CLARION PRINTING HOUSE, INC., and EULOGIO YUTINGCO, Petitioners, vs. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION (Third

Division) and MICHELLE MICLAT, Respondents.

CARPIO-MORALES, J.:

Respondent Michelle Miclat (Miclat) was employed on April 21, 1997 on a probationary basis as marketing assistant with a monthly salary of P6,500.00 by petitioner Clarion Printing House (CLARION) owned by its co-petitioner Eulogio Yutingco. At the time of her employment, she was not informed of the standards that would qualify her as a regular employee.

On September 16, 1997, the EYCO Group of Companies of which CLARION formed part filed with the Securities and Exchange Commission (SEC) a 'Petition for the Declaration of Suspension of Payment, Formation and Appointment of Rehabilitation Receiver/ Committee, Approval of Rehabilitation Plan with Alternative Prayer for Liquidation and Dissolution of Corporation[1] the pertinent allegations of which read:

x x x

5. The situation was that since all these companies were sister companies and were operating under a unified and centralized management team, the financial requirements of one company would normally be backed up or supported by one of the available fundings from the other companies.

6. The expansion exhausted the cash availability of Nikon, NKI, and 2000 because those fundings were absorbed by the requirements of NPI and EYCO Properties, Inc. which were placed on real estate investments. However, at the time that those investments and expansions were made, there was no cause for alarm because the market situation was very bright and very promising, hence, the decision of the management to implement the expansion.

7. The situation resulted in the cash position being spread thin. However, despite the thin cash positioning, the management still was very positive and saw a very viable proposition since the expansion and the additional investments would result in a bigger real estate base which would be very credible collateral for further expansions. It was envisioned that in the end, there would be bigger cash procurement which would result in greater volume of production, profitability and other good results based on the expectations and projections of the team itself.

8. Unfortunately, factors beyond the control and anticipation of the management came into play which caught the petitioners flat-footed, such as:

a) The glut in the real estate market which has resulted in the bubble economy for the real estate demand which right now has resulted in a severe slow down in the sales of properties;b) The economic interplay consisting of the inflation and the erratic changes in t he peso-dollarexchange rate which precipitated a soaring banking interest.c) Labor problems that has precipitated adverse company effect on the media and in the financial circuit.d) Liberalization of the industry (GATT) which has resulted in flooding the market with imported goods;e) Other related adverse matters.

9. The inability of the EYCO Group of Companies to meet the obligations as they fall due on the schedule agreed with the bank has now become a stark reality. The situation therefore is that since the obligations would not be met within the scheduled due date, complications and problems would definitely arise that would impair and affect theoperations of the entire conglomerate comprising the EYCO Group of Companies.

x x x

12. By virtue of this development, there is a need for suspension of all accounts o[r] obligations incurred by the petitioners in their separate and combined capacities in the meantime that they are working for the rehabilitation of the companies that would eventually redound to the benefit of these creditors.

13. The foregoing notwithstanding, however, the present combined financial condition of the petitioners clearly indicates that their assets are more than enough to pay off the credits.

x x x (Emphasis and underscoring supplied)[2]chanroblesvirtuallawlibrary

On September 19, 1997, the SEC issued an Order[3] the pertinent portions of which read:

x x x

It appearing that the petition is sufficient in form and substance, the corporate petitioners' prayer for the creation ofmanagement or receivership committee and creditors' approval of the proposed Rehabilitation Plan is hereby set forhearing on October 22, 1997 at 2:00 oclock in the afternoon at the SICD, SEC Bldg., EDSA, Greenhills, Mandaluyong City.

x x x

Finally, the petitioners are hereby enjoined from disposing any and all of their properties in any manner, whatsoever, except in the ordinary course of business and from making any payment outside of the legitimate business expenses during the pendency of the proceedings and as a consequence of the filing of the Petition, all actions, claims and proceedings against herein petitioners pending before any court, tribunal, office board and/or commission are deemed SUSPENDED until further orders from this Hearing Panel pursuant to the rulings of the Supreme Court in the cases of RCBC v. IAC et al., 213 SCRA 830 and BPI v. CA, 229 SCRA 223. (Underscoring supplied)

And on September 30, 1997, the SEC issued an Order[4] approving the creation of an interim receiver for the EYCO Group of Companies.

On October 10, 1997, the EYCO Group of Companies issued to its employees the following Memorandum:[5]

This is to formally announce the entry of the Interim Receiver Group represented by SGV from today until October 22, 1997 or until further formal notice from the SEC.

This interim receiver group's function is to make sure that all assets of the company are secured and accounted for both for the protection of us and our creditors.

Their function will involve familiarization with the different processes and controls in our organization & keeping physical track of our assets like inventories and machineries.

Anything that would be required from you would need to be in writing and duly approved by the top management in order for us to maintain a clear line.

We trust that this temporary inconvenience will benefit all of us in the spirit of goodwill. Let's extend our full cooperation to them.

Thank you. (Underscoring supplied)

On October 22, 1997, the Assistant Personnel Manager of CLARION informed Miclat by telephone that her employment contract had been terminated effective October 23, 1997. No reason was given for the termination.

The following day or on October 23, 1997, on reporting for work, Miclat was informed by the General Sales Manager that her termination was part of CLARION's cost-cutting measures.

On November 17, 1997, Miclat filed a complaint[6] for illegal dismissal against CLARION and Yutingco (petitioners) before the National Labor Relations Commission (NLRC).

In the meantime, or on January 7, 1998, the EYCO Group of Companies issued a Memorandum[7]addressed to company managers advising them of 'a temporary

partial shutdown of some operations of the Company commencing on January 12, 1998 up to February 28, 1998:

In view of the numerous external factors such as slowdown in business and consumer demand and consistent with Art. 286 of the Revised Labor Code of the Philippines, we are constrained to go on a temporary partial shutdown of some operations of the Company.

To implement this measure, please submit to my office through your local HRAD the list of those whom you will require to report for work and their specific schedules. Upon revalidation and approval of this list, all those not in the list will not receive any pay nor will it be credited against their VL.

Please submit the listing no later than the morning of Friday, January 09, 1998.

Shutdown shall commence on January 12, 1998 up to February 28, 1998 , unless otherwise recalled at an earlier date.

Implementation of th[ese] directives will be done through your HRAD departments. (Underscoring supplied)

In her Position Paper[8] dated March 3, 1998 filed before the labor arbiter, Miclat claimed that she was never informed of the standards which would qualify her as a regular employee. She asserted, however, that she qualified as a regular employee since her immediate supervisor even submitted a written recommendation in her favor before she was terminated without just or authorized cause.

Respecting the alleged financial losses cited by petitioners as basis for her termination, Miclat disputed the same, she contending that as marketing assistant tasked to receive sales calls, produce sales reports and conduct market surveys, a credible assessment on production and sales showed otherwise.

In any event, Miclat claimed that assuming that her termination was necessary, the manner in which it was carried out was illegal, no written notice thereof having been served on her, and she merely learned of it only a day before it became effective.

Additionally, Miclat claimed that she did not receive separation pay, 13 th month pay and salaries for October 21, 22 and 23, 1997.

On the other hand, petitioners claimed that they could not be faulted for retrenching some of its employees including Miclat, they drawing attention to the EYCO Group of Companies' being placed under receivership, notice of which was sent to its supervisors and rank and file employees via a Memorandum of July 21, 1997; that in the same memorandum, the EYCO Group of Companies advised them of a scheme for voluntary separation from employment with payment of severance pay; and that CLARION was only adopting the 'LAST IN, FIRST OUT PRINCIPLE when it terminated Miclat who was relatively new in the company.

Contending that Miclat's termination was made with due process, petitioners referred to the EYCO Group of Companies' abovesaid July 21, 1997 Memorandum which, so they claimed, substantially complied with the notice requirement, it having been issued more than one month before Miclat was terminated on October 23, 1997.

By Decision[9] of November 23, 1998, the labor arbiter found that Miclat was illegally dismissedand directed her reinstatement. The dispositive portion of the decision reads:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered ordering the respondent to reinstate complainant to her former or equivalent position without loss of seniority rights and benefits and to pay her backwages , from the time of dismissal to actual reinstatement, proportionate 13 th month pay and two (2) dayssalary computed as follows:

a.1) Backwages ' 10/23/97 to 11/30/98P6,500.00 x 13.25 months' = P86,125.00

a.2) Proportionate 13th month pay1/12 of P86,125 = 7,177.08

b) 13th month pay - 1997

=P6,500 x 9.75 months/12 = 5,281.25c) Two days salary

=P6,500/26 x 2 days = 500.00TOTAL P 99,083.33

(Emphasis and underscoring supplied).

Before the National Labor Relations Commission (NLRC) to which petitioners appealed, they argued that:[10]

1. [CLARION] was placed under receivership thereby evidencing the fact that it sustained business losses to warrant the termination of [Miclat] from her employment.2. The dismissal of [Miclat] from her employment having been effected in accordance with the law and in good faith, [Miclat] does not deserve to be reinstated and paid backwages, 13th month pay and two (2) days salary.

And petitioners pointed out that CLARION had expressed its decision to shutdown its operations by Memorandum[11] of January 7, 1998 to its company managers.

Appended to petitioners' appeal before the NLRC were photocopies of their balance sheets from 1997 to November 1998 which they claimed to unanimously show that x x x [petitioner] company experienced business reverses which were made the basis x x x in retrenching x x x.[12]chanroblesvirtuallawlibrary

By Resolution[13] of June 17, 1999, the NLRC affirmed the labor arbiter's decision. The pertinent portion of the NLRC Resolution reads:

There are three (3) valid requisites for valid retrenchment: (1) the retrenchment is necessary to prevent losses and such losses are proven; (2) written notices to the employees and to the Department of Labor and Employment at least one (1) month prior to the intended date of retrenchment; and (3) payment of separation pay equivalent to one (1) month pay or at least ' month pay for every year of service, whichever is higher. The two notices are mandatory. If the notice to the workers is later than the notices sent to DOLE, the date of termination should be at least one month from the date of notice to the workers.

In Lopez Sugar Corporation v. Federation of Free Workers Philippine Labor Union Association (PLUA-NACUSIP) and National Labor Relations Commission, the Supreme Court had the occasion to set forth four standards which would justify retrenchment, being, firstly, - the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bona fide nature of the retrenchment would appear to be seriously in question; secondly, - the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic course with serious consequences for the livelihood of the employees retired or otherwise laid-off; thirdly, - because of the consequential nature of retrenchment, it must be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other cost than labor costs; and lastly, - the alleged losses if already realized and the expected imminent losses sought to be forestalled, must be proven by sufficient and convincing evidence.

The records show that these requirements were not substantially complied with. And proofs presented by respondents-appellants were short of being sufficient and convincing to justify valid retrenchment. Their position must therefore fail. The reason is simple. Evidences on record presented fall short of the requirement of substantial, sufficient and convincing evidence to persuade this Commission to declare the validity of retrenchment espoused by respondents-appellants. The petition before the Securit[ies] and Exchange Commission for suspension of payment does not prove anything to come within the bounds of justifying retrenchment. In fact, the petition itself lends credence to the fact that retrenchment was not actually reinstated under the circumstances prevailing when it stated, 'The foregoing notwithstanding, however, the present combined financial condition of the petitioners clearly indicates that their assets are more than enough to pay off the credits. Verily, reading further into the petition, We are not ready to disregard the fact that the petition merely seeks to suspend payments of their obligation from creditor banks and other financing institutions,

and not because of imminent substantial financial loss. On this account, We take note of paragraph 7 of the petition which stated: 'The situation resulted in cash position being spread thin. However, despite the thin cash positioning, the management was very positive and saw a very viable proposition since the expansion and the additional investments would result in a bigger real estate base which would be a very credible collateral for further expansions. It was envisioned that in the end, there would a bigger cash procurement which would result in greater volume of production, profitability and other good results based on the expectations and projections of the team itself. Admittedly, this does not create a picture of retrenchable business atmosphere pursuant to Article 283 of the Labor Code.

We cannot disregard the fact that respondent-appellants failed in almost all of the criteria set by law and jurisprudence in justifying valid retrenchment. The two (2) mandatory notices were violated. The supposed notice to the DOLE (Annex '4, List of Employees on Shutdown) is of no moment, the same having no bearing in this case. Herein complainant-appellee was not even listed therein and the date of receipt by DOLE, that is, January 18, 1999, was way out of time in relation to this case. And no proof was adduced to evidence cost cutting measures, to say the least. Nor was there proof shown that separation pay had been awarded to complainant-appellee.

WHEREFORE, premises considered, and finding no grave abuse of discretion on the findings of Labor Arbiter Nieves V. De Castro, the appeal is DENIED for lack of merit.

The decision appealed from is AFFIRMED in toto. (Italics in the original; underscoring supplied; citations omitted)

Petitioners' Motion for Reconsideration of the NLRC resolution having been denied by Resolution[14] of July 29, 1999, petitioners filed a petition for certiorari[15] before the Court of Appeals (CA) raising the following arguments:

1. PETITIONER CLARION WAS PLACED UNDER RECEIVERSHIP THEREBY EVIDENCING THE FACT THAT IT SUSTAINED BUSINESS LOSSES TO WARRANT THE TERMINATION OF PRIVATE RESPONDENT MICLAT FROM HER EMPLOYMENT.2. THE DISMISSAL OF PRIVATE RESPONDENT MICLAT FROM HER EMPLOYMENT HAVING BEEN EFFECTED IN ACCORDANCE WITH THE LAW AND IN GOOD FAITH, PRIVATE RESPONDENT DOES NOT DESERVE TO BE REINSTATED AND PAID BACKWAGES, 13TH MONTH PAY AND TWO (2) DAYS SALARY. (Underscoring supplied)

By Decision[16] of November 24, 2000, the CA sustained the resolutions of the NLRC in this wise:

In the instant case, Clarion failed to prove its ground for retrenchment as well as compliance with the mandated procedure of furnishing the employee and the Department of Labor and Employment (hereafter, DOLE) with one (1) month written notice and payment of separation pay to the employee. Clarion's failure to discharge its burden of proof is evident from the following instances:

First, Clarion presented no evidence whatsoever before the Labor Arbiter. To prove serious business losses, Clarion presented its 1997 and 1998 financial statements and the SEC Order for the Creation of an Interim Receiver, for the first time on appeal before the NLRC . The Supreme Court has consistently disallowed such practice unless the party making the belated submission of evidence had satisfactorily explained the delay. In the instant case, said financial statements are not admissible in evidence due to Clarion's failure to explain the delay.

Second, even if such financial statements were admitted in evidence, they would not alter the outcome of the case as statements have weak probative value. The required method of proof in such case is the presentation of financial statements prepared by independent auditors and not merely by company accountants. Again, petitioner failed in this regard.

Third, even audited financial statements are not enough. The employer must present the statement for the year immediately preceding the year the employee was retrenched, which Clarion failed to do in the instant case, to prove not only

the fact of business losses but more importantly, the fact that such losses were substantial, continuing and without immediate prospect of abatement. Hence, neither the NLRC nor the courts must blindly accept such audited financial statements. They must examine and make inferences from the data presented to establish business losses. Furthermore, they must be cautioned by the fact that 'sliding incomes' or decreasing gross revenues alone are not necessarily business losses within the meaning of Art. 283 since in the nature of things, the possibility of incurring losses is constantly present in business operations.

Last, even if business losses were indeed sufficiently proven, the employer must still prove that retrenchment was resorted to only after less drastic measures such as the reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiency, reduction of marketing and advertising costs, faster collection of customer accounts, reduction of raw materials investment and others, have been tried and found wanting. Again, petitioner failed to prove the exhaustion of less drastic measures short of retrenchment as it had failed with the other requisites.

It is interesting to note that Miclat started as a probationary employee on 21 April 1997. There being no stipulation to the contrary, her probation period had a duration of six (6) months from her date of employment. Thus, after the end of the probation period on 22 October 1997, she became a regular employee as of 23 October 1997 since she was allowed to work after the end of said period . It is also clear that her probationary employment was not terminated at the end of the probation period on the ground that the employee failed to qualify in accordance with reasonable standards made known to her at the time of engagement.

However, 23 October 1997 was also the day of Miclat's termination from employment on the ground of retrenchment. Thus, we have a bizarre situation when the first day of an employee's regular employment was also the day of her termination. However, this is entirely possible, as had in fact happened in the instant case, where the employer's basis for termination is Art. 288, instead of Art. 281 of the Labor Code. If petitioner terminated Miclat with Art. 281 in mind, it would have been too late to present such theory at this stage and it would have been equally devastating for petitioner had it done so because no evidence exists to show that Miclat failed to qualify with petitioner's standards for regularization. Failure to discharge its burden of proof would still be petitioner's undoing.

Whichever way We examine the case, the conclusion is the same ' Miclat was illegally dismissed. Consequently, reinstatement without loss of seniority rights and full backwages from date of dismissal on 23 October 1997 until actual reinstatement is in order.

WHEREFORE, the instant petition is hereby DISMISSED and the 29 July 1999 and 7 June 1999 resolutions of the NLRC are SUSTAINED. (Emphasis and underscoring supplied)

By Resolution[17] of May 23, 2001, the CA denied petitioner's motion for reconsideration of the decision.

Hence, the present petition for review on certiorari, petitioners contending that:

WITH ALL DUE RESPECT, THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN SUSTAINING THE ASSAILED DECISIONS OF HONORABLE PUBLIC RESPONDENT COMMISSION:

A. HOLDING THAT PRIVATE RESPONDENT MICLAT WAS ILLEGALLY DISMISSED; andB. ORDERING THE REINSTATEMENT OF PRIVATE RESPONDENT MICLAT TO HER FORMER OR EQUIVALENT POSITION WITHOUT LOSS OF SENIORITY RIGHTS AND BENEFITS AND PAYMENT OF BACKWAGES, 1[3]TH MONTH PAY AND TWO (2) DAYS SALARY.[18]chanroblesvirtuallawlibrary

Petitioners argue that the conclusion of the CA that no sufficient proof of financial losses on the part of CLARION was adduced is patently erroneous, given the serious business reverses it had gravely suffered as reflected in its financial statements/balance sheets, thereby leaving as its only option the retrenchment of its employees including Miclat.[19]chanroblesvirtuallawlibrary

Petitioners further argue that when a company is under receivership and a receiver is appointed to take control of its management and corporate affairs, one of the evident reasons is to prevent further losses of said company and protect its remaining assets from being dissipated; and that the submission of financial reports/statements prepared by independent auditors had been rendered moot and academic, the company having shutdown its operations and having been placed under receivership by the SEC due to its inability to pay or comply with its obligations.[20]chanroblesvirtuallawlibrary

Respecting the CA's holding that the financial statements CLARION submitted for the first time on appeal before the NLRC are inadmissible in evidence due to its failure to explain the delay in the submission thereof, petitioners lament the CA's failure to consider that technical rules on evidence prevailing in the courts are not controlling in proceedings before the NLRC which may consider evidence such as documents and affidavits submitted by the parties for the first time on appeal.[21]chanroblesvirtuallawlibrary

As to the CA's holding that CLARION failed to prove the exhaustion of less drastic measures short of retrenching, petitioners advance that prior to the termination of Miclat, CLARION, together with the other companies under the EYCO Group of Companies, was placed under receivership during which drastic measures to continue business operations of the company and eventually rehabilitate itself were implemented.[22]chanroblesvirtuallawlibrary

Denying Miclat's entitlement to backwages, petitioners proffer that her dismissal rested upon a valid and authorized cause. And petitioners assail as grossly erroneous the award of 13th month pay to Miclat, she not having sought it and, therefore, there was no jurisdiction to award the same.[23]chanroblesvirtuallawlibrary

The petition is partly meritorious.

Contrary to the CA's ruling, petitioners could present evidence for the first time on appeal to the NLRC. It is well-settled that the NLRC is not precluded from receiving evidence, even for the first time on appeal, because technical rules of procedure are not binding in labor cases.

The settled rule is that the NLRC is not precluded from receiving evidence on appeal as technical rules of evidence are not binding in labor cases. In fact, labor officials are mandated by the Labor Code to use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process. Thus, in Lawin Security Services v. NLRC, and Bristol Laboratories Employees' Association-DFA v. NLRC, we held that even if the evidence was not submitted to the labor arbiter, the fact that it was duly introduced on appeal to the NLRC is enough basis for the latter to be more judicious in admitting the same, instead of falling back on the mere technicality that said evidence can no longer be considered on appeal. Certainly, the first course of action would be more consistent with equity and the basic notions of fairness. (Italics in the original; citations omitted)[24]chanroblesvirtuallawlibrary

It is likewise well-settled that for retrenchment to be justified, any claim of actual or potential business losses must satisfy the following standards: (1) the losses are substantial and not de minimis; (2) the losses are actual or reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing expected losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven by sufficient and convincing evidence.[25] And it is the employer who has the onus of proving the presence of these standards.

