G.R. No.
L-15045 January 20, 1961 not have defined an "employer" in such a way as to include the Government
IN RE: PETITION FOR EXEMPTION FROM COVERAGE BY THE SOCIAL SECURITY
SYSTEM. ROMAN CATHOLIC ARCHBISHOP OF MANILA, petitioner-appellant,
vs.
SOCIAL SECURITY COMMISSION, respondent-appellee.
Feria, Manglapus and Associates for petitioner-appellant.
Legal Staff, Social Security System and Solicitor General for respondent-
appellee.
GUTIERREZ DAVID, J.:
On September 1, 1958, the Roman Catholic Archbishop of Manila, thru
counsel, filed with the Social Security Commission a request that "Catholic
Charities, and all religious and charitable institutions and/or organizations,
which are directly or indirectly, wholly or partially, operated by the Roman
Catholic Archbishop of Manila," be exempted from compulsory coverage of
Republic Act No. 1161, as amended, otherwise known as the Social Security
Law of 1954. The request was based on the claim that the said Act is a labor
law and does not cover religious and charitable institutions but is limited to
businesses and activities organized for profit. Acting upon the
recommendation of its Legal Staff, the Social Security Commission in its
Resolution No. 572, series of 1958, denied the request. The Roman Catholic
Archbishop of Manila, reiterating its arguments and raising constitutional
objections, requested for reconsideration of the resolution. The request,
however, was denied by the Commission in its Resolution No. 767, series of
1958; hence, this appeal taken in pursuance of section 5(c) of Republic Act No.
1161, as amended.
Section 9 of the Social Security Law, as amended, provides that coverage "in
the System shall be compulsory upon all members between the age of sixteen
and sixty rears inclusive, if they have been for at least six months a the service
of an employer who is a member of the System, Provided, that the
Commission may not compel any employer to become member of the System
unless he shall have been in operation for at least two years and has at the
time of admission, if admitted for membership during the first year of the
System's operation at least fifty employees, and if admitted for membership
the following year of operation and thereafter, at least six employees x x x."
The term employer" as used in the law is defined as any person, natural or
juridical, domestic or foreign, who carries in the Philippines any trade,
business, industry, undertaking, or activity of any kind and uses the services of
another person who is under his orders as regards the employment, except
the Government and any of its political subdivisions, branches or
instrumentalities, including corporations owned or controlled by the
Government" (par. [c], see. 8), while an "employee" refers to "any person who
performs services for an 'employer' in which either or both mental and
physical efforts are used and who receives compensation for such services"
(par. [d], see. 8). "Employment", according to paragraph [i] of said section 8,
covers any service performed by an employer except those expressly
enumerated thereunder, like employment under the Government, or any of
its political subdivisions, branches or instrumentalities including corporations
owned and controlled by the Government, domestic service in a private home,
employment purely casual, etc.
From the above legal provisions, it is apparent that the coverage of the Social
Security Law is predicated on the existence of an employer-employee
relationship of more or less permanent nature and extends to employment of
all kinds except those expressly excluded.
Appellant contends that the term "employer" as defined in the law should —
following the principle of ejusdem generis — be limited to those who carry on
"undertakings or activities which have the element of profit or gain, or which
are pursued for profit or gain," because the phrase ,activity of any kind" in the
definition is preceded by the words "any trade, business, industry,
undertaking." The contention cannot be sustained. The rule ejusdem
generis applies only where there is uncertainty. It is not controlling where the
plain purpose and intent of the Legislature would thereby be hindered and
defeated. (Grosjean vs. American Paints Works [La], 160 So. 449). In the case
at bar, the definition of the term "employer" is, we think, sufficiently
comprehensive as to include religious and charitable institutions or entities
not organized for profit, like herein appellant, within its meaning. This is made
more evident by the fact that it contains an exception in which said institutions
or entities are not included. And, certainly, had the Legislature really intended
to limit the operation of the law to entities organized for profit or gain, it would
and yet make an express exception of it.
It is significant to note that when Republic Act No. 1161 was enacted, services
performed in the employ of institutions organized for religious or charitable
purposes were by express provisions of said Act excluded from coverage
thereof (sec. 8, par. [j] subpars. 7 and 8). That portion of the law, however, has
been deleted by express provision of Republic Act No. 1792, which took effect
in 1957. This is clear indication that the Legislature intended to include
charitable and religious institutions within the scope of the law.
In support of its contention that the Social Security Law was intended to cover
only employment for profit or gain, appellant also cites the discussions of the
Senate, portions of which were quoted in its brief. There is, however, nothing
whatsoever in those discussions touching upon the question of whether the
law should be limited to organizations for profit or gain. Of course, the said
discussions dwelt at length upon the need of a law to meet the problems of
industrializing society and upon the plight of an employer who fails to make a
profit. But this is readily explained by the fact that the majority of those to be
affected by the operation of the law are corporations and industries which are
established primarily for profit or gain.
Appellant further argues that the Social Security Law is a labor law and,
consequently, following the rule laid down in the case of Boy Scouts of the
Philippines vs. Araos (G.R. No. L-10091, January 29, 1958) and other cases1,
applies only to industry and occupation for purposes of profit and gain. The
cases cited, however, are not in point, for the reason that the law therein
involved expressly limits its application either to commercial, industrial, or
agricultural establishments, or enterprises. .
Upon the other hand, the Social Security Law was enacted pursuant to the
"policy of the Republic of the Philippines to develop, establish gradually and
perfect a social security system which shall be suitable to the needs of the
people throughout the Philippines and shall provide protection to employees
against the hazards of disability, sickness, old age and death." (See. 2, Republic
Act No. 1161, as amended.) Such enactment is a legitimate exercise of the
police power. It affords protection to labor, especially to working women and
minors, and is in full accord with the constitutional provisions on the
"promotion of social justice to insure the well-being and economic security of
all the people." Being in fact a social legislation, compatible with the policy of
the Church to ameliorate living conditions of the working class, appellant
cannot arbitrarily delimit the extent of its provisions to relations between
capital and labor in industry and agriculture.
There is no merit in the claim that the inclusion of religious organizations
under the coverage of the Social Security Law violates the constitutional
prohibition against the application of public funds for the use, benefit or
support of any priest who might be employed by appellant. The funds
contributed to the System created by the law are not public funds, but funds
belonging to the members which are merely held in trust by the Government.
At any rate, assuming that said funds are impressed with the character of
public funds, their payment as retirement death or disability benefits would
not constitute a violation of the cited provisions of the Constitution, since such
payment shall be made to the priest not because he is a priest but because he
is an employee.
Neither may it be validly argued that the enforcement of the Social Security
Law impairs appellant's right to disseminate religious information. All that is
required of appellant is to make monthly contributions to the System for
covered employees in its employ. These contributions, contrary to appellant's
contention, are not in the nature of taxes on employment." Together with the
contributions imposed upon the employees and the Government, they are
intended for the protection of said employees against the hazards of disability,
sickness, old age and death in line with the constitutional mandate to promote
social justice to insure the well-being and economic security of all the people.
IN VIEW OF THE FOREGOING, Resolutions Nos. 572 kind 767, series of 1958,
of the Social Security Commission are hereby affirmed. So ordered with costs
against appellant.
G.R. No. L-21223 August 31, 1966
PHILIPPINE BLOOMING MILLS CO., INC. (As Employer) and FRANCISCO TONG (As
Assistant General Manager) and Attorney-in-Fact of SUSUMO SONODA, SENJI
TANAKA, TAKASHIKO KUMAMOTO, HITOSHI NAKAMURA, TETSUO KODU,
(Employees), petitioners and appellants,
vs.
SOCIAL SECURITY SYSTEM, respondent and appellee.
Demetrio B. Salem for petitioners and appellants. After hearing, the Commission denied the petition for the reason that,
Office of the Solicitor General Edilberto Barot and Solicitor Camilo D. Quiason although under the original provisions of Section 3 (d) of Rule I of the Rules
for respondent and appellee. and Regulations of the SSS, alien-employees (who are employed temporarily)
BARRERA, J.: and their employers are entitled to a rebate of a proportionate amount of their
The facts of this case are not disputed: respective contributions upon the employees' departure from the Philippines,
The Philippine Blooming Mills Co., Inc., a domestic corporation since the start said rule was amended by eliminating that portion granting a return of the
of its operations in 1957, has been employing Japanese technicians under a premium contributions. This amendment became effective on January 14,
pre-arranged contract of employment, the minimum period of which 1958, or before the employment of the subject aliens terminated. The rights
employment is 6 months and the maximum is 24 months. of covered employees who are separated from employment, under the
From April 28, 1957, to October 26, 1958, the corporation had in its employ 6 present Rules, are covered by Rule IX which allows a return of the premiums
Japanese technicians. In connection with the employment of these aliens, it only if they have been members for at least 2 years.
sent an inquiry to the Social Security System (SSS) whether these employees It is this resolution of the Commission that is the subject of the present appeal,
are subject to compulsory coverage under the System, which inquiry was appellants contending that the amendment of the Rules and Regulations of
answered by the First Deputy Administrator of the SSS, under date of August the SSS, insofar as it eliminates the provision on the return of premium
29, 1957, as follows: contributions, originally embodied in Section 3(d) of Rule I, constituted an
SIR: impairment of obligations of contract. It is claimed, in effect, that when
With reference to your letter of August 24, 1957, appellants-employees became members in September, 1957, and paid the
hereunder are our answers to your queries: corresponding premiums to the System, it1 is subject to the condition that
Aliens employed in the Philippines: upon their departure from the Philippines, these employees, as well as their
Aliens who are employed in the Philippines shall also be employer, are entitled to a rebate of a proportionate amount of their
compulsorily covered. But aliens who are employed respective contributions.
temporarily shall, upon their departure from the The contention cannot be sustained. Appellants' argument is based on the
Philippines, be entitled to a rebate of a proportionate theory that the employees' membership in the System established contractual
amount of their contributions; their employers shall be relationship between the members and the System, in the sense
entitled to the same proportionate rebate of their contemplated and protected by the constitutional prohibition against its
contributions in behalf of said aliens employed by them. impairment by law. But, membership in this institution is not the result of a
(Rule I, Sec. 3[d], Rules and Regulations.) bilateral, consensual agreement where the rights and obligations of the
Starting September, 1957, and until the aforementioned Japanese employees parties are defined by and subject to their will. Republic Act 1161 requires
left the Philippines on October 26, 1958, the corresponding premium compulsory coverage of employers and employees under the System. It is
contributions of the employer and the employees on the latter's memberships actually a legal imposition, on said employers and employees, designed to
in the SSS were as follows: provide social security to the workingmen. Membership in the SSS is,
therefore, in compliance with a lawful exercise of the police power of the
Amount of Premiums
State, to which the principle of non-impairment of the obligation of contract
Contributed
SS Monthly is not a proper defense.
Name
Number Salary As pointed out by the Solicitor General, the issue that should be determined
2.5% 3.5% Total
(Employee) (Employer) in this case is whether, in implementing the SSS law and denying appellants'
claim for refund of their premium contributions, due process was observed.
Susumu 03- The Rules and Regulations promulgated by the SSS, pursuant to the rule-
P520.00 P175.00 P245.00 P420.00 making authority granted in Section 4(a) of Republic Act 1161, was duly
Sonoda 075177
approved by the President on July 18, 1957, and published in the Official
Senji 03- Gazette on September 15, 1957.2 These rules and regulations, among others,
520.00 175.00 245.00 420.00 provide:
Tanaka 075178
I
Kahei 03- DETERMINATION OF COMPULSORY COVERAGE
500.00 175.00 245.00 420.00
Tanaka 075179 3. The determination of whether an employer or an employee shall be
compulsorily covered shall be vested in the Commission. The following general
Takashiko 03- principles shall guide the Commission in deciding each case:
500.00 175.00 245.00 420.00
Kumamoto 075180 xxx xxx xxx
(d) Aliens who are employed in the Philippines shall also be compulsorily
Hitoshi 03- covered. But aliens who ate employed temporarily and whose visas are only
500.00 175.00 245.00 420.00
Nakamura 075181 for fixed terms shall, upon their departure from the Philippines, be entitled to
a rebate of a proportionate amount of their contributions; their employers
Tetsuo 03-
500.00 175.00 245.00 420.00 shall be entitled to the same proportionate rebate of their contributions in
Kudo 075182
behalf of said aliens employed by them.
XI
AMENDMENTS AND EFFECTIVITY
Total— P1,050.00 P1,470.00 P2,520.00
1. The Commission may, by appropriate resolution, amend, repeal,
On October 7, 1958, the Assistant General Manager of the corporation, on its revise and/or modify all or any part or parts of these Rules and
behalf and as attorney-in-fact of the Japanese technicians, filed a claim with Regulations, as well as adopt any additional rule or rules, whenever
the SSS for the refund of the premiums paid to the System, on the ground of the need therefor should arise. Any amendment and/or additional
termination of the members' employment. As this claim was denied, they filed rule, however, shall not take effect until and after the
a petition with the Social Security Commission for the return or refund of the corresponding resolution of the Commission has been submitted to
premiums, in the total sum of P2,520.00, paid by the employer corporation and approved by the President of the Philippines.
and the 6 Japanese employees, plus attorneys' fees. This claim was 2. These Rules and Regulations, any amendment thereof, or any
controverted by the SSS, alleging that Rule IX of the Rules and Regulations of additional rule or rules subsequently adopted by the Commission,
the System, as amended, requires membership in the System for at least 2 shall take effect on the date they are approved by the President of
years before a separated or resigned employee may be allowed a return of his the Philippines.
personal contributions. Under the same rule, the employer is not also entitled
to a refund of the premium contributions it had paid.
Rule I Section 3 (d) and Rule IX, however, were later amended, which
amendment was approved by the President on January 14, 1958, to read as
follows:
(d) Aliens who are employed in the Philippines shall also be
compulsorily covered (Sec. 3, Rule I)
EFFECT OF SEPARATION FROM EMPLOYMENT
When an employee under compulsory coverage is separated from
employment, his employer's contribution on his account shall cease
at the end of the month of separation; but such employee may
continue his membership in the System and receive the benefits of
the Act, as amended, in accordance with these rules. If he continues
paying the 6 per cent monthly premiums representing his as well as
the employer's contribution, based on his monthly salary at the
time of his separation; but if at the time of his separation the
covered employee has been a member of the System for at least
two years, he shall have the option to choose any one of the
following adjustments of his membership in the System:
1. A refund of an amount equivalent to his total contributions of
two and one-half per centum plus interests at the rate of three per
centum per annum, compounded annually;
xxx xxx x x x (Rule IX)
These amended Rules were published in the November 10, 1958 issue of the
Official Gazette.3
It is not here disputed that the Rules and Regulations of the SSS, having been
promulgated in implementation of a law, have the force and effect of a
statute;" that the amendment thereto, although approved by the President on
January 14, 1958, was published in the Official Gazette in November, 1958, or
after the employment of the Japanese technicians had ceased and the
corresponding claim for the refund of the premium contributions was filed
with the System. The question pertinent to this case now is whether or not
appellants are bound by the amended Rules requiring membership for two
years before refund of the premium contributions may be
allowed.1äwphï1.ñët
These rules and regulations were promulgated to provide guidelines to be
observed in the enforcement of the law. As a matter of fact, Section 3 of Rule
I is merely an enumeration of the "general principles to (shall) guide the
Commission" in the determination of the extent or scope of the compulsory
coverage of the law. One of these guiding principles is paragraph (d) relied
upon by appellants, on the coverage of temporarily-employed aliens. It is not
here pretended, that the amendment of this Section 3(d) of Rule I, as to
eliminate the provision granting to these aliens the right to a refund of part of
their premium contributions upon their departure from the Philippines, is not
in implementation of the law or beyond the authority of the Commission to
do.
It may be argued, however, that while the amendment to the Rules may have
been lawfully made by the Commission and duly approved by the President on
January 14, 1958, such amendment was only published in the November 1958
issue of the Official Gazette, and after appellants' employment had already
ceased. Suffice it to say, in this regard, that under Article 2 of the Civil
Code,5 the date of publication of laws in the Official Gazette is material for the
purpose of determining their effectivity, only if the statutes themselves do not
so provide.
In the present case, the original Rules and Regulations of the SSS specifically
provide that any amendment thereto subsequently adopted by the
Commission, shall take effect on the date of its approval by the President.
Consequently, the delayed publication of the amended rules in the Official
Gazette did not affect the date of their effectivity, which is January 14, 1958,
when they were approved by the President. It follows that when the Japanese
technicians were separated from employment in October, 1958, the rule
governing refund of premiums is Rule IX of the amended Rules and
Regulations, which requires membership for 2 years before such refund of
premiums may be allowed.
Wherefore, finding no error in the resolution of the Commission appealed
from, the same is hereby affirmed, with costs against the appellants. So
ordered.
G.R. No. L-26298 September 28, 1984
CMS ESTATE, INC., petitioner,
vs.
SOCIAL SECURITY SYSTEM and SOCIAL SECURITY COMMISSION, respondents.
Sison Dominguez & Cervantes for petitioner.
The Legal Counsel for respondent SSS.
CUEVAS, J.:
This appeal by the CMS Estate, Inc. from the decision rendered by the Social
Security Commission in its Case No. 12, entitled "CMS Estate, Inc. vs. Social
Security System, declaring CMS subject to compulsory coverage as of
September 1, 1957 and "directing the Social Security System to effect such
coverage of the petitioner's employees in its logging and real estate business
conformably to the provision of Republic Act No. 1161, as amended was
certified to Us by the defunct Court of Appeals 1 for further disposition
considering that purely questions of law are involved.
Petitioner is a domestic corporation organized primarily for the purpose of
engaging in the real estate business. On December 1, 1952, it started doing
business with only six (6) employees. It's Articles of Incorporation was
amended on June 4, 1956 in order to engage in the logging business. The
Securities and Exchange Commission issued the certificate of filing of said
amended articles on June 18, 1956. Petitioner likewise obtained an ordinary
license from the Bureau of Forestry to operate a forest concession of 13,000
hectares situated in the municipality of Baganga, Province of Davao.
On January 28, 1957, petitioner entered into a contract of management with
one Eufracio D. Rojas for the operation and exploitation of the forest
concession The logging operation actually started on April 1, 1957 with four
monthly salaried employees. As of September 1, 1957, petitioner had 89
employees and laborers in the logging operation. On December 26, 1957,
petitioner revoked its contract of management with Mr. Rojas.
On August 1, 1958, petitioner became a member of the Social Security System
with respect to its real estate business. On September 6, 1958, petitioner
remitted to the System the sum of P203.13 representing the initial premium
on the monthly salaries of the employees in its logging business. However, on
October 9, 1958, petitioner demanded the refund of the said amount, claiming
that it is not yet subject to compulsory coverage with respect to its logging
business. The request was denied by respondent System on the ground that
the logging business was a mere expansion of petitioner's activities and for
purposes of the Social Security Act, petitioner should be considered a member
of the System since December 1, 1952 when it commenced its real estate
business.
On November 10, 1958, petitioner filed a petition with the Social Security
Commission praying for the determination of the effectivity date of the
compulsory coverage of petitioner's logging business.
After both parties have submitted their respective memoranda, the
Commission issued on January 14, 1960, Resolution No. 91, 2 the dispositive
portion of which reads as follows:
Premises considered, the instant petition is hereby
denied and petitioner is hereby adjudged to be subject
to compulsory coverage as of Sept. 1, 1957 and the Social
Security System is hereby directed to effect such
coverage of petitioner's employees in its logging and real
estate business conformably to the provisions of Rep. Act
No. 1161, as amended.
SO ORDERED.
Petitioner's motion for reconsideration was denied in Resolution No. 609 of
the Commission.
These two (2) resolutions are now the subject of petitioner's appeal. Petitioner
submits that respondent Commission erred in holding —
(1) that the contributions required of employers and
employees under our Social Security Act of 1954 are not
in the nature of excise taxes because the said Act was
allegedly enacted by Congress in the exercise of the
police power of the State, not of its taxing power;
(2) that no contractee — independent contractor
relationship existed between petitioner and Eufracio D.
Rojas during the time that he was operating its forest
concession at Baganga, Davao;
(3) that a corporation which has been in operation for
more than two years in one business is immediately
covered with respect to any new and independent
business it may subsequently engage in;
 (4) that a corporation should be treated as a single
employing unit for purposes of coverage under the Social
Security Act, irrespective of its separate, unrelated and
independent business established and operated at
different places and on different dates; and
(5) that Section 9 of the Social Security Act on the
question of compulsory membership and employers
should be given a liberal interpretation.
Respondent, on the other hand, advances the following propositions, inter
alia:
(1) that the Social Security Act speaks of compulsory
coverage of employers and not of business;
(2) that once an employer is initially covered under the
Social Security Act, any other business undertaken or
established by the same employer is likewise subject in
spite of the fact that the latter has not been in operation
for at least two years;
(3) that petitioner's logging business while actually of a
different, distinct, separate and independent nature
from its real estate business should be considered as an
operation under the same management;
(4) that the amendment of petitioner's articles of
incorporation, so as to enable it to engage in the logging
business did not alter the juridical personality of
petitioner; and
(5) the petitioner's logging operation is a mere expansion
of its business activities.
