Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 191475 December 11, 2013

PHILIPPINE CARPET MANUFACTURING CORPORATION, PACIFIC CARPET MANUFACTURING

CORPORATION, MR. PATRICIO LIM and MR. DAVID LIM, Petitioners,
vs.
IGNACIO B. TAGYAMON,PABLITO L. LUNA, FE B. BADA YOS, GRACE B. MARCOS, ROGELIO C. NEMIS,
ROBERTO B. ILAO, ANICIA D. DELA CRUZ and CYNTHIA L. COMANDAO, Respondents.

DECISION

PERALTA, J.:

The Case

This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Court of
Appeals (CA)Decision1 dated July 7, 2009 and Resolution2 dated February 26, 2010 in CA-G.R. SP No. 105236. The
assailed decision granted the petition for certiorari filed by respondents Ignacio B. Tagyamon (Tagyamon), Pablito I.
Luna (Luna), Fe B. Badayos (Badayos), Grace B. Marcos (Marcos), Rogelio C. Nemis (Nemis), Roberto B. Ilao (Ilao),
Anicia D. Dela Cruz (Dela Cruz), and Cynthia L. Comandao (Comandao), the dispositive portion of which reads:

WHEREFORE, the petition is GRANTED. The private respondent is hereby ordered to reinstate the petitioners with
full backwages less the amounts they received as separation pays. In case reinstatement would no longer be feasible
because the positions previously held no longer exist, the private respondent shall pay them backwages plus, in lieu
of reinstatement, separation pays equal to one (1) month pay, or one-half (1/2) month pay for every year of service,
whichever is higher. In addition, the private respondent is hereby ordered to pay the petitioners moral damages in the
amount of P20,000.00 each.

SO ORDERED.3

The Facts

Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a corporation registered in the Philippines engaged
in the business of manufacturing wool and yarn carpets and rugs. 4 Respondents were its regular and permanent
employees, but were affected by petitioners retrenchment and voluntary retirement programs.

On March 15, 2004, Tagyamon,5 Luna,6 Badayos,7 Dela Cruz,8 and Comandao9 received a uniformly worded
Memorandum of dismissal, to wit:

This is to inform you that in view of a slump in the market demand for our products due to the un-competitiveness of
our price, the company is constrained to reduce the number of its workforce. The long-term effects of September 11
and the war in the Middle East have greatly affected the viability of our business and we are left with no recourse but
to reorganize and downsize our organizational structure.

We wish to inform you that we are implementing a retrenchment program in accordance with Article 283 of the Labor
Code of the Philippines, as amended, and its implementing rules and regulations.
In this connection, we regret to advise you that you are one of those affected by the said exercise, and your
employment shall be terminated effective at the close of working hours on April 15, 2004.

Accordingly, you shall be paid your separation pay as mandated by law. You will no longer be required to report for
work during the 30-day notice period in order to give you more time to look for alternative employment. However, you
will be paid the salary corresponding to the said period. We shall process your clearance and other documents and
you may claim the payables due you on March 31, 2004.

Thank you for your services and good luck to your future endeavors. 10

As to Marcos, Ilao, and Nemis, they claimed that they were dismissed effective March 31, 2004, together with fifteen
(15) other employees on the ground of lack of market/slump in demand. 11 PCMC, however, claimed that they availed
of the companys voluntary retirement program and, in fact, voluntarily executed their respective Deeds of Release,
Waiver, and Quitclaim.12

Claiming that they were aggrieved by PCMCs decision to terminate their employment, respondents filed separate
complaints for illegal dismissal against PCMC, Pacific Carpet Manufacturing Corporation, Mr. Patricio Lim and Mr.
David Lim. These cases were later consolidated. Respondents primarily relied on the Supreme Courts decision
inPhilippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas (Philcea case),13 as to the validity of the
companys retrenchment program. They further explained that PCMC did not, in fact, suffer losses shown by its acts
prior to and subsequent to their termination.14 They also insisted that their acceptance of separation pay and signing
of quitclaim is not a bar to the pursuit of illegal dismissal case.15

PCMC, for its part, defended its decision to terminate the services of respondents being a necessary management
prerogative. It pointed out that as an employer, it had no obligation to keep in its employ more workers than are
necessary for the operation of his business. Thus, there was an authorized cause for dismissal. Petitioners also
stressed that respondents belatedly filed their complaint as they allowed almost three years to pass making the
principle of laches applicable. Considering that respondents accepted their separation pay and voluntarily executed
deeds of release, waiver and quitclaim, PCMC invoked the principle of estoppel on the part of respondents to
question their separation from the service. Finally, as to Marcos, Ilao and Nemis, PCMC emphasized that they were
not dismissed from employment, but in fact they voluntarily retired from employment to take advantage of the
companys program.16

On August 23, 2007, Labor Arbiter (LA) Donato G. Quinto, Jr. rendered a Decision dismissing the complaint for lack
of merit.17 The LA found no flaw in respondents termination as they voluntarily opted to retire and were subsequently
re-employed on a contractual basis then regularized, terminated from employment and were paid separation
benefits.18 In view of respondents belated filing of the complaint, the LA concluded that such action is a mere
afterthought designed primarily for respondents to collect more money, taking advantage of the 2006 Supreme Court
decision.19

On appeal, the National Labor Relations Commission (NLRC) sustained the LA decision.20 In addition to the LA
ratiocination, the NLRC emphasized the application of the principle of laches for respondents inaction for an
unreasonable period.

Still undaunted, respondents elevated the matter to the CA in a petition for certiorari. In reversing the earlier decisions
of the LA and the NLRC, the CA refused to apply the principle of laches, because the case was instituted prior to the
expiration of the prescriptive period set by law which is four years. It stressed that said principle cannot be invoked
earlier than the expiration of the prescriptive period.21 Citing the Courts decision in the Philcea case, the CA applied
the doctrine of stare decisis, in view of the similar factual circumstances of the cases. As to Ilao, Nemis and Marcos,
while acknowledging their voluntary resignation, the CA found the same not a bar to the illegal dismissal case
because they did so on the mistaken belief that PCMC was losing money. 22 With the foregoing findings, the CA
ordered that respondents be reinstated with full backwages less the amounts they received as separation pay. In
case of impossibility of reinstatement, the CA ordered PCMC to pay respondents backwages and in lieu of
reinstatement, separation pay equal to one month pay or month pay for every year of service whichever is higher,
plus moral damages.23

The Issues

Aggrieved, petitioners come before the Court in this petition for review on certiorari based on this ground, to wit:

IN RENDERING ITS DISPUTED DECISION AND RESOLUTION, THE COURT A QUO HAS DECIDED A
QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND/OR ESTABLISHED JURISPRUDENCE.

a) Res Judicata should not be followed if to follow it is to perpetuate error (Philippine Trust Co., and Smith Bell & Co.
vs. Mitchell, 59 Phil. 30, 36 (1933). The (Supreme) Court is not precluded from rectifying errors of judgment if blind
and stubborn adherence to the doctrine of immutability of final judgments would involve the sacrifice of justice for
technicality (Heirs of Maura So vs. Obliosca, G.R. No. 147082, January 28, 2008, 542 SCRA 406)

b) Not all waivers and quitclaims are invalid as against public policy. Waivers that represent a voluntary and
reasonable settlement of the laborers claims are legitimate and should be respected by the Court as the law between
the parties (Gamogamo vs. PNOC Shipping and Transport Corp., G.R. No. 141707, May 2, 2002;Alcasero vs.
NLRC, 288 SCRA 129) Where the persons making the waiver has done so voluntarily, with a full understanding
thereof, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as
valid and binding undertaking (Periquet vs. NLRC, 186 SCRA 724 [1990]; Magsalin vs. Coca Cola Bottlers Phils., Inc.
vs. National Organization of Working Men (N.O.W.M.], G.R. No. 148492, May 2, 2003).24

Petitioners contend that the Philcea case decided by this Court and relied upon by the CA in the assailed decision
was based on erroneous factual findings, inapplicable financial statement, as well as erroneous analysis of such
financial statements.25 They, thus, implore the Court to revisit the cited case in order to dispense with substantial
justice.26 They explain that the Court made conclusions based on erroneous information. Petitioners also insist that
the doctrines of res judicata and law of the case are not applicable, considering that this case does not involve the
same parties as the Philcea case.27 They likewise point out that not all respondents were involuntarily separated on
the ground of redundancy as some of them voluntarily availed of the companys Voluntary Separation
Program.28 They further contend that respondents are guilty not only of laches but also of estoppel in view of their
inaction for an unreasonable length of time to assail the alleged illegal dismissal and in voluntarily executing a
release, quitclaim and waiver.29

The Courts Ruling

Laches

Laches has been defined as the failure or neglect for an unreasonable and unexplained length of time to do that
which by exercising due diligence, could or should have been done earlier, thus, giving rise to a presumption that the
party entitled to assert it either has abandoned or declined to assert it. 30 It has been repeatedly31 held by the Court
that:

x x x Laches is a doctrine in equity while prescription is based on law. Our courts are basically courts of law not
courts of equity. Thus, laches cannot be invoked to resist the enforcement of an existing legal right. x x x Courts
exercising equity jurisdiction are bound by rules of law and have no arbitrary discretion to disregard them. In Zabat Jr.
v. Court of Appeals x x x, this Court was more emphatic in upholding the rules of procedure. We said therein:

As for equity which has been aptly described as a "justice outside legality," this is applied only in the absence of, and
never against, statutory law or, as in this case, judicial rules of procedure. Aequetas nunguam contravenit legis. The
pertinent positive rules being present here, they should preempt and prevail over all abstract arguments based only
on equity.
Thus, where the claim was filed within the [four-year] statutory period, recovery therefore cannot be barred by laches.
Courts should never apply the doctrine of laches earlier than the expiration of time limited for the commencement of
actions at law."32

An action for reinstatement by reason of illegal dismissal is one based on an injury to the complainants rights which
should be brought within four years from the time of their dismissal pursuant to Article 1146 33 of the Civil Code.
Respondents complaint filed almost 3 years after their alleged illegal dismissal was still well within the prescriptive
period. Laches cannot, therefore, be invoked yet.34 To be sure, laches may be applied only upon the most convincing
evidence of deliberate inaction, for the rights of laborers are protected under the social justice provisions of the
Constitution and under the Civil Code.35

Stare Decisis

The main issue sought to be determined in this case is the validity of respondents dismissal from employment.
Petitioners contend that they either voluntarily retired from the service or terminated from employment based on an
authorized cause. The LA and the NLRC are one in saying that the dismissal was legal. The CA, however, no longer
discussed the validity of the ground of termination. Rather, it applied the Courts decision in the Philcea casewhere
the same ground was thoroughly discussed. In other words, the appellate court applied the doctrine of stare
decisis and reached the same conclusion as the earlier case.

Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state of
facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the same, even
though the parties may be different.36 Where the facts are essentially different, however, stare decisis does not apply,
for a perfectly sound principle as applied to one set of facts might be entirely inappropriate when a factual variant is
introduced.37

The question, therefore, is whether the factual circumstances of this present case are substantially the same as
the Philcea case.

We answer in the affirmative.

This case and the Philcea case involve the same period which is March to April 2004; the issuance of Memorandum
to employees informing them of the implementation of the cost reduction program; the implementation of the
voluntary retirement program and retrenchment program, except that this case involves different employees; the
execution of deeds of release, waiver, and quitclaim, and the acceptance of separation pay by the affected
employees.

The illegality of the basis of the implementation of both voluntary retirement and retrenchment programs of petitioners
had been thoroughly ruled upon by the Court in the Philcea case. It discussed the requisites of both retrenchment
and redundancy as authorized causes of termination and that petitioners failed to substantiate them. In ascertaining
the bases of the termination of employees, it took into consideration petitioners claim of business losses; the
purchase of machinery and equipment after the termination, the declaration of cash dividends to stockholders, the
hiring of 100 new employees after the retrenchment, and the authorization of full blast overtime work for six hours
daily. These, said the Court, are inconsistent with petitioners claim that there was a slump in the demand for its
products which compelled them to implement the termination programs. In arriving at its conclusions, the Court took
note of petitioners net sales, gross and net profits, as well as net income. The Court, thus, reached the conclusion
that the retrenchment effected by PCMC is invalid due to a substantive defect. We quote hereunder the Courts
pronouncement in the Philcea case, to wit:

Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites for a
valid retrenchment of its employees. We believe that respondents acted in bad faith in terminating the employment of
the members of petitioner Union.
Contrary to the claim of respondents that the Corporation was experiencing business losses, respondent Corporation,
in fact, amassed substantial earnings from 1999 to 2003. It found no need to appropriate its retained earnings except
on March 23, 2001, when it appropriated P60,000,000.00 to increase production capacity. x x x

xxxx

The evidence on record belies the P22,820,151.00 net income loss in 2004 as projected by the SOLE. On March 29,
2004, the Board of Directors approved the appropriation of P20,000,000.00 to purchase machinery to improve its
facilities, and declared cash dividends to stockholders at P30.00 per share. x x x

xxxx

It bears stressing that the appropriation of P20,000,000.00 by the respondent Corporation on September 16, 2004
was made barely five months after the 77 Union members were dismissed on the ground that respondent Corporation
was suffering from "chronic depression." Cash dividends were likewise declared on March 29, 2004, barely two
weeks after it implemented its "retrenchment program."

If respondent Corporation were to be believed that it had to retrench employees due to the debilitating slump in
demand for its products resulting in severe losses, how could it justify the purchase of P20,000,000.00 worth of
machinery and equipment? There is likewise no justification for the hiring of more than 100 new employees, more
than the number of those who were retrenched, as well as the order authorizing full blast overtime work for six hours
daily. All these are inconsistent with the intransigent claim that respondent Corporation was impelled to retrench its
employees precisely because of low demand for its products and other external causes.

xxxx

That respondents acted in bad faith in retrenching the 77 members of petitioner is buttressed by the fact that Diaz
issued his Memorandum announcing the cost-reduction program on March 9, 2004, after receipt of the February 10,
2004 letter of the Union president which included the proposal for additional benefits and wage increases to be
incorporated in the CBA for the ensuing year. Petitioner and its members had no inkling, before February 10, 2004,
that respondent Corporation would terminate their employment. Moreover, respondent Corporation failed to exhaust
all other means to avoid further losses without retrenching its employees, such as utilizing the latter's respective
forced vacation leaves. Respondents also failed to use fair and reasonable criteria in implementing the retrenchment
program, and instead chose to retrench 77 of the members of petitioner out of the dismissed 88 employees. Worse,
respondent Corporation hired new employees and even rehired the others who had been "retrenched."

As shown by the SGV & Co. Audit Report, as of year end December 31, 2003, respondent Corporation increased its
net sales by more than P8,000,000.00. Respondents failed to prove that there was a drastic or severe decrease in
the product sales or that it suffered severe business losses within an interval of three (3) months from January 2004
to March 9, 2004 when Diaz issued said Memorandum. Such claim of a depressed market as of March 9, 2004 was
only a pretext to retaliate against petitioner Union and thereby frustrate its demands for more monetary benefits and,
at the same time, justify the dismissal of the 77 Union members.

xxxx

In contrast, in this case, the retrenchment effected by respondent Corporation is invalid due to a substantive defect,
non-compliance with the substantial requirements to effect a valid retrenchment; it necessarily follows that the
termination of the employment of petitioner Union's members on such ground is, likewise, illegal. As such, they
(petitioner Union's members) are entitled to reinstatement with full backwages. 38

We find no reason to depart from the above conclusions which are based on the Courts examination of the evidence
presented by the parties therein. As the respondents here were similarly situated as the union members in
the Philcea case, and considering that the questioned dismissal from the service was based on the same grounds
under the same circumstances, there is no need to relitigate the issues presented herein. In short, we adopt the
Courts earlier findings that there was no valid ground to terminate the employees.

A closer look at petitioners arguments would show that they want the Court to re-examine our decision in
thePhilcea case allegedly on the ground that the conclusions therein were based on erroneous interpretation of the
evidence presented.

Indeed, in Abaria v. National Labor Relations Commission,39 although the Court was confronted with the same issue
of the legality of a strike that has already been determined in a previous case, the Court refused to apply the doctrine
of stare decisis insofar as the award of backwages was concerned because of the clear erroneous application of the
law. We held therein that the Court abandons or overrules precedents whenever it realizes that it erred in the prior
decision.40 The Courts pronouncement in that case is instructive:

The doctrine though is not cast in stone for upon a showing that circumstances attendant in a particular case override
the great benefits derived by our judicial system from the doctrine of stare decisis, the Court is justified in setting it
aside. For the Court, as the highest court of the land, may be guided but is not controlled by precedent. Thus, the
Court, especially with a new membership, is not obliged to follow blindly a particular decision that it determines, after
re-examination, to call for a rectification.41

The Abaria case, however, is not applicable in this case. There is no reason to abandon the Courts ruling in
1wphi 1

thePhilcea case.

Do we apply the aforesaid decision to all the respondents herein? Again, we answer in the affirmative.

Just like the union members in the Philcea case, respondents Tagyamon, Luna, Badayos, Dela Cruz, and Comandao
received similarly worded memorandum of dismissal effective April 15, 2004 based on the same ground of slump in
the market demand for the companys products. As such, they are similarly situated in all aspects as the union
members. With respect to respondents Marcos, Nemis and Ilao, although they applied for voluntary retirement, the
same was not accepted by petitioner. Instead, it issued notice of termination dated March 6, 2004 to these same
employees.42 And while it is true that petitioner paid them separation pay, the payment was in the nature of separation
and not retirement pay. In other words, payment was made because of the implementation of the retrenchment
program and not because of retirement.43 As their application for availing of the companys voluntary retirement
program was based on the wrong premise, the intent to retire was not clearly established, or rather that the retirement
is involuntary. Thus, they shall be considered discharged from employment. 44 Consequently, they shall be treated as if
they are in the same footing as the other respondents herein and the union members in the Philcea case.

Waivers, Releases and Quitclaims

"As a rule, deeds of release and quitclaim cannot bar employees from demanding benefits to which they are legally
entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not amount to
estoppel."45 To excuse respondents from complying with the terms of their waivers, they must locate their case within
any of three narrow grounds: (1) the employer used fraud or deceit in obtaining the waivers; (2) the consideration the
employer paid is incredible and unreasonable; or (3) the terms of the waiver are contrary to law, public order, public
policy, morals, or good customs or prejudicial to a third person with a right recognized by law. 46The instant case falls
under the first situation.

As the ground for termination of employment was illegal, the quitclaims are deemed illegal as the employees consent
had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and releases by employees
pressured into signing by unscrupulous employers minded to evade legal responsibilities. 47 The circumstances show
that petitioners misrepresentation led its employees, specifically respondents herein, to believe that the company
was suffering losses which necessitated the implementation of the voluntary retirement and retrenchment programs,
and eventually the execution of the deeds of release, waiver and quitclaim. 48

It can safely be concluded that economic necessity constrained respondents to accept petitioners monetary offer and
sign the deeds of release, waiver and quitclaim. That respondents are supervisors and not rank-and-file employees
does not make them less susceptible to financial offers, faced as they were with the prospect of unemployment. The
Court has allowed supervisory employees to seek payment of benefits and a manager to sue for illegal dismissal
even though, for a consideration, they executed deeds of quitclaims releasing their employers from liability. 49

x x x There is no nexus between intelligence, or even the position which the employee held in the company when it
concerns the pressure which the employer may exert upon the free will of the employee who is asked to sign a
release and quitclaim. A lowly employee or a sales manager, as in the present case, who is confronted with the same
dilemma of whether [to sign] a release and quitclaim and accept what the company offers them, or [to refuse] to sign
and walk out without receiving anything, may do succumb to the same pressure, being very well aware that it is going
to take quite a while before he can recover whatever he is entitled to, because it is only after a protracted legal battle
starting from the labor arbiter level, all the way to this Court, can he receive anything at all. The Court understands
that such a risk of not receiving anything whatsoever, coupled with the probability of not immediately getting any
gainful employment or means of livelihood in the meantime, constitutes enough pressure upon anyone who is asked
to sign a release and quitclaim in exchange of some amount of money which may be way below what he may be
entitled to based on company practice and policy or by law. 50

The amounts already received by respondents as consideration for signing the releases and quitclaims should be
deducted from their respective monetary awards.51

WHEREFORE, premises considered, the petition is hereby DENIED. The Court of Appeals Decision dated July 7,
2009 and Resolution dated February 26, 2010 in CA-G.R. SP No. 105236 are AFFIRMED.

SO ORDERED.
 G.R. No. 208986, January 13, 2016

HIJO RESOURCES CORPORATION, Petitioner, v. EPIFANIO P. MEJARES, REMEGIO C. BALURAN, JR.,

DANTE SAYCON, AND CECILIO CUCHARO, REPRESENTED BY NAMABDJERA-HRC,Respondents.

DECISION

CARPIO, J.:

The Case

This petition for review1 assails the 29 August 2012 Decision2 and the 13 August 2013 Resolution3 of the Court of
Appeals in CA-G.R. SP No. 04058-MIN. The Court of Appeals reversed and set aside the Resolutions dated 29 June
2009 and 16 December 2009 of the National Labor Relations Commission (NLRC) in NLRC No. MIC-03-000229-08
(RAB XI-09-00774-2007), and remanded the case to the Regional Arbitration Branch, Region XI, Davao City for
further proceedings.

The Facts

Respondents Epifanio P. Mejares, Remegio C. Baluran, Jr., Dante Saycon, and Cecilio Cucharo (respondents) were
among the complainants, represented by their labor union named "Nagkahiusang Mamumuo ng Bit, Djevon, at
Raquilla Farms sa Hijo Resources Corporation" (NAMABDJERA-HRC), who filed with the NLRC an illegal dismissal
case against petitioner Hijo Resources Corporation (HRC).

Complainants (which include the respondents herein) alleged that petitioner HRC, formerly known as Hijo
Plantation Incorporated (HPI), is the owner of agricultural lands in Madum, Tagum, Davao del Norte, which were
planted primarily with Cavendish bananas. In 2000, HPI was renamed as HRC. In December 2003, HRC's
application for the conversion of its agricultural lands into agri-industrial use was approved. The machineries and
equipment formerly used by HPI continued to be utilized by HRC.

Complainants claimed that they were employed by HPI as farm workers in HPI's plantations occupying various
positions as area harvesters, packing house workers, loaders, or labelers. In 2001, complainants were absorbed by
HRC, but they were working under the contractor-growers: Buenaventura Tano (Bit Farm); Djerame Pausa (Djevon
Farm); and Ramon Q. Laurente (Raquilla Farm). Complainants asserted that these contractor-growers received
compensation from HRC and were under the control of HRC. They further alleged that the contractor-growers did
not have their own capitalization, farm machineries, and equipment.

On 1 July 2007, complainants formed their union NAMABDJERA-HRC, which was later registered with the
Department of Labor and Employment (DOLE). On 24 August 2007, NAMABDJERA-HRC filed a petition for
certification election before the DOLE.

When HRC learned that complainants formed a union, the three contractor-growers filed with the DOLE a notice of
cessation of business operations. In September 2007, complainants were terminated from their employment on the
ground of cessation of business operations by the contractor-growers of HRC. On 19 September 2007,
complainants, represented by NAMABDJERA-HRC, filed a case for unfair labor practices, illegal dismissal, and illegal
deductions with prayer for moral and exemplary damages and attorney's fees before the NLRC.

On 19 November 2007, DOLE Med-Arbiter Lito A. Jasa issued an Order,4 dismissing NAMABDJERA-HRC's petition for
certification election on the ground that there was no employer-employee relationship between complainants
(members of NAMABDJERA-HRC) and HRC. Complainants did not appeal the Order of Med-Arbiter Jasa but pursued
the illegal dismissal case they filed.

On 4 January 2008, HRC filed a motion to inhibit Labor Arbiter Maria Christina S. Sagmit and moved to dismiss the
complaint for illegal dismissal. The motion to dismiss was anchored on the following arguments: (1) Lack of
jurisdiction under the principle of res judicata; and (2) The Order of the Med-Arbiter finding that complainants were
not employees of HRC, which complainants did not appeal, had become final and executory.
 The Labor Arbiter's Ruling

On 5 February 2008, Labor Arbiter Sagmit denied the motion to inhibit. Labor Arbiter Sagmit likewise denied the
motion to dismiss in an Order dated 12 February 2008. Labor Arbiter Sagmit held that res judicata does not apply.
Citing the cases of Manila Golf & Country Club, Inc. v. IAC5 and Sandoval Shipyards, Inc. v. Pepito,6 the Labor
Arbiter ruled that the decision of the Med-Arbiter in a certification election case, by the nature of that proceedings,
does not foreclose further dispute between the parties as to the existence or non-existence of employer-employee
relationship between them. Thus, the finding of Med-Arbiter Jasa that no employment relationship exists between
HRC and complainants does not bar the Labor Arbiter from making his own independent finding on the same issue.
The non-litigious nature of the proceedings before the Med-Arbiter does not prevent the Labor Arbiter from hearing
and deciding the case. Thus, Labor Arbiter Sagmit denied the motion to dismiss and ordered the parties to file their
position papers.

HRC filed with the NLRC a petition for certiorari with a prayer for temporary restraining order, seeking to nullify the
5 February 2008 and 12 February 2008 Orders of Labor Arbiter Sagmit.

The Ruling of the NLRC

The NLRC granted the petition, holding that Labor Arbiter Sagmit gravely abused her discretion in denying HRC's
motion to dismiss. The NLRC held that the Med-Arbiter Order dated 19 November 2007 dismissing the certification
election case on the ground of lack of employer-employee relationship between HRC and complainants (members
of NAMABDJERA-HRC) constitutes res judicata under the concept of conclusiveness of judgment, and thus,
warrants the dismissal of the case. The NLRC ruled that the Med-Arbiter exercises quasi-judicial power and the
Med-Arbiter's decisions and orders have, upon their finality, the force and effect of a final judgment within the
purview of the doctrine of res judicata.

On the issue of inhibition, the NLRC found it moot and academic in view of Labor Arbiter Sagmit's voluntary
inhibition from the case as per Order dated 11 March 2009.

The Ruling of the Court of Appeals

The Court of Appeals found the ruling in the Sandoval case more applicable in this case. The Court of Appeals
noted that the Sandoval case, which also involved a petition for certification election and an illegal dismissal case
filed by the union members against the alleged employer, is on all fours with this case. The issue in Sandoval on
the effect of the Med-Arbiter's findings as to the existence of employer-employee relationship is the very same
issue raised in this case. On the other hand, the case of Chris Garments Corp. v. Hon. Sto. Tomas7 cited by the
NLRC, which involved three petitions for certification election filed by the same union, is of a different factual
milieu.

The Court of Appeals held that the certification proceedings before the Med-Arbiter are non-adversarial and merely
investigative. On the other hand, under Article 217 of the Labor Code, the Labor Arbiter has original and exclusive
jurisdiction over illegal dismissal cases. Although the proceedings before the Labor Arbiter are also described as
non-litigious, the Court of Appeals noted that the Labor Arbiter is given wide latitude in ascertaining the existence
of employment relationship. Thus, unlike the Med-Artbiter, the Labor Arbiter may conduct clarificatory hearings and
even avail of ocular inspection to ascertain facts speedily.

Hence, the Court of Appeals concluded that the decision in a certification election case does not foreclose further
dispute as to the existence or non-existence of an employer-employee relationship between HRC and the
complainants.

On 29 August 2012, the Court of Appeals promulgated its Decision, the dispositive portion of which reads: chanRoblesvirtualLawlibrary

WHEREFORE, the petition is hereby GRANTED and the assailed Resolutions dated June 29, 2009 and December 16,
2009 of the National Labor Relations Commission are hereby REVERSED AND SET ASIDE. Let NLRC CASE No. RAB-
XI-09-00774-0707 be remanded to the Regional Arbitration Branch, Region XI, Davao City for further proceedings.

SO ORDERED.8 ChanRoblesVirtualawlibrary

cralawlawlibrary
 The Issue

Whether the Court of Appeals erred in setting aside the NLRC ruling and remanding the case to the Labor Arbiter
for further proceedings.

The Ruling of the Court

We find the petition without merit.

There is no question that the Med-Arbiter has the authority to determine the existence of an employer-employee
relationship between the parties in a petition for certification election. As held inM. Y. San Biscuits, Inc. v. Acting
Sec. Laguesma:9 chanroblesvirtuallawlibrary

Under Article 226 of the Labor Code, as amended, the Bureau of Labor Relations (BLR), of which the med-arbiter is
an officer, has the following jurisdiction -
"ART. 226. Bureau of Labor Relations. - The Bureau of Labor Relations and the Labor Relations Divisionfs] in the
regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative
or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or
problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-
agricultural, except those arising from the implementation or interpretation of collective bargaining agreements
which shall be the subject of grievance procedure and/or voluntary arbitration.

The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by agreement
of the parties." (Italics supplied)
From the foregoing, the BLR has the original and exclusive jurisdiction to inter alia,decide all disputes, grievances
or problems arising from or affecting labor-management relations in all workplaces whether agricultural or non-
agricultural. Necessarily, in the exercise of this jurisdiction over labor-management relations, the med-arbiter has
the authority, original and exclusive, to determine the existence of an employer-employee relationship between the
parties.

Apropos to the present case, once there is a determination as to the existence of such a relationship, the med-
arbiter can then decide the certification election case. As the authority to determine the employer-employee
relationship is necessary and indispensable in the exercise of jurisdiction by the med-arbiter, his finding thereon
may only be reviewed and reversed by the Secretary of Labor who exercises appellate jurisdiction under Article 259
of the Labor Code, as amended, which provides -
"ART. 259. Appeal from certification election orders. - Any party to an election may appeal the order or results of
the election as determined by the Med-Arbiter directly to the Secretary of Labor and Employment on the ground
that the rules and regulations or parts thereof established by the Secretary of Labor and Employment for the
conduct of the election have been violated. Such appeal shall be decided within fifteen (15) calendar days."10
cralawlawlibrary

In this case, the Med-Arbiter issued an Order dated 19 November 2007, dismissing the certification election case
because of lack of employer-employee relationship between HRC and the members of the respondent union. The
order dismissing the petition was issued after the members of the respondent union were terminated from their
employment in September 2007, which led to the filing of the illegal dismissal case before the NLRC on 19
September 2007. Considering their termination from work, it would have been futile for the members of the
respondent union to appeal the Med-Arbiter' s order in the certification election case to the DOLE Secretary.
Instead, they pursued the illegal dismissal case filed before the NLRC.

The Court is tasked to resolve the issue of whether the Labor Arbiter, in the illegal dismissal case, is bound by the
ruling of the Med-Arbiter regarding the existence or non-existence of employer-employee relationship between the
parties in the certification election case.

The Court rules in the negative. As found by the Court of Appeals, the facts in this case are very similar to those in
the Sandoval case, which also involved the issue of whether the ruling in a certification election case on the
existence or non-existence of an employer-employee relationship operates as res judicata in the illegal dismissal
case filed before the NLRC. In Sandoval, the DOLE Undersecretary reversed the finding of the Med-Arbiter in a
certification election case and ruled that there was no employer-employee relationship between the members of
the petitioner union and Sandoval Shipyards, Inc. (SSI), since the former were employees of the subcontractors.
Subsequently, several illegal dismissal cases were filed by some members of the petitioner union against SSI. Both
the Labor Arbiter and the NLRC ruled that there was no employer-employee relationship between the parties, citing
the resolution of the DOLE Undersecretary in the certification election case. The Court of Appeals reversed the
NLRC ruling and held that the members of the petitioner union were employees of SSI. On appeal, this Court
affirmed the appellate court's decision and ruled that the Labor Arbiter and the NLRC erred in relying on the
pronouncement of the DOLE Undersecretary that there was no employer-employee relationship between the
parties. The Court cited the ruling in the Manila Golf11 case that the decision in a certification election case, by the
very nature of that proceeding, does not foreclose all further dispute between the parties as to the existence or
non-existence of an employer-employee relationship between them.

This case is different from the Chris Garments case cited by the NLRC where the Court held that the matter of
employer-employee relationship has been resolved with finality by the DOLE Secretary, whose factual findings were
not appealed by the losing party. As mentioned earlier, the Med-Arbiter's order in this case dismissing the
petition for certification election on the basis of non-existence of employer-employee relationship was
issued after the members of the respondent union were dismissed from their employment. The purpose
of a petition for certification election is to determine which organization will represent the employees in their
collective bargaining with the employer.12The respondent union, without its member-employees, was thus
stripped of its personality to challenge the Med-Arbiter's decision in the certification election case.
Thus, the members of the respondent union were left with no option but to pursue their illegal
dismissal case filed before the Labor Arbiter. To dismiss the illegal dismissal case filed before the Labor
Arbiter on the basis of the pronouncement of the Med-Arbiter in the certification election case that there was no
employer-employee relationship between the parties, which the respondent union could not even appeal to the
DOLE Secretary because of the dismissal of its members, would be tantamount to denying due process to the
complainants in the illegal dismissal case. This, we cannot allow.

WHEREFORE, we DENY the petition. We AFFIRM the 29 August 2012 Decision and the 13 August 2013
Resolution of the Court of Appeals in CA-G.R. SP No. 04058-MIN.

SO ORDERED
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 167050 June 1, 2011

SOCIAL SECURITY COMMISSION, Petitioner,

vs.
RIZAL POULTRY and LIVESTOCK ASSOCIATION, INC., BSD AGRO INDUSTRIAL DEVELOPMENT
CORPORATION and BENJAMIN SAN DIEGO, Respondents.

DECISION

PEREZ, J.:

This petition for certiorari challenges the Decision 1 dated 20 September 2004 and Resolution2 dated 9 February 2005
of the Court of Appeals. The instant case stemmed from a petition filed by Alberto Angeles (Angeles) before the
Social Security Commission (SSC) to compel respondents Rizal Poultry and Livestock Association, Inc. (Rizal
Poultry) or BSD Agro Industrial Development Corporation (BSD Agro) to remit to the Social Security System (SSS) all
contributions due for and in his behalf. Respondents countered with a Motion to Dismiss3 citing rulings of the National
Labor Relations Commission (NLRC) and Court of Appeals regarding the absence of employer-employee relationship
between Angeles and the respondents.