Sections 5 and 6 of Presidential Decree No. 902-A (P.D. 902-A) (REORGANIZATION OF THE SECURITIES AND EXCHANGE COMMISSION WITH ADDITIONAL POWERS AND PLACING SAID AGENCY UNDER THE ADMINISTRATIVE SUPERVISION OF THE OFFICE OF THE PRESIDENT'),[26] as amended, read:

SEC. 5 In addition to the regulatory and adjudicative functions of THE SECURITIES AND EXCHANGE COMMISSION over corporations, partnerships and other forms of associations registered with it as expressly granted under existing laws and decrees, it shall have original and exclusive jurisdiction to hear and decide cases involving:

x x x

(d) Petitions of corporations, partnerships or associations declared in the state of suspension of payments in cases where the corporation, partnership or association possesses sufficient property to cover all debts but foresees the impossibility of meeting them when they respectively fall due or in cases where the corporation, partnership, association has no sufficient assets to cover its liabilities, but is under the management of a Rehabilitation Receiver or Management Committee created pursuant to this Decree.

SEC. 6. In order to effectively exercise such jurisdiction, the Commission shall possess the following powers:x x x

(c) To appoint one or more receivers of the property, real and personal, which is the subject of the action pending before the Commission in accordance with the provisions of the Rules of Court in such other cases whenever necessary in order to preserve the rights of the parties-litigants and/or protect the interest of the investing public and creditors: Provided, however, That the Commission may in appropriate cases, appoint a rehabilitation receiver of corporations, partnerships or other associations not supervised or regulated by other government agencies who shall have, in addition to powers of the regular receiver under the provisions of the Rules of Court, such functions and powers as are provided for in the succeeding paragraph (d) hereof: x x x

(d) To create and appoint a management committee, board or body upon petition or motu propio to undertake the management of corporations, partnership or other associations not supervised or regulated by other government agencies in appropriate cases when there is imminent danger of dissipation, loss, wastage or destruction of assets or other properties or paralization of business operations of such corporations or entities which may be prejudicial to the interest of minority stockholders, parties-litigants of the general public: x x x (Emphasis and underscoring supplied).

From the above-quoted provisions of P.D. No. 902-A, as amended, the appointment of a receiver or management committee by the SEC presupposes a finding that, inter alia, a company possesses sufficient property to cover all its debts but 'foresees the impossibility of meeting them when they respectively fall due and 'there is imminent danger of dissipation, loss, wastage or destruction of assets of other properties or paralization of business operations.

That the SEC, mandated by law to have regulatory functions over corporations, partnerships or associations,[27] appointed an interim receiver for the EYCO Group of Companies on its petition in light of, as quoted above, the therein enumerated 'factors beyond the control and anticipation of the management rendering it unable to meet its obligation as they fall due, and thus resulting to 'complications and problems . . . to arise that would impair and affect [its] operations . . . shows that CLARION, together with the other member-companies of the EYCO Group of Companies, was suffering business reverses justifying, among other things, the retrenchment of its employees.

This Court in fact takes judicial notice of the Decision[28] of the Court of Appeals dated June 11, 2000 in CA-G.R. SP No. 55208, 'Nikon Industrial Corp., Nikolite Industrial Corp., et al. [including CLARION], otherwise known as the EYCO Group of Companies v. Philippine National Bank, Solidbank Corporation, et al., collectively known and referred as the 'Consortium of Creditor Banks,which was elevated to this Court via Petition for Certiorari and docketed as G.R. No. 145977, but which petition this Court dismissed by Resolution dated May 3, 2005:

Considering the joint manifestation and motion to dismiss of petitioners and respondents dated February 24, 2003, stating that the parties have reached a final and comprehensive settlement of all the claims and counterclaims subject matter of the case and accordingly, agreed to the dismissal of the petition for certiorari, the Court Resolved to DISMISS the petition for certiorari (Underscoring supplied).

The parties in G.R. No. 145977 having sought, and this Court having granted, the dismissal of the appeal of the therein petitioners including CLARION, the CA decision which affirmed in toto the September 14, 1999 Order of the SEC, the dispositive portion of which SEC Order reads:

WHEREFORE, premises considered, the appeal is as it is hereby, granted and the Order dated 18 December 1998 is set aside. The Petition to be Declared in State

of Suspension of payments is hereby disapproved and the SAC Plan terminated. Consequently, all committee, conservator/ receivers created pursuant to said Order are dissolved and discharged and all acts and orders issued therein are vacated.

The Commission, likewise, orders the liquidation and dissolution of the appellee corporations. The case is hereby remanded to the hearing panel below for that purpose.

x x x (Emphasis and underscoring supplied),

has now become final and executory. Ergo, the SEC's disapproval of the EYCO Group of Companies' 'Petition for the Declaration of Suspension of Payment . . . and the order for the liquidation and dissolution of these companies including CLARION, must be deemed to have been unassailed.

That judicial notice can be taken of the above-said case of Nikon Industrial Corp. et al. v. PNB et al., there should be no doubt.

As provided in Section 1, Rule 129 of the Rules of Court:

SECTION 1. Judicial notice, when mandatory. ' A court shall take judicial notice, without the introduction of evidence, of the existence and territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative, executive and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical divisions. (Emphasis and underscoring supplied)

which Mr. Justice Edgardo L. Paras interpreted as follows:

A court will take judicial notice of its own acts and records in the same case, of facts established in prior proceedings in the same case, of the authenticity of its own records of another case between the same parties, of the files of related cases in the same court, and of public records on file in the same court. In addition judicial notice will be taken of the record, pleadings or judgment of a case in another court between the same parties or involving one of the same parties, as well as of the record of another case between different parties in the same court. Judicial notice will also be taken of court personnel. (Emphasis and underscoring supplied)[29]chanroblesvirtuallawlibrary

In fine, CLARION's claim that at the time it terminated Miclat it was experiencing business reverses gains more light from the SEC's disapproval of the EYCO Group of Companies' petition to be declared in state of suspension of payment, filed before Miclat's termination, and of the SEC's consequent order for the group of companies' dissolution and liquidation.

This Court's finding that Miclat's termination was justified notwithstanding, since at the time she was hired on probationary basis she was not informed of the standards that would qualify her as a regular employee, under Section 6, Rule I of the Implementing Rules of Book VI of the Labor Code which reads:

SEC. 6. Probationary employment. There is probationary employment where the employee, upon his engagement, is made to undergo a trial period during which the employer determines his fitness to qualify for regular employment, based on reasonable standards made known to him at the time of engagement.

Probationary employment shall be governed by the following rules:

x x x

(d) In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee (Emphasis and underscoring supplied),

she was deemed to have been hired from day one as a regular employee.[30]chanroblesvirtuallawlibrary

CLARION, however, failed to comply with the notice requirement provided for in Article 283 of the Labor Code, to wit:

ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF PERSONNEL. ' The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the worker and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. x x x (Emphasis and underscoring supplied)

This Court thus deems it proper to award the amount equivalent to Miclat's one (1) month salary of P6,500.00 as nominal damages to deter employers from future violations of the statutory due process rights of employees.[31]chanroblesvirtuallawlibrary

Since Article 283 of the Labor Code also provides that '[i]n case of retrenchment to prevent losses, . . . the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. . . , [a] fraction of at least six (6) months [being] considered one (1) whole year, this Court holds that Miclat is entitled to separation pay equivalent to one (1) month salary.

As to Miclat's entitlement to 13th month pay, paragraph 6 of the Revised Guidelines on the 13thMonth Pay Law provides:

6. 13th Month Pay of Resigned or Separated Employee

An employee x x x whose services were terminated any time before the time for payment of the 13th month pay is entitled to this monetary benefit in proportion to the length of time he worked during the calendar year up to the time of his resignation or termination from the service. Thus if he worked only from January up to September his proportionate 13th month pay shall be equivalent to 1/12 of his total basic salary he earned during that period.

x x x

Having worked at CLARION for six months, Miclat's 13th month pay should be computed as follows:(Monthly Salary x 6 ) / 12 = Proportionate 13th month pay(P6,500.00 x 6) / 12 = P3,250.00

With the appointment of a management receiver in September 1997, however, all claims and proceedings against CLARION, including labor claims,[32] were deemed suspended during the existence of the receivership.[33] The labor arbiter, the NLRC, as well as the CA should not have proceeded to resolve respondent's complaint for illegal dismissal and should instead have directed respondent to lodge her claim before the then duly-appointed receiver of CLARION. To still require respondent, however, at this time to refile her labor claim against CLARION under the peculiar circumstances of the case ' that 8 years have lapsed since her termination and that all the arguments and defenses of both parties were already ventilated before the labor arbiter, NLRC and the CA; and that CLARION is already in the course of liquidation ' this Court deems it most expedient and advantageous for both parties that CLARION's liability be determined with finality, instead of still requiring respondent to lodge her claim at this time before the liquidators of CLARION which would just entail a mere reiteration of what has been already argued and pleaded. Furthermore, it would be in the best interest of the other creditors of CLARION that claims against the company be finally settled and determined so as to further expedite the liquidation proceedings. For the lesser number of claims to be proved, the sooner the claims of all creditors of CLARION are processed and settled.

WHEREFORE, the Court of Appeals November 24, 2000 Decision, together with its May 23, 2001 Resolution, is SET ASIDE and another rendered declaring the legality of the dismissal of respondent, Michelle Miclat. Petitioners are ORDERED, however, to PAY her the following in accordance with the foregoing discussions:

1) P6,500.00 as nominal damages for non-compliance with statutory due process;2) P6,500.00 as separation pay; and

3) P3,250.00 as 13th month pay.

Let a copy of this Decision be furnished the SEC Hearing Panel charged with the liquidation and dissolution of petitioner corporation for inclusion, in the list of claims of its creditors, respondent Michelle Miclat's claims, to be satisfied in accordance with Article 110 of the Labor Code in relation to the Civil Code provisions on Concurrence and Preference of Credits.

Costs against petitioners.

SO ORDERED.

JPL MARKETING PROMOTIONS,- versus' - ' COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION,NOEL GONZALES, RAMON ABESA III and FAUSTINO ANINIPOT,

x-------------------------------------------------------------------x

TINGA, J.: This is a petition for review of the Decision[1] of the Court of Appeals in CA-G.R. SP No. 62631 dated 03 October 2001 and its Resolution[2] dated 25 January 2002 denying petitioner's Motion for Reconsideration, affirming the Resolution of the National Labor Relations Commission (NLRC), Second Division, dated 27 July 2000, awarding separation pay, service incentive leave pay, and 13th month pay to private respondents. JPL Marketing and Promotions (hereinafter referred to as 'JPL') is a domestic corporation engaged in the business of recruitment and placement of workers. On the other hand, private respondents Noel Gonzales, Ramon Abesa III and Faustino Aninipot were employed by JPL as merchandisers on separate dates and assigned at different establishments in Naga City and Daet, Camarines Norte as attendants to the display of California Marketing Corporation (CMC), one of petitioner's clients. On 13 August 1996, JPL notified private respondents that CMC would stop its direct merchandising activity in the Bicol Region, Isabela, and Cagayan Valley effective 15 August 1996.[3] They were advised to wait for further notice as they would be transferred to other clients. However, on 17 October 1996,[4] private respondents Abesa and Gonzales filed before the National Labor Relations Commission Regional Arbitration Branch (NLRC) Sub V complaints for illegal dismissal, praying for separation pay, 13th month pay, service incentive leave pay and payment for moral damages.[5] Aninipot filed a similar case thereafter. After the submission of pertinent pleadings by all of the parties and after some clarificatory hearings, the complaints were consolidated and submitted for resolution. Executive Labor Arbiter Gelacio L. Rivera, Jr. dismissed the complaints for lack of merit.[6] The Labor Arbiter found that Gonzales and Abesa applied with and were employed by the store where they were originally assigned by JPL even before the lapse of the six (6)-month period given by law to JPL to provide private respondents a new assignment. Thus, they may be considered to have unilaterally severed their relation with JPL, and cannot charge JPL with illegal dismissal.[7] The Labor Arbiter held that it was incumbent upon private respondents to wait until they were reassigned by JPL, and if after six months they were not reassigned, they can file an action for separation pay but not for illegal dismissal.[8] The claims for 13th month pay and service incentive leave pay was also denied since private respondents were paid way above the applicable minimum wage during their employment.[9] Private respondents appealed to the NLRC. In its Resolution,[10] the Second Division of the NLRC agreed with the Labor Arbiter's finding that when private respondents filed their complaints, the six-month period had not yet expired, and that CMC's decision to stop its operations in the areas was beyond the control of JPL, thus, they were not illegally dismissed. However, it found that despite JPL's effort to look for clients to which private respondents may be reassigned it was unable to do so, and hence they are entitled to separation pay.[11] Setting aside the Labor Arbiter's decision, the NLRC ordered the payment of:

1. Separation pay, based on their last salary rate and counted from the first day of their employment with the respondent JPL up to the finality of this judgment;

2. Service Incentive Leave pay, and 13th month pay, computed as in No.1 hereof.[12]

Aggrieved, JPL filed a petition for certiorari under Rule 65 of the Rules of Court with the Court of Appeals, imputing grave abuse of discretion on the part of the NLRC. It claimed that private respondents are not by law entitled to separation pay, service incentive leave pay and 13th month pay. The Court of Appeals dismissed the petition and affirmed in toto the NLRC resolution. While conceding that there was no illegal dismissal, it justified the award of separation pay on the grounds of equity and social justice.[13] The Court of Appeals rejected JPL's argument that the difference in the amounts of private respondents' salaries and the minimum wage in the region should be considered as payment for their service incentive leave and 13th month pay.[14]Notwithstanding the absence of a contractual agreement on the grant of 13th month pay, compliance with the same is mandatory under the law. Moreover, JPL failed to show that it was exempt from paying service incentive leave pay. JPL filed a motion for reconsideration of the said resolution, but the same was denied on 25 January 2002.[15] In the instant petition for review, JPL claims that the Court of Appeals committed reversible error in rendering the assailed Decision and Resolution.[16] The instant case does not fall under any of the instances where separation pay is due, to wit: installation of labor-saving devices, redundancy, retrenchment or closing or cessation of business operation,[17] or disease of an employee whose continued employment is prejudicial to him or co-employees,[18] or illegal dismissal of an employee but reinstatement is no longer feasible.[19] Meanwhile, an employee who voluntarily resigns is not entitled to separation unless stipulated in the employment contract, or the collective bargaining agreement, or is sanctioned by established practice or policy of the employer.[20] It argues that private respondents' good record and length of service, as well as the social justice precept, are not enough to warrant the award of separation pay. Gonzales and Aninipot were employed by JPL for more than four (4) years, while Abesa rendered his services for more than two (2) years, hence, JPL claims that such short period could not have shown their worth to JPL so as to reward them with payment of separation pay.[21]In addition, even assuming arguendo that private respondents are entitled to the benefits awarded, the computation thereof should only be from their first day of employment with JPL up to 15 August 1996, the date of termination of CMC's contract, and not up to the finality of the 27 July 2000 resolution of the NLRC.[22] To compute separation pay, 13th month pay, and service incentive leave pay up to 27 July 2000 would negate the findings of both the Court of Appeals and the NLRC that private respondents were not unlawfully terminated.[23] Additionally, it would be erroneous to compute service incentive leave pay from the first day of their employment up to the finality of the NLRC resolution since an employee has to render at least one (1) year of service before he is entitled to the same. Thus, service incentive leave pay should be counted from the second year of service.[24] On the other hand, private respondents maintain that they are entitled to the benefits being claimed as per the ruling of this Court in Serrano v. NLRC, et al.[25] They claim that their dismissal, while not illegal, was tainted with bad faith.[26] They allege that they were deprived of due process because the notice of termination was sent to them only two (2) days before the actual termination.[27] Likewise, the most that JPL offered to them by way of settlement was the payment of separation pay of seven (7) days for every year of service.[28] Replying to private respondents' allegations, JPL disagrees that the notice it sent to them was a notice of actual termination. The said memo merely notified them of the end of merchandising for CMC, and that they will be transferred to other clients.[29] Moreover, JPL is not bound to observe the thirty (30)-day notice rule as there was no dismissal to speak of. JPL counters that it was private respondents who acted in bad faith when they sought employment with another establishment, without even the courtesy of informing JPL that they were leaving for good, much less tender their resignation.[30] In addition, the offer of seven (7) days per year of service as separation pay was merely an act of magnanimity on its part, even if private respondents are not entitled to a single centavo of separation pay.[31] The case thus presents two major issues, to wit: whether or not private respondents are entitled to separation pay, 13th month pay and service incentive leave pay, and granting that they are so entitled, what should be the reckoning point for computing said awards.

Under Arts. 283 and 284 of the Labor Code, separation pay is authorized only in cases of dismissals due to any of these reasons: (a) installation of labor saving devices; (b) redundancy; (c) retrenchment; (d) cessation of the employer's business; and (e) when the employee is suffering from a disease and his continued employment is prohibited by law or is prejudicial to his health and to the health of his co-employees. However, separation pay shall be allowed as a measure of social justice in those cases where the employee is validly dismissed for causes other than serious misconduct or those reflecting on his moral character, but only when he was illegally dismissed.[32] In addition, Sec. 4(b), Rule I, Book VI of the Implementing Rules to Implement the Labor Code provides for the payment of separation pay to an employee entitled to reinstatement but the establishment where he is to be reinstated has closed or has ceased operations or his present position no longer exists at the time of reinstatement for reasons not attributable to the employer. The common denominator of the instances where payment of separation pay is warranted is that the employee was dismissed by the employer.[33] In the instant case, there was no dismissal to speak of. Private respondents were simply not dismissed at all, whether legally or illegally. What they received from JPL was not a notice of termination of employment, but a memo informing them of the termination of CMC's contract with JPL. More importantly, they were advised that they were to be reassigned. At that time, there was no severance of employment to speak of. Furthermore, Art. 286 of the Labor Code allows the bona fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, wherein an employee/employees are placed on the so-called 'floating status. When that floating status' of an employee lasts for more than six months, he may be considered to have been illegally dismissed from the service. Thus, he is entitled to the corresponding benefits for his separation, and this would apply to suspension either of the entire business or of a specific component thereof.[34] As clearly borne out by the records of this case, private respondents sought employment from other establishments even before the expiration of the six (6)-month period provided by law. As they admitted in their comment, all three of them applied for and were employed by another establishment after they received the notice from JPL.[35] JPL did not terminate their employment; they themselves severed their relations with JPL. Thus, they are not entitled to separation pay.The Court is not inclined in this case to award separation pay even on the ground of compassionate justice. The Court of Appeals relied on the cases[36] wherein the Court awarded separation pay to legally dismissed employees on the grounds of equity and social consideration. Said cases involved employees who were actually dismissed by their employers, whether for cause or not. Clearly, the principle applies only when the employee is dismissed by the employer, which is not the case in this instance. In seeking and obtaining employment elsewhere, private respondents effectively terminated their employment with JPL. In addition, the doctrine enunciated in the case of Serrano[37] cited by private respondents' has already been abandoned by our ruling in Agabon v. National Labor Relations Commission.[38] There we ruled that an employer is liable to pay indemnity in the form of nominal damages to a dismissed employee if, in effecting such dismissal, the employer failed to comply with the requirements of due process. However, private respondents are not entitled to the payment of damages considering that there was no violation of due process in this case. JPLs' memo dated 13 August 1996 to private respondents is not a notice of termination, but a mere note informing private respondents of the termination of CMC's contract and their re-assignment to other clients. The thirty (30)-day notice rule does not apply. Nonetheless, JPL cannot escape the payment of 13th month pay and service incentive leave pay to private respondents. Said benefits are mandated by law and should be given to employees as a matter of right. Presidential Decree No. 851, as amended, requires an employer to pay its rank and file employees a 13th month pay not later than 24 December of every year. However, employers not paying their employees a 13th month pay or its equivalent are not covered by said law.[39] The term 'its equivalent was defined by the law's implementing guidelines as including Christmas bonus, mid-year bonus, cash bonuses and other payment amounting to not less than 1/12 of the basic salary but shall not include cash and stock dividends, cost-of-living-

allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits.[40] On the other hand, service incentive leave, as provided in Art. 95 of the Labor Code, is a yearly leave benefit of five (5) days with pay, enjoyed by an employee who has rendered at least one year of service. Unless specifically excepted, all establishments are required to grant service incentive leave to their employees. The term 'at least one year of service shall mean service within twelve (12) months, whether continuous or broken reckoned from the date the employee started working.[41] The Court has held in several instances that 'service incentive leave is clearly demandable after one year of service.[42] Admittedly, private respondents were not given their 13th month pay and service incentive leave pay while they were under the employ of JPL. Instead, JPL provided salaries which were over and above the minimum wage. The Court rules that the difference between the minimum wage and the actual salary received by private respondents cannot be deemed as their 13th month pay and service incentive leave pay as such difference is not equivalent to or of the same import as the said benefits contemplated by law. Thus, as properly held by the Court of Appeals and by the NLRC, private respondents are entitled to the 13th month pay and service incentive leave pay. However, the Court disagrees with the Court of Appeals' ruling that the 13th month pay and service incentive leave pay should be computed from the start of employment up to the finality of the NLRC resolution. While computation for the 13th month pay should properly begin from the first day of employment, the service incentive leave pay should start a year after commencement of service, for it is only then that the employee is entitled to said benefit. On the other hand, the computation for both benefits should only be up to 15 August 1996, or the last day that private respondents worked for JPL. To extend the period to the date of finality of the NLRC resolution would negate the absence of illegal dismissal, or to be more precise, the want of dismissal in this case. Besides, it would be unfair to require JPL to pay private respondents the said benefits beyond 15 August 1996 when they did not render any service to JPL beyond that date. These benefits are given by law on the basis of the service actually rendered by the employee, and in the particular case of the service incentive leave, is granted as a motivation for the employee to stay longer with the employer. There is no cause for granting said incentive to one who has already terminated his relationship with the employer. The law in protecting the rights of the employees authorizes neither oppression nor self-destruction of the employer. 'It should be made clear that when the law tilts the scale of justice in favor of labor, it is but recognition of the inherent economic inequality between labor and management. The intent is to balance the scale of justice; to put the two parties on relatively equal positions. There may be cases where the circumstances warrant favoring labor over the interests of management but never should the scale be so tilted if the result is an injustice to the employer. Justitia nemini neganda est (Justice is to be denied to none).[43] WHEREFORE, the petition is GRANTED IN PART. The Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 62631 are hereby MODIFIED. The award of separation pay is deleted. Petitioner is ordered to pay private respondents their 13th month pay commencing from the date of employment up to 15 August 1996, as well as service incentive leave pay from the second year of employment up to 15 August 1996. No pronouncement as to costs. SO ORDERED.

