Labor Arbiter, but the writ for its execution commanding the employer to reinstate the employee, while the final act which compels the employer to exercise the option is the service upon it of the writ of execution when, instead of admitting the employee back to his work, the employer chooses to reinstate the employee in the payroll only. If the employer does not exercise this option, it must forthwith admit the employee back to work, otherwise it may be punished for contempt. 29 A closer examination, however, shows that the necessity for a writ of execution under Article 224 applies only to final and executory decisions which are not within the coverage of Article 223. For comparison, we quote the material portions of the subject articles: Art. 223. Appeal. . . . In any event, the decision of the Labor Arbiter reinstating a dismissed or separated employee, insofar as the reinstatement aspect is concerned, shall immediately be executory, even pending appeal. The employee shall either be admitted back to work under the same terms and conditions prevailing prior to his dismissal or separation or, at the option of the employer, merely reinstated in the payroll. The posting of a bond by the employer shall not stay the execution for reinstatement provided herein. xxx xxx xxx Art. 224. Execution of decisions, orders, or awards. (a) The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter, or med-arbiter or voluntary arbitrator may, motu propio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory, requiring a sheriff or a duly deputized officer to execute or enforce final decisions, orders or awards of the Secretary of Labor and Employment or regional director, the Commission, the Labor Arbiter or med-arbiter, or voluntary arbitrators. In any case, it shall be the duty of the responsible officer to separately furnish immediately the counsels of record and the parties with copies of said decisions, orders or awards. Failure to comply with the duty prescribed herein shall subject such responsible officer to appropriate administrative sanctions. Article 224 states that the need for a writ of execution applies only within five (5) years from the date a decision, an order or award becomes final and executory. It can not relate to an award or order of reinstatement still to be appealed or pending appeal which Article 223 contemplates. The provision of Article 223 is clear that an award for reinstatement shall be immediately executory even pending appeal and the posting of a bond by the employer shall not stay the execution for reinstatement. The legislative intent is quite obvious, i.e., to make an award of reinstatement immediately enforceable, even pending appeal. To require the application for and issuance of a writ of execution as prerequisites for the execution of a reinstatement award would certainly betray and run counter to the very object and intent of Article 223, i.e., the immediate execution of a reinstatement order. The reason is simple. An application for a writ of execution and its issuance could be delayed for numerous reasons.

21 A mere continuance or postponement of a scheduled hearing, for instance, or an inaction on the part of the Labor Arbiter or the NLRC could easily delay the issuance of the writ thereby setting at naught the strict mandate and noble purpose envisioned by Article 223. In other words, if the requirements of Article 224 were to govern, as we so declared in Maranaw, then the executory nature of a reinstatement order or award contemplated by Article 223 will be unduly circumscribed and rendered ineffectual. In enacting the law, the legislature is presumed to have ordained a valid and sensible law, one which operates no further than may be necessary to achieve its specific purpose. Statutes, as a rule, are to be construed in the light of the purpose to be achieved and the evil sought to be remedied. 30 And where the statute is fairly susceptible of two or more constructions, that construction should be adopted which will most tend to give effect to the manifest intent of the lawmaker and promote the object for which the statute was enacted, and a construction should be rejected which would tend to render abortive other provisions of the statute and to defeat the object which the legislator sought to attain by its enactment. 31 In introducing a new rule on the reinstatement aspect of a labor decision under R.A. No. 6715, Congress should not be considered to be indulging in mere semantic exercise. On appeal, however, the appellate tribunal concerned may enjoin or suspend the reinstatement order in the exercise of its sound discretion. Furthermore, the rule is that all doubts in the interpretation and implementation of labor laws should be resolved in favor of labor. 32 In ruling that an order or award for reinstatement does not require a writ of execution the Court is simply adhering and giving meaning to this rule. Henceforth, we rule that an award or order for reinstatement is selfexecutory. After receipt of the decision or resolution ordering the employee's reinstatement, the employer has the right to choose whether to re-admit the employee to work under the same terms and conditions prevailing prior to his dismissal or to reinstate the employee in the payroll. In either instance, the employer has to inform the employee of his choice. The notification is based on practical considerations for without notice, the employee has no way of knowing if he has to report for work or not. WHEREFORE, the petition is DENIED and the decision of the Labor Arbiter is hereby REINSTATED. Costs against petitioner. SO ORDERED. Narvasa, C.J., Regalado, Davide, Jr., Romero, Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Hermosisima, Jr., Panganiban and Torres, Jr., JJ., concur.

