labrel cases 3
DESCRIPTION
Labor Relations CasesTRANSCRIPT
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Quitclaim not bar to filing of dismissal case
[G.R. No. 191475. December 11, 2013.]
PHILIPPINE CARPET MANUFACTURING CORPORATION, PACIFIC CARPET MANUFACTURING
CORPORATION, MR. PATRICIO LIM and MR. DAVID LIM,petitioners, vs. IGNACIO B. TAGYAMON,
PABLITO L. LUNA, FE B. BADAYOS, GRACE B. MARCOS, ROGELIO C. NEMIS, ROBERTO B. ILAO,
ANICIA D. DELA CRUZ and CYNTHIA L. COMANDAO, respondents.
DECISION
PERALTA, J p:
The Case
This is a petition for review on certiorari under Rule 45 of the Rules of Court assailing the Court of
Appeals (CA) Decision dated July 7, 2009 and Resolution dated February 26, 2010 in CA-G.R. SP No. 105236.
The assailed decision granted the petition for certiorari filed by respondents Ignacio B. Tagyamon (Tagyamon),
Pablito I. Luna (Luna), Fe B. Badayos (Badayos), Grace B. Marcos (Marcos), Rogelio C. Nemis (Nemis), Roberto
B. Ilao (Ilao), Anicia D. Dela Cruz (Dela Cruz), and Cynthia L. Comandao (Comandao), the dispositive portion of
which reads:
WHEREFORE, the petition is GRANTED. The private respondent is hereby ordered to reinstate the petitioners
with full backwages less the amounts they received as separation pays. In case reinstatement would no longer
be feasible because the positions previously held no longer exist, the private respondent shall pay them
backwages plus, in lieu of reinstatement, separation pays equal to one (1) month pay, or one-half (1/2) month
pay for every year of service, whichever is higher. In addition, the private respondent is hereby ordered to pay
the petitioners moral damages in the amount of P20,000.00 each.
SO ORDERED.
The Facts
Petitioner Philippine Carpet Manufacturing Corporation (PCMC) is a corporation registered in the Philippines
engaged in the business of manufacturing wool and yarn carpets and rugs. Respondents were its regular and
permanent employees, but were affected by petitioner's retrenchment and voluntary retirement
programs. cEASTa
On March 15, 2004, Tagyamon, Luna, Badayos, Dela Cruz, and Comandao received a uniformly worded
Memorandum of dismissal, to wit:
This is to inform you that in view of a slump in the market demand for our products due to the un-
competitiveness of our price, the company is constrained to reduce the number of its workforce. The long-term
effects of September 11 and the war in the Middle East have greatly affected the viability of our business and we
are left with no recourse but to reorganize and downsize our organizational structure.
We wish to inform you that we are implementing a retrenchment program in accordance with Article 283 of the
Labor Code of the Philippines, as amended, and its implementing rules and regulations.
In this connection, we regret to advise you that you are one of those affected by the said exercise, and your
employment shall be terminated effective at the close of working hours on April 15, 2004.
Accordingly, you shall be paid your separation pay as mandated by law. You will no longer be required to report
for work during the 30-day notice period in order to give you more time to look for alternative employment.
However, you will be paid the salary corresponding to the said period. We shall process your clearance and other
documents and you may claim the payables due you on March 31, 2004.
Thank you for your services and good luck to your future endeavors.
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As to Marcos, Ilao, and Nemis, they claimed that they were dismissed effective March 31, 2004, together with
fifteen (15) other employees on the ground of lack of market/slump in demand. PCMC, however, claimed that
they availed of the company's voluntary retirement program and, in fact, voluntarily executed their respective
Deeds of Release, Waiver, and Quitclaim.
Claiming that they were aggrieved by PCMC's decision to terminate their employment, respondents filed separate
complaints for illegal dismissal against PCMC, Pacific Carpet Manufacturing Corporation, Mr. Patricio Lim and Mr.
David Lim. These cases were later consolidated. Respondents primarily relied on the Supreme Court's decision
in Philippine Carpet Employees Association (PHILCEA) v. Hon. Sto. Tomas (Philcea case), as to the validity of the
company's retrenchment program. They further explained that PCMC did not, in fact, suffer losses shown by its
acts prior to and subsequent to their termination. They also insisted that their acceptance of separation pay and
signing of quitclaim is not a bar to the pursuit of illegal dismissal case.
PCMC, for its part, defended its decision to terminate the services of respondents being a necessary
management prerogative. It pointed out that as an employer, it had no obligation to keep in its employ more
workers than are necessary for the operation of his business. Thus, there was an authorized cause for dismissal.
Petitioners also stressed that respondents belatedly filed their complaint as they allowed almost three years to
pass making the principle of laches applicable. Considering that respondents accepted their separation pay and
voluntarily executed deeds of release, waiver and quitclaim, PCMC invoked the principle of estoppel on the part
of respondents to question their separation from the service. Finally, as to Marcos, Ilao and Nemis, PCMC
emphasized that they were not dismissed from employment, but in fact they voluntarily retired from employment
to take advantage of the company's program.
On August 23, 2007, Labor Arbiter (LA) Donato G. Quinto, Jr. rendered a Decision dismissing the complaint for
lack of merit. The LA found no flaw in respondents' termination as they voluntarily opted to retire and were
subsequently re-employed on a contractual basis then regularized, terminated from employment and were paid
separation benefits. In view of respondents' belated filing of the complaint, the LA concluded that such action is
a mere afterthought designed primarily for respondents to collect more money, taking advantage of the 2006
Supreme Court decision.
On appeal, the National Labor Relations Commission (NLRC) sustained the LA decision. In addition to the LA
ratiocination, the NLRC emphasized the application of the principle of laches for respondents' inaction for an
unreasonable period.
Still undaunted, respondents elevated the matter to the CA in a petition for certiorari. In reversing the earlier
decisions of the LA and the NLRC, the CA refused to apply the principle of laches, because the case was
instituted prior to the expiration of the prescriptive period set by law which is four years. It stressed that said
principle cannot be invoked earlier than the expiration of the prescriptive period. Citing the Court's decision in
the Philcea case, the CA applied the doctrine of stare decisis, in view of the similar factual circumstances of the
cases. As to Ilao, Nemis and Marcos, while acknowledging their voluntary resignation, the CA found the same
not a bar to the illegal dismissal case because they did so on the mistaken belief that PCMC was losing
money. With the foregoing findings, the CA ordered that respondents be reinstated with full backwages less the
amounts they received as separation pay. In case of impossibility of reinstatement, the CA ordered PCMC to pay
respondents backwages and in lieu of reinstatement, separation pay equal to one month pay or 1/2 month pay
for every year of service whichever is higher, plus moral damages.
The Issues
Aggrieved, petitioners come before the Court in this petition for review on certiorari based on this ground, to wit:
IN RENDERING ITS DISPUTED DECISION AND RESOLUTION, THE COURT A QUO HAS DECIDED A QUESTION
OF SUBSTANCE NOT IN ACCORD WITH LAW AND/OR ESTABLISHED JURISPRUDENCE.
a)Res Judicata should not be followed if to follow it is to perpetuate error (Philippine Trust Co., and Smith Bell &
Co. vs. Mitchell, 59 Phil. 30, 36 (1933). The (Supreme) Court is not precluded from rectifying errors of judgment
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if blind and stubborn adherence to the doctrine of immutability of final judgments would involve the sacrifice of
justice for technicality (Heirs of Maura So vs. Obliosca, G.R. No. 147082, January 28, 2008, 542 SCRA
406) DaIACS
b)Not all waivers and quitclaims are invalid as against public policy. Waivers that represent a voluntary and
reasonable settlement of the laborer's claims are legitimate and should be respected by the Court as the law
between the parties (Gamo-gamo vs. PNOC Shipping and Transport Corp., G.R. No. 141707, May 2,
2002; Alcasero vs. NLRC, 288 SCRA 129) Where the persons making the waiver has done so voluntarily, with a
full understanding thereof, and the consideration for the quitclaim is credible and reasonable, the transaction
must be recognized as valid and binding undertaking (Periquet vs. NLRC, 186 SCRA 724 [1990];Magsalin vs.
Coca Cola Bottlers Phils., Inc. vs. National Organization of Working Men (N.O.W.M.], G.R. No. 148492, May 2,
2003).