The Social Security Law was enacted pursuant to the policy of the government
"to develop, establish gradually and perfect a social security system which
shall be suitable to the needs of the people throughout the Philippines, and
shall provide protection against the hazards of disability, sickness, old age and
death" (Sec. 2, RA 1161, as amended). It is thus clear that said enactment
implements the general welfare mandate of the Constitution and constitutes
a legitimate exercise of the police power of the State. As held in the case
of Philippine Blooming Mills Co., Inc., et al. vs. SSS 3 —
Membership in the SSS is not a result of bilateral,
concensual agreement where the rights and obligations
of the parties are defined by and subject to their will, RA
1161 requires compulsory coverage of employees and
employers under the System. It is actually a legal
imposition on said employers and employees, designed
to provide social security to the workingmen.
Membership in the SSS is therefore, in compliance with
the lawful exercise of the police power of the State, to
which the principle of non-impairment of the obligation
of contract is not a proper defense.
xxx xxx xxx
The taxing power of the State is exercised for the purpose of raising revenues.
However, under our Social Security Law, the emphasis is more on the
promotion of the general welfare. The Act is not part of out Internal Revenue
Code nor are the contributions and premiums therein dealt with and provided
for, collectible by the Bureau of Internal Revenue. The funds contributed to
the System belong to the members who will receive benefits, as a matter of
right, whenever the hazards provided by the law occur.
All that is required of appellant is to make monthly
contributions to the System for covered employees in its
employ. These contributions, contrary to appellant's
contention, are not 'in the nature of taxes on
employment.' Together with the contributions imposed
upon employees and the Government, they are intended
for the protection of said employees against the hazards
of disability, sickness, old age and death in line with the
constitutional mandate to promote social justice to
insure the well-being and economic security of all the
people.4
Because of the broad social purpose of the Social Security Act, all doubts in
construing the Act should favor coverage rather than exemption.
Prior to its amendment, Sec. 9 of the Act provides that before an employer
could be compelled to become a member of the System, he must have been
in operation for at least two years and has at the time of admission at least six
employees. It should be pointed out that it is the employer, either natural, or
judicial person, who is subject to compulsory coverage and not the business.
If the intention of the legislature was to consider every venture of the
employer as the basis of a separate coverage, an express provision to that
effect could have been made. Unfortunately, however, none of that sort
appeared provided for in the said law.
Should each business venture of the employer be considered as the basis of
the coverage, an employer with more than one line of business but with less
than six employees in each, would never be covered although he has in his
employ a total of more than six employees which is sufficient to bring him
within the ambit of compulsory coverage. This would frustrate rather than
foster the policy of the Act. The legislative intent must be respected. In the
absence of an express provision for a separate coverage for each kind of
business, the reasonable interpretation is that once an employer is covered in
a particular kind of business, he should be automatically covered with respect
to any new name. Any interpretation which would defeat rather than promote
the ends for which the Social Security Act was enacted should be eschewed. 5
Petitioner contends that the Commission cannot indiscriminately combine for
purposes of coverage two distinct and separate businesses when one has not
yet been in operation for more than two years thus rendering nugatory the
period for more than two years thus rendering nugatory the period of
stabilization fixed by the Act. This contention lacks merit since the amendatory
law, RA 2658, which was approved on June 18, 1960, eliminated the two-year
stabilization period as employers now become automatically covered
immediately upon the start of the business.
Section 10 (formerly Sec. 9) of RA 1161, as amended by RA 2658 now provides:
Sec. 10. Effective date of coverage. — Compulsory
coverage of the employer shall take effect on the first
day of his operation, and that of the employee on the
date of his employment. (Emphasis supplied)
As We have previously mentioned, it is the intention of the law to cover as
many persons as possible so as to promote the constitutional objective of
social justice. It is axiomatic that a later law prevails over a prior statute and
moreover the legislative in tent must be given effect. 6
Petitioner further submits that Eufrancio Rojas is an independent contractor
who engages in an independent business of his own consisting of the
operation of the timber concession of the former. Rojas was appointed as
operations manager of the logging consession; 7 he has no power to appoint
or hire employees; as the term implies, he only manages the employees and it
is petitioner who furnishes him the necessary equipment for use in the logging
business; and he is not free from the control and direction of his employer in
matter connected with the performance of his work. These factors clearly
indicate that Rojas is not an independent contractor but merely an employee
of petitioner; and should be entitled to the compulsory coverage of the Act.
The records indubitably show that petitioner started its real estate business
on December 1, 1952 while its logging operation was actually commenced on
April 1, 1957. Applying the provision of Sec. 10 of the Act, petitioner is subject
to compulsory coverage as of December 1, 1952 with respect to the real estate
business and as of April 1, 1957 with respect to its logging operation.
WHEREFORE, premises considered, the appeal is hereby DISMISSED. With
costs against petitioner.
SO ORDERED.
G.R. No. 138051 June 10, 2004
JOSE Y. SONZA, petitioner,
vs.
ABS-CBN BROADCASTING CORPORATION, respondent.
DECISION
CARPIO, J.:
The Case
Before this Court is a petition for review on certiorari 1 assailing the 26 March
1999 Decision2 of the Court of Appeals in CA-G.R. SP No. 49190 dismissing the
petition filed by Jose Y. Sonza ("SONZA"). The Court of Appeals affirmed the
findings of the National Labor Relations Commission ("NLRC"), which affirmed
the Labor Arbiter’s dismissal of the case for lack of jurisdiction.
The Facts
In May 1994, respondent ABS-CBN Broadcasting Corporation ("ABS-CBN")
signed an Agreement ("Agreement") with the Mel and Jay Management and
Development Corporation ("MJMDC"). ABS-CBN was represented by its
corporate officers while MJMDC was represented by SONZA, as President and
General Manager, and Carmela Tiangco ("TIANGCO"), as EVP and Treasurer.
Referred to in the Agreement as "AGENT," MJMDC agreed to provide SONZA’s
services exclusively to ABS-CBN as talent for radio and television. The
Agreement listed the services SONZA would render to ABS-CBN, as follows:
a. Co-host for Mel & Jay radio program, 8:00 to 10:00 a.m.,
Mondays to Fridays;
b. Co-host for Mel & Jay television program, 5:30 to 7:00 p.m.,
Sundays.3
ABS-CBN agreed to pay for SONZA’s services a monthly talent fee of ₱310,000
for the first year and ₱317,000 for the second and third year of the Agreement.
ABS-CBN would pay the talent fees on the 10th and 25th days of the month.
On 1 April 1996, SONZA wrote a letter to ABS-CBN’s President, Eugenio Lopez
III, which reads:
Dear Mr. Lopez,
We would like to call your attention to the Agreement dated May
1994 entered into by your goodself on behalf of ABS-CBN with our
company relative to our talent JOSE Y. SONZA.
As you are well aware, Mr. Sonza irrevocably resigned in view of
recent events concerning his programs and career. We consider
these acts of the station violative of the Agreement and the station
as in breach thereof. In this connection, we hereby serve notice of
rescission of said Agreement at our instance effective as of date.
Mr. Sonza informed us that he is waiving and renouncing recovery
of the remaining amount stipulated in paragraph 7 of the
Agreement but reserves the right to seek recovery of the other
benefits under said Agreement.
Thank you for your attention.
Very truly yours,
(Sgd.)
JOSE Y. SONZA
President and Gen. Manager4
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the
Department of Labor and Employment, National Capital Region in Quezon
City. SONZA complained that ABS-CBN did not pay his salaries, separation pay,
service incentive leave pay, 13th month pay, signing bonus, travel allowance
and amounts due under the Employees Stock Option Plan ("ESOP").
On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no
employer-employee relationship existed between the parties. SONZA filed an
Opposition to the motion on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZA’s monthly talent fees through
his account at PCIBank, Quezon Avenue Branch, Quezon City. In July 1996,
ABS-CBN opened a new account with the same bank where ABS-CBN
deposited SONZA’s talent fees and other payments due him under the
Agreement.
In his Order dated 2 December 1996, the Labor Arbiter5 denied the motion to
dismiss and directed the parties to file their respective position papers. The
Labor Arbiter ruled:
In this instant case, complainant for having invoked a claim that he
was an employee of respondent company until April 15, 1996 and
that he was not paid certain claims, it is sufficient enough as to
confer jurisdiction over the instant case in this Office. And as to
whether or not such claim would entitle complainant to recover
upon the causes of action asserted is a matter to be resolved only
after and as a result of a hearing. Thus, the respondent’s plea of lack
of employer-employee relationship may be pleaded only as a
matter of defense. It behooves upon it the duty to prove that there
really is no employer-employee relationship between it and the
complainant.
The Labor Arbiter then considered the case submitted for resolution. The
parties submitted their position papers on 24 February 1997.
On 11 March 1997, SONZA filed a Reply to Respondent’s Position Paper with
Motion to Expunge Respondent’s Annex 4 and Annex 5 from the Records.
Annexes 4 and 5 are affidavits of ABS-CBN’s witnesses Soccoro Vidanes and
Rolando V. Cruz. These witnesses stated in their affidavits that the prevailing
practice in the television and broadcast industry is to treat talents like SONZA
as independent contractors.
The Labor Arbiter rendered his Decision dated 8 July 1997 dismissing the
complaint for lack of jurisdiction.6 The pertinent parts of the decision read as
follows:
xxx
While Philippine jurisprudence has not yet, with certainty, touched
on the "true nature of the contract of a talent," it stands to reason
that a "talent" as above-described cannot be considered as an
employee by reason of the peculiar circumstances surrounding the
engagement of his services.
It must be noted that complainant was engaged by respondent by
reason of his peculiar skills and talent as a TV host and a radio
broadcaster. Unlike an ordinary employee, he was free to perform
the services he undertook to render in accordance with his own style.
The benefits conferred to complainant under the May 1994
Agreement are certainly very much higher than those generally
given to employees. For one, complainant Sonza’s monthly talent
fees amount to a staggering ₱317,000. Moreover, his engagement
as a talent was covered by a specific contract. Likewise, he was not
bound to render eight (8) hours of work per day as he worked only
for such number of hours as may be necessary.
The fact that per the May 1994 Agreement complainant was
accorded some benefits normally given to an employee is
inconsequential. Whatever benefits complainant enjoyed arose
from specific agreement by the parties and not by reason of
employer-employee relationship. As correctly put by the
respondent, "All these benefits are merely talent fees and other
contractual benefits and should not be deemed as ‘salaries, wages
and/or other remuneration’ accorded to an employee,
notwithstanding the nomenclature appended to these benefits.
Apropos to this is the rule that the term or nomenclature given to a
stipulated benefit is not controlling, but the intent of the parties to
the Agreement conferring such benefit."
The fact that complainant was made subject to respondent’s Rules
and Regulations, likewise, does not detract from the absence of
employer-employee relationship. As held by the Supreme Court,
"The line should be drawn between rules that merely serve as
guidelines towards the achievement of the mutually desired result
without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which
aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and
the means to achieve it." (Insular Life Assurance Co., Ltd. vs. NLRC,
et al., G.R. No. 84484, November 15, 1989).
x x x (Emphasis supplied)7
SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a
Decision affirming the Labor Arbiter’s decision. SONZA filed a motion for
reconsideration, which the NLRC denied in its Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before the
Court of Appeals assailing the decision and resolution of the NLRC. On 26
March 1999, the Court of Appeals rendered a Decision dismissing the case.8
Hence, this petition.
The Rulings of the NLRC and Court of Appeals
The Court of Appeals affirmed the NLRC’s finding that no employer-employee
relationship existed between SONZA and ABS-CBN. Adopting the NLRC’s
decision, the appellate court quoted the following findings of the NLRC:
x x x the May 1994 Agreement will readily reveal that MJMDC
entered into the contract merely as an agent of complainant Sonza,
the principal. By all indication and as the law puts it, the act of the
agent is the act of the principal itself. This fact is made particularly
true in this case, as admittedly MJMDC ‘is a management company
devoted exclusively to managing the careers of Mr. Sonza and his
broadcast partner, Mrs. Carmela C. Tiangco.’ (Opposition to Motion
to Dismiss)
Clearly, the relations of principal and agent only accrues between
complainant Sonza and MJMDC, and not between ABS-CBN and
MJMDC. This is clear from the provisions of the May 1994
Agreement which specifically referred to MJMDC as the ‘AGENT’.
As a matter of fact, when complainant herein unilaterally rescinded
 said May 1994 Agreement, it was MJMDC which issued the notice
of rescission in behalf of Mr. Sonza, who himself signed the same in
his capacity as President.
Moreover, previous contracts between Mr. Sonza and ABS-CBN
reveal the fact that historically, the parties to the said agreements
are ABS-CBN and Mr. Sonza. And it is only in the May 1994
Agreement, which is the latest Agreement executed between ABS-
CBN and Mr. Sonza, that MJMDC figured in the said Agreement as
the agent of Mr. Sonza.
We find it erroneous to assert that MJMDC is a mere ‘labor-only’
contractor of ABS-CBN such that there exist[s] employer-employee
relationship between the latter and Mr. Sonza. On the contrary, We
find it indubitable, that MJMDC is an agent, not of ABS-CBN, but of
the talent/contractor Mr. Sonza, as expressly admitted by the latter
and MJMDC in the May 1994 Agreement.
It may not be amiss to state that jurisdiction over the instant
controversy indeed belongs to the regular courts, the same being
in the nature of an action for alleged breach of contractual
obligation on the part of respondent-appellee. As squarely
apparent from complainant-appellant’s Position Paper, his claims
for compensation for services, ‘13th month pay’, signing bonus and
travel allowance against respondent-appellee are not based on the
Labor Code but rather on the provisions of the May 1994
Agreement, while his claims for proceeds under Stock Purchase
Agreement are based on the latter. A portion of the Position Paper
of complainant-appellant bears perusal:
‘Under [the May 1994 Agreement] with respondent ABS-
CBN, the latter contractually bound itself to pay
complainant a signing bonus consisting of shares of
stocks…with FIVE HUNDRED THOUSAND PESOS
(₱500,000.00).
Similarly, complainant is also entitled to be paid 13th
month pay based on an amount not lower than the
amount he was receiving prior to effectivity of (the)
Agreement’.
Under paragraph 9 of (the May 1994 Agreement),
complainant is entitled to a commutable travel benefit
amounting to at least One Hundred Fifty Thousand Pesos
(₱150,000.00) per year.’
Thus, it is precisely because of complainant-appellant’s own
recognition of the fact that his contractual relations with ABS-CBN
are founded on the New Civil Code, rather than the Labor Code, that
instead of merely resigning from ABS-CBN, complainant-appellant
served upon the latter a ‘notice of rescission’ of Agreement with
the station, per his letter dated April 1, 1996, which asserted that
instead of referring to unpaid employee benefits, ‘he is waiving and
renouncing recovery of the remaining amount stipulated in
paragraph 7 of the Agreement but reserves the right to such
recovery of the other benefits under said Agreement.’ (Annex 3 of
the respondent ABS-CBN’s Motion to Dismiss dated July 10, 1996).
Evidently, it is precisely by reason of the alleged violation of the May
1994 Agreement and/or the Stock Purchase Agreement by
respondent-appellee that complainant-appellant filed his
complaint. Complainant-appellant’s claims being anchored on the
alleged breach of contract on the part of respondent-appellee, the
same can be resolved by reference to civil law and not to labor law.
Consequently, they are within the realm of civil law and, thus, lie
with the regular courts. As held in the case of Dai-Chi Electronics
Manufacturing vs. Villarama, 238 SCRA 267, 21 November 1994, an
action for breach of contractual obligation is intrinsically a civil
dispute.9 (Emphasis supplied)
The Court of Appeals ruled that the existence of an employer-employee
relationship between SONZA and ABS-CBN is a factual question that is within
the jurisdiction of the NLRC to resolve.10 A special civil action for certiorari
extends only to issues of want or excess of jurisdiction of the NLRC.11 Such
action cannot cover an inquiry into the correctness of the evaluation of the
evidence which served as basis of the NLRC’s conclusion.12 The Court of
Appeals added that it could not re-examine the parties’ evidence and
substitute the factual findings of the NLRC with its own.13
The Issue
In assailing the decision of the Court of Appeals, SONZA contends that:
THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRC’S
DECISION AND REFUSING TO FIND THAT AN EMPLOYER-EMPLOYEE
RELATIONSHIP EXISTED BETWEEN SONZA AND ABS-CBN, DESPITE
THE WEIGHT OF CONTROLLING LAW, JURISPRUDENCE AND
EVIDENCE TO SUPPORT SUCH A FINDING.14
The Court’s Ruling
We affirm the assailed decision.
No convincing reason exists to warrant a reversal of the decision of the Court
of Appeals affirming the NLRC ruling which upheld the Labor Arbiter’s
dismissal of the case for lack of jurisdiction.
The present controversy is one of first impression. Although Philippine labor
laws and jurisprudence define clearly the elements of an employer-employee
relationship, this is the first time that the Court will resolve the nature of the
relationship between a television and radio station and one of its "talents."
There is no case law stating that a radio and television program host is an
employee of the broadcast station.
The instant case involves big names in the broadcast industry, namely Jose
"Jay" Sonza, a known television and radio personality, and ABS-CBN, one of
the biggest television and radio networks in the country.
SONZA contends that the Labor Arbiter has jurisdiction over the case because
he was an employee of ABS-CBN. On the other hand, ABS-CBN insists that the
Labor Arbiter has no jurisdiction because SONZA was an independent
contractor.
Employee or Independent Contractor?
The existence of an employer-employee relationship is a question of fact.
Appellate courts accord the factual findings of the Labor Arbiter and the NLRC
not only respect but also finality when supported by substantial
evidence.15 Substantial evidence means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.16 A party
cannot prove the absence of substantial evidence by simply pointing out that
there is contrary evidence on record, direct or circumstantial. The Court does
not substitute its own judgment for that of the tribunal in determining where
the weight of evidence lies or what evidence is credible.17
SONZA maintains that all essential elements of an employer-employee
relationship are present in this case. Case law has consistently held that the
elements of an employer-employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer’s power to control the employee on the means
and methods by which the work is accomplished.18 The last element, the so-
called "control test", is the most important element.19
A. Selection and Engagement of Employee
ABS-CBN engaged SONZA’s services to co-host its television and radio
programs because of SONZA’s peculiar skills, talent and celebrity status.
SONZA contends that the "discretion used by respondent in specifically
selecting and hiring complainant over other broadcasters of possibly similar
experience and qualification as complainant belies respondent’s claim of
independent contractorship."
Independent contractors often present themselves to possess unique skills,
expertise or talent to distinguish them from ordinary employees. The specific
selection and hiring of SONZA, because of his unique skills, talent and celebrity
status not possessed by ordinary employees, is a circumstance indicative, but
not conclusive, of an independent contractual relationship. If SONZA did not
possess such unique skills, talent and celebrity status, ABS-CBN would not
have entered into the Agreement with SONZA but would have hired him
through its personnel department just like any other employee.
In any event, the method of selecting and engaging SONZA does not
conclusively determine his status. We must consider all the circumstances of
the relationship, with the control test being the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees
going to MJMDC. SONZA asserts that this mode of fee payment shows that he
was an employee of ABS-CBN. SONZA also points out that ABS-CBN granted
him benefits and privileges "which he would not have enjoyed if he were truly
the subject of a valid job contract."
All the talent fees and benefits paid to SONZA were the result of negotiations
that led to the Agreement. If SONZA were ABS-CBN’s employee, there would
be no need for the parties to stipulate on benefits such as "SSS, Medicare, x x
x and 13th month pay"20 which the law automatically incorporates into every
employer-employee contract.21Whatever benefits SONZA enjoyed arose from
contract and not because of an employer-employee relationship.22
SONZA’s talent fees, amounting to ₱317,000 monthly in the second and third
year, are so huge and out of the ordinary that they indicate more an
independent contractual relationship rather than an employer-employee
relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely
because of SONZA’s unique skills, talent and celebrity status not possessed by
ordinary employees. Obviously, SONZA acting alone possessed enough
bargaining power to demand and receive such huge talent fees for his services.
The power to bargain talent fees way above the salary scales of ordinary
employees is a circumstance indicative, but not conclusive, of an independent
contractual relationship.
The payment of talent fees directly to SONZA and not to MJMDC does not
negate the status of SONZA as an independent contractor. The parties
expressly agreed on such mode of payment. Under the Agreement, MJMDC is
the AGENT of SONZA, to whom MJMDC would have to turn over any talent fee
accruing under the Agreement.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate
their relationship. SONZA failed to show that ABS-CBN could terminate his
services on grounds other than breach of contract, such as retrenchment to
prevent losses as provided under labor laws.23
During the life of the Agreement, ABS-CBN agreed to pay SONZA’s talent fees
as long as "AGENT and Jay Sonza shall faithfully and completely perform each
condition of this Agreement."24 Even if it suffered severe business losses, ABS-
CBN could not retrench SONZA because ABS-CBN remained obligated to pay
SONZA’s talent fees during the life of the Agreement. This circumstance
indicates an independent contractual relationship between SONZA and ABS-
CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs,
ABS-CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its
undertaking in the Agreement to continue paying SONZA’s talent fees during
the remaining life of the Agreement even if ABS-CBN cancelled SONZA’s
programs through no fault of SONZA.25
SONZA assails the Labor Arbiter’s interpretation of his rescission of the
Agreement as an admission that he is not an employee of ABS-CBN. The Labor
Arbiter stated that "if it were true that complainant was really an employee,
he would merely resign, instead." SONZA did actually resign from ABS-CBN but
he also, as president of MJMDC, rescinded the Agreement. SONZA’s letter
clearly bears this out.26 However, the manner by which SONZA terminated his
relationship with ABS-CBN is immaterial. Whether SONZA rescinded the
Agreement or resigned from work does not determine his status as employee
or independent contractor.