22 05. SECOND DIVISION G.R. No. 119268 February 23, 2000 are employees of private respondent, and, as such, their dismissal must be for just cause and after due process. It disposed of the case as follows: WHEREFORE, in view of all the foregoing considerations, the decision of the Labor Arbiter appealed from is hereby SET ASIDE and another one entered: 1. Declaring the respondent company guilty of illegal dismissal and accordingly it is directed to reinstate the complainants, namely, Alberto A. Gonzales, Joel T. Morato, Gavino Panahon, Demetrio L. Calagos, Sonny M. Lustado, Romeo Q. Clariza, Luis de los Angeles, Amado Centino, Angel Jardin, Rosendo Marcos, Urbano Marcos, Jr., and Joel Ordeniza, to their former positions without loss of seniority and other privileges appertaining thereto; to pay the complainants full backwages and other benefits, less earnings elsewhere, and to reimburse the drivers the amount paid as washing charges; and 2. Dismissing the charge of unfair [labor] practice for insufficiency of evidence. SO ORDERED.4 Private respondent's first motion for reconsideration was denied. Remaining hopeful, private respondent filed another motion for reconsideration. This time, public respondent, in its decision5 dated October 28, 1994, granted aforesaid second motion for reconsideration. It ruled that it lacks jurisdiction over the case as petitioners and private respondent have no employer-employee relationship. It held that the relationship of the parties is leasehold which is covered by the Civil Code rather than the Labor Code, and disposed of the case as follows: VIEWED IN THE LIGHT OF ALL THE FOREGOING, the Motion under reconsideration is hereby given due course. Accordingly, the Resolution of August 10, 1994, and the Decision of April 28, 1994 are hereby SET ASIDE. The Decision of the Labor Arbiter subject of the appeal is likewise SET ASIDE and a NEW ONE ENTERED dismissing the complaint for lack of jurisdiction. No costs. SO ORDERED.6

ANGEL JARDIN, DEMETRIO CALAGOS, URBANO MARCOS, ROSENDO MARCOS, LUIS DE LOS ANGELES, JOEL ORDENIZA and AMADO CENTENO, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) and GOODMAN TAXI (PHILJAMA INTERNATIONAL, INC.) respondents. QUISUMBING, J.: This special civil action for certiorari seeks to annul the decision1 of public respondent promulgated on October 28, 1994, in NLRC NCR CA No. 003883-92, and its resolution2 dated December 13, 1994 which denied petitioners motion for reconsideration. Petitioners were drivers of private respondent, Philjama International Inc., a domestic corporation engaged in the operation of "Goodman Taxi." Petitioners used to drive private respondent's taxicabs every other day on a 24-hour work schedule under the boundary system. Under this arrangement, the petitioners earned an average of P400.00 daily. Nevertheless, private respondent admittedly regularly deducts from petitioners, daily earnings the amount of P30.00 supposedly for the washing of the taxi units. Believing that the deduction is illegal, petitioners decided to form a labor union to protect their rights and interests. Upon learning about the plan of petitioners, private respondent refused to let petitioners drive their taxicabs when they reported for work on August 6, 1991, and on succeeding days. Petitioners suspected that they were singled out because they were the leaders and active members of the proposed union. Aggrieved, petitioners filed with the labor arbiter a complaint against private respondent for unfair labor practice, illegal dismissal and illegal deduction of washing fees. In a decision3 dated August 31, 1992, the labor arbiter dismissed said complaint for lack of merit. On appeal, the NLRC (public respondent herein), in a decision dated April 28, 1994, reversed and set aside the judgment of the labor arbiter. The labor tribunal declared that petitioners

23 Expectedly, petitioners sought reconsideration of the labor tribunal's latest decision which was denied. Hence, the instant petition. In this recourse, petitioners allege that public respondent acted without or in excess of jurisdiction, or with grave abuse of discretion in rendering the assailed decision, arguing that: I THE NLRC HAS NO JURISDICTION TO ENTERTAIN RESPONDENT'S SECOND MOTION FOR RECONSIDERATION WHICH IS ADMITTEDLY A PLEADING PROHIBITED UNDER THE NLRC RULES, AND TO GRANT THE SAME ON GROUNDS NOT EVEN INVOKED THEREIN. II THE EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN THE PARTIES IS ALREADY A SETTLED ISSUE CONSTITUTING RES JUDICATA, WHICH THE NLRC HAS NO MORE JURISDICTION TO REVERSE, ALTER OR MODIFY. III IN ANY CASE, EXISTING JURISPRUDENCE ON THE MATTER SUPPORTS THE VIEW THAT PETITIONERS-TAXI