Petitioners contend that the Philcea case decided by this Court and relied upon by the CA in the assailed decision
was based on erroneous factual findings, inapplicable financial statement, as well as erroneous analysis of such
financial statements. They, thus, implore the Court to revisit the cited case in order to dispense with substantial
justice. They explain that the Court made conclusions based on erroneous information. Petitioners also insist
that the doctrines of res judicata and law of the case are not applicable, considering that this case does not
involve the same parties as the Philcea case. They likewise point out that not all respondents were involuntarily
separated on the ground of redundancy as some of them voluntarily availed of the company's Voluntary
Separation Program. They further contend that respondents are guilty not only of laches but also of estoppel in
view of their inaction for an unreasonable length of time to assail the alleged illegal dismissal and in voluntarily
executing a release, quitclaim and waiver.
The Court's Ruling
Laches
Laches has been defined as the failure or neglect for an unreasonable and unexplained length of time to do that
which by exercising due diligence, could or should have been done earlier, thus, giving rise to a presumption
that the party entitled to assert it either has abandoned or declined to assert it. It has been repeatedly held by
the Court that:
. . . Laches is a doctrine in equity while prescription is based on law. Our courts are basically courts of law not
courts of equity. Thus, laches cannot be invoked to resist the enforcement of an existing legal right. . . . Courts
exercising equity jurisdiction are bound by rules of law and have no arbitrary discretion to disregard them.
InZabat Jr. v. Court of Appeals . . ., this Court was more emphatic in upholding the rules of procedure. We said
therein: ADTCaI
As for equity which has been aptly described as a "justice outside legality," this is applied only in the absence of,
and never against, statutory law or, as in this case, judicial rules of procedure. Aequetas nunguam contravenit
legis. The pertinent positive rules being present here, they should preempt and prevail over all abstract
arguments based only on equity.
Thus, where the claim was filed within the [four-year] statutory period, recovery therefore cannot be barred by
laches. Courts should never apply the doctrine of laches earlier than the expiration of time limited for the
commencement of actions at law."
An action for reinstatement by reason of illegal dismissal is one based on an injury to the complainants' rights
which should be brought within four years from the time of their dismissal pursuant to Article 1146 of the Civil
Code. Respondents' complaint filed almost 3 years after their alleged illegal dismissal was still well within the
prescriptive period. Laches cannot, therefore, be invoked yet. To be sure, laches may be applied only upon the
most convincing evidence of deliberate inaction, for the rights of laborers are protected under the social justice
provisions of the Constitution and under the Civil Code.
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Stare Decisis
The main issue sought to be determined in this case is the validity of respondents' dismissal from employment.
Petitioners contend that they either voluntarily retired from the service or terminated from employment based on
an authorized cause. The LA and the NLRC are one in saying that the dismissal was legal. The CA, however, no
longer discussed the validity of the ground of termination. Rather, it applied the Court's decision in the Philcea
case where the same ground was thoroughly discussed. In other words, the appellate court applied the doctrine
of stare decisis and reached the same conclusion as the earlier case.
Under the doctrine of stare decisis, when a court has laid down a principle of law as applicable to a certain state
of facts, it will adhere to that principle and apply it to all future cases in which the facts are substantially the
same, even though the parties may be different. Where the facts are essentially different, however, stare
decisisdoes not apply, for a perfectly sound principle as applied to one set of facts might be entirely
inappropriate when a factual variant is introduced.
The question, therefore, is whether the factual circumstances of this present case are substantially the same as
the Philcea case.
We answer in the affirmative.
This case and the Philcea case involve the same period which is March to April 2004; the issuance of
Memorandum to employees informing them of the implementation of the cost reduction program; the
implementation of the voluntary retirement program and retrenchment program, except that this case involves
different employees; the execution of deeds of release, waiver, and quitclaim, and the acceptance of separation
pay by the affected employees.
The illegality of the basis of the implementation of both voluntary retirement and retrenchment programs of
petitioners had been thoroughly ruled upon by the Court in the Philcea case. It discussed the requisites of both
retrenchment and redundancy as authorized causes of termination and that petitioners failed to substantiate
them. In ascertaining the bases of the termination of employees, it took into consideration petitioners' claim of
business losses; the purchase of machinery and equipment after the termination, the declaration of cash
dividends to stockholders, the hiring of 100 new employees after the retrenchment, and the authorization of full
blast overtime work for six hours daily. These, said the Court, are inconsistent with petitioners' claim that there
was a slump in the demand for its products which compelled them to implement the termination programs. In
arriving at its conclusions, the Court took note of petitioners' net sales, gross and net profits, as well as net
income. The Court, thus, reached the conclusion that the retrenchment effected by PCMC is invalid due to a
substantive defect. We quote hereunder the Court's pronouncement in the Philcea case, to wit:
Respondents failed to adduce clear and convincing evidence to prove the confluence of the essential requisites
for a valid retrenchment of its employees. We believe that respondents acted in bad faith in terminating the
employment of the members of petitioner Union.
Contrary to the claim of respondents that the Corporation was experiencing business losses, respondent
Corporation, in fact, amassed substantial earnings from 1999 to 2003. It found no need to appropriate its
retained earnings except on March 23, 2001, when it appropriated P60,000,000.00 to increase production
capacity. . . .
xxx xxx xxx
The evidence on record belies the P22,820,151.00 net income loss in 2004 as projected by the SOLE. On March
29, 2004, the Board of Directors approved the appropriation of P20,000,000.00 to purchase machinery to
improve its facilities, and declared cash dividends to stockholders at P30.00 per share. . . .
xxx xxx xxx
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It bears stressing that the appropriation of P20,000,000.00 by the respondent Corporation on September 16,
2004 was made barely five months after the 77 Union members were dismissed on the ground that respondent
Corporation was suffering from "chronic depression." Cash dividends were likewise declared on March 29, 2004,
barely two weeks after it implemented its "retrenchment program."
If respondent Corporation were to be believed that it had to retrench employees due to the debilitating slump in
demand for its products resulting in severe losses, how could it justify the purchase of P20,000,000.00 worth of
machinery and equipment? There is likewise no justification for the hiring of more than 100 new employees,
more than the number of those who were retrenched, as well as the order authorizing full blast overtime work
for six hours daily. All these are inconsistent with the intransigent claim that respondent Corporation was
impelled to retrench its employees precisely because of low demand for its products and other external causes.
xxx xxx xxx
That respondents acted in bad faith in retrenching the 77 members of petitioner is buttressed by the fact that
Diaz issued his Memorandum announcing the cost-reduction program on March 9, 2004, after receipt of the
February 10, 2004 letter of the Union president which included the proposal for additional benefits and wage
increases to be incorporated in the CBA for the ensuing year. Petitioner and its members had no inkling, before
February 10, 2004, that respondent Corporation would terminate their employment. Moreover, respondent
Corporation failed to exhaust all other means to avoid further losses without retrenching its employees, such as
utilizing the latter's respective forced vacation leaves. Respondents also failed to use fair and reasonable criteria
in implementing the retrenchment program, and instead chose to retrench 77 of the members of petitioner out
of the dismissed 88 employees. Worse, respondent Corporation hired new employees and even rehired the
others who had been "retrenched."
As shown by the SGV & Co. Audit Report, as of year end December 31, 2003, respondent Corporation increased
its net sales by more than P8,000,000.00. Respondents failed to prove that there was a drastic or severe
decrease in the product sales or that it suffered severe business losses within an interval of three (3) months
from January 2004 to March 9, 2004 when Diaz issued said Memorandum. Such claim of a depressed market as
of March 9, 2004 was only a pretext to retaliate against petitioner Union and thereby frustrate its demands for
more monetary benefits and, at the same time, justify the dismissal of the 77 Union members.
xxx xxx xxx
In contrast, in this case, the retrenchment effected by respondent Corporation is invalid due to a substantive
defect, non-compliance with the substantial requirements to effect a valid retrenchment; it necessarily follows
that the termination of the employment of petitioner Union's members on such ground is, likewise, illegal. As
such, they (petitioner Union's members) are entitled to reinstatement with full backwages.
We find no reason to depart from the above conclusions which are based on the Court's examination of the
evidence presented by the parties therein. As the respondents here were similarly situated as the union
members in the Philcea case, and considering that the questioned dismissal from the service was based on the
same grounds under the same circumstances, there is no need to relitigate the issues presented herein. In short,
we adopt the Court's earlier findings that there was no valid ground to terminate the employees.
A closer look at petitioners' arguments would show that they want the Court to re-examine our decision in
the Philcea case allegedly on the ground that the conclusions therein were based on erroneous interpretation of
the evidence presented.