As a brief backgrounder, Angeles had earlier filed a complaint for illegal dismissal against BSD Agro and/or its owner,
Benjamin San Diego (San Diego). The Labor Arbiter initially found that Angeles was an employee and that he was
illegally dismissed. On appeal, however, the NLRC reversed the Labor Arbiters Decision and held that no employer-
employee relationship existed between Angeles and respondents. The ruling was anchored on the finding that the
duties performed by Angeles, such as carpentry, plumbing, painting and electrical works, were not independent and
integral steps in the essential operations of the company, which is engaged in the poultry business. 4 Angeles
elevated the case to the Court of Appeals via petition for certiorari. The appellate court affirmed the NLRC ruling and
upheld the absence of employer-employee relationship.5 Angeles moved for reconsideration but it was denied by the
Court of Appeals.6 No further appeal was undertaken, hence, an entry of judgment was made on 26 May 2001. 7

At any rate, the SSC did not take into consideration the decision of the NLRC. It denied respondents motion to
dismiss in an Order dated 19 February 2002. The SSC ratiocinated, thus:

Decisions of the NLRC and other tribunals on the issue of existence of employer-employee relationship between
parties are not binding on the Commission. At most, such finding has only a persuasive effect and does not constitute
res judicata as a ground for dismissal of an action pending before Us. While it is true that the parties before the NLRC
and in this case are the same, the issues and subject matter are entirely different. The labor case is for illegal
dismissal with demand for backwages and other monetary claims, while the present action is for remittance of unpaid
SS[S] contributions. In other words, although in both suits the respondents invoke lack of employer-employee
relationship, the same does not proceed from identical causes of action as one is for violation of the Labor Code
while the instant case is for violation of the SS[S] Law.

Moreover, the respondents arguments raising the absence of employer-employee relationship as a defense already
traverse the very issues of the case at bar, i.e., the petitioners fact of employment and entitlement to SS[S] coverage.
Generally, factual matters should not weigh in resolving a motion to dismiss when it is based on the ground of failure
to state a cause of action, but rather, merely the sufficiency or insufficienciy of the allegations in the complaint. x x x.
In this respect, it must be observed that the petitioner very categorically set forth in his Petition, that he was employed
by the respondent(s) from 1985 to 1997.8

A subsequent motion for reconsideration filed by respondents was likewise denied on 11 June 2002. The SSC
reiterated that the principle of res judicata does not apply in this case because of the "absence of the indispensable
element of identity of cause of action."9

Unfazed, respondents sought recourse before the Court of Appeals by way of a petition for certiorari. The Court of
Appeals reversed the rulings of the SSC and held that there is a common issue between the cases before the SSC
and in the NLRC; and it is whether there existed an employer-employee relationship between Angeles and
respondents. Thus, the case falls squarely under the principle of res judicata, particularly under the rule on
conclusiveness of judgment, as enunciated in Smith Bell and Co. v. Court of Appeals. 10

The Court of Appeals disposed, thus:

WHEREFORE, the petition is GRANTED. The Order dated February 19, 2000 and the Resolution dated June 11,
2002 rendered by public respondent Social Security Commissoin in SSC Case No. 9-15225-01 are hereby
REVERSED and SET ASIDE and the respondent commission is ordered to DISMISS Social Security Commission
Case No. 9-15225-01.11

After the denial of their motion for reconsideration in a Resolution 12 dated 9 February 2005, petitioner filed the instant
petition.

For our consideration are the issues raised by petitioner, to wit:

WHETHER OR NOT THE DECISION OF THE NLRC AND THE COURT OF APPEALS, FINDING NO
EMPLOYER-EMPLOYEE RELATIONSHIP, CONSTITUTES RES JUDICATA AS A RULE ON
CONCLUSIVENESS OF JUDGMENT AS TO PRECLUDE THE RELITIGATION OF THE ISSUE OF
EMPLOYER-EMPLOYEE RELATIONSHIP IN A SUBSEQUENT CASE FILED BEFORE THE PETITIONER.

WHETHER OR NOT RESPONDENT COURT OF APPEALS MAY ORDER OUTRIGHT THE DISMISSAL
OF THE SSC CASE IN THE CERTIORARI PROCEEDINGS BEFORE IT.13

SSC maintains that the prior judgment rendered by the NLRC and Court of Appeals, that no employer-employee
relationship existed between the parties, does not have the force of res judicata by prior judgment or as a rule on the
conclusiveness of judgment. It contends that the labor dispute and the SSC claim do not proceed from the same
cause of action in that the action before SSC is for non-remittance of SSS contributions while the NLRC case was for
illegal dismissal. The element of identity of parties is likewise unavailing in this case, according to SSC. Aside from
SSS intervening, another employer, Rizal Poultry, was added as respondent in the case lodged before the SSC.
There is no showing that BSD Agro and Rizal Poultry refer to the same juridical entity. Thus, the finding of absence of
employer-employee relationship between BSD Agro and Angeles could not automatically extend to Rizal Poultry.
Consequently, SSC assails the order of dismissal of the case lodged before it.

SSC also claims that the evidence submitted in the SSC case is different from that adduced in the NLRC case.
Rather than ordering the dismissal of the SSC case, the Court of Appeals should have allowed SSC to resolve the
case on its merits by applying the Social Security Act of 1997.

Respondents assert that the findings of the NLRC are conclusive upon the SSC under the principle of res judicata
and in line with the ruling in Smith Bell v. Court of Appeals. Respondents argue that there is substantially an identity
of parties in the NLRC and SSC cases because Angeles himself, in his Petition, treated Rizal Poultry, BSD Agro and
San Diego as one and the same entity.
Respondents oppose the view proffered by SSC that the evidence to prove the existence of employer-employee
relationship obtaining before the NLRC and SSS are entirely different. Respondents opine that the definition of an
employee always proceeds from the existence of an employer-employee relationship.

In essence, the main issue to be resolved is whether res judicata applies so as to preclude the SSC from resolving
anew the existence of employer-employee relationship, which issue was previously determined in the NLRC case.

Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47(b) of the Rules
of Civil Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c).14

There is "bar by prior judgment" when, as between the first case where the judgment was rendered and the second
case that is sought to be barred, there is identity of parties, subject matter, and causes of action. In this instance, the
judgment in the first case constitutes an absolute bar to the second action. 15

But where there is identity of parties in the first and second cases, but no identity of causes of action, the first
judgment is conclusive only as to those matters actually and directly controverted and determined and not as to
matters merely involved therein. This is the concept of res judicata known as "conclusiveness of judgment." Stated
differently, any right, fact or matter in issue directly adjudicated or necessarily involved in the determination of an
action before a competent court in which judgment is rendered on the merits is conclusively settled by the judgment
therein and cannot again be litigated between the parties and their privies, whether or not the claim, demand,
purpose, or subject matter of the two actions is the same.16 1avvphi1

Thus, if a particular point or question is in issue in the second action, and the judgment will depend on the
determination of that particular point or question, a former judgment between the same parties or their privies will be
final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit. Identity
of cause of action is not required but merely identity of issue.17

The elements of res judicata are: (1) the judgment sought to bar the new action must be final; (2) the decision must
have been rendered by a court having jurisdiction over the subject matter and the parties; (3) the disposition of the
case must be a judgment on the merits; and (4) there must be as between the first and second action, identity of
parties, subject matter, and causes of action. Should identity of parties, subject matter, and causes of action be
shown in the two cases, then res judicata in its aspect as a "bar by prior judgment" would apply. If as between the two
cases, only identity of parties can be shown, but not identical causes of action, then res judicata as "conclusiveness
of judgment" applies.18

Verily, the principle of res judicata in the mode of "conclusiveness of judgment" applies in this case. The first element
is present in this case. The NLRC ruling was affirmed by the Court of Appeals. It was a judicial affirmation through a
decision duly promulgated and rendered final and executory when no appeal was undertaken within the reglementary
period. The jurisdiction of the NLRC, which is a quasi-judicial body, was undisputed. Neither can the jurisdiction of the
Court of Appeals over the NLRC decision be the subject of a dispute. The NLRC case was clearly decided on its
merits; likewise on the merits was the affirmance of the NLRC by the Court of Appeals.

With respect to the fourth element of identity of parties, we hold that there is substantial compliance.

The parties in SSC and NLRC cases are not strictly identical. Rizal Poultry was impleaded as additional respondent
in the SSC case. Jurisprudence however does not dictate absolute identity but only substantial identity. 19 There is
substantial identity of parties when there is a community of interest between a party in the first case and a party in the
second case, even if the latter was not impleaded in the first case. 20

BSD Agro, Rizal Poultry and San Diego were litigating under one and the same entity both before the NLRC and the
SSC. Although Rizal Poultry is not a party in the NLRC case, there are numerous indications that all the while, Rizal
Poultry was also an employer of Angeles together with BSD Agro and San Diego. Angeles admitted before the NLRC
that he was employed by BSD Agro and San Diego from 1985 until 1997. 21 He made a similar claim in his Petition
before the SSC including as employer Rizal Poultry as respondent. 22 Angeles presented as evidence before the SSC
his Identification Card and a Job Order to prove his employment in Rizal Poultry. He clarified in his Opposition to the
Motion to Dismiss23 filed before SSC that he failed to adduce these as evidence before the NLRC even if it would
have proven his employment with BSD Agro. Most significantly, the three respondents, BSD Agro, Rizal Poultry and
San Diego, litigated as one entity before the SSC. They were represented by one counsel and they submitted their
pleadings as such one entity. Certainly, and at the very least, a community of interest exists among them. We
therefore rule that there is substantial if not actual identity of parties both in the NLRC and SSC cases.

As previously stated, an identity in the cause of action need not obtain in order to apply res judicata by
"conclusiveness of judgment." An identity of issues would suffice.

The remittance of SSS contributions is mandated by Section 22(a) of the Social Security Act of 1997, viz:

SEC. 22. Remittance of Contributions. - (a) The contributions imposed in the preceding Section shall be remitted to
the SSS within the first ten (10) days of each calendar month following the month for which they are applicable or
within such time as the Commission may prescribe. Every employer required to deduct and to remit such
contributions shall be liable for their payment and if any contribution is not paid to the SSS as herein prescribed, he
shall pay besides the contribution a penalty thereon of three percent (3%) per month from the date the contribution
falls due until paid. x x x.

The mandatory coverage under the Social Security Act is premised on the existence of an employer-employee
relationship.24 This is evident from Section 9(a) which provides:

SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon all employees not over sixty (60) years of
age and their employers: Provided, That in the case of domestic helpers, their monthly income shall not be less than
One thousand pesos (P1,000.00) a month x x x.

Section 8(d) of the same law defines an employee as any person who performs services for an employer in which
either or both mental or physical efforts are used and who receives compensation for such services, where there is
an employer-employee relationship. The illegal dismissal case before the NLRC involved an inquiry into the existence
or non-existence of an employer-employee relationship. The very same inquiry is needed in the SSC case. And there
was no indication therein that there is an essential conceptual difference between the definition of "employee" under
the Labor Code and the Social Security Act.

In the instant case, therefore, res judicata in the concept of "conclusiveness of judgment" applies. The judgment in
the NLRC case pertaining to a finding of an absence of employer-employee relationship between Angeles and
respondents is conclusive on the SSC case.

A case in point is Smith Bell and Co. v. Court of Appeals 25 which, contrary to SSC, is apt and proper reference. Smith
Bell availed of the services of private respondents to transport cargoes from the pier to the company's warehouse.
Cases were filed against Smith Bell, one for illegal dismissal before the NLRC and the other one with the SSC, to
direct Smith Bell to report all private respondents to the SSS for coverage. While the SSC case was pending before
the Court of Appeals, Smith Bell presented the resolution of the Supreme Court in G.R. No. L-44620, which affirmed
the NLRC, Secretary of Labor, and Court of Appeals finding that no employer-employee relationship existed between
the parties, to constitute as bar to the SSC case. We granted the petition of Smith Bell and ordered the dismissal of
the case. We held that the controversy is squarely covered by the principle of res judicata, particularly under the rule
on "conclusiveness of judgment." Therefore, the judgment in G.R. No. L-44620 bars the SSC case, as the relief
sought in the latter case is inextricably related to the ruling in G.R. No. L-44620 to the effect that private respondents
are not employees of Smith Bell.
The fairly recent case of Co v. People,26 likewise applies to the present case. An information was filed against Co by
private respondent spouses who claim to be employees of the former for violation of the Social Security Act,
specifically for non-remittance of SSS contributions. Earlier, respondent spouses had filed a labor case for illegal
dismissal. The NLRC finally ruled that there was no employer-employee relationship between her and respondent
spouses. Co then filed a motion to quash the information, arguing that the facts alleged in the Information did not
constitute an offense because respondent spouses were not her employees. In support of her motion, she cited the
NLRC ruling. This Court applied Smith Bell and declared that the final and executory NLRC decision to the effect that
respondent spouses were not the employees of petitioner is a ruling binding in the case for violation of the Social
Security Act. The Court further stated that the doctrine of "conclusiveness of judgment" also applies in criminal
cases.27

Applying the rule on res judicata by "conclusiveness of judgment" in conjunction with the aforecited cases, the Court
of Appeals aptly ruled, thus:

In SSC Case No. 9-15225-01, private respondent Angeles is seeking to compel herein petitioners to remit to the
Social Security System (SSS) all contributions due for and in his behalf, whereas in NLRC NCR CA 018066-99
(NLRC RAB-IV-5-9028-97 RI) private respondent prayed for the declaration of his dismissal illegal. In SSC No. 9-
15225-01, private respondent, in seeking to enforce his alleged right to compulsory SSS coverage, alleged that he
had been an employee of petitioners; whereas to support his position in the labor case that he was illegally dismissed
by petitioners BSD Agro and/or Benjamin San Diego, he asserted that there was an employer-employee relationship
existing between him and petitioners at the time of his dismissal in 1997. Simply stated, the issue common to both
cases is whether there existed an employer-employee relationship between private respondent and petitioners at the
time of the acts complaint of were committed both in SSC Case No. 9-15225-01 and NLRC NCR CA 018066-99
(NLRC RAB-IV-5-9028-977-RI).

The issue of employer-employee relationship was laid to rest in CA GR. SP. No. 55383, through this Courts Decision
dated October 27, 2000 which has long attained finality. Our affirmation of the NLRC decision of May 18, 1999 was
an adjudication on the merits of the case.

Considering the foregoing circumstances, the instant case falls squarely under the umbrage of res judicata,
particularly, under the rule on conclusiveness of judgment. Following this rule, as enunciated in Smith Bell and Co.
and Carriaga, Jr. cases, We hold that the relief sought in SSC Case No. 9-15225-01 is inextricably related to Our
ruling in CA GR SP No. 55383 to the effect that private respondent was not an employee of petitioners.28

The NLRC decision on the absence of employer-employee relationship being binding in the SSC case, we affirm the
dismissal by Court of Appeals of the SSC case.

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated 20 September
2004, as well as its Resolution dated 9 February 2005, is AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 192558 February 15, 2012

BITOY JAVIER (DANILO P. JAVIER), Petitioner, ( look at labstan cases ER EE Relationship )

vs.
FLY ACE CORPORATION/FLORDELYN CASTILLO, Respondents.

DECISION

MENDOZA, J.:

This is a petition under Rule 45 of the Rules of Civil Procedure assailing the March 18, 2010 Decision 1 of the Court of
Appeals (CA) and its June 7, 2010 Resolution,2 in CA-G.R. SP No. 109975, which reversed the May 28, 2009
Decision3 of the National Labor Relations Commission (NLRC) in the case entitled Bitoy Javier v. Fly Ace/Flordelyn
Castillo,4 holding that petitioner Bitoy Javier (Javier) was illegally dismissed from employment and ordering Fly Ace
Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement.

Antecedent Facts

On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor standard
benefits. He alleged that he was an employee of Fly Ace since September 2007, performing various tasks at the
respondents warehouse such as cleaning and arranging the canned items before their delivery to certain locations,
except in instances when he would be ordered to accompany the companys delivery vehicles, aspahinante; that he
reported for work from Monday to Saturday from 7:00 oclock in the morning to 5:00 oclock in the afternoon; that
during his employment, he was not issued an identification card and payslips by the company; that on May 6, 2008,
he reported for work but he was no longer allowed to enter the company premises by the security guard upon the
instruction of Ruben Ong (Mr. Ong), his superior;5 that after several minutes of begging to the guard to allow him to
enter, he saw Ong whom he approached and asked why he was being barred from entering the premises; that Ong
replied by saying, "Tanungin mo anak mo;" 6 that he then went home and discussed the matter with his family; that he
discovered that Ong had been courting his daughter Annalyn after the two met at a fiesta celebration in Malabon City;
that Annalyn tried to talk to Ong and convince him to spare her father from trouble but he refused to accede; that
thereafter, Javier was terminated from his employment without notice; and that he was neither given the opportunity
to refute the cause/s of his dismissal from work.

To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier was a
stevedore or pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was subscribed before
the Labor Arbiter (LA).7

For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries. Sometime in
December 2007, Javier was contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis at an agreed
rate of P 300.00 per trip, which was later increased to P 325.00 in January 2008. Mr. Ong contracted Javier roughly 5
to 6 times only in a month whenever the vehicle of its contracted hauler, Milmar Hauling Services, was not available.
On April 30, 2008, Fly Ace no longer needed the services of Javier. Denying that he was their employee, Fly Ace
insisted that there was no illegal dismissal.8 Fly Ace submitted a copy of its agreement with Milmar Hauling Services
and copies of acknowledgment receipts evidencing payment to Javier for his contracted services bearing the words,
"daily manpower (pakyaw/piece rate pay)" and the latters signatures/initials.
Ruling of the Labor Arbiter

On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to present
proof that he was a regular employee of Fly Ace. He wrote:

Complainant has no employee ID showing his employment with the Respondent nor any document showing that he
received the benefits accorded to regular employees of the Respondents. His contention that Respondent failed to
give him said ID and payslips implies that indeed he was not a regular employee of Fly Ace considering that
complainant was a helper and that Respondent company has contracted a regular trucking for the delivery of its
products.

Respondent Fly Ace is not engaged in trucking business but in the importation and sales of groceries. Since there is
a regular hauler to deliver its products, we give credence to Respondents claim that complainant was contracted on
"pakiao" basis.

As to the claim for underpayment of salaries, the payroll presented by the Respondents showing salaries of workers
on "pakiao" basis has evidentiary weight because although the signature of the complainant appearing thereon are
not uniform, they appeared to be his true signature.

xxxx

Hence, as complainant received the rightful salary as shown by the above described payrolls, Respondents are not
liable for salary differentials. 9

Ruling of the NLRC

On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and immediately
concluded that he was not a regular employee simply because he failed to present proof. It was of the view that
apakyaw-basis arrangement did not preclude the existence of employer-employee relationship. "Payment by result x
x x is a method of compensation and does not define the essence of the relation. It is a mere method of computing
compensation, not a basis for determining the existence or absence of an employer-employee relationship.10" The
NLRC further averred that it did not follow that a worker was a job contractor and not an employee, just because the
work he was doing was not directly related to the employers trade or business or the work may be considered as
"extra" helper as in this case; and that the relationship of an employer and an employee was determined by law and
the same would prevail whatever the parties may call it. In this case, the NLRC held that substantial evidence was
sufficient basis for judgment on the existence of the employer-employee relationship. Javier was a regular employee
of Fly Ace because there was reasonable connection between the particular activity performed by the employee (as a
"pahinante") in relation to the usual business or trade of the employer (importation, sales and delivery of groceries).
He may not be considered as an independent contractor because he could not exercise any judgment in the delivery
of company products. He was only engaged as a "helper."

Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For failing to
present proof of a valid cause for his termination, Fly Ace was found to be liable for illegal dismissal of Javier who
was likewise entitled to backwages and separation pay in lieu of reinstatement. The NLRC thus ordered:

WHEREFORE, premises considered, complainants appeal is partially GRANTED. The assailed Decision of the labor
arbiter is VACATED and a new one is hereby entered holding respondent FLY ACE CORPORATION guilty of illegal
dismissal and non-payment of 13th month pay. Consequently, it is hereby ordered to pay complainant DANILO
"Bitoy" JAVIER the following:

1. Backwages -P 45,770.83
 2. Separation pay, in lieu of reinstatement - 8,450.00

3. Unpaid 13th month pay (proportionate) - 5,633.33

TOTAL -P 59,854.16

All other claims are dismissed for lack of merit.

SO ORDERED.11

Ruling of the Court of Appeals

On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace and
reinstated the dismissal of Javiers complaint as ordered by the LA. The CA exercised its authority to make its own
factual determination anent the issue of the existence of an employer-employee relationship between the parties.
According to the CA:

xxx

In an illegal dismissal case the onus probandi rests on the employer to prove that its dismissal was for a valid cause.
However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be
established. x x x it is incumbent upon private respondent to prove the employee-employer relationship by substantial
evidence.

xxx

It is incumbent upon private respondent to prove, by substantial evidence, that he is an employee of petitioners, but
he failed to discharge his burden. The non-issuance of a company-issued identification card to private respondent
supports petitioners contention that private respondent was not its employee. 12

The CA likewise added that Javiers failure to present salary vouchers, payslips, or other pieces of evidence to bolster
his contention, pointed to the inescapable conclusion that he was not an employee of Fly Ace. Further, it found that
Javiers work was not necessary and desirable to the business or trade of the company, as it was only when there
were scheduled deliveries, which a regular hauling service could not deliver, that Fly Ace would contract the services
of Javier as an extra helper. Lastly, the CA declared that the facts alleged by Javier did not pass the "control test."

He contracted work outside the company premises; he was not required to observe definite hours of work; he was not
required to report daily; and he was free to accept other work elsewhere as there was no exclusivity of his contracted
service to the company, the same being co-terminous with the trip only.13 Since no substantial evidence was
presented to establish an employer-employee relationship, the case for illegal dismissal could not prosper.

The petitioners moved for reconsideration, but to no avail.

Hence, this appeal anchored on the following grounds:

I.

WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER
WAS NOT A REGULAR EMPLOYEE OF FLY ACE.

II.
 WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER IS
NOT ENTITLED TO HIS MONETARY CLAIMS.14

The petitioner contends that other than its bare allegations and self-serving affidavits of the other employees, Fly Ace
has nothing to substantiate its claim that Javier was engaged on a pakyaw basis. Assuming that Javier was indeed
hired on a pakyaw basis, it does not preclude his regular employment with the company. Even the acknowledgment
receipts bearing his signature and the confirming receipt of his salaries will not show the true nature of his
employment as they do not reflect the necessary details of the commissioned task. Besides, Javiers tasks
as pahinante are related, necessary and desirable to the line of business by Fly Ace which is engaged in the
importation and sale of grocery items. "On days when there were no scheduled deliveries, he worked in petitioners
warehouse, arranging and cleaning the stored cans for delivery to clients." 15 More importantly, Javier was subject to
the control and supervision of the company, as he was made to report to the office from Monday to Saturday, from
7:00 oclock in the morning until 5:00 oclock in the afternoon. The list of deliverable goods, together with the
corresponding clients and their respective purchases and addresses, would necessarily have been prepared by Fly
Ace. Clearly, he was subjected to compliance with company rules and regulations as regards working hours, delivery
schedule and output, and his other duties in the warehouse.16

The petitioner chiefly relied on Chavez v. NLRC,17 where the Court ruled that payment to a worker on a per trip basis
is not significant because "this is merely a method of computing compensation and not a basis for determining the
existence of employer-employee relationship." Javier likewise invokes the rule that, "in controversies between a
laborer and his master, x x x doubts reasonably arising from the evidence should be resolved in the formers favour.
The policy is reflected is no less than the Constitution, Labor Code and Civil Code." 18

Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally dismissed by the latters failure to
observe substantive and procedural due process. Since his dismissal was not based on any of the causes recognized
by law, and was implemented without notice, Javier is entitled to separation pay and backwages.

In its Comment,19 Fly Ace insists that there was no substantial evidence to prove employer-employee relationship.
Having a service contract with Milmar Hauling Services for the purpose of transporting and delivering company
products to customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere "per trip basis." Javier,
who was actually a loiterer in the area, only accompanied and assisted the company driver when Milmar could not
deliver or when the exigency of extra deliveries arises for roughly five to six times a month. Before making a delivery,
Fly Ace would turn over to the driver and Javier the delivery vehicle with its loaded company products. With the
vehicle and products in their custody, the driver and Javier "would leave the company premises using their own
means, method, best judgment and discretion on how to deliver, time to deliver, where and [when] to start, and
manner of delivering the products."20

Fly Ace dismisses Javiers claims of employment as baseless assertions. Aside from his bare allegations, he
presented nothing to substantiate his status as an employee. "It is a basic rule of evidence that each party must prove
his affirmative allegation. If he claims a right granted by law, he must prove his claim by competent evidence, relying
on the strength of his own evidence and not upon the weakness of his opponent." 21 Invoking the case ofLopez v.
Bodega City,22 Fly Ace insists that in an illegal dismissal case, the burden of proof is upon the complainant who
claims to be an employee. It is essential that an employer-employee relationship be proved by substantial evidence.
Thus, it cites:

In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee was
for a valid cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship must
first be established.

Fly Ace points out that Javier merely offers factual assertions that he was an employee of Fly Ace, "which are
unfortunately not supported by proof, documentary or otherwise." 23 Javier simply assumed that he was an employee
of Fly Ace, absent any competent or relevant evidence to support it. "He performed his contracted work outside the
premises of the respondent; he was not even required to report to work at regular hours; he was not made to register
his time in and time out every time he was contracted to work; he was not subjected to any disciplinary sanction
imposed to other employees for company violations; he was not issued a company I.D.; he was not accorded the
same benefits given to other employees; he was not registered with the Social Security System (SSS) as petitioners
employee; and, he was free to leave, accept and engage in other means of livelihood as there is no exclusivity of his
contracted services with the petitioner, his services being co-terminus with the trip only. All these lead to the
conclusion that petitioner is not an employee of the respondents." 24

Moreover, Fly Ace claims that it had "no right to control the result, means, manner and methods by which Javier
would perform his work or by which the same is to be accomplished." 25 In other words, Javier and the company driver
were given a free hand as to how they would perform their contracted services and neither were they subjected to
definite hours or condition of work.

Fly Ace likewise claims that Javiers function as a pahinante was not directly related or necessary to its principal
business of importation and sales of groceries. Even without Javier, the business could operate its usual course as it
did not involve the business of inland transportation. Lastly, the acknowledgment receipts bearing Javiers signature
and words "pakiao rate," referring to his earned salaries on a per trip basis, have evidentiary weight that the LA
correctly considered in arriving at the conclusion that Javier was not an employee of the company.

The Court affirms the assailed CA decision.

It must be noted that the issue of Javiers alleged illegal dismissal is anchored on the existence of an employer-
employee relationship between him and Fly Ace. This is essentially a question of fact. Generally, the Court does not
review errors that raise factual questions. However, when there is conflict among the factual findings of the
antecedent deciding bodies like the LA, the NLRC and the CA, "it is proper, in the exercise of Our equity jurisdiction,
to review and re-evaluate the factual issues and to look into the records of the case and re-examine the questioned
findings."26 In dealing with factual issues in labor cases, "substantial evidence that amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion is sufficient."27

As the records bear out, the LA and the CA found Javiers claim of employment with Fly Ace as wanting and deficient.
The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of Procedure of the NLRC 28 allows
a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not mean a complete
dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the facts speedily and
objectively with little regard to technicalities or formalities but nowhere in the rules are they provided a license to
completely discount evidence, or the lack of it. The quantum of proof required, however, must still be satisfied.
Hence, "when confronted with conflicting versions on factual matters, it is for them in the exercise of discretion to
determine which party deserves credence on the basis of evidence received, subject only to the requirement that
their decision must be supported by substantial evidence." 29 Accordingly, the petitioner needs to show by substantial
evidence that he was indeed an employee of the company against which he claims illegal dismissal.

Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and cheese. It is,
therefore, incumbent upon the Court to determine whether the party on whom the burden to prove lies was able to
hurdle the same. "No particular form of evidence is required to prove the existence of such employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be
admitted.http://www.lawphil.net/judjuris/juri2009/may2009/gr_179652_2009.html - fnt31 Hence, while no particular
form of evidence is required, a finding that such relationship exists must still rest on some substantial evidence.
Moreover, the substantiality of the evidence depends on its quantitative as well as its qualitative aspects."30Although
substantial evidence is not a function of quantity but rather of quality, the x x x circumstances of the instant case
demand that something more should have been proffered. Had there been other proofs of employment, such as x x x
inclusion in petitioners payroll, or a clear exercise of control, the Court would have affirmed the finding of employer-
employee relationship."31
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim by the
requisite quantum of evidence.32 "Whoever claims entitlement to the benefits provided by law should establish his or
her right thereto x x x."33 Sadly, Javier failed to adduce substantial evidence as basis for the grant of relief.

In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By way of
evidence on this point, all that Javier presented were his self-serving statements purportedly showing his activities as
an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his claim. Hence, the
Court sees no reason to depart from the findings of the CA.

While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in the
company premises during weekdays arranging and cleaning grocery items for delivery to clients, no other proof was
submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in
strengthening Javiers cause. In said document, all Valenzuela attested to was that he would frequently see Javier at
the workplace where the latter was also hired as stevedore. 34 Certainly, in gauging the evidence presented by Javier,
the Court cannot ignore the inescapable conclusion that his mere presence at the workplace falls short in proving
employment therein. The supporting affidavit could have, to an extent, bolstered Javiers claim of being tasked to
clean grocery items when there were no scheduled delivery trips, but no information was offered in this subject simply
because the witness had no personal knowledge of Javiers employment status in the company. Verily, the Court
cannot accept Javiers statements, hook, line and sinker.

The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to determine the
existence of an employer-employee relationship, viz: (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. Of these
elements, the most important criterion is whether the employer controls or has reserved the right to control the
employee not only as to the result of the work but also as to the means and methods by which the result is to be
accomplished.35

In this case, Javier was not able to persuade the Court that the above elements exist in his case. He could not
1avvphi1

submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages as an
employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javiers allegations
did not establish that his relationship with Fly Ace had the attributes of an employer-employee relationship on the
basis of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it had an
agreement with a hauling company to undertake the delivery of its goods. It was also baffling to realize that Javier did
not dispute Fly Aces denial of his services exclusivity to the company. In short, all that Javier laid down were bare
allegations without corroborative proof.

Fly Ace does not dispute having contracted Javier and paid him on a "per trip" rate as a stevedore, albeit on
apakyaw basis. The Court cannot fail to note that Fly Ace presented documentary proof that Javier was indeed paid
on a pakyaw basis per the acknowledgment receipts admitted as competent evidence by the LA. Unfortunately for
Javier, his mere denial of the signatures affixed therein cannot automatically sway us to ignore the documents
because "forgery cannot be presumed and must be proved by clear, positive and convincing evidence and the burden
of proof lies on the party alleging forgery." 36

Considering the above findings, the Court does not see the necessity to resolve the second issue presented.

One final note. The Courts decision does not contradict the settled rule that "payment by the piece is just a method of
compensation and does not define the essence of the relation." 37 Payment on a piece-rate basis does not negate
regular employment. "The term wage is broadly defined in Article 97 of the Labor Code as remuneration or earnings,
capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece or commission
basis. Payment by the piece is just a method of compensation and does not define the essence of the relations. Nor
does the fact that the petitioner is not covered by the SSS affect the employer-employee relationship. However, in
determining whether the relationship is that of employer and employee or one of an independent contractor, each
case must be determined on its own facts and all the features of the relationship are to be
considered."38 Unfortunately for Javier, the attendant facts and circumstances of the instant case do not provide the
Court with sufficient reason to uphold his claimed status as employee of Fly Ace.

While the Constitution is committed to the policy of social justice and the protection of the working class, it should not
be supposed that every labor dispute will be automatically decided in favor of labor. Management also has its rights
which are entitled to respect and enforcement in the interest of simple fair play. Out of its concern for the less
privileged in life, the Court has inclined, more often than not, toward the worker and upheld his cause in his conflicts
with the employer. Such favoritism, however, has not blinded the Court to the rule that justice is in every case for the
deserving, to be dispensed in the light of the established facts and the applicable law and doctrine. 39

WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the Court of Appeals and its June 7, 2010
Resolution, in CA-G.R. SP No. 109975, are hereby AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 188464 July 29, 2015

ALBERTO J. RAZA, Petitioner,

vs.
DAIKOKU ELECTRONICS PHILS., INC. and MAMORU ONO, Respondents.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari assailing the Court of Appeals' Decision 1 dated December 22,
2008 and Resolution2 dated April 14, 2009 which upheld the finding of the National Labor Relations Commission
(NLRC) in its Resolutions dated May 31, 2006 and July 31, 2006 that petitioner was validly dismissed by
respondents.

The facts of the case follow.