DRIVERS ARE EMPLOYEES OF RESPONDENT TAXI COMPANY.7 The petition is impressed with merit. The phrase "grave abuse of discretion amounting to lack or excess of jurisdiction" has settled meaning in the jurisprudence of procedure. It means such capricious and whimsical exercise of judgment by the tribunal exercising judicial or quasi-judicial power as to amount to lack of power.8 In labor cases, this Court has declared in several instances that disregarding rules it is bound to observe constitutes grave abuse of discretion on the part of labor tribunal. In Garcia vs. NLRC,9 private respondent therein, after receiving a copy of the labor arbiter's decision, wrote the labor arbiter who rendered the decision and expressed dismay over the judgment. Neither notice of appeal was filed nor cash or surety bond was posted by private respondent. Nevertheless, the labor tribunal took cognizance of the letter from private respondent and treated said letter as private respondent's appeal. In a certiorari action before this Court, we ruled that the labor tribunal acted with grave abuse of discretion in treating a mere letter from private respondent as private respondent's appeal in clear violation of the rules on appeal prescribed under Section 3(a), Rule VI of the New Rules of Procedure of NLRC. In Philippine Airlines Inc. vs. NLRC,10 we held that the labor arbiter committed grave abuse of discretion when he failed to resolve immediately by written order a motion to dismiss on the ground of lack of jurisdiction and the supplemental motion to dismiss as mandated by Section 15 of Rule V of the New Rules of Procedure of the NLRC. In Unicane Workers Union-CLUP vs. NLRC,11 we held that the NLRC gravely abused its discretion by allowing and deciding an appeal without an appeal bond having been filed as required under Article 223 of the Labor Code. In Maebo vs. NLRC,12 we declared that the labor arbiter gravely abused its discretion in disregarding the rule governing position papers. In this case, the parties have already filed their position papers and even agreed to consider the case submitted for decision, yet the labor arbiter still admitted a supplemental position paper and memorandum, and by taking into consideration, as basis for his decision, the alleged facts adduced therein and the documents attached thereto. In Gesulgon vs. NLRC,13 we held that public respondent gravely abused its discretion in treating the motion to set aside judgment and writ of execution as a petition for relief of judgment. In doing so, public respondent had, without sufficient basis, extended the reglementary period for filing petition for relief from judgment contrary to prevailing rule and case law. In this case before us, private respondent exhausted administrative remedy available to it by seeking reconsideration of public respondent's decision dated April 28, 1994, which public respondent denied. With this motion for reconsideration, the labor tribunal had ample opportunity to rectify errors or mistakes it may have committed before resort to courts of justice can be had.14 Thus, when private respondent filed a second motion for reconsideration, public respondent should have forthwith denied it in accordance with Rule

24 7, Section 14 of its New Rules of Procedure which allows only one motion for reconsideration from the same party, thus: Sec. 14. Motions for Reconsideration. Motions for reconsideration of any order, resolution or decision of the Commission shall not be entertained except when based on palpable or patent errors, provided that the motion is under oath and filed within ten (10) calendar days from receipt of the order, resolution or decision with proof of service that a copy of the same has been furnished within the reglementary period the adverse party and provided further, that only one such motion from the same party shall be entertained. [Emphasis supplied] The rationale for allowing only one motion for reconsideration from the same party is to assist the parties in obtaining an expeditious and inexpensive settlement of labor cases. For obvious reasons, delays cannot be countenanced in the resolution of labor disputes. The dispute may involve no less than the livelihood of an employee and that of his loved ones who are dependent upon him for food, shelter, clothing, medicine, and education. It may as well involve the survival of a business or an industry.15 As correctly pointed out by petitioner, the second motion for reconsideration filed by private respondent is indubitably a prohibited pleading16 which should have not been entertained at all. Public respondent cannot just disregard its own rules on the pretext of "satisfying the ends of justice",17 