Indeed, in Abaria v. National Labor Relations Commission, although the Court was confronted with the same
issue of the legality of a strike that has already been determined in a previous case, the Court refused to apply
the doctrine of stare decisis insofar as the award of backwages was concerned because of the clear erroneous
application of the law. We held therein that the Court abandons or overrules precedents whenever it realizes
that it erred in the prior decision. The Court's pronouncement in that case is instructive:
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The doctrine though is not cast in stone for upon a showing that circumstances attendant in a particular case
override the great benefits derived by our judicial system from the doctrine of stare decisis, the Court is justified
in setting it aside. For the Court, as the highest court of the land, may be guided but is not controlled by
precedent. Thus, the Court, especially with a new membership, is not obliged to follow blindly a particular
decision that it determines, after re-examination, to call for a rectification.
The Abaria case, however, is not applicable in this case. There is no reason to abandon the Court's ruling in
the Philcea case.
Do we apply the aforesaid decision to all the respondents herein? Again, we answer in the affirmative.
Just like the union members in the Philcea case, respondents Tagyamon, Luna, Badayos, Dela Cruz, and
Comandao received similarly worded memorandum of dismissal effective April 15, 2004 based on the same
ground of slump in the market demand for the company's products. As such, they are similarly situated in all
aspects as the union members. With respect to respondents Marcos, Nemis and Ilao, although they applied for
voluntary retirement, the same was not accepted by petitioner. Instead, it issued notice of termination dated
March 6, 2004 to these same employees. And while it is true that petitioner paid them separation pay, the
payment was in the nature of separation and not retirement pay. In other words, payment was made because of
the implementation of the retrenchment program and not because of retirement. As their application for availing
of the company's voluntary retirement program was based on the wrong premise, the intent to retire was not
clearly established, or rather that the retirement is involuntary. Thus, they shall be considered discharged from
employment. Consequently, they shall be treated as if they are in the same footing as the other respondents
herein and the union members in the Philcea case.
Waivers, Releases and Quitclaims
"As a rule, deeds of release and quitclaim cannot bar employees from demanding benefits to which they are
legally entitled or from contesting the legality of their dismissal. The acceptance of those benefits would not
amount to estoppel." To excuse respondents from complying with the terms of their waivers, they must locate
their case within any of three narrow grounds: (1) the employer used fraud or deceit in obtaining the waivers;
(2) the consideration the employer paid is incredible and unreasonable; or (3) the terms of the waiver are
contrary to law, public order, public policy, morals, or good customs or prejudicial to a third person with a right
recognized by law. The instant case falls under the first situation.
As the ground for termination of employment was illegal, the quitclaims are deemed illegal as the employees'
consent had been vitiated by mistake or fraud. The law looks with disfavor upon quitclaims and releases by
employees pressured into signing by unscrupulous employers minded to evade legal responsibilities. The
circumstances show that petitioner's misrepresentation led its employees, specifically respondents herein, to
believe that the company was suffering losses which necessitated the implementation of the voluntary
retirement and retrenchment programs, and eventually the execution of the deeds of release, waiver and
quitclaim.
It can safely be concluded that economic necessity constrained respondents to accept petitioners' monetary offer
and sign the deeds of release, waiver and quitclaim. That respondents are supervisors and not rank-and-file
employees does not make them less susceptible to financial offers, faced as they were with the prospect of
unemployment. The Court has allowed supervisory employees to seek payment of benefits and a manager to
sue for illegal dismissal even though, for a consideration, they executed deeds of quitclaims releasing their
employers from liability.
. . . There is no nexus between intelligence, or even the position which the employee held in the company when
it concerns the pressure which the employer may exert upon the free will of the employee who is asked to sign a
release and quitclaim. A lowly employee or a sales manager, as in the present case, who is confronted with the
same dilemma of whether [to sign] a release and quitclaim and accept what the company offers them, or [to
refuse] to sign and walk out without receiving anything, may do succumb to the same pressure, being very well
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aware that it is going to take quite a while before he can recover whatever he is entitled to, because it is only
after a protracted legal battle starting from the labor arbiter level, all the way to this Court, can he receive
anything at all. The Court understands that such a risk of not receiving anything whatsoever, coupled with the
probability of not immediately getting any gainful employment or means of livelihood in the meantime,
constitutes enough pressure upon anyone who is asked to sign a release and quitclaim in exchange of some
amount of money which may be way below what he may be entitled to based on company practice and policy or
by law.
The amounts already received by respondents as consideration for signing the releases and quitclaims should be
deducted from their respective monetary awards.
WHEREFORE, premises considered, the petition is hereby DENIED. The Court of Appeals Decision dated July
7, 2009 and Resolution dated February 26, 2010 in CA-G.R. SP No. 105236 are AFFIRMED.
SO ORDERED.
||| (Philippine Carpet Manufacturing Corp. v. Tagyamon, G.R. No. 191475, [December 11, 2013])
Burden of proof of employer-employee relationship
[G.R. No. 192558. February 15, 2012.]
BITOY JAVIER (DANILO P. JAVIER), petitioner, vs. FLY ACE CORPORATION/FLORDELYN
CASTILLO, respondents.
DECISION
MENDOZA, J p:
This is a petition under Rule 45 of the Rules of Civil Procedure assailing the March 18, 2010 Decision of the
Court of Appeals (CA) and its June 7, 2010 Resolution, in CA-G.R. SP No. 109975, which reversed the May 28,
2009 Decision of the National Labor Relations Commission (NLRC) in the case entitled Bitoy Javier v. Fly
Ace/Flordelyn Castillo, holding that petitioner Bitoy Javier (Javier) was illegally dismissed from employment and
ordering Fly Ace Corporation (Fly Ace) to pay backwages and separation pay in lieu of reinstatement.
Antecedent Facts
On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries and other labor
standard benefits. He alleged that he was an employee of Fly Ace since September 2007, performing various
tasks at the respondent's warehouse such as cleaning and arranging the canned items before their delivery to
certain locations, except in instances when he would be ordered to accompany the company's delivery vehicles,
as pahinante; that he reported for work from Monday to Saturday from 7:00 o'clock in the morning to 5:00
o'clock in the afternoon; that during his employment, he was not issued an identification card and payslips by
the company; that on May 6, 2008, he reported for work but he was no longer allowed to enter the company
premises by the security guard upon the instruction of Ruben Ong (Mr. Ong), his superior; that after several
minutes of begging to the guard to allow him to enter, he saw Ong whom he approached and asked why he was
being barred from entering the premises; that Ong replied by saying, "Tanungin mo anak mo;" that he then
went home and discussed the matter with his family; that he discovered that Ong had been courting his
daughter Annalyn after the two met at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and
convince him to spare her father from trouble but he refused to accede; that thereafter, Javier was terminated
from his employment without notice; and that he was neither given the opportunity to refute the cause/s of his
dismissal from work.
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To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged that Javier was a
stevedore or pahinante of Fly Ace from September 2007 to January 2008. The said affidavit was subscribed
before the Labor Arbiter (LA).
For its part, Fly Ace averred that it was engaged in the business of importation and sales of groceries. Sometime
in December 2007, Javier was contracted by its employee, Mr. Ong, as extra helper on a pakyaw basis at an
agreed rate of P300.00 per trip, which was later increased to P325.00 in January 2008. Mr. Ong contracted
Javier roughly 5 to 6 times only in a month whenever the vehicle of its contracted hauler, Milmar Hauling
Services, was not available. On April 30, 2008, Fly Ace no longer needed the services of Javier. Denying that he
was their employee, Fly Ace insisted that there was no illegal dismissal. Fly Ace submitted a copy of its
agreement with Milmar Hauling Services and copies of acknowledgment receipts evidencing payment to Javier
for his contracted services bearing the words, "daily manpower(pakyaw/piece rate pay)" and the latter's
signatures/initials.
Ruling of the Labor Arbiter
On November 28, 2008, the LA dismissed the complaint for lack of merit on the ground that Javier failed to
present proof that he was a regular employee of Fly Ace. He wrote:
Complainant has no employee ID showing his employment with the Respondent nor any document showing that
he received the benefits accorded to regular employees of the Respondents. His contention that Respondent
failed to give him said ID and payslips implies that indeed he was not a regular employee of Fly Ace considering
that complainant was a helper and that Respondent company has contracted a regular trucking for the delivery
of its products.
Respondent Fly Ace is not engaged in trucking business but in the importation and sales of groceries. Since there
is a regular hauler to deliver its products, we give credence to Respondents' claim that complainant was
contracted on "pakiao" basis.
As to the claim for underpayment of salaries, the payroll presented by the Respondents showing salaries of
workers on "pakiao" basis has evidentiary weight because although the signature of the complainant appearing
thereon are not uniform, they appeared to be his true signature.
xxx xxx xxx
Hence, as complainant received the rightful salary as shown by the above described payrolls, Respondents are
not liable for salary differentials.