FAR EAST AGRICULTURAL SUPPLY, INC. and/or ALEXANDER UY,Petitioners,cralaw

- versus -JIMMY LEBATIQUE and THE HONORABLE COURT OF APPEALS,Respondents.x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION QUISUMBING, J.:

Before us is a petition for review on certiorari assailing the Decision[1] dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its Resolution[2] datedMarch 15, 2004 denying the motion for reconsideration.The appellate court had reversed the Decision[3] dated October 15, 2002 of the National Labor Relations Commission (NLRC) setting aside the Decision[4] dated June 27, 2001 of the Labor Arbiter.

Petitioner Far East Agricultural Supply, Inc. (Far East) hired on March 4, 1996 private respondent Jimmy Lebatique as truck driver with a daily wage of P223.50.He delivered animal feeds to the companys clients.

On January 24, 2000, Lebatique complained of nonpayment of overtime work particularly on January 22, 2000, when he was required to make a second delivery in Novaliches,Quezon City.That same day, Manuel Uy, brother of Far Easts General Manager and petitioner Alexander Uy, suspended Lebatique apparently for illegal use of company vehicle.Even so, Lebatique reported for work the next day but he was prohibited from entering the company premises.

On January 26, 2000, Lebatique sought the assistance of the Department of Labor and Employment (DOLE) Public Assistance and Complaints Unit concerning the nonpayment of his overtime pay.According to Lebatique, two days later, he received a telegram from petitioners requiring him to report for work.When he did the next day, January 29, 2000, Alexander asked him why he was claiming overtime pay.Lebatique explained that he had never been paid for overtime work since he started working for the company.He also told Alexander that Manuel had fired him.After talking to Manuel, Alexander terminatedLebatique and told him to look for another job.

On March 20, 2000, Lebatique filed a complaint for illegal dismissal and nonpayment of overtime pay.The Labor Arbiter found that Lebatique was illegally dismissed, and ordered his reinstatement and the payment of his full back wages, 13th month pay, service incentive leave pay, and overtime pay.The dispositive portion of the decision is quoted herein in full, as follows:

WHEREFORE, we find the termination of complainant illegal.He should thus be ordered reinstated with full backwages.He is likewise ordered paid his 13thmonth pay, service incentive leave pay and overtime pay as computed by the Computation and Examination Unit as follows:

Backwages:01/25/00 - 10/31/00 = 9.23 mos.P 223.50 x 26 x 9.23 = P 53,635.5311/01/0006/26/01 = 7.86 mos.P 250.00 x 26 x 7.86 =51,090.00P 104,725.5313th Month Pay: 1/12 of P 104,725.53 =8,727.13Service Incentive Leave Pay01/25/0010/31/00 = 9.23 mos.P 223.50 x 5/12 x 9.23 =P 859.5411/01/00 06/26/01 = 7.86 mos.P 250.00 x 5/12 x 7.86 =[818.75]1,678.29115,130.95

b)Overtime Pay: (3 hours/day)03/20/97 4/30/97 = 1.36 mos.P 180/8 x 1.25 x 3 x 26 x 1.36= P 2,983.5005/01/97 02/05/98 = 9.16 mos.P 185/8 x 1.25 x 3 x 26 x 9.16=20,652.9402/06/98 10/30/99 = 20.83 mos.P 198/8 x 1.25 x 3 x 26 x [20.83]=50,265.3910/31/9901/24/00 = 2.80 mos.cP 223.50/8 x 1.25 x 3 x 26 x 2.80= 7,626.94cralaw81,528.77TOTAL AWARDP 196,659.72

O ORDERED.[5]cralawcralawOn appeal, the NLRC reversed the Labor Arbiter and dismissed the complaint for lack of merit.The NLRC held that there was no dismissal to speak of since Lebatique was merely suspended.Further, it found that Lebatique was a field personnel, hence, not entitled to overtime pay and service incentive leave pay.Lebatique sought reconsideration but was denied.

cralawAggrieved, Lebatique filed a petition for certiorari with the Court of Appeals.The Court of Appeals, in reversing the NLRC decision, reasoned that Lebatique was suspended on January 24, 2000 but was illegally dismissed on January 29, 2000 when Alexander told him to look for another job.It also found that Lebatique was not a field personnel and therefore entitled to payment of overtime pay, service incentive leave pay, and 13th month pay.

It reinstated the decision of the Labor Arbiter as follows:WHEREFORE, premises considered, the decision of the NLRC dated 27 December 2002 is hereby REVERSED and the Labor Arbiters decision dated27 June 2001 REINSTATED. SO ORDERED.[6]

Petitioners moved for reconsideration but it was denied. Hence, the instant petition wherein petitioners assign the following errors:

THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002AND IN RULING THAT THE PRIVATE RESPONDENT WAS ILLEGALLY DISMISSED.THE COURT OF APPEALS ERRED IN REVERSING THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION DATED 15 OCTOBER 2002AND IN RULING THAT PRIVATE RESPONDENT IS NOT A FIELD PERSONNEL AND THER[E]FORE ENTITLED TO OVERTIME PAY AND SERVICE INCENTIVE LEAVE PAY.THE COURT OF APPEALS ERRED IN NOT DISMISSING THE PETITION FOR CERTIORARI FOR FAILURE OF PRIVATE RESPONDENT TO ATTACH CERTIFIED TRUE COPIES OF THE QUESTIONED DECISION AND RESOLUTION OF THE PUBLIC RESPONDENT.[7]

cralawSimply stated, the principal issues in this case are: (1) whether Lebatique was illegally dismissed; and (2) whether Lebatique was a field personnel, not entitled to overtime pay.cralaw Petitioners contend that, (1) Lebatique was not dismissed from service but merely suspended for a day due to violation of company rules; (2) Lebatique was not barred from entering the company premises since he never reported back to work; and (3)Lebatique is estopped from claiming that he was illegally dismissed since his complaint before the DOLE was only on the nonpayment of his overtime pay.cralawAlso, petitioners maintain that Lebatique, as a driver, is not entitled to overtime pay since he is a field personnel whose time outside the company premises cannot be determined with reasonable certainty.According to petitioners, the drivers do not observe regular working hours unlike the other office employees.The drivers may report early in the morning to make their deliveries or in the afternoon, depending on the production of animal feeds and the traffic conditions.Petitioners also aver that Lebatique worked for less than eight hours a day.[8]chanroblesvirtuallawlibraryLebatique for his part insists that he was illegally dismissed and was not merely suspended.He argues that he neither refused to work nor abandoned his job.He further contends that abandonment of work is inconsistent with the filing of a complaint for illegal dismissal.He also claims that he is not a field personnel, thus, he is entitled to overtime pay and service incentive leave pay. After consideration of the submission of the parties, we find that the petition lacks merit.We are in agreement with the decision of the Court of Appeals sustaining that of the Labor Arbiter. It is well settled that in cases of illegal dismissal, the burden is on the employer to prove that the termination was for a valid cause.[9]In this case, petitioners failed to discharge such burden.Petitioners aver that Lebatique was merely suspended for one day but he abandoned his work thereafter.To constitute abandonment as a just cause for dismissal, there must be: (a) absence without justifiable reason; and (b) a clear intention, as manifested by some overt act, to sever the employer-employee relationship.[10]The records show that petitioners failed to prove that Lebatique abandoned his job.Nor was there a showing of a clear intention on the part of Lebatique to sever the employer-employee relationship.When Lebatique was verbally told by Alexander Uy, the companys General Manager, to look for another job, Lebatique was in effect dismissed.Even assuming earlier he was merely suspended for illegal use of company vehicle, the records do not show that he was afforded the opportunity to explain his side.It is clear also from the sequence

of the events leading to Lebatiques dismissal that it was Lebatiquescomplaint for nonpayment of his overtime pay that provoked the management to dismiss him, on the erroneous premise that a truck driver is a field personnel not entitled to overtime pay. An employee who takes steps to protest his layoff cannot by any stretch of imagination be said to have abandoned his work and the filing of the complaint is proof enough of his desire to return to work, thus negating any suggestion of abandonment.[11]A contrary notion would not only be illogical but also absurd. cralawIt is immaterial that Lebatique had filed a complaint for nonpayment of overtime pay the day he was suspended by managements unilateral act.What matters is that he filed the complaint for illegal dismissal on March 20, 2000, after he was told not to report for work, and his filing was well within the prescriptive period allowed under the law. cralawOn the second issue, Article 82 of the Labor Code is decisive on the question of who are referred to by the term field personnel.It provides, as follows:

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

cralawx x x x

Field personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty.

cralawIn Auto Bus Transport Systems, Inc. v. Bautista,[12] this Court emphasized that the definition of a field personnel is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employees performance is unsupervised by the employer. We held that field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to determine whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and performance are constantly supervised by the employer.[13] cralawAs correctly found by the Court of Appeals, Lebatique is not a field personnel as defined above for the following reasons: (1) company drivers, including Lebatique, are directed to deliver the goods at a specified time and place; (2) they are not given the discretion to solicit, select and contact prospective clients; and (3) Far East issued a directive that company drivers should stay at the clients premises during truck-ban hours which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.[14]Even petitioners admit that the drivers can report early in the morning, to make their deliveries, or in the afternoon, depending on the production of animal feeds.[15]Drivers, like Lebatique, are under the control and supervision of management officers.Lebatique, therefore, is a regular employee whose tasks are usually necessary and desirable to the usual trade and business of the company.Thus, he is entitled to the benefits accorded to regular employees of Far East, including overtime pay and service incentive leave pay.cralawNote that all money claims arising from an employer-employee relationship shall be filed within three years from the time the cause of action accrued; otherwise, they shall be forever barred.[16] Further, if it is established that the benefits being claimed have been withheld from the employee for a period longer than three years, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the

amount of the benefits withheld within three years before the filing of the complaint.[17] cralaw Lebatique timely filed his claim for service incentive leave pay, considering that in this situation, the prescriptive period commences at the time he was terminated.[18]On the other hand, his claim regarding nonpayment of overtime pay since he was hired in March 1996 is a different matter. In the case of overtime pay, he can only demand for the overtime pay withheld for the period within three years preceding the filing of the complaint on March 20, 2000. However, we find insufficient the selected time records presented by petitioners to compute properly his overtime pay. The Labor Arbiter should have required petitioners to present the daily time records, payroll, or other documents in managements control to determine the correct overtime pay due Lebatique. cralawWHEREFORE, the petition is DENIED for lack of merit.The Decision dated September 30, 2003 of the Court of Appeals in CA-G.R. SP No. 76196 and its Resolution dated March 15, 2004 are AFFIRMED with MODIFICATION to the effect that the case is herebyREMANDED to the Labor Arbiter for further proceedings to determine the exact amount of overtime pay and other monetary benefits due Jimmy Lebatique which herein petitioners should pay without further delay. Costs against petitioners. cralawSO ORDERED.

NATIONAL FEDERATION OF LABOR (NFL), CENON BANGA, et.al.vs. THE HON. COURT OF APPEALS (8TH DIV.), NATIONAL LABOR RELATIONS COMMISSION,

EXECUTIVE LABOR ARBITER RHETT JULIUS J. PLAGATA, SIME DARBY PILIPINAS, INC., AMERICAN RUBBER COMPANY, INC., SEAN OKELLEY and/or EXPEDITO

DOQUILLO, SR., respondents

CALLEJO, SR., J.:

This is a petition for review of the Decision1 of the Court of Appeals in CA-G.R. SP No. 56230, holding that the petitioners were properly paid their separation pay after the closure of the rubber plantation of Sime Darby Pilipinas, Inc. (SDPI) in Latuan, Isabela, Basilan.

The Antecedents

American Rubber Company, Inc. (ARCI) is a domestic corporation existing in and incorporated under the laws of the Philippines. It was the registered and beneficial owner of a 1, 024-hectare rubber plantation in Latuan, Isabela, Basila. On July 21, 1986, ARCI also had another rubber plantation in Tumajubong and Ito-ito. ACI entered into a Farm Management Agreement (FMA) with SDPI, another domestic corporation, involving the 1,024-hectare rubber plantation in Latuan and other rubber plantations. SDPI was given the right to manage, administer, develop, cultivate, and improve the rubber plantations as an agro-industrial development project, specifically designed for planting rubber trees, processing of and marketing of its products and providing technical expertise for a period of twenty-five years, or up to the year 2011.2

National Federation of Labor (NFL) was the duly registered bargaining agent of the daily-and-monthly-paid rank-and-file employees of SDPI in the Latuan rubber plantation.3 SDPI and NFL executed a collective bargaining agreement (CBA) in which they agreed that in case of permanent or temporary lay-off, workers affected would be entitled to termination pay as provided by the Labor Code. The 150 petitioners were daily-and-monthly paid employees of SDPI in the Latuan plantation and were, likewise, members of NFL.

On June 15, 1988, during the effectivity of the FMA between ARCI and SDPI, Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law (CARL) of 1988, took effect.4 Section 8 thereof mandated that all lands of public domain leased, held or possessed by multinational corporations or association or private non-governmental corporations, devoted to agro-industrial enterprises shall be subjected to immediate compulsory acquisition and distribution upon the applicable lease, management, grower or service contracts

in effects as of August 29, 1987 or otherwise upon its valid termination, whichever comes sooner but not later than after ten years following the effectivity of Rep. Act No. 6657.

Prior to the expiration of the June 30, 1998 deadline, SDPI decided to terminate the FMA with ARCI and cease operation of the rubber plantation in Latuan, Isabela, Basilan, effective January 17, 1998. On December 17, 1997, SDPI served formal notices of termination to all the employees of the plantation effective January 17, 1998.5 Simultaneously, a letter to the Department of Labor of Employment (DOLE) of Region IX, Zamboanga City, respecting the terminations was sent by SDPI. Separation pay for the employees was computed pursuant to the provisions of the CBA between SDPI and NFL, in relation to the Labor Code of the Philippines.

Meanwhile, when the 150 daily-and-monthly-paid rank-and-file employees received their individual termination letters, the members of the NFL met, on January 10, 1998, and approved Resolution No. 1, Series of 1998, requesting SDPI that the separation pay benefits for its members be segregated from regular workdays, vacation leave, unused sick leave and other benefits.6 Cenon S. Banga, the union president of the daily-paid-rank-and-file employees, wrote Emmanuel A. Tamayo, the Senior Vice President of SDPI, requesting the segregation of separation pay benefits from the other receivables.7 He also sent, on the same date, a letter to SDPI seeking the clarification on the basis of computation of their separation pay. He pointed out that separation pay should be computed pursuant to the company policy of thirty days per year of service. He stressed that the union members would refuse to receive the computed separation pay if less than that previously given to employees whose employment had been terminated by SDPI on prior dates pursuant to the company policy,8 more specifically separation pay equivalent to one month for every year of employment of the employees.

On January 17, 1998, each of the petitioners received his separation pay equivalent to one-half month pay for every year of service, and other benefits which were all lumped in one Metrobank check.9 The petitioners simultaneously executed individual Released and Quitclaim10 following the explanation to them by Executive Labor Arbiter (ELA) Rhett Julius J. Plagata of the nature and legal effects of the said quitclaims.11 The Labor Arbiter also assured that each of the petitioners executed his respected deed of quitclaim voluntarily.

However, on April 2, 1998, the petitioners filed a complaint for illegal dismissal, deficiency in separation pay, backwages, reinstatement, legal interest, moral damages, exemplary damages, attorneys fees, and cost of litigation before the Regional Arbitration Branch of Zamboanga City of the National Labor Relations Commission (NLRC), docketed as NLRC case No. RAB-09-04-00125-98.12 The complainants raised the following issues:

(1) whether or not the complainants were illegally dismissed; and (2) whether or not they are entitled to their claims for separation pay differentials (non-payment of the exact computation of separation pay), legal interest, moral and exemplary damages, and attorneys fees and costs of litigation.

A matter also put is the effect of the quitclaim and releases executed by the complaints before the undersigned on 15 and 16 January 1998 in consideration of payment to them by SDPI of separation pay computed at one-half (1/2) month pay for every years of service.13

On November 24, 1998, the ELA rendered a decision dismissing the complaints for lack of merit.14 He ruled the termination of the petitioners employment was based on authorized cause, namely, the closure of SDPI, Latuan rubber plantation, as a consequence of the implementation of CARL, which set the deadline for the compulsory distribution of agricultural, including agro-industrial lands ten years after the effectivity of the law or June 30, 1998. Consequently, pursuant to the CBA between the SDPI and NFL in relation to Article 283 of the Labor Code, the dismissed employees should receive separation pay at the rate of one-half month pay per year of service instead of a rate equivalent to one month for every year of service. He also held that the petitioners had no right to invoke company policy of paying separation pay equivalent to one month pay for every year of employment granted by SDPI for its retrenched employees in its plantations. He also ruled that the petitioners were estopped from demanding

for separation pay differentials because they voluntarily and willingly executed their respective deeds of quitclaim.

Aggrieved, the petitioners appealed to the NLRC, which issued a Resolution on May 19, 1999 affirming the decision of the ELA.15 The NLRC ruled that payment of separation pay in check did not violate Article 102 of the Labor Code which required payment of wages in legal tender because (a) the check is a legal tender; and (b) the statement allows payment of wages in check in special circumstances, as in the present case where the individual complaints were paid large amounts of monetary benefits.

Dissatisfied, the petitioners filed a motion for reconsideration of the resolution, contending that the NLRC denied the said motion for lack of merit. In the absence of any provision in the CBA, the existing company policy or practice should have been applied in the computation of the separation pay of the monthly-paid employees. Thee noted that in several instances, SDPI had paid separation pay computed at one month per year of service. The NLRC denied the motion in a Resolution dated August 23, 1999.16

Distressed, the petitioners filed a petition for certiorari under Rule 65 of the 1997 Rules of Procedure before the Court of Appeals (CA) docketed as CA-G.R. SP No. 56230. The petitioners alleged that:

(I)THE RESPONDENT NLRC COMMITED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, MORE SPECIFICALLY, IN NOT RULING THAT THE ELIMINATION OR DIMINUTION OF EMPLOYEE BENEFITS IS PROHIBITED UNDER ARTICLE 100 OF THE LABOR CODE, AS AMENDED.(II)THE RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, MORE SPECIFICALLY, WHEN IT RULED THAT PETITIONER-WORKERS WERE ESTOPED FROM CLAIMING THE BALANCE OF THEIR SEPARATION PAY OR BENEFITS.(III)THE RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION, MORE SPECIFICALLY, WHEN IT RULED THAT CHECK IS LEGAL TENDER.17

In its Manifestation and Motion, the Office of the Solicitor General (OSG) agreed that the petitioners were dismissed based on authorized cause. However, it asserted that they were entitled to separation pay equivalent to one-month pay for every year of service. Citing the case of Robles v. Zambales Chromite Mining Co., 18 the OSG opined that to hold that payment of separation pay equivalent to one-month pay applies only in cases of retrenchment and not when the termination is due to cessation of business operations not due to serious business losses, would create a distinction which was not contemplated under the law. According to the OSG, Section 9, Implementing Rules of Book VI, which provides that in case of terminations based on business closures, separation pay shall be computed at one-half month pay per year of service, cannot prevail over the provisions of the law.

The OSG furthered that the petitioners were not barred from recovering the balance of their separation pay because they were compelled to sign the quitclaims prepared by the respondent SDPI. The signing was made a condition to enable the petitioners to receive their separation pay and other monetary benefits without undue delay.

On May 7, 2001, the CA rendered a decision affirming the decision of the NLRC and dismissing the petition.

Applying Article 283 of the Labor Code, the CA ruled that separation pay due to business closures not due to business losses shall be equivalent to one-month pay or atleast one-half month pay for every year of service, whichever is higher. Citing the cases of Philippine Tobacco Flue-Curing & Redrying Corporation v. NLRC [19] and Naguiat v. NLRC,[20] the CA held that separation pay of employees dismissed based on business closures should be one half their respective monthly wage, multiplied by the number of years they actually rendered service, provided that they worked for at least six months during a given year.

The threshold issue is whether or not the CA erred in holding that the petitioners are entitled to separation pay equivalent to one-half month pay for every year of employment with the private respondent.