especially when its disposition of a legal controversy ran afoul with a clear and long standing jurisprudence in this jurisdiction as elucidated in the subsequent discussion. Clearly, disregarding a settled legal doctrine enunciated by this Court is not a way of rectifying an error or mistake. In our view, public respondent gravely abused its discretion in taking cognizance and granting private respondent's second motion for reconsideration as it wrecks the orderly procedure in seeking reliefs in labor cases. But, there is another compelling reason why we cannot leave untouched the flip-flopping decisions of the public respondent. As mentioned earlier, its October 28, 1994 judgment is not in accord with the applicable decisions of this Court. The labor tribunal reasoned out as follows: On the issue of whether or not employer-employee relationship exists, admitted is the fact that complainants are taxi drivers purely on the "boundary system". Under this system the driver takes out his unit and pays the owner/operator a fee commonly called "boundary" for the use of the unit. Now, in the determination the existence of employer-employee relationship, the Supreme Court in the case of Sara, et al., vs. Agarrado, et al. (G.R. No. 73199, 26 October 1988) has applied the following four-fold test: "(1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power of control the employees conduct." "Among the four (4) requisites", the Supreme Court stresses that "control is deemed the most important that the other requisites may even be disregarded". Under the control test, an employer-employee relationship exists if the "employer" has reserved the right to control the "employee" not only as to the result of the work done but also as to the means and methods by which the same is to be accomplished. Otherwise, no such relationship exists. (Ibid.) Applying the foregoing parameters to the case herein obtaining, it is clear that the respondent does not pay the drivers, the complainants herein, their wages. Instead, the drivers pay a certain fee for the use of the vehicle. On the matter of control, the drivers, once they are out plying their trade, are free to choose whatever manner they conduct their trade and are beyond the physical control of the owner/operator; they themselves determine the amount of revenue they would want to earn in a day's driving; and, more significantly aside from the fact that they pay for the gasoline they consume, they likewise shoulder the cost of repairs on damages sustained by the vehicles they are driving. Verily, all the foregoing attributes signify that the relationship of the parties is more of a leasehold or one that is covered by a charter agreement under the Civil Code rather than the Labor Code.18 The foregoing ratiocination goes against prevailing jurisprudence. In a number of cases decided by this Court,19 we ruled that the relationship between jeepney owners/operators on one hand and jeepney drivers on the other under the boundary system is that of employer-employee and not of lessor-lessee. We explained that in the lease of chattels, the lessor loses complete control over the chattel leased although the lessee cannot be reckless in the use thereof, otherwise he would be responsible for the damages to the lessor. In the case of jeepney owners/operators and jeepney drivers, the

25 former exercise supervision and control over the latter. The management of the business is in the owner's hands. The owner as holder of the certificate of public convenience must see to it that the driver follows the route prescribed by the franchising authority and the rules promulgated as regards its operation. Now, the fact that the drivers do not receive fixed wages but get only that in excess of the so-called "boundary" they pay to the owner/operator is not sufficient to withdraw the relationship between them from that of employer and employee. We have applied by analogy the abovestated doctrine to the relationships between bus owner/operator and bus conductor,20 auto-calesa owner/operator and driver,21 and recently between taxi owners/operators and taxi drivers.22 Hence, petitioners are undoubtedly employees of private respondent because as taxi drivers they perform activities which are usually necessary or desirable in the usual business or trade of their employer. As consistently held by this Court, 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. The requirement of notice and hearing is set-out in Article 277 (b) of the said Code. Hence, petitioners, being employees of private respondent, can be dismissed only for just and authorized cause, and after affording them notice and hearing prior to termination. In the instant