D. Power of Control
Since there is no local precedent on whether a radio and television program
host is an employee or an independent contractor, we refer to foreign case
law in analyzing the present case. The United States Court of Appeals, First
Circuit, recently held in Alberty-Vélez v. Corporación De Puerto Rico Para La
Difusión Pública ("WIPR")27 that a television program host is an independent
contractor. We quote the following findings of the U.S. court:
Several factors favor classifying Alberty as an independent
contractor. First, a television actress is a skilled position requiring
talent and training not available on-the-job. x x x In this regard,
Alberty possesses a master’s degree in public communications and
journalism; is trained in dance, singing, and modeling; taught with
the drama department at the University of Puerto Rico; and acted
in several theater and television productions prior to her affiliation
with "Desde Mi Pueblo." Second, Alberty provided the "tools and
instrumentalities" necessary for her to perform. Specifically, she
provided, or obtained sponsors to provide, the costumes, jewelry,
and other image-related supplies and services necessary for her
appearance. Alberty disputes that this factor favors independent
contractor status because WIPR provided the "equipment
necessary to tape the show." Alberty’s argument is misplaced. The
equipment necessary for Alberty to conduct her job as host of
"Desde Mi Pueblo" related to her appearance on the show. Others
provided equipment for filming and producing the show, but these
were not the primary tools that Alberty used to perform her
particular function. If we accepted this argument, independent
contractors could never work on collaborative projects because
other individuals often provide the equipment required for
different aspects of the collaboration. x x x
Third, WIPR could not assign Alberty work in addition to filming
"Desde Mi Pueblo." Alberty’s contracts with WIPR specifically
provided that WIPR hired her "professional services as Hostess for
the Program Desde Mi Pueblo." There is no evidence that WIPR
assigned Alberty tasks in addition to work related to these tapings.
x x x28 (Emphasis supplied)
Applying the control test to the present case, we find that SONZA is not an
employee but an independent contractor. The control test is the most
important test our courts apply in distinguishing an employee from an
independent contractor.29 This test is based on the extent of control the hirer
exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse
holds true as well – the less control the hirer exercises, the more likely the
worker is considered an independent contractor.30
First, SONZA contends that ABS-CBN exercised control over the means and
methods of his work.
SONZA’s argument is misplaced. ABS-CBN engaged SONZA’s services
specifically to co-host the "Mel & Jay" programs. ABS-CBN did not assign any
other work to SONZA. To perform his work, SONZA only needed his skills and
talent. How SONZA delivered his lines, appeared on television, and sounded
on radio were outside ABS-CBN’s control. SONZA did not have to render eight
hours of work per day. The Agreement required SONZA to attend only
rehearsals and tapings of the shows, as well as pre- and post-production staff
meetings.31 ABS-CBN could not dictate the contents of SONZA’s script.
However, the Agreement prohibited SONZA from criticizing in his shows ABS-
CBN or its interests.32 The clear implication is that SONZA had a free hand on
what to say or discuss in his shows provided he did not attack ABS-CBN or its
interests.
We find that ABS-CBN was not involved in the actual performance that
produced the finished product of SONZA’s work.33 ABS-CBN did not instruct
SONZA how to perform his job. ABS-CBN merely reserved the right to modify
the program format and airtime schedule "for more effective
programming."34 ABS-CBN’s sole concern was the quality of the shows and
their standing in the ratings. Clearly, ABS-CBN did not exercise control over the
means and methods of performance of SONZA’s work.
SONZA claims that ABS-CBN’s power not to broadcast his shows proves ABS-
CBN’s power over the means and methods of the performance of his work.
Although ABS-CBN did have the option not to broadcast SONZA’s show, ABS-
CBN was still obligated to pay SONZA’s talent fees... Thus, even if ABS-CBN was
completely dissatisfied with the means and methods of SONZA’s performance
of his work, or even with the quality or product of his work, ABS-CBN could not
dismiss or even discipline SONZA. All that ABS-CBN could do is not to broadcast
SONZA’s show but ABS-CBN must still pay his talent fees in full.35
Clearly, ABS-CBN’s right not to broadcast SONZA’s show, burdened as it was
by the obligation to continue paying in full SONZA’s talent fees, did not amount
to control over the means and methods of the performance of SONZA’s work.
ABS-CBN could not terminate or discipline SONZA even if the means and
methods of performance of his work - how he delivered his lines and appeared
on television - did not meet ABS-CBN’s approval. This proves that ABS-CBN’s
control was limited only to the result of SONZA’s work, whether to broadcast
the final product or not. In either case, ABS-CBN must still pay SONZA’s talent
fees in full until the expiry of the Agreement.
In Vaughan, et al. v. Warner, et al.,36 the United States Circuit Court of Appeals
ruled that vaudeville performers were independent contractors although the
management reserved the right to delete objectionable features in their
shows. Since the management did not have control over the manner of
performance of the skills of the artists, it could only control the result of the
work by deleting objectionable features.37
SONZA further contends that ABS-CBN exercised control over his work by
supplying all equipment and crew. No doubt, ABS-CBN supplied the
equipment, crew and airtime needed to broadcast the "Mel & Jay" programs.
However, the equipment, crew and airtime are not the "tools and
instrumentalities" SONZA needed to perform his job. What SONZA principally
needed were his talent or skills and the costumes necessary for his
appearance.38Even though ABS-CBN provided SONZA with the place of work
and the necessary equipment, SONZA was still an independent contractor
since ABS-CBN did not supervise and control his work. ABS-CBN’s sole concern
was for SONZA to display his talent during the airing of the programs.39
A radio broadcast specialist who works under minimal supervision is an
independent contractor.40 SONZA’s work as television and radio program host
required special skills and talent, which SONZA admittedly possesses. The
records do not show that ABS-CBN exercised any supervision and control over
how SONZA utilized his skills and talent in his shows.
Second, SONZA urges us to rule that he was ABS-CBN’s employee because ABS-
CBN subjected him to its rules and standards of performance. SONZA claims
that this indicates ABS-CBN’s control "not only [over] his manner of work but
also the quality of his work."
The Agreement stipulates that SONZA shall abide with the rules and standards
of performance "covering talents"41 of ABS-CBN. The Agreement does not
require SONZA to comply with the rules and standards of performance
prescribed for employees of ABS-CBN. The code of conduct imposed on
SONZA under the Agreement refers to the "Television and Radio Code of the
Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been adopted by
the COMPANY (ABS-CBN) as its Code of Ethics."42 The KBP code applies to
broadcasters, not to employees of radio and television stations. Broadcasters
are not necessarily employees of radio and television stations. Clearly, the
rules and standards of performance referred to in the Agreement are those
applicable to talents and not to employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired party
indicate that the latter is an employee of the former.43 In this case, SONZA
failed to show that these rules controlled his performance. We find that these
general rules are merely guidelines towards the achievement of the mutually
desired result, which are top-rating television and radio programs that comply
with standards of the industry. We have ruled that:
Further, not every form of control that a party reserves to himself over the
conduct of the other party in relation to the services being rendered may be
accorded the effect of establishing an employer-employee relationship. The
facts of this case fall squarely with the case of Insular Life Assurance Co., Ltd.
vs. NLRC. In said case, we held that:
Logically, the line should be drawn between rules that merely serve
as guidelines towards the achievement of the mutually desired
result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind
or restrict the party hired to the use of such means. The first, which
aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and
the means used to achieve it.44
The Vaughan case also held that one could still be an independent contractor
although the hirer reserved certain supervision to insure the attainment of the
desired result. The hirer, however, must not deprive the one hired from
performing his services according to his own initiative.45
Lastly, SONZA insists that the "exclusivity clause" in the Agreement is the most
extreme form of control which ABS-CBN exercised over him.
This argument is futile. Being an exclusive talent does not by itself mean that
SONZA is an employee of ABS-CBN. Even an independent contractor can
validly provide his services exclusively to the hiring party. In the broadcast
industry, exclusivity is not necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in the
entertainment industry.46 This practice is not designed to control the means
and methods of work of the talent, but simply to protect the investment of the
broadcast station. The broadcast station normally spends substantial amounts
of money, time and effort "in building up its talents as well as the programs
they appear in and thus expects that said talents remain exclusive with the
station for a commensurate period of time."47 Normally, a much higher fee is
paid to talents who agree to work exclusively for a particular radio or television
station. In short, the huge talent fees partially compensates for exclusivity, as
in the present case.
MJMDC as Agent of SONZA
SONZA protests the Labor Arbiter’s finding that he is a talent of MJMDC, which
contracted out his services to ABS-CBN. The Labor Arbiter ruled that as a talent
of MJMDC, SONZA is not an employee of ABS-CBN. SONZA insists that MJMDC
is a "labor-only" contractor and ABS-CBN is his employer.
In a labor-only contract, there are three parties involved: (1) the "labor-only"
contractor; (2) the employee who is ostensibly under the employ of the "labor-
only" contractor; and (3) the principal who is deemed the real employer.
Under this scheme, the "labor-only" contractor is the agent of the principal. The
law makes the principal responsible to the employees of the "labor-only
contractor" as if the principal itself directly hired or employed the
employees.48 These circumstances are not present in this case.
There are essentially only two parties involved under the Agreement, namely,
SONZA and ABS-CBN. MJMDC merely acted as SONZA’s agent. The Agreement
expressly states that MJMDC acted as the "AGENT" of SONZA. The records do
not show that MJMDC acted as ABS-CBN’s agent. MJMDC, which stands for
Mel and Jay Management and Development Corporation, is a corporation
organized and owned by SONZA and TIANGCO. The President and General
Manager of MJMDC is SONZA himself. It is absurd to hold that MJMDC, which
is owned, controlled, headed and managed by SONZA, acted as agent of ABS-
CBN in entering into the Agreement with SONZA, who himself is represented
by MJMDC. That would make MJMDC the agent of both ABS-CBN and SONZA.
As SONZA admits, MJMDC is a management company devoted exclusively to
managing the careers of SONZA and his broadcast partner, TIANGCO. MJMDC
is not engaged in any other business, not even job contracting. MJMDC does
not have any other function apart from acting as agent of SONZA or TIANGCO
to promote their careers in the broadcast and television industry.49
Policy Instruction No. 40
SONZA argues that Policy Instruction No. 40 issued by then Minister of Labor
Blas Ople on 8 January 1979 finally settled the status of workers in the
broadcast industry. Under this policy, the types of employees in the broadcast
industry are the station and program employees.
Policy Instruction No. 40 is a mere executive issuance which does not have the
force and effect of law. There is no legal presumption that Policy Instruction
No. 40 determines SONZA’s status. A mere executive issuance cannot exclude
independent contractors from the class of service providers to the broadcast
industry. The classification of workers in the broadcast industry into only two
groups under Policy Instruction No. 40 is not binding on this Court, especially
when the classification has no basis either in law or in fact.
Affidavits of ABS-CBN’s Witnesses
SONZA also faults the Labor Arbiter for admitting the affidavits of Socorro
Vidanes and Rolando Cruz without giving his counsel the
opportunity to cross-examine these witnesses. SONZA brands these witnesses
as incompetent to attest on the prevailing practice in the radio and television
industry. SONZA views the affidavits of these witnesses as misleading and
irrelevant.
While SONZA failed to cross-examine ABS-CBN’s witnesses, he was never
prevented from denying or refuting the allegations in the affidavits. The Labor
Arbiter has the discretion whether to conduct a formal (trial-type) hearing
after the submission of the position papers of the parties, thus:
Section 3. Submission of Position Papers/Memorandum
xxx
These verified position papers shall cover only those claims and
causes of action raised in the complaint excluding those that may
have been amicably settled, and shall be accompanied by all
supporting documents including the affidavits of their respective
witnesses which shall take the place of the latter’s direct testimony.
xxx
Section 4. Determination of Necessity of Hearing. – Immediately
after the submission of the parties of their position
papers/memorandum, the Labor Arbiter shall motu propio
determine whether there is need for a formal trial or hearing. At
this stage, he may, at his discretion and for the purpose of making
such determination, ask clarificatory questions to further elicit facts
or information, including but not limited to the subpoena of
relevant documentary evidence, if any from any party or witness.50
The Labor Arbiter can decide a case based solely on the position papers and
the supporting documents without a formal trial.51 The holding of a formal
hearing or trial is something that the parties cannot demand as a matter of
right.52 If the Labor Arbiter is confident that he can rely on the documents
before him, he cannot be faulted for not conducting a formal trial, unless
under the particular circumstances of the case, the documents alone are
insufficient. The proceedings before a Labor Arbiter are non-litigious in nature.
Subject to the requirements of due process, the technicalities of law and the
rules obtaining in the courts of law do not strictly apply in proceedings before
a Labor Arbiter.
Talents as Independent Contractors
ABS-CBN claims that there exists a prevailing practice in the broadcast and
entertainment industries to treat talents like SONZA as independent
contractors. SONZA argues that if such practice exists, it is void for violating
the right of labor to security of tenure.
The right of labor to security of tenure as guaranteed in the
Constitution53 arises only if there is an employer-employee relationship under
labor laws. Not every performance of services for a fee creates an employer-
employee relationship. To hold that every person who renders services to
another for a fee is an employee - to give meaning to the security of tenure
clause - will lead to absurd results.
Individuals with special skills, expertise or talent enjoy the freedom to offer
their services as independent contractors. The right to life and livelihood
guarantees this freedom to contract as independent contractors. The right of
labor to security of tenure cannot operate to deprive an individual, possessed
with special skills, expertise and talent, of his right to contract as an
independent contractor. An individual like an artist or talent has a right to
render his services without any one controlling the means and methods by
which he performs his art or craft. This Court will not interpret the right of
labor to security of tenure to compel artists and talents to render their services
only as employees. If radio and television program hosts can render their
services only as employees, the station owners and managers can dictate to
the radio and television hosts what they say in their shows. This is not
conducive to freedom of the press.
Different Tax Treatment of Talents and Broadcasters
The National Internal Revenue Code ("NIRC")54 in relation to Republic Act No.
7716,55 as amended by Republic Act No. 8241,56 treats talents, television and
radio broadcasters differently. Under the NIRC, these professionals are subject
to the 10% value-added tax ("VAT") on services they render. Exempted from
the VAT are those under an employer-employee relationship.57 This different
tax treatment accorded to talents and broadcasters bolters our conclusion
that they are independent contractors, provided all the basic elements of a
contractual relationship are present as in this case.
Nature of SONZA’s Claims
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay,
separation pay, service incentive leave, signing bonus, travel allowance, and
amounts due under the Employee Stock Option Plan. We agree with the
findings of the Labor Arbiter and the Court of Appeals that SONZA’s claims
are all based on the May 1994 Agreement and stock option plan, and not on the
Labor Code. Clearly, the present case does not call for an application of the
Labor Code provisions but an interpretation and implementation of the May
1994 Agreement. In effect, SONZA’s cause of action is for breach of contract
which is intrinsically a civil dispute cognizable by the regular courts.58
WHEREFORE, we DENY the petition. The assailed Decision of the Court of
Appeals dated 26 March 1999 in CA-G.R. SP No. 49190 is AFFIRMED. Costs
against petitioner.
SO ORDERED.
G.R. No. 114733 January 2, 1997
AURORA LAND PROJECTS CORP. Doing business under the name "AURORA
PLAZA" and TERESITA T. QUAZON, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and HONORIO
DAGUI, respondents.
HERMOSISIMA, JR., J.:
The question as to whether an employer-employee relationship exists in a
certain situation continues to bedevil the courts. Some businessmen try to
avoid the bringing about of an employer-employee relationship in their
enterprises because that judicial relation spawns obligations connected with
workmen's compensation, social security, medicare, minimum wage,
termination pay, and unionism.1 In light of this observation, it behooves this
Court to be ever vigilant in Checking the unscrupulous efforts of some of our
entrepreneurs, primarily aimed at maximizing their return on investments at
the expense of the lowly workingman.
This petition for certiorari seeks the reversal of the Resolution2 of public
respondent National Labor Relations Commission dated March 16, 1994
affirming with modification the decision of the Labor Arbiter, dated May 25,
1992, finding petitioners liable to pay private respondent the total amount of
P195,624.00 as separation pay and attorney's fees.
The relevant antecedents:
Private respondent Honorio Dagui was hired by Doña Aurora Suntay Tanjangco
in 1953 to take charge of the maintenance and repair of the Tanjangco
apartments and residential buildings. He was to perform carpentry, plumbing,
electrical and masonry work. Upon the death of Doña Aurora Tanjangco in
1982, her daughter, petitioner Teresita Tanjangco Quazon, took over the
administration of all the Tanjangco properties. On June 8, 1991, private
respondent Dagui received the shock of his life when Mrs. Quazon suddenly
told him: "Wala ka nang trabaho mula ngayon,"3 on the alleged ground that
his work was unsatisfactory. On August 29, 1991, private respondent, who was
then already sixty-two (62) years old, filed a complaint for illegal dismissal with
the Labor Arbiter.
On May 25, 1992, Labor Arbiter Ricardo C. Nora rendered judgment, the
decretal portion of which reads:
IN VIEW OF ALL THE FOREGOING, respondents Aurora Plaza and/or
Teresita Tanjangco Quazon are hereby ordered to pay the
complainant the total amount of ONE HUNDRED NINETY FIVE
THOUSAND SIX HUNDRED TWENTY FOUR PESOS (P195,624.00)
representing complainant's separation pay and the ten (10%)
percent attorney's fees within ten (10) days from receipt of this
Decision.
All other issues are dismissed for lack of merit.4
Aggrieved, petitioners Aurora Land Projects Corporation and Teresita T.
Quazon appealed to the National Labor Relations Commission. The
Commission affirmed, with modification, the Labor Arbiter's decision in a
Resolution promulgated on March 16, 1994, in the following manner:
WHEREFORE, in view of the above considerations, let the appealed
decision be as it is hereby AFFIRMED with (the) MODIFICATION that
complainant must be paid separation pay in the amount of
P88,920.00 instead of P177,840.00. The award of attorney's fees is
hereby deleted.5
As a last recourse, petitioners filed the instant petition based on grounds not
otherwise succinctly and distinctly ascribed, viz:
I
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN AFFIRMING
THE LABOR ARBITER'S DECISION SOLELY ON THE BASIS OF ITS
STATEMENT THAT "WE FAIL TO FIND ANY REASON OR
JUSTIFICATION TO DISAGREE WITH THE LABOR ARBITER IN HIS
FINDING THAT HONORIO DAGUI WAS DISMISSED BY THE
RESPONDENT" (p. 7, RESOLUTION), DESPITE — AND WITHOUT
EVEN BOTHERING TO CONSIDER — THE GROUNDS STATED IN
PETITIONERS' APPEAL MEMORANDUM WHICH ARE PLAINLY
MERITORIOUS.
II
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN FINDING
THAT COMPLAINANT WAS EMPLOYED BY THE RESPONDENTS
MORE SO "FROM 1953 TO 1991" (p. 3, RESOLUTION).
III
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN AWARDING
SEPARATION PAY IN FAVOR OF PRIVATE RESPONDENT MORE SO
FOR THE EQUIVALENT OF 38 YEARS OF ALLEGED SERVICE.
IV
RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING
BOTH PETITIONERS LIABLE FOR SEPARATION PAY.6
It is our impression that the crux of this petition rests on two elemental issues:
(1) Whether or not private respondent Honorio Dagui was an employee of
petitioners; and (2) If he were, whether or not he was illegally dismissed.
Petitioners insist that private respondent had never been their employee.
Since the establishment of Aurora Plaza, Dagui served therein only as a job
contractor. Dagui had control and supervision of whoever he would take to
perform a contracted job. On occasion, Dagui was hired only as a "tubero" or
plumber as the need arises in order to unclog sewerage pipes. Every time his
services were needed, he was paid accordingly. It was understood that his job
was limited to the specific undertaking of unclogging the pipes. In effect,
petitioners would like us to believe that private respondent Dagui was an
independent contractor, particularly a job contractor, and not an employee of
Aurora Plaza.
We are not persuaded.
Section 8, Rule VIII, Book III of the Implementing Rules and Regulations of the
Labor Code provides in part:
There is job contracting permissible under the Code if the following
conditions are met:
xxx xxx xxx
(2) The contractor has substantial capital or investment in the form
of tools, equipment, machineries, work premises, and other
materials which are necessary in the conduct of his business.
Honorio Dagui earns a measly sum of P180.00 a day (latest salary).7 Ostensibly,
and by no stretch of the imagination can Dagui qualify as a job contractor. No
proof was adduced by the petitioners to show that Dagui was merely a job
contractor, and it is absurd to expect that private respondent, with such
humble resources, would have substantial capital or investment in the form of
tools, equipment, and machineries, with which to conduct the business of
supplying Aurora Plaza with manpower and services for the exclusive purpose
of maintaining the apartment houses owned by the petitioners herein.
The bare allegation of petitioners, without more, that private respondent
Dagui is a job contractor has been disbelieved by the Labor Arbiter and the
public respondent NLRC. Dagui, by the findings of both tribunals, was an
employee of the petitioners. We are not inclined to set aside these findings.
The issue whether or not an employer-employee relationship exists in a given
case is essentially a question of fact.8 As a rule, repetitious though it has
become to state, this Court does not review supposed errors in the decision
of the NLRC which raise factual issues, because factual findings of agencies
exercising quasi-judicial functions [like public respondent NLRC] are accorded
not only respect but even finality, aside from the consideration that this Court
is essentially not a trier of facts.9
However, we deem it wise to discuss this issue full-length if only to bolster the
conclusions reached by the labor tribunals, to which we fully concur.