The petitioners contend that the private respondent is bound by its policy of granting separation pay equivalent to one-month pay for every year of service to its retrenched employees in the Tumajubong and Latuan plantations prior to the closure of Latuan rubber plantation where they were employed. They aver that the separation pay equivalent to one-half month pay for every year of service with the private respondent is proscribed by Article 100 of the Labor Code of the Philippines, to wit:

ART. 100. Prohibition against elimination or diminution of benefits.- Nothing in this book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code.

The petitioners posit that Article 100 of the Labor Code of the Philippines should prevail over any provisions of the CBA between the NFL and the private respondent. They assert that they believed in good faith that the private respondent would follow and implement its policy which had been in effect even before the private respondent and the NFL executed their CBA. They contend that had the NFL and/or its members been informed, before the execution of the said CBA, that the private respondent would not follow its policy when the plantation stopped its operation, for sure, NFL and/or its members would have insisted in the inclusion in the CBA of a provision granting each of them separation pay equivalent to one month pay for every year of service. On the other hand, the CA ruled that:

We agree with respondent SDPI that its past payment of separation pay at one (1) month pay for every year of service cannot be taken as precedent or company practice applicable to individual complaints herein due to different factual setting. Firstly, there was no provision in the CBA between the respondent SDPI and the rank-and-file employees in Tumajubong Rubber Plantation fixing the rate of separation pay for any worker who was terminated for authorized cause. Secondly, the Tumajubong Rubber Plantation and Latuan Rubber Plantation where individual complaints herein were assigned were two entities, separate and distinct from each other. Thirdly, the workers in the Latuan Rubber Plantation alluded to have been terminated from employment on April 1, 1994 in pursuance of the staff reduction program were actually separated from the service due to redundancy, and, as such, they were entitled to separation pay equivalent to one (1) month pay for every year of service under Article 283 of the Labor Code. Fourthly, Rustom Democrito and other complaining workers in the early NLRC Case No. M-001457-93 (RAB 09-11-00297-90) were paid of their separation pay at one (1) month pay per year of service by virtue of a compromise settlement.

If-at-all, respondent SDPI, through Mr. Ortalla and other representatives in the CBA negotiations, have intended to uniformly grant separation pay at one (1) month pay per year of service to all workers who were terminated from employment due to authorized cause as what complainants would want to make it appear, the parties to the CBA could have expressly made a provision to that effect to erase any doubt to the contrary.21

We agree with the NLRC and the CA.

Article 283 of the Labor Code provides that employees who are dismissed due to closures that are not due to business insolvency should be paid separation pay equivalent to one-month pay or to at least one-half month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one whole year, thus:

ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to at least his one (1) month pay or to at least (1) month pay for

every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or to at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

Patently, in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay of employees shall be equivalent to one-month pay or to at least one-half month pay for every year of service, whichever is higher.22 In no case will an employee get less than one-month separation pay if the separation from the service is due to the above stated causes, provided that he has already served for at least six months. Thus, if an employee had been in the service for at least six months, he is entitled to a full months pay as his termination pay if his separation from the job is due to any of the causes enumerated above. However, if he has to his credit ten years of service, he is entitled to five months pay, this being higher than one-month pay. Stated differently, the computation of termination pay should be based on either one-month or one-half month pay, whichever will yield to the employees higher separation pay, taking into consideration his length of service.23

In this case, the petitioners had served the respondent SDPI for a period longer than six months. Hence, their separation pay computed at one-half pay per year of service is more than the minimum one-month pay.

Pursuant to the 1995 CBA between the SDPI and its Latuan daily-paid rank-and-file employees, permanent or temporary lay-off workers affected would be entitled to termination pay as by the Labor Code.24 The parties did not incorporate in the CBA a specific provision providing that employees terminated from employment due to the closure of business operations would be entitled to separation pay equivalent to one-month pay for every year of service. The parties opted to be bound by the provisions of the Labor Code and not by company policy. The employees of the private respondent who were members of the NFL ratified the CBA which had been in force and effect for three years before the closure of the plantation, without the NFL initiating the revision thereof.

It bears stressing that a collective bargaining agreement refers to the negotiated contract between the legitimate labor organization and the employer concerning wages, hours of work and all other terms and conditions of employment in the bargaining unit.25 During the negotiations, the parties, management and union meet and convene promptly and expeditiously in good faith for the purpose of negotiating an agreement.26 Had the daily-paid rank-and-file employees deemed the same to be a diminution of their benefits, they should have rejected the CBA. The petitioners never assailed the CBA as prejudicial to them or for having been in violation of Article 100 of the Labor Code. Unless annulled, the CBA, as a contract governing the employer and the employees respecting the terms of employment, should prevail.

The records reveal that there is no substantial evidence to support the claim that a similar practice had been made in the case of monthly-paid employees. Neither is there any evidence that a CBA exist between monthly-paid rank-and-file employees and the SDPI. Consequently, Article 283 of the Labor Code, which grants separation pay equivalent to one-month pay or one-half month pay for every year of service, whichever is higher, to the employees retrenched due to business closures, should apply.

We find that the petitioners contention, that they were impelled to execute the deed of quitclaim and receive their separation pay and monetary benefits because, otherwise, they and their families would have starved, is implausible. We agree with the following ratiocination of the ELA:

Beforehand, however, it must be stressed that when the complainants were paid separation benefits and executed their quitclaims and releases before the undersigned on 15 and 16 January 1998, the undersigned verified and confirmed that they did so voluntarily and willingly, after having been made to understand the consequences thereof. And they received their separation benefits and executed their quitclaims and releases despite the fact that they had asked for but were not granted a higher rate of separation pay; that their union officers were present at that time; that they were made to understand the consequences

of their receiving the separation benefits proffered to them and their execution of quitclaims and releases.

Their voluntary acceptance of separation benefits and execution of quitclaims and releases, to the mind of the undersigned, now bars the complainants from asking for more. If they were not amenable to the computation or amount thereof, they should have accepted the same. But by so accepting the separation benefits, they thereby entered into a compromise thereon with SDPI. This is so, even if the existence of company policy or practice on the basis of which the complainants ask for separation pay differentials, is assumed to be true.

While it is true that quitclaims are frowned upon the in labor claims, this holds true only when the consideration therefor is unconscionably low. Where, however, the consideration is substantial, the efficacy and validity thereof has been upheld, more so, where the quitclaim was voluntarily and willingly executed, as in the instant case.

The amount of separation pay paid to and received by the complainants, was one-half of what they wanted. To the mind of the undersigned, that constituted substantial consideration for the quitclaims the complainants voluntarily executed. This is particularly so, considering that the separation pay the complainants received (one-half month pay for every year of service) was the minimum prescribed by law, as embodied in Article 283 of the Labor Code, as amended.

As held in Periquet vs. National Labor Relations Commission, 186 SCRA 724 (1990):

Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not be disowned simply because of a changed of mind. It is only where there is a clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of the settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must recognized as a valid and binding undertaking.

This ruling was subsequently reiterated and applied in Samaniego vs. National Labor Relations Commission, 198 SCRA (1991) and Veloso vs. Department of Labor and Employment, 200 SCRA 201 (1991).

Accordingly, the complainants are not entitled to, and cannot anymore be granted separation pay differentials.

It bears stressing anew that the complainants were paid substantial amounts of separation pay in the presence of the undersigned, before whom they executed and corresponding quitclaims and releases and to whom they affirmed the voluntariness and their willingness as to the execution thereof and receipt of separation benefits proffered to them by SDPI at that time, with understanding as to the contents of the quitclaims and releases and the consequences of their said acts.

In the light of the foregoing discussion, the other money claims of the complainants must also be set aside.27

We do not agree with the claim of the petitioners that the payment of separation pay and other benefits in check is in violation of Article 102 of the Labor Code, which provides:

Art. 102.- Forms of Payment. No employers shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits or any object other than legal tender, even when expressly requested by the employee.

Payment of wages by check or money order shall be allowed when such payment is customary on the date of effectivity of this Code, or is necessary because of

special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor or a stipulation in a collective bargaining agreement.

Payment by check- payment of wages by bank checks, postal checks or money orders is allowed where such manner of wage payment is customary on the date of the effectivity of the Code, where it is stipulated in a collective bargaining agreement, or where all of the following conditions are met:

1. There is a bank or other facility for encashment within a radius of one (1) kilometer from the workplace;2. The employer, or any of his agents or representatives, does not receive any pecuniary benefit directly or indirectly from the arrangement;3. The employee are given reasonable time during banking hours to withdraw their wages from the bank which time shall be considered as compensable hours worked if done during the working hours; and4. The payment by check is with the written consent of the employees concerned if there is no collective agreement authorizing the payment of wages by bank checks.28

The term wage was defined in Article 97(f) of the Labor Code as the remuneration or earnings, however, designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee.29 Wages shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages in forms other than legal tender, that is by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are present.

In the present case, the petitioners separation pay, other benefits, and the wages from January 1 to 17 were paid in check. Strictly speaking, SDPI violated the Labor Code when it included wages from January 1 to 17, 1998 in the check. Considering, however, the amount of other monetary benefits to be paid, payment in check was the most convenient form for both the petitioners and the respondent. Further, as pointed out by the respondents, the petitioners are deemed estopped from questioning the legality of payment of wages from January 1 to 17, 1998 in check because the same was raised for the first time only in their appeal before the NLRC.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The decision and resolution of the Court of Appeals in CA-G.R. SP No. 56230 are AFFIRMED.

SO ORDERED.

PEDRO CHAVEZ, Petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC. and ALVIN LEE, Plant

Manager, Respondents.

D E C I S I O N

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari of the Resolution[1] dated December 15, 2000 of the Court of Appeals (CA) reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485. The assailed resolution reinstated the Decision dated July 10, 1998 of the National Labor Relations Commission (NLRC), dismissing the complaint for illegal dismissal filed by herein petitioner Pedro Chavez. The said NLRC decision similarly reversed its earlier Decision dated January 27, 1998 which, affirming that of the Labor Arbiter, ruled that the petitioner had been illegally dismissed by respondents Supreme Packaging, Inc. and Mr. Alvin Lee.

The case stemmed from the following facts:

The respondent company, Supreme Packaging, Inc., is in the business of manufacturing cartons and other packaging materials for export and distribution. It engaged the services of the petitioner, Pedro Chavez, as truck driver on October 25, 1984. As such, the petitioner was tasked to deliver the respondent

company's products from its factory in Mariveles, Bataan, to its various customers, mostly in Metro . The respondent company furnished the petitioner with a truck. Most of the petitioner's delivery trips were made at nighttime, commencing at 6:00 p.m. from Mariveles, and returning thereto in the afternoon two or three days after. The deliveries were made in accordance with the routing slips issued by respondent company indicating the order, time and urgency of delivery. Initially, the petitioner was paid the sum of P350.00 per trip. This was later adjusted to P480.00 per trip and, at the time of his alleged dismissal, the petitioner was receivingP900.00 per trip.

Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent company's plant manager, his (the petitioner's ) desire to avail himself of the benefits that the regular employees were receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others. Although he promised to extend these benefits to the petitioner, respondent Lee failed to actually do so.

On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration Branch No. III of the NLRC in San Fernando, Pampanga. Before the case could be heard, respondent company terminated the services of the petitioner. Consequently, on May 25, 1995, the petitioner filed an amended complaint against the respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, 13th month pay, among others. The case was docketed as NLRC Case No. RAB-III-02-6181-95.

The respondents, for their part, denied the existence of an employer-employee relationship between the respondent company and the petitioner. They averred that the petitioner was an independent contractor as evidenced by the contract of service which he and the respondent company entered into. The said contract provided as follows:

That the Principal [referring to Supreme Packaging, Inc.], by these presents, agrees to hire and the Contractor [referring to Pedro Chavez], by nature of their specialized line or service jobs, accepts the services to be rendered to the Principal, under the following terms and covenants heretofore mentioned:

1. That the inland transport delivery/hauling activities to be performed by the contractor to the principal, shall only cover travel route from Mariveles to Metro . Otherwise, any change to this travel route shall be subject to further agreement by the parties concerned.2. That the payment to be made by the Principal for any hauling or delivery transport services fully rendered by the Contractor shall be on a per trip basis depending on the size or classification of the truck being used in the transport service, to wit:a) If the hauling or delivery service shall require a truck of six wheeler, the payment on a per trip basis from Mariveles to Metro shall be THREE HUNDRED PESOS (P300.00) and EFFECTIVE December 15, 1984.b) If the hauling or delivery service require a truck of ten wheeler, the payment on a per trip basis, following the same route mentioned, shall be THREE HUNDRED FIFTY (P350.00) Pesos and Effective December 15, 1984.

3. That for the amount involved, the Contractor will be to [sic] provide for [sic] at least two (2) helpers;4. The Contractor shall exercise direct control and shall be responsible to the Principal for the cost of any damage to, loss of any goods, cargoes, finished products or the like, while the same are in transit, or due to reckless [sic] of its men utilized for the purpose above mentioned;5. That the Contractor shall have absolute control and disciplinary power over its men working for him subject to this agreement, and that the Contractor shall hold the Principal free and harmless from any liability or claim that may arise by virtue of the Contractor's non-compliance to the existing provisions of the Minimum Wage Law, the Employees Compensation Act, the Social Security System Act, or any other such law or decree that may hereafter be enacted, it being clearly understood that any truck drivers, helpers or men working with and for the Contractor, are not employees who will be indemnified by the Principal

for any such claim, including damages incurred in connection therewith;6. This contract shall take effect immediately upon the signing by the parties, subject to renewal on a year-to-year basis.[2]chanroblesvirtuallawlibrary

This contract of service was dated December 12, 1984. It was subsequently renewed twice, on July 10, 1989 and September 28, 1992. Except for the rates to be paid to the petitioner, the terms of the contracts were substantially the same.

The relationship of the respondent company and the petitioner was allegedly governed by this contract of service.

The respondents insisted that the petitioner had the sole control over the means and methods by which his work was accomplished. He paid the wages of his helpers and exercised control over them. As such, the petitioner was not entitled to regularization because he was not an employee of the respondent company. The respondents, likewise, maintained that they did not dismiss the petitioner. Rather, the severance of his contractual relation with the respondent company was due to his violation of the terms and conditions of their contract. The petitioner allegedly failed to observe the minimum degree of diligence in the proper maintenance of the truck he was using, thereby exposing respondent company to unnecessary significant expenses of overhauling the said truck.

After the parties had filed their respective pleadings, the Labor Arbiter rendered the Decision dated February 3, 1997, finding the respondents guilty of illegal dismissal. The Labor Arbiter declared that the petitioner was a regular employee of the respondent company as he was performing a service that was necessary and desirable to the latter's business. Moreover, it was noted that the petitioner had discharged his duties as truck driver for the respondent company for a continuous and uninterrupted period of more than ten years.

The contract of service invoked by the respondents was declared null and void as it constituted a circumvention of the constitutional provision affording full protection to labor and security of tenure. The Labor Arbiter found that the petitioner's dismissal was anchored on his insistent demand to be regularized. Hence, for lack of a valid and just cause therefor and for their failure to observe the due process requirements, the respondents were found guilty of illegal dismissal. The dispositive portion of the Labor Arbiter's decision states:

WHEREFORE, in the light of the foregoing, judgment is hereby rendered declaring respondent SUPREME PACKAGING, INC. and/or MR. ALVIN LEE, Plant Manager, with business address at BEPZ, Mariveles, Bataan guilty of illegal dismissal, ordering said respondent to pay complainant his separation pay equivalent to one (1) month pay per year of service based on the average monthly pay of P10,800.00 in lieu of reinstatement as his reinstatement back to work will not do any good between the parties as the employment relationship has already become strained and full backwages from the time his compensation was withheld on February 23, 1995 up to January 31, 1997 (cut-off date) until compliance, otherwise, his backwages shall continue to run. Also to pay complainant his 13th month pay, night shift differential pay and service incentive leave pay hereunder computed as follows:

a) Backwages .. P248,400.00b) Separation Pay .... P140,400.00c) 13th month pay .P 10,800.00d) Service Incentive Leave Pay .. 2,040.00

TOTAL P401,640.00

Respondent is also ordered to pay ten (10%) of the amount due the complainant as attorney's fees.

SO ORDERED.[3]chanroblesvirtuallawlibrary

The respondents seasonably interposed an appeal with the NLRC. However, the appeal was dismissed by the NLRC in its Decision[4] dated January 27, 1998, as it affirmed in toto the decision of the Labor Arbiter. In the said decision, the NLRC characterized the contract of service between the respondent company and the petitioner as a 'scheme that was resorted to by the respondents who, taking advantage of the petitioner's unfamiliarity with the English language and/or legal niceties, wanted to evade the effects and implications of his becoming a regularized employee.[5]chanroblesvirtuallawlibrary

The respondents sought reconsideration of the January 27, 1998 Decision of the NLRC. Acting thereon, the NLRC rendered another Decision[6] dated July 10, 1998, reversing its earlier decision and, this time, holding that no employer-employee relationship existed between the respondent company and the petitioner. In reconsidering its earlier decision, the NLRC stated that the respondents did not exercise control over the means and methods by which the petitioner accomplished his delivery services. It upheld the validity of the contract of service as it pointed out that said contract was silent as to the time by which the petitioner was to make the deliveries and that the petitioner could hire

his own helpers whose wages would be paid from his own account. These factors indicated that the petitioner was an independent contractor, not an employee of the respondent company.

The NLRC ruled that the contract of service was not intended to circumvent Article 280 of the Labor Code on the regularization of employees. Said contract, including the fixed period of employment contained therein, having been knowingly and voluntarily entered into by the parties thereto was declared valid citing Brent School, Inc. v. Zamora.[7] The NLRC, thus, dismissed the petitioner's complaint for illegal dismissal.

The petitioner sought reconsideration of the July 10, 1998 Decision but it was denied by the NLRC in its Resolution dated September 7, 1998. He then filed with this Court a petition for certiorari, which was referred to the CA following the ruling in St. Martin Funeral Home v. NLRC.[8]chanroblesvirtuallawlibrary

The appellate court rendered the Decision dated April 28, 2000, reversing the July 10, 1998 Decision of the NLRC and reinstating the decision of the Labor Arbiter. In the said decision, the CA ruled that the petitioner was a regular employee of the respondent company because as its truck driver, he performed a service that was indispensable to the latter's business. Further, he had been the respondent company's truck driver for ten continuous years. The CA also reasoned that the petitioner could not be considered an independent contractor since he had no substantial capital in the form of tools and machinery. In fact, the truck that he drove belonged to the respondent company. The CA also observed that the routing slips that the respondent company issued to the petitioner showed that it exercised control over the latter. The routing slips indicated the chronological order and priority of delivery, the urgency of certain deliveries and the time when the goods were to be delivered to the customers.

The CA, likewise, disbelieved the respondents' claim that the petitioner abandoned his job noting that he just filed a complaint for regularization. This actuation of the petitioner negated the respondents' allegation that he abandoned his job. The CA held that the respondents failed to discharge their burden to show that the petitioner's dismissal was for a valid and just cause. Accordingly, the respondents were declared guilty of illegal dismissal and the decision of the Labor Arbiter was reinstated.

In its April 28, 2000 Decision, the CA denounced the contract of service between the respondent company and the petitioner in this wise:

In summation, we rule that with the proliferation of contracts seeking to prevent workers from attaining the status of regular employment, it is but necessary for the courts to scrutinize with extreme caution their legality and justness. Where from the circumstances it is apparent that a contract has been entered into to preclude acquisition of tenurial security by the employee, they should be struck down and disregarded as contrary to public policy and morals. In this case, the 'contract of service is just another attempt to exploit the unwitting employee and deprive him of the protection of the Labor Code by making it appear that the stipulations of the parties were governed by the Civil Code as in ordinary transactions.[9]chanroblesvirtuallawlibrary

However, on motion for reconsideration by the respondents, the CA made a complete turn around as it rendered the assailed Resolution dated December 15, 2000 upholding the contract of service between the petitioner and the respondent company. In reconsidering its decision, the CA explained that the extent of control exercised by the respondents over the petitioner was only with respect to the result but not to the means and methods used by him. The CA cited the following circumstances: (1) the respondents had no say on how the goods were to be delivered to the customers; (2) the petitioner had the right to employ workers who would be under his direct control; and (3) the petitioner had no working time.

The fact that the petitioner had been with the respondent company for more than ten years was, according to the CA, of no moment because his status was determined not by the length of service but by the contract of service. This contract, not being contrary to morals, good customs, public order or public policy, should be given the force and effect of law as between the respondent company and the petitioner. Consequently, the CA reinstated the July 10, 1998 Decision of the NLRC dismissing the petitioner's complaint for illegal dismissal.

Hence, the recourse to this Court by the petitioner. He assails the December 15, 2000 Resolution of the appellate court alleging that:

(A)

THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF JURISDICTION IN GIVING MORE CONSIDERATION TO THE 'CONTRACT OF SERVICE ENTERED INTO BY PETITIONER AND PRIVATE RESPONDENT THAN ARTICLE 280 OF THE LABOR CODE OF THE PHILIPPINES WHICH CATEGORICALLY DEFINES A REGULAR EMPLOYMENT NOTWITHSTANDING ANY WRITTEN AGREEMENT TO THE CONTRARY AND REGARDLESS OF THE ORAL AGREEMENT OF THE PARTIES;(B)THE COURT OF APPEALS COMMITTED A GRAVE ABUSE OF DISCRETION AMOUNTING TO EXCESS OF JURISDICTION IN REVERSING ITS OWN FINDINGS THAT PETITIONER IS A REGULAR EMPLOYEE AND IN HOLDING THAT THERE EXISTED NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PRIVATE RESPONDENT AND PETITIONER IN AS MUCH AS THE 'CONTROL TEST WHICH IS CONSIDERED THE MOST ESSENTIAL CRITERION IN DETERMINING THE EXISTENCE OF SAID RELATIONSHIP IS NOT PRESENT.[10]chanroblesvirtuallawlibrary

The threshold issue that needs to be resolved is whether there existed an employer-employee relationship between the respondent company and the petitioner. We rule in the affirmative.