Petitioner Alberto J. Raza (Raza) was hired as a driver by respondent Daikoku Electronics Phils., Inc. (Daikoku) on
January 11, 1999. Eventually, he was assigned to drive for the other respondent, the company president Mamoru
Ono (Ono). Raza claims that his working days and hours depended on Ono's schedule and needs, so it was not
unusual for him to be ordered to work from very early in the morning up to past midnight of any day, including
Sundays.3

On the evening of July 21, 2003, Raza dropped Ono off at the latter's residence called the Pacific Plaza
Condominium in Makati City. But Raza, instead of parking the company vehicle at the condominium building's parking
area, drove the vehicle to his home and parked it there overnight. The next morning, as Raza was about to fetch Ono,
the latter confronted him and asked why the vehicle was not at the condominium parking lot. Raza replied with a lie,
telling Ono that he parked the car at the condominium building but in the wrong slot. Three (3) days later, on July 24,
2003, Raza was served a company Notice of Violation of the Code of Conduct for Dishonesty. On July 25, 2003,
Raza submitted his written explanation wherein he admitted bringing the car to his home without permission and lying
about it to Ono.4 He apologized for these infractions but he also indicated that he was previously told by Ono that he
could use the car if he needed to.5

The company's Investigation Committee conducted a hearing wherein Raza again admitted bringing the car home
and lying about it to Ono, but Raza reiterated that there were previous occasions when Ono authorized him to bring
the vehicle home.6 The Committee then recommended the suspension of Raza for twelve (12) days without pay for
the offenses of parking the company vehicle at home without authority and for lying about it. 7 However, disregarding
such recommendation, the company's General Affairs Manager Gerardo Gaytano sent a letter dated August 7, 2003
terminating Raza's services for dishonesty.8 Respondents explain that the harsher punishment was imposed because
at the meeting of the board of directors, Ono denied permitting Raza to use the company car and even presented a
report from the Pacific Plaza Security Office stating that from May 1, 2003 to July 20, 2003, Raza did not park the
company car at the said building for a total of thirty-one (31) instances, all without authority nor permission. 9

Thus, Raza filed his Complaint for illegal dismissal with claims for damages and attorney's fees.
On January 15, 2005, Labor Arbiter Lita V. Alibut rendered a Decision 10 in favor of Raza as complainant. In NLRC
Case No. RAB-IV-9-18127-03-L, the said officer ruled as follows:

WHEREFORE, finding the complainant's dismissal unlawful, respondents are hereby directed to reinstate
complainant to his former position without loss of seniority rights and other benefits and (are) further ordered solidarily
to pay complainant backwages from the time of his dismissal up to actual reinstatement minus the salary
corresponding to the suspension period of twelve days plus 10% of the total award for attorney's fees computed as
follows:

FULL BACKWAGES:
A. Basic pay
From 8/14/03 to 1/14/05
P12,000 x 17.03 = P204,360.00
B. 13th month pay
P204,360 12 = 17,030.00
C. Service Incentive Leave Pay
P12,000 30 x 5 days x 17.03 12 = 2,838.33

P224,228.33
Less: P12,000 30 x 12 days = 4,800.00
TOTAL: P219,428.33
Attorneys fee of P219,428.33 x 10% = P21,942.83

SO ORDERED.11

The Labor Arbiter found that the allegations of Raza's infractions, such as his repeated use of the company vehicle
without permission, are unsubstantiated by evidence.12 She ruled that although the company alleges that there were
thirty-one (31) prior incidents of Raza taking the company vehicle, allegedly reported by the condominium security
guard, Raza was not confronted with the same in the notice of violation and neither was it presented during the
deliberations by the investigating committee. And even if such report was admitted, the Labor Arbiter still sustained
Raza's explanation that he was permitted to do so by Ono and that there were times when Raza would work until 1
:30 in the morning and was told to report back to work at 7 :00 in the morning of the same day, or with just a few
hours of rest in between.13 Disagreeing with the decision of the Labor Arbiter, respondents filed an appeal to the
NLRC.

In a Resolution14 dated August 31, 2005, the NLRC dismissed the appeal due to respondents' failure to include a
certificate of non-forum shopping and lack of proper verification.

A motion for reconsideration with manifestation and compliance was filed by respondents.15 It was duly opposed by
Raza, who alleged that the same was filed out of time. 16

The NLRC, in a Resolution17 dated May 31, 2006, reinstated the appeal of respondents and ruled that the application
of technical rules of procedure may be relaxed to meet the demands of substantial justice. In the same resolution, the
NLRC set aside the findings of the Labor Arbiter and ruled in favor of respondents. 18 It held that Raza was not illegally
dismissed since the infractions he committed were a just cause for dismissal. 19 Such infractions include the taking of
the company vehicle without authority, which the NLRC described as a "recurring act," and the uttering of falsehood
towards company president Ono, which it believed was a show of disrespect and brought dishonor to the
latter.20 However, the NLRC still found respondents liable for Raza's monthly salary, 13th month pay and service
incentive leave pay during his period of reinstatement from the time of their receipt of the Labor Arbiter's decision up
to the time of the NLRC's decision.21 The NLRC held:
WHEREFORE, premises considered, respondents' Motion for Reconsideration is GRANTED. Complainant's Motion
to Cite Respondents in Contempt is DENIED for lack of merit. 1w phi 1

The assailed Decision dated January 15, 2005 of the Labor Arbiter is REVERSED and SET ASIDE and a new one is
hereby entered declaring that complainant was validly dismissed from his employment. Nevertheless, for failure to
reinstate complainant Alberto J. Raza pursuant to the Labor Arbiter's Decision, respondent DAIKOKU
ELECTRONICS PHILS., INC. is hereby ordered to pay him his wages from 11 March 2005 up to the promulgation of
this Resolution, provisionally computed as follows:

Basis pay: (3/11/05 5/11/06)

(P8,790.00 x 14 months) = P123,060.00
13th month pay:
(P123,060.00/12 mos.) = 10,255.55
Service Incentive Leave Pay:
(P8,790.00/30 x 5 days x 14 mos. / 12) = 1,709.17

TOTAL = P135,024.72

SO ORDERED.22

Raza filed a motion for reconsideration of the above decision, but the same was denied by the NLRC in a
Resolution23 dated July 31, 2006.

Raza filed a petition for certiorari with the CA, assailing the NLRC's resolutions, but the petition was initially dismissed
by the appellate court in its Order24 dated November 6, 2006 for its failure to meet procedural requirements, such as
the inclusion of pleadings and documents relevant to the petition, as well as the inclusion of the actual addresses of
the respondents. From the said dismissal, Raza filed a motion for reconsideration while submitting the pertinent
documents that were missing in his petition.25 Thus, in an Order26 dated September 24, 2007, the CA granted the
motion and reinstated the petition, as well as declared Raza an indigent litigant.

On December 22, 2008, the CA, in CA-G.R. SP No. 100714, rendered its assailed Decision,27 denying the petition
filed by Raza. The dispositive portion of that decision states:

WHEREFORE, in view of the foregoing, the petition is DISMISSED. The assailed rulings STAND.

SO ORDERED.28

The CA rejected Raza's allegation that respondents' motion for reconsideration of the NLRC's August 31, 2005
Resolution was filed late with the NLRC, stating that Raza failed to substantiate such allegation with evidence. 29Then,
it found that Raza's dishonesty, consisting of parking the vehicle at his home overnight and lying about it to Ono, is
deserving of the sanction of dismissal.30

The motion for reconsideration filed by Raza was likewise denied in the other assailed Resolution, 31 dated April 14,
2009.

Hence, this petition. Petitioners rely on the following grounds for the grant of their petition:

I.
THE HONORABLE COURT OF APPEALS ERRED IN LAW WHEN IT CONSIDERED RESPONDENTS' MOTION
FOR RECONSIDERATION DATED OCTOBER 21, 2005 SUBMITTED BEFORE THE NATIONAL LABOR
RELATIONS COMMISSION WHICH WAS OBVIOUSLY FILED OUT OF TIME AND IN TRAVESTY OF THE
ADMINISTRATION OF JUSTICE.

II.

THE HONORABLE COURT OF APPEALS ERRED IN LAW WHEN IT ALLOWED THE IMPOSITION OF A
GROSSLY DISPROPORTIONATE PENALTY ON THE ALLEGED INFRACTION COMMITTED BY PETITIONER.

The issues for this Court's resolution are procedural and substantive: whether the respondents' Motion for
Consideration dated October 21, 2005 was submitted on time with the NLRC, and whether petitioner Alberto J. Raza
committed infractions or violations of company rules that merit the penalty of dismissal from employment.

As for the procedural ground, petitioner Raza argues that the motion for reconsideration filed by respondents with the
NLRC after the tribunal initially dismissed their appeal was filed out of time. 32 He states that the deadline for filing the
said motion was October 21, 2005, but there was allegedly a certification from the postmaster that the latter's office
was without any clear record of mailing, or even a record of mailing or dispatch.33 Raza admits, however, that the
envelopes sent to the NLRC and his counsel all indicate through stamps and handwritten markings that the mailing
date was October 21, 2005.34

To this Court, Raza's contentions as to the allegedly late filing of respondents' motion with the NLRC are untenable.
Verily, the concerns raised are all factual which, under a petition for review under Rule 45, should not have been
elevated to this Court for review. This Court is not a trier of facts, and this rule applies in labor cases. 35The issue in
question first came up and was already raised on the appeal with the NLRC, whose disposition of it was already
affirmed by the Court of Appeals. In such a situation, the findings of the lower tribunals are no longer to be disturbed,
and are even accorded finality,36 unless the case falls under any of the exceptions that would necessitate this Court's
review.37 The petition does not even allege nor demonstrate that the case is covered by any of these exceptions.

At any rate, this Court finds nothing out of the ordinary nor irregular in the mailing of the motion of respondents as
would put in doubt the timeliness of its filing. The mailing of the motion was done on the deadline for the filing and
service of such, which was October 21, 2005, as indicated by the post office on the envelopes as well as in the
registry receipts sent to the NLRC. Thus, the motion is considered filed on that date and the filing was on time.
Petitioner does not dispute but even admits the fact that the envelopes and registry receipts bear that date. The rule
is that whenever the filing of a motion or pleading is not done personally, the date of mailing (by registered mail), as
indicated by the post office on the envelope or the registry receipt, is considered as the date of filing.38The fact that
the post office indicated October 21, 2005 on the envelope and receipts as the mailing date, as examined first-hand
by the NLRC based on its records, entitles respondents to the presumption that the motion was indeed mailed on
said date. Official duties in this case, of a post office employee are presumed to be regularly performed, unless
there is an assertion otherwise and the one so asserting rebuts such with affirmative evidence of irregularity or failure
to perform a duty.39 In addition, the stamps and marks made by the postal worker are considered entries in the regular
course of duty which are considered accurate unless proven otherwise. 40

The postmaster's belated certification41 that there is no clear record of mailing or dispatch or that dispatch or delivery
was done on a later date does not contradict the fact of mailing done on October 21, 2005. On the contrary, the
evidence disputes the postmaster's certification.

In Raza's own Second Motion to Cite Respondents in Contempt, 42 the post office's copies of Registry Receipt Number
1421 (which corresponds to the mailing done to Raza's counsel (Atty. Gesmundo) of his copy of the motion) and
Receipt Number 1422 (which corresponds to the mailing of the NLRC's copy) were submitted in evidence to the
NLRC.43 The receipts were clearly marked "V. Gesmundo" and "NLRC," respectively, the names of the
recipients.44 Then, the date November 2, 2005, which appears thereon and which the postmaster certified as the date
of "dispatch" does not negate the fact of mailing done on October 21, 2005. That the mail was dispatched or
delivered by the postal service on a later date that it was deposited or "mailed" by the sender is only logical. And it is
only probable that there would be a delay of a few days between the mailing and delivery. As to the alleged absence
of a "clear record of mailing," the same only refers to the office's own record, but the stamps and marks of October
21, 2005 on the envelopes are also a record and are reliable evidence of mailing done on that date. Also, it has been
held that between the belated certification of the postmaster and the marking or stamping done by the post office at
the time of mailing, the latter is preferred as evidence for having been done closer to the transaction in question,
especially in this case when the postmaster's certification does not even clearly allege nor prove any irregularity or
mistake made in such marking or stamping.45

The Court now proceeds to the case's substantive aspect. The respondents claim that Raza committed infractions
that deserve the punishment of dismissal, as they amount to valid grounds for termination as defined in Article 282 (a)
and ( c) of the Labor Code.46 Raza, for his part, disagrees and contends that dismissal is a very severe punishment
that is not commensurate to his purported offense.47 He also maintains that he was previously allowed by his superior
to take home the company vehicle.48

What is in issue, therefore, is whether petitioner Raza's numerous acts of taking the company car home overnight
and lying about one of the incidents to the company president legally deserve the supreme penalty of dismissal from
the company.

The Court denies the petition. Raza was validly dismissed within the confines of a just cause for termination as
provided for in the Labor Code. 1w phi 1

Before the Court resolves the issue, it needs reiterating that such an exercise requires this Court to re-examine the
facts and weigh the evidence on record, which is normally a task that is not for this Court to perform, for basic is the
rule that the Court is not a trier of facts and this rule applies with greater force in labor cases. 49 Questions of fact are
for the labor tribunals to resolve.50 It is elementary that the scope of this Court's judicial review under Rule 45 of the
Rules of Court is confined only to errors of law and does not extend to questions of fact.51 However, the case at bar
falls under one of the recognized exceptions to the rule, that exception being when the findings of the Labor Arbiter
conflict with those of the NLRC and the Court of Appeals.52 The conflicting findings of the Labor Arbiter, NLRC and the
Court of Appeals pave the way for this Court to review factual issues even if it is exercising its function of judicial
review under Rule 45.53

In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid
cause and failure to do so would necessarily mean that the dismissal was illegal. 54

Upon this Court's assessment, however, it finds that this burden has been discharged by respondents and this Court
agrees with the latter that petitioner Raza's acts amounted to serious misconduct which falls under the valid grounds
for termination of the services of an employee as provided for in the Labor Code, specifically Article 282 (a) thereof,
to wit:

ART. 282. Termination by employer. - An employer may terminate an employment for any of the following causes:

(a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative
in connection with his work; x x x.

Misconduct is improper or wrongful conduct.55 It is the transgression of some established and definite rule of action, a
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of
judgment.56 For misconduct to justify dismissal under the law, (a) it must be serious, (b) must relate to the
performance of the employee's duties; and (c) must show that the employee has become unfit to continue working for
the employer.57
In the case at bar, it must be noted that Raza's termination came not as a result of a singular incident on July 21,
2003 of driving home the company car, keeping it overnight and then lying about such act to the company president
the next day. It came because such incident launched a company investigation during which it was found out that the
July 21, 2003 incident was preceded by thirty-one (31) other instances in the previous two and a half (2-1/2) months
(or from May 1, 2003 to July 20, 2003) in which Raza similarly did not park the car in the assigned area but took it
home overnight without permission.58 Thus, the termination letter against Raza mentioned a "recurring act of taking
the subject vehicle without authority,"59 as a ground for his separation from service. This Court finds and agrees with
respondents that the above acts constitute serious misconduct which rendered Raza's termination valid.

Raza admits his acts but prays for a lighter penalty because he disputes the actual number of incidents wherein he
brought home the subject car and he claims that he enjoyed the authority to do so from the respondents. 60However,
not only does he fail to provide an actual number of his admitted acts of bringing home the car, he also fails to
substantiate his claim that he did the same with the "permission and tolerance" of the company president. The
evidence also disagrees with his contentions. First, as to the actual number of incidents, the "in and out" logs of the
condominium security guards are clear and indisputable. The guards dutifully logged as "in" the time when the
subject car was driven into the parking lot and, again, they logged it as "out" when the car was driven out.

Based on the said record, this Court counted at least twenty-nine (29) incidents of the car being driven into the
parking lot in the early or late evenings, only to be driven out within a few minutes, indicating that the vehicle did not
stay parked therein for the whole night. Second, if it is true that the acts of driving the company car home was with
the permission of Ono or the previous company president, then Ono would not have asked Raza about the car's
whereabouts the previous night in the morning of July 22, 2003. Then, Raza, too, would not have had any reason to
lie, as he could have simply told Ono that he drove the car home as the latter had previously permitted. Instead, he
waited for a formal investigation for him to finally admit driving home the car. What is also material is that Raza has
no evidence of having obtained permission other than his mere assertion.

The Court expects proof from Raza because his claims go against ordinary experience and common practice among
companies. A company's executive vehicle is usually for the personal service of the person to whom it is assigned
and is supposed to be available solely to the latter at any given time. It is rarely made available for the personal use
and service of the chauffeur even if the executive is already home and retired for the night and the chauffeur himself
has to go to his own residence that is away from his master's residence. By taking the vehicle out and driving it to his
home, the driver exposes such company property to the risk of damage or loss due to collisions, theft or even
untoward incidents such as a fire or civil disturbance. There is also a risk of company liability to third persons arising
from such use. In addition, such use is not free of costs, since the extra journey entails fuel use, wear and tear, and
other allied expenses. Therefore, it can be safely held that use of a company vehicle for a driver's personal needs is
more of an exceptional privilege rather than the norm. It cannot be presumed as bestowed on every employee, not
even a chauffeur, so that one who claims to have it has the obligation to provide proof of his authority, permission or
privilege for the use to be considered warranted.

As to the allegation that the penalty of dismissal is too harsh, it is long established that an employer is given a wide
latitude of discretion in managing its own affairs, and in the promulgation of policies, rules and regulations on work-
related activities of its employees.61 The broad discretion includes the implementation of company rules and
regulations and the imposition of disciplinary measures on its workers. 62 But for the management prerogative to be
upheld, the exercise of disciplining employees and imposing appropriate penalties on erring workers must be
practiced in good faith for the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid agreements. 63

In the case at bar, the infractions of Raza were numerous enough that they already amount to an unlawful taking of
company resources and that they may be subsumed under the charge of serious misconduct leveled against him. 64 It
has been held that "although as a rule this Court leans over backwards to help workers and employees continue with
their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company
property are a different matter."65 Such may be penalized with dismissal.66 It matters little that Raza claims that his
record prior to this was clean or that he has yet to cause substantial damage to the company or to its property in
committing his acts. His transgressions are too serious and too many to escape without heavy sanction. In the
present situation wherein Raza has already been found guilty of numerous acts of driving the company vehicle for his
personal use without prior authority, the Court cannot expect and require the employer company to wait for one more
such instance of unauthorized use or for actual damage to be caused by such use before the company can be
considered justified in penalizing the erring employee. 67 This Court has held that a series of irregularities when put
together may constitute serious misconduct, which is a just cause for termination. 68In the case at bar, the seriousness
and volume of the prior incidents, committed in such a short period of time, are already enough as ground to
terminate petitioner.

On this note, this Court disagrees with the Labor Arbiter's finding that the infractions were too light and do not merit
the supreme sanction of dismissal. The arbiter's finding is grounded on her incorrect disregard of the security guards'
report on the thirty-one (31) alleged prior incidents, which she claimed was not included in the notice of violation and
was not presented during the hearing by the investigating committee. The Labor Arbiter also held that even if the
incidents [were] considered, such are excused by Raza's long and unusual working hours. Suffice it to state during
the investigation, Raza himself admitted such incidents as, during his appearance before the investigating committee,
he himself alleged and acknowledged that on several occasions, "Mr. Mamoru Ono authorized (him) to take the
vehicle home," which has the effect of admitting that he, indeed, has previously taken the car home. 69 Then, the
company's letter of termination dated August 7, 2003 included as one of the grounds therefor Raza's allegedly
"recurring act of taking the subject vehicle without authority," 70 which Raza had the chance to refute via a letter-motion
for reconsideration71 dated August 19, 2003.

In any case, the presentation of the security guards' report for the first time with the Labor Arbiter through the
respondents' Position Paper is neither too late nor improper. For one thing, the NLRC is not restricted by the technical
rules of procedure and is allowed to be liberal in the application of its rules in hearing and deciding labor cases.
Under Section 2, Rule I of the 2005 Revised Rules of Procedure and reiterated verbatim in the same provision of the
2011 Rules of Procedure of the National Labor Relations Commission, it is provided that:

Section 2. Construction. - These Rules shall be liberally construed to carry out the objectives of the Constitution, the
Labor Code of the Philippines and other relevant legislations, and to assist the parties in obtaining just, expeditious
and inexpensive resolution and settlement of labor disputes.

Further, under Section 10, Rule VII of both the 2005 Revised Rules of Procedure and the 2011 NLRC Rules it is also
identically stated that:

Section 10. Technical rules not binding. - The rules of procedure and evidence prevailing in courts of law and equity
shall not be controlling and the Commission shall use every and all reasonable means to ascertain the facts in each
case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process.

In any proceeding before the Commission, the parties may be represented by legal counsel but it shall be the duty of
the Chairman, any Presiding Commissioner or Commissioner to exercise complete control of the proceedings at all
stages.

And far more importantly, it is precisely at the stage of the filing of the position paper that the parties are required to
submit "supporting documents and affidavits" to bolster their causes of action or defenses, as the case may
be.72Hence, it was just proper and the most opportune time that the said report was presented at that stage and at the
level of the Labor Arbiter.

Then, too, it is with the Labor Arbiter that Raza had the chance to refute, contradict or deny the veracity of the
report. He had every opportunity to present his own controverting evidence to impeach the credibility of such
1wphi 1

evidence. He did none of that, however. Instead, Raza admitted in his Reply that he indeed brought the car to his
own house "for a number of times," albeit allegedly with prior "knowledge, permission and tolerance" of his
superior.73 Although he was unclear whether such "number of times" corresponds with the number of incidents
reflected in the security guards' report, what is more important is his admission of the fact of bringing home the car
more than a few times. He did not deny nor disprove that he committed such acts, even when he was given the
chance to do so. In administrative proceedings, one may not claim having been denied due process when one has
been given ample opportunity to be heard, for the essence of due process is simply an opportunity to explain one's
side or an opportunity to seek reconsideration of the action or ruling complained of. 74 It is evident in the case at bar
that Raza was not barred from being heard nor that he had an absolute lack of opportunity to be heard.

Also, unlike the Labor Arbiter, the Court does not excuse Raza's acts by considering his allegedly long working hours
or the fact that he was allegedly duty-bound to report for work very early in the morning and get dismissed late at
night, including Sundays and holidays. Even if such working conditions were true, then it only makes Raza entitled to
overtime, night differential and holiday pay, if ever such remain unpaid to him, a claim which he does not even make
in his complaint. But certainly, such does not justify his acts of appropriating the use of company property for his own
personal gain without prior permission. The fact that he is often tired right after driving Ono to the latter's residence
every night and the fact that he is still required to report early the next day does not entitle him to the use of the
company car as his own service vehicle, as such entails risks and expenses to the company that the latter has not
consented to facing. The Court likewise fails to see how the personal use of the car could have greatly benefited
Raza's work performance, since he himself claimed in his Position Paper that he did not live far, as he also resided in
Makati City, which is the same city as his master Ono's residence. 75 This Court has previously upheld as legal the
dismissal of employees for using the employer's vehicle for their own private purposes without prior permission or
authority. In Saco v. Mercantile Corporation of Davao,76 the Court held that "a rule prohibiting employees from using
company vehicles for private purposes without authority from management is a reasonable one." Thus, an employee
who used the company vehicle twice in pursuing his own personal interests, on company time and deviating from his
authorized route, all without permission, was held to have been validly dismissed, for, as the Court held, to condone
the employee's conduct will erode the discipline that an employer should uniformly apply so that it can expect
compliance to the same rules and regulations by its other employees. 77 In another case, Family Planning Organization
of the Philippines v. NLRC,78 the Court also affirmed the dismissal of an employee who used the company vehicle
twice without permission and for personal reasons, noting that employees must yield obedience to the rule against
unauthorized use of company vehicles because this is proper and necessary for the conduct of the employer's
business or concern.79

While the Court remains invariably committed towards social justice and the protection of the working class from
exploitation and unfair treatment, it, nevertheless, recognizes that management also has its own rights which, as
such, are entitled to respect and enforcement in the interest of simple fair play.80 The aim is always to strike a balance
between an avowed predilection for labor, on the one hand, and the maintenance of the legal rights of capital, on the
other.81 Indeed, the Court should be ever mindful of the legal norm that justice is in every case for the deserving, to be
dispensed with in the light of established facts, the applicable law, and existing jurisprudence. 82

WHEREFORE, the petition is DENIED. The Court of Appeals' Decision dated December 22, 2008 and Resolution
dated April 14, 2009 are AFFIRMED. The Labor Arbiter, unless barred by mootness or some other legal cause, is
hereby ORDERED TO PROCEED WITH THE EXECUTION of the May 31, 2006 Resolution of the NLRC WITH
DISPATCH.83

No costs.

SO ORDERED.

G.R. No. 189255, June 17, 2015

JESUS G. REYES, Petitioner, v. GLAUCOMA RESEARCH FOUNDATION, INC., EYE REFERRAL

CENTER AND MANUEL B. AGULTO, Respondent.

DECISION
 PERALTA, J.:

Before the Court is a petition for review on certiorari seeking to reverse and set aside the Decision1and
Resolution2 of the Court of Appeals (CA), dated April 20, 2009 and August 25, 2009, respectively, in
CA-G.R. SP No. 104261. The assailed CA Decision annulled the Decision of the National Labor
Relations Commission (NLRC) in NLRC NCR Case No. 05-0441-05 and reinstated the Decision of the
Labor Arbiter (LA) in the same case, while the CA Resolution denied petitioner's motion for
reconsideration.

The instant petition arose from a complaint for illegal dismissal filed by petitioner against respondents
with the NLRC, National Capital Region, Quezon City. Petitioner alleged that: on August 1, 2003, he
was hired by respondent corporation as administrator of the latter's Eye Referral Center (ERC); he
performed his duties as administrator and continuously received his monthly salary of P20,000.00
until the end of January 2005; beginning February 2005, respondent withheld petitioner's salary
without notice but he still continued to report for work; on April 11, 2005, petitioner wrote a letter to
respondent Manuel Agulto (Agulto), who is the Executive Director of respondent corporation, informing
the latter that he has not been receiving his salaries since February 2005 as well as his 14 th month
pay for 2004; petitioner did not receive any response from Agulto; on April 21, 2005, petitioner was
informed by the Assistant to the Executive Director as well as the Assistant Administrative Officer, that
he is no longer the Administrator of the ERC; subsequently, petitioner's office was padlocked and
closed without notice; he still continued to report for work but on April 29, 2005 he was no longer
allowed by the security guard on duty to enter the premises of the ERC.

On their part, respondents contended that: upon petitioner's representation that he is an expert in
corporate organizational structure and management affairs, they engaged his services as a consultant
or adviser in the formulation of an updated organizational set-up and employees' manual which is
compatible with their present condition; based on his claim that there is a need for an administrator
for the ERC, he later designated himself as such on a trial basis; there is no employer-employee
relationship between them because respondents had no control over petitioner in terms of working
hours as he reports for work at anytime of the day and leaves as he pleases; respondents also had no
control as to the manner in which he performs his alleged duties as consultant; he became
overbearing and his relationship with the employees and officers of the company soured leading to the
filing of three complaints against him; petitioner was not dismissed as he was the one who voluntarily
severed his relations with respondents.

On January 20, 2006, the LA assigned to the case rendered a Decision3 dismissing petitioner's
complaint. The LA held, among others, that petitioner failed to establish that the elements of an
employer-employee relationship existed between him and respondents because he was unable to
show that he was, in fact, appointed as administrator of the ERC and received salaries as such; he
also failed to deny that during his stint with respondents, he was, at the same time, a consultant of
various government agencies such as the Manila International Airport Authority, Manila
Intercontinental Port Authority, Anti-Terrorist Task Force for Aviation and Air Transportation Sector;
his actions were neither supervised nor controlled by the management of the ERC; petitioner, likewise,
did not observe working hours by reporting for work and leaving therefrom as he pleased; and, he
was receiving allowances, not salaries, as a consultant.

On appeal, the NLRC reversed and set aside the Decision of the LA. The NLRC declared petitioner as
respondents' employee, that he was illegally dismissed and ordered respondents to reinstate him to
his former position without loss of seniority rights and privileges with full backwages. The NLRC held
that the basis upon which the conclusion of the LA was drawn lacked support; that it was incumbent
for respondents to discharge the burden of proving that petitioner's dismissal was for cause and
effected after due process was observed; and, that respondents failed to discharge this burden.4

Respondents filed a motion for reconsideration, but it was denied by the NLRC in its Resolution5 dated
May 30, 2008.

Respondents then filed a Petition for Certiorari6 with the CA.

In its assailed Decision, the CA annulled and set aside the judgment of the NLRC and reinstated the
Decision of the LA. The CA held that the LA was correct in ruling that, under the control test and the
economic reality test, no employer-employee relationship existed between respondents and petitioner.

Petitioner filed a motion for reconsideration, but the CA denied it in its Resolution dated August 25,
2009.

Hence, the present petition for review on certiorari based on the following grounds: chanroblesvirtuallawlibrary

THE HONORABLE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION IN NOT DISMISSING
RESPONDENTS' PETITION FOR CERTIORARI ON THE GROUND THAT RESPONDENTS SUBMITTED A
VERIFICATION THAT FAILS TO COMPLY WITH THE 2004 RULES ON NOTARIAL PRACTICE. cralawlawlibrary

II

THE HONORABLE COURT OF APPEALS ERRED AND ABUSED ITS DISCRETION IN RULING THAT NO
EMPLOYER-EMPLOYEE RELATIONSHIP EXISTS BETWEEN RESPONDENTS AND PETITIONER.7 cralawlawlibrary

As to the first ground, petitioner contends that respondents' petition for certiorari filed with the CA
should have been dismissed on the ground that it was improperly verified because the jurat portion of
the verification states only the community tax certificate number of the affiant as evidence of her
identity. Petitioner argues that under the 2004 Rules on Notarial Practice, as amended by a
Resolution8 of this Court, dated February 19, 2008, a community tax certificate is not among those
considered as competent evidence of identity.

The Court does not agree.

This Court has already ruled that competent evidence of identity is not required in cases where the
affiant is personally known to the notary public.9

Thus, in Jandoquile v. Revilla, Jr.,10 this Court held that:

chanroblesvirtuallawlibrary

If the notary public knows the affiants personally, he need not require them to show their
valid identification cards. This rule is supported by the definition of a "jurat" under Section 6, Rule
II of the 2004 Rules on Notarial Practice. A "jurat" refers to an act in which an individual on a single
occasion: (a) appears in person before the notary public and presents an instrument or document;
(b) is personally known to the notary public or identified by the notary public through competent
evidence of identity; (c) signs the instrument or document in the presence of the notary; and (d)
takes an oath or affirmation before the notary public as to such instrument or document. 11 cralawlawlibrary

Also, Section 2(b), Rule IV of the 2004 Rules on Notarial Practice provides as follows: chanroblesvirtuallawlibrary

SEC. 2. Prohibitions -

(a) x x x
(b) A person shall not perform a notarial act if the person involved as signatory to the instrument or
document -
(1) is not in the notary's presence personally at the time of the notarization; and

(2) is not personally known to the notary public or otherwise identified by the notary public through
competent evidence of identity as defined by these Rules.
Moreover, Rule II, Section 6 of the same Rules states that:

SEC 6. Jurat. - "Jurat" refers to an act in which an individual on a single occasion:chanroblesvirtuallawlibrary

(a) appears in person before the notary public and presents an instrument or document;

(b) is personally known to the notary public or identified by the notary public through competent
evidence of identity as defined by these Rules;

(c) signs the instrument or document in the presence of the notary; and

(d) takes an oath or affirmation before the notary public as to such instrument or document.
In legal hermeneutics, "or" is a disjunctive that expresses an alternative or gives a choice of one
among two or more things.12 The word signifies disassociation and independence of one thing from
another thing in an enumeration.13

Thus, as earlier stated, if the affiant is personally known to the notary public, the latter need not
require the former to show evidence of identity as required under the 2004 Rules on Notarial Practice,
as amended.

Applying the above rule to the instant case, it is undisputed that the attorney-in-fact of respondents
who executed the verification and certificate against forum shopping, which was attached to
respondents' petition filed with the CA, is personally known to the notary public before whom the
documents were acknowledged. Both attorney-in-fact and the notary public hold office at respondents'
place of business and the latter is also the legal counsel of respondents.

In any event, this Court's disquisition in the fairly recent case of Heirs of Amada Zaulda v. Isaac
Zaulda14 regarding the import of procedural rules vis-a-vis the substantive rights of the parties, is
instructive, to wit:
chanroblesvirtuallawlibrary

[G]ranting, arguendo, that there was non-compliance with the verification requirement, the rule is
that courts should not be so strict about procedural lapses which do not really impair the proper
administration of justice. After all, the higher objective of procedural rule is to ensure that the
substantive rights of the parties are protected. Litigations should, as much as possible, be decided on
the merits and not on technicalities. Every party-litigant must be afforded ample opportunity for the
proper and just determination of his case, free from the unacceptable plea of technicalities.

In Coca-Cola Bottlers v. De la Cruz, where the verification was marred only by a glitch in the evidence
of the identity of the affiant, the Court was of the considered view that, in the interest of justice, the
minor defect can be overlooked and should not defeat the petition.

The reduction in the number of pending cases is laudable, but if it would be attained by precipitate, if
not preposterous, application of technicalities, justice would not be served. The law abhors
technicalities that impede the cause of justice. The court's primary duty is to render or dispense
justice. "It is a more prudent course of action for the court to excuse a technical lapse and afford the
parties a review of the case on appeal rather than dispose of the case on technicality and cause a
grave injustice to the parties, giving a false impression of speedy disposal of cases while actually
resulting in more delay, if not miscarriage of justice."

What should guide judicial action is the principle that a party-litigant should be given the fullest
opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty,
honor, or property on technicalities. The rules of procedure should be viewed as mere tools designed
to facilitate the attainment of justice. Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must always be eschewed.
At this juncture, the Court reminds all members of the bench and bar of the admonition in the often-
cited case of Alonso v. Villamor:chanroblesvirtuallawlibrary

Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it deserts its proper
office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant
consideration from courts. There should be no vested rights in technicalities.15cralawlawlibrary

Anent the second ground, petitioner insists that, based on evidence on record, an employer-employee
relationship exists between him and respondents.

The Court is not persuaded.