Jurisprudence is firmly settled that whenever the existence of an employment
relationship is in dispute, four elements constitute the reliable yardstick: (a)
the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer's power to control the
employee's conduct.10 It is the so-called "control test," and that is, whether
the employer controls or has reserved the right to control the employee not
only as to the result of the work to be done but also as to the means and
methods by which the same is to be accomplished,11 which constitute the
most important index of the existence of the employer-employee relationship.
Stated otherwise, an employer-employee relationship exists where the person
for whom the services are performed reserves the right to control not only the
end to be achieved but also the means to be used in reaching such end.12
All these elements are present in the case at bar. Private respondent was hired
in 1953 by Doña Aurora Suntay Tanjangco (mother of Teresita Tanjangco-
Quazon), who was then the one in charge of the administration of the
Tanjangco's various apartments and other properties. He was employed as a
stay-in worker performing carpentry, plumbing, electrical and necessary work
(sic) needed in the repairs of Tanjangco's properties.13 Upon the demise of
Doña Aurora in 1982, petitioner Teresita Tanjangco-Quazon took over the
administration of these properties and continued to employ the private
respondent, until his unceremonious dismissal on June 8, 1991.14
Dagui was not compensated in terms of profits for his labor or services like an
independent contractor. Rather, he was paid on a daily wage basis at the rate
of P180.00.15 Employees are those who are compensated for their labor or
services by wages rather than by profits.16 Clearly, Dagui fits under this
classification.
Doña Aurora and later her daughter petitioner Teresita Quazon evidently had
the power of dismissal for cause over the private respondent.17
Finally, the records unmistakably show that the most important requisite of
control is likewise extant in this case. It should be borne in mind that the power
of control refers merely to the existence of the power and not to the actual
exercise thereof. It is not essential for the employer to actually supervise the
performance of duties of the employee; it is enough that the former has a right
to wield the power.18 The establishment of petitioners is engaged in the
leasing of residential and apartment buildings. Naturally, private respondent's
work therein as a maintenance man had to be performed within the premises
of herein petitioners. In fact, petitioners do not dispute the fact that Dagui
reports for work from 7:00 o'clock in the morning until 4:00 o'clock in the
afternoon. It is not far-fetched to expect, therefore, that Dagui had to observe
the instructions and specifications given by then Doña Aurora and later by Mrs.
Teresita Quazon as to how his work had to be performed. Parenthetically,
since the job of a maintenance crew is necessarily done within company
premises, it can be inferred that both Doña Aurora and Mrs. Quazon could
easily exercise control on private respondent whenever they please.
The employment relationship established, the next question would have to be:
What kind of an employee is the private respondent — regular, casual or
probationary?
We find private respondent to be a regular employee, for Article 280 of the
Labor Code provides:
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 project or undertaking the completion
or termination of which has been determined at the time of the
engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the
duration of the season.
An employment shall be deemed to be casual if it is not covered by
the preceding paragraph: Provided, That, any employee who has
rendered at least one 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 actually exists.
As can be gleaned from this provision, 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 activity in which they are
employed.19
Whichever standard is applied, private respondent qualifies as a regular
employee. As aptly ruled by the Labor Arbiter:
. . . As owner of many residential and apartment buildings in Metro
Manila, the necessity of maintaining and employing a permanent
stay-in worker to perform carpentry, plumbing, electrical and
necessary work needed in the repairs of Tanjangco's properties is
readily apparent and is in fact needed. So much so that upon the
demise of Doña Aurora Tanjangco, respondent's daughter Teresita
Tanjangco-Quazon apparently took over the administration of the
properties and continued to employ complainant until his outright
dismissal on June 8, 1991. . . . 20
The jobs assigned to private respondent as maintenance man, carpenter,
plumber, electrician and mason were directly related to the business of
petitioners as lessors of residential and apartment buildings. Moreover, such
a continuing need for his services by herein petitioners is sufficient evidence
of the necessity and indispensability of his services to petitioners' business or
trade.
Private respondent Dagui should likewise be considered a regular employee
by the mere fact that he rendered service for the Tanjangcos for more than
one year, that is, beginning 1953 until 1982, under Doña Aurora; and then
from 1982 up to June 8, 1991 under the petitioners, for a total of twenty-nine
(29) and nine (9) years respectively. Owing to private respondent's length of
service, he became a regular employee, by operation of law, one year after he
was employed in 1953 and subsequently in 1982. In Baguio Country Club
Corp., v. NLRC,21 we decided that it is more in consonance with the intent and
spirit of the law to rule that the status of regular employment attaches to the
casual employee on the day immediately after the end of his first year of
service. To rule otherwise is to impose a burden on the employee which is not
sanctioned by law. Thus, the law does not provide the qualification that the
employee must first be issued a regular appointment or must first be formally
declared as such before he can acquire a regular status.
Petitioners argue, however, that even assuming arguendo that private
respondent can be considered an employee, he cannot be classified as a
regular employee. He was merely a project employee whose services were
hired only with respect to a specific job and only while the same exists,22 thus
falling under the exception of Article 280, paragraph 1 of the Labor Code.
Hence, it is claimed that he is not entitled to the benefits prayed for and
subsequently awarded by the Labor Arbiter as modified by public respondent
NLRC.
The circumstances of this case in light of settled case law do not, at all, support
this averment. Consonant with a string of cases beginning with Ochoco
v. NLRC,23 followed by Philippine National Construction Corporation
v. NLRC,24 Magante v. NLRC,25 and Capitol Industrial Construction Corporation
v. NLRC,26 if truly, private respondent was employed as a "project employee,"
petitioners should have submitted a report of termination to the nearest
public employment office everytime his employment is terminated due to
completion of each project, as required by Policy Instruction No. 20, which
provides:
Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any phase
thereof in which they are employed, regardless of the number of
project in which they have been employed by a particular
construction company. Moreover, the company is not required to
obtain a clearance from the Secretary of Labor in connection with
such termination. What is required of the company is a report to the
nearest Public Employment Office for statistical purposes.
Throughout the duration of private respondent's employment as maintenance
man, there should have been filed as many reports of termination as there
were projects actually finished, if it were true that private respondent was only
a project worker. Failure of the petitioners to comply with this simple, but
nonetheless compulsory, requirement is proof that Dagui is not a project
employee.27
Coming now to the second issue as to whether or not private respondent
Dagui was illegally dismissed, we rule in the affirmative.
Jurisprudence abound as to the rule that the twin requirements of due
process, substantive and procedural, must be complied with, before a valid
dismissal exists.28 Without which the dismissal becomes void.29
The twin requirements of notice and hearing constitute the essential elements
of due process. This simply means that the employer shall afford the worker
ample opportunity to be beard and to defend himself with the assistance of
his representative, if he so desires.30 As held in the case of Pepsi Cola Bottling
Co. v. NLRC:31
The law requires that the employer must furnish the worker sought
to be dismissed with two written noticesbefore termination of
employee can be legally effected: (1) notice which apprises the
employee of the particular acts or omissions for which his dismissal
is sought; and (2) the subsequent notice which informs the
employee of the employer's decision to dismiss him (Section 13, BP
130; Sections, 2-6, Rule XIV, Book V Rules and Regulations
Implementing the Labor Code as amended), Failure to comply with
the requirements taints the dismissal with illegality. This procedure
is mandatory; in the absence of which, any judgment reached by
management is void and inexistent. (Tingson, Jr. v. NLRC, 185 SCRA
498 [1990]; National Service Corporation v. NLRC, 168 SCRA 122
[1988]; Ruffy v. NLRC, 182 SCRA 365 [1990].
These mandatory requirements were undeniably absent in the case at bar.
Petitioner Quazon dismissed private respondent on June 8, 1991, without
giving him any written notice informing the worker herein of the cause for his
termination. Neither was there any hearing conducted in order to give Dagui
the opportunity to be heard and defend himself. He was simply told: "Wala ka
nang trabaho mula ngayon," allegedly because of poor workmanship on a
previous job.32 The undignified manner by which private respondent's services
were terminated smacks of absolute denial of the employee's right to due
process and betrays petitioner Quazon's utter lack of respect for labor. Such
an attitude indeed deserves condemnation.
The Court, however, is bewildered why only an award for separation pay in
lieu of reinstatement was made by both the Labor Arbiter and the NLRC. No
backwages were awarded. It must be remembered that backwages and
reinstatement are two reliefs that should be given to an illegally dismissed
employee. They are separate and distinct from each other. In the event that
reinstatement is no longer possible, as in this case,33 separation pay is
awarded to the employee. The award of separation pay is in lieu of
reinstatement and not of backwages. In other words, an illegally dismissed
employee is entitled to (1) either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and (2) backwages.34 Payment of backwages
is specifically designed to restore an employee's income that was lost because
of his unjust dismissal.35 On the other hand, payment of separation pay is
intended to provide the employee money during the period in which he will
be looking for another employment.36
Considering, however, that the termination of private respondent Dagui was
made on June 8, 1991 or after the effectivity of the amendatory provision of
Republic Act No. 6715 on March 21, 1989, private respondent's backwages
should be computed on the basis of said law.
It is true that private respondent did not appeal the award of the Labor Arbiter
awarding separation pay sans backwages. While as a general rule, a party who
has not appealed is not entitled to affirmative relief other than the ones
granted in the decision of the court below,37 law and jurisprudence authorize
a tribunal to consider errors, although unassigned, if they involve (1) errors
affecting the lower court's jurisdiction over the subject matter, (2) plain errors
not specified, and (3) clerical errors.38 In this case, the failure of the Labor
Arbiter and the public respondent NLRC to award backwages to the private
respondent, who is legally entitled thereto having been illegally dismissed,
amounts to a "plain error" which we may rectify in this petition, although
private respondent Dagui did not bring any appeal regarding the matter, in the
interest of substantial justice. The Supreme Court is clothed with ample
authority to review matters, even if they are not assigned as errors on appeal,
if it finds that their consideration is necessary in arriving at a just decision of
the case.39 Rules of procedure are 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 avoided.40 Thus, substantive rights like the award of
backwages resulting from illegal dismissal must not be prejudiced by a rigid
and technical application of the rules.41
Petitioner Quazon argues that, granting the petitioner corporation should be
held liable for the claims of private respondent, she cannot be made jointly
and severally liable with the corporation, notwithstanding the fact that she is
the highest ranking officer of the company, since Aurora Plaza has a separate
juridical personality.
We disagree.
In the cases of Maglutac v. National Labor Relations Commission,42 Chua
v. National Labor Relations Commission,43 and A.C. Ransom Labor Union-CCLU
v. National Labor Relations Commission 44 we were consistent in holding that
the highest and most ranking officer of the corporation, which in this case is
petitioner Teresita Quazon as manager of Aurora Land Projects Corporation,
can be held jointly and severally liable with the corporation for the payment
of the unpaid money claims of its employees who were illegally dismissed. In
this case, not only was Teresita Quazon the most ranking officer of Aurora
Plaza at the time of the termination of the private respondent, but worse, she
had a direct hand in the private respondent's illegal dismissal. A corporate
officer is not personally liable for the money claims of discharged corporate
employees unless he acted with evident malice and bad faith in terminating
their employment.45 Here, the failure of petitioner Quazon to observe the
mandatory requirements of due process in terminating the services of Dagui
evinced malice and bad faith on her part, thus making her liable.
Finally, we must address one last point. Petitioners aver that, assuming that
private respondent can be considered an employee of Aurora Plaza,
petitioners cannot be held liable for separation pay for the duration of his
employment with Doña Aurora Tanjangco from 1953 up to 1982. If petitioners
should be held liable as employers, their liability for separation pay should only
be counted from the time Dagui was rehired by the petitioners in 1982 as a
maintenance man.
We agree.
Petitioners' liability for separation pay ought to be reckoned from 1982 when
petitioner Teresita Quazon, as manager of Aurora Plaza, continued to employ
private respondent. From 1953 up to the death of Doña Aurora sometime in
1982, private respondent's claim for separation pay should have been filed in
the testate or intestate proceedings of Doña Aurora. This is because the
demand for separation pay covered by the years 1953-1982 is actually a
money claim against the estate of Doña Aurora, which claim did not survive
the death of the old woman. Thus, it must be filed against her estate in
accordance with Section 5, Rule 86 of the Revised Rules of Court, to wit:
 Sec. 5. Claims which must be filed under tire notice. If not filed,
barred; exceptions. — All claims for money against the decedent,
arising from contract, express or implied, whether the same be due,
not due, or contingent, all claims for funeral expenses for the last
sickness of the decedent, and judgment for money against the
decedent, must be filed within the time limited in the notice;
otherwise they are barred forever, except that they may be set
forth as counterclaims in any action that the executor or
administrator may bring against the claimants. . . .
WHEREFORE, the instant petition is partly GRANTED and the Resolution of the
public respondent National Labor Relations Commission dated March 16,
1994 is hereby MODIFIED in that the award of separation pay against the
petitioners shall be reckoned from the date private respondent was re-
employed by the petitioners in 1982, until June 8, 1991. In addition to
separation pay, full backwages are likewise awarded to private respondent,
inclusive of allowances, and other benefits or their monetary equivalent
pursuant to Article 27946 of the Labor Code, as amended by Section 34 of
Republic Act No. 6715, computed from the time he was dismissed on June 8,
1991 up to the finality of this decision, without deducting therefrom the
earnings derived by private respondent elsewhere during the period of his
illegal dismissal, pursuant to our ruling in Osmalik Bustamante, et
al. v. National Labor Relations Commission.47
No costs.
SO ORDERED.
SINGER SEWING MACHINE CASE
G.R. No. L-28134 June 30, 1971
SOCIAL SECURITY SYSTEM, petitioner,
vs.
THE COURT OF APPEALS and THE PHILIPPINE GUARDS PROTECTION
UNIT, respondents.
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General
Pacifico P. de Castro, Solicitor Antonio M. Martinez, Attorney Luz M. Villamor
and Attorney Rafael M. Buñag for petitioner.
Alejandro P. Capitulo for private respondent.
VILLAMOR, J.:
This is an appeal by the Social Security System from the judgment of the Court
of Appeals declaring null and void the membership of private cases Philippine
Guards Protection Unit in the Social Security System from August 1, 1958 to
June 17, 1960, pursuant to Republic Act No. 1161 (The Social security Act of
1954), as amended by Republic Act No. 1792 and accordingly excluding it from
compulsory coverage during that period; declaring the said private cases a
member of the Social Security System only as of June 18, 1960, pursuant
Republic Act No. 2658, which farther amended the said Section 9; and
ordering the Social Security System to refund to the said cases the
contributions remitted by the latter to the System corresponding to the first
period mentioned.
The following proceedings gave rise to the present appeal:
On February 18, 1960, as a result of a letter sent by the Social Security System
to the Philippine Guards Protection Unit threatening it with court action if it
did not continue to remit its contributions to the System, the said protection
unit, owned and operated by Clemente V. Eslao filed with the Social Security
Commission a petition for exclusion from coverage under the System and for
a refund its remittances for September and October 1958. The reason given
by the unit is that it is not subject to compulsory coverage under the Social
Security Act of 1954, as amended by Republic Act No. 1792, because it is not
the employer, but merely the agent of the thirty-nine security guards or
watchmen whose names appear in its membership list, for, actually, it has only
one employee, namely, the clerk-secretary of the office. Under Section 9 of
the Social Security Act of 1954, as amended by Republic Act No. 1792, which
work effect on June 21, 1957, "the Commission may not compel any employer
to become a member of the System unless he shall have been in operation for
at least two years and has, at the time of admission, if admitted for
membership during the first year of the System's operation, at least fifty
employees and if admitted for membership in the following year of operation
and thereafter, at least six employees ...." After the issues had been joined and
the case heard, the Social Security Commission, on April 12, 1961, handed
down a resolution finding the Philippine Guards Protection Unit the employer
of the security guards or watchmen, and accordingly declaring the latter
subject to compulsory coverage. A motion to reconsider was filed, but the
same was denied in an order of May 8, 1961. Hence, an appeal was interposed
by the Philippine Guards Portion Unit with the Court of Appeals, which
reversed the resolution and order of the Commission in a decision
promulgated on July 24, 1967, the dispositive portion whereof is summarized
in the opening sentence of this Opinion.
We have noticed that although under the judgment of the Court of Appeals
private respondent's membership in the System as of June 18, 1960, has been
expressly declared and recognized pursuant to Section 9 of the Social Security
Act of 1954, as amended by Republic Act No. 2658, which eliminated among
others, the requirement under Republic Act. No. 1792 that the employer
should have at least six employees for purposes of compulsory coverage, it is
not clear from the appealed decision if it is also the sense and intent of that
court that the security guards or watchmen in the roster of private respondent
should, under Republic Act No. 2658, likewise not be considered employees
of the said respondent. As it now stands, the decision under review can be
interpretend to mean that private cases became a member of the system as
of June 18, 1960, when Republic Act No. 2658 took effect, because it had at
least one employee, but that the security guards or watchmen in its roster
should not — as under Republic Act No. 1792 — be considered private
respondent's employees. To dispel any doubt and obviate further suits on the
matter, we hereby make it clear that the issue for resolution is whether or not
for purposes of social security coverage, the security guards or watchmen in
question should be considered private respondent's employee's not only
under Republic Act No. 1792, but also under Republic Act No. 2658.
The pertinent facts concerning the mechanics of the tripartite relationship
among the Philippine Guards Protection Unit, its clients and the security
guards or watchmen, which were substantially adopted by the Court of
Appeals, are succinctly stated in the basic resolution of the Social Security
Commission, to wit:
... [W]henever a person approaches the owner of the
agencies for employment, the owner tells him to secure
a license as a special watchman and in the meantime, the
owner would look for persons or establishments that
need the service of a guard or guards. If no such persons
or establishments are found after the applicant has
secured a license, he remains with the agency as an
"extra guard" and he is utilized by the agency as a
substitute for those guards going on vacation or for those
who are sick or otherwise absent (t.s.n., April 4, 1960, pp.
11-12). The owner may refuse to accommodate an
applicant if he so desires (t.s.n., April 28, 1960, pp. 6-7).
When a person or establishment requiring the service of
a guard is found by the owner, a contract is entered into
between the owner of the agency and the client, either
orally or in writing (t.s.n., April 4, 1960, p. 17) The owner
collects from the client the fee for the service and from
the amount received, the owner pays the salary of the
guard, retaining a part thereof for himself as his
"commission" as long as the watchman is assigned to
guard the premises of a client (t.s.n., April 4, 1960, p. 18).
The owner of the agency furnishes the firearms and
ammunitions, but the watchmen buy their own uniforms
(t.s.n., April 4, 1960, pp. 20, 21).
If a client is dissatisfied with the service of a guard, as
when a guard is always late, the agency may change the
guard if the client so requests, or it may impose a fine on
the guard as a disciplinary measure (t.s.n., April 4, 1960,
pp. 17-18).
The reasons of the Court of Appeals for concluding that there is no employer-
employee relationship between private cases and the security guards and
watchmen may be summarized as follows: (a) it is to the employing units or
companies that the watchmen render their services, hence, it is the former
that are the employers of the watchmen, pursuant to Section 8 (c) of the Act,
which defines an employer as one who "uses the services of another person
who is under his orders as regards the employment," and to Section 8(d),
which defines an employee as one "whoperforms services for an employer in
which either or both mental and physical efforts are used and who receives
compensation for such services where there is an employer-employee
relation." While the companies or units hand over the watchmen's
compensation to private respondent, which in turn pays the salaries of the
watchmen after deducting a commission, whatever right or interest private
cases has in the said salaries is limited to receiving the same for, in behalf of
and in trust for the watchmen, subject to its right to deduct its commission for
securing work for them. (b) Since no service is rendered by the watchmen to
private respondent, it follows that in relation to their duties of guarding,
watching and protecting the interests of the companies or units, the
watchmen receive no orders from private cases but from the said companies
or units. (c) It is the companies or units that hire or engage the watchmen,
because without their asking for the latter's services, the watchmen
concerned cannot be employed in the said companies or units. (d) The
employing company or unit has the right to ask for a change or replacement
or even to terminate its agreement with private respondent. (e) The Supreme
Court has in a number of cases, recognized special watchmen as employees of
the companies to which they are assigned; and while those cases involve the
interpretation of the Workers Compensation Act and not the Social Security
Act, the two laws being kindred legislations aimed at providing protection to
the employees against the hazards of disability, sickness and death it would
not be improper to adopt a uniform interpretation.
Several considerations constrain us to differ with the views expressed above,
and the conclusion arrived at, by cases Court of Appeals.
The Social Security Act of 1954, in its Section 8, contains, for purposes of social
security coverage, definitions of terms, among which are the following:
(c) Employer. — Any person, natural or juridical,
domestic or foreign, who carries on in the Philippines any
trade, business, industry, undertaking, or activity of any
kind and uses the services of another person who is
under his orders as regards the employment, except the
Government and any of its political subdivisions,
branches or instrumentalities, including corporations
owned or controlled by the Government.
(d) Employee. — Any person who performs services for
an "employer" in which either or both mental and
physical efforts are used and who receives compensation
for such services, where there is an employer-employee
relationship.
Tested against the criteria in Section 8 (c) and (d) of the Act, Cases Philippine
Guards Protection unit must be considered an employer of the thirty-nine
security guards or watchmen, and the latter employees of said respondent.