Ruling of the NLRC
On appeal with the NLRC, Javier was favored. It ruled that the LA skirted the argument of Javier and
immediately concluded that he was not a regular employee simply because he failed to present proof. It was of
the view that a pakyaw-basis arrangement did not preclude the existence of employer-employee relationship.
"Payment by result . . . is a method of compensation and does not define the essence of the relation. It is a
mere method of computing compensation, not a basis for determining the existence or absence of an employer-
employee relationship." The NLRC further averred that it did not follow that a worker was a job contractor and
not an employee, just because the work he was doing was not directly related to the employer's trade or
business or the work may be considered as "extra" helper as in this case; and that the relationship of an
employer and an employee was determined by law and the same would prevail whatever the parties may call it.
In this case, the NLRC held that substantial evidence was sufficient basis for judgment on the existence of the
employer-employee relationship. Javier was a regular employee of Fly Ace because there was reasonable
connection between the particular activity performed by the employee (as a 'pahinante') in relation to the usual
business or trade of the employer (importation, sales and delivery of groceries). He may not be considered as an
independent contractor because he could not exercise any judgment in the delivery of company products. He
was only engaged as a "helper."
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Finding Javier to be a regular employee, the NLRC ruled that he was entitled to a security of tenure. For failing
to present proof of a valid cause for his termination, Fly Ace was found to be liable for illegal dismissal of Javier
who was likewise entitled to backwages and separation pay in lieu of reinstatement. The NLRC thus ordered:
WHEREFORE, premises considered, complainant's appeal is partially GRANTED. The assailed Decision of the
labor arbiter is VACATED and a new one is hereby entered holding respondent FLY ACE CORPORATION guilty of
illegal dismissal and non-payment of 13th month pay. Consequently, it is hereby ordered to pay complainant
DANILO "Bitoy" JAVIER the following:
1. Backwages - P45,770.83
2. Separation pay, in lieu of reinstatement - 8,450.00
3. Unpaid 13th month pay (proportionate) - 5,633.33
TOTAL - P59,854.16
=========
All other claims are dismissed for lack of merit.
SO ORDERED.
Ruling of the Court of Appeals
On March 18, 2010, the CA annulled the NLRC findings that Javier was indeed a former employee of Fly Ace and
reinstated the dismissal of Javier's complaint as ordered by the LA. The CA exercised its authority to make its
own factual determination anent the issue of the existence of an employer-employee relationship between the
parties. According to the CA:
xxx xxx xxx
In an illegal dismissal case the onus probandi rests on the employer to prove that its dismissal was for a valid
cause. However, before a case for illegal dismissal can prosper, an employer-employee relationship must first be
established. . . . it is incumbent upon private respondent to prove the employee-employer relationship by
substantial evidence.
xxx xxx xxx
It is incumbent upon private respondent to prove, by substantial evidence, that he is an employee of petitioners,
but he failed to discharge his burden. The non-issuance of a company-issued identification card to private
respondent supports petitioners' contention that private respondent was not its employee.
The CA likewise added that Javier's failure to present salary vouchers, payslips, or other pieces of evidence to
bolster his contention, pointed to the inescapable conclusion that he was not an employee of Fly Ace. Further, it
found that Javier's work was not necessary and desirable to the business or trade of the company, as it was only
when there were scheduled deliveries, which a regular hauling service could not deliver, that Fly Ace would
contract the services of Javier as an extra helper. Lastly, the CA declared that the facts alleged by Javier did not
pass the "control test." He contracted work outside the company premises; he was not required to observe
definite hours of work; he was not required to report daily; and he was free to accept other work elsewhere as
there was no exclusivity of his contracted service to the company, the same being co-terminous with the trip
only. Since no substantial evidence was presented to establish an employer-employee relationship, the case for
illegal dismissal could not prosper.
The petitioners moved for reconsideration, but to no avail.
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Hence, this appeal anchored on the following grounds:
I.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER WAS
NOT A REGULAR EMPLOYEE OF FLY ACE.
II.
WHETHER THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER IS
NOT ENTITLED TO HIS MONETARY CLAIMS.
The petitioner contends that other than its bare allegations and self-serving affidavits of the other employees,
Fly Ace has nothing to substantiate its claim that Javier was engaged on a pakyaw basis. Assuming that Javier
was indeed hired on a pakyaw basis, it does not preclude his regular employment with the company. Even the
acknowledgment receipts bearing his signature and the confirming receipt of his salaries will not show the true
nature of his employment as they do not reflect the necessary details of the commissioned task. Besides, Javier's
tasks as pahinante are related, necessary and desirable to the line of business by Fly Ace which is engaged in
the importation and sale of grocery items. "On days when there were no scheduled deliveries, he worked in
petitioners' warehouse, arranging and cleaning the stored cans for delivery to clients." More importantly, Javier
was subject to the control and supervision of the company, as he was made to report to the office from Monday
to Saturday, from 7:00 o'clock in the morning until 5:00 o'clock in the afternoon. The list of deliverable goods,
together with the corresponding clients and their respective purchases and addresses, would necessarily have
been prepared by Fly Ace. Clearly, he was subjected to compliance with company rules and regulations as
regards working hours, delivery schedule and output, and his other duties in the warehouse.
The petitioner chiefly relied on Chavez v. NLRC, where the Court ruled that payment to a worker on a per trip
basis is not significant because "this is merely a method of computing compensation and not a basis for
determining the existence of employer-employee relationship." Javier likewise invokes the rule that, "in
controversies between a laborer and his master, . . . doubts reasonably arising from the evidence should be
resolved in the former's favour. The policy is reflected is no less than the Constitution, Labor Code and Civil
Code."
Claiming to be an employee of Fly Ace, petitioner asserts that he was illegally dismissed by the latter's failure to
observe substantive and procedural due process. Since his dismissal was not based on any of the causes
recognized by law, and was implemented without notice, Javier is entitled to separation pay and backwages.
In its Comment, Fly Ace insists that there was no substantial evidence to prove employer-employee relationship.
Having a service contract with Milmar Hauling Services for the purpose of transporting and delivering company
products to customers, Fly Ace contracted Javier as an extra helper or pahinante on a mere "per trip basis."
Javier, who was actually a loiterer in the area, only accompanied and assisted the company driver when Milmar
could not deliver or when the exigency of extra deliveries arises for roughly five to six times a month. Before
making a delivery, Fly Ace would turn over to the driver and Javier the delivery vehicle with its loaded company
products. With the vehicle and products in their custody, the driver and Javier "would leave the company
premises using their own means, method, best judgment and discretion on how to deliver, time to deliver, where
and [when] to start, and manner of delivering the products."
Fly Ace dismisses Javier's claims of employment as baseless assertions. Aside from his bare allegations, he
presented nothing to substantiate his status as an employee. "It is a basic rule of evidence that each party must
prove his affirmative allegation. If he claims a right granted by law, he must prove his claim by competent
evidence, relying on the strength of his own evidence and not upon the weakness of his opponent." Invoking
the case of Lopez v. Bodega City, Fly Ace insists that in an illegal dismissal case, the burden of proof is upon the
complainant who claims to be an employee. It is essential that an employer-employee relationship be proved by
substantial evidence. Thus, it cites:
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11
In an illegal dismissal case, the onus probandi rests on the employer to prove that its dismissal of an employee
was for a valid cause. However, before a case for illegal dismissal can prosper, an employer-employee
relationship must first be established.
Fly Ace points out that Javier merely offers factual assertions that he was an employee of Fly Ace, "which are
unfortunately not supported by proof, documentary or otherwise." Javier simply assumed that he was an
employee of Fly Ace, absent any competent or relevant evidence to support it. "He performed his contracted
work outside the premises of the respondent; he was not even required to report to work at regular hours; he
was not made to register his time in and time out every time he was contracted to work; he was not subjected
to any disciplinary sanction imposed to other employees for company violations; he was not issued a company
I.D.; he was not accorded the same benefits given to other employees; he was not registered with the Social
Security System (SSS) as petitioner's employee; and, he was free to leave, accept and engage in other means of
livelihood as there is no exclusivity of his contracted services with the petitioner, his services being co-terminus
with the trip only. All these lead to the conclusion that petitioner is not an employee of the respondents."
Moreover, Fly Ace claims that it had "no right to control the result, means, manner and methods by which Javier
would perform his work or by which the same is to be accomplished." In other words, Javier and the company
driver were given a free hand as to how they would perform their contracted services and neither were they
subjected to definite hours or condition of work.