It is a basic rule of evidence that each party must prove his affirmative allegation.16 If he claims a
right granted by law, he must prove his claim by competent evidence, relying on the strength of his
own evidence and not upon the weakness of that of his opponent.17 The test for determining on whom
the burden of proof lies is found in the result of an inquiry as to which party would be successful if no
evidence of such matters were given.18 In an illegal dismissal case, the onus probandi rests on the
employer to prove that its dismissal of an employee was for a valid cause.19However, before a case for
illegal dismissal can prosper, an employer-employee relationship must first be established.20 Thus, in
filing a complaint before the LA for illegal dismissal, based on the premise that he was an employee of
respondents, it is incumbent upon petitioner to prove the employer-employee relationship by
substantial evidence.21

In regard to the above discussion, the issue of whether or not an employer-employee relationship
existed between petitioner and respondents is essentially a question of fact.22 The factors that
determine the issue include who has the power to select the employee, who pays the employee's
wages, who has the power to dismiss the employee, and who exercises control of the methods and
results by which the work of the employee is accomplished.23 Although no particular form of evidence
is required to prove the existence of the relationship, and any competent and relevant evidence to
prove the relationship may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence, which is that amount of relevant evidence that a reasonable mind might accept
as adequate to justify a conclusion.24

Generally, the Court does not review factual questions, primarily because the Court is not a trier of
facts.25 However, where, like here, there is a conflict between the factual findings of the LA and the
CA, on one hand, and those of the NLRC, on the other, it becomes proper for the Court, in the
exercise of its equity jurisdiction, to review and re-evaluate the factual issues and to look into the
records of the case and re-examine the questioned findings.26

Etched in an unending stream of cases are four standards in determining the existence of an
employer-employee relationship, namely: (a) the manner of selection and engagement of the putative
employee; (b) the mode of payment of wages; (c) the presence or absence of power of dismissal;
and, (d) the presence or absence of control of the putative employee's conduct. Most determinative
among these factors is the so-called "control test."27

Indeed, the power of the employer to control the work of the employee is considered the most
significant determinant of the existence of an employer-employee relationship.28 This test is premised
on whether the person for whom the services are performed reserves the right to control both the end
achieved and the manner and means used to achieve that end.29

In the present case, petitioner contends that, as evidence of respondents' supposed control over him,
the organizational plans he has drawn were subject to the approval of respondent corporation's Board
of Trustees. However, the Court agrees with the disquisition of the CA on this matter, to wit: chanroblesvirtuallawlibrary

[Respondents'] power to approve or reject the organizational plans drawn by [petitioner] cannot be
the control contemplated in the "control test." It is but logical that one who commissions another to do
a piece of work should have the right to accept or reject the product. The important factor to consider
in the "control test" is still the element of control over how the work itself is done, not just the end
result thereof.

Well settled is the rule that where a person who works for another performs his job more or less at his
own pleasure, in the manner he sees fit, not subject to definite hours or conditions of work, and is
compensated according to the result of his efforts and not the amount thereof, no employer-employee
relationship exists.30
cralawlawlibrary

What was glaring in the present case is the undisputed fact that petitioner was never subject to
definite working hours. He never denied that he goes to work and leaves therefrom as he pleases.31In
fact, on December 1-31, 2004, he went on leave without seeking approval from the officers of
respondent company. On the contrary, his letter32 simply informed respondents that he will be away
for a month and even advised them that they have the option of appointing his replacement during his
absence. This Court has held that there is no employer-employee relationship where the supposed
employee is not subject to a set of rules and regulations governing the performance of his duties
under the agreement with the company and is not required to report for work at any time, nor to
devote his time exclusively to working for the company.33

In this regard, this Court also agrees with the ruling of the CA that: chanroblesvirtuallawlibrary

Aside from the control test, the Supreme Court has also used the economic reality test in determining
whether an employer-employee relationship exists between the parties. Under this test, the economic
realities prevailing within the activity or between the parties are examined, taking into consideration
the totality of circumstances surrounding the true nature of the relationship between the parties. This
is especially appropriate when, as in this case, there is no written agreement or contract on which to
base the relationship. In our jurisdiction, the benchmark of economic reality in analyzing possible
employment relationships for purposes of applying the Labor Code ought to be the economic
dependence of the worker on his employer.

In the instant case, as shown by the resume of [petitioner], he concurrently held consultancy positions
with the Manila International Airport Authority (from 04 March 2001 to September 2003 and from 01
November 2004 up to the present) and the Anti-Terrorist Task Force for Aviation and Air
Transportation Sector (from 16 April 2004 to 30 June 2004) during his stint with the Eye Referral
Center (from 01 August 2003 to 29 April 2005). Accordingly, it cannot be said that the [petitioner]
was wholly dependent on [respondent] company.34 cralawlawlibrary

In bolstering his contention that there was an employer-employee relationship, petitioner draws
attention to the pay slips he supposedly received from respondent corporation. However, he does not
dispute the findings of the CA that there are no deductions for SSS and withholding tax from his
compensation, which are the usual deductions from employees' salaries. Thus, the alleged pay slips
may not be treated as competent evidence of petitioner's claim that he is respondents' employee.

In addition, the designation of the payments to petitioner as salaries, is not determinative of the
existence of an employer-employee relationship.35 Salary is a general term defined as a remuneration
for services given.36 Evidence of this fact, in the instant case, was the cash voucher issued in favor of
petitioner where it was stated therein that the amount of P20,000.00 was given as petitioner's
allowance for the month of December 2004, although it appears from the pay slip that the said
amount was his salary for the same period.

Additional evidence of the fact that petitioner was hired as a consultant and not as an employee of
respondent corporation are affidavits to this effect which were executed by Roy Oliveres 37 and Aurea
Luz Esteva,38 who are Medical Records Custodian and Administrative Officer, respectively, of
respondent corporation. Petitioner insists in its objection of the use of these affidavits on the ground
that they are, essentially, hearsay. However, this Court has ruled that although the affiants had not
been presented to affirm the contents of their affidavits and be cross-examined, their affidavits may
be given evidentiary value; the argument that such affidavits were hearsay was not
persuasive.39Likewise, this Court ruled that it was not necessary for the affiants to appear and testify
and be cross-examined by counsel for the adverse party.40 To require otherwise would be to negate
the rationale and purpose of the summary nature of the proceedings mandated by the Rules and to
make mandatory the application of the technical rules of evidence.41

These affidavits are corroborated by evidence, as discussed above, showing that petitioner has no
definite working hours and is not subject to the control of respondents.

Lastly, the Court does not agree with petitioner's insistence that his being hired as respondent
corporation's administrator and his designation as such in intra-company correspondence proves that
he is an employee of the corporation. The fact alone that petitioner was designated as an
administrator does not necessarily mean that he is an employee of respondents. Mere title or
designation in a corporation will not, by itself, determine the existence of an employer-employee
relationship.42 In this regard, even the identification card which was issued to petitioner is not an
adequate proof of petitioner's claim that he is respondents' employee. In addition, petitioner's
designation as an administrator neither disproves respondents' contention that he was engaged only
as a consultant.

As a final point, it bears to reiterate that while the Constitution is committed to the policy of social
justice and the protection of the working class, it should not be supposed that every labor dispute will
be automatically decided in favor of labor.43 Management also has its rights which are entitled to
respect and enforcement in the interest of simple fair play.44 Out of its concern for the less privileged
in life, the Court has inclined, more often than not, toward the worker and upheld his cause in his
conflicts with the employer.45 Such favoritism, however, has not blinded the Court to the rule that
justice is in every case for the deserving, to be dispensed in the light of the established facts and the
applicable law and doctrine.46

WHEREFORE, the instant petition is DENIED. The Decision and Resolution of the Court of Appeals,
dated April 20, 2009 and August 25, 2009, respectively, in CA-G.R. SPNo. 104261, are AFFIRMED.

SO ORDERED. ch

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION
G.R. No. 175170 September 5, 2012

MISAMIS ORIENTAL II ELECTRIC SERVICE COOPERATIVE (MORESCO II), Petitioner,

vs.
VIRGILIO M. CAGALAWAN, Respondent.

DECISION

DEL CASTILLO, J.:

In labor cases, strict adherence with the technical rules is not required.1 This literal policy, however, should still
conform with the rudiments of equitable principles of law. For instance, belated submission of evidence may only be
allowed if the delay is adequately justified and the evidence is clearly material to establish the party's cause. 2

By this Petition for Review on Certiorari,3 petitioner Misamis Oriental II Electric Service Cooperative (MORESCO II)
assails the Decision4 dated July 26, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 84991, which reversed and
set aside the Resolutions dated February 27, 20045 and April 26, 20046 of the National Labor Relations Commission
(NLRC), and thereby reinstated the Labor Arbiters Decision7 dated September 30, 2003 pronouncing respondent
Virgilio M. Cagalawan (Cagalawan) to have been constructively dismissed from employment. Also assailed is the CA
Resolution8 dated September 6, 2006 which denied MORESCO IIs Motion for Reconsideration and granted
Cagalawans Partial Motion for Reconsideration.

Factual Antecedents

On September 1, 1993, MORESCO II, a rural electric cooperative, hired Cagalawan as a Disconnection Lineman on
a probationary basis. On March 1, 1994 Cagalawan was appointed to the same post this time on a permanent
basis.9 On July 17, 2001, he was designated as Acting Head of the disconnection crew in Area III sub-office of
MORESCO II in Balingasag, Misamis Oriental (Balingasag sub-office).10 In a Memorandum11 dated May 9, 2002,
MORESCO II General Manager Amado B. Ke-e (Ke-e) transferred Cagalawan to Area I sub-office in Gingoog City,
Misamis Oriental (Gingoog sub-office) as a member of the disconnection crew. Said memorandum stated that the
transfer was done "in the exigency of the service."

In a letter12 dated May 15, 2002, Cagalawan assailed his transfer claiming he was effectively demoted from his
position as head of the disconnection crew to a mere member thereof. He also averred that his transfer to the
Gingoog sub-office is inconvenient and prejudicial to him as it would entail additional travel expenses to and from
work. He likewise sought clarification on what kind of exigency exists as to justify his transfer and why he was the one
chosen to be transferred.

In a Memorandum13 dated May 16, 2002, Ke-e explained that Cagalawans transfer was not a demotion since he was
holding the position of Disconnection Head only by mere designation and not by appointment. Ke-e did not, however,
state the basis of the transfer but instead advised Cagalawan to just comply with the order and not to question
managements legitimate prerogative to reassign him.

In reply, Cagalawan claimed that he was transferred because he executed an Affidavit 14 in support of his co-
employee Jessie Rances, who filed an illegal dismissal case against MORESCO II.15 He emphasized though that his
action was not an act of disloyalty to MORESCO II, contrary to what was being accused of him. Nonetheless,
Cagalawan still reported for work at Gingoog sub-office on May 27, 2002 but reserved his right to contest the legality
of such transfer.16

Meanwhile and in view of Cagalawans transfer, Ke-e issued an order17 recalling the formers previous designation as
Acting Head of the disconnection crew of the Balingasag sub-office.
Cagalawan eventually stopped reporting for work. On July 1, 2002, he filed a Complaint for constructive dismissal
before the Arbitration branch of the NLRC against MORESCO II and its officers, Ke-e and Danilo Subrado (Subrado),
in their capacities as General Manager and Board Chairman, respectively.

Proceedings before the Labor Arbiter

When the Labor Arbiter, in an Order18 dated September 13, 2002, directed the parties to submit their respective
verified position papers, only Cagalawan complied.19 He alleged that his transfer was unnecessary and was made
only in retaliation for his having executed an affidavit in favor of a co-worker and against MORESCO II. In support of
his contention, Cagalawan submitted a certification20 executed by the Head of the disconnection crew of the Gingoog
sub-office, Teodoro Ortiz (Ortiz), attesting that the said sub-office was not undermanned. In fact, when Cagalawan
stopped working, no other employee was transferred or hired in his stead, a proof that there were enough
disconnection crew members in Gingoog sub-office who can very well handle the assigned tasks. Moreover,
Cagalawan claimed that his transfer constituted a demotion from his position as Acting Head of the disconnection
crew which he had occupied for almost 10 months. As such, he should be considered regular in that position and
entitled to its corresponding salary.

Cagalawan further alleged that his transfer from Balingasag to Gingoog sub-office was tantamount to illegal
constructive dismissal for being prejudicial and inconvenient as he had to spend an additional amount of P197.0021 a
day, leaving him nothing of his salary. He therefore had no choice but to stop working.

Aside from reinstatement and backwages, Cagalawan sought to recover damages and attorneys fees because to
him, his transfer was effected in a wanton, fraudulent, oppressive or malevolent manner. Apart from MORESCO II, he
averred that Ke-e and Subrado should also be held personally liable for damages since the two were guilty of bad
faith in effecting his transfer. He believed that Subrado had a hand in his arbitrary transfer considering that he is the
son-in-law of Subrados opponent in the recent election for directorship in the electric cooperative. In fact, Subrado
even asked a certain Cleopatra Moreno Manuel to file a baseless complaint against him as borne out by the
declaration of Bob Abao in an affidavit.22

In view of MORESCO IIs failure to file a position paper, Cagalawan filed a Motion 23 for the issuance of an order to
declare the case submitted for decision. This was granted in an Order 24 dated March 14, 2003.

On September 30, 2003, the Labor Arbiter rendered a Decision 25 declaring that Cagalawans transfer constituted
illegal constructive dismissal. Aside from finding merit in Cagalawans uncontroverted allegation that the transfer
became grossly inconvenient for him, the Labor Arbiter found no sufficient reason for his transfer and that the same
was calculated to rid him of his employment, impelled by a vindictive motive after he executed an Affidavit in favor of
a colleague and against MORESCO II.

Thus, the Labor Arbiter ordered Cagalawans reinstatement to the position of Collector and awarded him backwages
from the date of his transfer on May 16, 2002 up to his actual reinstatement. However, the Labor Arbiter denied his
prayer for regularization as head of the disconnection crew since the period of six months which he claimed as
sufficient to acquire regular status applies only to probationary employment. Hence, the fact that he was acting as
head of the disconnection crew for 10 months did not entitle him to such position on a permanent basis. Moreover,
the decision to promote him to the said position should only come from the management.

With respect to damages, the Labor Arbiter found Ke-e to have acted capriciously in effecting the transfer, hence, he
awarded moral and exemplary damages to Cagalawan. Attorneys fees was likewise adjudged in his favor.

The dispositive portion of the Decision reads:

WHEREFORE, premises considered, judgment is rendered declaring the transfer of complainant as tantamount to
constructive dismissal and ordering respondents to reinstate complainant to his position as collector in Balingasag,
Misamis Oriental without loss of seniority rights and to pay complainant the following:

1. Backwages - P 189,096.00
2. Exemplary damages - P 10,000.00
3. Moral damages - P 20,000.00
4. Attorney's fee 10% - P 21,909.60
GRAND TOTAL AWARD P 241,005.60

SO ORDERED.26

Proceedings before the National Labor Relations Commission

MORESCO II and Cagalawan both appealed the Labor Arbiters Decision.

In its Memorandum on Appeal,27 MORESCO II invoked the liberal application of the rules and prayed for the NLRC to
admit its evidence on appeal. MORESCO II denied that Cagalawans transfer was done in retaliation for executing an
affidavit in favor of a co-worker. MORESCO II explained that the transfer was in response to the request of the area
manager in Gingoog sub-office for additional personnel in his assigned area. To substantiate this, it submitted a
letter28 dated May 8, 2002 from Gingoog sub-office Area Manager, Engr. Ronel B. Canada (Engr. Canada),
addressed to Ke-e. In said letter, Engr. Canada requested for two additional disconnection linemen in order to attain
the collection quota allocated in his area. MORESCO II then averred that as against this letter of Engr. Canada who
is a managerial employee, the certification issued by Ortiz should be considered as incompetent since the latter is a
mere disconnection crew.

Moreover, Cagalawans claim of additional expenses brought about by his transfer, specifically for meal and
transportation, deserves no appreciation at all since he would still incur these expenses regardless of his place of
assignment and also considering that he was provided with a rented motorcycle with fuel and oil allowance.

Also, MORESCO II intimated that it has no intention of removing Cagalawan from its employ especially since his
father-in-law was its previous Board Member. In fact, it was Cagalawan himself who committed an act of
insubordination when he abandoned his job.

In his Reply29 to MORESCO IIs Memorandum of Appeal, Cagalawan averred that the latter cannot present any
evidence for the first time on appeal without giving any valid reason for its failure to submit its evidence before the
Labor Arbiter as provided under the NLRC rules. Further, the evidence sought to be presented by MORESCO II is not
newly discovered evidence as to warrant its admission on appeal. In particular, he claimed that the May 8, 2002 letter
of Engr. Canada should have been submitted at the earliest opportunity, that is, before the Labor Arbiter. MORESCO
IIs failure to present the same at such time thus raises suspicion that the document was merely fabricated for the
purpose of appeal. Moreover, Cagalawan claimed that if there was indeed a request from the Area Manager of
Gingoog sub-office for additional personnel as required by the exigency of the service, such reason should have been
mentioned in Ke-es May 16, 2002 Memorandum. In this way, the transfer would appear to have a reasonable basis
at the outset. However, no such mention was made precisely because the transfer was without any valid reason.

Anent Cagalawans partial appeal,30 he prayed that the decision be modified in that he should be reinstated as
Disconnection Lineman and not as Collector.

The NLRC, through a Resolution31 dated February 27, 2004, set aside and vacated the Decision of the Labor Arbiter
and dismissed Cagalawans complaint against MORESCO II. The NLRC admitted MORESCO IIs evidence even if
submitted only on appeal in the interest of substantial justice. It then found said evidence credible in showing that
Cagalawans transfer to Gingoog sub-office was required in the exigency of the cooperatives business interest. It
also ruled that the transfer did not entail a demotion in rank and diminution of pay as to constitute constructive
dismissal and thus upheld the right of MORESCO II to transfer Cagalawan in the exercise of its sound business
judgment.

Cagalawan filed a Motion for Reconsideration32 but the same was denied by the NLRC in a Resolution33 dated April
26, 2004.

Proceedings before the Court of Appeals

Cagalawan thus filed a Petition for Certiorari34 with the CA. In a Decision35 dated July 26, 2005, the CA found the
NLRC to have gravely abused its discretion in admitting MORESCO IIs evidence, citing Section 3, Rule V of the
NLRC Rules of Procedure36 which prohibits the parties from making new allegations or cause of action not included in
the complaint or position paper, affidavits and other documents. It held that what MORESCO II presented on appeal
was not just an additional evidence but its entire evidence after the Labor Arbiter rendered a Decision adverse to it.
To the CA, MORESCO IIs belated submission of evidence despite the opportunities given it cannot be countenanced
as such practice "defeats speedy administration of justice" and "smacks of unfairness."

The dispositive portion of the CA Decision reads:

IN VIEW THEREOF, the petition is GRANTED. The Decision of the Labor Arbiter is reinstated with the modification
that if reinstatement of petitioner is not feasible, he should be paid separation pay in accordance with law.

SO ORDERED.37

MORESCO II filed a Motion for Reconsideration38 insisting that it may present evidence for the first time on appeal as
the NLRC is not precluded from admitting the same because technical rules are not binding in labor cases. Besides,
of paramount importance is the opportunity of the other party to rebut or comment on the appeal, which in this case,
was afforded to Cagalawan.

Cagalawan, for his part, filed a Partial Motion for Reconsideration, 39 seeking modification of the Decision by ordering
his reinstatement to the position of Disconnection Lineman instead of Collector.

In a Resolution40 dated September 6, 2006, the CA maintained its ruling that MORESCO IIs unexplained failure to
present evidence or submit a position paper before the Labor Arbiter for almost 12 months from receipt of
Cagalawans position paper is intolerable and cannot be permitted. Hence, it denied its Motion for Reconsideration.
With respect to Cagalawans motion, the same was granted by the CA, viz:

Anent petitioners Partial Motion for Reconsideration, We find the same meritorious. The records of this case reveal
that prior to his constructive dismissal, petitioner was a Disconnection Lineman, not a Collector, assigned at
Balingasag, Misamis Oriental. Hence, We modify the dispositive portion of Our July 26, 2005 Decision, to read:

IN VIEW THEREOF, the petition is GRANTED. The Decision of the Labor Arbiter is reinstated with modification that
petitioner be reinstated to his position as Disconnection Lineman in Balingasag, Misamis Oriental with further
modification that if reinstatement of petitioner is not feasible, he should be paid separation pay in accordance with
law. 41(Emphasis in the original.)

Issues

MORESCO II thus filed this petition raising the following issues:

(1) Was the respondent constructively dismissed by the petitioner?

(2) Did the Court of Appeals err in reversing the NLRC? 42

MORESCO II insists that Cagalawans transfer was necessary in order to attain the collection quota of the Gingoog
sub-office. It contests the credibility of Ortizs certification which stated that there was no need for additional
personnel in the Gingoog sub-office. According to it, Ortiz is not a managerial employee but merely a disconnection
crew who is not competent to make declarations in relation to MORESCO IIs business needs. It likewise refutes
Cagalawans claim of incurring additional expenses due to his transfer which caused him inconvenience. In sum, it
claims that Cagalawan was not constructively dismissed but instead had voluntarily abandoned his job.

MORESCO II avers that the CAs ruling is not in accordance with jurisprudence on the matter of admitting evidence
on appeal in labor cases. It submits that the NLRC is correct in accepting its evidence submitted for the first time on
appeal in line with the basic precepts of equity and fairness. The NLRC also correctly ruled in its favor after properly
appreciating its evidence which had been rebutted and contradicted by Cagalawan.

Our Ruling

The petition has no merit.

MORESCO IIs belated submission of

evidence cannot be permitted.

Labor tribunals, such as the NLRC, are not precluded from receiving evidence submitted on appeal as technical rules
are not binding in cases submitted before them.43 However, any delay in the submission of evidence should be
adequately explained and should adequately prove the allegations sought to be proven. 44

In the present case, MORESCO II did not cite any reason why it had failed to file its position paper or present its
cause before the Labor Arbiter despite sufficient notice and time given to do so. Only after an adverse decision was
rendered did it present its defense and rebut the evidence of Cagalawan by alleging that his transfer was made in
response to the letter-request of the area manager of the Gingoog sub-office asking for additional personnel to meet
its collection quota. To our mind, however, the belated submission of the said letter-request without any valid
explanation casts doubt on its credibility, specially so when the same is not a newly discovered evidence. For one,
the letter-request was dated May 8, 2002 or a day before the memorandum for Cagalawans transfer was issued.
MORESCO II could have easily presented the letter in the proceedings before the Labor Arbiter for serious
examination. Why it was not presented at the earliest opportunity is a serious question which lends credence to
Cagalawans theory that it may have just been fabricated for the purpose of appeal.

It should also be recalled that after Cagalawan received the memorandum for his transfer to the Gingoog sub-office,
he immediately questioned the basis thereof through a letter addressed to Ke-e. If at that time there was already a
letter-request from the Gingoog area manager, Ke-e could have easily referred to or specified this in his subsequent
memorandum of May 16, 2002 which served as his response to Cagalawans queries about the transfer. However,
the said memorandum was silent in this respect. Nevertheless, Cagalawan, for his part, faithfully complied with the
transfer order but with the reservation to contest its validity precisely because he was not adequately informed of its
real basis.

The rule is that it is within the ambit of the employers prerogative to transfer an employee for valid reasons and
according to the requirement of its business, provided that the transfer does not result in demotion in rank or
diminution of salary, benefits and other privileges. 45 This Court has always considered the managements prerogative
to transfer its employees in pursuit of its legitimate interests. But this prerogative should be exercised without grave
abuse of discretion and with due regard to the basic elements of justice and fair play, such that if there is a showing
that the transfer was unnecessary or inconvenient and prejudicial to the employee, it cannot be upheld. 46
Here, while we find that the transfer of Cagalawan neither entails any demotion in rank since he did not have tenurial
security over the position of head of the disconnection crew, nor result to diminution in pay as this was not sufficiently
proven by him, MORESCO IIs evidence is nevertheless not enough to show that said transfer was required by the
exigency of the electric cooperatives business interest. Simply stated, the evidence sought to be admitted by
MORESCO II is not substantial to prove that there was a genuine business urgency that necessitated the transfer.

Notably, the only evidence adduced by MORESCO II to support the legitimacy of the transfer was the letter-request
of Engr. Canada. However, this piece of evidence cannot in itself sufficiently establish that the Gingoog sub-office
was indeed suffering from losses due to collection deficiency so as to justify the assignment of additional personnel in
the area. Engr. Canadas letter is nothing more than a mere request for additional personnel to augment the number
of disconnection crew assigned in the area. While it mentioned that the areas collection efficiency should be
improved and that there is a shortage of personnel therein, it is, standing alone, self-serving and thus cannot be
considered as competent evidence to prove the accuracy of the allegations therein. MORESCO II could have at least
presented financial documents or any other concrete documentary evidence showing that the collection quota of the
Gingoog sub-office has not been met or could not be reached. It should have also submitted such other documents
which would show the lack of sufficient personnel in the area. Unfortunately, the area managers letter provides no
more than bare allegations which deserve not even the slightest credit.

When there is doubt between the evidence submitted by the employer and that submitted by the employee, the
scales of justice must be tilted in favor of the employee.47 This is consistent with the rule that an employers cause
could only succeed on the strength of its own evidence and not on the weakness of the employees evidence. 48Thus,
MORESCO II cannot rely on the weakness of Ortizs certification in order to give more credit to its own evidence.
Self-serving and unsubstantiated declarations are not sufficient where the quantum of evidence required to establish
a fact is substantial evidence, described as more than a mere scintilla.49 "The evidence must be real and substantial,
and not merely apparent."50 MORESCO II has miserably failed to discharge the onus of proving the validity of
Cagalawans transfer.

Clearly, not only was the delay in the submission of MORESCO IIs evidence not explained, there was also failure on
its part to sufficiently support its allegation that the transfer of Cagalawan was for a legitimate purpose. This being the
case, MORESCO IIs plea that its evidence be admitted in the interest of justice does not deserve any merit.

Ke-e and Subrado, as corporate officers,

could not be held personally liable for
Cagalawans monetary awards.

In the Decision of the Labor Arbiter, the manager of MORESCO II was held to have acted in an arbitrary manner in
effecting Cagalawans transfer such that moral and exemplary damages were awarded in the latters favor. However,
the said Decision did not touch on the issue of bad faith on the part of MORESCO IIs officers, namely, Ke-e and
Subrado. Consequently, no pronouncement was made as to whether the two are also personally liable for
Cagalawans money claims arising from his constructive dismissal.

Still, we hold that Ke-e and Subrado cannot be held personally liable for Cagalawans money claims.

"Bad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral
obliquity and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes
of the nature of fraud."51 Here, although we agree with the Labor Arbiter that Ke-e acted in an arbitrary manner in
effecting Cagalawans transfer, the same, absent any showing of some dishonest or wrongful purpose, does not
amount to bad faith.

Suffice it to say that bad faith must be established clearly and convincingly as the same is never
presumed.52Similarly, no bad faith can be presumed from the fact that Subrado was the opponent of Cagalawans
father-in-law in the election for directorship in the cooperative. Cagalawan's claim that this was one of the reasons
why he was transferred is a mere allegation without proof. Neither does Subrado 's alleged instruction to file a
complaint against Cagalawan bolster the Iatter's claim that the former had malicious intention against him. As the
Chairman of the Board of Directors of MORESCO II, Subrado has the duty and obligation to act upon complaints of
its clients. On the contrary, the Court finds that Subrado had no participation whatsoever in Cagalawan's illegal
dismissal; hence. the imputation of bad faith against him is untenable.

WHEREFORE, the petition is DENIED. The Decision dated July 26, 2005 or the Court of Appeals in CA-G.R. SP No.
84991 and its Resolution dated September 6, 2006, are AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 186344 February 20, 2013

LEOPARD SECURITY AND INVESTIGATION AGENCY, Petitioner,

vs.
TOMAS QUITOY, RAUL SABANG and DIEGO MORALES, Respondents.

DECISION

PEREZ, J.:

Is an award of separation pay proper despite lack of showing of illegal dismissal? This is the main issue- in this Rule
45 Petition for Review on Certiorari assailing the Decision1 dated 26 September 20082 rendered and the Resolution
dated 21 January 20093 issued by the Twentieth Division of the Court of Appeals (CA) in CA-G.R. SP No. 03097.

The factual antecedents are not in dispute.

Alongside Numeriano Ondong, respondents Tomas Quitoy, Raul Sabang and Diego Morales were hired as security
guards by petitioner Leopard Security and Investigation Agency (LSIA) which maintained its office at BCC House,
537 Shaw Boulevard, Mandaluyong City.4 All being residents of Cebu City, respondents were assigned by LSIA to the
different branches of its only client in said locality, Union Bank of the Philippines (Union Bank). On 1 April 2005, it
appears that Union Bank served a notice to LSIA, terminating the parties security service contract effective at the
end of business hours of 30 April 2005.5 Thru its representative, Rogelio Morales, LSIA informed respondents on 29
April 2005 of the termination of its contract with Union Bank which had decided to change its security provider. Upon
Morales instruction, respondents went to the Union Bank Cebu Business Park Branch on 30 April 2005, for the
turnover of their service firearms to Arnel Cortes, Union Banks Chief Security Officer.6

On 3 May 2005, respondents and Ondong filed a complaint for illegal dismissal, unpaid 13th month pay and service
incentive leave pay (SILP), moral and exemplary damages as well as attorneys fees against LSIA, its President,
Jose Poe III, Union Bank, its Regional Service and Operations Officer, Catherine Cheung, HerbertHojas, Protectors
Services, Inc. (PSI) and Capt. Gerardo Jaro. With the complaint already docketed as RAB Case No. 07-05-0979-
2005 before the Regional Arbitration Branch No. VII of the National Labor Relations Commission (NLRC) in Cebu
City,7 it appears that LSIA sent on 10 May 2005 a notice requiring respondents to report for work to its Mandaluyong
City office.8 In an Order dated 6 June 2005, Cheung and Hojas were later dropped as parties-respondents from the
case upon motion of respondents. In view of Ondongs execution of a quitclaim, on the other hand, his complaint was
likewise dismissed with prejudice, resulting in the exclusion of PSI and Jaro as parties-respondents from the case.9

In support of their complaint, respondents averred that they were hired and assigned by LSIA to the different Cebu
City branches of Union Bank which directly paid their salaries and whose branch managers exercised direct control
and supervision over them. Required to work from 7:30 a.m. to 9:00 p.m. daily, respondents claimed that they took
orders and instructions from Union Banks branch managers since LSIA had no administrative personnel in Cebu
City. Respondents further asserted that, after introducing himself as a representative of LSIA on 29 April 2005,
Morales belatedly informed them that their services would be terminated at the end of the office hours on the same
business day. Directed by Morales to report to Union Banks Cebu Business Park Branch the next day, respondents
maintained that they surrendered their service firearms to Cortes who told them that Union Bank would be engaging
the services of another security agency effective the next working day. Not even reimbursed their firearm bond nor
told that Union Bank had no monetary obligation to them, respondents claimed they were constrained to file their
complaint and to pray that the former be held jointly and severally liable with LSIA for their claims.10

In its position paper, LSIA, on the other hand, asseverated that upon being hired, respondents opted for an
assignment in Cebu City and were, accordingly, detailed at the different branches of Union Bank in said locality.
Informed by Union Bank on 1 April 2005 of the termination of their security service contract effective 30 April 2005,
LSIA claimed that it relieved respondents from their assignments by the end of the business hours of the latter date.
Petitioners would, on 10 May 2005, direct respondents to report for work at its Mandaluyong City office. As
respondents failed to do so, LSIA alleged that it issued show cause letters on 21 June 2005, requiring the former to
explain why they should not be administratively sanctioned for their unexplained absences. As the avowed direct
employer of respondents, LSIA also prayed that Union Bank be dropped from the case and that the complaint be
altogether dismissed for lack of merit.11 Invoking the security service contract it executed with LSIA from which its lack
of an employer-employee relationship with respondents could be readily gleaned, Union Bank, in turn, asserted that
the complaint should be dismissed as against it for lack of cause of action. 12

On 6 April 2006, Labor Arbiter Violeta Ortiz-Bantug rendered a Decision, finding LSIA liable for the illegal dismissal of
respondents. Faulting LSIA for informing respondents of the termination of their services only on 30 April 2005
despite Union Banks 1 April 2005 advice of the termination of its security service contract, the Labor Arbiter ruled
that the 10 May 2005 report to work order did not show a sincere intention on the part of LSIA to provide respondents
with other assignments. Aside from respondents claims for backwages, LSIA was ordered by the Labor Arbiter to pay
the formers claim for separation pay on the ground that reinstatement was no longer feasible under the
circumstances. Although absolved from liability for the foregoing awards upon the finding that LSIA was an
independent contractor, Union Bank was, however, held jointly and severally liable with said security agency for the
payment of respondents claims for proportionate 13th month pay and SILP for the three years immediately preceding
the institution of the case.13

On appeal, the foregoing decision was modified in the 20 March 2007 Decision rendered by the Fourth Division of the
NLRC in NLRC Case No. V-000570-2006. Applying the principle that security agencies like LSIA are allowed to put
security guards on temporary off-detail or floating status for a period not exceeding six months, the NLRC discounted
the factual and legal bases for the illegal dismissal determined by the Labor Arbiter as well as the backwages
awarded in favor of respondents. Finding that the filing of the complaint on 3 May 2005 was premature, the NLRC
took note of the fact that respondents did not even protest against the report to work order issued by LSIA. Even
then, the NLRC upheld the Labor Arbiters award of separation pay on the theory that reinstatement was no longer
viable. The awards of proportionate 13th month pay and SILP for which Union Bank and LSIA were held solidarily
liable were likewise sustained for failure of the latter to discharge the burden of proving payment of said labor
standard benefits.14 Belatedly submitting documents to prove its payment of SILP, LSIA filed a motion for
reconsideration of the foregoing decision15 which was, however, denied for lack of merit in the NLRCs 23 July 2007
Resolution.16

Dissatisfied, LSIA filed the Rule 65 Petition for Certiorari docketed before the CA as CA-G.R. SP No. 03097. Calling
attention to the impropriety of the award of separation pay absent a finding of illegal dismissal, LSIA also faulted the
NLRC for ignoring the evidence it submitted alongside its motion for reconsideration to prove the payment of
respondents SILP for the years 2003, 2004 and 2005.17 On 26 September 2008, the then Twentieth Division of the
CA rendered the herein assailed decision, affirming the NLRCs 23 July 2007 Decision and denying LSIAs petition for
lack of merit. Applying the principle that respondents could not be considered illegally dismissed before the lapse of
six months from their being placed on floating status by LSIA,18 the CA justified the awards of separation pay,
proportionate 13th month pay and SILP in the following wise:

In another vein, however, xxx respondents were caught off guard when Rogelio Morales, [LSIAs] representative
summarily told them not to report to Union Bank anymore. They did not understand its implications as no one
bothered to explain what would happen to them. At any rate, it is clear as day that xxx respondents no longer wish to
continue their employment with [LSIA] because of the shabby treatment previously given them. Their relations have
obviously turned sour. Such being the case, separation pay, in lieu of reinstatement, is proper. Separation pay is
granted where reinstatement is no longer advisable because of strained relations between the employer and the
employee.

xxxx

The burden of proving payment of holiday pay and salary differentials belong to the employer, not the employee.
Here [LSIA] failed to present proofs that xxx respondents received payment for [SILP] and thirteenth month pay which
accrued to them under the law. As the labor arbiter ruled, however, payment of [SILP] shall only be for the last three
(3) years of xxx respondents service taking into consideration the provisions on prescription of money claims and
proportionate 13th month pay for the year 2004.19

Aggrieved by the foregoing decision as well as the CAs 21 January 2009 denial of their motion for reconsideration
thereof,20 LSIA and Poe filed the Petition for Review on Certiorari at bench, on the following grounds:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE NLRC
DECISION AWARDING TO RESPONDENTS SEPARATION PAY DESPITE ITS FINDINGS THAT THEY
WERE NOT ILLEGALLY DISMISSED.