Private respondent carries on a business — watchmen's service — from which
it derives its income in the form of what it terms "commission". It uses the
services of other persons — the guards or watchmen — to carry on its
business. Without them, cases would not be in business, which consists solely
in the letting out of watchmen's services for a fee. The guards or watchmen
render their services to private respondent by allowing themselves to be
assigned by said respondent, which, furnishes them arms and ammunition,
guard and protect, the properties and interests of private respondents clients,
thus enabling that respondents to fulfill its contractual obligation. Who the
clients will be under what terms and conditions the services will be rendered,
are matters determined not by the guards or the watchmen, but not by private
respondents. On the other hand the client companies have no hand in
selecting who among the guards or watchmen shall be assigned to them. It is
private respondents that issues assignment orders and instruction and
exercise control and supervision over the guard or watchmen, so much so that
if for one reason or another, the client is dissatisfied with a services of a
particular guard the client cannot himself terminate the services of a particular
guard, but has to notify private respondents, which either substitutes with
another or metes out to him disciplinary measures. That in the course of a
watchman's assignment the client conceivably issues instruction to him, does
not in the least detract from the fact that private respondents is the said
employer of the said watchman, for in contemplation such instruction carry
no more weight than mere request, the privity of contract between the client
and private respondents, not between the client, the guardsman or
watchman. Collolarily, such giving out of instructions inevitably spring from
the clients right predicated on the contract for services entered into by it with
private respondents.
In the matter of compensation, there can be question to all the guards or
watchmen receive compensation from private respondents and not from
private companies or establishments whose premises they are guarding. The
fee contracted to be paid by the client is admittedly not equal to the salary of
a guard or a watchman; such fee is arrived at independently of the salary to
which the guard or watchman is entitled under his arrangements with private
respondent. All the fees received by private respondent from its clients
constitute, its gross income; and the salaries it pays to the guards or watchmen
and to its clerk-secretary, its ex for, say, office rent, light, water and telephone
services, licenses, firearms and ammunition, are expenses incurred in the
operation of the business. The net income or profit arrived at after deducting
these expenses from the gross income. Consequently, the term "commission"
as applied to the difference between the fee received from a client and the
salary paid to a guard or watchman is a misnomer and its use by private cases
can alter the relationship of employer and employee between it and the
guards or watchmen.
In defining an employee, sanction 8(d) employs the phrase "who receives
compensation for such services, where is an employer-employee
relationship." Considering our view that the guards or watchmen included in
its roster are private respondent's employees, and considering, further, that
private respondent is bona fide independent contractor, the client companies
may not be deemed employers of said guards or watchmen, pursuant to
Section 8(j) (10), which reads:
Employees of bona fide independent contractors shall
not be deemed employees of the employer engaging the
service of said contractors.
In Viana v. Al-Lagadan and Pica, 99 Phil., 408, 411-412, we said:
In determining the existence of employer-employee
relationship, the following elements are generally
considered, namely: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power
of dismissal and (4) the power to control the employee's
conduct — although the latter is the most important
element (35 AM. Jur. 445). ....
From our earlier discussion it can be seen that all the four
elements enumerated above are present to make out a
relationship of employer and employee between private
cases and its thirty-nine security guards or watchmen.
The cases cited by respondent Court of Appeals, none of which, by the way,
involves an interpretation of the Social Security Act of 1954, are not
applicable. Associated Watchmen and Social Security Union (PTWO), et al. v.
United States Lines, et al., 101 Phil., 896, involved a determination of whether
a labor dispute existed between the watchmen and the companies to which
they were assigned by the watchmen's agencies, and applied Section 2 of
Republic Act No. 875 (The Industrial Peace Act), which defined a labor dispute
as "any controversy concerning terms, tenure ... regardless of whether the
disputants stand in the proximate relation of employer and employee."
Maligaya Ship Watchmen Agency, et al. v. Associated Watchmen And Security
Union (PTWO), 103 Phil., 920, involved the determination of who among the
members of watchmen's agencies should be allowed to take part in
certification elections; and we there held that the watchmen who were
actually guarding the ships and their cargo should be considered laborers or
employees of the shipping lines for purposes of the elections, in view, among
others, of the following considerations:
... [T]here never were contracts between the shipping
lines and their agencies, on the one hand, and the
watchmen agencies-petitioners, on the other. The
guarding of each ship and its cargo was never the subject
of a contract between one and the other. The watchmen
agencies never undertook for a specified sum the
guarding of the vessels and their cargo, were never paid
therefor a lump sum without reference to the number of
watchmen performing the duties of guarding and the
wages that each should receive for his work. ....
The fact situation in the case is quite different from that
in the present, for here there is admittedly a contract
entered into, other orally or in writing, between private
respondent and its client companies, and, precisely, the
guarding of the companies' premises and properties is
 the subject of the contracts. In the payment by the client Paulino Manongdo for petitioners-appellants.
to private respondents of compensation, there is Orlando L. Espinas for respondent-appellee.
reference to the number of watchmen but none to the BARRERA, J.:
wages each shall receive for his work. This is an appeal by Agapita Pajarillo, et al., from the resolution of the Social
In Nicolas, et al. v. Dacara, et al., 106 Phil., 934, the issue was whether a sum Security Commission, denying their petition to be exempted from coverage of
of money in the hands of protective agency representing "salaries of the Social Security System.
guards employed by the different companies affiliated with the detective and There is no controversy as to the facts of this case. Appellants are owners of
protective agency" could be garnished for the payment of back wages fishing boats being used for fishing at sea, namely:
judicially adjudicated in favor of other guards affiliated with the same
Owner Name of Vessel
protective agency. We there held, citing Maligaya Ship Watchmen Agency,
that since the money in question secured by the sheriff represented wages Agapita Pajarillo Bagong Kalayaan
due the guards "from companies that have employed their services, that the
said amount really and actually represents such wages," the same could not Basilio Medina Stella Maris
be attached or garnished for the debts of the protective agency to the other
guards. Again, there is no similarity between that case and the present, for Rosario Relloso Villa Florida
here the security guards or watchmen receive their salaries not from the
companies whose premises and properties they guard, but from private Teofila Campana Salenian
respondent itself. In Compañia Maritima v. Cabagnot Vda. de Hio, et al. 107
Phil., 873, we held that for purposes of workmen's compensation benefits, a Melicia Totanes Nazareno
watchman recruited by a protective agency to guard the premises of a
company should be considered an employee of said company should be Melicia Totanes San Pedro
considered an employee of said company; but there "it was found by the
Ireneo Racelis Ricardo
(Workmen's Compensation) Commission that the salary of the deceased was
paid directly from the funds of petitioner," the Compañia Maritima. It will be
Salvador Boral Villa Rosario
borne in mind, moreover, that in contradistinction with Section 8(j) (10) of the
Social Security Act of 1954 (quoted above), under Section 39 of the Workmen's Cesar King Felipa
Compensation Act the term "employer" includes "the owner or lessee of a
factory or establishment or place of work or any other person who is virtually Ramon King Tacia
the owner or manager of the business carried on in the establishment or place
of work but who, for the reason that there is an independent contractor in the Jaime King Aday
same, or for any other reason, is not the direct employer of laborers employed
there." Amelia Reyes Queen Mary
There are practical considerations why private respondents Philippine Guards
Protection Unit, and not its clients, would be considered, for purposes of social Amelia Reyes Nanay
security coverage, the employer of the 39 guards or watchmen listed in its
roster (a) A watchman is not permanently assigned to a client; for one reason Teofilo Nasis Teresita
or another he may be pulled out of a particular assignment and detailed to
Rosario Reyes Charing Uno
another client. Consequently, different clients have to deduct premiums from
different watchmen at different times and remit them to the System together Rosario Reyes Charing Dos
with the clients' own share of the premiums. (b) Under the arrangements
between private respondents and its the clients, the latter do not determine Aurora Sales Aurora
how much salary is to be plaid to the watchmen. The clients merely pay to
private respondent the fee stipulated in their contracts. How, then, can a client As such property-owners, they enter into agreement1 with the so-
deduct the premiums due from a watchman? And how can it determine the called patrons or pilots, whereby the latter take charge of appellants fishing
amount of the watchman's premium as well as its own? (c) Service performed vessels, equipment, and gear used for fishing. Once entrusted with the
by one person for another is not considered an employment if the same is equipment, the pilot "hires" the crew to man the boat and secures their
"purely casual and not for the purpose of occupation or business of the provisions. This is usually financed from loans obtained in the form of
employer" (Section 8[j][3], Social Security Act of 1954). Under private advances from fish dealers, and payable in kind when the boat returns with
respondent's hypothesis, a watchman may at times be considered an catch from the fishing trip. (pp. 23-24, t.s.n.).
employee and at other times not, depending on whether or not he happens These fishing trips are not regular. The fishermen go out to the sea only when
to be assigned to a client which carries on a trade business, industry, there is no moon or it is not yet very bright. For this reason, even in months of
undertaking or activity of any kind (Section 8[c], supra). A fortiori, of private fine weather, the most that a boat can make are 18 fishing days every month.
respondent's 39 watchmen, some may be covered by the System's plan, while These men have no regular income. If the trip yields a catch, the proceeds
others not. To pursue the matter further, all the 39 watchmen may be covered thereof are divided into three parts: one part goes to the owner of the boat
sometimes, and not at other times. (d) If private respondent's clients are and equipment; one part is set aside to cover expenses like crude oil and for
considered the watchmen's employees, it may happen that the 39 different maintenance of the boat, and the other one-third is divided among the men,
watchmen, have 39 different employers, which absurd, considering that all the with the pilot getting 3 times the share of a crew-member; and the
watchmen are on the payroll and under the supervision of only one entity. "machinist", who tends or operates the engine of the motorized boat,
PREMISES CONSIDERED, the judgment appealed from is reversed and set receiving twice the share of a crew-member. (pp. 9, 23, t.s.n.).
aside. Private respondents membership in the Social Security System from The men (usually 12 for every vessel, including the pilot) are under no
August 1, 1958 up to the present is declared valid and effective. Coverage in obligation to stay in one outfit. Sometimes, they join as members of the crew
the System upon all its employees falling within the required age level, for one night only; sometimes two, or three days. Then, they leave and join
including its security guards or watchmen, is hereby declared compulsory; and other outfits. (pp. 18-19, t.s.n.). Even the pilot himself is not bound to retain
private respondent is directed to pay or remit to petitioner all back premiums his charge for any definite duration. He can return the boat to its owner
due. Costs against private respondent. anytime, if he does not want to manage it anymore. (p. 11, t.s.n.). The vessel-
owners, appellants in the present case, required to register as employers with
G.R. No. L-21930 August 31, 1966
the Social Security System, filed a joint petition with the Social Security
AGAPITA PAJARILLO, ET AL., petitioners-appellants,
Commission, claiming that there exists no employer-employee relationship
vs.
between them and the crew of their fishing vessels, and praying that they be
SOCIAL SECURITY SYSTEM, respondent-appellee.
exempted from the compulsory coverage of the law. After hearing, their
petition was denied, the Commission holding that while the services of the
crew-members are engaged by the pilots, the latter are mere employees or
agents of the boat-owners. Thus, it is contended, a boat-owner can abolish the
employment of the crew-members by withdrawing from the pilot the
authority to take charge of the vessel. Appellants, consequently, were directed
to report their coverage and that of their respective pilots and crew-members
to the Commission and to pay the prescribed premiums pursuant to Sections
18, 19 and 20 of the Republic Act 1161, as amended. The boat-owners filed
the present appeal.
The only issue raised before the Commission and presented in this appeal is,
as stated by the Commission itself, "whether under the facts set forth above,
there exists an employer-employee relationship between the petitioners and
the crew-members of their respective fishing boats within the meaning of
Republic Act 1161, as amended.
Under the law, an employer is a "person, natural or juridical, domestic or
foreign, who carries on in the Philippines any trade, business, industry,
undertaking, or activity of any kind and uses the services of another person
who is under his orders as regards the employment. "2 In the case at bar, the
pilots are not under the orders of the boat-owners as regards their
employment. They go out to sea not upon direction of the boat-owners, but
upon their own volition as to when, how long and where to go fishing. Much
less do the boat-owners in any way control the crew-members with whom the
former have no relationship whatsoever. These crew-members simply join
every trip for which the pilots allow them, without any reference to the owners
of the vessel.
On the other hand, an employee is defined as a "person who performs services
for an 'employer' in which either or both mental and physical efforts are used
and who receives compensation for such services, where there is an employer-
employee relationship."3 In the present case, neither the pilots nor the crew-
members receive compensation from the boat-owners. They only share in
their own catch produced by their own efforts. There is no showing that
outside of their one-third share, the boat-owners have anything to do with the
distribution of the rest of the catch among the pilots and the crew-members.
The latter perform no service for the boat-owners, but mainly for their own
benefit.1äwphï1.ñët
In the undertaking in question, the boat-owners obviously are not responsible
for the wage, salary, or fee of the pilot and crew-members. Their sole
participation in the venture is the furnishing or delivery of the equipment used
for fishing, after which, they merely wait for the boat's return and receive their
share in the catch, if there is any. For this part, a person who joins the outfit is
entitled to a share or participation in the fruit of the fishing trip. If it gives no
return, the men get nothing. It appears to us, therefore, that the undertaking
is in the nature of a joint venture, with the boat-owner supplying the boat and
its equipments, and the pilot and crew-members contributing the necessary
labor, and the parties getting specific shares for their respective contributions.
But, even assuming arguendo that the pilot and crew-members may be
treated as employees of the boat-owners, they cannot also be made subject
to compulsory coverage under the Social Security Act. As previously stated,
the men are under no obligation to remain in the outfit for any definite period.
Thus, one can be the crew-member of an outfit for one day and be the
member of the crew of another vessel the next day. Also, a fishing boat has no
regular schedule of fishing trips. It all depends on the weather and other
natural conditions, and the volition of the pilots and crew-men themselves.
And, even when a fishing trip is completed, it is no assurance of income for the
fishermen and the boat-owner as well. Clearly, the services rendered by the
fishermen are no different from the agricultural labor performed by a share or
leasehold tenant or worker, which is specifically excluded from the definition
of "employment",4 and exempted from the coverage of the Social Security Act.
Add to this the extreme difficulty, if not impossibility, of determining
the monthly wage of earning of these fishermen for the purpose of fixing the
amount of their and the supposed employer's contributions,5 and there is
even reason to exempt the parties to this kind of undertaking from compulsory
registration with the Social security System.
In view of the foregoing considerations, the resolution of the Social Security
Commission appealed from is hereby set aside, and petitioners-appellants are
declared exempted from compulsory coverage of the Social Security law. No
costs. So ordered.
G.R. No. 100388 December 14, 2000
SOCIAL SECURITY SYSTEM, petitioner,
vs.
THE COURT OF APPEALS and CONCHITA AYALDE, respondents.
DECISION
YNARES-SANTIAGO, J.:
In a petition before the Social Security Commission, Margarita Tana, widow of
the late Ignacio Tana, Sr., alleged that her husband was, before his demise, an
employee of Conchita Ayalde as a farmhand in the two (2) sugarcane
plantations she owned (known as Hda. No. Audit B-70 located in Pontevedra,
La Carlota City) and leased from the University of the Philippines (known as
Hda. Audit B-15-M situated in La Granja, La Carlota City). She further alleged
that Tana worked continuously six (6) days a week, four (4) weeks a month,
and for twelve (12) months every year between January 1961 to April 1979.
For his labor, Tana allegedly received a regular salary according to the
minimum wage prevailing at the time. She further alleged that throughout the
given period, social security contributions, as well as medicare and employees
compensation premiums were deducted from Tana’s wages. It was only after
his death that Margarita discovered that Tana was never reported for
coverage, nor were his contributions/premiums remitted to the Social Security
System (SSS). Consequently, she was deprived of the burial grant and pension
benefits accruing to the heirs of Tana had he been reported for coverage.
Hence, she prayed that the Commission issue an order directing:
1. respondents Conchita Ayalde and Antero Maghari as her administrator to
pay the premium contributions of the deceased Ignacio Tana, Sr. and report
his name for SSS coverage; and
2. the SSS to grant petitioner Margarita Tana the funeral and pension benefits
due her.1
The SSS, in a petition-in-intervention, revealed that neither Hda. B-70 nor
respondents Ayalde and Maghari were registered members-employers of the
SSS, and consequently, Ignacio Tana, Sr. was never registered as a member-
employee. Likewise, SSS records reflected that there was no way of verifying
whether the alleged premium contributions were remitted since the
respondents were not registered members-employers. Being the agency
charged with the implementation and enforcement of the provisions of the
Social Security Law, as amended, the SSS asked the Commission’s leave to
intervene in the case.2
In his answer, respondent Antero Maghari raised the defense that he was a
mere employee who was hired as an overseer of Hda. B-70 sometime during
crop years 1964-65 to 1971-72, and as such, his job was limited to those
defined for him by the employer which never involved matters relating to the
SSS. Hence, he prayed that the case against him be dismissed for lack of cause
of action.3
For her part, respondent Ayalde belied the allegation that Ignacio Tana, Sr.
was her employee, admitting only that he was hired intermittently as an
independent contractor to plow, harrow, or burrow Hda. No. Audit B-15-M.
Tana used his own carabao and other implements, and he followed his own
schedule of work hours. Ayalde further alleged that she never exercised
control over the manner by which Tana performed his work as an independent
contractor. Moreover, Ayalde averred that way back in 1971, the University of
the Philippines had already terminated the lease over Hda. B-15-M and she
had since surrendered possession thereof to the University of the Philippines.
Consequently, Ignacio Tana, Sr. was no longer hired to work thereon starting
in crop year 1971-72, while he was never contracted to work in Hda. No. Audit
B-70. She also prayed for the dismissal of the case considering that Ignacio
Tana, Sr. was never her employee.4
After hearing both parties, the Social Security Commission issued a Resolution
on January 28, 1988, the dispositive portion of which reads:
After a careful evaluation of the testimonies of the petitioner and her
witnesses, as well as the testimony of the respondent together with her
documentary evidences, this Commission finds that the late Ignacio Tana was
employed by respondent Conchita Ayalde from January 1961 to March 1979.
The testimony of the petitioner which was corroborated by Agaton Libawas
and Aurelio Tana, co-workers of the deceased Ignacio Tana, sufficienty
established the latter’s employment with the respondent.
As regards respondent Antero Maghari, he is absolved from liability because
he is a mere employee of Conchita Ayalde.
PREMISES CONSIDERED, this Commission finds and so holds that the late
Ignacio Tana had been employed continuously from January 1961 to March
1979 in Hda. B-70 and Hda. B-15-M which are owned and leased, respectively,
by respondent Conchita (Concepcion) Ayalde with a salary based on the
Minimum Wage prevailing during his employment.
Not having reported the petitioner’s husband for coverage with the SSS,
respondent Conchita (Concepcion) Ayalde is, therefore, liable for the payment
of damages equivalent to the death benefits in the amount of P7,067.40 plus
the amount of P750.00 representing funeral benefit or a total of P7,817.40.
Further, the SSS is ordered to pay to the petitioner her accrued pension
covering the period after the 5-year guaranteed period corresponding to the
employer’s liability.
SO ORDERED."5
Respondent Ayalde filed a motion for reconsideration6 which the Commission
denied for lack of merit in an Order dated November 3, 1988.7
Not satisfied with the Commission’s ruling, Ayalde appealed to the Court of
Appeals, docketed as CA-G.R. SP No. 16427, raising the following assignment
of errors:
I where there are conflicting and contradictory findings of fact, this Court has
The Social Security Commission erred in not finding that there is
sufficient evidence to show that:
(a) The deceased Ignacio Tana, Sr. never worked in the
farmland of respondent-appellant situated in
Pontevedra, La Carlota City, otherwise known as
Hacienda No. Audit B-70, (Pontevedra B-70 Farm for
short), in any capacity, whether as a daily or monthly
laborer or as independent contractor;
(b) During the time that respondent-appellant was
leasing a portion of the land of the University of the
Philippines, otherwise known as Hacienda Audit No. B-
15-M, (La Granja B-15 Farm for short), the deceased
Ignacio Tana, Sr. was hired thereat on a ‘pakyaw’ basis,
or as an independent contractor, performing the services
of an ‘arador’ (Plower), for which he was proficient, using
his own carabao and farming implements on his own
time and discretion within the period demanded by the
nature of the job contracted.
II
The Social Security Commission erred in holding that there is no
evidence whatsoever to show that respondent-appellant was no
longer leasing La Granja B-15 Farm.
III
The Social Security Commission erred in not holding that the
deceased Ignacio Tana, having been hired as an independent
contractor on ‘pakyaw’ basis, did not fall within the coverage of the
Social Security Law.8
The Court of Appeals rendered judgment in favor of respondent-appellant
Conchita Ayalde and dismissed the claim of petitioner Margarita Tan.
The SSS, as intervenor-appellee, filed a Motion for Reconsideration, which was
denied on the ground that the arguments advanced are "mere reiterations of
issues and arguments already considered and passed upon in the decision in
question which are utterly insufficient to justify a modification or reversal of
said decision."9
Hence, this petition for review on certiorari on the following assigned errors:
1) The Court of Appeals was in error in ruling that an employee
working under the "pakyaw" system is considered under the law to
be an independent contractor.
2) The Court of Appeals was in error in not giving due consideration
to the fundamental tenet that doubts in the interpretation and
implementation of labor and social welfare laws should be resolved
in favor of labor.
3) The Court of Appeals was in error in disregarding the settled rule
that the factual findings of administrative bodies on matters within
their competence shall not be disturbed by the courts.