case, private respondent had no valid cause to terminate the employment of petitioners. Neither were there two (2) written notices sent by private respondent informing each of the petitioners that they had been dismissed from work. These lack of valid cause and failure on the part of private respondent to comply with the twin-notice requirement underscored the illegality surrounding petitioners' dismissal. Under the law, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.23 It must be emphasized, though, that recent judicial pronouncements24 distinguish between employees illegally dismissed prior to the effectivity of Republic Act No. 6715 on March 21, 1989, and those whose illegal dismissals were effected after such date. Thus, employees illegally dismissed prior to March 21, 1989, are entitled to backwages up to three (3) years without deduction or qualification, while those illegally dismissed after that date are granted full backwages inclusive of allowances and other benefits or their monetary equivalent from the time their actual compensation was withheld from them up to the time of their actual reinstatement. The legislative policy behind Republic Act No. 6715 points to "full backwages" as meaning exactly that, i.e., without deducting from backwages the earnings derived elsewhere by the concerned employee during the period of his illegal dismissal. Considering that petitioners were terminated from work on August 1, 1991, they are entitled to full backwages on the basis of their last daily earnings. With regard to the amount deducted daily by private respondent from petitioners for washing of the taxi units, we view the same as not illegal in the context of the law. We note that after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play.25 Hence, the drivers are not entitled to reimbursement of washing charges.1wphi1.nt WHEREFORE, the instant petition is GRANTED. The assailed DECISION of public respondent dated October 28, 1994, is hereby SET ASIDE. The DECISION of public respondent dated April 28, 1994, and its RESOLUTION dated December 13, 1994, are hereby REINSTATED subject to MODIFICATION. Private respondent is directed to reinstate petitioners to their positions held at the time of the complained dismissal. Private respondent is likewise ordered to pay petitioners their full backwages, to be computed from the date of dismissal until their actual reinstatement. However, the order of public respondent that petitioners be reimbursed the amount paid as washing charges is deleted. Costs against private respondents. SO ORDERED. Bellosillo, Mendoza and De Leon, Jr., JJ., concur. Buena, on official leave.

26 06. SECOND DIVISION G.R. No. 159268 October 27, 2006 In the early part of 1994, the board members contemplated closing its Wawa Branch Office inasmuch as the desired number of the members and volume of transactions were not met with, rendering it more costly to maintain. On May 1, 1994, in their monthly meeting, Josefina informed (them) that she intends to take a leave of absence from May 9 to May 30, 1994. Her proposal was immediately approved by the board. In a Special Meeting on June 2, 1994, the board members resolved to close its Wawa branch. Meantime, after the lapse of her leave of absence on May 30, 1994, Josefina did not report for work anymore. Later on, she filed her resignation. Almost nine (9) months thereafter, on February 25, 1995, Josefina filed a complaint with the Provincial Office of the Department of Labor in Malolos, Bulacan for illegal dismissal, and non-payment of 13th month pay or Christmas Bonus. She pray(ed) that she be reinstated and paid backwages as well as moral damages. The case was referred to a Labor Arbiter. When the parties failed to settle their differences, they were required to submit their respective position papers. Trial ensued. On March 23, 1998, the Labor Arbiter rendered his decision, to wit: "WHEREFORE, premises considered, judgment is hereby entered in favor of complainant and against respondents, ordering the latter, jointly and severally as follows: 1. To pay the sum of P2,000.00 as 13th month pay of complainant for the years 1995 up to 1997; 2. To pay the additional sum of P188,000.00 as backwages of complainant from the date of her dismissal up to this writing; and, 3. To pay the additional sum of P28,000.00 as separation pay of complainant from 1991 up to this writing. All other issues or claims are hereby ordered dismissed for want of merit. SO ORDERED." (NLRC Decision, p. 6; Rollo, p. 26)

BALAGTAS MULTI-PURPOSE COOPERATIVE, INC., and AURELIO SANTIAGO, petitioners, vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION and JOSEFINA HIPOLITOHERRERO,respondents.