II

THE COURT OF APPEALS ERRED WHEN IT UPHELD THE NLRC DECISION AWARDING TO
RESPONDENTS SERVICE INCENTIVE LEAVE PAY FOR THE YEARS 2003, 2004 AND 2005.21

In urging the grant of their petition, LSIA and Poe argue that, upon discounting the factual basis for respondents
claim that they were illegally dismissed from employment, the CA should have disallowed the award of separation
pay awarded by the Labor Arbiter and the NLRC. They insist that like backwages, separation pay is the legal
consequence of a finding of illegal dismissal and should, perforce, be deleted in the absence thereof, particularly
when no evidence was adduced to prove the strained relations between the employer and employee. LSIA and Poe
also fault the CA for ignoring the Bank Advice Slips and On Demand Statement of Account belatedly submitted
alongside the motion for reconsideration they filed before the NLRC, to prove payment of respondents SILP for the
years 2004 and 2005.22 In their comment to the petition, on the other hand, respondents insist that they have been
illegally dismissed from employment and that the Labor Arbiters determination to that effect was erroneously
reversed by both the NLRC and the CA.23

The petition is impressed with merit.

Applying Article 28624 of the Labor Code of the Philippines by analogy, this Court has repeatedly recognized that
security guards may be temporarily sidelined by their security agency as their assignments primarily depend on the
contracts entered into by the latter with third parties.25 Temporary "off-detail" or "floating status" is the period of time
when security guards are in between assignments or when they are made to wait after being relieved from a previous
post until they are transferred to a new one. It takes place when, as here, the security agencys clients decide not to
renew their contracts with the agency, resulting in a situation where the available posts under its existing contracts
are less than the number of guards in its roster.26 For as long as such temporary inactivity does not continue for a
period exceeding six months, it has been ruled that placing an employee on temporary "off-detail" or "floating status"
is not equivalent to dismissal.27

In the case at bench, respondents were informed on 29 April 2005 that they were going to be relieved from duty as a
consequence of the 30 April 2005 expiration of the security service contract between Union Bank and LSIA. While
respondents lost no time in immediately filing their complaint on 3 May 2005, the record equally shows that they were
directed by LSIA to report for work at its Mandaluyong City office on 10 May 2005 or a mere ten days from the time
the former were effectively sidelined. Considering that a security guard is only considered illegally dismissed from
service when he is sidelined from duty for a period exceeding six months, 28 we find that the CA correctly upheld the
NLRCs ruling that respondents were not illegally dismissed by LSIA. Parenthetically, said ruling is binding on
respondents who did not appeal either the decision rendered by the NLRC or the CA in line with the entrenched
procedural rule in this jurisdiction that a party who did not appeal cannot assign such errors as are designed to have
the judgment modified.29

Having correctly ruled out illegal dismissal of respondents, the CA reversibly erred, however, when it sustained the
NLRCs award of separation pay on the ground that the parties relationship had already been strained. For one,
liability for the payment of separation pay is a legal consequence of illegal dismissal where reinstatement is no longer
viable or feasible. Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to the twin reliefs
of full backwages and reinstatement without loss of seniority rights. 30 Aside from the instances provided under Articles
28331 and 28432 of the Labor Code, separation pay is, however, granted when reinstatement is no longer feasible
because of strained relations between the employer and the employee. 33 In cases of illegal dismissal, the accepted
doctrine is that separation pay is available in lieu of reinstatement when the latter recourse is no longer practical or in
the best interest of the parties.34

As a relief granted in lieu of reinstatement, however, it consequently goes without saying that an award of separation
pay is inconsistent with a finding that there was no illegal dismissal. Standing alone, the doctrine of strained relations
will not justify an award of separation pay, a relief granted in instances where the common denominator is the fact
that the employee was dismissed by the employer.35 Even in cases of illegal dismissal, the doctrine of strained
relations is not applied indiscriminately as to bar reinstatement, especially when the employee has not indicated an
aversion to returning to work36 or does not occupy a position of trust and confidence in 37 or has no say in the
operation of the employers business.38 Although litigation may also engender a certain degree of hostility, it has
likewise been ruled that the understandable strain in the parties relations would not necessarily rule out
reinstatement which would, otherwise, become the rule rather than the exception in illegal dismissal cases. 39

Our perusal of the position paper they filed a quo shows that, despite erroneously believing themselves to have been
illegally dismissed, respondents had alleged no circumstance indicating the strained relations between them and
LSIA and had even alternatively prayed for reinstatement alongside the payment of separation pay. 40 Since
application of the doctrine of strained relations presupposes a question of fact which must be demonstrated and
adequately supported by evidence,41 the CA clearly erred in ruling that the parties relations had already soured and
that an award of separation pay in favor of respondents is proper. Apprised by Union Bank on 1 April 2005 that it was
no longer renewing its security service contract after 30 April 2005, LSIA may have tarried in informing respondents
of the fact only on 29 April 2005. As correctly ruled by the NLRC, however, the resultant inconvenience to
respondents cannot detract from the fact that the employer-employee relationship between the parties still subsisted
and had yet to be severed when respondents filed their complaint on 3 May 2005. 1wphi1

Absent illegal dismissal on the part of LSIA and abandonment of employment on the part of respondents, we find that
the latters reinstatement without backwages is, instead, in order. In addition to respondents alternative prayer
therefor in their position paper, reinstatement is justified by LSIAs directive for them to report for work at its
Mandaluyong City office as early of 10 May 2005. As for the error ascribed the CA for failing to correct the NLRCs
disregard of the evidence showing LSIAs payment of respondents SILP, suffice it to say that the NLRC is not
precluded from receiving evidence, even for the first time on appeal, because technical rules of procedure are not
binding in labor cases.42 Considering that labor officials are, in fact, encouraged to use all reasonable means to
ascertain the facts speedily and objectively, with little resort to technicalities of law or procedure, 43 LSIA correctly
faults the CA for likewise brushing aside the evidence of SILP payments it submitted during the appeal stage before
the NLRC.

The record shows that respondents were uniformly awarded SILP at the rate of P666.00 for the period May 3 to
December 31, 2002, P1,000.00 for the period January 1 to December 31, 2003, P1,040.00 for the period January 1 to
December 31, 2004 and P347.36 for the period January 1 to May 3, 2005 or a total of P3,053.36 each.44 The Bank
Advice Slips and On Demand Statement of Account45 submitted by LSIA before the NLRC shows uniform payments
of SILP to respondents in the sum of P1,025 for the year 2004 which should, therefore, be deducted from the award
of said benefit in favor of respondent. Although LSIA also submitted a Bank Advice Slip showing a
supposed P1,065.00 payment of SILP for the year 2005 in favor of respondent Sabang only, the absence of an On
Demand Statement of Account for said amount impels Us to disallow the further deduction thereof from the SILP
award.

WHEREFORE, premises considered, the petition is GRANTED and the assailed Decision dated 26 September 2008
is, accordingly, MODIFIED to direct the reinstatement of respondents in lieu of the award of separation pay and to
deduct the sum of P1,025.00 from the SILP individually awarded in favor of respondents. The rest isAFFIRMED.

SO ORDERED.
 G.R. No. 197763, December 07, 2015

SMART COMMUNICATIONS, INC., MR. NAPOLEON L. NAZARENO, AND MR. RICKY P.

ISLA,Petitioners, v. JOSE LENI Z. SOLIDUM, Respondent.

G.R. No. 197836

JOSE LENI Z. SOLIDUM, Petitioner, v. SMART COMMUNICATIONS, INC., MR. NAPOLEON L. NAZARENO,
AND MR. RICKY P. ISLA, Respondent.

DECISION

VELASCO JR., J.:

The Case

These are consolidated petitions filed under Rule 45 of the Rules of Court assailing the Decision dated April 4,
20111 and Resolution dated July 14, 20112 of the Court of Appeals (CA) in CA-G.R. SP No. 109765 entitled Jose
Leni Z. Solidum v. National Labor Relations Commission (First Division), Smart Communications, Inc., Napoleon L.
Nazareno and Ricky P. Isla. The CA Decision affirmed with modification the Resolution dated January 26, 2009 and
Decision dated May 29, 2009 of the National Labor Relations Commission (NLRC) in NLRC Case No. 00-11-09564-
05.

The Facts

The facts as found by the CA are as follows: chanRoblesvirtualLawlibrary

In an Employment Contract dated April 26, 2004,3 Smart Communications, Inc. (Smart) hired Jose Leni Solidum
(Solidum) as Department Head of Smart Prepaid/Buddy Activations under the Product Marketing Group. Existing
company procedures provide that a department head shall approve project proposals coming from his marketing
assistants and product managers/officers. Once approved, a finance officer will assign a reference number to the
project with a stated budget allocation. If the Company decides to engage the services of a duly accredited creative
agency, the department head will coordinate with it to discuss the details of the project. The implementation details
and total amount of the project will then be included in a Cost Estimate (CE) submitted to the Company, routed for
approval, and returned to the selected agency for implementation. After the project is carried out, the agency will
bill the Company by sending the CE with attached invoices and other supporting documents.

On September 21, 2005, Solidum received a Notice to Explain of even date 4 from the Company charging him with
acts of dishonesty and breach of trust and confidence. In summary, he was charged with violating "various
company policies by misrepresenting and using his position and influence in his grant plot to defraud Smart by
conceptualizing fictitious marketing events, appointing fictitious advertising agencies to supposedly carry out
marketing events and submitting fictitious documents to make it appear that the marketing events transpired."5 He
was charged with the following infractions: (1) falsification and/or knowingly submitting falsified contents of
reports/documents relative to his duties and responsibilities; (2) obtaining through fraudulent means materials,
goods or services from the Company; (3) failing or refusing to disclose to the Company any existing or future
dealings, transactions, relationships, etc. posing or would pose possible conflict of interest; (4) other forms of
deceit, fraud, swindling, and misrepresentation committed by an employee against the company or its
representative; and (5) fraud or willful breach of trust in relation to transactions covered by Invoice No. 2921 and
CE No. 2005-533 as well as CE Nos. 2005-413, 2005-459, 2005-461, 2005-526, 2005-460, 2005-552 and 2005-
527 that were approved/noted by him. Solidum received a copy of the Notice on the same date. Pending
administrative investigation, Solidum was placed under preventive suspension without pay for a period of thirty
(30) days.

In a letter dated September 26, 2005,6 Solidum denied the charges and claimed that he never defrauded nor
deceived the Company in his transactions.
Continued audit investigation, however, revealed that Solidum approved/noted several CEs covering activities for
which payments were made but did not actually carried out. Unaccredited third parties were also engaged in the
implementation of the projects. Thus, the Company issued another Notice to Explain dated October 21, 20057 to
Solidum, this time covering the following additional CEs: 2005-416, 2005-480, 2005-481, 2005-479, 2005-512,
2005-513, and 2005-533. Solidum was again preventively suspended for another ten (10) days. Further, the
Company scheduled the administrative investigation of the case on October 26, 2005.

Solidum then sent a letter dated October 24, 20058 to the Company requesting copies of the pertinent documents
so he can prepare an intelligible explanation. In another letter dated October 26, 2005,9 Solidum stated that the
investigation is highly suspicious and his extended suspension imposed undue burden. He also reserved his right to
present evidence. In his last letter dated October 28, 2005,10 Solidum declared that he shall no longer receive or
entertain notices or memorandum, except the final decision resolving the administrative charges against him.

Thereafter, the Company issued a letter dated November 2, 2005, alleging that Solidum refused to accept the
documents that he had requested. Using this allegation, the Company imposed an additional preventive suspension
often (10) days on Solidum.

Based on the available evidence, the Company decided to dismiss Solidum for breach of trust in a Notice of
Decision dated November 9, 2005.11 Corollarily, a Notice of Termination was served on him on November 11, 2005.

Aggrieved, Solidum filed a complaint dated November 19, 2005 for illegal suspension and dismissal with money
claims before the Arbitration Branch of the NLRC claiming that his extended suspension and subsequent
termination were without just cause and due process.

In a Decision dated July 3, 2006,12 the labor arbiter declared that the extended period of suspension without pay
was illegal and that Solidum was unjustly dismissed from work without observance of procedural due process. He
was ordered reinstated and was awarded backwages and monetary claims. The labor arbiter ratiocinated that the
ground of breach of trust and confidence is restricted to managerial employees; however, no substantial evidence
was presented to prove that Solidum has the prerogatives akin to a manager other than his titular designation as
department head.

The Company appealed the adverse decision of the labor arbiter to the NLRC but was denied for having been filed
out of time and/or for non-perfection, thus:
Records show that respondents received a copy of the Decision on "July 10, 2006" (See Registry Return Receipt, p.
561, Record) However, respondents filed their appeal only on "July 25, 2006" x x x already beyond the
reglementary ten (10) calendar day period for filing an appeal to the Commission. x x x

Moreover, perusal of the appeal shows that the appeal bond attached to it is not accompanied by a security deposit
or collateral. The CERTIFICATE OF NO COLLATERAL x x x that was submitted by the bonding company stating that
the bond was issued on (sic) behalf of respondent SMART "without collateral because they are our valued client"
and that "[t]he company declares its commitment to honor the validity of the foregoing bond notwithstanding the
absence of collateral" does not serve any purpose other than an admission that the security deposit or collateral
requirement under Section 6, Rule VI of the Revised Rules of [Procedure of the NLRC for perfecting an appeal was
not complied with. Needless to state, the absence of a security deposit or collateral securing the bond renders the
appeal legally infirm.13
ChanRoblesVirtualawlibrary

In its motion for reconsideration, the Company insisted that the appeal was filed within the reglementary period
considering that it received the labor arbiter's decision only on July 13, 2006 and not July 10, 2006. It presented
among others the Certification from Makati Central Post Office, the pertinent page of the letter carrier's Registry
Book, and the respective affidavit of the letter carrier and the Company's receiving clerk. It added that in case of
conflict between the registry receipt and the postmaster's certification, the latter should prevail. Likewise, the
Company maintained that the surety bond was secured by its goodwill and the alleged lack of collateral or security
will not render the bond invalid in view of the surety's unequivocal commitment to pay the monetary award.

Finding merit in the motion, the NLRC issued a Resolution dated January 26, 200914 reversing its earlier ruling and
giving due course to the appeal. It upheld the certification of the postmaster over the registry receipt and found
that there was substantial compliance with the bond requirement, viz:
Given the factual milieu, the Commission rules that respondents' appeal was indeed filed within the ten (10) day
period x x x. Since the Decision [of the Labor Arbiter] dated July 3, 2006 was received by respondents on July 13,
2006, respondents have (sic) effectively until July 25, 2006 (considering that July 23 was a Sunday, and July 24
was a declared nonworking day) x x x.

xxxx

As to the absence of security deposit or collateral, the Commission x x x finds that respondents were able to
comply substantially with the pre-requisite for the perfection of appeal.

x x x While the appeal bond was posted without security or collateral, the Certification dated July 20, 2006, issued
by the bonding company attests to the latter's "commitment to honor the validity of the foregoing bond
notwithstanding the absence of collateral." Otherwise stated, the very purpose of a security or collateral should be
deemed served considering the guarantee of the bonding company to pay the entire amount of the bond in the
event respondents suffer an adverse disposition of their appeal. It matters not that the bond was issued on behalf
of respondents without collateral for after all, the bond is accompanied by a declaration under oath bearing the
bonding company's commitment to honor the validity of the surety bond and attesting that the surety bond is
genuine and shall be in effect until the final disposition of the case.
The NLRC likewise reversed the labor arbiter's decision. It ruled that the seriousness of Solidum's infractions
justified the additional period of suspension. It added that the labor arbiter erred in declaring Solidum's dismissal
illegal and without just cause on the basis that he is not a managerial employee. On the contrary, overwhelming
evidence showed that Solidum holds a position of trust and has violated various company policies. Finally, the
NLRC found that Solidum was accorded procedural due process. The dispositive portion of the Resolution thus
reads:
WHEREFORE, the foregoing considered, the Commission hereby resolves as follows:

1. complainant's Motion to Inhibit dated June 13, 2008 is DENIED for lack of merit.

2. respondents' Motion for Reconsideration dated July 27, 2007 is GRANTED and their instant appeal dated
July 25, 2006 is given DUE COURSE.

3. the Commission's Resolution dated July 4, 2007 is SET ASIDE and VACATED.

4. the appealed Decision a quo dated July 3, 2006 is SET ASIDE and new one is ENTERED dismissing the
complaint below for lack of merit.

SO ORDERED.
Thus, Solidum appealed to the CA. The CA then rendered the assailed Decision dated April 4, 2011 affirming with
modification the Decision of the NLRC. The dispositive portion of the CA Decision reads:
FOR THESE REASONS, the Court AFFIRMS the NLRC Resolution dated January 26, 2009 with the MODIFICATION
that petitioner Jose Leni Solidum be paid his salaries and benefits which accrued during the period of his extended
preventive suspension.

SO ORDERED.
From such Decision both parties moved for reconsideration. The CA denied such Motions in a Resolution dated July
14, 2011. From such ruling of the appellate court, both parties appealed. Hence, the instant petitions.

The Issues

In G.R. No. 197763, Smart raises the following issues:

(A)

The Court of Appeals gravely erred in declaring illegal the second preventive suspension imposed by petitioner
Smart upon the respondent.

(B)
The Court of Appeals gravely erred in declaring that petitioner Smart may not place the respondent under another
preventive suspension after discovery of additional offenses notwithstanding that the offenses committed by the
respondent warrant another preventive suspension.15 ChanRoblesVirtualawlibrary

In G.R. No. 197836, Solidum raises the following issues, to wit:

A.

Whether or not the public respondent Court of Appeal's Decision dated April 4, 2011 and Resolution dated July 14,
2011, ruling that the appeal of private respondent Smart filed with public respondent NLRC was well taken within
the reglementary period, is in accordance with law, rules and prevailing jurisprudence.

B.

Whether or not the public respondent Court of Appeal's Decision dated April 4, 2011 and Resolution dated July 14,
2011, considering private respondent Smart's appeal with the NLRC as perfected by upholding the validity of the
appeal bond posted by said private respondent Smart even if there was no security deposit or collateral, is in
accordance with Section 4 and 6, Rule VI of the 2005 NLRC Revised Rules of Procedure, NLRC Memorandum
Circular 1-01, series of 2004, and prevailing jurisprudence.

C.

Whether or not the public respondent Court of Appeals gravely erred in failing to consider the evidence petitioner
showing that even up to the present, or more than five (5) years after the expiration of the 10-day reglementary
period to file a perfected appeal with the NLRC on July 20, 2006, private respondent Smart still fails to provide
petitioner with a certified true copy of the surety bond and copy of the security deposit required for the perfection
of the appeal under Section 6, Rule VI of the 2005 NLRC Revised Rules of Procedure.

D.

Whether or not the public respondent Court of Appeals committed grave abuse of discretion in upholding the
validity of the appeal bond filed by private respondent Smart despite the fact that both the appeal bond and
collateral securing the said bond had long expired.

E.

Whether or not the public respondent Court of Appeals gravely erred in ruling that the technical rules are not
controlling in any proceeding before the NLRC.

F.

Whether or not the public respondent Court of Appeals gravely erred in affirming the Resolution of public
respondent NLRC dated January 26, 2009 which set aside the decision of the labor arbiter dated July 3, 2006
declaring that petitioner's preventive suspension for more than 30 days without pay is illegal and tantamount to
constructive dismissal.

G.

Whether or not the public respondent Court of Appeals gravely erred in finding that petitioner was afforded
procedural due process by private respondent under the Two-Notice Rule.

H.

Whether or not the public respondent Court of Appeals gravely erred in finding that those irregularities committed
by petitioner were proven by documentary evidence and testimonies of his product managers and marketing
assistants despite the fact that none of those product managers and marketing assistants appeared and testified
during the hearings and, most importantly, during the hearing for cross-examination on their submitted affidavits
and documentary evidence as scheduled by the labor arbiter upon specific request and manifestation by the
petitioner invoking his constitutional right to cross-examine.

I.

Whether or not the public respondent Court of Appeals gravely erred in finding that herein petitioner is a fiduciary
employee and is therefore covered by the trust and confidence rule to a wider latitude.

J.

Whether or not the public respondent Court of Appeals gravely erred in finding that petitioner is a managerial
employee.

K.

Whether or not the public respondent Court of Appeals gravely erred in finding that there was just and valid cause
to terminate the petitioner from the service.16
ChanRoblesVirtualawlibrary

The Court's Ruling

The petitions must be denied.

Solidum's 2nd preventive suspension is valid

In G.R. No. 197763, Smart contended:

On the same vein, the respondent was validly placed under second preventive suspension for the reason that
pending investigation of separate and distinct set of offenses committed by the respondent as contained in the
second Notice to Explain dated 21 October 2005 (Annex F hereof), his continued presence in the company
premises during the investigation poses serious and imminent threat to the life or property of the employer and co-
workers.17ChanRoblesVirtualawlibrary

On the other hand, Solidum claims that his preventive suspension of 20 days is an extension of his initial 30-day
suspension and, hence, illegal and constitutes constructive dismissal.

Smart's position is impressed with merit.

The relevant provisions regarding preventive suspensions are found in Sections 8 and 9 of Rule XXIII, Book V of
the Omnibus Rules Implementing the Labor Code (Omnibus Rules), as amended by Department Order No. 9, Series
of 1997, which read as follows:
Section 8. Preventive suspension. The employer may place the worker concerned under preventive suspension only
if his continued employment poses a serious and imminent threat to the life or property of the employer or of his
co-workers.

Section 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The
employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the
employer may extend the period of suspension provided that during the period of extension, he pays the wages
and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to
him during the extension if the employer decides, after completion of the hearing, to dismiss the worker,
(Emphasis supplied)
By a preventive suspension an employer protects itself from further harm or losses because of the erring
employee. This concept was explained by the Court in Gatbonton v. National Labor Relations Commission:18
Preventive suspension is a disciplinary measure for the protection of the company's property pending
investigation of any alleged malfeasance or misfeasance committed by the employee. The employer may
place the worker concerned under preventive suspension if his continued employment poses a serious and
imminent threat to the life or property of the employer or of his co-workers. However, when it is determined that
there is no sufficient basis lo justify an employee's preventive suspension, the latter is entitled to the payment of
salaries during the time of preventive suspension. (Emphasis supplied)
Such principle was applied by the Court in Bluer Than Blue Joint Ventures/Mary Ann Dela Vega v. Esteban,19 where
it was ruled:
Preventive suspension is a measure allowed by law and afforded to the employer if an employee's continued
employment poses a serious and imminent threat to the employer's life or property or of his co-workers. It may be
legally imposed against an employee whose alleged violation is the subject of an investigation.

In this case, the petitioner was acting well within its rights when it imposed a 10-day preventive suspension on
Esteban. While it may be that the acts complained of were committed by Esteban almost a year before
the investigation was conducted, still, it should be pointed out that Esteban was performing functions
that involve handling of the petitioner's property and funds, and the petitioner had every right to
protect its assets and operations pending Esteban's investigation. (Emphasis supplied)
While the Omnibus Rules limits the period of preventive suspension to thirty (30) days, such time frame pertains
only to one offense by the employee. For an offense, it cannot go beyond 30 days. However, if the employee is
charged with another offense, then the employer is entitled to impose a preventive suspension not to exceed 30
days specifically for the new infraction. Indeed, a fresh preventive suspension can be imposed for a separate or
distinct offense. Thus, an employer is well within its rights to preventively suspend an employee for other
wrongdoings that may be later discovered while the first investigation is ongoing.

As in this case, Smart was able to uncover other wrongdoings committed by Solidum during the investigation for
the initial charges against him. These newly discovered transgressions would, thus, require an additional period to
investigate. The first batch of offenses was captured in the September 21, 2005 Notice to Explain issued by Smart.
The notice covers fraud or willful breach of trust in relation to transactions covered by Invoice No. 2921 and CE No.
2005-533 as well as CE Nos. 2005-413, 2005-459, 2005-461, 2005-526, 2005-460, 2005-552 and 2005-527 that
were noted by him. For these offenses, Solidum was issued a preventive suspension without pay for 30 days.

On October 21, 2005, Smart, however, issued another notice to explain to Solidum this time involving additional
CEs: 2005-416, 2005-480, 2005-481, 2005-479, 2005-512, and 2005-513. Solidum was again preventively
suspended for twenty (20) days. The preventive suspension of 20 days is not an extension of the suspension
issued in relation to the September 21, 2005 Notice to Explain but is a totally separate preventive suspension for
the October 21, 2005 Notice to Explain. As earlier pointed out, the transactions covered by the 30-day preventive
suspension are different from that covered by the 20-day preventive suspension. Such being the case the court a
quo was incorrect when it treated said suspension as an "extension" and, consequently, it is a miscue to award
Solidum the payment of back salaries and benefits corresponding to the 20-day preventive suspension of Solidum.

As to the issues raised by Solidum in G.R. No. 197836, the same are bereft of merit.

Smart's appeal from the Decision of the labor arbiter was filed within the reglementary period

Solidum contends that Smart's motion for reconsideration of the labor arbiter's Decision was filed out of time. The
issue here is: When did Smart receive a copy of the Decision? The confusion originated from the date stamped by
the receiving clerk of Smart on the receiving copy of the Decision as July 10, 2006. Smart claims that the stamped
date was erroneous as it actually received a copy of the Decision only on July 13, 2006. Such claim is supported by
the certification from the postmaster of the Makati Central Post Office, the letter carrier's Registry Book, and the
affidavits of the letter carrier and Smart's receiving clerk. With such overwhelming evidence, there can be no other
conclusion except that Smart received a copy of the Decision on July 13, 2006 and filed their motion for
reconsideration within the prescribed 10-day period on July 25, 2006, as July 24, 2006 fell on a Sunday. Thus,
Smart's Motion was timely filed.

Smart substantially complied with the requirements of an appeal bond

Next, Solidum questions the validity of the appeal bond filed by Smart, pointing out the lack of a proof of security
deposit or collateral necessary to perfect its appeal to the NLRC. To recall, Section 6, Rule VI of the 2005 NLRC
Revised Rules of Procedure states:
Section 6. Bond. - In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an
appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash
deposit or surety bond equivalent in amount to the monetary award, exclusive of damages and attorney's fees.

In case of surety bond, the same shall be issued by a reputable bonding company duly accredited by the
Commission or the Supreme Court, and shall be accompanied by original or certified true copies of the following:
xxxx

c) proof of security deposit or collateral securing the bond: provided, that a check shall not be considered as
an acceptable security. (Emphasis supplied)
Thus, Solidum claims that the lack of proof of security deposit or collateral securing the bond renders the bond
irregular and the appeal legally infirm.

We disagree.

As aptly found by the NLRC, substantial compliance with the rules on appeal bonds has been repeatedly held by
this Court to be sufficient for the perfection of an appeal:
The perfection of an appeal within the reglementary period and in the manner prescribed by law is jurisdictional,
and noncompliance with such legal requirement is fatal and effectively renders the judgment final and executory.
As provided in Article 223 of the Labor Code, as amended, in case of a judgment involving a monetary award, an
appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the Commission in the amount equivalent to the monetary award in the
judgment appealed from.

However, not only in one case has this Court relaxed this requirement in order to bring about the immediate and
appropriate resolution of cases on the merits. In Quiambao v. National Labor Relations Commission, this Court
allowed the relaxation of the requirement when there is substantial compliance with the rule. Likewise, in Ong v.
Court of Appeals, the Court held that the bond requirement on appeals may be relaxed when there is substantial
compliance with the Rules of Procedure of the NLRC or when the appellant shows willingness to post a partial bond.
The Court held that "while the bond requirement on appeals involving monetary awards has been relaxed in certain
cases, this can only be done where there was substantial compliance of the Rules or where the appellants, at the
very least, exhibited willingness to pay by posting a partial bond."20
ChanRoblesVirtualawlibrary

Furthermore, considering that it is the NLRC that has interpreted its own rules on this matter, the Court is inclined
to accept such interpretation. The Court has held, "By reason of the special knowledge and expertise of
administrative agencies over matters falling under their jurisdiction, they are in a better position to pass judgment
on those matters."21 Moreover, the NLRC properly relaxed the rules on appeal bonds.

The NLRC has the power and authority to promulgate rules of procedure under Article 218(a) of the Labor Code. As
such, it can suspend the rules if it finds that the interests of justice will be better served if the strict compliance
with the rules should be relaxed. In short, a substantial compliance may be allowed by the NLRC especially in this
case where the party which submitted the bond is a multibillion company which can easily pay whatever monetary
award may be adjudged against it. Even if there is no proof of security deposit or collateral, the surety bond issued
by an accredited company is adequate to answer for the liability if any to be incurred by Smart.

Solidum is not entitled to reinstatement

Next, Solidum claims that due to the extension of his period of preventive suspension, he must be considered as
having been constructively dismissed and entitled to reinstatement and backwages. To support his claim, Solidum
cites Maricalum Mining Corporation v. Decorion22 Such case, however, is not factually on all fours with the instant
case. In Maricalum, the Court ruled that Decorion was illegally constructively dismissed, which is why he was
entitled to reinstatement. Here, Solidum was validly dismissed for loss of trust and confidence. Thus, his reliance
on Maricalum is misplaced and will not justify his reinstatement.

As to Solidum's claim of denial of due process, such issues are factual in nature. This Court, not being a trier of
facts, will not pass upon such issues, as ruled in Nahas v. Olarte:23
The Court is not a trier of facts; factual findings of the labor tribunals when affirmed by the CA are generally
accorded not only respect, but even finality, and are binding on this Court.
Notably, Solidum's allegation that he was denied his right to counsel was passed upon the NLRC in this wise:
Similarly, the Commission is not convinced with Labor Arbiter Pati's finding that the complainant was deprived on
his right to counsel when he was not allowed to be assisted by his counsel at the alleged investigation held on
September 21, 2005. Other than his bare claim, there is no evidence on record buttressing complainant's
claim.24 x x x (Emphasis supplied)
Similarly, Solidum contends that he did not receive other documents necessary for him to be apprised of the
charges against him. Such are also issues of fact. The NLRC ruled on this matter in this wise:
The Commission is likewise not convinced with the finding of Labor Arbiter Pati that complainant was deprived of
due process when he was not furnished copies of the documents he referred to in his letter dated October 24, 2005
thereby prompting him not to attend the hearings on October 26 and 28, 2005. There is evidence to show that
respondents furnished copies of the documents requested by complainant but which the latter refused
to received when they were sent to his residence.25x x x (Emphasis supplied)
It is not necessary that witnesses be cross-examined by counsel of the adverse party in proceedings
before the labor arbiter

Solidum further alleges that he was denied the right to cross-examine the witnesses who submitted affidavits in
favor of Smart; thus, the affidavits must be considered hearsay and inadmissible. In support of such contention,
Solidum cites Naguit v. National Labor Relations Commission26

Such contention is misplaced.

The controlling jurisprudence on the matter is the ruling in the more recent Philippine Long Distance Telephone
Company v. Honrado,27 where the Court ruled:
It is hornbook in employee dismissal cases that "[t]he essence of due process is an opportunity to be heard, or as
applied to administrative proceedings, an opportunity to explain one's side x x x. A formal or trial type hearing is
not at all times and in all instances essential to due process, the requirements of which are satisfied where the
parties are afforded fair and reasonable opportunity to explain their side of the controversy." Neither is it
necessary that the witnesses be cross-examined by counsel for the adverse party. (Emphasis supplied)
The Court explained the reason why cross-examination is not required in the proceedings before the labor arbiter
in Reyno v. Manila Electric Company,28 citing Rabago v. National Labor Relations Commission29 where the Court
ruled:
x x x The argument that the affidavit is hearsay because the affiants were not presented for cross-examination is
not persuasive because the rules of evidence are not strictly observed in proceedings before administrative bodies
like the NLRC where decisions may be reached on the basis of position papers only. x x x
Clearly, the alleged denial of Solidum's request to cross-examine the witnesses of Smart does not render their
affidavits hearsay. Thus, these pieces of evidence were properly considered by the labor tribunal.

Solidum was a managerial employee of Smart

Next, Solidum argues that he is not a fiduciary or managerial employee and, therefore, cannot be legally dismissed
on the ground of loss of trust and confidence. Article 212(m) of the Labor Code defines a Managerial Employee as:
(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management
policies and/or to hire, transfer, suspend, lay-off recall, discharged, assign or discipline employees. x x x
The NLRC found that Solidum was a managerial employee in this wise:
The facts on hand indubitably show that complainant occupied the position of Department Mead and held the same
with trust and confidence as required him under his employment contract. As Department Head of the Smart
Buddy Activations and Usage Group, complainant led and directed his subordinates composed of product
managers, product officers, and senior marketing assistants to achieving the company's marketing
goals. Moreover, complainant appears to have the authority to devise, implement and control strategic
and operational policies of the Department he was then heading. Likewise, it cannot be denied that
complainant's Department has a budget of millions of pesos over which he exercises the power to allocate to
different marketing projects conceptualized by him and/or his subordinates. The records would also show that for
complainant's services, he received a monthly salary in the hefty amount of P233,910.00, monthly allowance of
P19,000.00, and bonuses and incentives of more than P7 Million.