Fly Ace likewise claims that Javier's function as a pahinante was not directly related or necessary to its principal
business of importation and sales of groceries. Even without Javier, the business could operate its usual course
as it did not involve the business of inland transportation. Lastly, the acknowledgment receipts bearing Javier's
signature and words "pakiao rate," referring to his earned salaries on a per trip basis, have evidentiary weight
that the LA correctly considered in arriving at the conclusion that Javier was not an employee of the company.
The Court affirms the assailed CA decision.
It must be noted that the issue of Javier's alleged illegal dismissal is anchored on the existence of an employer-
employee relationship between him and Fly Ace. This is essentially a question of fact. Generally, the Court does
not review errors that raise factual questions. However, when there is conflict among the factual findings of the
antecedent deciding bodies like the LA, the NLRC and the CA, "it is proper, in the exercise of Our equity
jurisdiction, to review and re-evaluate the factual issues and to look into the records of the case and re-examine
the questioned findings." In dealing with factual issues in labor cases, "substantial evidence that amount of
relevant evidence which a reasonable mind might accept as adequate to justify a conclusion is sufficient."
As the records bear out, the LA and the CA found Javier's claim of employment with Fly Ace as wanting and
deficient. The Court is constrained to agree. Although Section 10, Rule VII of the New Rules of Procedure of the
NLRC allows a relaxation of the rules of procedure and evidence in labor cases, this rule of liberality does not
mean a complete dispensation of proof. Labor officials are enjoined to use reasonable means to ascertain the
facts speedily and objectively with little regard to technicalities or formalities but nowhere in the rules are they
provided a license to completely discount evidence, or the lack of it. The quantum of proof required, however,
must still be satisfied. Hence, "when confronted with conflicting versions on factual matters, it is for them in the
exercise of discretion to determine which party deserves credence on the basis of evidence received, subject
only to the requirement that their decision must be supported by substantial evidence." Accordingly, the
petitioner needs to show by substantial evidence that he was indeed an employee of the company against which
he claims illegal dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk and cheese. It
is, therefore, incumbent upon the Court to determine whether the party on whom the burden to prove lies was
able to hurdle the same. "No particular form of evidence is required to prove the existence of such employer-
employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Hence,
while no particular form of evidence is required, a finding that such relationship exists must still rest on some
substantial evidence. Moreover, the substantiality of the evidence depends on its quantitative as well as
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itsqualitative aspects." Although substantial evidence is not a function of quantity but rather of quality, the . . .
circumstances of the instant case demand that something more should have been proffered. Had there been
other proofs of employment, such as . . . inclusion in petitioner's payroll, or a clear exercise of control, the Court
would have affirmed the finding of employer-employee relationship."
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or substantiate such claim
by the requisite quantum of evidence. "Whoever claims entitlement to the benefits provided by law should
establish his or her right thereto . . . ." Sadly, Javier failed to adduce substantial evidence as basis for the grant
of relief.
In this case, the LA and the CA both concluded that Javier failed to establish his employment with Fly Ace. By
way of evidence on this point, all that Javier presented were his self-serving statements purportedly showing his
activities as an employee of Fly Ace. Clearly, Javier failed to pass the substantiality requirement to support his
claim. Hence, the Court sees no reason to depart from the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made to work in the
company premises during weekdays arranging and cleaning grocery items for delivery to clients, no other proof
was submitted to fortify his claim. The lone affidavit executed by one Bengie Valenzuela was unsuccessful in
strengthening Javier's cause. In said document, all Valenzuela attested to was that he would frequently see
Javier at the workplace where the latter was also hired as stevedore. Certainly, in gauging the evidence
presented by Javier, the Court cannot ignore the inescapable conclusion that his mere presence at the workplace
falls short in proving employment therein. The supporting affidavit could have, to an extent, bolstered Javier's
claim of being tasked to clean grocery items when there were no scheduled delivery trips, but no information
was offered in this subject simply because the witness had no personal knowledge of Javier's employment status
in the company. Verily, the Court cannot accept Javier's statements, hook, line and sinker.
The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests to determine
the existence of an employer-employee relationship, viz.: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the power to control the employee's conduct. Of
these elements, the most important criterion is whether the employer controls or has reserved the right to
control the employee not only as to the result of the work but also as to the means and methods by which the
result is to be accomplished.
In this case, Javier was not able to persuade the Court that the above elements exist in his case. He could not
submit competent proof that Fly Ace engaged his services as a regular employee; that Fly Ace paid his wages as
an employee, or that Fly Ace could dictate what his conduct should be while at work. In other words, Javier's
allegations did not establish that his relationship with Fly Ace had the attributes of an employer-employee
relationship on the basis of the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Ace's
assertion that it had an agreement with a hauling company to undertake the delivery of its goods. It was also
baffling to realize that Javier did not dispute Fly Ace's denial of his services' exclusivity to the company. In short,
all that Javier laid down were bare allegations without corroborative proof.
Fly Ace does not dispute having contracted Javier and paid him on a "per trip" rate as a stevedore, albeit on
a pakyaw basis. The Court cannot fail to note that Fly Ace presented documentary proof that Javier was indeed
paid on a pakyaw basis per the acknowledgment receipts admitted as competent evidence by the LA.
Unfortunately for Javier, his mere denial of the signatures affixed therein cannot automatically sway us to ignore
the documents because "forgery cannot be presumed and must be proved by clear, positive and convincing
evidence and the burden of proof lies on the party alleging forgery."
Considering the above findings, the Court does not see the necessity to resolve the second issue presented.
One final note. The Court's decision does not contradict the settled rule that "payment by the piece is just a
method of compensation and does not define the essence of the relation." Payment on a piece-rate basis does
not negate regular employment. "The term 'wage' is broadly defined in Article 97 of the Labor Code as
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13
remuneration or earnings, capable of being expressed in terms of money whether fixed or ascertained on a time,
task, piece or commission basis. Payment by the piece is just a method of compensation and does not define the
essence of the relations. Nor does the fact that the petitioner is not covered by the SSS affect the employer-
employee relationship. However, in determining whether the relationship is that of employer and employee or
one of an independent contractor, each case must be determined on its own facts and all the features of the
relationship are to be considered." Unfortunately for Javier, the attendant facts and circumstances of the instant
case do not provide the Court with sufficient reason to uphold his claimed status as employee of Fly Ace.
While the Constitution is committed to the policy of social justice and the protection of the working class, it
should not be supposed that every labor dispute will be automatically decided in favor of labor. Management
also has its rights which are entitled to respect and enforcement in the interest of simple fair play. Out of its
concern for the less privileged in life, the Court has inclined, more often than not, toward the worker and upheld
his cause in his conflicts with the employer. Such favoritism, however, has not blinded the Court to the rule that
justice is in every case for the deserving, to be dispensed in the light of the established facts and the applicable
law and doctrine.
WHEREFORE, the petition is DENIED. The March 18, 2010 Decision of the Court of Appeals and its June 7,
2010 Resolution, in CA-G.R. SP No. 109975, are herebyAFFIRMED.
SO ORDERED.
||| (Javier v. Fly Ace Corp., G.R. No. 192558, [February 15, 2012])
Evidence presented for the first time on appeal
[G.R. No. 186344. February 20, 2013.]
LEOPARD SECURITY AND INVESTIGATION AGENCY, petitioner, vs. TOMAS QUITOY, RAUL SABANG
and DIEGO MORALES, respondents.
DECISION
PEREZ, J p:
Is an award of separation pay proper despite lack of showing of illegal dismissal? This is the main issue in this
Rule 45 Petition for Review on Certiorari assailing the Decision dated 26 September 2008 rendered and the
Resolution dated 21 January 2009 issued by the Twentieth Division of the Court of Appeals (CA) in CA-G.R. SP
No. 03097.
The factual antecedents are not in dispute.
Alongside Numeriano Ondong, respondents Tomas Quitoy, Raul Sabang and Diego Morales were hired as
security guards by petitioner Leopard Security and Investigation Agency (LSIA) which maintained its office at
BCC House, 537 Shaw Boulevard, Mandaluyong City. All being residents of Cebu City, respondents were
assigned by LSIA to the different branches of its only client in said locality, Union Bank of the Philippines (Union
Bank). On 1 April 2005, it appears that Union Bank served a notice to LSIA, terminating the parties' security
service contract effective at the end of business hours of 30 April 2005. Thru its representative,
RogelioMorales, LSIA informed respondents on 29 April 2005 of the termination of its contract with Union Bank
which had decided to change its security provider. Upon Morales' instruction, respondents went to the Union
Bank Cebu Business Park Branch on 30 April 2005, for the turnover of their service firearms to Arnel Cortes,
Union Bank's Chief Security Officer. On 3 May 2005, respondents and Ondong filed a complaint for illegal
dismissal, unpaid 13th month pay and service incentive leave pay (SILP), moral and exemplary damages as well
as attorney's fees against LSIA, its President, Jose Poe III, Union Bank, its Regional Service and Operations
Officer, Catherine Cheung, Herbert Hojas, Protectors Services, Inc. (PSI) and Capt. Gerardo Jaro. With the
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complaint already docketed as RAB Case No. 07-05-0979-2005 before the Regional Arbitration Branch No. VII of
the National Labor Relations Commission (NLRC) in Cebu City, it appears that LSIA sent on 10 May 2005 a
notice requiring respondents to report for work to its Mandaluyong City office. In an Order dated 6 June 2005,
Cheung and Hojas were later dropped as parties-respondents from the case upon motion of respondents. In
view of Ondong's execution of a quitclaim, on the other hand, his complaint was likewise dismissed with
prejudice, resulting in the exclusion of PSI and Jaro as parties-respondents from the case.