The elements to determine the existence of an employment relationship are: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the employer's power to control the employee's conduct.[11] The most important element is the employer's control of the employee's conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.[12] All the four elements are present in this case.

First. Undeniably, it was the respondents who engaged the services of the petitioner without the intervention of a third party.

Second. Wages are defined as 'remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for service rendered or to be rendered.[13] That the petitioner was paid on a per trip basis is not significant. This is merely a method of computing compensation and not a basis for determining the existence or absence of employer-employee relationship. One may be paid on the basis of results or time expended on the work, and may or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not.[14] In this case, it cannot be gainsaid that the petitioner received compensation from the respondent company for the services that he rendered to the latter.

Moreover, under the Rules Implementing the Labor Code, every employer is required to pay his employees by means of payroll.[15] The payroll should show, among other things, the employee's rate of pay, deductions made, and the amount actually paid to the employee. Interestingly, the respondents did not present the payroll to support their claim that the petitioner was not their employee, raising speculations whether this omission proves that its presentation would be adverse to their case.[16]chanroblesvirtuallawlibrary

Third. The respondents' power to dismiss the petitioner was inherent in the fact that they engaged the services of the petitioner as truck driver. They exercised this power by terminating the petitioner's services albeit in the guise of 'severance of contractual relation due allegedly to the latter's breach of his contractual obligation.

Fourth. As earlier opined, of the four elements of the employer-employee relationship, the 'control test is the most important. Compared to an employee, an independent contractor is one who carries on a distinct and independent business and undertakes to perform the job, work, or service on its own account and under its own responsibility according to its own manner and method, free from the control and direction of the principal in all matters connected with the performance of the work except as to the results thereof.[17] Hence, while an independent contractor enjoys independence and freedom from the control and supervision of his principal, an employee is subject to the employer's power to control the means and methods by which the employee's work is to be performed and accomplished.[18]chanroblesvirtuallawlibrary

Although the respondents denied that they exercised control over the manner and methods by which the petitioner accomplished his work, a careful review of the records shows that the latter performed his work as truck driver under the

respondents' supervision and control. Their right of control was manifested by the following attendant circumstances:

1. The truck driven by the petitioner belonged to respondent company;2. There was an express instruction from the respondents that the truck shall be used exclusively to deliver respondent company's goods; [19]3. Respondents directed the petitioner, after completion of each delivery, to park the truck in either of two specific places only, to wit: at its office in Metro at 2320 Osmea Street, Makati City or at BEPZ, Mariveles, Bataan;[20] and4. Respondents determined how, where and when the petitioner would perform his task by issuing to him gate passes and routing slips. [21]

a. The routing slips indicated on the column REMARKS, the chronological order and priority of delivery such as 1stdrop, 2nd drop, 3rd drop, etc. This meant that the petitioner had to deliver the same according to the order of priority indicated therein.b. The routing slips, likewise, showed whether the goods were to be delivered urgently or not by the word RUSH printed thereon.c. The routing slips also indicated the exact time as to when the goods were to be delivered to the customers as, for example, the words tomorrow morning was written on slip no. 2776.

These circumstances, to the Court's mind, prove that the respondents exercised control over the means and methods by which the petitioner accomplished his work as truck driver of the respondent company. On the other hand, the Court is hard put to believe the respondents' allegation that the petitioner was an independent contractor engaged in providing delivery or hauling services when he did not even own the truck used for such services. Evidently, he did not possess substantial capitalization or investment in the form of tools, machinery and work premises. Moreover, the petitioner performed the delivery services exclusively for the respondent company for a continuous and uninterrupted period of ten years.

The contract of service to the contrary notwithstanding, the factual circumstances earlier discussed indubitably establish the existence of an employer-employee relationship between the respondent company and the petitioner. It bears stressing that the existence of an employer-employee relationship cannot be negated by expressly repudiating it in a contract and providing therein that the employee is an independent contractor when, as in this case, the facts clearly show otherwise. Indeed, the employment status of a person is defined and prescribed by law and not by what the parties say it should be.[22]chanroblesvirtuallawlibrary

Having established that there existed an employer-employee relationship between the respondent company and the petitioner, the Court shall now determine whether the respondents validly dismissed the petitioner.

As a rule, the employer bears the burden to prove that the dismissal was for a valid and just cause.[23] In this case, the respondents failed to prove any such cause for the petitioner's dismissal. They insinuated that the petitioner abandoned his job. To constitute abandonment, these two factors must concur: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship.[24] Obviously, the petitioner did not intend to sever his relationship with the respondent company for at the time that he allegedly abandoned his job, the petitioner just filed a complaint for regularization, which was forthwith amended to one for illegal dismissal. A charge of abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal, more so when it includes a prayer for reinstatement.[25]chanroblesvirtuallawlibrary

Neither can the respondents' claim that the petitioner was guilty of gross negligence in the proper maintenance of the truck constitute a valid and just cause for his dismissal. Gross negligence implies a want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.[26] The negligence, to warrant removal from service, should not merely be gross but alsohabitual.[27] The single and isolated act of the petitioner's negligence in the proper maintenance of the truck alleged by the respondents does not amount to 'gross and habitual neglect warranting his dismissal.

The Court agrees with the following findings and conclusion of the Labor Arbiter:

As against the gratuitous allegation of the respondent that complainant was not dismissed from the service but due to complainant's breach of their contractual relation, i.e., his violation of the terms and conditions of the contract, we are very

much inclined to believe complainant's story that his dismissal from the service was anchored on his insistent demand that he be considered a regular employee. Because complainant in his right senses will not just abandon for that reason alone his work especially so that it is only his job where he depends chiefly his existence and support for his family if he was not aggrieved by the respondent when he was told that his services as driver will be terminated on February 23, 1995.[28]chanroblesvirtuallawlibrary

Thus, the lack of a valid and just cause in terminating the services of the petitioner renders his dismissal illegal. Under Article 279 of the Labor Code, an employee who is unjustly dismissed is entitled to reinstatement, without loss of seniority rights and other privileges, and to the payment of full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement.[29] However, as found by the Labor Arbiter, the circumstances obtaining in this case do not warrant the petitioner's reinstatement. A more equitable disposition, as held by the Labor Arbiter, would be an award of separation pay equivalent to one month for every year of service from the time of his illegal dismissal up to the finality of this judgment in addition to his full backwages, allowances and other benefits.

WHEREFORE, the instant petition is GRANTED. The Resolution dated December 15, 2000 of the Court of Appeals reversing its Decision dated April 28, 2000 in CA-G.R. SP No. 52485 is REVERSED and SET ASIDE. The Decision dated February 3, 1997 of the Labor Arbiter in NLRC Case No. RAB-III-02-6181-5, finding the respondents guilty of illegally terminating the employment of petitioner Pedro Chavez, is REINSTATED.

SO ORDERED.

G & M (Phils.), Inc., Petitioner, vs. EPIFANIO CRUZ, respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

The well-entrenched rule, especially in labor cases, is that findings of fact of quasi-judicial bodies, like the National Labor Relations Commission (NLRC), are accorded with respect, even finality, if supported by substantial evidence. Particularly when passed upon and upheld by the Court of Appeals, they are binding and conclusive upon the Supreme Court and will not normally be disturbed.[1]

The Court finds no reason in this case to depart from such doctrine.

Petitioner G & M (Phils.), Inc. recruited respondent Cruz as trailer driver for its foreign principal, Salim Al Yami Est., for a period of two years, and with a stipulated monthly salary of US$625, starting June 6, 1990. Respondent alleged that when he arrived in the Kingdom of Saudi Arabia, he was made to sign an employment contract in blank and his salary was reduced to SR604.00. Seven months into employment, his employer deported him on December 28, 1990. According to respondent, the cause for his dismissal was his complaint for sub-human working conditions, non-payment of wages and overtime pay, salary deduction and change of employer. Hence, he filed with the Labor Arbiter an Affidavit/Complaint against petitioner for illegal dismissal, underpayment and non-payment of wages, and refund of transportation expenses. Respondent claims that he was only paid in an amount equivalent to five months salary and he did not receive his salary for the last two months. Respondent submitted a copy of his pay slip showing the amount of SR604.00 as his basic salary.[2]

Petitioner contends that respondent abandoned his job when he joined an illegal strike and refused to report for work, constituting a breach of his employment contract and a valid cause for termination of employment. Petitioner also claims that the pay slip submitted by respondent is inadmissible because the original copy was not presented and that its existence, due execution, genuineness and authenticity were not established.[3]

The Labor Arbiter found merit in petitioner's claim that respondent abandoned his job, but nevertheless granted respondent's claim for underpayment of wages and two months unpaid salary. The dispositive portion of the Labor Arbiter's decision reads:

WHEREFORE, premises considered, the charge of illegal dismissal is hereby denied for lack of merit. However, respondent G & M (Phils.), Inc., is hereby

ordered to pay within ten (10) days from receipt hereof, herein complainant Epifanio Cruz, the sums of P77,455.00 to be adjusted as earlier stated, and US$1,250.00 or its peso equivalent at the time of payment.

SO ORDERED.[4]

On partial appeal to the NLRC, the same was dismissed per Resolution dated June 10, 1998, with the following dispositive portion:

WHEREFORE, the appeal is Dismissed for lack of merit. Respondent G & M (Phils.) Inc., and Salim Al Yami Est., are hereby ordered jointly and severally liable to pay complainant Epifanio Cruz the Philippine Peso equivalent at the time of actual payment of the following sums:

a) THREE THOUSAND ONE HUNDRED TWENTY FIVE US DOLLARS (US$3,125.00) less THREE THOUSAND TWENTY SAUDI RIYALS (SR3,020.000) representing salary differentials for five months; andb) ONE THOUSAND TWO HUNDRED FIFTY US DOLLARS (US$1,250.00) representing unpaid salaries for two (2) months.

Other dispositions of the appealed Decision stand AFFIRMED.

SO ORDERED.[5]

Petitioner filed a special civil action for certiorari in the Court of Appeals, docketed as CA-G.R. SP No. 49729, but it was dismissed for lack of merit.[6]

Hence, this petition for review on certiorari under Rule 45 of the Rules of Court, based on the following grounds:

THE COURT OF APPEALS FAILED TO CONSIDER THE FACT THAT WITH THE RESPONDENT'S ADMISSION OF RECEIPT OF THE PAYMENTS OF HIS SALARIES ALTHOUGH ALLEGEDLY SHORT OF WHAT WAS STIPULATED IN HIS CONTRACT - THE 'BURDEN OF EVIDENCE IS NOW SHIFTED UPON HIM TO SHOW CONCRETE PROOF THAT INDEED HE WAS SHORT-CHANGED OF HIS SALARIES.

CONTRARY TO THE COURT OF APPEAL'S [sic] CONCLUSION, THE 'PAYROLL ISSUE IS OF GREAT IMPORTANCE IN THE DETERMINATION OF THE ISSUES IN THE CASE AT BAR INASMUCH AS IT IS THE RESPONDENT WHO HAS THE BURDEN OF PRESENTING EVIDENCE OF SHORT PAYMENT AFTER HAVING ADMITTED TO HAVE RECEIVED CERTAIN AMOUNTS FOR HIS SALARIES.[7]

This petition mainly involves factual issues, i.e., whether or not there is evidence on record to support the findings of the Labor Arbiter, the NLRC and the Court of Appeals that respondent is entitled to the payment of salary differential and unpaid wages. This calls for a re-examination of the evidence, which the Court cannot entertain. As stated earlier, factual findings of labor officials, who are deemed to have acquired expertise in matters within their respective jurisdiction, are generally accorded not only respect but even finality, and bind the Court when supported by substantial evidence. It is not the Court's function to assess and evaluate the evidence all over again, particularly where the findings of both the Arbiter and the Court of Appeals concur.[8]

Nevertheless, even if the Court delves into the issues posed by petitioner, there is still no reason to grant the petition.

It was the finding of the Court of Appeals that it is the burden of petitioner to prove that the salaries paid by its foreign principal complied with the contractual stipulations of their agency-worker agreement. Since petitioner failed to discharge such burden, then it was correct for the NLRC to rely on respondent's claim of underpayment.[9]

The Court of Appeals also ruled that since the positive testimony of respondent, as creditor, is sufficient to prove non-payment even without the indefinite testimony of petitioner, as debtor, then the payroll (pay slip), presented by respondent to prove that he only received the amount of SR604.00 as basic monthly salary, is immaterial.[10]

Petitioner, however, insists that since respondent already admitted that his employer paid him, albeit short of what was stipulated upon, then petitioner has

no more obligation to show that respondent was paid, and it now rests upon respondent to prove underpayment, and the pay slip submitted by respondent, which is of 'questionable authenticity, is not enough to prove the same.[11]

The rule is that the burden of proving payment of monetary claims rests on the employer,[12] in this case, herein petitioner, it being the employment agency or recruitment entity, and agent of the foreign principal, Salim Al Yami Est.,[13] which recruited respondent. In Jimenez vs. NLRC,[14] which involves a claim for unpaid wages/commissions, separation pay and damages against an employer, the Court ruled that where a person is sued for a debt admits that the debt was originally owed, and pleads payment in whole or in part, it is incumbent upon him to prove such payment. This is based on the principle of evidence that each party must prove his affirmative allegations. Since petitioner asserts that respondent has already been fully paid of his stipulated salary, the burden is upon petitioner to prove such fact of full payment.

In this case, while respondent may have admitted that he has actually been paid the amount of SR604.00 as monthly salary, it does not discharge petitioner from proving full payment of the stipulated monthly salary of US$625.00 based on the Agency-Worker Agreement. Respondent's admission that some payments have been made does not change the burden of proof. Petitioner still has the burden of establishing payments beyond those admitted by respondent.[15]

Thus, it was stated in the Jimenez case that:

As a general rule, one who pleads payment has the burden of proving it. Even where the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove payment, rather than on the plaintiff to prove non-payment. The debtor has the burden of showing with legal certainty that the obligation has been discharged by payment.

When the existence of a debt is fully established by the evidence contained in the record, the burden of proving that it has been extinguished by payment devolves upon the debtor who offers such a defense to the claim of the creditor. Where the debtor introduces some evidence of payment, the burden of going forward with the evidence - as distinct from the general burden of proof - shifts to the creditor, who is then under a duty of producing some evidence to show non-payment.

Petitioner merely denied respondent's claim of underpayment. It did not present any controverting evidence to prove full payment. Hence, the findings of the Labor Arbiter, the NLRC and the Court of Appeals that respondent was not fully paid of his wages stand.

The positive testimony of a creditor may be sufficient of itself to show non-payment, even when met by indefinite testimony of the debtor. Similarly, the testimony of the debtor may also be sufficient to show payment, but, where his testimony is contradicted by the other party or by a disinterested witness, the issue may be determined against the debtor since he has the burden of proof. The testimony of the debtor creating merely an inference of payment will not be regarded as conclusive on that issue.

Hence, for failure to present evidence to prove payment, petitioners defaulted in their defense and in effect admitted the allegations of private respondents.[16]

With regard to the admissibility of the pay slips, both the Labor Arbiter and the NLRC found that it was admissible as evidence. As a general rule, the Court is not duty-bound to delve into the accuracy of the NLRC's factual findings in the absence of a clear showing that these were arbitrary and bereft of any rational basis.[17] In the present case, petitioner failed to demonstrate any arbitrariness or lack of rational basis on the part of the NLRC.[18]

Article 221 of the Labor Code provides that proceedings before the NLRC are not covered by the technical rules of evidence and procedure. The probative value of the copy of the pay slips is aptly justified by the NLRC, as follows:

the payslips are original duplicates of computerized payslips issued by the employer, Salim Al Yami Est., to its workers which contain entries such as pay date, employee's I.D. number, employee name, category, basic rate, overtime hours and other relevant information, including an itemization of earnings (basic pay, overtime pay, meal allowance for the period covered) and deductions. The

fact that the payslips are not authenticated will not militate against complainant's claim, considering that in presenting the payslips, complainant has established the fact of underpayment, and the burden has shifted to the respondent to prove that complainant was totally compensated for actual services rendered.[19] (Emphasis supplied)

WHEREFORE, the petition is DENIED for lack merit.

SO ORDERED.

Puno, (Chairman), Callejo, Sr., Tinga, and Chico-Nazario, JJ., concur.

R & E TRANSPORT, INC., and HONORIO ENRIQUEZ, Petitioners, vs. AVELINA P. LATAG, representing her deceased husband, PEDRO M. LATAG, Respondents.

D E C I S I O N

PANGANIBAN, J.:

Factual issues may be reviewed by the Court of Appeals (CA) when the findings of fact of the National Labor Relations Commission (NLRC) conflict with those of the labor arbiter. By the same token, this Court may review factual conclusions of the CA when they are contrary to those of the NLRC or of the labor arbiter.

The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to nullify the June 3, 2002 Decision2and the August 28, 2002 Resolution3 of the Court of Appeals in CA-GR SP No. 67998. The appellate court disposed as follows:

WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed Order of public respondent NLRC is SET ASIDE. The March 14, 20014 [D]ecision of the Labor Arbiter a quo is REINSTATED.5

The challenged Resolution denied petitioners Motion for Reconsideration.

The Factual Antecedents

The antecedents of the case are narrated by the CA as follows:

Pedro Latag was a regular employee x x x of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from business operations, [Latag] x x x transferred to [petitioner] R & E Transport, Inc. x x x. He was receiving an average daily salary of five hundred pesos (P500.00) as a taxi driver.

[Latag] got sick in January 1995 and was forced to apply for partial disability with the SSS, which was granted. When he recovered, he reported for work in September 1998 but was no longer allowed to continue working on account of his old age.

Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his retirement pay pursuant to Republic Act 7641 but he was ignored. Thus, on December 21, 1998, [Latag] filed a case for payment of his retirement pay before the NLRC.

Latag however died on April 30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter rendered a decision in favor of [Latag], the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered ordering x x x LA MALLORCA TAXI, R & E TRANSPORT, INC. and their owner/chief executive officer HONORIO ENRIQUEZ to jointly and severally pay MRS. AVELINA P. LATAG the sum ofP277,500.00 by way of retirement pay for her deceased husband, PEDRO M. LATAG.

SO ORDERED.

On January 21, 2000, [Respondent Avelina Latag,] with her then counsel[,] was invited to the office of [petitioners] counsel and was offered the amount of P38,500.00[,] which she accepted. [Respondent] was also asked to sign an already prepared quitclaim and release and a joint motion to dismiss the case.

After a day or two, [respondent] received a copy of the January 10, 2000 [D]ecision of the Labor Arbiter.

On January 24, 2000, [petitioners] filed the quitclaim and motion to dismiss. Thereafter, on May 23, 2000, the Labor Arbiter issued an order, the relevant portion of which states:

WHEREFORE, the decision stands and the Labor Arbitration Associate of this Office is directed to prepare the Writ of Execution in due course.

SO ORDERED.

On January 21, 2000, [petitioners] interposed an appeal before the NLRC. On March 14, 2001, the latter handed down a [D]ecision[,] the decretal portion of which provides:

WHEREFORE, in view of the foregoing, respondents Appeal is hereby DISMISSED for failure to post a cash or surety bond, as mandated by law.

SO ORDERED.

On April 10, 2001, [petitioners] filed a motion for reconsideration of the above resolution. On September 28, 2001, the NLRC came out with the assailed [D]ecision, which gave due course to the motion for reconsideration.6(Citations omitted)

Respondent appealed to the CA, contending that under Article 223 of the Labor Code and Section 3, Rule VI of the New Rules of Procedure of the NLRC, an employers appeal of a decision involving monetary awards may be perfected only upon the posting of an adequate cash or surety bond.

Ruling of the Court of Appeals

The CA held that the labor arbiters May 23, 2000 Order had referred to the earlier January 10, 2000 Decision awarding respondentP277,500 as retirement benefit.

According to the appellate court, because petitioners appeal before the NLRC was not accompanied by an appropriate cash or surety bond, such appeal was not perfected. The CA thus ruled that the labor arbiters January 10, 2000 Decision and May 23, 2000 Order had already become final and executory.

Hence, this Petition.7

IssuesPetitioners submit the following issues for our consideration:IWhether or not the Court should respect the findings of fact [of] the NLRC as against [those] of the labor arbiter.IIWhether or not, in rendering judgment in favor of Petitioners, the NLRC committed grave abuse of discretion.IIIWhether or not private respondent violated the rule on forum-shopping.IVWhether or not the appeal of petitioners from the Order of the labor arbiter to the NLRC involves [a] monetary award.8

In short, petitioners raise these issues: (1) whether the CA acted properly when it overturned the NLRCs factual findings; (2) whether the rule on forum shopping was violated; and (3) whether the labor arbiters Order of May 23, 2000 involved a monetary award.