4) The Court of Appeals was in error in ruling that even granting
arguendo that Ignacio Tana was employed by Conchita Ayalde, such
employment did not entitle him to compulsory coverage since he
was not paid any regular daily wage or basic pay and he did not work
for an uninterrupted period of at least six months in a year in
accordance with Section 8(j) (1) of the SS Law.
The pivotal issue to be resolved in this petition is whether or not an agricultural
laborer who was hired on "pakyaw" basis can be considered an employee
entitled to compulsory coverage and corresponding benefits under the Social
Security Law.
Petitioner, Social Security System (or SSS), argues that the deceased Ignacio
Tana, Sr., who was hired by Conchita Ayalde on "pakyaw" basis to perform
specific tasks in her sugarcane plantations, should be considered an employee;
and as such, his heirs are entitled to pension and burial benefits.
The Court of Appeals, however, ruled otherwise, reversing the ruling of the
Social Security Commission and declaring that the late Ignacio Tana, Sr. was an
independent contractor, and in the absence of an employer-employee
relationship between Tana and Ayalde, the latter cannot be compelled to pay
to his heirs the burial and pension benefits under the SS Law.
At the outset, we reiterate the well-settled doctrine that the existence of an
employer-employee relationship is ultimately a question of fact.10 And while it
is the general rule that factual issues are not within the province of the
Supreme Court, said rule is not without exception. In cases, such as this one,
not hesitated to scrutinize the records to determine the facts for itself.11Our
disquisition of the facts shall be our guide as to whose findings are supported
by substantial evidence.
The mandatory coverage under the SSS Law (Republic Act No. 1161, as
amended by PD 1202 and PD 1636) is premised on the existence of an
employer-employee relationship, and Section 8(d) defines an "employee" as
"any person who performs services for an employer in which either or both
mental and physical efforts are used and who receives compensation for such
services where there is an employer-employee relationship." The essential
elements of an employer-employee relationship are: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the power of control with regard to the means and methods
by which the work is to be accomplished, with the power of control being the
most determinative factor.12
There is no question that Tana was selected and his services engaged by either
Ayalde herself, or by Antero Maghari, her overseer. Corollarily, they also held
the prerogative of dismissing or terminating Tana’s employment. The dispute
is in the question of payment of wages. Claimant Margarita Tana and her
corroborating witnesses testified that her husband was paid daily wages "per
quincena" as well as on "pakyaw" basis. Ayalde, on the other hand, insists that
Tana was paid solely on "pakyaw" basis. To support her claim, she presented
payrolls covering the period January of 1974 to January of 1976; 13 and
November of 1978 to May of 1979.14
A careful perusal of the records readily show that the exhibits offered are not
complete, and are but a mere sampling of payrolls. While the names of the
supposed laborers appear therein, their signatures are nowhere to be found.
And while they cover the years 1975, 1976 and portions of 1978 and 1979,
they do not cover the 18-year period during which Tana was supposed to have
worked in Ayalde’s plantations. Also an admitted fact is that these exhibits only
cover Hda. B70, Ayalde having averred that all her records and payrolls for the
other plantation (Hda. B-15-M) were either destroyed or lost.15
To our mind, these documents are not only sadly lacking, they are also
unworthy of credence. The fact that Tana’s name does not appear in the
payrolls for the years 1975, 1976 and part of 1978 and 1979, is no proof that
he did not work in Hda. B70 in the years 1961 to 1974, and the rest of 1978
and 1979. The veracity of the alleged documents as payrolls are doubtful
considering that the laborers named therein never affixed their signatures to
show that they actually received the amounts indicated corresponding to their
names. Moreover, no record was shown pertaining to Hda. B-15-M, where
Tana was supposed to have worked. Even Ayalde admitted that she hired Tana
as "arador" and sometimes as laborer during milling in Hda. B-15-M.16 In light
of her incomplete documentary evidence, Ayalde’s denial that Tana was her
employee in Hda. B-70 or Hda. B-15-M must fail.
In contrast to Ayalde’s evidence, or lack thereof, is Margarita Tana’s positive
testimony, corroborated by two (2) other witnesses. On the matter of wages,
they testified as follows:
Margarita Tana:
Q. During the employment of your late husband, was he paid any wages?
A. Yes, he was paid.
Q. What was the manner of payment of his salary, was it on "pakyaw" or daily
basis?
A. Daily basis.
Q. How many times did he receive his salary in a month’s time?
A. 2 times. they were made to acknowledge receipt of their wages by signing on sheets
Q. You mean, payday in Hda. B-70 is every 15 days? of ruled paper, which are different from those presented by Ayalde as
A. Yes, sir. documentary evidence. In fine, we find that the testimonies of Margarita Tana,
xxx xxx xxx Agaton Libawas and Aurelio Tana prevail over the incomplete and inconsistent
ATTY. GALVAN: documentary evidence of Ayalde.
To prove that it is material to the main question because if ever the hacienda In the parallel case of Opulencia Ice Plant and Storage v. NLRC, the petitioners
maintains complete payrolls of their employees, then the burden of proof lies argued that since Manuel P. Esita’s name does not appear in the payrolls of
in the petitioner….. the company it necessarily means that he was not an employee. This Court
HEARING OFFICER: held:
Let the witness answer, if she knows. "Petitioners further argue that ‘complainant miserably failed to present any
WITNESS: documentary evidence to prove his employment. There was no timesheet, pay
There was no payroll, only pad paper. slip and/or payroll/cash voucher to speak of. Absence of these material
ATTY. GALVAN: (continuing) documents are necessarily fatal to complainant’s cause.’
Q. Were the names of workers of the hacienda all listed in that pad paper every We do not agree. No particular form of evidence is required to prove the
payday? existence of an employer-employee relationship. Any competent and relevant
A. Yes, we just sign on pad paper because we have no payroll to be signed. evidence to prove the relationship may be admitted. For, if only documentary
xxx xxx xxx evidence would be required to show that relationship, no scheming employer
Q. What do you understand by payroll? would ever be brought before the bar of justice, as no employer would wish
A. Payroll is the list where the whole laborers are listed and receive their to come out with any trace of the illegality he has authored considering that it
salaries. should take much weightier proof to invalidate a written instrument. Thus, as
Q. And how did that differ from the pad paper which you said you signed? in this case where the employer-employee relationship between petitioners
A. There is a difference. and Esita was sufficiently proved by testimonial evidence, the absence of time
Q. What is the difference? sheet, time record or payroll has become inconsequential."20 (Underscoring
A. In the payroll, at the end there is a column for signature but in the pad ours)
paper, we only sign directly. Clearly, then, the testimonial evidence of the claimant and her witnesses
Q. Did it contain the amount that you receive? constitute positive and credible evidence of the existence of an employer-
A. Yes, sir. employee relationship between Tana and Ayalde. As the employer, the latter
Q. And the date corresponding to the payroll pad? is duty-bound to keep faithful and complete records of her business affairs,
A. I am not sure but it only enumerates our names and then we were given not the least of which would be the salaries of the workers. And yet, the
our salaries. documents presented have been selective, few and incomplete in substance
Q. Now, did you have a copy of that? and content. Consequently, Ayalde has failed to convince us that, indeed, Tana
ATTY. GALVAN: was not her employee.
Objection, Your Honor, it is not the petitioner who had a copy, it is usually the The argument is raised that Tana is an independenent contractor because he
owner because the preparation of the payrolls is done by the employer who….. was hired and paid wages on "pakyaw" basis. We find this assertion to be
ATTY. UNGCO: specious for several reasons.
That is why I’m asking ….. First, while Tana was sometimes hired as an "arador" or plower for
HEARING OFFICER: intermittent periods, he was hired to do other tasks in Ayalde’s plantations.
Let the witness answer. Objection overruled. Ayalde herself admitted as much, although she minimized the extent of Tana’s
WITNESS: labors. On the other hand, the claimant and her witnesses were direct and
I don’t have. firm in their testimonies, to wit:
xxx xxx xxx MARGARITA TANA:
Q. When you are receiving daily wage of P4.00 how much was your quincenal Q. Was your late husband’s work continuous or not?
together with your husband? A. His work was continuous except on Sundays.
A. The highest salary I received for my own was P30.00 in one quincena. Q. Mrs. Witness, in January 1961, how many days in a week did your late
Q. What about the salary of your husband, how much? husband work?
A. The same. A. 4 weeks in January 1961.
Q. Was this P30.00 per quincena later on increased? Q. And how many months for that year did he work?
A. There was an increase because formerly it was P4.00 now it is P8.00. A. 12 months.
Q. In 1979 how much was your husband’s salary per quincena? Q. Is this working pattern of your husband, considering that you testified that
A. In one quincena my husband receives P60.00 while I only receive P30.00.17 he worked continuously, the same all throughout his employment from 1961
AGATON LIBAWAS: to 1978?
Q. During your employment, do you sign payrolls everytime you draw your A. Yes, he worked continuously from 1961 to 1978 for 6 days a week, 4 weeks
salary? a month and 12 months each year.
A. We sign on intermediate pad. Q. Mrs. Witness, how many months did your husband work in 1979
Q. You mean, the practice of the hacienda is to have the names of the laborers considering that he died in 1979?
receiving that salaries listed on that intermediate pad? A. 3 months.
A. Yes, sir.18 Q. What was the nature of the work of your late husband from 1961 until his
AURELIO TANA: death in 1979?
Q. By the way, how many times did you receive your salaries in a month? A. Cutting canes, hauling canes with the use of canecarts, plowing, hauling
A. We receive our wages twice a month that is, every 15 days. fertilizers, weeding and stubble cleaning.
Q. Did you sign payrolls everytime you received your salaries? xxx xxx xxx
A. In the pad paper as substitute payroll. Q. Now, the other co-workers of yours, you said they were Agaton Libawas,
Q. Do you know if all the workers of the hacienda were listed in that payrolls? Narciso Dueñas, Juan Dueñas, and Aurelio Tana, what were their jobs?
A. Yes, sir. A. Hauling canes by the use of bull carts and cutting canes. Their works are the
Q. Who was in charge in giving your salaries? same with that of my husband’s.
A. Antero Maghari.19 Q. But you mentioned among the duties of your husband as "arador" meaning
These witnesses did not waver in their assertion that while Tana was hired by – plowing the fields?
Ayalde as an "arador" on "pakyaw" basis, he was also paid a daily wage which A. Yes, he was also plowing because that is one of his duties.21
Ayalde’s overseer disbursed every fifteen (15) days. It is also undisputed that AGATON LIBAWAS:
Q. How about petitioner Margarita Tana and the late Ignacio Tana, were they
regular workers, or extra workers?
A. They were regular workers.
Q. In your case, Mr. Witness, considering that according to you, you are only
a relief worker, please inform the Commission how many months each year
from 1961 to 1984 did you work in Hda. B-70 and Hda. B-15M with Conchita
Ayalde?
A. During milling season, I worked 2 months, during cultivation if they are short
of plowers then they would call me to work for at least 3 months as a plower.
Q. So, all in all, each year, from 1961 to 1984 your average working months in
Hda. B-70 and B-15M are 5 months each year?
A. Yes, sir.
Q. Mr. Witness, to prove that you have worked there, will you please inform
at least 5 laborers of Hda. B-70 and B-15M of Conchita Ayalde?
A. Juan Dueñas, Narciso Dueñas, Aurelio Tana, Ignacio and Margarita Tana.
xxx xxx xxx
Q. Will you please inform the Commission if the deceased Ignacio Tana which
is according to you, was a regular worker of the 2 haciendas, if how many
months did he work during lifetime from 1961 until he died in 1979?
A. His work was continuous.
Q. And by continuous you mean he worked straight 12 months each year
except in 1979?
A. He worked only for 10 months because the 2 months are already
preparation for cultivation.
xxx xxx xxx
Q. And according to you, in a year’s time, you worked only for at least 5 months
in Hda. B-70 and B-15M, is that correct?
A. Yes.
Q. And during this time that you are working in your riceland you will agree
with me that you do not know whether the laborers of this Hda. B-70 and Had
B-15M are really working because you are devoting your time in your riceland,
is that correct?
A. I knew because the place of their work is just near my house, it is along the
way.
Q. How about when the canes are already tall, can you actually see the workers
in Hda. B-70 and B-15M when you are busy at your riceland?
A. Yes, because they have to pass in my house.
Q. Is there no other passage in that hacienda except that road in front of your
house?
A. Yes.
Q. Are you sure about that?
A. Yes, I am sure.22
AURELIO TANA:
Q. Do you know what is the work of the petitioner during the time when you
were together working in the field?
A. We were working together, like cutting and loading canes, hoeing, weeding,
applying fertilizers, digging canals and plowing.
Q. During your employment in the said hacienda where were you residing?
A. There inside the hacienda.
Q. What about the petitioner?
A. The same.
Q. How far is your house from the house of the petitioner?
A. About 20 arms-length.
Q. How far is Hda. B-70 from Hda. B-15.
A. It is very near it is divided by the road.
Q. What road are you referring to?
A. Highway road from Barangay Buenavista to La Granja.
Q. During your employment will you please inform the Commission the
frequency of work of the late Ignacio Tana?
A. 4 weeks a month, 6 days a week, 12 months a year.
Q. Why is it that you are in a position to inform the Commission about the
period of employment of Ignacio Tana?
A. Because we were together working.23
It is indubitable, therefore, that Tana worked continuously for Ayalde, not only
as "arador" on "pakyaw" basis, but as a regular farmhand, doing backbreaking
jobs for Ayalde’s business. There is no shred of evidence to show that Tana
was only a seasonal worker, much less a migrant worker. All witnesses,
including Ayalde herself, testified that Tana and his family resided in the
plantation. If he was a mere "pakyaw" worker or independent contractor, then
there would be no reason for Ayalde to allow them to live inside her property
for free. The only logical explanation is that he was working for most part of
the year exclusively for Ayalde, in return for which the latter gratuitously
allowed Tana and his family to reside in her property.
The Court of Appeals, in finding for Ayalde, relied on the claimant’s and her
witnesses’ admission that her husband was hired as an "arador" on "pakyaw"
basis, but it failed to appreciate the rest of their testimonies. Just because he
was, for short periods of time, hired on "pakyaw" basis does not necessarily
mean that he was not employed to do other tasks for the remainder of the
year. Even Ayalde admitted that Tana did other jobs when he was not hired to
plow. Consequently, the conclusion culled from their testimonies to the effect
that Tana was mainly and solely an "arador" was at best a selective
appreciation of portions of the entire evidence. It was the Social Security
Commission that took into consideration all the documentary and testimonial
evidence on record.
Secondly, Ayalde made much ado of her claim that Tana could not be her
employee because she exercised no control over his work hours and method
of performing his task as "arador." It is also an admitted fact that Tana, Jr. used
his own carabao and tools. Thus, she contends that, applying the "control
test," Tana was not an employee but an independent contractor.
A closer scrutiny of the records, however, reveals that while Ayalde herself
may not have directly imposed on Tana the manner and methods to follow in
performing his tasks, she did exercise control through her overseer.
Be that as it may, the power of control refers merely to the existence of the
power. It is not essential for the employer to actually supervise the
performance of duties of the employee; it is sufficient that the former has a
right to wield the power.24 Certainly, Ayalde, on her own or through her
overseer, wielded the power to hire or dismiss, to check on the work, be it in
progress or quality, of the laborers. As the owner/lessee of the plantations,
she possessed the power to control everyone working therein and everything
taking place therein.
Jurisprudence provides other equally important considerations which support
the conclusion that Tana was not an independent contractor. First, Tana
cannot be said to be engaged in a distinct occupation or business. His carabao
and plow may be useful in his livelihood, but he is not independently engaged
in the business of farming or plowing. Second, he had been working exclusively
for Ayalde for eighteen (18) years prior to his demise. Third, there is no dispute
that Ayalde was in the business of growing sugarcane in the two plantations
for commercial purposes. There is also no question that plowing or preparing
the soil for planting is a major part of the regular business of Ayalde.
Under the circumstances, the relationship between Ayalde and Tana has more
of the attributes of employer-employee than that of an independent
contractor hired to perform a specific project. In the case of Dy Keh Beng v.
International Labor,25 we cited our long-standing ruling in Sunripe Coconut
Products Co. v. Court of Industrial Relations, to wit:
"When a worker possesses some attributes of an employee and others of an
independent contractor, which make him fall within an intermediate area, he
may be classified under the category of an employee when the economic facts
of the relations make it more nearly one of employment than one of
independent business enterprise with respect to the ends sought to be
accomplished." (Underscoring Ours)26
We find the above-quoted ruling to be applicable in the case of Tana. There is
preponderance of evidence to support the conclusion that he was an
employee rather than an independent contractor.
The Court of Appeals also erred when it ruled, on the alternative, that if ever
Tana was an employee, he was still ineligible for compulsory coverage because
he was not paid any regular daily wage and he did not work for an
uninterrupted period of at least six months in a year in accordance with
Section 8(j) (I) of the Social Security Law. There is substantial testimonial
evidence to prove that Tana was paid a daily wage, and he worked
continuously for most part of the year, even while he was also occasionally
called on to plow the soil on a "pakyaw" basis. As a farm laborer who has
worked exclusively for Ayalde for eighteen (18) years, Tana should be entitled
to compulsory coverage under the Social Security Law, whether his service was
continuous or broken.
Margarita Tana alleged that SSS premiums were deducted from Tana’s salary,
testifying, thus:
Q. Were there deductions from the salaries of your husband while he was
employed with the respondent from 1961 to 1979?
A. Yes, there were deductions but I do not know because they were the ones
deducting it.1âwphi1
Q. Why do you know that his salaries were deducted for SSS premiums?
A. Because Antero Maghari asked me and my husband to sign SSS papers and
he told us that they will take care of everything.
Q. How much were the deductions every payday?
A. I do not know how much because our daily wage was only P4.00.27
Agaton Libawas, also testified:
Q. Mr. Witness, in your 15-day wages do you notice any deductions from it?
A. There were deductions and we were informed that it was for SSS.
Q. Mr. Witness, since when were there deductions from your salaries?
A. Since 1961.
Q. Up to when?
A. Up to 1979.
Q. Mr. Witness, are you a member of the SSS?
A. No.
Q. How about petitioner, if you know?
A. No, also.
Q. What happened to the deductions did you not ask your employer?
A. We asked but we were answered that we were being remitted for our SSS.
Q. Did you not verify?
A. No, because I just relied on their statement.28
Ayalde failed to counter these positive assertions. Even on the assumption
that there were no deductions, the fact remains that Tana was and should
have been covered under the Social Security Law. The circumstances of his
employment place him outside the ambit of the exception provided in Section
8(j) of Republic Act No. 1611, as amended by Section 4 of R.A. 2658.
WHEREFORE, in view of all the foregoing, the Decision of the Court of Appeals
in C.A.-G.R. SP No. 16427 and the Resolution dated June 14, 1991 are hereby
REVERSED and SET ASIDE. The Resolution of the Social Security Commission in
SSC Case No. 8851 is REINSTATED.
No costs.
SO ORDERED.
G.R. No. L-21642 July 30, 1966
SOCIAL SECURITY SYSTEM, petitioner-appellee,
vs.
CANDELARIA D. DAVAC, ET AL., respondents;
LOURDES Tuplano, respondent-appellant.
J. Ma. Francisco and N. G. Bravo for respondent-appellant.
Office of the Solicitor General Arturo A. Alafriz, Solicitor Camilo D. Quiason and
E. T. Duran for petitioner-appellee.
BARRERA, J.:
This is an appeal from the resolution of the Social Security Commission
declaring respondent Candelaria Davac as the person entitled to receive the
death benefits payable for the death of Petronilo Davac.
The facts of the case as found by the Social Security Commission, briefly are:
The late Petronilo Davac, a former employee of Lianga Bay Logging Co., Inc.
became a member of the Social Security System (SSS for short) on September
1, 1957. As such member, he was assigned SS I.D. No. 08-007137. In SSS form
E-1 (Member's Record) which he accomplished and filed with the SSS on
November 21, 1957, he designated respondent Candelaria Davac as his
beneficiary and indicated his relationship to her as that of "wife". He died on
April 5, 1959 and, thereupon, each of the respondents (Candelaria Davac and
Lourdes Tuplano) filed their claims for death benefit with the SSS. It appears
from their respective claims and the documents submitted in support thereof,
that the deceased contracted two marriages, the first, with claimant Lourdes
Tuplano on August 29, 1946, who bore him a child, Romeo Davac, and the
second, with Candelaria Davac on January 18, 1949, with whom he had a
minor daughter Elizabeth Davac. Due to their conflicting claims, the processing
thereof was held in abeyance, whereupon the SSS filed this petition praying
that respondents be required to interpose and litigate between themselves
their conflicting claims over the death benefits in question.1äwphï1.ñët
On February 25, 1963, the Social Security Commission issued the resolution
referred to above, Not satisfied with the said resolution, respondent Lourdes
Tuplano brought to us the present appeal.
The only question to be determined herein is whether or not the Social
Security Commission acted correctly in declaring respondent Candelaria Davac
as the person entitled to receive the death benefits in question.
Section 13, Republic Act No. 1161, as amended by Republic Act No. 1792, in
force at the time Petronilo Davac's death on April 5, 1959, provides:
1. SEC. 13. Upon the covered employee's death or total and
permanent disability under such conditions as the Commission may
define, before becoming eligible for retirement and if either such
death or disability is not compensable under the Workmen's
Compensation Act, he or, in case of his death, his beneficiaries, as
recorded by his employer shall be entitled to the following benefit:
... . (emphasis supplied.)
Under this provision, the beneficiary "as recorded" by the employee's
employer is the one entitled to the death benefits. In the case of Tecson vs.