In support of their complaint, respondents averred that they were hired and assigned by LSIA to the different
Cebu City branches of Union Bank which directly paid their salaries and whose branch managers exercised direct
control and supervision over them. Required to work from 7:30 a.m. to 9:00 p.m. daily, respondents claimed
that they took orders and instructions from Union Bank's branch managers since LSIA had no administrative
personnel in Cebu City. Respondents further asserted that, after introducing himself as a representative of LSIA
on 29 April 2005, Morales belatedly informed them that their services would be terminated at the end of the
office hours on the same business day. Directed by Morales to report to Union Bank's Cebu Business Park Branch
the next day, respondents maintained that they surrendered their service firearms to Cortes who told them that
Union Bank would be engaging the services of another security agency effective the next working day. Not even
reimbursed their firearm bond nor told that Union Bank had no monetary obligation to them, respondents
claimed they were constrained to file their complaint and to pray that the former be held jointly and severally
liable with LSIA for their claims.
In its position paper, LSIA, on the other hand, asseverated that upon being hired, respondents opted for an
assignment in Cebu City and were, accordingly, detailed at the different branches of Union Bank in said locality.
Informed by Union Bank on 1 April 2005 of the termination of their security service contract effective 30 April
2005, LSIA claimed that it relieved respondents from their assignments by the end of the business hours of the
latter date. Petitioners would, on 10 May 2005, direct respondents to report for work at its Mandaluyong City
office. As respondents failed to do so, LSIA alleged that it issued show cause letters on 21 June 2005, requiring
the former to explain why they should not be administratively sanctioned for their unexplained absences. As the
avowed direct employer of respondents, LSIA also prayed that Union Bank be dropped from the case and that
the complaint be altogether dismissed for lack of merit. Invoking the security service contract it executed with
LSIA from which its lack of an employer-employee relationship with respondents could be readily gleaned, Union
Bank, in turn, asserted that the complaint should be dismissed as against it for lack of cause of action.
On 6 April 2006, Labor Arbiter Violeta Ortiz-Bantug rendered a Decision, finding LSIA liable for the illegal
dismissal of respondents. Faulting LSIA for informing respondents of the termination of their services only on 30
April 2005 despite Union Bank's 1 April 2005 advice of the termination of its security service contract, the Labor
Arbiter ruled that the 10 May 2005 report to work order did not show a sincere intention on the part of LSIA to
provide respondents with other assignments. Aside from respondents' claims for backwages, LSIA was ordered
by the Labor Arbiter to pay the former's claim for separation pay on the ground that reinstatement was no
longer feasible under the circumstances. Although absolved from liability for the foregoing awards upon the
finding that LSIA was an independent contractor, Union Bank was, however, held jointly and severally liable with
said security agency for the payment of respondents' claims for proportionate 13th month pay and SILP for the
three years immediately preceding the institution of the case.
On appeal, the foregoing decision was modified in the 20 March 2007 Decision rendered by the Fourth Division
of the NLRC in NLRC Case No. V-000570-2006. Applying the principle that security agencies like LSIA are allowed
to put security guards on temporary off-detail or floating status for a period not exceeding six months, the NLRC
discounted the factual and legal bases for the illegal dismissal determined by the Labor Arbiter as well as the
backwages awarded in favor of respondents. Finding that the filing of the complaint on 3 May 2005 was
premature, the NLRC took note of the fact that respondents did not even protest against the report to work
order issued by LSIA. Even then, the NLRC upheld the Labor Arbiter's award of separation pay on the theory that
reinstatement was no longer viable. The awards of proportionate 13th month pay and SILP for which Union Bank
and LSIA were held solidarily liable were likewise sustained for failure of the latter to discharge the burden of
proving payment of said labor standard benefits. Belatedly submitting documents to prove its payment of SILP,
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LSIA filed a motion for reconsideration of the foregoing decision which was, however, denied for lack of merit in
the NLRC's 23 July 2007 Resolution.
Dissatisfied, LSIA filed the Rule 65 Petition for Certiorari docketed before the CA as CA-G.R. SP No. 03097.
Calling attention to the impropriety of the award of separation pay absent a finding of illegal dismissal, LSIA also
faulted the NLRC for ignoring the evidence it submitted alongside its motion for reconsideration to prove the
payment of respondents' SILP for the years 2003, 2004 and 2005. On 26 September 2008, the then Twentieth
Division of the CA rendered the herein assailed decision, affirming the NLRC's 23 July 2007 Decision and denying
LSIA's petition for lack of merit. Applying the principle that respondents could not be considered illegally
dismissed before the lapse of six months from their being placed on floating status by LSIA, the CA justified the
awards of separation pay, proportionate 13th month pay and SILP in the following wise:
In another vein, however, . . . respondents were caught off guard when Rogelio Morales, [LSIA's] representative
summarily told them not to report to Union Bank anymore. They did not understand its implications as no one
bothered to explain what would happen to them. At any rate, it is clear as day that . . . respondents no longer
wish to continue their employment with [LSIA] because of the shabby treatment previously given them. Their
relations have obviously turned sour. Such being the case, separation pay, in lieu of reinstatement, is proper.
Separation pay is granted where reinstatement is no longer advisable because of strained relations between the
employer and the employee.
xxx xxx xxx
The burden of proving payment of holiday pay and salary differentials belong to the employer, not the
employee. Here [LSIA] failed to present proofs that . . . respondents received payment for [SILP] and thirteenth
month pay which accrued to them under the law. As the labor arbiter ruled, however, payment of [SILP] shall
only be for the last three (3) years of . . . respondents' service taking into consideration the provisions on
prescription of money claims and proportionate 13th month pay for the year 2004.
Aggrieved by the foregoing decision as well as the CA's 21 January 2009 denial of their motion for
reconsideration thereof, LSIA and Poe filed the Petition for Review on Certiorari at bench, on the following
grounds:
I
THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR WHEN IT UPHELD THE NLRC DECISION
AWARDING TO RESPONDENTS SEPARATION PAY DESPITE ITS FINDINGS THAT THEY WERE NOT
ILLEGALLY DISMISSED.
II
THE COURT OF APPEALS ERRED WHEN IT UPHELD THE NLRC DECISION AWARDING TO
RESPONDENTS SERVICE INCENTIVE LEAVE PAY FOR THE YEARS 2003, 2004 AND 2005.
In urging the grant of their petition, LSIA and Poe argue that, upon discounting the factual basis for
respondents' claim that they were illegally dismissed from employment, the CA should have disallowed the
award of separation pay awarded by the Labor Arbiter and the NLRC. They insist that like backwages, separation
pay is the legal consequence of a finding of illegal dismissal and should, perforce, be deleted in the absence
thereof, particularly when no evidence was adduced to prove the strained relations between the employer and
employee. LSIA and Poe also fault the CA for ignoring the Bank Advice Slips and On Demand Statement of
Account belatedly submitted alongside the motion for reconsideration they filed before the NLRC, to prove
payment of respondents' SILP for the years 2004 and 2005. In their comment to the petition, on the other
hand, respondents insist that they have been illegally dismissed from employment and that the Labor Arbiter's
determination to that effect was erroneously reversed by both the NLRC and the CA.
The petition is impressed with merit.
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Applying Article 286 of the Labor Code of the Philippines by analogy, this Court has repeatedly recognized that
security guards may be temporarily sidelined by their security agency as their assignments primarily depend on
the contracts entered into by the latter with third parties. Temporary "off-detail" or "floating status" is the
period of time when security guards are in between assignments or when they are made to wait after being
relieved from a previous post until they are transferred to a new one. It takes place when, as here, the security
agency's clients decide not to renew their contracts with the agency, resulting in a situation where the available
posts under its existing contracts are less than the number of guards in its roster. For as long as such
temporary inactivity does not continue for a period exceeding six months, it has been ruled that placing an
employee on temporary "off-detail" or "floating status" is not equivalent to dismissal.