The Courts Ruling

The Petition is partly meritorious.

First Issue:

Factual Findings of the NLRC

Petitioners maintain that the CA erred in disregarding the factual findings of the NLRC and in deciding to affirm those of the labor arbiter. Allegedly, the NLRC findings were based on substantial evidence, while those of the labor arbiter were groundless. Petitioners add that the appellate court should have refrained from tackling issues of fact and, instead, limited itself to those of jurisdiction or grave abuse of discretion on the part of the NLRC.

The power of the CA to review NLRC decisions via a Rule 65 petition is now a settled issue. As early as St. Martin Funeral Homes v. NLRC,9 we have definitively ruled that the proper remedy to ask for the review of a decision of the NLRC is a special civil action for certiorari under Rule 65 of the Rules of Court,10 and that such petition should be filed with the CA in strict observance of the doctrine on the hierarchy of courts.11 Moreover, it has already been explained that under Section 9 of Batas Pambansa (BP) 129, as amended by Republic Act 7902,12 the CA -- pursuant to the exercise of its original jurisdiction over petitions for certiorari -- was specifically given the power to pass upon the evidence, if and when necessary, to resolve factual issues.13

Likewise settled is the rule that when supported by substantial evidence,14 factual findings made by quasi-judicial and administrative bodies are accorded great respect and even finality by the courts. These findings are not infallible, though; when there is a showing that they were arrived at arbitrarily or in disregard of the evidence on record, they may be examined by the courts.15 Hence, when factual findings of the NLRC are contrary to those of the labor arbiter, the evidentiary facts may be reviewed by the appellate court.16 Such is the situation in the present case; thus, the doors to a review are open.17

The very same reason that behooved the CA to review the factual findings of the NLRC impels this Court to take its own look at the findings of fact. Normally, the Supreme Court is not a trier of facts.18 However, since the findings of fact in the present case are conflicting,19 it waded through the records to find out if there was enough basis for the appellate courts reversal of the NLRC Decision.

Number of Creditable Yearsof Service for Retirement Benefits

Petitioners do not dispute the fact that the late Pedro M. Latag is entitled to retirement benefits. Rather, the bone of contention is the number of years that he should be credited with in computing those benefits. On the one hand, we have the findings of the labor arbiter,20 which the CA affirmed. According to those findings, the 23 years of employment of Pedro with La Mallorca Taxi must be added to his 14 years with R & E Transport, Inc., for a total of 37 years. On the other, we also have the findings of the NLRC21 that Pedro must be credited only with his service to R & E Transport, Inc., because the evidence shows that the aforementioned companies are two different entities.

After a careful and painstaking review of the evidence on record, we support the NLRCs findings. The labor arbiters conclusion -- that Mallorca Taxi and R & E Transport, Inc., are one and the same entity -- is negated by the documentary evidence presented by petitioners. Their evidence22 sufficiently shows the following facts: 1) R & E Transport, Inc., was established only in 1978; 2) Honorio Enriquez, its president, was not a stockholder of La Mallorca Taxi; and 3) none of the stockholders of the latter company hold stocks in the former. In the face of such evidence, which the NLRC appreciated in its Decision, it seems that mere surmises and self-serving assertions of Respondent Avelina Latag formed the bases for the labor arbiters conclusions as follows:

While [Pedro M. Latag] claims that he worked as taxi driver since March 1961 since the days of the La Mallorca Taxi, which was later renamed R & E Transport, Inc., [petitioners] limit the employment period to 14 years.

Resolving this matter, we note [respondents] ID (Annex A, [Latag] position paper), which appears to bear the signature of Miguel Enriquez on the front portion and the date February 27, 1961 when [x x x Latag] started with the company. We also note an SSS document (Annex C) which shows that the date of initial coverage of Pedro Latag, with SSS No. 03-0772155, is February 1961.

Viewed against [petitioners] non-disclaimer [sic] that La Mallorca preceded R & E Taxi, Inc.[;] x x x that both entities were/are owned by the Enriquez family, with [petitioner] Honorio [Enriquez] as the latters President[; and] x x x that La Mallorca was a different entity (page 2, [petitioners] position paper), we are of the conclusion that [Latags] stint with the Enriquez family dated back since February 1961 and thus, he should be entitled to retirement benefits for 37 years, as of the date of the filing of this case on December 12, 1998.23

Furthermore, basic is the rule that the corporate veil may be pierced only if it becomes a shield for fraud, illegality or inequity committed against a third person.24 We have thus cautioned against the inordinate application of this doctrine. In Philippine National Bank v. Andrada Electric & Engineering Company,25 we said:

x x x [A]ny application of the doctrine of piercing the corporate veil should be done with caution. A court should be mindful of the milieu where it is to be applied. It must be certain that the corporate fiction was misused to such an

extent that injustice, fraud, or crime was committed against another, in disregard of its rights. The wrongdoing must be clearly and convincingly established; it cannot be presumed. Otherwise, an injustice that was never unintended may

result from an erroneous application.

x x xx x xx x x

The question of whether a corporation is a mere alter ego is one of fact. Piercing the veil of corporate fiction may be allowed only if the following elements concur: (1) control -- not mere stock control, but complete domination -- not only of finances, but of policy and business practice in respect to the transaction attacked, must have been such that the corporate entity as to this transaction had at the time no separate mind, will or existence of its own; (2) such control must have been used by the defendant to commit a fraud or a wrong to perpetuate the violation of a statutory or other positive legal duty, or a dishonest and an unjust act in contravention of plaintiffs legal right; and (3) the said control and breach of duty must have proximately caused the injury or unjust loss complained of.26

Respondent has not shown by competent evidence that one taxi company had stock control and complete domination over the other or vice versa. In fact, no evidence was presented to show the alleged renaming of La Mallorca Taxi to R & E Transport, Inc. The seven-year gap between the time the former closed shop and the date when the latter came into being also casts doubt on any alleged intention of petitioners to commit a wrong or to violate a statutory duty. This lacuna in the evidence compels us to reverse the Decision of the CA affirming the labor arbiters finding of fact that the basis for computing Pedros retirement pay should be 37 years, instead of only 14 years.

Validity of the Quitclaimand Waiver

As to the Quitclaim and Waiver signed by Respondent Avelina Latag, the appellate court committed no error when it ruled that the document was invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all quitclaims are invalid per se. Courts, however, are wary of schemes that frustrate workers rights and benefits, and look with disfavor upon quitclaims and waivers that bargain these away.

Courts have stepped in to annul questionable transactions, especially where there is clear proof that a waiver, for instance, was wangled from an unsuspecting or a gullible person; or where the agreement or settlement was unconscionable on its face.[27 A quitclaim is ineffective in barring recovery of the full measure of a workersrights, and the acceptance of benefits therefrom does not amount to estoppel.28 Moreover, a quitclaim in which the consideration is scandalously low and inequitable cannot be an obstacle to the pursuit of a workers legitimate claim.29

Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641,30 provides:

Art. 287. Retirement. - x x x

x x xx x xx x x

In the absence of a retirement plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole year.

Unless the parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.

x x xx x xx x x (Italics supplied)

The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary.31 Since Pedro was paid according to the boundary system, he is not entitled to the 13thmonth32 and the service incentive pay;33 hence, his retirement pay should be computed on the sole basis of his salary.

It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the boundary or fee they pay to the owners or operators of their vehicles.34 Thus, the basis for computing their benefits should be the average daily income. In this case, the CA found that Pedro was earning an average of five hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500 x 15 days x 14 years of service equalsP105,000. Compared with this amount, the P38,850 he received, which represented just over one third of what was legally due him, was unconscionable.

Second Issue:

Was There Forum Shopping?

Also assailed are the twin appeals that two different lawyers filed for respondent before the CA. Petitioners argue that instead of accepting her explanation, the appellate court should have dismissed the appeals outright for violating the rule on forum shopping.

Forum shopping is the institution of two or more actions or proceedings grounded on the same cause, on the supposition that one or the other court would render a favorable disposition.35 Such act is present when there is an identity of parties, rights or causes of action, and reliefs sought in two or more pending cases.36 It is usually resorted to by a party against whom an adverse judgment or order has been issued in one forum, in an attempt to seek and possibly to get a favorable opinion in another forum, other than by an appeal or a special civil action for certiorari.37

We find, as the CA38 did, that respondent has adequately explained why she had filed two appeals before the appellate court. In the August 5, 2002 Affidavit39 that she attached as Annex A to her Compliance to Show Cause Order with Comment on petitioners Motion for Reconsideration,40 she averred that she had sought the services of another counsel to file her Petition for certiorari before the CA. She did so after her original counsel had asked for an extension of time to file the Petition because of time constraints and a tremendous workload, only to discover later that the original counsel had filed a similar Petition.

We cannot fault respondent for her tenacity. Besides, to disallow her appeal would not be in keeping with the policy of labor laws41 to shun highly technical procedural laws in the higher interest of justice.

Third Issue:

Monetary Award

Petitioners contention is that the labor arbiters January 10, 2000 Decision was supplanted by the Compromise Agreement that had preceded the formers official release42 to, and receipt43 by, the parties. It appears from the records that they had entered into an Amicable Settlement on January 21, 2000; that based on that settlement, respondent filed a Motion to Dismiss on January 24, 2000, before the labor arbiter who officially released on the same day his Decision dated January 10, 2000; that upon receipt of a copy thereof, respondent filed a Manifestation and Motion to Set Aside the Motion to Dismiss; and that the labor arbiter subsequently calendared the case for conference, held hearings thereon, and required the parties to exchange positions -- by way of comments, replies and rejoinders -- after which he handed down his May 23, 2000 Order.

Under the circumstances, the case was in effect reopened by the proceedings held after respondent had filed her Manifestation and Motion to Set Aside the Motion to Dismiss. This ruling is in accordance with the fourth paragraph of Section 2, Rule V of the New Rules of Procedure of the NLRC,44 which therefore correctly held as follows:

x x x Thus, the further hearings conducted thereafter, to determine the validity of complainants manifestation and motion are but mute confirmation that indeed the 10 January 2000 decision in this case has not as yet attained finality. Finally,

the appealed order of 23 May 2000 itself declaring [that] the decision stands and the Labor Arbitration Associate of this office is directed to prepare the Writ of

Execution in due course, obviously, is a conclusion that the decision in this case has been supplanted and rendered functus officio by the herein parties acts.

Thus, when the Labor Arbiter a quo found in his appealed order that the amount of P38,850.00 is unconscionable viewed against the amount awarded in the

decision, the same became appealable independently of the 10 January 2000 decision, which has not attained finality, in the first place.45

We cannot concur, however, in petitioners other contention that the May 23, 2000 Order did not involve a monetary award. If the amicable settlement between the parties had rendered the January 10, 2000 Decision functus oficio, then it follows that the monetary award stated therein was reinstated -- by reference -- by the aforementioned Order. The appeal from the latter should perforce have followed the procedural requirements under Article 223 of the Labor Code.

As amended, this provision explicitly provides that an appeal from the labor arbiters decision, award or order must be made within ten (10) calendar days from receipt of a copy thereof by the party intending to appeal it; and, if the judgment involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond. Such cash or bond must have been issued by a reputable bonding company duly accredited by the NLRC in the amount equivalent to the monetary award stated in the judgment. Sections 1, 3 and 6 of Rule VI of the New Rules of Procedure of the NLRC implement this Article.

Indeed, this Court has repeatedly ruled that the perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but jurisdictional, and the failure to perfect an appeal has the effect of rendering the judgment final and executory.46 Nonetheless, procedural lapses may be disregarded because of fundamental considerations of substantial justice;47 or because of the special circumstances of the case combined with its legal merits or the amount and the issue involved.48

The requirement to post a bond to perfect an appeal has also been relaxed in cases when the amount of the award has not been included in the decision of the labor arbiter.49 Besides, substantial justice will be better served in the present case by allowing petitioners appeal to be threshed out on the merits,50 especially because of serious errors in the factual conclusions of the labor arbiter as to the award of retirement benefits.

WHEREFORE, this Petition is partly GRANTED. The Decision of the Court of Appeals is MODIFIED by crediting Pedro M. Latag with 14 years of service. Consequently, he is entitled to retirement pay, which is hereby computed atP105,000 less the P38,850 which has already been received by respondent, plus six (6) percent interest thereon from December 21, 1998 until its full payment. No costs.

SO ORDERED.

KING OF KINGS TRANSPORT,INC., CLAIRE DELA FUENTE, and MELISSA LIM vs. SANTIAGO O. MAMAC,cralawx-----------------------------------------------------------------------------------------x

D E C I S I O N

VELASCO, JR., J.:

Is a verbal appraisal of the charges against the employee a breach of the procedural due process?This is the main issue to be resolved in this plea for review under Rule 45 of theSeptember 16, 2004 Decision[1] of the Court of Appeals (CA) in CA-GR SP No. 81961.Said judgment affirmed the dismissal of bus conductor Santiago O. Mamac from petitioner King of Kings Transport, Inc. (KKTI), but ordered the bus company to pay full backwages for violation of the twin-notice requirement and 13th-month pay.Likewise assailed is the December 2, 2004 CA Resolution[2] rejecting KKTIs Motion for Reconsideration.

The FactscralawPetitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente and Melissa Lim. cralawRespondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) onApril 29, 1999.The DMTC employees including respondent formed the Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union and registered it with the Department of Labor and Employment.Pending the holding of a certification election in DMTC, petitioner KKTI was incorporated with the Securities and Exchange Commission which acquired new buses. Many DMTC employees were subsequently transferred to KKTI and excluded from the election.cralawcralawThe KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE.Respondent was elected KKKK president. Respondent was required to accomplish a Conductors Trip Report and submit it to the company after each trip.As a background, this report indicates the ticket opening and closing for the particular day of duty.After submission, the company audits the reports. Once an irregularity is discovered, the company issues an Irregularity Report against the employee, indicating the nature and details of the irregularity.Thereafter, the concerned employee is asked to explain the incident by making a written statement or counter-affidavit at the back of the same Irregularity Report.After considering the explanation of the employee, the company then makes a determination of whether to accept the explanation or impose upon the employee a penalty for committing an infraction.That decision shall be stated on said Irregularity Report and will be furnished to the employee. Upon audit of the October 28, 2001 Conductors Report of respondent, KKTI noted an irregularity.It discovered that respondent declared several sold tickets as returned tickets causing KKTI to lose an income of eight hundred and ninety pesos. While no irregularity report was prepared on theOctober 28, 2001 incident, KKTI nevertheless asked respondent to explain the discrepancy.In his letter,[3] respondent said that the erroneous declaration in his October 28, 2001 Trip Report was unintentional.He explained that during that days trip, the windshield of the bus assigned to them was smashed; and they had to cut short the trip in order to immediately report the matter to the police.As a result of the incident, he got confused in making the trip report.

On November 26, 2001, respondent received a letter[4] terminating his employment effectiveNovember 29, 2001.The dismissal letter alleged that the October 28, 2001 irregularity was an act of fraud against the company.KKTI also cited as basis for respondents dismissal the other offenses he allegedly committed since 1999. On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions, nonpayment of 13th-month pay, service incentive leave, and separation pay.He denied committing any infraction and alleged that his dismissal was intended to bust union activities.Moreover, he claimed that his dismissal was effected without due process. In its April 3, 2002 Position Paper,[5] KKTI contended that respondent was legally dismissed after his commission of a series of misconducts and misdeeds.It claimed that respondent had violated the trust and confidence reposed upon him by KKTI.Also, it averred that it had observed due process in dismissing respondent and maintained that respondent was not entitled to his money claims such as service incentive leave and 13th-month pay because he was paid on commission or percentage basis. cralawOn September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered judgment dismissing respondents Complaint for lack of merit.[6]chanroblesvirtuallawlibrary cralawAggrieved, respondent appealed to the National Labor Relations Commission (NLRC).On August 29, 2003, the NLRC rendered a Decision, the dispositive portion of which reads:

WHEREFORE, the decision dated 16 September 2002 is MODIFIED in that respondent King of Kings Transport Inc. is hereby ordered to indemnify complainant in the amount of ten thousand pesos (P10,000) for failure to comply with due process prior to termination. The other findings are AFFIRMED. SO ORDERED.[7]chanroblesvirtuallawlibrary

Respondent moved for reconsideration but it was denied through the November 14, 2003Resolution[8] of the NLRC. Thereafter, respondent filed a Petition for Certiorari before the CA urging the nullification of the NLRC Decision and Resolution.

The Ruling of the Court of Appeals

cralawAffirming the NLRC, the CA held that there was just cause for respondents dismissal. It ruled that respondents act in declaring sold tickets as returned tickets x x x constituted fraud or acts of dishonesty justifying his dismissal.[9] Also, the appellate court sustained the finding that petitioners failed to comply with the required procedural due process prior to respondents termination. However, following the doctrine inSerrano v. NLRC,[10]itmodified the award of PhP 10,000 as indemnification by awarding full backwages from the time respondents employment was terminated until finality of the decision. Moreover, the CA held that respondent is entitled to the 13th-month pay benefit. Hence, we have this petition.

The Issues

Petitioner raises the following assignment of errors for our consideration: Whether the Honorable Court of Appeals erred in awarding in favor of the complainant/private respondent, full back wages, despite the denial of his petition for certiorari.

Whether the Honorable Court of Appeals erred in ruling that KKTI did not comply with the requirements of procedural due process before dismissing the services of the complainant/private respondent. Whether the Honorable Court of Appeals rendered an incorrect decision in that [sic] it awarded in favor of the complaint/private respondent, 13th month pay benefits contrary to PD 851.[11]

The Courts Ruling cralawThe petition is partly meritorious. The disposition of the first assigned error depends on whether petitioner KKTI complied with the due process requirements in terminating respondents employment; thus, it shall be discussed secondly. Non-compliance with the Due Process Requirements Due process under the Labor Code involves two aspects: first, substantivethe valid and authorized causes of termination of employment under the Labor Code; and second, proceduralthe manner of dismissal.[12]In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that the termination of employment of respondent was based on a just cause. This ruling is not at issue in this case. The question to be determined is whether the procedural requirements were complied with. Art. 277 of the Labor Code provides the manner of termination of employment, thus: Art. 277. Miscellaneous Provisions.x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment.Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission.The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

Accordingly, the implementing rule of the aforesaid provision states: SEC. 2. Standards of due process; requirements of notice.In all cases of termination of employment, the following standards of due process shall be substantially observed: I.For termination of employment based on just causes as defined in Article 282 of the Code: (a) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (b) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (c) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. [13] In case of termination, the foregoing notices shall be served on the employees last known address.[14] cralawTo clarify, the following should be considered in terminating the services of employees: cralaw(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that

the employees are given the opportunity to submit their written explanation within a reasonable period.Reasonable opportunity under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense.[15]This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint.Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees.A general description of the charge will not suffice.Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. cralaw(2)cralawAfter serving the first notice, the employers should schedule and conduct a hearing orconference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management.During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement. cralaw(3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. In the instant case, KKTI admits that it had failed to provide respondent with a charge sheet.[16] However, it maintains that it had substantially complied with the rules, claiming that respondent would not have issued a written explanation had he not been informed of the charges against him.[17]chanroblesvirtuallawlibrary We are not convinced. First,respondent was not issued a writtennotice charging him of committing an infraction.The law is clear on the matter.A verbal appraisal of the charges against an employee does not comply with the first notice requirement.In Pepsi Cola Bottling Co. v. NLRC,[18] the Court held that consultations or conferences are not a substitute for the actual observance of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano,[19] the Court, sanctioning the employer for disregarding the due process requirements, held that the employees written explanation did not excuse the fact that there was a complete absence of the first notice. Second,even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his offense, such would not comply with the requirements of the law.We observe from the irregularity reports against respondent for his other offenses that such contained merely a general description of the charges against him.The reports did not even state a company rule or policy that the employee had allegedly violated.Likewise, there is no mention of any of the grounds for termination of employment under Art. 282 of the Labor Code. Thus, KKTIs standard charge sheet is not sufficient notice to the employee. Third,no hearing was conducted.Regardless of respondents written explanation, a hearing was still necessary in order for him to clarify and present evidence in support of his defense.Moreover, respondent made the letter merely to explain the circumstances relating to the irregularity in his October 28, 2001 Conductors Trip Report.He was unaware that a dismissal proceeding was already being effected.Thus, he was surprised to receive the November 26, 2001 termination letter indicating as grounds, not only hisOctober 28, 2001 infraction, but also his previous infractions. Sanction for Non-compliance with Due Process Requirements As stated earlier, after a finding that petitioners failed to comply with the due process requirements, the CA awarded full backwages in favor of respondent in accordance with the doctrine in Serrano v. NLRC.[20]However, the doctrine

in Serrano had already been abandoned in Agabon v. NLRC by ruling that if the dismissal is done without due process, the employer should indemnify the employee with nominal damages.[21]chanroblesvirtuallawlibrary Thus, for non-compliance with the due process requirements in the termination of respondents employment, petitioner KKTI is sanctioned to pay respondent the amount of thirty thousand pesos (PhP 30,000) as damages.