Social Security System, (L-15798, December 28, 1961), this Court, construing
said Section 13, said:
It may be true that the purpose of the coverage under the Social
Security System is protection of the employee as well as of his
family, but this purpose or intention of the law cannot be enforced
to the extent of contradicting the very provisions of said law as
contained in Section 13, thereof, ... . When the provision of a law
are clear and explicit, the courts can do nothing but apply its clear
and explicit provisions (Velasco vs. Lopez, 1 Phil, 270; Caminetti vs.
U.S., 242 U.S. 470, 61 L. ed. 442).
But appellant contends that the designation herein made in the person of the
second and, therefore, bigamous wife is null and void, because (1) it
contravenes the provisions of the Civil Code, and (2) it deprives the lawful wife
of her share in the conjugal property as well as of her own and her child's
legitime in the inheritance.
As to the first point, appellant argues that a beneficiary under the Social
Security System partakes of the nature of a beneficiary in life insurance policy
and, therefore, the same qualifications and disqualifications should be
applied.
Article 2012 of the New Civil Code provides:
ART. 2012. Any person who is forbidden from receiving any
donation under Article 739 cannot be named beneficiary of a life
insurance policy by the person who cannot make any donation to
him according to said article.
And Article 739 of the same Code prescribes:
ART. 739. The following donations shall be void:
(1) Those made between persons who were guilty of adultery or
concubinage at the time of the donation;
xxx xxx xxx
Without deciding whether the naming of a beneficiary of the benefits accruing
from membership in the Social Security System is a donation, or that it creates
a situation analogous to the relation of an insured and the beneficiary under
a life insurance policy, it is enough, for the purpose of the instant case, to state
that the disqualification mentioned in Article 739 is not applicable to herein
appellee Candelaria Davac because she was not guilty of concubinage, there
being no proof that she had knowledge of the previous marriage of her
husband Petronilo.1
Regarding the second point raised by appellant, the benefits accruing from
membership in the Social Security System do not form part of the properties
of the conjugal partnership of the covered member. They are disbursed from
a public special fund created by Congress in pursuance to the declared policy
of the Republic "to develop, establish gradually and perfect a social security
system which ... shall provide protection against the hazards of disability,
sickness, old age and death."2
The sources of this special fund are the covered employee's contribution
(equal to 2-½ per cent of the employee's monthly compensation);3 the
employer's contribution (equivalent to 3-½ per cent of the monthly
compensation of the covered employee);4 and the Government contribution
which consists in yearly appropriation of public funds to assure the
maintenance of an adequate working balance of the funds of the
System.5 Additionally, Section 21 of the Social Security Act, as amended by
Republic Act 1792, provides:
SEC. 21. Government Guarantee. — The benefits prescribed in this
Act shall not be diminished and to guarantee said benefits the
Government of the Republic of the Philippines accepts general
responsibility for the solvency of the System.
From the foregoing provisions, it appears that the benefit receivable under the
Act is in the nature of a special privilege or an arrangement secured by the
law, pursuant to the policy of the State to provide social security to the
workingmen. The amounts that may thus be received cannot be considered as
property earned by the member during his lifetime. His contribution to the
fund, it may be noted, constitutes only an insignificant portion thereof. Then,
the benefits are specifically declared not transferable,6 and exempted from
tax legal processes, and lien.7Furthermore, in the settlement of claims
thereunder the procedure to be observed is governed not by the general
provisions of law, but by rules and regulations promulgated by the
Commission. Thus, if the money is payable to the estate of a deceased
member, it is the Commission, not the probate or regular court that
determines the person or persons to whom it is payable.8 that the benefits
under the Social Security Act are not intended by the lawmaking body to form
part of the estate of the covered members may be gathered from the
subsequent amendment made to Section 15 thereof, as follows:
SEC. 15. Non-transferability of benefit. — The system shall pay the
benefits provided for in this Act to such persons as may be entitled
thereto in accordance with the provisions of this Act. Such benefits
are not transferable, and no power of attorney or other document
executed by those entitled thereto in favor of any agent, attorney,
or any other individual for the collection thereof in their behalf shall
be recognized except when they are physically and legally unable to
collect personally such benefits: Provided, however, That in the case
of death benefits, if no beneficiary has been designated or the
designation there of is void, said benefits shall be paid to the legal
heirs in accordance with the laws of succession. (Rep. Act 2658,
amending Rep. Act 1161.)
In short, if there is a named beneficiary and the designation is not invalid (as it
is not so in this case), it is not the heirs of the employee who are entitled to
receive the benefits (unless they are the designated beneficiaries themselves).
It is only when there is no designated beneficiaries or when the designation is
void, that the laws of succession are applicable. And we have already held that
the Social Security Act is not a law of succession.9
Wherefore, in view of the foregoing considerations, the resolution of the
Social Security Commission appealed from is hereby affirmed, with costs
against the appellant.
So ordered.
TAN V. BALLENA
CHICO-NAZARIO, J.:
Assailed in this Petition for Review on Certiorari1 under Rule 45 of the Rules of
Court are the Decision2 and Resolution3 of the Court of Appeals dated 30
September 2004 and 9 May 2005, respectively, in CA-G.R. SP No. 79101. The
appellate court's Decision set aside the Resolutions4 of the Department of
Justice (DOJ) dated 19 March 2002 and 9 August 2002, and reinstated the Final
Resolution5 of the Provincial Prosecutor in I.S. Nos. 01-03-1007, 01-04-1129
and 01-04-1130, which ordered the filing of two (2) informations against
petitioners Antonio Tan, Danilo Domingo and Robert Lim. The appellate
court's Resolution denied petitioners' Motion for Reconsideration.
The factual and procedural antecedents of the case are as follows:
Petitioners Antonio Tan, Danilo Domingo and Robert Lim were officers of
Footjoy Industrial Corporation (Footjoy), a domestic corporation engaged in
the business of manufacturing shoes and other kinds of footwear, prior to the
cessation of its operations sometime in February 2001.
On 19 March 2001, respondent Amelito Ballena,6 and one hundred thirty-nine
(139) other employees of Footjoy, filed a Joint Complaint-Affidavit7 before the
Office of the Provincial Prosecutor of Bulacan against the company and
petitioners Tan and Domingo in their capacities as owner/president and
administrative officer, respectively.8
The Complaint-Affidavit alleged that the company did not regularly report the
respondent employees for membership at the Social Security System (SSS) and
that it likewise failed to remit their SSS contributions and payment for their
SSS loans, which were already deducted from their wages.
According to respondents, these acts violated Sections 9, 10, 22 and 24,
paragraph (b) of Republic Act No. 1161, as amended by Republic Act No.
8282;9 as well as Section 28, paragraphs (e), (f), and (h) thereof, in relation to
Article 315 of the Revised Penal Code, the pertinent portions of which read:
SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon
all employees not over sixty (60) years of age and their employers:
x x x Provided, finally, That nothing in this Act shall be construed as
a limitation on the right of employers and employees to agree on
and adopt benefits which are over and above those provided under
this Act.
SEC. 10. Effective Date of Coverage. - Compulsory coverage of the
employer shall take effect on the first day of his operation and that
of the employee on the day of his employment: x x x.
SEC. 22. Remittance of Contributions. -- (a) The contribution
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. If
deemed expedient and advisable by the Commission, the collection
and remittance of contributions shall be made quarterly or semi-
annually in advance, the contributions payable by the employees to
be advanced by their respective employers: Provided, That upon
separation of an employee, any contribution so paid in advance but
not due shall be credited or refunded to his employer.
(b) The contributions payable under this Act in cases where an
employer refuses or neglects to pay the same shall be collected by
the SSS in the same manner as taxes are made collectible under the
National Internal Revenue Code, as amended. Failure or refusal of
the employer to pay or remit the contributions herein prescribed
shall not prejudice the right of the covered employee to the
benefits of the coverage.
The right to institute the necessary action against the employer may
be commenced within twenty (20) years from the time the
delinquency is known or the assessment is made by the SSS, or from
the time the benefit accrues, as the case may be.
(c) Should any person, natural or juridical, defaults in any payment
of contributions, the Commission may also collect the same in
either of the following ways:
1. By an action in court, which shall hear and dispose of
the case in preference to any other civil action; x x x.
SEC. 24. Employment Records and Reports. -
xxxx
(b) Should the employer misrepresent the true date of
employment of the employee member or remit to the
SSS contributions which are less than those required in
this Act or fail to remit any contribution due prior to the
date of contingency, resulting in a reduction of benefits,
the employer shall pay to the SSS damages equivalent to
the difference between the amount of benefit to which
the employee member or his beneficiary is entitled had
the proper contributions been remitted to the SSS and
the amount payable on the basis of the contributions
actually remitted: x x x.
SEC. 28. Penal Clause. -
xxxx
(e) Whoever fails or refuses to comply with the
provisions of this Act or with the rules and regulations
promulgated by the Commission, shall be punished by a
fine of not less than Five thousand pesos (P5,000.00) nor
more than Twenty thousand pesos (P20,000.00), or
imprisonment for not less than six (6) years and one (1)
day nor more than twelve (12) years, or both, at the
discretion of the court: Provided, That, where the
violation consists in failure or refusal to register
employees or himself, in case of the covered self-
employed, or to deduct contributions from the
employees' compensation and remit the same to the
SSS, the penalty shall be a fine of not less Five thousand
pesos (P5,000.00) nor more than Twenty thousand pesos
(P20,000.00) and imprisonment for not less than six (6)
years and one (1) day nor more than twelve (12) years.
 (f) If the act or omission penalized by this Act be
committed by an association, partnership, corporation
or any other institution, its managing head, directors or
partners shall be liable to the penalties provided in this
Act for the offense.
xxxx
(h) Any employer who after deducting the monthly
contributions or loan amortizations from his employee's
compensation, fails to remit the said deductions to the
SSS within thirty (30) days from the date they became
due shall be presumed to have misappropriated such
contributions or loan amortizations and shall suffer the
penalties provided in Article Three hundred fifteen of the
Revised Penal Code.
Art. 315. Swindling (estafa). - Any person who shall defraud another
by any of the means mentioned hereinbelow shall be punished by:
xxxx
1. With unfaithfulness or abuse of confidence, namely:
xxxx
(b) By misappropriating or converting, to the prejudice of
another, money, goods, or any other personal property
received by the offender in trust or on commission, or
for administration, or under any other obligation
involving the duty to make delivery of or to return the
same, even though such obligation be totally or partially
guaranteed by a bond; or by denying having received
such money, goods, or other property.
Respondents also alleged their entitlement to actual and exemplary damages
and attorney's fees.
In their Joint Counter-Affidavit,10 petitioners Tan and Domingo blamed the
economic distress that beset their company for their failure to timely pay and
update the monthly SSS contributions of the employees. They alleged that the
company's dire situation became even more aggravated when the buildings
and equipment of Footjoy were destroyed by fire on 4 February 2001.11 This
incident eventually led to the cessation of the company's operations. Because
of this, some of the company's employees tried to avail themselves of their
SSS benefits but failed to do so. It was then that the employees filed their
complaint.
Petitioners Tan and Domingo thereafter underlined their good faith and lack
of criminal culpability when they acknowledged their fault and demonstrated
their willingness to pay their obligations by executing a memorandum of
agreement with the SSS on 10 April 2001, the pertinent portions of which read:
April 10, 2001
FOOTJOY INDUSTRIAL CORPORATION
Antonio Tan
President
Mercado St., Guiguinto, Bulacan
Dear Mr. Antonio Tan,
Pursuant to Office Order No. 141-V dated February 2, 1995, your
application to pay on installment the amount of P5,227,033.66
representing SS premium contribution and penalties for the period
August 2000 up to January 2001 is hereby approved subject,
however, to the following terms and conditions:
1. That the amount of P5,227,033.66 be paid in twenty-four (24)
monthly installment (sic):
xxxx
2. Upon payment, you are hereby directed to submit to us within
three days the official receipt as proof of payment of the monthly
installment; and,
3. That in the event of default in the payment of at least two (2)
monthly installments or non-compliance with the payment plan,
the employer's total outstanding obligations shall become due and
demandable without need of further notice otherwise, we will
pursue legal action against you.
Please be guided accordingly.
Very truly yours,
(Signed) Maylene M. Sanchez
Branch Head
CONFORME:
(Signed) Antonio Tan12
On 17 May 2001, the Assistant Provincial Prosecutor issued a Joint
Resolution,13 which found probable cause to charge Footjoy, Antonio Tan, and
Danilo Domingo with violations of Sections 9, 10 and 24, paragraph (b) in
relation to Section 28, paragraphs (e), (f) and (h) of the Social Security Law. On
the other hand, the charge for the violation of Article 315, paragraph 1(b) of
the Revised Penal Code was dismissed, as the same was deemed absorbed by
the violations under the SSS Law, but the penalty imposed by the former law
would be applied whenever appropriate. The Provincial Prosecutor approved
the above Resolution on 29 May 2001 and affirmed the filing of informations
against petitioners Tan and Domingo.
On 14 June 2001, respondents filed a Motion14 to implead five additional party
respondents purportedly for being "owners and/or responsible officers" of
Footjoy, in accordance with the above-mentioned Section 28 paragraph (f) of
the SSS Law.
Meanwhile, on 29 June 2001, petitioners filed a Motion for
Reconsideration15 of the above Joint Resolution.
The Assistant Provincial Prosecutor issued a Final Resolution 16 on 20 August
2001, the dispositive portion of which provides:
Accordingly, the original resolution is modified by impleading
therein as additional respondent Robert Lim.17On the other hand,
two informations (one count each) for violation of Sec. 9 in relation
to Sec. 10 and, Sec. 24(b) should be prepared for filing in court. All
the rest found in the original resolution are maintained.
On 20 September 2001, the Provincial Prosecutor issued a Supplementary
Resolution,18 which clarified the last statement in the Final Resolution, stating
that:
Let it, therefore, be understood and for which this supplementary
resolution is being issued, that the last recommendation of Pros. F.
F. Malapit was approved as [to] the filing of two informations as
contained in his approved original resolution, that is, violations of
Sec. 9, 10 & 24(b) in relation to Sec. 28, pars. (e) (f) and (h) of R.A.
1161, as amended.
Thus, on 28 September 2001, the Provincial Prosecutor filed two informations
against petitioners Tan, Domingo and Lim in Branch 18 of the Regional Trial
Court (RTC) of Bulacan. Criminal Case No. 2592-M-200119 charged petitioners
Tan, Domingo and Lim with violation of Section 9 in relation to Section 10 and
Section 28, paragraph (e) of the Social Security Law. On the other hand,
Criminal Case No. 2593-M-2001 charged petitioners with violation of Section
24 paragraph (b) in relation to Section 28, paragraph (h) of said law.
On 13 November 2001, petitioners filed a Petition for Review20 with the DOJ,
alleging, inter alia, that the Assistant Prosecutor committed grave and
manifest error when he found probable cause to charge them with the alleged
offenses.
Due to the pendency of the above petition, petitioners filed with the RTC of
Bulacan a motion for the suspension of their scheduled arraignment21 in the
criminal cases, in accordance with Section 11, paragraph (c) of Rule 116 22 of
the Revised Rules of Criminal Procedure.23
On 19 March 2002, the DOJ resolved to grant the petition for review,24 stating:
WHEREFORE, the assailed resolution is REVERSED. The Provincial
Prosecutor of Bulacan is hereby directed to cause the withdrawal of
the informations for violation of the Social Security Law earlier filed
against respondents Antonio Tan, Danilo Domingo, and Robert Lim
and to report the action thereon within ten (10) days from receipt
thereof.
Respondents filed a Motion for Reconsideration25 of the DOJ resolution, but
the same was denied in a Resolution26dated 9 August 2002.
On 16 October 2002, respondents filed with the Court of Appeals a Petition
for Certiorari27 under Rule 65 of the Revised Rules of Court, which was
docketed as CA-G.R. SP No. 79101. Respondents claimed that the DOJ
committed grave abuse of discretion amounting to lack or excess of
jurisdiction in finding that no probable cause existed to charge petitioners Tan,
Domingo and Lim with violations of the SSS Law; that the allegation of
petitioners' failure to report respondents to the SSS for coverage is not
supported by evidence; and that charges [for the violation] of a special law
such as the Social Security Act can be overcome by a show of good faith and
lack of intent to commit the same.
In a Resolution28 issued on 29 November 2002, the Court of Appeals dismissed
outright the above petition because only respondents Zenaida Borlongan and
Francis Bulaong, who did not possess a special power of attorney empowering
them to sign on behalf of the other respondents, signed the certification of
non-forum shopping. The petition was also filed only on 16 October 2002 or
one day beyond the reglementary period, which ended on 15 October 2002.
Respondents then filed a Motion for Reconsideration29 of the appellate court's
resolution, contending that the procedural lapses committed by their counsel
were honest and excusable mistakes and that the same should give way to
their meritorious case. They, likewise, prayed for the admission of a Special
Power of Attorney30 that authorized Mercy Santomin, Zenaida Borlongan and
Ronaldo Nicol to sign court pleadings and documents on their behalf.
Before resolving the respondents' motion, the Court of Appeals directed the
respondents to amend their petition by impleading as party petitioners the
two hundred thirty-eight (238) other employees of Footjoy, whose names
were not included in the title of the original petition, but were merely
contained in an annexed document.31 On 13 March 2003, respondents filed
their amended petition, which was signed by only one hundred eighty
employees.32
On 2 June 2003, the Court of Appeals rendered a Resolution33 which granted
the respondents' Motion for Reconsideration of the 29 November 2002
resolution and admitted the amended petition.
After requiring the parties to comment, the Court of Appeals issued the
assailed Decision dated 30 September 2004, the dispositive portion of which
reads:
WHEREFORE, premises considered, the resolutions of the
Department of Justice dated March 19, 2002 and August 9, 2002
are VACATED and SET ASIDE, while the final resolution of the
Provincial Prosecutor of Bulacan dated August 20, 2001
is REINSTATED.34
In reversing the DOJ resolutions, the Court of Appeals ruled that the agency
acted with grave abuse of discretion when it committed a palpable mistake in
dismissing the charges against petitioners. The appellate court found that
petitioners were indeed remiss in their duty to remit the respondents' SSS
contributions in violation of Section 28(h) of the Social Security Law. The
petitioners' claim of good faith and the absence of criminal intent should not
have been considered, as these were evidentiary in nature and should thus be
more properly proved in a trial. Furthermore, the appellate court declared that
said defenses are unavailing in crimes punishable by a special law, which are
characterized as mala prohibita. In these crimes, it is enough that they were
done freely and consciously and that the intent to commit the same need not
be proved.
Petitioners moved for a reconsideration35 of the above decision, but the same
was denied by the Court of Appeals in a Resolution36 dated 9 May 2005, the
dispositive portion of which reads:
WHEREFORE, for lack of merit, the motion for reconsideration
is DENIED.
Petitioners now come before us, pleading that we reverse the assailed
decision and resolution of the Court of Appeals as we rule on the following
issues:
I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
GRIEVOUS ERROR AND ACTED WITHOUT JURISDICTION WHEN IT
GAVE DUE COURSE TO THE RESPONDENTS' PETITION
FOR CERTIORARI DESPITE THE FACT THAT IT WAS FILED OUT [OF]
TIME.
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED
GRIEVOUS ERROR WHEN IT GAVE DUE COURSE TO THE
RESPONDENTS' PETITION FOR CERTIORARI DESPITE THE FACT THAT
THE TWO (2) SIGNATORIES THEREAT WERE NOT ABLE TO SHOW
THAT THEY WERE DULY AUTHORIZED BY THE OTHER PETITIONERS
TO FILE THE PETITION ON THEIR BEHALF.
III.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED SERIOUS
ERROR WHEN IT REVERSED THE RESOLUTION OF THE DOJ WHICH
FOUND OUT THAT THE PETITIONERS COULD NOT BE INDICTED FOR
ANY VIOLATION OF THE SSS LAW FOR WANT OF PROBABLE
CAUSE.37
Petitioners' case centers on the alleged error of the Court of Appeals in giving
due course to a formally defective petition. Respondents, on the other hand,
pray for a liberal interpretation of the rules in pleading for their cause.
We find that the petition lacks merit.
Procedurally, petitioners argue that the Court of Appeals gravely erred in
taking cognizance of the respondents' Petition for Certiorari even if the
original petition was filed one day beyond the reglementary period allowed by
the rules, and the two signatories therein were not shown to have been
properly authorized by their co-petitioners to file the petition.
Section 1, Rule 65 of the Rules of Court provides for the requirements for filing
a Petition for Certiorari, namely:
Section 1. Petition for certiorari. When any tribunal, board or officer
exercising judicial or quasi-judicial functions has acted without or in
excess of its or his jurisdiction, or with grave abuse of discretion
amounting to lack or excess of jurisdiction, and there is no appeal,
nor any plain, speedy, and adequate remedy in the ordinary course
of law, a person aggrieved thereby may file a verified petition in the
proper court, alleging the facts with certainty and praying that
judgment be rendered annulling or modifying the proceedings of
such tribunal, board or officer, and granting such incidental reliefs
as law and justice may require.
The petition shall be accompanied by a certified true copy of the
judgment, order or resolution subject thereof, copies of all
pleadings and documents relevant and pertinent thereto, and
a sworn certification of non-forum shopping as provided in the third
paragraph of Section 3, Rule 46. (Emphases ours.)