In the case at bench, respondents were informed on 29 April 2005 that they were going to be relieved from duty
as a consequence of the 30 April 2005 expiration of the security service contract between Union Bank and LSIA.
While respondents lost no time in immediately filing their complaint on 3 May 2005, the record equally shows
that they were directed by LSIA to report for work at its Mandaluyong City office on 10 May 2005 or a mere ten
days from the time the former were effectively sidelined. Considering that a security guard is only considered
illegally dismissed from service when he is sidelined from duty for a period exceeding six months, we find that
the CA correctly upheld the NLRC's ruling that respondents were not illegally dismissed by LSIA. Parenthetically,
said ruling is binding on respondents who did not appeal either the decision rendered by the NLRC or the CA in
line with the entrenched procedural rule in this jurisdiction that a party who did not appeal cannot assign such
errors as are designed to have the judgment modified.
Having correctly ruled out illegal dismissal of respondents, the CA reversibly erred, however, when it sustained
the NLRC's award of separation pay on the ground that the parties' relationship had already been strained. For
one, liability for the payment of separation pay is a legal consequence of illegal dismissal where reinstatement is
no longer viable or feasible. Under Article 279 of the Labor Code, an illegally dismissed employee is entitled to
the twin reliefs of full backwages and reinstatement without loss of seniority rights. Aside from the instances
provided under Articles 283 and 284 of the Labor Code, separation pay is, however, granted when
reinstatement is no longer feasible because of strained relations between the employer and the employee. In
cases of illegal dismissal, the accepted doctrine is that separation pay is available in lieu of reinstatement when
the latter recourse is no longer practical or in the best interest of the parties.
As a relief granted in lieu of reinstatement, however, it consequently goes without saying that an award of
separation pay is inconsistent with a finding that there was no illegal dismissal. Standing alone, the doctrine of
strained relations will not justify an award of separation pay, a relief granted in instances where the common
denominator is the fact that the employee was dismissed by the employer. Even in cases of illegal dismissal, the
doctrine of strained relations is not applied indiscriminately as to bar reinstatement, especially when the
employee has not indicated an aversion to returning to work or does not occupy a position of trust and
confidence in or has no say in the operation of the employer's business. Although litigation may also engender
a certain degree of hostility, it has likewise been ruled that the understandable strain in the parties' relations
would not necessarily rule out reinstatement which would, otherwise, become the rule rather than the exception
in illegal dismissal cases.
Our perusal of the position paper they filed a quo shows that, despite erroneously believing themselves to have
been illegally dismissed, respondents had alleged no circumstance indicating the strained relations between
them and LSIA and had even alternatively prayed for reinstatement alongside the payment of separation
pay. Since application of the doctrine of strained relations presupposes a question of fact which must be
demonstrated and adequately supported by evidence, the CA clearly erred in ruling that the parties' relations
had already soured and that an award of separation pay in favor of respondents is proper. Apprised by Union
Bank on 1 April 2005 that it was no longer renewing its security service contract after 30 April 2005, LSIA may
have tarried in informing respondents of the fact only on 29 April 2005. As correctly ruled by the NLRC, however,
the resultant inconvenience to respondents cannot detract from the fact that the employer-employee relationship
between the parties still subsisted and had yet to be severed when respondents filed their complaint on 3 May
2005.
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Absent illegal dismissal on the part of LSIA and abandonment of employment on the part of respondents, we
find that the latter's reinstatement without backwages is, instead, in order. In addition to respondent's
alternative prayer therefor in their position paper, reinstatement is justified by LSIA's directive for them to report
for work at its Mandaluyong City office as early of 10 May 2005. As for the error ascribed the CA for failing to
correct the NLRC's disregard of the evidence showing LSIA's payment of respondents' SILP, suffice it to say that
the NLRC is not precluded from receiving evidence, even for the first time on appeal, because technical rules of
procedure are not binding in labor cases. Considering that labor officials are, in fact, encouraged to use all
reasonable means to ascertain the facts speedily and objectively, with little resort to technicalities of law or
procedure, LSIA correctly faults the CA for likewise brushing aside the evidence of SILP payments it submitted
during the appeal stage before the NLRC.
The record shows that respondents were uniformly awarded SILP at the rate of P666.00 for the period May 3 to
December 31, 2002, P1,000.00 for the period January 1 to December 31, 2003, P1,040.00 for the period January
1 to December 31, 2004 and P347.36 for the period January 1 to May 3, 2005 or a total of P3,053.36 each. The
Bank Advice Slips and On Demand Statement of Account submitted by LSIA before the NLRC shows uniform
payments of SILP to respondents in the sum of P1,025 for the year 2004 which should, therefore, be deducted
from the award of said benefit in favor of respondent. Although LSIA also submitted a Bank Advice Slip showing
a supposed P1,065.00 payment of SILP for the year 2005 in favor of respondent Sabang only, the absence of an
On Demand Statement of Account for said amount impels Us to disallow the further deduction thereof from the
SILP award.
WHEREFORE, premises considered, the petition is GRANTED and the assailed Decision dated 26 September
2008 is, accordingly, MODIFIED to direct the reinstatement of respondents in lieu of the award of separation
pay and to deduct the sum of P1,025.00 from the SILP individually awarded in favor of respondents. The rest
isAFFIRMED.
SO ORDERED.
||| (Leopard Security and Investigation Agency v. Quitoy, G.R. No. 186344, [February 20, 2013])
Contempt powers of the NLRC
[G.R. No. 176085. February 8, 2012.]
FEDERICO S. ROBOSA, ROLANDO E. PANDY, NOEL D. ROXAS, ALEXANDER ANGELES, VERONICA
GUTIERREZ, FERNANDO EMBAT, and NANETTE H. PINTO, petitioners, vs. NATIONAL LABOR
RELATIONS COMMISSION (First Division), CHEMO-TECHNISCHE MANUFACTURING, INC. and its
responsible officials led by FRANKLIN R. DE LUZURIAGA, and PROCTER & GAMBLE PHILIPPINES,
INC., respondents.
DECISION
BRION, J p:
We resolve the petition for review on Certiorari seeking the reversal of the resolutions of the Court of
Appeals (CA) rendered on February 24, 2006 and December 14, 2006 in CA-G.R. SP No. 80436.
Factual Background
Federico S. Robosa, Rolando E. Pandy, Noel D. Roxas, Alexander Angeles, Veronica Gutierrez, Fernando Embat
and Nanette H. Pinto (petitioners) were rank-and-file employees of respondent Chemo-Technische
Manufacturing, Inc. (CTMI), the manufacturer and distributor of "Wella" products. They were officers and
members of the CTMI Employees Union-DFA (union). Respondent Procter and Gamble Philippines, Inc. (P &
GPI) acquired all the interests, franchises and goodwill of CTMI during the pendency of the dispute.
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Sometime in the first semester of 1991, the union filed a petition for certification election at CTMI. On June 10,
1991, Med-Arbiter Rasidali Abdullah of the Office of the Department of Labor and Employment in the National
Capital Region (DOLE-NCR) granted the petition. The DOLE-NCR conducted a consent election on July 5, 1991,
but the union failed to garner the votes required to be certified as the exclusive bargaining agent of the
company.
On July 15, 1991, CTMI, through its President and General Manager Franklin R. de Luzuriaga, issued a
memorandum announcing that effective that day: (1) all sales territories were demobilized; (2) all vehicles
assigned to sales representatives should be returned to the company and would be sold; (3) sales
representatives would continue to service their customers through public transportation and would be given
transportation allowance; (4) deliveries of customers' orders would be undertaken by the warehouses; and (5)
revolving funds for ex-truck selling held by sales representatives should be surrendered to the cashier (for Metro
Manila) or to the supervisor (for Visayas and Mindanao), and truck stocks should immediately be surrendered to
the warehouse.
On the same day, CTMI issued another memorandum informing the company's sales representatives and sales
drivers of the new system in the Salon Business Group's selling operations.
The union asked for the withdrawal and deferment of CTMI's directives, branding them as union busting acts
constituting unfair labor practice. CTMI ignored the request. Instead, it issued on July 23, 1991 a notice of
termination of employment to the sales drivers, due to the abolition of the sales driver positions.
On August 1, 1991, the union and its affected members filed a complaint for illegal dismissal and unfair labor
practice, with a claim for damages, against CTMI, De Luzuriaga and other CTMI officers. The union also moved
for the issuance of a writ of preliminary injunction and/or temporary restraining order (TRO).