Under the foregoing facts, complainant's duties and responsibilities, coupled with the amount of salaries he is
receiving and other benefits he is entitled to, certainly show that his position of Department Head is managerial in
nature.30 (Emphasis supplied)
Solidum denies that he is a managerial employee by stating that just because he directed subordinates, he should
be considered a managerial employee. He also argues that just because he had a large salary does not mean that
he was a managerial employee. Finally, Solidum denies having the power to lay down and execute management
policies.

Notably, however, Solidum does not deny having "the authority to devise, implement and control strategic and
operational policies of the Department he was then heading." This is clearly the authority to lay down and execute
management policies. Consequently, the CA affirmed these findings. Thus, the NLRC and the CA correctly found
that Solidum was a managerial employee. As such, he may be validly dismissed for loss of trust and confidence.

The rulings of trial court in criminal cases generally do not bind the labor tribunals

Further, Solidum alleges that he did not commit any dishonesty-related offense that would justify Smart's loss of
confidence in him. He supports such allegation with the rulings of two (2) trial courts of Makati City that ruled that
Solidum did not commit any fraud in the subject transactions.

Solidum's reliance on the rulings of the trial courts is misplaced. His acquittal before such courts cannot bind the
labor tribunal.

In Amadeo Fishing Corporation v. Nierra,31 the Court ruled that "an acquittal in criminal prosecution does not have
the effect of extinguishing liability for dismissal on the ground of breach of trust and confidence." While in Vergara
v. National Labor Relations Commission,32 the Court was even more succinct and ruled that the filing of the
complaint by. the public prosecutor is a sufficient ground for a dismissal of an employee for loss of trust and
confidence, to wit:
The Court finds adequate basis for private respondent's loss of trust and confidence in petitioner, x x x Besides,
the evidence supporting the criminal charge, found after preliminary investigation as sufficient to
show prima facie guilt, constitutes just cause for his termination based on loss of trust and
confidence. To constitute just cause, petitioner's malfeasance did not require criminal conviction. Verily, petitioner
was dismissed not because he was convicted of theft, but because his dishonest acts were substantially proven,
(Emphasis supplied)
In the instant case, both the NLRC and the CA found Solidum guilty of the alleged acts that constituted grounds for
his dismissal for loss of trust and confidence, which were summarized by the CA as follows:
First, Solidum noted two versions of CE No. 2005-533 with description "Buy SIM Download All You Can" but
containing different particulars. Specifically, the second CE included charges from various radio stations which are
not found in the first CE. However, the Company discovered that the only projects with approved radio components
were the "Mindanao Kolek Mo To Promo" which ended on July 15, 2005; the "Visayas Kolek Mo To Promo" which
ended on August 15, 2005, and the "Smart Download and Win" with promo period from August 22 to October 22,
2005. The "Buy SIM Download All You Can" has no approved radio component. Moreover, Solidum submitted
certificates of performance from various radio stations which are outside of the promo periods.

Second, in the implementation of several projects, Solidum endorsed unaccredited third parties, which is already a
violation of established company policies. One of these corporations is M&M Events, Inc., which turned out as a
non-existing corporation. The Smart Senior Product Officer Ma. Luisa Suguitan even testified that she has not
worked with an agency such as M&M Events, Inc. Worse, the said entity cannot be found in its declared business
address and the VAT registration number appearing on its sales invoice is registered under a different company.
Moreover, Solidum approved CE No. 2005-459 and CE No. 2005-460, pertaining to different projects, but with
attached invoices from M&M Events, Inc. bearing the same date and amount. Finally, Solidum deviated from the
existing company procedures. He presented CEs to his subordinate product manager for signature with his approval
already affixed. Later, it was discovered that the duly signed CEs were altered without the knowledge of the
product manager. He even dictated to the agency the title to be used and the details that should be included in the
CEs. The CEs were then forwarded directly to him instead of the Smart marketing point person. Solidum also
charged certain projects against the budget of another approved program.
Such findings of the NLRC and affirmed by the CA are binding on this Court. Thus, Solidum's petition must also fail
on this point.

WHEREFORE, the petition of Jose Leni Z. Solidum in G.R. No. 197836 is hereby DENIED. The petition of
petitioners Smart Communications, Inc, et al. in G.R. No. 197763 is PARTIALLY GRANTED. The Court of Appeals
Decision dated April 4, 2011 is hereby AFFIRMED withMODIFICATION that the award of salaries and benefits
that accrued during the period of extended preventive suspension is DELETED.

No costs.

SO ORDERED. chanr
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 176085 February 8, 2012

FEDERICO S. ROBOSA, ROLANDO E. PANDY, NOEL D. ROXAS, ALEXANDER ANGELES, VERONICA

GUTIERREZ, FERNANDO EMBAT, and NANETTE H. PINTO, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division), CHEMO-TECHNISCHE MANUFACTURING, INC.
and its responsible officials led by FRANKLIN R. DE LUZURIAGA, and PROCTER & GAMBLE PHILIPPINES,
INC., Respondents.

DECISION

BRION, J.:

We resolve the petition for review on certiorari1 seeking the reversal of the resolutions of the Court of Appeals (CA)
rendered on February 24, 20062 and December 14, 20063 in CA-G.R. SP No. 80436.

Factual Background

Federico S. Robosa, Rolando E. Pandy, Noel D. Roxas, Alexander Angeles, Veronica Gutierrez, Fernando Embat
and Nanette H. Pinto (petitioners) were rank-and-file employees of respondent Chemo-Technische Manufacturing,
Inc. (CTMI), the manufacturer and distributor of "Wella" products. They were officers and members of the CTMI
Employees Union-DFA (union). Respondent Procter and Gamble Philippines, Inc. (P & GPI) acquired all the interests,
franchises and goodwill of CTMI during the pendency of the dispute.

Sometime in the first semester of 1991, the union filed a petition for certification election at CTMI. On June 10, 1991,
Med-Arbiter Rasidali Abdullah of the Office of the Department of Labor and Employment in the National Capital
Region (DOLE-NCR) granted the petition. The DOLE-NCR conducted a consent election on July 5, 1991, but the
union failed to garner the votes required to be certified as the exclusive bargaining agent of the company.

On July 15, 1991, CTMI, through its President and General Manager Franklin R. de Luzuriaga, issued a
memorandum4 announcing that effective that day: (1) all sales territories were demobilized; (2) all vehicles assigned
to sales representatives should be returned to the company and would be sold; (3) sales representatives would
continue to service their customers through public transportation and would be given transportation allowance; (4)
deliveries of customers orders would be undertaken by the warehouses; and (5) revolving funds for ex-truck selling
held by sales representatives should be surrendered to the cashier (for Metro Manila) or to the supervisor (for
Visayas and Mindanao), and truck stocks should immediately be surrendered to the warehouse.

On the same day, CTMI issued another memorandum 5 informing the companys sales representatives and sales
drivers of the new system in the Salon Business Groups selling operations.

The union asked for the withdrawal and deferment of CTMIs directives, branding them as union busting acts
constituting unfair labor practice. CTMI ignored the request. Instead, it issued on July 23, 1991 a notice of termination
of employment to the sales drivers, due to the abolition of the sales driver positions. 6
On August 1, 1991, the union and its affected members filed a complaint for illegal dismissal and unfair labor practice,
with a claim for damages, against CTMI, De Luzuriaga and other CTMI officers. The union also moved for the
issuance of a writ of preliminary injunction and/or temporary restraining order (TRO).

The Compulsory Arbitration Proceedings

The labor arbiter handling the case denied the unions motion for a stay order on the ground that the issues raised by
the petitioners can best be ventilated during the trial on the merits of the case. This prompted the union to file on
August 16, 1991 with the National Labor Relations Commission (NLRC), a petition for the issuance of a preliminary
mandatory injunction and/or TRO.7

On August 23, 1991, the NLRC issued a TRO.8 It directed CTMI, De Luzuriaga and other company executives to (1)
cease and desist from dismissing any member of the union and from implementing the July 23, 1991 memorandum
terminating the services of the sales drivers, and to immediately reinstate them if the dismissals have been effected;
(2) cease and desist from implementing the July 15, 1991 memorandum grounding the sales personnel; and (3)
restore the status quo ante prior to the formation of the union and the conduct of the consent election.

Allegedly, the respondents did not comply with the NLRCs August 23, 1991 resolution. They instead moved to
dissolve the TRO and opposed the unions petition for preliminary injunction.

On September 12, 1991, the NLRC upgraded the TRO to a writ of preliminary injunction. 9 The respondents moved for
reconsideration. The union opposed the motion and urgently moved to cite the responsible CTMI officers in contempt
of court.

On August 25, 1993, the NLRC denied the respondents motion for reconsideration and directed Labor Arbiter
Cristeta Tamayo to hear the motion for contempt. In reaction, the respondents questioned the NLRC orders before
this Court through a petition for certiorari and prohibition with preliminary injunction. The Court dismissed the petition
for being premature. It also denied the respondents motion for reconsideration, as well as a second motion for
reconsideration, with finality. This notwithstanding, the respondents allegedly refused to obey the NLRC directives.
The respondents defiance, according to the petitioners, resulted in the loss of their employment.

Meanwhile, the NLRC heard the contempt charge. On October 31, 2000, it issued a resolution 10 dismissing the
charge. It ordered the labor arbiter to proceed hearing the main case on the merits.

The petitioners moved for, but failed to secure, a reconsideration from the NLRC on the dismissal of the contempt
charge. They then sought relief from the CA by way of a petition for certiorari under Rule 65.

The CA Decision

The CA saw no need to dwell on the issues raised by the petitioners as the question it deemed appropriate for
resolution is whether the NLRCs dismissal of the contempt charge against the respondents may be the proper
subject of an appeal. It opined that the dismissal is not subject to review by an appellate court. Accordingly, the CA
Special Sixth Division dismissed the petition in its resolution of February 24, 2006.11

The CA considered the prayer of P & GPI to be dropped as party-respondent moot and academic.

The petitioners sought a reconsideration, but the CA denied the motion in its resolution of December 14,
2006.12Hence, the present Rule 45 petition.

The Petition
The petitioners charge the CA with grave abuse of discretion in upholding the NLRC resolutions, despite the
reversible errors the labor tribunal committed in dismissing the contempt charge against the respondents. They
contend that the respondents were guilty of contempt for their failure (1) to observe strictly the NLRC status quo
order; and (2) to reinstate the dismissed petitioners and to pay them their lost wages, sales commissions, per diems,
allowances and other employee benefits. They also claim that the NLRC, in effect, overturned this Courts affirmation
of the TRO and of the preliminary injunction.

The petitioners assail the CAs reliance on the Courts ruling that a contempt charge partakes of a criminal
proceeding where an acquittal is not subject to appeal. They argue that the facts obtaining in the present case are
different from the facts of the cases where the Courts ruling was made. They further argue that by the nature of this
case, the Labor Code and its implementing rules and regulations should apply, but in any event, the appellate court is
not prevented from reviewing the factual basis of the acquittal of the respondents from the contempt charges.

The petitioners lament that the NLRC, in issuing the challenged resolutions, had unconstitutionally applied the law.
They maintain that not only did the NLRC unconscionably delay the disposition of the case for more than twelve (12)
years; it also rendered an unjust, unkind and dubious judgment. They bewail that "[f]or some strange reason, the
respondent NLRC made a queer [somersault] from its earlier rulings which favor the petitioners." 13

The Case for the Respondents

Franklin K. De Luzuriaga

De Luzuriaga filed a Comment14 on May 17, 2007 and a Memorandum on December 4, 2008, 15 praying for a
dismissal of the petition.

De Luzuriaga argues that the CA committed no error when it dismissed the petition for certiorari since the dismissal of
the contempt charge against the respondents amounted to an acquittal where review by an appellate court will not lie.
In any event, he submits, the respondents were charged with indirect contempt which may be initiated only in the
appropriate regional trial court, pursuant to Section 12, Rule 71 of the Rules of Court. He posits that the NLRC has no
jurisdiction over an indirect contempt charge. He thus argues that the petitioners improperly brought the contempt
charge before the NLRC.

Additionally, De Luzuriaga points out that the petition raises only questions of facts which, procedurally, is not allowed
in a petition for review on certiorari. Be this as it may, he submits that pursuant to Philippine Long Distance
Telephone Company, Inc. v. Tiamson,16 factual findings of labor officials, who are deemed to have acquired expertise
in matters within their respective jurisdictions, are generally accorded not only respect but even finality. He stresses
that the CA committed no reversible error in not reviewing the NLRCs factual findings.

Further, De Luzuriaga contends that the petitioners verification and certification against forum shopping is defective
because it was only Robosa and Pandy who executed the document. There was no indication that they were
authorized by Roxas, Angeles, Gutierrez, Embat and Pinto to execute the required verification and certification.

Lastly, De Luzuriaga maintains that the petitioners are guilty of forum shopping as the reliefs prayed for in the petition
before the CA, as well as in the present petition, are the same reliefs that the petitioners may be entitled to in the
complaint before the labor arbiter.17

P & GPI

As it did with the CA when it was asked to comment on the petitioners motion for reconsideration, 18 P & GPI prays in
its Comment19 and Memorandum20 that it be dropped as a party-respondent, and that it be excused from further
participating in the proceedings. It argues that inasmuch as the NLRC resolved the contempt charge on the merits, an
appeal from its dismissal through a petition for certiorari is barred. Especially in its case, the dismissal of the petition
for certiorari is correct because it was never made a party to the contempt proceedings and, thus, it was never
afforded the opportunity to be heard. It adds that it is an entity separate from CTMI. It submits that it cannot be made
to assume any or all of CTMIs liabilities, absent an agreement to that effect but even if it may be liable, the present
proceedings are not the proper venue to determine its liability, if any.

On December 16, 2008, the petitioners filed a Memorandum21 raising essentially the same issues and arguments laid
down in the petition.

The Courts Ruling

Issues

The parties submissions raise the following issues:

(1) whether the NLRC has contempt powers;

(2) whether the dismissal of a contempt charge is appealable; and

(3) whether the NLRC committed grave abuse of discretion in dismissing the contempt charge against the
respondents.

On the first issue, we stress that under Article 21822 of the Labor Code, the NLRC (and the labor arbiters) may hold
any offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with law. The
penalty for direct contempt consists of either imprisonment or fine, the degree or amount depends on whether the
contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the labor arbiter or the
Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the Rules of Court. 23

Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt proceedings
before the trial court. This mode is to be observed only when there is no law granting them contempt powers. 24 As is
clear under Article 218(d) of the Labor Code, the labor arbiter or the Commission is empowered or has jurisdiction to
hold the offending party or parties in direct or indirect contempt. The petitioners, therefore, have not improperly
brought the indirect contempt charges against the respondents before the NLRC.

The second issue pertains to the nature of contempt proceedings, especially with respect to the remedy available to
the party adjudged to have committed indirect contempt or has been absolved of indirect contempt charges. In this
regard, Section 11, Rule 71 of the Rules of Court states that the judgment or final order of a court in a case of indirect
contempt may be appealed to the proper court as in a criminal case. This is not the point at issue, however, in this
petition. It is rather the question of whether the dismissal of a contempt charge, as in the present case, is appealable.
The CA held that the NLRCs dismissal of the contempt charges against the respondents amounts to an acquittal in a
criminal case and is not subject to appeal.

The CA ruling is grounded on prevailing jurisprudence.

In Yasay, Jr. v. Recto,25 the Court declared:

A distinction is made between a civil and [a] criminal contempt. Civil contempt is the failure to do something ordered
by a court to be done for the benefit of a party. A criminal contempt is any conduct directed against the authority or
dignity of the court.26

The Court further explained in Remman Enterprises, Inc. v. Court of Appeals 27 and People v. Godoy28 the character of
contempt proceedings, thus
The real character of the proceedings in contempt cases is to be determined by the relief sought or by the dominant
purpose. The proceedings are to be regarded as criminal when the purpose is primarily punishment and civil when
the purpose is primarily compensatory or remedial.

Still further, the Court held in Santiago v. Anunciacion, Jr.29 that:

But whether the first or the second, contempt is still a criminal proceeding in which acquittal, for instance, is a bar to a
second prosecution. The distinction is for the purpose only of determining the character of punishment to be
administered.

In the earlier case of The Insurance Commissioner v. Globe Assurance Co., Inc., 30 the Court dismissed the appeal
from the ruling of the lower court denying a petition to punish the respondent therein from contempt for lack of
evidence. The Court said in that case:

It is not the sole reason for dismissing this appeal. In the leading case of In re Mison, Jr. v. Subido, it was stressed by
Justice J.B.L. Reyes as ponente, that the contempt proceeding far from being a civil action is "of a criminal nature
and of summary character in which the court exercises but limited jurisdiction." It was then explicitly held: "Hence, as
in criminal proceedings, an appeal would not lie from the order of dismissal of, or an exoneration from, a charge of
contempt of court." [footnote omitted]

Is the NLRCs dismissal of the contempt charges against the respondents beyond review by this Court? On this
important question, we note that the petitioners, in assailing the CA main decision, claim that the appellate court
committed grave abuse of discretion in not ruling on the dismissal by the NLRC of the contempt charges. 31 They also
charge the NLRC of having gravely abused its discretion and having committed reversible errors in:

(1) setting aside its earlier resolutions and orders, including the writ of preliminary injunction it issued, with its
dismissal of the petition to cite the respondents in contempt of court;

(2) overturning this Courts resolutions upholding the TRO and the writ of preliminary injunction;

(3) failing to impose administrative fines upon the respondents for violation of the TRO and the writ of
preliminary injunction; and

(4) failing to order the reinstatement of the dismissed petitioners and the payment of their accrued wages
and other benefits.

In view of the grave abuse of discretion allegation in this case, we deem it necessary to look into the NLRCs
dismissal of the contempt charges against the respondents. As the charges were rooted into the respondents alleged
non-compliance with the NLRC directives contained in the TRO32 and the writ of preliminary injunction,33we first
inquire into what really happened to these directives.

The assailed NLRC resolution of October 31, 200034 gave us the following account on the matter -

On the first directive, x x x We find that there was no violation of the said order. A perusal of the records would show
that in compliance with the temporary restraining order (TRO), respondents reinstated back to work the sales drivers
who complained of illegal dismissal (Memorandum of Respondents, page 4).

Petitioners allegation that there was only payroll reinstatement does not make the respondents guilty of contempt of
court. Even if the drivers were just in the garage doing nothing, the same does not make respondents guilty of
contempt nor does it make them violators of the injunction order. What is important is that they were reinstated and
receiving their salaries.
As for petitioners Danilo Real, Roberto Sedano and Rolando Manalo, they have resigned from their jobs and were
paid their separation pay xxx (Exhibits "6," "6-A," "7," "7-A," "8," "8-A," Respondents Memorandum dated August 12,
1996). The issue of whether they were illegally dismissed should be threshed out before the Labor Arbiter in whose
sala the case of unfair labor practice and illegal dismissal were (sic) filed. Records also show that petitioner Antonio
Desquitado during the pendency of the case executed an affidavit of desistance asking that he be dropped as party
complainant in as much as he has already accepted separation benefits totaling to P63,087.33.

With respect to the second directive ordering respondents to cease and desist from implementing the memoranda
dated July 15, 1991 designed to ground sales personnel who are members of the union, respondents alleged that
they can no longer be restrained or enjoined and that the status quo can no longer be restored, for implementation of
the memorandum was already consummated or was a fait accompli. x x x

All sales vehicles were ordered to be turned over to management and the same were already sold[.] xxx [I]t would be
hard to undo the sales transactions, the same being valid and binding. The memorandum of July 15, 1991 authorized
still all sales representatives to continue servicing their customers using public transportation and a transportation
allowance would be issued.

xxxx

The third directive of the Commission is to preserve the "status quo ante" between the parties.

Records reveal that WELLA AG of Germany terminated its Licensing Agreement with respondent company effective
December 31, 1991 (Exhibit "11," Respondents Memorandum).

On January 31, 1992, individual petitioners together with the other employees were terminated xxx. In fact, this event
resulted to the closure of the respondent company. The manufacturing and marketing operations ceased. This is
evidenced by the testimony of Rosalito del Rosario and her affidavit (Exh. "9," memorandum of Respondents) as well
as Employers Monthly Report on Employees Termination/dismissals/suspension xxx (Exhibits "12-A" to "12-F," ibid)
as well as the report that there is a permanent shutdown/total closure of all units of operations in the establishment
(Ibid). A letter was likewise sent to the Department of Labor and Employment (Exh. "12," Ibid) in compliance with
Article 283 of the Labor Code, serving notice that it will cease business operations effective January 31, 1992.

The petitioners strongly dispute the above account. They maintain that the NLRC failed to consider the following:

1. CTMI violated the status quo ante order when it did not restore to their former work assignments the
dismissed sales drivers. They lament that their being "garaged" deprived them of benefits, and they were
subjected to ridicule and psychological abuse. They assail the NLRC for considering the payroll
reinstatement of the drivers as compliance with its stay order.

They also bewail the NLRCs recognition of the resignation of Danilo Real, Roberto Sedano, Rolando
Manalo and Antonio Desquitado as they were just compelled by economic necessity to resign from their
employment. The quitclaims they executed were contrary to public policy and should not bar them from
claiming the full measure of their rights, including their counsel who was unduly deprived of his right to
collect attorneys fees.

2. It was error for the NLRC to rule that the memorandum, grounding the sales drivers, could no longer be
restrained or enjoined because all sales vehicles were already sold. No substantial evidence was presented
by the respondents to prove their allegation, but even if there was a valid sale of the vehicles, it did not
relieve the respondents of responsibility under the stay order.

3. The alleged termination of the licensing agreement between CTMI and WELLA AG of Germany, which
allegedly resulted in the closure of CTMIs manufacturing and marketing operations, occurred after the
 NLRCs issuance of the injunctive reliefs. CTMI failed to present substantial evidence to support its
contention that it folded up its operations when the licensing agreement was terminated. Even assuming that
there was a valid closure of CTMIs business operations, they should have been paid their lost wages,
allowances, incentives, sales commissions, per diems and other employee benefits from August 23, 1991 up
to the date of the alleged termination of CTMIs marketing operations.

Did the NLRC commit grave abuse of discretion in dismissing the contempt charges against the respondents? An act
of a court or tribunal may only be considered as committed in grave abuse of discretion when it was performed in a
capricious or whimsical exercise of judgment which is equivalent to lack of jurisdiction. The abuse of discretion must
be so patent and gross as to amount to an evasion of a positive duty enjoined by law, or to act at all in contemplation
of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion or personal
hostility.35

The petitioners insist that the respondents violated the NLRC directives, especially the status quo ante order, for their
failure to reinstate the dismissed petitioners and to pay them their benefits. In light of the facts of the case as drawn
above, we cannot see how the status quo ante or the employer-employee situation before the formation of the union
and the conduct of the consent election can be maintained. As the NLRC explained, CTMI closed its manufacturing
and marketing operations after the termination of its licensing agreement with WELLA AG of Germany. In fact, the
closure resulted in the termination of CTMIs remaining employees on January 31, 1992, aside from the sales drivers
who were earlier dismissed but reinstated in the payroll, in compliance with the NLRC injunction. The petitioners
termination of employment, as well as all of their money claims, was the subject of the illegal dismissal and unfair
labor practice complaint before the labor arbiter. The latter was ordered by the NLRC on October 31, 2000 to proceed
hearing the case.36 The NLRC thus subsumed all other issues into the main illegal dismissal and unfair labor practice
case pending with the labor arbiter. On this point, the NLRC declared:

Note that when the injunction order was issued, WELLA AG of Germany was still under licensing agreement with
respondent company. However, the situation has changed when WELLA AG of Germany terminated its licensing
agreement with the respondent, causing the latter to close its business.

Respondents could no longer be ordered to restore the status quo as far as the individual petitioners are concerned
as these matters regarding the termination of the employees are now pending litigation with the Arbitration Branch of
the Commission. To resolve the incident now regarding the closure of the respondent company and the matters
alleged by petitioners such as the creations of three (3) new corporations xxx as successor-corporations are matters
best left to the Labor Arbiter hearing the merits of the unfair labor practice and illegal dismissal cases.37

We find no grave abuse of discretion in the assailed NLRC ruling. It rightly avoided delving into issues which would
clearly be in excess of its jurisdiction for they are issues involving the merits of the case which are by law within the
original and exclusive jurisdiction of the labor arbiter. 38 To be sure, whether payroll reinstatement of some of the
petitioners is proper; whether the resignation of some of them was compelled by dire economic necessity; whether
the petitioners are entitled to their money claims; and whether quitclaims are contrary to law or public policy are
issues that should be heard by the labor arbiter in the first instance. The NLRC can inquire into them only on appeal
after the merits of the case shall have been adjudicated by the labor arbiter.

The NLRC correctly dismissed the contempt charges against the respondents. The CA likewise committed no grave
1wphi 1

abuse of discretion in not disturbing the NLRC resolution.

In light of the above discussion, we find no need to dwell into the other issues the parties raised.

WHEREFORE, premises considered, we hereby DENY the petition for lack of merit and AFFIRM the assailed
resolutions of the Court of Appeals.

SO ORDERED
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 169494 March 14, 2007

CABALEN MANAGEMENT CO., INC., MA.ESTELA O. NIEVERA, IAN TIONGSON, ADJI TIONGSON, ESTER O.
NIEVERA and ANASTACIA NAVAL, ADRIANO JR. CORPORATION, LEDA A. PANGILINAN, EVA S.
CANDELARIA, ROSE MARIE MORALES, DANILO SUNUBA, LETECIA DAVID, MARLON BULANADI, MA.
THERESA L. GADDI and CONSUELO HALILI REYES, Petitioners,
vs.
JESUS P. QUIAMBAO, GERALDINE M. PALERMO, RODEL B. PANGILINAN, WILLIAM F. LACSON, ROCHELLE
B. DE LEON, JOCELYN B. DEANG, EDGAR E. DE GUZMAN, VIZIER INOCENCIO, VINCENT EDWARD C.
MAPUA and JESSEBEL G. OBIEN, Respondents.

DECISION

CARPIO MORALES, J.:

Before this Court is a petition for review on certiorari assailing the April 29, 2005 Decision 1 of the Court of Appeals
and Resolution of August 25, 20052 in CA-G.R. SP No. 85159.

The assailed Decision reversed the finding of the National Labor Relations Commission (NLRC) and that of the Labor
Arbiter that, except for respondents Jesus P. Quiambao (Quiambao) and Geraldine M. Palermo (Palermo), the other
respondents were validly dismissed from employment for their various infractions of the Code of Conduct of petitioner
Cabalen Management Co., Inc. (the company). The assailed Resolution, on the other hand, denied petitioners
motion for reconsideration.

Prior to their dismissal, respondents Quiambao, Palermo, Rochelle B. De Leon and Jocelyn B. Deang were working
as dining supervisor, cashier, receptionist, and kitchen supervisor, respectively, while respondents Jessebel G.
Obien, Edgar E. De Guzman, Rodel B. Pangilinan, William F. Lacson, Vizier Inocencio and Vincent Edward C. Mapua
were waiters at the companys Cabalen restaurant, Quad, Glorietta branch.

On September 4, 2001, respondents received a memorandum placing each one of them on preventive suspension
for 30 days without pay and ordering them to explain within 48 hours reported violations of the companys Code of
Conduct.

In compliance with the memorandum, respondents filed their written explanations, denying or refuting the charges
against them.

On October 4, 2001, respondents, with the exception of Quiambao and Palermo, were served with notices of
dismissal after petitioners adjudged them guilty of the charges.

The dismissal of respondents was based on the statements of two witnesses, Henry dela Vega Balen (Balen) and
Roderick Malana (Malana), their co-employees, that they had connived with one another in pocketing tips which were
intended for the group, serving food or drinks without receipts or with tampered ones, and committing like forms of
stealing, resulting in losses or damages to the company.
An audit report dated September 19, 2001 on the companys accountable forms and on incidents of missing bar order
slips (OS), swapping of dining and bar OS, unrecorded bar OS issuance, and excessive cancellation of OS and
official receipts, was also considered as evidence against respondents.

As for Quiambao and Palermo, while they were directed to immediately report to the Human Resources Department
(HRD), they were allegedly not given any assignments.

Respondents thus filed three separate cases3 against herein petitioners, the company and Adriano Jr. Corporation,
together with the Cabalen restaurant at the Glorietta, for illegal dismissal and illegal suspension, with claims for 13th
month pay, sick and vacation leaves, monthly allowances, weekly tip, monthly signed chit, unpaid salaries, moral and
exemplary damages, attorneys fees, and regularization for respondents Palermo, Pangilinan, Lacson, Deang and De
Guzman. The complaints were later amended to implead herein individual petitioners as respondents.

Labor Arbiter Virginia T. Luyas-Azarraga, finding that the evidence presented by petitioners had sufficiently proved
the charges against respondents Lacson, De Leon, Deang, Pangilinan, De Guzman and Obien, held, by Decision of
November 27, 2002,4 that they were validly dismissed from the service.

With respect to respondents Quiambao and Palermo, however, the Labor Arbiter ordered petitioners to reinstate them
to their previous positions "under the same terms and conditions prevailing as of September 4, 2001, but without
backwages."5 The two were accordingly directed to return to work within 48 hours from receipt of the decision. All
other claims, except for the proportionate 13th month pay for 2001, were dismissed for lack of merit.

The complaints of Inocencio and Mapua, who failed to sign the position paper for the complainants, were dismissed
for lack of interest.

By Resolution of September 30, 2003,6 the NLRC affirmed the Labor Arbiters decision. In upholding the Labor
Arbiters findings and conclusions, the Commission found well-taken the observation that, stripped of herein
respondents attacks on the persons of herein individual petitioners, respondents had presented no material
allegation or evidence to controvert the charges against them.

Respondents filed a motion for reconsideration of the NLRC resolution, with a supplemental manifestation 7 from
respondent Quiambao that he was not reinstated to his previous position, as ordered by the Labor Arbiter, but was
instead assigned to the companys head office in a "floating status," and that on April 21, 2003, he was served a
Notice of Termination of Service because the company was said to be losing heavily and had to retrench to avoid
closure.

Respondents motion for reconsideration was denied by the NLRC by Resolution of April 28, 2004 for lack of merit.8

On respondents petition for certiorari,9 the Court of Appeals, by Decision of April 29, 2005, reversed and set aside
the NLRC decision and resolution.

The appellate court found the statements of petitioners witnesses bereft of probative value, there being no clear
showing when, where, to and before whom those statements were made, aside from the fact that they were not
sworn to before a notary public.

As for the audit report of September 19, 2001, the appellate court noted that it failed to state that respondents were
responsible for the reported irregularities; and that the procedures on valid dismissals laid down by the Labor Code
and the companys Code of Conduct were not religiously followed.

Passing on the status of employment of respondents Palermo, Pangilinan, Lacson, Deang and De Guzman who were
hired from August 1997 to January 1999, the appellate court held that having served the company for more than a
year, they should be considered regular employees, their positions as cashier, receptionist, and waiters being
reasonably necessary to the companys usual business.

The appellate court held, however, that the award of moral and exemplary damages, attorneys fees and costs of suit
was not in accord with law and jurisprudence in the absence of proof that the dismissal was attended by fraud or bad
faith.

Petitioners were thus ordered to reinstate respondents to their former positions without loss of seniority rights and
other privileges and to pay them their full back wages, allowances, and other benefits computed from the time their
compensation was withheld up to the time of their actual reinstatement.

WHEREFORE, the petition is granted, and the resolutions of the public respondent NLRC dated September 30, 2003
and April 28, 2004 are hereby reversed and set aside. Accordingly, petitioners are ordered reinstated to their
respective former positions without loss of seniority rights and other privileges, and to their full backwages, inclusive
of allowances, and to their other benefits or monetary equivalent computed from the time their compensation was
withheld from them up to the time of their actual reinstatement.

No pronouncement as to the costs.10

Their Motion for Reconsideration having been denied by the appellate court, petitioners lodged the present petition
which hinges on the sufficiency of evidence of a valid dismissal.

Amid these conflicting findings, which circumstance is a recognized exception 11 to the general rule that only questions
of law may be entertained in a petition for review on certiorari, 12 this Court is constrained to re-examine the sufficiency
of the evidence proffered by petitioners in dismissing respondents.

It is a well-established rule that the employer has the burden of proving a valid dismissal of an employee,13 for which
two requisites must concur: (a) the dismissal must be for any of the causes expressed in the Labor Code; 14and (b) the
employee must be accorded due process, basic of which is the opportunity to be heard and to defend himself. 15

To establish a just or authorized cause for dismissal, substantial evidence 16 or "such amount of relevant evidence
which a reasonable mind might accept as adequate to justify a conclusion" is required. 17 Further required is that an
employee sought to be dismissed must be served two written notices before the termination of his employment. The
first notice must apprise him of the particular acts or omissions upon which his dismissal is grounded; the second, to
inform him of the employers decision to terminate his employment. 18 While the failure of the employer to comply with
these notice requirements does not make the dismissal illegal as long as a just or authorized cause has been proved,
it renders the employer liable for payment of damages because of the violation of the workers right to statutory due
process.19

Section 3 of Rule V of the New Rules of Procedure of the NLRC,20 which governs the proceedings before the Labor
Arbiter, provides:

Section 3. Submission of Position Papers/Memorandum. Should the parties fail to agree upon an amicable
settlement, either in whole or in part, during the conferences, the Labor Arbiter shall issue an order stating therein the
matters taken up and agreed upon during the conferences and directing the parties to simultaneously file their
respective verified position papers.