Specifically, the requirement of verification is contained in Section 4, Rule 7 of
the Rules of Court, to wit:
Sec. 4. Verification. Except when otherwise specifically required by
law or rule, pleadings need not be under oath, verified or
accompanied by affidavit.
A pleading is verified by an affidavit that the affiant has read the
pleading and that the allegations therein are true and correct of his
personal knowledge or based on authentic records.
A pleading required to be verified which contains a verification
based on "information and belief" or upon "knowledge, information
and belief," or lacks a proper verification, shall be treated as an
unsigned pleading.
On the other hand, the fourth paragraph of Section 3, Rule 46 of the Rules of
Court provides:
The petitioner shall also submit together with the petition a sworn
certification that he has not theretofore commenced any other
action involving the same issues in the Supreme Court, the Court of
Appeals or different divisions thereof, or any other tribunal or
agency; if there is such other action or proceeding, he must state
the status of the same; and if he should thereafter learn that a
similar action or proceeding has been filed or is pending before the
Supreme Court, the Court of Appeals, or different divisions thereof,
or any other tribunal or agency, he undertakes to promptly inform
the aforesaid courts and other tribunal or agency thereof within five
(5) days therefrom.
Finally, the reglementary period within which a Petition for Certiorari must be
filed is provided for under the first paragraph of Section 4, Rule 65,38 to wit:
The petition shall be filed not later than sixty (60) days from notice
of the judgment, order or resolution. In case a motion for
reconsideration or new trial is timely filed, whether such motion is
required or not, the petition shall be filed not later than sixty (60)
days counted from the notice of the denial of the motion.
(Emphasis ours.)
In the present case, only two employees signed the original Petition's
verification and certification of non-forum shopping and the same was filed
one day beyond the period allowed by the rules. The appellate court initially
resolved to dismiss the original petition precisely for these reasons in a
Resolution dated 29 November 2002. When asked to reconsider, the appellate
court ordered the filing of an amended petition in order to include all the
original complainants. An amended petition was then filed in compliance with
the said order, but only one hundred eighty (180) of the two hundred forty
(240) original complainants signed the verification and certification of non-
forum shopping. The Court of Appeals then granted the motion for
reconsideration and resolved to reinstate the petition. Thereafter, on 30
September 2004, the assailed decision that upheld the filing of the
informations against the petitioners was issued.
This Court finds no fault in the assailed actions of the Court of Appeals.
It is a well-settled principle that rules of procedure are 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.39 In deciding a case, the
appellate court has the discretion whether or not to dismiss the same, which
discretion must be exercised soundly and in accordance with the tenets of
justice and fair play, taking into account the circumstances of the case.40 It is
a far better and more prudent cause of action for the court to excuse a
technical lapse and afford the parties a review of the case to attain the ends
of justice, rather than dispose of the case on technicality and cause grave
injustice to the parties, giving a false impression of speedy disposal of cases
while actually resulting in more delay, if not a miscarriage of justice.41
The Court of Appeals committed no reversible error when it gave due course
to the amended petition despite the signing of the verification and
certification of non-forum shopping of only some, and not all, of the original
complainants.
Under justifiable circumstances, we have already allowed the relaxation of the
requirements of verification and certification so that the ends of justice may
be better served.42 Verification is simply intended to secure an assurance that
the allegations in the pleading are true and correct and not the product of the
imagination or a matter of speculation, and that the pleading is filed in good
faith; while the purpose of the aforesaid certification is to prohibit and
penalize the evils of forum shopping.43
In Torres v. Specialized Packaging Development Corporation,44 we ruled that
the verification requirement had been substantially complied with despite the
fact that only two (2) out of the twenty-five (25) petitioners have signed the
petition for review and the verification. In that case, we held that the two
signatories were unquestionably real parties-in-interest, who undoubtedly
had sufficient knowledge and belief to swear to the truth of the allegations in
the Petition.
In Ateneo de Naga University v. Manalo,45 we also ruled that there was
substantial compliance with the requirement of verification when only one of
the petitioners, the President of the University, signed for and on behalf of the
institution and its officers.
Similarly, in Bases Conversion and Development Authority v. Uy,46 we allowed
the signature of only one of the principal parties in the case despite the
absence of a Board Resolution which conferred upon him the authority to
represent the petitioner BCDA.
In the present case, the circumstances squarely involve a verification that was
not signed by all the petitioners therein. Thus, we see no reason why we
should not uphold the ruling of the Court of Appeals in reinstating the petition
despite the said formal defect.
On the requirement of a certification of non-forum shopping, the well-settled
rule is that all the petitioners must sign the certification of non-forum
shopping. The reason for this is that the persons who have signed the
certification cannot be presumed to have the personal knowledge of the other
non-signing petitioners with respect to the filing or non-filing of any action or
claim the same as or similar to the current petition.47 The rule, however,
admits of an exception and that is when the petitioners show reasonable
cause for failure to personally sign the certification. The petitioners must be
able to convince the court that the outright dismissal of the petition would
defeat the administration of justice.48
In the case at bar, counsel for the respondents disclosed that most of the
respondents who were the original complainants have since sought
employment in the neighboring towns of Bulacan, Pampanga and Angeles City.
Only the one hundred eighty (180) signatories were then available to sign the
amended Petition for Certiorari and the accompanying verification and
certification of non-forum shopping.49 Considering the total number of
respondents in this case and the elapsed period of almost two years since the
filing of the Joint Complaint Affidavit on 19 March 2001 and the filing of the
amended petition on 13 March 2003, we hold that the instant case sufficiently
falls under the exception to the aforesaid rule. Thus, the Court of Appeals
cannot be said to have erred in overlooking the above procedural error.
We also cannot fault the act of the Court of Appeals in ordering submission of
an amended petition and the reinstatement of the same despite the original
petition's late filing, considering the obvious merits of the case.
In Vallejo v. Court of Appeals,50 the Court of Appeals initially dismissed the
Petition for Certiorari for having been filed beyond the reglementary period,
but on appeal, we reversed the appellate court's ruling, as petitioner had
presented a good cause for the proper determination of his case.
Petitioners claim that the Court of Appeals committed serious error when it
reversed the DOJ resolution, which found that there was no probable cause to
indict petitioners for any violation of the SSS Law. They argue that the DOJ is
the highest agency and the ultimate authority to decide the existence or non-
existence of probable cause, and that the Court of Appeals does not have the
authority to reverse such findings.
This argument is utterly misguided.
Probable cause is defined as the existence of such facts and circumstances as
would excite the belief in a reasonable mind, acting on the facts within the
knowledge of the prosecutor, that the person charged was guilty of the crime
for which he was prosecuted.51 It is a reasonable ground of presumption that
a matter is, or may be, well-founded, such a state of facts in the mind of the
prosecutor as would lead a person of ordinary caution and prudence to
believe, or entertain an honest or strong suspicion, that a thing is so. The term
does not mean "actual and positive cause" nor does it import absolute
certainty. It is merely based on opinion and reasonable belief.52
The determination of probable cause is a function that belongs to the public
prosecutor, one that, as far as crimes cognizable by the RTC are concerned,
and notwithstanding that it involves an adjudicative process of a sort,
exclusively pertains, by law, to said executive officer, the public
prosecutor.53 This broad prosecutorial power is, however, not unfettered,
because just as public prosecutors are obliged to bring forth before the law
those who have transgressed it, they are also constrained to be circumspect
in filing criminal charges against the innocent. Thus, for crimes cognizable by
the regional trial courts, preliminary investigations are usually conducted.54 As
defined under the law, a preliminary investigation is an inquiry or a proceeding
to determine whether there is sufficient ground to engender a well-founded
belief that a crime has been committed, and the respondent is probably guilty
thereof and should be held for trial.55
The findings of the prosecutor with respect to the existence or non-existence
of probable cause is subject to the power of review by the DOJ. Indeed, the
Secretary of Justice may reverse or modify the resolution of the prosecutor,
after which he shall direct the prosecutor concerned either to file the
corresponding information without conducting another preliminary
investigation, or to dismiss or move for dismissal of the complaint or
information with notice to the parties.56
This power of review, however, does not preclude this Court and the Court of
Appeals from intervening and exercising our own powers of review with
respect to the DOJ's findings. In the exceptional case in which grave abuse of
discretion is committed, as when a clear sufficiency or insufficiency of
evidence to support a finding of probable cause is ignored, the Court of
Appeals may take cognizance of the case via a petition under Rule 65 of the
Rules of Court.57
This is precisely the situation in the case at bar. In deciding the respondents'
Petition for Certiorari, the Court of Appeals ruled that the DOJ committed
palpable mistake in reversing the Final Resolution of the Provincial Prosecutor
and, in so doing, acted with grave abuse of discretion.
In the assailed decision, the Court of Appeals declared that the DOJ's dismissal
of the charges against petitioners, on the ground that the evidence on record
did not support the same, was incorrect. Furthermore, the appellate court
held that the defenses of petitioners of good faith and lack of criminal intent
should not have been considered, inasmuch as the offenses charged were for
violations of a special law and are therefore characterized as mala prohibita,
in which the intent to commit is immaterial.
After carefully reviewing the records of this case, we agree with the Court of
Appeals' findings that there was indeed probable cause to indict petitioners
for the offenses charged.
In a preliminary investigation, a full and exhaustive presentation of the parties'
evidence is not required, but only such as may engender a well-grounded
belief that an offense has been committed and that the accused is probably
guilty thereof.58 Certainly, it does not involve the determination of whether or
not there is evidence beyond reasonable doubt pointing to the guilt of the
person. Only prima facie evidence is required; or that which is, on its face,
good and sufficient to establish a given fact, or the group or chain of facts
constituting the party's claim or defense; and which, if not rebutted or
contradicted, will remain sufficient.59 Therefore, matters of evidence are more
appropriately presented and heard during the trial.60
In the present case, petitioners were charged with violations of the SSS Law
for their failure to either promptly report some of the respondents for
compulsory coverage/membership with the SSS or remit their SSS
contributions and loan amortizations. In support of their claims, respondents
have attached unto their Joint Complaint-Affidavit a summary of their
unreported and unremitted SSS contributions,61 as gathered from the SSS
Online Inquiry System, and a computation of their unreported and unremitted
SSS contributions.62
On the part of the petitioners, they have not denied their fault in not remitting
the SSS contributions and loan payments of the respondents in violation of
Section 28, paragraphs (e), (f) and (h) of the SSS Law. Instead, petitioners
interposed the defenses of lack of criminal intent and good faith, as their
failure to remit was brought about by alleged economic difficulties, and they
have already agreed to settle their obligations with the SSS through a
memorandum of agreement to pay in installments.1avvphi1
As held by the Court of Appeals, the claims of good faith and absence of
criminal intent for the petitioners' acknowledged non-remittance of the
respondents' contributions deserve scant consideration. The violations
charged in this case pertain to the SSS Law, which is a special law. As such, it
belongs to a class of offenses known as mala prohibita.
The law has long divided crimes into acts wrong in themselves called acts mala
in se; and acts which would not be wrong but for the fact that positive law
forbids them, called acts mala prohibita. This distinction is important with
reference to the intent with which a wrongful act is done. The rule on the
subject is that in acts mala in se, the intent governs; but in acts mala prohibita,
the only inquiry is, has the law been violated?63 When an act is illegal, the
intent of the offender is immaterial.64
Thus, the petitioners' admission in the instant case of their violations of the
provisions of the SSS Law is more than enough to establish the existence of
probable cause to prosecute them for the same.
WHEREFORE, in light of the foregoing, the Petition for Review under Rule 45
of the Rules of Court is hereby DENIED.
The assailed Decision dated 30 September 2004 of the Court of Appeals in CA-
G.R. SP No. 79101 and the Resolution dated 9 May 2005 are hereby AFFIRMED.
Costs against petitioners.
SO ORDERED.
G.R. No. 128667 December 17, 1999
RAFAEL A. LO, petitioner,
vs.
COURT OF APPEALS and GREGORIO LUGUIBIS, respondents.
MENDOZA, J.:
The facts are as follows:
On April 22, 1953, private respondent Gregorio Luguibis began working as a
mechanic at the Polangui Rice Mill, Inc., owned by Jose Lo. Private respondent
was paid P4.00 daily. In 1959, in addition to his work at the rice mill, he asked
to render services as a mechanic at the Polangui Bijon Factory also owned by
Jose Lo. His wage was later increased, and from 1964 to 1970, when he
resigned due to illness, he was receiving a daily wage of P10.00.
It appears that the management of the rice mill and noodle factory, originally
owned by Jose Lo, were transferred in 1978 to his son, petitioner Rafael Lo,
and his sister, Leticia Lo. Petitioner took over the rice mill, which then became
known as the Rafael Lo Rice and Corn Mill, while Leticia Lo became the
operator and manager of the Polangui Bijon Factory. 3
In 1981, private respondent was rehired by Jose Lo, as mechanic, with a daily
wage of P34.00, plus allowance. While repairing one of the defective machines
at the noodle factory on August 11, 1984, private respondent met an accident
and suffered injuries which forced him to retire soon thereafter.
In 1985, private respondent filed his application for retirement benefits with
the Social Security System (SSS). His application, however, was denied since
per SSS records he became a member only in 1983, and contributions in his
favor were remitted only from October 1983 to September 1984. As private
respondent knew that SSS contributions of P3.50 have been deducted from
his monthly salary since compulsory SSS coverage took effect in 1957, private
respondent filed a petition with the Social Security Commission against
petitioner Rafael Lo and Jose Lo. On May 3, 1994, the Commission upheld
private respondent's claim and ordered petitioner and Jose Lo to remit to the
SSS the unpaid contributions in favor of private respondent for the periods
September 1957-September 1970, and January 1981-September 1984,
including penalties and charges.
Instead of filing a notice of appeal, petitioner then filed a petition for
review 4 with the Court of Appeals. The appellate court, nonetheless, took
cognizance of the petition as an appeal and decided it on the merits.
On January 3, 1996, the Court of Appeals affirmed the decision of the
Commission, except that it ordered petitioner to pay to the SSS the amount
representing the unpaid contributions for the period January 1981 to
September 1983, instead of the period January 1981 to September 1984.
When the appellate court denied his motion for reconsideration, 5 petitioner
filed this petition for review, where he assigns the following errors: 6
I. THE FINDING THAT THE BULK OF THE CLAIMS HAS NOT PRESCRIBED IS
NOT IN ACCORD WITH AND/OR CONTRARY TO THE APPLICABLE LAW AND
DECISIONS OF THIS HONORABLE COURT.
II. THE FINDINGS OF FACT THAT IMPELLED THE HONORABLE COURT OF
APPEALS TO REJECT THE DEFENSE IS BASED ON A MISAPPREHENSION OF
FACTS, IS UNSUPPORTED BY THE EVIDENCE, AND THERE IS GRAVE ABUSE
OF DISCRETION.
First. Petitioner argues that the right of private respondent to file an action to
claim his SSS benefits has already prescribed. He claims that the Court of
Appeals should not have applied to this case the ruling in People
v.Monteiro, 7 where it was held that the period of prescription for failure to
register with the SSS commences on the day of the discovery of the violation.
According to petitioner, Monteiro can only be applied to penal offenses,
whereas the present case involves civil claims and should, therefore, be
governed by the Civil Code provisions on prescription. Petitioner argues:
Payment of SS premium, as stated in the Decision, is an
obligation created by law hence, without need of
demand, it becomes due on the date when such
payment should be made. Hence, under Article 1150 [of
the Civil Code], the right of action to recover unremitted
SS premium accrues on the date it is payable and maybe
brought beginning such date. If the period of non-
remittance covers a certain period, say 10 years, such
claim is divisible into as many parts as there are
installments due, although for purposes of convenience
and avoidance of multiplicity of suits, such accumulated
claims may be brought in a single case. However, for
purposes of prescription the accumulated claims should
be segregated to determine which have already
prescribed. This is no different from a claim for
backwages, underpayment and the like under the Labor
Code which fall due periodically mostly on a weekly or
even daily basis where all claims more than 3 years old
reckoned from the date of the filing of the claim are
segregated and considered prescribed. Which is unlike a
claim for separation pay which is unitary or indivisible,
the same being based on the length of service of an
employee and accrues only on the date he is separated
from the service. 8
The argument is untenable.
Sec. 22 (b), par. 2, of Republic Act No. 1161, or the SSS Law, as amended,
states:
The right to institute the necessary action against the
employer may be commenced within twenty (20) years
from the time the delinquency is known or the
assessment is made by the SSS, or from the time the
benefit accrues, as the case may be. (emphasis supplied)
The clear and explicit language of the statute leaves no room for doubt as to
its application. 9 Indeed, in Benedicto v.Abad Santos, 10 we held that §22(b) of
R.A. 1161 applies to administrative and civil actions against an employer for
his failure to remit SSS contributions. Criminal actions for violations of the SSS
law, on the other hand, prescribes in four years, as provided in Act No. 3326. 11
Private respondent, in this case, discovered the delinquency of petitioner in that the latter was indeed employed as mechanic at the
remitting his SSS contributions only after his separation from employment on rice mill.
September 13, 1984. Prior thereto, private respondent could not have known On the other hand, the evidence of the opposing party
that his SSS contributions were not being remitted by petitioner since with respect to the issue of when Luguibis became an
deductions were made on his salary monthly. Thus, even if petitioner is correct employee of the rice mill and bijon factory was
in saying that the prescriptive period should be counted from the day on which inconsistent. Rafael Lo alleged in one pleading that
the corresponding action could have been instituted, the action in this case Luguibis became an employee at the rice mill on October
could only be instituted when the delinquency was made known to the private 10, 1983 while he testified on cross-examination that
respondent and not when the obligation to pay the premiums accrued. Luguibis was hired sometime in 1980. Rafael's sister
Thus, even if the case of People v. Monteiro were not applied to the present Leticia testified upon being cross-examined that prior to
case, R.A. 1161, §22(b) expressly provides that the period of prescription to 10 October 1983, Luguibis was never hired as regular
file the necessary action against the employer should likewise commence on employee at the rice mill. 16
the day said violation was discovered. Time and again we have ruled that "in reviewing administrative decisions . . .
Petitioner likewise contends that the 20-year prescriptive period does not the findings of fact made therein must be respected as long as they are
apply to private respondent's claims prior to 1980 because Presidential Decree supported by substantial evidence, even if not overwhelming or
No. 1636, which amended R.A. 1161 to provide for such period, took effect on preponderant; that it is not for the reviewing court to weigh the conflicting
January 1, 1980. Hence, since R.A. 1161 did not originally provide for a evidence, determine the credibility of the witnesses, or otherwise substitute
prescriptive period prior to its amendment, the Civil Code provisions on its own judgment for that of the administrative agency on the sufficiency of
prescription should govern. the evidence; that the administrative decision in matters, within the executive
The argument has no merit. jurisdiction, can only be set aside on proof of grave abuse of discretion, fraud,
In amending R.A. 1161, P.D. 1636 provided for a 20-year prescriptive period or error of law." 17
and, in effect, extended the 10-year period of prescription provided by the Clearly, the Court of Appeals and the Commission had sufficient basis in
Civil Code. For cases, therefore, with rights arising prior to P.D. 1636, the 20- concluding that private respondent was an employee of petitioner in 1957,
year prescriptive period shall take effect as long as the original prescriptive when compulsory SSS coverage took effect.
period has not expired. 12 WHEREFORE, the petition is DISMISSED and the decision of the Court of
Even assuming that the prescriptive period has begun to run in this case prior Appeals is hereby AFFIRMED.
to the discovery of the violation in 1985, it could have started only at the time SO ORDERED.
the benefit accrued, i.e., in September 1970 when private respondent left his
job due to illness. On January 1, 1980, when P.D. 1636 took effect, the 10-year
prescriptive period has not expired and was, thus, deemed extended to 20
years.
In any case, as earlier stated, the provision of §22(b) of R.A. 1161 is clear that
the period of prescription commences to run only upon the discovery of the
violation, which in this case took place in 1985. When the complaint was filed
on August 14, 1985, therefore, less than one year has passed since the
discovery of the delinquency. Nor do we find it necessary to discuss
petitioner's contention that the Civil Code principles on divisible obligations
and payments in installments should be applied, considering the clear and
unmistakable language of R.A. 1161.
Second. Petitioner questions the finding of the Commission that private
respondent was a regular employee of the rice mill and bijon factory when the
compulsory SSS coverage took effect in 1957. He alleges that the Court of
Appeals' findings are unsupported by evidence, and committed grave abuse
of discretion in arriving at its decision. 13
According to petitioner, the Court of Appeals itself found Leticia Lo's testimony
"not very credible," 14 since the reports she submitted did not contain all the
names of the employees of the rice mill and noodle factory 15 which she
mentioned in her testimony.
The contention has no merit. The appellate court did not just rely on the
testimony of Leticia Lo but on the findings of the Social Security Commission,
thus:
The Commission did not err in finding that Gregorio
Luguibis was a regular employee of Jose Lo from
September 1957 to September 1970 and a regular
employee of the Rafael Lo Rice and Corn Mill from
January, 1981 to September 1984. Such conclusion was
reached after a thorough consideration of all the
evidence (sic) presented by the parties. Hearings were
conducted where Gregorio Luguibis, Jesus Balingasa,
Rafael Lo, Leticia Lo, and Bernard Redillas testified.
Documentary evidence (sic) were also presented as
correctly found by the Commission, the evidence (sic) of
Luguibis were more convincing.
The testimony of Gregorio Luguibis was explicit and
clear. He named the exact dates of his actual
employment at the rice mill, the nature of his work, and
the amount of wages he was paid. Balingasa
corroborated Lugubi's testimony with respect to the fact