The Compulsory Arbitration Proceedings
The labor arbiter handling the case denied the union's motion for a stay order on the ground that the issues
raised by the petitioners can best be ventilated during the trial on the merits of the case. This prompted the
union to file on August 16, 1991 with the National Labor Relations Commission (NLRC), a petition for the
issuance of a preliminary mandatory injunction and/or TRO.
On August 23, 1991, the NLRC issued a TRO. It directed CTMI, De Luzuriaga and other company executives to
(1) cease and desist from dismissing any member of the union and from implementing the July 23, 1991
memorandum terminating the services of the sales drivers, and to immediately reinstate them if the dismissals
have been effected; (2) cease and desist from implementing the July 15, 1991 memorandum grounding the
sales personnel; and (3) restore the status quo ante prior to the formation of the union and the conduct of the
consent election.
Allegedly, the respondents did not comply with the NLRC's August 23, 1991 resolution. They instead moved to
dissolve the TRO and opposed the union's petition for preliminary injunction.
On September 12, 1991, the NLRC upgraded the TRO to a writ of preliminary injunction. The respondents
moved for reconsideration. The union opposed the motion and urgently moved to cite the responsible CTMI
officers in contempt of court.
On August 25, 1993, the NLRC denied the respondents' motion for reconsideration and directed Labor Arbiter
Cristeta Tamayo to hear the motion for contempt. In reaction, the respondents questioned the NLRC orders
before this Court through a petition for certiorari and prohibition with preliminary injunction. The Court dismissed
the petition for being premature. It also denied the respondents' motion for reconsideration, as well as a second
motion for reconsideration, with finality. This notwithstanding, the respondents allegedly refused to obey the
NLRC directives. The respondents' defiance, according to the petitioners, resulted in the loss of their
employment.
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Meanwhile, the NLRC heard the contempt charge. On October 31, 2000, it issued a resolution dismissing the
charge. It ordered the labor arbiter to proceed hearing the main case on the merits.
The petitioners moved for, but failed to secure, a reconsideration from the NLRC on the dismissal of the
contempt charge. They then sought relief from the CA by way of a petition for certiorari under Rule 65.
The CA Decision
The CA saw no need to dwell on the issues raised by the petitioners as the question it deemed appropriate for
resolution is whether the NLRC's dismissal of the contempt charge against the respondents may be the proper
subject of an appeal. It opined that the dismissal is not subject to review by an appellate court. Accordingly, the
CA Special Sixth Division dismissed the petition in its resolution of February 24, 2006.
The CA considered the prayer of P & GPI to be dropped as party-respondent moot and academic.
The petitioners sought a reconsideration, but the CA denied the motion in its resolution of December 14,
2006. Hence, the present Rule 45 petition.
The Petition
The petitioners charge the CA with grave abuse of discretion in upholding the NLRC resolutions, despite the
reversible errors the labor tribunal committed in dismissing the contempt charge against the respondents. They
contend that the respondents were guilty of contempt for their failure (1) to observe strictly the NLRC status
quoorder; and (2) to reinstate the dismissed petitioners and to pay them their lost wages, sales
commissions, per diems, allowances and other employee benefits. They also claim that the NLRC, in effect,
overturned this Court's affirmation of the TRO and of the preliminary injunction.
The petitioners assail the CA's reliance on the Court's ruling that a contempt charge partakes of a criminal
proceeding where an acquittal is not subject to appeal. They argue that the facts obtaining in the present case
are different from the facts of the cases where the Court's ruling was made. They further argue that by the
nature of this case, the Labor Code and its implementing rules and regulations should apply, but in any event,
the appellate court is not prevented from reviewing the factual basis of the acquittal of the respondents from the
contempt charges.
The petitioners lament that the NLRC, in issuing the challenged resolutions, had unconstitutionally applied the
law. They maintain that not only did the NLRC unconscionably delay the disposition of the case for more than
twelve (12) years; it also rendered an unjust, unkind and dubious judgment. They bewail that "[f]or some
strange reason, the respondent NLRC made a queer [somersault] from its earlier rulings which favor the
petitioners."
The Case for the Respondents
Franklin K. De Luzuriaga
De Luzuriaga filed a Comment on May 17, 2007 and a Memorandum on December 4, 2008, praying for a
dismissal of the petition.
De Luzuriaga argues that the CA committed no error when it dismissed the petition for certiorari since the
dismissal of the contempt charge against the respondents amounted to an acquittal where review by an
appellate court will not lie. In any event, he submits, the respondents were charged with indirect contempt
which may be initiated only in the appropriate regional trial court, pursuant to Section 12, Rule 71 of the Rules
of Court. He posits that the NLRC has no jurisdiction over an indirect contempt charge. He thus argues that the
petitioners improperly brought the contempt charge before the NLRC.
Additionally, De Luzuriaga points out that the petition raises only questions of facts which, procedurally, is not
allowed in a petition for review on certiorari. Be this as it may, he submits that pursuant to Philippine Long
Distance Telephone Company, Inc. v. Tiamson, factual findings of labor officials, who are deemed to have
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acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but
even finality. He stresses that the CA committed no reversible error in not reviewing the NLRC's factual findings.
Further, De Luzuriaga contends that the petitioners' verification and certification against forum shopping is
defective because it was only Robosa and Pandy who executed the document. There was no indication that they
were authorized by Roxas, Angeles, Gutierrez, Embat and Pinto to execute the required verification and
certification.
Lastly, De Luzuriaga maintains that the petitioners are guilty of forum shopping as the reliefs prayed for in the
petition before the CA, as well as in the present petition, are the same reliefs that the petitioners may be entitled
to in the complaint before the labor arbiter.
P & GPI
As it did with the CA when it was asked to comment on the petitioners' motion for reconsideration, P & GPI
prays in its Comment and Memorandum that it be dropped as a party-respondent, and that it be excused from
further participating in the proceedings. It argues that inasmuch as the NLRC resolved the contempt charge on
the merits, an appeal from its dismissal through a petition for certiorari is barred. Especially in its case, the
dismissal of the petition for certiorari is correct because it was never made a party to the contempt proceedings
and, thus, it was never afforded the opportunity to be heard. It adds that it is an entity separate from CTMI. It
submits that it cannot be made to assume any or all of CTMI's liabilities, absent an agreement to that effect but
even if it may be liable, the present proceedings are not the proper venue to determine its liability, if any.
On December 16, 2008, the petitioners filed a Memorandum raising essentially the same issues and arguments
laid down in the petition.
The Court's Ruling
Issues
The parties' submissions raise the following issues:
(1)whether the NLRC has contempt powers;
(2)whether the dismissal of a contempt charge is appealable; and
(3)whether the NLRC committed grave abuse of discretion in dismissing the contempt charge against the
respondents.
On the first issue, we stress that under Article 218 of the Labor Code, the NLRC (and the labor arbiters) may
hold any offending party in contempt, directly or indirectly, and impose appropriate penalties in accordance with
law. The penalty for direct contempt consists of either imprisonment or fine, the degree or amount depends on
whether the contempt is against the Commission or the labor arbiter. The Labor Code, however, requires the
labor arbiter or the Commission to deal with indirect contempt in the manner prescribed under Rule 71 of the
Rules of Court.
Rule 71 of the Rules of Court does not require the labor arbiter or the NLRC to initiate indirect contempt
proceedings before the trial court. This mode is to be observed only when there is no law granting them
contempt powers. As is clear under Article 218 (d) of the Labor Code, the labor arbiter or the Commission is
empowered or has jurisdiction to hold the offending party or parties in direct or indirect contempt. The
petitioners, therefore, have not improperly brought the indirect contempt charges against the respondents
before the NLRC.
The second issue pertains to the nature of contempt proceedings, especially with respect to the remedy available
to the party adjudged to have committed indirect contempt or has been absolved of indirect contempt charges.
In this regard, Section 11, Rule 71 of the Rules of Court states that the judgment or final order of a court in a
case of indirect contempt may be appealed to the proper court as in a criminal case. This is not the point at
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issue, however, in this petition. It is rather the question of whether the dismissal of a contempt charge, as in the
present case, is appealable. The CA held that the NLRC's dismissal of the contempt charges against the
respondents amounts to an acquittal in a criminal case and is not subject to appeal.
The CA ruling is grounded on prevailing jurisprudence.
In Yasay, Jr. v. Recto, the Court declared:
A distinction is made between a civil and [a] criminal contempt. Civil contempt is the failure to do something
ordered by a court to be done for the benefit of a party. A criminal contempt is any conduct directed against the
authority or dignity of the court.
The Court further explained in Remman Enterprises, Inc. v. Court of Appeals and People v. Godoy the character
of contempt proceedings, thus
The real character