These verified position papers shall cover only those claims and causes of action raised in the complaint excluding
those that may have been amicably settled, and shall be accompanied by all supporting documents including the
affidavits of their respective witnesses which shall take the place of the latters direct testimony. The parties shall
thereafter not be allowed to allege facts, or present evidence to prove facts, not referred to and any cause or causes
of action not included in the complaint or position papers, affidavits and other documents . . . (Emphasis and
underscoring supplied)

Section 9 of the same Rule states that "proceedings before a Labor Arbiter shall be non-litigious in nature" and that
"subject to the requirements of due process, the technicalities of law and procedure and the rules obtaining in the
courts of law shall not strictly apply thereto." It is sufficient that the documents submitted by the parties have a
bearing on the issue at hand and support the positions taken by them.21

In light of the afore-quoted provisions, there was no necessity for the statements of Balen and Malana to be sworn to
before a notary public or that the said witnesses be presented in person before the Labor Arbiter. For the statements
to be of probative value, however, they must measure up to basic evidentiary requirements. 22

In IBM Philippines, Inc. v. NLRC,23 this Court clarified that the liberality in administrative procedure "does not go so far
as to justify orders without a basis in evidence having rational probative value." And in Uichico v. National Labor
Relations Commission,24 it held:

x x x It is true that administrative and quasi-judicial bodies like the NLRC are not bound by technical rules of
procedure in the adjudication of cases. However, this procedural rule should not be construed as a license to
disregard certain fundamental evidentiary rules. While the rules of evidence prevailing in courts of law or equity are
not controlling in the proceedings before the NLRC, the evidence presented before it must at least have a modicum of
admissibility for it to be given some probative value. x x x. (Emphasis and underscoring supplied)

In the instant case, only photocopies25 of the statements of Balen and Malana form part of the records despite
petitioners reliance thereon to prove respondents purported transgressions. Jarcia Machine Shop and Auto Supply,
Inc. v. NLRC26 held that the unsigned photocopies of daily time records (DTRs), which were presented by the therein
employer to show that its employee was neglectful of his duties, were of "doubtful or dubious probative value." 27

Indeed, the DTRs annexed to the present petition would tend to establish private respondents neglectful attitude
towards his work duties as shown by repeated and habitual absences and tardiness and propensity for working
undertime for the year 1992. But the problem with these DTRs is that they are neither originals nor certified true
copies. They are plain photocopies of the originals, if the latter do exist. More importantly, they are not even signed
by private respondent nor by any of the employers representatives x x x.

Likewise, although Balen and Malanas statements bore their signatures, they are wanting in material particulars, the
most glaring of which are the dates of execution.28 Understandably, respondents objected to their admission, they
claiming that the statements were presented only after their cases for illegal dismissal were filed before the Labor
Arbiter.29

In Balens statement, his name was hand printed on the first page thereof on the space provided therefor, but the
spaces intended for the date and the witnesses were left blank.

The purported transcript of Malanas 15-page question-and-answer testimony, on the other hand, while bearing his
hand printed name and signature at the top rightmost margin of the first page and on every page thereafter, merely
indicated the person making the inquiry with the initials "TLG." While the initials may have referred to Theresa L.
Gaddi, manager of the HRD,30 this point was never clarified by petitioners, hence, it remains in the realm of
speculation and surmises. Neither were the omissions as to date and other particulars rectified. The appellate courts
discrediting of the statements as bereft of rational probative value upon which a decision or order may properly be
based is thus well-taken.

Respecting the audit report, petitioners posit that the therein mentioned documented incidents-bases of faulting
respondents were so numerous to have been incurred in the normal course of business. It added that the statements
of Balen and Malana regarding the alleged wrongdoings of respondents who had possession of the accountable
forms were corroborated by the audit report.

It bears noting that while the audit report covered a 20-month period (January 2000 to August 31, 2001), respondents
had served only partly in the restaurants Glorietta branch due to the companys practice of rotating employees every
so often. For that matter, respondents Quiambao and Obien were assigned to the same branch in March and August
of 2000, respectively; Deang and Lacson, in October 2000; De Leon in April 2001; and De Guzman in June 2001
only.31 Respondents alleged involvement in the reported irregularities moreover appeared to be incongruent with the
companys awarding them of certificates32 of commendation, recognition or appreciation for their invaluable service
during the same period.

Petitioners contention that the number of cancelled OS and receipts and the incidents of swapping dining OS with
bar OS were beyond the normal course of business deserves scant attention, petitioners not having established the
average figures in the ordinary course of its business.

All told, neither the statements of Balen and Malana nor the audit report could support a valid ground for dismissal.

It also does not help petitioners cause that they failed to follow rudiments of due process and even the rules laid
down in their own Code of Conduct. Section 2 of Rule XIV of the Omnibus Rules Implementing the Labor
Code33specifically provides, as follows:

Section 2. Standards of due process; requirements of notice. In all cases of termination of employment, the
following standards of due process shall be substantially observed:

1. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to
said employee reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee concerned, with the assistance of counsel, if the
employee so desires, is given opportunity to respond to the charge, present his evidence, or rebut the
evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due consideration of all the
circumstances, grounds have been established to justify his termination.

x x x x (Underscoring supplied)

The foregoing provision has been interpreted to mean that the written notice to the employees who stand to lose their
employment must specify the particular acts or omissions constituting the grounds for their dismissal. 34 The rule
ensures that the employees are able to answer the charges and to defend themselves from imputed wrongdoings
before their dismissals are ordered.

A review of the charges in the Notice to Explain and Suspension of September 4, 2001 shows that most, if not all,
were couched in general terms. Thus, respondents Quiambao and Obien were charged with "negligence in the
performance of duties resulting to losses or damages amounting to more than P5,000.00" and "involvement in
stealing in any form." On the other hand, Palermo, Lacson and De Leon were charged with "issuing /serving food or
drinks without corresponding receipts or [with] tampered receipts" and "stealing in any form," while Pangilinan and De
Guzman were charged with "pocketing tips intended for the group" and "stealing in any form." The charges against
Deang, meanwhile, consisted of "withholding information on administrative or legal cases" and "stealing in any form."
Precisely because of petitioners failure to sufficiently state the acts or omissions constituting the alleged
transgressions that respondent Obien asked to be clarified of the charges against her. 35 Because of the vagueness of
the charges, it followed that respondents could only issue a general denial.

The Corrective Action Report (CARE) furnished each of the respondents in accordance with the companys Code of
Conduct was not any better. It did not contain the date/s when the alleged infractions were committed,36 the person/s
who reported the same for investigation, or the signatures of the employees immediate supervisors.

Petitioners did not even heed their own procedures on disciplinary actions. The only facts extant in the records are
that respondents were issued above-said CARE Forms asking them to explain their alleged infractions within 48
hours; and they subsequently received notices of dismissal after they submitted their written explanations. There is,
however, nothing to show that before their dismissal, respondents were informed of their immediate supervisors
decision to terminate their services, or that they were thereafter invited to an administrative investigation before the
HRD manager or officer who is tasked to conduct the investigation in the presence of the employees immediate
supervisor/s and the witnesses, if necessary, as provided under Section IV of the companys Code of Conduct.37

No record of any administrative investigation proceeding, which under the companys rules, was to be "minuted," had
also been presented. Hence, only petitioners allegation that the statements of the witnesses were taken as part of
the administrative investigation is before this Court. Allegations without proof do not deserve consideration.

Finally, on the dismissal of Quiambao allegedly on the ground of business losses, it was incumbent upon petitioners
to prove it by substantial evidence. It did not, however. In fact, Quiambao presented documents to disprove the
validity of his retrenchment on that ground. For petitioners failure to discharge its burden then, this Court is
constrained to hold that respondent Quiambaos dismissal was not valid.

WHEREFORE, the Petition is DENIED. The challenged Decision of the Court of Appeals is AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 168988 June 19, 2007

FERNANDO G. MANAYA, petitioner,

vs.
ALABANG COUNTRY CLUB INCORPORATED, respondent.

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure filed by Fernando G.
Manaya (petitioner) assailing: (1) the Decision1 of the Court of Appeals in CA-G.R. SP No. 75417, dated 9 May 2005,
granting the Petition of Alabang Country Club Inc. (respondent) and setting aside the Resolutions dated 30 August
2002 and 30 October 2002 of the National Labor Relations Commission (NLRC); and (2) the Resolution 2 of the Court
of Appeals dated 21 July 2005 denying petitioners Motion for Reconsideration of its earlier Decision.

The assailed decision of the Court of Appeals reversed the Resolution of the NLRC dismissing the appeal of the
respondent for failure to perfect its appeal within the statutory period. Instead, the Court of Appeals ordered the
NLRC to give due course to the appeal of the respondent.

The antecedent facts are:

Petitioner alleged that on 21 August 1989, he was initially hired by the respondent as a maintenance helper 3receiving
a salary of P198.00 per day. He was later designated as company electrician. He continued to work for the
respondent until 22 August 1998 when the latter, through its Engineering and Maintenance Department Manager,
Engr. Ronnie B. de la Cruz, informed him that his services were no longer required by the company. 4Petitioner
alleged that he was forcibly and illegally dismissed without cause and without due process on 22 August
1998.5 Hence, he filed a Complaint6 before the Labor Arbiter. He claimed that he had not committed any infraction of
company policies or rules and that he was not paid his service incentive leave pay, holiday pay and 13th month pay.
He further asserted that with his more or less nine years of service with the respondent, he had become a regular
employee. He, therefore, demanded his reinstatement without loss of seniority rights with full backwages and all
monetary benefits due him.7

In its Answer, respondent denied that petitioner was its employee. It countered by saying that petitioner was
employed by First Staffing Network Corporation (FSNC), with which respondent had an existing Memorandum of
Agreement dated 21 August 1989. Thus, by virtue of a legitimate job contracting, petitioner, as an employee of
FSNC, came to work with respondent, first, as a maintenance helper, and subsequently as an electrician.
Respondent prayed for the dismissal of the complaint insisting that petitioner had no cause of action against it.

In a Decision, dated 20 November 2000, the Labor Arbiter held:

WHEREFORE, premises considered, complainant Fernando G. Manaya is hereby found to be a regular employee of
respondent Alabang Country Club, Inc., as aforediscussed. His dismissal from the service having been effected
without just and valid cause and without the due observance of due process is hereby declared illegal. Consequently,
respondent Alabang Country Club, Inc. is hereby ordered to reinstate complainant to his former position without loss
of seniority rights and other benefits appurtenant thereto with full backwages in the partial amount of P160,724.48 as
computed by Ms. Ma. Concepcion Manliclic and duly noted by Ms. Ma. Elena L. Estadilla, OIC-CEU, NCR-South
Sector which computation has been made part of the records.

Furthermore, respondent Alabang Country Club, Inc. and First Staffing Network Corporation are hereby ordered to
pay complainant, jointly and severally the following amounts by way of the following:

1. Service Incentive Leave 2,961.75

2. 13th Month Pay 15,401.10, and

3. Attorneys fees of ten (10%) percent of the total

monetary award herein adjudged due him, within ten (10) days from receipt hereof. 8

Respondent filed an Appeal with the NLRC which dismissed the same. 9 In a Resolution dated 30 August 2002, the
NLRC held:

PREMISES CONSIDERED, instant appeal from the Decision of November 20, 2000 is hereby DISMISSED for failure
to perfect appeal within the statutory period of appeal. The Decision is now final and executory. 10

The NLRC found that respondents counsel of record Atty. Angelina A. Mailon of Monsod, Valencia and Associates
received a copy of the Labor Arbiters Decision on or before 11 December 2000 as shown by the postal stamp or
registry return card.11 Said counsel did not file a withdrawal of appearance. Instead, a Memorandum of Appeal 12dated
26 December 2000 was filed by the respondents new counsel, Atty. Arizala of Tierra and Associates Law Office.
Reckoned from 11 December 2000, the date of receipt of the Decision by respondents previous counsel, the filing of
the Memorandum of Appeal by its new counsel on 26 December 2000 was clearly made beyond the reglementary
period. The NLRC held that the failure to perfect an appeal within the statutory period is not only mandatory but
jurisdictional. The appeal having been belatedly filed, the Decision of the Labor Arbiter had become final and
executory.13

Respondent filed a Motion for Reconsideration,14 which the NLRC denied in a Resolution dated 30 October
2002.15 The NLRC held that the decision of the Labor Arbiter has become final and executory on 28 November 2002;
thus, Entry of Judgment, dated 8 January 200316 was issued.

Respondent filed a Petition for Certiorari17 under Rule 65 of the Rules of Court before the Court of Appeals. In a
Decision dated 9 May 2005,18 the Court of Appeals granted the petition and ordered the NLRC to give due course to
respondents appeal of the Labor Arbiters Decision. Petitioner filed a Motion for Reconsideration which was denied
by the Court of Appeals in a Resolution19 dated 21 July 2005.

Not to be dissuaded, petitioner filed the instant petition before this Court.

The issue for resolution:

WHETHER OR NOT THE COURT OF APPEALS COMMITTED AN ERROR WHEN IT ORDERED THE NLRC TO
GIVE DUE COURSE TO THE APPEAL OF RESPONDENT ALABANG COUNTRY CLUB, INCORPORATED EVEN
IF THE SAID APPEAL WAS FILED BEYOND THE REGLEMENTARY PERIOD OF TEN (10) DAYS FOR
PERFECTING AN APPEAL.20

Essentially, the issue raised by the respondent before the NLRC in assailing the decision of the Labor Arbiter pertains
to the finding of the Labor Arbiter that petitioner was a regular employee of the respondent.
In granting the petition, the Court of Appeals relied mainly on the case of Aguam v. Court of Appeals, 21 where this
Court held that litigation must be decided on the merits and not on technicalities. The appellate court further justified
the grant of respondents petition by saying that the negligence of its counsel should not bind the respondent.22

The Court of Appeals gave credence to respondents claim that its lawyer abandoned the case; hence, they were not
effectively represented by a competent counsel. It further held that the respondent, upon its receipt of the Decision of
the Labor Arbiter on 15 December 2000, filed its appeal on 26 December 2000 through a new lawyer. The appeal
filed by respondent through its new lawyer on 26 December 2000 was well within the reglementary period, 25
December 2000 being a holiday.

It is axiomatic that when a client is represented by counsel, notice to counsel is notice to client. In the absence of a
notice of withdrawal or substitution of counsel, the Court will rightly assume that the counsel of record continues to
represent his client and receipt of notice by the former is the reckoning point of the reglementary period. 23 As
heretofore adverted, the original counsel did not file any notice of withdrawal. Neither was there any intimation by
respondent at that time that it was terminating the services of its counsel.

For negligence not to be binding on the client, the same must constitute gross negligence as to amount to a
deprivation of property without due process.24 This does not exist in the case at bar. Notice sent to counsel of record
is binding upon the client and the neglect or failure of counsel to inform him of an adverse judgment resulting in the
loss of his right to appeal is not a ground for setting aside a judgment, valid and regular on its face.25

Even more, it is respondents duty as a client to be in touch with his counsel so as to be constantly posted about the
case. It is mandated to inquire from its counsel about the status and progress of the case from time to time and
cannot expect that all it has to do is sit back, relax and await the outcome of the case. 26

On this score, we hold that the notice to respondents counsel, Atty. Angelina A. Mailon on 11 December 2000 is the
controlling date of the receipt of the decision.

We now come to the issue of whether or not the Court of Appeals properly gave due course to the petition of the
respondent before it.

Of relevance is Section 1, Rule VI of the 2005 Revised Rules of the NLRC

Section 1. PERIODS OF APPEAL. Decisions, resolutions or orders of the Labor Arbiter shall be final and executory
unless appealed to the Commission by any or both parties within ten (10) calendar days from receipt thereof; and in
case of decisions, resolutions or orders of the Regional Director of the Department of Labor and Employment
pursuant to Article 129 of the Labor Code, within five (5) calendar days from receipt thereof. If the 10th or 5th day, as
the case may be, falls on a Saturday, Sunday or holiday, the last day to perfect the appeal shall be the first working
day following such Saturday, Sunday or holiday.

No motion or request for extension of the period within which to perfect an appeal shall be allowed.

Remarkably, in highly exceptional instances, we have allowed the relaxing of the rules on the application of the
reglementary periods of appeal.27 Thus:

In Ramos v. Bagasao, 96 SCRA 395, we excused the delay of four days in the filing of a notice of appeal because the
questioned decision of the trial court was served upon appellant Ramos at a time when her counsel of record was
already dead. Her new counsel could only file the appeal four days after the prescribed reglementary period was
over. In Republic v. Court of Appeals, 83 SCRA 453, we allowed the perfection of an appeal by the Republic despite
the delay of six days to prevent a gross miscarriage of justice since the Republic stood to lose hundreds of hectares
of land already titled in its name and had since then been devoted for educational purposes. In Olacao v. National
Labor Relations Commission, 177 SCRA 38, 41, we accepted a tardy appeal considering that the subject matter in
issue had theretofore been judicially settled, with finality, in another case. The dismissal of the appeal would have
had the effect of the appellant being ordered twice to make the same reparation to the appellee. 28

We pronounced in those cases that technicality should not be allowed to stand in the way of equitably and completely
resolving the rights and obligations of the parties.

In all these, the Court allowed liberal interpretation given the extraordinary circumstances that justify a deviation from
an otherwise stringent rule.29

Clearly, emphasized in these cases is that the policy of liberal interpretation is qualified by the requirement that there
must be exceptional circumstances to allow the relaxation of the rules. 30

Absent exceptional circumstances, we adhere to the rule that certain procedural precepts must remain inviolable, like
those setting the periods for perfecting an appeal or filing a petition for review, for it is doctrinally entrenched that the
right to appeal is a statutory right and one who seeks to avail oneself of that right must comply with the statute or
rules. The rules, particularly the requirements for perfecting an appeal within the reglementary period specified in the
law, must be strictly followed as they are considered indispensable interdictions against needless delays and for
orderly discharge of 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 and the failure to perfect the appeal renders the
judgment of the court final and executory. Just as a losing party has the right to file an appeal within the prescribed
period, the winning party also has the correlative right to enjoy the finality of the resolution of his/her case. 31

In this particular case, we adhere to the strict interpretation of the rule for the following reasons:

Firstly, in this case, entry of judgment had already been made32 which rendered the Decision of the Labor Arbiter as
final and executory.

Secondly, it is a basic and irrefragable rule that in carrying out and in interpreting the provisions of the Labor Code
and its implementing regulations, the workingmans welfare should be the primordial and paramount consideration.
The interpretation herein made gives meaning and substance to the liberal and compassionate spirit of the law
enunciated in Article 4 of the Labor Code that "all doubts in the implementation and interpretation of the provisions of
the Labor Code including its implementing rules and regulations shall be resolved in favor of labor."33

In the case of Bunagan v. Sentinel34 we declared that:

[T]hat the perfection of an appeal within the statutory or reglementary period is not only mandatory, but jurisdictional,
and failure to do so renders the questioned decision final and executory and deprives the appellate court of
jurisdiction to alter the final judgment, much less to entertain the appeal. The underlying purpose of this principle is to
prevent needless delay, a circumstance which would allow the employer to wear out the efforts and meager
resources of the worker to the point that the latter is constrained to settle for less than what is due him. This Court
has declared that although the NLRC is not bound by the technical rules of procedure and is allowed to be liberal in
the interpretation of the rules in deciding labor cases, such liberality should not be applied where it would render futile
the very purpose for which the principle of liberality is adopted. The liberal interpretation stems from the mandate that
the workingmans welfare should be the primordial and paramount consideration. We see no reason in this case to
waive the rules on the perfection of appeal.35

The Court is aware that the NLRC is not bound by the technical rules of procedure and is allowed to be liberal in the
interpretation of rules in deciding labor cases. However, such liberality should not be applied in the instant case as it
would render futile the very purpose for which the principle of liberality is adopted. The liberal interpretation in favor of
labor stems from the mandate that the workingmans welfare should be the primordial and paramount consideration.
x x x.36 (Emphases supplied.)
Indeed, there is no room for liberality in the instant case "as it would render futile the very purpose for which the
principle of liberality is adopted." As so rightfully enunciated, "the liberal interpretation in favor of labor stems from the
mandate that the workingmans welfare should be the primordial and paramount consideration." This Court has
repeatedly ruled that delay in the settlement of labor cases cannot be countenanced. Not only does it involve the
survival of an employee and his loved ones who are dependent on him for food, shelter, clothing, medicine and
education; it also wears down the meager resources of the workers to the point that, not infrequently, they either give
up or compromise for less than what is due them.37

Without doubt, to allow the appeal of the respondent as what the Court of Appeals had done and remand the case to
the NLRC would only result in delay to the detriment of the petitioner. In Narag v. National Labor Relations
Commission,38 citing Vir-Jen Shipping and Marine Services, Inc. v. National Labor Relations Commission,39 we held
that delay in most instances gives the employers more opportunity not only to prepare even ingenious defenses, what
with well-paid talented lawyers they can afford, but even to wear out the efforts and meager resources of the workers,
to the point that not infrequently the latter either give up or compromise for less than what is due them. 40

Nothing is more settled in our jurisprudence than the rule that when the conflicting interest of loan and capital are
weighed on the scales of social justice, the heavier influence of the latter must be counter-balanced by the sympathy
and compassion the law must accord the under-privileged worker.41

Thirdly, respondent has not shown sufficient justification to reverse the findings of the Labor Arbiter as affirmed by the
NLRC.

Pertinent provision of the Labor Code provides:

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;

(b) If the decision, order or award was secured through fraud or coercion, including graft an corruption;

(c) If made purely on question of law; and

(d) If serious errors in the finding of facts are raised which would cause grave or irreparable damage or injury to the
appellant.

Under the above provision, to obtain a reversal of the decision of the Labor Arbiter, the respondent must be able to
show in his appeal that any one of the above instances exists.

Respondent failed to show the existence of any of the above. A more than perfunctory reading of the Decision of the
Labor Arbiter shows that the same is supported by the evidence on record.

Respondent narrates that it had a contract of services, first, with Supreme Construction (Supreme). Supreme
assigned petitioner to work with the respondent starting as a painter and moving on to perform electrical jobs.
Respondent terminated its contract with Supreme and entered into another contract of services with another job-
contracting agency, First Staffing Network Corporation. Petitioner continued to work for the respondent which claimed
that the former was supplied by FNSC to it as part of its contract to supply the manpower requirements of the
respondent. Petitioner is not the employee of the respondent. He was directly hired first by Supreme then later by
FNSC and deployed to work with the respondent based on the contract of services between respondent and these
job-contracting agencies. All these considered, respondent insists that petitioner is therefore not its employee.
We do not agree to this submission of the respondent. The Labor Arbiter concluded otherwise and this finds support
from the evidence, thus:

[R]espondent was not able to convincingly disprove complainants claims that at the outset, he was directly hired by it
as a maintenance helper on 21 August 1989. Although said respondent alleges that complainant was hired by its job
contractor, Supreme Construction, it failed to submit in evidence the Contract of Service it had entered into in order to
establish the entry of complainant as deployed by said company for his duties at Alabang Country Club, Inc. pursuant
to the said Agreement. It can therefore be readily presumed that said respondent did not produce the said document
because the production of the same will readily prove complainants assertion of having been hired long before said
contractor Supreme Construction entered into the picture. We have noted complainants admission of having been
later coerced to sign up with said Supreme Construction by respondent Alabang Country Club, Inc. which he did as
he was told in his fear of losing his job.

As shown by respondent Alabang Country Club, Inc.s own evidence, it later terminated its contract of service or
Memorandum of Agreement with Supreme Construction and entered into a new contract of service with respondent
First Staffing Network Corporation effective on 16 June 1994. However by said respondents own allegation, even
with the absence of complainants supposed direct employer Supreme Construction, he still remained in its employ
until he signed up with respondent First Staffing Network Corporation on 11 February 1996. This indeed runs counter
to the normal course of human experience such that when a contractor losses (sic) his contract of service he packs
up along with all his employees, but in this case, complainant was not terminated from the service notwithstanding
the expiration/termination of the contract of service of his alleged direct employer. Complainant remained working
with respondent Alabang Country Club, Inc. despite the severance of the contractual relations between itself and
Supreme Construction.

The initial Memorandum of Agreement entered into by respondents Alabang Country Club, Inc. and First Staffing
Network Corporation was dated, 16 June 1994, and was apparently renewed thereafter providing under Article III
On Compensation thereof, the following, viz:

"3.01 For and in consideration of the performance by FIRST STAFFING of its obligations under this AGREEMENT,
the CLIENT agrees to pay the former based on the schedule of billing rates which shall be specified in the Personnel
Requisition Form signed by the CLIENT. The schedule of billing rates is as follows, to wit:

"BILLING RATES/HOUR PLUS 10% VALUE ADDED TAX

"Covered Pos.

ABC

Waiters Accounting Supervisor

Janitors Data Encoders

Bag Boy Gen. Clerks

Stewards Secretary

Cook Helpers Receptionist

Messengers Secretary

Cashier"
"xxx."

Nowhere, does complainants position of electrician appear as covered in the said contract. Finally, suffice it for Us to
stress that the said contract covers almost all of respondents Alabang Country Club, Inc.s workforce including those
whose jobs or activities are directly related to said respondents business, emphasizing in no uncertain terms that
respondent First Staffing Network Corporation was not a truly bonafide job contractor, as it did not contract out
specific service but merely supplied work personnel, a clear indication, that it was engaged in a "job only"
contracting which is prohibited by law.

Besides, the said respondent First Staffing Network Corporation failed to prove that it is a bonafide job contractor by
showing that it had an adequate capital or investment in tools, equipments and machineries and premises for that
matter, and so did respondent Alabang Country Club, Inc. fail to establish the same. For that matter, respondent First
Staffing Network Corporation had waived its right to present any evidence in its favor in this case.

Obviously, herein respondent Alabang Country Club, Inc. actually resorted to contracting out all the positions for its
workforce in violation of law in its desire to circumvent said employees rights as regular employees under the law. 42

The existence of an employer-employee relationship between petitioner and respondent is fortified by the fact that
during his stint with the respondent, petitioner was given the opportunity to attend a seminar/training on refrigeration
and air conditioning from 16 January 1995 to 18 February 1995. 43 A certificate of participation signed by three of
respondents officials was issued to the petitioner.

Equally significant is Article 106 of the Labor Code, as amended, which provides that legitimate job contracting is
permitted, but labor-only contracting is prohibited. The said provision reads:

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

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this
Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and extent that he is liable to employees
directly employed by him.

The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the
rights of workers established under the Code. In so prohibiting or restricting, he may make appropriate distinctions
between labor only contracting and job contracting as well as differentiations within these types of contracting and
determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent
any violation or circumvention of any provision of this Code.

There is "laboronly" contracting where the person supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers
recruited and placed by such person are performing activities which are directly related to the principal business of
such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer
who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

Rule VIII-A, Book III of the Omnibus Rules Implementing the Labor Code, as amended by Department Order No. 18,
distinguishes between legitimate and labor only contracting:

Section 3. Trilateral Relationship in Contracting Arrangements. - In legitimate contracting, there exists a trilateral
relationship under which there is a contract for a specific job, work or service between the principal and the contractor
or subcontractor, and a contract of employment between the contractor and subcontractor and its workers. Hence,
there are three parties involved in these arrangements, the principal which decides to farm out a job or service to a
contractor or subcontractor, the contractor or subcontractor which has the capacity to independently undertake the
performance of the job, work or service, and the contractual workers engaged by the contractor or subcontractor to
accomplish the job, work or service.

Section 5. Prohibition against laboronly contracting. Labor-only contracting is hereby declared prohibited. For this
purpose, labor only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits,
supplies or places workers to perform a job, work or service for a principal, and any of the following elements are
present:

i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or
service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the principal, or

ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee.

The foregoing provisions shall be without prejudice to the application of Article 248(c) of the Labor Code, as
amended.

"Substantial capital or investment" refers to capital stocks and subscribed capitalization in the case of corporations,
tools, equipments, implements, machineries and work premises, actually and directly used by the contractor or
subcontractor in the performance or completion of the job, work or service contracted out.

The "right to control" shall refer to the right reserved to the person for whom the services of the contractual workers
are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching
that end.

The test to determine the existence of independent contractorship is whether one claiming to be an independent
contractor has contracted to do the work according to his on methods and without being subject to the control of the
employer, except only as to the results of the work.

In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e., to
ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the
job contractor, only for the payment of the employees wages whenever the contractor fails to pay the same. Other
than that, the principal employer is not responsible for any claim made by the employees. 44

Despite respondents disavowal of the existence of the employer-employee relationship between it and petitioner and
its insistence that petitioner is an employee first, of Supreme and subsequently, of FSNC, the totality of the facts and
surrounding circumstances of the case convey otherwise.

On this point, the law is clear-cut. In laboronly contracting, the statute creates an employeremployee relationship
for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent
of the principal employer and the latter is responsible to the employees of the laboronly contractor as if such
employees had been directly employed by the principal employer.

The Labor Code and its implementing rules empower the Labor Arbiter to be the trier of facts in labor cases. Much
reliance is placed on findings of facts of the Arbiter having had the opportunity to talk to and discuss with the parties
and their witnesses the factual matters of the case during the conciliation phase. 45 We, thus, give full credence to the
findings of facts of the labor arbiter.

Wherefore, premises considered, the Petition is GRANTED. The Decision of the Court of Appeals dated 9 May 2005
and its Resolution dated 21 July 2005 is REVERSED. The Decision of the Labor Arbiter dated 20 November 2000 is
reinstated. Let the records of the above-entitled case be remanded to the Labor Arbiter for immediate execution of
the Decision. No costs.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Baguio City

FIRST DIVISION

G.R. No. 182800 April 20, 2015

MANILA MINING CORPORATION, Petitioner,

vs.
LOWITO AMOR, ET. AL., Respondents.

DECISION

PEREZ, J.:

Compliance with the requirements for the perfection of an appeal from the decision of a Labor Arbiter is at issue in
this Rule 45 Petition for Review on Certiorari which primarily seeks the nullification of the 29 November 2007
Decision1 rendered by the then Twenty-Second Division of the Court of Appeals (CA) in CA-G.R. SP No. 00609,2the
decretal portion of which states:

WHEREFORE, the petition is hereby GRANTED. The Resolutions of the NLRC dated 25 April 2005 and 30 June
2007, respectively, are ANNULLED and SET ASIDE. The 25 October 2004 Resolution of the Labor Arbiter is
REINSTATED.

SO ORDERED.3

The facts are not in dispute.

Respondents Lowito Amor, Rollybie Ceredon, Julius Cesar, Ronito Martinez and Fermin Tabili, Jr. were regular
employees of petitioner Manila Mining Corporation, a domestic corporation which operated a mining claim in Placer,
Surigao del Norte, in pursuit of its business of large-scale open-pit mining for gold and copper ore. In compliance with
existing environmental laws, petitioner maintained Tailing Pond No. 7 (TP No. 7), a tailings containment facility
required for the storage of waste materials generated by its mining operations. When the mine tailings being pumped
into TP No. 7 reached the maximum level in December 2000, petitioner temporarily shut down its mining operations
pending approval of its application to increase said faciltys capacity by the Department of Environment and Natural
Resources-Environment Management Bureau (DENR-EMB), Butuan City. Although the DENR-EMB issued a
temporary authority on 25 January 2001 for it to be able to continue operating TP No. 7 for another six (6) months
and to increase its capacity, petitioner failed to secure an extension permit when said temporary authority eventually
lapsed.4

On 27 July 2001, petitioner served a notice, informing its employees and the Department of Labor and Employment
Regional Office No. XII (DOLE) of the temporary suspension of its operations for six months and the temporary lay-off
of two-thirds of its employees.5 After the lapse of said period, petitioner notified the DOLE on 11 December 2001 that
it was extending the temporary shutdown of its operations for another six months.6 Adversely affected by petitioners
continued failure to resume its operations, respondents filed the complaint for constructive dismissal and monetary
claims which was docketed as NLRC Case No. RAB-13-10-00226-2003 before the Regional Arbitration Branch No.
XIII of the National Labor Relations Commission (NLRC). On 25 October 2004, Executive Labor Arbiter Benjamin E.
Pelaez rendered a Decision holding petitioner liable for constructive dismissal in view of the suspension of its
operations beyond the six-month period allowed under Article 2867 of the Labor Code of the Philippines. Finding that
the cause of suspension of petitioners business was not beyond its control, 8the Labor Arbiter applied Article 2839 of
the same Code and disposed of the case in the following wise:
WHEREFORE, premises considered, judgment is hereby entered:

1) Declaring [respondents] to have been constructively dismissed from their employment; and 2) Ordering [petitioner]
to pay xxx [respondents] their separation pay equivalent to one (1) month pay or to at least one-half (1/2) month pay
for every year of service, whichever is higher, a fraction of at least six (6) months shall be considered as one whole
year, moral damages and exemplary damages in the amount of Ten Thousand Pesos (P10,000.00) and Five
Thousand Pesos (P5,000.00), respectively, for each of the [respondents] and attorneys fees equivalent to ten (10%)
percent in the total amount of TWO MILLION ONE HUNDRED THIRTY EIGHT THOUSAND ONE HUNDRED
NINETY & 02/100 PESOS (P2,138,190.02) ONLY x x x x

All other claims are dismissed for lack of merit.