Thirteenth (13th)-Month Pay

cralawSection 3 of the Rules Implementing Presidential Decree No. 851[22] provides the exceptions in the coverage of the payment of the 13th-month benefit.The provision states: cralawSEC. 3.Employers covered.The Decree shall apply to all employers except to: cralawx x x x cralawe) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned. Petitioner KKTI maintains that respondent was paid on purely commission basis; thus, the latter is not entitled to receive the 13th-month pay benefit.However, applying the ruling in Philippine Agricultural Commercial and Industrial Workers Union v. NLRC,[23]the CA held that respondent is entitled to the said benefit.cralawIt was erroneous for the CA to apply the case of Philippine Agricultural Commercial and Industrial Workers Union. Notably in the said case, it was established that the drivers and conductors praying for 13th- month pay were not paid purely on commission.Instead, they were receiving a commission in addition to a fixed or guaranteed wage or salary.Thus, the Court held that bus drivers and conductors who are paid a fixed or guaranteed minimum wage in case their commission be less than the statutory minimum, and commissions only in case where they are over and above the statutory minimum, are entitled to a 13th-month pay equivalent to one-twelfth of their total earnings during the calendar year. cralawOn the other hand, in his Complaint,[24] respondent admitted that he was paid on commission only.Moreover, this fact is supported by his pay slips[25] which indicated the varying amount of commissions he was receiving each trip.Thus, he was excluded from receiving the 13th-month pay benefit.cralawcralawWHEREFORE, the petition is PARTLY GRANTED and the September 16, 2004 Decision of the CA is MODIFIED by deleting the award of backwages and 13th-month pay. Instead, petitioner KKTI is ordered to indemnify respondent the amount of thirty thousand pesos (PhP 30,000) as nominal damages for failure to comply with the due process requirements in terminating the employment of respondent. cralawNo costs.cralawSO ORDERED.

PEOPLE OF PHILIPPINES,Vs. JOSEPH JAMILOSA,x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x cralawThis is an appeal from the Decision[1] of the Regional Trial Court (RTC) of Quezon City in Criminal Case No. Q-97-72769 convicting appellant Joseph Jamilosa of large scale illegal recruitment under Sections 6 and 7 of Republic Act (R.A.) No. 8042, and sentencing him to life imprisonment and to pay a P500,000.00 fine. The Information charging appellant with large scale illegal recruitment was filed by the Senior State Prosecutor on August 29, 1997.The inculpatory portion of the Information reads:

cralawThat sometime in the months of January to February, 1996, or thereabout in the City of Quezon, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, representing to have the capacity, authority or license to contract, enlist and deploy or transport workers for overseas employment, did then and there, willfully, unlawfully and criminally recruit, contract and promise to deploy, for a fee the herein complainants, namely, Haide R. Ruallo, Imelda D. Bamba, Geraldine M. Lagman and Alma E. Singh, for work or employment in Los Angeles, California, U.S.A. in Nursing Home and Care Center without first obtaining the required license and/or authority from the Philippine Overseas Employment Administration (POEA). cralawContrary to law.[2] cralawOn arraignment, the appellant, assisted by counsel, pleaded not guilty to the charge. The case for the prosecution, as synthesized by the Court of Appeals (CA), is as follows: cralawThe prosecution presented three (3) witnesses, namely: private complainants Imelda D. Bamba, Geraldine M. Lagman and Alma E. Singh. cralawWitness Imelda D. Bamba testified that on January 17, 1996, she met the appellant in Cubao, Quezon City on board an aircon bus.She was on her way to Shoemart (SM),North EDSA, Quezon City where she was working as a company nurse.The appellant was seated beside her and introduced himself as a recruiter of workers for employment abroad.The appellant told her that his sister is a head nurse in a nursing home in Los Angeles, California, USA and he could help her get employed as a nurse at a monthly salary of Two Thousand US Dollars ($2,000.00) and that she could leave in two (2) weeks time.He further averred that he has connections with the US Embassy, being a US Federal Bureau of Investigation (FBI) agent on official mission in the Philippines for one month.According to the appellant, she has to pay the amount of US$300.00 intended for the US consul.The appellant gave his pager number and instructed her to contact him if she is interested to apply for a nursing job abroad. cralawOn January 21, 1996, the appellant fetched her at her office.They then went to her house where she gave him the photocopies of her transcript of records, diploma, Professional Regulatory Commission (PRC) license and other credentials.On January 28 or 29, 1996, she handed to the appellant the amount of US$300.00 at the McDonalds outlet in North EDSA, Quezon City, and the latter showed to her a photocopy of her supposed US visa.The appellant likewise got several pieces of jewelry which she was then selling and assured her that he would sell the same at theUS embassy.However, the appellant did not issue a receipt for the said money and jewelry.Thereafter, the appellant told her to resign from her work at SM because she was booked with Northwest Airlines and to leave for Los Angeles, California, USA onFebruary 25, 1996. cralawThe appellant promised to see her and some of his other recruits before their scheduled departure to hand to them their visas and passports; however, the appellant who was supposed to be with them in the flight failed to show up.Instead, the appellant called and informed her that he failed to give the passport and US visa because he had to go to the province because his wife died.She and her companions were not able to leave for the United States.They went to the supposed residence of the appellant to verify, but nobody knew him or his whereabouts.They tried to contact him at the hotel where he temporarily resided, but to no avail.They also inquired from the US embassy and found out that there was no such person connected with the said office.Thus, she decided to file a complaint with the National Bureau of Investigation (NBI). cralawProsecution witness Geraldine Lagman, for her part, testified that she is a registered nurse by profession.In the morning of January 22, 1996, she went to SM North EDSA,Quezon City to visit her cousin Imelda Bamba.At that time, Bamba informed her that she was going to meet the appellant who is an FBI agent and was willing to help nurses find a job abroad.Bamba invited Lagman to go with her.On the same date at about 2:00 oclock in the afternoon, she and Bamba met the appellant at the SM Fast-Food Center, Basement, North EDSA, Quezon City.The appellant convinced them of his ability to send them abroad and told them that he has a sister in the United States.Lagman told the appellant that she had no working experience in any hospital but the appellant assured her that it is not necessary to have one.The appellant asked for US$300.00 as payment to secure an American visa and an additional amount of

Three Thousand Four Hundred Pesos (P3,400.00) as processing fee for other documents. cralawOn January 24, 1996, she and the appellant met again at SM North EDSA, Quezon City wherein she handed to the latter her passport and transcript of records.The appellant promised to file the said documents with the US embassy.After one (1) week, they met again at the same place and the appellant showed to her a photocopy of her US visa.This prompted her to give the amount of US$300.00 and two (2) bottles of Black Label to the appellant.She gave the said money and liquor to the appellant without any receipt out of trust and after the appellant promised her that he would issue the necessary receipt later.The appellant even went to her house, met her mother and uncle and showed to them a computer printout from Northwest Airlines showing that she was booked to leave for Los Angeles, California, USA onFebruary 25, 1996. cralawFour days after their last meeting, Extelcom, a telephone company, called her because her number was appearing in the appellants cellphone documents.The caller asked if she knew him because they were trying to locate him, as he was a swindler who failed to pay his telephone bills in the amount of P100,000.00.She became suspicious and told Bamba about the matter.One (1) week before her scheduled flight on February 25, 1996, they called up the appellant but he said he could not meet them because his mother passed away.The appellant never showed up, prompting her to file a complaint with the NBI for illegal recruitment. cralawLastly, witness Alma Singh who is also a registered nurse, declared that she first met the appellant on February 13, 1996 at SM North EDSA, Quezon City when Imelda Bamba introduced the latter to her.The appellant told her that he is an undercover agent of the FBI and he could fix her US visa as he has a contact in the USembassy.The appellant told her that he could help her and her companions Haidee Raullo, Geraldine Lagman and Imelda Bamba find jobs in the US as staff nurses in home care centers. cralawOn February 14, 1996 at about 6:30 in the evening, the appellant got her passport and picture.The following day or on February 15, 1996, she gave the appellant the amount of US$300.00 and a bottle of cognac as grease money to facilitate the processing of her visa.When she asked for a receipt, the appellant assured her that there is no need for one because she was being directly hired as a nurse in the United States. cralawShe again met the appellant on February 19, 1996 at the Farmers Plaza and this time, the appellant required her to submit photocopies of her college diploma, nursing board certificate and PRC license.To show his sincerity, the appellant insisted on meeting her father.They then proceeded to the office of her father in Barrio Ugong,Pasig City and she introduced the appellant.Thereafter, the appellant asked permission from her father to allow her to go with him to the Northwest Airlines office in Ermita,Manila to reserve airline tickets.The appellant was able to get a ticket confirmation and told her that they will meet again the following day for her to give P10,000.00 covering the half price of her plane ticket.Singh did not meet the appellant as agreed upon.Instead, she went to Bamba to inquire if the latter gave the appellant the same amount and found out that Bamba has not yet given the said amount.They then paged the appellant through his beeper and told him that they wanted to see him.However, the appellant avoided them and reasoned out that he could not meet them as he had many things to do.When the appellant did not show up, they decided to file a complaint for illegal recruitment with the NBI. cralawThe prosecution likewise presented the following documentary evidence: cralawExh. A Certification dated February 23, 1998 issued by Hermogenes C. Mateo, Director II, Licensing Branch, POEA. cralawExh. B Affidavit of Alma E. Singh dated February 23, 1996.[3] cralawOn the other hand, the case for the appellant, as culled from his Brief, is as follows: cralawAccused JOSEPH JAMILOSA testified on direct examination that he got acquainted with Imelda Bamba inside an aircon bus bound for Caloocan City when the latter borrowed his cellular phone to call her office at Shoe Mart (SM), North Edsa, Quezon City.He never told Bamba that he could get her a job in Los Angeles, California, USA, the truth being that she wanted to leave

SM as company nurse because she was having a problem thereat.Bamba called him up several times, seeking advice from him if Los Angeles, California is a good place to work as a nurse.He started courting Bamba and they went out dating until the latter became his girlfriend.He met Geraldine Lagman and Alma Singh at the Shoe Mart (SM), North Edsa, Quezon City thru Imelda Bamba.As complainants were all seeking advice on how they could apply for jobs abroad, lest he be charged as a recruiter, he made Imelda Bamba, Geraldine Lagman and Alma Singh sign separate certifications on January 17, 1996 (Exh. 2), January 22, 1996 (Exh. 4), and February 19, 1996 (Exh. 3), respectively, all to the effect that he never recruited them and no money was involved.Bamba filed an Illegal Recruitment case against him because they quarreled and separated.He came to know for the first time that charges were filed against him in September 1996 when a preliminary investigation was conducted by Fiscal Daosos of the Department of Justice.(TSN,October 13, 1999, pp. 3-9 and TSN, December 8, 1999, pp. 2-9)[4] cralawOn November 10, 2000, the RTC rendered judgment finding the accused guilty beyond reasonable doubt of the crime charged.[5]The fallo of the decision reads: cralawWHEREFORE, judgment is hereby rendered finding accused guilty beyond reasonable doubt of Illegal Recruitment in large scale; accordingly, he is sentenced to suffer the penalty of life imprisonment and to pay a fine of Five Hundred Thousand Pesos (P500,000.00), plus costs. cralawAccused is ordered to indemnify each of the complainants, Imelda Bamba, Geraldine Lagman and Alma Singh the amount of Three Hundred US Dollars ($300.00). cralawSO ORDERED.[6] cralawIn rejecting the defenses of the appellant, the trial court declared: cralawTo counter the version of the prosecution, accused claims that he did not recruit the complainants for work abroad but that it was they who sought his advice relative to their desire to apply for jobs in Los Angeles, California, USA and thinking that he might be charged as a recruiter, he made them sign three certifications, Exh. 2, 3 and 4, which in essence state that accused never recruited them and that there was no money involved. cralawAccuseds contention simply does not hold water.Admittedly, he executed and submitted a counter-affidavit during the preliminary investigation at the Department of Justice, and that he never mentioned the aforesaid certifications, Exhibits 2, 3 and 4 in said counter-affidavit.These certifications were allegedly executed before charges were filed against him.Knowing that he was already being charged for prohibited recruitment, why did he not bring out these certifications which were definitely favorable to him, if the same were authentic.It is so contrary to human nature that one would suppress evidence which would belie the charge against him. cralawDenials of the accused can not stand against the positive and categorical narration of each complainant as to how they were recruited by accused who had received some amounts from them for the processing of their papers.Want of receipts is not fatal to the prosecutions case, for as long as it has been shown, as in this case, that accused had engaged in prohibited recruitment.(People v. Pabalan, 262 SCRA 574). cralawThat accused is neither licensed nor authorized to recruit workers for overseas employment, is shown in the Certification issued by POEA, Exh. A. cralawIn fine, the offense committed by the accused is Illegal Recruitment in large scale, it having been committed against three (3) persons, individually.[7] cralawAppellant appealed the decision to this Court on the following assignment of error: THE TRIAL COURT ERRED IN CONVICTING ACCUSED-APPELLANT OF THE CRIME OF ILLEGAL RECRUITMENT IN LARGE SCALE DESPITE THE FACT THAT THE LATTERS GUILT WAS NOT PROVED BEYOND REASONABLE DOUBT BY THE PROSECUTION.[8] cralawAccording to appellant, the criminal Information charging him with illegal recruitment specifically mentioned the phrase for a fee, and as such, receipts to

show proof of payment are indispensable.He pointed out that the three (3) complaining witnesses did not present even one receipt to prove the alleged payment of any fee. In its eagerness to cure this patent flaw, the prosecution resorted to presenting the oral testimonies of complainants which were contrary to the ordinary course of nature and ordinary habits of life [under Section 3(y), Rule 131 of the Rules on Evidence] and defied credulity. Appellant also pointed out that complainants testimony that they paid him but no receipts were issued runs counter to the presumption under Section [3](d), Rule 131 of the Rules on Evidence that persons take ordinary care of their concern. The fact that complainants were not able to present receipts lends credence to his allegation that it was they who sought advice regarding their desire to apply for jobs in Los Angeles, California, USA. Thus, thinking that he might be charged as a recruiter, he made them sign three (3) certifications stating that he never recruited them and there was no money involved. On the fact that the trial court disregarded the certifications due to his failure to mention them during the preliminary investigation at the Department of Justice (DOJ), appellant pointed out that there is no provision in the Rules of Court which bars the presentation of evidence during the hearing of the case in court. He also pointed out that the counter-affidavit was prepared while he was in jail and probably not assisted by a lawyer.[9]chanroblesvirtuallawlibrary

cralawAppellee, through the Office of the Solicitor General (OSG), countered that the absence of receipts signed by appellant acknowledging receipt of the money and liquor from the complaining witnesses cannot defeat the prosecution and conviction for illegal recruitment. The OSG insisted that the prosecution was able to prove the guilt of appellant beyond reasonable doubt via the collective testimonies of the complaining witnesses, which the trial court found credible and deserving of full probative weight.It pointed out that appellant failed to prove any ill-motive on the part of the complaining witnesses to falsely charge him of illegal recruitment. On appellants claim that the complaining witness Imelda Bamba was his girlfriend, the OSG averred: cralawAppellants self-serving declaration that Imelda is his girlfriend and that she filed a complaint for illegal recruitment after they quarreled and separated is simply preposterous.No love letters or other documentary evidence was presented by appellant to substantiate such claim which could be made with facility.Imelda has no reason to incriminate appellant except to seek justice.The evidence shows that Alma and Geraldine have no previous quarrel with appellant.Prior to their being recruited by appellant, Alma and Geraldine have never met appellant.It is against human nature and experience for private complainants to conspire and accuse a stranger of a most serious crime just to mollify their hurt feelings.(People v. Coral, 230 SCRA 499, 510 [1994])[10]cralawThe OSG posited that the appellants reliance on the certifications[11] purportedly signed by the complaining witnesses is misplaced, considering that the certifications are barren of probative weight. cralawOn February 23, 2005, the Court resolved to transfer the case to the CA.[12]On June 22, 2005, the CA rendered judgment affirming the decision of the RTC.[13]chanroblesvirtuallawlibrary The OSG filed a Supplemental Brief, while the appellant found no need to file one. cralawThe appeal has no merit. cralawArticle 13(b) of the Labor Code of the Philippines defines recruitment and placement as follows: cralaw(b)cralawRecruitment and placement refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not.Provided, That any person or entity which, in any manner, offers or promises for a fee employment to two or more persons shall be deemed engaged in recruitment and placement. cralawSection 6 of R.A. No. 8042 defined when recruitment is illegal: cralawSEC. 6.Definition. For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or

advertising for employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such non-licensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. x x x cralawAny recruitment activities to be undertaken by non-licensee or non-holder of contracts shall be deemed illegal and punishable under Article 39 of the Labor Code of the Philippines.[14]Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group.[15]chanroblesvirtuallawlibrary cralawTo prove illegal recruitment in large scale, the prosecution is burdened to prove three (3) essential elements, to wit: (1) the person charged undertook a recruitment activity under Article 13(b) or any prohibited practice under Article 34 of the Labor Code; (2) accused did not have the license or the authority to lawfully engage in the recruitment and placement of workers; and (3) accused committed the same against three or more persons individually or as a group.[16]As gleaned from the collective testimonies of the complaining witnesses which the trial court and the appellate court found to be credible and deserving of full probative weight, the prosecution mustered the requisite quantum of evidence to prove the guilt of accused beyond reasonable doubt for the crime charged.Indeed, the findings of the trial court, affirmed on appeal by the CA, are conclusive on this Court absent evidence that the tribunals ignored, misunderstood, or misapplied substantial fact or other circumstance. cralawThe failure of the prosecution to adduce in evidence any receipt or document signed by appellant where he acknowledged to have received money and liquor does not free him from criminal liability. Even in the absence of money or other valuables given as consideration for the services of appellant, the latter is considered as being engaged in recruitment activities. It can be gleaned from the language of Article 13(b) of the Labor Code that the act of recruitment may be for profit or not.It is sufficient that the accused promises or offers for a fee employment to warrant conviction for illegal recruitment.[17]As the Court held in People v. Sagaydo:[18]chanroblesvirtuallawlibrary cralawSuch is the case before us.The complainants parted with their money upon the prodding and enticement of accused-appellant on the false pretense that she had the capacity to deploy them for employment abroad.In the end, complainants were neither able to leave for work abroad nor get their money back. cralawThe fact that private complainants Rogelio Tibeb and Jessie Bolinao failed to produce receipts as proof of their payment to accused-appellant does not free the latter from liability.The absence of receipts cannot defeat a criminal prosecution for illegal recruitment.As long as the witnesses can positively show through their respective testimonies that the accused is the one involved in prohibited recruitment, he may be convicted of the offense despite the absence of receipts.[19] cralawAppellants reliance on the certifications purportedly signed by the complaining witnesses Imelda Bamba, Alma Singh and Geraldine Lagman[20] is misplaced.Indeed, the trial court and the appellate court found the certifications barren of credence and probative weight. We agree with the following pronouncement of the appellate court: cralawAnent the claim of the appellant that the trial court erred in not giving weight to the certifications (Exhs. 2, 3 & 4) allegedly executed by the complainants to the effect that he did not recruit them and that no money was involved, the same deserves scant consideration. cralawThe appellant testified that he was in possession of the said certifications at the time the same were executed by the complainants and the same were always in his possession; however, when he filed his counter-affidavit during the preliminary investigation before the Department of Justice, he did not mention the said certifications nor attach them to his counter-affidavit. cralawWe find it unbelievable that the appellant, a college graduate, would not divulge the said certifications which would prove that, indeed, he is not an illegal recruiter.By failing to present the said certifications prior to the trial, the

appellant risks the adverse inference and legal presumption that, indeed, such certifications were not genuine.When a party has it in his possession or power to produce the best evidence of which the case in its nature is susceptible and withholds it, the fair presumption is that the evidence is withheld for some sinister motive and that its production would thwart his evil or fraudulent purpose.As aptly pointed out by the trial court:cralawx x xThese certifications were allegedly executed before charges were filed against him.Knowing that he was already being charged for prohibited recruitment, why did he not bring out these certifications which were definitely favorable to him, if the same were authentic.It is so contrary to human nature that one would suppress evidence which would belie the charge against him.(Emphasis Ours)[21] cralawAt the preliminary investigation, appellant was furnished with copies of the affidavits of the complaining witnesses and was required to submit his counter-affidavit. The complaining witnesses identified him as the culprit who recruited them. At no time did appellant present the certifications purportedly signed by the complaining witnesses to belie the complaint against him.He likewise did not indicate in his counter-affidavit that the complaining witnesses had executed certifications stating that they were not recruited by him and that he did not receive any money from any of them.He has not come forward with any valid excuse for his inaction.It was only when he testified in his defense that he revealed the certifications for the first time.Even then, appellant lied when he claimed that he did not submit the certifications because the State Prosecutor did not require him to submit any counter-affidavit, and that he was told that the criminal complaint would be dismissed on account of the failure of the complaining witnesses to appear during the preliminary investigation.The prevarications of appellant were exposed by Public Prosecutor Pedro Catral on cross-examination, thus: QcralawMr. Witness, you said that a preliminary investigation [was] conducted by the Department of Justice through State Prosecutor Daosos.Right?AcralawYes, Sir. QcralawWere you requested to file your Counter-Affidavit?AcralawYes, Sir.I was required. QcralawDid you file your Counter-Affidavit?AcralawYes, Sir, but he did not accept it. QcralawWhy?AcralawBecause he said never mind because the witness is not appearing so he dismissed the case. QcralawAre you sure that he did not accept your Counter-Affidavit, Mr. Witness?AcralawI dont know of that, Sir. QcralawIf I show you that Counter-Affidavit you said you prepared, will you be able to identify the same, Mr. Witness?AcralawYes, Sir. QcralawI will show you the Counter-Affidavit dated June 16, 1997 filed by one Joseph J. Jamilosa, will you please go over this and tell if this is the same Counter-Affidavit you said you prepared and you are going to file with the investigating state prosecutor?AcralawYes, Sir.This the same Counter-Affidavit. QcralawThere is a signature over the typewritten name Joseph J. Jamilosa, will you please go over this and tell this Honorable Court if this is your signature, Mr. Witness?AcralawYes, Sir.This is my signature. QcralawDuring the direct examination you were asked to identify [the] Certification as Exh. 2 dated January 17, 1996, allegedly issued by Bamba, one of the complainants in this case, when did you receive this Certification issued by Imelda Bamba, Mr. Witness?AcralawThat is the date, Sir. QcralawYou mean the date appearing in the Certification.AcralawYes, Sir. QcralawWhere was this handed to you by Imelda Bamba, Mr. Witness?AcralawAt SM North Edsa, Sir.