DECISION

AZCUNA, J.: This is a petition for review assailing the decision1 and resolution,2 dated September 27, 2002 and July 24, 2003, respectively, of the Court of Appeals (CA) in CA-G.R. SP No. 50431 entitled "Balagtas Multi-Purpose Cooperative, Inc. and Aurelio Santiago v. National Labor Relations Commission (NLRC) and Josefina Hipolito-Herrero," which dismissed the petition for certiorari filed by petitioners Balagtas Multi-Purpose Cooperative, Inc. and Aurelio Santiago. The facts are as follows:3 Balagtas Multi-Purpose Cooperative, Inc. (Balagtas, for brevity) is a duly organized and existing cooperative under the laws of the Philippines. Sometime in April 1991, Balagtas hired Josefina G. Hipolito-Herrero, (Josefina, for brevity) as part time manager in its office in Sulok, Panginay, Balagtas, Bulacan, where she was required to report on a monthly salary of P4,000.00 between 2:00 to 6:00 p.m., Monday to Friday. In September 1992, Balagtas created a branch office at Wawa, Balagtas, Bulacan. Josefina was required to report at the said Wawa branch from 8:00 to 12:00 noon before reporting to her office at Sulok from 2:00 to 6:00 p.m. For the additional work, Josefina received a proportionate increase in salary.

27 Aggrieved, Balagtas appealed the decision to the National Labor Relations Commission (NLRC) but failed to post either a cash or surety bond as required by Article 223 of the Labor Code. Instead, petitioners filed a manifestation and motion, stating, among others, that under Republic Act No. 6938, Article 62(7) of the Cooperative Code of the Philippines, petitioners are exempt from putting up a bond in an appeal from the decision of the inferior court. On July 20, 1998, the NLRC rendered the assailed order, to wit: "WHEREFORE, premises considered, respondents are hereby given ten (10) inextendible days from receipt of this Order within which to post a cash or surety bond in the amount of TWO HUNDRED EIGHTEEN THOUSAND PESOS (P218,000.00) PESOS, failure of which shall constitute a waiver and non-perfection of the appeal. In addition thereto, the employer as well as counsel shall submit a joint declaration under oath attesting that the surety bond posted is genuine and that it shall be in effect until final disposition of the case. SO ORDERED." (NLRC Order, p. 4; Rollo, p. 15) On September 28, 1998, the NLRC struck down petitioners' Motion for Reconsideration (Annex B, pp. 18-20, Rollo). Petitioners then filed a petition for certiorari with the CA, alleging that the NLRC acted with grave abuse of discretion amounting to excess or lack of jurisdiction in directing them to post an appeal bond despite the clear mandate of Article 62, paragraph (7)4 of Republic Act No. 6938 (Cooperative Code) which dispensed with such requirement. The CA initially dismissed the petition for failure of petitioners to attach copies of the certain relevant documents and records cited therein. However, when the matter was elevated to the Court, the CA was directed to admit the petition filed by petitioners. After the parties submitted their respective pleadings, the CA resolved to dismiss the petition in the assailed decision dated September 27, 2002 holding that the exemption from putting up a bond by a cooperative applies to cases decided by inferior courts only. The CA ratiocinated as follows: If the lawmakers' intention is for an "all embracing exemption in favor of all cooperatives, including but not limited to quasi-judicial bodies, Congress could simply have provided that all cooperatives are exempted from the requirement of posting appeal bonds in all its appeal(s) regardless of the nature of the suit or the forum where the action is filed. Ironically, this is not what appears in the cooperative law, and [it] instead delimits the exemption only to appeals from the decision of the inferior courts. That, a fortiori, is the manifest intention of the legislators. Withal, we are dealing with a matter of exemption from a usual requirement in taking an appeal. In the ordinary course of things, if there is a genuine intention to give cooperatives "a cover all" exemption from the appeal bond requirement, it must be clearly and unequivocally stated in the law. Exemptions cannot spring out of mere presumptions or deductions. 5 Their motion for reconsideration having been denied, petitioners filed the present petition. The issues are: Whether cooperatives are exempted from filing a cash or surety bond required to perfect an employer's appeal under Section 2236 of Presidential Decree No. 442 (the Labor Code); and, Whether a certification issued by the Cooperative Development Authority constitutes substantial compliance with the requirement for the posting of a bond. Petitioners argue that Article 62, paragraph (7) of the Cooperative Code exempts cooperatives from posting an appeal bond. Moreover, the CA should not have given a restrictive interpretation to "inferior courts" as encompassing only municipal, metropolitan and regional trial courts because the term appears in a special law. Rather, "inferior courts" should be interpreted to have a generic meaning which includes even quasi-judicial courts or bodies like the NLRC. Petitioners assert this would be more in accord with the intention of the legislators to grant more benefits and privileges to cooperatives under the Cooperative Code. Otherwise, the exemption granted under the law would have no meaning considering that appeal bonds are, in almost all instances, no longer required in perfecting an appeal from the decisions of municipal, metropolitan and regional trial courts.