SO ORDERED.10

Aggrieved, petitioner filed its memorandum of appeal before the NLRC11 and moved for the reduction of the appeal
bond to P100,000.00, on the ground that its financial losses in the preceding years had rendered it unable to put up
one in cash and/or surety equivalent to the monetary award. 12 In opposition, respondents moved for the dismissal of
the appeal in view of the fact that, despite receipt of the appealed decision on 24 November 2004, petitioner mailed
their copy of the memorandum of appeal only on 7 February 2005. Respondents also argued that the appeal bond
tendered by petitioner was so grossly disproportionate to monetary award for the same to be considered substantial
compliance with the requirements for the perfection of an appeal from a Labor Arbiters decision. 13 Without addressing
the procedural issues raised by respondents, however, the NLRC Fifth Division went on to render a Resolution dated
25 April 2005 in NLRC CA No. M-008433-2005, reversing the appealed decision and dismissing the complaint for
lack of merit. Finding that the continued suspension of petitioners operations was due to circumstances beyond its
control, the NLRC ruled that, under Article 283 of the Labor Code, respondents were not even entitled to separation
pay considering the eventual closure of their employers business due to serious business losses or financial
reverses.14

Unfazed by the denial of their motion for reconsideration in the NLRCs 30 June 2005 Resolution, 15 respondents filed
the Rule 65 petition for certiorari which was docketed as CA-G.R. SP No. 00609 before the Mindanao Station of the
CA. Insisting that petitioners memorandum of appeal was filed 65 days after the lapse of reglementary period for
appeal, respondents called attention to the fact that, as grossly inadequate as it already was vis--vis
the P2,138,190.0216 monetary award adjudicated in their favor, the check in the sum of P100,000.00 deposited by
petitioner by way of appeal bond was dishonored upon presentment for payment. Aside from the fact that the Labor
Arbiters25 October 2004 Decision had already attained finality, respondents faulted the NLRC for applying Article
283 of the Labor Code absent allegation and proof of compliance with the requirements for the closure of an
employers business due to serious business losses.17 In its comment, on the other hand, petitioner claimed that,
having caused the same to be immediately funded, the check it issued for the appeal bond had since been deposited
by the NLRC. Insisting that the cessation of its operations was due to causes beyond its control, petitioner argued
that the subsequent closure of its business due to business losses exempted it from paying separation pay. 18

On 29 November 2007, the CAs then Twenty-Second Division rendered the herein assailed decision, granting
respondents petition and nullifying the NLRCs 25 April 2005 Resolution. In reinstating the Labor Arbiters 25 October
2004 Decision, the CA ruled that petitioner failed to perfect its appeal therefrom considering that the copy of its 3
December 2004 Memorandum of Appeal intended for respondents was served the latter by registered mail only on 7
February 2005. Aside from posting an unusually smaller sum as appeal bond, petitioner was likewise faulted for
replenishing the check it issued only on 1 April 2005 or 24 days before the rendition of the assailed NLRC Decision.
Applying the principle that the right to appeal is merely a statutory remedy and that the party who seeks to avail of the
same must strictly follow the requirements therefor, the CA decreed that the Labor Arbiters Decision had already
attained finality and, for said reason, had been placed beyond the NLRCs power of review. 19Petitioners motion for
reconsideration of the foregoing decision was denied for lack of merit in the CAs 2 May 2008 Resolution, 20 hence, this
Rule 45 petition for review on certiorari.21 Petitioner seeks the reversal of the CAs 29 November 2007 Decision and 2
May 2008 Resolution on the following grounds:
THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT PETITIONERS APPEAL FILED WITH THE
NATIONAL LABOR RELATIONS COMMISSION WAS FATALLY DEFECTIVE [SINCE IT] HAD FULLY COMPLIED
WITH THE REQUIREMENTS OF THE LABOR CODE FOR PERFECTING AN APPEAL.

THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION IN IMMEDIATELY SETTING ASIDE
THE DECISION OF THE NLRC WITHOUT REVIEWING THE MERITS OF THE CASE.

AT THE TIME OF THE PROMULGATION OF THE ASSAILED DECISION BY THE COURT OFAPPEALS, THE
HONORABLE SUPREME COURT HAD ALREADY AFFIRMED THE FINDING THAT PETITIONER WAS ALREADY
PERMANENTLY CLOSED DUE TO MASSIVE FINANCIAL LOSSES.22

Time and again, it has been held that the right to appeal is not a natural right or a part of due process; it is merely a
statutory privilege, and may be exercised only in the manner and in accordance with the provisions of law. 23 A party
who seeks to avail of the right must, therefore, comply with the requirements of the rules, failing which the right to
appeal is invariably lost.24 Insofar as appeals from decisions of the Labor Arbiter are concerned, Article 223 of the
Labor Code of the Philippines25 provides that, "(d)ecisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the [NLRC] by any or both parties within ten (10) calendar days from the receipt of such
decisions, awards or orders." In case of a judgment involving a monetary award, the same provision mandates that,
"an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the [NLRC] in the amount equivalent to the monetary award in the judgment
appealed from." Alongside the requirement that "the appellant shall furnish a copy of the memorandum of appeal to
the other party," the foregoing requisites for the perfection of an appeal are reiterated under Sections 1, 4 and 6, Rule
VI of the NLRC Rules of Procedure in force at the time petitioner appealed the Labor Arbiters 25 October 2004
Decision, viz.:

SECTION 1. PERIODS OF APPEAL. - Decisions, resolutions or orders of the Labor Arbiter shall be final and
executory unless appealed to the Commission by any or both parties within ten (10)calendar days from receipt of
such decisions, resolutions or orders of the Labor Arbiter x x x x. If the 10th x x x x day x x x x falls on a Saturday,
Sunday or a holiday, the last day to perfect the appeal shall be the next working day.

SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. - (a) The Appeal shall be filed within the reglementary
period as provided in Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule
7 of the Rules of Court, with proof of payment of the required appeal fee and the posting of a cash or surety bond as
provided in Section 6 of this Rule; shall be accompanied by memorandum of appeal in three (3) legibly typewritten
copies which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a
statement of the date when the appellant received the appealed decision, resolution or order and a certificate of non-
forum shopping with proof of service on the other party of such appeal. A mere notice of appeal without complying
with the other requisites aforestated shall not stop the running of the period for perfecting an appeal. (Italics supplied)

xxxx

SECTION 6. BOND. - In case the decision of the Labor Arbiter or the Regional Director involves a monetary award,
an appeal by the employer may be perfected only upon the posting of a cash or surety bond. The appeal bond shall
either be in cash or surety in an amount equivalent to the monetary award, exclusive of damages and attorneys fees.

xxxx

No motion to reduce bond shall be entertained except on meritorious grounds and upon the posting of a bond in a
reasonable amount in relation to the monetary award.

The filing of the motion to reduce bond without compliance with the requisites in the preceding paragraph shall not
stop the running of the period to perfect an appeal.
Having received the Labor Arbiters Decision on 24 November 2004, 26 petitioner had ten (10) calendar days or until 4
December 2004 within which to perfect an appeal. Considering that the latter date fell on a Saturday, petitioner had
until the next working day, 6 December 2004, within which to comply with the requirements for the perfection of its
appeal. Our perusal of the record shows that, despite bearing the date 3 December 2004, petitioners memorandum
of appeal was subscribed before Notary Public Ronald Rex Recidoro only on 6 December 2004. 27 Without proof as to
the actual date of filing of said pleading being presented by both parties, the CA discounted the timeliness of its filing
in light of the established fact that the copy thereof intended for respondents was only served by registered mail on 7
February 2005.28 Since proof of service of the memorandum on appeal is required for the perfection of an appeal from
the decision of the Labor Arbiter, the CA ruled that "respondents filed its appeal not earlier than 07 February 200[5],
which is way beyond the ten-day reglementary period to appeal."29

As allegation is not evidence, however, the rule is settled that the burden of evidence lies with the party who asserts
the affirmative of an issue.30 As the parties claiming the non-perfection of petitioners appeal, it was, therefore,
respondents who had the burden of proving that said memorandum of appeal was, indeed, filed out of time. By and of
itself, the fact that the copy of memorandum of appeal intended for respondents was served upon them by registered
mail only on 7 February 2005 does not necessarily mean that petitioners appeal from the Labor Arbiters decision
was filed out of time. On the principle that justice should not be sacrificed for technicality, 31it has been ruled that the
failure of a party to serve a copy of the memorandum to the opposing party is not a jurisdictional defect and does not
bar the NLRC from entertaining the appeal.32 Considering that such an omission is merely regarded as a formal lapse
or an excusable neglect,33 the CA reversibly erred in ruling that, under the circumstances, petitioner could not have
filed its appeal earlier than 7 February 2005.

The question regarding the appeal bond rises from the record which shows that, in addition to its memorandum of
appeal, petitioner filed a 6 December 2004 motion for the reduction of the appeal bond on the ground that the cash
equivalent of the monetary award and/or cost of the surety bond have proven to be prohibitive in view of the
tremendous business losses it allegedly sustained. As supposed measure of its good faith in complying with the
Rules, petitioner attached to its motion Philam Bank Check No. 0000627153, dated 6 December2004, in the amount
of P100,000.00 only. As pointed out by respondents, however, said check was subsequently dishonored upon
presentment for payment for insufficiency of funds. In its 1 April 2005 Ex-Parte Manifestation, petitioner informed the
NLRC that it "only learned belatedly that the same check was dishonored" as there appeared to be "an inadvertent
mix-up as other checks issued for [its] other obligations were negotiated ahead [thereof], leaving an insufficient
balance in its account." As a consequence, petitioner claimed that "the deficiency in deposit has been promptly and
immediately replenished as soon as the check's dishonor was reported" and that the same may already be re-
deposited at any of NLRC's depositary banks.34

The issue that has be devilled labor litigation for long has been clarified by the ruling in McBurnie v. Ganzon, et
al.,35 which built on and extended the ruling that while it is true that reduction of the appeal bond has been allowed in
meritorious cases36 on the principle that substantial justice is better served by allowing appeals on the merits, 37 it has
been ruled that the employer should comply with the following conditions: (1) the motion to reduce the bond shall be
based on meritorious grounds; and (2) a reasonable amount in relation to the monetary award is posted by the
appellant, otherwise the filing of the motion to reduce bond shall not stop the running of the period to perfect an
appeal.38

The McBurnie ruling pronounced:

xxx

Furthermore, on the matter of the filing and acceptance of motions to reduce appeal bond, as provided in Section 6,
Rule VI of the 2011 NLRC Rules of Procedure, the Court hereby RESOLVES that henceforth, the following guidelines
shall be observed:

(a) The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following
conditions: (1) there is meritorious ground; and (2) a bond in a reasonable amount is posted;
 (b) For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to ten percent (10), of the monetary award subject of the appeal,
exclusive of damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day reglementary
period to perfect an appeal from the labor arbiter's decision to the NLRC;

(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final
amount of bond that shall be posted by the appellant, still in accordance with the standards of meritorious
grounds and reasonable amount; and

(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the
amount of the provisional bond, the appellant shall be given a fresh period of ten (10) days from notice of the
NLRC order within which to perfect the appeal by posting the required appeal bond. 39

In this case, we see that with no proof to substantiate its claim, petitioner moved for a reduction of the appeal bond on
the proferred basis of serious losses and reverses it supposedly sustained in the years prior to the rendition of the
Labor Arbiter's decision.

The first condition may be left for the nonce. As to the second condition, we may consider that the amount
ofP100,000.00 supposedly posted was provisional bond sufficient to suspend the running of the 10-day reglementary
period to perfect an appeal from the Labor Arbiter's decision. That would however not improve petitioner's position
one bit.

Respondent correctly called attention to the fact that the check submitted by petitioner was dishonored upon
presentment for payment, thereby rendering the tender thereof ineffectual. Although the NLRC chose not to address
the issue of the perfection of the appeal as well as the reduction of the bond in its Resolution dated 25 April 2005, the
record shows that petitioner only manifested its deposit of the funds for the check 24 days before the resolution of its
appeal or 116 days after its right to appeal the Labor Arbiters decision had expired. Having filed its motion and
memorandum on the very last day of the reglementary period for appeal, moreover, petitioner had no one but itself to
blame for failing to post the full amount pending the NLRCs action on its motion for reduction of the appeal bond. If
redundancy be risked it must be emphasized that the posting of a bond is indispensable to the perfection of an
appeal in cases involving monetary awards from the decision of the Labor Arbiter. Since it is the posting of a cash or
surety bond which confers jurisdiction upon the NLRC,40 the rule is settled that non-compliance is fatal and has the
effect of rendering the award final and executory. 41

Viewed in the light of the foregoing considerations, the CA cannot be faulted for no longer discussing the merits of
petitioners case. Although appeal is an essential part of our judicial process, it has been held, time and again, that
1avvphi1

the right thereto is not a natural right or a part of due process but is merely a statutory privilege. Thus, the perfection
of an appeal in the manner and within the period prescribed by law is not only mandatory but also jurisdictional and
failure of a party to conform to the rules regarding appeal will render the judgment final and executory. Once a
decision attains finality, it becomes the law of the case and can no longer be revised, reviewed, changed or altered.
The basic rule of finality of judgment is grounded on the fundamental principle of public policy and sound practice
that, at the risk of occasional error, the judgment of courts and the award of quasi-judicial agencies must become final
at some definite date fixed by law.42

Without necessarily resulting to a termination of employment, an employer may at any rate, bona fide suspend the
operation of its business for a period of not exceeding six months under Article 286 of the Labor Code. 43 While the
employer is, on the one hand, duty bound to reinstate his employees to their former positions without loss of seniority
rights if the operation of the business is resumed within six months, employment is deemed terminated where the
suspension exceeds said period.44 Not having resumed its operations within six months from the time it suspended its
operations on 27 July 2001, it necessarily follows that petitioner is liable to pay respondents separation
pay45 computed at one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is
higher,46 as well as the damages and attorneys fees adjudicated by the Labor Arbiter. Without proof of the serious
business losses it allegedly sustained and/or compliance with the reportorial requirements under Article 283 of the
Labor Code, petitioner cannot expediently plead exemption from said liabilities due to the supposed financial reverses
which led to the eventual closure of its business. It is essentially required that the alleged losses in business
operations must be proven for, otherwise, said ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning business losses or reverses in their business ventures in order to ease out
employees.47 The condition of business losses justifying retrenchment is normally shown by audited financial
documents like yearly balance sheets and profit and loss statements as well as annual income tax returns 48 which
were not presented in this case.

Neither can petitioner evade said liabilities on the strength of the 28 July 2005 Decision rendered by the CA's Twenty-
Second Division in CAG.R. SP No. 00072, entitled Rosita Asumen, et al. v. National Labor Relations Commission, et
al., where its employees' claim for separation pay was denied on account of the subsequent closure of its business
due to serious business losses and financial reverses. 49 Although the employees Rule 45 petition for review on
certiorari had been denied in the 7 February 2007 Resolution issued by this Court's Second Division in UDK-
13776,50 the ruling in said case can hardly be considered binding on respondents who were not parties thereto. As for
the inequality in benefits which would supposedly result if the CA's assailed decision and resolution were not
reversed, suffice it to say that this Court had sustained the claim for . separation pay of petitioner's employees in the
case of Manila Mining Corp Employees Association-Federation of Free Workers Chapter, et al. v. Manila Mining
Corporation, et al.51 Stare decisis is inapplicable; the matter of separation pay for petitioner's employees has been
decided case to case.

WHEREFORE, premises considered, the petition is DENIED for lack of merit.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. Nos. 174365-66 February 4, 2015

ROMEO BASAN, DANILO DIZON, JAIME L. TUMABIAO, JR., ROBERTO DELA RAMA, JR., RICKY S. NICOLAS,
CRISPULO D. DONOR, GALO FALGUERA, and NATIONAL LABOR RELATIONS COMMISSION, Petitioners,
vs.
COCA-COLA BOTTLERS PHILIPPINES,* Respondent.

DECISION

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to reverse and set
aside the Decision1 dated August 31, 2005 and Resolution2 dated August 24, 2006 of the Court of Appeals (CA) in
CA-G.R. SP Nos. 80977 & 87071, which reversed the Resolutions dated January 30, 2003 3 and September 24,
20034 of the National Labor Relations Commission (NLRC) in NLRC 00-02-01419-97.

The factual antecedents are as follows.

On February 18, 1997, petitioners Romeo Basan, Danilo Dizon, Jaime L. Tumabiao, Jr., Roberto Dela Rama,Jr.,
Ricky S. Nicolas, Crispulo D. Donor, Galo Falguera filed a complaint for illegal dismissal with money claims against
respondent Coca-Cola Bottlers Philippines, alleging that respondent dismissed them without just cause and prior
written notice required by law. In their position paper, petitioners provided for the following material dates: 5

Name of Petitioner Date of Hiring Date of Dismissal

Dela Rama November 16, 1995 February 13, 1997

Dizon October 1988 December 15, 1996

Tumabiao February 2, 1992 February 13, 1997

Basan July 13, 1996 January 31, 1997

Donor September 16, 1995 February 13, 1997

Nicolas May 10, 1996 January 30, 1997

Falguera January 15, 1991 April 1996

Respondent corporation, however, countered that it hired petitioners as temporary route helpers to act as substitutes
for its absent regular route helpers merely for a fixed period in anticipation of the high volume of work in its plants or
sales offices.6 As such, petitioners claims have no basis for they knew that their assignment as route helpers was
temporary in duration.

On August 21, 1998, the Labor Arbiter ruled in favor of petitioners and found that since they were performing
activities necessary and desirable to the usual business of petitioner for more than the period for regularization,
petitioners are considered as regular employees, and thus, their dismissal was done contrary to law in the absence of
just cause and prior written notice.7 Thus, it ordered respondent to reinstate petitioners with full backwages from the
time their salaries were withheld until their actual reinstatement and to pay their lump sum increase extended to them
in their collective bargaining agreement, their accrued vacation and sick leave benefits, as well as monetary awards
and attorneys fees.8

On January 30, 2003, the NLRC affirmed the Labor Arbiters decision and rejected respondents contention that
petitioners were merely employed for a specific project or undertaking the completion or termination of which has
been determined at the time of their engagement. It stressed that nowhere in the records of the case was it shown
that petitioners were hired as project or seasonal employees, respondent having failed to submit any contract of
project or other similar proof thereof.9 It also noted that neither can petitioners be considered as probationary
employees for the fact that they had performed their services for more than six (6) months. In addition, the NLRC
upheld the Labor Arbiters ruling that petitioners, as route helpers, performed work directly connected or necessary
and desirable in respondents ordinary business of manufacturing and distributing its softdrink products. Thus,
respondent failed to overcome petitioners assertion that they were regular employees. As such, their employment
could only be terminated with just cause and after the observance of the required due process. Thereafter, the
subsequent motion for reconsideration filed by respondent was further denied by the NLRC on September 24, 2003.

On December 9, 2003, respondent filed a petition for certiorari 10 with the CA alleging grave abuse of discretion on the
part of the NLRC in finding that petitioners were regular employees. In the meantime, petitioners filed before the
Labor Arbiter a Motion for Issuance of a Writ of Execution 11 dated December 15, 2003, to which respondent filed a
Manifestation and Motion with attached Opposition. 12 On March 25, 2004, the Labor Arbiter ordered that the Writ of
Execution be issued, which was affirmed by the NLRC on June 21, 2004. Consequently, respondent filed another
petition for Certiorari13 on October 22, 2004, claiming that the NLRC committed grave abuse of discretion in directing
the execution of a judgment, the propriety and validity of which was still under determination of the appellate court.

In its Decision dated August 31, 2005, the CA consolidated respondents two (2) petitions for certiorari and reversed
the rulings of the NLRC and the Labor Arbiter in the following wise:

That the respondents "performed duties which are necessary or desirable in the usual trade or business of Coca-
Cola," is of no moment. This is not the only standard for determining the status of ones employment. Such fact does
not prevent them from being considered as fixed term employees of Coca-Cola whose engagement was "fixed" for a
specific period. The respondents repeated hiring for various periods (ranging from more than six months for private
respondent Basan to eight years in the case of private respondent Dizon) would not automatically categorize them as
REGULAR EMPLOYEES.

xxxx

It being supported by facts on record and there being no showing that the employment terms were foisted on the
employees through circumstances vitiating or diminishing their consent, following Brent School, Inc. vs. Zamora(G.R.
No. 48494, Feb. 5, 1990), the respondents must be considered as fixed term employees whose "seasonal
employment" or employment for a "period" have been "set down." After all, as conceded by Brent, fixed term
employment continues to be allowed and enforceable in this jurisdiction. Not being permanent regular employees, it
must be held that the respondents are not entitled to reinstatement and payment of full backwages. 14

Petitioners sought a reconsideration of the CAs Decision on procedural and substantive grounds. On the procedural,
they alleged that respondent, in filing its appeal of the Labor Arbiters August 21, 1998 decision with the NLRC only
on December 20, 1998, rendered the Decision of the Labor Arbiter final and executory, and thus, deprived the CA of
jurisdiction to alter the final judgment.15 They also claimed that the Resolutions of the NLRC have become final and
executory in view of the Entries of Judgment dated December 16, 2003 and September 16, 2004 issued by the
NLRC. As to the substantial matter, petitioners assert that they are regular employees entitled to security of tenure.

On August 24, 2006, the CA denied petitioners motion for reconsideration in saying that it is no longer necessary to
discuss whether respondent was able to timely appeal the Labor Arbiters decision to the NLRC, in view of the fact
that the latter had already given due course to said appeal by deciding the case on the merits and, more importantly,
petitioners failure to raise the alleged infirmity before the NLRC in opposition to respondents appeal.

Hence, the instant petition invoking the following grounds:

I.

THE HONORABLE COURT OF APPEALS SERIOUSLY AND PATENTLY ERRED AND COMMITTED
GRAVE ABUSE OF DISCRETION AMOUNTING TO THE LACK OR EXCESS OF JURISDICTION IN
RULING THAT THE PETITIONERS WERE NOT REGULAR EMPLOYEES.

II.

THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN THE CHALLENGED

DECISIONS AS TO WARRANT THE EXERCISE OF THE COURTS DISCRETIONARY APPELLATE
JURISDICTION.

Petitioners essentially maintain that contrary to the findings of the CA, they were continuously hired by respondent
company to perform duties necessary and desirable in the usual trade or business and are, therefore, regular
employees. They allege that if their services had really been engaged for fixed specific periods, respondent should
have at least provided the contracts of employment evidencing the same.

For its part, respondent contends that the petition should be denied due course for its verification and certification of
non-forum shopping was signed by only one of the petitioners. It alleges that even assuming the validity of the same,
it should still be dismissed for the appellate court aptly found that petitioners were fixed-term employees who were
hired intermittently. Respondent also asserts that petitioners failed to completely substantiate their claims, for during
the hearing conducted before the Labor Arbiter on March 11, 1998, the payslips presented by petitioners merely
established the following employment terms:

Name of Petitioner Length of Service Dates

Dela Rama 5 months, 4 months Between November 30, 1995

And March 31, 1996

Dizon 4 months In 1993

2 months In 1994
9 months In 1996

Tumabiao 3 months From November 15, 1996

To January 31, 1997

Basan 6.5 months From May 15, 1996

1 month To December 31, 1996
From January 15, 1997
To January 31, 1997

Donor 1 month From February 15, 1996

To March 15, 1996
1 month From December 15, 1996
To January 15, 1997

Nicolas 8.5 months In 1996 and 1997

Falguera 6 months From 1992

 To 1997

Considering that the evidence presented showed that petitioners merely rendered their services for periods of less
than a year, respondent claims that petitioners could not have attained regular employment status. It added that its
failure to present petitioners employment contracts was due to a fire that destroyed its Manila Plant where said
contracts were kept. Nevertheless, respondent persistently asserts that where a fixed period of employment was
agreed upon knowingly and voluntarily by the petitioners, the duration of which was made known to them at the time
of their engagement, petitioners cannot now claim otherwise. In addition, it disagrees with the contention that
petitioners, as route helpers, were performing functions necessary or desirable to its business.

The petition is impressed with merit.

On the procedural issue, We hold that while the general rule is that the verification and certification of non-forum
shopping must be signed by all the petitioners in a case, the signature of only one of them, petitioner Basan in this
case, appearing thereon may be deemed substantial compliance with the procedural requirement. Jurisprudence is
replete with rulings that the rule on verification is deemed substantially complied with when one who has ample
knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters
alleged in the petition have been made in good faith or are true and correct. 16 Similarly, this Court has consistently
held that when under reasonable or justifiable circumstances, as when all the petitioners share a common interest
and invoke a common cause of action or defense, as in this case, the signature of only one of them in the certification
against forum shopping substantially complies with the certification requirement. 17 Thus, the fact that the petition was
signed only by petitioner Basan does not necessarily result in its outright dismissal for it is more in accord with
substantial justice to overlook petitioners procedural lapses. 18 Indeed, the application of technical rules of procedure
may be relaxed in labor cases to serve the demand of justice.19

As for the primordial issue in this case, it must be noted that the same has already been resolved in Magsalin v.
National Organization of Working Men,20 wherein this Court has categorically declared that the nature of work of route
helpers hired by Coca Cola Bottlers Philippines, Inc. is necessary and desirable in its usual business or trade thereby
qualifying them as regular employees, to wit:

Coca-Cola Bottlers Phils., Inc., is one of the leading and largest manufacturers of softdrinks in the country.
Respondent workers have long been in the service of petitioner company. Respondent workers, when hired, would
go with route salesmen on board delivery trucks and undertake the laborious task of loading and unloading softdrink
products of petitioner company to its various delivery points.

Even while the language of law might have been more definitive, the clarity of its spirit and intent, i.e., to ensure a
"regular" worker's security of tenure, however, can hardly be doubted. In determining whether an employment should
be considered regular or non-regular, the applicable test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the employer. The standard, supplied by the
law itself, is whether the work undertaken is necessary or desirable in the usual business or trade of the employer, a
fact that can be assessed by looking into the nature of the services rendered and its relation to the general scheme
under which the business or trade is pursued in the usual course. It is distinguished from a specific undertaking that is
divorced from the normal activities required in carrying on the particular business or trade. But, although the work to
be performed is only for a specific projector seasonal, where a person thus engaged has been performing the job for
at least one year, even if the performance is not continuous or is merely intermittent, the law deems the repeated and
continuing need for its performance as being sufficient to indicate the necessity or desirability of that activity to the
business or trade of the employer. The employment of such person is also then deemed to be regular with respect to
such activity and while such activity exists.

The argument of petitioner that its usual business or trade is softdrink manufacturing and that the work assigned to
respondent workers as sales route helpers so involves merely "postproduction activities," one which is not
indispensable in the manufacture of its products, scarcely can be persuasive. If, as so argued by petitioner company,
only those whose work are directly involved in the production of softdrinks may be held performing functions
necessary and desirable in its usual business or trade, there would have then been no need for it to even maintain
regular truck sales route helpers. The nature of the work performed must be viewed from a perspective of the
1wphi1

business or trade in its entirety and not on a confined scope.

The repeated rehiring of respondent workers and the continuing need for their services clearly attest to the necessity
or desirability of their services in the regular conduct of the business or trade of petitioner company. The Court of
Appeals has found each of respondents to have worked for at least one year with petitioner company. While this
Court, in Brent School, Inc. vs. Zamora, has upheld the legality of a fixed-term employment, it has done so, however,
with a stern admonition that where from the circumstances it is apparent that the period has been imposed to
preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law,
morals, good customs, public order and public policy. The pernicious practice of having employees, workers and
laborers, engaged for a fixed period of few months, short of the normal six-month probationary period of employment,
and, thereafter, to be hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be
countenanced. The fact that respondent workers have agreed to be employed on such basis and to forego the
protection given to them on their security of tenure, demonstrate nothing more than the serious problem of
impoverishment of so many of our people and the resulting unevenness between labor and capital. A contract of
employment is impressed with public interest. The provisions of applicable statutes are deemed written into the
contract, and "the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other." 21

In fact, in Pacquing, et. al. v. Coca-Cola Philippines, Inc.,22 this Court applied the ruling cited above under the principle
of stare decisis et non quieta movere (follow past precedents and do not disturb what has been settled). It was held
therein that since petitioners, as route helpers, were performing the same functions as the employees in Magsalin,
which are necessary and desirable in the usual business or trade of Coca Cola Philippines, Inc., they are considered
as regular employees entitled to security of tenure.

Here, respondent, in its position paper, expressly admitted that petitioners were employed as route helpers in
anticipation of the high volume of work in its plants and sales offices.23 As such, respondents contention that
petitioners could not have attained regular employment status for they merely rendered services for periods of less
than a year cannot be sustained in view of the Magsalin doctrine previously cited. Indeed, the "pernicious practice" of
engaging employees for a fixed period short of the six-month probationary period of employment, and again, on a
day-to-day basis thereafter, mocks the law.

At this point, it is worth recalling that Article 280 of the Labor Code, as amended, provides:

ART. 280. REGULAR AND CASUAL EMPLOYMENT. - The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer, except where the employment has been fixed for a specific projector undertaking,
the completion or termination of which has been determined at the time of the engagement of the employee or where
the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any
employee who has rendered at least one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is employed and his employment shall continue
while such activity exists. Thus, pursuant to the Article quoted above, there are two kinds of regular employees,
namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual
business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous
or broken, with respect to the activities in which they are employed.24 Simply stated, regular employees are classified
into: (1) regular employees by nature of work; and (2) regular employees by years of service. The former refers to
those employees who perform a particular activity which is necessary or desirable in the usual business or trade of
the employer, regardless of their length of service; while the latter refers to those employees who have been
performing the job, regardless of the nature thereof, for at least a year. 25

Petitioners, in this case, fall under the first kind of regular employee above. As route helpers who are engaged in the
service of loading and unloading softdrink products of respondent company to its various delivery points, which is
necessary or desirable in its usual business or trade, petitioners are considered as regular employees. That they
merely rendered services for periods of less than a year is of no moment since for as long as they were performing
activities necessary to the business of respondent, they are deemed as regular employees under the Labor Code,
irrespective of the length of their service.

Nevertheless, respondent, as in Magsalin, also asserts that even assuming that petitioners were performing activities
which are usually necessary or desirable in its usual business or trade, they were employed not as regular employees
but only for a fixed period, which is well within the boundaries of the law, as ruled in Brent School, Inc. v.
Zamora,26 viz.:

There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity
and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on the freedom of
the parties to fix the duration of a contract, whatever its object, be it specie, goods or services, except the general
admonition against stipulations contrary to law, morals, good customs, public order or public policy. Under the Civil
Code, therefore, and as a general proposition, fixed-term employment contracts are not limited, as they are under the
present Labor Code, to those by nature seasonal or for specific projects with pre-determined dates of completion;
they also include those to which the parties by free choice have assigned a specific date of termination.

xxxx

Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280
of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's
right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral
agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the
substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly
and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being
exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes
other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to
lead to absurd and unintended consequences.27

Thus, under the above Brent doctrine, while it was not expressly mentioned in the Labor Code, this Court has
recognized a fixed-term type of employment embodied in a contract specifying that the services of the employee shall
be engaged only for a definite period, the termination of which occurs upon the expiration of said period irrespective
of the existence of just cause and regardless of the activity the employee is called upon to perform. 28Considering,
however, the possibility of abuse by employers in the utilization of fixed-term employment contracts, this Court, in
Brent, laid down the following criteria to prevent the circumvention of the employees security of tenure:

1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any
force, duress, or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or

2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former or the latter. 29 Unfortunately, however, the records of
this case is bereft of any proof which will show that petitioners freely entered into agreements with
respondent to perform services for a specified length of time. In fact, there is nothing in the records to show
 that there was any agreement at all, the contracts of employment not having been presented. While
respondent company persistently asserted that petitioners knowingly agreed upon a fixed period of
employment and repeatedly made reference to their contracts of employment, the expiration thereof being
made known to petitioners at the time of their engagement, respondent failed to present the same in spite of
all the opportunities to do so. Notably, it was only at the stage of its appeal to the CA that respondent
provided an explanation as to why it failed to submit the contracts they repeatedly spoke of.30 Even granting
that the contracts of employment were destroyed by fire, respondent could have easily submitted other
pertinent files, records, remittances, and other similar documents which would show the fixed period of
employment voluntarily agreed upon by the parties. They did not, however, aid this Court with any kind of
proof which might tend to show that petitioners were truly engaged for specified periods, seemingly content
with the convenient excuse that the contracts were destroyed by fire. Indeed, respondents failure to submit
the necessary documents, which as employers are in their possession, gives rise to the presumption that
their presentation is prejudicial to its cause.31

While fixed term employment is not per se illegal or against public policy, the criteria above must first be established
to the satisfaction of this Court. Yet, the records of this case reveal that for years, petitioners were repeatedly
engaged to perform functions necessary to respondents business for fixed periods short of the six-month
probationary period of employment. If there was really no intent to circumvent security of tenure, respondent should
have made it clear to petitioners that they were being hired only for fixed periods in an agreement freely entered into
by the parties. To this Court, respondents act of hiring and re-hiring petitioners for periods short of the legal
probationary period evidences its intent to thwart petitioners security of tenure, especially in view of an awareness
that ordinary workers, such as petitioners herein, are never on equal terms with their employers.32 It is rather
unjustifiable to allow respondent to hire and rehire petitioners on fixed terms, never attaining regular status. 33 Hence,
in the absence of proof showing that petitioners knowingly agreed upon a fixed term of employment, We uphold the
findings of the Labor Arbiter and the NLRC and so rule that petitioners are, indeed, regular employees, entitled to
security of tenure. Consequently, for lack of any clear, valid, and just or authorized cause in terminating petitioners'
employment, We find respondent guilty of illegal dismissal.

WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision dated August 31, 2005
and Resolution dated August 24, 2006 of the Court of Appeals in CA-G.R. SP Nos. 80977 & 87071 are SET ASIDE.
The Resolutions dated January 30, 2003 and September 24, 2003 of the NLRC in NLRC 00-02-01419-97, affirming in
toto the Decision dated August 21, 1998 of the Labor Arbiter are REINSTATED with MODIFICATION. Taking into
account petitioners' reinstatement in 199934 and petitioner Falguera's receipt of P792,815.64 separation
pay,35 respondent is hereby ORDERED to pay petitioners the following: (1) backwages computed from the date their
salaries were withheld from them until their actual reinstatement; (2) allowances and other benefits, or their monetary
equivalent, at the time of their dismissal; (3) attorney's fees equivalent to ten percent ( 10%) of the monetary awards;
and (4) interest at six percent ( 6%) per annum of the total monetary awards, computed from the finality of this
Decision until their full satisfaction. For this purpose, the records of this case are hereby REMANDED to the Labor
Arbiter for proper computation of said awards, deducting amounts already received. Costs against petitioner.

SO ORDERED.