QcralawDuring the direct examination you were also asked to identify a Certification Exh. 3 for the defense dated February 19, 1996, allegedly issued by Alma Singh, one of the complainants in this case, will you please go over this and tell us when did Alma Singh allegedly issue to you this Certification?AcralawOn February 19, 1996, Sir. QcralawAnd also during the direct examination, you were asked to identify a Certification which was already marked as Exh. 4 for the defense dated January 22, 1996allegedly issued by Geraldine M. Lagman, one of the complainants in this case, will you please tell the court when did Geraldine Lagman give you this Certification?AcralawJanuary 22, 1996, Sir. QcralawDuring that time, January 22, 1996, January 17, 1996 and February 19, 1996, you were in possession of all these Certification.Correct, Mr. Witness?AcralawYes, Sir. QcralawThese were always in your possession.Right?AcralawYes, Sir, with my papers. QcralawDo you know when did the complainants file cases against you?AcralawI dont know, Sir. QcralawAlright.I will read to you this Counter-Affidavit of yours, and I quote I, Joseph Jamilosa, of legal age, married and resident of Manila City Jail, after having duly sworn to in accordance with law hereby depose and states that: 1) the complainants sworn under oath to the National Bureau of Investigation that I recruited them and paid me certain sums of money assuming that there is truth in those allegation of this (sic) complainants.The charge filed by them should be immediately dismissed for certain lack of merit in their Sworn Statement to the NBI Investigator; 2) likewise, the complainants allegation is not true and I never recruited them to work abroad and that they did not give me money, they asked me for some help so I [helped] them in assisting and processing the necessary documents, copies for getting US Visa; 3) the complainant said under oath that they can show a receipt to prove that they can give me sums or amount of money.That is a lie.They sworn (sic), under oath, that they can show a receipt that I gave to them to prove that I got the money from them.I asked the kindness of the state prosecutor to ask the complainants to show and produce the receipts that I gave to them that was stated in the sworn statement of the NBI; 4) the allegation of the complainants that the charges filed by them should be dismissed because I never [received] any amount from them and they can not show any receipt that I gave them, Manila City Jail, Philippines, June 16, 1997.So, Mr. Witness, June 16, 1997 is the date when you prepared this.Correct?AcralawYes, Sir. QcralawNow, my question to you, Mr. Witness, you said that you have with you all the time the Certification issued by [the] three (3) complainants in this case, did you allege in your Counter-Affidavit that this Certification you said you claimed they issued to you?AcralawI did not say that, Sir. QcralawSo, it is not here in your Counter-Affidavit?AcralawNone, Sir. QcralawWhat is your educational attainment, Mr. Witness?AcralawI am a graduate of AB Course Associate Arts in 1963 at the University of the East. QcralawYou said that the State Prosecutor of the Department of Justice did not accept your Counter-Affidavit, are you sure of that, Mr. Witness?AcralawYes, Sir. QcralawDid you receive a copy of the dismissal which you said it was dismissed?AcralawNo, Sir.I did not receive anything. QcralawDid you receive a resolution from the Department of Justice?AcralawNo, Sir. QcralawDid you go over the said resolution you said you received here?AcralawI just learned about it now, Sir. QcralawDid you read the content of the resolution?

AcralawNot yet, Sir.Its only now that I am going to read.

COURTQcralawYou said it was dismissed.Correct?AcralawYes, Your Honor. QcralawDid you receive a resolution of this dismissal?AcralawNo, Your Honor. FISCAL CATRALQcralawWhat did you receive?AcralawI did not receive any resolution, Sir.Its just now that I learned about the finding. QcralawYou said you learned here in court, did you read the resolution filed against you, Mr. Witness?AcralawI did not read it, Sir. QcralawDid you read by yourself the resolution made by State Prosecutor Daosos, Mr. Witness?AcralawNot yet, Sir. QcralawWhat did you take, if any, when you received the subpoena from this court?AcralawI was in court already when I asked Atty. Usita to investigate this case. QcralawYou said a while ago that your Affidavit was not accepted by State Prosecutor Daosos.Is that correct?AcralawYes, Sir. QcralawWill you please read to us paragraph four (4), page two (2) of this resolution of State Prosecutor Daosos.cralaw(witness reading par. 4 of the resolution)cralawAlright.What did you understand of this paragraph 4, Mr. Witness?AcralawProbably, guilty to the offense charge.[22]

cralawIt turned out that appellant requested the complaining witnesses to sign

the certifications merely to prove that he was settling the cases:

COURTQcralawThese complainants, why did you make them sign in the certifications?AcralawBecause one of the complainants told me to sign and they are planning to sue me. QcralawYou mean they told you that they are filing charges against you and yet you [made] them sign certifications in your favor, what is the reason why you made them sign?AcralawTo prove that Im settling this case. QcralawDespite the fact that they are filing cases against you and yet you were able to make them sign certifications?AcralawOnly one person, Your Honor, who told me and he is not around. QcralawBut they all signed these three (3) certifications and yet they filed charges against you and yet you made them sign certifications in your favor, so what is the reason why you made them sign?cralaw(witness can not answer)[23]

cralawThe Court notes that the trial court ordered appellant to refund US$300.00 to each of the complaining witnesses.The ruling of the appellate court must be modified.Appellant must pay only the peso equivalent of US$300.00 to each of the complaining witnesses. cralawIN LIGHT OF ALL THE FOREGOING, the appeal is DISMISSED.The Decision of the Court of Appeals affirming the conviction of Joseph Jamilosa for large scale illegal recruitment under Sections 6 and 7 of Republic Act No. 8042 is AFFIRMED WITH MODIFICATION. The appellant is hereby ordered to refund to each of the complaining witnesses the peso equivalent of US$300.00.Costs against appellant.

SO ORDERED.

DEOGRACIASCANSINO,-versus-PRUDENTIAL SHIPPING AND MANAGEMENT CORPORATION (in substitution for MEDBULK MARITIME MANAGEMENT CORPORATION) and SEA JUSTICE, S.A.,

Respondents.x-----------------------------------------------------------------------------------------x

DECISION

SANDOVAL-GUTIERREZ, J.:Before us is a petition for review on certiorari filed under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Decision[1] of the Court of Appeals dated March 21, 2002 in CA-G.R. SP No. 57111. The facts of the case, as gleaned from the records, are:On July 18, 1996, pursuant to a contract of employment,[2] Deogracias Cansino, petitioner, worked as a seaman in the Medbulk Maritime Management Corporation, a local manning agent of Sea Justice, S.A., a Greek shipping company. Under the contract, petitioner will serve on board the vessel M/V Commander for a term of twelve (12) months with a monthly basic salary of US$470.00, fixed overtime pay of US$141.00 for 120 hours, and vacation leave with pay of US$63.00 per month, or a total monthly compensation of US$674.00. The contract was then processed and approved by the Philippine Overseas Employment Administration (POEA). cralawWhile on board the M/V Commander, the ships master, Captain Nikolaos Kandylis, unilaterally altered the terms and conditions of the employment contract.Petitioners position as seaman was changed to pumpman.Actually this was a promotion considering that his initial monthly pay of US$674.00 was raised to US$1,164.00.

Later, Captain Kandylis received several derogatory reports against petitioner, such as drunkenness, insubordination, abandonment of post, and disorderly behavior. These were duly recorded in the ships logbook.

On August 10, 1996, seven (7) members of the crew of M/V Commander (including petitioner) submitted a request to Captain Kandylis for early repatriation because of family problems. Their requests were granted. After disembarking, they were furnished hotel accommodations and repatriation expenses. Petitioner then returned to thePhilippines. On November 18, 1996, petitioner filed with the Arbitration Branch, NLRC, National Capital Region a complaint for illegal dismissal and underpayment of wages against Medbulk Maritime Management Corporation[3] and Sea Justice, S.A.

On August 31, 1998, the Labor Arbiter dismissed petitioners complaint, holding that his employment was validly terminated.He was found liable for drunkenness, a ground for dismissal from the service under his contract of employment.

On appeal, the NLRC, in its Decision, set aside the Labor Arbiters judgment, thus:cralawACCORDINGLY, premises considered, the August 31, 1998 decision of the Labor Arbiter is hereby set aside and new one entered ordering respondent Prudential Shipping to pay complainant the amount of US$258.00 as underpayment of wages from September to November 1886 and US$10,000.00 representing his salary from December 1996 to July 1997.cralawSO ORDERED. cralawRespondents filed a motion for reconsideration but it was denied.Respondents then filed with the Court of Appeals a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended.On March 21, 2002, the Court of Appeals promulgated its Decision granting respondents petition and setting aside the NLRC Decision.Petitioner filed a motion for reconsideration.However, it was denied by the appellate court on September 5, 2002.Hence, the instant petition raising the sole issue of whether the Court of Appeals erred in holding that petitioners dismissal from employment was for cause.Section 2, Rule VII, Book IV of the POEA Rules And Regulations Governing Overseas Employment provides:

cralawSEC. 2. Grounds for Disciplinary Action. Commission by the worker of any of the offenses enumerated below or of similar offenses while working overseas shall be subject to appropriate disciplinary actions as the Administration may deem necessary:x x xcralaw(c) Desertion or abandonment;cralaw(d) Drunkenness, especially where the laws of the host country prohibit intoxicating drinks;x x xcralaw(g) Creating trouble at the worksite or in the vessel; Appendix 2 of the POEA Standard Employment Contract for Filipino migrant workers contains a list of offenses with corresponding sanctions. This list includes drunkenness.Petitioner contends that Captain Kandylis has a grudge against him, the reason why he entered in the Masters Report that he (petitioner) was involved in a fight among several members of the crew.

There is nothing in the records of this case that supports petitioners contention. On the contrary, the ships log of the M/V Commander states that he was drunk four (4) times and was not in his post once.

The Masters Report[4] dated October 6, 1996 signed by Captain Kandylis contains these entries: the illegal consumption of alcoholic drinks by the Philippine crew put in danger the crew, the vessel, her cargo, the other nearby sailing vessels as well as environment from eventual destruction. One of the crew members named therein was petitioner. The Report shows that he was always drunk, disorderly and disobedient; and that the Conformity for Sobriety which every member of the crew was made to sign was violated every day.

In Haverton Shipping Ltd v. National Labor Relations Commission,[5] we described the ships log as the official record of a ships voyage which its captain is obligated by law to keep wherein, among others, he records the decisions he has adopted, a summary of the performance of the vessel, and other daily events. The entries made therein by a person performing a duty required by law are prima facie evidence of the facts stated therein. InAbacast Shipping and Management Agency, Inc. v. National Labor Relations Commission,[6] we said that the logbook is a respectable record that can be relied upon when the entries therein are presented in evidence. In Stolt-Nielsen Marine Services (Phils.), Inc. v. National Labor Relations Commission,[7] citing Haverton and Abacast, we reiterated the evidentiary value of the ships log. Consequently, we find no reason why we should not give credence to Captain Kandylis Masters Report.

In the earlier case of Seahorse Maritime Corporation v. National Labor Relations Commission,[8] which likewise involved a seaman who was prone to intoxication and creating trouble aboard ship when drunk, we held that serious misconduct in the form of drunkenness and disorderly and violent behavior, habitual neglect of duty, and insubordination or willful disobedience to the lawful orders of his superior officer, are just causes for dismissal of an employee under Article 282[9] of the Labor Code, and that where the dismissal is for cause, the erring seaman is neither entitled to separation pay or to the salaries for the unexpired portion of his contract.

We likewise cannot sustain petitioners claim that he was underpaid. In fact, Captain Kandylis increased his monthly compensation from US$674.00 to US$1,164.00 which he received.While the contract as altered was not approved by the POEA, however, the lack of such approval is inconsequential since the alteration redounded to petitioners benefit.

WHEREFORE, we DENY the petition and AFFIRM the assailed Decision of the Court of Appeals in CA-G.R. SP No. 57111.Costs against petitioner.SO ORDERED.

VIRGINIA G. NERI and JOSE CABELIN, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION FAR EAST BANK & TRUST COMPANY (FEBTC) and BUILDING CARE CORPORATION, respondents.

BELLOSILLO, J.:

Respondents are sued by two employees of Building Care Corporation, which provides janitorial and other specific services to various firms, to compel Far Bast Bank and Trust Company to recognize them as its regular employees and be paid the same wages which its employees receive.

Building Care Corporation (BCC, for brevity), in the proceedings below, established that it had substantial capitalization of P1 Million or a stockholders equity of P1.5 Million. Thus the Labor Arbiter ruled that BCC was only job contracting and that consequently its employees were not employees of Far East Bank and Trust Company (FEBTC, for brevity). on appeal, this factual finding was affirmed by respondent National Labor Relations Commission (NLRC, for brevity). Nevertheless, petitioners insist before us that BCC is engaged in "labor-only" contracting hence, they conclude, they are employees of respondent FEBTC.

Petitioners Virginia G. Neri and Jose Cabelin applied for positions with, and were hired by, respondent BCC, a corporation engaged in providing technical, maintenance, engineering, housekeeping, security and other specific services to its clientele. They were assigned to work in the Cagayan de Oro City Branch of respondent FEBTC on 1 May 1979 and 1 August 1980, respectively, Neri an radio/telex operator and Cabelin as janitor, before being promoted to messenger on 1 April 1989.

On 28 June 1989, petitioners instituted complaints against FEBTC and BCC before Regional Arbitration Branch No. 10 of the Department of Labor and Employment to compel the bank to accept them as regular employees and for it to pay the differential between the wages being paid them by BCC and those received by FEBTC employees with similar length of service.

On 16 November 1989, the Labor Arbiter dismissed the complaint for lack of merit. 1 Respondent BCC was considered an independent contractor because it proved it had substantial capital. Thus, petitioners were held to be regular employees of BCC, not FEBTC. The dismissal was appealed to NLRC which on 28 September 1990 affirmed the decision on appeal. 2 On 22 October 1990, NLRC denied reconsideration of its affirmance, 3prompting petitioners to seek redress from this Court.

Petitioners vehemently contend that BCC in engaged in "labor-only" contracting because it failed to adduce evidence purporting to show that it invested in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of its business. Moreover, petitioners argue that they perform duties which are directly related to the principal business or operation of FEBTC. If the definition of "labor-only" contracting 4 is to be read in conjunction with job contracting, 5 then the only logical conclusion is that BCC is a "labor only" contractor. Consequently, they must be deemed employees of respondent bank by operation of law since BCC is merely an agent of FEBTC following the doctrine laid down in Philippine Bank of Communications v. National Labor Relations Commission 6 where we ruled that where "labor-only" contracting exists, the Labor Code itself establishes an employer-employee relationship between the employer and the employees of the "labor-only" contractor; hence, FEBTC should be considered the employer of petitioners who are deemed its employees through its agent, "labor-only" contractor BCC.

We cannot sustain the petition.

Respondent BCC need not prove that it made investments in the form of tools, equipment, machineries, work premises, among others, because it has established that it has sufficient capitalization. The Labor Arbiter and the NLRC both determined that BCC had a capital stock of P1 million fully subscribed and paid for. 7 BCC is therefore a highly capitalized venture and cannot be deemed engaged in "labor-only" contracting.

It is well-settled that there is "labor-only" contracting where: (a) the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others; and, (b) the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. 8

Article 106 of the Labor Code defines "labor-only" contracting thus —

Art. 106. Contractor or subcontractor. — . . . . There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited by such persons are performing activities which are directly related to the principal business of such employer . . . . (emphasis supplied).

Based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has substantial capital. While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. In other words, the law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or". If the intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction "and" should have been used. But, having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities they perform are directly related to the principal business of respondent bank.

Be that as it may, the Court has already taken judicial notice of the general practice adopted in several government and private institutions and industries of hiring independent contractors to perform special services. 9These services range from janitorial, 10 security 11 and even technical or other specific services such as those performed by petitioners Neri and Cabelin. While these services may be considered directly related to the principal business of the employer, 12 nevertheless, they are not necessary in the conduct of the principal business of the employer.

In fact, the status of BCC as an independent contractor was previously confirmed by this Court in Associated Labor Unions-TUCP v. National Labor Relations Commission, 13 where we held thus —

The public respondent ruled that the complainants are not employees of the bank but of the company contracted to serve the bank. Building Care Corporation is a big firm which services, among others, a university, an international bank, a big local bank, a hospital center, government agencies, etc. It is a qualified independent contractor. The public respondent correctly ruled against petitioner's contentions . . . . (Emphasis supplied).

Even assuming ex argumenti that petitioners were performing activities directly related to the principal business of the bank, under the "right of control" test they must still be considered employees of BCC. In the case of petitioner Neri, it is admitted that FEBTC issued a job description which detailed her functions as a radio/telex operator. However, a cursory reading of the job description shows that what was sought to be controlled by FEBTC was actually the end-result of the task, e.g., that the daily incoming and outgoing telegraphic transfer of funds received and relayed by her, respectively, tallies with that of the register. The guidelines were laid down merely to ensure that the desired end-result was achieved. It did not, however, tell Neri how the radio/telex machine should be operated. In the Shipside case, 14 we ruled —

. . . . If in the course of private respondents' work (referring to the workers), SHIPSIDE occasionally issued instructions to them, that alone does not in the least detract from the fact that only STEVEDORES is the employer of the private respondents, for in legal contemplation, such instructions carry no more weight than mere requests, the privity of contract being between SHIPSIDE and STEVEDORES . . . .

Besides, petitioners do not deny that they were selected and hired by BCC before being assigned to work in the Cagayan de Oro Branch of FFBTC. BCC likewise acknowledges that petitioners are its employees. The record is replete with evidence disclosing that BCC maintained supervision and control over petitioners through its Housekeeping and Special Services Division: petitioners reported for work wearing the prescribed uniform of BCC; leaves of absence were filed directly with BCC; and, salaries were drawn only from BCC. 15

As a matter of fact, Neri even secured a certification from BCC on 16 May 1986 that she was employed by the latter. On the other hand, on 24 May 1988, Cabelin filed a complaint for underpayment of wages, non-integration of salary adjustments mandated by Wage Orders Nos. 5 & 6 and R.A. 6640 as well as for illegal deduction 16against BCC alone which was provisionally dismissed on 19 August 1988 upon Cabelin's manifestation that his money claim was negligible. 17

More importantly, under the terms and conditions of the contract, it was BCC alone which had the power to reassign petitioners. Their deployment to FEBTC was not subject to the bank's acceptance. Cabelin was promoted to messenger because the FEBTC branch manager promised BCC that two (2) additional janitors would be hired from the company if the promotion was to be effected. 18 Furthermore, BCC was to be paid in lump sum unlike in the situation in Philippine Bank of Communications 19 where the contractor, CESI, was to be paid at a daily rate on a per person basis. And, the contract therein stipulated that the CESI was merely to provide manpower that would render temporary services. In the case at bar, Neri and Cabelin were to perform specific special services. Consequently, petitioners cannot be held to be employees of FEBTC as BCC "carries an independent business" and undertaken the performance of its contract with various clients according to its "own manner and method, free from the control and supervision" of its principals in all matters "except as to the results thereof." 20

Indeed, the facts in Philippine Bank of Communications do not square with those of the instant case. Therein, the Court ruled that CESI was a "labor-only" contractor because upholding the contract between the contractor and the bank would in effect permit employers to avoid the necessity of hiring regular or permanent employees and would enable them to keep their employees indefinitely on a temporary or casual basis, thus denying them security of tenure in their jobs. This of course violates the Labor Code. BCC has not committed any violation. Also, the former case was for illegal dismissal; this case, on the other hand, is for conversion of employment status so that petitioners can receive the same salary being given to regular employees of FEBTC. But, as herein determined, petitioners are not regular employees of FEBTC but of BCC. At any rate, the finding that BCC in a qualified independent contractor precludes us from applying the Philippine Bank of Communications doctrine to the instant petition.

The determination of employer-employee relationship involves factual findings. 21 Absent any grave abuse of discretion, and we find none in the case before us, we are bound by the findings of the Labor Arbiter as affirmed by respondent NLRC.

IN VIEW OF THE FOREGOING, the Petition for Certiorari is DISMISSED.

SO ORDERED.