28 In addition, petitioners contend that the posting of an appeal bond in labor cases has been dispensed with by the Court in a number of cases if to do so would best serve the interest of justice and due process. Such judicial liberality should, according to petitioners, be applied in the present case in light of the fact that there is a law, the Cooperative Code, which clearly exempts cooperatives from posting appeal bonds. The petition lacks merit. The provision cited by petitioners cannot be taken in isolation and must be interpreted in relation to the Cooperative Code in its entirety. It must be kept in mind that the enactment of the Cooperative Code is pursuant to the State's declared policy of fostering the "creation and growth of cooperatives as a practical vehicle for prompting self-reliance and harnessing people power towards the attainment of economic development and social justice." Towards this end, the government has been mandated to "ensure the provision of technical guidance, financial assistance and other services to enable said cooperatives to develop into viable and responsive economic enterprises and thereby bring about a strong cooperative movement that is free from any conditions that might infringe upon the autonomy or organizational integrity of cooperatives."7 In line with this, certain benefits and privileges were expressly granted to cooperative entities under the statute. The provision invoked by petitioners regarding the exemption from payment of an appeal bond is only one among a number of such privileges which appear under the article entitled "Tax and Other Exemptions" of the code, thus: Art. 62. Tax and Other Exemptions. Cooperatives transacting business with both members and nonmembers shall not be subject to tax on their transactions to members. Notwithstanding the provisions of any or regulation to the contrary, such cooperatives dealing with nonmembers shall enjoy the following tax exemptions: (1) Cooperatives with accumulated reserves and undivided net savings of not more than Ten million pesos (P10,000,000.00) shall be exempt from all national, city, provincial, municipal or barangay taxes of whatever name and nature. Such cooperatives shall be exempt from customs duties, advance sales or compensating taxes on their importation of machineries, equipment and spare parts used by them and which are not available locally as certified by the Department of Trade and Industry. All tax-free importations shall not be transferred to any person until after five (5) years, otherwise, the cooperative and the transferee or assignee shall be solidarily liable to pay twice the amount of the tax and/or duties thereon. (2) Cooperatives with accumulated reserves and undivided net savings of more than Ten million pesos (P10,000,000.00) shall pay the following taxes at the full rate: (a) Income Tax On the amount allocated for interest on capitals: Provided, That the same tax is not consequently imposed on interest individually received by members; (b) Sales Tax On sales to nonmembers: Provided, however, That all cooperatives, regardless of classification, are exempt from the payment of income and sale taxes for a period of ten (10) years. For cooperatives whose exemptions were removed by Executive Order No. 93, the ten-year period shall be reckoned from the effectivity date of said executive order. Cooperatives created after the approval of this Code shall be granted the same exemptions, the period of which shall be reckoned from the date of registration with the Authority: Provided, That at least twenty-five per centum (25%) of the net income of the cooperatives is returned to the members in the form of interest and/or patronage refunds; (c) All other taxes unless otherwise provided herein; and (d) Donations to charitable, research and educational institutions and reinvestment to socioeconomic projects within the area of operation of the cooperative may be tax deductible. (3) All cooperatives, regardless of the amount of accumulated reserves and undivided net savings shall be exempt from payment of local taxes and taxes on transactions with banks and insurance companies: Provided, That all sales or services rendered for nonmembers shall be subject to the applicable percentage taxes except sales made by producers, marketing or service cooperatives: Provided, further, That nothing in this article shall preclude the examination of the books of accounts or other accounting records of the cooperative by duly authorized internal revenue officers for internal revenue tax purposes only, after previous authorization by the Authority.

29 (4) Any judge in his capacity as notary public, ex-officio, shall render service, free of charge, to any person or group of persons requiring either the administration of oath or the acknowledgment of articles of cooperation of a cooperative applicant for registration and instruments of loan from cooperative not exceeding Fifty thousand pesos (P50,000.00). (5) Any register of deeds shall accept for registration, free of charge, any instrument relative to a loan made under this Code which does not exceed Fifty thousand pesos (P50,000.00) or the deeds of title of any property acquired by the cooperative or any paper or document drawn in connection with any action brought by the cooperative or with any court judgment rendered in its favor or any instrument relative to a bond of any accountable officer of a cooperative for the faithful performance of his duties and obligations. (6) Cooperatives shall be exempt from the payment of all court sheriff's fees payable to the Philippine Government for and in connection with all actions brought under this Code, or where such action is brought by the Cooperative Development Authority before the court, to enforce the payment of obligations contracted in favor of the cooperative. (7) All cooperatives shall be exempt from putting up a bond for bringing an appeal against the decision of an inferior court or for seeking to set aside any third party claim: Provided, That a certification of the Authority showing that the net assets of the cooperative are in excess of the amount of the bond required by the court in similar cases shall be accepted by the court as a sufficient bond. (8) Any security issued by cooperatives shall be exempt from the provisions of the Securities Act provided such security shall not be speculative. Considering that the above provision relates to "tax and other exemptions," the same must be strictly construed. This follows the well-settled principle that exceptions are to be strictly but reasonably construed; they extend only so far as their language warrants, and all doubts should be resolved in favor of the general provision rather than the exceptions.8 An express exception, exemption, or saving clause excludes other exceptions. Express exceptions constitute the only limitations on the operation of a statute and no other exception will be implied.9 The rule proceeds from the premise that the legislative body would not have made specific enumerations in a statute, if it had the intention not to restrict its meaning and confine its terms to those expressly mentioned. Consequently, where a general rule is established by a statute with exceptions, the Court will not curtail the former nor add to the latter by implication.10 Courts may not, in the guise of interpretation, enlarge the scope of a statute and include therein situations not provided nor intended by the lawmakers.11 Statutes which are plain and specific should be applied without attempted construction and interpretation. Thus, where a provision of law expressly limits its application to certain transactions, it cannot be extended to other transactions by interpretation.12 The term "court" has a settled meaning in this jurisdiction which cannot be reasonably interpreted as extending to quasi-judicial bodies like the NLRC unless otherwise clearly and expressly indicated in the wording of the statute. Simply because these tribunals or agencies exercise quasi-judicial functions does not convert them into courts of law. In any event, Article 119 of the Cooperative Code itself expressly embodies the legislative intention to extend the coverage of labor statutes to cooperatives, to wit: Art. 119. Compliance with Other Laws. (1) The Labor Code and all other labor laws shall apply to all cooperatives. For this reason, petitioners must comply with the requirement set forth in Article 223 of the Labor Code in order to perfect their appeal to the NLRC. It must be pointed out that the right to appeal is not a constitutional, natural or inherent right. It is a privilege of statutory origin and, therefore, available only if granted or provided by statute. The law may validly provide limitations or qualifications thereto or relief to the prevailing party in the event an appeal is interposed by the losing party. 13 In this case, the obvious and logical purpose of an appeal bond is to insure, during the period of appeal, against any occurrence that would defeat or diminish recovery by the employee under the judgment if the latter is subsequently affirmed.14 This is consistent with the State's constitutional mandate to afford full protection to labor in order to forcefully and meaningfully underscore labor as a primary social and economic force.15

30 Based on the foregoing, therefore, no error can be ascribed to the CA for holding that the phrase "inferior courts" appearing in Article 62 paragraph (7) of the Cooperative Code does not extend to "quasi-judicial agencies" and that, perforce, petitioners are not exempt from posting the appeal bond required under Article 223 of the Labor Code. WHEREFORE, the petition is DENIED and petitioners are given ten (10) days from the finality of this DECISIONwithin which to post the cash or surety bond required for their appeal. No costs. SO ORDERED. Puno, J., Chairperson, Sandoval-Gutierrez, Corona, and Azcuna, JJ., concur.